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Maker Of 5-hour ENERGY® Falls Short On Robinson-Patman Act Claims Again
06/17/2025On May 28, 2025, the United States District Court for the Central District of California held that plaintiffs failed to prove that they incurred an antitrust injury flowing from the differential promotional allowances provided to certain wholesalers by the manufacturer of 5-hour ENERGY®. U.S. Wholesale Outlet & Distrib., Inc., et al. v. Living Essentials, et al. (C.D. Ca. May 28, 2025). After a Ninth Circuit remand, the Court filed an amended findings of fact and conclusions of law affirming its prior judgement in favor of defendant on claims brought under the Robinson-Patman Act (“RPA”) and California’s Unfair Competition Law (“UCL”).
Plaintiffs, all California-based wholesalers, alleged that Living Essentials, the manufacturer and distributor of 5-hour ENERGY, violated Section 2(d) of the RPA by providing Costco with promotional allowances—such as payments for in-store advertising, endcaps, and other marketing items—on terms that were not proportionally equal to those offered to plaintiffs. Plaintiffs contended that these disproportionate allowances gave Costco a competitive advantage, enabling it to sell 5-hour ENERGY at lower prices and divert sales away from plaintiffs. Plaintiffs also asserted a claim under California’s UCL, arguing that the same conduct constituted unfair competition.
After an initial trial and appeal, the Ninth Circuit vacated the district court’s adjudication of the Section 2(d) claim and remanded for further proceedings. Specifically, the appellate court directed the district court to determine whether Costco and plaintiffs purchased 5-hour ENERGY “within approximately the same period of time”—a necessary element for establishing that the parties were in competition for purposes of the Robinson-Patman Act. The Ninth Circuit also instructed the district court to consider whether, even if this temporal overlap was not established, plaintiffs had “otherwise proved their section 2(d) claim,” including alternative proof of actual competition, disproportionate promotional allowances, and the requisite antitrust injury.
On remand, Living Essentials responded that any promotional differences were justified, that the promotions were tailored to the different needs of Costco and plaintiffs, and that plaintiffs had not suffered the type of competitive injury required to prevail under the RPA.
The district court found that plaintiffs’ and Costco Business Centers (“CBC’s”), a separate type of Costco store which caters primarily—but not exclusively—to small businesses, were in competition: they operated at the same functional level, in the same geographic areas, and purchased 5-hour ENERGY of like grade and quality within approximately the same period. The court also determined that Living Essentials provided Costco with promotional allowances of greater value than those given to plaintiffs—14.7 cents per bottle for Costco versus 0.5 to 2.7 cents (or, at most, 9.4 cents if all claimed promotions were included) for plaintiffs.
However, the court held that Plaintiffs failed to prove antitrust injury, a necessary element for a private plaintiff to prevail under Section 2(d). The court emphasized that injury cannot be presumed from the mere existence of discrimination. Rather, plaintiffs needed to show that the lack of proportionally equal promotional allowances threatened their ability to compete, such as by enabling Costco to lower its prices and divert sales, or by forcing plaintiffs to lower their prices to unprofitable levels. The evidence presented, including expert testimony, did not establish a causal connection between the promotional allowances and any actual or threatened injury to plaintiffs’ competitive position. As a result, the court also rejected plaintiffs’ UCL claim, which was predicated on the same conduct.
This decision highlights the standards courts apply under the Robinson-Patman Act. Even where plaintiffs can show that promotional allowances were not proportionally equal, they must still provide concrete evidence of competitive injury—such as lost sales or profits directly attributable to the alleged discrimination.
