MARJAM SUPPLY COMPANY v. FIRESTONE BUILDING PRODUCTS COMPANY, LLC et al
Filing
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OPINION. Signed by Judge William J. Martini on 11/30/12. (gh, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Civ. No. 11-7119 (WJM)
MARJAM SUPPLY COMPANY,
Plaintiff,
OPINION
v.
FIRESTONE BUILDING PRODUCTS
COMPANY, LLC, FIRESTONE
DIVERSIFIED PRODUCTS, LLC, ALLIED
BUILDING PRODUCTS CORP.,
PERFORMANCE ROOFING ASSOCIATES,
INC., ROOFING SPECIALTIES, INC., and
CHARLES “CHUCK” GOLDEN
Defendants.
WILLIAM J. MARTINI, U.S.D.J.:
This matter comes before the Court on three motions to dismiss under Federal
Rule of Civil Procedure 12(b)(6) filed by: (1) Defendants Firestone Building Products
Company and Firestone Diversified Products, LLC (hereinafter “Firestone”); (2) Allied
Building Products Corp. (“Allied”) and Charles Golden; and, (3) Defendants
Performance Roofing Associates, Inc. (“Performance”) and Roofing Specialties, Inc.
(“RSI”). Plaintiff Marjam Supply Company (“Marjam”) opposes the motions. For the
reasons set forth below, the relief sought by Defendants will be GRANTED in part and
DENIED in part.
1
I.
FACTUAL AND PROCEDURAL BACKGROUND 1
Firestone is the leading manufacturer of commercial roofing systems and related
roofing products (“Firestone Products”) within the United States. (Compl. ¶ 16.)
Firestone markets and sells its Firestone Products primarily through: (1) independently
owned distributors (“Distributors”), such as Plaintiff Marjam and Defendant Allied; and
(2) independent manufacturer representatives (“Manufacturer Representatives”) including
Defendants Performance and RSI. (Id. at ¶ 18.)
Distributors v. Manufacturer Representatives
Based on the pleadings, it appears that Manufacturer Representatives market
Firestone Products to members of the construction industry, e.g., architects and
contractors; Distributors, on the other hand, sell Firestone Products to third parties. (Id.
at ¶¶ 18, 23.) It is clear that Distributors and Manufacturer Representatives are
contractually assigned to specific and oftentimes overlapping geographic areas in which
to market and sell Firestone Products. (Id. at ¶¶ 18, 22, 26.) However, as pled, it is
unclear what the nature of the relationship is between Distributors and Manufacturer
Representatives as it relates to the marketing and sales of Firestone Products. 2
In 1995, Marjam became one of Firestone’s Distributors, id. at ¶ 55, which the
Court infers to mean that at that time, Marjam first entered into a contractual relationship
with Firestone to sell Firestone Products to third parties in certain specified geographical
territories. Defendant Allied and non-parties ABC Supply Co., Inc. and its subsidiary,
1
As this is a 12(b)(6) motion to dismiss, the following version of events assumes Plaintiff’s allegations in the
Complaint are true.
2
The Court notes that Marjam has pled that it was required to supply Performance and RSI with marketing
information and customer lists. (Compl. ¶ 60.)
2
Bradco Supply Corp., are also Firestone Distributors and directly compete with Marjam
for the same business in various sales territories. (Id. at ¶¶ 34, 44.)
Beginning in August 1999, Marjam became a Distributor in a sales territory which
included Philadelphia. (Id. at ¶ 56.) Allied became Marjam’s direct competitor in the
Philadelphia market on November 1, 2001. (Id. at ¶ ¶ 34, 36, 51.)
In spite of competition from direct competitors, from 1999 through 2009,
Marjam’s sales of Firestone Products “grew exponentially.” (Id. at ¶ 66.) However, in
2010 and 2011, Marjam’s sales of Firestone Products suddenly plummeted. (Id.)
Marjam attributes its decline in sales to certain actions taken by Firestone.
