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Gregory Marketing Corp. v. Wakefern Food Corp.

Decided: December 16, 1985.

GREGORY MARKETING CORPORATION AND DANIEL SCHER, PLAINTIFFS
v.
WAKEFERN FOOD CORPORATION AND APPLE MARKETING CO-OP, INC., DEFENDANTS



Villanueva, J.s.c.

VILLANUEVA

Defendants move for summary judgment to dismiss one count of plaintiffs' complaint.

The issues are whether plaintiffs' complaint alleging price discrimination sets forth a cause of action under the New Jersey Antitrust Act, N.J.S.A. 56:9-3, and whether plaintiffs

are barred from maintaining this action under the doctrines of res judicata and collateral estoppel, because an identical claim made under federal antitrust statutes, containing the same statutory provisions, was dismissed in the United States District Court for lack of antitrust standing.

The court holds plaintiffs' claims under the act are barred by the dismissal of their prior federal action under the doctrines of res judicata and collateral estoppel. In addition, plaintiffs' complaint fails to state a cause of action under the New Jersey Antitrust Act.

The first count of plaintiffs' complaint*fn1 alleges a cause of action against Wakefern Food Corporation ("Wakefern") for illegal price discrimination in violation of § 3 of the New Jersey Antitrust Act (the "New Jersey act"), N.J.S.A. 56:9-3. Plaintiffs allege that Wakefern received preferential prices on apple juice products it purchased from defendant Apple Marketing Co-op, Inc. ("Apple Marketing"), formerly Red Cheek, Inc. ("Red Cheek").

Specifically, defendants contend that this state complaint is merely a rerun of plaintiffs' complaint under the federal Robinson-Patman Act, 15 U.S.C.A. § 13 et seq., which was dismissed by the United States District Court for the District of New Jersey ("district court"), and, in any event, this count fails to state a cause of action for two reasons: First, the New Jersey act does not regulate, nor provide any remedy for, alleged price discrimination. The act contains no provision remotely resembling the Robinson-Patman Act, but rather is modeled after the federal Sherman Antitrust Act, 15 U.S.C.A. § 1 et seq., which neither regulates nor prohibits price discrimination; and secondly, plaintiffs' price discrimination claim is barred under the doctrines of res judicata and collateral estoppel because the

district court dismissed on the merits the exact same antitrust claim that plaintiffs assert here.

DESCRIPTION OF THE PARTIES.

Plaintiff Gregory Marketing Corporation is a food brokerage firm which served as a broker for Red Cheek for a number of years. Plaintiff Daniel Scher is an officer of Gregory and its majority shareholder and sues solely in that capacity.

Defendant Wakefern is a corporation organized on the cooperative plan that provides certain services, including bulk purchasing, for its members who own and operate "Shop-Rite" supermarkets.

Defendant Apple Marketing Co-op, Inc., formerly Red Cheek, Inc. ("Red Cheek"), a manufacturer of apple juice products, had a long standing agreement with Gregory to introduce or otherwise broker Red Cheek products in an assigned territorial market.

THE PRIOR FEDERAL ACTION.

The present action is virtually identical in factual allegations to a prior federal action that was brought in the United States District Court for the District of New Jersey ("federal action"), seeking damages arising out of the alleged price discrimination scheme of defendants. Plaintiffs sought damages based upon violations of federal antitrust statutes as well as a variety of state claims.

Both actions are being litigated by the same plaintiffs, against the same defendants, and, most importantly, concern the same alleged transactions and occurrences.

THE PRICE DISCRIMINATION CLAIMS.

The federal action and the present action contain identical price discrimination claims against Wakefern. Whereas the claim in the federal action sought relief under both the federal

Robinson-Patman Act and the New Jersey Antitrust Act, the claim in the instant action seeks relief under only the New Jersey act.

According to plaintiffs' allegations in both actions, "Wakefern utilized its dominant position in the marketplace to induce Red Cheek to discriminate in price between different purchasers of products of like grade and quality." Specifically, plaintiffs allege that: (1) from February through July 1984, while all other Red Cheek customers were paying $11.85 a case for Red Cheek's 40 ounce, natural apple juice, Wakefern was allegedly receiving one case gratis for each case purchased; and (2) from June through August 1984, Wakefern allegedly received a $1.86 discount on Red Cheek's one-half gallon clear and natural promotion when other Red Cheek customers were receiving no discount. Plaintiffs allege that these allegedly discriminatory pricing practices were intended to injure competition in the marketplace and damage Gregory; and that Wakefern knew that the price discrimination was not cost justified.

Plaintiffs further allege that when Scher became aware of the discriminatory pricing practices, he then informed Red Cheek of the wrongful nature of these alleged practices, and Red Cheek nonetheless directed him to supply customers who inquired about the practices with fabricated explanations. Plaintiffs allege that Scher refused to comply with these directives and, as a result thereof, Red Cheek terminated Gregory as a broker.

DISMISSAL OF THE FEDERAL ACTION.

The district court dismissed the federal antitrust claim in the federal action for lack of antitrust standing and lack of antitrust injury under § 4 of the Clayton Act, 15 U.S.C.A. § 15, which creates the federal private antitrust remedy. In doing so, the district court held:

The claimed violation of the antitrust laws here is based on the preferential price given to Wakefern by Red Cheek. The anticompetitive effect of such actions is on those competitors of Wakefern's that did not receive the price cuts.

Plaintiffs' injuries of lower commissions and the breach of its contract are not injuries received by reason of that which ...


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