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From Antitrust Law Daily, July 24, 2014

Automotive paint distributor’s rejected claims against DuPont undisturbed

By Jeffrey May, J.D.

The federal district court in Denver will not permit a Colorado company in the business of selling automotive coatings to auto body repair shops and retailers to “rehash old arguments, reframe pre-existing evidence, and attempt to raise new arguments” in an action against E.I. DuPont De Nemours and Company (DuPont). The complaining distributor’s motion pursuant to Federal Rule of Civil Procedure 59(e) to alter or amend a summary judgment order in favor of DuPont pursuant was denied (JTS Choice Enterprises, Inc. v. E.I. DuPont De Nemours and Co., July 22, 2014, Martinez, W.).

In February, the court granted DuPont's motion for summary judgment on the plaintiff's seven antitrust claims under federal and state law, as well as state law claims for common law fraud, breach of the duty of good faith and fair dealing, and a violation of the Colorado Consumer Protection Act (2014-1 Trade Cases ¶78,699). The court had rejected claims by JTS Choice Enterprises, Inc. (Choice) that DuPont engaged in anticompetitive actions in violation of these laws.

Among other things, Choice had contended that DuPont unlawfully restrained competition between its “jobbers” by providing financial assistance to certain favored distributors and that it attempted to monopolize and conspired to monopolize the Colorado market for automotive coatings. In addition, Choice alleged that DuPont engaged in fraud by claiming that it was taking steps to stop one of Choice's competitors from poaching Choice's customers and that it breached its duty of good faith and fair dealing by not treating distributors equally and not stopping the purported poaching.

In its motion, Choice sought reconsideration only of its claims for fraud and breach of the duty of good faith and fair dealing. Because judgment had not yet been entered in the case, Rule 59(e) did not technically apply. In its discretion, the court considered its earlier ruling on summary judgment, applying a less stringent standard than that applicable to a Rule 59(e) motion. However, even under the less stringent standard, the court refused to disturb its prior ruling.

With respect to the fraud claim, the court refused to permit Choice to argue a new agency theory of liability or to pursue arguments raised for the first time in the Rule 59(e) motion. Choice was not permitted “to re-cast its arguments regarding which false statements supported its fraud claims.”

Choice also contended that the court mischaracterized its argument regarding the basis upon which DuPont breached the duty of good faith and fair dealing. Choice asserted that the court failed to address its claim that DuPont improperly used an “anti-poaching” provision of its loyalty-based rewards program or “Champion Program” contract to prevent Choice from attempting to acquire a competing jobber's customers, while allowing the competitor to pursue Choice’s customers. The court disagreed with the plaintiff's suggestion that it failed to address this contention. The court had previously ruled that any deficiencies with regard to how DuPont enforced the Champion contract between DuPont and the competing jobber could not be pursued by Choice. In its earlier ruling, the court noted that, if any party acted in bad faith, it was the competing jobber against whom Choice had already settled its claims.

“Plaintiff has failed to cite an intervening change in the law, any evidence that was unavailable at the time of the original briefing, or any need to correct clear error or prevent manifest injustice,” the court explained. Thus, the court refused to permit Choice to take “a second bite at the summary judgment apple.”

The case is No. 1:11-cv-03143-WJM-KMT.

Attorneys: Lauren Elizabeth Mosse Thompson (Theodore W. Rosen, PC) for JTS Choice Enterprises, Inc. David Matthew Stauss (Ballard Spahr, LLP) for E.I. Du Pont De Nemours and Co.

Companies: JTS Choice Enterprises, Inc.; E.I. Du Pont De Nemours and Co.

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