O.E.M. Glass Network, Inc. v. Mygrant Glass Company, Inc.O.E.M. Glass Network, Inc. v. Mygrant Glass Company, Inc.
Plaintiffs O.E.M. Glass Network, Inc. and Brooklyn Wholesale Glass Inc. (collectively, “OEMGN” or “Plaintiffs“) bring antitrust claims against Defendants Mygrant Glass Company, Inc. (“Mygrant“); Interstate Glass of Amityville NY, LLC and Metro Glass Distributing, Inc. (collectively, “Interstate“); Xinyi Auto Glass North America Corp. (“Xinyi“); Vitro, S.A.B. de C.V., Vitro Automotive Glass LLC, and Vitro Automotriz, S.A. de C.V. (“Vitro Automotriz,” and, collectively with Vitro S.A.B. de C.V. and Vitro Automotive Glass LLC, “Vitro“); Fuyao Glass America Inc.
Currently pending before the court is Defendants’ motion to dismiss Plaintiffs’ Amended Complaint. (See Defs. Mot. to Dismiss (“Mot.“) (Dkt. 88); see also Aug. 21, 2019 Stip. & Order (Dkt. 102) (applying Defendants’ fully briefed motion to Plaintiffs’ Amended Complaint).) For the following reasons, Defendants’ motion is GRANTED IN PART and DENIED IN PART.
I. BACKGROUND
A. Facts
The court takes the following statement of facts from Plaintiffs’ Amended Complaint, the well-pleaded allegations of which the court generally accepts as true. See N.Y. Pet Welfare Ass‘n v. City of New York, 850 F.3d 79, 86 (2d Cir. 2017).
1. The Parties
OEMGN is an aftermarket auto glass1 wholesaler. (Am. Compl. ¶ 2.) It purchases aftermarket auto glass products from manufacturers and resells those products to consumers in the New York Metropolitan Area. (Id.)
Defendants Mygrant and Interstate (collectively, the “Wholesaler Defendants“) are also aftermarket auto glass wholesalers that operate in the New York Metropolitan area. (Id. ¶¶ 22-23.) Mygrant is the largest independent aftermarket auto glass wholesaler in the United States; it owns and operates approximately 70 warehouses nationwide. (Id. ¶ 22.) According to Plaintiffs, Mygrant is “one of the only national wholesalers of aftermarket auto glass products” with sales totaling hundreds of millions of dollars per year. (Id. ¶¶ 22, 100.)
Defendants Xinyi, Vitro, Fuyao, and ATI are manufacturers of aftermarket auto glass products. (Id. ¶¶ 24-27.) Defendant Sika is a manufacturer of products containing urethane, a chemical adhesive used in the installation of some aftermarket auto glass products. (Id. ¶ 30.) Xinyi, Vitro, Fuyao, and ATI and Sika (collectively, the “Manufacturer Defendants“) sell their products to wholesalers like Plaintiffs and the Wholesaler Defendants. (Id. ¶ 31.)
2. The Alleged Conspiracy
Plaintiffs allege that OEMGN differentiates itself from its competitors by offering lower prices and that this “presents a disruptive threat to entrenched wholesalers” like the Wholesaler Defendants. (Id. ¶ 2.) According to Plaintiffs, the Wholesaler Defendants responded to this threat by refusing to purchase from manufacturers that deal with OEMGN and by pressuring manufacturers and other wholesalers to boycott OEMGN. (Id. ¶¶ 3, 5.)
OEMGN first learned of the alleged conspiracy in January 2014 from a sales representative at Carlite, a non-party auto glass manufacturer. (Id. ¶¶ 36, 38.) At that time, the Carlite employee informed OEMGN that the Wholesaler Defendants were applying “significant pressure” to Carlite to stop selling glass to OEMGN. (Id. ¶ 38.) In order to avoid being “punish[ed]” by the Wholesaler Defendants, the
Plaintiffs allege that each of the Manufacturer Defendants, along with at least two additional non-parties, participated in the conspiracy orchestrated by the Wholesaler Defendants to boycott OEMGN.
a. Vitro
OEMGN began regularly purchasing aftermarket auto glass products from Vitro in approximately January 2014. (Id. ¶ 43.) Shortly after the relationship began, OEMGN placed an order with Vitro that never arrived. (Id.) A few months later, in or around July 2014, an employee of a non-party manufacturer allegedly informed OEMGN that “there was a Vitro delivery that was supposed to come [to OEMGN] and went to Mygrant.” (Id.)
