# Petition — Southern Concrete Co. v. United States Steel Corp.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1977
- **Citation:** 429 U.S. 1096

## Text

Ruited States
- --t-
OcToBEeR TERM, 1976

Now 6 = 8564

SouTHERN CoNcCRETE COMPANY,
Petitioner,
vs.
Untrep Stares STEEL CorPoRATION,

Respondent.

PETITION FOR A WRIT OF CERTIORARI
to the United States Court of Appeals
for the Fifth Circuit

Joun H. Boonr,

Suite 420 Russ Buildina
235 Montgomery Street
San Francisco, California 94104

Attorney for Petitioner
Southern Concrete Company

i

JOHN V. SKINNER, JR.

Eart B. Wirson, Jr.

SKINNER, WILSON, Bears
& STRICKLAND

1” iG Peachtree Center
Atlanta, Georgia 30303

A, Mims WiLkKINSON, Jr.

Law Orrices of A. Mims WILKINSON
1069 Spring Street, N.W.
Atlanta, Georgia 30309

Of Counsel

SS
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PERNAU -WALSH PRINTING CO. - 562 MISSION STREET - SAN FRANCISCO. CA 94105

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Subject Index
Page
ee I Be 5 cc vccectecccsessscsécsccaces 2
I 856 os wind ee ROR H 6S 36bs bs bbb eb eOKbsO* - Ktsas 2
9 § Sr er cree eet ee 2
EY nnd od ian da ccs eae cGneleen abe Cekhaceress 3
Ee id ond i caeneennesenesesucten 4
EE ceri cu end Mane 400 en asean set eenheninks 4
I a ee
EL bs vids sb dudedebanionsds cobiene Oobeustaes 16
Reasons for granting the Wit ........ccccscccscccscccees 19
I
I FSi bo dec th kde oho kbcdsows oedtescdevasenke 19
II
The conflict among the circuit courts of appeals regard-
ing “standing” to recover damages under Section 4
a EY UD Cicanidccians ccededesecéantaces 21
III
The instant case is exceptionally suited for resolution
of the confusion surrounding Section 4 of the Clayton
TEE. cn tag GUM RRUs oes UAE NEES Mie donne eeeus 28
A.
To date this Court has only sanctioned a requirement
of causation in fact although recognizing a further
limitation by the Courts of Appeals ............. 31
B.
The duty concept has never been applied to antitrust
DT Jecusdhecdbeedks sued denatiebiaesahaenuues 32
C

Even if the duty concept is read into the Clayton Act
the opinion of the Fifth Circuit is too restrictive.. 34

D.

To date this Court has not sanctioned the concept of
proximate cause although its existence has been
IED vn 0's on. dbdnse cédee des dex inudtbuckecwas 35

CE, adic debncndanedecs sive dead ev ictdedecatenns 38

Table of Authorities Cited
Cases Pages
Ash vy. International Business Machines, Inc., 353 F.2d 491
Se Ee ED. ove vaceetbedesbaeucedaecasuedceaéde cs 23
Battle v. Liberty National Life Insurance Co., 493 F.2d 39
‘. |) te Me, EE <b oue Gua s soph ckeced Chacbsnarsenuaies 26, 28
Buckley Towers Condominium, Ine. vy. Buchwals, 533 F.2d
a ee ek Sn oo ueatbe ahd s 6anbbaes alana deete 28
Conference of Studio Unions v. Loew’s Ine., 193 F.2d 51
tS EE un Wines. sdab we We een tb eee ee emee eee 21
Congress Building Corp. v. Loew’s, Inc., 246 F.2d 587 (7th
Cir. 1957) ..... oeduenueedencbabhisedsceeatnsesedens 27
Continental Ore Co. v. Union Carbide & Carbon Corp., 370
ee Ge WE. witaomennueheeeeeuseunesianeendbaece 31
Cromar Co. v. Nuclear Materials and Equipment Corp.,
1976-2 Trade Cas. 961,073 (3rd Cir. 1976) ............ 24, 25
Daily v. Quality School Plan, Inc., 380 F.2d 484 (5th
Se SE Keccuadsdockwenksanwnss chen Gleisatnsenns 26
Fields Productions, Ine. v. United Artists Corp., 482 F.2d
1010, affirming per curiam, 318 F.Supp. 87 ........... 27
Fortner Enterprises v. United States Steel Corp., 394 U.S.
Se ED ddd ban eh UNG aads Cw ends l 065 0458 Has boss RKeR 16, 17

Harrison v. Paramount Pictures, Ine., 115 F.Supp. 312
(E.D. Pa. 1953), aff’d per curiam 211 F.2d 405 (3rd Cir.

