Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

NATIONAL AUTO BROKERS CORP. v. GMC

April 5, 1974

National Auto Brokers Corp., et al. Plaintiffs,
v.
General Motors Corp., et al. Defendants


Griesa, District Judge.


The opinion of the court was delivered by: GRIESA

GRIESA, District Judge.

This is an action, involving mainly antitrust charges, brought by a company called National Auto Brokers Corp. ("Nabcor") against General Motors, Ford, Chrysler and American Motors and other defendants.

 As will be described in more detail shortly, Nabcor claims to have organized a system of franchised brokers, who, for modest fees, act as agents for retail auto buyers, and arrange for purchases of automobiles from automobile dealers at substantially less than regular retail prices. According to the complaint, the alleged Nabcor organization consists basically of Nabcor at the top of a system of brokers to which Nabcor sells franchises. Beneath Nabcor, there are three levels of brokers: "master brokers", "area brokers" and simply brokers.

 The four auto manufacturer defendants have moved for partial summary judgment dismissing the claims in the complaint made under the Robinson-Patman Act and certain other claims. The motions are granted in part and denied in part.

 Plaintiffs have moved for class action treatment. In an unreported bench decision of November 7, 1973, I denied this motion as to one of the classes sought to be represented. In the present opinion I am denying plaintiffs' motion as to the other class.

 The Parties and Certain Prior Proceedings

 The original complaint, filed December 10, 1970, contained 27 counts. Counts 9-13, relating to advertising practices of various newspaper defendants, were severed from this action on March 2, 1973, National Auto Brokers Corp. v. General Motors Corp., 1973-CCH Trade Cas. P74,405 (S.D.N.Y. 1973), and were assigned docket number 70 Civ. 5421B.

 The instant action now bears docket number 70 Civ. 5421A. The complaint charges numerous violations of the antitrust laws by defendant automobile manufacturers, various dealers franchised by the manufacturers, financial institutions and other parties named as defendants and co-conspirators, directed against plaintiff Nabcor and its organization.

 There are ten named plaintiffs. The first three plaintiffs are Nabcor, and Frank Maiorana and Anthony Maiorana, the principals of Nabcor.

 Plaintiff General Auto Sales & Leasing, Inc. is alleged to have been, from 1967 to 1970, a Nabcor "master broker" in Lancaster, New York. This is said to be the second tier in the Nabcor organization. Plaintiff Dale Strimpel was the principal of General Auto Sales.

 Plaintiff Nabcor of East New York, Inc. ("Nabcor East") is alleged to be a master broker in Yonkers, New York.

 Plaintiff Courtesy Auto Brokers, a partnership, is alleged to have been, from February to December 1968, an "area broker" (the third tier in the Nabcor organization) in Huntington Station, New York.

 Plaintiff Robert B. Heim is alleged to have been doing business as Robert Heim Auto Sales in Bethlehem, Pennsylvania, and to have acted as a Nabcor area broker in 1969-70.

 Plaintiff Louis H. Jamele is alleged to operate Lou's Auto Mart in Middlebury, Connecticut and Waterbury, Connecticut, and is alleged to be Nabcor broker.

 Plaintiff Alfred J. Young is alleged to do business as A. J. Young, Sr. Auto Sales in Watertown, New York, and is alleged to be a Nabcor broker.

 Plaintiffs moved for class action treatment, seeking to represent two classes, one called the "broker class" and consisting of Nabcor and the 250 or so brokers in the Nabcor organization; the other, called the "retailer class", consisting not only of Nabcor and its 250 brokers, but also all regular franchised auto dealers, all companies engaged in the automobile fleet leasing business, and all other brokers such as Nabcor. The total membership of this retailer class was allegedly about 42,000. On November 7, 1973, in an unreported bench decision, this Court denied class action treatment with respect to the retailer class except for the Nabcor organization, and reserved decision as to class action status for the broker class. The latter issue will be dealt with later in this opinion.

 Summary Judgment Motions

 It should be stated at the outset that my rulings on the summary judgment motions relate only to claims of the named plaintiffs in this action. I am not ruling as to possible claims of parties not before the Court, including absent members of the Nabcor "broker class".

 Summary of Counts

 The following is a summary of the counts involved in the summary judgment motions. Counts 14-17 are brought by and on behalf of Nabcor and its broker-franchisees against General Motors, Ford, Chrysler and American Motors and allege price and other discrimination in violation of Sections 2(a), 2(d) and 2(e) of the Robinson-Patman Act, 15 U.S.C. §§ 13(a), 13(d) and 13(e). Counts 16 and 17 also refer to Section 2(f) of the Act. 15 U.S.C. § 13(f).

 Counts 18-27 were originally brought on behalf of the entire "retailer class" referred to earlier. The Court has already denied class action treatment to the retailer class, except as to the Nabcor organization. Thus Counts 18-27 will only be considered with respect to Nabcor and its broker-franchisees. Counts 18-27 are brought against the four auto manufacturer defendants.

 Counts 18-20 are brought under Sherman Act §§ 1, 2 and 3 respectively (15 U.S.C. §§ 1, 2 and 3) and allege illegal practices by the auto manufacturers regarding "destination charges".

 Count 21 alleges that the destination charges involve price discrimination in violation of Robinson-Patman Act § 2(a).

 Count 22 alleges that the destination charges involve unlawful tying in violation of Clayton Act § 3, 15 U.S.C. § 14.

