Felder's Collision Parts, Inc. v. General Motors Company et al

Filing 61

RULING: The Defendants' 54 Motion to Dismiss is GRANTED. All of the claims contained in the 50 Amended Complaint are DISMISSED. The 57 and 60 Motions for Leave as amicus curiae are DISMISSED AS MOOT. Signed by Judge James J. Brady on 4/23/2014. (SMG)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
FELDER’S COLLISION PARTS, INC.
CIVIL ACTION
VERSUS
NO. 12-646-JJB-SCR
GENERAL MOTORS COMPANY ET AL
RULING ON DEFENDANT’S MOTION TO DISMISS FIRST AMENDED AND
SUPPLEMENTAL COMPLAINT
This matter is before the Court on a Motion (doc. 54) to Dismiss First Amended and
Supplemental Complaint brought by Defendants, General Motors LLC (“GM”), and All Star
Advertising Agency, Inc., All Star Chevrolet North, L.L.C., and All Star Chevrolet, Inc.
(collectively referred to herein as “All Star”).

Plaintiff, Felder’s Collision Parts, Inc.

(“Felder’s”), has filed an opposition (doc. 56), to which the Defendants have filed a reply (doc.
59). Oral argument is unnecessary. The Court’s jurisdiction exists pursuant to 28 U.S.C. § 1331.
For the reasons stated herein, the Defendants’ Motion (doc. 54) is GRANTED.
I.

Background
Felder’s has brought this action pursuant to several federal and state antitrust statutes as

well as other Louisiana state laws. Specifically, Felder’s has brought claims pursuant to Sections
1 and 2 of the Sherman Act, 15 U.S.C. §§ 1,2, the Louisiana Unfair Trade Practices and
Consumer Protection Act (“LUTPA”), La. Rev. Stat. § 51:1401, et seq., and several other
Louisiana revised statutes, La. R.S. §§ 51:122, 123, 124, 137, and 422. Additionally, Felder’s
contends that GM, All Star, and John Doe Defendants 1-25 (“Doe Defendants”) should be held
jointly and severally liable for conspiring to aforementioned violations under La. Civ. Code art.
2324.

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The facts of this case have been detailed in a previous ruling and therefore will be
summarily addressed herein. The suit arises out of a price incentive program called “Bump the
Competition” in which distributors like All Star can sell GM’s original equipment manufacturer
parts (“OEM parts”) at a deep discount below its costs to consumers and then apply to GM for a
rebate to account for the lost cost. The distributors are also entitled to receive a lost profit.
Felder’s alleges that this program is only available for OEM parts that have an aftermarket
equivalent. Felder’s further alleges that the program is nothing more than a predatory pricing
scheme intended to drive aftermarket part dealers out of the market in an effort to obtain
monopoly power.
Defendants filed a Motion (doc. 22) to Dismiss Felder’s complaint arguing that the
claims were insufficiently pled. Upon reviewing the complaint and the memorandum filed in
both support and opposition to the motion to dismiss, the Court agreed with the Defendants but
granted Felder’s leave to cure the complaint’s insufficiently pled claims (doc. 32). Though there
were many deficiencies in Felder’s complaint, the Court found that the most glaring were that the
complaint failed to allege facts to adequately define the proper geographic market, demonstrate
All Star’s market power in the relevant market, and demonstrate that All Star participated in
predatory below-cost pricing. The Court set forth a detailed roadmap, firmly rooted in federal
antitrust jurisprudence, to guide Felder’s as it cured its insufficiently pled claims. Further,
Felder’s was allowed to conduct discovery to unearth facts to support its claims before it was
required to file its Amended and Supplemental Complaint (“Amended Complaint”) (doc. 47).
All Star now argues by way of the motion to dismiss presently before the Court, that
Felder’s has failed to heed the Court’s instruction and therefore failed to sufficiently plead its
claims. In response, Felder’s argues that it has provided the required factual matter to support

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each and every one of its claims. Thus, its Amended Complaint is sufficient to withstand
Felder’s motion to dismiss.

