holding that a plaintiff need only “allegef] specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among the defendants”
How later courts described this case
- holding that a plaintiff need only “allegef] specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among the defendants”
- finding that, because the plaintiff could not have recovered for damages had it brought suit for them within four years of the initial act that caused them, it could do so at a later date
- considering pre-limitations period allegations when determining whether the plaintiffs had sufficiently alleged conspiracy
- “[T]he Sherman Act does not restrict the long recognized right of a trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.”
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
sma a a sa mses I,
O.E.M. GLASS NETWORK, INC. and BROOKLYN
WHOLESALE GLASS INC.,
Plaintiffs, MEMORANDUM & ORDER
19-CV-742 (NGG) (LB)
-against-
MYGRANT GLASS COMPANY, INC.,
INTERSTATE GLASS OF AMITYVILLE NY,
LLC, METRO GLASS DISTRIBUTING, INC., FILED
XINYI AUTO GLASS NORTH AMERICA IN CLERK'S OFFICE
CORP., VITRO, S.A.B. de C.V., VITRO US DISTRICT COURT E.D.N.Y. >
AUTOMOTIVE GLASS LLC, FUYAO GLASS s+ JAN 31 2020
AMERICA INC., AUTO TEMP INC., and SIKA * □□□□ J
CORPORATION, □□□
BROOKLYN OFFICE □□□□□□
Defendants.
cin i ae pata en □□□□□□□□□□□□□□□□□□□□□□□
NICHOLAS G. GARAUFIS, United States District Judge.
Plaintiffs O.E.M. Glass Network, Inc. and Brooklyn Wholesale Glass Inc. (collectively,
“QEMGN” or “Plaintiffs”) bring antitrust claims against Defendants Mygrant Glass Company,
Inc. (“Mygrant”); Interstate Glass of Amityville NY, LLC and Metro Glass Distributing, Inc.
(collectively, “Interstate”); Xinyi Auto Glass North America Corp. (“Xinyi”); Vitro, S.A.B. de
C.V., Vitro Automotive Glass LLC, and Vitro Automotriz, S.A. de C.V. (“Vitro Automotriz,”
and, collectively with Vitro S.A.B. de C.V. and Vitro Automotive Glass LLC, “Vitro”); Fuyao
Glass America Inc. (“Fuyao”); Auto Temp Inc. (“ATI”); and Sika Corporation (“Sika”). (Am.
Compl. (Dkt. 99).) Plaintiffs allege that Defendants entered into an illegal conspiracy to
eliminate OEMGN, a wholesaler of aftermarket auto glass, by orchestrating a group boycott
among OEMGN’s competitors and suppliers. (Id. § 1.) Plaintiffs allege that this conduct
amounts to a per se illegal group boycott (id.), and that Defendants’ conduct violates the
Sherman Act and New York’s Donnelly Act and constitutes tortious interference with OEMGN’s
prospective business relations (id. 6).
Currently pending before the court is Defendants’ motion to dismiss Plaintiffs’ Amended
Complaint. (See Defs. Mot. to Dismiss (“Mot.”) (Dkt. 88); see also Aug. 21, 2019 Stip. & Order
(Dkt. 102) (applying Defendants’ fully briefed motion to Plaintiffs’ Amended Complaint).) For
the following reasons, Defendants’ motion is GRANTED IN PART and DENIED IN PART.
I. BACKGROUND
A. Facts
The court takes the following statement of facts from Plaintiffs’ Amended Complaint, the
well-pleaded allegations of which the court generally accepts as true. See N.Y. Pet Welfare Ass'n
v. City of New York, 850 F.3d 79, 86 (2d Cir. 2017).
1. The Parties
OEMGN is an aftermarket auto glass! wholesaler. (Am. Compl. 2.) It purchases
aftermarket auto glass products from manufacturers and resells those products to consumers in
the New York Metropolitan Area. (/d.)
Defendants Mygrant and Interstate (collectively, the “Wholesaler Defendants’’) are also
aftermarket auto glass wholesalers that operate in the New York Metropolitan area. Ud. J] 22-
23.) Mygrant is the largest independent aftermarket auto glass wholesaler in the United States; it
owns and operates approximately 70 warehouses nationwide. (id. § 22.) According to Plaintiffs,
Mygrant is “one of the only national wholesalers of aftermarket auto glass products” with sales
totaling hundreds of millions of dollars per year. (Id. FJ 22, 100.)
1 Aftermarket auto glass is manufactured to replace broken or faulty glass parts in automobiles, such as windshields
and side windows. (Am. Compl. 29.)
Defendants Xinyi, Vitro, Fuyao, and ATI are manufacturers of aftermarket auto glass
products. (/d. 24-27.) Defendant Sika is a manufacturer of products containing urethane, a
chemical adhesive used in the installation of some aftermarket auto glass products. (Ud. J 30.)
Xinyi, Vitro, Fuyao, and ATI and Sika (collectively, the “Manufacturer Defendants”) sell their
products to wholesalers like Plaintiffs and the Wholesaler Defendants. (/d. 31.)
2. The Alleged Conspiracy
Plaintiffs allege that OEMGN differentiates itself from its competitors by offering lower
prices and that this “presents a disruptive threat to entrenched wholesalers” like the Wholesaler
Defendants. (id. 2.) According to Plaintiffs, the Wholesaler Defendants responded to this
threat by refusing to purchase from manufacturers that deal with OEMGN and by pressuring
manufacturers and other wholesalers to boycott OEMGN. (Jd. ff 3, 5.)
OEMGN first learned of the alleged conspiracy in January 2014 from a sales
representative at Carlite, a non-party auto glass manufacturer. (/d. {7 36, 38.) At that time, the
Carlite employee informed OEMGN that the Wholesaler Defendants were applying “significant
pressure” to Carlite to stop selling glass to OEMGN. (/d. 738.) In order to avoid being
“punish[ed]” by the Wholesaler Defendants, the Carlite employee demanded that OEMGN
provide a list of its suppliers to relay to Mygrant. Ud. 438.) A different Carlite employee
subsequently told OEMGN that Mygrant wanted to ensure that there “would be one less guy in
town,” and that Mygrant intended to “get competitors out of the area.” (Jd. 439.) Mygrant had
allegedly indicated, however, that Interstate was an “acceptable competitor.” (Jd) OEMGN
thought it “had no choice but to comply with Carlite’s demand” and “reluctantly” shared its list
of suppliers with Carlite. (Jd. 40.) The Carlite representative said he would share the list with
Mygrant because he had to “defend [himself] with two major customers that have concerns.”
