Lewis v. Philip Morris Inc.

355 F.3d 515, 2004 U.S. App. LEXIS 531
CourtCourt of Appeals for the Sixth Circuit
DecidedJanuary 15, 2004
Docket01-6174, 01-6502
StatusPublished
Cited by149 cases

This text of 355 F.3d 515 (Lewis v. Philip Morris Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lewis v. Philip Morris Inc., 355 F.3d 515, 2004 U.S. App. LEXIS 531 (6th Cir. 2004).

Opinions

ROGERS, J., announced the judgment of the court and delivered an opinion, in which MOORE and KATZ, concurred except as to Part II.B. MOORE, J. (pp. 534-39), delivered a separate opinion, in which KATZ, D. J., concurred as to the issues addressed in Parts I and II, which constitutes the opinion of the court on these issues.

OPINION

PER CURIAM.

Judge Moore would reverse on all the claims as to which the district court granted summary judgment. Judge Rogers would affirm the summary judgment against plaintiffs who have purchased indirectly from defendant, but he would reverse summary judgment entered against plaintiffs who purchase directly from defendant. Judge Katz would find that all violations of the Act are properly analyzed under §§ 2(d) and (e) and not § 2(a), and thus would affirm summary judgment as to the § 2(a) claims on grounds alternative to those relied on by the district court. Summary judgment is therefore REVERSED on Count I as to all plaintiffs and on Count II as to those plaintiffs who purchase directly from defendant and AFFIRMED on Count II as to those plaintiffs who do not purchase directly from defendant, and the case is REMANDED for further proceedings.

ROGERS, Circuit Judge.

This case involves the grant of summary judgment in favor of Philip Morris, Inc.1 in a Robinson-Patman Act case. Cigarette vending machine owners and operators (“vendors”) sued Philip Morris under section 2 of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. §§ 13(a), (d), and (e) (the “Act”), alleging that Philip Morris had violated these provisions by failing to provide vendors with promotional fees and programs in the same manner that it provided such fees and programs to other retailers. The district court granted Philip Morris summary judgment, holding that eight out of ten of the plaintiff vendors did not have standing because they did not purchase cigarettes directly from Philip Morris, and, alternatively, no plaintiffs proved that they were in competition with the other retailers. I would hold that the vendors who did not purchase directly from Philip Morris lacked statutory standing, but that the remaining plaintiffs who have standing are in [520]*520competition with the other retailers.2

I. BACKGROUND

A. The Robinson-Patman Act

The Robinson-Patman Act was passed in 1936 as an amendment to the Clayton Act.3 The Clayton Act is an antitrust law that primarily protected against “primary line” price discrimination, or price discrimination tending to injure the price discriminator’s competitors. 14 Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application, ¶2302 (1999) (Hovenkanvp) (“[T]he concern with original § 2 of the Clayton Act was entirely with what we today would call ‘primary-line’ price discrimination.”); see also George Haug Co., Inc. v. Rolls Royce Motor Cars, Inc., 148 F.3d 136, 141 n. 2 (2d Cir.1998) (defining primary-line price discrimination). In response to criticism that the Clayton Act did not protect small retail stores from the concentrated buying power of larger chain stores, Congress passed the Robinson-Patman Act. The reason for its enactment was to “curb and prohibit all devices by which large buyers gained discriminatory preferences over smaller ones by virtue of their greater purchasing power.” FTC v. Henry Broch & Co., 363 U.S. 166, 168, 80 S.Ct. 1158, 4 L.Ed.2d 1124 (1960). The Robinson-Patman Act protects against primary-line violations, see, e.g., FTC v. AnheuserBusch, Inc., 363 U.S. 536, 80 S.Ct. 1267, 4 L.Ed.2d 1385 (1960), and also, significantly for this case, against “secondary-line” violations, those that occur “when a seller’s discrimination impacts competition among the seller’s customers; i.e., the favored purchasers and disfavored purchasers.” George Haug Co., supra. The present case involves an alleged secondary-line violation because it is the competitors of the favored purchasers that are claiming discrimination rather than the competitors of Philip Morris.

B. The Cause of the Controversy

This case involves claims that Philip Morris discriminated against machine vendors of cigarettes in favor of another class of cigarette seller — convenience stores, mini-marts and gas stations (collectively referred to as “convenience stores”). On November 1, 1998, Philip Morris terminated a program, called Plan MV, under which it paid fees to vendors if they followed certain guidelines regarding the placement of advertising materials on their vending machines and the location of Philip Morris cigarettes in certain slots of the machines. Philip Morris thereafter instituted new programs for convenience stores that provided for price promotions, product promotions, and incentive promotions in exchange for the convenience stores’ participation in the programs. Under the new price promotion programs, Philip Morris paid an amount of money to convenience stores for every carton or pack of Philip Morris cigarettes sold as long as the customer received a discount in an amount equal to the price promotion.4 An example [521]*521of a product promotion was one in which, if the consumer bought one pack, the consumer would get one pack free. With an incentive promotion, the stores were given gifts to give away to cigarette purchasers. These programs were called the Retail Masters, Retail Leaders and Ranch Party '99 Programs. Vendors allege that after the programs went into effect, vendors were unable to compete with the convenience stores’ low prices, thereby incurring substantial losses.

C. Statutory scheme

Claiming that they are “in competition” with convenience stores, vendors alleged violations of sections 2(a), 2(d) and 2(e) of the Robinson-Patman Act. Section 2(a) prohibits a supplier from “discriminat[ing] in price between different purchasers of like grade and quality” where “the effect is substantially to lessen competition.” 5 15 U.S.C. § 13(a). Section 2(a) protects against direct and indirect price discrimination. American News Co. v. FTC, 300 F.2d 104, 109 (2d Cir.1962). Direct discrimination occurs when a seller charges different prices to different buyers. Robbins Flooring, Inc. v. Fed. Floors, Inc., 445 F.Supp. 4, 8 (E.D.Pa. 1977). Indirect discrimination occurs “when one buyer receives something of value not offered to other buyers,” such as free goods. Id.

Section 2(a) applies only if “two or more consummated sales of commodities of like grade and quality are made at discriminatory prices by the same seller to two or more different purchasers contemporaneously or within the same approximate time period.” Hugh C. Hansen, Robinson-Pat-man Law: A Revieiv and Analysis, 51 Fordham L.Rev. 1113, 1127-28 (1983) (footnotes omitted).

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355 F.3d 515, 2004 U.S. App. LEXIS 531, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lewis-v-philip-morris-inc-ca6-2004.