UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA OCALA DIVISION CONTRACTOR TOOL SUPPLY, INC., Plaintiff, v. CASE NO. 5:24-cv-347-JA-PRL JPW INDUSTRIES, INC., Defendant.

ORDER This case is before the Court on Defendant’s motion to dismiss the amended complaint (Doc. 36)! and Plaintiff's response (Doc. 38). Based on the Court’s review of the parties’ submissions, the motion must be granted in part and denied in part. I. BACKGROUND Plaintiff, Contractor Tool Supply, Inc. (CTS), is a distributor of specialized woodworking tools operating through its brick-and-mortar store, its website, and Amazon.com. (Am. Compl. {4 11, 18, 28, 24, 26, 29). Defendant, JPW Industries, Inc. (JPW), is a leading manufacturer of multiple woodworking-tool

1 Plaintiff explains that it inadvertently filed the same amended complaint multiple times due to a “clerical error.” (See Docs. 33, 34, & 35; Doc. 38 at 1). The Court will refer to the last-filed of these (Doc. 35) as the Amended Complaint.

brands, including Axiom, JET, and Powermatic, and controls over half of the woodworking-tool market in the United States.? dd. 9] 18, 16-22). In the autumn of 2021, JPW included CTS in its Sphere 1 Preferred Vendor Agreement & Program wherein JPW agreed to provide CTS with favorable trading terms

so long as CTS met JPW’s volume requirements. (Id. {| 42-44). By 2023, JPW’s representatives had “repeatedly praised CTS for dramatically increasing the sales of JPW’s Products,” and CTS became the third largest source of sales for JPW. (Id. | 50-52). JPW maintains a Minimum Advertised Price (MAP) policy, meaning that resellers of JPW’s tools are prohibited from advertising those tools for sale below

a price point defined by JPW. (Id. {4 36, 70; Doc. 36-1 at 3). The MAP policy is referenced in the Amended Complaint and attached as an exhibit to JPW’s motion. (Am. Compl. § 36, 70, 83, 115; Doc. 36-1). In light of the pleadings and the parties’ briefings on the motion to dismiss, the Court finds the MAP policy is “(1) central to the plaintiffs claims[] and (2) undisputed, meaning that its authenticity is not challenged.” Johnson v. City of Atlanta, 107 F.4th 1292, 1300 (11th Cir. 2024). It therefore may be considered at this stage of the case. See id.

In general, restrictions on advertising “cannot be the basis of a vertical [resale-price maintenance] claim because [a MAP policy] does not restrain resale prices, but merely restricts advertising.” Worldhomecenter.com, Inc. v. KWC Am., Inc., No. 10 CIV. 7781 NRB, 2011 WL 4352390, at *5 (S.D.N.Y. Sept. 15, 2011); see also Blind Dr. Inc. v. Hunter Douglas, Inc., No. C-04-2678 MHP, 2004 WL 1976562, at *7 (N.D. Cal. Sept. 7, 2004); Campbell v. Austin Air Sys., Ltd., 423 F. Supp. 2d 61, 69 n.6 (W.D.N.Y. 2005). However, CTS alleges that JPW’s prohibition on “Price in Cart” discounts makes selling JPW’s tools at below-MAP prices impracticable on Amazon. See Acquaire v. Canada Dry Bottling Co. of N.Y., Inc., 24 F.3d 401, 406 (2d Cir. 1994) (affirming the district court’s adoption of the magistrate judge’s report and recommendation; noting magistrate’s concern about “enforce[ment] [of] resale price maintenance in the guise of enforcing compliance with [a] promotional program”); Valuepest.com of Charlotte, Inc. v. Bayer Corp., 561 F.3d 282, 290-91 (4th Cir. 2009) (noting a

company could strategize to “evade[] the rule against resale price maintenance by labeling its arrangement” in a way “to avoid antitrust scrutiny’). Accepting all the well-pleaded allegations in the Amended Complaint as true, the Court finds CTS has plausibly alleged the existence of resale-price maintenance as it pertains to JPW’s tools sold on Amazon. See also Twombly, 550 U.S. at 555 (“[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.” (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974))).