DE K<esnab duane dhis eben enanteeehde een sdeas 24, 27
Hawaii v. Standard Oil Co., 405 U.S. 251 .............. 32, 38
In Re American Cement Corp. C-681 (1964) ............ 7
In Re Lone Star Cement Co., FTC Dkt. #8585 (1963) ... 7
In Re Martin-Marietta Co., FTC Dkt. #8280 (1961) ..... 7
In Re Mississippi River Fuel Corp., FTC Dkt. #8657

CEE. nae chains duaun Rathah ed eae k heat bl weeeeed 7
In Re Multidistrict Vehicle Air Pollution M.D.L. No. 31,

ee EE EE os éxidae Ga woken s Kale tains caaneae ld ebide as 21, 23
In Re National Portland Cement Co., FTC Dkt. +8654

(1965) ..... PONE ne RARE es SO Pr mR em OE PCR 7
In Re Texas Industries, Inc., FTC Dkt. #8656 (1965) ... 7

In Re United States Steel Corp., FTC Dkt. #8655 (1965) 4,7
International Association of Heat and Frost Insulation and
Asbestos Workers v. United Contractors Ass’n., Inc. of
Pittsburgh, Pa., 483 F.2d 384 (3rd Cir. 1973), amended
GS Fae eee CRUE GR TOE) 6 cscvcccccescccescecsss 24

Tasie or Autrsorities Crrep lil

Pages
Jeffrey v.. Southwestern Bell, 518 F.2d 1129 (5th Cir.
SED ckudcuhadnuhual oeeebacedecrseevecceauc as couss 27, 28
Karseal Corp. v. Richfield Oil Corp., 221 F.2d 358 (9th
ek SEE | -s Saccccedeuudxeukdeckecestabenncane 21, 22, 35, 36
Kauffman v. Dreyfus Fund, Inc., 434 F.2d 727 (3rd Cir.
DD | 2s so ddvaeauasnsededsensenbesecctnaseseseuess 23, 24
Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690 (5th
Gh vcel vid daee pandageaeansnnseeedeacashseeers 28

Loeb v. Eastman Kodak Co., 183 Fed. 704 (3rd Cir. 1910) 23
M. C. Manufacturing Co. v. Texas Foundries, Ine., 517

p & FF % | eter rer ane ee 28
Malamvud vy. Sinclair Oil Corp., 521 F.2d 1142 (6th Cir.

BD: -Lictbuandseeseeceaesebekeaceueenavnss 21, 23, 25, 34, 35
Melrose Realty Co., Inc. v. Loew’s, 234 F.2d 518 (3ra Cir.

i ee ee id ee eee eee cal 24, 27
Mulvey v. Samuel Goldwyn Productions, 433 F.2d 1073

PC Se ccc cckcnseeteseduuseveeeeeeewanseess 27
North Texas Producers Association v. Metzger Dairies, Inc.,

Bs £ &: 2. Ep errrrrrTT TT Tre 18
Perkins y. Standard Oil Co., 396 F.2d 809 (9th Cir. 1968),

reversed 395 U.S. 642 (1969) ........cccccccccccccees 22, 23
Perma-Life Mufflers, Inc. v. International Parts Corp.,

a i, Gh Bet SED neces jucendeeobedbnesseware 20, 31, 32
Shumate & Co. v. National Ass’n of See. Dealers, Ine., 509

- & & YF & GE er ey year 28
South Carolina Council of Milk Producers, Ine. v. Newton,

BD ae ee CU Gs PEE dno cee ccdecccedccccncbees 26
State of Alaska v. Standard Oil of California, 487 F.2d

ee Me GE, ED a ce.db'seeecckbaessnhe tenes ceaue 22, 27, 37
Steiner v. 20th Century-Fox Film Corp., 232 F.2d 190 (9th

i ditdiadehiakn 6¥de ih vob hee Sens 6eebn es ees 27
Twentieth Century Fox Film Corp. v. Samuel Goldwyn, 328

