The opinion of the court was delivered by: Hurley, District Judge.
By notice of motion dated January 15, 1999, defendants Grinnell
Lithographic Co., Inc. ("Grinnell") and Oliver Munson ("Munson"),
seek the following relief:
1. an order pursuant to Rule 56 of the Federal Rules of Civil
(a) dismissing all claims of Philip Morris, Incorporated
("plaintiff") for failure to prove that it suffered an injury as
a result of defendants' conduct, or, alternatively;
(b) dismissing plaintiff's treble damages claim under Section
2(c) of the Robinson-Patman Act, 15 U.S.C. § 13(c) ("§ 2(c)"),
given the absence of proof of "antitrust injury" as required by
Section 4 of the Clayton Act, 15 U.S.C. § 15 ("§ 4");
(c) dismissing plaintiff's claim under Section 180.03 of the
New York State Penal Law ("§ 180.03") on the ground that the
statute does not create a private cause of action; and
(d) dismissing plaintiff's claims against Munson on the ground
there is no evidence to indicate his authorization or awareness
of payments made by Les Sutorius ("Sutorius") to Louis Cappelli
2. an order, pursuant to Federal Rules of Evidence 104, 401,
403 and/or 702, declaring the report of plaintiff's expert (the
"Rapp Report") to be inadmissible as "irrelevant and unreliable";
3. in the event plaintiff's federal claim — i.e., the
purported violation of the Robinson-Patman Act — is dismissed,
declining to exercise supplemental jurisdiction over the state
As explained below, the relief sought in paragraphs 1(a)(b) and
(d) above are denied; the relief sought in paragraph 1(c) —
pertaining to the cause of action predicated on § 180.03 — is
granted; the relief sought in paragraph 2 — pertaining to the
Rapp Report — is granted to the extent a hearing will be held
before me immediately prior to jury selection to determine
whether the Rapp Report and corresponding testimony of its author
passes muster under relevant provisions of the Federal Rules of
Evidence, consistent with the holding in Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238
(1999); and the relief sought in paragraph 3 is denied as moot in
view of the above determinations.
The complaint in this action arises from a bribery scheme
participated in by Cappelli, the former Graphics Purchasing
Manager of plaintiff's Marketing Services Purchasing Department,
and Grinnell, a vendor which provided lithographic printing
services to plaintiff.
Munson was and is the President, Chair of the Board, and a
shareholder of Grinnell. Sutorius was a salesperson for Grinnell.
For more than ten years, Sutorius, acting for Grinnell, made
weekly bribe payments to Cappelli. The weekly sums began at $100
per week in or about 1979, increasing over time to $400 a week
for the mid-1988 to 1990 period. In addition, Cappelli was
provided with golf vacations, and other gratuities, by Grinnell
during the 1980s.
It is alleged in the complaint that "in excess of $150,000 in
illegal bribes, kickbacks and gratuities" were paid to Cappelli
in return for his manipulating the purchasing process for
lithographic printing services to favor Grinnell. (Amended Compl.
¶ 1.) During the time frame involved, plaintiff awarded Grinnell
contracts in excess of $54 million. The resulting injury to
plaintiff was that "it paid substantially inflated prices" for
the services received. Id.
On February 21, 1995, plaintiff filed the present action,
alleging a federal claim based on the Robinson-Patman Act, as
well as state law claims for fraud, commercial bribery and breach
of fiduciary duty.
Extensive pre-trial proceedings occurred thereafter, with the
case being placed on the ready trial calendar on October 15,
1998. A week later, defendants successfully sought permission to
file a belated summary judgment motion.
The items of relief requested by defendants*fn1 shall be
discussed seriatim consistent with the sequence set forth in
the notice of motion, beginning with the multiple requests for
summary judgment. Before doing so, however, the standards for
determining a motion for summary judgment will be reviewed.
B. Standards for Summary Judgment
The party seeking summary judgment "bears the initial
responsibility of informing the district court of the basis for
its motion" and identifying which materials "it believes
demonstrate the absence of a genuine issue of material fact."
Celotex, 477 U.S. at 323, 106 S.Ct. 2548; see also Trebor
Sportswear Co. v. The Ltd. Stores, Inc., 865 F.2d 506, 511 (2d
Cir. 1989). The substantive law governing the case will identify
those facts that are material, and "[o]nly disputes over facts
that might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment." Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91
L.Ed.2d 202 (1986).
Once the moving party has come forward with support
demonstrating that no genuine issue of material fact remains to
be tried, including pleadings, depositions, interrogatory
answers, and affidavits, the burden shifts to the non-moving
party to provide similar support setting forth specific facts
about which a genuine triable issue remains. See Fed.R.Civ.P.
