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Mathew Enterprise, Inc. v. Chrysler Group LLC

United States District Court, N.D. California, San Jose Division

April 20, 2017



          BETH LABSON FREEMAN United States District Judge

         Plaintiff Mathew Enterprise, Inc., a Chrysler, Jeep, Dodge, and Ram (“CJDR”) dealer operating at Stevens Creek CJDR (“Stevens Creek”) brought this action alleging 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 Price Discrimination Act (“RPA” or “Robinson-Patman Act”), 15 U.S.C. § 13.[1] On October 13, 2016, after a 7-day trial, the jury found in favor of Defendant Chrysler. See generally Verdict Form, ECF 331.

         I. BACKGROUND

         A. Statement of Facts

         Chrysler manufactures and distributes CJDR vehicles through a network of authorized dealers, including Stevens Creek. Stipulation of Facts, Jury Instruction No. 13, ECF 329. 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 Tr. 177:4-9, ECF 345 (testimony of M. Zaheri).

         Chrysler has a variety of incentive programs, which provide discounts or rebates to dealers or consumers. Id. at 180:4-16 (testimony of M. Zaheri). One such program, at issue in this case, is the Volume Growth Program (“VGP”), which generally provides dealers with incentives if they meet certain sales objectives in a given month. Id. at 312:1-11 (testimony of S. Begley). In this action, Stevens Creek claimed that for a period of time from July 2012 through June 2013, Chrysler violated the Robinson-Patman Act by engaging in price discrimination against Stevens Creek through the manner in which Chrysler set Stevens Creek's monthly sales objectives to qualify for incentive payments under Chrysler's VGP. Jury Instruction No. 2, EF 329.

         During the time period in question, Stevens Creek was the largest CJDR dealer in the Bay Area. Tr. 194:10-11, ECF 345 (testimony of M. Zaheri). Stevens Creek brought this litigation because of a new entrant, Fremont, which had significantly fewer sales than did Stevens Creek but still received the incentives.[2] Id. at 194:11-12, 199:13-15, 199:22-200:7.

         At trial, the uncontroverted evidence showed that Chrysler's formula for existing dealers' sales objectives was based on each dealer's prior year's actual sales plus a percentage increase in sales required to earn the incentive payments. Id. at 181:11-24 (testimony of M. Zaheri); id. at 448:19-21, ECF 346 (testimony of M. Thompson). This formula was applied to Stevens Creek and all other existing dealers during the relevant time. Stipulation of Facts, Jury Instruction No. 13.

         For Fremont, a new dealership without a prior year's track record, no actual sales data was available. Chrysler allowed Fremont to participate in the incentive program by developing sales objectives generally based on Fremont's “planning potential, ” or projected sales. Id. at 449:10-25 (testimony of M. Thompson). That formula was in place for 6 months, and then replaced with Fremont's actual prior sales data. Id. at 458:7-14 (testimony of M. Thompson). Stevens Creek claimed that it was entitled to a modified sales objective because Fremont would take sales away from it since the two dealers were 14 miles apart and Stevens Creek's prior year's sales data reflected high volume absent competition from Fremont. Id. at 199:2-25, 200:1-7, ECF 345 (testimony of M. Zaheri).

         B. The Robinson-Patman Act

         Section 2, “when originally enacted as part of the Clayton Act in 1914, was born of a desire by Congress to curb the use by financially powerful corporations of localized price-cutting tactics which had gravely impaired the competitive position of other sellers.” FTC v. Anheuser-Busch, Inc., 363 U.S. 536, 543 & n.6 (1960) (citations omitted). By enacting the Robinson-Patman Act, “Congress sought to target the perceived harm to competition occasioned by powerful buyers, rather than sellers.” Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 175 (2006). The Act provides, in relevant part:

It shall be 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 or tend to create a monopoly in any line of commerce, 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 . . . .

