Dismissal of Class Action Affirmed by U.S. Court of Appeals

Chad W. Pekron and R. Ryan Younger defended a major retail chain and two of its district managers in a putative class action alleging that the company’s discount program violates the Arkansas Price Discrimination Act.  Plaintiff sought a statutory penalty of $200 to $1000 for each sale allegedly in violation of the Act, in an amount exceeding $20 million.  Plaintiff filed the action in the Circuit Court of Pulaski County, Arkansas, and the case was successfully removed to federal court under the Class Action Fairness Act on the grounds that the district managers were fraudulently joined to the complaint and could therefore be disregarded for purposes of diversity jurisdiction.  Attorneys for the defendants argued that the court could rely upon the affidavits of the district managers for purposes of establishing fraudulent joinder – an issue that is the subject of significant dispute.  Once the case remained in federal court, defendants argued that the court should apply the “functional availability” doctrine of the Robinson-Patman Act to the Arkansas statute.  In a matter of first impression, the district court agreed and dismissed the lawsuit with prejudice.  The matter was appealed to the U. S. Court of Appeals for the Eighth Circuit and the judgment was affirmed.