# Alexander v. National Farmers' Organization

> District Court, W.D. Missouri · July 5, 1985 · 614 F. Supp. 745

URL: https://www.frixlaw.com/law-library/cases/2141587

## Case

- **Full name:** Robert B. ALEXANDER, Et Al., Plaintiffs, v. NATIONAL FARMERS’ ORGANIZATION, Et Al., Defendants and Counterclaim Plaintiffs, v. ASSOCIATED MILK PRODUCERS, INC., Et Al., Counterclaim Defendants
- **Court:** District Court, W.D. Missouri
- **Decided:** July 5, 1985
- **Citations:** 614 F. Supp. 745; 1985 U.S. Dist. LEXIS 18184
- **Precedential status:** Published
- **Opinion:** Opinion by Oliver
- **Judges:** John W. Oliver
- **Cited by:** 11 later opinions in the Frix Law Library

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## Opinion text

MEMORANDUM OPINION, FINDINGS OF FACT, AND CONCLUSIONS OF LAW ON REMAND
JOHN W. OLIVER, Senior District Judge.
The parties agreed that ten major issues were presented by the various motions and voluminous briefs and appendices filed after the Court of Appeals' remand. After the Court had read and considered all the post-remand briefs that had been filed, nine of those major issues were the subject of three days of oral argument.
1
The parties waived oral argument to the tenth issue and agreed that it should be decided on the briefs that had been filed.
After oral argument the parties presented an agreed order directing further proceedings in regard to each of the ten major issues presented. The paragraphs of that post-oral argument order were designed to track with the order in which the various issues had been orally argued.
This memorandum opinion, which will serve as our findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, will track with the paragraphs of the post-oral argument order. During the course of this memorandum opinion we will frequently refer to the counterclaim plaintiff as “NFO” and to the counterclaim defendants as “defendants.”
Our consideration of the arguments of the parties required that we study the entire transcript of the testimony of all the witnesses and exhibits adduced on the issue of damages. We were also required to study a substantial portion of the testimony of a substantial number of other witnesses and other exhibits adduced on questions other than damages during the trial of the entire case. In addition, we have reviewed and considered the handwritten notes we made during the trial of the case which, in accordance with our established practice in non-jury cases, included our contemporaneously recorded reaction in regard to the credibility of the various witnesses as they testified and of the various exhibits as they were adduced in evidence at trial.
It is, of course, impossible for the Court to comply with the mandate of Rule 52(a) that “judgment shall be entered pursuant to Rule 58” at this time. For, as will be apparent from our determination of the various issues, a number of those issues are not in procedural posture for the entry of a final judgment.
A number of interlocutory orders will, however, be entered during the course of this memorandum opinion in regard to particular issues. Appropriate procedures will be directed under which final judgments may be simultaneously entered in regard to the interlocutory orders entered in regard to those issues and in regard to the orders that will later be entered in regard to all ten of the issues presented after remand. We turn now to the first issue presented after remand.
ISSUE NO. 1 — STANDING—DEFENDANTS’ RENEWED JOINT MOTION TO DISMISS
After remand, defendants CMPC, AMPI, and Mid-Am, filed a renewed joint motion
*751
to dismiss NFO’s damage claims for lack of standing. That renewed motion was based primarily on the defendants’ view of
Associated General Contractors v. Carpenters,
459 U.S. 519 , 103 S.Ct. 897 , 74 L.Ed.2d 723 (1983) and their view of the Eighth Circuit’s application of the principles stated in that case in
McDonald v. Johnson & Johnson,
722 F.2d 1370 (8th Cir.1983).
Defendants contended at oral argument that the granting of the renewed motion to dismiss for lack of standing would end the need for further inquiry in regard to any other question that might be presented on remand in that such a ruling would constitute a determination that NFO would not be able to recover any damages in this ease. (Oral Argument: p. 51-52).
The Court of Appeals accepted the defendants’ argument that “NFO cannot recover its asserted ‘price reduction’ damages.”
Alexander v. National Farmers Organization,
687 F.2d 1173, 1208 (8th Cir.1982). However, that court expressly rejected “defendants attempt to bootstrap from this price reduction issue to deny NFO standing to recover any damages.”
Id.
at 1209 .
The Court of Appeals made a number of specific factual findings in the course of its discussion of the standing question. It found that NFO transacted business through the NFO Dairy Trust; that NFO cannot be considered in isolation from the NFO Dairy Trust; that NFO and the NFO Dairy Trust were
not
a mere conduit for monies to pass from buyers to producers; that buyers of NFO milk arranged purchases through NFO, and not through individual farmers; that buyers, terminating purchases in the face of defendants’ harassment, sent notice of such termination to NFO and not to individual farmers; that buyers dealt with NFO as a single entity; that buyers viewed the trust arrangement, if at all, as a bookkeeping matter; that the trust fund was not a mechanical pass through device; that NFO reblended the proceeds of its marketing efforts through the trust; that NFO determined the actual pay price to producers; that NFO deducted marketing expenses from the trust proceeds; that NFO’s marketing program was in direct competition with the defendant co-ops; that NFO, as a competitor, was a direct target of the unlawful conspiracy; that NFO was not an indirect or derivative victim of actions aimed at individual farmers; that NFO earned net revenues in the form of membership dues and check-off fees; and that NFO’s losses of dues and fees represent direct injury to its business or property.
Many of the findings of fact made by the Court of Appeals are inconsistent with any number of the findings of fact proposed by defendants in the appendix attached to the defendants’ pending standing motion. We are satisfied that the parties and this Court must accept the findings of fact made by the Court of Appeals. We are equally satisfied, contrary to defendants’ basic contention, that the Supreme Court did not make any substantial change in antitrust law when it handed down
AGC.
Nor did the Eighth Circuit when it decided
McDonald v. Johnson & Johnson.
We shall therefore enter an interlocutory order denying defendants’ renewed motion to dismiss NFO’s damage claims for lack of standing. Accordingly, it is
ORDERED (1) that defendants renewed joint motion to dismiss NFO’s damage claims for lack of standing should be and the same is hereby denied.
ISSUE NO. 2 — NFO’S RULE 37 MOTION FOR MONETARY SANCTIONS AGAINST DEFENDANTS
I.
NFO’s Rule 37 motion, filed solely against AMPI, prays for an order awarding NFO the following monetary sanctions:
1. NFO’s costs, fees and expenses incurred in connection with uncovering AMPI’s suppression and destruction of evidence in an amount to be determined;
2. NFO’s costs, fees and expenses incurred in connection with pursuing
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relief under Rule 37, in the amount of $182,942.53;
3. NFO’s costs, fees and expenses incurred in connection with defending the claims brought by AMPI in Phase III of this litigation, in an amount to be determined;
4. An additional amount equal to one percent of AMPI’s 1982 gross revenues; and
5. Such other amounts as this Court may deem just and proper.
NFO’s suggestions in support of that motion accurately state that this Court determined in November of 1978 that NFO’s Rule 37 motion against AMPI would be granted and that the imposition of sanctions would be deferred until after the appeals in this case were resolved.
NFO argues that “this Court’s determination that Rule 37 sanctions should be imposed has been emphatically endorsed and even broadened by the Court of Appeals, leaving only the question of the particular sanctions that should be imposed in order to achieve the purposes of Rule 37.” NFO therefore contends that at least two considerations support its request that sanctions should be imposed in an amount not less than $26,347,780; namely “(1) AMPI’s conduct was properly labeled by the Court of Appeals as ‘egregious’ and ‘outrageous’ and cannot be characterized as merely negligent or inadvertent; it was rather deliberate, pervasive, carried out at the highest levels of AMPI and involved not just delay but irretrievable destruction of evidence. It thus presents this Court with a record of wrongdoing which surpasses anything in the annals of Rule 37” and “(2) [mjany of the forms of sanctions available under Rule
37
— e.g., claim preclusion, costs of pursuing the Rule 37 motion, striking of pleadings, etc. — would be futile here because NFO has already won on the merits of its claim, and on AMPI’s counterclaim, and NFO is already entitled to attorneys’ fees and costs, as the prevailing plaintiff in an antitrust case; accordingly, many of the customary forms of sanctions would not materially serve the compensatory and deterrent purposes of the Rule.” (NFO’s Sugg, in Support at 5-6).
NFO suggests that this Court (a) determine that NFO “is entitled to the fees and expenses incurred in uncovering AMPI’s suppression and destruction of evidence and in pursuing this Rule 37 motion.”
(Id.
at 6-7). Specifically, NFO requests that this Court “endorse the principle that NFO is entitled to compensation for the expenditures and for the hours devoted to the Rule 37 effort.”
(Id.
at 7). NFO adds that “[ujpon the receipt of such a ruling, the parties may then confer in an effort to arrive at an agreed-upon figure.”
(Id.
at 7). NFO also requests that compensation for this and all other sanction items be calculated at “the higher billing rates in effect today, in order to adjust for inflation and to avoid rewarding delay.”
(Id.
at 8).
In a similar manner, NFO proposes that “this Court endorse the principle that NFO is entitled to compensation for items, such as the San Antonio Grand Jury costs— again at current rates — and leave the specific allocation task to the efforts of counsel, at least in the first instance.”
(Id.
at 10).
NFO directs attention to the Court of Appeals’ statement that “the district court properly could have imposed the most severe sanctions upon AMPI — dismissal of its claims and default judgment against it on NFO’s claim.”
(Alexander v. NFO, supra,
687 F.2d at 1205 ;
see
NFO’s Sug. at 12.) NFO contends that the “remedial purposes of the Rule would thus be served if this Court requires AMPI to compensate NFO for all its costs and fees incurred in defending AMPI’s Phase III claim.”
(Id.
at 12). NFO again suggests that “the Court adopt this sanction in principle at this time.”
(Id.
at 13).
And finally, NFO, with primary reliance upon
Litton Systems, Inc. v. American Telephone & Telegraph Co.,
700 F.2d 785 (2d Cir.1983), requests that this Court impose a fine of at least $26,347,780 on AMPI for the reason that such a sanction is “the
only
available sanction which could advance the deterrence goal” of Rule 37.
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(NFO Sugg, in Support at 14, NFO’s emphasis).
II.
AMPI argues that “NFO is seeking a windfall” (AMPI’s Suggestions in Opposition, p. 2); that “[t]o award NFO additional relief on top of the adverse inferences already drawn by the Court of Appeals ... would be unjust” and that “NFO has failed to demonstrate any reason why it should be accorded any relief beyond that which already has been bestowed upon it by the appellate court.”
(Id.
at 2); that “NFO has failed to show any prejudicial impact resulting from the challenged conduct”; that “NFO engaged in document suppression and destruction of its own”
(Id.
at 3); that “NFO’s proposals are grossly overreaching”; and that “[gjranting NFO’s requests would constitute a miscarriage of justice under the circumstances.”
(Id.
at 10). AMPI further argues that “[i]f this Court decides to award additional, monetary sanctions, such a deflator [as that applied by the Court of Appeals], applied to both hours and hourly rates, is appropriate here.”
(Id.
at 12).
AMPI, as did NFO, made appropriate recognition of this Court’s letters of August 12 and August 25, 1983 (which directed attention to the Supreme Court’s admonition in
Hensley v. Eckerhart,
461 U.S. 424 , 103 S.Ct. 1933 , 76 L.Ed.2d 40 (1982), that “an application for attorney’s fees should not and need not result ‘in a second major litigation’ ”) and stated that “[i]n accordance with this Court’s admonition, the parties will confer in good faith about fees when and if this Court determines that compensation for particular activities is appropriate.”
(Id.
at 13).
III.
It is apparent from what we have stated above that both NFO and AMPI indicated in their respective briefs that they were willing to confer in good faith in regard to the amount of any attorneys’ fees and expenses that might be awarded by way of Rule 37 sanctions. That willingness was confirmed at oral argument. The agreed post-oral argument order provided:
2.
SANCTIONS
— Rule
37 NFO Motion Against AMPI.
The parties shall meet, confer, and attempt to reach agreement on those portions of NFO’s motion for costs, Appendix A, totalling $167,717 in attorneys fees and $15,225 in disbursements, together with items NFO is claiming in relation to the San Antonio grand jury proceeding. Commencing June 4, 1984, NFO shall make available to counsel for the counterclaim defendants all underlying records to substantiate those claims for Rule 37 attorneys fees and costs. Commencing June 14, 1984, NFO shall likewise make available to counsel for counterclaim defendants all underlying records to substantiate its claims for costs and fees relating to the San Antonio grand jury matter.
On or about June 25, 1984 counsel shall submit to the Court a report indicating which items of Rule 37 and San Antonio grand jury costs and fees are agreed and those which remain in dispute. Agreement by the counterclaim defendants that any particular costs were incurred by NFO shall not constitute an admission, or a waiver of any argument by counterclaim defendants that the agreed upon expenditure was reasonably or necessarily incurred or is recoverable as a matter of law.
In conjunction with its Rule 37 motion NFO has also claimed attorney fees and costs in defense of Phase III of the litigation. Because the Phase III costs and fees overlap, at least in part, the same category of fees and costs claimed by NFO in its Cost petition, and because resolution of the issue will necessarily entail a direct apportionment of those costs, NFO’s Rule 37 request for Phase III attorney’s fees and costs shall be handled in conjunction with the resolution of this issue in the context of NFO’s Cost petition and in the manner set forth in Paragraph 10 below.
