Petition — M. C. Manufacturing Co. v. Texas Foundries, Inc.

MICHAEL RODAK, V. CLERK }

In the Supreme Court

of the

United States

OCTOBER TERM, 1975

M. C. MANUFACTURING CO., INC., and

UNIVERSAL AUTOMATIC MACHINE CO., INC.,

Petitioners,

VS.

TEXAS FOUNDRIES, INC., and H/R PRODUCTS, INC.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

JIM AMMERMAN

P. O. Box 299

Marshall, Texas 75670

JACK N. PRICE

306 East 11th, Suite L-7

Austin, Texas 78701

ATTORNEYS FOR PETITIONERS.

Langley’s, 2213 E. Austin, F. O. Box 278, Marshali, Texas 75670, 214/938-6002

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JJ. I I. 6.665. ds cicodesssventacses 2

The Robinson-Patman Questioůorurk 3

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Statement of the PP Tee ee eee Pee rer 5

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The Robinson-Patman Quest io 18

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Appendix

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Judgment Dated August 21, 1975.................. App. 12

Opinion of Novmeber 12, 1975.................... App. 13

TABLE OF CASES

American Can Company v. Bruce’s Juices, 187 F. 2d 919

(5th Cir. 1951) modified 190 F. 2d 73, 74...........

Cherokee Laboratories v. Rotary Drilling Services,

383 F. 2d 97 (Sth Cir. 1967) cert. den. 390 U.S. 904...

Hobart Brothers Co. v. Malcolm T. Gilliland, Inc.,

471 F. 2d 894 (5th Cir. 1973) cert. den. 412 U.S. 923...

Lehrman v. Gulf, 464 F. 2d 26 (Sth Cir. 1974) cert. den.

es err er ere re eT eee eee

Terrell v. Household Goods Carriers Bureau,

404 F. 2d 16 (Sth Cir. 1974)... 1.1... ccc .

U. S. v. Shotwell Mfg. Co., 78 S. Ct.

nn

Wall Products Co. v. National Gypsum Co.,

RI Fe nr ee ae

Youngstown Sheet & Tube Co. v. Lucey Products Co.,

430 F. 2d 135 ay r

6

NO :

In the Supreme Court

of the United States

October Term, 1975

M. C. MANUFACTURING CO., IN., and

UNIVERSAL AUTOMATIC MACHINE CO., INC.,

Petitioners.

VS.

TEXAS FOUNDRIES, NC., and H/R PRODUCTS, INC.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Petitioners, M. C. Manufacturing Co., Inc., and Universal

Automatic Machine Co., Inc., (hereinafter collectively referred to

as Universal“) respectfully pray that a writ of certiorari issue to

review the judgment of the United States Court of Appeals for

the Fifth Circuit entered in this proceeding on August 21, 1975.

OPINIONS BELOW

The opinion of the Court of Appeals is reported in 517

F. 2d 1059. No opinion was rendered by the district court.

2

JURISDICTION

The judgment of the Court of Appeals was entered on

August 21, 1975. A timely motion for rehearing was denied on

November 12, 1975, and this petition is filed within ninety days

of that date. This court's jurisdiction is invoked under 28 U.S.C.

Sec. 1254 (1).

QUESTIONS PRESENTED

Two questions are presented by this petition. One involves

the Sherman Act, and the other involves the Robinson-Patman

Act.

The Sherman Act Question

The Court of Appeals held that petitioners-plaintiffs,

Universal, had failed to prove fact“ of injury resulting from a

Sherman Act Section 1 violation. The proof showed that as a

result of a forbidden conspiracy, Universal's chief supplier,

respondent-defendant Texas Foundries, loc., extended a lower

price quotation to petitioners-plaintiffs’ competitor, respondent-

defendant H /R Products, Inc., which enabled H /R to become

successful bidder for a government contract to produce type

„G“ lifting plugs. The Court of Appeals concluded (1) that the

price granted H/R by Texas Foundries couid not be utilized by

Universal in proving fact“ of injury, i.e., in establishing that

Universal could have secured the award, and (2) the evidence

revealed that a third company, i.e., Land-Air, I.., was second

low bidder and would have secured the award in the absence of

the conspiratorially low price. The first question, therefore,

consists of two parts:

1. Did the Court of Appeals for the Fifth Circuit

correctly conclude that Universal failed to

establish fact“ of injury where,

(a) the evidence shows that by utilization of the

same price extended by Texas Foundries

3

to H/R, Universal would have been the low

bidder? and,

(b) the evidence reveals facts upon which the

jury could justifiably conclude that the

second low bidder, Land-Air, Inc., was not

eligible for and would not have received the

award even in the absence of the H/R bid?

Robinson-Patman Act Question

With respect to the Robinson-Patman Act claim, the proof

shows that on November 12, 1971, Universal entered a purchase-

order contract with Texas Foundries for rough-cast plugs at a

price of 32.5-cents each, F.0.B. Texas Foundries Plant (Lufkin,

Texas). On November 18, 1971, Texas Foundries quoted 32.5-

cents per casting price F. O. B. Texas Foundries plant, in response

to Universal's request for quotation upon which to base a bid for

Government Contract No. DAAA-09-72-0208. Texas Foundries

represented that this was the lowest price it could or would

extend, but on November 29, 1971 (according to the finding

of the jury) Texas Foundries quoted a price of 31¢ per casting

F. O. B. South Bend, Indiana (H /R's place of business) to H /R. As

a result of these discriminatory quotations, Universal did not

receive the award of Government Contract DAAA-09-72-C-0208,

and therefore,, obviously, did not purchase rough castings from

Texas Foundries with which to fulfill such contract. However,

Universal (pursuant to the November 12, 1971 purchase order)

and H/R (pursuant to its November 29, 1971 agreement) both

purchased the same item (the rough cast plugs) from Texas

Foundries, at different prices and upon different freight terms,

during the same period of time. Despite this, the lower court

held that Universal failed to prove that the discriminatory

purchases were ‘in competition” and therefore no violation of

Robinson-Patman was demonstrated. Accordingly, the Robinson-

Patman Act question is:

2. Is a Robinson-Patman Act violation established,

prima facie, when the proof shows that

4

competiting bidders for the same Government

awards are being sold the same item, at discrimi-

natory prices, during the same period of time,

albeit for two different contract awards, where one

of the bidders is prevented from securing one of

the contract awards because of the discrimatory

pricing?

STATUTES INVOLVED

The statutory provisions involved are Section 1 of the

Sherman Act (Title 15 U.S.C. Sec. 1), Section 2(a) and (f)

of the Robinson-Patman Amendment to the Clayton Act, (Title

15 U.S.C. Sec. 14 (a) and (f) ) and Section 4 of the Clayton Act

(Title 15 U.S.C. Sec. 15) which provide, in pertinent part:

Sherman Act Section 1:

“Every contract, combination in the form of trust

or otherwise, or conspiracy, in restraint of trade or

commerce among the several states, or with foreign

nations is hereby declared to be illegal!

Robinson-Patman Act Section 2(a):

“It shall be unlawful for any person engaged in

commerce in the course of such commerce, either

directiy or indirectly, to discriminate in price between

purchasers, ...”.

