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From Antitrust Law Daily, August 14, 2015

Clorox price discrimination claims on hold, pending appeal

By Greg Hammond, J.D.

Claims that The Clorox Co. engaged in price discrimination against Woodman’s Food Market, Inc. were stayed pending appeal of two court orders. The federal district court in Madison determined that there was no reason to grant Woodman’s motion for reconsideration, and a stay would be appropriate where it would simplify the issues in question, streamline any trial, and reduce the burden of litigation on the parties and the court (Woodman’s Food Market, Inc. v. The Clorox Co., August 13, 2015, Crocker, S.).

Woodman’s is an employee-owned corporation that operates 15 retail grocery stores in Wisconsin and Illinois. Clorox manufactures and sells a number of consumer and professional products, including bleach, cat litter, charcoal, cleaning supplies, containers, personal care products, sandwich bags, water filtration products, and wraps.

Although Woodman’s had been a customer of Clorox for many years, Clorox announced in October 2014 that the grocery chain would be reclassified as a “general market retailer” and would be placed in a different “channel” than Sam’s Club and Costco. As a result, Woodman’s no longer could purchase large packs of any Clorox product, which are typically bought and sold at a lower unit cost than smaller packs of the same products. Woodman’s filed suit against Clorox, alleging price discrimination in violation of the Robinson Patman Act. The court certified two orders for interlocutory appeal in July. Woodman’s has subsequently moved for reconsideration of the interlocutory appeal orders, and Clorox moved to stay all proceedings pending appeal.

Reconsideration. In support of its motion for reconsideration, Woodman’s argued that, although the court has ruled that “special packaging, or package sizes” constitutes a promotional service, the court was not asked to address Woodman’s allegation that Clorox has failed to provide notice of what other promotional services or allowances Clorox is offering to Sam’s Club or Costco, depriving Woodman’s of the opportunity to take advantage of any such promotions. The court determined, however, that regardless of whether Woodman’s might have a claim—now or in the future—with regard to other types of promotional services, it was still appropriate to certify the large-sized packaging and standing decisions because a ruling from the court of appeals will save the district court and the parties time and expense on the majority of issues in this case.

Woodman’s also took issue with the court’s statement that Woodman’s failed to cite any authority expressly authorizing the court to order Clorox to resume direct sales to Woodman’s as a remedy to a Section 1 Sherman Act violation. The statements at issue, however, were merely dicta, the court stated. They did not resolve the issue.

Lastly, Woodman’s contended that it should not be found to have waived its rights to pursue relief on any claims that have not yet been argued on their merits before the court. This argument was also rejected because the court never reached a decision on the viability of any of Woodman’s claims except for those addressed in the February and April orders. The court further noted that the possibility of other claims is not a sufficient basis for the court to rescind its order certifying an interlocutory appeal.

Stay. The court granted Clorox’s motion for a stay pending appeal. Specifically, the court found that the lawsuit was still in its early stages and a stay was likely to simplify the issues in question, streamline any trial, and reduce the burden of litigation on the parties and the court.

The case number is 14-cv-734-slc.

Attorneys: John Alan Kassner, III (Von Briesen & Roper, SC) for Woodman's Food Market, Inc. Joshua H. Soven (Gibson Dunn & Crutcher LLP) for The Clorox Co., and The Clorox Sales Co.

Companies: Woodman's Food Market, Inc.; The Clorox Co.; The Clorox Sales Co.

MainStory: TopStory Antitrust WisconsinNews

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