Leslie H. Dial Enterprises, Inc., a South Carolina corporation that operates four small grocery businesses in the state, has filed suit against R.J. Reynolds-Tobacco Company (RJR), Wal-Mart Stores, Inc., and SAM’s Club for anti-trust violations in their retail practices.
“Our country’s free-enterprise atmosphere of business and retail has been tarnished by backroom deals and threats,” states Les Dial, President of Dial Enterprises. “Our company has earned a strong reputation among our clients for being fair, up-front, and reliable. I am very disappointed in the intimidation tactics RJR, Wal-Mart, and SAM’s Club have used on small, locally-owned businesses just to make a few extra bucks.”
The lawsuit alleges that RJR chose to illegally and unfairly restrain trade by selectively choosing to provide promotional services and benefits, such as buydowns and free products, for their cigarettes to Wal-Mart Stores, Inc. (d/b/a Sam’s Club) and other retailers in the competitive market while deliberately excluding other local retailers, such as the stores operated by Dial Enterprises.
On or about September 2001, an RJR representative informed one of Dial Enterprises’ customers, who owns a small convenience store that purchased cigarettes from Dial Enterprises at wholesale prices, that in order to continue to be a retailer of RJR brand cigarettes, he could no longer purchase from Dial Enterprises. The customer was instructed by the RJR representative to purchase its cigarettes from SAM’s Club, which is owned and operated by Wal-Mart Stores.
The suit further claims that Wal-Mart used its large purchase volume and influence with RJR to encourage and limit its competitors from receiving RJR’s promotional benefits. As a direct cause of RJR’s illegal and unfair restraint of trade and Wal-Mart’s influence, Dial Enterprises has significantly lost sales, profits, and customers and has almost effectively been cut out of the cigarette business.
Mr. Dial is suing RJR, Wal-Mart, and SAM’s Club under two federal laws and the South Carolina Unfair Trade Practices Act. The federal Sherman Act declares illegal contracts and conspiracies in restraint of trade and prohibits monopolization. The federal Robinson-Patman Act and the South Carolina Unfair Trade Practices Act both prohibit unfair methods of competition in commerce, including price and promotional discrimination.
“We have received numerous calls and complaints from our customers all over the state about RJR’s business and pricing policies,” states Dial. “Yes, we are motivated to take action because we have lost money, but we are more motivated by trying to protect free enterprise and small business owners’ rights.”
Montgomery, Alabama attorneys Jere Beasley, Dee Miles, and Clint Carter of the Beasley, Allen, Crow, Methvin, Portis & Miles, P.C. law firm and Charleston, South Carolina attorneys Ken Harrell, Chris McCool, and Craig Smith of the Joye Law Finn, LLP are representing Dial Enterprises.
“This type of business practice has become more common over the past several years; probably due to the economic downturn the country has been experiencing,” explains attorney Dee Miles. “But, a tight year in sales does not justify RJR and Wal-Mart preying on independent store owners who are struggling to make a profit, too.” Chris McCool added, “This type of abuse by giant corporations against smaller, more vulnerable folks solely for profit mirrors the type of corporate greed we saw in recent debacles with companies like Enron and Worldcom. The abuse must stop and Les Dial is stepping forward to help put an end to it.”
The suit was filed in federal court in Columbia, South Carolina.