UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
July 31, 2006
MONSIEUR TOUTON SELECTION, LTD., PLAINTIFF,
FUTURE BRANDS, LLC, THE ABSOLUT SPIRITS COMPANY, INC., AND JIM BEAM BRANDS CO., JOINTLY SEVERALLY AND INDIVIDUALLY, DEFENDANTS.
The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.
OPINION AND ORDER
Plaintiff Monsieur Touton Selection Ltd. ("Touton"), a spirits wholesaler, brings this action against defendants Future Brands, LLC ("Future Brands"), the Absolut Spirits Company ("Absolut"), and Jim Beam Brands Co. ("Beam") (collectively, "defendants"). Plaintiff alleges that defendants have violated both federal antitrust laws and the laws of New Jersey by refusing to honor plaintiff's purchase orders for defendants' Absolut Vodka line of products, and by discriminating against Touton with regard to the terms of sale of one particular type of Absolut Vodka. All defendants now move to dismiss Touton's federal claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.*fn1 For the following reasons, defendants' motion is granted, but plaintiff is granted leave to file a Second Amended Complaint.*fn2
A. The Parties
Touton is a New York corporation with its registered corporate offices in Willingboro, New Jersey.*fn4 It claims to be an authorized wholesaler of Absolut Vodka, one of the leading brands of vodka in the United States.*fn5 However, defendants assert, and plaintiff agrees, that "[o]f all of [Absolut's] branded vodkas, Touton was authorized to distribute only Absolut Vodka 80 proof (`Absolut Blue')."*fn6
Future Brands is a joint venture between defendants Absolut and Beam.*fn7 All three defendants are Delaware corporations.*fn8 Future Brands and Beam have their principal place of business in New Jersey, while Absolut operates from New York City.*fn9 Plaintiff also alleges the existence of "various persons not named as defendants herein [who] have participated as co-conspirators in the offense[s] hereinafter alleged, and [who] have performed acts and made statements in furtherance thereof."*fn10
B. The Alleged Misconduct
The gravamen of plaintiff's allegations is that "[o]ver the past three years, the Defendants have engaged upon [sic] a course of conduct designed to limit the Plaintiff's ability to offer the Absolut Brand."*fn11 This conduct has apparently taken many forms, "including but not limited to: disparate treatment in amount and type of product available for shipment, discriminatory pricing, failure to provide to Plaintiff pricing and other benefits offered to other similarly situated but favored entities; failure to deliver the entire range of products offered to other distributors and/or wholesalers."*fn12
More specifically, plaintiff has repeatedly had its purchase orders for Absolut Vodka rejected, ignored, or otherwise not fulfilled.*fn13 According to plaintiff, defendants have also "acted to limit the allocation of its product(s) to the Plaintiff without justification or reason."*fn14 Plaintiff also alleges that "the Defendants stated that [they] would price the products based upon the shipping date . . . not the date of acceptance of the purchase orde(s)."*fn15
According to Touton, defendant Absolut, as well as its parent corporation,*fn16 "treat its brand `Absolut' as a unified and singular business unit, and [have] promoted the brand `Absolut' over and above any individual type of vodka [they] may sell or offer.*fn17 But "despite its treatment of the entire line of Absolut products as unified, [defendant Absolut] has steadfastly refused to provide the Plaintiff with the entire line of Absolut brand vodka products, without reason or justification."*fn18
Out of these facts, plaintiff pleads several causes of action. The federal antitrust claims appear to consist of Counts Four, Five and Eight. Count Four, denominated as an allegation of "Unfair Business Practices," charges that "Defendants have offered promotions, commercial bribes, special deals and pricing, benefits and bonuses to the competitors of the Plaintiff, but has not offered the same to the Plaintiff, thereby creating a separate and different class of distributor."*fn19 Count Five, "Deceptive Trade Practices," alleges that "Defendants have created a program identified as the 'entity grant' program, which, upon information and belief, is administered unequally and constitutes an illegal kickback and/or subsidy scheme."*fn20 Count Eight alleges "Price Discrimination," and charges that "Defendants have conspired among themselves and others unnamed to discriminate against the Plaintiff as to price, availability, quantity and other terms so as to eliminate the Plaintiff as a competitor in the relevant market in violation of the Robinson-Patman Act."*fn21
The Complaint also sets forth an assortment of state law claims arising out of plaintiff's business dealings with defendants.*fn22 Plaintiff seeks various forms of relief, including compensatory, punitive and treble damages, an injunction compelling defendants to treat Touton the same way as they treat other wholesalers, and a declaratory judgment to essentially the same effect.*fn23
C. New Jersey Proceedings
The parties have already engaged in a protracted struggle concerning Touton's rights to distribute Absolut Vodka, which until now has taken place entirely in New Jersey.*fn24 In January 2004, Absolut petitioned the New Jersey Division of Alcoholic Beverage Control ("NJ ABC") for a declaration that it was permitted to stop selling Absolut Blue to Touton pursuant to New Jersey's Anti-Discrimination Act.*fn25 Absolut accused Touton of improperly using Absolut Blue as a loss leader to gain access to retail accounts for Touton's own inventory of wines.*fn26 Plaintiffs filed a counter-petition with NJ ABC, asserting many of the same allegations contained in the Complaint.
