The opinion of the court was delivered by: Richard J. Holwell, District Judge:
MEMORANDUM OPINION AND ORDER
This is a price discrimination action under the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. § 13 (2006) (the "RPA"). Plaintiffs, a number of small solely owned auto parts stores and a trade association including such stores, allege they have been competitively injured by defendants' price discrimination in violation of the RPA. Defendants are several auto parts manufacturers, as well as large chain retailers that sell auto parts. Plaintiffs allege that the manufacturer defendants discriminate in favor of the large chain retailer defendants, injuring disfavored purchasers such as the small store plaintiffs.
The Court previously dismissed plaintiffs' second amended complaint (the "Prior Complaint") because it did not plausibly allege violations of the RPA. Coalition for a Level Playing Field, L.L.C. v. AutoZone, Inc., 737 F.Supp.2d 194 (S.D.N.Y. 2010) (the "September 2010 Opinion"). Rather than dismiss with prejudice, the Court permitted plaintiffs to propose curative amendments, and plaintiffs have in turn moved to amend, attaching a third amended complaint (the "Proposed Complaint"). In support of that motion, they note: (1) the addition of putatively curative allegations; (2) a change in the focus of the complaint from auto parts in general to auto part product lines; and (3) their inability to determine or plead the extent of price discrimination without discovery. Defendants oppose amendment and seek dismissal with prejudice, arguing inter alia that the proposed additions are entirely conclusory and do not cure the defects in the Prior Complaint. For the reasons that follow, plaintiffs' motion to amend is denied.
The facts of this case and its procedural history are discussed at length in the Court's September 2010 Opinion, so only a brief exposition follows. As always at the motion to dismiss stage, the Court takes the well-pled factual allegations of the complaint as true and draws reasonable inferences in plaintiffs' favor. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007).
The plaintiffs in the Proposed Complaint are four small solely-owned auto parts stores, and the "Coalition for a Level Playing Field, LLC," a coalition of small stores and the warehouse middle-man distributors such stores buy parts through. (Proposed Complaint ¶¶ 3-6.) The solely owned stores and warehouse distributors operate in a segment of the auto parts aftermarket that is generally three-step: manufacturers sell to distributors, distributors sell to small locally owned stores, and the small local stores sell to consumers.*fn1 (Proposed Complaint ¶ 74(B).) Over the last several decades the small stores and warehouse distributors have fallen on hard times, as they struggle to compete with the large chain stores that have become an increasingly prevalent feature of the American consumer goods market. (Proposed Complaint ¶ 79.) Such chain stores operate in a two-step segment of the auto parts market: manufacturers sell to large chain retailers, then the chain retailers handle all distribution functions and sell to consumers. (Proposed Complaint ¶¶ 61-62 (distribution functions); ¶ 74 (direct resale).) Defendants are nine such manufacturers and four such chain stores. (Proposed Complaint ¶¶ 7-26(A), 27-57.)
Plaintiffs' core allegation is that the chain stores' success, at least with respect to the auto parts market, is the result of pervasive price discrimination in violation of the RPA. (Proposed Complaint ¶ 83.) They allege that the chain stores in the two step segment of the market force manufacturers to charge them favorable prices for parts, (Proposed Complaint ¶¶ 94(L)-(M)), giving them a significant competitive advantage over the disfavored small stores and warehouse distributors in the three-step segment of the market. (Proposed Complaint ¶¶ 78-79.)
Plaintiff Coalition for a Level Playing Field, LLC, joined by 133 small stores and warehouse distributors, first filed suit against the retailer defendants in the Eastern District of New York on February 16, 2000. See Complaint, Coalition for a Level Playing Field v. Autozone Inc., No. 00 Civ. 953 (E.D.N.Y. Feb. 16, 2000). After completion of discovery, a representative number of plaintiffs proceeded to trial which resulted in a jury verdict for defendants, and judgment was entered in defendants' favor on January 28, 2003. (Prager Decl. Ex. 4.) On October 27, 2004, the Coalition, joined by certain of the plaintiffs from the Eastern District Action who had not gone to trial, filed this suit in the Southern District of New York, re-alleging a number of RPA claims and also raising a new claim alleging discovery misconduct on the part of the defendants in the Eastern District action. The Eastern District action and this one are similar, and in the September 2010 Opinion the Court found aspects of this action precluded by the Eastern District action. Further details on that subject are beyond the scope of this opinion.
