- Sixth Circuit Dismissed Claim with Prejudice after Iqbal Challenge
- June 22, 2012
- Law Firm: Dressman Benzinger LaVelle psc - Crestview Hills Office
- In New Albany Tractor v. Louisville Tractor, et. al., ---F.3d ---, 2011 WL 2448909 (6th Cir. 2011), the Sixth Circuit Court of Appeals cited to Bell Atl. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, ---U.S. ----, ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009), discussed whether a dismissal with prejudice is appropriate when a plaintiff fails to meet the plausibility standard established by these cases.
Plaintiff brought claims against Defendants alleging they violated the Robinson-Patman Act, 15 U.S.C.§ 13(a). The Act prohibits sellers from having two prices for the same product. The goal of the Act is to prevent large buyers from getting better pricing than smaller buyers. In this case, Plaintiff alleged that the manufacturer controlled the distributor's resale price in violation of the Act. After reviewing the matter, the District Court granted the Defendant's motions to dismiss with prejudice.
Plaintiff appealed arguing (1) that the district court erred in granting the motions to dismiss for failure to state a plausible claim, and (2) the district court erred in failing to allow Plaintiff to amend its complaint or in the alternative dismissing without prejudice. New Albany Tractor at *4.
Plaintiff had sought to prove that the arrangement between the two Defendants caused it to pay a discriminatory price, but because it could not conduct discovery, it could not get the information to support its claims. The Court stated "The plaintiff apparently can longer obtain the factual detail necessary because the language of Iqbal specifically directs that no discovery may be conducted in cases such as this, even when the information needed to establish a claim of discriminatory pricing is solely within the purview of the defendant or a third party, as it is here." Id. at *5 (citing Ashcroft v. Iqbal, 129 S.Ct. at 1954).
The Court analyzed the Robinson-Patman Act and concluded that without knowledge from the Defendants, the Plaintiff could not plausibly allege a violation of the Act. The Court affirmed the district court's decision to dismiss Plaintiff's claim.
Next, the Court addressed the issues of leave to amend and dismissal with prejudice. The Court found that since Plaintiff had not sought leave to amend it, it had waived that argument. As for dismissal with prejudice, the Court noted that the lower court had granted Plaintiff ample opportunity to submit additional evidence in support of its claims. In particular, the Court referenced an extensive affidavit from Plaintiff's President that was submitted to supplement the allegations of the Complaint. The Court again stated that the information necessary to the Plaintiff's claims was in the hands of the Defendants. Nevertheless, the Court found that the lower court had not abused its discretion in dismissing claims with prejudice.
The ultimate conclusion is that complaints in the federal courts that fail to state a plausible claim, even where the evidence needed for such a claim is in the hands of the defendant, will be dismissed and likely with prejudice.