“the geographic market in some instances may encompass the entire Nation” and that “men’s, women’s, and children’s shoes” is an adequately defined product market). Thus, the question is whether CTS has “adequately allege[d] actual or potential harm to competition” resulting from the alleged resale-price- maintenance agreement in this case. Jacobs, 626 F.3d at 1336. “Actual harm is indicated by a factual connection between the alleged harmful conduct and its impact on competition in the market... .” Id. at 1339 (citing Spanish Broad. Sys., 376 F.3d at 1072). To state a claim, an antitrust plaintiff must make “specific factual allegations” of the actual anticompetitive effects of the defendant’s conduct. Id. (quoting Spanish Broad. Sys., 376 F.3d at 1073). “By ‘anticompetitive,’ the law means that a given practice both harms allocative efficiency and could ‘raise[ ] the prices of goods above competitive levels or diminish[ ] their quality ....” Jd. (bracketed alterations in original) (emphasis removed) (quoting Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1433 (9th Cir. 1995)). “Actual anticompetitive effects include, but are not limited

to, reduction of output, increase in price, or deterioration in quality.” Id. (citing United States v. Brown Univ., 5 F.3d 658, 668 (8d Cir. 19938)). “Higher prices alone are not the ‘epitome’ of anticompetitive harm .... Rather, consumer welfare, understood in the sense of allocative efficiency, is the animating concern of the Sherman Act.” Jd.

Here, CTS has not plausibly alleged any actual injury to competition within the woodworking-tool market. CTS alleges that the elimination of “Price in Cart” discounts has “harmed consumers through increased prices and decreased availability of JPW’s products.” (Am. Compl. § 119). But CTS points to no examples of higher prices or decreased availability for any of JPW’s tools— in fact, the only prices of JPW’s tools referenced in the Amended Complaint are below-MAP prices that were allegedly advertised by Amazon. (Id. 4] ‘71, 73). In the Eleventh Circuit, “bald statement[s]” of harm to competition, without specific examples, are inadequate to “establish[] the competitive level above which [a defendant’s] allegedly anticompetitive conduct artificially raised prices.” Jacobs, 626 F.3d at 1339. Failing to plausibly plead actual harm to competition, CTS’s “only avenue of relief [is] to sufficiently allege potential harm.” Jd. To do so, CTS must (1) “define the relevant market and establish that the defendant[] possessed power in that market” and (2) make “specific allegations linking market power to harm to competition in that market.” Id. (first quoting Levine, 72 F.3d at 1551; and then quoting Spanish Broad. Sys., 376 F.3d at 1073). The Eleventh Circuit has defined “market power” as “the ability to raise price significantly above the competitive level without losing all of one’s business,” Graphic Prods. Distribs., Inc. v. Itek Corp., 717 F.2d 1560, 1570 (11th Cir. 1983) (citing Valley Liquors, Inc. v. Renfield Imps., Lid., 678 F.2d 742, 745 (7th Cir. 1982) (Posner, J.)). Because market power is often difficult for courts to objectively quantify, “market share is frequently used in litigation as a surrogate for market power.” Id. In any event, “[mjarket power alone cannot be sufficient to show the potential for genuine adverse effects on competition.” Duty Free Ams., Inc. v. Estee Lauder Cos., 797 F.3d 1248, 1270 (11th Cir. 2015) (quoting Spanish Broad. Sys., 376 F.3d at 1073). Indeed, “[a] plaintiff seeking to use market power as a

proxy for adverse effect must show market power, plus some other ground... such as the inherent anticompetitive nature of the defendant’s behavior or the

