Gorlick Distrib. Ctrs. v. Car Sound Exhaust Sys.

Summarized by:

  • Court: 9th Circuit Court of Appeals Archives
  • Area(s) of Law: Corporations
  • Date Filed: 07-19-2013
  • Case #: 10-36083
  • Judge(s)/Court Below: Per Curiam: Chief Judge Kozinski, Circuit Judges Paez and Rawlinson; Partial Dissent by Paez
  • Full Text Opinion

In order to be found in violation of the Robinson-Patman Act, the buyer must have knowledge of the discriminatory prices; if a competitor has no reason to know its lower prices were anything other than a well-deserved reward a claim cannot stand.

Gorlick Distribution Centers ("Gorlick") and Defendant, Allied Exhaust Systems, Inc. (“Allied”) have long been competitors in the auto parts sales industry. When Gorlick learned that Allied was receiving better prices from an auto parts seller, Defendant Car Sound Exhaust System, Inc. (“Car Sound”), it filed claims alleging violation of the Robinson-Patman Act and the Sherman Act. The Robinson-Patman Act, 15 U.S.C. § 13, prohibits sellers from “discriminating on price in the sale of like goods,” and buyers from “’knowingly induc[ing] or receiv[ing] a discrimination in price which is prohibited by [the] section,” thereby reducing competition. In order for a buyer, to be found in violation, he or she must knowingly receive a lower price and know that there would be little defense to a Robinson-Patman Act claim. The Ninth Circuit held that Gorlick did not establish the adequate mens rea of “knowingly” in terms of Allied. The panel also struck down Gorlick's attempt to show Allied’s knowledge through its trade experience. Because Allied had no reason or ability to know the prices that other competitors paid to receive Car Sound products, it cannot be said to have known of a violation of the Robinson-Patman Act. Gorlick further claimed that Allied had a duty to inquire about the prices competitors were receiving from Car Sound. However, the only precedent that calls for such a duty occurred when a buyer coerced a seller to not offer competitors the same deal the buyer was given. Finally, the panel ruled that Gorlick's Sherman Act claim failed. The Sherman Act protects against “contracts, combinations, or conspiracies that unreasonably restrain trade.” To prevail on a Sherman Act claim, the plaintiff must prove injury to competition. The panel found that Car Sound’s intrabrand competition actually encouraged interbrand competition because Gorlick was selling to Car Sound’s competitors. AFFIRMED.

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