United States District Court, N.D. California, San Jose Division
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [RE: ECF
166]
BETH
LABSON FREEMAN United States District Judge
Plaintiff,
Mathew Enterprise, Inc., a Chrysler, Jeep, Dodge and Ram
(“CJDR”) dealer operating as Stevens Creek CJDR
(“Stevens Creek”), alleges that Defendant
Chrysler Group LLC (“Chrysler”) offered incentive
payments to other CJDR dealers in Northern California but not
to Stevens Creek in violation of § 2(a) of the
Robinson-Patman Act (“RPA”). Stevens Creek
initially brought four claims, but only the § 2(a) claim
for damages remains. Chrysler now asks the Court to grant
summary judgment in its favor on that claim. For the reasons
below, the Court GRANTS IN PART and DENIES IN PART
Chrysler’s motion.
I.BACKGROUND
A.
Preliminary Facts
The
Court begins by summarizing preliminary facts, which the
parties have not deemed to be material, but the Court
includes as background.[1] Chrysler manufactures and distributes
CJDR vehicles through a network of authorized dealers,
including Stevens Creek. Ans. ¶¶ 9-11, ECF 57.
Stevens Creek has been a CJDR dealer in San Jose, California
since 2006, before alleged competitors San Leandro CJDR
(“San Leandro”) and Fremont CJDR
(“Fremont”) entered the market. See
Zaheri Decl. ¶ 3, ECF 197; Ans. ¶¶ 21, 31.
While Stevens Creek’s pleadings focus on competition
with San Leandro and Fremont, it also identifies other CJDR
dealers to whom Chrysler sells vehicles in Northern
California, including Putnam CJDR (“Putnam”) and
Normandin CJDR (“Normandin”). Ans. ¶ 14;
Stockton Report (“Stockton”) Tab 3 at 1, ECF
171-5. The Court refers to Fremont, San Leandro, Putnam, and
Normandin collectively as “Surrounding
Dealers.”[2]
Chrysler
assists dealers by offering them incentive programs. Ans.
¶ 18. For example, in or about April 2011, Chrysler
implemented the Volume Growth Program (“VGP”),
under which Chrysler provided incentive payments to dealers
that met or exceeded sales objectives. Id.
¶¶ 18, 30. Some of the sales objectives were set
monthly, based in part on the dealer’s sales history.
Id. ¶¶ 18-19; see also
Def.’s Exh. 13 (Thompson Depo.) at 86:12-16, ECF
171-10. With the exception of April 2012, Stevens Creek met
its monthly sales objectives from July 2011 through June
2012. Ans. ¶ 29.
B.
Undisputed Facts
The
following facts are undisputed unless otherwise
noted.[3] Once a dealer earns its VGP incentive
payments, Chrysler does not require dealers to use the VGP
payments for any particular purpose. Thompson Depo. at
15:1-14. In the ordinary course of business, Stevens Creek
used its payments to lower prices to price-sensitive
customers or to increase its profits. Def.’s Exh. 3
(No. 20). From April 2011 through June 2012, Stevens
Creek’s average transaction price for a vehicle was
$30, 699, see Def.’s Exh. 10 (Woroch Report)
¶ 55, ECF 173-12, while incentives averaged over $700
per vehicle or about 2.3% of the average price, see
Stockton ¶ 41, ECF 171-5.
In June
2012, Fremont became an authorized CJDR dealer. From June
2012 to June 2013, Chrysler continued to base Stevens
Creek’s monthly objectives in part on Stevens
Creek’s sales history from the prior year without
taking into account Fremont’s entry into the market. At
the same time, Chrysler calculated Fremont’s sales
objectives using a different formula. Stockton Report
¶¶ 40-41; see also Def.’s Exh. 5
(No. 7). A year after Fremont’s entry, objectives for
all relevant dealers were set using the same formula. (That
occurred because Fremont then had a sales history on which to
base its incentive benchmarks.)
In the
year following Fremont’s entry, Stevens Creek missed
its VGP incentives each month from July 2012 to June 2013. In
July 2012, Stevens Creek earned a “fast start”
payment- which is different from a VGP payment-and tried but
failed to meet its VGP objective. Stockton Tab 14 at 1, ECF
173-7. Stevens Creek received no incentive payments from
August 2012 to June 2013. Id. at 1. In contrast,
Fremont earned its incentives in each month over that period.