After considering the parties’ arguments and reviewing the

Amended Complaint, the Court is ready to rule.
II.

Discussion
A. Rule 12(b)(6) Standard
Federal Rule of Civil Procedure 12(b)(6) provides for dismissal of a complaint for

“failure to state a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6). When
reviewing the complaint, a court must accept all well-pleaded factual allegations as true. C.C.
Port. Ltd. v. Davis-Penn Mortg. Co., 61 F.3d 288, 289 (5th Cir. 1995). In order to survive a
motion to dismiss, the complaint must plead “enough facts to state a claim to relief that is
plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A court need
not determine at this preliminary stage whether the plaintiff’s claims will ultimately succeed on
the merits. Id. at 556. Instead, a court must identify the factual allegations entitled to the
presumption of truth and determine whether they state a plausible claim for relief. Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009).
B. Federal Antitrust Claims
Felder’s would like this Court to believe that at the heart of this case “is a fundamental
legal question—whether the All Star Defendants’ practice of selling parts to collision centers and
body shops at a price below the cost paid to GM for a particular part constitutes predatory
pricing.” Opposition, Doc. 56, at 13. However, what is fundamental to any antitrust analysis is a
proper definition of the relevant market and a defendant’s power to detrimentally effect
competition therein.

Indeed, this inquiry into both market definition and market power is

fundamental to properly evaluating the plausibility of a predatory pricing scheme. See Ruling,

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Doc. 32, at 17 (recognizing that “market power and market definition are essential to the analysis
of whether Felder’s could be (or is being) driven out of the market due to Defendants’
conduct.”); see also A.A. Poultry Farms, Inc. v. Rose Acre Farms, Inc., 881 F.2d 1369 (7th Cir.
1989) (“Only if market structure makes recoupment feasible need a court inquire into the relation
between price and cost.”). For this reason, the Court will first determine whether Felder’s has
properly pled the relevant market definition before delving into Felder’s substantive antitrust
claims.
i.

Market Definition
An adequate definition of the relevant market is critical because it “provides the

framework against which economic power can be measured.” Jayco Sys., Inc. v. Savin Bus.
Machines Corp., 777 F.2d 306, 319 (5th Cir. 1985).

The relevant market is determined by

analyzing the relevant geographic and product markets.

Apani Sw., Inc. v. Coca-Cola

Enterprises, Inc., 300 F.3d 620, 626-28 (5th Cir. 2002). The Fifth Circuit has recognized that a
trial court may dismiss a § 2 claim for a plaintiff’s failure to define the relevant market. Jayco
Sys., 777 F.2d at 319; see also Apani Sw., 300 F.3d at 628 (explaining that deficient market
definition may be grounds to grant a motion to dismiss a § 1 claim).1 The complaint must
account for cross-elasticity of demand, i.e., whether a product is “reasonably interchangeable by
consumers for the same purposes.” PSKS, Inc. v. Leegin Creative Leather Products, Inc., 615
F.3d 412, 417 (5th Cir. 2010). A plaintiff must offer evidence demonstrating where consumers
currently purchase the product and where alternative products or alternative sources of the
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According to the Fifth Circuit,
Whether a relevant market has been identified is usually a question of fact; however, in some
circumstances, the issue may be determined as a matter of law. Where the plaintiff fails to define
its proposed relevant market with reference to the rule of reasonable interchangeability and crosselasticity of demand, or alleges a proposed relevant market that clearly does not encompass all
interchangeable substitute products even when all factual inferences are granted in plaintiff's
favor, the relevant market is legally insufficient, and a motion to dismiss may be granted.
Apani, 300 F.3d at 628 (internal quotations and citations omitted).