FR rrr err cr rer Tree 22, 37
U.S. v. Griffith Amusement Co., 334 U.S. 100 (1948) ..... 18
Volaseo Products Co. v. Lloyd A. Fry Roofing Co., 308

ee ee Se GO ED vs cain ce caductccbecedécvécene 25

iv TaBLE oF AUTHORITIES CITED

Constitutions | Pages
United States Constitution, Seventh Amendment ......... 3
Statutes
Clayton Act, as amended by the Robinson-Patman Act:
Bestia B uc cccccccceseéeséesseenseseeeeeseanneee 16
ate. B ..cccoscctcescsveccenaeueeneun Kin neatins une 16
RE © cccdcevcecvcsseneacuan 2, 3, 20, 21, 27, 28, 30, 31, 33
tee Fon cc cccccnccseeuceeeensesseeeeeeee 16
Sherman Act, 15 U.S.C.:
Geis Bo. cccscssvbeccesssdveaeeeeee 2, 3, 16, 17, 18, 19
Bettie B cccocvcccesecccenesseeaceuuesneasee .16, 18, 19
Texts

Bean, Antitrust: Standing And Passing On, 26 Baylor L.
Rev. (1974) :
ys ££ BT. he 23

Economie Reports On Mergers and Vertical Integration
in the Cement Industry (FTC April, 1966):

Passe GREER .. ccccseccetssscunetbaucseesueneea 7

Damen BERGER co. cccccceseguveeesenesemsseaneneaye 7
McLaughlin, Proximate Cause, 39 Harv. L. Rev. (1925) :

Fame BED. .coccccoceccccovvscsedcetecesbeecdeneer eens 38

Page BD .cccccccccsencdscctdseupensetnedesneaneel 38
Pollock, Standing to Sue, Remoteness of Injury, and The

Passing-On Doctrine, 32 Antitrust L.J. (1966):

ame © cccocccccovcccesvcsscsecokeceedennaueenneann 36

BERD DO ncccccvccccceccceds cececeunsueeneeenaneneeen 36
Prosser, Torts (4th Ed., 1971):

Section SE, we. FRSe ccccdsccccccvcscteusteauan 33, 34

LE ES Pe ee 31

Bestiom -46, wm. GEE ociccciccdsvcssshecveuseuseusen 38
Prosser, Torts (2d Ed., 1955) Section 47, p. 252 ......... 36
Restatement, Second, Torts:

Bestion 255, op. BD 6b GOB, .cccceccdccnccedveuusenes 33

Mastiom GER . .ccccccedeccvcesseeeensssee eee 38

In the Supreme Court

OF THE

Runited States

October. TERM, 1976

No.

SovuTHERN CONCRETE COMPANY,
Petitioner,

vs.

UntTep States STEEL CORPORATION,
Respondent.

PETITION FOR A WRIT OF CERTIORARI

to the United States Court of Appeals
for the Fifth Circuit

Petitioner, Southern Concrete Company, Inc., prays
that a writ of certiorari issue to review the judgment

‘ of the United States Court of Appeals for the Fifth

Mireuit entered on July 19, 1976.

2

CITATION TO OPINIONS BELOW

The opinion of the District Court for the Northern
District of Georgia granting partial summary judg-
ment to Respondent is printed in Appendix B hereto
and is reported at 394 F.Supp. 362. The opinion of
the Court of Appeals which affirmed the judgment of
the District Court for the Northern District of
Georgia is printed in Appendix A hereto and is re-
ported at 535 F.2d 313. -

JURISDICTION
The judgment of the Court of Appeals was entered
on July 19, 1976. The Court of Appeals denied Peti-
tioner’s Motion for Rehearing and Motion for Re-
hearing En Banc on September 24, 1976.

THE QUESTIONS PRESENTED )

1. Whether a horizontal competitor of a recipient
of loans extended in violation of Section 1 of the
Sherman Act, 15 U.S.C. 1, has standing under Section
4 of the Clayton Act, 15 U.S.C. 15, to recover damages
caused by said violations.

