How Auto-Parts Plaintiffs and Others Can or Should Commence an Individual Lawsuit for Damages under the RPA in Light of Recent RPA Litigation Developments

First Published 2/28/03; Last Update: 03/01/03 11:00

You Are Faced with a Simple Business Problem The problem which many interested readers has to face is a simple business problem. How much investment would you have to make in terms of time and money, and what are the risks. Against this you have to weigh the prospective rewards.

If you can commence a Robinson-Patman Act lawsuit with guaranteed legal fee (such as a reasonable, single up-front payment), the costs to be incurred in an RPA lawsuit should be a small percentage of the prospective rewards for most litigants. The real cost is in legal time, for all parties.

The prospects for recovery relate to the damages suffered by the plaintiff during the time period for damages as against the defendants involved, and the issue of whether the defendants are liable is hardly an issue at all. This is so because the evidence is overwhelming that the major retailers are obtaining better deals from manufacturers, on a per-unit basis, than their traditional-distribution.

Lawyers have to be careful when taking on a case to make sure there adequate proof of liability of the defendants, but in RPA litigation the liability of defendants (i.e., the expectation of having sufficient evidence on liability to go to a jury) is a given, it seems to me. Thus, the issue is really one of a plaintiff's damages in relation to the anticipated out-of-pocket expenses of the suit (and any up-front, single-payment legal fee which might be involved).

As I said, this is really a business decision which has to be made, such as: Should I incur expenses of $75,000 over a period of 2-3 years for the reasonable prospect of obtaining recovery of $1,000,000 over that same period?

The real issue for a prospective plaintiff is to try to identify the prospective costs and the prospective recovery to make the business question most meaningful.

Also, there is some effort by the plaintiff which has to go into a lawsuit, but this effort is far less than the plaintiff's current effort to stay in business and really should be considered part of such effort (and perhaps the only profitable part of such overall efforts).

Where Do We Go from Here? I have had many auto-parts clients and others ask me where we go from here.

The answer is very clear to me. Everyone has Robinson-Patman Act claims to pursue, even the 22 auto-parts plaintiffs who lost at trial during late January, 2003.

One relevant fact to remember is that no manufacturers were sued, which means that the trial is not preclusive at all as to the liability of any of the manufacturers as to any of the 22 plaintiffs (or any other of the 221 plaintiffs for that matter).

There are other facts which need to be discussed which enable me to conclude that each plaintiff has a valuable asset which is wasting (for damages to such plaintiff by numerous companies in their respective violations of the Robinson-Patman Act). The statute of limitations is four years from the date of the filing of an action, which means that as of today, 2/28/03, all damages occurring to any company prior to 2/28/99 are lost forever, because of the statute of limitations, in absence of any specific reason for "tolling" of the statute of limitations (but don't even begin to think of tolling issues, because they are difficult to establish).

Lessons Learned from the Auto-Parts Lawsuit Up to Today

I learn something in every lawsuit, and the auto-parts litigation up to this date has certainly been no exception. I have learned a lot, which enables me to come up with a game plan for persons who are interested, whether or not they are plaintiffs in the auto-parts lawsuit. What I have to say below applies generally to anyone who as a traditional distributor of goods purchases directly from manufacturers or other vendors from which competing major retailers also purchase the same goods.

These lessons I've learned include the following (but do not include all of the lessons I've learned, and do not necessarily include the full lesson in any specific case):

  1. I have learned that it is economical to commence a RPA action on behalf of a small, single-store company with annual sales substantially less than $1 million per year. In fact, a lawsuit of this type brought in the plaintiff's own Federal District Court may well be preferable to having a lawsuit with many plaintiffs brought in a Federal District Court distant to all but one of the plaintiffs.

  2. A plaintiff's own local lawyer or law firm can do much of the litigation work in support of the plaintiff's local RPA lawsuit, and the needed support from experienced RPA counsel can be provided by telephone, fax, email and occasional meetings, to make the RPA litigation effective.

  3. A local law firm can be found to render its services on a contingent-fee basis for the most part when such firm has the support of an experienced RPA attorney, as co-counsel of record, with an interest in the case.

  4. Discovery can be provided on a low-cost basis using trained paralegal personnel, working with the plaintiff under the direction and control of the attorneys.

  5. Keeping the costs under control from the plaintiff's standpoint is the heart or essence of meaningful RPA litigation, and this can be done (as the auto-parts plaintiffs have seen, even in a huge RPA action).

  6. Plaintiffs should prepare a list of (a) major-retail competitors and (b) manufacturers from whom the prospective plaintiff has purchased any goods during the preceding 4 years; and also estimate for each of the 4 years the dollar amount of purchases from each of the manufacturers. Also, the prospective plaintiff should start gathering information about the competitive scene by listing each competitor in the marketing area and finding out when each competitor started its business at such location (together with an estimate of the size of the store in square feet). This information will be helpful in deciding who should be sued, if anyone.