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product could be found if a competitor raises prices. Doctor's Hosp. v. Southeast Med. Alliance,
123 F.3d 301, 311 (5th Cir. 1997); see also Apani, 300 F.3d at 628 (explaining that geographic
market “must correspond to the commercial realities of the industry and be economically
significant.”).
As it pertains to the relevant product market, the Court previously found that the
allegations found in the complaint were sufficient to withstand a motion to dismiss but cautioned
that Felder’s failure to specify the relevant market(s) was something that needed to be corrected
in the Amended Complaint. Ruling, Doc. 32, at 11. Felder’s has done this by defining the
market as one for “automobile collision parts for which there is an aftermarket alternative and
that are compatible with GM vehicles.” Doc. 50, at ¶ 10. The issue is whether Felder’s has
alleged enough facts to sufficiently define the relevant geographic market.
The Court found Felder’s definition of the relevant geographic market to be insufficiently
pled. Specifically, the Court found that “Felder’s does not address whether consumers could
practicably turn to other geographic areas for parts, nor does Felder’s specify whether competing
dealers from outside areas could come into the market.” Ruling, Doc. 32, at 11. To cure this
deficiency, the Court instructed Felder’s to “allege further detail regarding the number of
competitors in the geographic area, the area of effective competition, whether buyers can
practicably turn to other sellers for supplies, and whether other dealers can reasonably move into
the market to compete.” Id. at 12.
In its motion to dismiss, All Star argues that Felder’s has failed to follow the Court’s
instructions. All Star acknowledges that Felder’s has included information listing the counties in
Louisiana and Mississippi in which both it and All Star compete. Nevertheless, All Star avers
that Felder’s Amended Complaint remains deficient because Felder’s neither mentions whether

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body shops in these counties obtain collision parts from dealers outside of the geographic area,
nor whether outside dealers in other parts of the country could move into the market to compete.
Furthermore, Felder’s fails to mention whether it operates in areas outside of the proposed
geographic market. Felder’s responds by arguing that it has pled a sufficient geographic market.
In addition to highlighting the counties listed in which both it and All Star compete, Felder’s
points to the facts it added concerning competitors who have been driven out of the market,
competitors who have not entered into the market to compete, and discussed how difficult it is to
enter into the proposed market. All Star replies by arguing that Felder’s is merely attempting to
persuade the Court to make impermissible inferences about the definition of the geographic
market without alleging the requisite facts. Additionally, All Star argues that Felder’s proposed
geographic market is implausible as a matter of law because the Amended Complaint establishes,
by including a national dealer of after-market parts, that the geographic market is larger than that
demonstrated by the listed counties.
After reviewing the Amended Complaint, the Court disagrees with All Star’s contention
that Felder’s has completely failed to follow the Court’s instructions. Indeed, Felder’s has
included information about a competitor in the proposed market in its discussion of Keystone
Automotive Industries, Inc. (“Keystone”), the country’s largest after-market parts distributor.
Doc. 50, at ¶ 54. This new allegation also demonstrates whether and where buyers can turn to
other sellers for supplies. Finally, Felder’s included allegations to support an inference that it is
difficult for other dealers to reasonably move into the proposed market to compete. Id. at ¶ 4850. Nevertheless, the Court agrees with the Defendant’s ultimate contention that Felder’s has
failed to adequately define the geographic market. Critically, Felder’s own allegations contradict
its proposed geographic market.

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First, Felder’s amendment includes a national seller of after-market parts as a competitor
in the proposed geographic market. While it does not naturally follow that the inclusion of a
national seller leads to the conclusion that the geographic market should be national in scope, it
does lead to the plausible inference that the actual geographic scope of competition is larger than
that which is proposed in the Amended Complaint. It further leads to more questions as to the
existence of other national or regional sellers, which may not be “the country’s largest
aftermarket parts distributor,” but nonetheless are sellers to which buyers in the proposed market
could reasonably turn.

