John Deere & Co. sued for alleged antitrust violations

An antitrust complaint against John Deere & Co. was filed April 19, 2006, in the Federal District Court for the Southern District of West Virginia. The complaint alleges that John Deere & Co.’s effort to consolidate its dealerships constitutes an illegal restraint of trade under the Sherman Antitrust Act. The plaintiff operates Blueridge Farm Center, a John Deere retail outlet, and entered into an agreement to purchase R.P. Johnson Sons, Inc. (R.P. Johnson) another John Deere outlet for a commercially reasonable amount. The sale was subject to John Deere & Co.’s approval, but John Deere & Co. refused to consent to the sale unless the plaintiff also purchased another John Deere retail outlet. The plaintiff has no interest in acquiring the additional Deere outlet. The value of the sale transaction, the plaintiff claims, is substantially lessened without John Deere & Co.’s consent. In addition, the complaint alleges that John Deere & Co. will discontinue its dealership relationship with the plaintiff if the plaintiff acquires R.P. Johnson without also acquiring another John Deere retail outlet. The complaint alleges that John Deere & Co. has instituted a nationwide policy with its dealers to consolidate as many dealerships in as few dealers as possible, thereby requiring dealers to either acquire additional dealerships or sell their existing dealerships to larger dealers. The policy is furthered, the complaint alleges, by John Deere & Co.’s non-approval of dealership sale transactions if the proposed sale does not advance the goal of consolidating dealerships into fewer retailers. To further its claim, the plaintiff alleges that John Deere & Co. is willing to approve the sale of R.P. Johnson to another company for less than the liquidation value of R.P. Johnson because the sale would further John Deere & Co.’s dealership consolidation policy. The complaint also alleges that John Deere & Co. has intentionally interfered with the business relationship between the plaintiff and R.P. Johnson. James C. Justice Companies, Inc. v. Deere & Company, No. S:06-0287 (S. D. W. V. filed Apr. 19, 2006).

John Deere, in lieu of answering the complaint, filed a motion to stay the litigation pending arbitration. The basis for Deere’s motion is language contained in the dealership agreement between John Deere and Blueridge Farm Center that John Deere claims requires the matter to be submitted to arbitration. On July 28, 2006, the court ruled that it could not resolve whether the arbitration provision in the dealership agreement applied to the dispute due to limited briefing on the key issues relevant to Deere’s motion. Accordingly, the court gave the parties until October 6, 2006, to conduct limited discovery on issues related to the application of the arbitration provision. After the October 6 deadline for conducting additional discovery, Deere must file any supplemental memorandum in support of its motion to stay the litigation pending arbitration by October 20, 2006. After that, the plaintiff will be given time to file a reply.

Update: John Deere filed a reply brief to the plaintiff’s brief on January 11, 2007. The case was then submitted to the judge on the issue of whether the dispute must go to arbitration before the court can hear the dispute. In early 2008, the judge ruled that the matter should go to arbitration. James C. Campanies, Inc. v. Deere & Company, No. 5:06-cv-00287, 2008 U.S. Dist. LEXIS 24730 (S.D.W.VA. Mar. 27, 2008). The judge also stated that, if the plaintiff ultimately prevailed, they would be entitled to treble damages. As of May 28, 2008, arbitration had not yet been scheduled.