Ud.)
Plaintiffs allege that each of the Manufacturer Defendants, along with at least two
additional non-parties, participated in the conspiracy orchestrated by the Wholesaler Defendants
to boycott OEMGN.
a. Vitro
OEMGN began regularly purchasing aftermarket auto glass products from Vitro in
approximately January 2014. (Ud. 9 43.) Shortly after the relationship began, OEMGN placed an
order with Vitro that never arrived. (Jd.) A few months later, in or around July 2014, an
employee of a non-party manufacturer allegedly informed OEMGN that “there was a Vitro
delivery that was supposed to come [to OEMGN] and went to Mygrant.” (id)
On June 18, 2014, a sales representative from Carlite recounted a conversation he had
with Interstate’s owner, Angelo Marino, during which Mr. Marino allegedly admitted that the
Wholesaler Defendants pressured Vitro to halt its sales to OEMGN. (Id 9 44.) Mr. Marino
allegedly said that “[OEMGN] is not going to make it” because Mygrant had been “pretty
successful in making sure no one sells [to OEMGN].” (/d.} On October 20, 2014, Vitro’s
General Manager allegedly informed OEMGN that both Wholesaler Defendants had pressured
Vitro to stop its sales to OEMGN. (Jd. 745.) Vitro subsequently reduced its sales to OEMGN,
before completely cutting off sales to OEMGN sometime in 2015. Ud. ff] 45-46.)
Near the end of 2015, Vitro’s General Manager informed OEMGN that Vitro would not
be selling to OEMGN to avoid putting its Mygrant account “at risk.” (id. 9 47.) He said that
multiple wholesalers complained about Vitro selling to OEMGN, but that “the one that
concemed [him] the most [wa]s Mygrant.” (/d. 7 47.) In January 2016, the same manager stated
that a high-level employee at Mygrant told him not to sell to OEMGN. (/d. 7 48.) He also
confirmed that Vitro was “selling a lot of product” to Mygrant. (/d.)
b, ATI
Plaintiffs allege that OEMGN has unsuccessfully attempted to purchase ATI aftermarket
auto glass products on several occasions. (/d. 50.) Specifically, the Amended Complaint
alleges that “[iJn or around December 2013, in concert with Mygrant and Interstate, ATI agreed
to boycott all sales of its aftermarket auto glass products to OEMGN.” (Ud. 451.) ATI has not
sold to OEMGN since that time, despite repeated inquiries, and has allegedly “taken measures to
preclude OEMGN from purchasing ATI-manufactured glass through alternate channels.” (/d.)
OEMGN allegedly heard of ATI’s decision to boycott OEMGN during a call with a
Carlite sales representative on December 17, 2013. (Id 52.) The representative informed
OEMGN that he had recently spoken with Matthew Fassler, co-owner of ATI, who had
expressed concern about losing a “bazillion dollars’ worth of [Mygrant’s] business” if ATI did
not boycott OEMGN. (/d.) Mr. Fassler also allegedly said that selling to OEMGN may not be
“worth the risk .. . of losing[] Mygrant’s business.” (/d.)
OEMGN attempted to buy ATI-manufactured glass products from another wholesaler,
non-party Auto Glass Outlet (“AGO”). (fd. 53.) AGO initially agreed; in January 2014,
however, AGO informed OEMGN that it would not complete the sale because Douglas Fassler,
the other co-owner of ATI, told AGO it would not sell to it if products were passed on to
OEMGN. (id. 954.) Mr. Fassler further told AGO that “Mygrant was on [its] back not to give
glass to anybody who support[s] OEMGN” and that, if it AGO sold ATI products to OEMGN,
ATI would be “in big trouble with Mygrant.” Cd. 754.) Similarly, OEMGN sought to purchase
ATI glass through non-party C-Auto Glass, Inc. (“C-Auto”), another non-party wholesaler. (Jd.
955.) Ina January 29, 2014 email, however, C-Auto informed OEMGN that ATI would not
even provide a quote for products that it believed “may be going to Brooklyn or other NY
markets.” (/d. ]56.) In February 2014, American Glass Distributors—a “large regional
wholesaler”—likewise refused to sell ATI products to OEMGN, noting that “[e]ven with the best
attempts at stealth these things are always found out.” (Jd. 4 57.)
On August 9, 2016, Douglas Fassler allegedly confirmed that ATI was refusing to sell to
OEMGN at Mygrant’s request. Ud. 59.)
Cc. Fuyao
Plaintiffs allege that OEMGN has unsuccessfully attempted to purchase Fuyao
aftermarket auto glass products on several occasions. (/d. 61.) The Amended Complaint
alleges that “[i]n or around early 2014, in concert with Mygrant and Interstate, Fuyao agreed to
boycott all sales of its aftermarket auto glass products to OEMGN.” Cid.)
Plaintiffs allege several specific incidents in support of this assertion. In February 2014,
OEMGN attempted to purchase Fuyao glass from AGD. (Ud. 9 63.) However, Plaintiffs allege
that Fuyao canceled the sale when it learned that the glass AGD ordered would be sold through
to OEMGN. (/d.) Then, in June 2014, OEMGN heard from a Carlite sales representative that
Angelo Marino of Interstate said that Fuyao “won’t do business with [OEMGN]” because of the
boycott. (7d. J 62.) On November 4, 2014, an AGD sales representative confirmed that the
“only reason why” AGD could not sell Fuyao glass to OEMGN was Fuyao’s fear of “reciprocity
no matter what from Mygrant.” (/d. § 64.) In another conversation between OEMGN and an
AGD sales representative, the representative indicated that Mygrant pressured Fuyao to halt all
sales to OEMGN. (Jd. 9 65.) According to the sales representative, if AGD sold any Fuyao
aftermarket glass to OEMGN, Fuyao would retaliate by either raising prices to AGD or by
halting any future sales to AGD. (/d.)