Second, Felder’s alleges that a direct competitor operating in the

proposed geographic market was forced out of the market by the alleged predatory pricing
scheme. Doc. 50, at ¶ 53. The fact that this direct competitor is located over 100 miles away
from any of the counties also included in the proposed geographic market also leads to the
plausible inference that the geographic market is larger than presently defined in the Amended
Complaint. Therefore, the Court must conclude that the proposed geographic market is too
narrowly drawn and thus insufficiently pled. Wampler v. Southwestern Bell Telephone Co., 597
F.3d 741 (5th Cir. 2010) (affirming the dismissal of a plaintiff’s claim when the proposed
geographic market was too narrowly defined to represent a plausible geographic market).
In sum, the Court finds that Felder’s has failed to sufficiently define the effective area of
competition because the Amended Complaint’s allegations belie its own alleged proposed
geographic market. For this reason, Felder’s has failed to adequately plead its antitrust claims
because they are all dependent upon a sufficient definition of the relevant market. See Apani, 300
F.3d at 632-33 (affirming the district court’s dismissal of all of the plaintiff’s antitrust claims for

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failure to adequately define the geographic market). Accordingly, Felder’s federal antitrust
claims are dismissed.2
i.

Predatory Pricing

Though it has found that the predatory pricing claim has been insufficiently pled due to
Felder’s failure to properly allege the geographic market, the Court will nevertheless briefly
address this claim. This is due primarily in part to Felder’s request for reconsideration of the
Court’s previous ruling in which the Court held that whether the dealers engaged in below-cost
pricing should be determined at the time that the dealers were reimbursed.
Rule 54(b) of the Federal Rules of Civil Procedure provides that:
[A]ny order or other decision, however designated, that adjudicates fewer than all
the claims or the rights and liabilities of fewer than all the parties does not end the
action as to any of the claims or parties and may be revised at any time before the
entry of a judgment adjudicating all the claims and all the parties’ rights and
liabilities.
FED. R. CIV. P. 54(b). A Court retains jurisdiction over all claims in a suit and may alter its
earlier decisions until a final judgment has been issued. Livingston Downs Racing Ass’n v.
Jefferson Downs Corp., 259 F. Supp. 2d 471, 475 (M.D. La. 2002). “District courts have
considerable discretion in deciding whether to reconsider an interlocutory order.” Keys v. Dean
Morris, LLP, 2013 WL 2387768, at *1 (M.D. La. May 30, 2013).

“Although courts are

concerned with principles of finality and judicial economy, ‘the ultimate responsibility of the
federal courts, at all levels, is to reach the correct judgment under law.’” Id. (quoting Georgia
Pacific, LLC v. Heavy Machines, Inc., 2010 WL 2026670, at *2 (M.D. La. May 20, 2010)).

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The Court’s findings as to the sufficiency of the federal antitrust claims apply with equal force to Felder’s claims
brought pursuant to state law antitrust statutes. Because the state statutes track the Sherman Act almost verbatim,
“Louisiana courts have turned to the federal jurisprudence analyzing those parallel federal provisions for guidance.”
Southern Tool & Supply, Inc. v. Beerman Precision, Inc., 862 So.2d 271, 278 (La. App. 4 Cir. 11/26/03). Having
found that the federal antitrust allegations are insufficient as pled, the Court must also find that the alleged violations
of state law are likewise insufficiently pled.

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Nevertheless, “rulings should only be reconsidered where the moving party has presented
substantial reasons for reconsideration.” Louisiana v. Sprint Communications Co., 899 F. Supp.
282, 284 (M.D. La. 1995).
After review, the Court does not find substantial grounds for reconsideration pursuant to
Rule 54(b) of the Federal Rules of Civil Procedure. Felder’s has not presented “substantial
reasons for reconsideration.” Instead, Felder’s attempts to persuade this Court that the case law
that it has already thoroughly evaluated and found to apply to the facts of this case is unavailing.
Critically, Felder’s attempts to do so without citing a single case, law review article, advisory
opinion, or any administrative guidance to support its position.3 Accordingly, Felder’s request
for reconsideration is denied.
With its holding in place, the Court turns to whether Felder’s has amended its complaint
to allege below-cost pricing in line with Fifth Circuit precedent. The Court previously surmised
that Felder’s had failed to originally do so as a result of a lack of information related to the
Defendants’ costs and profits, or alternatively, the use of an incorrect formula to calculate
average variable costs. The imbalance of information was cured when the Defendants were
compelled by this Court to turn over relevant documents.

