Dunham's, Inc. v. Nat. Buying Syndicate of Texas

614 F. Supp. 616, 1985 U.S. Dist. LEXIS 21280
District Court, E.D. Michigan·Decided March 28, 1985·No. 84-CV-3331-DT·Published·Cited by 3 cases

Opinion

MEMORANDUM OPINION AND ORDER

PHILIP PRATT, District Judge.

The question presented is whether this court has personal jurisdiction over a nonresident corporate defendant — National Buying Syndicate of Texas (NBS).

I.

This is an antitrust case. The plaintiff here, Dunham’s Inc., a Michigan corporation, is a retail seller of sporting goods. Three separate defendants are named: *618 NBS, a Texas corporation; Michigan Sporting Goods Distributors, Inc. (MC Sporting Goods), a Michigan corporation; and Figgie International Company, an Ohio corporation. 1

Plaintiff commenced this action on July 19, 1984, alleging violations of the Sherman Act, 15 U.S.C. §§ 1, 4, 5, the Clayton Act, 15 U.S.C. § 16, and the Robinson-Patman Act, 15 U.S.C. § 13. It is alleged that the defendants conspired and participated in unlawful price discrimination and restraint of trade.

II.

NBS operates a syndicate or buying group composed of various sporting goods retailers throughout the United States. NBS advertises that it has members in 47 states. The buying syndicate operates in the following manner. It purchases, or arranges for purchases, of sporting goods merchandise between manufacturers or wholesalers and members of the NBS buying syndicate. These purchases are made in large quantity at discounted prices. Therefore, NBS members are able to buy these goods at prices less than what they would have to pay wholesalers in the normal course of their business. By obtaining merchandise at discount prices, NBS members are able to sell their goods at more competitive prices while still making an attractive profit. In short, NBS’s operation apparently offers members the opportunity to buy merchandise at lower than normal prices and thereby gain a competitive advantage in the marketplace over non-NBS member retailers.

It is essential to understand NBS’s mode of operation insofar as it can be gleaned from the parties’ submissions. A letter and brochure sent to plaintiff by NBS on December 28, 1983 explains the NBS membership requirements and operations. Plaintiff’s Exhibit A. NBS members are required to pay a one-time initiation fee of $1,000. In addition to this, members must pay monthly dues of $175. There are also certain registration fees of $150 per member.

In addition to the dues obligations of a member, NBS has established financial criteria which must be satisfied before NBS membership is granted. These include a satisfactory Dun & Bradstreet financial rating, a minimum level of retail sales in sporting goods merchandise and several other requirements. NBS members purchase most of their merchandise during semi-annual buying markets held in Fort Worth, Texas. Vendors that represent manufacturers and wholesalers of sporting goods equipment exhibit and sell their goods at these shows.

When NBS members order merchandise, they are required to use “NBS purchase orders for all Syndicate orders.” According to NBS procedures, the NBS office in Fort Worth must be sent a copy of all purchase orders on a weekly basis. Additionally, copies of all correspondence or letters “related to Syndicate orders” must be sent to the NBS office once a week. Plaintiff’s Exhibit E.

With standard NBS sales, the vendor bills all merchandise to NBS. The merchandise itself, however, is drop-shipped to the ordering member. In turn, the member then pays the vendor directly rather than going through NBS. Plaintiffs Exhibit E. On occasion, with what NBS calls “exceptional deals,” merchandise will be shipped to one of the NBS warehouses. 2 When this is done, the merchandise is then reshipped to NBS members which have ordered the goods. NBS itself must pay for these “exceptional deals” with its own check. Members must then reimburse NBS for these goods directly instead of paying the vendor.

*619 Plaintiff applied for NBS membership in December of 1983. Its application was denied. Plaintiff contends:

Acting pursuant to Defendant Syndicate’s policies and practices ... and in combination and conspiracy with other persons including, without limitation, retailers who are members of Defendant Syndicate, Defendant Syndicate denied, excluded and barred Plaintiff Dunham’s from membership in Defendant Syndicate.
As a direct and proximate result of being denied, vetoed and barred from membership in Defendant Syndicate, Plaintiff Dunham’s has been denied the benefits of such membership, including without limitation, the extremely large and extraordinary price and volume discounts, reduced prices, favorable terms and other benefits ... and Plaintiff Dunham’s has been limited, restrained and injured in its ability to compete.

Plaintiff seeks both money damages and equitable relief for defendants’ alleged antitrust violations.

III.

This matter is now before the court on defendant NBS’s motion to dismiss, pursuant to Fed.R.Civ.P. 12(b)(2), (5), on the ground that this court lacks personal jurisdiction over it because the requisite minimum contacts do not exist with the forum state. 3

It is plaintiff’s position that the requirement of “minimum contacts” is irrelevant when subject matter jurisdiction is based on a federal statute rather than on diversity of citizenship. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1956). Defendant, on the other hand, contends that this court must engage in some type of “minimum, contacts” analysis to determine whether NBS is amenable to suit in the forum state.

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Dunham's, Inc. v. Nat. Buying Syndicate of Texas, 614 F. Supp. 616, 1985 U.S. Dist. LEXIS 21280 (E.D. Mich. 1985).

614 F. Supp. 616 (Dunham's, Inc. v. Nat. Buying Syndicate of Texas) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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