Antitrust Law Daily Wrap Up, ANTITRUST—MDLa: Waterway Screening Machine Maker Failed to State Antitrust Claims, But Did State Louisiana Unfair Trade Claim, Over Rival’s Bid Submission Conduct, (Jan 17, 2013)

By Tobias J. Gillett, J.D., LLM.

A manufacturer of machines to remove debris from waterways failed to allege sufficient facts concerning a competitor’s conduct in securing a bid to manufacture those machines to support claims under Louisiana’s antitrust and monopolization statutes, but did alleged enough facts to state a claim under the Louisiana Unfair Trade Practices Act (LUTPA), the federal district court in Baton Rouge has ruled (Duperon Corp. v. Screening Systems Int’l, Inc., January 16, 2013, Jackson, B.).

Duperon Corporation and Duperon Innovation, LLC (collectively, Duperon) possessed United States Patent Number 5,425,875 (“the ‘875 patent”) on a “Screen Scraper for Trash Racks.” In 2011, Duperon submitted a bid for a project to build four machines to remove debris from waterways in Terrebonne Parish, Louisiana. The project called for a “Duperon Screen Scraper for Trash Racks” or “equivalent.”

Screening Systems International Inc. (SSI) was awarded the contract, but Duperon demanded that all bids be withdrawn, allegedly after learning that SSI had secured the bid by offering screen scrapers that infringed the ‘875 patent. SSI revised its bid to offer a screen scraper that it claimed did not infringe the ‘875 patent.

Duperon filed suit, alleging claims under Louisiana’s antitrust law and the Louisiana Unfair Trade Practices Act (LUTPA), among other claims. SSI filed a motion to dismiss.

Antitrust and Monopolization

The Louisiana antitrust statute bars “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce in this state,” and the anti-monopoly statute prohibits individuals from “monopoliz[ing], or attempt[ing] to monopolize, or combin[ing], or conspir[ing] with any other person to monopolize any part of the trade or commerce within this state.” The court found Duperon’s allegations here insufficient to survive a motion to dismiss.

The court found Duperon’s assertions that its “representatives were prevented from further dealings with the contract” after the bid was closed were insufficient to constitute a restraint on competition. The court observed that Duperon had received numerous contract bids from Terrebonne Parish over many years, and that SSI received the bid in this case because it offered a lower price. The fact that Duperon did not receive this one bid did not constitute a constraint on competition as a whole.

The court also found that Duperon “lack[ed] sufficient factual allegations to suggest that [SSI] had the market power or ability to control prices or exclude competition” to support a claim for attempted monopolization under the Louisiana statute. Therefore, the court dismissed Duperon’s claim for conspiracy in restraint of trade under Louisiana law.

Louisiana Unfair Trade Practices Act

LUTPA prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Although the court noted that LUPTA only sanctioned “egregious actions involving elements of fraud, misrepresentation, deception, or other unethical conduct,” the court nonetheless found that Duperon had stated a claim under LUTPA.

The court based this conclusion on a range of facts alleged by Duperon, including that SSI conceded it infringed the ‘875 patent; that it “promised not to manufacture infringing machinery and that it would withdraw its bid”; that it sent Duperon a letter stating that it would withdraw its bid, but “later presented a bid which was still considered an ‘equivalent’ to [Duperon’s] machine,” and that SSI conceded that it “circumvent[ed] the required pre-approval process in its second bid for the project.” The court considered these facts sufficient to support a claim under LUTPA, and therefore declined to dismiss Duperon’s claim.

The court also declined to dismiss a claim for intentional interference with business under Louisiana law. The court dismissed a claim of unfair competition under the Lanham Act and a claim for intentional interference with contractual relations under Louisiana law.

The case is No. 12-296-BAJ-DLD.

Attorneys: Scott Cameron Barney (Chaffe McCall, LLP) for Duperon Corp. Russel O. Primeaux (Kean, Miller, Hawthorne, D'Armond) for Screening Systems International, Inc.

Companies: Duperon Corp.; Screening Systems International, Inc.

Cases: Antitrust StateUnfairTradePractices LouisianaNews