Specifically, Marjam alleges that beginning in 2010, Firestone sold identical
Firestone Products to Allied, ABC, and Bradco for significantly less than the prices
which Firestone made available to Marjam. (Id. at ¶¶ 72-73.) Marjam further alleges
that in that same time period, Firestone offered Marjam’s direct competitors – but not
Marjam – certain rebates and price discounts, as well as secret financing and extended
payment terms. (Id. at ¶¶ 74-79, 80.) Specific examples include: Firestone selling
identical quantities of APP160 Firestone roofing products to Marjam for $1.25 more per
roll than it did to one of Marjam’s direct competitors; a “March 2010 Incentive Stocking
Program”; and, special buy programs and rebates. (Id. at ¶ 80.) On October 25, 2011,
Firestone terminated its Distributor Agreement with Marjam, effective as of December
31, 2011.
3
Marjam claims that as a result of Firestone’s actions, Marjam’s business has
suffered due to lost sales, profits, and customers. Moreover, Allied is now the only
significant Distributor of Firestone Products within Philadelphia. (Id. at ¶¶ 70, 83.)
Marjam asserts that Firestone’s actions were instigated and promoted by
Performance, RSI, Allied, ABC, and Bradco, who all viewed Marjam as a “price cutter.”
(Id. at ¶¶ 68-69.) However, Marjam does not allege any specific instances showing how
any of those parties instigated, promoted, or were in any other way involved in
Firestone’s decisions to offer less favorable sales terms to Marjam or to terminate
Marjam’s Distributor Agreement. 3
Charles “Chuck” Golden
Defendant Charles Golden is a former Marjam employee. Marjam claims that in
the course of that employment, Golden gained access to Marjam’s confidential and
proprietary Firestone Products sales information. Marjam further claims that “Golden
executed an Employment Agreement” under which he agreed that he would not disclose
that information. (Id. at ¶¶ 50-54.)
On April 7, 2011, Golden resigned from Marjam to join Allied. (Id. at ¶ 51.)
Marjam asserts that Golden is now disclosing Marjam’s proprietary information to
Firestone, Allied, Performance, and RSI, in violation of his Employment Agreement.
Marjam further claims that Defendants’ use of that information allowed Firestone to
terminate Marjam’s Distributorship without materially affecting Firestone’s sales of
3
The Court notes that Marjam’s pleading alleges that a Performance employee recognized that former-Marjam
employee “[Charles] Golden’s specific knowledge of Marjam’s Firestone Product customers would assist Firestone
in retaining Marjam’s Firestone [sic] customers when and if Marjam was terminated as a Firestone distributor.”
(Compl. ¶ 54.) However, it is unclear whether that information was ever conveyed to Firestone.
4
Firestone Products. (Id. at ¶ 124.) However, it is unclear how and why Golden shared
that proprietary information with Firestone. Moreover, Marjam does not allege any facts
which suggest that Allied, Performance, or RSI have used Marjam’s proprietary
information to benefit their respective businesses. 4
Marjam’s Complaint
On December 6, 2011, Marjam commenced suit against Defendants. Marjam has
asserted antitrust claims against Firestone, Performance, and RSI for violations of
Sections 13(a) and (d) of the Robinson-Patman Act (the “RPA”), 15 U.S.C. § 13 (Counts
One and Three, respectively), and against Performance, RSI and Allied for violating
Section 13(f) of the RPA (Count Two). Marjam has also asserted a breach of fiduciary
duty claim against Golden and an unfair competition claim against Firestone,
Performance, RSI and Allied (Count Four). In addition, Marjam has asserted a claim
against Golden for breach of his Employment Agreement (Count Five) and a claim
against Firestone, Performance, RSI and Allied for tortuously inducing that breach
(Count Six). 5 In response to Marjam’s pleading, Defendants have filed three separate
12(b)(6) motions to dismiss.
II. DISCUSSION
A. Failure to State a Claim
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint,
in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted.
4
Marjam does set forth specific instances in which it lost customers to non-parties ABC and Bradco after Firestone
terminated Marjam’s Distributorship. (Compl. ¶ 83.)
5
Marjam has voluntarily withdrawn its Breach of the Implied Covenant of Good Faith and Fair Dealing claim
against Firestone (Count Seven). See Marjam’s Opp’n Br. 36, ECF No. 25.
5
The moving party bears the burden of showing that no claim has been stated. Hedges v.
United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under
Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in
the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975);
Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir.
1998).
Although a complaint need not contain detailed factual allegations, “a plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels
and conclusions, and a formulaic recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations
must be sufficient to raise a plaintiff’s right to relief above a speculative level, such that it
is “plausible on its face.” See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc.,
542 F.3d 59, 64 (3d Cir. 2008). A claim has “facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing
Twombly, 550 U.S. at 556).