Mr. Donohoe’s June 29, 1984 letter and Mr. Barnes’ sequel letter of July 10, 1984
*754
both advised the Court that NFO’s and AMPI’s negotiations pursuant to .paragraph 2 of this Court’s May 31, 1984 order have been unsuccessful.
IV.
The transcript of the proceedings held November 20, 1978 shows that this Court refused to impose the sanction of default or dismissal against AMPI because it believed that to have done so would have been contrary to the construction placed on Rule 37 by several then recent decisions of our controlling Court of Appeals. Pages 12,214 and 12,215 of the transcript reflect our citation of the then most recently decided Eighth Circuit case of
Schleper v. Ford Motor Co., Auto Div.,
585 F.2d 1367 (8th Cir.1978). We also directed attention to
Edgar v. Slaughter,
548 F.2d 770 (8th Cir.1977) which, as did
Schleper ,
had cited
Fox v. Studebaker-Worthington,
516 F.2d 989 (8th Cir.1975), with approval.
We further noted that
Edgar
had quoted Judge Van Oosterhout’s statement in
Fox
to the effect that “[t]here is a strong policy favoring a trial on the merits and against depriving a party of his day in court.”
Edgar, supra,
548 F.2d at 772 . (Tr. 12,-215).
The Note entitled “The Emerging Deterrence Orientation in the Imposition of Discovery Sanctions,” 91 Harv.L.Rev. 1033, accurately reflected that the Eighth Circuit’s policy as expressed in
Fox
was consistent with the views expressed by most courts until the Supreme Court handed down its brief per curiam opinion in
National Hockey League v. Metropolitan Hockey Club, Inc.,
427 U.S. 639 , 96 S.Ct. 2778 , 49 L.Ed.2d 747 (1976). While that Note urged a “[t]ougher use of Rule 37 sanctions, and of dismissal and default judgments in particular”
(id.
at 1055), it conceded that “[t]he view of discovery sanctions reflected in
National Hockey League
and other recent cases has not yet been fully developed” and chat “[sjeveral questions pertaining to the way in which sanctions will be administered under this view remain unanswered”
(id.
at 1047).
National Hockey League
was, of course, on the books at the time the Eighth Circuit in
Edgar
reiterated its Rule 37 policy favoring a trial on the merits rather than the imposition of a default or dismissal sanction under Rule 37. And the Court of Appeals cited
Fox
to support its conclusion that this Court did not abuse the discretion vested by Rule 37 when it elected to follow the policy stated by the Court of Appeals in that 1975 case.
The Court of Appeals, however, in this case emphatically stated its view that “[w]e can only describe AMPI’s conduct as outrageous.”
Alexander v. NFO, supra,
687 F.2d at 1205 .
While the Court of Appeals did not cite
Roadway Express, Inc. v. Piper,
447 U.S. 752 , 100 S.Ct. 2455 , 65 L.Ed.2d 488 (1980), it is clear to this Court that the Court of Appeals had in mind the Supreme Court’s admonition in that ease which, quoting
National Hockey League ,
stated that “Rule 37 sanctions must be applied diligently both ‘to penalize those whose conduct may be deemed to warrant such a sanction, [and] to deter those who might be tempted to such conduct in the absence of such a deterrent.’ ”
Roadway Express, supra,
447 U.S. at 763-64 , 100 S.Ct. at 2462-63 .
In short, we are satisfied that the Court of Appeals has implicitly directed this Court to penalize AMPI for conduct which the Court of Appeals characterized as “egregious” and “outrageous” and also to impose sanctions which will deter others who might be tempted to such conduct in other cases.
Judge Conner’s district court imposition of sanctions was affirmed by the Second Circuit in
Litton Systems, Inc. v. American Tel. & Tel. Co.,
700 F.2d 785 (2d Cir.1983). As did this Court, Judge Conner first ruled the merits of the defendant’s Rule 37 motion but deferred his decision on the sanctions to be imposed until after the conclusion of the trial. See
Litton Systems, Inc. v. American Tel. & Tel. Co.,
90 F.R.D. 410, 421 (S.D.N.Y.1981). Judge Conner’s opinion imposing sanctions is re
*755
ported in 91 F.R.D. 574 (S.D.N.Y.1981). That opinion shows that the defendant was insisting upon the extreme sanction of dismissal because of plaintiff’s failure to comply with discovery orders rather than the imposition of a lesser sanction. Judge Conner, in reliance upon both
Roadway Express, Inc. v. Piper
and
National Hockey League
held that:
Our adversarial system of civil justice rests upon access of all parties to all evidence bearing on the controversy between them, including that in the control of adverse parties. This, of course, requires the absolute honesty of each party in answering discovery requests and complying with discovery orders. Destruction or concealment by a party of relevant documents in its files threatens the viability and public acceptance of the system.
Litton Systems, supra,
91 F.R.D. at 576 . Judge Conner added that:
“Among the factors to be considered in determining what sanction is appropriate for a willful failure to make discovery are the importance of the information sought; the offending party's record of cooperation in other respects; whether and in what circumstances it ultimately produced the information; the extent of prejudice occasioned by the delay in its production; and public policy aspects of the litigation.”
(Id.
at 576).
Judge Conner concluded that apart from the conduct which he discussed in both of his district court opinions, that “the discovery conduct on both sides in this case has been generally good.”
(Id.
at 577). We find that the same thing was generally true in this case. In
Litton
all the documents that were withheld were ultimately produced. Except for the relatively small number of the unknown documents that were destroyed, the same thing is true in this case. Furthermore, no one has attempted to make the untenable argument that any of the destroyed documents could have in any way related to the amount of damages which NFO claims in this case.
We have carefully weighed the factors which control the imposition of sanctions as above discussed, including but not limited to public policy considerations, and conclude that NFO is entitled to an order imposing sanctions as generally prayed for in its Rule 37 motion with one exception. We do not believe it is either proper or appropriate to impose an additional amount of monetary sanctions equal to one percent of AMPI’s 1982 gross revenues as prayed for in paragraph 4 of NFO’s Rule 37 motion.
The interlocutory orders to be entered, of course, cannot state specific amounts because the hope that the parties would be able to agree on those amounts has not been realized. Because of that factor we also defer ruling the question of whether NFO’s counsel should be compensated at the higher billing rates in effect today as specifically prayed for in paragraph 2 of its motion and generally prayed for in regard to paragraphs 1 and 3 of its motion. For the reasons stated, it is
ORDERED (1) that this Court endorses the principle that NFO is entitled to compensation for the efforts devoted to its Rule 37 motion. The parties are accordingly directed again to confer in an effort to arrive at an agreed figure. It is further
ORDERED (2) that this Court also endorses the principle that NFO is entitled to the compensation in connection with the San Antonio grand jury proceeding. The parties are accordingly directed to confer in the same manner in that regard. It is further
ORDERED (3) that this Court endorses the principle that NFO is entitled to be compensated for at least some of its costs and fees incurred in defending AMPI’s Phase III claim. The parties are accordingly directed again to confer in the same manner in that regard. The extent to which the total costs and fees incurred in defending AMPI’s Phase III claim will be determined after review of NFO’s claim in that regard, and after review of the agree
*756
ment, if any, of the parties in that regard. It is further
ORDERED (4) that it would be unjust under all the circumstances for this Court to exercise its discretion in favor of NFO’s prayer stated in paragraph 4 of its motion that AMPI, in effect, be fined the sum of $26,347,780, the alleged equivalent of one percent of AMPI’s gross annual revenues. That portion of NFO’s Rule 37 motion should be and the same is hereby denied.
ISSUE NO. 3 — AMPI’S MOTION AGAINST NFO FOR SANCTIONS
I.
Following remand, AMPI filed a memorandum and suggestions in further support of (1) its April 18, 1975 Motion For Order For NFO To Show Cause Why It Should Not Be Held in Contempt and a Motion for Order Compelling Discovery and (2) in support of its April 21, 1976 Motion For Order Declaring NFO In Contempt.
The relief sought by those motions requested dismissal of NFO’s market penetration claims as a sanction for the alleged “cleanout” of NFO’s home office in anticipation of document production and for NFO’s alleged failure and delay in producing various documents in a timely manner.
NFO’s memorandum in opposition points out that all of the exhibits attached to AMPI’s memorandum and suggestions were earlier filed with the Court of Appeals. NFO therefore argues that AMPI implicitly submitted to the Court of Appeals the issue as to whether this Court erred in not granting AMPI’s motions. Indeed, AMPI argues that the Court of-Appeals necessarily considered and ruled upon AMPI’s motions for sanctions for the reason that the Court of Appeals did not impose any sanctions on NFO. NFO argues that the Eighth Circuit’s mandate puts AMPI’s motions “out of the reach of this Court on remand” and that “this Court is foreclosed and relieved from ruling upon them now.”
AMPI’s reply to that argument suggests that the very principles espoused by NFO in opposing AMPI’s motion for sanctions would be directly applicable to NFO’s Rule 37 motion for sanctions and that NFO, having received the sanctions it requested from the Court of Appeals, must be deemed to have abandoned any claim for the monetary sanctions for which they now contend on remand.
We conclude that an order should be entered consistent with paragraph 3 of this Court's May 31, 1984 order which was agreed to by all parties.
II.
Examination of Exhibit F, AMPI’s January 24, 1977 narrative based on then existing discovery in support of AMPI’s motions, and Exhibit G-l, which was the February 22, 1977 NFO answer to that narrative statement, establish that NFO’s admissions, standing alone, establish, at the very least, that substantial delay was involved on the part of NFO in its production of particular documentary evidence in this case. NFO’s outright denials of particular paragraphs of AMPI’s narrative and NFO’s guarded and qualified admissions of other paragraphs establish the existence of a substantial conflict in the testimony of particular witnesses whose depositions were eventually taken.
AMPI’s April 19, 1977 reply to NFO’s suggestions in opposition to AMPI’s motion emphasized that the obvious conflict in the testimony “can only be resolved by an evidentiary hearing in open court where credibility and demeanor can be assessed by the trier of the fact.”
{Id.
at 2. See similar statements to that effect on pages 8 and 18).
The parties, however, in the agreed order of May 31, 1984, stated the following in regard to the issues presented by AMPI’s motion for sanctions against NFO:
3.
SANCTIONS
— AMPFs
Motion Against NFO
— The record on this issue is closed, it has been fully briefed and argued. The counterclaim defendant
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AMPI has sought adverse inferences and an as yet unquantified amount of attorney’s fees and expenses as sanctions in conjunction with its motion. If the Court rules the motion in AMPI’s favor, counterclaim defendant AMPI shall be’ permitted to submit, within a reasonable period of time, a cost petition setting forth the precise fees and costs it claims.
Exhibit D attached to AMPI’s memorandum and suggestions is a copy of AMPI’s April 27, 1976 response to a reply brief filed by NFO in regard to one of AMPI’s motions for an order declaring NFO in contempt. On page 3 of that April 27,1976 response AMPI candidly stated that “it is fair to say that if there had been no NFO Rule 37 motion AMPI might have been more willing to follow Mid-Am counsel’s course when it learned of the ‘clean-out’ from them for the first time in early 1974, and might not have followed this matter up with as much vigor.” AMPI added, we think quite properly, that: “Nevertheless AMPI’s motion should be judged on its substance and merits.”
As noted above, paragraph 3 of the agreed order of May 31, 1984 advised the Court that the parties consider that the record on the issue presented by AMPI’s motion for sanctions against NFO is “closed.” On the basis of the present record, however, we are satisfied that although AMPI certainly made an appropriate showing of untimely, and in some narrow instances, a total failure of document production on the part of NFO, discretion should not be exercised in favor of AMPI to the extent that we enter an order that NFO’s market penetration claims should be dismissed.
We recognize, of course, that the Court of Appeals took an extremely dim view of what it described as AMPI’s “egregious” and “outrageous” conduct in connection with its treatment of what it called “the suppression and destruction of evidence by AMPI.”
Alexander v. NFO, supra,
687 F.2d at 1205 . We must also recognize that the Court of Appeals, unlike this Court, apparently was not in the least concerned with whether, after all was said and done, NFO suffered any real prejudice as a result of the delay, for example, of the production of the San Antonio grand jury documents.
We cannot, however, believe that the Court of Appeals intended to lay down any general rule that the most severe sanction of dismissal or default should routinely be imposed, regardless of the nature of the documents involved and regardless of their relevance or materiality to a particular case. While the Court of Appeals apparently was not concerned about the relevancy of all the documents involved in NFO’s Rule 37 motion, we cannot ignore the fact that we know enough about the documents involved in AMPI’s motion for sanctions to conclude that in our judgment, subject to what the Court of Appeals may later have to say, AMPI should be entitled to its costs and attorneys fees for deposing the witnesses listed on page 6, footnote 5, of AMPI’s memorandum and suggestions filed in this Court after remand.
Those costs and attorney’s fees, of course, would be limited to the depositions taken, or the parts of other depositions taken, solely on the issue of NFO’s alleged concealment and destruction of documents.
Accordingly, it is
ORDERED that AMPI shall, within a reasonable period of time to be established by the Court on recommendation of the parties, prepare, serve and file a cost petition setting forth the precise fees and costs it claims in accordance with what we have above stated.
