Yagoozon, Inc. v. Fun Express LLC

Filing 16

MEMORANDUM AND ORDER adopting 13 Report and Recommendations, and GRANTING Defendant's 9 Motion to Dismiss. The Clerk is directed to enter judgment in favor of Fun Express LLC. -- So Ordered by Judge Mary M. Lisi on 5/14/2014. (Duhamel, John)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND

YAGOOZON, INC.,
Plaintiff

v.

C.A. No. 13-595-ML

FUN EXPRESS LLC,
Defendant

MEMORANDUM AND ORDER
This matter is before the Court on the objection filed by
the

plaintiff,

Recommendation

Yagoozon,
(“R&R”)

Inc.

(“Yagoozon”),

issued

by

Magistrate

to

a

Judge

Report

and

Almond

on

February 10, 2014. (Dkt. No. 13). In the R&R, Magistrate Judge
Almond

recommends

that

the

motion

to

dismiss

(Dkt.

No.

9)

asserted by the defendant, Fun Express LLC (“Fun Express”), be
granted with regard to all claims. This Court has reviewed the
R&R,

Yagoozon’s

memorandum

supporting

its

objection

to

Fun

Express’s motion, and Fun Express’s response thereto. Because the
Court finds no merit in Yagoozon’s contentions, the Court adopts
the R&R in its entirety. Accordingly, Fun Express’s motion to
dismiss the complaint is GRANTED and the complaint is DISMISSED.
I. Standards of Review
Pursuant

to

Fed.R.Civ.P.
1

72(b)(3),

this

Court

must

“determine de novo any part of the magistrate judge’s disposition
that has been properly objected to.” Fed.R.Civ.P. 72(b)(3). The
Court may “accept, reject, or modify the recommended disposition;
receive further evidence; or return the matter to the magistrate
judge with

instructions.”

Id.

Because

a motion

to

dismiss

a

complaint is a dispositive motion, this Court reviews de novo the
issues under objection. Fed.R.Civ.P. 72(b).
In

considering

a

defendant’s

motion

to

dismiss

the

complaint, the Court “accept[s] as true all well-pleaded facts
alleged in the complaint and draw[s] all reasonable inferences
therefrom in the pleader's favor.” Santiago v. Puerto Rico, 655
F.3d 61, 72 (1st Cir.2011); Rederford v. U.S. Airways, Inc., 589
F.3d 30, 35 (1st Cir.2009)(Court accepts “the well-pleaded facts
as true, viewing factual allegations in the light most favorable
to the plaintiff.”). However, “statements in the complaint that
simply offer legal labels and conclusions or merely rehash causeof-action

elements”

Republican

State

must

be

Leadership

isolated
Comm.,

and
669

ignored.
F.3d

50,

Schatz
55

v.

(1st

Cir.2012); Rodriguez–Ramos v. Hernandez–Gregorat, 685 F.3d 34, 40
(1st Cir.2012).
II. Factual Background and Procedural History
On August 16, 2013, Yagoozon, a corporation that markets
children’s toys, novelty items, and party goods on the internet,
2

brought

a

four-count

complaint

(the

“Complaint”)

against

Fun

Express, asserting (Count I) violation of the Sherman Act, 15
U.S.C. § 1 et seq.; (Count II) violation of the Robinson-Patman
Act, 15 U.S.C. § 13; (Count III) violation of the Federal Trade
Commission Act, 15 U.S.C. § 41 et seq.; and (Count IV) violation
of the Clayton Act, 15 U.S.C. § 13. In the Complaint, Yagoozon
alleges that Fun Express “is a subsidiary of parent corporation
Oriental Trading Co.” Complaint ¶ 8.
According to Yagoozon, it began purchasing products from Fun
Express in 2011, at which time Fun Express did not maintain or
enforce a minimum advertised price (“MAP”) policy. Complaint ¶¶
10, 11. In the Complaint, Yagoozon alleged that, in 2012, it was
notified by Fun Express that Yagoozon “was not in compliance with
[Fun Express’s] MAP policy because Yagoozon’s pricing was not
identical with Oriental Trading Co. in connection with a similar,
but

not

identical,

item

offered

by

Oriental

Trading

Co.”