Id. at 1. For the purposes of this motion, the
parties agree that if the definition of a “Favored
Dealer” is one that earned its incentives, Fremont was
a Favored Dealer from at least August 2012 through June 2013.
See Reply Statement of Undisputed Facts
(“Reply Statement”) (Fact No. 30), ECF 228.
Over
the same period, other Surrounding Dealers sometimes earned
and sometimes missed their incentives. Id.; see
also Stockton Tab 14 at 1. Specifically, in the 12
months following Fremont’s entry, Normandin met its
objectives five times, San Leandro met its objectives eight
times, and Putnam met its objectives two times. Stockton Tab
14 at 1. As a result, the parties dispute whether San
Leandro, Normandin, and Putnam were also Favored Dealers from
August 2012 to June 2013 because they did not receive
incentives in some months but enjoyed greater average
incentives than Stevens Creek over the entire period.
Id. at 1.
For the
purposes of this motion, the parties do not dispute that the
alleged incentive discrimination caused Stevens Creek to lose
sales from August 2012 through June 2013. See Reply
Statement (Fact No. 47). This price discrimination did not
cause Stevens Creek to raise its published or advertised
prices, see Def.’s Exh. 3 (Interrog. No. 12),
but Stevens Creek did raise its actual prices, on average, by
approximately the amount of the lost incentives. See
Def.’s Exh 8 (Stockton Depo. 3) at 749:21-24. The
missed incentives did not drive Stevens Creek from the
market. Id. at 793:19-23.
Stevens
Creek has not identified any customer that purchased a
vehicle of like grade and quality from a Favored Dealer after
negotiating with Stevens Creek, nor does Stevens Creek have
any evidence of “specific customers or the number of
customers who compared Stevens Creek’s retail prices
with those of a [Surrounding] Dealer” or who did not
purchase from Stevens Creek because the Surrounding
Dealers’ retail prices were lower. Def.’s Exh. 2
(Interrog. Nos. 15-18), ECF 171-2; see also
Def.’s Exh 12 (Zaheri Depo.) at 34:21- 35:8, ECF
173-16. Similarly, Stevens Creek does not know how many
customers negotiated with it but instead bought a vehicle of
another brand, a different CJDR vehicle, or no vehicle at
all. Id. at 131:14-132:20. Stevens Creek’s
expert also does not have any “specific knowledge of
the purchasing practices of specific customers” or
“what the cross elasticity of demand is between Stevens
Creek and any particular dealer.” Stockton Depo. 1 at
260:5-22. In addition, Stevens Creek has not conducted a
survey of customers, nor has Stevens Creek compared a list of
customers that contacted but did not purchase a vehicle from
it to Surrounding Dealers’ customer lists from the
relevant period. Id. at 520:1-22.
II.LEGAL
STANDARD
“A
party is entitled to summary judgment if the ‘movant
shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.’” City of Pomona v. SQM North America
Corp., 750 F.3d 1036, 1049 (9th Cir. 2014) (quoting
Fed.R.Civ.P. 56(a)). “The moving party initially bears
the burden of proving the absence of a genuine issue of
material fact.” In re Oracle Corp. Sec.
Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)).
“Where the non-moving party bears the burden of proof
at trial, the moving party need only prove that there is an
absence of evidence to support the non-moving party’s
case.” Id.
“Where
the moving party meets that burden, the burden then shifts to
the non-moving party to designate specific facts
demonstrating the existence of genuine issues for
trial.” Id. “[T]he non-moving party must
come forth with evidence from which a jury could reasonably
render a verdict in the non-moving party’s
favor.” Id.
“The
court must view the evidence in the light most favorable to
the nonmovant and draw all reasonable inferences in the
nonmovant’s favor.” City of Pomona, 750
F.3d at 1049. “‘Where the record taken as a whole
could not lead a rational trier of fact to find for the
nonmoving party, there is no genuine issue for
trial.’” Id. (quoting Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986)).
III.DISCUSSION
Chrysler
seeks summary judgment on Stevens Creek’s remaining
damages claim for price discrimination under § 2(a) of
the RPA, 15 U.S.C. § 13(a), which makes it
“unlawful for any person engaged in commerce . . . 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.” 15 U.S.C. § 13(a).
