Antitrust—Robinson-Patman Act—No Salt Added: The Supreme Court Promotes Healthy Competition by Taking the Salt Out of the Robinson-Patman Act. Volvo v. Reeder-Simco, 126 S. Ct. 860 (2006).

University of Arkansas at Little Rock Law Review, Dec 2007

Arkansas's current path in nursing-home regulation is leading to the destruction of its nursing-home system. In particular, the Arkansas Resident's Rights Statute favors plaintiffs and allows for high damage awards. The statute's civil enforcement provision lacks guidelines for the application of the statute or the award of damages. In February of 2006, the Arkansas Supreme Court decided Health Facilities Management Corp. v. Hughes, a nursing home case concerning the Arkansas Resident's Rights Statute. The court's decision on the issue of liability under the statute was well-reasoned and stayed faithful to the goals of the statute, encouraging nursing-home licensees to live up to their responsibilities. However, while the court could have decided the case so as to clarify the statute and give guidance to the parties involved, the court's decision only contributed to the ambiguity on the issue of damages. In the decision, the court laid out a vague standard for the statute's application that seems to overlap with traditional negligence law and gives juries exceedingly broad discretion in assessing compensatory damages under the statute. This note begins by looking at the facts of the case at hand, Health Facilities Management Corp. v. Hughes. The note then provides the reader with a background that includes the state of the nursing-home industry, different approaches to problems in long-term care, and the state of Arkansas's laws and litigation regarding nursing homes. Next, the note looks at the Arkansas Supreme Court's reasoning in Health Facilities Management Corp. Finally, the note discusses the significance of that case and will call for change in Arkansas's approach to nursing home litigation.

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Antitrust—Robinson-Patman Act—No Salt Added: The Supreme Court Promotes Healthy Competition by Taking the Salt Out of the Robinson-Patman Act. Volvo v. Reeder-Simco, 126 S. Ct. 860 (2006).