15 U.S.C. § 13(a). Thus, in order to establish a violation of the RPA, a plaintiff has the burden of proving: (1) sales were made in interstate commerce; (2) the product sold was of the same grade and quality as that sold to other buyers; (3) the seller discriminated in price between the two buyers; and (4) that the discrimination had a prohibited effect on competition. See generally Volvo Trucks, 546 U.S. 164; Gen. Auto Parts Co. v. Genuine Parts Co., No. CIV 04-379, 2007 WL 704121, at *3 (D. Idaho Mar. 5, 2007) (citing 15 U.S.C. § 13(a)). The Supreme Court has explained “that 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.” Volvo Trucks, 546 U.S. at 176 (citing Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 220 (1993)) (internal quotation marks omitted).

         At issue here is the judicially created doctrine of “functional availability.” “According to this court-created rule, the plaintiff in a Robinson-Patman Act suit cannot recover damages for lower prices paid by its competitors to the defendant if those same prices were available to the plaintiff from a practical standpoint and on equal terms with its competitors.” See Smith Wholesale Co., Inc. v. R.J. Reynolds Tobacco Co., 477 F.3d 854, 866 (6th Cir. 2007) (citation and internal quotation marks omitted); see also Gen. Auto Parts, 2007 WL 704121, at *3.

         C. The Trial and This Motion

         On September 26, 2016, a jury was empaneled, and the trial proceeded for 7 days. ECF 315, 316, 318, 320, 324, 325, 328, 330. On October 13, 2016, after deliberating for two days, the jury returned a verdict. ECF 330. The jury found that although Stevens Creek had proved by a preponderance of the evidence that (1) the vehicle sales from Chrysler that were being compared were of like grade and quality and (2) the sales from Chrysler that were being compared occurred at about the same time, Stevens Creek did not prove price discrimination by a preponderance of the evidence. Id. Accordingly, the jury returned a verdict for Defendant.

         On November 8, 2016, Stevens Creek filed a motion for a new trial. Mot., ECF 334. Plaintiff challenges one jury instruction and the related verdict form question. Id. at 3. A hearing on the motion was held on January 19, 2017, and the motion was taken under submission. For the reasons stated herein, Stevens Creek's motion is DENIED.


         Federal Rule of Civil Procedure 59(a)(1)(A) provides that, after a jury trial, a court may grant a new trial “for any reason for which a new trial has heretofore been granted in an action at law in federal court.” Such reasons may include a “verdict [that] is contrary to the clear weight of the evidence, ” a verdict “based upon false or perjurious evidence, ” or “to prevent a miscarriage of justice.” Passantino v. Johnson & Johnson Consumer Prods., Inc., 212 F.3d 493, 510 n.15 (9th Cir. 2000) (citation omitted). A court may also grant a new trial if it has given “erroneous jury instructions” or failed “to give adequate instructions.” Murphy v. City of Long Beach, 914 F.2d 183, 187 (9th Cir. 1990) (citations omitted). To warrant a new trial, the movant must show that there was instructional error and that such error was prejudicial. See Tritchler v. Cnty. of Lake, 358 F.3d 1150, 1154 (9th Cir. 2004) (finding that “harmless errors do not require reversal”). In evaluating whether a particular jury instruction was erroneous, the court must consider the jury instructions as a whole, and whether they “fairly and adequately cover the issues presented, correctly state the law, and are not misleading.” Duran v. City of Maywood, 221 F.3d 1127, 1130 (9th Cir. 2000) (citation and internal quotation marks omitted).


         Plaintiff provides three grounds upon which it argues it is entitled to a new trial. First, Plaintiff argues that Jury Instruction 23 and Verdict Form Question No. 3 improperly stated the law regarding the burden of establishing functional availability by assigning the full burden of proof on that issue to Stevens Creek. Mot. 3. Second, Stevens Creek asserts that Jury Instruction 23 improperly stated the law regarding the elements of functional availability. Id. at 6. Finally, Stevens Creek contends that Jury Instruction 23 and Verdict Form Question No. 3 were confusing because they “toggl[ed] between the concepts ...

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