Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

HUGHES v. HALBACH & BRAUN INDUS.

January 13, 1998

CEIRIOG HUGHES, Plaintiff, -vs- HALBACH & BRAUN INDUSTRIES, LTD., a Pennsylvania corporation, HALBACH & BRAUN MASCHINENFABRIK GMBH & CO., a Federal Republic of Germany corporation, MINE TECHNIK AMERICA, INC., a Delaware corporation, MILLCRAFT INDUSTRIES, a Pennsylvania corporation, WESTFALIA BECORIT INDUSTRIETECNIK GMBH, a Federal Republic of Germany corporation, WESTFALIA MINING PROGRESS, INC., a Delaware corporation, RUHRKOHLE BERGBAU AG, a Federal Republic of Germany corporation, RAG BETEILIGUNGS-GMBH, a Federal Republic of Germany corporation, DEUTSCHE BERGBAU TECHNIK GMBH, a Federal Republic of Germany corporation, et al., Defendants.


The opinion of the court was delivered by: AMBROSE

OPINION AND ORDER OF COURT

 Plaintiff Ceiriog Hughes ("Hughes"), former Vice President, Sales and Service, of Defendant Halbach & Braun Industries Ltd. ("H&B"), commenced this suit following the termination of his employment. The Complaint and Amended Complaint *fn1" set forth thirteen alleged causes of action, ranging from breach of contract to antitrust violations, stemming from Hughes's refusal to participate in an alleged bid-rigging scheme.

 Hughes has named a wealth of defendants, including: H&B, his former employer, and an American subsidiary of Defendant Halbach & Braun Maschinenfabrik GmbH & Co. ("HBM"); Eberhard Braun, President and owner of HBM; Edgar Maier Reinhardt, President of H&B; Mine Technik America, Inc. ("Mine Technik"), with whom H&B merged on November 13, 1995; Millcraft Industries ("Millcraft"), an H&B minority shareholder; Jack Piatt, President of Millcraft; Robert Fisher, Executive Vice President of H&B; Hans Papenbrock, Vice President of Engineering of H&B; Westfalia Becorit Industrietecnik GmbH; Westfalia Mining Progress, Inc., which changed its name on July 25, 1995, to Mine Technik; Walter von der Linden, President of Westfalia; Robert Sylvester, Comptroller of Westfalia Mining; Micahel Davin, Comptroller of Hemscheidt USA; Deutsche Bergbau-Technik GmbH; Ruhrkohle Bergbau AG; Joachim Geisler, Chief Executive of Mine Technik; RAG BeteiligungsGmbH; and Dr. Hans Jacobi, Chairman of the managing board of RAG Technik AG. The individuals are named both in their individual and official capacities.

 Pending is a "Motion to Dismiss Counts One, Five, Seven, Eight, Nine, Ten, Eleven and Twelve Pursuant to Fed. R. Civ. P. 12(b)(6); and, in the alternative, as to Counts Five and Nine, Motion for More Definite Statement Pursuant to Fed. R. Civ. P. 12(e)," (Docket No. 7), filed on behalf of Mine Technik, Piatt, Davin, Papenbrock, Sylvester and Geisler (hereinafter collectively referred to as the "Defendants"). The Defendants essentially challenge the assertion of Counts 1, 5, 7, 8, 9, 10, 11, 12 on the basis of either standing or timeliness. *fn2" Hughes takes issue with each of the Defendants' statements.

 After careful consideration, and for the reasons set forth below, the Motion is denied as to Counts 11 and 12, and granted in all other respects. The dismissal of Counts 5, and 7 is, however, without prejudice to file an Amended Complaint curing the deficiencies.

 STANDARD

 In deciding a motion to dismiss, all factual allegations and all reasonable inferences therefrom must be accepted as true and viewed in the light most favorable to the Plaintiff. Colburn v. Upper Darby Twp., 838 F.2d 663, 666 (3d Cir. 1988), cert. denied, 489 U.S. 1065, 103 L. Ed. 2d 808, 109 S. Ct. 1338 (1989). I may dismiss a complaint only if it appears beyond a reasonable doubt that plaintiff can prove no set of facts in support of his claims which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). In ruling on a motion for failure to state a claim, I must look to "whether sufficient facts are pleaded to determine that the complaint is not frivolous, and to provide defendants with adequate notice to frame an answer." Colburn, 838 F.2d at 666.

 ANALYSIS

 (A) Count One - Sherman Antitrust Act

 In Count One, Hughes contends that the Defendants "conspired and agreed to rig the bids for the Cypress Emerald contract so that Westfalia Mining, the American subsidiary of Westfalia, would be awarded the contract on price, even though said price was artificially inflated." Complaint, P 65. Hughes argues that this conspiracy and bid-rigging violated § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, and that he suffered a resulting injury in the nature of termination of employment and damage to his reputation.