Finally, on or around February 27, 2015, AGD admitted to OEMGN that, at the behest of
the Wholesaler Defendants, “we in the industry are all supposed to unite to... keep you out of
the business.” (Jd. | 66.) At that time, the AGD sales representative allegedly told OEMGN that
he would be “circumspect” and sell OEMGN Fuyao-manufactured products. (/d.) However, this
never happened. (/d.) On or around July 19, 2016, that same AGD sales representative informed
OEMGN that, due to pressure from Mygrant, Fuyao insisted that AGD was “not allowed” to sell
Fuyao glass to OEMGN. (/d.) AGD thereafter refused to sell any aftermarket auto glass to
OEMGN. (/d.)
a. Xinyi
Starting in approximately November 2013, OEMGN regularly purchased aftermarket
auto glass products from Xinyi. (/d. 68.) At some point in 2014, however, Plaintiffs allege
that “in agreement with Mygrant and Interstate, Xinyi halted all sales of its aftermarket auto
glass products to OEMGN.” (Id. 7 69.)
On or around March 4, 2014, OEMGN sought to buy aftermarket auto glass from
Shenzhen Benson Automobile Glass Co., Ltd. (“Benson”), a Xinyi subsidiary. (7d. 70.) As
soon as it learned of the sale, Xinyi stopped it. Ud.) In a discussion on or around September 5,
2014, a Benson sales representative indicated that Benson would not sell to OEMGN because of
the “situation” with Mygrant. (id. 71.) Then, on or around May 12, 2015, Xinyi simply
refused to sell aftermarket auto glass to OEMGN, stating that it could not do so unless Mygrant
“disappear[ed].” (/d. | 72.) On or around July 19, 2016, an AGD sales representative informed
OEMGN that due to pressure from Mygrant, Xinyi mandated that AGD was “not allowed” to sell
Xinyi glass to OEMGN. (id. J 73.) AGD thereafter refused to sell to OEMGN. (/d.)
Plaintiffs further allege that in 2017, a Xinyi sales representative told OEMGN that
Mygrant had previously agreed with Xinyi to discontinue sales to certain of Mygrant’s
competitors in Florida. (/d. 174.) The representative noted that Mygrant’s competitive position
gave it “a strong reason” to talk to Xinyi and establish a boycott any of its competitors. (id.)
During that discussion, the Xinyi representative again explained that Xinyi would not sell
aftermarket auto glass products to OEMGN. (Jd)
é. Pittsburgh Glass Works
Non-party Pittsburgh Glass Works, LLC (“PGW”) is a manufacturer and wholesaler in
Pittsburgh, Pennsylvania. (Jd. 77.) PGW is a subsidiary of the LKQ Corporation, a leading
provider of aftermarket auto parts. (/d.) In or around December 2016, PGW sold its auto glass
manufacturing business to Vitro. (/d.) Plaintiffs allege that in January 2014, OEMGN and a
PGW division agreed to a sale of PGW aftermarket auto glass products. (/d. 78.) However, at
Interstate’s behest, PGW subsequently reversed its decision and refused to open OEMGN’s
account. (/d@.) In or around May 2016, OEMGN spoke with a sales representative from Carlite
who had recently spoken with PGW. (Ud. 79.) During this call, OEMGN allegedly learned that
Interstate’s owner, Angelo Marino, personally called PGW to “let [them] have it.” Vd.) During
that conversation between Interstate and PGW, Mr. Marino allegedly indicated that PGW was
“not supposed to be selling” any auto glass products to OEMGN. (/d.)
f International Auto Glass Distributors, Inc.
Non-party International Auto Glass Distributors Inc. (““IAGD”) is a wholesaler in Bronx,
New York. (/d. § 80.) IAGD is a competitor of Mygrant, Interstate, and OEMGN. (/d@.) On or
around February 2014, IAGD called OEMGN to offer their “help” in purchasing aftermarket
auto glass. (/d. 81.) However, on or around March 2014, IAGD’s owner called OEMGN to
terminate the arrangement. (/d.) According to IAGD’s owner, “everyone” had pressured him
not to sell aftermarket auto glass to OEMGN. (/d@.) OEMGN understood “everyone” to include
the Wholesaler Defendants. (Jd) Ultimately, [AGD refused to sell to OEMGN or to place any
orders for aftermarket auto glass on behalf of OEMGN. (/d. { 82.)
g. Sika
In or around early 2014, OEMGN sought to purchase urethane from Sika. (/d. { 84.) In
or around January 2014, OEMGN called a Sika sales representative to discuss the status of a
pending OEMGN sales account. (/d.) The Sika representative indicated that Mygrant had
“strongarmed” Sika to boycott OEMGN because Mygrant “didn’t want anyone dealing with
[OEMGN]” and would “flatten anybody” that did. (id) According to the Sika sales
representative, Dow Chemical—which also manufactures urethane products—informed Mygrant
that Sika was opening a sales account with OEMGN. (/d.) The Sika sales representative further
indicated that his boss, upon receiving Mygrant’s demand to boycott sales to OEMGN, was
concermed, because the company “couldn’t jeopardize millions of dollars in business” just to sell
to OEMGN. (/d.) OEMGN subsequently contacted Sika to purchase urethane in February and
June of 2018; Sika refused to sell product to OEMGN on both occasions. (/d. J] 85-86.)
B. Procedural History
Plaintiffs filed their complaint in this court on February 6, 2019 asserting claims for □
antitrust conspiracy in violation of the Sherman Act (15 U.S.C. § 1) and New York’s Donnelly
Act (New York General Business Law §§ 340 et seq.), as well as a claim for tortious interference
with OEMGN’s prospective business relations. (Compl. (Dkt. 1) ff 105-28.)
Defendants—other than Vitro Automotriz—filed their fully briefed motion to dismiss on
May 17, 2019. (Mot.; Pls. Mem. in Opp’n to Mot. (“Opp’n”) (Dkt. 93); Defs. Reply in Further
Supp. of Mot. (“Reply” (Dkt. 94).)
