The opinion of the court was delivered by: Barrington D. Parker, Jr., District Judge.
MEMORANDUM DECISION AND ORDER
This is a civil antitrust class action brought under the
Clayton Act, 15 U.S.C. § 15, et seq., seeking relief on behalf
of consumers who purchased shoes made and distributed by Nine
West Group, Inc. ("Nine West"). The complaint alleges a vertical
and horizontal price-fixing conspiracy in violation of Section 1
of the Sherman Antitrust Act, 15 U.S.C. § 1. Before this Court is
defendants' motion to dismiss the complaint for failure to state
a claim upon which relief can be granted and for failure to plead
fraud with particularity. See Fed.R.Civ.P. 12(b)(6) and 9(b).
In deciding a motion under Rule 12(b)(6), the Court is required
to accept as true all factual allegations in the complaint and
construe those allegations in the plaintiff's favor. See Scheuer
v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90
(1974); Easton v. Sundram, 947 F.2d 1011, 1014-15 (2d Cir.
1991). The following facts are construed accordingly.
This action consolidates some twenty-five class actions filed
against Nine West and various retailers. Plaintiffs are
individuals suing on behalf of themselves and other consumers who
purchased Nine West shoes after January 1, 1988. Defendants are
Nine West, a manufacturer and retailer of women's shoes, and ten
department store chains*fn1 that sell Nine West
shoes*fn2 to the public. Plaintiffs contend that Nine West
engaged in a horizontal and vertical price-fixing conspiracy with
the department store defendants and other unnamed co-conspirators
to fix the minimum prices of Nine West shoes in violation of § 1
of the Sherman Act.
Beginning in 1988, plaintiffs contend that representatives of
the Department Store defendants and Nine West meet regularly at
semi-annual trade shows to set the minimum retail prices on
various styles for the upcoming season, to determine which Nine
West styles would be sold to the public at a discount during the
season, and on which dates these events would occur.
Plaintiffs allege that defendants created what they termed
"Off-Limits Lists" which included the minimum prices on dozens of
styles of Nine West Shoes and contained various restrictions on
sale of the shoes including "breakdates," "promotional windows,"
"minimum prices," and "promotional prices." The "breakdates"
referred to the date when certain shoes first could be sold
regularly at a discount by the defendants. The "promotional
windows" were the specific dates on which shoes could be sold at
reduced prices, and what those prices should be. For all other
shoes not on the "Off-Limits Lists," defendants agreed not to
sell below the "keystone" price, an industry term meaning twice
the wholesale cost.
Plaintiffs allege that defendants' conspiracy operated
horizontally and vertically. Count I of the complaint accuses
defendants of horizontal price-fixing which resulted from
agreements between Nine West and its direct competitors, the
Department Store defendants. Count II alleges vertical
price-fixing between the Department Store defendants and Nine
West, as their supplier of Nine West shoes.
According to the complaint, defendants enforced their agreement
on prices against other Nine West retailers "through a farranging
system of policing and coercion." Complaint ¶ 78. Plaintiffs
allege a system involving monitoring prices to ensure compliance,
and threats by Nine West to cut off or delay shipments to any
store that did not adhere to the agreed upon prices. Plaintiffs
claim that other Nine West retailers who complied with these
prices became willing or unwilling co-conspirators.
Plaintiffs assert that as a result of defendants' conspiracy,
"(a) prices charged for Nine West Shoes sold to Plaintiffs and
the Class have been raised, fixed or stabilized at artificially
high and non-competitive levels; (b) Plaintiffs and other members
of the Class have been deprived of the benefits of free, open and
unrestricted competition in the purchase of Nine West Shoes; and
(c) competition in sale of Nine West Shoes has been unlawfully
restrained, suppressed and eliminated." Complaint ¶¶ 89 & 94. The
complaint alleges that members of the class have suffered "injury
to their business and their property." Id. Specifically,
plaintiffs claim they have paid "excessive, non-competitive
prices for Nine West shoes as a direct result of defendants'
price-fixing." Plaintiffs' Memorandum of Law in Opposition to
Defendants' Motion to Dismiss at 3.
This motion challenges the sufficiency of the complaint.
Defendants argue that it should be dismissed because (1)
plaintiffs have not pled antitrust injury, (2) the complaint
fails to plead facts sufficient to put the individual defendants
on notice of the fraud and conspiracy claims against each of
them, and (3) plaintiffs' claims are limited by the four-year
statute of limitations.
For the reasons set forth below, the motion to dismiss is denied.