Clayton Act Section 4:

That any person who shall be injured in his business

or property by reason of anything forbidden in the

antitrust laws may sue therefor in any district court of

the United States.

5

STATEMENT OF THE CASE

The facts of the case are summarized, in general fashion,

in the initial portion of the opinion of the Fifth Circuit Court of

Appeals. Additional facts are noted in the sections of the

opinion relating to the ‘Sherman Act Claim“ and the “‘Robinson-

Patmar Claim”. Those facts are accurate, except to the extent

specifically challenged in this application. (An “in-depth”

analysis of the facts is contained in Appellee’s Brief filed in the

Fifth Circuit Court of Appeals, to which reference may be had if

necessary). With this qualification, the statement of the case by

the lower court is adopted.

REASONS FOR GRANTING THE WRIT

Sherman Act Questio.

The opinion of the Fifth Circuit Court of Appeals

recognizes that the jury was justified in finding a violation of

Section 1 of the Sherman Act. The opinion states:

“If plaintiffs’ theory of the case and version of the

evidence were accepted by the jury, as they may have

been, then a Sherman Act violation has been

established.”

However, the opinion holds that the “fact” of injury has

not been established because plaintifts failed to establish

that in the absence of the defendant's discriminatory pricing

scheme Universal would have received this contract

The Court of Appeals correctly notes that the bid of

Universal on contract DAAA-09-72-C-0208 was the third iow bid

submitted, the first being that of the defendant H/R and the

second being that of Land-Air, Inc. Universal demonstrated,

using the same profit and cost factors employed in submitting

its bid, that had it received the same price as was extended to

H/R it would have been the successful bidder, i.e., its bid would

have been substantially lower than that of H/R.' This would

have made Universal the low bidder, since the record shows that

the only other company to obtain a price quotation from Texas

Foundries for this contract was Deco-Grand, whose bid was not

in contention (and who, therefore, would not benefit from the

8 e bid revision).

The Fifth Circuit Court holds that this conspiratorially

iow” price extended to H/R must be disregarded in determining

the “fact” of injury, i.e., whether Universal would have been the

successful bidder. This is a novel proposition, without precedent.

it is contrary to concepts engrained in antitrust laws.

Comparable assumptions have long been sanctioned in proof of

the extent of damages. For example, Wa// Products Co. v.

National Gypsum Co.,357 F. Supp. 832, allowed plaintiffs to

recover the difference in the price actually paid for wallboard,

and the price which it was assumed Plaintiffs would have been

paid absent the conspiracy. Cherokee Laboratories v. Rotary

Drilling Services, 383 F. 2d 97 (Sth Cir. 1967) cert. den.

390 U.S. 904 sanctioned the assumption by plaintiff of

defendant's sales figures in making a damage projection (of

lost profits). Lehrman v. Gulf, 464 F. 2d 26 (Sth Cir. 1974)

cert. den. 409 U.S. 1077, and Terre// v. Household Goods

Carriers Bureau, 494 F. 2d 16 (Sth Cir. 1974) upheld

assumptions of projected sales figures based on opinion (expert

and non-expert) evidence, and Hobart Brothers Co. vs. Malcolm

T. Gilliland, Inc., 471 F. 2d 894 (5th Cir. 1973) cert. den.

412 U.S. 923, holds that damage proof can be based on

assumptions if the assumptions rest on an evidentiary base.

Obviously, therefore, Universal could assume the lower sales

price for the purpose of proving extent of damages. What

logic is there, therefore, in denying its use to prove fact of

damages?

Reasoning further, it is obvious that the “conspiratorially

1

Mr Merle Childress testified thet had the lower price extended H/R been

wanted to Universal. Universal's Did would have Deen submitted on this dess.

with profit and other cost factors the same

7

low” price is a fact that is an integral part of the proof of the

conspiracy and an overt action pursuant to the conspiracy. Why

then, must it be ignored when determining “fact” of damage?

The illogic of the proposition is compound.

Furthermore, the role of the Land-Air bid was not properly

examined by the lower court, which held: it is crystal clear

that Land-Air was a viable bidder and that, even after dis-

regarding H /R's low bid because of the special conspiratorially

low price it received from Texas Foundries, Land-Air’s bid

stood between Universal and the opportunity to acquire this

contract.” The evidence is to the contrary for, even accepting

the Court of Appeals’ position that the “conspiratorially low”

price must be ignored in ascertaining fact“ of damage, the

jury was justified in finding that Universal would have received

the award, and that Land-Air was not eligible for and would

not have received it. Though it is adequately shown by the

record, an affidavit obtained from a Land-Air executive and

submitted to the Court of Appeals in connection with the

petitioners-pilaintiffs’ motion for rehearing lays to rest any

question on the point.

These propositions will be discussed separately, with the

latter proposition being discussed first.

1. Land-Air was not a viable bidder and did not stand

between Universal and the opportunity to acquire

the contract.

Bids on the contract in question were opened on

December 3, 1971. App. 456. The contract award was signed on

December 30, 1971. P. Ex. 46, App. 1397, et. seq. The pre-

award surveys were heid, as they are customarily held, within the

period from the date of the bid opening to the date of the

contract award. App. 211. The purpose of the pre-award survey

is succinctly stated in the testimony of Mr. Childress (App. 207):

Q. Now, what does the term if you are familiar it

(sic) in connection with your dealings with the govern-

ment or APSA called a ‘pre-award survey’?

“A. Upon notification that your company is either

low bidder or within the realm of competitive prices,

among the low bidders, then the government performs

what they call a pre-award survey on usually the three

low bidders. That is for the purpose of establishing

qualifications of each company to ascertain the fact

that they can perform if the government awards them

the contract, at this pre-award survey where they delve

into all aspects of your business

The record reveals that there is a misconception anc a mis-

statement in the following quotation critical to the lower court's

opinion relating to the pre-award survey and Land- Air's status as

a ‘viable bidder”:

“While it is true that Land-Air’s bid was initially

classified as nonresponsive and consequently Land-Air

did not receive a pre-award survey, a memo from the

APSA contracts specialist in charge of contraci

DAAA-09-72-C-0208 negotiations introduced at trial

reveals that an amendment was received from Land-Air

on December 1, which negated the previous non-

responsive action considered, and led to reinstatement

of Land-Air’s bid prior to award. It is crystal clear that

Land-Air was a viable bidder and that, even after dis-

regarding N / R's low bid because of the special, con-

spriatorially low price it received from Texas

Foundries, Land- Air's bid stood between Universal and

the opportunity to acquire this contract.”

Land-Air’s failure to receive a pre-award survey was not a

consequence of the initial classification of Land- Air's bid as non-

responsive, though it is true that Land-Air’s amendment caused a

change in the previous classification, and was in time for the bid

opening December 3, 1971. App. 1394. P. Ex. 43. The amend-

ment was inadvertently misdirected and placed with the no

bid’ responses, but this was corrected and the Bid Opening

Officer and Recorder were notified of the error on December 17,

1971, and corrective action was taken. App. 1394. This was

well within the pre-award survey ohase, as is evidenced by the

fact that the pre-award survey of Universal Automatic Machine

Company, Inc., was not made until December 16, 1971. P. Ex.