On August 5, 2019, Plaintiffs amended their complaint to add as a defendant Vitro
Automotriz, a subsidiary of Vitro, S.A.B. de C.V. (Am. Compl. see also Pls. June 28, 2019
Letter (Dkt. 97).) Shortly thereafter, the parties stipulated that Defendants’ motion to dismiss
shall be deemed to apply to the Amended Complaint as to the previously-served Defendants.
(Aug. 21, 2019 Stip. & Order.) On November 27, 2019, Vitro Automotriz filed a motion to
dismiss and motion to join the other Defendants’ motion to dismiss. (Vitro Automotriz Mot. to
Dismiss and Mot. for Joinder (Dkt. 109).) The court GRANTS Vitro Automotriz’s motion to
join, and considers its motion to dismiss along with the other Defendants’ motion.
Il. LEGAL STANDARD
A. Motions to Dismiss
1. Generally
To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A complaint must contain facts that do more than present a “sheer possibility that a
defendant has acted unlawfully.” Jgbal, 556 U.S. at 678. In deciding Defendants’ motion to
dismiss, the court “will accept all factual allegations in the [c]omplaint as true and draw all
reasonable inferences in [Plaintiffs’] favor.” L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419,
429 (2d Cir. 2011). However, the court will “identify[] pleadings that, because they are no more
than conclusions, are not entitled to the assumption of truth.” /gbal, 556 U.S. at 679. The court
10
must then evaluate the “well-pleaded factual allegations” and “determine whether they
plausibl[y] give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. Even when, before
discovery, “facts are peculiarly within the possession and control of the defendant,” the
complaint must still provide “enough fact to raise a reasonable expectation that discovery will
reveal evidence of illegality.” Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010)
(quoting Twombly, 550 U.S. at 556).
2. For a Complaint Pleading Antitrust Conspiracy
A complaint pleading an antitrust conspiracy “need not show that its allegations
suggesting an agreement are more likely than not true or that they rule out the possibility of
independent action,” and “[s]kepticism of a conspiracy's existence is insufficient to warrant
dismissal.” Gelboim v. Bank of Am. Corp., 823 F.3d 759, 781 (2d Cir. 2016). Nonetheless, “a
finding of conspiracy requires ‘evidence that tends to exclude the possibility’ that the defendant
was ‘acting independently.’” United States v. Apple, Inc., 791 F.3d 290, 315 (2d Cir. 2015)
(quoting Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984)).
A plaintiff may properly allege an antitrust conspiracy by asserting direct or indirect
evidence of an illegal agreement. See Jowa Pub. Emps.’ Ret. Sys. v. Merrill Lynch, Pierce,
Fenner & Smith Inc., 340 F. Supp. 3d 285, 317 (S.D.N.Y. 2018). Direct evidence is “evidence
that is explicit and requires no inferences to establish the proposition or conclusion being
asserted,” and may include “a document or conversation explicitly manifesting the existence of
the agreement in question.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 324 n.23 (3d Cir.
2010) (citation omitted); see also Mayor & City Council of Balt. v. Citigroup, Inc., 709 F.3d 129,
136 (2d Cir. 2013) (“[A] plaintiff may, of course, assert direct evidence that the defendants
entered into an agreement in violation of the antitrust laws. ... Such evidence would consist, for
11
example, of a recorded phone call in which two competitors agreed to fix prices at a certain
level.” (citation omitted)).
Indirect evidence, on the other hand, includes “circumstantial facts supporting
the inference that a conspiracy existed.” Jowa Pub. Emps.’ Ret. Sys., 340 F. Supp. 3d at 317
(quoting Mayor & City Council of Balt.,709 F.3d at 136). Frequently, antitrust plaintiffs are able
to allege only indirect evidence because “conspiracies are rarely evidenced by explicit
agreements and nearly always must be proven though inferences that may fairly be drawn from
the behavior of the alleged conspirators.” Gelboim, 823 F.3d at 781 (quotation marks and
citation omitted). However, “merely alleging parallel conduct alone is not sustainable.” Jn re
Zinc Antitrust Litig., 155 F. Supp. 3d 337, 366 (S.D.N.Y. 2016) (citing, inter alia, Twombly, 550
USS. at 556; Mayor & City Council of Balt., 709 F.3d at 135-36). A plaintiff can successfully
allege a claim by setting forth parallel behavior accompanied by “plus factors,” such as “(1) a
common motive to conspire; (2) evidence . . . show[ing] that the parallel acts were against the
apparent individual economic self-interest of the alleged conspirators; and (3) evidence of a high
level of interfirm communications.” Gelboim, 823 F.3d at 781; see also Starr v. Sony BMG
Music Entm’t, 592 F.3d 314, 323 (2d Cir. 2010) (holding that a plaintiff need only “allegef]
specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an
agreement among the defendants”).
Hil. DISCUSSION
A. Federal Antitrust Claims
1. Section 1 of the Sherman Act
“Section 1 of [the Sherman Act] makes illegal every contract, combination[,] or
conspiracy in restraint of trade or commerce among the several states.” Fashion Originators’
12
Guild of America, Inc. v. FTC, 312 U.S. 457, 465 (1941); see also 15 U.S.C. § 1. “Although the
Sherman Act, by its terms, prohibits every agreement in restraint of trade, the Supreme Court has
long recognized that Congress intended to outlaw only unreasonable restraints.” Apple, 791 F.3d
at 321(citations and quotation marks omitted) (alterations adopted).
Such a contract, combination, or conspiracy may be either horizontal or vertical in nature.
A horizontal agreement is between competitors at the same level of the market (e.g., two
wholesalers), while a vertical agreement is between actors at different levels of the market (e.g.,
a wholesaler and a manufacturer). See Elecs. Commce’ns Corp. v. Toshiba Am. Consumer Prods.,
129 F.3d 240, 243 (2d Cir. 1997). Horizontal restraints are “classic examples” of “obviously
unreasonable restraints,” and, as such, “trigger per se liability under Section 1” of the Sherman
Act. Ace Arts, LLC v. Sony/ATV Music Pub., LLC, 56 F. Supp. 3d 436, 447 (S.D.N.Y. 2014)
(citations omitted). Vertical restraints, on the other hand, “are generally subject to ‘rule of
reason’ analysis.” Elecs. Comme’ns Corp., 129 F.3d at 243 (citations omitted). Under this
analysis, “an agreement will not violate the antitrust laws unless it can be shown that it will have
an actual adverse effect on competition in the relevant market.” Jd. □□ 244, “Whether...