ISSUE NO. 4 — PRECLUSION OF NFO’S EXPERT WITNESS
ISSUE NO. 5 — CAUSATION
ISSUE NO. 6 — DAMAGES MEASUREMENT
I.
All three of the issues stated in the above heading are directly related and will be so treated. In the course of our discus
*758
sion we shall set forth the basic arguments made in the various briefs filed by the parties in sufficient detail so that it will be understood that we have given those arguments appropriate consideration in making our determination of the questions presented in regard to all three issues.
II.
NFO’s Motion for Damages
The Court of Appeals in
Alexander v. National Farmers Organization, supra,
687 F.2d at 1210 , remanded this case with directions that this Court, “in its discretion, conduct such further proceedings and make such new findings as may be appropriate to ensure that the determination of damages and other relief can be made consistent with this opinion.” Following that remand, NFO and the NFO class claimants filed a motion for an order of this Court that would award them damages against AMPI, Mid-Am and CMPC as follows: (1) NFO market-penetration damages in the amount of $12,947,034, trebled to $38,841,102, and (2) NFO claimant price-reduction damages in the amount of $1,075,383, trebled to $3,226,149.
Although afforded the opportunity to do so, NFO elected not to adduce any new or additional evidence. Plaintiffs expressly stated on page 1 of their brief in support of their motion for damages that “plaintiffs have not introduced any new damage evidence nor new damage theories, but instead rely upon the evidence adduced and the theories originally advanced at trial.”
2
Compliance with the Court of Appeals’ directions on remand has been an extremely difficult task for the reason that the parties radically disagree in regard to how the opinion of the Court of Appeals should be read. NFO stated that its brief in support of its motion was “submitted to aid the Court in quantifying the recoverable damages by indicating the impact of the Eighth Circuit’s decision ... and by providing a ‘road map’ (Appendix A attached hereto) which outlines and condenses the damage proofs already presented.” (NFO’s Brief in Support of Mot. for Damages at 1).
Describing the Eighth Circuit’s opinion in 687 F.2d 1173 , NFO stated that “[t]he Eighth Circuit held that assessment of damages may be based on inferences drawn ‘from the circumstances and evidence as a whole.’
Id.
at 1210.” NFO then stated that “the evidence shows, and the Eighth Circuit found, that the defendants were the ‘major marketers of milk produced in the Midwest,’
id.
at 1192, and that, among other findings, ‘NFO’s marketing efforts became a serious problem for Mid-Am, AMPI and CMPC.'
Id.
at 1194;” that “ ‘NFO and AMPI were in full scale competition,’
id.
at 1189, and ‘Mid-Am viewed NFO as a substantial threat.’
Id.”',
and that “[t]hese ‘major marketers’ engaged in a ‘broad pattern,’
id.
at 1200, of concerted predation throughout a ‘ten state region,’
id.
at 1193, specifically intended to ‘eliminate NFO as a competitor.'
Id.”
(NFO's Brief in Support at 1).
NFO further stated that “[t]he Eighth Circuit found that ‘the fact of injury is unmistakable on this record’ and specifically instructed this Court that it has ‘broad latitude in assessing the amount of damages which NFO
shall
recover.’
Id.
at 1210 (emphasis added [by NFO])” and that “[i]n light of this instruction, and in view of the ‘circumstances and evidence as a whole,’ only one inference can be drawn: NFO, virtually from the beginning in ‘full scale competition’ with the defendant ‘ma
*759
jor marketers,’ had the potential to achieve a substantial share of the ten state milk market.”
Id.
at 2. ■
Based on that reading of the Court of Appeals’ opinion, NFO argued that “[t]he only substantive antitrust issue that remains in this proceeding under Section 4 of the Clayton Act is the quantification of damages suffered by the plaintiffs” and that “[u]nder the Eighth Circuit’s decision, NFO is entitled to the marketing fees and membership dues it would have received had there been no antitrust violation.”
Id.
at 2-3.
In support of its claim for damages NFO relies on the same market structure theory and the same test market theory which it presented at trial through the testimony of Dr. Robert A. Nathan (Nathan). The first theory, according to NFO, would be established by paragraphs 2268-74 and paragraphs 2331-58 of NFO’s proposed findings of fact and by pages 9635-54 of Nathan’s direct examination. NFO states that its second theory would be established by paragraphs 2261-67 and paragraph 2275-2330 of NFO’s proposed findings of fact and pages 9585-93 of Nathan’s direct testimony.
3
NFO states that the price-reduction damages now claimed on behalf of “the NFO class claimants,” is supported by an analysis prepared by NFO counsel, and is based on paragraphs 2018-62 of the findings of fact proposed by NFO at trial. NFO argues that the Court of Appeals recognizes “that these price reduction damages belonged to the individual NFO dairy farmers.” NFO cites and relies upon the familiar antitrust cases of
Zenith v. Hazeltine Research, Inc.,
395 U.S. 100, 123-34 , 89 S.Ct. 1562, 1576-82 , 23 L.Ed.2d 129 (1969);
Bigelow v. RKO Radio Pictures, Inc.,
327 U.S. 251, 264 , 66 S.Ct. 574, 579 , 90 L.Ed. 652 (1946);
Story Parchment Co. v. Paterson Parchment Paper Co.,
282 U.S. 555, 561-66 , 51 S.Ct. 248, 250-52 , 75 L.Ed. 544 (1931); and
Eastman Kodak Co. v. Southern Photo Materials Co.,
273 U.S. 359, 377-79 , 47 S.Ct. 400, 404-05 , 71 L.Ed. 684 (1927), and the progeny of those cases. NFO, however, has directed attention to a relatively small number of its proposed findings of fact or to the portions of the record which they contend would support those proposed findings of fact.
Rather, NFO quoted the latter portion of a sentence of the Court of Appeals’ opinion which stated that; “It was error, however, [for the district court] not to draw factual inferences adverse to AMPI on matters undertaken in or through offices and individuals involved in the destruction of documents.” NFO therefore argued that “NFO is at least entitled to the very strongest adverse inferences that can be drawn from the wholesale destruction” of the Little Rock documents and that “[a] reasonable adverse inference is that the destroyed evidence would have reinforced the admission that when the defendants honestly analyzed NFO’s potential, they too concluded that NFO was capable of becoming a major milk pooling firm, and would do so unless they conspired to force it out of the market.” (NFO’s Brief in Supp. of Mot. for Damages at 16-17.)
III.
Defendants filed two separate briefs in opposition to NFO’s motion for damages, one brief directed to the question of “causation”; the other brief directed to the question of “measurement of damages.”
IV.
Defendants’ Causation Brief
Defendants' causation brief, as did NFO’s brief in support of its motion for damages, focused on particular portions of the Court of Appeals’ opinion to support its reading of that opinion. Defendants make reference to a substantial number of statements in the Court of Appeals’ opinion to
*760
support their argument that a “ ‘threshold factual issue [of] causation’ [ 687 F.2d at 1208 ] is very much alive.” (Brief in Opposition: Causation at 2.) For example, defendants noted that the Court of Appeals, after holding that NFO was not entitled to recover any alleged “price-reduction” damages stated that “[l]osses of such dues and fees,
to the extent attributable
to the defendants’ unlawful conduct, represent direct injury to NFO in its ‘business or property.’
Id.
at 1209 (emphasis added by defendants)” and that the Court of Appeals added in a footnote that “[u]nder these circumstances, lost membership dues are not indirect injuries and NFO is entitled to recover such dues
to the extent such losses are reasonably shown to be caused by the antitrust conspiracy. Id.
at 1209 n. 42 (emphasis added by defendants).” (Brief in Opp: Causation at 2-3). Defendants argue that the Court of Appeals “defined the standard” to be applied on remand “for the third time” when it stated that “... NFO has a right to recover the fees and dues that
it reasonably shows it would have derived in such markets but for the effect of the unlawful conduct. Id.
at 1210 (emphasis added and footnote omitted by defendants).” (Brief in Opp. at 3).
Defendants contend that the Court of Appeals “provided guideposts for application of the standard” which defendants contend is applicable on remand in connection with its discussion of specific overt acts which the Court of Appeals found to be in violation of the antitrust laws.
Id.
at 3. Defendants point to the Court of Appeals discussion of Gandy Dairy, located in San Angelo, Texas, (in connection with which NFO presently claims no damages), and to the footnote appended to the discussion of that dairy’s refusal to purchase NFO milk which stated that “ ‘[o]f course, in assessing damages, the district court may consider
the extent to which NFO’s harm is attributable to AMPI’s conduct.’
687 F.2d at 1196 n. 21 (emphasis added by defendants).” (Brief in Opp. at 4). Defendants also directed attention to another footnote to the Court of Appeals’ discussion of defendants’ litigation and threats of litigation against actual or potential customers of NFO which stated that “[implicit in the [district court’s] findings may be determinations as to the
extent to which NFO was harmed
by this aspect of defendants’ conduct.
Such questions can be fully considered on remand. Id.
at 1203 n. 35 (emphasis added by defendants).” (Brief in Opp. at 4).
Defendants further contend that the Court of Appeals made clear that it anticipated that factual questions might be presented on remand in connection with certain of the defendants’ mergers and acquisitions. Defendants note that after the Court of Appeals concluded that it could not say that “it was clearly erroneous for the district court to reject findings that the acquisitions, mergers and related milk pooling practices were part of an unlawful conspiracy,”
(Alexander v. NFO, supra,
687 F.2d at 1206 ) it went on to say that:
In instances where acquisitions of independent dairies resulted in actual displacement of preexisting NFO sales, however, the district court, on remand, should consider whether such conduct following acquisition reflects an intent to block NFO
rather than a legitimate business decision based upon price, quality or similar factors.
Where post-acquisition terminations of NFO sales are found to be part of a scheme to eliminate NFO, such lost sales would form a basis for NFO’s damage claim.
Id.
at 1206-07 (emphasis added by defendants).” (Brief in Opp. at 4-5)
Defendants concede that the Court of Appeals’ determination that NFO could not recover “price reduction
damages ”
did not completely remove the “price reduction
issue ”
from factual consideration on remand. Defendants directed attention to the fact that after the Court of Appeals determined that “NFO’s net revenues were ... tied to the volume of its marketing, not to the
price
it earned,” the Court of Appeals stated that “[t]he price reduction issue
may
be relevant to NFO’s damages in that, by virtue of selling at lower prices, NFO
may
have lost members or, in turn,
*761
marketing volume. The measure of such harm, however, would be the lost fees and dues
from those who stopped marketing through NFO,
not the price differential. 687 F.2d at 1208-09 (emphasis added by defendants).” (Brief in Opp. at 7).
Defendants contend that under the directions provided by the Court of Appeals as above quoted, NFO must not only prove it lost sales to handlers such as Beatrice, Gandy, Wanger and Foremost, but that it has the burden of proving that NFO thereby lost “member milk marketings and members” of NFO. (Brief in Opp. at 7). Defendants contend that such “particularized proof” is mandated by the Court of Appeals’ conclusion that:
Here, there is no doubt that the unlawful conspiracy was the material cause, for example, of Beatrice’s cutoff decision in March of 1971 and of Foremost’s subsequent rejection of the same shipments, [citations omitted].
The extent to which rejections of NFO milk by these dairies in other periods (or by other dairies in the face of similar conduct) were also due to defendants’ conspiracy is a factual question for the district court. Id.
at 1210 (emphasis added by defendants).
(Brief in Opp. at 7-8).
Defendants further pointed to what it described as “the appellate court’s repeated admonitions concerning the effect of NFO’s mismanagement and bungling upon the ‘harm’ sustained by NFO, Inc.” (Brief in Opp. at 11). Defendants noted that the Court of Appeals quoted with apparent approval this Court’s observation,
In re Midwest Milk Monopolization Litigation,
510 F.Supp. 381, at 420 (1981), which stated that “the record would come closer to supporting a set of findings that NFO became a victim of its own propaganda and that its ignorance and inexperience in the dairy field required it to experiment with one unsound idea after another____
Id.
at 1188.” (Brief in Opp. at 11). Defendants’ causation brief also directed attention to that portion of the Court of Appeals’ opinion which stated that:
The defendants also attack NFO’s right to recover membership dues and checkoff fees on the ground such
damages are speculative, present impossible tracing problems, and ultimately reflect self-inflicted harm rather than damage causally linked to defendants’ unlawful conduct. These arguments largely raise factual questions for the district court,
but the fundamental legal guidelines are clear. 687 F.2d at 1209 (emphasis added by defendants).
(Brief in Opp. at 11-12).
And finally, in the same regard, defendants quote the following passage of the Court of Appeals:
We also recognize that NFO’s entry into the business of milk marketing was not conceived or managed as effectively as the efforts of the co-ops and that NFO cannot recover for losses clearly attributable to its own failures.
On the other hand, NFO correctly argues that “defendants are really trying to clip NFO’s wings and then escape liability on the grounds that NFO ‘cannot fly.’ ” [citations omitted] We note only that
the district court must weigh these factors,
mindful that the legal standard permits recovery where defendant’s unlawful conduct is “a material cause of injury; a plaintiff need not exhaust all possible alternative sources of injury in fulfilling his burden of proving compensable injury.” [citation omitted] 687 F.2d at 1210 (emphasis added by defendants).