On June 18, 2014, a sales representative from Carlite recounted a conversation he had with Interstate‘s owner, Angelo Marino, during which Mr. Marino allegedly admitted that the Wholesaler Defendants pressured Vitro to halt its sales to OEMGN. (Id. ¶ 44.) Mr. Marino allegedly said that “[OEMGN] is not going to make it” because Mygrant had been “pretty successful in making sure no one sells [to OEMGN].” (Id.) On October 20, 2014, Vitro‘s General Manager allegedly informed OEMGN that both Wholesaler Defendants had pressured Vitro to stop its sales to OEMGN. (Id. ¶ 45.) Vitro subsequently reduced its sales to OEMGN, before completely cutting off sales to OEMGN sometime in 2015. (Id. ¶¶ 45-46.)
Near the end of 2015, Vitro‘s General Manager informed OEMGN that Vitro would not be selling to OEMGN to avoid putting its Mygrant account “at risk.” (Id. ¶ 47.) He said that multiple wholesalers complained about Vitro selling to OEMGN, but that “the one that concerned [him] the most [wa]s Mygrant.” (Id. ¶ 47.) In January 2016, the same manager stated that a high-level employee at Mygrant told him not to sell to OEMGN. (Id. ¶ 48.) He also confirmed that Vitro was “selling a lot of product” to Mygrant. (Id.)
b. ATI
Plaintiffs allege that OEMGN has unsuccessfully attempted to purchase ATI aftermarket auto glass products on several occasions. (Id. ¶ 50.) Specifically, the Amended Complaint alleges that “[i]n or around December 2013, in concert with Mygrant and Interstate, ATI agreed to boycott all sales of its aftermarket auto glass products to OEMGN.” (Id. ¶ 51.) ATI has not sold to OEMGN since that time, despite repeated inquiries, and has allegedly “taken measures to preclude OEMGN from purchasing ATI-manufactured glass through alternate channels.” (Id.)
OEMGN allegedly heard of ATI‘s decision to boycott OEMGN during a call with a Carlite sales representative on December 17, 2013. (Id. ¶ 52.) The representative informed OEMGN that he had recently spoken with Matthew Fassler, co-owner of ATI, who had expressed concern about losing a “bazillion dollars’ worth of [Mygrant‘s] business” if ATI did not boycott OEMGN. (Id.) Mr. Fassler also allegedly said that selling to OEMGN may not be
OEMGN attempted to buy ATI-manufactured glass products from another wholesaler, non-party Auto Glass Outlet (“AGO“). (Id. ¶ 53.) AGO initially agreed; in January 2014, however, AGO informed OEMGN that it would not complete the sale because Douglas Fassler, the other co-owner of ATI, told AGO it would not sell to it if products were passed on to OEMGN. (Id. ¶ 54.) Mr. Fassler further told AGO that “Mygrant was on [its] back not to give glass to anybody who support[s] OEMGN” and that, if AGO sold ATI products to OEMGN, ATI would be “in big trouble with Mygrant.” (Id. ¶ 54.) Similarly, OEMGN sought to purchase ATI glass through non-party C-Auto Glass, Inc. (“C-Auto“), another non-party wholesaler. (Id. ¶ 55.) In a January 29, 2014 email, however, C-Auto informed OEMGN that ATI would not even provide a quote for products that it believed “may be going to Brooklyn or other NY markets.” (Id. ¶ 56.) In February 2014, American Glass Distributors—a “large regional wholesaler“—likewise refused to sell ATI products to OEMGN, noting that “[e]ven with the best attempts at stealth these things are always found out.” (Id. ¶ 57.)
On August 9, 2016, Douglas Fassler allegedly confirmed that ATI was refusing to sell to OEMGN at Mygrant‘s request. (Id. ¶ 59.)
c. Fuyao
Plaintiffs allege that OEMGN has unsuccessfully attempted to purchase Fuyao aftermarket auto glass products on several occasions. (Id. ¶ 61.) The Amended Complaint alleges that “[i]n or around early 2014, in concert with Mygrant and Interstate, Fuyao agreed to boycott all sales of its aftermarket auto glass products to OEMGN.” (Id.)
Plaintiffs allege several specific incidents in support of this assertion. In February 2014, OEMGN attempted to purchase Fuyao glass from AGD. (Id. ¶ 63.) However, Plaintiffs allege that Fuyao canceled the sale when it learned that the glass AGD ordered would be sold through to OEMGN. (Id.) Then, in June 2014, OEMGN heard from a Carlite sales representative that Angelo Marino of Interstate said that Fuyao “won‘t do business with [OEMGN]” because of the boycott. (Id. ¶ 62.) On November 4, 2014, an AGD sales representative confirmed that the “only reason why” AGD could not sell Fuyao glass to OEMGN was Fuyao‘s fear of “reciprocity no matter what from Mygrant.” (Id. ¶ 64.) In another conversation between OEMGN and an AGD sales representative, the representative indicated that Mygrant pressured Fuyao to halt all sales to OEMGN. (Id. ¶ 65.) According to the sales representative, if AGD sold any Fuyao aftermarket glass to OEMGN, Fuyao would retaliate by either raising prices to AGD or by halting any future sales to AGD. (Id.)
