The opinion of the court was delivered by: NEAHER
This is a private antitrust action commenced on September 24, 1973 by Diehl & Sons, Inc. ("Diehl") and its subsidiary Truck Rent-A-Center, Inc. ("TRAC") against International Harvester Company ("Harvester") and International Harvester Credit Corporation ("IHCC"), its whollyowned subsidiary. By a supplemental complaint filed on May 27, 1975, plaintiffs allege eight causes of action: two claims of conspiracy in restraint of trade, Sherman Act § 1, 15 U.S.C. § 1, and two claims of attempted monopolization, Sherman Act § 2, 15 U.S.C. § 2 (Counts One and Eight); two price discrimination claims under the Robinson-Patman Act, § 2(a), (d), and (e), 15 U.S.C. § 13(a), (d), and (e) (Counts Two and Three); two Dealer-Day-In-Court Act claims, 15 U.S.C. § 1221, et seq. (Counts Four and Five); and two pendent State claims (Counts Six and Seven). Harvester has in turn counterclaimed against Diehl for sums allegedly due and owing on open account. On defendants' earlier motion, summary judgment was entered in favor of Harvester and IHCC dismissing plaintiffs' Sherman Act claims, and in favor of Harvester for a portion of the amount it sought by counterclaim. The relevant facts of this case are set forth fully in this court's earlier decision and, accordingly, need not be recounted at this time. See Diehl & Sons, Inc. v. International Harvester Co., 426 F. Supp. 110 (E.D.N.Y. 1976).
The case is now before the court on defendants' renewed motion for summary judgment in their favor on the balance of the counterclaims and dismissing plaintiffs' remaining claims. Rule 56, F.R.Civ.P. The remaining claims and counterclaims will be treated in turn.
Robinson-Patman Act Claims
The earlier decision in this case dismissed plaintiffs' Robinson-Patman Act claims insofar as they purported to state a cause of action against defendant IHCC, and held that plaintiff's allegations that Harvester favored its own sales branches as to price and allocation of goods for resale failed to state a cause of action under the Act. Diehl, 426 F. Supp. at 122-23. Plaintiffs were, however, permitted to proceed on the basis of their contention that Harvester had extended more favorable used truck allowances (UTA's) and warranty terms to certain of TRAC's competitors. Id., 426 F. Supp. at 123. The court noted that factual questions existed with respect to Harvester's contentions that (1) TRAC and its competitors are truck lessors; (2) TRAC does not purchase trucks from Harvester; and (3) in any event, TRAC does not really compete with those leasing companies alleged to have been the recipients of favorable treatment. In addition, the court deferred consideration of whether discriminatory warranty treatment is actionable under the Act.
At the time defendants first moved for summary judgment, they had not yet completed or filed their deposition of Robert L. Austin, one of plaintiffs' principals. On the basis of this now-completed and filed deposition, and the intervening decision of the Second Circuit in FLM Collision Parts, Inc. v. Ford Motor Co., 543 F.2d 1019 (2d Cir. 1976), cert. denied, 429 U.S. 1097, 51 L. Ed. 2d 545, 97 S. Ct. 1116 (1977), defendants now maintain that plaintiffs' price discrimination claims are ripe for summary dismissal. Plaintiffs have responded with a new affidavit of Austin, and argue that the FLM case is not dispositive of their claim.
On the basis of the Austin deposition, defendants now argue that plaintiffs are foreclosed from asserting that TRAC's lease-purchase agreements qualify as "sales" for purposes of the Robinson-Patman Act. Relying on the following excerpt from the Austin deposition, defendants maintain that "Mr. Austin and his counsel candidly admitted that TRAC 'was engaged exclusively in the leasing of trucks' and that none of its trucks were sold." (Defendants' Reply Mem. at 6):
"Q -- Truck-Rent-A-Center was engaged exclusively in the leasing of trucks; is that not correct?
"Q -- TRAC did not sell any trucks, did it?
"MR. RHODES [plaintiffs' attorney]: Well, I believe the record is clear. If they engaged in truck leasing, they couldn't sell trucks.
"MR. SMITH [defendants' attorney]: I withdraw the question." Austin Dep. (5/22/74) at 378-79.
