Portable Power, Inc. v. Energizer Holdings, Inc.

Background

This order addresses three related antitrust cases, including Portable Power, Inc. v. Energizer Holdings, Inc., No. 23-cv-02091-PCP. The plaintiffs alleged that Energizer Holdings, Inc. and Walmart, Inc. agreed that Walmart would receive preferential treatment while Energizer monitored other retailers and raised their wholesale prices when they undercut Walmart’s retail prices. The alleged arrangement involved Energizer’s “Project Atlas” pricing-monitoring group and allegedly remained in effect from at least 2018 onward.

The complaints alleged that Energizer and Walmart’s conduct increased wholesale and retail prices for Energizer batteries and affected retail prices for Duracell batteries. Portable Power was an online battery retailer that alleged Energizer raised its wholesale prices by 50% to 85% for certain products and later stopped shipping some products because Portable Power had not raised its retail prices to match Walmart’s. The three plaintiff groups were: customers who bought Energizer products from retailers other than Walmart; customers who bought Energizer or Duracell batteries directly from Walmart stores; and retailers or others who bought Energizer products directly from Energizer. The actions were brought as proposed class actions.

Defendants’ Motion

The defendants filed one motion to dismiss all three complaints under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim. They argued that the plaintiffs had not plausibly alleged an agreement between Energizer and Walmart, had not alleged harm to competition in violation of Section 1 of the Sherman Act or the state laws, and that some plaintiffs lacked antitrust standing. They also challenged the Copeland plaintiffs’ ability to bring claims under the laws of states where no named plaintiff lived or made a relevant purchase.

Sherman Act Claims

Section 1 of the Sherman Act prohibits contracts, combinations, or conspiracies that unreasonably restrain trade. The court explained that the plaintiffs had to plausibly allege both an agreement and an unreasonable restraint.

The court held that the complaints plausibly alleged an agreement. The plaintiffs did not provide direct evidence of an agreement, but they alleged factual circumstances from which an agreement could reasonably be inferred. Those allegations included Energizer’s use of Walmart’s retail prices to calculate wholesale prices, efforts to stop other retailers from undercutting Walmart, communications describing the policy as “1000% about Walmart,” and the alleged mutual benefits to Energizer and Walmart. The court rejected the defendants’ argument that Energizer could have taken similar actions independently. At the pleading stage, the question was whether the alleged conduct more plausibly reflected an agreement than independent business decisions.

The court also held that the plaintiffs plausibly alleged an unreasonable restraint. Because the alleged agreement was vertical—between a manufacturer and a retailer at different levels of the supply chain—the court applied the rule of reason. Under that approach, the plaintiffs initially had to plausibly allege a substantial anticompetitive effect that harmed consumers in a relevant market.

The court accepted, for pleading purposes, the plaintiffs’ proposed nationwide market for disposable battery products. It found that the alleged increases in Energizer’s wholesale prices, Walmart’s retail prices, and retail prices for Duracell batteries provided enough factual detail to plausibly allege direct harm to competition. The court also found that the allegations plausibly showed market power when Energizer and Walmart’s combined influence in wholesale and retail markets was considered. The alleged restraint could prevent retailers from competing by offering lower prices, and the alleged price increases supported the claim of competitive harm.

The court stated that the defendants could later present procompetitive justifications—business benefits that might outweigh competitive harm—for the alleged restraints. It concluded, however, that the complaints had done enough at the pleading stage to allow the Sherman Act claims to continue.

Antitrust Standing

Antitrust standing is the requirement that a private plaintiff show an injury of the kind the antitrust laws are meant to prevent and a sufficiently direct connection between that injury and the alleged restraint. The defendants challenged only the standing of the Schuman plaintiffs, who bought Energizer and Duracell batteries directly from Walmart.

The court held that those plaintiffs adequately alleged antitrust standing. They alleged that they paid inflated prices, that the alleged agreement protected Walmart from retail price competition, and that this protection allowed Walmart to raise retail prices. The court found the alleged injury sufficiently direct and not merely speculative at the pleading stage. It therefore concluded that all three plaintiff groups adequately pleaded their Sherman Act claims.

State-Law Claims

The Copeland plaintiffs also brought state antitrust and consumer-protection claims, and the Portable Power and Schuman plaintiffs brought claims under California’s Cartwright Act and Unfair Competition Law. The defendants argued that the Copeland plaintiffs lacked Article III standing to bring claims under the laws of states where no named plaintiff lived or made a relevant purchase.

The court rejected that argument under the defendants’ Rule 12(b)(1) motion, which challenges federal subject-matter jurisdiction. It held that whether an out-of-state plaintiff can pursue a claim under a particular state’s law is a merits question rather than an Article III standing question. Because the defendants moved only under Rule 12(b)(1), the court denied the request to dismiss the Copeland claims on that basis without taking a position on the separate legal issue.

The court also denied the motion to dismiss the state antitrust claims because the defendants offered no independent reason for dismissing them beyond their arguments about the Sherman Act claims. For the same reason, it denied the motion to dismiss the state consumer-protection claims.

Disposition

Judge P. Casey Pitts denied the defendants’ motion to dismiss. The court also stated that, under the parties’ stipulation and an earlier court order, the stay on discovery and required disclosures was lifted.