Finally, on or around February 27, 2015, AGD admitted to OEMGN that, at the behest of the Wholesaler Defendants, “we in the industry are all supposed to unite to . . . keep you out of the business.” (Id. ¶ 66.) At that time, the AGD sales representative allegedly told OEMGN that he would be “circumspect” and sell OEMGN Fuyao-manufactured products. (Id.) However, this never happened. (Id.) On or around July 19, 2016, that same AGD sales representative informed OEMGN that, due to pressure from Mygrant, Fuyao insisted that AGD was “not allowed” to sell Fuyao glass to OEMGN. (Id.) AGD thereafter refused to sell any aftermarket auto glass to OEMGN. (Id.)
d. Xinyi
Starting in approximately November 2013, OEMGN regularly purchased aftermarket auto glass products from Xinyi.
On or around March 4, 2014, OEMGN sought to buy aftermarket auto glass from Shenzhen Benson Automobile Glass Co., Ltd. (“Benson“), a Xinyi subsidiary. (Id. ¶ 70.) As soon as it learned of the sale, Xinyi stopped it. (Id.) In a discussion on or around September 5, 2014, a Benson sales representative indicated that Benson would not sell to OEMGN because of the “situation” with Mygrant. (Id. ¶ 71.) Then, on or around May 12, 2015, Xinyi simply refused to sell aftermarket auto glass to OEMGN, stating that it could not do so unless Mygrant “disappear[ed].” (Id. ¶ 72.) On or around July 19, 2016, an AGD sales representative informed OEMGN that due to pressure from Mygrant, Xinyi mandated that AGD was “not allowed” to sell Xinyi glass to OEMGN. (Id. ¶ 73.) AGD thereafter refused to sell to OEMGN. (Id.)
Plaintiffs further allege that in 2017, a Xinyi sales representative told OEMGN that Mygrant had previously agreed with Xinyi to discontinue sales to certain of Mygrant‘s competitors in Florida. (Id. ¶ 74.) The representative noted that Mygrant‘s competitive position gave it “a strong reason” to talk to Xinyi and establish a boycott any of its competitors. (Id.) During that discussion, the Xinyi representative again explained that Xinyi would not sell aftermarket auto glass products to OEMGN. (Id.)
e. Pittsburgh Glass Works
Non-party Pittsburgh Glass Works, LLC (“PGW“) is a manufacturer and wholesaler in Pittsburgh, Pennsylvania. (Id. ¶ 77.) PGW is a subsidiary of the LKQ Corporation, a leading provider of aftermarket auto parts. (Id.) In or around December 2016, PGW sold its auto glass manufacturing business to Vitro. (Id.) Plaintiffs allege that in January 2014, OEMGN and a PGW division agreed to a sale of PGW aftermarket auto glass products. (Id. ¶ 78.) However, at Interstate‘s behest, PGW subsequently reversed its decision and refused to open OEMGN‘s account. (Id.) In or around May 2016, OEMGN spoke with a sales representative from Carlite who had recently spoken with PGW. (Id. ¶ 79.) During this call, OEMGN allegedly learned that Interstate‘s owner, Angelo Marino, personally called PGW to “let [them] have it.” (Id.) During that conversation between Interstate and PGW, Mr. Marino allegedly indicated that PGW was “not supposed to be selling” any auto glass products to OEMGN. (Id.)
f. International Auto Glass Distributors, Inc.
Non-party International Auto Glass Distributors Inc. (“IAGD“) is a wholesaler in Bronx, New York. (Id. ¶ 80.) IAGD is a competitor of Mygrant, Interstate, and OEMGN. (Id.) On or around February 2014, IAGD called OEMGN to offer their “help” in purchasing aftermarket auto glass. (Id. ¶ 81.) However, on or around March 2014, IAGD‘s owner called OEMGN to terminate the arrangement. (Id.) According to IAGD‘s owner, “everyone” had pressured him not to sell aftermarket auto glass to OEMGN. (Id.) OEMGN understood “everyone” to include the Wholesaler Defendants. (Id.) Ultimately, IAGD refused to sell to OEMGN or to place any orders for aftermarket auto glass on behalf of OEMGN. (Id. ¶ 82.)
g. Sika
In or around early 2014, OEMGN sought to purchase urethane from Sika. (Id. ¶ 84.) In or around January 2014, OEMGN called a Sika sales representative to discuss the status of a pending OEMGN sales account. (Id.) The Sika representative indicated that Mygrant had “strongarmed” Sika to boycott OEMGN because
B. Procedural History
Plaintiffs filed their complaint in this court on February 6, 2019 asserting claims for antitrust conspiracy in violation of the
Defendants—other than Vitro Automotriz—filed their fully briefed motion to dismiss on May 17, 2019. (Mot.; Pls. Mem. in Opp‘n to Mot. (“Opp‘n“) (Dkt. 93); Defs. Reply in Further Supp. of Mot. (“Reply“) (Dkt. 94).)