Through
§ 2(a), Congress “sought to target the perceived
harm to competition occasioned by powerful buyers, rather
than sellers; specifically, Congress responded to the advent
of large chainstores, enterprises with the clout to obtain
lower prices for goods than smaller buyers could
demand.” Volvo Trucks N. Am., Inc. v. Reeder-Simco
GMC, Inc., 546 U.S. 164, 175 (2006). At the
same time, “Robinson-Patman does not ban all price
differences charged to different purchasers of commodities of
like grade and quality; rather, the Act proscribes price
discrimination only to the extent that it threatens to injure
competition.” Id. at 177 (internal citation
omitted). In other words, the Act is intended to stimulate
competition, not to protect existing competitors.
Id. at 181.
Where,
as here, a plaintiff seeks damages for price discrimination,
the plaintiff must establish both “competitive
injury” and “antitrust injury.” For an
injunction, “all that is required . . . is proof that
competitive injury may result.” Hasbrouck
v. Texaco, Inc., 842 F.2d 1034, 1042 (9th Cir. 1987),
aff'd, 496 U.S. 543 (1990) (emphasis in original). To
recover damages, however a plaintiff must also show
“antitrust injury, ” which requires “some
showing of actual injury and causation.” Id.
at 1041. Chrysler argues that Stevens Creek lacks evidence to
establish either form of injury, and the Court considers each
in turn.
A.
Competitive Injury
To
establish competitive injury, a plaintiff must “show
that (1) the relevant . . . sales were made in interstate
commerce; (2) the [goods] were of ‘like grade and
quality’; (3) [the seller] ‘discriminated in
price between’ [the plaintiff] and another purchaser of
[the goods]; and (4) ‘the effect of such discrimination
may be . . . to injure, destroy, or prevent
competition’ to the advantage of a favored
purchaser.” Volvo, 546 U.S. at 176-77
(quoting 15 U.S.C. § 13(a)). Here, Chrysler challenges
Stevens Creek’s proof regarding only the last element.
A
plaintiff may establish the last element either directly,
through evidence that sales or profits were diverted from a
disfavored purchaser to a favored purchaser, or indirectly,
through evidence that a “favored competitor received a
significant price reduction over a substantial period of
time, ” which gives rise to what is called a Morton
Salt presumption. Id. at 177; see also Fall
City Industries, Inc. v. Vanco Beverages, Inc., 460 U.S.
428, 437-38 (483); FTC v. Morton Salt Co., 334 U.S.
37, 49-51 (1948). Chrysler argues that Stevens Creek lacks
evidence to make either showing here, see Mot. at
10-19, ECF 166, and the Court considers each option in turn.
1.
Direct Evidence of Diverted Sales or Profits
Chrysler
contends that Stevens Creek lacks evidence to directly show
competitive injury through diversion of sales or profits to a
favored competitor because, as noted above, it is undisputed
that Stevens Creek cannot identify any customers who (1) did
not purchase a vehicle from Stevens Creek because a
Surrounding Dealer offered a lower price, (2) purchased a
similar vehicle from a Surrounding Dealer after negotiating
with Stevens Creek, (3) informed Stevens Creek that s/he had
received a lower offer from a Surrounding Dealer, or (4) even
compared Stevens Creek’s prices to those of a
Surrounding Dealer. See Def.’s Exh. 2
(Interrog. Nos. 15-18).
To
argue that such evidence is necessary, Chrysler relies on
Volvo, which considered an RPA claim brought by a
Volvo dealer to challenge Volvo for failing to offer
identical concessions to dealers bidding for the same custom
projects. Volvo, 546 U.S. at 169-71. As evidence,
the plaintiff offered two instances where it directly
competed with another Volvo dealer for the same project,
including one where the plaintiff lost to the allegedly
favored competitor, but in both cases Volvo in fact offered
the dealers matching concessions for their bids. Id.
at 172, 180. The plaintiff also compared concessions Volvo
gave to it and other dealers, but for different sales.
Id. The Supreme Court found these comparisons
insufficient to show diverted sales because “in none of
the discrete instances . . . did [the plaintiff] compete with
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