56(e); Anderson, 477 U.S. at 250, 106 S.Ct. 2505; Borthwick v.
First Georgetown Sec., Inc., 892 F.2d 178, 181 (2d Cir. 1989);
Donahue, 834 F.2d at 57. The Court must resolve all ambiguities
and draw all reasonable inferences in favor of the non-moving
party. See Donahue, 834 F.2d at 57. Moreover, the Court's role
on a motion for summary judgment "in short, is confined . . . to
issue-finding; it does not extend to issue-resolution." Gallo v.
Prudential Residential Servs., Ltd. Partnership, 22 F.3d 1219,
1224 (2d Cir. 1994); see also Consarc Corp. v. Marine Midland
Bank, N.A., 996 F.2d 568, 572 (2d Cir. 1993).
"[T]he mere existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported
motion for summary judgment; the requirement is that there be no
genuine issue of material fact." Anderson, 477 U.S. at 247-48,
106 S.Ct. 2505 (emphases omitted). Moreover, "[c]onclusory
allegations will not suffice to create a genuine issue. There
must be more than a `scintilla of evidence,' and more than `some
metaphysical doubt as to the material facts.'" Delaware & Hudson
Ry. Co. v. Consolidated Rail Corp., 902 F.2d 174, 178 (2d Cir.
1990) (quoting Anderson, 477 U.S. at 252, 106 S.Ct. 2505, and
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)); see also Carey
v. Crescenzi, 923 F.2d 18, 21 (2d Cir. 1991). "The non-movant
cannot escape summary judgment merely by vaguely asserting the
existence of some unspecified disputed material facts, . . . or
defeat the motion through mere speculation or conjecture."
Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121
(2d Cir. 1990) (citations and internal quotations omitted).
C. Purported Absence of Proof of Injury
Defendants' initial argument is that all of plaintiff's
claims should be dismissed because it has not suffered any injury
as a result of defendants' conduct.
Plaintiff intends to call Richard T. Rapp, Ph.D. ("Rapp"), an
economist and president of an economics consulting firm, to
testify as an expert that "Philip Morris paid an average of
approximately 22 percent more for products when purchased from
Grinnell than in comparable transactions from other vendors,
resulting in approximately $11.5 million in damages to Philip
Morris." (See Rapp Affidavit, sworn to Feb. 5, 1999 ("Rapp
Aff."), at ¶ 3.) But, as noted, defendants have moved to preclude
such testimony being offered at trial, and therefore, have asked
the Court to focus solely on the "undisputed
factual (i.e., non-expert) evidence" in deciding this issue.
(See Defs.' Mem. at 20.)
Based on the submissions of counsel, it appears — as defendants
assert — that neither Cappelli nor any other individual who
provided information during the discovery phase of the case, was
able to identify a specific transaction in which a product
supplied by Grinnell could have been furnished to plaintiff by
another vendor at a lower price. That circumstance, however, is
not fatal to plaintiff's case. To the contrary — and not
considering the proffered testimony of Rapp as requested by
defendants — there is a legal presumption that, at a minimum, the
prices paid by plaintiff to Grinnell were inflated by the amount
of the bribes and, accordingly, the bribe amounts are recoverable
as damages. Grace v. E.J. Kozin Co., 538 F.2d 170, 173-74 (7th
Cir. 1976); Continental Mgmt. Inc. v. United States, 208 Ct.Cl.
501, 527 F.2d 613, 618 (1975) ("[I]t is enough to show the fact
and amount of the bribes — nothing further need be alleged or
proved by way of specific or direct injury."); Novartis Corp. v.
Luppino (In re Luppino), 221 B.R. 693, 703 n. 4 (Bankr.
S.D.N.Y. 1998); see also Donemar, Inc. v. Molloy, 252 N.Y. 360,
365, 169 N.E. 610 (1930); City of New York v. Liberman,
232 A.D.2d 42, 660 N.Y.S.2d 872, 875 (1st Dep't 1997).
In sum, there is a material issue of fact whether plaintiff
sustained an injury as a result of the bribes paid to Cappelli
even if the damages delineated by Rapp are culled from the
discussion. That being the case, defendants' omnibus request for
summary judgment is rejected, thereby necessitating a discussion
of their alternative, more limited summary judgment applications.
The first of these, seeking a dismissal of plaintiff's treble
damages claim based on a violation of § 2(c) of the
Robinson-Patman Act, is the subject of the next section of this
Memorandum Opinion, section "D."
