Alerts and Updates
Dealer Groups Warn Supreme Court Against Rollback of Price Discrimination Law in Reeder-Simco Case
September 13, 2005
"Don't eliminate existing protection for dealers from price discrimination by manufacturers." That was the fundamental message of an amicus curiae, or "friend of the court," brief the Dealer Services Group of Duane Morris LLP filed recently with the United States Supreme Court on behalf of several dealer groups from a variety of industries. The cooperative effort involved organizations such as the North American Equipment Dealers Association, the Service Station Dealers of America and Allied Trades, the American Booksellers Association and several health product distributors.
The brief was filed with the Supreme Court in a very important case for truck dealers, Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc. In that case, an Arkansas-based Volvo truck dealer sued Volvo Trucks North America, Inc., claiming that Volvo had violated a federal law called the Robinson-Patman Act ("RPA") by giving other Volvo dealers more favorable discounts on new trucks than Volvo offered to the plaintiff dealer. The RPA forbids certain kinds of price discrimination, that is, the practice of charging different buyers different prices for the same product.
At trial, the dealer argued that he was targeted for elimination as part of a plan by the manufacturer to reduce the number of dealerships. A jury returned a verdict in favor of the dealer, Reeder-Simco, which was awarded damages of roughly $5 million. A federal appeals court affirmed the jury verdict after an appeal by Volvo. Volvo then asked the Supreme Court to consider the case. The Supreme Court, which has total discretion as to what cases it hears, agreed to do so - a notable event because it has been more than a decade since the Supreme Court last considered a case involving the RPA.
In its Supreme Court brief, Volvo argued that it should be permitted to engage in price discrimination among its dealers, based on the nature of the heavy truck business, where customers frequently obtain bids from different dealers before placing an order. Volvo's position is that the RPA does not apply to the practice of offering discounts on trucks that are built-to-order. A number of other truck manufacturers and other organizations filed briefs supporting Volvo. The federal government agencies responsible for enforcement of the federal antitrust laws also filed a brief supporting Volvo's position.
Given the importance of the case to dealers across the country, the Dealer Services Group at Duane Morris agreed to prepare and file an amicus curiae brief with the Supreme Court in support of the dealer. The brief argued that the Supreme Court should not accept Volvo's invitation to roll back the existing restrictions against price discrimination by manufacturers. It pointed out that if the Court were to adopt Volvo's arguments, manufacturers "would be largely or entirely free to blatantly discriminate" against dealers in any industry where buyers' products are built-to-order. The result would be that dealers like Reeder-Simco "would survive only at the pleasure of the supplier." Manufacturers "could use price discrimination to 'punish' purchasers who engaged in price discounting and other pro-consumer practices" and, in turn, competition - and consumers - would suffer.
The brief also reminded the Court that "[s]ociety benefits from strong, independent distributors and retailers" and that "[s]uch businesses are the backbone of the American economy." It concluded that it would be fundamentally inconsistent with the principles on which the United States was founded to deny small businesses an "opportunity to compete on a level playing field with their larger brethren, in order that the best competitor might prevail, not merely the largest."
The Supreme Court is scheduled to hear oral argument in the Reeder-Simco case on October 31, 2005, and a decision is expected in the late winter or early spring of next year.
A copy of the amicus curiae brief filed by the dealer group in the Reeder-Simco case can be found at http://www.duanemorris.com/site/static/dealeramicus.pdf.
For Further Information
If you have any questions about this Alert, please contact Wayne A. Mack or J. Manly Parks or the lawyer in the firm with whom you are regularly in contact.
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