Freeman Industries, LLC v. Eastman Chemical Co.

172 S.W.3d 512, 2005 Tenn. LEXIS 668, 2005 WL 2036209
CourtTennessee Supreme Court
DecidedAugust 25, 2005
DocketE2003-00527-SC-S09-CV
StatusPublished
Cited by239 cases

This text of 172 S.W.3d 512 (Freeman Industries, LLC v. Eastman Chemical Co.) is published on Counsel Stack Legal Research, covering Tennessee Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Freeman Industries, LLC v. Eastman Chemical Co., 172 S.W.3d 512, 2005 Tenn. LEXIS 668, 2005 WL 2036209 (Tenn. 2005).

Opinion

OPINION

JANICE M. HOLDER, J.,

delivered the opinion of the court,

in which FRANK F. DROWOTA, III, C.J., and E. RILEY ANDERSON, ADOLPHO A. BIRCH, JR., and WILLIAM M. BARKER, JJ„ joined.

We granted permission to appeal to determine: 1) whether an indirect purchaser may bring an action under the Tennessee Trade Practices Act against defendants involved in an price-fixing scheme; 2) whether the conduct complained of falls within the scope of the act; and 3) whether the trial court erred in declining to grant summary judgment to the defendants as to the plaintiffs unjust enrichment claim. We conclude that although an indirect purchaser may bring an action under the Tennessee Trade Practices Act, the conduct complained of in this case did not substantially affect Tennessee commerce and thus falls outside the scope of the act. We further conclude that to sustain an unjust enrichment claim, the plaintiff is not required to: 1) establish that the defendants received a direct benefit or 2) exhaust all remedies against the party with whom the plaintiff is in privity if the pursuit of the remedies would be futile. Because the plaintiff failed to provide a factual basis to support its bare allegation that any attempt to exhaust its remedies would have been futile, the trial court erred in failing to grant the defendants’ motion for summary judgment on the unjust enrichment claim. Accordingly, the judgment of the Court of Appeals is affirmed in part and reversed in part, and the case is remanded *516 to the trial court for further proceedings in accordance with this opinion.

Defendant Eastman Chemical Co. (“Eastman”) is a Delaware corporation with its principal place of business in Kingsport, Tennessee. Defendants Hoechst Aktiengesellschaft (“Hoechst”) and Nutrinova Nutrition Specialities & Food Ingredients, GmbH (“Nutrinova”) are German corporations with principal places of business in Frankfurt, Germany. Defendants Daciel Chemical Industries, Ltd. (“Daciel”) and Nippon Gohsei Industries, Ltd. (“Nippon”) are Japanese corporations with principal places of business in Tokyo and Osaka, Japan, respectively. Eastman, Hoechst, Nutrinova, Daciel, and Nippon (collectively “defendants”) are producers of sorbates. Sorbates are food preservatives used in small quantities in high-moisture and high-sugar products to slow the growth of mold.

Between 1998 and 2001, each defendant pleaded guilty to fixing the prices of sor-bates in violation of the Sherman Antitrust Act. See 15 U.S.C. § 1 (1997). The defendants also have settled federal lawsuits brought by a nationwide class of direct purchasers of sorbates as well as lawsuits brought by indirect purchasers in fourteen states, including Tennessee, and the District of Columbia.

Plaintiff Freeman Industries, LLC (“Freeman”) is a New York corporation with its principal place of business in Tuck-ahoe, New York. Freeman is an end-user of food products containing sorbates and purchases these products at supermarkets in New York. Freeman, as an indirect purchaser of sorbates, filed a lawsuit against the defendants claiming a violation of the Tennessee Trade Practices Act (“TTPA”), Tenn.Code Ann. § 47-25-101 et seq. (2001), and unjust enrichment.

The trial court granted the defendants’ motion to dismiss Freeman’s TTPA claim. The trial court concluded that the TTPA does not apply to indirect purchasers or to transactions occurring outside of Tennessee. The trial court denied the defendants’ motion for summary judgment as to Freeman’s unjust enrichment claim.

On interlocutory review, the Court of Appeals concluded that although indirect purchasers may recover under the TTPA, the act does not apply to indirect purchasers who are not “Tennessee consumers.” The Court of Appeals further concluded that Freeman could not recover under the TTPA because it failed to establish that it “had a transaction in Tennessee that was substantially affected by the defendants’ illegal conduct.” With respect to Freeman’s unjust enrichment claim, the Court of Appeals held that a plaintiff is not required to confer a direct benefit upon a defendant to proceed with a claim for unjust enrichment. The Court of Appeals therefore modified the portion of the trial court’s judgment that held that the TTPA is not applicable to indirect purchasers and affirmed the trial court’s judgment in all other respects. We granted review.

ANALYSIS

A. Tennessee Trade Practices Act

We must first decide whether the trial court erred in granting the defendants’ motion to dismiss Freeman’s TTPA claims pursuant to Tennessee Rule of Civil Procedure 12.02(6). A motion to dismiss a complaint for failure to state a claim pursuant to Rule 12.02(6) “admits the truth of all of the relevant and material allegations contained in the complaint, but it asserts that the allegations fail to establish a cause of action.” Leach v. Taylor, 124 S.W.3d 87, 90 (Tenn.2004). When reviewing a dismissal of a complaint under Rule 12.02(6), we must take the factual allegations of the complaint as true and review the trial *517 court’s legal conclusions de novo without any presumption of correctness. Id.

1. Indirect Purchasers

Tennessee Code Annotated section 47-25-106 (2001) provides for a civil remedy against those who violate the TTPA. Section 47-25-106 states that:

[a]ny person who is injured or damaged by any such arrangement, contract, agreement, trust, or combination described in this part may sue for and recover, in any court of competent jurisdiction, from any person operating such trust or combination, the full consideration or sum paid by the person for any goods, wares, merchandise, or articles, the sale of which is controlled by such combination or trust.

By providing a civil remedy to “[a]ny person who is injured or damaged” as the result of violations of the TTPA, the plain language of section 47-25-106 provides a cause of action to indirect purchasers. See City of Cookeville ex rel. Reg’l Med. Ctr. v. Humphrey, 126 S.W.3d 897, 902 (Tenn.2004) (providing that where the language of a statute is clear and unambiguous, we must apply the statute in accordance with its plain language). Contrary to the Court of Appeals’ holding, the plain language of section 47-25-106 does not prohibit recovery to indirect purchasers who are nonresidents of Tennessee. Moreover, sections 47-25-101 and -102 1 (2001) prohibit price fixing agreements that tend to affect the price to the “producer or consumer” of such products. These statutes reflect a clear intent to protect and afford a remedy to ultimate consumers.

This Court has identified two purposes of the TTPA. See Baird v. Smith, 128 Tenn. 410, 161 S.W. 492, 493 (1913).

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Bluebook (online)
172 S.W.3d 512, 2005 Tenn. LEXIS 668, 2005 WL 2036209, Counsel Stack Legal Research, https://law.counselstack.com/opinion/freeman-industries-llc-v-eastman-chemical-co-tenn-2005.