45, App. 1396.

Therefore, a pre-award survey could have been made prior

to the bid awara had Land-Air been considered for the award.

But the record conclusively demonstrates that Land- Air received

no pre-award survey and was not in position to be considered for

the award, and therefore was not a “viable bidder”.

H/R, Universal, and AMS Manufacturing, Inc. of Amity-

ville, N. V., were all subjected to pre-award surveys. AMS

submitted the fourth low bid. P. Ex. 43, App. 1391. Govern-

ment regulations require a pre-award survey to determine

whether a bidder is “responsible” (to be distinguished from

“responsive’’) and entitied to an award. Witness the following

excerpts from the testimony of Anthony Costa, Supervisor

Contracts Speicalist, Procurement Division, United States Army

Ammunitions Command, Joliet, Illinois: (App. 397-399)

Q. What constitutes the evaluation phase? What

specific activities and various distinct categories make

up a part of the evaluation phase?

“A. The first thing that would be considered is to

review the bid packages of those within the zone of

consideration of an award to verify that they are all

responsive.

Q. What establishes the criteria for the zone of

consideration?

“A. Well, if one award is made - - it depends on the

bid process. The one award is made and maybe ten

bids submitted, and the first four maybe are close.

“Then the balance on the remaining six, see, the prices

are entirely out of line, then you would concentrate

10

on the first four on this particular example lm giving.

Q. Yes sir. You would select from all the bids those

that appear to be more nearly competitive with each

other as to price?

“A. Yes. You would include all bids in the evaluation

but would concentrate on the low. You would check

all the packages to see that they are all responsive to

the invitation..

Q. You probably have had occasion where bidders

simply did not meet some specification in the in-

vitation to bid and, therefore, would have to be

eliminated?

“A. Yes. If a bidder is non-responsive, he can be

eliminated.

Q. Let me go on the record and ask you about this

particular lift plug bid that we have identified and

whether it had any restriction on it concerning the

type of prime contractor that would have to ve

selected by you folks?

“A. Yes. This solicitation, the one you asked about - -

Do you want me to repeat the number?

Q. No, sir.

“A. It was a one hundred percent small business set-

aside.

Q. Could you tell us what that means?

A. It was restricted to small business firms.

Q. What is the next step, sir, in this part of the

11

evaluation phase?

“A. The next step would be to request a pre-award

survey on that firm or firms that you feel would have

to be termed as responsible producers.

Q. What is a ‘pre-award survey’? How would you

define that for us?

“A. | think the name in itself indicates what it is. Do

you want a better or different answer?

Q. Let me ask you this: Your rules and regulations

require that a pre-award survey team be constituted to

evaluate a certain number of bidders in a given con-

tract to determine whether or not they are responsible

bidders? 8

“A. Yes, sir.” (Emphasis supplied)

There is one instance in which a bidder can be determined to

be “responsible” without a pre-award survey: (App. 410)

Q. Do your regulations require a pre-award survey

for any prime contractor under consideration to be

awarded a bid?

“A. No.

Q. In what instance would it not be?

“A. Well, if we have records here to justify that that

responsive bidder is responsible, we can make that

decision with a Contract Officer’s determination.

Q. But in the instance we are talking about there was

@ pre-award survey on H/R and Universal and Amity-

ville, New York.

12

“A. That’s what the records show here.” (Emphasis

supplied)

This testimony in itself supports the conclusion that the jury

reached, (i.e., that Universal would have received the award),

since there was never a determination of any sort that Land-Air

was a responsible bidder. But there is more support in the

record.

First, one of the reasons for making the responsible“

determination is pertinent: (App. 419)

“Q. Do you require your potential prime contractors

to advise you in this lift plug situation of their in-

tended source of supply of raw castings?

“A. You mean prior to award?

Q. Yes, sir.

A. This is required in the pre-award survey.

Q. Why is it required?

‘A. Well, to assure he would be a responsible prime

contractor; and to be a responsible prime contractor

he has to show who he will get his supplies from.”

This was never done with respect to Land- Air.

Next, the testimony elaborates on the basis for making

a “responsible” determination without a pre-award survey:

(App. 428-430)

“CROSS EXAMINATION BY MR. HATHAWAY:

„Q. Now, can you give me the status of those four

bidders after evaluation with reference to their relative

13

positions?

“A. Do you want them in order, sir?

Q. As to who they were, yes, sir. in other words

H/R must have been first; they got the contract?

“A. Yes.

“Q. Can we get the price now? | want to know who

numbers two, three and four were after evaluation.

“A. The evaluated bid price for H/R is .47362, and

the evaluated bid price for Universal is .49107. is that

all you want?

Q. No. | want three and four. Who is that?

“A. The second one was Land- Air which was .48678.

The third lowest was Universal Automatic Machine and

| gave you that figure. The fourth lowest was AMS

Manufacturing Incorporated, .517482.

“Q. If H/R Products had not bid that contract, or if

for some reason they had indicated after opening for

the bids that they could not perform and preferred

not to perform, then who would have gotten the

contract? Would it have been Land-Air?

“A. After opening bid, if they didn’t want to perform,

then they would have to go through regulatory pro-

cedures to withdraw their bid.

“Q. There is a regulatory procedure for this?

“A. Yes.

Q. And if it had not taken place and Land-Air had

14

“A. (interrupting) They would be the next lowest

responsive. / don’t know if they were responsible or

not, but if they had the pre-award and passed they

would be next in line. 3

“Q. We don’t know if you had a 1524 on Land-Air

did we?

“A. I didn’t see it.

“Q. You didn’t?

“A. No. There’s reasons. Maybe they were making

the item at the time. | don’t know. it could have been

determined as 3 responsible procedure.

“Q. Let me request at this point if upon signing this

deposition if a Form 1524 can be found on Land- Air,

would you then attach that as Defendant H/R Exhibit?

“A. Yes.

‘Q. If one is found?

“A. Yes.”

No. “1524”, i.e., pre-award survey form, relating to Land-Air

was ever found or attached, and it is obvious that no pre-award

survey of Land-Air was ever made. Thus, under Costa’s testi-

mony, Land- Air could not have been next in line’, with no pre-

award survey, unless determined by a contract officer to be

The record even conclusively demonstrates that Land-Air

could not have been considered “responsible” without a pre-

award survey. As noted in the lower court's opinion, Universal

received the only government contract let in 1970. This contract

15

was awarded on June 16, 1970, and, with additions, was still

being performed when the contract in question was let in

December, 1971. Thus, it is obvious that Land-Air was not

“making the item at the time“. No basis existed for determining

Land-Air to be responsible. There is not even the slightest hint

in the record or in any of the papers relating to the award of the

contract in question that Land- Air fell into any category that

could be considered responsible without a pre award survey.

Even H/R, which has previously furnished more Type G lifting

plugs to the government than any other known company, and

Universal, which was in the process of satisfying the existing

contract with the government, were required to have pre-award

surveys. Furthermore, the contract in question had a 50-percent

option provision. Since Land-Air’s bid was very close to H/R’s,

if Land-Air had been a viable bidder, a survey would have been

made to determine if Land-Air was eligible for one-half of the

award. ’

It is therefore apparent that Land- Ar was not the subject

of a pre-award survey and was not considered for the bid award.

