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N.D.N.Y.,2012.

Dayton Superior Corp. v. Spa Steel Products, Inc.

Slip Copy, 2012 WL 113663 (N.D.N.Y.), 2012-1 Trade Cases P 77,757, 76 UCC Rep.Serv.2d 495

No. 1:08–CV–1312 (FJS/RFT).

Jan. 13, 2012.

Thompson Hine, LLP, Thomas J. Collin, Esq., Jennifer S. Roach, Esq., of Counsel, Cleveland, OH, for Plaintiff.

SCULLIN, Senior District Judge. I. INTRODUCTION

Currently before the Court is Plaintiff’s motion to dismiss Defendant‘s first and third amended counterclaims

against it for antitrust violations under the Robinson–Patman Act and breaches of the implied warranties of mer–

chantability and fitness for a particular purpose for defective products.

II. BACKGROUND

fendant’s counterclaims had been resolved, (2) granted Plaintiff’s motion to strike Defendant’s affirmative defenses,

and (3) dismissed Defendant’s second counterclaim for unfair competition. As to Defendant‘s first and third counter-

claims, the Court granted Defendant’s request for leave to amend; FN1 and, on October 21, 2011, Defendant filed an

amended answer, including its amended first and third counterclaims. In response, Plaintiff filed the instant motion

to dismiss on November 4, 2011.

Rule 8(a)(2) requires that a pleading contain “a short and plain statement of the claim showing that the pleader

is entitled to relief[.]” Fed.R.Civ.P. 8(a)(2). This pleading standard does not require “detailed factual allegations,”

but it does require “more than labels and conclusions, and a formulaic recitation of the elements of a cause of ac-

all reasonable inferences in favor of the nonmoving party. See Gorman v. Consol. Edison Corp., 488 F.3d 586, 591–

92 (2d Cir.2007) (citation omitted). Moreover, in ruling on a motion to dismiss, the court may consider “any written

instrument attached to the complaint as an exhibit, any materials incorporated into it by reference, and any other

documents that are integral to it.” Youngblood v. Artus, No. 9:10–CV00752, 2011 WL 6337774, *4 (N.D.N.Y.

Dec.19, 2011) (citation omitted).

1. Defendant‘s first counterclaim: Price-discrimination under the Robinson–Patman Act

The Robinson–Patman Act (“RPA”) prohibits discriminatory pricing among competing buyers of the same

goods. See 15 U.S.C. § 13(a). To state a prima facie claim for secondary-line price discrimination FN2 under section

2(a), a plaintiff must establish the following: (1) the seller’s sales were made in interstate commerce; (2) the seller

discriminated in price between the two purchasers; (3) the product contemporaneously sold to the competing pur-

FN2. A secondary-line price discrimination claim, which Defendant asserts here, is a claim where the al–

legedly injured party is in competition with a favored customer of the seller. See George Haug Co., Inc. v.

Rolls Royce Motor Cars Inc., 148 F.3d 136, 141 n .2 (2d Cir.1998) (citation omitted).

Plaintiff now moves to dismiss Defendant’s first counterclaim because it contends that Defendant has failed to

state a claim for price discrimination and that it lacks standing to do so.

FN3. In its first motion to dismiss, Plaintiff asserted that Defendant lacked standing because it failed to al–

lege that at least one of the sales of the discriminatorily-priced goods crossed a state line, either in connec-

tion with its purchase by Defendant or in connection with its purchase by a favored customer. The Court

held that Defendant had pled facts sufficient to establish the Court’s subject matter jurisdiction over this

counterclaim because Plaintiff was involved in interstate commerce. See Dkt. No. 56 at 15.

To establish standing, a plaintiff must show that (1) he has suffered an injury–in-fact, (2) the defendant‘s com-

plained-of conduct caused the injury–in-fact, and (3) it is likely that the relief requested will redress his injury. See

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 102–03, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (quotations

and other citations omitted). “Although a plaintiff’s substantive price discrimination claims arise from Section 2(a)

of the [RPA], the plaintiff’s private right of action (or standing) to seek treble damages for such a violation is pro-

vided by Section 4 of the Clayton Act, 15 U.S.C. § 15.” Dayton Superior Corp. v. Marjam Supply Co., Inc., No. 07

CV 5215, 2011 WL 710450, *6 (E.D.N.Y. Feb.22, 2011) (citation omitted). Such “a plaintiff must show (1) an inju–

ry–in–fact; (2) that has been caused by the violation; and (3) that is the type of injury contemplated by the statute.”

Blue Tree Hotels Inv. (Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 220 (2d

discriminatory pricing … resulted in injury, destruction and the prevention of competition between [D]efendant and

its competitors.” See id. at ¶ 30.

Moreover, taking the affidavit Defendant submitted into consideration for purposes of Plaintiff’s jurisdictional

challenge, one of Defendant‘s customers purchased a majority of Plaintiff’s products from competitors of Defendant,

rather than Defendant, because Defendant’s prices were consistently 10% to 15% higher than those of its competi-

Accordingly, the Court finds that Defendant has plausibly pled a sufficient nexus for causation purposes be-

tween Plaintiff’s allegedly discriminatory pricing and Defendant‘s alleged injury to withstand a motion to dismiss on

this ground. Whether Defendant’s economic loss may ultimately be fairly attributed to Plaintiff’s allegedly discrimi-

natory-pricing practices is better reserved for a motion for summary judgment should such a motion prove to be ap-

propriate following discovery. For these reasons, the Court denies Plaintiff’s motion to dismiss Defendant’s first

dismiss. See Dkt. No. 56 at 18–20.

