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THEOPHIL v. SHELLER-GLOBE CORP.

February 22, 1978

WILLIAM G. THEOPHIL, Plaintiff, against SHELLER-GLOBE CORP., et al., Defendants.


The opinion of the court was delivered by: NICKERSON

MEMORANDUM AND ORDER

NICKERSON, District Judge

 Defendants move to dismiss this purported class action complaint which alleges in Count I violations of the Sherman and Clayton Acts, in Count II a common law conspiracy to defraud, and in Count III a common law claim for punitive damages. Defendants make the motion pursuant to Rules 12(b)(1), 12(b)(6) and 12(c) of the Federal Rules of Civil Procedure, and urge (1) that the complaint states no claim under the antitrust laws but merely a common law "fraud" claim, (2) that plaintiff as a retail consumer can show no injury to his "business or property" within the meaning of Section 4 of the Clayton Act, 15 U.S.C. § 15, and thus has no antitrust claim, and (3) that the action is barred by the four year statute of limitations in 15 U.S.C. § 15b. Defendants say that if the antitrust count falls, so do the pendent common law counts.

 In substance the complaint alleges as follows. In March 1972 plaintiff bought from defendant Philbor Motors, Inc. ("Philbor") a motor home vehicle manufactured in April 1971 by defendant Sheller-Globe Corporation ("Sheller-Globe") and delivered by Sheller-Globe to Philbor in June 1971. Philbor sold to plaintiff under a "Manufacturer's Statement of Origin" and bill of sale designating the vehicle as a 1972 model. The thirteen defendants other than Philbor manufacture and distribute such vehicles to retailers throughout the United States.

 Each vehicle is identified to the retail purchaser on the bill of sale and on the Manufacturer's Statement of Origin as belonging to a particular model year. This system of identification provides the dealers with a systematic method of representation to the public that a particular vehicle is the same in construction, component parts, styling, state of the art, and market value as other vehicles of the same model year and is different from those of another model year. The vehicles depreciate in market value throughout their model year. Defendants knew that the members of the plaintiff class of consumers place substantial significance on the model year in making purchases.

 From in or prior to 1970 defendants and their dealers engaged in a conspiracy in restraint of trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, by making a series of agreements designed to raise and fix prices at which vehicles remaining unsold at the end of a model year would be sold in the following model year and to restrain competition in the sale of vehicles after the end of the model year. To effectuate the conspiracy the defendant manufacturers advised their retailers that on their request the manufacturers would issue for each vehicle remaining unsold at the end of the model year a new Manufacturer's Statement of Origin identifying the old vehicle "as being of the upcoming new model year."

 The retailers made such requests, and the manufacturers responded as they had agreed. The retailers then represented to the general public that the old vehicles were of the new model year and offered them at the higher new model year prices.

 The conspiracy had the effect of fixing prices at arbitrarily high and non-competitive levels and substantially restraining competition in the sale and distribution of vehicles.

 Plaintiff purchased a vehicle identified as a 1972 model, when in fact it was a product of the 1971 year, and because of the intentional mislabeling plaintiff paid a price in excess of fair market value.

 I

 Defendants first contend that while the facts pleaded support a common law case of fraud they do not state a violation of Section 1 of the Sherman Act; that the antitrust laws were designed to make illegal those restraints of trade characteristic of restraints deemed illegal at common law, see Apex Hosiery Co. v. Leader, 310 U.S. 469, 498, 84 L. Ed. 1311, 60 S. Ct. 982 (1940); and that a conspiracy to misrepresent should not be deemed a violation of the antitrust laws.

 Section 1 of the Sherman Act, 15 U.S.C. § 1 provides in pertinent part that "[every] contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." Defendants urge that their alleged activities do not constitute a "restraint" of trade within the meaning of this section.

 Plaintiff maintains that this is a classic price fixing case, see, e.g., United States v. Socony-Vacuum Oil Co., Inc., 310 U.S. 150, 84 L. Ed. 1129, 60 S. Ct. 811 (1940), that conspiracies to fix prices are illegal whatever the method or machinery used to that end, and that the scheme here was designed for the express purpose of eliminating the normal year end competition in leftover models and raising artifically their prices to those of the following model year. The complaint alleges that the conspiracy in fact raised the prices of older models and eliminated or substantially restrained competition in their sale and distribution.

 Although the complaint does not allege that the defendants agreed to adhere to a price schedule, that is not a prerequisite to a violation of the Sherman Act. United States v. Container Corp. of America, 393 U.S. 333, 334-5, 21 L. Ed. 2d 526, 89 S. Ct. 510 (1969); United States v. General Motors Corp., 384 U.S. 127, 147-8, 16 L. Ed. 2d 415, 86 S. Ct. 1321 (1966). The fact that each defendant manufacturer was free to set its own price for old models, and agreed only that the starting point was that they would be treated as if they were new models, does not make the agreement any less a restraint of trade. "It was an agreed starting point; it had been agreed upon between ...


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