Woodman's Food Market, Inc. v. Clorox Company
2016 U.S. App. LEXIS 14883
7th Cir.2016Background
- Clorox sold large-pack consumer products (e.g., 40-oz dressing, 42-lb cat litter) at lower unit prices, but in 2014 announced it would sell large packs only to wholesale clubs (Costco, Sam’s Club), excluding grocery retailers like Woodman’s.
- Woodman’s sued under the Robinson-Patman Act (15 U.S.C. §§ 13(a), (d), (e)), alleging Clorox’s refusal to sell large packs constituted unlawful price discrimination because large-pack size is a promotional “service or facility.”
- Woodman’s later abandoned its §13(a) claim and proceeded under §13(e) only; it sought injunctive relief.
- The district court denied Clorox’s Rule 12(b)(6) motion to dismiss, relying on FTC administrative materials and vintage FTC decisions suggesting package size can be a promotional service, and also denied Clorox’s later motion alleging mootness/discontinuance of sales; both rulings were certified for interlocutory appeal.
- On appeal the Seventh Circuit examined statutory purpose, FTC guidance, prior circuit precedent, and legislative history to decide whether package size alone qualifies as a §13(e) “service or facility.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether package size (large packs) is a "service or facility" under §13(e) | Woodman’s: large-pack unit discounts and shopper convenience are promotional services that §13(e) forbids if not equally offered | Clorox: package size is a product attribute/quantity discount, not a promotional service; pricing/quantity effects belong under §13(a) | Court: reversed — package size alone is not a §13(e) promotional service; discounts tied to size are for §13(a); convenience of size is not a §13(e) service |
| Whether ancillary promotional attributes combined with size could be §13(e) services | Woodman’s: broadly characterizes size-related benefits as promotional | Clorox: only bona fide promotional/advertising services are covered | Court: acknowledged some packaging used for promotion (seasonal, holiday, special promotional packaging) might fall under §13(e), but Clorox’s large packs here do not |
| Whether Woodman’s is still a “purchaser” for purposes of §13(e) after Clorox ceased direct sales | Woodman’s: can be an indirect purchaser (per Fred Meyer) and still have statutory rights | Clorox: Woodman’s no longer buys from Clorox and lacks statutory standing | Court: did not resolve as jurisdictional here; reversed district court’s denial and remanded for reconsideration consistent with opinion |
| Proper statutory construction of §§13(d)/(e) in light of antitrust policy | Woodman’s: §13(e) should be read to reach practices harming intrabrand competitors like Woodman’s | Clorox: §13(e) must be narrowly read to avoid swallowing §13(a) and to conform with consumer-welfare antitrust principles | Court: §13(d)/(e) are narrow, aimed at promotional/advertising-related favors meant to conceal price discrimination; interpret narrowly to preserve §13(a)’s role |
Key Cases Cited
- Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, 546 U.S. 164 (2006) (antitrust primarily protects interbrand competition; Robinson-Patman must fit within that policy)
- Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) (Robinson-Patman should be construed consistently with broader antitrust policies)
- FTC v. Fred Meyer, Inc., 390 U.S. 341 (1968) (historical context on promotional allowances and the FTC’s interpretive guides)
- FTC v. Simplicity Pattern Co., 360 U.S. 55 (1959) (background on price discrimination and promotional payments)
- United States v. Colgate & Co., 250 U.S. 300 (1919) (suppliers’ discretion to choose customers is a fundamental principle)
- Centex-Winston Corp. v. Edward Hines Lumber Co., 447 F.2d 585 (7th Cir. 1971) (quantity/price differentials analyzed under §13(a), not §13(e))