The purpose of this website is to explain:
The range and types of victims of RPA violations, in no particular order, are: (i) the public; (ii) small towns, villages and cities; (iii) the taxpayers and residents of small towns, villages and cities; (iv) the competitors of the major retail corporations violating the Robinson-Patman Act (RPA); (v) the employees and shareholders of these competitors; (vi) smaller manufacturers competing with larger manufacturers in trying to sell to the major retail chains; (vi) their shareholders and employees; (vii) the nation's largest manufacturers trying unsuccessfully to make a profit in selling to the nation's leading chain stores; (vii) their employees and shareholders; (viii) the accountants, lawyers, doctors and other professionals servicing the small and intermediate retail, whole and manufacturing companies being driven out of business by the major chains; and (ix) the economic and political structure of the United States.
With so much at stake, and the losses already piling up, why is it that nobody seems to be doing anything to stop the problem?
This website try to suggest why, and what can be done by a limited number of persons to change the situation.
There is almost no private enforcement of the Robinson-Patman Act by private persons. Contrast this, for example, to a major corporation issuing a false statement causing some investors to profit and others to lose money. There would be a fight among plaintiffs and class-action lawyers to be able to control the litigation to recover for whatever victims can be identified (without any offset for the profits achieved by the other side of the losing transactions).
Why isn't there such a rush by attorneys and clients to enforce the RPA?
First of all, there are no class actions permitted under federal rules for Robinson-Patman Act cases. Class Actions Not Permitted Under the RPA - citations of numerous cases. Accordingly, an aggrieved plaintiff must file its action alone Example of RPA Complaint (prior to amendment) by a Single Plaintiff, The Intimate Bookshop, Inc., or try to join with other plaintiffs in what is known as a "permissive joinder of parties" under Rule 20(a) of the Federal Rules of Civil Procedure. Example of RPA Complaint by about 240 Plaintiffs, The Auto-Parts RPA Litigation. Rule 20(a), F.R.Civ.P., provides:
Permissive Joinder of Parties
(a) Permissive Joinder. All persons may join in one action as plaintiffs if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action. All persons (and any vessel, cargo or other property subject to admiralty process in rem) may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the action. A plaintiff or defendant need not be interested in obtaining or defending against all the relief demanded. Judgment may be given for one or more of the plaintiffs according to their respective rights to relief, and against one or more defendants according to their respective liabilities.
(b) Separate Trials. The court may make such orders as will prevent a party from being embarrassed, delayed, or put to expense by the inclusion of a party against whom the party asserts no claim and who asserts no claim against the party, and may order separate trials or make other orders to prevent delay or prejudice.
The reason that single plaintiffs generally (i.e., 999,999 out of 1 million) do not choose to sue under the RPA are the high costs of federal litigation (including expert witnesses, attorneys' fees, discovery requirements, motion practice), and the general unwillingness to sue their suppliers (the manufacturers and/or wholesalers which are giving better per-unit prices to the major-chain competitors.
Also, because of the paucity of RPA actions brought privately, there is no plaintiff's RPA bar (i.e., group of attorneys scattered throughout the U.S.) available for a desirous plaintiff to use to find an experienced RPA attorney. The attorneys servicing the prospective plaintiff in other matters probably doesn't want to get involved, particularly if it means suing the established businesses in the area.
Thus, for most desirous persons there is no realistic opportunity to obtain RPA help.
But even when the help is offered, such as when a trade association invites its membership to listen to an experienced RPA attorney who can answer their questions, there is little or no interest in suing, generally because of the costs, delays and uncertainty, and more importantly, I believe, the inherent distrust which businesspersons have for lawyers, for a variety of historical and other reasons, some justified and some absolutely unjustified.
In a recent effort by a trade association to solicit interest among its members, slightly more than 100 out of 19,000 (or about 1/5th of 1% - .0002 - of the) possible plaintiff businesses joined the action, after one year of extensive, industry-wide efforts to try to put together a group of RPA plaintiffs.
At one time, prior to President Reagan's presidency, there was vigorous enforcement of the RPA by the Federal Trade Commission. This stopped after and by reason of President Reagan's inauguration, in January, 1981. At this time, the U.S. government bowed out of enforcing the RPA (other than for scattered, meaningless activities apparently designed to mislead the public into thinking enforcement was taking place when in fact the orders for non-enforcement had been issued). See Section Entitled "The Probable Origin of the DNA Code - Wal-Mart - in 1981", which Provides a History of the Secret DNA Code by Which Major Chain Superstores Are Getting Manufacturers' Rebates Not Known or Available to The Superstores' Independent Competitors
If businesses were not suing under the RPA because they felt that the government should be and was enforcing the Act, this may account for some reluctance for private persons to sue, but after a period of time, when half of the independent businesses have gone out of business, the small independent competitors realized the truth, and by that time they had insufficient funds to do anything, except plan for getting out of the business as effectively as possible, even by selling out to the major superstore which was putting them out of business. After all, how could you expect to sell your business to someone you were suing? Main Reasons for Failure of KMart, Woolworth, Montgomery Wards and Other Injured Major Retailers to Bring Suit
After years of wondering about this problem, of why injured retailers in bankruptcy or at any time before or after bankruptcy, do not bring an action for damages against the persons violating the RPA and causing them injury.
