UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PATRICIA L. PATTERSON, individually
and on behalf of all others similarly
situated; ROBERT PATTERSON,
individually and on behalf of all
others similarly situated,
Plaintiffs-Appellants,

v.                                                             No. 98-2774

FORD MOTOR CREDIT COMPANY;
DUTCH MILLER CHEVROLET,
INCORPORATED, and all other motor
vehicle dealerships similarly
situated,
Defendants-Appellees.

Appeal from the United States District Court
for the Southern District of West Virginia, at Huntington.
Robert J. Staker, Senior District Judge.
(CA-98-6, CA-98-86-3)

Argued: October 27, 1999

Decided: February 2, 2000

Before MURNAGHAN, NIEMEYER, and TRAXLER,
Circuit Judges.

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Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: James William St Clair, ST CLAIR & LEVINE, Hunting-
ton, West Virginia, for Appellants. Thomas M. Byrne, SUTHER-
LAND, ASBILL & BRENNAN, L.L.P., Atlanta, Georgia, for
Appellees. ON BRIEF: William D. Levine, ST CLAIR & LEVINE,
Huntington, West Virginia, for Appellants. Kristen Jones Indermark,
SUTHERLAND, ASBILL & BRENNAN, L.L.P., Atlanta, Georgia;
Robert H. Sweeney, Jr., Scott D. Maddox, JENKINS FENSTER-
MAKER, P.L.L.C., Huntington, West Virginia; Michael T. Chaney,
KAY, CASTO, CHANEY, LOVE & WISE, Charleston, West Vir-
ginia, for Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Patricia and Robert Patterson appeal from the district court's order
dismissing, pursuant to Rule 12(b)(6), their claims against Dutch Mil-
ler Chevrolet, Incorporated ("Dutch Miller") and Ford Motor Credit
Company ("FMCC") under section 2(c) of the Robinson-Patman Act,
see 15 U.S.C.A. § 13(c) (West 1997), in which they contend that
Dutch Miller and FMCC violated anti-trust laws when Dutch Miller
received compensation for assigning the Pattersons' installment con-
tract to FMCC. We affirm.

I.

The Pattersons decided to purchase a sport utility vehicle from
Dutch Miller, provided that they could obtain affordable financing.
The Pattersons allege that in order to induce them to close the deal,
Dutch Miller promised to use its best efforts to secure favorable
financing for the Pattersons. According to the Pattersons, Dutch Mil-
ler's financial personnel represented that 14.75 percent was the best
interest rate available, and the Pattersons, relying upon this informa-
tion, entered into an installment agreement to purchase the vehicle
from Dutch Miller at an interest rate of 14.75 percent. The terms of

                    2
the agreement required the Pattersons to make monthly installment
payments of the purchase price along with interest. The total cost of
financing the vehicle at this rate was $9,110.61, assuming the Patter-
sons made each installment payment as scheduled. It is undisputed
that FMCC was not a party to this agreement.

Dutch Miller then assigned the installment sales contract to FMCC,
which agreed to purchase the contract from Dutch Miller at an interest
rate lower than the 14.75 percent rate provided by the terms of the
contract.1 In return for placing the financing with FMCC, Dutch Mil-
ler was paid the difference (known generally as a"discount" or the
"dealer's participation") between the finance charge at the higher
interest rate set forth in the installment contract and the finance
charge at the lower interest rate that FMCC was willing to extend.
According to the Pattersons, Dutch Miller knew -- before the install-
ment contract was executed -- that FMCC was willing to buy the
paper from Dutch Miller at a rate lower than 14.5 percent. Moreover,
the Pattersons allege that the defendants had arranged for the assign-
ment of the contract before the Pattersons executed it.

A couple of additional facts bear mentioning. The Pattersons do not
allege that they sought financing through an outside source or that
they attempted to compare the interest rate quoted by Dutch Miller
with rates offered by other lenders in the retail market. Likewise,
there are no allegations that FMCC would have been willing to extend
to the Pattersons a more favorable rate than 14.75 percent had the Pat-
tersons sought financing directly from FMCC in the retail market.

The Pattersons brought this action in state court, alleging that
Dutch Miller and FMCC violated the Robinson-Patman Act when
FMCC paid Dutch Miller a "discount" in connection with the assign-
ment of the Pattersons' installment sales contract. Even though the
Pattersons do not suggest that the underlying sale of the vehicle was
not at arm's length, Dutch Miller, according to the complaint, began
serving as the Pattersons' agent responsible for obtaining favorable
financing. The Pattersons claim that the discount payment amounted
_________________________________________________________________
1 The Pattersons contend that FMCC agreed to purchase the installment
sales contract from Dutch Miller at a rate of 10.75 percent. See Brief of
Appellants at 4.

