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Marjam Supply Company v. Firestone Building

November 30, 2012


The opinion of the court was delivered by: William J. Martini, U.S.D.J.


This matter comes before the Court on three motions to dismiss under Federal Rule of Civil Procedure 12(b)(6) filed by: (1) Defendants Firestone Building Products Company and Firestone Diversified Products, LLC (hereinafter "Firestone"); (2) Allied Building Products Corp. ("Allied") and Charles Golden; and, (3) Defendants Performance Roofing Associates, Inc. ("Performance") and Roofing Specialties, Inc. ("RSI"). Plaintiff Marjam Supply Company ("Marjam") opposes the motions. For the reasons set forth below, the relief sought by Defendants will be GRANTED in part and DENIED in part.


Firestone is the leading manufacturer of commercial roofing systems and related roofing products ("Firestone Products") within the United States. (Compl. ¶ 16.) Firestone markets and sells its Firestone Products primarily through: (1) independently owned distributors ("Distributors"), such as Plaintiff Marjam and Defendant Allied; and (2) independent manufacturer representatives ("Manufacturer Representatives") including Defendants Performance and RSI. (Id. at ¶ 18.)

Distributors v. Manufacturer Representatives

Based on the pleadings, it appears that Manufacturer Representatives market Firestone Products to members of the construction industry, e.g., architects and contractors; Distributors, on the other hand, sell Firestone Products to third parties. (Id. at ¶¶ 18, 23.) It is clear that Distributors and Manufacturer Representatives are contractually assigned to specific and oftentimes overlapping geographic areas in which to market and sell Firestone Products. (Id. at ¶¶ 18, 22, 26.) However, as pled, it is unclear what the nature of the relationship is between Distributors and Manufacturer Representatives as it relates to the marketing and sales of Firestone Products.*fn2

In 1995, Marjam became one of Firestone's Distributors, id. at ¶ 55, which the Court infers to mean that at that time, Marjam first entered into a contractual relationship with Firestone to sell Firestone Products to third parties in certain specified geographical territories. Defendant Allied and non-parties ABC Supply Co., Inc. and its subsidiary, Bradco Supply Corp., are also Firestone Distributors and directly compete with Marjam for the same business in various sales territories. (Id. at ¶¶ 34, 44.)

Beginning in August 1999, Marjam became a Distributor in a sales territory which included Philadelphia. (Id. at ¶ 56.) Allied became Marjam's direct competitor in the Philadelphia market on November 1, 2001. (Id. at ¶ ¶ 34, 36, 51.)

In spite of competition from direct competitors, from 1999 through 2009, Marjam's sales of Firestone Products "grew exponentially." (Id. at ¶ 66.) However, in 2010 and 2011, Marjam's sales of Firestone Products suddenly plummeted. (Id.) Marjam attributes its decline in sales to certain actions taken by Firestone.

Specifically, Marjam alleges that beginning in 2010, Firestone sold identical Firestone Products to Allied, ABC, and Bradco for significantly less than the prices which Firestone made available to Marjam. (Id. at ¶¶ 72-73.) Marjam further alleges that in that same time period, Firestone offered Marjam's direct competitors -- but not Marjam -- certain rebates and price discounts, as well as secret financing and extended payment terms. (Id. at ¶¶ 74-79, 80.) Specific examples include: Firestone selling identical quantities of APP160 Firestone roofing products to Marjam for $1.25 more per roll than it did to one of Marjam's direct competitors; a "March 2010 Incentive Stocking Program"; and, special buy programs and rebates. (Id. at ¶ 80.) On October 25, 2011, Firestone terminated its Distributor Agreement with Marjam, effective as of December 31, 2011.

Marjam claims that as a result of Firestone's actions, Marjam's business has suffered due to lost sales, profits, and customers. Moreover, Allied is now the only significant Distributor of Firestone Products within Philadelphia. (Id. at ¶¶ 70, 83.)

Marjam asserts that Firestone's actions were instigated and promoted by Performance, RSI, Allied, ABC, and Bradco, who all viewed Marjam as a "price cutter." (Id. at ¶¶ 68-69.) However, Marjam does not allege any specific instances showing how any of those parties instigated, promoted, or were in any other way involved in Firestone's decisions to offer less favorable sales terms to Marjam or to terminate Marjam's Distributor Agreement.*fn3

Charles "Chuck" Golden

Defendant Charles Golden is a former Marjam employee. Marjam claims that in the course of that employment, Golden gained access to Marjam's confidential and proprietary Firestone Products sales information. Marjam further claims that "Golden executed an Employment Agreement" under which he agreed that he would not disclose that information. (Id. at ¶¶ 50-54.)

On April 7, 2011, Golden resigned from Marjam to join Allied. (Id. at ¶ 51.) Marjam asserts that Golden is now disclosing Marjam's proprietary information to Firestone, Allied, Performance, and RSI, in violation of his Employment Agreement. Marjam further claims that Defendants' use of that information allowed Firestone to terminate Marjam's Distributorship without materially affecting Firestone's sales of Firestone Products. (Id. at ¶ 124.) However, it is unclear how and why Golden shared that proprietary information with Firestone. Moreover, Marjam does not ...

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