Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—N.D. Ohio: Terminated dealer could not bring claims under state equipment dealership, antitrust laws, (Jul 25, 2014)

By Edward L. Puzzo, J.D.

A terminated tire dealer could not sustain an action against its manufacturer under either the Ohio farm machinery and construction equipment dealer law or the state antitrust law, the federal district court in Akron, Ohio has ruled (B&S Transport, Inc. v. Bridgestone Americas Tire Operations, LLC, July 24, 2014, Lioi, S.).

B&S Transport was an authorized Bridgestone tire dealer for nearly three decades, primarily selling to government contractors such as the Defense Logistics Agency. In February 2013, Bridgestone notified B&S Transport that it would be terminated as an authorized dealer at the end of 2013. This litigation ensued. Among the claims B&S Transport asserted against Bridgestone were alleged violations of the Ohio farm machinery and construction equipment dealer law and the state antitrust law.

Ohio dealer law. The Ohio farm machinery and construction equipment dealer law, Ohio Rev. Code § 1353.06, prohibits suppliers from terminating, failing to renew, or substantially altering a dealer agreement without good cause. According to B&S Transport, Bridgestone’s cited reason for terminating the contract—a change in distribution and go-to-market strategies—did not constitute good cause under the statute. The court rejected the claim on two grounds.

First, the dealer law cited by B&S Transport refers to suppliers and dealers of farm machinery or construction equipment. Sales of motor vehicles are specifically excluded from the law. Since B&S Transport made no allegation that it was a farm machinery or construction equipment dealer, it was not covered by the dealer law.

Second, the cited law provides only one remedy: The supplier must repurchase inventory held by the dealer at the time the dealer agreement was terminated. Even if plaintiff met the first requirement, it failed to ask Bridgestone to repurchase its inventory, the court found.

Since a claim by plaintiff under the farm machinery and construction equipment law would not survive a motion to dismiss, the court denied plaintiff’s motion to amend its complaint to include claims under the dealer law.

Restraint of trade. B&S Transport also sought to add a state claim for restraint of trade. Such claims under Ohio law are analyzed under the criteria of the federal Sherman Act, the court stated. A Sherman Act claim requires more than an allegation of a restraint of trade; an agreement in restraint of trade must also be pleaded, consisting either of an explicit agreement to restrain trade or sufficient circumstantial evidence tending to exclude the possibility of independent conduct. Nowhere in the restraint of trade cause of claim did the plaintiffs allege an express or circumstantial agreement in restraint of trade. Even if an agreement in restraint of trade had been alleged, it would have had to be shown to be unreasonable.

“Two frameworks exist for evaluating reasonableness: the per se rule and the rule of reason,” the court explained. “The per se rule is appropriate where the challenged practice is entirely void of redeeming competitive rationales, while under the rule of reason, a plaintiff has the burden of demonstrating significant anti-competitive effects within a relevant market.”

In this case, the dealer did not allege that Bridgestone’s actions lacked a redeeming competitive rationale, the court noted. In fact, the dealer identified Bridgestone’s stated reason for termination as a change in distribution and go-to-market strategies. Such strategies may demonstrate a redeeming competitive rationale, rather than a restraint of trade. Nor did the dealer demonstrate—or even allege—anticompetitive effects within a relevant market, the court observed.

B&S Transport alleged damages from the termination decision, but the Sherman Act requires an allegation that competition itself, not just the plaintiff, sustained damages.

Since a restraint of trade claim would not withstand a motion to dismiss, the dealer’s motion to amend their complaint to include such a claim had to be denied. If the dealer had antitrust claims against Bridgestone that had not been brought thus far, a separate antitrust action would be appropriate, the court concluded.

The case is Civil Action No. 5:13-cv-2793.

Attorneys: Glenn A. Crickenberger (Gary, Williams, Parenti, Watson & Gary) for B&S Transport, Inc. David T. Moss (Hanna, Campbell & Powell) for Bridgestone Americas Tire Operations, LLC.

Companies: B&S Transport, Inc.; Bridgestone Americas Tire Operations, LLC.

Cases: Antitrust FranchisingDistribution OhioNews