2. Where a plaintiff proves an antitrust viola-
tion, causation in fact and damage, is there a further
requirement under Section 4 of the Clayton Act re-
quiring that the antitrust violation constituted a
breach of a duty owed to the plaintiff, ie., “standing”.

3

a. If there is such a requirement, is the test
one of determining the purpose of the antitrust
prohibition or one of determining the necessary
consequence of the Defendant's illegal acts.

b. If there is such a requirement and the test
is one of determining the purpose of the antitrust
prohibition, is horizontal competitor exclusion in
the market for the tied product the only purpose
of the antitrust prohibition against a credit-tie-in.

3. Where a plaintiff proves an antitrust violation,
causation in fact and damage, is there a further re-
quirement under Section 4 of the Clayton Act requir-
ing that the causation be proximate.

a. If there is such a requirement, is the test
of proximate cause correctly stated by the “tar-
get area” test, the “direct injury” test, the “area
of the economy” test, the new tests of either the
Sixth or Third Circuits or some other test.

4. Whether the issue of proximate cause should
have been submitted to the jury and, in granting the
motion for partial summary judgment, did the Trial
Court deny petitioner’s constitutional right to a trial
by jury. :

STATUTES INVOLVED
The statutory provisions involved are Section 1 of
the Sherman Act, 15 U.S.C. $1, Section 4 of the Clay-
ton Act, 15 U.S.C. §15 and U.S. Const. Amend. VII.
These statutes are set out in Appendix C.

4

STATEMENT OF THE CASE
INTRODUCTION

This is a private antitrust case brought by Southern
Concrete Company (a defunct Atlanta ready-mix com-
pany hereinafter referred to as “Southern”) against
United States Steel Corporation (a manufacturer of
cement for sale to ready-mix producers in Atlanta
hereinafter referred to as “U.S. Steel”) and against
Williams Brothers Concrete Company (another At-
lanta ready-mix company hereinafter referred to as
“Williams Brothers”).

The basic facts upon which this case was brought
were that U.S. Steel, stymied in its efforts at vertical
integration by enforcement by the Federal Trade
Commission vlocking vertical mergers of cement and
ready-mix companies, adopted a new technique of
vertical integration, Le., the loan of substantial sums
of money to a puppet ready-mix company (Williams
Brothers) with the understanding that Williams
Brothers would purchase its cement from U.S. Steel.’
By reason of the vast sums of money available to Wil-
liams Brothers from the deep pocket of U.S. Steel,
Williams Brothers was able to enjoy substantial ad-
vantages over its competitors, incinding petitioner
Southern Concrete Company. With the deep pocket

'1The Federal Trade Commission later held this practice illegal,
In Re United States Steel Corp., Dkt. #8655, CCH Trade Reg.
Rep. FTC Complaints, Orders & Stipulations, § 20,139.

s

5

of U.S. Steel, Williams Brothers was able to acquire
vast amounts of new equipment (trucks and plants),
hire numerous salesmen, enjoy lower costs because of
the new equipment and plants and lower interest
rates, needed less cash for debt servicing, and, with
lower costs, cut the price of ready-mix, resulting in
the elimination of many producers including South-

ern. (Appendix on Appeal, pp. 168-183).?

THE FACTS OF THE CASE

Southern was organized in 1959 as a producer of
ready-mix concrete. With an initial capitalization of
$25,000, Southern started business with a small ready-
mix concrete plant near Atlanta, Georgia. In 1961,
Southern opened a second plant in downtown Atlanta.
Southern’s business was not immediately profitable
and in early years moderate start-up losses were in-
curred. However, by 1964, Southern had turned the
corner and made a moderate profit of $2,610. In 1965,
the business was in full swing and enjoyed a profit of
$87,764 (R. 2984-2985).

The Atlanta ready-mix market in 1965 was highly
competitive with numerous small companies vying for

*Hereinafter the Appendix on Appeal wil’ be cited as “App.
p. .....”, and Plaintiff’s Exhibits not included in the Appendix on
Appeal will be cited as “PX ....... oe!

