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September 28, 1999


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 Procedure:

(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 ("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"; and

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 claims asserted.

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.


A. Format

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

A motion for summary judgment may be granted only when it is shown "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987).

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
      Robinson-Patman Act

Plaintiff's first cause of action is based on a charged violation of § 2(c) of the Robinson-Patman Act*fn2 which provides:

  Payment or acceptance of commission, brokerage, or
  other compensation
    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.

15 U.S.C. § 13(c).

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. 1988).

  (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
      of Action

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 ...

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