(Brief in Opp. at 12).
Defendants state that the voluminous findings of fact proposed in Appendix A attached to defendants’ causation brief to NFO’s motion to award damage “clearly establishes” that:
o NFO’s “dragnet” damage theory, indiscriminately attributing
all
of NFO’s alleged losses to defendants’ conduct, fails to account for the effects on NFO of
lawful
competition by defendants
and
third parties. It is therefore fatally defective as a matter of law.
*762
o NFO’s milk quality problems were monumental, unprecedented and caused NFO to be unattractive to customers and members,
o NFO’s reputation as a militant, radical organization and its misguided policies and gross mismanagement caused losses of customers and members alike.
o NFO’s experimentation with one unsound marketing “gimmick” after another and incessant appeals (“crisis drives”) for money alienated dairy farmers.
o NFO’s internal record-keeping, particularly its financial records, were in such disarray that reasoned management decision-making was impossible; NFO could not even determine whether the dairy program was losing money.
o NFO’s sales “efforts” were feeble indeed. NFO failed to even contact a number of potential customers in the “damage” area. Even when NFO representatives made pro forma “get-acquainted” calls and received indications of handler interest, NFO did not follow up.
o NFO’s mismanagement was not confined to the Midwest but permeated NFO’s dairy program throughout the country. Indeed, NFO’s performance was
better
in the area allegedly subject to conspiratorial conduct than it was in the “non-conspiracy” areas,
o NFO’s ineffectiveness was not confined to its dairy program. NFO’s blunders in other commodities, such as the cull cow program, and millions of dollars of losses in its grain program caused widespread membership defection.
o NFO repeatedly imposed one mandatory deduction after another on dairy farmers marketing through NFO until its dairy deductions became the highest in the industry. This tactic alienated existing as well as potential members.
o NFO’s asserted “loyal” membership base was illusory. NFO’s own records indicate that scores of those “die-hard” members hadn’t paid their dues for years. Indeed, NFO carried on its books millions of dollars of unpaid dues, a significant portion of which had been delinquent for over 10 years.
(Brief in Opp. at 13-14).
In addition, defendants contend that NFO has ignored the fact that this Court has rejected any number of findings of fact which NFO proposed at the time of trial and the fact that the Court of Appeals did not disturb those rejected findings on appeal.
4
The defendants, for example, state that “this Court has already rejected NFO’s proposed findings of its alleged capability in dairy marketing and its alleged ability to draw dairy farmers” and direct attention to this Court’s treatment of those particular paragraphs in 510 F.Supp. at 454 , which shows rejection of paragraphs 346-47, 349-50, 352, and 354 of NFO proposed findings of fact. (Brief in Opp. at 20). We shall illustrate the thrust of defendants’ argument in the next section of this memorandum opinion.
V.
To understand the present significance of this Court’s rejection of particular findings of fact proposed by NFO at trial, we set forth all of the paragraphs which NFO proposed that we should have found in regard to “NFO’s Recruiting Efforts”. NFO proposed findings of fact in that re
*763
gard were stated in paragraphs 345 to 354 in its trial proposed findings of fact:
5
345. Once NFO decided in 1958 to alter its purpose and start bargaining instead of protesting, NFO began soliciting dairy, meat and grain farmers to sign the NFO membership agreement.
346. [Rejected] Dairy farmers were as interested in joining NFO as were meat and grain farmers.
347. [Rejected] NFO solicited new-members at meetings by focusing on the primary commodities that they produced.
348. From 1958 to 1965, NFO’s primary activity was soliciting farmers to join NFO.
349. [Rejected] The percentage of all NFO members in an area who are dairy farmers generally corresponds to the percentage of all farmers in that area who are dairy farmers.
350. [Rejected] Most of the farmers that NFO enrolled as members in Minnesota and Wisconsin were dairy farmers.
351. NFO is the only farm organization in the United States that markets milk, meat and grain.
352. [Rejected] NFO’s multi-commodity program was attractive to farmers.
353. NFO emphasized its cull-cow program when it attempted to enlist dairy farmers to market milk through NFO.
354. [Rejected] Generally, farmers received more money for cows marketed through the NFO cull-cow program than they did for those sold through local auctions.
Examination of our treatment of those ten proposed findings of fact on 510 F.Supp. at 454 shows that we adopted only paragraphs 348 and 351 as proposed. Paragraphs 345 and 353, were modified in accordance with our view of the weight of the credible evidence.
In considering the significance of this Court’s determination at trial that NFO had not adduced sufficient credible evidence to support NFO’s proposed findings of fact as contained in paragraphs 346, 347, 349, 350, 352, and 354, as above quoted, it must be understood that paragraph 2215 of NFO’s proposed damage finding of fact, (which would reflect an acceptance of the data reflected in NFO Exhibit No. 1023) is based on the assumption that NFO was, in fact, entitled to all five findings of fact proposed in paragraphs 345-50 of its proposed findings of fact.
6
The thrust of defendants’ argument in regard to the impact of this Court’s rejection of NFO’s proposed findings of fact is thus made clear when it is understood that this Court expressly rejected paragraph 349 of NFO’s proposed findings of fact which stated: “349. The percentage of all NFO members in an area who are dairy farmers generally corresponds to the percentage of all farmers in that area who are dairy farmers.” NFO contended at trial that its proposed finding of fact in paragraph 349 was supported by the following cited testimony: “Staley, Tr. at 1651-59; Berkhahn, Tr. at 6468-70; Scott, Tr. at 2541-43, 3076.” Although a small number of the pages of the testimony of Staley, Berkhahn or Scott were included in Appendix G which NFO filed in support of its motion for damages, the particular pages cited in support, of paragraph 349 were not reproduced for inclusion in that appendix. Examination of the conclusory testimony of each of those three witnesses in the complete transcript of their testimony establishes the reasons why this Court eonclud
*764
ed that NFO had not adduced sufficient credible evidence to support the finding of fact as proposed in paragraph 349.
In regard to Staley’s testimony, for example, the pages cited by NFO to support paragraph 349, Tr. at 1651-1659, show that Staley was permitted to testify in response to leading questions, subject, however, to the defendants’ objections, that NFO’s recruiting efforts established that “the breakdown of farmers who joined NFO on the basis of commodity produced was the same as for all farmers in that state” (Tr. 1655-56).
On page 1860 of the transcript the Court noted that Staley’s testimony on direct examination in regard to NFO membership had been given “in very, very conclusory language, based upon no factual data that I know anything about” and that “I am at a complete loss of knowing what actual membership, so far as milk participation is concerned, that NFO has any place in the United States up to this point.”
Berkhahn testified on direct examination that NFO membership “tended to parallel very closely the type of agricultural production that was produced in that area” (Tr. 6468) and that he thought he could “estimate how many dairy producers you had who were interested in marketing through NFO” (Tr. 6470). When cross-examined about the testimony he had given on direct examination he conceded that neither he nor any one he knew had any idea about how many dairy farmers in the United States were members of NFO.
Berkhahn was being specifically examined about his testimony given on page 6470 of his direct examination, see Tr. 6687, when he gave the following testimony on cross-examination at Tr. 6689:
Q (By Mr. Park) Mr. Berkhahn, in the year 1970, how many dairy farmers in the United States were members of the NFO?
A I don’t know.
Q Do you know who knows?
A No, I don’t.
Q Do you know whether that figure is ascertainable from within NFO’s records?
A No, I do not.
Q If I were to ask you the same question for every year for 1971, 1972, and 1973, and 1974, would your answer be the same?
A Yes, it would.
Q Are you aware of any system or procedure within the NFO today from which one could ascertain how many of the total NFO membership are dairy farmers?
A No, I am not aware of any.
Scott testified on direct examination on the pages cited by NFO to support the proposed finding stated in paragraph 349 that “if the dairy farmers in the area, the majority of them were dairy farmers, then we tended to have a majority of our members as dairy farmers” (Tr. 2541); that “in that area [Southwest Missouri] there were a lot of dairy farmers and we had a high percentage of the dairy farmers in that area as members of NFO” (Tr. 2542); and that “the membership tended to break down the same way wherever [he had] worked for NFO” (Tr. 2543).
Defendants’ cross-examination of Scott, however, established that his conclusion that “about fifty percent of the producers in Southwest Missouri were members of the National Farmers Organization” was based on what “someone had told” him and that he had only been told that those producers “had signed at some time and paid their dues at some time” (Tr. 3074). Tr. 3077 of Scott’s cross-examination shows that he confirmed the testimony he had given at a damage deposition in October 1975 that he knew of no way that he could determine the number of NFO members who were dairy farmers by checking any NFO record.
Scott further testified, Tr. 3081, that the following testimony given at his October 1975 damage deposition was true and correct at the time of trial:
*765
“Q As a matter of fact, from what you know in the way of NFO records, it will be impossible to do it, wouldn’t it, as far as you know?
“A As far as I know, yes.
“Q Now, how about the State of Oklahoma, do you have any opinion as to the total number of dairy farmers who are members of NFO in the State of Oklahoma?
“A No, sir.
“Q Again, based on your knowledge, would it be impossible from NFO records to determine the number of dairy farmers in the State of Oklahoma or who were members of NFO at any point in time?
“A To get a complete list, yes.
“Q The same question with regard to the State of Kansas, do you have any judgment or opinion as to the total number of dairy farmers who are members of NFO who are physically located in the State of Kansas?
“A The same answer, I would not be able to say.”
“Q Do you know the number of members in the State of Missouri?
“A No, not — I couldn’t give you the specific number of members.”
Scott further testified that:
“Q And you have never known the number of NFO members for any period of time, is that right?
“A That is correct.
“Q So that if I were to ask you, Mr. Scott, sitting here today to make some kind of a comparison between, say, NFO’s membership as of December 31, 1974 and December 31st of any other year, you would just be wholly incapable of doing that, isn’t that right?
“A That is correct.
“Q Because the basic data, the underlying percentage, just doesn’t exist on which you can form an opinion, is that right?
“A That is right.”
The problem created by NFO’s election to stand on the findings of facts it proposed at trial and its attempted reliance upon proposed findings of fact which have been expressly rejected by this Court is not confined to paragraph 349 which we used as an example and which we have discussed in detail. For it is clear, again by way of example, that NFO’s proposed findings of fact in paragraphs 2298 to 2312 in regard to “NFO’s minimum performance, absent restraints” is based on the assumption that all of the findings of fact proposed by NFO in paragraphs 128-340 and paragraphs 469-2017 were, in fact, supported by the greater weight of the credible evidence. A glance at NFO’s “[Rejected]” proposed findings of fact in 510 F.Supp. at 443 to 454 and 458 to 501 in regard to those particular paragraphs will show the large number of proposed findings of fact which this Court concluded were not supported by the greater weight of the credible evidence.
VI.
Defendants’ Measurement Brief
Defendants’ measurement brief filed in opposition to NFO’s motion for an order to award damages was solely directed toward the propriety of NFO’s measures of damages for alleged lost membership dues and checkoff fees.
Defendants argued that “NFO’s damage evidence is even more speculative and inadmissible on this remand than it was at the trial, inasmuch as NFO has failed to prevail on most of the acts of alleged illegality which it asserted at the trial as the predicate for its damage theories and computations.” (Brief in Opp.: Measurement of Damages at 5.)
7
Defendants contend that
*766
the “Eighth Circuit affirmed this Court’s findings of the legality of many of the acts and practices challenged by NFO on appeal, including charges relating to mergers and acquisitions of independent cooperatives ( 687 F.2d at 1206 ); pool loading
(Id.);
standby pools (ARSPC)
(Id.
at 1206-07); alleged bad faith litigation
(Id.,
at 1200); attempts to. block NFO’s USD A qualification
(Id.
at 1199); and the alleged conspiracy with AMDI
(Id.
at 1.199). (Measurement Brief at 5-6).”
8
Defendants further argue that the “only unlawful conduct found by the Court of Appeals — all occurring in 1970-71 — related to certain specific handlers, Gandy Dairy, Wanzer Dairy, Beatrice-Fort Worth, and Foremost-Dallas, threats of suits against handlers that could be shown to have resulted in the rejection of NFO milk, and the acquisition of independent proprietary dairies insofar as they were designed to, and did, foreclose NFO milk. ( 687 F.2d at 1196-1204, 1206-07 )” and that “the appellate court specifically directed this Court on the remand to weigh and consider the extent to which NFO was injured and ‘harmed’ thereby.” (Measurement Brief at 6-7).
Defendants argued that Dr. Nathan’s opinions are not credible because those opinions were based on unsupported assumptions given him by NFO and because he lacked the expertise required by Rules 702 and 703 of the Federal Rules of Evidence. Defendants contend that “Rule 702 imposes two threshold requirements for the admissibility of expert testimony: (1) the testimony must be helpful to the trier of fact to understand the evidence or to determine a fact in issue, and (2) the expert must be qualified to express opinions that are relevant to the inquiry.” (Measurement Brief at 13). Defendants further argued that Rule 703 must be given appropriate consideration for the reason that the “purpose of Rule 703 is to make certain that the expert’s opinion has sufficient basis without reference to unsupported assumptions and theoretical speculation.” (Measurement Brief at 15).