The answer is complex:
I believe the last point is the most important reason, that the human being who have to make the decision have more allegiance to their own future than to the well-being of the investors and company.
Anyway, for whatever reason, we have arrived today, in year 2002, at a point where virtually nobody is suing any manufacturers or superstores for violation of the RPA. The only significant exception is the attorney creating this website for you to read, and his clients.
Although a class action is not permitted by court decisions under Rule 23, F.R.Civ.P. (which limits the ability to put a class of separate plaintiffs and their claims together into a single action, there seems to be no reason why a derivative action under Rules 23.1 and 23.2, which allow one or more named plaintiffs to commence an action on behalf of a single unwilling plaintiff, should not be permitted.
If this is the case, a single shareholder or member of an unincorporated association could bring suit on behalf of the corporation or association not willing to commence the suit itself.
Rules 23.1 and 23.2, F.R.Civ.P., provide:
Rule 23.1. Derivative Actions by Shareholders
In a derivative action brought by one or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which may properly be asserted by it, the complaint shall be verified and shall allege (1) that the plaintiff was a shareholder or member at the time of the transaction of which the plaintiff complains or tht the plaintiff's share or membership thereafter devolved on the plaintiff by operation of law, and (2) that the action is not a collusive one to confer jurisdiction on a court of the United States which it would not otherwise have. The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for the plaintiff's failure to obtain the action or for not making the effort. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association. The action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to shareholders or members in such manner as the court directs.
Rule 23.2. Actions Relating to Unincorporated Associations
An action brought by or against the members of an unincorporated association as a class by naming certain members as representative parties may be maintained only if it appears that the representative parties will fairly and adequately protect the interests of the association and its members. In the conduct of the action the court may make appropriate orders corresponding with those described in Rule 23(d), and the procedure for dismissal or compromise of the action shall correspond with that provided in Rule 23(e).
F.R.Civ.P. Rules 23.1 and 23.1 are obviously designed to enable an injured shareholder (injured by reason of the corporation's failure to enforce its rights) to enforce the corporation's rights through a "derivative lawsuit", in which the shareholder files the claim on behalf of the corporation because the corporation has not been willing to do so itself, for whatever reason(s).
Although there are various class-action concepts which are picked up by reference in Rules 23.1 and 23.2, these are only picked up to ensure fairness of representation of the other shareholders or association members who are also affected by the lawsuit.
The RPA decisions which prohibit a class action by one plaintiff on behalf of thousands of separate plaintiffs similarly situated is clearly not applicable here, because the only plaintiff involved with a RPA claim is the corporation which is unwilling to sue itself. Thus, there is no reason for invoking the rule prohibiting RPA class actions when the only plaintiff with a claim is a single corporation (such as Lechters or Kmart).
The use of Rules 23.1 and 23.2, F.R.Civ.P., might also attract the class-action bar to expand the nation's (private) enforcement of the RPA, and in due course encourage the state and federal politicians to order RPA enforcement by state and federal agencies.
It seems clear that state enforcement of the RPA is more apt to start before any meaningful federal enforcement.
But any enforcement activity would be welcome, to force manufacturers to give equal per-unit prices to all competing customers, unless the price difference is cost justified (and the manufacturer actually knows its costs, and the price at which it is selling goods to its major retail customers).
It was much easier to conclude that a derivative action could be brought in the name of a publicly-traded corporation such as Kmart or Woolworth or Lechters than it is to conclude that citizen of a town, village or county could bring a similar RPA suit on behalf of the town, village or county.
Taxpayer actions are not designed for this type of relief. They presuppose that the town, city or county is spending taxpayer money inappropriately and the taxpayer is trying to stop the alleged illegal expenditure. See A Taxpayer's Action in Federal Court to Try to Stop Government Subsidies to Big Business - Amounting to Several $ Billion Per Year in New York City.
Thus, a derivative suit by a citizen or resident attempting to exercise the right of a government agency to sue is clearly distinguishable from a taxpayer action, and probably could not be brought as a taxpayer action, although there would be no harm in alleging a taxpayer action as an alternative basis for commencement of the suit, on the grounds that governmental money is being dissipated by not making claim for moneys which are due the government by reason of the violations of the RPA.
