Johnny Prescott & Son Oil v. Rymes Heating Oils

2014 DNH 127

• Court: District Court, D. New Hampshire
• Decided: June 6, 2014
• Docket: 13-cv-437-LM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Johnny Prescott & Son Oil Company, Inc.

v. Civil No. 13-cv-437-LM Opinion No. 2014 DNH 127 Rymes Heating Oils, Inc.

O R D E R

Johnny Prescott & Son Oil Company, Inc. (“Prescott”) brings

this suit against Rymes Heating Oils, Inc. (“Rymes”). Prescott

seeks damages for violations of the New Hampshire Consumer

Protection Act (“CPA”), N.H. Rev. Stat. Ann. (“RSA”) § 358-A

(Count I), illegal restraint of trade under RSA § 356:2 (Count

II), illegal monopoly under RSA § 356:3 (Count III),

discriminatory pricing under the Clayton Act, 15 U.S.C. § 13

(Count IV), and illegal underselling under the Clayton Act, 15

U.S.C. § 13a (Count V). Rymes moves to dismiss Prescott’s

complaint under Rule 12(b)(6) of the Federal Rules of Civil

Procedure. For the reasons that follow, the motion is granted.

Standard of Review

To survive scrutiny under Rule 12(b)(6), a “complaint must

contain sufficient factual matter, accepted as true, to state a

claim to relief that is plausible on its face.” González-

Maldonado v. MMM Healthcare, Inc., 693 F.3d 244, 247 (1st Cir. 2012) (internal quotation marks omitted). When assessing a

complaint under Rule 12(b)(6), the court must “accept[] as true

all well-pled facts in the complaint and draw[] all reasonable

inferences in favor of [the] plaintiff[].” Plumbers’ Union

Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp., 632

F.3d 762, 771 (1st Cir. 2011). However, “some allegations,

while not stating ultimate legal conclusions, are nevertheless

so threadbare or speculative that they fail to cross ‘the line

between the conclusory and the factual.’” Peñalbert-Rosa v.

Fortuño-Burset, 631 F.3d 592, 595 (1st Cir. 2011) (quoting Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 557 n.5 (2007)).

Background

The facts in this section are drawn from the complaint.

See Butler v. Balolia, 736 F.3d 609, 611 (1st Cir. 2013).

Prescott is a New Hampshire heating fuel distributor.

Prescott purchases fuel from third party wholesalers and both

sells fuel directly to customers and distributes fuel to

smaller, local distributors. This practice is known as

“through-putting.” One of Prescott’s through-putting buyers is

Davis Fuels of Epsom, Inc. (“Davis”).

On approximately July 30, 2013, Tom Prescott, Prescott’s

president, spoke with John Rymes, Rymes’s vice-president.

During the conversation, Mr. Rymes told Mr. Prescott that he had

2 heard there was “a new competitor in Epsom.” Compl. (doc. no.

1) 2 ¶ 9. Mr. Prescott explained that Davis was entering the

propane business. Mr. Rymes expressed dismay at hearing this

news because Davis had taken one of Rymes’s customers. Mr.

Rymes also asked where Davis was getting his propane. Mr.

Prescott responded that Davis would be buying it from Prescott.

Mr. Rymes allegedly replied “game on Tom, I will be selling

heating oil in the Concord-Bow area for cost so you won’t make

any money this year.” Compl. (doc. no. 1) 3 ¶ 13.

On approximately August 10, 2013, Rymes began advertising

heating oil at $2.99 per gallon cash price and $3.07 per gallon

pre-buy price. Prescott alleges that this price was

“approximately 50 cents below [the price of] any other

distributors and below cost for dealers such as Prescott and

Davis. Compl. (doc. no. 1) 3 ¶ 14. Based on Rymes’s alleged

actions, Prescott brought the present suit.

Discussion

The court addresses the counts out of order, beginning with

the federal claims in Counts IV and V of the complaint.

A. Count IV: Discriminatory Pricing (Clayton Act)

In this Count, Prescott alleges that Rymes’s oil pricing

violates the Clayton Act, 15 U.S.C. § 13. Although not entirely

3 clear from the complaint, it appears that Prescott is alleging

that Rymes violated 15 U.S.C. § 13(a). As such, the court will

treat this count as a claim under 15 U.S.C. § 13(a).1 This

statute, in pertinent part, reads as follows:

It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered[.]

15 U.S.C. § 13(a)

“[T]here are two prerequisites to recovery under 15 U.S.C.

§ 13(a).” Bridges v. MacLean-Stevens Studios, Inc., 201 F.3d 6,

13 (1st Cir. 2000). “First, the prices complained of must be

below an appropriate measure of the defendant’s costs.” Id.

1 In its Memorandum of Law in Support of Plaintiff’s Objection to Defendant’s Motion to Dismiss (doc. no. 10-1) 13, Prescott refers to this count more specifically as “Discriminatory Pricing (15 USC § 3(a)).”