In considering a motion to dismiss, the court generally relies on the complaint,
attached exhibits, and matters of public record. Sands v. McCormick, 502 F.3d 263 (3d
Cir. 2007). The court may also consider “undisputedly authentic document[s] that a
defendant attaches as an exhibit to a motion to dismiss if the plaintiff’s claims are based
on the [attached] document[s].” Pension Benefit Guar. Corp. v. White Consol. Indus.,
998 F.2d 1192, 1196 (3d Cir.1993).
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B. Analysis
(a)
Marjam’s Robinson-Patman Act Claims
The Robinson-Patman Act (“RPA”) amends Section 2 of the Clayton Antitrust
Act. Palmer News, Inc. v. ARA Services, Inc., 476 F.Supp. 1176, 1181 (D. Kans. 1979).
For purposes of this Opinion, it is sufficient to note that generally speaking, the RPA
prohibits discriminatory pricing of similar goods when such pricing injures competition.
Am. Academic Suppliers, Inc. v. Beckley-Cardy, Inc., 699 F. Supp. 152, 154 (N.D. Ill.
1988). See also Volvo Truck North America, Inc. v. Reeder-Simco GMC, Inc., 546 U.S.
164, 175 (2006) (setting forth the history and purposes of the RPA).
(i) Marjam’s §§ 13 (a) and (d) Claims
In Counts One and Three, Marjam alleges that Firestone, Performance, and RSI
violated RPA §§ 13(a) and (d), respectively. § 13(a) speaks to overt price discrimination,
and states, in pertinent part, that:
“It shall be unlawful for any person engaged in commerce, . . . either directly or
indirectly, 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.” 6
6
RPA price discrimination claims generally fall into three categories: (1) primary line price discrimination, in which
a seller’s price discrimination harms competition with the seller’s competitors; (2) secondary-line price
discrimination, in which a seller’s discrimination impacts competition among the seller’s customers, i.e., the favored
purchasers and disfavored purchasers, and; (3) tertiary-line violations, which occur when the seller’s price
discrimination harms competition between customers of the favored and disfavored purchases who are not direct
competitors. United Magazines Co. v. Murdoch Magazines Distribution, Inc., 353 F. Supp. 2d 433, 447 (S.D.N.Y.
2004). This case raises a claim of secondary-line price discrimination.
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15 U.S.C. § 13(a). See also Volvo Trucks, 546 U.S. at 177 (2006) and Feesers,
Inc. v. Michael Foods, Inc., 498 F.3d 206 (3d Cir. 2007) (setting forth the
elements of a § 13(a) claim).
Furthermore, it should be noted that defendants who do not “control[] the price or
terms of sale that the plaintiff alleges are discriminatory” cannot be liable under § 13(a)
because “[w]ithout such control, a person cannot be said to ‘discriminate in price.’”
United Magazines Co. v. Murdoch Magazines Distribution, Inc., 353 F. Supp. 2d 433,
447 (S.D.N.Y. 2004) aff’d sub nom. United Magazine Co., Inc. v. Curtis Circulation Co.,
279 F. App’x 14 (2d Cir. 2008).
§ 13(d) supplements § 13(a)’s ban on overt price discrimination by prohibiting
sellers from paying for promotional services for some buyers while allowing other buyers
to pay for those services themselves. P. Lorillard Co. v. FTC, 267 F.2d 439, 443 (3d Cir.
1959). Thus, under § 13(d), a supplier cannot “grant advertising or other sales
promotional allowances to one ‘customer’ who resells the supplier’s ‘products or
commodities’ unless the allowances are ‘available on proportionally equal terms to all
other customers competing in the distribution of such products or commodities.’” 7
F.T.C. v. Fred Meyer, Inc., 390 U.S. 341, 343 (1968).
In this case, Marjam alleges the following: that Firestone sold identical products to
Marjam at higher prices than it did to Marjam’s direct competitors; that Firestone offered
promotional allowances and rebates to Marjam’s direct competitors which it did not offer
7
More precisely, 15 U.S.C. § 13(d) states:
“It shall be unlawful for any person engaged in commerce to pay or contract for the payment of anything of value to
or for the benefit of a customer of such person in the course of such commerce as compensation or in consideration
for any services or facilities furnished by or through such customer in connection with the processing, handling,
sale, or offering for sale of any products or commodities manufactured, sold, or offered for sale by such person,
unless such payment or consideration is available on proportionally equal terms to all other customers competing in
the distribution of such products or commodities.”