  7. Persons who fail to sue when they have legitimate claims are the losers, but are losers because of their own failure rather than the illegal activities of others. The law provides a remedy, and an RPA action can obtain substantial redress for many or most injured persons, when a suit is commenced individually. The problem with a suit brought on behalf of a large number of plaintiffs is that the large number of plaintiffs makes the suit less capable of being settled for an amount which the plaintiffs would say is reasonable for them, which forces the case to go to trial.

  8. Another lesson is that the legal system in the United States provides civil justice through settlement, not through trial. Trial is the club which forces litigants to settle, but if the amount of settlement is too high, many defendants would rather try the case and hope for a jury verdict in their favor, and if the jury goes against them, they will undoubtedly file a notice of appeal and do whatever they can do to avoid or postpone liability. So that even if a plaintiff wins at trial, the dollar amount of the jury verdict is not handed over to the winning plaintiff. Instead, the winning plaintiff gets additional bills and uncertainty through the appellate process, and still requires a settlement to be able to obtain some justice earlier rather than much later. Remember, justice delayed is justice denied, and winning a lawsuit after 10 years is like not winning at all, at least from the standpoint of someone just starting out.

Calculating the Value of Your Prospective Lawsuit

Commencing an RPA lawsuit would make no sense if your main or sole reason is to recover damages, and if the amount of your damages for the envisioned lawsuit is not a multiple over the anticipated costs (including the value of contingent-fee legal services) of the envisioned lawsuit.

What I have learned over the years is that few corporate presidents have any idea that an RPA action has enough value to warrant filing the suit, or what a reasonable estimate of the value might be. If you are interested in making an estimate of the value of your claims, you should look at the following RPAMall articles:

  1. Estimating Your Damages and Recovery in an RPA Suit

  2. Damages Rule of Thumb: 9,000 X 1 Day's Loss of Profits

  3. Liability: Easier to Prove Than the Amount of RPA Damages

  4. How to Prove Damages in an RPA Action

After reading these articles on RPA damages, and understanding that you are being sold goods by the manufacturers at a discount which is about half as much as the discount which these same manufacturers are giving to your major retailer competitors, you should easily come to the conclusion that your losses of sales and income has resulted from the lower prices at which your major retail competitors are buying their inventory.

The amount of your damages at a minimum should be the profit margin you lost on your lost sales during the preceding four years (together with the amount of the discriminatory differential paid by you as to the sales you did not lose) or perhaps the total amount of gross profit margin which you lost when you reduced your profit margins to try to stop your loss of customers and sales, during the preceding four years.

Most traditional wholesalers should be able to determine that they have the possibility of major recoverable damages in an RPA lawsuit, and once that is determined, there is also the trebling which occurs if you have to try the case (and win). But, because the goal is to settle the case without trial for most plaintiffs (and defendants as well), you shouldn't give any serious thought to obtaining more than your actual damages in any settlement. Most defendants will not settle for an amount which includes any part of trebled damages.

On the other hand, smaller cases are more apt to settle for dollar amounts which are equal to if not greater than the plaintiff's actual damages for the four-year period. This is so because of the high costs of defending an RPA lawsuit, which makes it better for the defendant to pay more than the amount of actual damages in smaller cases because the cost of continued litigation would exceed the cost of the settlement.

When looking at settlements, defendants have to take into account that they are paying as much as $500 to $800 per hour for top RPA defense counsel, and from $200 to $500 per hour for subordinate counsel, and perhaps $150 per hour for paralegal services, and often having two or three law firms involved in the defense for one defendant, which can amount to perhaps 200 to 2,000 hours of work in some months (which translates to legal fees of $80,000 to $800,000 in a single month, assuming an average hourly rate of $400).

Now you can see the importance of having your case litigated on a contingent-fee basis, which is only possible (from a practical standpoint) if your case has value in the professional opinion of the attorneys who are willing to take your case on a contingent-fee (or mostly contingent-fee) basis.

RPAMall Articles of Interest

I have several articles in this RPAMall website which relate to the hiring and use of attorneys, which I invite you to read:

  1. Selecting an Attorney to Start an RPA Lawsuit

  2. One Store, One RPA Suit; and No RPA Class Actions

  3. Virtual Law Firms in Price Discrimination Field

  4. If RPA Attorney and Client Live in Different States

  5. Available Services for RPA Plaintiffs or Attorneys

  6. Assistance Offered to RPA Plaintiffs' Attorneys

  7. RPAMall Website - Main RPA Menu

  8. If you have any questions, you can email them to me, attorney Carl E. Person, at carlpers@ix.netcom.com or fax them to me at 212-307-0247 or call me at 212-307-4444. I respond to every communication.

  9. 30-Minute Infomercial on the Robinson-Patman Act by Attorney Carl E. Person, the editor/author of this Robinson-Patman Act website, aired on various radio stations 29-Minute Radio Infomercial of Carl E. Person entitled "ONE MILLION FORTUNES LOOKING FOR THEIR RIGHTFUL OWNERS".

Carl E. Person, Editor, LawMall, carlpers@lawmall.com
For the c.v. (resume) of Attorney Carl E. Person, click on Carl Person C.V.

RPAMall Material (other than statutes and text of cases) Copyright 1997-2003 by Carl E. Person

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