Defendants’ alleged conduct constitutes a horizontal conspiracy, and therefore is a per se
violation, is a legal conclusion that the Court does not accept as true on a motion to dismiss.”
Ace Arts, 56 F, Supp. 3d at 448 (quoting Integrated Sys. & Power, Inc. v. Honeywell Int'l, Inc.,
713 F. Supp. 2d 286, 290 (S.D.N.Y. 2010)).
Courts also recognize “the existence of ‘hub-and-spoke’ conspiracies in which an entity
at one level of the market structure, the ‘hub,’ coordinates an agreement among competitors at a
different level, the ‘spokes.’” Apple, 791 F.3d at 314 (citation omitted). “These arrangements
consist of both vertical agreements between the hub and each spoke and a horizontal agreement
13
among the spokes ‘to adhere to the hub's terms,’ often because the spokes ‘would not have gone
along with the vertical agreements except on the understanding that the other spokes were
agreeing to the same thing.’” Jd. (citation omitted) (alteration adopted). “[A] hub-and-spoke
theory is cognizable under Section 1 only if there are both vertical agreements between the hub
and each spoke, and also a horizontal agreement among the various spokes with each other.” Jn
re Zinc Antitrust Litig., 155 F. Supp. 3d at 376) (citing Apple, 791 F.3d at 314).
All participants in such conspiracies are liable “when the objective of the conspiracy was
a per se unreasonable restraint of trade.” Apple, 791 F.3d at 323. And “certain concerted
refusals to deal or group boycotts are so likely to restrict competition without any offsetting
efficiency gains that they should be condemned as per se violations of § 1 of the Sherman Act.”
In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig., 383 F. Supp. 3d 187, 245
(S.D.N.Y. 2019) (quoting NW Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472
U.S. 284, 290 (1985)). “A concerted refusal to deal or group boycott is ‘an agreement to
pressure a supplier or customer not to deal with another competitor.’” Jd. (quoting Reading Int'l,
Inc. v. Oaktree Capital Mgmt., Inc., 317 F. Supp. 2d 301, 318 (S.D.N.Y. 2003)).
2. Statute of Limitations
Defendants Xinyi and Sika argue that Plaintiffs’ antitrust claims against them are barred
by the Sherman Act’s four-year statute of limitations. (See Mem. at 22, 24; Reply at 13-15.)?
The court agrees as to Sika, but not as to Xinyi.
? Defendants Mygrant, Interstate, ATI, and Fuyao also seem to assert that some of Plaintiffs’ allegations against
them are time-barred because they relate to actions taken four years ago (Mem. at 10 n.4, 12 n.5, 17). Plaintiffs are
correct, however, that “[a]lthough OEMGN may not recover damages accruing more than four years prior to the
filing of the Complaint, the Court may stil] consider allegations of pre-limitations conspiratorial conduct to establish
the conspiracy” where Plaintiffs’ claims themselves are not time-barred. (Opp’n at 30.) See In re Pre-Filled
Propane Tank Antitrust Litig., 860 F.3d 1059, 1069 (8th Cir. 2017) (considering pre-limitations period allegations
when determining whether the plaintiffs had sufficiently alleged conspiracy); ef Zenith, 401 U.S. 338 (allowing for
14
Under the Sherman Act, a plaintiff must file suit within four years after a cause of action
accrues. 15 U.S.C. § 15b. “An antitrust cause of action generally ‘accrues and the statute begins
to run when a defendant commits an act that injures a plaintiff's business.’” Rite Aid Corp. v.
Am. Exp. Travel Related Servs. Co., 708 F. Supp. 2d 257, 263-64 (E.D.N.Y. 2010) (Garaufis, J.)
(quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338 (1971)). “When an
antitrust injury is caused [by] a single injurious act, the statute of limitations runs from that act,
even if the resulting injury continues over a prolonged period.” Jd. at 267 (citing, inter alia,
Zenith, 401 U.S. at 338-39). “If, however, an antitrust violation consists of a series of acts that
repeatedly invade a plaintiff's interests and continue over time, a cause of action may accrue each
time the plaintiff is injured anew.” Jd. (citations omitted). In other words, “[t]he statute of
limitations does not only run from a defendant's initial act if the defendant engages in ‘conduct
which constitutes a continuing violation of the Sherman Act and which inflicts continuing and
accumulating harm.”” /d. (quoting Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S.
481, 502 n.15 (1968) (alterations adopted)). This “continuing violation exception most often
applies to conspiratorial conduct.” Jd.
“When the continuing violation exception applies, ‘an overt act by the defendant is
required to restart the statute of limitations and the statute runs from the last overt act.’” Id. at
268 (citation omitted); see also Klehr v. A.O. Smith Corp., 521 U.S. 179, 189 (1997) (“[EJach
overt act that is part of the violation and that injures the plaintiff . . . starts the statutory period
running again, regardless of the plaintiff's knowledge of the alleged illegality at much earlier
times.” (citation omitted)). ““An overt act ‘is characterized by two elements: (1) it must be a new
the recovery of antitrust damages “even though some undetermined portion of those damages was the proximate
result of conduct occurring more than four years prior to the filing of the counterclaim”).
15
and independent act that is not merely a reaffirmation of a previous act; and (2) it must inflict □
new and accumulating injury on the plaintiff.’” Rite Aid, 708 F. Supp. 2d at 268 (quoting DXS,
Inc. v. Siemens Med. Sys., Inc., 100 F.3d 463, 467 (6th Cir. 1996)).
In a refusal-to-deal case such as this one, “[i]f an initial refusal to deal with a party is
final, the statute of limitations begins to run and does not restart when the plaintiff makes
subsequent unsuccessful efforts to deal with the defendant.” Vitale v. Marlborough Gallery, No.
93-CV-6276 (PKL), 1994 WL 654494, at *5 (S.D.N.Y. July 5, 1994). Here, Plaintiffs filed their
initial complaint in this court on February 6, 2019. (Compl.) In order for their claims to be
timely, therefore, they must allege that each Defendant committed at least one overt act on or
after February 6, 2015.