 Count 23 accuses the manufacturers of common law fraud in connection with the destination charge.

 Counts 24-26 are further charges of price discrimination under Robinson-Patman Act § 2(a). Count 27 alleges "service discrimination" under Robinson-Patman Act § 2(e).

 The auto manufacturer defendants seek, on their summary judgment motions, dismissal of Counts 14-17 and 21-27, and Counts 18-20 as to all plaintiffs except Nabcor. These defendants also seek dismissal of certain of the claims of Nabcor asserted in Counts 18-20.

 Statutory Provisions

 Section 2(a) of the Robinson-Patman Act, the price discrimination provision, provides in relevant part as follows:

 
"(a) 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 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: . . . And provided further, That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade: . . ." 15 U.S.C. § 13(a).

 Section 2(d), which bars discriminatory payments by a seller to a buyer for promotional services, provides:

 
"(d) It shall be unlawful for any person engaged in commerce to pay or contract for the payment of anything of value to or for the benefit of a customer of such person in the course of such commerce as compensation or in consideration for any services or facilities furnished by or through such customer in connection with the processing, handling, sale, or offering for sale of any products or commodities manufactured, sold, or offered for sale by such person, unless such payment of consideration is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities." 15 U.S.C. § 13(d).

 Section 2(e), which prohibits discriminations in promotional services when the seller furnishes the service to the buyer, provides:

 
"(e) It shall be unlawful for any person to discriminate in favor of one purchaser against another purchaser or purchasers, of a commodity bought for resale, with or without processing, by contracting to furnish or furnishing, or by contributing to the furnishing of, any services or facilities connected with the processing, handling, sale, or offering for sale of such commodity so purchased upon terms not accorded to all purchasers on proportionally equal terms." 15 U.S.C. § 13(e).

 Section 2(f) of the Robinson-Patman Act provides:

 
"(f) It shall be unlawful for any person engaged in commerce, in the course of such commerce, knowingly to induce or receive a discrimination in price which is prohibited by this section." 15 U.S.C. § 13(f).

 Certain other statutory provisions are relevant, but need not be quoted at this point.

 Grounds for Summary Judgment Motions

 Defendant auto manufacturers assert that all of the Robinson-Patman Act claims should be dismissed because plaintiffs are not "purchasers" or "customers" within the meaning of the statutory provisions, but are instead merely purchasing agents for the real purchasers or customers -- the ultimate car buyers. The moving defendants also contend that, in any event, plaintiffs are not purchasers from or customers of the auto manufacturers, as required by the statutory provisions. Defendants assert that if plaintiffs purchased automobiles at all, such purchases were made from franchised auto dealers, not from the auto manufacturers.

 Defendants make another contention specifically directed to certain Robinson-Patman Act claims of discrimination against Nabcor and its brokers in favor of "fleet purchasers" of automobiles. Defendants contend that such fleet purchasers are not in competition with Nabcor and its brokers.

 Specifically as to Count 27, alleging that defendant manufacturers solicit fleet sales and direct these sales to certain favored dealers rather than to Nabcor, defendants urge that the claim is groundless since plaintiffs admit that they have never sold to fleet buyers and have never intended to do so.

 With regard to the Sherman Act claims for alleged overcharges (Counts 18-20), defendants assert that plaintiffs sustained no injury because these overcharges were passed on in their entirety. The same defense is asserted with respect to the common law fraud claim (Count 23) regarding the alleged overcharges.

 As to the Clayton Act § 3 claim (Count 22), alleging that certain unlawful "destination charges" were imposed, defendants contend that the claim in effect alleges the tying of a service to a commodity -- something not covered by the statute.

 Nabcor's System of Business

 Plaintiffs assert that there is a sharp differentiation between the Nabcor system and regular franchised automobile dealers. In the first place, Nabcor and its brokers deal in any brand of automobile. Nabcor is not franchised by any auto manufacturer, and its brokers generally have no such franchises.

 Another claimed distinction between the Nabcor system and regular franchised auto dealers is that the Nabcor brokers generally do not have retail show rooms or repair shops and do not need to make large capital or overhead expenditures. The complaint alleges that for this reason "the Nabcor organization was able to sell new automobiles of any make or model at a markup substantially discounted from the markup needed or desired by franchised dealers" (par. 107).

 However, the Nabcor organization obtains its cars from regular franchised automobile dealers. When Nabcor started its business in 1966, its concept was that it would purchase automobiles from these franchised dealers on a "fleet" or wholesale basis. *fn1" The complaint alleges that from 1966 to the time of the filing of the action (December 1970) plaintiffs purchased more than 1,000 new automobiles from franchised automobile dealers.

 The "Purchaser" - "Customer" Issue

 As the statute itself indicates, in order to maintain a cause of action under Section 2(a) of the Robinson-Patman Act, the plaintiff must be a purchaser from the person charged with the discrimination. Klein v. Lionel Corp., 237 F.2d 13, 14-15 (3d Cir. 1956). Mere sales agents are not covered. Loren Specialty Mfg. Co. v. Clark Mfg. Co., 360 F.2d 913, 914-15 (7th Cir.), cert. denied, 385 U.S. 957, 17 L. Ed. 2d 303, 87 S. Ct. 392 (1966). Section 2(e) also applies only to purchasers. Section 2(d) uses the term "customer", which is given the same meaning as the term "purchaser" ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.