After ruling that Touton was not entitled to purchase the full line of Absolut-branded vodka under New Jersey law, the NJ ABC referred both parties' claims to an Administrative Law Judge ("ALJ"). On March 13, 2006, the ALJ ruled that Touton had forfeited the protections of the New Jersey Anti-Discrimination Act, a ruling which allowed Absolut to discontinue sales of Absolut Blue to Touton. Touton's cross-claims were also dismissed. Both of these rulings were the result of Touton's failure to provide discovery in the administrative law proceeding, despite repeated warnings by the ALJ that such failures would result in an adverse judgment against it.*fn27 The ALJ's rulings were affirmed by the NJ ABC on May 10, 2006. Touton now asserts, without elaboration, that the NJ ABC's decision affirming the ALJ ruling is "on appeal."*fn28
Touton also initiated an action in New Jersey Superior Court in February 2004, raising many of the state law claims raised before the NJ ABC and in the present action. The Superior Court action was swiftly dismissed under the doctrine of primary jurisdiction in deference to the NJ ABC.
HI. APPLICABLE LAW
A. Legal Standard
A motion to dismiss pursuant to Rule 12(b)(6) should be granted only if "'it appears beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief.'"*fn29 Plaintiffs receive "the benefit of any fact that could be established later consistent with the complaint's allegations."*fn30 At the same time, although the plaintiff's allegations are taken as true, the claim may still fail as a matter of law if it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief, or if the claim is not legally feasible.*fn31
1. Rule 8(a)
Rule 8(a)(2) of the Federal Rules of Civil Procedure requires that the plaintiff provide "a short and plain statement of the claim showing that the pleader is entitled to relief." Complaints are not required to "lay out facts corresponding to every 'element' of a legal theory."*fn32 Rather, plaintiffs plead claims "which is to say, grievances," and need not allege "either the factual or legal 'elements' of a prima facie case."*fn33 Rather, a complaint must merely "'give the defendant[s] fair notice of what the plaintiff's claim is and the grounds upon which it rests."'*fn34 Fair notice is "'that which will enable the adverse party to answer and prepare for trial, allow the application of res judicata, and identify the nature of the case so that it may be assigned the proper form of trial."'*fn35 Accordingly, a complaint "'need not set out in detail the facts upon which the claim is based. "'*fn36
B. Robinson-Patman Act
The only possible federal claims raised by the Complaint are claims under sections 2(a), 2(c), 2(d) or 2(e) of the Clayton Act, as amended by the Robinson-Patman Act (hereinafter "Robinson-Patman Act"). There are no special pleading requirements beyond Rule 8(a) for Robinson-Patman Act claims.*fn37 However, even under Rule 8(a), a complaint must be more than "a bare bones statement of conspiracy or . . . injury under the antitrust laws without any supporting facts."'*fn38
1. Section 2(a)
Section 2(a), in sum, prohibits discriminatory pricing among competing buyers of the same goods.*fn39 To state a claim for secondary-line price discrimination*fn40 under section 2(a), a plaintiff must allege that: (1) the seller made sales in interstate commerce; (2) the seller discriminated in price between two different buyers; (3) the product sold to both purchasers was of like grade and quality; and (4) the price discrimination had an unlawful effect on competition.*fn41
In order to establish an unlawful effect on competition, a plaintiff must allege that it was actually competing with the favored purchaser at the time of the price discrimination.*fn42 An allegation of actual competition at the time of the price discrimination, and of a price discrimination that was substantial and sustained over time, will satisfy the fourth element of a section 2(a) claim.*fn43
2. Section 2(c)