Plaintiffs’ claims against Xinyi are timely. Although Plaintiffs allege that Xinyi stopped
selling to OEMGN in 2014, Xinyi did not inform OEMGN that it would no longer sell to it until
May 12, 2015. (Am. Compl. ff 69, 72.) This refusal was not a mere reaffirmation of previous
conduct, as Defendants suggest. Rather, it was the first time that OEMGN learned directly from
Xinyi why it had not been selling to OEMGN—because of Mygrant—and that it would continue
to refuse to do so unless Mygrant “disappear[ed].” (Am. Compl. { 72.) Indeed, before this
conversation, Plaintiffs would have been hard-pressed to convincingly allege that Xinyi engaged
in a conspiracy to refuse to sell to it because Xinyi had not, in fact, explicitly refused to do so.
Cf Zenith, 401 U.S. at 340 (finding that, because the plaintiff could not have recovered for
damages had it brought suit for them within four years of the initial act that caused them, it could
do so at a later date); Discover Fin. Servs. v. Visa U.S.A. Inc., 598 F. Supp. 2d 394, 403
(S.D.N.Y. 2008) (citing Zenith to determine that the plaintiff's claim for damages did not accrue
when the claim would have been so speculative as to bar recovery). Construing Plaintiffs’
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allegations in a light most favorable to them, Xinyi’s refusal to deal with OEMGN on May 12,
2015 was not a subsequent refusal at all, but rather, its initial refusal. Plaintiffs’ claims accrued
against Xinyi, at the earliest, on that date.
. Sika presents a more difficult case. Plaintiffs allege:
In or around early 2014, OEMGN sought to purchase urethane from
Sika. In or around January 2014, OEMGN called a Sika sales
representative to discuss the status of a pending OEMGN sales
account. The Sika representative indicated that Mygrant had
“strongarmed” Sika to boycott OEMGN because Mygrant “didn’t
want anyone dealing with [OEMGN]” and would “flatten anybody”
that did. According to the Sika sales representative, Dow Chemical
— a competing manufacturer of urethane products — had informed
Myegrant that Sika was opening a sales account with OEMGN. The
Sika sales representative further indicated that his boss, upon
receiving Mygrant’s demand to boycott sales to OEMGN, was
concerned, because the company “couldn’t jeopardize millions of
dollars in business” just to sell to OEMGN.
(Am. Compl. { 84.) Thus, unlike Xinyi, Sika explicitly refused to deal with OEMGN, and
explained why, well before February 9, 2015. The Amended Complaint’s only other allegations
against Sika are that it “refused to sell product to OEMGN” after OEMGN contacted it on
February 9, 2015 and again on June 28, 2018. (id. [J 85-86.) Such bare allegations, without
more, do not support any conclusion other than that these refusals were reaffirmations of Sika’s
clear refusal to sell to OEMGN—due to pressure from Mygrant—beginning in 2014.
In arguing to the contrary, Plaintiffs rely on Daniel v. Am. Bd. of Emergency Med., 988 F.
Supp. 112 (W.D.N.Y. 1997) and Simon-Whelan v. Andy-Warhol Found. for the Visual Arts, Inc.,
No. 07-CV-6423 (LTS), 2009 WL 1457177 (S.D.N.Y. May 26, 2009). (See Opp’n at 28.) That
reliance is misplaced. In Daniel, the court observed that “Plaintiffs’ allegations of [a
defendant’s] continuing refusal to reopen the practice track . . . are insufficient to support a
finding of continuing antitrust conspiracy.” Daniel, 988 F. Supp. at 121. In that case, however,
the plaintiffs—employees or former employees of Defendants—“[also] asserted several
17
additional acts by the hospital Defendants which they allege occurred during the limitations
period, including demotions or losses of responsibility, the denial of jobs, raises and promotions,
[and] receipt of less remuneration than ABEM certified physicians ....” Jd. (footnote call
number omitted). Plaintiffs here have not made any such specific allegations against Sika, but
instead have alleged no more than Sika’s “continuing refusal” to sell to them since 2014.
The court in Simon-Whelan explicitly found that a second refusal to authenticate the
plaintiff's painting was an overt act only because “Plaintiff alleges that Defendants not only
permitted, but encouraged, him to resubmit the painting with additional documentation and that
he suffered additional, distinct injury as a result of the second denial.” 2009 WL 1457177, at *7.
Plaintiffs here have alleged no such contact from Sika; in fact, in both 2015 and 2018, OEMGN
initiated the contact that led to Sika’s subsequent refusals to deal with it. (Compl. ff 85-86.)
Plaintiffs’ federal antitrust claims against Sika are therefore time-barred and must be
dismissed.
3. The Wholesaler Defendants
There is no dispute that the two Wholesaler Defendants operate at the same level of the
market, and thus that any agreement alleged between them is horizontal in nature. Defendants
argue, however, that Plaintiffs have not alleged sufficient facts to support an inference that there
was such agreement between the Wholesaler Defendants. (Defs. Mem. in Supp. of Mot.
(“Mem.”) (Dkt. 89) at 7-9; Reply at 1-2.) In support of this argument, Defendants contend that
Plaintiffs have offered only “[n]aked conclusions that defendants agreed with one another not to
deal with plaintiff,” which “are insufficient to state a valid claim under Section 1 of the Sherman
Act.” (Mem. at 8 (quoting RxUSA Wholesale, Inc. v. Alcon Labs., Inc., 661 F. Supp. 2d 218, 237
(E.D.N.Y. 2009), aff'd, 391 F. App’x 59 (2d Cir. 2010)) (quotation marks omitted) (alterations
18
adopted).) This may be an accurate statement of law, but it is an inaccurate characterization of
the Amended Complaint.
