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AUDELL PETROLEUM CORP. v. SUBURBAN PARACO CORP.

September 29, 1995

AUDELL PETROLEUM CORPORATION, and MCGRAW STREET REALTY CORPORATION, Plaintiffs, against SUBURBAN PARACO CORPORATION, d/b/a Paraco Gas, Defendant.


The opinion of the court was delivered by: HURLEY

 HURLEY, District Judge

 Presently before the Court is a Motion to Dismiss by Suburban Paraco Corporation ("Defendant"), pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)"), for failure to state a claim for an illegal tying arrangement. For the reasons set forth below, Defendant's motion is denied.

 Background

 Plaintiffs filed the instant suit in August 1994, alleging that Defendant violated the Sherman Act, 15 U.S.C. § 1 et seq. Specifically, Plaintiffs contend that the requirement by Defendant that Audell purchase propane and transportation services from Defendant as a condition to McGraw's purchase of the Shirley Facility constitutes a tying arrangement prohibited by the Sherman Act. (Compl. P 26.)

 DISCUSSION

 A Complaint should not be dismissed for failure to state a claim, "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); see also Austern v. Chicago Bd. Options Exch., Inc., 898 F.2d 882, 885 (2d Cir 1990), cert. denied, 498 U.S. 850, 112 L. Ed. 2d 107, 111 S. Ct. 141 (1990). In reviewing the sufficiency of a Complaint, the Court takes the plaintiff's allegations as true and construe them in a light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974) (citing Conley, 355 U.S. at 45-46); Stewart v. Jackson & Nash, 976 F.2d 86, 87 (2d Cir. 1992).

 In short, a Complaint should be summarily dismissed pursuant to Rule 12(b)(6) "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984) (citing Conley, 355 U.S. at 45-46). With these principles in mind, the Court turns to a discussion of the issues in the case at bar.

 I. Pleading Requirements for Antitrust Claims

 As an initial matter, the Court addresses Defendant's argument that "the ordinary notice theory of pleading is not sufficient when measuring the sufficiency of complaints brought under the antitrust laws." (Def.'s Mem. Supp. at 3.) Specifically, Defendant contends that

 
because antitrust cases are considerably more complex than negligence or contract actions, the Federal Courts do require plaintiffs to plead with some particularity each of the elements of the claims alleged for relief identified, including a statement of matters and their relation to each other.

 (Id.)

 Plaintiffs, however, disagree with Defendant's contention that there is a heightened standard of pleading for antitrust cases. (Pls.' Mem. Opp. at 9.) Plaintiffs are correct. In 1957, the Second Circuit "repudiated the idea that some special pleading is required in antitrust cases, and the law of this Circuit has been clear ever since." See Three Crown Ltd. Partnership v. Caxton Corp., 817 F. Supp. 1033, 1047 (S.D.N.Y. 1993) (citing Nagler v. Admiral Corp., 248 F.2d 319, 322-23 (2d Cir. 1957)) (footnote omitted). "[A] short plain statement of a claim for relief which gives notice to the opposing party is all that is necessary in antitrust cases, as in other cases under the Federal Rules." George C. Frey Ready-Mixed Concrete, Inc., 554 F.2d 551, 554 (2d Cir. 1977) (citations omitted).

 In short, the Court finds that there is no heightened pleading requirement for antitrust claims.

 II. Section 1 of the Sherman Act

 The instant Complaint alleges a violation of Section 1 of the Sherman Act. In part, that section provides as follows:

 
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.

 Under the Sherman Act, a particular arrangement may be per se illegal, or illegal pursuant to a "rule of reason" analysis. Id.

 
Courts apply a per se rule only to "agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use."

 Id. (quoting Northern Pac. Ry. v. United States, 356 U.S. 1, 5, 2 L. Ed. 2d 545, 78 S. Ct. 514 (1958)).

 
The legality of all other arrangements is governed by a rule of reason, "which invites a more open inquiry into, and a balancing of, such factors as the power of the defendants, the effects of the arrangement, its possible redeeming virtues, and the availability of alternative ways of achieving any legitimate objectives with fewer threats to competition."

 Id. (citation omitted and emphasis added).

 III. Illegal Tying Arrangement

 "A tying arrangement is 'an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product.'" Yentsch v. Texaco, Inc., 630 F.2d 46, 56 (2d Cir. 1980) (quoting Northern Pac. Ry., 356 U.S. 1, 2 L. Ed. 2d 545, 78 S. Ct. 514). "A seller violates the antitrust laws through a tying arrangement when it uses its market power over one product to 'force' a consumer to purchase a second product." Gonzalez v. St. Margaret's House Hous. Dev. Fund Corp., 880 F.2d 1514, ...


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