As to whether governments are entitled to sue under the RPA, see Who Can Sue for Unlawful Price Discrimination - Individuals, Corporations, Towns and Other Governmental Bodies.
It is not wholly clear that there is such a right, but this is because the right has not yet been clearly litigated in the courts. There is no reason under law that the right does not exist, as explained in the linked material in the preceding paragraph.
Assuming the right exists for a government agency to sue for damages under the RPA, there is no reason that F.R.Civ.P. Rules 23.1 and 23.2 can't be used, in absence of federal decisions denying government associations the right to use Rules 23.1 and 23.2, as to which I will do some research and make appropriate modifications of this website (even eliminating any proposal for derivate suits on behalf of state and local government entities if caselaw so indicates).
But my thinking at this time, is that there is no reason why a town, village or county could not have a suit brought on its behalf, derivatively, under Rules 23.1 and 23.2 at first consideration of the idea.
The Results of My Legal Research
I have concluded that Rules 23.1 and 23.2 may be used to start a derivative RPA action on behalf of a city or town (in New York State) and perhaps a city, town or state in other states, depending on the extent to which state law permits taxpayer actions in the state. New York law prohibits taxpayer actions against state agencies, but permits them against cities, town, villages, counties and other local governmental agencies.
The key phrase seems to be "taxpayer derivative suit", which is found in the following cases:
The foregoing cases, when read in light of the applicable state law, seem to provide a basis for having a taxpayer derivative action on behalf of a local governmental entity to recover for its injuries under the RPA caused by a superstore chain and the manufacturers from which it buys its goods on a discriminatory basis.
If injured towns, villages and counties are permitted to (and do actually) commence actions against superstore chains for destroying the tax base and property values in the town or village or county, this would be a most important reason for the companies violating the RPA to try to reorganize their respective businesses (if they can) to bring them back into compliance with the RPA -- and without any help from the federal agencies supposedly enforcing the RPA. The only meaningful thing about a person having worked for the Federal Trade Commission during recent years is that future employers will know that the person has never worked in significant antitrust law enforcement.
For persons interested in the RPA laws of other states, I have two quick facts to provide:
- California Business & Professions Code, Section 17,045, et seq. or Sections 17040-17051 (known as the "Unfair Practices Act", which deals almost exclusively with cases of price discrimination, secret rebates and "loss selling"); but a WARNING: the awareness by plaintiffs of the offering or payment of the rebates may cause such rebates to no longer qualify as "secret rebates".
- California Business and Professions Code, Section 17,200, which provides as follows:class action provisions
As used in this chapter, unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.
- Unfair Business Practices - Cal. Bus. and Prof. Code Section 17204 confers standing on any person acting for the interests of itself, its members, or the general public.
- Cal. Bus. and Prof. Code Section 17203 allows a court to make such orders as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.
- California Cases Concerning Class Actions and Their Prerequisites Hold: The factors that impact the decision to grant or deny class certification are numerous. Generally, there must be an ascertainable class and a well-defined community of interest in the questions of law and fact presented. The community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. Additionally, the substantive and procedural guidance found in the Federal Rules of Civil Procedure relating to class actions are also beneficial considerations.
What is needed in this country is a return to enforcement of law, particularly the Robinson-Patman Act. This is so especially because there is no significant enforcement of the Sherman Act and Clayton Act, and the RPA will have to be a surrogate statute to accomplish some of the objectives of the other, non-enforced antitrust statutes.
I invite you to look at these related websites:
- LawMall - the Parent Website
- RPAMall Website on the Robinson-Patman Act
- Don't Cry for Arthur Andersen - Millions of Americans Lost Their Savings and/or Jobs during AA's Auditing Watch
- Enron Website
- Website on How to Stop Wal-Mart and Globalization
- Website on Kuralt/Intimate's RPA Lawsuit against Superstores Barnes & Noble and Borders
- Website on Giving Notice by Violation Gram or Violation E-Mail to Violators of the Robinson-Patman Act to Help You and Others Prove They Were Violating the RPA Knowingly
- Website for RPA Lawsuit by 143 Auto-Parts Wholesalers and Jobbers against Wal-Mart, Sam's Club, AutoZone and other Auto-Parts Superstores.
- Website on How to Cope with Prosecutorial Abuse by an Equally "Concentrated" Government
Carl E. Person, Editor, LawMall, firstname.lastname@example.org
For the c.v. (resume) of Attorney Carl E. Person, click on Carl Person C.V.
Copyright © 2002 by Carl E. Person
Lawmall and RPAMall are servicemarks of Carl E. Person