Within the scope of this opinion are the claims, dismissed without prejudice in the September 2010 Opinion, which plaintiffs now seek to press in the Proposed Complaint. There are two such claims. First, the Proposed Complaint again raises a claim for direct price discrimination against the manufacturer defendants under Section 2(a) of the RPA, and against the retailer defendants under Section 2(f) of the RPA. Section 2(a) prohibits a seller from discriminating in price when certain conditions are met, and Section 2(f) prohibits a buyer from knowingly receiving discriminatory prices. 15 U.S.C. § 13(a), (f). Second, the Proposed Complaint again raises a claim for indirect price discrimination under Sections 2(d) and 2(e), which prohibit sellers from selectively providing or funding advertising and promotional programs to buyers in order to indirectly discriminate in price between favored and disfavored purchasers. Buyers are likewise prohibited from knowingly receiving prohibited discriminatory advertising and promotional favors. Id. § 13(d), (e).
As regards the Section 2(a) and Section 2(f) price discrimination claim, in the September 2010 Opinion the Court found that the Prior Complaint failed to plausibly state a claim. That Complaint had supported its allegations of illegality primarily with a price sheet showing certain price differentials at the retail and warehouse level: retail prices set by the defendant retailers were sometimes lower than the prices warehouse distributors charged to small store plaintiffs. From that, the complaint alleged anticompetitive price discrimination in violation of the RPA. Noting that "courts may not presume illegality when the 'nub' of a complaint alleges conduct that is equally capable of being legal," September 2010 Opinion, 737 F.Supp.2d at 214 (citing Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009)), the Court concluded that the Prior Complaint failed because it alleged conduct equally capable of being lawful under the RPA. Id. at 215-19. Specifically, the Court noted that the Proposed Complaint also raised the reasonable inferences that: (1) price differentials resulted from functional discounts given by manufacturers for the mix of services provided by the retailer defendants, and (2) price differentials resulted from materially different terms of sale between the retailer and manufacturer defendants as opposed to those between the warehouse distributors and manufacturer defendants. Both types of conduct are lawful under the RPA. See id. at 210-13. Because the Prior Complaint did not allege facts that rendered plausible an inference of illegality, particularly in light of the lawful conduct its factual allegations suggested, the Court dismissed the price discrimination claim. Id. at 216.*fn2
Also in the September 2010 Opinion, the Court found that the Section 2(d) and 2(e) advertising and promotion claim suffered from an additional defect-its allegations were at too high a level of generality to state a claim on behalf of any particular plaintiff as against any particular defendant. Id. at 218. The Prior Complaint alleged that vendor agreements between the various defendants afforded advertising and promotional program kickbacks, without describing or identifying any particular programs received by any particular defendants. Nor did the Prior Complaint plead which of several hundred plaintiffs were denied the opportunity to share in which advertising or promotional program of which defendant manufacturer. Noting that each plaintiffs' claim against each defendant must be plausibly plead, the Court found that this en masse approach to pleading hundreds of claims did not satisfy Rule 8. Id.
The Court did not dismiss either the price discrimination or advertising and promotion program claims with prejudice. Rather, the Court deferred decision on whether to grant leave to amend and afforded plaintiffs an opportunity to propose curative amendments.
II. THE PROPOSED COMPLAINT
The Proposed Complaint makes a number of changes that plaintiffs contend cure the deficiencies in the Prior Complaint.
A.Fewer Plaintiffs and Defendants
The Proposed Complaint drastically reduces the number of plaintiffs. While the Prior Complaint had 134 plaintiffs (Prior Complaint ¶ 6), the Proposed Complaint has but four-the Coalition itself, Gil's Auto Parts, Amelia's Automotive, Inc., and M&M Auto Parts, Inc. (Proposed Complaint ¶¶ 3-6.) Plaintiffs contend that this "was done to dramatically simplify the case and make it easier to set forth the required allegations, and enabled the Proposed Pleading to do so without any attached schedules." (Pl. Mem. 3.)
As for Retailer Defendants, the Proposed Complaint again alleges that four different store chains are independently engaged in the same behavior of inducing price discrimination to competitively injure small parts stores:
90. Wal-Mart and Sam's Club have systematically violated the Robinson-Patman Act since approximately 1981 by activities . that ha[ve] resulted in lower costs of product (including auto parts) for Wal-Mart than its competitors are paying for the same products, and this strategy of violating the Robinson-Patman Act to drive competitors out of business has been adopted and used successfully by AutoZone and Advance, which are admittedly attempting to emulate Wal-Mart's activities. (Proposed Complaint ¶ 90.)
The Proposed Complaint has reduced from twelve to nine the number of parts manufacturers that are allegedly complicit in each of the four retailer defendants' price discrimination efforts. The "Manufacturer Defendants" are defined as ArvinMeritor, Inc., Ashland, Inc. (Valvoline Division), Cardone Industries USA, Ford Motor Company (Motorcraft division), Pennzoil-Quaker State Company, SOPUS Products, Inc., Standard Motor Products, Inc., Stant Manufacturing, and The Armor All/STP Products Company. (Proposed Complaint ...