## Facts

- Rutman Wine Company, an Ohio wine distributor, had distributed E. & J. Gallo Winery products for about 40 years, with Gallo wines comprising roughly one-quarter of Rutman’s sales.
- Gallo terminated Rutman as a distributor and appointed Wine Distributors, Inc. (WDI) as its replacement.
- Rutman alleged Gallo provided WDI better promotional and marketing services and other assistance than it provided Rutman and other distributors.
- Rutman sued seeking damages and injunctive relief, including reinstatement as a Gallo distributor.
- The case was filed in the Northern District of Ohio and transferred to the Eastern District of California.
- After dismissal of a first amended complaint, Rutman filed a second amended complaint asserting: (1) Sherman Act § 1, (2) Sherman Act § 2, (3) Robinson–Patman Act §§ 2(d) and 2(e), and (4) parallel Ohio antitrust claims.
- The district court dismissed Counts 1–4 with prejudice under Rule 12(b)(6), denied further leave to amend, and denied discovery; Rutman appealed.

## Issues

1. Whether the complaint plausibly alleged antitrust injury and harm to competition (not merely harm to Rutman) under Sherman Act §§ 1 and 2 and analogous state antitrust law.
2. Whether the complaint stated a Robinson–Patman Act § 2(e) claim by alleging discriminatory services that impaired Rutman’s ability to compete with favored purchasers.
3. Whether the district court abused its discretion by denying further amendment and discovery before dismissing with prejudice.

## Decision

- The Ninth Circuit affirmed the Rule 12(b)(6) dismissal with prejudice of Counts 1–4.
- The court held Rutman failed to plead antitrust injury and injury to competition, as required for Sherman Act and parallel state antitrust claims.
- The court held Rutman failed to plead that allegedly discriminatory services adversely affected Rutman’s ability to compete with favored distributors, as required for a § 2(e) Robinson–Patman claim.
- The court held the district court did not abuse its discretion in denying further amendment and discovery because Rutman had multiple opportunities to plead and the defects were substantive rather than matters uniquely requiring discovery.

## Legal Principles

- Antitrust liability requires harm to competition in the relevant market; harm to a single competitor, including termination as a distributor, is not enough.
- Vertical non-price restraints and exclusive distributorship arrangements are not automatically unlawful; a plaintiff must allege facts showing an unreasonable restraint of trade and competitive effects.
- A Robinson–Patman Act § 2(e) claim based on discriminatory promotional or related services requires allegations that the discrimination impaired the plaintiff’s ability to compete with favored purchasers and threatened competitive harm.
- Courts may dismiss antitrust claims at the pleading stage when essential elements (market-level competitive injury and related statutory elements) are missing; discovery is not required to supply a cause of action, and leave to amend may be denied as futile after repeated deficient pleadings.

## Conclusion

The Ninth Circuit upheld dismissal with prejudice because the distributor’s allegations described a supplier–distributor dispute and lost business to a replacement distributor but did not plead market-level competitive harm under the Sherman Act or competitive impairment required by Robinson–Patman § 2(e), and further amendment and discovery were properly denied.


Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729 (9th Cir. 1987)