Complaint ¶ 12 (emphasis added). Yagoozon further alleged that
Fun Express canceled Yagoozon’s order and refused to sell product
to

Yagoozon,

Complaint

¶

13,

an

action

that,

according

to

Yagoozon, “was intended to eliminate Yagoozon from the market for
the

benefit

of

[Fun

Express]

and

Oriental

Trading

Co.,

its

parent.” Complaint ¶ 14. Yagoozon asserts that Fun Express “is a
subsidiary of parent corporation Oriental Trading Co. ... the
3

nation’s largest direct retailer of party goods.” Complaint ¶¶ 8,
9. This assertion is confirmed by Fun Express in its corporate
disclosure statement, which states that Fun Express is wholly
owned by Oriental Trading Company, Inc. (Dkt. No. 4).
On October 9, 2013, Fun Express filed a motion to dismiss
the

Complaint

opposition

(Dkt.

on

No.

November

4,

9).

Yagoozon

2013

(Dkt.

filed
No.

11),

a

response
to

which

in
Fun

Express filed a reply on November 14, 2013 (Dkt. No. 12).
On February 10, 2014, Magistrate Judge Almond issued an R&R
recommending

that

Yagoozon’s

claims

be

dismissed

in

their

entirety. (Dkt. No. 13). Yagoozon filed a timely objection to the
R&R (Dkt. No. 14), to which Fun Express filed a response (Dkt.
No. 15).
III. Discussion
At the outset, the Court notes that Yagoozon’s objections to
the R&R were limited to the alleged violations of Section 1 of
the Sherman Act (Count I) and the Robinson-Patman Act (Count
II1). Accordingly, any objections to the R&R with respect to
Yagoozon’s

other

claims

are

waived.

Garayalde-Rijos

v.

Municipality of Carolina, —F.3d.—, 2014 WL 1270607 at *5 (1st
Cir. March 28, 2014)(citing Cortés–Rivera v. Dep't of Corr. &
1

Yagozoon conceded at oral argument that the claims asserted
under the Clayton Act in Count IV are essentially the same claims
asserted in Count II.
4

Rehab. of P.R., 626 F.3d 21, 27 (1st Cir.2010) (quoting Santiago
v. Canon U.S.A., Inc., 138 F.3d 1, 4 (1st Cir.1998)); See Local
Rule LR Cv 72(d)(1) (Failure to file specific objections and
order the transcript in a timely manner constitutes waiver of the
right to review by the district judge and the right to appeal the
Court’s decision.).
This Court finds no merit in Yagoozon’s asserted objections
to the R&R. Having considered Yagoozon’s arguments and the reply
of

Fun

Express,

this

Court

finds

the

detailed

analysis

and

conclusions made by Magistrate Judge Almond to be factually sound
and legally correct.
Count

I

of

the

Complaint

alleged

that

“[Fun

Express]

violated the Sherman Act when it conspired with Oriental Trading
Co. to oust Plaintiff from the market for items produced by [Fun
Express].” Complaint ¶ 24. Because Fun Express is a wholly-owned
subsidiary of Oriental Trading Co., a conspiracy between the two
is

legally

impossible.

Copperweld

Corp.

v.

Independence

Tube

Corp., 467 U.S. 752, 768–69, 104 S.Ct. 2731, 2740–41, 81 L.Ed.2d
628

(1984).

Under

Copperweld,

a

parent

corporation

and

its

wholly-owned subsidiaries are the same entities for antitrust
purposes and their coordinated activity “must be viewed as that
of a single enterprise for the purposes of § 1 of the Sherman
Act.” Id. at 771, 104 S.Ct. at 2741–42.
5

As noted in the R&R, Yagoozon has argued that Fun Express
and Oriental Trading Co. might be merely “affiliated entities,”
but Yagoozon provided no supporting evidence, nor did it move to
amend the Complaint. R&R at 5. In its objection to the R&R,
Yagoozon again contends that “[t]he evidence may reveal that Fun
Express and Oriental Trading have distinct interests or functions
such that they are capable of conspiring for purposes of § 1 of
the Sherman Act.” Obj. to R&R at 6 (Dkt. No. 14-1) (emphasis
added).