                    3
to a commercial bribe from FMCC to the agent for the Pattersons,
Dutch Miller, in violation of section 2(c) of the Robinson-Patman
Act.

The complaint also alleged that Dutch Miller ran afoul of the West
Virginia Consumer Credit Protection Act by negotiating a retail inter-
est rate that was higher than FMCC was offering to dealers like Dutch
Miller. And, the Pattersons asserted that Dutch Miller and FMCC had
engaged in a civil conspiracy to defraud them and violate state and
federal law, including the Robinson-Patman Act. 2

The defendants removed the action to district court and moved to
dismiss the complaint. The district court dismissed the Robinson-
Patman claim and the claim that alleged conspiracy to violate the
Robinson-Patman Act, reasoning that the Act applies only to transac-
tions involving tangible goods and that the payment from FMCC to
Dutch Miller did not involve goods. With respect to the Pattersons'
remaining claims, which arose under West Virginia law, the district
court declined to exercise supplemental jurisdiction because it
believed the claims raised novel issues of state law. See 28 U.S.C.A.
§ 1367(c)(1) (West 1993). The remaining claims were thus remanded
to state court.

II.

A.

The Robinson-Patman Act was aimed at curbing certain practices
maintained by large buyers or sellers of goods to evade antitrust
restrictions on price discrimination. "One method employed to cir-
cumvent the Clayton Act was through the use of `dummy broker-
ages'" whereby, for instance, "a large buyer with economic clout
might insist that in order to do business sellers must pay a fee to a
designated `broker' . . . [who] would then turn the money over to the
large buyer." Stephen Jay Photography, Ltd. v. Olan Mills, Inc., 903
F.2d 988, 992 (4th Cir. 1990). Section 2(c) of the Robinson-Patman
Act was directed primarily toward this practice:
_________________________________________________________________
2 The complaint also purported to be a class action. The Pattersons,
however, did not obtain class certification.

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          It shall be unlawful for any person engaged in commerce . . .
          to pay or grant, or to receive or accept, anything of value as
          a commission, brokerage, or other compensation, or any
          allowance or discount in lieu thereof, except for services
          rendered in connection with the sale or purchase of goods,
          wares, or merchandise, either to the other party to such
          transaction or to an agent, representative, or other intermedi-
          ary therein where such intermediary is acting in fact for or
          in behalf, or is subject to the direct or indirect control, of
          any party to such transaction other than the person by whom
          such compensation is so granted or paid.

15 U.S.C.A. § 13(c). The language of this provision is broad, how-
ever, and may well apply to other techniques used to effect price dis-
crimination. The Supreme Court has noted that section 2(c) might
proscribe commercial bribery, see FTC v. Henry Broch & Co., 363
U.S. 166, 169-70 n.6 (1960), and some circuit courts of appeal have
so held, see Stephen Jay Photography, 903 F.2d at 992 n.6 (collecting
cases). Whether commercial bribery comes within the scope of this
section remains an open question in this circuit. See id. at 991-93. We
need not resolve this question, however, since the Pattersons' claim
fails even if commercial bribery were prohibited by section 2(c) of the
Robinson-Patman Act.

The district court concluded that the payment of the dealer's partic-
ipation -- the alleged bribe -- did not fall within the purview of sec-
tion 2(c) because it did not involve the sale of tangible goods. And,
indeed, the circuit courts of appeal appear to be in agreement that sec-
tion 2(c) covers only transactions that involve the transfer of tangible
goods. See, e.g., Harris v. Duty Free Shoppers Ltd. Partnership, 940
F.2d 1272, 1274 (9th Cir. 1991); Union City Barge Line, Inc. v. Union
Carbide Corp., 823 F.2d 129, 140-41 (5th Cir. 1987); Freeman v.
Chicago Title & Trust Co., 505 F.2d 527, 529-31 (7th Cir. 1974) (per
curiam).

The Pattersons do not quarrel with this general proposition. Rather,
they urge us to conclude that since FMCC's purchase of the install-
ment sales contract made the underlying sale possible, the "dominant
nature" of the transaction was the transfer of a tangible good, i.e., the
automobile. We cannot agree. It is undisputed that FMCC was not a

                     5
party to the sales contract. It is undisputed that FMCC was not a
buyer or seller of goods. It is undisputed that the Pattersons played no
role in Dutch Miller's assignment of the installment contract to
FMCC. And, the Pattersons do not allege that the installment sales
contract was contingent upon the acceptance of the installment con-
tract by FMCC or financing by FMCC.