8
to Marjam; that as a result of Firestone’s behavior, Marjam became unable to compete
with its direct competitors in sales of Firestone Products to third parties; and that
ultimately, Firestone’s actions have decreased the competition for sales of Firestone
Products in certain geographic markets. On these facts, the Court finds that Marjam has
sufficiently alleged its § 13(a) and § 13(d) claims against Firestone. Accordingly,
Firestone’s motion to dismiss Counts One and Three will be DENIED. See, e.g., En
Vogue v. UK Optical Ltd., 843 F. Supp. 838, 845 (E.D.N.Y. 1994) (§ 13(a) price claim
sufficiently pled); Ann M. Finneran, The Distinction Between the Scope of [§ 13(a)] and
[§§ 13(d) and (e)] of the [RPA], 83 Mich. L. Rev. 1584, 1585 (1985) (it is an open
question whether the same conduct can be challenged under both §§ 13(a) and 13(d)
(citing FTC v. Fred Meyer, 390 U.S. at 343-44 (1968)).
However, because Marjam has failed to plead facts which suggest that any other
party, including Defendants RSI and Performance, had any control over the prices and
promotions Firestone offered to Marjam or had any input in Firestone’s decision to
terminate Marjam’s Distributorship, there are no facts which support Marjam’s claim that
Performance and RSI are liable under § 13(a) and § 13(d). Accordingly, Performance
and RSI’s motion to dismiss Counts One and Three will be GRANTED.
(ii) Marjam’s § 13 (f) Claim
In Count Two, Marjam alleges that Allied, Performance, and RSI violated § 13(f)
of the RPA. 15 U.S.C. § 13(f) is aimed at buyers, rather than sellers, and states that:
. . . (i)t shall be unlawful for any person engaged in commerce, in the course of
such commerce, knowingly to induce or receive a discrimination in price which is
prohibited by this section.
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15 U.S.C. § 13(f).
As currently pled, there are no facts which suggest that Allied, Performance, or
RSI ever induced or received discriminatory prices for Firestone Products, much less that
any of those actions were knowingly committed. Accordingly, Marjam has failed to state
a § 13(f) claim against Allied, Performance, or RSI and those Defendants’ motions to
dismiss Count Two will therefore be GRANTED.
(b) Marjam’s State Law Claims
In addition to its RPA claims, Marjam has alleged several causes of action arising
under New Jersey law, all of which stem from Defendant Charles Golden’s alleged
disclosure of Marjam’s proprietary business information.
(i) Marjam’s Claims Stemming from Golden’s Breach of His
Employment Agreement
Counts Five and Six arise out of Golden’s alleged breach of an “executed”
Employment Agreement under which Golden agreed “that following the termination of
his employment at Marjam, he would not disclose Marjam’s confidential and proprietary
business and customer information, or utilize such information to compete with Marjam.”
(Compl. ¶¶ 52.)
More precisely, in Count Five, Marjam asserts a claim against Golden
for “Breach of Employment Agreement.” And in Count Six, Marjam asserts a claim
against Firestone, Performance, RSI, and Allied for “Tortious Interference and
Inducement of Breach of [Golden’s Employment Agreement].”
In response, Defendants Allied and Golden have supplied the Court with a “copy
of Charles Golden’s unexecuted Employment Agreement with Marjam.” (Declar. of
10
Michael J. Hahn, Esq., ECF No. 18-2) (emphasis added.) Marjam has not disputed the
authenticity of that document. And thus, based on the undisputedly authentic documents
presented to the Court, there is no executed Employment Agreement for Golden to be in
breach of. 8 Nor is there an executed Employment Agreement for Firestone, Performance,
RSI, or Allied to have induced Golden to breach. Accordingly, Defendants’ motions to
Dismiss Counts Five and Six will be GRANTED.
(ii) Marjam’s Breach of Fiduciary Duty and Unfair Competition
Claims
In Count Four, Marjam asserts a claim against Golden, Firestone, Performance,
RSI, and Allied for “Breach of Fiduciary Duty and Unfair Competition.” While pled as
one claim, Count Four is more appropriately broken down into a breach of fiduciary duty
claim against Golden and an unfair competition claim against Firestone, Performance,
RSI, and Allied.