The reason for this may not be clear in the record, though the

jury could certainly conclude from the evidence that Land-Air

was not “responsible”. However, because of the lower court's

opinion, an affidavit of the Chairman of the Board and Chief

Executive Officer of Land-Air was obtained, which explains why

Land-Air was not considered (and why Land-Air was obviously

determined not to be responsible). it is here reproduced:

THE STATE OF TEXAS

COUNTY OF TARRANT

KNOW ALL PERSONS BY THESE PRESENTS:

BEFORE ME, the undersigned authority, on this day per-

sonally appeared PAT RUTHERFORD, who, being by me first

duly sworn upon his oath states that he is over the age of 18

years and in no way incapacitated to make this Affidavit, and

that the following facts are true and correct:

My name is PAT RUTHERFORD. | wes the Chairman of

16

the Board and Chief Executive Officer of Land- Air, Inc., and |

am presently living in Honolulu, Hawaii. | am personally familiar

with the facts concerning a government contract for Type 8“

Lifting Plugs, which was awarded in late 1971 or early 1972 by

the Ammunition Procurement Supply Agency, APSA, then

located at Joliet, Illinois. | believe the government contract on

this procurement was numbered DAAA-09-72-C-0208 and it is

my recollection that the bids were opened on or about December

3, 1971. had determined that after the bids were opened the

second lowest bid was submitted by my Company, Land-Air,

Inc. Although we were at first determined to have filed a non-

responsive bid, we amended our original bid which was received

by the government on or about December 1, 1971, which re-

instated our bid prior to the award. In connection with our bid

on this matter and | believe that the records will show that our

bid was .48678 ( per plug, we determined from our principal

supplier, Link-Belt of Indianapolis, Indiana that they were unable

to supply us the unfinished plug castings or rough castings as

they could not produce them sufficiently early enough to

comply with the government contract in issue. Accordingly, |

informed the government officials at APSA, Joliet, Illinois that

my Company did not have a supply source for the unfinished

plug castings and that my Company, Land-Air, Inc., was,

therefore, withdrawing its bid and we did so. My company never

received a pre-award survey on this particular contract because

our bid had been withdrawn and | understood government pro-

curement regulations to require such a pre-award survey before

any award as a prerequisite to obtaining all or part of the govern-

ment contract in issue. 0

We have supplied these finished Type 8“ Lifting P.

on government contracts or APSA before the fall of 1971, but

we had completed our last order about a year before or sometime

in 1970 and had been out of production for substantially a year

at the time we submitted the bid referred to hereinabove.

/s/ PAT RUTHERFORD

Thus, the affidavit reveals that Land-Air removed itself from

17

consideration for the award because it was informed by its

supplier, Link- Belt, that Link- Beit could not supply the necessary

raw castings. Referring again to Costa's testimony, this is the

prime consideration in determining whether a contractor is

responsible This makes abundantly clear the fact that Land-

Air was not in contention for the contract in question.

The affidavit is “outside the record“, but the record

supports the obvious jury finding that Land-Air, without a pre-

award survey or contract officer's determination that it was a

responsible bidder, was not considered responsible and was not

eligible for the award.

If petitioners are wrong, in this, it is submitted that bringing

an incontrovertible fact to the attention of the court by affidavit

is proper where the lower court’s opinion is based upon an

erroneous conclusion with respect to that fact and the entire

disposition of the cause hangs in the balance. it is within the

province of this court to reverse and remand for further develop-

ment of the facts, where the integrity of the judicial process so

demands. U.S. „ Shotwell Mfg. Co., 78 S. Ct. 245, 355 U. S.

233, 2 L. Ed. 234; Youngstown Sheet & Tube Co. v. Lucey

Products Co., 403 F. 2d 135 (5th Cir. 1968). The latter case

holds that although, generally, failure to put on all proof nec-

essary for a judgment is fatal error, there are occasions when

innocent, and justifiably unknowing litigants are entitled to a

remand to insure that substantial justice be done. This is cer-

tainly such a case, for how could plaintiffs know that the Court

would deny the use of the lower price to prove fact of damage,

or that Land-Air would be called a viable bidder when the bid

record indicated otherwise? Obviously, therefore, if the Court

concludes that the record does not justify the jury's finding,

justice requires that the case be rernanded.

2. Respondents’ recaiculations of the bid based upon

the lower price extended H/R by Texas Foundries

cannot be disregarded.

The Court of Appeals opinion concludes that the

recaiculation of the bid based upon the lower price extended by

18

Texas Foundries to H/R cannot be considered for the purpose of

determining whether Universal would have been low bidder in

the absence of the discriminating pricing scheme. This con-

clusion is based on the reasoning that the Sherman Act is

designed to facilitate competition and eliminate anticompetitive

acts, and that application of this basic principle requires that the

lower price extended to H /R be disregarded. This conclusion is

novel, and apparently of first impression, but it is without

authority or reason.

Facilitation of competition generally promotes lower prices

and more efficient business administration. It is more reasonable

to conclude, as the jury was free to do, that since Texas Found-

ries had the ability to extend the lower price to one competitor,

it should have extended the same price to all to whom it issued

price quotations. Had it done so, the record shows that Universal

could and would have submitted a lower bid than H/R, and

would have obtained the award.

The lower price has to be treated as a fact. It was granted

by Texas Foundries to H/R. it was a part of the basis for the

jury's finding of the conspiracy, and constituted an overt act

pursuant to the conspiracy. Obviously, it could be considered

in measuring the extent of damages. (Support for this prop-

position is found in the cases cited in the initial discussion of

REASONS FOR GRANTING THE WRIT, Supra. Certainly,

therefore, there is no reason to deny use of the fact (of the lower

price) to prove fact“ of damage, i.e., to prove that Universal

would have secured the award had it secured the same price.

The Robinson-Patman Question

With regard to the Robinson-Patman claim, the Court re-

cognizes that H/R and Universal purchased from Texas Foundries

“contemporaneously”, i.e., within the same time-frame, but

holds that “plaintiffs have failed to prove that the purchases were

made in competition“ . The Court reached this conclusion

because of its reasoning that the government selection under

both the 1970 contract and the December, 1971 contract of a

single producer for each precluded the possibility of competition

between these suppliers as a matter of law”. The Court cate

gorized the seperate contracts as “separate, distinct market (a)

open only to a single producer”.

The latter proposition clearly is not true, for the pre-ewerd

survey contained a request that the survey cover a 50-percent

option of the quantity awarded. Therefore, H/R and Universal

were in competition for either one-half or 100-percent of the

quantity awarded, and could have wound up selling to the same

customer (the government) under the same contract. Further-

more, the fact that H/R was ultimately awarded 100-percent of

the contract quantity does not keep H/R and Universal from

being “competitive purchasers” as required by the act. This

proposition is established by American Can Company vs. Bruce’s

Juices, 187 F. 2d 919 (Sth Cir. 1951) modified 190 F. 2d 73, 74.