Defendants contend that the Austin testimony disposes of the issue, previously left open, of whether "TRAC's lease-purchase agreements more closely resemble purchases than normal leases." Diehl, 426 F. Supp. at 123. Plaintiffs, however, have conceded throughout this litigation that TRAC was engaged in the leasing of trucks, and have never denied that its transactions were denominated "leases." For example, John Schwenter, former Diehl president, had stated, in an affidavit cited in our prior decision (Diehl, 426 F. Supp. at 123), that "TRAC used two forms of lease in leasing trucks to its customers," a "lease-purchase" agreement and a "full service lease." Schwenter Aff. (6/26/75), para. 20 (emphasis supplied). The court did not then view plaintiffs' characterization of TRAC's agreements as "leases" dispositive of their price discrimination claims, and the Austin testimony does not alter that conclusion. Although further probing by counsel might well have elicited facts placing this issue beyond dispute, see Webber v. Shell Oil Co., 1975-1 Trade Cas. 65, 838 (C.D. Cal. 1975), the record as it now stands is inconclusive. On a motion for summary judgment the court must draw all permissible inferences in favor of the party opposing the motion. See Hill v. A-T-O, Inc., 535 F.2d 1349 (2 Cir. 1976). Applying this rule to the record as a whole, including the most recent Austin affidavit (10/24/77), para. 15, it is necessary to conclude that there is a question of fact with respect to whether TRAC's lease-purchases are within the ambit of the Robinson-Patman Act, which can only be resolved by presentation of evidence at trial.
Defendants next argue that plaintiffs' claims of discriminatory UTA and warranty treatment do not come within the purview of § 2(d) and (e) of the Robinson-Patman Act, but only, if at all, within § 2(a), and that under FLM Collision Parts, supra, only a direct purchaser may press a § 2(a) claim.
By their terms, subsections (d) and (e) of § 2 prohibit a seller from paying compensation for (§ 2(d)) or providing (§ 2(e)) services or facilities related to the "processing, handling, sale, or offering for sale" of the seller's product, unless such treatment is available to all "customers" (§ 2(d)) or "purchasers" (§ 2(e)) "on proportionately equal terms." The courts have uniformly held that the prohibitions of § 2(d) and (e) are "limited to ending disguised price discriminations in the form of advertising and promotional payments and cooperative merchandising programs." Cecil Corley Motor Co., Inc. v. General Motors Corp., 380 F. Supp. 819, 849 (M.D. Tenn. 1974). See FTC v. Fred Meyer, Inc., 390 U.S. 341, 351-52, 19 L. Ed. 2d 1222, 88 S. Ct. 904 (1968); Rutledge v. Electric Hose & Rubber Co., 511 F.2d 668 (9 Cir. 1975); Kirby v. P. R. Mallory & Co., 489 F.2d 904 (7 Cir. 1973), cert. denied, 417 U.S. 911, 41 L. Ed. 2d 215, 94 S. Ct. 2610 (1974); Purdy Mobile Homes, Inc. v. Champion Home Builders Co., 71 F.R.D. 341 (E.D. Wash. 1975). Thus, one commentator has written that "the legislative purpose and governing judicial rulings confine [§ 2(d) and (e)] to cooperative promotional arrangements between the supplier and customer in connection with the customer's resale of the particular product." F. Rowe, Price Discrimination Under the Robinson-Patman Act, 376 (1962) (emphasis in original). Whether the higher UTA's and extended warranties with greater rates of labor reimbursement allegedly afforded TRAC's competitors constituted promotional allowances is a factual question precluding summary disposition of Count III of the supplemental complaint.
Similarly, issues of fact pervade plaintiffs' claims under § 2(a) of the Act. This section prohibits a seller "directly or indirectly" from discriminating "in price between different purchasers of commodities of like grade and quality . . . ." 15 U.S.C. § 13(a). The generally accepted rule is that "price" for purposes of § 2(a) means the amount actually paid by the purchaser, that is, the quoted invoice price less any discounts, offsets or allowances afforded the purchaser and not otherwise reflected in the invoice price. 4 Von Kalinowski, Antitrust Laws and Trade Regulation § 27.03, at 27-24. See Guyott Company v. Texaco, Inc., 261 F. Supp. 942, 948 (D. Conn. 1966); F. Rowe, supra, at 87. Whether the allegedly discriminatory UTA's and warranties served as offsets against or allowances indirectly reducing invoice prices to TRAC's competitors on trucks purchased from Harvester is an issue that must be resolved by the trier of fact. See Viviano Macaroni Co. v. FTC, 411 F.2d 255 (3 Cir. 1969); Glowacki v. Borden, Inc., 420 F. Supp. 348 (N.D. Ill. 1976); National Nut Co. v. Kelling Nut Co., 61 F. Supp. 76 (N.D. Ill. 1945).