On the facts, defendants argued in their measurement brief that “[a]t the trial, Nathan admitted that he was not, and did not purport to be, an expert in the dairy marketing industry. (Nathan, Tr. 10314, 10317, 10712-22, 10740, 10760-61, 11135; DF.l).” (Measurement Brief at 18). Defendants contend, on the facts, that Nathan disclaimed having any expertise in the dairy industry or in raw milk marketing and that he relied almost entirely upon assumptions provided by NFO counsel without investigation or knowledge of that validity of the assumptions which had been given him by counsel.
The questions of whether Nathan could properly assume that NFO had the capabilities to be what Nathan described as a “major” marketer of raw milk and whether NFO could have penetrated each of the ten “damage” orders but for the assumed wrongful conduct of the defendants were in sharp factual dispute. Defendants’ measurement brief pointed out that on direct examination, Nathan testified that he considered that the most important factor to take into account in regard to NFO’s capability had to do with NFO’s membership base (Tr. 9593-94) and that he had also testified on direct examination that NFO could be considered as a prospective major
*767
pooling firm because of “NFO’s experience in organization, its general status as a major farming organization in the middlewest, given its membership throughout that area, in varying degrees, [and] given its experience — some experience in milk marketing prior to this major thrust in 1969-1970” (Tr. 9638).
In regard to NFO’s prior experience in milk marketing, in defendants’ measurement brief, defendants directed attention to testimony given by Nathan as he had testified as follows on cross-examination:
Q. (By Mr. Peterson) What did NFO counsel tell you, if anything, about NFO’s prior experience in milk marketing?
A. They told me no details as to how extensive it was nor how long. They told mé to assume that NFO had had experience in milk marketing.
Q. Well, did they tell you to assume whether those experiences were successful or unsuccessful?
A. No, sir, they did not.
Q. Well, do you know anything about the nature of those experiences?
A. I do not.
Q. So when NFO in 1970 decided to engage in direct milk marketing, a direct marketing program, you don’t know whether NFO had a successful or unsuccessful past history as far as milk marketing efforts are concerned?
A. That is correct. (Nathan, Tr. 10601-02).
(Measurement Brief at 27-28).
For a further example of Nathan’s cross-examination in regard to the manner in which he had accepted the assumption of NFO’s capability, defendants’ measurement brief noted that Nathan had testified as follows:
Q. You are assuming that NFO had the full capacity to be a major marketer and there were no restrictions or limitations on their obtaining that capability?
A. I did not go into the limitations, nor did I assume whether these limitations were balanced equally or more than balanced or more than offset by advantages.
Q. You didn’t even consider whether there were limitations, did you?
A. That is correct.
Q. If there were limitations, wouldn’t that cause some readjustment in your theory?
A. Depends on what the advantages are, the pluses that would balance off with the minuses.
Q. But that is nothing that you can tell us about here today?
A. That is correct, sir. (Nathan, Tr. 10182-83).
(Measurement Brief at 29).
Defendants noted that Nathan conceded on cross-examination that he had no “personal knowledge of the capabilities of NFO’s management” and that consideration of that factor was “purely an assumption” (Tr. 10593). Nathan testified as follows:
Q. And who does that assumption [of the capabilities of NFO’s management] come from, or what is it based upon, if anything?
A. As I recall, this was an assumption given to me by NFO counsel.
Q. Would this assumption include an adequate staff, integrity of management, a good level of payroll and experience, as far as capability is concerned?
A.
I don’t know really what the counsel has in mind. I was told to assume that NFO had managerial capabilities and resources to achieve
— to
become a significant factor. I don’t recall any discussion about the components.
Q.
You didn’t discuss the components, they told you to assume that NFO has whatever capability is neces
*768
sary to penetrate these markets, am I stating it fairly?
A.
Yes, I think that is correct.
(Nathan, Tr. 10593; emphasis added by defendants).
(Measurement Brief at 30).
Defendants contended in their measurement brief that Nathan’s lack of experience in regard to the milk marketing industry causes him to focus on inappropriate factors in his attempt to project NFO’s assumed capability and expected performance and thus argued that his testimony should not be accepted.
Defendants relied upon and urge that this Court accept the testimony of Dr. Emerson Babb, a member of the Department of Agricultural Economics at Purdue University since 1960, called by defendants, who they state was “well qualified to testify as an economic expert in dairy marketing and to assist the Court as the trier of fact on these matters.” (Measurement Brief at 31). Defendants argued that “Dr. Babb articulated most fully and convincingly the errors contained in Nathan’s basic assumption that NFO possessed the capability to become a major factor in the business of marketing raw milk.” (Meas. Brief at 32).
Defendants further contended in their measurement brief that Dr. Babb demonstrated that “Nathan’s reliance in his direct testimony in making his projections of NFO’s expected penetration of the 10 Midwest federal milk orders upon assumptions of NFO’s estimated membership among Midwest dairy farmers, its milk marketing experience prior to 1970, its focus upon the Midwest area in milk marketing and its experience in other agricultural commodities, was totally misplaced.”
Id.
at 32-33.
Defendants, of course, contend that the disputed issues of fact created by the testimony of Dr. Nathan and Dr. Babb should be resolved in favor of the defendants.
VII.
Defendants further argued in its measurement brief that NFO, by its election to rely solely on the proposed findings of fact presented at trial, attempts on remand to recover damages which were occasioned by acts of lawful, rather than unlawful competition. Defendants rely on cases such as
MCI Communications v. American Tel. & Tel. Co.,
708 F.2d 1081 (7th Cir.),
cert. denied,
— U.S. -, 104 S.Ct. 234 , 78 L.Ed.2d 226 (1983). Defendants argued that the Court of Appeals directed this Court on remand to consider and weigh the extent to which NFO’s “harm” was attributable to the specific conduct found by it to be illegal, including the circumstances that might be said to be established in regard to Gandy Dairy ( 687 F.2d at 1196 n. 21), Wanzer Dairy
(id.
at 1199 n. 29), threats of suits against handlers which resulted in rejections of NFO milk
(id.
at 1203 n. 35), Beatrice-Fort Worth and Foremost Dairy-Dallas rejection of NFO milk
(id.
at 1210) and how the acquisitions of independent proprietary dairies may. have been part of a scheme to eliminate NFO
(id.
at 1207).
Defendants’ measurement brief directed particular attention to various findings of fact and conclusions of law which the Court of Appeals affirmed. In that regard, defendants stated that the Court of Appeals “upheld this Court’s findings and conclusions that NFO did not prove the offenses of attempt to monopolize and monopolization.
(Id.
at 1191) [and] ... affirmed this Court’s dismissal of NFO’s claims against ARSPC.
(Id.)”
(Meas. Brief at 47). Defendants added that the Court of Appeals also affirmed this Court’s findings “relating to the legality of (1) mergers and acquisitions of independent cooperatives ( 687 F.2d at 1206 ); (2) pool loading
(Id.);
(3) standby pools (ARSPC)
(Id.
at 1206-07); (4) alleged bad faith litigation
(Id.
at 1200); (5) attempts to block NFO’s qualification by the USDA
(Id.
at 1195); and (6) the alleged conspiracy with AMDI
(Id.
at 1199).” (Meas. Brief at 47).
Defendants thus argued that NFO failed to prevail in regard to particular alleged unlawful acts and conduct for the reason the Court of Appeals left undisturbed this Court’s findings of fact and conclusions of
*769
law in regard to the claims made by NFO in regard to “conduct related to (1) full supply contracts (NFO Proposed Fdgs. 592-596, 828, 907-08, 1102, 1661, 1678, 1680, 1688, 1725, 1751, 1775, 1777, 1823, 1835, rejected by this Court, 510 F.Supp. at 462, 469-70, 475, 492-94, 497 ); (2) base plans (NFO Proposed Fdgs. 591, 791-793, 1952, rejected by this Court, 510 F.Supp. at 460, 467, 499 ); (3) CMPC retroactive competitive credits (NFO Proposed Fdgs. 1472-73, rejected by this Court, 510 F.Supp. at 486-87 ; and (4) alleged predatory acts against fourteen specific handlers.”
9
(Footnotes omitted). (Meas. Brief at 48).
Defendants point out that a substantial number of NFO’s proposed findings of fact, resubmitted on remand in exactly the same form as originally submitted at trial, were predicated on the conduct of defendants described in NFO’s proposed trial findings 128-340, 469-2017. See, for example, NFO proposed damage findings of fact, paragraphs 2298-2312, 2323-25, 2331-44, 2355-58, 2360, 2362, 2364, 2366, 2368.
10
The fourth major contention made in defendants’ measurement brief was stated as follows: “Nathan’s damage theories and projections are predicated upon assumptions not supported by the trial record which renders them speculative and inadmissible.” Defendants do not repeat in this part of their brief their earlier discussion of what they earlier described as the “two major assumptions” that they contend NFO and Dr. Nathan relied upon in fashioning and presenting NFO’s damage theories and calculations.
11
Rather, defendants argue that in “addition to his major assumptions related to defendants’ alleged restrictive practices and NFO’s capability, Nathan also relied upon a host of other assumptions in projecting NFO’s expected ‘but for’ performance, all of which were crucial to his damage calculations but were not proved at trial.” (Meas. Brief at 74). Defendants stated that the additional assumptions relied upon by NFO and Dr. Nathan included the following assumptions:
1. That a major milk marketing organization is one with 5% or more of the milk pooled on a particular federal order.
Id.
at 75.
2. That NFO would have entered each of the ten damage orders on the dates assumed by Nathan as given to him by NFO counsel but for the defendants’ as
*770
sumed wrongful acts and practices.
Id.
at 75.
3. That NFO would achieve its projected market shares in equal annual increments within three years of its assumed date of entry in each of the ten damage orders.
12
Id.
at 75.
4. That once NFO attained its projected shares in the ten damage orders, it would thereafter maintain them.
Id.
at 76.
5. That individual federal milk orders are separate economic markets.
13
Id.
at 77.
6. That the ten damage orders are comparable based solely upon the degree of “concentration” in them in 1969, which “concentration” would not vary thereafter.
Id.
at 78.
7. That old Order 68 (Twin Cities) is reasonably comparable to the other nine damage orders so that NFO’s experiences on Order 68 were properly transferable to the other damage orders.
Id.
at 79.
8. That NFO’s net dues receipts were $60.83 — $62.20 per member and its net checkoff fees were three cents per hundredweight.
Id.
at 80.
9. That NFO members regularly paid their NFO membership dues.
Id.
at 84.
10. That no NFO producers located in the ten damage order area marketed their milk on orders outside of that area, that no NFO dairy farmers marketed their milk through other organizations, and that NFO’s membership and milk volume data were accurate.
Id.
at 85.
11. That but for the alleged restrictive acts and practices of the defendants, NFO would have imposed a 2c per cwt. dairy bargaining expense checkoff in January, 1972, and a 6c per cwt. dairy bargaining expense checkoff in early 1976.
Id.
at 87-88.
The major thrust of defendants’ arguments in support of their fourth major contention are based on the general proposition that NFO’s and Nathan’s reliance upon assumptions which are not supported by the record destroys all of NFO’s damage computations.
Defendants’ arguments, of course, are founded on their view that the testimony of defendants’ witnesses, particularly that of Dr. Babb, should be accepted rather than the testimony of NFO’s witnesses, particularly that of Nathan. Defendants, of course, also argue that principles of law stated in cases such as
MCI Communications, supra,
should be applied to the factual circumstances which defendants contend are established by the record in this case.
The fifth and final major contention made in defendants’ measurement brief was stated as follows: “NFO’s damage theories for recovery of alleged lost dues and checkoff fees are speculative and based on guesswork.”
Id.
at 92. The final part of defendants’ brief again attacks NFO’s “market structure” theory on the ground that the average poolings to the ten damage orders “is not a legally permissible damage theory”; that such theory “is predicated solely upon unsupported and speculative assumptions”; that the theory “produces absurd results not to be expected in the real world”; and that such theory is therefore “illegally speculative and conjectural.”
Id.
at 93, 94, 96 and 100.
NFO’s “test market” theory was again attacked on the ground that NFO’s attempt to base that theory on its 1973 performance on Old Order 68 “is not a legally permissible damage theory.” Defendants argue, in general, that experience on a single federal
*771
milk order may not properly be used to determine expected performance on other federal milk orders and defendants further argue, in particular, that Old Order 68 could not be used in any event for the reason that NFO failed to establish that Old Order 68 was reasonably comparable to the other nine damage orders. Defendants further argued that NFO’s 1971-1973 poolings on Old Order 68 were unique to that order and that NFO failed to consider any of its experience on that order after 1973.
Defendants final argument in its measurement brief was based on a comparison of NFO’s performance in the ten damage orders with NFO’s performance on other market orders which NFO entered but where damages are not claimed. Defendants rely on the analysis made by defendants’ witnesses Dr. Babb and George Hansen of NFO’s 1970-1977 experience on every market order that NFO entered during those years. Defendants contend, on the facts, that the Babb-Hansen analysis “shows that NFO did much better in the damage orders in terms of percentages of milk volumes pooled than it did in the other orders during the period 1970 through 1977.”
14
Defendants thus argue that “NFO’s superior performance in the damage orders shows that if predatory practices existed there, they did not impair NFO’s ability to obtain customers and producers” and that “[t]he hypothesis that NFO was injured by predatory practices in the damage orders in failing to obtain dairy farmer members or customers must therefore be rejected.” (Meas. Brief at 134).