 Defendants counter that Hughes has no standing to sue for wrongful termination. "Whether a plaintiff has standing to raise antitrust claims is a threshold issue." Baglio v. Baska et. al., 940 F. Supp. 819, 828 (W.D. Pa. 1996), aff'd, 116 F.3d 467 (3d Cir. 1997), citing, Associated General Contractors, Inc. v. California State Council of Carpenters, 459 U.S. 519, 74 L. Ed. 2d 723, 103 S. Ct. 897 (1983). "The antitrust laws were promulgated to protect competition, not competitors, and courts must analyze the question of antitrust injury from the viewpoint of the consumer of the product or services at issue." Id., citing, Alberta Gas Chemicals, Ltd. v. E.I. DuPont de Nemours, 826 F.2d 1235, 1241 (3d Cir. 1989), cert. denied, 486 U.S. 1059, 100 L. Ed. 2d 930, 108 S. Ct. 2830 (1988). Consequently, courts are hesitant to find standing to exist, because the antitrust statute permits the recovery of treble damages. Gregory Marketing Corp. v. Wakefern Food Corp., 787 F.2d 92, 98 (3d Cir. 1986), cert. denied, 479 U.S. 821, 93 L. Ed. 2d 40, 107 S. Ct. 87 (1986).

 Courts employ a two-pronged test to determine whether a plaintiff has standing. "The plaintiff must first prove that he has suffered an antitrust injury." Baglio, 940 F. Supp. at 828. The second inquiry requires that the plaintiff "prove that he is the most efficient enforcer of the antitrust laws." Id. (citations omitted). Defendants do not challenge Hughes' standing as to the second element. *fn3"

 Instead, the Defendants only attack Hughes' ability to demonstrate an "injury." According to the United States Court of Appeals for the Third Circuit, a plaintiff has suffered an antitrust injury only if (1) he has suffered the type of injury which the antitrust laws were designed to protect; and (2) the injury flows from that which makes defendant's acts unlawful. Gulfstream III Associates, Inc. v. Gulfstream Aerospace Corp., 995 F.2d 425, 429 (3d Cir. 1993).

 Termination from employment is not, Defendants insist, the type of injury that the antitrust laws were written to guard against. The Third Circuit court's decision in Gregory Marketing Corp. v. Wakefern Food Corp., 787 F.2d 92 (3d Cir. 1986), Defendants contend, supports this conclusion. In Gregory, plaintiff served as a broker for a manufacturer of apple juice. The broker was compensated based upon a percentage of gross sales. At some point in time, the manufacturers began providing the defendant retailer special price discounts not available to other purchasers. The broker objected to the discounts as illegal, but the retailer declined to stop the discounts. Rather, the retailer directed plaintiff broker to fabricate a reason for the discount, in the event that any other purchasers inquired. When the broker refused to comply, the retailer terminated its brokerage agreement. Gregory, 787 F.2d at 92-93.

 The broker commenced suit, alleging two injuries resulting from the alleged antitrust violations: (1) termination of the brokerage agreement resulted in loss of future commissions; and (2) the discounts afforded the retailer decreased the broker's commissions. Id. at 93. The district court dismissed the claim, holding that "the broker's injury did not flow from that which makes defendant's acts unlawful," and thus it "is not the type of injury that the antitrust laws were written to guard against." Id. (internal quotation marks and citations omitted). In so holding, the district court distinguished the decision rendered in Ostrofe v. H.S. Crocker Co., Inc., 670 F.2d 1378 (9th Cir. 1982), vacated and remanded, 460 U.S. 1007, 75 L. Ed. 2d 475, 103 S. Ct. 1244 (1983), on remand, 740 F.2d 739 (9th Cir. 1984), cert. dismissed, 469 U.S. 1200, 84 L. Ed. 2d 309, 105 S. Ct. 1155 (1985) (allowing an antitrust suit by an employee forced to resign due to refusal to carry out a price fixing arrangement). The district court "suggested that an employee's injury is more closely linked to the antitrust violation than a broker's would be...." Gregory, 787 F.2d at 94.

 The Third Circuit court affirmed the district court's conclusion, finding that the broker "is not an appropriate party to assert the claim set forth in the present lawsuit." Id. at 95. The antitrust violation alleged, the court noted, grows out of the pricing agreement between the manufacturer and the retailer. The lost future commissions, the court determined, did not flow from decreased competition in the apple market. Id. at 96. And while the reduced profit commission did result from the discount agreement, it "was not caused by the anticompetitive nature of that agreement." Id. Indeed, the court reasoned, the manufacturer could have reduced its prices for all buyers, thus reducing the broker's commissions, but there would have been no antitrust injury. Id. Moreover, the court concluded, the broker's participation "was not essential to carrying out the anticompetitive nature of the agreement." Id.

