Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Wis.: Grocer denied injunction forcing Clorox to sell it “large pack” products, (Jun 1, 2015)

By Peter Reap, J.D., LL.M.

Grocery store operator Woodman’s Food Market, Inc., was not entitled to a preliminary injunction to “maintain the status quo” by forcing defendants The Clorox Company to sell Woodman’s a variety of its “large pack” products while Woodman’s claim for violation of the price discrimination provisions of the Robinson-Patman Act proceeded, the federal district court in Madison, Wisconsin, has ruled. Woodman’s failed to show either that it would have no adequate remedy at law or that it would be irreparably harmed if an injunction was not issued (Woodman’s Food Market, Inc. v. Clorox Co., May 28, 2015, Crocker, S.).

Until October 1, 2014, Woodman’s had purchased a variety of large pack products from Clorox. In September 2014, Clorox informed Woodman’s that it was sorting its retailer customers into categories such as “general market” and “club” stores. Starting October 1, 2014, only club stores could buy certain large pack products from Clorox. Because Clorox had classified Woodman’s as a general market store, Woodman’s no longer could purchase large pack products from Clorox.

Woodman’s filed this lawsuit under the price discrimination provisions of the Robinson-Patman Act, 15 U.S.C. §§ 13(a), (d) and (e). Clorox parried by unilaterally ending all business dealings with Woodman’s on February 24, 2015. Clorox then moved to dismiss Woodman’s complaint for lack of jurisdiction, arguing that Woodman’s was no longer a “purchaser” under the Act. On April 27, 2015, the court determined that Woodman’s could still qualify as a purchaser with standing under the Act because Woodman’s continues to purchase Clorox products through wholesalers. The court also permitted Woodman’s to amend its complaint to add a claim of conspiracy to restrain trade under § 1 of the Sherman Act.

Woodman’s has since clarified that its request for a preliminary injunction is limited to its claims under the Robinson-Patman Act. Woodman’s asked that the court order Clorox to “mak[e] available to Woodman’s products which Clorox sold to Woodman’s until September 30, 2014, and which Clorox continues to sell to other retailers competing with Woodman’s in the distribution of Clorox products.”

Preliminary injunction. To obtain a preliminary injunction, the moving party must meet these threshold requirements: (1) it has no adequate remedy at law; (2) it will suffer irreparable harm if a preliminary injunction is denied; and (3) there is some likelihood of success on the merits of the claim. If the moving party meets the threshold burden, then the court proceeds to the balancing phase, where it weighs the competing harms to the parties if an injunction is granted or denied and also considers which outcome would be in the public interest.

Previously, Clorox contended that if this court reached the preliminary injunction motion, then it would need to decide only two questions: (1) whether Woodman’s has stated a claim as a matter of law under Section 2(e) of the Robinson-Patman Act and (2) whether Woodman’s is likely to incur irreparable harm unless the court orders Clorox to sell the products at issue to Plaintiff,” the court noted. Thus, because the court determined in the April 2015 order that Woodman’s stated a claim under § 2(e), the only remaining disputed issue was whether Woodman’s would suffer irreparable harm if a preliminary injunction did not issue.

Woodman’s contended that an award of damages would not adequately compensate it for its losses because it could forever lose current customers who wish to purchase large packs of Clorox products. Woodman’s feared that these customers will turn to club stores not only for the large-pack items that Woodman’s no longer could provide but also their overall grocery needs. Woodman’s argued that because it would not be able to measure such losses “with any degree of certainty,” money damages cannot be an adequate remedy.

However, Woodman’s presented no evidence to support its position, according to the court. Woodman’s relied solely on the affidavit of Clinton Woodman, vice president of Woodman’s, who stated: “Woodman’s is justifiably concerned that its current large pack purchasers will stop buying their Clorox products from Woodman’s once Woodman’s is forced to sell the smaller, more expensive packs of those products and raise its prices on those products due to the higher unit cost. Woodman's is further concerned that those same customers, upon learning that the large packs they prefer to purchase are still available at Sam's Club and Costco, will stop shopping at Woodman's and start purchasing those products, and other products that, until now, they have been purchasing from Woodman's, at Sam's Club and Costco.”

The executive undoubtedly believed what he said, but his conclusory and self-serving statements were too conjectural to provide to support a finding of irreparable harm, the court explained. Woodman’s also did not explain why it would not be able to calculate its lost sales of large pack products by looking at past sales of these products and any decline in its sale of similar products in alternative sizes.

It was also unclear why Woodman’s believed that customers who had bought large-pack Clorox products along with their other groceries would cease all purchases of all other groceries from Woodman’s in favor of shopping exclusively at club stores simply because those stores offered larger packages of a narrow range of goods. Although Woodman’s could lose its sales of large-pack items without a preliminary injunction—a damage that was easily calculable—there was no evidence from which the court could reasonably infer that Woodman’s also would lose sales of regular-sized products. In fact, it was possible that sales of regular-sized Clorox products would increase, the court observed.

Because Woodman’s failed to meet the threshold requirement of irreparable harm—and arguably the requirement of no adequate remedy at law—Woodman’s was not entitled to a preliminary injunction.

The court also conducted a cursory examination of all the other preliminary injunction considerations in order to expedite appellate review and to protect the interests of the parties. Because the court determined that Woodman’s stated a claim under the Robinson-Patman Act, Woodman’s had some likelihood of success on the merits—at least on the limited record currently before the court. However, this finding alone did not outweigh the fact that Woodman’s failed to establish either of the other two threshold factors of irreparable harm or an inadequate remedy at law, the court reasoned. The same was true of the considerations related to the competing harms to the parties and the public interest.

The competing harms factor was at best neutral because both parties described their prospective harm in a speculative and conclusory manner. Finally, the public interest that Woodman’s identified was the desire for “unfettered competition between all retailers,” yet Woodman’s failed to adduce any evidence to support its “concerns,” the court said.

The case is No. 14-cv-734-slc.

Attorneys: John Alan Kassner, III (Von Briesen & Roper, SC) for Woodman's Food Market, Inc. Joshua H. Soven (Gibson Dunn & Crutcher LLP) for Clorox Co.

Companies: Woodman's Food Market, Inc.; Clorox Co.

Cases: Antitrust WisconsinNews