There it was established that American Can extended arbitrary

and discriminatory terms to Bruce’s Juices on a item known as

the 3.12 Iscan” (d can used as a container for citrus juices sold

in competition with bottled drinks). This prevented Bruce's

Juices from buying any of the 3.12 Iscans, as pointed out by the

Court at page 923:

“The fact that it was denied the benefit of the lower

price on the 3.12 Iscan in the above manner made it

financially impossible for Plaintiff to purchase that

particular lacan along with its competitors.”

This Court then held, however, that the failure of the

plaintiff to purchase the 3.12 Iscan did not deny the Plaintiff

the status of a competing purchaser under the act, stating at page

924:

“| Moreover, Plaintiff was not bound to purchase the

3.12 lecan upon such terms in order to attain the

status of a competing purchaser under the act, as its

failure to do so was directly attributable to Defen-

dant’s own discriminatory pricing.”

By the same token Universal's failure to purchase either .

APPENDIX

Appendix - 1

ips ps LE

2 2 78825

1 Ne 15 2 5 23

ita HE IE

N. C. MFG. co. INC. v. TEXAS FOUNDRIES, INC.

Robinson-Patman legality of price

Trade Reguiation—914

chase that contempiste contemporeneous

delivery must be evelusted as of dates

discriminatory the respective contracts were made.

Clayton Act, s 2, f) as amended by

Robinson-Patman Price Discrimination

Act, 15 U.S.C.A. 130, f).

Patmen Price Discrimination Act, 15

U.S.C.A. 13. f).

Act,

a

; and that discrimination between contracts to pur-

to present jury

claim

held that plaintiff which feiled to

prove that in the absence of defendants

discriminatory pricing scheme it would

tract in question fed to present jury

1 121325

Hoa foie

nat i

eH op

ae UY

Judge

ion

To constitute s Robinson-Petmen

U.S.C.A. 6 13{a, f).

that Act, 6 2, f) es amended by

ceused injury Patmen Price i

adduce evidence thet

. damage which resulted.

‘Stones Act, 6 1,15 US.

z!

7730 8

—

PUBLISHING CO.

Creasifi-

ef the court

Hi

Appendix 2

7416 M. C. AFG. co.. INC. v. TEXAS FOUNDRIES, INC.

7417

9. Trade Reguistion—913

Even if sales at different prices are

contemporaneous, involve goods of like

grade end quality, price distinction is not

justified by good business cause end it

causes injury to the disadventaged pur-

chaser, recovery under Robinson-Patman

Act is precluded absent proof thet price

veriance detrimentally effected competi-

tion. Clayton Act, s 2(a, f) as amended

by Robinson-Patmen Price Discrimine-

tion Act, 15 U.S.C.A. 6 13a, f).

10. Trade Regulstion— 913,932

Competition between buyers at dis-

perete prices is essential to a violation of

Robinson-Patman Act and existence of

this requisite is normally a fact question

to be determined by making e realistic

appraisal of eli relevent fects. Clayton

Act, 8 2(a, f) as amended by Roabinson-

Patman Price Discrimination Act, 15

U.S.C.A. 6 13 (a, f).

11. Trade Regulstion—913

Purchases were not made “in com-

petition” as required in order to establish

Robinson-Patmaen Act Discriminstory

pricing daim, where plaintiff contrac-

tor s purchases of lifting plugs could

only be sccepted by government in ful -

fillment of 1970 contract while defend-

ant contractor's purchases similarity could

be used only on 1971 contract and, re-

gerdiess of subsequen( discrepency in

price to these suppliers, by defendant

seller, government had to purchase from

each, and only from eech, the specified

number of plugs st agreed price under

respective contracts. Clayton Act, s 20,

f) as amended by Robinson-Patman Price

Discrimination Act,15 U.S. C. A : 130,

f).

12. Trade Reguletion—913

injury to s competitior is not test

for Robinson-Patmen violation; test is

injury to competition. Cieyton Act,

s 2, f) as emended by Robinson-Pat-

man Price Discrimination Act, 15 US.

C.A. 6 130. .

1. The Type “G” lifting plug is a ma-

leable iron device which the military ser-

vices use to lift 155 mm. ertiliery pro-

jectiles. The lifting plug has @ loop st

one end, known as the “beil,” end is

|

i

a

g

i

8

into the nose of an unfused artillery

Projectile, thereby facilitating the move-

ment of such projectiles. When s pro-

jectile is to be fired, the lifting

removed end repieced by en

i

Appeal from the United States Dis-

— Court for the Eastern District of

exes.

Before GOLDBERG, CLARK and

GEE, Circuit Judges.

CLARK, Circuit Judge:

Piainti ffs, M. C. Manufacturing Com-

peny, inc. (M.C.), and its wholly-owned

subsidiery, Universal Automatic Machine

Company, inc. (Universal), initiated this

Privete antitrust action ageinst defend-

ants, Texas Foundries, inc. (Texas

Foundries) and H/R Products, inc.

(H/R), alleging that the defendants con-

spired to restrain trade in violation of

Section 1 of the Sherman Act, 15 U.S.C.

s 1, through the utilization of a price

discrimination scheme which siso was vi-

olative of Section 2 of the Clayton Act

as amended by the Robinson-Patman

Act, 15 US.C. 136 & f). Trial to:

jury resulted in a general verdict for

plaintiffs of $73,000.00 which was then

trebled by the triai court to $219,000.00.

Texas Foundries and H/R petition this

court for relief from the judgment en-

tered pursuant to thet Wurd. We re-

ae

Universal alleges that this contro-

versy srose while it end H/R were

actively competing for a December, 1971

government contract to supply a finished

military hardwere item known as 8 Type

“G” lifting plug,’ because Texas Found-

ries quoted H/R e lower price than it

quoted Universal to supply the required

unfinished plug castings." According to

plaintiffs, H/R and Texas Foundries

Clandestinely agreed by telephone on the

29th of November, 1971, to s price of 31

cents per unfinished plug casting deliv-

ered to Rs plant (South Bend, ind

ane). Texas Foundries had quoted Uni-

versal @ price of 32.5 cents .o. b. Texas

Foundries’ plant (Lufkin, Texas) only 11

Gays rer, on the 18th of November.

—

.

Appendix 3

M. C. MFG. cO. INC. v. TEXAS FOUNDRIES, INC. 7417

of a conspiracy between Texas Foundries

and NR in wolation of Section 1 of the

Sherman Act aimed st the destruction of

Universal as @ competitor. They further

assert that the ultimate sale to /R of a

portion of the castings required to per-

form the contract at the lower price con-

stituted a vioistion of the Robinson-Pat-

man Act's proscription of price distinc-

tions between purchasers since on No

vember 12, 1971, Texas Foundries and

Universal had entered into a subcontract

at 32.5 cents per casting to fulfill a prior

contract rd to Universal.”

For their pert, the defendants con-

tend that Texas Foundries’ agreement to

sell to H/R at @ lower price wes reached

after the December, 1971 contract had

been swerded and then only after H/R's

intended suppliers communicated to

H/R that they could not satisfy /R re

quirements. They further contend the

price reduction by Texas Foundries was

intended to meet the price offered by

H/R’s other suppliers and to find a mar-

ket for @ substantial overage of castings

which had been produced under Texas

Foundries’ Preexisting contract with

Universal.