On August 5, 2019, Plaintiffs amended their complaint to add as a defendant Vitro Automotriz, a subsidiary of Vitro, S.A.B. de C.V. (Am. Compl.; see also Pls. June 28, 2019 Letter (Dkt. 97).) Shortly thereafter, the parties stipulated that Defendants’ motion to dismiss shall be deemed to apply to the Amended Complaint as to the previously-served Defendants. (Aug. 21, 2019 Stip. & Order.) On November 27, 2019, Vitro Automotriz filed a motion to dismiss and motion to join the other Defendants’ motion to dismiss. (Vitro Automotriz Mot. to Dismiss and Mot. for Joinder (Dkt. 109).) The court GRANTS Vitro Automotriz‘s motion to join, and considers its motion to dismiss along with the other Defendants’ motion.
II. LEGAL STANDARD
A. Motions to Dismiss
1. Generally
To survive a
2.
A complaint pleading an antitrust conspiracy “need not show that its allegations suggesting an agreement are more likely than not true or that they rule out the possibility of independent action,” and “[s]kepticism of a conspiracy‘s existence is insufficient to warrant dismissal.” Gelboim v. Bank of Am. Corp., 823 F.3d 759, 781 (2d Cir. 2016). Nonetheless, “a finding of conspiracy requires ‘evidence that tends to exclude the possibility’ that the defendant was ‘acting independently.‘” United States v. Apple, Inc., 791 F.3d 290, 315 (2d Cir. 2015) (quoting Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984)).
A plaintiff may properly allege an antitrust conspiracy by asserting direct or indirect evidence of an illegal agreement. See Iowa Pub. Emps.’ Ret. Sys. v. Merrill Lynch, Pierce, Fenner & Smith Inc., 340 F. Supp. 3d 285, 317 (S.D.N.Y. 2018). Direct evidence is “evidence that is explicit and requires no inferences to establish the proposition or conclusion being asserted,” and may include “a document or conversation explicitly manifesting the existence of the agreement in question.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 324 n.23 (3d Cir. 2010) (citation omitted); see also Mayor & City Council of Balt. v. Citigroup, Inc., 709 F.3d 129, 136 (2d Cir. 2013) (“[A] plaintiff may, of course, assert direct evidence that the defendants entered into an agreement in violation of the antitrust laws . . . . Such evidence would consist, for example, of a recorded phone call in which two competitors agreed to fix prices at a certain level.” (citation omitted)).
Indirect evidence, on the other hand, includes “circumstantial facts supporting the inference that a conspiracy existed.” Iowa Pub. Emps.’ Ret. Sys., 340 F. Supp. 3d at 317 (quoting Mayor & City Council of Balt., 709 F.3d at 136). Frequently, antitrust plaintiffs are able to allege only indirect evidence because “conspiracies are rarely evidenced by explicit agreements and nearly always must be proven though inferences that may fairly be drawn from the behavior of the alleged conspirators.” Gelboim, 823 F.3d at 781 (quotation marks and citation omitted). However, “merely alleging parallel conduct alone is not sustainable.” In re Zinc Antitrust Litig., 155 F. Supp. 3d 337, 366 (S.D.N.Y. 2016) (citing, inter alia, Twombly, 550 U.S. at 556; Mayor & City Council of Balt., 709 F.3d at 135-36). A plaintiff can successfully allege a claim by setting forth parallel behavior accompanied by “plus factors,” such as “(1) a common motive to conspire; (2) evidence . . . show[ing] that the parallel acts were against the apparent individual economic self-interest of the alleged conspirators; and (3) evidence of a high level of interfirm communications.” Gelboim, 823 F.3d at 781; see also Starr v. Sony BMG Music Entm‘t, 592 F.3d 314, 323 (2d Cir. 2010) (holding that a plaintiff need only “allege[] specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among the defendants“).
