Antitrust Law Daily Wrap Up, ANTITRUST—M.D. Fla.: Hand tool distributor's amended complaint against tool manufacturer partially survives dismissal, (May 7, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

Amended complaint alleged interference with distributorship agreement by Amazon.com, unnamed as a defendant but alleged to be both an online sales platform provider and a competitor to the distributor.

The federal district court judge in Orlando, Florida has partially granted dismissal of a tool distributor's antitrust claims against a woodworking tool manufacturer. The relationship between the distributor and manufacturer, which had inured to the benefit of both, had soured following some alleged interference by non-party Amazon.com. The initial complaint was dismissed in its entirety, and an amended complaint was filed. For the amended complaint, the court granted dismissal of the Sherman Act claim and the claim under Florida's Sherman Act analog statute, and also dismissed one of the claims under the Robinson-Patman Act, leaving intact the other Robinson-Patman Act claim and the Florida statute claim predicated upon it, and the breach of contract claim. The dismissals were without prejudice, and the distributor was granted leave to file a second amended complaint (Contractor Tool Supply, Inc. v. JPW Industries, Inc., No. 5:24-cv-00347-JA-PRL (M.D. Fla. May 5, 2025)).

Background. JPW Industries, Inc. (JPW), manufactures woodworking machinery and hand tools. JPW has a Minimum Advertised Price (MAP) policy for its distributors, which sets a floor price for a given product, below which JPW's distributors may not advertise the product but which effectively permits privately negotiating lower actual selling prices.

Contractor Tool Supply, Inc. (CTS) distributes hand tools of various manufacturers, including those of JPW. CTS effects its sales through (1) a brick-and-mortar store facility; (2) its Internet website; and (3) online on the Amazon.com website through an Amazon "Storefront" called "Vera Tools."

CTS was designated by JPW as a "Preferred Vendor" entitled to benefits such as lower pricing and higher rebates if specified sales performances are met. In late 2023, CTS and JPW extended their "Preferred Vendor" agreement to run into the 2024 year. CTS initiated a marketing campaign based upon the renewed agreement.

Separate and apart from CTS's "Vera Tools" Amazon Storefront, Amazon.com itself also sells JPW products. On July 9, 2024, CTS filed a complaint in federal district court against JPW (but did not name Amazon as a defendant) alleging that Amazon, whose JPW product sales significantly decreased during CTS's marketing campaign, prevailed upon JPW to place limits upon the sales of JPW products on the Vera Tools Storefront through, inter alia, unilateral alteration of the Preferred Vendor agreement terms, imposition of fees upon CTS that were not imposed upon Amazon or other distributors, and restrictions upon the how CTS could operate its Vera Tools website. CTS's complaint alleged breach of contract, and violations of (1) the Sherman Act [15 U.S.C. § 1]; (2) the Robinson-Patman Act [15 U.S.C. § 13]; (3) the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) [Fla. Stat. §§ 501.201-501.213]; and the Florida Antitrust Act [Fla. Stat. § 542.18]. JPW's motion to dismiss the initial complaint was granted.

CTS filed an amended complaint, which JPW moved to dismiss.

Breach of contract. The court denied JPW's motion to dismiss CTS's breach of contract claim. Because the woodworking tools involved were "goods" subject to a contract for sale [Fla. Stat. § 672.105(1)], Florida's version of the Uniform Commercial Code (UCC) applied [Fla. Stat. § 672.102]. CTS alleged a written contract for a specified quantity of tools for which CTS was ready to pay an agreed price, and that JPW breached the agreement by refusing to fulfill CTS's orders for the tools. The mutual promises constituted legal consideration. CTS accordingly asserted a plausible plea of contractual breach. Whether there was a meeting of the minds sufficient to form a contract is a question for the factfinder, which must take into account the information adduced in the discovery phase.

Sherman Act-resale-price maintenance. The judge found that while CTS did plausibly plead that a resale price maintenance agreement existed, it did not plausibly plead actual or potential harm to competition caused by the scheme. Although CTS alleges that the elimination of CTS's ability to effect discounts on the website purchasing utility has "harmed consumers through increased prices and decreased availability of JPW’s products," no examples of decreased availability or higher prices are included in the amended complaint. There was no connection asserted between JPW's power in the woodworking tools market and harm to competition in that market. JPW's motion to dismiss CTS's Sherman Act [15 U.S.C. § 1] vertical resale-price maintenance claim was granted.

Robinson-Patman Act. The court partially granted JPW's motion to dismiss CTS's claims under the Robinson-Patman Act. JPW's motion to dismiss CTS's unlawful price discrimination claim [15 U.S.C. § 13(a)] was granted. Although the amended complaint did allege at least two sales by JPW to at least two different purchasers at different prices, the allegations needed to plead actual injury. The sales referred to in the amended complaint occurred before the alleged meeting between JPW and Amazon and therefore could not have been caused by the alleged conspiracy.

The court did, however, deny dismissal of CTS's Robinson-Patman Act discriminatory promotional allowances claim [15 U.S.C. § 13(d)]. Although CTS's claim that JPW paid promotional allowances to Amazon that were not availed to CTS was scant in particulars, it was sufficient to plausibly plead the claim.

Florida state law claims. A Robinson-Patman Act discriminatory promotional allowances claim [15 U.S.C. § 13(d)] can be a predicate to sue under FDUTPA, so JPW's motion to dismiss that claim was denied. Conversely, CTS's Florida Antitrust Act is analogous to the Sherman Act, so the dismissal of CTS's Sherman Act claim warranted dismissal of its Florida Antitrust Act claim.

The Case is No. 5:24-cv-00347-JA-PRL.

Judge: Antoon, J.

Attorneys: Michael Christen Kelley (Lawson Huck Gonzalez, PLLC) for Contractor Tool Supply, Inc. Kevin W. Cox (Holland & Knight LLP) for JPW Industries, Inc.

Companies: Contractor Tool Supply, Inc.; JPW Industries, Inc.

Cases: Antitrust FranchisingDistribution FloridaNews