## Facts

- Uniroyal, Inc. (Uniroyal) manufactured and sold tires to dealers, including Hoff and Thames, Inc., doing business as Case Tire and Supply Company (Case), and Otasco, Inc. (Otasco).
- Uniroyal filed suit in federal court (diversity jurisdiction) against Case and two individual guarantors to collect an alleged unpaid balance for tires sold on credit and to enforce personal guaranties.
- Case answered and asserted counterclaims. Case initially named Otasco as a counterclaim defendant, but Otasco was later dismissed without prejudice, leaving Uniroyal as the counterclaim defendant.
- Case operated as a tire reseller with a relatively limited distribution capability. Otasco was a much larger buyer and functioned more like a wholesaler: it bought in bulk, used its own warehousing, and managed distribution to local outlets.
- Case alleged unlawful price discrimination under the Robinson–Patman Act based on Uniroyal’s pricing practices, including allegations that Uniroyal (a) transferred tires to its company-owned stores at lower prices, (b) sold tires to other Mississippi dealers at lower prices, and (c) sold tires to Otasco at a lower price than to Case.
- Case also alleged that Uniroyal’s relationship with Otasco amounted to an agreement or combination in restraint of trade under Sherman Act § 1, violated Mississippi antitrust statutes, and breached a supposed agreement granting Case an exclusive sales territory.
- Uniroyal responded that any lower price given to Otasco reflected a functional discount justified by cost savings. Because Otasco performed significant warehousing and distribution functions and purchased in volume through centralized systems, Uniroyal claimed its own selling, warehousing, and delivery costs were materially lower when serving Otasco than when serving Case.
- The matter came before the court on cross-motions for summary judgment: Uniroyal sought summary judgment on Case’s counterclaims, and Case sought summary judgment attacking the adequacy of Uniroyal’s cost-justification studies supporting the discount to Otasco.

## Issues

1. Whether Case showed a triable Robinson–Patman Act § 2(a) price-discrimination claim, or whether Uniroyal’s lower price to Otasco was a lawful functional discount justified by cost savings supported by Uniroyal’s cost studies.
2. Whether Case produced evidence sufficient to support a Sherman Act § 1 claim that Uniroyal and Otasco had a contract, combination, or conspiracy in restraint of trade.
3. Whether Case’s Mississippi antitrust claim could survive summary judgment on the same record.
4. Whether Case presented evidence of an enforceable exclusive-territory agreement that Uniroyal breached by allowing Otasco to buy and resell tires in Case’s area.
5. Whether Uniroyal’s cost-justification studies were legally inadequate so that Case was entitled to summary judgment against Uniroyal’s cost-justification defense.

## Decision

- The court granted Uniroyal’s motion for summary judgment on Case’s amended counterclaims.
- The court denied Case’s motion for summary judgment challenging Uniroyal’s cost-justification studies.
- On the Robinson–Patman claim, the court held that the price differential to Otasco was supported by evidence of functional differences and cost savings tied to Otasco’s bulk purchasing and its assumption of warehousing and distribution functions, and that the cost-justification showing was sufficient at the summary-judgment stage.
- The court rejected the Sherman Act § 1 theory because the record did not show significant evidence of concerted, anticompetitive action between Uniroyal and Otasco beyond an ordinary supplier–customer relationship and pricing arrangement.
- The Mississippi antitrust claim failed on the same summary-judgment record that defeated the federal conspiracy theory.
- The exclusive-territory contract claim failed because Case did not produce evidence of a definite, enforceable agreement granting it exclusivity that would bar Uniroyal from selling to Otasco for resale in the area.

## Legal Principles

- A Robinson–Patman Act § 2(a) price differential is not unlawful if the seller proves the differential is justified by differences in the cost of manufacture, sale, or delivery.
- A functional discount may be permissible when the favored buyer performs additional distribution or marketing functions that reduce the seller’s costs, and the discount reasonably corresponds to those savings.
- Cost-justification proof need not be perfectly exact; at summary judgment, reasonably prepared cost studies and supporting materials can satisfy the seller’s burden when the opposing party does not produce specific evidence creating a genuine dispute over the cost basis.
- A Sherman Act § 1 claim requires proof of a contract, combination, or conspiracy; unilateral pricing decisions and a standard vertical selling relationship, without more, do not establish concerted action.
- State antitrust claims based on the same alleged restraint generally fail when the record does not support a finding of an anticompetitive agreement.
- An exclusive-territory claim requires proof of a clear, enforceable agreement; a dealer’s expectation or informal assurances are not enough to establish contractual exclusivity.

## Conclusion

In Uniroyal, Inc. v. Hoff and Thames, Inc., the court disposed of a dealer’s antitrust and contract counterclaims on summary judgment, ruling that Uniroyal’s lower pricing to the larger buyer, Otasco, was supported as a cost-justified functional discount and that the dealer failed to produce evidence of a Sherman Act agreement, an independent state antitrust violation, or an enforceable exclusive-territory contract.


Uniroyal, Inc. v. Hoff and Thames, Inc., 511 F. Supp. 1060 (1981)