6

the available business. This competitive position is
best illustrated by the following table:

Ready-Mix*
Annual Purchases Produced
Of Cement and Sold % of
Ready-Mix Companies (in bbls.) (in cu. yds.) Market
Whitley Concrete 350,000 497,500 28
Peavy Concrete 300,000 411,000 24
MacDougal Warren 225,000 308,250 18
Southern Concrete 100,000 137,000 8
Humphries Ready-Mix 65,000 89,000 5.2
D. B. Thornton 50,000 68,500 4
Jackson’s Ready-Mix 50,000 68,500 4
East Side Lumber 35,000 47,950 2.8
Turner’s Ready-Mix 30,000 41,100 2.4
College Park Ready-Mix 25,000 34,250 2
Harralson Conerete 20,000 27,400 1.6
Total 1,250,000 1,712,500 100

*On the average 1 barrel of cement is required to produce 1.37
eubie yards of ready-mix concrete.

The situation with regard to cement producers was
equally competitive.

Cement Company Cement Sold (in bbl.) % of Market
Southern Concrete 262,500 21
Lehigh 236,250 18.9
Lone Star 215,000 17.2
Marquette 201,250 16.1
Signal Mountain 117,500 9.4
Penn-Dixie 90,000 7.2
U.S. Steel /UAC* 67,500 5.4
Giant 60,006 4.8
Total 1,250,000 1

(Calculated from App. p. 238)

*UAC refers to the Universal Atlas Cement Company, a Divi-
sion of U.S. Steel.

Unlike several other metropolitan ready-mix concrete
markets, Atlanta had not been the target of the verti-

7

cal mergers by cement companies, which over the past
several years had plagued other metropolitan ready-
mix concrete markets. See generally, Economic Re-
PORTS ON MERGERS AND VERTICAL INTEGRATION IN THE
CemENT INDustRY, pp. 91-111, 122-123 (FTC April,
1966).

The cement companies were not unaware of FTC
enforcement attacks against such mergers. See gener-
ally, In Re Martin-Marietta Co., FTC Dkt. #8280
(1961); In Re Lone Star Cement Co., FTC Dkt.
#8585 (1963); In Re American Cement Corp. C-681
(1964); In Re Mississippi River Fuel Corp., FTC
Dkt. #8657 (1965) ; In Re National Portland Cement
Co., FTC Dkt. #8654 (1965); In Re Tezas Indus-
tries, Inc., FTC Dkt. #8656 (1965); In Re United
States Steel Corp., FTC Dkt. #8655 (1965).

But, while Atlanta enjoyed the benefit of free com-
petition and, with FTC enforcement activity, was
protected from vertical integration, the seeds were
being planted which would change this market.

At the end of 1964, another small family business,
Williams Brothers Lumber Company, began seriously
planning to enter the ready-mix concrete market.
Having accumulated a small amount of capital
($100,000) and having banking connections from
which they expected to obtain another $250,000
[$60,000 unsecured but endorsed by Johr Williams
and $190,000 secured by ready-mix trucks] (App. p.
227), Williams Brothers planned to build a ready-mix
plant in Chamblee, Georgia. It was estimated that
the new plant would use approximately 75,000 barrels

8

of cement—an amount which would give them be-
tween 5.7 and 6 percent of the market. (App. p 233).°

This in itself would not have been unusual, nor
wouid the state of competition in the Atlanta market
have been changed. In a competitive market new entry
is to be expected and encouraged. But far larger
forces were at work which would dramatically change
the market.

In September, 1974, U.S. Steel received word that
Williams Brothers was contemplating a ready-mix
plant and a U.S. Steel salesman began to solicit their
business. (App. p. 268)

On December 15, 1974, the Regional Sales Manager
of U.S. Steel reported:
“Tt is our opinion the Trust Company of Georgia
ean be of definite help with this firm and we
would appreciate the Treasury Department’s as-
sistance in this area.” (App. pp. 221-222)

The next day the treasurer for U.S. Steel, David
Adams III, wrote the Trust Company of Georgia (an
Atlanta bank) requesting a good word (App. p. 223)
and on December 28, 1964, the Trust Company of
Georgia reported :

‘* . . the new operation will be operated on as
little-paid-in capital as possible and any extended
credit will be a factor in their selection of a sup-
plier.” (App. p. 225)

The sales department was quick to respond to this
situation. The next day, December 29, 1964, the Reg-
8The 1964 total market was 1,250,000 barrels. If no growth is

assumed, 75,000 barrels -- 1,250,000 = 6.0%. If a growth of
75,000 barrels in 1965 is assumed, 75,000 -- 1,325,000 = 5.66%.