Section 2(c) provides in pertinent part that "[i]t shall be unlawful for any person engaged in commerce . . . to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation . . . except for services rendered in connection with the sale or purchase of goods, wares or merchandise. . . ."*fn44 The Second Circuit has left open the question of whether section 2(c) creates a general right of action for commercial bribery.*fn45 To the extent that such an action exists, a plaintiff must at a minimum allege that payments were made with the "intent to influence improperly the conduct of another by bestowing a benefit, [as] the essence of bribe receiving is in the agreement or understanding that the recipient's conduct will be influenced by the benefit."*fn46 Thus, an allegation that a payment was made or received by defendant, without an allegation that such payment was improper in some way, does not state a claim under section 2(c).*fn47
3. Sections 2(d) and 2(e)
Section 2(d) prohibits a seller from discriminating among its customers with regard to "any services or facilities furnished by or through such customer in connection with the processing, handling, sale or offering for sale or any products or commodities manufactured, sold, or offered for sale."*fn48 Section 2(e), in turn, prohibits such discrimination in providing "services or facilities connected with the processing, handling, sale or offering for sale" of a commodity purchased from the seller.*fn49 "These provisions were designed to prohibit indirect price discrimination in the form of advertising and other promotional allowances made available to purchasers on disproportionate terms."*fn50
Sections 2(a), 2(d) and 2(e) share many common elements. For example, "[c]courts have read section 2(a)'s "in commerce" requirement into both sections 2(d) and (e) . . . [and] [t]he plaintiff must demonstrate that the goods or commodity apply only to offers to customers competing in the same geographic area, and reselling at the same functional level."*fn51 However, while a plaintiff must demonstrate "actual injury," sections 2(d) and (e), unlike section 2(a), do not require demonstration of an injury to competition.*fn52
A. Plaintiffs Robinson-Patman Act Claims Must Be Dismissed
Even under the permissive regime of notice pleading, "[c]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent" dismissal.*fn53 Here, the Complaint provides an abundance of conclusory statements asserting defendants' malfeasance, but is devoid of allegations from which, even drawing all inferences in plaintiff's favor, a court could conclude that Touton has stated a claim for a violation of the RobinsonPatman Act or any other federal antitrust law. By the same token, the Complaint is far too vague to provide defendants with the notice of the claims against them to which they are entitled. Accordingly, the Complaint must be dismissed.
1. Plaintiff Has Not Stated a Section 2(a) Claim
In order to state a claim for a violation of section 2(a), Touton must allege the following: first, that relevant vodka sales were made in interstate commerce; second, that the vodka sold contemporaneously to Touton and to other wholesalers was of "'like grade and quality'"; third, that defendants "'discriminate[d] in price between" Touton and those other wholesalers of vodka; and fourth, that "'the effect of such discrimination may be . . . to injure, destroy, or prevent competition' to the advantage of a favored purchaser, i.e., one who 'receive[d] the benefit of such discrimination."'*fn54 Defendants contest the adequacy of plaintiff's pleading as to the last three elements, arguing in essence that the Complaint is so vague and conclusory as to fall far short of even Rule 8(a) pleading standards. Defendants are correct.
Much of the Complaint pertains to Touton's contention that defendants unlawfully refuse to sell to Touton any Absolut Vodka products except Absolut Blue.*fn55 But this type of grievance is simply not cognizable under the Robinson-Patman Act.*fn56 Section 2(a) itself states that "nothing herein  shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade." The Supreme Court long ago held that this provision of section 2(a) incorporates the "Colgate doctrine," which is the '"long recognized right of a trader or manufacturer engaged in an entirely private business  freely to exercise [its] own independent discretion as to parties with whom [it] will deal. "'*fn57 Thus, any Robinson-Patman claim premised on defendants' unwillingness to sell Touton the full range of Absolut Vodka products must be dismissed.
