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RAUL INTL. CORP. v. SEALED POWER CORP.

April 3, 1984

RAUL INTERNATIONAL CORPORATION, Atlas Continental Corporation, Western Atlas Corporation, and Curtis Automotive Corporation, Plaintiffs,
v.
SEALED POWER CORPORATION, Defendant



The opinion of the court was delivered by: SAROKIN

 This action is before the court on defendant's motion for summary judgment. *fn1" Among other issues, the case presents a matter of first impression concerning the scope of the Robinson-Patman Act.

 FACTS

 Plaintiffs are four related corporations engaged in the packaging of automotive replacement parts and their distribution in the United States and internationally. All four corporations are owned by Gene and Albert Raul, who are brothers; each is incorporated in New York and has a principal place of business in Carlstadt, New Jersey. Defendant Sealed Power Corporation, a Delaware corporation with its principal place of business in Michigan, manufactures and distributes automotive engine parts. Defendant produces and plaintiffs package and distribute, among other products, valve tappets. Also known as "lifters," valve tappets are part of the valve train in a piston engine and control the combustion and timing of the engine by opening and closing the intake and exhaust valves of the pistons. Valve tappets are in constant motion while an engine is operating. They therefore wear out quickly and require frequent replacement.

 For approximately twenty years, plaintiffs have distributed valve tappets; indeed, they have comprised plaintiffs' most profitable line. During this time, plaintiffs' primary, if not exclusive, source of valve tappets has been defendant or its predecessor, Johnson Products. According to defendant, it is an important but not dominant producer of valve tappets -- fifth largest in the world, and fourth in the United States. Plaintiffs, however, argue that "Sealed Power is the dominant factor in the valve tappet aftermarket," that is, the market for replacement parts sold under names other than those of the automobile manufacturer and marketed outside of such manufacturers' respective chains of distribution.

 In their complaint, plaintiffs allege antitrust violations, as well as violations of the common law of contracts and torts. According to plaintiffs, defendant has engaged in price discrimination and other pricing policies in an effort to drive plaintiffs out of business. Further, defendant has allegedly misrepresented that its prices were the most favorable it was offering, tortiously interfered with plaintiffs' relationships with their customers and breached its contract with plaintiffs by virtue of its pricing policies and its practice of competing with plaintiffs for plaintiffs' own customers. Defendant denies plaintiffs' allegations and now moves for summary judgment on all five counts of plaintiffs' complaint.

 DISCUSSION

 A. Count I: Violation of the Robinson-Patman Act, 15 U.S.C. § 13(a)

 Title 15 U.S.C. § 13(a) states, in pertinent part:

 
(a) It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, where the effect of such 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 either grants or knowingly receives the benefit of such discrimination, or with customers of either of them . . .

 In support of this motion, defendant offers the deposition testimony of Eugene Raul, president and chief executive officer of the plaintiff corporations. In particular, defendant relies upon the following colloquy:

 
Q. Is it a fact, sir, that since 1980 most of the tappets which you have purchased from Sealed Power have been resold to customers located in foreign countries?
 
A. Yes.
 
Q. And isn't it a fact, Mr. Raul, that by far most of your customers for tappets which you have purchased from Sealed Power have been sold to customers located in foreign countries?
 
A. Isn't that the same question?
 
Q. I said by far most of.
 
A. Yes.

 Defendants also argued that it understood that plaintiffs were to export all of the valve tappets purchased from defendant, an understanding gleaned both from plaintiffs' purchase orders and from a statement of Mr. Raul to that effect.

 Plaintiffs controvert these facts. Raul testified at deposition and contends in his certification that plaintiffs have and have had domestic customers, responsible for between 11% and 58% of their total sales during the last five years. Indeed, Raul claims, defendant "even introduced us to two customers located in New Jersey." Additionally, Raul states that plaintiffs' purchase orders are worded as they are for tax reasons, irrelevant to these particular products. He also claims that he never represented that his sales were solely for export.

 Plaintiffs' claims in the papers submitted in opposition to defendant's motions for summary judgment are not inconsistent with earlier deposition testimony. Taken together, they create a genuine issue of material fact as to whether plaintiffs sold solely for export. Similarly, although defendant offers convincing evidence that Chrysler Interparts, in favor of whom defendant allegedly price discriminated, purchased valve tappets solely for export, neither is this issue appropriate for summary judgment. Persuasive evidence in support of defendant's position appears in an internal Sealed Power memorandum, as well as in an April 12, 1982 article published in Automotive News. However, Mr. Raul's deposition testimony and certification create a genuine issue of material fact as to Interpart's sales: he states that Interparts in fact sells to domestic customers. Indeed, Interparts allegedly offered to sell valve tappets to Raul; as discussed, supra, these would not ...


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