9

ional Manager of Sales of U.S. Steel wrote the Gen-
eral Manager in New York:
“It might be an excellent idea for Von Bevern
and Raggio to give some thought to this to see
what could be done in the way of placing us in a

position to serve their requirements.” (App. ».
226)

Both Mr. Von Bevern and Mr. Raggio were in the
financial departments of U.S. Steel.

On January 8, 1965, the Regional Sales Manager
again asked the Treasury Department to meet with
the Williams Brothers, noting:

‘*In my opinion this is the best opportunity we
have had in a long time in the Atlanta market.
We will be the sole supplier of a ready-mixed
concrete producer which I believe will grow and
expand. I am recommending that we comply with
their request.” (App. p. 230)

At this time, the Williams Brothers were requesting
$50,000 to $75,000—the equivalent of 90 day credit
terms. (App. pp. 227-228)

The sales motivation of this transaction was not lost
on the finance people. On January 8, 1975, Mr. Von
Bevern wrote Mr. Raggio:

‘“‘T believe this will constitute a highly desirable
outlet for our new Atlanta facility [a cement

terminal] and that we should act positively and
promptly on this request.” (App. pp. 231-232)

The following proposal was suggested :

1. The Trust Company of Georgia would loan Wil-
liams Brothers $375,000, simple interest at 415%, pay-

10

able in five years, minimum payments of $50,000 with
the balance at the end of the term. (App. 235)

2. U.S. Steel would make arrangements for the
loan and would guarantee payment. “In such a man-
ner the bank would relieve Williams Brothers and the
individuals of their liability, substituting the credit
standing of U. S. Steel Corporation.” (App. p. 236)

3. U.S. Steel would receive an option to purchase
the concrete company in the event the Williams
Brothers should decide to sell the company. (App.
p. 236).

In the proposal it was made clear that the purpose
of the loan was to capture a large part of the Atlanta
ready-mix business. The president of U. S. Steel
wrote:

“This proposal is a must from a commercial and
business standpoint and represents the only pres-
ent opportunity for UAC to increase its market
participation in the expanding Atlanta market.”

(App. p. 244)

On February 23, 1965, the proposal was submitted
to the U.S. Steel Board of Directors and a resolution
was passed authorizing the transaction on either a
direct loan or a guarantee basis. (App. p. 245)

Mr. Raggio then went to Atlanta to present the
package to Williams Brothers. On March 2, 1965, Mr.
Raggio explained to the Southern Sales Manager that
while the Board of Directors had approved either a
direct loan or a guarantee, he preferred to sell the
Williams Brothers on the guarantee.

11

‘*Prior to the meeting, Mr. Raggio explained to
me his desire to sell a right of first refusal and a
fully collateralized loan of 444% with the Bank
holding all papers. We simply endorsed for the
Bank and would not be shown making any loans
to Williams Brothers, and I felt that was an
excellent idea.” (App. p. 246)

Having reached an agreement with Williams
Brothers, the papers were executed. (App. pp. 249-
257 ; 259; 267)

At this point the agreement was clear. U.S. Steel
agreed to loan money to Williams Brothers and Wil-
liams Brothers agreed to buy cement from UAC. As
Mr. Evans, an officer of the Trust Company of
Georgia, testified :

““Q. Now did any officer or employee of U.S.
Steel ever tell you why they were willing to
guarantee this $275,000 loan?

A. They were willing to do it in order to sell

cement to Williams Brothers Concrete Company.
* * ”

Q. Did anyone with Williams Brothers ever
express this information to you?

A. Yes, sir.” (App. p. 305-307) (Emphasis
added)

While this was the first illegal effort of U.S. Steel
to vertically integrate into the Atlanta market, all
that had been done was to finance a new ready-mix
competitor. If nothing else had occurred, the Atlanta
market in all probability would have continued as a
competitive market of small companies, and Peti-

12

tioner as well as several other ready-mix producers,
would still be in business.

But U.S. Steel did not stop with doubling its
cement sales. Avarice was too compelling. 75,000 bar-
rels were good but 300,000 barrels were even better.
The way was clear—more U.S. Steel investment into
the Atlanta ready-mix market. And, the vehicle had
the safety of avoiding an FTC attack because it
avoided the obviousness of vertical mergers.