To the extent Touton means to allege that defendants have committed price discrimination with regard to the sale of Absolut Blue, it omits several necessary allegations. First, as a matter of logic, "at least two transactions must take place in order to constitute a discrimination [in price]."*fn58 Moreover, the transactions in question must be reasonably contemporaneous with each other.*fn59 The Complaint is utterly devoid of any allegation of a specific transaction, contemporaneous or otherwise, consummated by defendants with Touton or with any allegedly favored competitor. For that matter, the Complaint does not identify any allegedly favored competitor except in the most conclusory terms.*fn60
Second, the Complaint contains no allegation relevant to the requirement that there be a discriminatory transaction involving goods of like grade or quality. Touton identifies itself as an "authorized wholesaler of Absolut Vodka."*fn61 But as it tacitly admits in its opposition brief, Touton has only ever been authorized to sell Absolut Blue.*fn62 Thus, Touton must allege that a favored purchaser bought Absolut Blue on more favorable terms than those offered to Touton.*fn63 Because, among other reasons, the words "Absolut Blue" never appear in the Complaint, Touton has failed in this task.
Third, plaintiff makes little attempt to allege harm to competition resulting from the alleged price discrimination. The Second Circuit requires a plaintiff to allege that it was actually competing with the favored purchaser at the time of the alleged discrimination.*fn64 All Touton offers are boilerplate assertions that "the elimination of the Plaintiff as a distributor of the Defendants' product(s) will lessen competition among distributors in the relevant marketplace, and in interstate commerce."*fn65 But as already noted, the Complaint does not allege the existence of a single favored purchaser, and gives virtually no indication of the time period in which the alleged discrimination took place.*fn66
Touton asserts that the Complaint "clearly states the type of conduct and the nature of the Defendants' actions," and protests that "[w]hat the Defendants are really suggesting is that the Plaintiff put on its entire case within the four corners of its complaint, and provide a factual recitation that is more than the notice pleading rules require."*fn67 But to demonstrate that the Complaint puts defendants on adequate notice of the claims against them, plaintiffs' opposition brief relies on the record developed in the New Jersey proceedings (which defendants, rather than plaintiff, submitted to the Court) - "[b]eyond [sic] the documents submitted in the various fora, the Defendants are on notice of the issues and assertions."*fn68
Touton's references to the New Jersey proceedings are beside the point.*fn69 Regardless of what happened in other fora, defendants are entitled to adequate notice of the claims against them in this forum. A defendant is not required to simply assume, based on vague allusions from a plaintiff, that the subject matter of the present action is similar to that of an earlier action between the same parties.*fn70 It would be improper to allow this case to proceed when defendants are largely clueless with respect to: which of its customers are alleged to have received favored treatment compared to Touton; which product or products are the subject of the alleged price discrimination; the general time period that the discrimination against Touton is alleged to have taken place; or the time and place of even a single allegedly discriminatory transaction.*fn71
Quite aside from the right of a defendant to adequate notice of plaintiff's claims and the grounds upon which they rest, the Court requires a complaint that permits the application of res judicata.*fn72 Indeed, defendants have raised res judicata as a defense to the many state law claims asserted against them by Touton. I need not reach this issue now because I do not intend to exercise supplemental jurisdiction over Touton's state law claims, but I note that it is difficult if not impossible to determine from the Complaint whether the allegations Touton made to the NJ ABC are identical, similar, or completely dissimilar to the allegations made in support of Touton's claims in this Court.
2. Plaintiffs Have Not Stated a Claim Under Any Other Provision of Robinson-Patman
The deficiencies of the Complaint identified by the foregoing discussion apply equally to Touton's attempt to plead a section 2(d) or 2(e) claim. In order to make out any such claim, Touton must, inter alia, indicate the nature of the "services or facilities" offered to favored purchasers but not to Touton. The only allegation that might bear on this issue is plaintiff's averment that "[t]he Defendants have created a program identified as the 'entity grant' program, which upon information and belief, is administered equally and constitutes an illegal kickback and/or subsidy scheme."*fn73 But even aside from the fact that there is no information in the Complaint concerning the parameters of the entity grant program, plaintiff must still identify at least one favored competitor who received the benefit of this program or any other allegedly unlawful "service" or "facility" offered by defendants.