III. DISCUSSION
A. Federal Antitrust Claims
1. Section 1 of the Sherman Act
“Section 1 of [the Sherman Act] makes illegal every contract, combination[,] or conspiracy in restraint of trade or commerce among the several states.” Fashion Originators’ Guild of America, Inc. v. FTC, 312 U.S. 457, 465 (1941); see also
Such a contract, combination, or conspiracy may be either horizontal or vertical in nature. A horizontal agreement is between competitors at the same level of the market (e.g., two wholesalers), while a vertical agreement is between actors at different levels of the market (e.g., a wholesaler and a manufacturer). See Elecs. Commc‘ns Corp. v. Toshiba Am. Consumer Prods., 129 F.3d 240, 243 (2d Cir. 1997). Horizontal restraints are “classic examples” of “obviously unreasonable restraints,” and, as such, “trigger per se liability under Section 1” of the Sherman Act. Ace Arts, LLC v. Sony/ATV Music Pub., LLC, 56 F. Supp. 3d 436, 447 (S.D.N.Y. 2014) (citations omitted). Vertical restraints, on the other hand, “are generally subject to ‘rule of reason’ analysis.” Elecs. Commc‘ns Corp., 129 F.3d at 243 (citations omitted). Under this analysis, “an agreement will not violate the antitrust laws unless it can be shown that it will have an actual adverse effect on competition in the relevant market.” Id. at 244. “Whether . . . Defendants’ alleged conduct constitutes a horizontal conspiracy, and therefore is a per se violation, is a legal conclusion that the Court does not accept as true on a motion to dismiss.” Ace Arts, 56 F. Supp. 3d at 448 (quoting Integrated Sys. & Power, Inc. v. Honeywell Int‘l., Inc., 713 F. Supp. 2d 286, 290 (S.D.N.Y. 2010)).
Courts also recognize “the existence of ‘hub-and-spoke’ conspiracies in which an entity at one level of the market structure, the ‘hub,’ coordinates an agreement among competitors at a different level, the ‘spokes.‘” Apple, 791 F.3d at 314 (citation omitted). “These arrangements consist of both vertical agreements between the hub and each spoke and a horizontal agreement among the spokes ‘to adhere to the hub‘s terms,’ often because the spokes ‘would not have gone along with the vertical agreements except on the understanding that the other spokes were agreeing to the same thing.‘” Id. (citation omitted) (alteration adopted). “[A] hub-and-spoke theory is cognizable under Section 1 only if there are both vertical agreements between the hub and each spoke, and also a horizontal agreement among the various spokes with each other.” In re Zinc Antitrust Litig., 155 F. Supp. 3d at 376 (citing Apple, 791 F.3d at 314).
All participants in such conspiracies are liable “when the objective of the conspiracy was a per se unreasonable restraint of trade.” Apple, 791 F.3d at 323. And “certain concerted refusals to deal or group boycotts are so likely to restrict competition without any offsetting efficiency gains that they should be condemned as per se violations of § 1 of the Sherman Act.” In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig., 383 F. Supp. 3d 187, 245 (S.D.N.Y. 2019) (quoting NW Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 290 (1985)). “A concerted refusal to deal or group boycott is ‘an agreement to pressure a supplier or customer not to deal with another competitor.‘” Id. (quoting Reading Int‘l, Inc. v. Oaktree Capital Mgmt., Inc., 317 F. Supp. 2d 301, 318 (S.D.N.Y. 2003)).
2. Statute of Limitations
Defendants Xinyi and Sika argue that Plaintiffs’ antitrust claims against them are barred by the Sherman Act‘s four-year statute of limitations. (See Mem. at 22, 24; Reply at 13-15.)2 The court agrees as to Sika, but not as to Xinyi.
“When the continuing violation exception applies, ‘an overt act by the defendant is required to restart the statute of limitations and the statute runs from the last overt act.‘” Id. at 268 (citation omitted); see also Klehr v. A.O. Smith Corp., 521 U.S. 179, 189 (1997) (“[E]ach overt act that is part of the violation and that injures the plaintiff . . . starts the statutory period running again, regardless of the plaintiff‘s knowledge of the alleged illegality at much earlier times.” (citation omitted)). “An overt act ‘is characterized by two elements: (1) it must be a new and independent act that is not merely a reaffirmation of a previous act; and (2) it must inflict new and accumulating injury on the plaintiff.‘” Rite Aid, 708 F. Supp. 2d at 268 (quoting DXS, Inc. v. Siemens Med. Sys., Inc., 100 F.3d 463, 467 (6th Cir. 1996)).
In a refusal-to-deal case such as this one, “[i]f an initial refusal to deal with a party is final, the statute of limitations begins to run and does not restart when the plaintiff makes subsequent unsuccessful efforts to deal with the defendant.” Vitale v. Marlborough Gallery, No. 93-CV-6276 (PKL), 1994 WL 654494, at *5 (S.D.N.Y. July 5, 1994). Here, Plaintiffs filed their initial complaint in this court on February 6, 2019. (Compl.) In order for their claims to be timely, therefore, they must allege that each Defendant committed at least one overt act on or after February 6, 2015.
Plaintiffs’ claims against Xinyi are timely. Although Plaintiffs allege that Xinyi stopped selling to OEMGN in 2014, Xinyi did not inform OEMGN that it would no longer sell to it until May 12,
Sika presents a more difficult case. Plaintiffs allege:
In or around early 2014, OEMGN sought to purchase urethane from Sika. In or around January 2014, OEMGN called a Sika sales representative to discuss the status of a pending OEMGN sales account. The Sika representative indicated that Mygrant had “strongarmed” Sika to boycott OEMGN because Mygrant “didn‘t want anyone dealing with [OEMGN]” and would “flatten anybody” that did. According to the Sika sales representative, Dow Chemical - a competing manufacturer of urethane products - had informed Mygrant that Sika was opening a sales account with OEMGN. The Sika sales representative further indicated that his boss, upon receiving Mygrant‘s demand to boycott sales to OEMGN, was concerned, because the company “couldn‘t jeopardize millions of dollars in business” just to sell to OEMGN.