In response, Plaintiffs point to several specific allegations from the Amended Complaint:
e Interstate’s owner, Angelo Marino, bragged about coordinating pricing with
Mygrant and labeled OEMGN a “price-cutter” (Am. Compl. J 36);
e Inor about January 2014, a sales representative of non-party manufacturer Carlite
informed OEMGN that both of the Wholesaler Defendants were starting to apply
“significant pressure” to Carlite to stop selling to OEMGN (id. 38);
e Inorder to “defend [himself] with two major customers” and to avoid being
“punish[ed],” the Carlite representative demanded a list of OEMGN’s suppliers to
relay to Mygrant (id. {] 38-40 (emphasis added));
e The Carlite representative further noted Mygrant’s intent was to “get competitors
out of the area,” but that Mygrant’s list of acceptable competitors included
‘Angelo’ [Marino]” (id. J 39);
e On June 18, 2014, a Carlite sales representative states that Mr. Marino admitted
that Interstate and Mygrant had pressured Vitro to halt its sales to OEMGN and
that “[OEMGN is] not going to make it” (id. { 44);
e Mr. Marino (of Interstate) proclaimed that OEMGN was a “cancer” because
manufacturers would not sell to it and that Mygrant is “pretty successful at
making sure that no one sells [to OEMGN]” (id.);
e On or around October 20, 2014, Vitro’s General Manager informed OEMGN that
“both” Mygrant and Interstate had pressured Vitro to stop its sales to OEMGN”
(id. J 45);
e On or around February 27, 2015, wholesaler AGD admitted to OEMGN that, at
the behest of Mygrant and Interstate, “we in the industry are all supposed to unite
to... keep you out of the business” (id. J 66);
e The truckload division of manufacturer PGW refused to sell products to OEMGN
despite having previously agreed to do so (id. J{ 77-79). In or around May 2016,
OEMGN learned that Interstate’s owner Mr. Marino personally called PGW to
“let [them] have it” and warned PGW that it was “not supposed to be selling” any
glass products to OEMGN (id. J 79);
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¢ In February 2014, wholesaler IAGD offered to “help” OEMGN buy glass. (id.
481). But in March 2014, after selling OEMGN one part, IAGD terminated the
arrangement after “everyone” pressured it not to sell to OBMGN. OEMGN
understood “everyone” to include Mygrant and Interstate (id.).
(See Opp’n at 13-14.) These allegations are mostly indirect, but, notably, include at least one
direct allegation: that Interstate’s owner “boasted that he has called Mygrant to discuss and
dictate the pricing of an aftermarket auto glass product sold by both Mygrant and Interstate” and
stated, “we control the board on that [price].” (Am. Compl. § 36.) This allegation—along with
several indirect allegations indicating parallel behavior and common motive—plausibly alleges
an agreement between the Wholesaler Defendants to boycott OEMGN. See Gelboim, 823 F.3d
at 782 (“[A]t the motion-to-dismiss stage, appellants must only put forth sufficient factual matter
to plausibly suggest an inference of conspiracy, even if the facts are susceptible to an equally
likely interpretation.”). The allegations, moreover, are extremely detailed, including the names
of people involved, dates of conversations, and direct quotations. If Plaintiffs’ allegetions here
are insufficient to allege an agreement between the Wholesaler Defendants, the court is not sure
what kind of allegations could, as a practical matter, allege such an agreement. See id. at 781
(“[C]onspiracies are rarely evidenced by explicit agreements and nearly always must be proven
though inferences that may fairly be drawn from the behavior of the alleged conspirators.”
(quotation marks and citation omitted)).
4. The Manufacturer Defendants
Defendants also argue that the Amended Complaint fails to state a claim against any of
the Manufacturer Defendants because it does not allege facts indicating that they entered into an
unlawful agreement with both or either of the Wholesaler Defendants. (Mem. at 9-10.) At its
core, “[i]dentifying the existence and nature of a conspiracy requires determining whether the
evidence ‘reasonably tends to prove that the defendant and others had a conscious commitment
20
to a common scheme designed to achieve an unlawful objective.’” Apple, 791 F.3d at 315
(quoting Monsanto, 465 U.S. at 764 (alteration adopted)).
As to Vitro, for example, the Amended Complaint alleges that, on October 20, 2014,
Vitro’s General Manager informed OEMGN that both Wholesaler Defendants had pressured it to
stop sales to OEMGN. (Am. Compl. 4 45.) Vitro subsequently reduced and, ultimately, cut off
all sales to OEMGN sometime in 2015. (Ud. J 45-46.) In late 2015 and early 2016, Vitro’s
General Manager also told OEMGN that Vitro would not be selling to OEMGN to avoid putting
its Mygrant account “at risk” and that a high-level Mygrant employee instructed him not to sell
to OEMGN. (id. ff 47-48.) The court will not repeat them all here, but the Amended Complaint
includes similarly detailed and compelling allegations regarding the existence of an agreement
between one or both of the Wholesaler Defendants and ATI (id. 52-57; 59), Fuyao (id. Jf 62,
64-66), and Xinyi (id. FJ 72-74). See supra Section [.A.2 (discussing Plaintiffs’ factual
allegations about each Defendant’s involvement in the alleged conspiracy). These allegations
include information about specific conversations, with quotes, dates, and names of some of the
people involved. .
Defendants’ primary contention is that Plaintiffs’ have alleged no more than parallel
refusals to deal (see, e.g., Mem. at 21), which would not amount to an antitrust violation, see
Verizon Commc’ns Inc. v. Law Offices of Curtis v. Trinko, LLP, 540 U.S. 398, 408 (2004)
(“[T]he Sherman Act does not restrict the long recognized right of a trader or manufacturer
engaged in an entirely private business, freely to exercise his own independent discretion as to
parties with whom he will deal.”) (citation and quotation marks omitted) (alteration adopted); Jn
re Zinc, 155 F. Supp. 3d at 366 (“[MJerely alleging parallel conduct alone is not sustainable.”
(citing Twombly, 550 U.S. at 556; Mayor & City Council of Balt., 709 F.3d at 135-36)). But, as
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Plaintiffs note, the Amended Complaint does not rest solely on its allegations that the
Manufacturer Defendants each independently refused to deal with it.
