Feesers, Inc. v. Michael Foods, Inc.

591 F.3d 191, 2010 U.S. App. LEXIS 337, 2010 WL 27209
CourtCourt of Appeals for the Third Circuit
DecidedJanuary 7, 2010
Docket09-2548, 09-2952, 09-2993
StatusPublished
Cited by21 cases

This text of 591 F.3d 191 (Feesers, Inc. v. Michael Foods, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Feesers, Inc. v. Michael Foods, Inc., 591 F.3d 191, 2010 U.S. App. LEXIS 337, 2010 WL 27209 (3d Cir. 2010).

Opinion

OPINION

SMITH, Circuit Judge.

This appeal by Feesers, Inc. (“Feesers”), a food distributor, arises out of a Robinson-Patman Act claim for unlawful price discrimination, 15 U.S.C. § 13 (the “RPA”), against Michael Foods, Inc. (“Michaels”), a food manufacturer, and Sodexo, Inc. (“Sodexo”), 1 a food service management company. Feesers claims that Sodexo was able to purchase egg and potato products from Michaels at a discounted price that was unavailable to Feesers. Following a bench trial, the District Court entered judgment for Feesers. We will vacate that judgment and instruct the District Court to enter judgment as a matter of law for Michaels and Sodexo. Feesers and Sodexo were not competing purchasers, and, therefore, Feesers cannot satisfy the competitive injury requirement of a prima facie ease of price discrimination under § 2(a) of the RPA. 2 In doing so, we *194 hold that, in a secondary-line price discrimination case, parties competing in a bid market cannot be competing purchasers where the competition for sales to prospective customers occurs before the sale of the product for which the RPA violation is alleged.

When reviewing a judgment entered after a bench trial, we exercise “plenary review over [the] [District [C]ourt’s conclusions of law” and its “choice and interpretation of legal precepts.” Am. Soc’y for Testing & Materials v. Corrpro Cos., 478 F.3d 557, 566 (3d Cir.2007) (internal quotations omitted). Findings of fact are reviewed for clear error. Id. The District Court had subject matter jurisdiction over this case under 28 U.S.C. § 1331, and we exercise appellate jurisdiction under 28 U.S.C. § 1291.

Michaels and Sodexo raise a host of issues in this appeal, but in light of this Court’s decision in Toledo Mack Sales & Service, Inc. v. Mack Trucks, Inc., 530 F.3d 204 (3d Cir.2008), and the Supreme Court’s decision in Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 126 S.Ct. 860, 163 L.Ed.2d 663 (2006), we need address only the issue of whether Sodexo and Feesers were “competing purchasers” for purposes of the RPA. Feesers, Inc. v. Michael Foods, Inc., 498 F.3d 206, 213 (3d Cir.2007) (quoting Falls City Indus, v. Vaneo Beverage, 460 U.S. 428, 435, 103 S.Ct. 1282, 75 L.Ed.2d 174 (1983)). 3

I.

The following facts were found by the District Court after a bench trial. Feesers, Inc. v. Michael Foods, Inc., 632 F.Supp.2d 414, 418 (M.D.Pa.2009).

Structure of the Food Service Industry

The food service industry consists of a three-tier distribution system: manufacturers sell products to distributors, who resell those products to operators, including self-operators (“self-ops”) and food service management companies. Id. at 420-21. Self-ops are institutions that perform all dining services internally. Food service management companies perform institutions’ dining services for a fee, id., and primarily target schools, hospitals, and nursing-homes. Sometimes operators negotiate with manufacturers for discounted *195 prices, known as “deviated prices.” Id. at 432. In those instances, the distributor purchases the product at list price from the manufacturer, sells the product to the operator at the deviated price, and receives the difference between the list price and the deviated price from the manufacturer. Id. An operator may also seek discounts from manufacturers by joining a Group Purchasing Organization (“GPO”). A GPO is a collection of operators who negotiate food prices collectively to achieve greater bargaining power against manufacturers and distributors. Id. at 421. “GPOs generally bargain for a lower price, but do not actually purchase the food for resale to institutions.” Id.

The Parties in this Appeal

Michaels is a manufacturer of egg and potato products that sells in bulk, nationwide. Id. It is the largest producer of liquid eggs in the United States. Id. Feesers is a regional distributor that distributes Michaels’s products, and others, to operators within a 200-mile radius of Harrisburg, Pennsylvania. Id. Sodexo is a multinational food service management company that serves institutions around the world. Id. Its services include planning menus, ordering food, preparing and serving meals, and overseeing labor issues. It is the largest private purchaser of food in the world. Id. Sodexo owns Entegra, a GPO. Id. at 427.

Michaels’s Pricing of Food Products

Michaels sells sixty percent of its products at deviated prices. Id. at 432. It has offered deviated pricing to self-ops since the mid-1990s and to food service management companies, like Sodexo, since at least 1999. “[0]n average from 2000 until 2004, Feesers paid $9.56, or 59% more than [Sodexo] for [Michaels’s] eleven top selling products.” Id. at 434. This pricing difference was described as “stunning” by Feesers’s expert witness. Id. The deviated pricing Sodexo received from Michaels was not institution-specific, so Sodexo could “use its low deviated price ... to win new accounts and to keep current customers.” Id. at 432.

Competition between Feesers and Sodexo

Feesers sells food to self-op institutions and food service management companies. 4 Id. at 421-22. Sodexo sells food in conjunction with its food service management services. Id. at 422. Institutional customers “regularly switch [between] self-op [and] management,” and at least three institutions have switched between Feesers and Sodexo. Id. 5 Both companies regularly seek self-op business. Id. Feesers tries to distribute for self-ops while Sodexo tries to convert self-ops to food service management.

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Bluebook (online)
591 F.3d 191, 2010 U.S. App. LEXIS 337, 2010 WL 27209, Counsel Stack Legal Research, https://law.counselstack.com/opinion/feesers-inc-v-michael-foods-inc-ca3-2010.