NFO’s Reply Causation Brief
NFO’s reply brief, filed in response to defendants’ causation brief, also responded to the portions of defendants’ measurement brief which NFO believed to relate to causation issues. The basic thrust of NFO’s causation reply brief is set forth in the first paragraph of that brief. NFO there stated that, under its view of this case on remand, NFO, as a private antitrust plaintiff, “is required to establish three elements; (1) a violation of the antitrust laws (violation); (2) cognizable injury attributable to the violation (fact of injury); and (3) the approximate amount of the damage (amount of damage).” (NFO’s Causation Reply Brief at 1-2). NFO then argued that the “Eighth Circuit’s August 31, 1982 liability decision conclusively establishes that NFO has already satisfied the first two elements of its three part burden” and that “[o]nly one task remains: a reasonable estimation of NFO’s damages.” (Causation Reply Brief at 2).
In a footnote on page 2 of its causation reply brief NFO makes clear its view of the impact of the Court of Appeals’ directions on remand by stating that “[cjontrary to defendants’ assertion that the ‘threshold factual issue [of] causation is very much alive’, causation was an integral aspect of the Eighth Circuit’s liability decision” and that “[t]hus, Defendants’ 98 page causation brief is just one more futile chapter in their long line of attempts to relitigate issues already conclusively determined by the Eighth Circuit.”
Id.
at 2, n. 4.
Although NFO quoted as a text at the outset of its causation reply brief that portion of the Court of Appeals’ opinion which stated that “the case is remanded for a determination of the amount of damages NFO
may
recover,” (emphasis ours) 687 F.2d at 1179 , it is clear that NFO places much greater reliance upon that portion of the Court of Appeals’ opinion which stated,
*772
on remand, “the district court has rather broad latitude in assessing the amount of damages which NFO
shall
recover,” (emphasis ours) 687 F.2d at 1210 .
NFO cited
Zenith
and
Bigelow
numerous times in its reply causation brief and, indeed, in all of its briefs filed after remand. NFO basically contends that when the Court of Appeals cited those two cases in support of its statement that “the district court has rather broad latitude in assessing the amount of damages which NFO shall recover” that the Court of Appeals made an “explicit holding” that NFO was entitled to recover damages on the basis of the evidence NFO adduced at trial and that the only task that this Court must perform on remand is to make what NFO calls a “reasonable estimation” of NFO’s damages.
NFO argued on pages 6 and 7 of its causation reply brief that “in order to recover on the basis of an estimate of its damages, a plaintiff need only establish ‘some causal connection’ between defendants’ unlawful acts and plaintiffs’ injuries, and this causal relationship ‘may properly be a matter of inference from the circumstances and evidence as a whole.’ ”
15
After properly noting that the Court of Appeals found the “fact of injury” in regard to Wanzer Dairy, the Beatrice cutoff, and Foremost's subsequent rejection of particular shipments, NFO argued on page 12 of its causation reply brief that “[o]nce the ‘fact of injury' is established, an antitrust plaintiff need only show ‘some causal connection’ between the defendants’ violation and the amount of plaintiff’s damages.”
NFO’s causation reply brief argued that the arguments made in defendants’ causation brief were “based solely on a tortured mischaracterization of the Eighth Circuit’s opinion” and that defendants “have misconstrued the Eighth Circuit’s decision.” NFO suggested that it has always “proposed to measure its lost market penetration damages using the general test market/market structure approach” and that the “Eighth Circuit never said that such approach could not be used to measure ‘the extent [NFO’s] losses are reasonably shown to be caused by the antitrust conspiracy.’ ” “To the contrary,” NFO’s reply brief argument continued, “the Eighth Circuit affirmatively
endorsed
NFO’s damage theory by directing this court’s attention to
Zenith, supra
and
Bigelow, supra,
as the cases governing NFO’s damages measurement proof.- ( 687 F.2d at 1210 .)” [Emphasis in the original].
Part V of NFO’s causation reply brief contains 80 pages of discussion under a heading which stated that “NFO’s inability to achieve its projected market penetration was the direct and intended result of defendants’ illegal predation.”
Id.
at 63. Although NFO stated on page 71 of its causation reply brief that it had made a full reply to defendants’ factual contentions in its response to defendants’ proposed findings of fact relating to causation, that brief contains but a lengthy discussion of “added examples of predation.”
NFO’s detailed discussion of what it contends was established by the evidence in the case was made in response to what NFO argued was the defendants’ “final acknowledgement” that defendants have the burden of proof on remand to establish that “NFO’s inability to prosper was
‘solely attributable
’ to causes other than defendants’ illegal conduct” and that because “defendants have fallen far short of proving that NFO’s losses were ‘clearly’ or ‘solely’ attributable to NFO’s alleged ineptitude,” NFO is accordingly entitled to recover all of the damages it has claimed.
Id.
at 64.
16
*773
NFO’s reply brief (page 69) also purported to state the reason why NFO elected to stand on the record made at trial rather than electing to have the record reopened after remand. NFO first stated that the “Eighth Circuit has already found that the fact of NFO’s injury is ‘unmistakable’ and that this injury took the form of lost membership dues and check off fees stemming from market foreclosure. ( 687 F.2d at 1210 )” and that, thus, “the Eighth Circuit has already found the existence of ‘some’ injury,
i.e.,
‘some’ market foreclosure.” NFO then states that the “only question remaining is the extent of that market foreclosure.” NFO flatly stated “[t]hat question is answered by NFO’s damage analyses.”
NFO’s causation reply brief made clear that NFO rests its entire damage case on “NFO’s damage analyses” adduced at trial. The basic theory stated in NFO’s causation reply brief is that the extent that NFO, in fact, lost membership dues and the extent that NFO, in fact, lost check off fees was reasonably shown by the damage analyses adduced at trial.
NFO’s detailed discussion of “defendants’ concerted predation” on the various market orders was focused solely on whether defendants had carried the burden of proof which NFO contends that defendants must carry in order to prevent NFO from recovering all of the damages claimed by it under the “damage analyses” that NFO advanced through Nathan at trial.
NFO’S Measurement Reply Brief
NFO introduced the arguments made in its measurement reply brief with the statement, based as usual on a citation of
Zenith
and
Bigelow ,
that the “essential point that the defendants miss in opposing NFO’s measurement of its lost market penetration damages is that an antitrust plaintiff who has been unlawfully excluded from the market in whole or in part need only prove his damages by a
reasonable
estimate.” (Emphasis in the original).
17
(Measurement Reply Brief at 1-2). NFO concluded the introduction section of that brief with the statement that “the defendants have said nothing that refutes [the] reasonableness [of NFO’s damage measurements.]” (Measurement Reply Brief at 5).
Part II of NFO’s measurement reply brief is captioned “NFO properly relied upon the expertise of economic expert Robert Nathan in measuring its lost market penetration damages.”
(Id.
at 5). NFO conceded, as it must, that “Nathan operated on the basis of assumptions supplied to him by others.”
(Id.
at 7). Specifically, NFO stated that “Dr. Nathan did unquestionably assume that NFO was injured by defendants’ antitrust conspiracy, and that NFO had the capability to become a major milk marketer.”
(Id.
at 10).
NFO argues that the correctness of the first assumption was established by the Court of Appeals’ determination that the “fact of NFO's injury” was established by trial record. In regard to Nathan’s second assumption, NFO argued that “NFO’s capability in dairy — is fully supported in the record, by NFO’s witnesses and, most con
*774
vincingly, by the undeniable fact that, in addition to the test market Order 68, NFO
did
succeed remarkably well in Chicago and the Southwest — until, as specifically found by the Court of Appeals, the defendants decimated the NFO program.” (Footnote omitted). (Emphasis in the original).
18
(Measurement Reply Brief at 10-11).
NFO conceded that Dr. Nathan made “certain judgments” when he formulated “NFO’s market-structure method for measuring damages”
(Id.
at 12). NFO argued that “[t]hese judgments, however, were all reasonable.”
(Id.
at 12). NFO specifically argued that Nathan’s “judgments” were reasonable because “[h]e relied upon Messrs. Hammond and Dahl,” described by NFO as “well respected agricultural marketing analysts,” and that he reasonably used a “rounded-off 5% standard” for determining whether a supplier had crossed the “major” market share threshold.
(Id.
at 13). NFO further argued that the three-year growth period Nathan elected to use, was not “plucked out of thin air; it had an actual empirical basis, i.e., NFO’s experience in old Order 68.”
(Id.
at 13).
NFO implicitly conceded that defendants have what NFO called “the empty, abstract opinion of Mr. Babb” in opposition to NFO's ability to grow as projected by Nathan, but NFO suggests that Babb’s testimony should be totally disregarded because “Mr. Babb’s view is worse than mere speculation because his opinion collides squarely with NFO’s history.” (Measurement Reply Brief at 14-15).
In response to defendants’ arguments that Nathan should have considered various other “economic factors” in his evaluation of NFO’s potential growth, such as NFO’s “ability to attract producers and handlers, experiences in other areas, and the like,” NFO conceded that “Nathan did not examine these ‘economic factors.’ ” NFO argued, however, that such “economic factors” are “in reality only components of NFO’s capacity in dairy” and that Nathan did not need to examine those factors for the reason that he had, properly according to NFO, “assumed that NFO was capable of becoming a major milk marketer.”
19
(Measurement Reply Brief at 18).
As would be anticipated, in the section of NFO’s measurement reply brief devoted to “The Test-Market Method” (p. 26) it is argued that “[t]he selection of old Order 68 as NFO’s test market was proper in all respects” and that the “record evidence on comparability in fact establishes that Order 68 was a valid test market for projecting losses in other damage markets.”
20
(Id.
at 7).
NFO contends that all of defendants’ arguments made in regard to NFO’s test market method wander “from the accepted standard, which is the use of a reasonable basis for estimating damages.”
(Id.
at 34). NFO argued that because “[fjederal orders are regulated and have government-gathered and collated statistics” those federal orders “are thus reliable economic units providing a reasonable basis for estimating NFO’s damages; this is all that is necessary.” (Measurement Reply Brief at 35).
In the “conclusion” portion of its measurement reply brief NFO reiterates the basic argument stated in the first sentence of that brief by stating that what “defendants have most consistently done throughout 238 pages of briefs is to completely ignore both the reasonableness standard
*775
enunciated in the controlling cases of
Zenith
and
Bigelow ,
and the ‘broad latitude,’ as the Eighth Circuit put it, that this Court has ‘in assessing the amount of damages NFO
shall
recover.’ 687 F.2d at 1210 (emphasis added by NFO).” (Measurement Reply Brief at 45). NFO’s brief concluded with the following sentence: “To prevent defendants from profiting from their years of concerted predation, and to compensate NFO and its dairy farmer members for the devastation defendants have wantonly inflicted upon them, NFO prays for damages in the amount of $12,947,034, trebled to $38,841,102, and the undersigned NFO class claimants pray for damages in the amount of $1,075,383, trebled to $3,226,-149.”
{Id.
at 46).
Having covered the arguments made by the parties in their briefs filed in connection with the issues under discussion, we turn now to a more detailed discussion of NFO’s lost market penetration damage computation theories.
NFO’S LOST MARKET — PENETRATION DAMAGE COMPUTATION THEORIES
I.
By way of introduction, it is appropriate to note that in the conclusion portion of its brief in support of its motion for damages NFO directed attention to what the Court of Appeals had to say about the familiar cases of
Eastman Kodak
and
Story Parchment
in
Arthur Murray, Inc. v. Oliver,
364 F.2d 28 (8th Cir.1966). As the record shows, this Court has been frequently reminded of the
Arthur Murray
litigation a number of times during the trial and determination of this case.
This Court’s determination of the defendants’ liability in
Arthur Murray
and the reasons this Court believed that the appointment of a Special Master was necessary in determination of the amount of plaintiffs damages was published in
Reserve Plan, Inc. v. Arthur Murray,
38 F.R.D. 23 (W.D.Mo.1965).
21
After finding the defendants to be liable for antitrust violations and after a detailed review of all pretrial orders entered by both judges and of plaintiffs failure to comply with those pretrial orders, we stated that “[sjince 1961 the two judges who have had the responsibility for seeing that this case be tried have been spectacularly unsuccessful in their efforts to get the plaintiff to prepare and present its case on damages in a manner that can be judicially understood.”
22
The Court of Appeals partially approved the appointment of a Special Master in
Arthur Murray I
but vacated a portion of this Court’s order of reference which would have enabled the Special Master to reopen the record and to review additional available relevant factual data on the issue of the amount of plaintiffs damages which had not been offered in evidence by either side during the trial of the ease.
This Court applied principles established by the Court of Appeals in
Arthur Murray I
when we made repeated and exhaustive inquiry as to whether NFO wished to have the record in this case reopened for the purpose of adducing additional evidence consistent with the Court of Appeals discussion of damages and its statement that further proceedings might be appropriate.
Arthur Murray I
required the consideration by the Court of Appeals of a record which showed that the district court had already made a finding that “the record
*776
contained such evidence of damages as could afford the basis for the rendering of a substantial verdict in plaintiffs favor.”