D. Motion to Dismiss Robinson-Patman Act Claim for Purported
Failure to Satisfy Antitrust Injury Requirement
(1) Commercial Bribery Falls Within the Ambit of § 2(c) of the
Plaintiff's first cause of action is based on a charged
violation of § 2(c) of the Robinson-Patman Act*fn2 which
Payment or acceptance of commission, brokerage, or
It shall be unlawful for any person engaged in
commerce, in the course of such commerce, to pay or
grant, or to receive or accept, anything of value as
a commission, brokerage, or other compensation, or
any allowance or discount in lieu thereof, except for
services rendered in connection with the sale or
purchase of goods, wares, or merchandise, either to
the other party to such transaction or to an agent,
representative, or other intermediary therein where
such intermediary is acting in fact for or in behalf,
or is subject to the direct or indirect control, of
any party to such transaction other than the person
by whom such compensation is so granted or paid.
Section 2(c) was enacted primarily to prevent large buyers from
obtaining indirect price discrimination by demanding that the
suppliers pay fees to bogus brokers, which fees would then be
returned to the buyers. Federal Trade Comm'n v. Henry Broch &
Co., 363 U.S. 166, 174, 80 S.Ct. 1158, 4 L.Ed.2d 1124 (1960);
Hansel `N Gretel Brand, Inc. v. Savitsky, 94 CV 4027, 1997 WL
543088, at *7 (S.D.N.Y. Sept.3, 1997); Roosevelt Savings Bank v.
Eveready Maint. Supply Co., 85 CV 245, 1987 WL 30194, at *1
(E.D.N.Y. Dec.2, 1987). But it has also been construed "to
cover cases of commercial bribery involving a breach of a
fiduciary duty by the buyer's agent," a situation akin to the one
at bar. Roosevelt Savings Bank, 1987 WL 30194, at *1, and cases
cited therein; see also Hansel `N Gretel, 1997 WL 543088, at
*7, and cases cited therein including Broch, 363 U.S. at 169 n.
6, 80 S.Ct. 1158.
(2) Defendants Have Violated § 2(c)
For plaintiff's cause of action predicated on § 2(c) to survive
defendants' motion for summary judgment, it must first appear
that there is a factual basis to maintain that the conduct
alleged constitutes "commercial bribery" within the purview of
the statute. That requirement clearly has been satisfied here,
nor do defendants contend otherwise for present purposes. Indeed,
if plaintiff's proof regarding Grinnell's conduct parallels the
allegations in the complaint, it would have been entitled to
injunctive or declaratory relief if the conduct was ongoing, even
in the absence of evidence of concomitant antitrust or
competitive injury. See, e.g., Federal Trade Comm'n v.
Simplicity Pattern Co., 360 U.S. 55, 64-66, 79 S.Ct. 1005, 3
L.Ed.2d 1079 (1959); The Grand Union Co. v. Federal Trade
Comm'n, 300 F.2d 92, 99 (2d Cir. 1962); Biddle Purch. Co. v.
Federal Trade Comm'n, 96 F.2d 687, 691 (2d Cir. 1938); Federal
Paper Board Co. v. Amata, 693 F. Supp. 1376, 1385-86 (D.Conn.
(3) Parties' Positions as to Whether Defendants' Violation of
§ 2(c), Standing Alone, is Sufficient to Support
Plaintiff's Claim for Treble Damages Under its First Cause
Plaintiff, however, is not asking for declaratory or injunctive
relief. Instead, it seeks treble damages under § 4.*fn3 As to
that claim, is the violation of § 2(c) by Grinnell sufficient to
defeat defendants' motion for summary judgment? What, if
anything, beyond the violation of that Section is required to
vest plaintiff with a private right of action to sue for damages
under the Clayton Act?
In defendants' view, considerably more is required. Citing such
cases as Amata, 693 F. Supp. 1376; Hansel `N Gretel, 1997 WL
543088; Miyano Machinery USA, Inc. v. Zonar, 1993 WL 23758, *7
(N.D.Ill. Jan.29, 1993); NL Industries, Inc. v. Gulf & Western
Industries, 650 F. Supp. 1115 (D.Kan. 1986); and Haff v.
Jewelmont Corp., 594 F. Supp. 1468, 1471-79 (N.D.Cal. 1984),
defendants make reference to § 4, and urge that a violation of §
2(c) must be supplemented by proof of "antitrust injury" to
permit an award for damages. (Defs.' Mem. at 22.) And it is urged
that plaintiff "cannot prove any set of facts sufficient to
show that it suffered as a competitor: there is no evidence of
collusion, no evidence that Grinnell interfered with other bids,
and no evidence that Philip Morris was injured as against ...