structure of the interbrand market.” Id. (quoting Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 97 (2d Cir. 1998)). CTS “has failed to establish the connection between [JPW]’s power in the [woodworking-tool] market and harm to competition in that market.” Jacobs, 626 F.3d at 1339. CTS alleges that JPW controls over fifty percent of the total woodworking-tool market within the United States and up to seventy-five percent of the market in some categories of woodworking tools. (Am. Compl. {| 16-22). Beyond that, the Amended Complaint provides no “direct evidence of the injurious exercise of market power [such as] evidence of restricted output and supracompetitive prices’ beyond stating that these conditions exist.” Jacobs, 626 F.3d at 1340 (alteration in original) (citation omitted) (quoting Rebel Oil, 51 F.3d at 1434). CTS speculates that JPW’s conduct will “incentivize[] competing woodworking machinery and tool brands to also increase their prices.” (Am. Compl. { 122). But “[t]his sparse allegation is precisely the type of bare legal conclusion that was insufficient in Twombly and Iqbal.” Jacobs, 626 F.3d at 1340. CTS “provides no basis on which a court could determine how harm to competition results from [JPW]’s agreements with its distributors (Gf such harm results at all).” Jd. (emphasis in original). And CTS does not adequately allege that interbrand competition “has been harmed by marketwide increased prices or reduced output.” Id. (citing Leegin Creative Leather Prods., 551 U.S. at 890). Thus, the Amended Complaint “contains insufficient factual allegations to plead a plausible case that [JPW]’s retail price maintenance agreements with its distributors had anticompetitive effects on the [woodworking tools] market.” Id. The motion to dismiss CTS’s Sherman Act claim (Count 2) must be granted. JPW also argues that CTS has failed to adequately allege that JPW’s conduct “has no pro-competitive benefit or justification,” as required under the rule of reason. Spanish Broad. Sys., 376 F.3d at 1071. JPW’s MAP policy states that it is designed to protect JPW’s brand by “promot[ing] advertising practices aimed at delivering a consistent message to consumers about the superior quality of [JPW’s] Products.” (Doc. 36-1). CTS does not directly engage JPW’s argument. Thus, the Court finds that CTS’s Sherman Act claim (Count 2) must be dismissed for this reason as well. C. Robinson-Patman Act Claims (Counts 3 & 4) Pursuant to 15 U.S.C. § 15(a), CTS sues JPW for unlawful price and promotional-allowance discrimination under §§ 2(a) and 2(d) of the Clayton Act, as amended by the RPA, 15 U.S.C. §§ 18(a) and 13(d), respectively (Counts 3 & 4). These claims are addressed in turn.

1997) (citing Chrysler Credit Corp. v. J. Truett Payne Co., 670 F.2d 575, 578 (5th Cir.1982)); see also McGahee v. N. Propane Gas Co., 858 F.2d 1487, 1493 (11th Cir. 1988). CTS specifically lists several of JPW’s products that it claims JPW sold at discriminatory prices. (Am. Compl. {{ 14, 68, 71, 73). However, JPW argues that CTS has not plausibly alleged that CTS contemporaneously purchased any JPW tools at functionally higher prices than those offered to Amazon. JPW deduces from the allegations in the Amended Complaint that CTS is asserting that JPW offered Amazon more favorable pricing during the February 2024 meeting, which occurred amid Amazon’s alleged “pressure campaign.” (Id. {| 61). JPW then sent CTS the March 11 email containing new proposed terms that CTS rejected, prompting JPW to stop filling CTS’s orders. Ud. {[{[ 61, 90-91). Thus, based on CTS’s allegations, JPW argues that price discrimination could

not have occurred at all because the parties ended their business relationship shortly after JPW began providing Amazon with more favorable pricing. In its

response, CTS recounts the discriminatory pricing that JPW purportedly agreed to give Amazon during the February 2024 meeting, (id. 137; Doc. 38 at 21), and claims that JPW’s discriminatory pricing structure resulted in significantly lower costs to Amazon relative to CTS, (Am. Compl. 189-40).

To show that the defendant discriminated in price, “[t]he complaining party must allege ... that there were two sales made by the same seller to at least two different purchasers at different prices.” Pierce v. Com. Warehouse, Div. of Thompson Auto. Warehouse, Inc., 876 F.2d 86, 87 (11th Cir. 1989). These disparate sales must occur “contemporaneously” to state a claim for unlawful price discrimination. Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 177 (2006). Taking the well-pleaded allegations of the Amended Complaint as true, and noting that CTS has alleged that JPW offered Amazon discriminatory pricing while JPW was still dealing with CTS, the Court finds that CTS has alleged “enough data” to overcome the initial hurdle of plausibly pleading that price discrimination occurred in this case. Quality Foods de Centro Am., S.A. v. Latin Am. Agribusiness Dev. Corp., S.A., 711 F.2d 989, 995 (11th Cir. 1983); see also F.T.C. v. Morton Salt Co., 334 U.S. 37, 45 (1948) (explaining that to state an unlawful price-discrimination claim, the plaintiff must allege “that a seller had charged one purchaser a higher price for like goods than he had charged one or more of the purchaser’s competitors”). But for the price discrimination claim to survive, CTS must allege that JPW’s discriminatory discounts caused a competitive injury that is “causally connected to the alleged antitrust violation.” Walker, 992 F. Supp. 1335, 1338 (M.D. Fla. 1997) (quoting DeLong Equip. Co. v. Wash. Mills Electro Mins. Corp.,