University of Arkansas at Little Rock Law Review Volume 29 | Issue 3 Article 7 2007 Antitrust—Robinson-Patman Act—No Salt Added: The Supreme Court Promotes Healthy Competition by Taking the Salt Out of the Robinson-Patman Act. Volvo v. Reeder-Simco, 126 S. Ct. 860 (2006). James Paul Purnell Follow this and additional works at: http://lawrepository.ualr.edu/lawreview Part of the Antitrust and Trade Regulation Commons, and the Securities Law Commons Recommended Citation James Paul Purnell, Antitrust—Robinson-Patman Act—No Salt Added: The Supreme Court Promotes Healthy Competition by Taking the Salt Out of the Robinson-Patman Act. Volvo v. Reeder-Simco, 126 S. Ct. 860 (2006)., 29 U. Ark. Little Rock L. Rev. 625 (2007). Available at: http://lawrepository.ualr.edu/lawreview/vol29/iss3/7 This Note is brought to you for free and open access by Bowen Law Repository: Scholarship & Archives. It has been accepted for inclusion in University of Arkansas at Little Rock Law Review by an authorized administrator of Bowen Law Repository: Scholarship & Archives. For more information, please contact . ANTITRUST-ROBNSON-PATMAN ACT-No SALT ADDED: THE SUPREME COURT PROMOTES HEALTHY COMPETITION BY TAKING THE SALT OUT OF THE ROBINSON-PATMAN ACT. Volvo v. Reeder-Simco, 126 S. Ct. 860 (2006). I. INTRODUCTION "Judicial Activism" is a term frequently used in jurisprudential debates, yet there is not a clear consensus on the definition of the term.' One form of judicial activism occurs when a member of the judiciary invalidates a piece of properly enacted legislation. 2 Scholars criticize this form of judicial activism because it gives credence to an elite minority's viewpoint, rather than giving deference to the majority's will. 3 Another form of judicial activism occurs when a judge refuses to follow horizontal precedent.4 Rather than criticize this form of activism, however, scholars have deemed it an appropriate exercise of the judiciary's constitutional authority.5 In Volvo v. Reeder Simco, 6 the Supreme Court narrowed the breadth of the Robinson-Patman Act ("Act"), 7 a seventy-year-old federal antitrust statute prohibiting price discrimination.8 Although the Court's decision is an activist one, 9 the Court's activism is laudable because it overruled erroneous horizontal precedent. 0 Ideally, the legislature should have corrected the Court's error," but legislative action in this case was improbable due to public resentment toward large corporations. 2 Moreover, the complexity of antitrust policies called for judicial action to ensure that the RobinsonPatman Act coincided with the broader goals of antitrust policy. 3 1. Keenan D. Kmiec, The Origin and Current Meanings of "JudicialActivism," 92 CAL. L. REv. 1441, 1443 (2004) (discussing how the definition of judicial activism varies depending on the context in which it is used). 2. Id. at 1463. 3. See ROBERT H. BORK, THE TEMPTING OF AMERICA 17 (1991). 4. Kmiec, supra note 1, at 1467. The doctrine of horizontal precedent requires a court to follow its past precedents. Id. 5. Id. at 1468. 6. 126 S. Ct. 860 (2006). 7. Margaret M. Zwisler, Volvo Trucks v. Reeder-Simco: Judicial Activism at the Supreme Court?, ANTITRUST, Summer 2006, at 40, 43. 8. See Discrimination in Price, Services, or Facilities, 15 U.S.C. § 13(a) (2006). 9. See Zwisler, supra note 7, at 43. 10. See discussion infra Part V.A. 11. Zwisler, supra note 7, at 43. 12. See discussion infra Part V.B. 13. See discussion infra Part V.C. UALR LAW REVIEW [Vol. 29 This note explores how the Court's decision in Volvo furthers the principle that the judiciary should correct flawed antitrust policy.' 4 First, the note outlines the facts giving rise to the type of price discrimination claim arising in Volvo. 5 Next, it examines the background of price discrimination jurisprudence. 6 Following the background section, the Court's reasoning in Volvo merits examination. 7 The note concludes by examining the significance of Volvo, specifically addressing the desirability of judicial activism in 18 Volvo and future antitrust cases. II. FACTS Reeder-Simco ("Reeder") sued Volvo in February of 2000, alleging that Volvo engaged in price discrimination by giving Reeder's competitors greater price concessions than the price concessions given to Reeder. 9 To provide a factual background for the Supreme Court's decision in Volvo, this section reviews Reeder's relationship with Volvo, 20 the facts giving rise to Reeder's lawsuit,2 and the decision of the Eighth Circuit Court of Appeals.22 A. Reeder's History with Volvo Reeder was a dealer of Class 8 trucks, selling exclusively Volvomanufactured trucks. 23 Reeder's agreement with Volvo assigned Reeder a geographic area where Volvo would not place another dealer; however, Reeder did not have the exclusive right to sell Volvo trucks in the area because Volvo dealers are allowed to sell trucks anywhere within the United States. 24 Reeder signed a five-year franchise agreement with Volvo, with an 14. See discussion infra Part V.C. 15. See infraPart II. 16. See infra Part III. 17. See infra Part IV. 18. See infra Part V. 19. Reeder-Simco v. Volvo, 374 F.3d 701, 705 (8th Cir. 2004). Reeder's suit alleged that Volvo violated the Robinson-Patman Act and the Arkansas Franchise Protection Act. Id. at 704. This case note, however, is limited to the Robinson-Patman Act claim because the Supreme Court's decision in Volvo addresses only the federal claim. Volvo v. Reeder-Simco, 126 S. Ct. 860, 865 (2006). 20. See infra Part II.A. 21. See infra Part ll.B. 22. See infra Part II.C. 23. See Brief of Respondent at 6, Volvo v. Reeder-Simco, 126 S. Ct. 860 (2006) (No. 04-905). Class 8 trucks are heavy-duty trucks weighing over 33,000 pounds. Id. at 4. Principal manufacturers of Class 8 trucks, such as Volvo, manufacture base trucks with various component parts added to meet a customer's particular demand. Id. 24. Id. at 4. 2007] ANTITRUST automatic one-year extension if Reeder met Volvo's sales objectives.2 5 Volvo could terminate the agreement for cause or if Reeder failed to meet certain sales objectives.26 As a Volvo dealer, Reeder determined the customer's product specifications and then negotiated a wholesale truck price from Volvo. 27 Volvo offered Reeder a wholesale price that was eighty percent of the retail price, but Volvo could reduce the price further by granting certain price concessions. Volvo's district managers determined the size of the concession Volvo was willing to offer based on the particular truck and the price of similar trucks that the customer could consider instead of Volvo trucks.29 Once Volvo determined the price concessions, the dealer established the customer's retail price.30 If the customer accepted the dealer's retail price, 31 then the dealer purchased the trucks from Volvo. Volvo had 146 authorized dealers during its alleged period of price discrimination. 32 During that time, Volvo enacted the "Volvo Vision," which was t (...truncated)


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James Paul Purnell. Antitrust—Robinson-Patman Act—No Salt Added: The Supreme Court Promotes Healthy Competition by Taking the Salt Out of the Robinson-Patman Act. Volvo v. Reeder-Simco, 126 S. Ct. 860 (2006)., University of Arkansas at Little Rock Law Review, 2007, Volume 29, Issue 3,