After reviewing the Amended

Complaint, the Court finds that Felder’s has failed to amend to allege below-cost pricing
pursuant to the Fifth Circuit standard as instructed by the Court in its previous ruling. Therefore,
even if Felder’s had sufficiently pled the relevant geographic market, it would still have failed to
properly plead a predatory pricing scheme.
C. LUTPA

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The Automotive Body Parts Association has filed a Motion for Leave to File an Amicus Brief in Support of
Plaintiffs (doc. 57). The Court has in its broad discretion elected not to grant leave. The amicus brief deals
primarily with the issue of monopoly leveraging which is not an issue that is before the Court. Accordingly, the
Motion (doc. 57) is denied.

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The Court previously found that Felder’s had failed to sufficiently plead a claim under
LUTPA but granted Felder’s leave to amend its claim. Ruling, Doc. 32, at 31. The Court agreed
with the Defendants’ reading of Van Hoose v. Gravois, 70 So.3d 1017, 1024 (La. App. 1 Cir.
7/7/11) and found that Felder’s failure to sufficiently allege an antitrust violation prevented it
from being able to sufficiently plead a violation of LUTPA. Id. The Court also found that
Felder’s failed to specifically allege that the Defendants committed fraud, misrepresentation,
deception, or unethical conduct. Id. Instead, Felder’s asserted that the Defendants engaged in an
effort to sell repair parts below cost, thereby committing an unfair or deceptive practice as
contemplated by LUTPA. Id. This the Court found to be “nothing more than a naked assertion
followed by a recitation of the applicable law.” Neither a naked assertion nor a mere recitation is
entitled to the presumption of truth. Ashcroft, 556 U.S. at 678. Given that Felder’s has again
failed to sufficiently plead an antitrust violation and failed to amend its LUTPA claim to
specifically allege that the Defendants committed fraud, misrepresentation, deception, or
unethical conduct, the Court has no choice but to find that Felder’s LUTPA claim must be
dismissed.
D. Solidary Liability Under La. Civ. Code art. 2324
La. Civ. Code art. 2324 provides the basis for solidary liability under Louisiana law. The
article provides in pertinent part: “He who conspires with another person to commit an
intentional and willful act is answerable, in solido, with that person for the damage caused by
that act.” Id. Courts have clarified that Art. 2324 “does not recognize an independent cause of
action for civil conspiracy.” Rhyce v. Martin, 173 F. Supp. 2d 521, 535 (E.D. La. 2001). Rather,
the actionable element is the wrong perpetrated by the actors involved in the conspiracy. Id.

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Stated differently, the conspiracy is the mechanism that must exist for a plaintiff to recover under
Art. 2324. The mere existence of a conspiracy, however, is not a basis for liability.
The Court previously found that Felder’s failure to plead the existence of a conspiracy
made its claim for solidary liability deficient. Ruling, Doc. 32, at 32. Though Felder’s has
amended its complaint to include allegations concerning the existence of a conspiracy, the Court
has found that these allegations are insufficiently pled and therefore dismissed. Accordingly,
Felder’s claim for solidary liability is dismissed.

III.

Conclusion
For the reasons stated herein, the Defendants’ Motion (doc. 54) to Dismiss is

GRANTED. Accordingly, all of the claims contained in the Amended Complaint (doc. 50) are
DISMISSED.
The Motions (docs. 57 & 60) filed by the Automotive Body Parts Association as amicus
curiae are DISMISSED AS MOOT.

Signed in Baton Rouge, Louisiana, on April 23, 2014.





JUDGE JAMES J. BRADY
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

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