Because the particular facts underiy-

ing this case are crucial to our resolution

of the controversy, a detailed review of

the events feeding to selection of a con-

tractor on government contract No.

DAAA—08—72-—C—0208 is werranted.

On October 27, 1971, tne Ammu-

nition Procurement Supply Agency

APSA) distributed a solicitation inwting

bids on @ contract to supply 1,984,006

Type G lifting plugs. A total of 159

prospective bidders were solicited. of

which 16, including Universal and /R.

3. Universal! hed been successful on

June 16, 1970 in bidding on a similar

government contract. This ewerd to

Universal wes for 2,033, 950 plugs with

an “add-on” ewerd of 450,000, pilus «

negotiated addition of 750,000 plugs.

4. Universal purchased approximetely

1,500,000 unfinished plugs from Texas

Foundries while fulfilling its 1970 con-

tract with add-ons and additions.

5. The preewerd survey invoives

government assessrnent of such factors as

@ bidder's financial status, production

capebility, technical capebility, plent

facilites and quality assurance capebil'-

ties while the cost evelustion takes into

account such factors as transportation

7418

ultimately submitted bids.

Upon receiving a solicitation from

the APSA, Universal askec Texas

Foundries to bid on @ subcontract to

supply unfinished piug castings. On

Novernber 18, 1971, Texas Foundries re-

sponded with a 32.5-cent per casting

price, fob. Texas Foundries pliant.

Based upon Texas Foundries’ quotation

mitted a final bid to APSA of 49.28

cents cer finished plug. During the time

prior to opening of bids. Texas

preewerd survey analysis, H/R wes

1977.

Appendix 4

7418 M. C. EG. co.. INC. v. TEXAS FOUNDRIES, INC.

7419

7420

SHERMAN ACT CLAIM premise, and thet it wes supported by

At tral plaintiffs’ ewdence tended to

show a discriminatory pricing conspiracy

between Texas Foundries and NN

aimed at the destruction of Universal as

®@ producer of Type G lifting plugs.

From the outset, plaintiffs have contend-

ed that on the 29th of November, 1971,

Texas Foundries and H/R consummated

@ secret telephonic agreement whereby

Texas F oundries committed itself to up-

ply unfinished plugs to /R at 31 cents

per casting, at H/R's plant, after only

eleven days earlier having assured Uni-

versal that a 32.5 cent per casting price,

fob. Texas Foundries plant, was the

lowest price it could possibly offer. The

reason for this discrepancy in price quo-

tations u found, according to plaintiffs

in H/R's precarious financial situation in

November of 1971. Until 1970, the yeer

of Universal's entry into the lifting plug

market, H/R had been the leading pro-

ducer of military lifting plugs. In 1970,

however, Universal received the only

government contract let that year,

causing H/R a concomitant 60,000

dollar loss At this point, plaintiffs’

theory continues, realizing that fa:iure to

obtain the 1971 contract would neces-

sitate abendonment of its plug business

and fully aware that Universal's failure

to get at least a portion of the 1971 con-

tract would portend the latter's business

demise R resolved to take whatever

steps were necessary (inciuding partic-

pation in „ discriminatory pricing

scheme) to insure that it would not again

be underbid by Universal.’

[1] If plaintiffs’ theory of the case

and version of the evidence were accept-

ed by the jury, as they may have been,

then a Sherman Act violation has been

established. We assume arguendo that

the jury verdict was besed on this

7. Im fect, after losing the 1971

contract to H/R Universal wes unable to

acquire other work in the commercial

field sufficient to hold its shop intact,

and finally had to liquidate its equip-

ment

8 Other evidence supportive of plan-

tiffs’ conspiracy theory included: proof

that H/R would not consider itself able

to bed unless @ hed positive commit.

ments for all the plug castings it would

need; H/R's knowledge prior to sub-

mession of its bid that its regrstered

supplier, Marion Malleabies, could not

Produce the rough castings in sufficient

quantity to satisfy government re-

the evidence. Under Section 1, 15 U.S.C.

s 1, “Every contract, combination ...

or conspiracy, im restraint of trade or

commerce... is declared to be eg.

However proof of the existence of an

actionable conspiracy s not

enough. in addition to proof that the

antitrust laws were violated, a pisintiff

proximately caused injury to his business

and adduce evidence that at least gives

an indication of the amount of demage

which resulted. Terrell v. Household

Goods Carriers’ Bureau, 494 F 2d 16, 20

(Sth Cir.), rehearing en banc denied, 496

F.2d 878, cert. dismissed, 419 US.

987, 95 S.Ct. 246, 42 L.Ed.2d 260

(1974); Kestenbaum v. Faistaff Brewing

Corp., 514 F.2d 680 (Sth Cir. 1975).

[2] Under the facts of this case,

plaintiffs feiled the second of this three-

pronged test. , they failed to prove

that an injury to Universal resulted from

defendants’ discriminatory pricing

scheme. While the fect of injury most

often involves evidentiary questions

which are properly for the jury le. g..

Story Parchment Co. v. Paterson Parch-

ment Paper Co., 282 U.S. 555, 562, 51

S.Ct. 248, 250, 75 L.Ed. 544, 548

(1931)] no such jury issue exists where,

as here, plaintiffs failed to establish that

im the absence of defendants’ discrim-

matory pricing scheme Universal would

have received this contract. Thus, the

trial court erred in refusing to direct a

verdict for defendants on the Sherman

Act claim at the close of plaintiffs’ case.

Plaintiffs’ premise is that, absent

the illegal bid to /R, Universal would

have received the contract. However, the

facts as adduced at trial reveal that even

if R' bid is disregarded, Universal

would not be the low bidder. Rather,

quirements; H/R's assertion that -still

another supplier, F.M.C. Corporation,

would supply the additional plugs neces-

sary to meet the t's require-

ments, while during trial H/R''s President

admitted that no firm commitment wes

—— —Uü

Appendix 5

M. C. HG. CO. INC. v. TEXAS FOUNDRIES, INC.

j

i

7

.

1

;

1

b

.

112

g

Fi

g

L

|

2

35

i

i

x

11

Air's bid prior to ewerd. It is crystal clear

that Land-Air wes a viable bidder and

that, even after disregarding /R = low

bid because of the special, conspire

torially low price it received from Texas

Foundries, Land-Air’'s bid stood between

Universal and the opportunity to acquire

lent to the 31-cent f.o.b. South Bend

N. By utilizing this price and apply-

ing the same profit and other cost fac-

tors @ hed employed in submitting its

bid based upon the 32.5-cent price, Uni-

versal caiculated it would heve bid an

damages he asserts. 15 U.S.C. s 15. For

the case et ber, this rule means that dem

ages ere recoverable only upon 8 show-

ing thet ebsent the anticompetitive prac-

tice plaintiff would not heve suffered

the loss. The anticompetitive conduct

which the evidence tended to establish in

the case st ber wes Texas Foundries’

special 31 cent price to /R, not its re

fusel to offer d comperabie price to

R' competitors. The price of 32.5

cents .o. b. Texes Foundries plant wes

shown to be the standard or usus! mor-

ket price quoted in connection with this

price wes the conspiratorie! price.”