(Am. Compl. ¶ 84.) Thus, unlike Xinyi, Sika explicitly refused to deal with OEMGN, and explained why, well before February 9, 2015. The Amended Complaint‘s only other allegations against Sika are that it “refused to sell product to OEMGN” after OEMGN contacted it on February 9, 2015 and again on June 28, 2018. (Id. ¶¶ 85-86.) Such bare allegations, without more, do not support any conclusion other than that these refusals were reaffirmations of Sika‘s clear refusal to sell to OEMGN—due to pressure from Mygrant—beginning in 2014.
In arguing to the contrary, Plaintiffs rely on Daniel v. Am. Bd. of Emergency Med., 988 F. Supp. 112 (W.D.N.Y. 1997) and Simon-Whelan v. Andy-Warhol Found. for the Visual Arts, Inc., No. 07-CV-6423 (LTS), 2009 WL 1457177 (S.D.N.Y. May 26, 2009). (See Opp‘n at 28.) That reliance is misplaced. In Daniel, the court observed that “Plaintiffs’ allegations of [a defendant‘s] continuing refusal to reopen the practice track . . . are insufficient to support a finding of continuing antitrust conspiracy.” Daniel, 988 F. Supp. at 121. In that case, however, the plaintiffs—employees or former employees of Defendants—“[also] asserted several additional acts by the hospital Defendants which they allege occurred during the limitations period, including demotions or losses of responsibility, the denial of jobs, raises and promotions, [and] receipt of less remuneration than ABEM certified physicians . . . .” Id. (footnote call number omitted). Plaintiffs here have not made any such specific allegations against Sika, but instead have
The court in Simon-Whelan explicitly found that a second refusal to authenticate the plaintiff‘s painting was an overt act only because “Plaintiff alleges that Defendants not only permitted, but encouraged, him to resubmit the painting with additional documentation and that he suffered additional, distinct injury as a result of the second denial.” 2009 WL 1457177, at *7. Plaintiffs here have alleged no such contact from Sika; in fact, in both 2015 and 2018, OEMGN initiated the contact that led to Sika‘s subsequent refusals to deal with it. (Compl. ¶¶ 85-86.)
Plaintiffs’ federal antitrust claims against Sika are therefore time-barred and must be dismissed.
3. The Wholesaler Defendants
There is no dispute that the two Wholesaler Defendants operate at the same level of the market, and thus that any agreement alleged between them is horizontal in nature. Defendants argue, however, that Plaintiffs have not alleged sufficient facts to support an inference that there was such agreement between the Wholesaler Defendants. (Defs. Mem. in Supp. of Mot. (“Mem.“) (Dkt. 89) at 7-9; Reply at 1-2.) In support of this argument, Defendants contend that Plaintiffs have offered only “[n]aked conclusions that defendants agreed with one another not to deal with plaintiff,” which “are insufficient to state a valid claim under Section 1 of the Sherman Act.” Mem. at 8 (quoting RxUSA Wholesale, Inc. v. Alcon Labs., Inc., 661 F. Supp. 2d 218, 237 (E.D.N.Y. 2009), aff‘d, 391 F. App‘x 59 (2d Cir. 2010)) (quotation marks omitted) (alterations adopted).) This may be an accurate statement of law, but it is an inaccurate characterization of the Amended Complaint.
