Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Woodman's Food Market Inc. v. Clorox Co.

United States Court of Appeals, Seventh Circuit

August 12, 2016

Woodman's Food Market, Inc., Plaintiff-Appellee,
v.
Clorox Company and Clorox Sales Company, Defendants-Appellants.

          Argued February 12, 2016

         Appeal from the United States District Court for the Western District of Wisconsin. No. 14-cv-734-slc - Stephen L. Crocker, Magistrate Judge.

          Before Wood, Chief Judge, Rovner, Circuit Judge, and Blakey, District Judge [*]

          WOOD, Chief Judge.

         Does 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.

         I

         The 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.

         For a 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.

         Woodman's 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.

         Woodman's 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 subsection 13(e).

         Clorox 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.

         After 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).

         II

         "Interbrand 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)).

         The 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 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.