Marjam’s Breach of Fiduciary Duty Claim
Under New Jersey law, an employee has a duty to not act contrary to his
employer’s interest, and cannot take affirmative steps to injure the employer’s business
while employed. Lamorte Burns & Co., Inc. v. Walters, 167 N.J. 285, 302, 305 (2001)
(employee defendants breached duty of loyalty by secretively collecting protected
information from plaintiff employer’s files while still employed to assist in their
formation of a competitive business upon their resignation).
8
At this time, the Court takes no position on the enforceability of the terms of the unsigned Employment
Agreement.
11
In this case, Marjam alleges that Golden, while still employed with Marjam,
compiled proprietary information, including Marjam’s proprietary business, sales,
customer, orders and pricing information relating to the sale of Firestone Products by
Marjam to its customers, including in the Philadelphia market. Marjam further claims
that Golden is now sharing that information with Marjam’s direct business competitors to
Marjam’s detriment, including with Allied, Golden’s current employer and the company
that directly competed with Marjam in the Philadelphia market. (Compl. ¶ 123.) On
these facts, the Court finds that Marjam has sufficiently pled its breach of loyalty claim
against Golden. Accordingly, Golden’s motion to dismiss Count Four will be DENIED.
See, e.g., P.C. of Yonkers, Inc. v. Celebrations! The Party And Seasonal Superstore,
L.L.C., CIV.A.04-4554 JAG, 2007 WL 708978, at *13 (D.N.J. Mar. 5, 2007) (breach of
duty of loyalty claim sufficiently pled where plaintiff employer alleged that during the
course of his employment, defendant employee accessed employer’s files to obtain trade
secrets and confidential and proprietary information for purposes contrary to his
employer’s interests.)
Marjam’s Unfair Competition Claim
Under New Jersey law, the tort of unfair competition generally consists of the
misappropriation of one’s property which has some sort of commercial or pecuniary
value. See Duffy v. Charles Schwab & Co., Inc., 97 F. Supp. 2d 592, 600 (D.N.J. 2000)
(citing New Jersey Optometric Ass’n v. Hillman-Kohan Eyeglasses, Inc., 144 N.J.Super.
411, 427–28 (Ch. Div. 1976)).
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In this case, Marjam asserts that Firestone, Performance, RSI, and Allied
“participated in, facilitated, assisted, cooperated with Golden for their own pecuniary
benefit and to the detriment of Marjam.” (Compl. ¶ 123.)
Although Marjam has pled
some facts which suggest that some of those parties may have gained access to some of
Marjam’s proprietary information, Marjam has not plead any facts which suggest that
Firestone, Performance, RSI, or Allied has reaped any financial benefit from the use of
Marjam’s proprietary information or has misappropriated that information in any other
way. Moreover, with the exception of Allied – for whom Golden is now employed –
Marjam fails to plead facts suggesting any kind of a relationship between Golden and
Firestone, Performance, or RSI which would facilitate Golden’s sharing of Marjam’s
proprietary information. In short, as pled, there are insufficient facts to support Marjam’s
unfair competition claim against Firestone, Performance, RSI, or Allied. Accordingly,
Defendants’ motions to dismiss Count Four will be GRANTED as to those Defendants.
See Moose Mountain Toymakers Ltd. v. Majik Ltd., LLC, Civ. No. 10-4934 (DMC)(JAD),
2011 WL 3625057, at *4 (D.N.J. Aug. 12, 2011) (citations omitted) (motion to dismiss
granted where unfair competition claim amounted to nothing more than a conclusory and
formulaic recitation of that cause of action).
III. CONCLUSION
For the reasons stated above, Defendants’ Rule 12(b)(6) motion are GRANTED
in part and DENIED in part. Specifically, Counts One and Three are DISMISSED as
against Performance and RSI, but REMAIN as against Firestone; Count Four is
DISMISSED as against Firestone, Performance, RSI, and Allied, but REMAINS as
13
against Charles Golden; Counts Two, Five, and Six are DISMISSED in their entirety;
Count Seven is DISMISSED as withdrawn by Plaintiff. An appropriate order follows.
/s/William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: November 30, 2012.
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