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990 F.2d 1186, 1202 (11th Cir. 19938)). Although CTS alleges that JPW’s price discrimination had the effect of “substantially lessen[ing] competition in the sale of the Products over a substantial period of time,” (Am. Compl. {[[ 188, 155), more is required. A private party who sues for damages under § 15(a) must plausibly allege an “actual injury attributable to something the antitrust laws were designed to prevent.” J. Truett Payne Co., 451 U.S. at 561-62. “A hallmark of the requisite competitive injury ... is the diversion of sales or profits from a disfavored purchaser to a favored purchaser.” Volvo Trucks N. Am., Inc., 546 U.S. at 177 (citing F.T.C. v. Sun Oil Co., 371 U.S. 505, 518-19 (1963), and Falls City Indus., Inc. v. Vanco Beverage, Inc., 460 U.S. 428, 437-38 (1983)). The Supreme Court has “also recognized that a permissible inference of competitive injury may arise” when a “favored competitor receive[s] a significant price reduction over a substantial period of time.” Jd. (citing Morton Salt, 334 U.S. at 49-51); see also Falls City Indus., 460 U.S. at 485 (“[I]njury to competition is established prima facie” by plausible allegations of “substantial price discrimination between competing purchasers over time.”). CTS argues that its allegation of “lost profits from displaced sales” resulting in “substantially lessen[ed] competition in the sale of the Products over a substantial period of time,” (Am. Compl. 138, 140, 155), “give[s] rise to a Morton-Salt presumption of market injury,” (Doc. 38 at 22 (citing Morton Salt, 334 U.S. at 45)). In Morton Salt, the Supreme Court considered a finding by the FTC that a business engaged in unlawful price discrimination under the RPA by offering a quantity discount system that, in practice, only large wholesalers could afford. Morton Salt, 334 U.S. at 41-42. The Morton Salt Court addressed the standard for showing the existence of a competitive injury resulting from discriminatory pricing, id. at 45-46, and determined there must be “a reasonable possibility that [the discriminatory pricing] may have [an anticompetitive effect]. Id. at 46 (citing Corn Prods. Co. v. F.T.C., 324 U.S. 726, 742 (1945)). The Morton Salt Court concluded that the standard was met in its

case because “the competitive opportunities of certain merchants were injured when they had to pay ... substantially more for their goods.” Id. CTS alleges that it “lost profits from displaced sales caused by the discriminatory pricing structure in favor of Amazon.” (Am. Compl. { 140). CTS

may be referring to Amazon’s alleged listing of JPW’s tools at below-MAP prices on September 19, 2023, and September 26, 2023. (Am. Compl. 4 71, 73). However, these listings occurred months before the February 2024 meeting between JPW and Amazon at which discriminatory pricing for Amazon was allegedly agreed upon. (/d. { 61, 90-91). Otherwise, CTS alleges that its sales of JPW’s tools had been “dramatically increasing” through the end of March 2024, up to and including the time at which JPW ended the parties’ business relationship, (Am. Compl. {{ 48, 54; Doc. 36 at 19). While CTS has plausibly alleged JPW began offering Amazon more favorable pricing in the weeks before JPW terminated CTS as a distributor, CTS does not point to any “diversion of

sales or profits from a disfavored purchaser to a favored purchaser” or otherwise plausibly allege that its “competitive opportunities . . . were injured” by the discriminatory pricing at that time since its sales were still “dramatically increasing.” (Am. Compl. {{ 48, 54); Volvo Trucks N. Am., Inc., 546 U.S. at 177; Morton Salt, 334 U.S. at 46. Moreover, CTS also does not plausibly allege that Amazon received “a significant price reduction [from JPW] over a substantial period of time” because the Amended Complaint alleges that the favorable pricing for Amazon was established only a month before JPW terminated its business relationship with CTS. See Mays v. Massey-Ferguson, Inc., No. CIV. A. CV187-131, 1990 WL 80673, at *3 (S.D. Ga. Apr. 26, 1990) (“Although the length of time over which the discrimination must occur has never been precisely defined, one sale on one date to one competitor cannot constitute substantial price discrimination ‘over time.”); Falls City Indus., 460 U.S. at 431 (discriminatory sales occurred for over six years); Morton Salt, 334 U.S. at 52 (respondent was “found to have engaged” in unlawful price discrimination “for a number of years”). Thus, CTS has not adequately alleged that JPW engaged in significant price discrimination between competing purchasers over a substantial period of time. CTS claims it sustained monetary losses of “at least $3 million,” (Am. Compl. {{ 139-40). But CTS does not plausibly link these alleged damages to . JPW’s price discrimination; they appear instead to be the consequence of the termination of the parties’ business arrangement after CTS rejected the terms of the March 11 email. See Fla. Seed Co. v. Monsanto Co., 105 F.3d 1372, 1376 (11th Cir. 1997) (“Simply put, this is not an antitrust case but rather a breach of contract case.”); Blank v. Preventive Health Programs, Inc., 504 F. Supp. 416, 419 (S.D. Ga. 1980) (“While these injuries may give rise to a breach of contract claim, such damages cannot be characterized as antitrust injuries remediable by a treble damages action.”).4 The motion to dismiss CTS’s claim for unlawful price discrimination under the RPA (Count 3) must be granted.