1. Standard on a Motion to Dismiss
Dismissal of a complaint pursuant to Fed.R.Civ.P. 12(b)(6) is
permitted "`only where it appears beyond doubt that the plaintiff
can prove no set of facts in support of the claim which would
entitle him to relief.'" Scotto v. Almenas, 143 F.3d 105,
109-10 (2d Cir. 1998) (quoting Conley v. Gibson, 355 U.S. 41,
45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)); see also Still v.
DeBuono, 101 F.3d 888, 891 (2d Cir. 1996). A district court's
function on a motion to dismiss under Rule 12(b)(6) is to assess
the legal feasibility of the challenged claims. Cooper v.
Parsky, 140 F.3d 433, 440 (2d Cir. 1998); Kopec v. Coughlin,
922 F.2d 152, 155 (2d Cir. 1991). The issue "is not whether a
plaintiff will ultimately prevail, but whether the claimant is
entitled to offer evidence to support the claims." Scheuer, 416
U.S. at 236, 94 S.Ct. 1683.
In antitrust cases in particular, "`dismissals prior to giving
the plaintiff ample opportunity for discovery should be granted
very sparingly.'" George Haug Co. v. Rolls Royce Motor Cars
Inc., 148 F.3d 136, 139 (2d Cir. 1998) (quoting Hospital
Building Co. v. Trustees of Rex Hosp., 425 U.S. 738, 746, 96
S.Ct. 1848, 48 L.Ed.2d 338 (1976)). Nonetheless, "`[i]t is
not . . . proper to assume that the [plaintiff] can prove facts
that it has not alleged or that the defendants have violated the
antitrust laws in ways that have not been alleged.'" Id.
(quoting Associated General Contractors of California, Inc. v.
California State Council of Carpenters, 459 U.S. 519, 526, 103
S.Ct. 897, 74 L.Ed.2d 723 (1983)).
An antitrust complaint must "`adequately . . . define the
relevant product market, . . . allege antitrust injury,
[and] . . . allege conduct in violation of the antitrust laws.'" Rock
TV Entertainment, Inc. v. Time Warner, Inc., No. 97 Civ. 0161(LMM),
1998 WL 37498, at *2 (S.D.N.Y. Jan. 30 1998) (quoting Sage
Realty Corp. v. ISS Cleaning Services Group, Inc., 936 F. Supp. 130,
135 (S.D.N.Y. 1996)). The burden on a plaintiff alleging
federal antitrust violations, however, is no greater than the
burden imposed on other claimants under the Federal Rules of
Civil Procedure. Gross v. New Balance Athletic Shoe, Inc.,
955 F. Supp. 242, 244 (S.D.N.Y. 1997). Our Circuit has stated that "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. v. Pine Hill Concrete Mix Corp.,
554 F.2d 551, 554 (2d Cir. 1977). Compare, e.g., Newburger, Loeb &
Co. v. Gross, 365 F. Supp. 1364, 1367-68 (S.D.N.Y.), aff'd in
part, rev'd in part on other grounds, 563 F.2d 1057 (2d Cir.
1977) ("skeletal" allegations sufficient), with, e.g., Heart
Disease Research Foundation v. General Motors Corp.,
463 F.2d 98, 100 (2d Cir. 1972) ("a bare bones statement of conspiracy or
of injury under the antitrust laws without any supporting facts
2. Federal Antitrust Laws
Section 1 of the Sherman Act provides in relevant part that
subject to certain limitations "[e]very 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." 15 U.S.C. § 1. Section 4 of
the Clayton Act allows private enforcement of the antitrust laws
and broadly defines the class of persons who may maintain a
private damage action.*fn3 Associated General Contractors
of California, Inc. v. California State Council of Carpenters,
459 U.S. 519, 529, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983)
[hereinafter "AGCC"]. The statute provides:
Any person who shall be injured in his business or
property by reason of anything forbidden in the
antitrust laws may sue therefor in any district court
of the United States in the district in which the
defendant resides or is found or has an agent,
without respect to the amount in controversy, and
shall recover threefold the damages by him sustained,
and the cost of suit, including a reasonable
In light of the statute's broad language, additional analysis
is required to determine whether or not a particular private
plaintiff is a proper party to bring a private antitrust action.
AGCC, 459 U.S. at 534 & n. 31, 103 S.Ct. 897. The Supreme Court
has identified several factors to consider in determining whether
a particular plaintiff has "antitrust standing." Id. at 537-44,
103 S.Ct. 897. They include: (1) the causal connection between an
antitrust violation and the alleged harm suffered by the
plaintiff; (2) the nature of plaintiff's antitrust injury; (3)
the directness or indirectness of the asserted injury; (4) the
existence of an identifiable class of persons other than
plaintiff who were more direct victims of the antitrust
violation, and (5) the potential for duplicative recovery or
complex apportionment of damages. Id. at 537-44, 103 S.Ct. ...