Arthur Murray, Inc. v. Oliver, supra,
364 F.2d at 30 . The purpose of this Court’s initial order appointing a Special Master was to reopen the record to receive
additional
accounting books and records that its study of the record established were in existence.
The Court of Appeals in
Arthur Murray I
recognized that a trial court has “the general power to reopen a case, either on motion of a party or on its own motion, while the matter is still under advisement, for the receipt of further evidence.”
Id.
at 34 . It concluded, however, that recognition of that power “may not be taken to imply that a court is entitled to engage freehandedly in adding evidence to a record on its own motion” and firmly stated that “it is not the business of a court to make additions of evidence in a submitted case on its own motion other than as there may be some element of such probative importance that its addition will prevent a miscarriage of justice from occurring in the situation.”
23
(Id.
at 34).
The primary lesson taught in
Arthur Murray I
was that a district court must refrain from reopening a case on its own motion in all but highly exceptional cases and that it should not consider doing so except to prevent a miscarriage of justice. Application of that principle in the circumstances of this case requires a finding that NFO must be held to its election to rely on the record made at trial and on the findings of fact which NFO initially proposed on the damage issues discussed in the Court of Appeals’ opinion in this case.
We now turn to a detailed analysis of NFO’s lost market penetration damage computation theories upon which NFO bases its claim that it should recover millions upon millions of dollars from the defendants.
II.
In the conclusion portion of its supporting brief NFO stated that the amount of damages claimed by NFO “represents the average damage amount arising from two reasonable methods of estimating NFO’s lost market penetration damages.” (Brief in Support of Mot. for Damages at 46). The summary of NFO’s damage computations, which was attached to its supporting brief as Appendix A, set forth NFO’s claim that “the total average amount of NFO’s lost-market penetration damages is $12,-947,034, which must be trebled to $38,841,-102.”
Although Part XV of NFO’s original proposed findings of fact, entitled “NFO lost penetration damages,” contained 390 separate proposed findings of fact set forth on 132 legal size pages, the summary contained in Appendix A attached to its supporting brief makes reference to a substantially smaller number of proposed findings of fact upon which NFO presently bases its damage claim. We have carefully reviewed all of NFO’s original 390 proposed findings, compared them with those cited in the Appendix A summary, and conclude that the proposed findings cited in the Appendix A summary set forth NFO’s theories of its alleged lost market penetration damages in sufficient detail to confine our discussion and analysis of NFO’s theories as reflected by the proposed findings of fact contained in NFO’s Appendix A summary.
Appendix A, for example, accurately states that NFO’s alleged lost market penetration damages as claimed under NFO’s test-market (10.5%) method were calculated under NFO proposed findings of fact paragraphs 2299-2312 (NFO P.F. 2299-2312),
24
*777
that its market-share method of damage calculation was made in accordance with NFO P.F. 2331-44, and that the estimated volumes of milk that would have been pooled by NFO and other data are summarized by various NFO exhibits cited in connection with those proposed findings of fact.
We turn now to NFO’s proposed calculations of its alleged market penetration damages.
III.
NFO cited only nine pages of Nathan’s testimony on direct examination (Tr. 9660-69) and NFO Exhibits 1015 and 1019 to support the thirteen proposed findings of fact which set forth NFO’s “test-market (10.5%) method” (NFO P.F. 2299-2312) and its “market-share method” (NFO P.F. 2331-44) under which NFO would have this Court “estimate the volume of milk that NFO would have pooled in the absence of market restraints.” NFO recognized that such a factual finding represents an essential first step in NFO’s proposed calculation of its “lost marketing expense checkoff fees.”
NFO also cited and relied on the six additional paragraphs of its originally proposed findings of fact, NFO P.F. 2264-65, 2286, and 2287 (test-market) and 2273 and 2275 (market-share) to support various paragraphs of the same thirteen proposed findings.
As will be noted later, each of those additionally cited proposed findings of fact, in turn, cited a number of other of NFO’s original proposed findings of fact. The cited pages of Nathan’s testimony reflect no more than Nathan’s description of NFO Exhibits 1015 and 1019.
25
As noted above, paragraphs 2264-65, 2286, and 2287 of NFO’s proposed findings of fact are cited to support NFO’s test-market (10.5%) method. Paragraph 2264 of NFO’s proposed findings of fact would have this Court find as a matter of fact that “[t]he penetration (in terms of volume of milk pooled) achieved by NFO in Federal Milk Market Order 68 in 1973 (10.5%) is an appropriate measure of the minimum penetration which NFO would be expected to have made, with comparable effort, in comparable markets, but for the conduct of the defendants described in P.F. 128-340, 469-2017.”
NFO cited Nathan’s direct testimony on pages 9584-99 and 9629-35 of the transcript to support that key proposed finding of fact. Nathan gave a negative answer to the question “Do you consider yourself an expert in milk marketing, Mr. Nathan”? (Tr. 9629). On page 9584 of the transcript, Nathan made clear that it was “NFO counsel,” rather than he, who had initially proposed the use of the yardstick or test market method of calculating NFO’s damages. And on page 9633 of the transcript, Nathan testified as follows in regard to Order 68, the market order which had been selected as the “test market”:
Q. Where did you get your understanding about the existence of any exclusionary or restrictive practices in Order 68?
A. NFO counsel.
Q. And have you checked that?
A. No, sir.
(Tr. 9633).
In regard to the assumption that must be made in regard to NFO’s efforts to penetrate the various damage markets, Nathan testified as follows:
Q. Is there anything that you must assume about that point, about the effort?
A. Well, certainly you must assume • that either the company did make a
*778
similar or identical effort or reasonably identical effort or it would have but for the restrictive practices.
(Tr. 9591).
The assumption actually made by Nathan in regard to the efforts made by NFO was stated as follows:
Q. Have you made any assumptions about the comparability of NFO’s efforts in markets other than the test market?
A. The only assumption that it did or would have made the same effort had it not been for the constraints. That is an assumption, yes, sir.
(Tr. 9592-93).
Nathan further testified that the “most important” factor which he took into account to justify the assumption of NFO’s capability in the various markets was NFO’s membership in the various damage markets. (Tr. 9594). Pages 9595-99 reflect the fact that NFO was unable- to adduce any credible evidence in regard to NFO’s membership in general and in regard to how many dairy farmers may have actually been active members of NFO at any particular time. Accordingly, those pages of the transcript outlined the method that Nathan used to “analyze” (Tr. 9595) the NFO dairy farmer membership. (Tr. 9595-99). Pages 9629-35 of the transcript of Nathan’s direct testimony was devoted to a general discussion of NFO’s Exhibit Nos. 1014(a), 1015-21, 1024-39, 1040, 1041, and 1225. All of those exhibits, together with a number of other NFO damage exhibits are included in Appendix E attached to NFO’s brief in support of its motion for damages.
26
NFO cites F. 105-6, 2211-2212, 2215-16, 2239, 2260-61, and 2265 to support paragraph 2264 of its proposed findings of fact. This Court has heretofore expressly rejected paragraphs 105 and 106 of NFO’s proposed findings of fact. Those proposed findings of fact will be set out in the next part of this opinion and will be discussed in connection with NFO’s market share theory-
While we believe it is generally true that a “new entrant in a market with an undifferentiated product will generally seek to make sales through price competition” (NFO P.F. 2211) and that “[mjarket entry in a concentrated market with an undifferentiated product will generally be facilitated by the desire of customers to have competing supplies” (NFO P.F. 2212), we do not believe that those general propositions either support NFO P.F. 2264 or NFO’s test market theory.
The other proposed findings cited to support NFO P.F. 2264 (NFO P.F. Nos. 2211-12, 2215-16, 2239, 2260-61 and 2265), with one exception, were based solely on Nathan’s direct testimony in which he described NFO Exhibit Nos. 1014, 1222, and 1223.
The excéption related to citation of other data to support NFO P.F. 2265 which proposed that this Court find that on all the damage market orders (other than Order 68) “NFO either: exerted efforts to penetrate comparable to those it exerted in Order 68; or would have exerted such efforts but for the defendants’ conduct described in F. 128-340, 469-2017.” NFO cited particular pages of testimony given by Staley, Scott, and Berkhahn and “F.
*779
436-43, 1598, 1830, 2276-85” to support that proposed finding of fact.
27
Reference to 510 F.Supp. at 454 establishes that we have heretofore refused to find most of the facts proposed in paragraphs 436-43 of NFO’s proposed findings in the form originally proposed by NFO. Indeed, reference to NFO’s proposed findings and to the findings made by this Court in 510 F.Supp. at 454 shows that NFO relied upon the same testimony from Staley, Scott, and Berkhahn but that this Court either rejected outright or substantially modified all of NFO’s proposed findings.
NFO’s proposed paragraphs 436-443 were under a general heading entitled “NFO Focuses Grade A Dairy Program in Midwest.” We refused to accept the testimony of Staley, Scott, Berkhahn, and Avila cited by NFO to support the following proposed findings:
436. After starting its Grade A milk marketing program in southwest Missouri and Wisconsin, NFO planned to expand that program to cover the heart of the Midwest, where NFO was the strongest. [Rejected]
437. For NFO, the heart of the Midwest included Wisconsin, Minnesota, Iowa, Missouri, Illinois, Kansas and Nebraska. [Rejected]
439. NFO expected to be able to begin marketing throughout the Midwest within about six months from the time it began marketing milk in southwest Missouri and Wisconsin. [Rejected]
442. NFO’s dairy program was focused on the Midwest, i.e., Wisconsin, Minnesota, Iowa, Missouri, Illinois, Kansas and Nebraska. [Rejected]
443. All three assistant directors in the NFO Dairy Department focused their attention on the Midwest through 1971. [Rejected]
We modified NFO’s proposed findings in paragraphs 438, 440, and 441 to read as follows:
438. After starting out in southwest Missouri and Wisconsin,' NFO planned [hoped] to expand its Grade A milk marketing program into Minnesota, Iowa, Illinois, Kansas and Nebraska as soon as it found buyers there.
440. NFO expected [hoped] that its Grade A milk marketing program would spread from southwest Missouri and Wisconsin through the Midwest within about six months because its programs for other commodities had done so.
441. NFO began establishing [established] milk reloads in southwest Missouri and Wisconsin in 1969.
The record in this case, see 510 F.Supp. at 490 , establishes that we refused to accept Berkhahn’s cited testimony as supporting of NFO P.F. 1598, which NFO has cited to support NFO P.F. 2265. NFO P.F. 1598 proposed that we find that “[i]n 1970-1971, any NFO attempt at starting up a dairy program in the Fergus Falls, Minnesota, area was foreclosed by lack of manufacturing outlets.” 510 F.Supp. 496 shows that we did find, in accordance with NFO P.F. 1830, that “[marketing problems in Minnesota, Wisconsin, and elsewhere diverted Berkhahn’s efforts from the Nebraska Order 65 during 1971 through 1975.” That finding of fact, however, can not be said to support NFO P.F. 2265.
NFO P.F. 2286, which merely states the fact that a new Upper Midwest Order 68 was established effective June 1, 1976, is cited as additional support for NFO P.F. 2301 and 2303 which proposed that we find that had old Orders 60 and 61, respectively, continued to exist, NFO would have pooled exactly the same volume of milk in each of the years 1976 through 1982 that it would have pooled on each of those orders in the year 1976. NFO P.F. 2312 cited NFO 2287 to support the same sort of proposed finding in regard to old Order 126 which, together with five other market orders, was merged into new Texas Order 126.
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The figures which reflect the projections adopted by Nathan in his testimony are reflected in NFO Exhibits No. 1015 and 1019 but no evidence other than Nathan’s testimony and the other data discussed above was adduced by NFO to support the reasonableness of that sort of an assumption.
IV.
Appendix A to NFO’s supporting brief identifies NFO P.F. 2331-44 as its proposed findings that purport to establish the validity and reasonableness of its market share method of calculating NFO’s alleged loss of marketing expense checkoff fees. Each of those proposed findings, however, rest solely on NFO Exhibit Nos. 1015 and 1019, Nathan’s description of those exhibits on direct examination, and NFO’s P.F. 2273 and 2275. NFO P.F. 2273 proposed that we find that NFO had the potential, as a new entrant in each damage order to achieve in three years after it entered each such order, the “shares of milk pooled” on each of those market orders that are set forth on NFO Exhibit 1014(a). NFO P.F. 2275 would have this Court find that it took three years from the time NFO entered Order 68 for it to obtain an annual 10.5% of all milk pooled on that market.
As was true in regard to the findings proposed in regard to NFO’s test market theory, NFO cited additional proposed damage findings to support NFO P.F. 2273 and 2275, which, in their turn, had been cited to support the findings proposed in regard to NFO’s market share theory. The additional proposed findings cited to support NFO P.F. 2273 and 2275 were, for the most part, set forth in the section of NFO’s capability to obtain major market shares.
NFO followed the same bootstrap method of citing one proposed damage finding to support another proposed damage finding in regard to the findings proposed to establish the validity and reasonableness of its market structure theory as it did in regard to its test market theory. The pattern of reliance upon Nathan’s description of NFO’s damage exhibits was the same in regard to both of NFO’s theories. As was true in regard to its presentation of its test market theory, NFO did cite a few additional of its proposed findings which had been proposed outside those proposed solely in regard to the damage issues presented. But, as was true in regard to its test market theory, NFO’s reliance upon findings it proposed on the issue of liability have in large part already been rejected by this Court.