(1). Price discrimination by the seller

In an attempt to cure the deficiencies of its initial counterclaim, Defendant added an example of Plaintiff’s al–

legedly discriminatory pricing to its amended counterclaim and attached an affidavit in support thereof.FN4 One of

erenced in Defendant’s counterclaim and attached thereto. See Youngblood, 2011 WL 6337774, at *4 (cita-

tion omitted).

During the period commencing in 2005 through 2007 we purchased a majority of [Plaintiff’s] products from A.H.

Harris and Barker Steel [competitors of Defendant]. The reason that we refrained from purchasing [Plaintiff’s]

products from [Defendant] was that those products were always 10% to 15% higher than the prices quoted by

Amended Answer/Counterclaim at ¶¶ 24–25, 31–32.

Accordingly, the Court finds that Defendant’s amended counterclaim adequately alleges that Plaintiff discrimi-

nated in price between competing buyers. Cf. Monsieur Touton Selection, Ltd. v. Future Brands, LLC, No. 06 Civ.

1124, 2006 WL 2192790, *6 (S.D.N.Y. Aug. 1, 2006) (granting motion to dismiss where complaint failed to “allege

the existence of a single favored purchaser, and g [ave] virtually no indication of the time period in which the al-

quality. See Amended Answer/Counterclaim at ¶¶ 24–25, 29.

Therefore, the Court finds that Plaintiff has sufficiently demonstrated that the offending products were of like

grade and quality.

(3). Unlawful effect on competition

and that Plaintiff’s discriminatory–pricing directly resulted in, among other things, “substantial economic loss[.]” See

Defendant’s Amended Answer/Counterclaim at ¶¶ 24, 31–32. Defendant further alleges that “the effect of

[P]laintiff’s policy of discriminatory pricing … resulted in injury, destruction and the prevention of competition be-

tween [D]efendant and its competitors.” See id. at ¶ 30. As an example of this discriminatory pricing, Defendant

alleges that BBL (a customer) bought goods from Barker Steel and A.H. Harris (competitors) because Plaintiff

2. Defendant’s third counterclaim: Implied warranties for defective products

As with the first counterclaim, the Court granted Defendant leave to amend its third counterclaim for breach of

the implied warranty of merchantability and breach of the implied warranty of fitness for a particular purpose.FN5

claims from Defendant’s allegations. See Dkt. No. 56.

FN6. Again, the Court may consider the letter for purposes of the instant motion to dismiss because it was

referenced in Defendant’s counterclaim and attached thereto. See Youngblood, 2011 WL 6337774, at *4 (ci-

tation omitted).

Specifically, Defendant alleges that one of its customers, Cold Springs Construction Company (“Cold

a. Breach of the implied warranty of merchantability

To succeed on a breach of the implied warranty of merchantability claim, the complainant must establish “ ‘

“(1) that the product was defectively designed or manufactured; (2) that the defect existed when the manufacturer

delivered it to the purchaser or user; and (3) that the defect is the proximate cause of the [injury].” ‘ “ Plemmons v.

the curing compound to Defendant, in its capacity as a distributor and re-seller of such products, on numerous occa-

sions. See Amended Answer/Counterclaim at ¶¶ 34–35. Thus, the Court finds that Defendant has sufficiently alleged

that the defect existed when the manufacturer delivered the product to the purchaser or user. Finally, Defendant’s

amended counterclaim and the letter attached thereto tend to show that the allegedly defective curing compound—a

product applied to freshly finished concrete pavement—was not fit for the ordinary purpose for which it was to be

the specific alleged defective product set forth herein, i.e., the curing compound.

b. Breach of the implied warranty of fitness for a particular purpose

To sustain a claim for a breach of the implied warranty of fitness for a particular purpose, the movant must es–

tablish three elements: (1) the seller, at the time of contracting, must have reason to know the particular purpose for

which the goods are required; (2) the seller must have reason to know that the buyer is relying on the seller’s skill or

judgment to select or furnish suitable goods for the specified purpose; and (3) the buyer must actually rely on the

seller’s skill or judgment. See Emerald Painting, Inc. v. PPG Indus., Inc., 99 A.D.2d 891, 891–92, 472 N.Y.S.2d 485

(3d Dep’t 1984) (quotation omitted); see also Symphony Fabrics Corp. v. Creations by Aria, Inc., 111 A.D.2d 650,

651, 490 N.Y.S.2d 212 (1st Dep’t 1985).

In this case, Defendant alleges that Plaintiff intentionally and recklessly sold and delivered the offending prod-

ucts on numerous occasions to Defendant and that, as a distributor and re-seller, Defendant sold and delivered the

offending products to its customers throughout the Northeastern United States. See Amended Answer/Counterclaim

at ¶¶ 34–35. Construed in the light most favorable to Defendant and taken as true for purposes of the instant motion

fendant’s breach of the implied warranty of fitness claim because Defendant has set forth just enough factual matter

to go forward at this stage of the litigation.FN8

FN8. However, as stated, unless Defendant otherwise shows good cause, the Court will limit discovery on

this counterclaim to the specific alleged defective product set forth herein, i.e., the curing compound.

IV. CONCLUSION

Type II Class B white pigmented curing compound that Plaintiff manufactured and Defendant identified, unless De–

fendant shows good cause why the Court should not so limit discovery; and the Court further

ORDERS that this matter is referred to Magistrate Judge Treece for all further pretrial matters, including a de-

termination on the scope of discovery related to Defendant‘s third counterclaim.

IT IS SO ORDERED.