The court finds the Southern District’s recent decision in Keurig to be particularly
instructive. There, the court found the following allegations sufficient to support the inference
that a conspiracy existed:
e “[T]hat an “expansive system of exclusionary and noncompetition agreements is
orchestrated by Keurig, and coffee and other beverage brands that enter into a
license or manufacturing agreement with Keurig do so with the express
knowledge of Keurig's anticompetitive agreements with other competitor roasters
and brands’”;
e “[T]hat the terms of Keurig’s agreements with roasters and brands are well known
within the market, and each company would have known that its competitors had
entered into these agreements”;
e [T]hat “[c]o-conspirators entered into [multi-year exclusionary] agreements with
the knowledge and agreement that distributors and other resellers will be required
to enter into, or already have entered into, agreements that limit their freedom to
do business outside of specified authorized locations”; and
e “{T]hat ‘the coffee and beverage brands’ agreements not to deal with . .. makers
that could otherwise increase their product output and sales revenue and provide a
back-up or second manufacturer or the like’ can only be explained by a
‘conspiracy to sustain supra-competitive prices ... by restraining price
competition.”
Keurig, 383 F.Supp.3d at 245.
Plaintiffs have stated strikingly similar allegations here, particularly that the efforts to
boycott OEMGN (and the widespread agreement to participate in that boycott) were well known
throughout the industry, and that each Manufacturer Defendant would have known that its
competitors were falling in line with the Wholesaler Defendants’ demands. (See, e.g., Am.
Compl. 9] 5, 44, 52, 54, 56-57, 62-66, 73, 79, 81). Such allegations of “conscious parallelism”
may be sufficient for the court to infer the existence of a horizontal agreement “when such
interdependent conduct is accompanied by circumstantial evidence and plus factors.” Mayor &
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City Council of Balt., 709 F.3d at 136 (citations omitted). Plaintiffs have alleged such
“circumstantial evidence and plus factors” here, including a high level of interfirm
communication (see, e.g., Am. Compl ff 44, 52, 54, 57, 62, 64-66, 74) and that the Manufacturer
Defendants each acted against their apparent economic self-interest by refusing to deal with
OEMGN. See Gelboim, 823 F.3d at 781. This is “enough factual matter (taken as true) to
suggest that an agreement was made,” Twombly, 550 U.S. at 557, and so dismissal is not
warranted. See Keurig, 383 F. Supp. 3d at 245 (“[P]laintiff is not required to show, at the
pleading stage, that the allegations suggesting agreement ‘are more likely than not true or that
they rule out the possibility of independent action.’” (quoting Anderson News, L.L.C. v. Am.
Media, Inc., 680 F.3d 162, 184 (2d Cir. 2012)).
* *
As Plaintiffs have sufficiently alleged that the Wholesaler Defendants orchestrated a
group boycott with and among the Manufacturer Defendants, the court finds that they have
plausibly alleged a per se violation of § 1 of the Sherman Act.
B. State Law Claims
1. The Donnelly Act
Because the Donnelly Act has the same four-year statute of limitations as the Sherman
Act, see N.Y. Gen. Bus. Law § 340(5), Plaintiffs’ Donnelly Act claims against Sika are time-
barred.
Defendants’ only argument in favor of dismissing Plaintiffs’ Donnelly Act claims as to
the other Defendants is that “dismissal for failure to state a claim under the Sherman Act requires
dismissal of the Donnelly Act claims premised upon the same factual allegations.” (Mem. at 25.)
The court has not dismissed Plaintiffs’ federal antitrust claims against any Defendant except
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Sika, and so Plaintiffs’ Donnelly Act claims against the remaining defendants survive as well.
See Linens of Europe, Inc. v. Best Mfg., Inc., No. 03-CV-9612 (GEL), 2004 WL 2071689, at *18
(S.D.N.Y. Sept. 16, 2004) (declining to dismiss the plaintiff's Donnelly Act claim where
“Defendants cite[d] no relevant state policies or statutory distinctions between the Sherman and
Donnelly Acts that should lead to the Court to analyze [plaintiff's] state antitrust claim
differently from its federal claim”).
2. Tortious Interference
Under New York law, plaintiffs must prove four elements to succeed on a claim for
tortious interference with a business relationship: (1) a business relationship between Plaintiffs
and a third party (2) that the Defendants knew of and intentionally interfered with (3) solely out
of malice or through the use of dishonest, unfair, or improper means (4) thereby injuring
Plaintiffs. See Kirch v. Liberty Media Corp., 449 F.3d 388, 400 (2d Cir. 2006). Plaintiffs have
plausibly alleged each of the elements; namely, that Defendants together have intentionally
diminished the ongoing business between third party suppliers and OEMGN—and between each
of the other Defendants and OEMGN—through coercion. This injured OEMGN because it was
unable to readily purchase auto glass. See Linens of Europe, 2004 WL 2071689, at *20
(allowing a tortious interference claim to proceed when the plaintiff alleged that a manufacturer
“refused to deal with [the plaintiff] at the behest of” its competitors).
In arguing to the contrary, Defendants rely primarily on Susskind v. Ipco Hosp. Supply
Corp., 373 N.Y.S. 2d 627, 629 (2d Dep’t 1975), an almost forty-five-year-old case, to support
their argument that this claim should be dismissed because Plaintiffs have not provided specific
allegations of prospective negotiations that reasonably could be expected to result in one or more
contracts. (Mem. at 26.) Plaintiffs have plausibly alleged, however, that they would enter into
24
contracts for the sale of aftermarket auto glass and supplies with the Wholesaler Defendants and
with third-party manufacturers. (See, e.g., Am. Compl. ff 43, 54, 56-57, 125.) This includes
allegations that Plaintiffs actually had entered into contracts with, for example, AGO and C-
Auto, that were later cancelled as a result of Defendants’ pressure. (Jd. JJ 53-56.) Such
allegations are sufficient under New York law to state a claim for tortious interference.
IV. CONCLUSION
For the foregoing reasons, Defendants’ motion is GRANTED IN PART and DENIED IN
PART. Plaintiffs’ federal and state antitrust claims against Sika are DISMISSED. All of
Plaintiffs’ other claims—including its tortious interference claim against Sika—survive.
The parties are DIRECTED to contact the chambers of Magistrate Judge Lois Bloom
regarding next steps in this case.
SO ORDERED. / fut
Nicholas G. Garaufis
Dated: Brooklyn, New York _—-YicHoLaso carauns □
January go, 2020 nited States District Judge
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