Yagoozon

also

suggests

that

“Fun

Express’s

bald

assertion, without more, that it is the wholly-owned subsidiary
of

Oriental

Trading”

is

insufficient

to

determine

whether

Copperweld applies. It is undisputable, however, that the parentsubsidiary relationship between the two entities was asserted by
Yagoozon in the Complaint; that the relationship was confirmed by
Fun Express in its submitted corporate disclosure statement; and
that no evidence to the contrary has been offered by Yagoozon.
Under

those

circumstances,

Yagoozon’s

mere

suggestion2

that

additional evidence may (or may not) reveal that Fun Express and
Oriental Trading Co. may have a more complex relationship that
falls outside the purview of Copperweld is the same argument

2

As noted in the R&R, Yagoozon did not seek to amend its
Complaint and formally allege that the relationship between Fun
Express and Oriental Trading Co. was anything other than a standard
parent-subsidiary relationship. R&R at 5.
6

previously raised before the Magistrate Judge and, as such, it is
not sufficient to withstand Fun Express’s motion to dismiss the
Complaint.
Yagoozon’s

second

objection

relates

to

dismissal

of

the

claim under the Robinson-Patman Act (Count IV). In the Complaint,
Yagoozon alleged that Fun Express violated the Robinson-Patman
Act when Fun Express (1) fixed prices for its products, Complaint
¶

28;

(2)

discriminated

against

Yagoozon,

id.

at

¶

29;

(3)

refused to deal with Yagoozon, id. at ¶ 30; (4) terminated the
distributorship with Yagoozon, id. at ¶ 31; and (5) conspired
with Oriental Trading Co. to oust Yagoozon from the market for
items produced by Fun Express. Id. at ¶ 32.
Under Section 2(a) of the Robinson–Patman Act, it is
unlawful for any person ... to discriminate in
price between different purchasers of commodities of
like grade and quality, where either or any of the
purchases involved in such discrimination are in
commerce, ... 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.... 15 U.S.C. §13(a);
See

e.g.,

Coastal

Fuels

of

Puerto

Rico,

Inc.

v

Caribbean

Petroleum Corp., 79 F.3d 182, 188 (1st Cir. 1996). To make out a
prima facie case, a plaintiff must allege a pair of sales at
different prices to different purchasers. Id. (citing Falls City
Indus., Inc. v. Vanco Beverage, Inc., 460 U.S. 428, 444 n. 10,
7

103

S.Ct.

1282,

1293

n.

10,

75

L.Ed.2d

174

(1983);

FTC

v.

Anheuser–Busch, Inc., 363 U.S. 536, 549, 80 S.Ct. 1267, 1274, 4
L.Ed.2d

1385

Complaint.

(1960)).

Instead,

notification

from

No

such

contention

Yagoozon

Fun

alleged

Express

that

is

that

made
it

Yagoozon

in

the

received

“was

not

in

compliance with its MAP policy because Yagoozon’s pricing was not
identical with Oriental Trading Co. in connection with a similar,
but

not

identical,

item

offered

by

Oriental

Trading

Co.”

Complaint at ¶ 12.
In

considering

a

12(b)(6)

motion

to

dismiss,

the

Court

ordinarily does not look beyond the four corners of the Complaint
to determine whether a plaintiff has met the requirement for
stating a prima facie case. Young v. Lepone, 305 F.3d 1, 10-11
(1st Cir. 2002). Because the allegations in the Complaint are
insufficient

to

support

a

claim

for

a

Robinson-Patman

Act

violation, the Magistrate Judge correctly concluded that Counts
II and IV of the Complaint could not withstand Fun Express’s
motion to dismiss.
Moreover, even if Yagoozon included an allegation that Fun
Express was selling the identical product to Oriental Trading at
a lower price, the corporate relationship between Fun Express and
Oriental

Trading

precludes

a

Robinson-Patman

Act

claim.

See

Security Tire & Rubber Co. v. Gates Rubber Co., 598 F.2d 962, 966
8

(5th

Cir.),

transfers

cert.

between

denied,
parent

444

company

U.S.

942

and

(1979)(holding

wholly

owned

that

subsidiary

cannot provide basis for Robinson-Patman Act Claim); Khoury v.
Getty Petroleum

Corp.,

Civ.

A.

No.

93-0216T,

1993

WL

622968

(D.R.I. Dec. 3, 1993)(listing cases following the holding in
Security Tire).
IV.

Conclusion
For the reasons stated herein, the R&R of Magistrate Judge

Almond

is

636(b)(1).

adopted

in

its

Accordingly,

Fun

entirety

pursuant

Express’s

motion

to
to

28

U.S.C.

dismiss

§

the

complaint is GRANTED. The Clerk is directed to enter judgment in
favor of Fun Express LLC.
SO ORDERED.
/s/ Mary M. Lisi
Mary M. Lisi
United States District Judge
May 14, 2014

9