These facts compel the conclusion that the purchase of the install-
ment sales contract by FMCC was part of a separate transaction from
the underlying automobile sale. We think it is clear, therefore, that the
assignment of the contract was a matter wholly between Dutch Miller
and FMCC. Of course, the purchase of an installment sales contract
is not a transaction involving tangible goods. See Freeman, 505 F.2d
at 530-31 (rejecting the argument that the transfer of a tangible physi-
cal document is a transaction involving goods). Because an install-
ment sales contract is "a writing . . . which evidence[s] both a
monetary obligation and a security interest in . . . specific goods," W.
Va. Code Ann. § 46-9-105(1)(b) (Michie Supp. 1999), it qualifies as
chattel paper, which is not a tangible good, see W. Va. Code Ann.
§ 46-9-105(1)(h) (Michie Supp. 1999). The essence of chattel paper
is the obligation that it represents, which is clearly intangible. There-
fore, the alleged "bribe" between FMCC and Dutch Miller is not one
which involves goods.

The fact that the alleged bribe is unconnected to the sale of goods
is underscored by the Pattersons' own allegations that Dutch Miller
somehow served as their agent. Even if we assume the truth of the
Pattersons' conclusory claim that Dutch Miller was their agent, they
only allege that Dutch Miller was their agent for purposes of obtain-
ing financing, nothing more. Indeed, the Pattersons concede that the
extension of credit to finance a purchase of goods is not equivalent
to the sale of goods. See Brief of Appellants at 12.

Because the alleged bribe -- the amount paid by FMCC to Dutch
Miller -- was connected only to the purchase and transfer of the
installment sales contract, it was not a transaction in tangible goods
within the reach of section 2(c) of the Robinson-Patman Act. Accord-
ingly, we affirm the district court's decision on the grounds that the
alleged bribe was not paid in connection with a transaction involving
tangible goods.

                     6
B.

In an attempt to circumvent the district court's ruling that the
alleged purchase of the contract by FMCC was not a transaction
involving goods, the Pattersons argue that we should look past the
technicalities of the arrangement and view the execution of the install-
ment sales contract and its subsequent assignment to FMCC as one
transaction, not two. They allege that these two transactions occurred
simultaneously, that FMCC's "purchase" of the contract made the sale
of the contract possible, and that therefore the"dominant nature" of
the single transaction was the transfer of tangible goods.

Assuming this is true, we are presented with another basis, perhaps
even more compelling than the first, on which to affirm the district
court's decision. In order for a commercial bribery claim to be cogni-
zable under section 2(c) of the Robinson-Patman Act, the alleged
bribe must traverse the "seller-buyer" line. See Stephen Jay
Photography, 903 F.2d at 992. As we have previously explained:

          In the appellate decisions which have found commercial
          bribery within the ambit of section 2(c) the common thread
          has been the passing of illegal payments from seller to buyer
          or vice versa. . . . [B]y restricting liability to situations when
          the seller-buyer line has been passed, courts have narrowed
          the scope of section 2(c) and upheld Congress' intent to
          leave the relationships of legitimate brokerages unaffected
          by section 2(c).

Id. (internal citations and quotation marks omitted). Thus, the Patter-
sons' claim must include a contention that the payment from FMCC
to Dutch Miller crossed the seller-buyer line.

The complaint characterizes Dutch Miller as the Pattersons' agent
during what they say was really a single transaction. Common sense
dictates that it is not possible for Dutch Miller to be on different sides
of the same transaction. Obviously, the Pattersons do not and cannot
allege that Dutch Miller was acting as the Patterson's agent during the
actual purchase of the vehicle because Dutch Miller was the seller.
They had a directly adversarial relationship to each other since, as
would any seller, Dutch Miller hoped to extract the highest price pos-

                     7
sible from the Pattersons, and the Pattersons wished to pay as little as
possible. Under such circumstances, the payment by FMCC to Dutch
Miller could not possibly be construed to cross the seller-buyer line
with respect to the purchase of the vehicle.

III.

Because we conclude that the Pattersons failed to state a claim
under the Robinson-Patman Act, their claim that Dutch Miller and
FMCC conspired to violate the Robinson-Patman Act fails as well.
Accordingly, we affirm the dismissal of the Pattersons' federal
claims, and we hold that the district court did not abuse its discretion
by refusing to exercise supplemental jurisdiction over the remaining
state law claims. See 28 U.S.C.A. § 1367(c)(3); Jordahl v. Demo-
cratic Party of Va., 122 F.3d 192, 203 (4th Cir. 1997). The decision
of the district court is affirmed.

AFFIRMED

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