In response, Plaintiffs point to several specific allegations from the Amended Complaint:
- Interstate‘s owner, Angelo Marino, bragged about coordinating pricing with Mygrant and labeled OEMGN a “price-cutter” (Am. Compl. ¶ 36);
- In or about January 2014, a sales representative of non-party manufacturer Carlite informed OEMGN that both of the Wholesaler Defendants were starting to apply “significant pressure” to Carlite to stop selling to OEMGN (id. ¶ 38);
- In order to “defend [himself] with two major customers” and to avoid being “punish[ed],” the Carlite representative demanded a list of OEMGN‘s suppliers to relay to Mygrant (id. ¶¶ 38-40 (emphasis added));
- The Carlite representative further noted Mygrant‘s intent was to “get competitors out of the area,” but that Mygrant‘s list of acceptable competitors included ‘Angelo’ [Marino]” (id. ¶ 39);
- On June 18, 2014, a Carlite sales representative states that Mr. Marino admitted that Interstate and Mygrant had pressured Vitro to halt its sales to OEMGN and that “[OEMGN is] not going to make it” (id. ¶ 44);
- Mr. Marino (of Interstate) proclaimed that OEMGN was a “cancer” because manufacturers would not sell to it and that Mygrant is “pretty successful at making sure no one sells [to OEMGN]” (id.);
- On or around October 20, 2014, Vitro‘s General Manager informed OEMGN that “both” Mygrant and Interstate had pressured Vitro to stop its sales to OEMGN” (id. ¶ 45);
- On or around February 27, 2015, wholesaler AGD admitted to OEMGN that, at the behest of Mygrant
and Interstate, “we in the industry are all supposed to unite to . . . keep you out of the business” (id. ¶ 66); - The truckload division of manufacturer PGW refused to sell products to OEMGN despite having previously agreed to do so (id. ¶¶ 77-79). In or around May 2016, OEMGN learned that Interstate‘s owner Mr. Marino personally called PGW to “let [them] have it” and warned PGW that it was “not supposed to be selling” any glass products to OEMGN (id. ¶ 79);
- In February 2014, wholesaler IAGD offered to “help” OEMGN buy glass. (Id. ¶ 81). But in March 2014, after selling OEMGN one part, IAGD terminated the arrangement after “everyone” pressured it not to sell to OEMGN. OEMGN understood “everyone” to include Mygrant and Interstate (id.).
(See Opp‘n at 13-14.) These allegations are mostly indirect, but, notably, include at least one direct allegation: that Interstate‘s owner “boasted that he has called Mygrant to discuss and dictate the pricing of an aftermarket auto glass product sold by both Mygrant and Interstate” and stated, “we control the board on that [price].” (Am. Compl. ¶ 36.) This allegation—along with several indirect allegations indicating parallel behavior and common motive—plausibly alleges an agreement between the Wholesaler Defendants to boycott OEMGN. See Gelboim, 823 F.3d at 782 (“[A]t the motion-to-dismiss stage, appellants must only put forth sufficient factual matter to plausibly suggest an inference of conspiracy, even if the facts are susceptible to an equally likely interpretation.“). The allegations, moreover, are extremely detailed, including the names of people involved, dates of conversations, and direct quotations. If Plaintiffs’ allegations here are insufficient to allege an agreement between the Wholesaler Defendants, the court is not sure what kind of allegations could, as a practical matter, allege such an agreement. See id. at 781 (“[C]onspiracies are rarely evidenced by explicit agreements and nearly always must be proven though inferences that may fairly be drawn from the behavior of the alleged conspirators.” (quotation marks and citation omitted)).
4. The Manufacturer Defendants
Defendants also argue that the Amended Complaint fails to state a claim against any of the Manufacturer Defendants because it does not allege facts indicating that they entered into an unlawful agreement with both or either of the Wholesaler Defendants. (Mem. at 9-10.) At its core, “[i]dentifying the existence and nature of a conspiracy requires determining whether the evidence ‘reasonably tends to prove that the defendant and others had a conscious commitment to a common scheme designed to achieve an unlawful objective.‘” Apple, 791 F.3d at 315 (quoting Monsanto, 465 U.S. at 764 (alteration adopted)).
As to Vitro, for example, the Amended Complaint alleges that, on October 20, 2014, Vitro‘s General Manager informed OEMGN that both Wholesaler Defendants had pressured it to stop sales to OEMGN. (Am. Compl. ¶ 45.) Vitro subsequently reduced and, ultimately, cut off all sales to OEMGN sometime in 2015. (Id. ¶¶ 45-46.) In late 2015 and early 2016, Vitro‘s General Manager also told OEMGN that Vitro would not be selling to OEMGN to avoid putting its Mygrant account “at risk” and that a high-level Mygrant employee instructed him not to sell to OEMGN. (Id. ¶¶ 47-48.) The court will not repeat them all here, but the Amended Complaint includes similarly detailed and compelling allegations regarding the existence of an
Defendants’ primary contention is that Plaintiffs’ have alleged no more than parallel refusals to deal (see, e.g., Mem. at 21), which would not amount to an antitrust violation, see Verizon Commc‘ns Inc. v. Law Offices of Curtis v. Trinko, LLP, 540 U.S. 398, 408 (2004) (“[T]he Sherman Act does not restrict the long recognized right of a trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.“) (citation and quotation marks omitted) (alteration adopted); In re Zinc, 155 F. Supp. 3d at 366 (“[M]erely alleging parallel conduct alone is not sustainable.” (citing Twombly, 550 U.S. at 556; Mayor & City Council of Balt., 709 F.3d at 135-36)). But, as Plaintiffs note, the Amended Complaint does not rest solely on its allegations that the Manufacturer Defendants each independently refused to deal with it.