2. Discriminatory Promotional Allowances (Count 4) JPW also moves to dismiss Count 4 of the Amended Complaint for discriminatory assistance with services or facilities under the RPA, 15 U.S.C. § 13(d). Section 13(d) prohibits manufacturers from offering special assistance to distributors with “processing, handling, sale, or offering for sale of any products or commodities manufactured . .. by such person” unless such assistance “is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.” Id. Thus, the RPA “requires that purchasers be given an equal opportunity to participate in certain types of seller programs relating to the resale of products, such as advertising and promotional programs, and that the benefits under those

programs be disbursed” on a proportional basis. Alan’s of Atlanta, Inc., 903 F.2d at 1423 (citing F.T.C. v. Fred Meyer, Inc., 390 U.S. 341, 358-59 (1967)). JPW moves to dismiss Count 4 on the basis that CTS “merely recites [the elements of the claim] in a conclusory fashion.” (Doc. 36 at 23). In the Amended Complaint, CTS alleges that JPW paid for promotional allowances to Amazon without offering similar promotional allowances to CTS. (Am. Compl. 153— 54). Specifically, CTS claims that JPW covered Amazon’s advertising costs to sell JPW’s products, (id. §] 153(a)), and provided Amazon with preferential inventory allocation, (id. § 153(b)). CTS further alleges these promotional allowances were exclusive to Amazon and were not offered to CTS. Ud. § 154). JPW complains that CTS does not specify any further details of the alleged promotional program. However, CTS’s allegations, taken as true, “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 555. The motion to dismiss CTS’s discriminatory promotional allowance claim (Count 4) must be denied.

D. State Law Claims (Counts 5 & 6) Finally, JPW moves to dismiss CTS’s claims under FDUTPA (Count 5) and the Florida Antitrust Act (Count 6). A plaintiff may proceed under FDUTPA if they can otherwise state a claim under “[a]ny law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices.” § 501.203(8)(c), Fla. Stat. Here, CTS has plausibly alleged a violation under § 138(d) of the RPA (Count 4) and can therefore state a claim under FDUTPA. See Morris Commce’ns Corp. v. PGA Tour, Inc., 285 F. Supp. 2d 1269, 1287 (M.D. Fla. 2002). Thus, JPW’s motion must be denied regarding the FDUPTA claim. JPW also moves to dismiss CTS’s Florida Antitrust Act claim (Count 6) on the basis that it must be rejected if CTS’s Sherman Act claim is dismissed. “The Florida legislature has adopted the antitrust law developed by the federal courts under the Sherman Act.” Okavage Grp., LLC v. United Wholesale Mortg., LLC, No. 3:21-cv-448, 2022 WL 17478298, at *3 n.4 (M.D. Fla. July 27, 2022) (citing All Care Nursing Serv., Inc. v. High Tech Staffing Servs., Inc., 135 F.3d 740, 745 n.11 (11th Cir. 1998)). Because the Court found that CTS’s Sherman Act claim (Count 2) was deficient, CTS’s claim under the Florida Antitrust Act also falls short. See St. Petersburg Yacht Charters, Inc. v. Morgan Yacht, Inc., 457 So. 2d 1028, 1082 (Fla. 2d DCA 1984). IV. CONCLUSION For the reasons given above, it is ORDERED that Defendant’s Motion to Dismiss (Doc. 36) is GRANTED in part. Counts 2, 3, and 6 of the Amended Complaint (Doc. 35) are DISMISSED without prejudice. Plaintiff may file a second amended complaint on or before May 22, 2025. Defendant shall respond to the operative complaint on or before June 5, 2025. Defendant’s motion is DENIED as to all other counts in the Amended Complaint. DONE and ORDERED in ,on May ”, 2025.

— United States District Judge Copies furnished to: Counsel of Record