Metro Communications v. Ameritech Mobile

Citation: Metro Comm. Co. v. Ameritech Mobile Comm., Inc., 984 F.2d 739 (6th Cir. 1993).

Factual Background
Metro Communications Company (“Plaintiff”) was engaged in the retail marketing of cellular telephone services in the Detroit, Michigan area. The Plaintiff entered into an agency contract with Ameritech Mobile Communication, Inc. (“Defendant”) whereby Plaintiff would purchase cellular service and equipment from Defendant. Subsequently, the Defendant began expanding its operations in the Detroit area and enlisted many “multi-location high volume retailers to sell its services.” Plaintiff was displeased with this and believed that “Ameritech entered into substantially more favorable contracts with [these large scale retailers]…” Plaintiff filed suit in federal court alleging: (1) breach of implied covenant of good faith and fair dealing; (2) violation of restricted competition rider; (3) violations of Robinson-Patman Act (“the Act”); and (4) illegal discrimination in favor of competing retailers. Plaintiff also argued that a letter from Defendant to Plaintiff constituted a valid modification of the original contract and should be enforceable. Defendant motioned for summary judgment on all claims.

Trial Court Proceedings
The District Court granted the Defendant’s motion for summary judgment. The Court dismissed the case holding that: (1) Plaintiff’s claims were barred by the two-year contractual statute of limitations; (2) Defendant did not breach covenant of good faith and fair dealing because the language of the contract clearly permitted the Defendant to compete with the Plaintiff through other retailers and agents; (3) the Plaintiff’s alleged modification of the contract was invalid because “it represented an impermissible limitation on the right-to-compete clause through terms inconsistent with” the language of the contract; and (4) Plaintiff failed to satisfy the requirements of the Robinson-Patman Act. Plaintiff appealed.

Appellate Court Proceedings
The Appellate Court affirmed the District Court’s order granting the Defendant’s motion for summary judgment. The Court reasoned that the agency contract granted Defendant the discretion to compete with the Plaintiff. The language of the contract stated “during the term of this Agreement, or thereafter, Ameritech Mobile reserves the right, with obligation or liability to the Agent [Plaintiff], to market CRS [cellular radio service] in the same area served by the Agent…” The Court held that this language was sufficient to place no restrictions on the Defendant’s right to compete with the Plaintiff, and that the implied covenant of good faith and fair dealing could not be used to add new terms to the original agreement.

The Court also held that the letter between Defendant and Plaintiff did not constitute a valid modification to the contract because it lacked the traditional prerequisites to valid contract formation: offer, acceptance and consideration. The letter stated, “[i]t is Ameritech Mobile’s policy to treat all of its agents in a fair and substantially similar fashion. I, therefore must disagree with your assertions of duress against you or unequal treatment among agents. ” The Court reasoned that the letter provided no evidence of mutual assent to the same terms or consideration.

Finally, the Court determined that the Defendant did not violate the Robinson-Patman Act. Under the Act, it is unlawful “for any person engaged in commerce to discriminate in price between different purchasers or commodities of like grade and quality.” The Act only applies to the sale of goods, and not services. The Court held that the cellular services provided by the Defendant were not goods within the meaning of the Act, and therefore the Act was inapplicable in this case.