 The Third Circuit court agreed with the district court that the Ostrofe decision was distinguishable, stating:

 
in that case, the Ninth Circuit permitted a suit alleging a Sherman Act violation to be brought by a former marketing director of a company who was discharged for refusing to carry out a bid-rigging scheme. That view has generally been rejected in similar cases by other courts. See e.g., In re Industrial Gas Litigation, 681 F.2d 514, 519 (3d Cir. 1986), cert. denied, 460 U.S. 1016, 75 L. Ed. 2d 487, 103 S. Ct. 1261 (1983); McNulty v. Borden, 542 F. Supp. 655 (E.D. Pa. 1982); Callahan v. Scott Paper Co., 541 F. Supp. 550 (E.D. Pa. 1982). Contra Shaw v. Russell Trucking Line, Inc., 542 F. Supp. 776 (W.D. Pa. 1982). Even were we to adopt the Ninth Circuit rule as to employees, it would not affect the outcome here. Analogizing to Blue Shield, Ostrofe II, relied heavily on the fact that the marketing director was an "essential participant" in the price-fixing scheme, which "could not succeed without his active cooperation." Ostrofe II, 740 F.2d 739 at 745-46. As noted above, however, this rationale is not applicable here since [the broker] was not essential to the ... agreement. Thus, Ostrofe II does not support [the broker's] argument that it has sustained an injury.

 787 F.2d 92 at 96-97.

 Defendants interpret Gregory as precluding a finding of standing in this instance. Under Gregory, Defendants insist, Hughes did not suffer "the type of injury which the antitrust laws were designed to prevent."

 Hughes disagrees with the Defendants' interpretation of Gregory. According to Hughes, standing was denied in Gregory because the broker did not play an integral role in the anticompetitive scheme. Here, Hughes contends that he did play an "essential role" in the anticompetitive scheme.

 Additionally, Hughes insists, the Third Circuit court did not reject the rationale of Ostrofe, rather, it simply found the case to be factually distinguishable. Hughes contends that, unlike Gregory, the factual situation here is a "mirror image" of that in Ostrofe. Docket No. 15, p. 5.

 I disagree with Hughes' contentions. First, in Gregory, the Third Circuit court recognized that the Ostrofe holding "has generally been rejected in similar cases by other courts," and thus, that it is an aberration. See Gregory, 787 F.2d at 96. I find this statement to be a clear indication of the Court's reluctance to embrace the Ostrofe decision. Indeed, the court simply gave no indication that it might embrace the Ostrofe holding in different factual circumstances. Interestingly, the United States District Court for the District of Maine reads the Gregory decision as "suggesting, without deciding, that the Third Circuit would deny standing to an employee claiming retaliatory discharge for refusal to violate the antitrust laws." See Ashmore v. Northeast Petroleum Division of Cargill, Inc., 843 F. Supp. 759, 763 n. 8 (D. Me. 1994).

 Significantly, Hughes is unable to cite to a single Third Circuit court decision holding that an employee has standing to assert antitrust claims against his/her former employer for wrongful discharge. While research did disclose a district court decision granting standing, Shaw v. Russell Trucks Line, Inc., 542 F. Supp. 776 (W.D. Pa. 1982) (finding the Ostrofe decision to be persuasive), it was issued prior to the Third Circuit court's decision in Gregory. Moreover, it is at odds with two other district court opinions. See Callahan v. Scott Paper Co., 541 F. Supp. 550 (E.D. Pa. 1982) and McNulty v. Borden, Inc., 542 F. Supp. 655 (E.D. Pa. 1982).

 Additionally, as noted by the Third Circuit court in Gregory, other circuits have rejected the Ostrofe analysis. See Industrial Gas Litigation, 681 F.2d 514 (7th Cir. 1982), cert. denied, 460 U.S. 1016, 75 L. Ed. 2d 487, 103 S. Ct. 1261 (1983) (holding that a former corporate president who had been terminated from employment and blacklisted by the industry did not suffer an antitrust injury so as to give him standing); Fallis v. Pendleton Woolen Mills, Inc., 866 F.2d 209 (6th Cir. 1989) (denying antitrust standing to an employee who was allegedly terminated for refusal to participate in a vertical price fixing scheme); O'Regan v. Arbitration Forums, Inc., 121 F.3d 1060, 1065 (7th Cir. 1997) (stating that "an employee ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.