MERRITT, Circuit Judge.
Plaintiff, New Albany Tractor, appeals the Federal Rule of Civil Procedure 12(b)(6) ("failure to state a claim upon which relief can be granted") dismissal of its complaint alleging violations of the Robinson-Patman Act, an amendment to the Clayton Act. Plaintiff also contends that it should have been allowed to amend the complaint, or, alternatively, it should have been dismissed without prejudice. The basic question before us is the effect of two recent Supreme Court decisions, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, ___ U.S. ____, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), which addressed pleading requirements under Rule 8 of the Federal Rules of Civil Procedure ("short and plain statement of the claim"). For the reasons that follow, we agree that these cases required the district court to dismiss the complaint with prejudice.
Plaintiff, New Albany Tractor, Inc., filed a complaint against defendants, Metalcraft of Mayville, Inc., d/b/a Scag Power Equipment and Louisville Tractor, Inc., alleging violation of the Robinson-Patman Act, 15 U.S.C. § 13(a). The Robinson-Patman Act prohibits, among other things, a seller from selling the same product to two different buyers at different prices.
Essentially, New Albany Tractor's complaint alleges a discriminatory pricing scheme between defendant Scag, the manufacturer, and defendant Louisville Tractor, in its role as the exclusive wholesaler of Scag equipment in the Louisville market, with the effect of reducing competition. In order to satisfy the requirement in the language of the Act that the sales must be to "different purchasers," plaintiff alleges that Louisville Tractor, which is the only purchaser of Scag products in the Louisville market due to its exclusive distributorship, is a "dummy" or strawman operation that is controlled by Scag so that any sale from Louisville Tractor to plaintiff is a fiction. Plaintiff alleges that it is Scag, not Louisville Tractor, selling directly to New Albany Tractor and the other retailers in the Louisville area. This "dummy" or "strawman" arrangement is known as "the indirect purchaser doctrine" for purposes of the Robinson-Patman Act.
Procedurally, this case had a somewhat confused history in the district court. After plaintiff, New Albany Tractor, filed its complaint, defendants, Scag Power Equipment and Louisville Tractor, filed individual motions to dismiss on the ground that New Albany Tractor had not made sufficient factual allegations that, as to pricing, would provide relief under Robinson-Patman. The district court initially denied the motions to dismiss, but, upon defendants' motions for reconsideration, agreed with defendants and granted the motions to dismiss the complaint.
Plaintiff raises two main issues on appeal: (1) the district court erred in granting the motions to dismiss by finding plaintiff's factual allegations in the complaint and the affidavit of its president, Richard Kesselring, insufficient to state a claim for relief under the Robinson-Patman Act, 15 U.S.C. § 13, and (2) the district court erred in failing to allow plaintiff to amend its complaint rather than giving the plaintiff an opportunity to amend.
Two recent decisions have changed the long-standing rule of Conley v. Gibson, in which the Supreme Court stated, "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim...." 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court said that a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." In Twombly, the Court changed the standard applicable to Rule 12(b)(6) motions to dismiss Sherman Act claims by directing that Rule 12(b)(6) must be read in conjunction with Rule 8(a), which requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Acknowledging that material allegations must be accepted as true and construed in the light most favorable to the nonmoving party, the Court nevertheless held that complaints in which plaintiffs have failed to plead enough factual detail to state a claim that is plausible on its face may be dismissed for failure to state a claim. 550 U.S. at 569-70, 127 S.Ct. 1955. The Court explained that courts may no longer accept conclusory legal allegations that do not include specific facts necessary to establish the cause of action.
This new "plausibility" pleading standard causes a considerable problem for plaintiff here because defendants Scag and Louisville Tractor are apparently the only entities with the information about the price at which Scag sells its equipment to Louisville Tractor. This pricing information is necessary in order for New Albany to allege that it pays a discriminatory price for the same Scag equipment, as required by the language of the Act. This type of exclusive distribution structure makes it particularly difficult to determine whether discriminatory pricing exists.
It is a violation of Robinson-Patman for a seller to provide the same product to two customers at different prices in a manner that gives one buyer a competitive advantage over the other. To make out a claim under Robinson-Patman, the plaintiff must allege: (1) two or more contemporaneous sales by the same seller; (2) at different prices; (3) of commodities of like grade and quality; (4) the discrimination had the requisite anticompetitive effect; and (5) the discrimination caused injury to the plaintiff. Rutledge v. Elec. Hose & Rubber Co., 511 F.2d 668, 677 (9th Cir.1975) (citations omitted). To survive a motion to dismiss, plaintiff's complaint must allege each of these elements with sufficient detail "to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true." Assoc. of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.2007) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955).
Defendants contend that plaintiff has failed adequately to plead that there were two sales by the same seller because the complaint lacks allegations of a contemporaneous sale to two different buyers, instead alleging only that Scag sold equipment directly to Louisville Tractor and that Louisville Tractor in turn sold equipment to plaintiff. To get around this deficiency, plaintiff relies on the "indirect purchaser doctrine." As our Court previously
Plaintiff must allege that Scag controls Louisville Tractor to such an extent that Louisville Tractor is reduced to a strawman simply doing the bidding of Scag in the Louisville market. Plaintiff alleges that Scag refuses to allow retailers in Louisville's exclusive sales area to purchase from any other Scag distributor. This does not show that Scag controls Louisville Tractor. Merely demonstrating the existence of an exclusive distributorship in a market area does not violate Robinson-Patman — or any other antitrust provision. In addition, plaintiff alleges that Scag "encouraged," "was aware of" and "allowed" Louisville Tractor to sell at the prices it did, but this does not show that Louisville Tractor was selling at a discriminatory price set by Scag. There is no allegation that it forced Louisville Tractor to sell at a certain price or that this price was discriminatory.
Plaintiff contends that the affidavit of its president, Richard Kesselring, alleges that Scag controls the warranty programs for its products, sets suggested retail prices, and performs and controls some advertising. The district court found that the allegations did not demonstrate the requisite control. They showed only that Louisville Tractor sets it own prices, which are monitored by Scag, but not set by Scag. Jan. 5, 2010, Order at 2. Plaintiff argues on appeal that the district court looked at the control issue too narrowly by focusing on whether Scag set or controlled in some way the prices at which Louisville Tractor sold Scag equipment. In order to violate the Act, plaintiff must allege discriminatory pricing set by Scag. To come within the indirect purchaser doctrine, both a discriminatory price and control of the price by the manufacturer of the selling price of the product in the hands of the distributor is necessary. Here we have insufficient allegations of both price discrimination and control.
Plaintiff contends in its opening brief that the district court erred in failing to grant it leave to amend its complaint, or, in the alternative, by failing to dismiss the complaint without prejudice. As to the leave-to-amend issue, Federal Rule of Civil Procedure 15(a) authorizes the court to freely grant leave to amend when there is no "undue delay, bad faith, or dilatory motive on the part of the movant." Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). In this case, however, plaintiff never formally requested leave to amend below and defendant argues
As to the dismissal-with-prejudice issue, we review the district court's decision for abuse of discretion, so the bar is high for reversal. The district court gave the plaintiff substantial additional time to come up with more specific evidence of control by Scag over Louisville Tractor or of a differential in price paid between plaintiff and other retailers. Plaintiff was unable to do so because the facts are unavailable to plaintiff. Without discovery, the plaintiff may have no way to find out the facts in the hands of competitors, but Iqbal specifically orders courts, as quoted above, to refuse to order further discovery. If the plaintiff should be able to find out the facts it needs to state a claim, it will have to file another complaint.
For the foregoing reasons, we affirm the judgment of the district court.
15 U.S.C. § 13(a).