Restoration of the competitive free-

dom which the Sherman Act is designed

to protect through elimination of the

anticompetitive practice is accomplished

ROBINSON-PATMAN ACT CLAIM

Plaintiffs also assert that defendants’

Appendix 6

7421 N. C. MFG. co. INC. v. TEXAS FOUNDRIES, INC.

7422

mson-Patmen Act. 15 U S.C. s 1308 f).

Under Section 2ia), it is uniewtul tor

either grants or knowingly receives the

benefit of such discrimination and (4)

where such differential is not in response

to changing market conditions,’ while

under Section 2(f), u u unlawful to

knowingly induce or recenve discrimina

tron in price prohibited by this section.

{5, 6] Recognizing that in order

for there to be discrimination between

purchasers violative of 6s 2(a) there

must be actual sales at two different

prices to two different actua! buyers,””"’

plaintiffs pursue the Robinson-Patman

claim on the besis of the price discrepancy

between Universal's purchase-order con-

tract with Texas Foundries dated No-

vember 12, 1971 and NN clandestine

November 29th agreement with Texas

Foundries which related to the Decem-

ber 30, 1971 contract These separate

contracts contemplated contemporane-

ous delivery of Type “G” lifting plugs

during 1972 but /R was given a price

10. In addition to the defense of

changing market conditions, a defendant

may rebut @ primatacie case of discrim:-

nation by showing that his lower price

wes made “in good faith to meet an

equally low price of @ competitor.”

15 USC. „ 13(b). Since, as discussed

infra, plaintiffs have failed to prove a

prima-facie case we do not decide the

applicability ve/ non of these defenses

under the facts of this case

11. Jones v. Metzger Dairies, inc., 334

F.2d 919, 924 (Sth Cir. 1964), cert.

denied, 379 U.S. 965. 85 S.Ct 659, 13

L.Ed.2d 559 (1965): accord, Stough v

May and Co., loc., 484 F 2d 22, 23

(Sth Cir. 1973); Hiram Walker, inc. v A

& S Tropical, inc., 407 F.2d 4, 7 (Sth

Cir.), corr. denied, 396 US. 901, 90

of 31 cents delivered at its plant while

Universe! wes given the substantially

higher price of 22 5 cents at Texas

Foundries’ pient.""

hed occurred even if the jury believed

that no agreement wes reeched by Texas

Foundries and H/R on the 29th of No-

vernber, but rather wes made ister —eft-

er the contract wes swerded—end as a

result of the failure of H/R's expected

supplier to produce. They contend that

even a January, 1972 agreement would

still be reasonably contemporaneous

with the November, 1971 egreement be

tween Texas Foundries and Universal,

since delivery was contemplated during

the same periods under both contracts

and no justification based upon a change

im market conditions or good faith

meeting of competition wes shown.

Defendants contest the sufficiency

of proof on every element essential to a

Robinson-Patman Act violation. We

need not weigh each element, however,

as our conclusion that plaintiffs have

failed to prove that the purchases were

made in competition’ forestalis the ne-

cessity of further consideration of piain-

tiffs’ claim under the Act.

[7-9] Discriminatory pricing is

violative of Robinson-Patman only when

it lessens or tends to prevent competition

Karpen & Bros. 177 F.2d 863 (7th Cir.

1949); Shaw's inc. v. Wilson-Jones Co.

105 F.2d 331, 333 (3rd Cir. 1939).

12. Universal contracted with Texas

Foundries on November 12 for the pur-

chase of 740,000 unfinished plug castings

(with delivery to continue through _Feb-

ruary, 1972) to fulfill the government's

addition to Universal's 1970 contract

R' agreement with Texas Foundries

wes of course in contemplation of /R;

attainment of the December, 1971

contract and required delivery beginning

in January, 1972.

13. The Robinson-Patman iegality of

Price discrimination between contracts

to purchase that contempiste contem-

poraneous delivery, must be evelusted as

of the dates the respective contracts

were made. See, Texas Sulphur Co. v.

J. R. Sienptot Co., 418 F.2d 793, 806

(Oth Cir. 1969).

— ae ne —

—— .

Appendix 7

M. C. S. co. INC. v. TEXAS FOUNDRIES, INC. 7422

Ag-Chem Equipment V.

Hahn, Inc., 480 F 2d 482, 490-91 (8th

Cir. 1973), and the existence of this re-

quisite is normally a fact question to be

determined by making @ realistic ap-

praisal of all the relevent facts. FTC.

Sun Ou Co., 371 U.S. 505, 527, 83 S.Ct.

358, 9 L.Ed.2d 466 (1963). However, in

the case at der the relevent facts are

without dispute. The government's selec-

tion under both the 1970 contract ad-

dition and the December, 1971 contract

14. 15 USC. 6 130 E. 9. FTC. *

Sun Ou Co., 371 U.S. 505, 527, 83 8 Ct.

358, 9 L.Ed2d 466 (1963); Atlas

Building Products Co. v. Diamond Block

& Gravel Co., 269 F 2d 950, 954 (10th

Cir. 1959), cert. denied, 363 US. 843,

80 S.Ct. 1608, 4 L.Ed 2d 1727 (1960).

Hartiey & Parker, inc. v. Florida Bever-

age Corp. 307 F.2d 916, 921 (Sth Cir.

1962); Chicago Sugar Co. „ American

Sugar Refining Co., 176 F 20 1, 7 (7th

Cir. 1949): Great Atlantic & Pacific Tee

Co. v. F.T.C., 106 F 2d 667. 676 (3rd

Cir. 1939), cert. denied, 308 US. 625.

60 S.Ct. 380, 84 L.Ed. 521 (1940) 8 8

W. Gas, Inc. v. Genera! Gas Corp., 247

F Supp. 339. 343 (N.D. Ga. 1965).

15. FTC. Borden Co., 383 U.S. 637

643, 86 S.Ct. 1092. 1097, 16 L Ed 2c

153 (1966). See Texas Gulf Sulphur Co

v. J R. Simpiot Co. 418 F 2d 793, 806

(9th Cir. 1969), Tri-Valley Packing Ass'n

„ F TC., 329 F 20 694 (9th Cir. 1964).

Refrigeration Engineering Corp. v. Frick

Co., 370 F Supp. 702, 712-13 O Tex

1974) “Essentially, we have ir the par-

ticular situation an analogue to standing

of @ single producer for each preciuded

the possibility of competition between

both, It is the government's unaveile-

bility to Universal as a customer of any

of the government's needs under the De-

cember, 1971 contract, and its similar un-

competition with those made under the

other. Each contract represented a sep-

arate, distinct market open only to a sin-

gle producer. Once it was awerded the

The cistomer has standing only to raise

and cu.npare those sales which are injuri-

ous to his competition.” Mayer Paving &

Asphalt Co. v. General Dynamics Corp.

486 F 20 763, 770 (7th Cir. 1973).cert.

denied, 414 US. 1146, 94 S.Ct. 899,

39 L.Ed.2d 102 (1974).

16. See, e g., Texas Gulf Sulphur Co.,

supra; S. S. Kresge Co. v. Champion

Spark Piug Co., 3 F.2d 415, 420 (6th

Cir. 1925).

