February 12, 2016
from the United States District Court for the Western
District of Wisconsin. No. 14-cv-734-slc - Stephen L.
Crocker, Magistrate Judge.
Wood, Chief Judge, Rovner, Circuit Judge, and Blakey,
District Judge [*]
size matter? Not always, as this case illustrates. The
dispute before us arose when Clorox decided to sell the
largest-sized containers of its products only to discount
warehouses such as Costco and Sam's Club. Ordinary
grocery stores, including plaintiff Woodman's Food
Market, had to content themselves with smaller packages.
Taking the position that package size is a promotional
service, Woodman's sued Clorox for unlawful price
discrimination under subsection 2(e) of the Robinson-Patman
Act, 15 U.S.C. § 13(e). The district court denied
Clorox's motion to dismiss for failure to state a claim.
Later it rejected Clorox's motion to dismiss the case on
mootness grounds. After that, the district court certified
both rulings for interlocutory appeal under 28 U.S.C. §
1292(b). We accepted the appeal, and we now reverse.
facts are simple and undisputed. The defendants, The Clorox
Sales Company and The Clorox Company (collectively
"Clorox") produce and sell a range of consumer
goods. The plaintiff, Woodman's Food Market, Inc., is a
local grocery store with 15 locations in Wisconsin and
Illinois; it purchases goods from Clorox and sells them to
its customers. Clorox sells some of its products in
"large packs, " such as 40-ounce salad dressing
bottles, 460-count plastic food-storage bags, and 42-pound
cat litter containers. The large packs tend to have a lower
unit price than smaller versions of the same product. They
also provide consumers with the convenience of needing to
shop less frequently.
time, Clorox sold large packs to many grocery stores,
including Woodman's. But in 2014 Clorox announced that
effective October 1 it would sell large packs only to
wholesale discount clubs. Clorox believed that
"simplify[ing] its go to market strategy" would let
it "streamline operations" and maximize sales. What
was good for Clorox, however, was not necessarily good for
Woodman's and its ilk, who were forced to offer their
customers only the less convenient and more expensive
(measured by unit price) items.
responded with this lawsuit, in which it alleged that
Clorox's refusal to sell it large packs amounts to
unlawful price discrimination under the Robinson-Patman Act,
15 U.S.C. §§ 13(a), (d), (e). Subsection 13(a)
prohibits price discrimination where the effect of that
discrimination "may be substantially to lessen
competition or tend to create a monopoly in any line of
commerce, or to injure, destroy, or prevent competition with
any person" who itself or whose customers benefit from
the discrimination. Any price discrimination that is
concealed as promotional "services or facilities"
(provided directly or reimbursed) is also prohibited, see
id. § 13(d), (e), whether or not it interferes
with competition, unless the payments or the actual services
are available on proportionally equal terms to all.
Woodman's alleges that the size of Clorox's large
packs is a promotional "service, " and therefore
that Clorox's refusal to sell large packs to
Woodman's is prohibited by subsections 13(d) and (e). It
seeks only injunctive relief.
claims were sharpened as the litigation progressed. First it
abandoned its straightforward price-discrimination claim
under subsection 13(a). The district court then ruled that
its promotional-service claim arose under subsection 13(e),
which covers the direct provision of services or facilities,
rather than under subsection 13(d), which covers payments for
services or facilities. The difference was immaterial, the
court thought, because the two subsections traditionally have
been analyzed identically. Woodman's claims, it thought,
fit better under subsection (e). Woodman's accepted that
interpretation, and so on appeal it relies exclusively on
moved to dismiss Woodman's complaint for failure to state
a claim, arguing that product size is not a
"service" or "facility" for purposes of
subsection 13(e). See Fed.R.Civ.P. 12(b)(6). The district
court denied the motion, relying on administrative materials
from the Federal Trade Commission (FTC, or Commission) and
two old FTC decisions-one from 1940 and one from 1956-holding
that product size can be a promotional service under
subsections 13(d) and (e). The court noted that the FTC has
never renounced these decisions.
the motion to dismiss was denied, Clorox stopped selling any
products to Woodman's. It then filed a motion to dismiss
Woodman's complaint as moot; the court construed this as
a motion to dismiss for lack of subject-matter jurisdiction.
See Fed. R. Crv. P. 12(b)(1). Clorox argued that because
Woodman's no longer purchased any products from
Clorox, it was no longer a "purchaser" within the
meaning of subsection 13(e). The court, citing FTC v.
Fred Meyer, Inc., 390 U.S. 341 (1968), denied the motion
because Woodman's could still purchase Clorox products
from other suppliers (and allegedly was doing so indirectly).
The district court then certified its two orders denying
Clorox's motions to dismiss as appropriate for
interlocutory appeal under 28 U.S.C. § 1292(b). Clorox
filed a timely petition to this Court for permission to
appeal, which we granted. (The district court also granted
Woodman's motion to amend its complaint to invoke section
1 of the Sherman Act, 15 U.S.C. § 1, but it stayed
further proceedings on that claim pending this appeal).
competition ... is the 'primary concern of antitrust
law.'" Volvo Trucks N. Am., Inc. v. Reeder-Simco
GMC, Inc., 546 U.S. 164, 180 (2006) (quoting
Continental TV, Inc. v. GTE Sylvania Inc., 433 U.S.
36, 51-52 n.19 (1997)). "Primary" concern does not
mean "exclusive" concern, however, and so we find
in the antitrust laws some doctrines that address in-trabrand
competition-that is, competition within a single brand. The
Robinson-Patman Act is one such statute. Its fit with
antitrust policy is awkward, as it was principally designed
to protect small businesses, but the Supreme Court has told
us that the Act should not be understood as an exception from
the consumer-welfare norm that animates the antitrust laws.
See id. at 180-81; see also Brooke Group Ltd. v.
Brown & Williamson Tobacco Corp., 509 U.S. 209, 221
(1993) ("the Robinson-Patman Act should be construed
consistently with broader policies of the antitrust
laws" (internal quotation marks omitted)).
Robinson-Patman Act was passed in 1936 as an amendment to the
Clayton Act of 1914. The Clayton Act initially banned price
discrimination-by which it meant the practice of selling the
same product at a different price to different
purchasers-when such discrimination harmed competition or was
based on a different quantity sold. FTC v. Simplicity
Pattern Co.,360 U.S. 55, 68-69 (1959). The
Robinson-Patman Act was designed to tighten these rules.
Id. First, while it retained the Clayton Act's
prohibition on differential pricing when that pricing would
"substantially lessen competition, " it went
further, by prohibiting differential pricing based on
quantity except when different price ...