4 This means the defendant must sell at a loss. “Second, the

defendant must have a reasonable prospect of recouping its

investment in below-cost prices.” Id. (citation omitted). This

means the defendant is likely to recover its immediate losses.

Prescott’s complaint fails to allege sufficient facts under

either prong. First, even giving Prescott’s complaint a broad

reading, nowhere does it allege that Rymes’s prices fell below

an appropriate measure of Rymes’s costs. The closest Prescott

gets is the allegation that Mr. Rymes intended to sell “heating

oil in the Concord-Bow area for cost.” Compl. (doc. no. 1) 3 ¶

13 (emphasis added). To sell at cost, as opposed to below cost,

however, does not violate 15 U.S.C. § 13(a). Similarly, at

other points in the complaint, Prescott alleges that Rymes

advertised oil at a price below that of other businesses, but

does not assert that Rymes advertised prices below an

appropriate measure of Rymes’s own cost. See Compl. (doc. no.

1) 3 ¶ 14. Likewise, the allegation that “Rymes’ pricing . . .

is below some appropriate measure of cost[,]” Compl. (doc. no.

1) 4 ¶ 21, is a “legal conclusion couched as [fact].” Twombly,

550 U.S. at 555. In short, at no point in the complaint does

Prescott specifically allege that Rymes sold its product below

an appropriate measure of its own cost. This failure is fatal

to Prescott’s claim.

5 Prescott’s failure to meet prong one under Bridges is a

sufficient basis to dismiss Count IV. However, Prescott’s

complaint also fails to meet the second requirement of Bridges.

At no point in the complaint does Prescott allege any facts that

plausibly show Rymes has a reasonable prospect of recouping

monies it has lost through below-cost pricing. Cf. Bridges, 201

F.3d at 13 (affirming summary judgment for plaintiff due to lack

of evidence on the recoupment element of statute); see also

Bailey v. Allgas, Inc., 284 F.3d 1237, 1239, 1244-1245, 1257-58

(11th Cir. 2002) (same).

In sum, Prescott’s complaint falls well short of alleging

the facts necessary to state the elements of a claim under 15

U.S.C. § 13(a). Accordingly, Count IV is dismissed.

B. Count V: Illegal Underselling (Clayton Act)

In this count, Prescott alleges that Rymes has sold and/or

contracted to sell goods in the United States at prices lower

than those sold elsewhere for the purpose of destroying

competition or eliminating a competitor. To support this

allegation, Prescott relies on 15 U.S.C. § 13a, i.e., Section 3

of the Robinson-Patman Act. However, the Supreme Court has made

clear that Section 3 of the Robinson-Patman Act is not part of

the Clayton Act and does not permit a private cause of action.

6 See Nashville Milk Co. v. Carnation Co., 355 U.S. 373, 376, 382

(1958). As such, Count V is also dismissed.2

C. Counts I-III: State Law Claims

As the court has now dismissed the federal causes of action

in Counts IV and V, all the remaining claims in this case are

based on state law. These counts were originally before the

court on supplemental jurisdiction. “As a general principle,

the unfavorable disposition of a plaintiff’s federal claims at

the early stages of a suit, well before the commencement of

trial, will trigger the dismissal without prejudice of any

supplemental state-law claims.” Rodriguez v. Doral Mortg.

Corp., 57 F.3d 1168, 1177 (1st Cir. 1995). While, “[i]n an

appropriate situation, a federal court may retain jurisdiction

over state-law claims notwithstanding the early demise of all

foundational federal claims[,] . . . the exercise of

supplemental jurisdiction in such circumstances is wholly

discretionary.” Id. (citations omitted). The court finds no

reason to retain jurisdiction over the state law claims in this

case. Accordingly, the state law claims in Counts I-III are

2 Rymes appears to treat both Count IV and Count V as claims made under 15 U.S.C. § 13(a). To the extent that Prescott is attempting to bring Count V under 15 U.S.C. § 13(a), Count V would fail to state a claim under 15 U.S.C. § 13(a) for the same reasons Count IV failed.

7 dismissed. Because no counts remain, the court dismisses

Prescott’s complaint.

Conclusion

In sum, the court dismisses the federal claims in Counts IV

and V for failure to state a claim upon which relief can be

granted. Because the court declines to exercise jurisdiction

over Prescott’s remaining state law claims, the court dismisses

them as well. The entirety of Prescott’s complaint is therefore

dismissed. Document no. 9 is granted; document no. 13 is denied

as moot. The clerk is directed to close the case.

SO ORDERED.

____________________________ Landya McCafferty United States District Judge

June 6, 2014

cc: Biron L. Bedard, Esq. Courtney H. G. Herz, Esq. Robert H. Miller, Esq.