July 5, 2022

Volume XII, Number 186

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Sixth Circuit Uses Some Old Supreme Court Cases To Give Robinson-Patman Act New Life

In Williams v. Duke Energy International, Inc., No. 10-3604 (6th Cir. June 4, 2012), the Sixth Circuit rejected a Rule 12(b)(6) challenge to a Robinson-Patman claim against Duke Energy for discriminatory pricing of retail electricity. The Robinson-Patman claim was based upon substantial side rebates Duke Energy gave to certain large customers, including GM, which were not given to Ohio retail customers such as the plaintiffs. The Sixth Circuit rejected Duke Energy’s various substantive attacks on the Robinson-Patman claim raised in its Fed. R. Civ. P. 12(b)(6) motion to dismiss.

The Sixth Circuit opinion is somewhat surprising given the largely negative treatment of the 76-year-old price discrimination law by federal courts in recent years. This 12(b)(6) holding is also in contrast to a recent trend of federal court rulings finding that plaintiffs had not adequately pled a viable Robinson-Patman claim under the Supreme Court’s Twombly-Iqbal line of cases regarding federal court 12(b)(6) pleading standards. Given the Supreme Court’s continued interest in the Robinson-Patman Act—sometimes called the “black sheep” of antitrust—this recent Sixth Circuit case may well be headed to the Supreme Court.

In reaching its holding, the Court applied the following reasoning:

First, the Court rejected a challenge to its jurisdiction over the Robinson-Patman claim under the filed rate doctrine. Relying upon the Sixth Circuit’s 2004 decision in MCI Telecomms. Corp. v. Ohio Bell Tel. Co., 376 F.3d 539 (6th Cir. 2004), and the First Circuit decision in Town of Norwood, Mass. v. New England Power Co., 202 F.3d 408 (1st Cir. 2000), the Court determined that the plaintiffs were not challenging the filed rates—but rather Duke Energy’s side agreements for rebates that were not approved or filed with the Public Utilities Commission of Ohio.

Second, the Court held that electricity is a “commodity” under the Robinson-Patman Act. Such a finding was crucial because the Act is only applicable to commodities, not services. The Court pointed out that in a 1993 decision, the Sixth Circuit indicated support for this proposition. The Court rejected the precedent of a 1979 Delaware District Court decision holding that electricity was not a commodity—especially in light of rulings by other courts that electricity is a commodity, because it is produced, sold, stored in small quantities, transmitted, and distributed in discrete quantities.

Third, the Court rejected the argument that the Act does not apply because the plaintiffs and the favored purchasers did not specifically compete for resale of electricity. Relying upon the seminal 1948 Supreme Court decision in FTC v. Morton Salt Co., 334 U.S. 37 (1948), the Court held that plaintiffs adequately alleged competitive injury when the competitive opportunities of certain merchants were injured because they had to pay substantially more for their goods than their competitors for other goods and services.

Fourth, the Court rejected the argument that plaintiffs failed to adequately allege competitive injury—citing the Supreme Court’s 1945 decision in Corn Prods. Refining Co. v. FTC, 324 U.S. 726 (1945)—stating that the Act does not require that the discrimination must, in fact, have harmed competition, but only that there is a reasonable possibility that competition has been harmed.

Fifth, the Court rejected the argument that plaintiffs did not allege the identity of the favored purchase or the effect of the cost of electricity on sales or profit margins. Because the favoritism occurred through side agreements and no discovery had taken place, plaintiffs had pled enough to proceed with the Robinson-Patman claim.

Like Mark Twain’s famous adage, reports of the death of the Robinson-Patman Act remain premature. While surviving a motion to dismiss does not preordain a merits verdict (even if the Supreme Court does not weigh in), at a minimum, this appellate opinion strongly suggests that businesses need to continue to include Robinson-Patman Act issues in their business risk assessments of pricing strategies.

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume II, Number 184
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About this Author

Nada Shamonki, Mintz Levin Law Firm, Los Angeles, Labor and Employment, Real Estate and Litigation Law Attorney
Of Counsel

Nada has extensive experience representing clients in all stages of state and federal commercial litigation, as well as with alternative dispute resolution, including mediation and arbitration. She manages disputes from inception through appeal and specializes in complex commercial problem solving and risk assessment and mitigation with a focus on achieving effective and efficient resolutions to complex legal and business problems.

Nada’s practice encompasses all aspects of complex commercial litigation and counseling, including real estate...

310-586-3208
Bruce Sokler, Mintz Levin Law Firm, Washington DC, Health Care, Antitrust and Litigation Attorney
Member

Bruce is Chair of the Antitrust Section and in his over 30 years in private practice, he has developed extensive experience in both antitrust and communications regulation, including associated First Amendment and copyright law matters

In the antitrust area, Bruce’s practice includes antitrust counseling and representation in connection with federal and state governmental matters, as well as private antitrust litigation. He counsels and has represented Fortune 100 companies, not-for-profits, start-up entities, and domestic and international joint ventures. Bruce has been involved in...

202-434-7303
Robert G. Kidwell Member Mintz DC Antitrust Health Care Enforcement & Investigations Communications Complex Commercial Litigation
Member

Rob’s Washington, DC-based competition and trade regulation practice involves counseling on the regulatory implications of business strategies, regulatory matters, policymaking, and litigation. He defends clients in complex litigation and in merger and regulatory reviews by the US Department of Justice, the Federal Trade Commission, the Committee on Foreign Investment in the US, and the Federal Communications Commission. Rob’s clients include media and telecommunications companies, health systems and providers, national retailers, trade associations, and life sciences and technology...

202-661-8752
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