Finally, Touton alludes to defendants' alleged offering of "commercial bribes" to unidentified "competitors of the Plaintiff.*fn74 This allegation fails to state a commercial bribery claim under Section 2(c), even assuming such a claim exists under Second Circuit law. The Second Circuit recently affirmed the dismissal of a similarly conclusory "commercial bribery" claim for reasons that apply equally here, noting that:
[Plaintiffs] allege that [defendant] and its vendors entered into purchase agreements pursuant to which the vendors would pay "allowances, bonuses, charges, commissions, credits, discounts, fees, incentives, profits, rebates, and/or kickbacks" to [defendant]. Based on these allegations, [plaintiffs] contend that [defendant] and its vendors engaged in a "Kickback Scheme" that constituted commercial bribery. This claim, however, is premised entirely on the tautology created by the fact that [plaintiffs] have labeled the payments made by vendors "Kickbacks": because the vendors pay kickbacks to [defendant], they are engaged in commercial bribery, and because the parties are engaged in commercial bribery, the payments made by vendors are kickbacks. Substituting [plaintiffs] repeated use in their complaint of the freighted word "Kickback" with the more benign "vendor payment" reveals that [plaintiffs] have not alleged any improper intent or conduct on the part of the vendors who made the payments to [defendants].*fn75
The Blue Tree Hotels court went on to note that "commercial bribery cannot be committed unilaterally by an alleged bribe receiver: one cannot be guilty of receiving a commercial bribe unless someone else is guilty of paying it."*fn76 Touton's commercial bribery allegation suffers from the opposite problem - one cannot be guilty of paying a commercial bribe unless someone else is guilty of receiving it. Defendants' point is well taken that, while Touton alleges that commercial bribes were "offered," Touton never alleges that such bribes were received by anyone.*fn77 In sum, Touton's allegation that unidentified competitors were offered unidentified payments by defendants does not state a Section 2(c) claim.
B. Supplemental Jurisdiction
There is no diversity jurisdiction in this case because Touton shares New Jersey corporate citizenship with two of the three defendants. And as this case is still at an early stage, there is no reason to exercise supplemental jurisdiction over Touton's state law claims once the federal claims are dismissed.*fn78
Moreover, principles of comity weigh heavily in favor of declining supplemental jurisdiction here. Determination of the preclusive effect of the NJ ABC's judgment is a matter of New Jersey law.*fn79 But as noted above, Touton lost its case before the NJ ABC because of its abject failure to participate in discovery, not because the ALJ or the NJ ABC reached the merits of the parties' contentions. Defendants analogize to a dismissal based on a plaintiff's failure to prosecute, but then acknowledge that "[t]he question of whether to apply res judicata to default judgments against plaintiffs who fail to prosecute remains unresolved."*fn80 To the extent that defendants' res judicata argument may present novel issues of New Jersey law, New Jersey courts should resolve such issues.*fn81
C. Leave to Amend
"It is the usual practice upon granting a motion to dismiss to allow leave to replead."*fn82 I grant such leave here with great reluctance, for two reasons. First, Touton (inexplicably) neglected to request leave to replead in the event its Complaint is dismissed. Second, I previously allowed Touton to amend its original Complaint after defendants had already filed a motion to dismiss, raising many of the same arguments they raise on the present motion.*fn83 Even with the benefit of this detailed critique of the original Complaint, Touton was still unable to produce a Complaint sufficient to put its opponents on notice of the grounds for the claims against them.
Although facts such as these often permit a conclusion that further amendment would be futile,*fn84 in this case it may still be possible for Touton to plead a Robinson-Patman Act claim consistent with this Opinion.*fn85 Thus, I will give Touton one last chance to amend its Complaint within twenty days of the date of this Opinion. However, no Second Amended Complaint should be filed unless Touton and its counsel reasonably believe that the deficiencies identified in this Opinion can be addressed.
Moreover, defendants are quite correct that "it is Plaintiff's burden to file a pleading from which the preclusive effect of  prior litigation can be ascertained.*fn86 If Touton again fails to meet this burden, and if it becomes necessary to reach the merits of the state law claims, the Court will not waste its time making uneducated guesses as to which claims may be precluded by the judgment of the NJ ABC. Instead, another impermissibly vague Complaint may lead to the conclusion that Touton's state law claims are entirely barred by res judicata.
For the foregoing reasons, defendants' motion to dismiss is granted without prejudice. Plaintiff is granted leave to file a Second Amended Complaint within twenty days of the date of this Opinion and Order. The Clerk of the Court is directed to close the pending motion [number 13 on the docket sheet].