28 Oct 2017 Cases

Wholesale Price Discrimination Litigation Involving Living Essentials, Inc.

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Compass Lexecon Senior Consultant Dr. Glenn Woroch was retained by Living Essentials, Inc. (best known for their product 5-hour ENERGY) and their outside counsel Gerry Hawxhurst and Daryl Crone from Crone Hawxhurst LLP in Los Angeles. A group of California distributors of consumer products claimed that Living Essentials violated Section 2(a) and 2(d) of the Robinson-Patman Act by its wholesale pricing policies for its “energy shot” products. Plaintiffs claimed that the class of distributors was disfavored relative to Costco Business Centers.

Dr. Woroch filed expert reports that showed how Plaintiffs’ expert failed to establish there was more than a de minimis differential per bottle, and to establish that sales throughout the entire state of California were affected. Dr. Woroch argued that Living Essentials tailored its product configurations and the corresponding pricing to distinct business models of distributors. He further showed that there was no statistical relationship between one of the Plaintiff’s resales and the claimed differentials in Living Essentials’ wholesale prices. The case was heard in U.S. District Court for Northern California by Judge Nathan Cousins. The parties settled just prior to the beginning of a jury trial. Dr. Woroch was supported by Nauman Ilias and Daniel Cherette from Compass Lexecon’s Washington, DC office.

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