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Marjam Supply Co. v. Firestone Building Products Company, LLC

United States District Court, D. New Jersey

April 1, 2019

MARJAM SUPPLY CO., Plaintiff,
v.
FIRESTONE BUILDING PRODUCTS COMPANY, LLC, et al., Defendants.

          OPINION

          WILLIAM J. MARTINI, U.S.D.J.

         This matter comes before the Court on Defendants Firestone Building Products Company, LLC's, Firestone Diversified Products, LLC's, and GenFlex Roofing Systems, LLC's collective motion for summary judgment. ECF No. 188. For the reasons set forth below, the motion is DENIED.

         I. BACKGROUND

         Plaintiff Marjam Supply Co. (“Marjam”) brings this antitrust suit under Sections 2(a) and 2(d) of the Robinson-Patman Act, 15 U.S.C. § 13, et seq. (“Act”). Marjam is a building-materials distribution company. Defendants Firestone Building Products Company, LLC, Firestone Diversified Products, LLC, and GenFlex Roofing Systems, LLC (collectively, “Firestone”) are manufacturers of building-construction materials, including those used for roofing. Until Firestone ended their relationship in October 2011, Marjam distributed Firestone's roofing materials in New York, New Jersey, Pennsylvania, and Delaware.

         Marjam accuses Firestone of offering its roofing products to Marjam's competitors (“Favored Distributors”)[1] at more favorable terms than those offered to Marjam through non-uniform rebate, discount, and financing programs. Op. at 3-4 (Nov. 30, 2012), ECF No. 38. Due to the disparate terms offered by Firestone, the Favored Distributors could allegedly offer Firestone's products to “Major Customers”[2] at lower prices than Marjam. Id. Marjam asserts it lost significant business to the Favored Distributors as a result. Id.

         This Court previously granted-in-part and denied-in-part a motion to dismiss the claims against Firestone. See Id. While dismissing much of the complaint, the Court allowed Marjam to proceed on its Section 2(a) and 2(d) claims. Id. at 9. With the Court's leave, Marjam added GenFlex as a defendant via amended complaint. See Amend. Compl. ¶¶ 116-132, ECF No. 92. Presently before the Court is Firestone's (including GenFlex's) motion for summary judgment on Marjam's remaining claims against it (Counts One, Two, and Four). Firestone Mot. (Jan. 11, 2019), ECF No. 188.

         II. DISCUSSION

         A. Summary Judgment Standard

         Summary judgment is appropriate if “there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law.” FRCP 56. A fact is material if its determination might affect the outcome of the suit under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). A dispute is genuine if “a reasonable jury could return a verdict for the nonmoving party.” Id. To make this determination, the Court views the facts in the light most favorable to the nonmovant and all reasonable inferences must be drawn in the nonmovant's favor. Scott v. Harris, 550 U.S. 372, 378 (2007).

         The moving party bears the burden of demonstrating the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The movant meets this burden by pointing to an absence of evidence supporting an essential element as to which the non-moving party will bear the burden of proof at trial. Id. at 325. If the moving party carries this initial burden, “the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial.” United States v. Donovan, 661 F.3d 174, 185 (3d Cir. 2011) (citation omitted).

         B. Firestone's Motion for Summary Judgment

         Firestone's numerous arguments for summary judgment fit into two broad categories: (1) Marjam cannot establish the requisite harm to competition and (2) even assuming it could, inter-brand competition negates any such harm. See generally Firestone Mot. Marjam counters each argument by citing record evidence. See Marjam Opp., ECF No. 189.

         C. Section 2(a) Claims

         Section 2(a) of the Act states:

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 the effect of such discrimination may be substantially to lessen competition . . . 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: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered.

15 U.S.C. § 13(a). A prima facie Section 2(a) claim requires four elements: “(1) that sales were made to two different purchasers in interstate commerce; (2) that the product sold was of the same grade and quality; (3) that defendant discriminated in price as between the two purchasers; and (4) that the discrimination had a prohibited effect on competition.” Feesers, Inc. v. Michael Foods, Inc., 498 F.3d 206, 212 (3d Cir. 2007). The fourth element includes both a “competitive injury” (i.e., “a reasonable possibility that the price difference may harm competition”) and an “antitrust injury” (i.e., “a causal connection between the price discrimination and actual damages suffered”). Id.; Stelwagon Mfg. Co. v. Tarmac Roofing Sys., Inc., 63 F.3d 1267, 1273 (3d Cir. 1995).

         Firestone primarily argues there is no genuine issue of material fact regarding whether Marjam suffered competitive or antitrust injuries (element four). Firestone also asserts there is no genuine issue regarding whether the products sold were “of the same grade and quality” (element two) and whether Firestone actually committed price discrimination (element three).

         1. Competitive Injury

         Firestone argues that Marjam cannot establish the fourth element of a Section 2(a) claim-that the price discrimination had a prohibited effect on competition (i.e., that the plaintiff suffered a “competitive injury”). Mot. at 8. Given Section 2(a)'s prophylactic purpose, to satisfy the competitive injury element, plaintiffs need only show “a reasonable possibility that the price difference may harm competition, ” not that it actually harmed competition. Feesers, 498 F.3d at 212 (brackets and citations omitted). Thus, plaintiffs may establish the competitive injury indirectly-by demonstrating substantial price discrimination over time (which evidences a reasonable possibility of harm)-or directly-through evidence of actual displaced sales (i.e., actual harm to competition). Id. at 216 (citations omitted). Here, Marjam does both.

         a. Direct Evidence of a Competitive Injury

         Direct proof of a competitive injury utilizes “direct evidence of displaced sales.” Id. (citation omitted); see also Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 177 (2006) (“A hallmark of the requisite competitive injury . . . is the diversion of sales or profits from a disfavored purchaser to a favored purchaser.”). Marjam points to two of its employees' depositions for such evidence: Joel Martin (a Marjam salesman responsible for Firestone products) and James Metcalf (Marjam's Product and Marketing Manager). Marjam Opp. at 58. Martin's deposition included the following soliloquy:

Q: Why did Marjam lose the business of Hamada?
A: We can only go off the costs that were given and price the customer.
Q: I don't understand your answer.
A: I don't understand what you're asking me for. You know-- Q: Are you suggesting that if you met your competitors' pricing you'd be pricing below cost?
A: Right. I don't know what my competitors are giving them. I'm just being told that I'm high from my customer.

Appx. to Sharon Decl., Ex. G, Martin Dep. at 69-70, ECF No. 189-6 (emphasis added). As to Metcalf, his deposition ...


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