The court finds the Southern District‘s recent decision in Keurig to be particularly instructive. There, the court found the following allegations sufficient to support the inference that a conspiracy existed:
- “[T]hat an ‘expansive system of exclusionary and noncompetition agreements is orchestrated by Keurig, and coffee and other beverage brands that enter into a license or manufacturing agreement with Keurig do so with the express knowledge of Keurig‘s anticompetitive agreements with other competitor roasters and brands‘“;
- “[T]hat the terms of Keurig‘s agreements with roasters and brands are well known within the market, and each company would have known that its competitors had entered into these agreements“;
- [T]hat “[c]o-conspirators entered into [multi-year exclusionary] agreements with the knowledge and agreement that distributors and other resellers will be required to enter into, or already have entered into, agreements that limit their freedom to do business outside of specified authorized locations“; and
- “[T]hat ‘the coffee and beverage brands’ agreements not to deal with . . . makers that could otherwise increase their product output and sales revenue and provide a back-up or second manufacturer or the like’ can only be explained by a conspiracy to sustain supra-competitive prices . . . by restraining price competition.”
Keurig, 383 F. Supp. 3d at 245.
Plaintiffs have stated strikingly similar allegations here, particularly that the efforts to boycott OEMGN (and the widespread agreement to participate in that boycott) were well known throughout the industry, and that each Manufacturer Defendant would have known that its competitors were falling in line with the Wholesaler Defendants’ demands. (See, e.g., Am. Compl. ¶¶ 5, 44, 52, 54, 56-57, 62-66, 73, 79, 81). Such allegations of “conscious parallelism” may be sufficient for the court to infer the existence of a horizontal agreement “when such interdependent conduct is accompanied by circumstantial evidence and plus factors.” Mayor & City Council of Balt., 709 F.3d at 136 (citations omitted). Plaintiffs have alleged such “circumstantial evidence and plus factors”
* * *
As Plaintiffs have sufficiently alleged that the Wholesaler Defendants orchestrated a group boycott with and among the Manufacturer Defendants, the court finds that they have plausibly alleged a per se violation of § 1 of the Sherman Act.
B. State Law Claims
1. The Donnelly Act
Because the Donnelly Act has the same four-year statute of limitations as the Sherman Act, see
Defendants’ only argument in favor of dismissing Plaintiffs’ Donnelly Act claims as to the other Defendants is that “dismissal for failure to state a claim under the Sherman Act requires dismissal of the Donnelly Act claims premised upon the same factual allegations.” (Mem. at 25.) The court has not dismissed Plaintiffs’ federal antitrust claims against any Defendant except Sika, and so Plaintiffs’ Donnelly Act claims against the remaining defendants survive as well. See Linens of Europe, Inc. v. Best Mfg., Inc., No. 03-CV-9612 (GEL), 2004 WL 2071689, at *18 (S.D.N.Y. Sept. 16, 2004) (declining to dismiss the plaintiff‘s Donnelly Act claim where “Defendants cite[d] no relevant state policies or statutory distinctions between the Sherman and Donnelly Acts that should lead to the Court to analyze [plaintiff‘s] state antitrust claim differently from its federal claim“).
2. Tortious Interference
Under New York law, plaintiffs must prove four elements to succeed on a claim for tortious interference with a business relationship: (1) a business relationship between Plaintiffs and a third party (2) that the Defendants knew of and intentionally interfered with (3) solely out of malice or through the use of dishonest, unfair, or improper means (4) thereby injuring Plaintiffs. See Kirch v. Liberty Media Corp., 449 F.3d 388, 400 (2d Cir. 2006). Plaintiffs have plausibly alleged each of the elements; namely, that Defendants together have intentionally diminished the ongoing business between third party suppliers and OEMGN—and between each of the other Defendants and OEMGN—through coercion. This injured OEMGN because it was unable to readily purchase auto glass. See Linens of Europe, 2004 WL 2071689, at *20 (allowing a tortious interference claim to proceed when the plaintiff alleged that a manufacturer “refused to deal with [the plaintiff] at the behest of” its competitors).
In arguing to the contrary, Defendants rely primarily on Susskind v. Ipco Hosp. Supply Corp., 373 N.Y.S. 2d 627, 629 (2d Dep‘t 1975), an almost forty-five-year-old case, to support their argument that this claim should be dismissed because Plaintiffs have not provided specific allegations of prospective negotiations that reasonably could be expected to result in one or more contracts. (Mem.
IV. CONCLUSION
For the foregoing reasons, Defendants’ motion is GRANTED IN PART and DENIED IN PART. Plaintiffs’ federal and state antitrust claims against Sika are DISMISSED. All of Plaintiffs’ other claims—including its tortious interference claim against Sika—survive.
The parties are DIRECTED to contact the chambers of Magistrate Judge Lois Bloom regarding next steps in this case.
SO ORDERED.
Dated: Brooklyn, New York
January 30, 2020
NICHOLAS G. GARAUFIS
United States District Judge