Defendants contend, however, that even if discriminatory UTA and warranty treatment is actionable under § 2(a), the FLM decision, supra, requires dismissal of Count II of the supplemental complaint. The question presented in FLM was whether an incentive allowance plan adopted by the defendant Ford Motor Company violated § 2(a) of the Robinson-Patman Act. Under the plan, authorized Ford dealers (the only purchasers with whom Ford dealt directly) could claim substantial discounts for automobile "crash parts" purchased for resale to independent repair shops; such discounts were not available for parts purchased for resale directly to consumers or to auto part wholesalers like plaintiff FLM. Reversing the judgment of the District Court, the Second Circuit held that Ford's pricing policy was not vulnerable under § 2(a) because all purchasers -- that is, Ford dealers -- were identically treated, and Ford was under no obligation "to equalize prices charged to those performing different functions in the line of distribution." 543 F.2d at 1026 (emphasis added).
On the authority of the FLM case, defendants now argue that TRAC, because it did not purchase trucks directly from Harvester, is incapable of stating a § 2(a) claim against Harvester. See Defendants' Mem. at 10-12. The FLM case is, however, readily distinguishable from the case at bar. First, as noted in this court's initial ruling on defendants' summary judgment motion, plaintiffs contend that TRAC's purchases of Harvester trucks were placed through Diehl solely as a matter of bookkeeping, raising a factual question as to whether "TRAC should properly be considered a purchaser from Harvester for Robinson-Patman Act purposes." Diehl, supra, 426 F. Supp. at 123-24.
See Austin Aff. (10/24/77), paras. 13-14. In any event, there is no doubt that Diehl was a direct purchaser of Harvester trucks. Second, while Ford sold its crash parts solely to authorized dealers, the gravamen of plaintiffs' remaining Robinson-Patman Act claims is that Harvester sold not only to franchised dealers, but also, through its factory outlets, to truck leasing companies allegedly in competition with TRAC, and that the prices charged these leasing companies were more favorable than those available to Diehl or TRAC. Thus the Second Circuit's conclusion in the FLM case that Ford had treated all purchasers equally is wholly inapplicable to the allegations of this complaint.
Last, and perhaps most important, the Second Circuit in FLM expressly indicated that its holding was casespecific: "We do not suggest or imply that, if a manufacturer grants a price discount or allowance to its wholesalers (whether or not labelled 'incentive'), which has the purpose or effect of defeating the objectives of the Act, § 2(a)'s language may not be construed to defeat it." 543 F.2d at 1027. To accept the broad reading of the FLM decision urged by defendants would contravene one of the primary motivating purposes of the Robinson-Patman Act: "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, 4 L. Ed. 2d 1124, 80 S. Ct. 1158 (1960). See FTC v. Fred Meyer, Inc., 390 U.S. 341, 348-50, 19 L. Ed. 2d 1222, 88 S. Ct. 904 (1968); FTC v. Morton Salt Co., 334 U.S. 37, 55, 92 L. Ed. 1196, 68 S. Ct. 822 (1948). The incentive plan at issue in the FLM case, it should be noted, was adopted in response to indications from the Federal Trade Commission that it regarded Ford's pre-1968 practice of charging undifferentiated prices for crash parts sold to its franchised dealers, without respect to the purposes for which the parts were bought, to be an unfair trade practice within the meaning of § 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, because independent repair shops were forced to pay higher prices than their franchised counterparts. Thus, the Ford plan was intended to promote, rather than inhibit, competition between Ford dealers and independent repair shops for auto body repair business. Id. at 1023. The placing of independent wholesalers like FLM at a competitive disadvantage was only incidental; indeed, Ford had attempted to avoid this result in formulating an earlier version of the incentive plan, which proved subject to abuses that undermined the objective of aiding independent shops.
In the instant case, defendants have offered no similar justification for the alleged price discrimination. Accordingly, the FLM case cannot be deemed dispositive of plaintiffs' Robinson-Patman Act claims.
Finally, defendants argue, again with reference to the recently-filed Austin deposition, that plaintiffs have failed to show more than de minimis competitive contacts between TRAC and its alleged competitors. The court disagrees. First, the specific testimony to which defendants allude does not purport to exhaust all of TRAC's competitive contacts with other truck leasing firms. See Austin Dep. (5/22/74), at 399-400. Second, Austin's deposition testimony is supportive, in our view, of his contention, set forth in his most recent affidavit, that TRAC "was in regular and daily competition for leasing business" with Hertz, Avis, AA Truck Rental Company, Mendon Leasing and other truck leasing firms. Austin Aff. (10/24/77), paras. 14, 17. See also ...