17. We emphasize it was the bids on the

December, 1971 contract which were in

competition—not the old and new sales

assailed here. These bids alone cannot

form the basis for a Robinson-Patman

Act claim since they do not satisfy the

two-purchaser requirement. A J

Goodmen & Son, inc. v. United Lacquer

Manuf. Corp., 81 F Supp. 880. 892

(O.Mass.1949). See text st note 11,

supra. We note this circuit's decision in

American Can Co. v. Bruce's Juices, lc.

187 F 20 919, 924 (Sth Cir.), cert.

dismissed, 242 US. 875. 72 S.Ct. 166,

96 L.Ed 657 (1951). which appeers to

Appendix 8

7423 M.C.MFG.CO., INC. v. TEXAS FOUNDRIES, INC.

7424

bed, which wes @ prerequisite to becom

ng @ purchaser from Texas Foundries,

Universal's 1970 contract addition wes

assured to it to the exciusion of all other

supphers regerdiess of any discrepency

i" prices pad on underlying subcon-

tracts. In the same fashion, the govern-

ment itself unconditionally un-

der the 1971 contract to purchase the

specified quantity of finished plugs

exclusively from RN. The very neture

of these mutually exclusive commitments

m the respective contracts meant that

Universal and H/R could not heve been

n competition” with respect to their

seperate purchases from Texas Foundries

Pursuant to the government contracts

Therefore, while the price discrepency

between the two actual purchases (as

distinguished from the bids related to

the 1971 contract) could heve affected

Universal's profits under the addition to

its 1970 contract, this discrimination in

NO way diminished Universal's compet:-

trve ability mm that plug market. “Injury

to @ competitor is not the test; the test

is injury to Competition.” Lioyd A. Fry

Roofing Co. v. FTC. 371 F.2d 277,

281 (7th Cir. 1966). Accord, GAF Corp.

v. Circle Floor Co, lac, 463 F 2d 752

(2nd Cw. 1972). cert. dismissed, 413

US 901, 93 Sci. 3058. 37 L.Ed 20

1045 (1973).

create 8 special exception to the two-

purchaser requirement where compet:-

tors in the same merket are engaged in

competitive purchasing and selling at the

time of the price discrimination and

where the failure of the plaintiff to con-

summate a second purchase of the item

discriminatorily priced is directly attrib-

utable to defendant's own discriminatory

practice. We conciude, however, that this

exception is inapplicable on the facts

now before us.

Specifically, in Bruce’s Juices, the

court held that plaintiff could bring a

Robinson-Patman Act claim against de-

fendant can manufacturer for defendant's

retusa! to offer plaintiff the same price

on e perticula type of cen offered

plaintiff's competitors, in spite of plain

tits failure to purchase that particular

type of can, where pilaeintiff was

purchasing other types of cens not so

discriminatority priced and competing

for the sale of its product peckaged in

such cans in the same merket as its

favored competitor. in our case, however,

Universal and H/P never purchased in

the same market As mentioned pre

viously, they were producing st al!

“Antitrust legsistion is concerned

primarily with the health of the competi-

tive process, not with the individuel

competitor who must sink or swim in

competitive enterprise. But as a necessary

imecident thereto, it is concerned with

effect of eliminating or crippling s com-

petitor. For, surely there is no more

Co., supra, 269 F 20 at 964. Accord, Bor.

den Co. v. FTC. 381 F.2d 175, 178

(4th Cir. 1967). Universal cannot aveil it-

self of this approech because it failed to

show an injury to competition generally

or that the revenue lost under the con-

tract addition wnpeired its individual

competitive status.

Piaintifts’ Robinson-Patman ciaim

s Presented in a setting analogous to the

situation where, aithough a seller seis

his product at different discriminatory

prices, he d not lable under Robinson-

Patmen because his buyers are not in

competition for the same ultimate

users." in our case, although the

government is the ultimate user under

both contracts, those individual contracts

constitute seperate, distinct markets,

each unaffected by prices aveilabie in

times pursuant to mandatory, single-pro-

ducer contracts, „ e., when they pur-

chased unfinished dug castings it wes

always Pursuant to s preexisting govern-

ment commitment that could not be

aitered upon the government's ability to

find a lower price after entry into the

contract. For this reason, the Bruce's

Juices exception is not applicable here.

18. On the contrary, Universal must

dave felt that its profitability on all

phases of the 1970 contract was satisfac-

tory since it quoted its finished plug

“addition” price to the government

besed upon a 32.5cent casting price

from Texas Foundries. Thus, though

Universal could have realized an increased

profit if it had received a lower casting

price from Texas Foundries and not

pessed the savings on, even this hypo-

thetice! profit wes not shown to heve

hed the necessary deleterious competitive

effect. While Universal did establish its

business denise (See note 7), its proof of

causation relisted to the deleterious

effect of the failure to acquire the 1971

contract rather than the loss of profit on

the 1970 contract addition.

SS ee

Appendix 9

M. C. r. co. INC. v. TEXAS FOUNDRIES, INC. 7424

the other. Universal and H/R were not

competing for the same consumer dollar

in thew activities under the 1970 and the

1971 contracts.”

20. “The whole thrust of the Robinson-

Patman Act concerns protection

of competition for resale. . Com-

petition is determined by careful snal-

ysis of each party's customers. Only if

they are eech directly efter the same

7425

There being no theory which will

support platin Sherman or Robinson-

Patman Act claims, the judgment below

5

Reversed.

dollar are they competing.” Ag-Chem

Equipment Co., Inc. v. Hahn, l.

350 F Supp. 1044, 1051 (D.Minn.1972).

modified on other grounds, 480 F 20

482 (8th Cir. 1973).

Adm. Office, U.S. Courts—West Publishing Company, Seint Paul, Minn.

APPENDIX - 10

Auited States Court of Appeals

FOR THE FIFTH CIRCUIT

October Term, 1974

No. 74-2246

D. C. Docket No. CA 1614

M. C. MANUFACTURING COMPANY, INC., ET Al.,

Plaintiffs-Appellees,

versus

TEXAS FOUNDRIES, INC., ET Al.,

Defendants-Appeliants.

Appeal! from the United States District Court for the

Eastern District of Texas

Before GOLDBERG, CLARK and GEE, Circuit Judges.

JUDGMENT

This cause came on to be heard on the transcript of the

record from the United States District Court for the Eastern

District of Texas, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here ordered

and adjudged by this Court that the judgment of the said District

Court in this cause be, and the same is hereby, reversed;

It is further ordered that plaintiffs-appellees pay to

defendants-appeliants, the costs on appeal to be taxed by the

Clerk of this Court.

August 21, 1975

Issued as Mandate:

APPENDIX - 11

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

NO. 74-2246

M. C. MANUFACTURING COMPANY, INC., ET AL.

Plaintiffs-Appellees,

versus

TEXAS FOUNDRIES, INC., ET Al.,

Defendants-Appellants.

Appeal from the United States District Court for the

Eastern District of Texas

ON PETITION FOR REHEARING

(November 12, 1975)

Before GOLDBERG, CLARK and GEE, Circuit Judges.

PER CURIAM:

IT IS ORDERED that the petition for rehearing filed in the

above entitled and numbered cause be and the same is hereby

denied.