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Worldhomecenter.Com, Inc v. Kwc America

September 15, 2011

WORLDHOMECENTER.COM, INC.,
PLAINTIFF,
v.
KWC AMERICA, INC., DEFENDANT.



The opinion of the court was delivered by: Naomi Reice Buchwald United States District Judge

MEMORANDUM A N D ORDER

Plaintiff Worldhomecenter.com, Inc. ("Plaintiff") brought this action against defendant KWC America, Inc. ("KWC") alleging violations of New York's antitrust law, N.Y. Gen. Bus. Law § 340, and consumer protection law, N.Y. Gen. Bus. Law § 349. Plaintiff also seeks declaratory and injunctive relief for alleged violations of N.Y. Gen. Bus. Law § 369-a and § 369-b. Defendant now moves to dismiss the action for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons discussed below, the motion is granted.

BACKGROUND

Plaintiff is a New York corporation that sells home improvement products through its web sites, Homecenter.com and Supplyhouse.com, and by telephone. (Compl. ¶¶ 4; 6.) Defendant is a Georgia corporation that manufactures and sells faucets, plumbing accessories, and kitchen accessories to its exclusive distributors for resale to the public. (Compl. ¶¶ 5; 7.) This action was originally filed in the Supreme Court of the State of New York, County of New York, and was removed to this Court based on diversity of citizenship, pursuant to 28 U.S.C. §§ 1332, 1441(a).

Plaintiff purchases KWC's products directly from KWC and other distributors and offers them for resale to customers online. (Compl. ¶ 8.) According to the complaint, due to the low overhead associated with an Internet business, plaintiff is able to offer KWC's products at lower prices than "traditional display room retailers." (Id.)

KWC has instituted a policy known as the Internet Advertising Policy ("IAP") which provides, in pertinent part:

KWC America has unilaterally determined that it will sell its products only to those accounts that . . . [d]o not use the Internet . . . to advertise KWC America products to the general public at a price that is more than twenty percent (20%) for KWC branded products and twenty-five percent (25%) for HANSA branded products below the list price set forth in the effective KWC and HANSA Price Books.

(Haller Decl. Ex. E.*fn1 ) According to the IAP, this provision "appl[ies] to all levels/pages on a website, other than pages associated with an intent to purchase. Actual prices charged customers [sic] may be provided by telephone, e-mail response, and product purchase confirmation webpages or communications." (Id.) The IAP also specifies that "[t]his policy applies only to advertised prices and does not apply to actual resale prices." (Id.) Furthermore, the IAP states that "KWC America will terminate its business relationship with any account that violates this Policy." (Id.)

According to the complaint, KWC has refused to ship and fill orders submitted by plaintiff unless and until plaintiff complies with the IAP. (Compl. ¶ 15.) The complaint also states that plaintiff has "refus[ed] to agree to sell KWC's products at a fixed price" but does not indicate whether plaintiff has refused to comply with the IAP. (Compl. ¶ 16.)

In addition to adopting the IAP, KWC has posted a disclaimer on its website, KWCAmerica.com, concerning consumers who purchase products from unauthorized dealers. The disclaimer provides:

[w]e cannot assist with problems that may occur from purchases from unauthorized channels, this includes online auctions and online purchases from dealers other than those listed in our Where to Buy. We require proof of purchase when processing warranty claims. This means: No Internet Selling, No Mail Order Sales, No Mass Merchants. (Compl. Ex. B.) The disclaimer also states: "[i]f you purchase KWC/HANSA products on the internet, be advised: WE WILL NOT HONOR ANY WARRANTY CLAIMS ON PRODUCTS PURCHASED FROM UNAUTHORIZED INTERNET SELLERS." (Id.) According to the complaint, KWC has indicated that it will not honor warranties on KWC products sold by the plaintiff. (Compl. ¶ 26.)

DISCUSSION

I. Legal Standard

When deciding a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must accept as true all well-pleaded facts alleged in the complaint and draw all reasonable inferences in plaintiffs' favor. Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 237 (2d Cir. 2007). A complaint must contain "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, -- U.S. --, 129 S. Ct. 1937, 1949 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Where a plaintiff has not "nudged [its] claims across the line from conceivable to plausible, [its] complaint must be dismissed." Twombly, 550 U.S. at 570. This pleading standard applies in "all civil actions." Iqbal, ---- U.S. ----, 129 S. Ct. at 1953.

II. Claims Asserted Against KWC

Plaintiff asserts four causes of action against KWC. We address each in turn.

A. Donnelly Act Claim

In its first cause of action, plaintiff alleges that KWC's policies constitute vertical price fixing in violation of New York's antitrust statute, the Donnelly ...


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