For example, NFO P.F. 105 and 106, both of which are secondarily relied upon to support both NFO’s test market theory and its market share theory, were as follows:
105. Most of the milk pooled in each of Federal Orders 30, 60, 61, 62, 64, 65, 68, 73, 106 and 126 comes from farms either within the respective order or in counties contiguous to the order. (NFO Exhs. 1046, 1475-768.)
106. Almost all of the milk pooled in each of Federal Orders 30, 60, 61, 62, 64, 65, 68, 73, 106 and 126 comes from states which are, at least partially, within the geographic area of the respective orders. (NFO Exhs. 1048, 1475-78.)
We concluded after trial, see 510 F.Supp. at 442, that NFO Exhibits 1046, 1475-78 did not support findings of fact proposed in NFO P.F. 105 and 106; that NFO had not adduced any additional credible evidence to support those proposed findings; and that, accordingly, we were required to reject both of those proposed findings.
For further example, it must further be noted that NFO cited and relied on its proposed finding as contained in paragraphs 341-468 to support its key proposed finding contained in NFO P.F. 2271 that “NFO had the capability and experience to become a major firm in Federal Marketing Orders 30, 60, 61, 62, 64, 65, 68, 73,106 and 126.” NFO P.F. 341-468 were contained in Part IV of NFO’s proposed findings of fact which was entitled NFO’s Capability in Dairy.
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Examination of pages 454 to 458 of 510 F.Supp. establishes that while this Court agreed that the greater weight of the credible evidence adduced at trial supported a relatively limited number of the findings of fact in the language proposed by NFO, and that' a substantial number of additional NFO’s proposed findings should be made in a modified form, it is clear that this Court also expressly rejected a large number of the findings of fact proposed by NFO in regard to NFO’s alleged Capability in Dairy.
Because NFO P.F. 2271 proposes that we find that NFO, in fact, “had the capability and experience to become a major firm” in each of the damage market orders, it is of paramount importance to set forth the relevant findings of fact proposed in NFO’s Part IV which we expressly determined were not supported by the greater weight of the credible evidence adduced at trial.
Examination of the findings of fact proposed by NFO in Part IV (pages 62 to 76, inclusive, of NFO’s proposed findings of fact) and review of the findings rejected on pages 454 to 458 of 510 F.Supp. shows that numerous paragraphs proposed in NFO’s Part IV have been already expressly rejected by this Court. The following list of proposed rejected findings fairly reflects this Court’s view of what the greater weight of the credible evidence failed to establish at trial:
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346. Dairy farmers were as interested in joining NFO as were meat and grain farmers. [Rejected]
349. The percentage of all NFO members in an area who are dairy farmers generally corresponds to the percentage of all farmers in that area who are dairy farmers. [Rejected]
380. NFO county organizations helped NFO to negotiate master contracts in milk. [Rejected]
398. Because of the NFO supply contract program, NFO had established truck routes of farmers in the Midwest by 1969. [Rejected]
407. By 1969, NFO had attracted significant dairy farmer membership throughout the Midwest. [Rejected]
421. The distribution systems for milk, grain, cattle, hogs and all other agricultural commodities are substantially the same. [Rejected]
422. NFO’s experience in marketing livestock and grain gave NFO the capacity to be a major factor in the dairy industry. [Rejected]
425. By making sales to high Class I utilization bottlers, NFO, even though it sold milk cheaper than AMPI, Mid-Am and CMPC, could still return as much money as or more than AMPI, Mid-Am and CMPC to dairy farmers. [Rejected]
426. NFO had the capacity to become a major factor in the dairy industry, both in sales to handlers and in providing services to farmers, because of its willingness to sell below prevailing market prices until it had established itself in those markets. [Rejected]
435. Because NFO did not operate bottling plants, it had the capacity to
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become a major factor insofar as sales to bottling plants were concerned. [Rejected]
468. Beginning no later than 1969, NFO has had the capability to become a major milk marketing association in each of Federal Orders 30, 60, 61, 62, 64, 65, 68, 73, 106 and 126. [Rejected]
NFO P.F. 2275, cited to support all of NFO’s market structure proposed findings, in its turn cited NFO P.F. 2263, 2282, and 2298 to support a proposed finding that “[i]t took three years from the time NFO entered Federal Milk Market Order 68 for it to obtain an annual 10.5% share of all the milk pooled on that order.” NFO P.F. 2263 and 2282 cited only NFO Exhibits 1016 and 1225 and Nathan’s testimony which generally described those exhibits to support those two proposed findings.
NFO P.F. 2298, however, cited a number of findings proposed on the issue of liability to support its proposed finding that “NFO either entered (pooled milk) or would have entered each of the below listed Federal Milk Market Orders in the years indicated but for the conduct of the defendants described in F. 128-340, 469-2017.” NFO Exhibits 191 and 1015 and the list included in NFO P.F. 2298 proposed the findings that NFO would have entered Orders 30, 62, 64, 106 and 126 in 1970; that NFO would have entered Orders 60, 61, 68 and 73 in 1971; and that NFO would have entered Order 65 in 1972.
Specifically, NFO cited NFO 846-66 and 878-909 to support NFO P.F. 2298. Those findings were among a large number of findings that NFO proposed in Part V, C, 4 and 5 of its proposed liability findings entitled “NFO’s entry in milk marketing in Missouri” and NFO’s “Response to the Midwest marketing.”
We accepted, modified, and rejected a number of those proposed findings after trial. It is sufficient for present purposes to state that we rejected NFO P.F. 903 which stated that the “conduct of Mid-Am, AMPI, and their co-conspirators, as generally described in F. 874-902, materially contributed to Hiland’s refusal to purchase raw milk from NFO beginning in early 1970.”
NFO also cited NFO P.F. 878-909 to support NFO P.F. 2298. Those findings were initially proposed in Part V, C, 6 of NFO proposed liability findings entitled NFO’s “Attempts to develop other markets for Missouri milk.” The only rejected finding that need be detailed is our rejection of NFO P.F. 908 which stated that “Mid-Am’s known policy of imposing additional charges on partial supply purchasers caused Sealtest — St. Louis to refuse to buy milk from NFO.”
Our treatment of NFO P.F. 1587 and 1588 will illustrate why those proposed liability findings and the other liability findings cannot be said to support the extremely broad finding proposed in NFO P.F. 2298 which proposed that we find that NFO either entered or would have entered each of the ten orders at sometime during the years 1970, 1971, and 1972. NFO P.F. 1587 proposed that we find that “[i]n 1970 or early 1971, there were at least 200 Grade A producers in the Order 61 area interested in marketing their milk production through NFO.” NFO P.F. 1588 proposed that we find “[i]n 1970 or early 1971, there were at least 200 Grade A producers in the Order 60 area interested in marketing their milk production through NFO.”
510 F.Supp. at 490 shows that we modified both those proposed findings by striking the language “at least 200” and by substituting instead the words “a number of” Grade A milk producers in Order 61 and 60 that were interested in marketing their milk through NFO. The modification of NFO’s proposed findings reflected a rejection of the credibility of Berkhahn’s testimony (Tr. 6470-71), allegedly based on his “experience and knowledge of the area” that at least 200 producers might have been interested in marketing through NFO in 1970 or 1971 in those two marketing orders.
That rejection of the number of producers is confirmed by NFO Exhibit 1024, which purported to state the “estimated
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numbers of producers who would have been pooled by NFO 1970-80.” For that exhibit, the validity of which we do not accept, shows that it assumed that in Order 61 NFO in 1971 would pool only 35 producers under NFO’s 10.5% theory and only 49 under its market structure theory. NFO Exhibit 1024 also assumed that in Order 60 in 1971 that NFO would pool 68 producers under its 10.5% theory and 73 under its market structure theory.
We are satisfied by our exhaustive review of the record and careful consideration of the voluminous briefs filed after remand that, in the final analysis, the question of whether NFO may properly be awarded any of its claimed lost market penetration damages turns on the question of whether Nathan’s testimony and the damage exhibits relied on by NFO to support its test market (10.5%) and market share theories may properly be considered as credible relevant evidence upon which a just and reasonable estimate of damage may be based or whether a damage award based in large part on Nathan’s testimony and NFO’s damage exhibits would be based on speculation or guesswork.
We turn to defendants’ arguments in regard to Nathan’s testimony and NFO’s lost market penetration damage exhibits in the next part of this opinion.
CREDIBILITY OF NFO’S LOST MARKET PENETRATION DAMAGE COMPUTATIONS
I.
Defendants have consistently and vigorously objected to and moved to preclude and strike, both at trial and after remand, Nathan’s lost market penetration damage evidence. The grounds upon which defendants have in the past and presently base their efforts to preclude Nathan’s testimony were accurately stated by Mr. Peterson in his oral argument on behalf of the defendants on Issue No. 4, Preclusion of NFO’s Expert Witness. The factual circumstances upon which defendants base their preclusion arguments are accurately set forth in defendants’ joint proposed findings of fact relating to preclusion of NFO’s new damage theories at the trial and to strike Nathan’s trial testimony.
The accurate factual data set forth in those proposed findings of fact were also stated at trial to support defendants’ objections to NFO’s proposed findings of fact 2098-2488 (“lost penetration damages”) as stated on the seven pages immediately preceding defendants’ joint response to paragraph 2098 of NFO’s proposed findings of fact.
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When we initially determined the liability issues in this case we found that it was unnecessary to reach the questions of “(3) whether NFO should be precluded from asserting its claims for damages for various alleged losses because of alleged violations of Pretrial Orders Nos. 10, 11, and 12; and (4) whether, in any event, NFO’s damage evidence was so conjectural and speculative as to be inadmissible.” 510 F.Supp. at 435.
Both those questions are again presented as issues after remand. Consistent with our long held view that cases should be decided on the merits rather than on procedural grounds, we have concluded that our determination of the question of Nathan’s credibility moots the necessity of
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ruling the preclusion question. It is therefore
ORDERED that defendants’ various motions to preclude and to strike the testimony of NFO’s expert witness Nathan should be and are hereby denied as moot.
II.
The question of whether NFO’s lost market penetration damage theories may be said to be based on credible evidence must be viewed in light of NFO’s recognition at trial that Nathan’s testimony was presented as an “economic analysis by an expert economist.” NFO’s Reply to Deft’s Responses to Part XV of NFO’s Prop. Findings of Fact, p. 214. That question must also be decided in light of NFO’s recognition that the testimony and evidence introduced through Nathan which defendants seek to preclude “are the heart of NFO’s damage case.” We thus turn to the ultimate factual question of whether, on the merits, NFO’s lost market penetration damage computation claim as primarily presented by Nathan’s testimony and NFO’s damage exhibits adduced during the course of that testimony can be said to constitute “a just and reasonable estimate of the damage based on relevant evidence” or whether an award based on such evidence would, on the facts, be based “on speculation or guesswork.”
Bigelow, supra,
327 U.S. at 264 , 66 S.Ct. at 579 .
Our detailed examination of NFO’s replies to defendants’ original responses to NFO’s proposed lost market penetration findings of fact put into appropriate focus the respective positions taken by the parties in regard to the factual issues presented by the evidence adduced by both sides in connection with the two methods that NFO has proposed in regard to how NFO’s alleged lost market penetration damages may be calculated.
We noted in an earlier part of our opinion that NFO PF 2264 proposes that we make the key finding, in accordance with Nathan’s cited testimony, that “[t]he penetration (in terms of volume of milk pooled) achieved by NFO in Federal Milk Market Order 68 in 1973 (10.5%) is an appropriate measure of the minimum penetration which NFO would be expected to have made, with comparable effort, in comparable markets, but for the conduct of the defendants described in F. 128-340, 469-2017.” We have also noted that NFO P.F. 2266, again in reliance upon Nathan’s testimony, proposes that we make the key finding of fact that “Federal Milk Market Orders 30, 60, 61, 62, 64, 65, 73, 106 and 126 are comparable to Federal Milk Market Order 68.”
Defendants argue in regard to NFO P.F. 2264, in reliance upon Babb’s testimony, that NFO’s attempted use of Old Order 68 as a test market was neither appropriate nor proper. Defendants also argue, quite independent of Babb’s testimony, that no factual basis was ever established by NFO which would entitle it to use Order 68 as a test market. Defendants pointed out that Nathan had at one time dropped consideration of any test market theory in accordance with instructions he received from NFO’s counsel and argue that Nathan thereafter used Old Order 68 solely because that order had been selected by NFO counsel. NFO, in its turn, attacks the credibility of Babb’s testimony and argues that Nathan’s testimony should be accepted. In regard to NFO P.F. 2266, defendants again rely upon Babb’s testimony to support their factual arguments that the federal orders selected by NFO were not in fact comparable to Old Order 68; that there was no credible evidence to establish comparability; and that it may not properly be assumed that the various individual federal market orders are to be considered as economic markets for the purpose of predicting market penetration. Defendants also argue that no proper foundation had been established for Nathan’s testimony in that regard.
Acceptance of NFO’s test market theory would require that this Court make the factual findings as proposed in NFO’s P.F. 2275 and 2276. NFO P.F. 2275, based primarily on N

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2141587. Public record. Not legal advice.