Background
Nine wholesale distributors sued Prestige Brands Holdings, Inc. and Medtech Products, Inc. under Section 2(a) of the Robinson-Patman Act. They alleged that Prestige sold Clear Eyes Redness Relief eye drops to Costco at an impermissibly lower price, including a 5% discount and occasional rebates and marketing benefits unavailable to the wholesalers, even though the wholesalers competed with Costco in reselling the product.
A jury found Prestige liable and awarded the wholesalers a combined $350,000 in damages, which was trebled under federal antitrust law. The district court also awarded more than $3 million in attorney’s fees and costs. A Ninth Circuit panel later affirmed the judgment on liability but vacated the fee award and remanded for a new award. Prestige sought rehearing en banc, challenging the panel’s approval of jury instructions that required proof of “some” displaced sales rather than a substantial impairment of each wholesaler’s ability to compete.
The Court’s Holding
The Ninth Circuit denied rehearing en banc after a majority of the court’s nonrecused active judges failed to vote in favor of rehearing. The order therefore left intact the panel opinion affirming Prestige’s liability under the Robinson-Patman Act and vacating and remanding the attorney’s-fee award.
Judge Forrest, joined by Judge VanDyke, dissented from the denial. The dissent argued that Section 2(a), Supreme Court precedent, decisions from other circuits, and the prevailing antitrust consensus require a secondary-line plaintiff to prove that discriminatory pricing substantially impaired its ability to compete. In the dissent’s view, allowing liability based merely on “some sales” being displaced eliminated that substantiality requirement and created a circuit split.
Key Takeaways
- The Ninth Circuit declined to rehear the case en banc, leaving the panel’s liability ruling in place.
- Under the standing panel decision, secondary-line Robinson-Patman Act liability in the Ninth Circuit does not require the jury instruction on substantial competitive impairment that Prestige requested.
- The denial did not restore the original attorney’s-fee award; the panel’s decision vacating that award and requiring a new one remains operative.
Why It Matters
The denial preserves a Ninth Circuit standard that may make it easier for disfavored purchasers to pursue secondary-line price-discrimination claims without proving that discriminatory prices substantially impaired their ability to compete. The dissent warned that this approach could expose manufacturers to treble damages and substantial fee awards for comparatively minor pricing disparities.
The order also highlights a disputed issue in Robinson-Patman Act doctrine: whether the statute’s word “substantially” limits the competitive injury that secondary-line plaintiffs must show. Because the full court declined review, that disagreement remains embedded in the Ninth Circuit’s precedent.