United States District Court, W.D. Washington, Seattle
ORDER GRANTING PLAINTIFF ARMACELL, LLC'S MOTION
TO DISMISS DEFENDANT BAILEY'S COUNTERCLAIM
RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Plaintiff Armacell LLC's
Motion to Dismiss Defendant Bailey's counterclaim under
Rule 12(b)(6). Dkt. #53. For the reasons stated below, the
Court GRANTS Plaintiff Armacell's Motion.
Armacell, LLC (“Armacell”) filed a Complaint
alleging that Defendant Bailey Sales & Associates, Inc.
(“Bailey”) failed to pay $544, 992.17 for
insulation products, breaching their Buy/Sell Representative
Agreement. Dkt. #1-7. The Complaint states that “over
the course of 2017 and 2018 . . . Armacell sold and shipped
to [Bailey] various quantities of products.” Dkt. #1-7
at 6. Payment for the products was due within 31 days after
receipt. Id. at 2. Armacell states Bailey failed to
pay amounts owed as they came due. Id. at
8. Armacell requests damages in the total principal
amount of $544, 992.17, plus interest. Id. at 11.
answered the Complaint and asserted its own Counterclaim.
Dkt. #10. Bailey claims Armacell engaged in discriminatory
sales of products to another customer in direct violation of
federal and Oregon state law. Id. at 8, 10 (relying
on 15 U.S.C. § 13; Or. Rev. Stat. § 646.040). In
response to Bailey's Counterclaim, Armacell filed a
Motion to Dismiss for failure to state a claim under Rule
12(b)(6). Dkt. #53.
Legal Standard under Rule 12(b)(6)
making a 12(b)(6) assessment, the court accepts all facts
alleged in the complaint as true, and makes all inferences in
the light most favorable to the non-moving party. Baker
v. Riverside County Office of Educ., 584 F.3d 821, 824
(9th Cir. 2009). However, the court is not required to accept
as true a “legal conclusion couched as a factual
allegation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007)). The complaint “must contain
sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face.” Id.
at 678. This requirement is met when the plaintiff
“pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. The complaint need
not include detailed allegations, but it must have
“more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not
do.” Twombly, 550 U.S. at 555. Absent facial
plausibility, a plaintiff's claims must be dismissed.
Id. at 570.
Plaintiff's Motion to Dismiss under Rule
Counterclaim asserts Armacell engaged in price
discrimination, violating federal and Oregon law, by selling
the same products to Bailey's competitor, Jones Stephens,
at a lesser rate of 25% to 40%. Dkt. #10 at 7 (citing 15
U.S.C. § 13; Or. Rev. Stat. § 646.040). Bailey
argues this disparate pricing for identical products
prevented free competition with Armacell's other
distributors and resulted in Bailey being forced out of the
market. Id. at 8.
argues Bailey has failed to state a claim upon which relief
can be granted. Dkt. #53. Armacell contends the Counterclaim
fails to (1) allege facts that would establish harm to
interbrand competition, (2) allege harm to competition
generally, (3) allege that a buyer with market power received
better pricing, (4) define a geographic or product market,
and (5) allege facts showing products at issue were of like
grade and quality. Id. at 3. Armacell argues that
without well-pled factual allegations that competition itself
was harmed - as opposed to harm to single firm - the
Counterclaim must be dismissed. Id. at 8.
Court agrees with Armacell. Under 15 U.S.C. § 13(a), it
is unlawful for “any person engaged in commerce . . .
to discriminate in price between different purchasers of
commodities of like grade and quality . . . where the effect
of such discrimination may be substantially to lessen
competition or to create a monopoly.” According to the
Supreme Court, 15 U.S.C. § 13 should be interpreted to
the protection of competition as opposed to the protection of
existing competitors. Volvo Trucks North America, Inc. v.
Reeder - Simco GMC, Inc., 546 U.S. 164, 181 (2006).
Here, as pointed out by Armacell, Bailey only identifies one
competitor, Jones Stephens. Bailey fails to identify in which
states Jones Stephens competed with Bailey, fails to identify
the specific products it purchased at a higher price, and
fails to allege facts that the products in question were of
like and grade quality. Overall, Bailey's claims alleging
discriminatory harm to competition are conclusory. Even when
making all inferences in the light most favorable to Bailey,
the Court concludes there are not adequate factual
allegations that competition has been harmed as a result of
the alleged price discrimination.
complaint is dismissed for failure to state a claim,
“leave to amend should be granted unless the court
determines that the allegation of other facts consistent with
the challenged pleading could not possibly cure the
deficiency.” Schreiber Distrib. Co. v. Serv-Well
Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). If
Bailey can allege additional facts to support the claim that