As early as the time of the first loan closing, Wil-
liams Brothers had expressed their willingness to un-
dertake further expansion with U.S. Steel’s money.
(App. p. 246)

On September 9, 1965, the Southern Sales Manager
for U.S. Steel wrote a “private” memorandum to the
UAC General Sales Manager:

‘In talking with Kirby Ward the other day, he
said they were thinking of a one million dollar
plant to be built next year, and this is the amount,
I am sure, that they will be talking about when
we see them in November.

I believe it would be a good idea to discuss this
matter with Mr. Raggio in the meantime so that
he can be prepared.” (PX 43)

The plans of U.S. Steel and Williams Brothers
were worked out in the next two months, and on
November 16, 1965, the President of UAC sought
U.S. Steel’s approval of a total loan of $1,300,000.

The purpose of the loan was to sell cement.

‘*Since commencing operations on March 1965
through October, the company has purchased

13

90,000 barrels of cement. Its purchases of UAC
cement during this period amounted to 76,000 bar-
rels—approximately 85% of requirements. The
company represents a potential outlet of 200,000
to 300,000 barrels to UAC in the next three years,
with over 500,000 barrels projected within five
years.” (PX 43)

The papers were prepared and U.S. Steel guaran-
teed an $800,000 loan from the Trust Company of
Georgia at 544% for 10 years. (App. pp. 273-275;
276-283. In addition, U.S. Steel received a 10-year
right of first refusal to purchase the stock of Wil-
liams Brothers Concrete.

This investment by U.S. Steel in the Atlanta mar-
ket was unprecedented. It was to have a devastating
effect on competition as well as on competitors. No
ready-mix concrete company had ever entered the
Atlanta market with 1 and 4 million dollars backing
from a cement supplier. In the following two years,
U.S. Steel would further intensify this situation by
guaranteeing an additional loan of $100,000 at 4%
over the prime interest rate for five years. (App. pp.
286, 287-289), and by making a direct U.S. Steel
loan of $150,000 at 14% over the prime interest rate
for five years. (App. pp. 294-296)

It cannot be said that Williams Brothers could
have procured such favorable financing from other
sources. As the affidavit of Walter Dobbins, the Pres-
ident of Southern Concrete, states, most of the other
ready-mix producers were paying 12 to 14 percent
interest on their loans and were required to repay

14

their loans in a shorter period of time—generally in
less than 5 years. (App. pp. 171-173) This statement
is supported by the fact that the Trust Company of
Georgia, without a U.S. Steel guarantee, offered only
short term credit to Williams Brothers. (App. p. 284)

The effect of these loans on the growth of Williams
Brothers and on the Atlanta ready-mix concrete mar-
ket was phenomenal. The cement shipments of U.S.
Steel to Williams Brothers illustrates the growth of
Williams Brothers:

Year BBL Cement
1965 107,000
1966 266,000
1967 379,000
1968 440,000
(PX 149)

The 1968 U.S. Steel sales of cement to Williams
Brothers represented approximately 80% of their
total purchases of cement. (PX 151) In 1965, U.S.
Steel had 85% of Williams Brothers total cement pur-
chases. (PX 43, p. 2) Accordingly, the total cement
purchases and ready-mix concrete sales (assuming
80%) for Williams Brothers were:

Year Purchases (BBL)! Sold (cu yd.)?
1965 133,750 183,238
1966 332,500 455,525
1967 473,750 647,037
1968 550,000 753,500

1UAC bbl. sold X 1.25 = total cement purchased.
2Cement purchased X 1.37 = cu. yd. cement sold.

15

The evidence further indicates that the Atlanta
consumption of ready-mix was relatively stable in
the years 1964 through 1969 [1,712,500 eu. yd. in 1964
and 1,659,328 eu. yds. in 1969]. (App. p. 297) Assum-
ing a 1,700,000 cubie yard market, Williams Brothers’
percent of the available business grew as follows:

Year Market Share
1964 0%
1965 10.78%
1966 20. 8%
1967 38. 2%
1968 44. 2%

Nor was this growth the result of anything but U.S.
Steel’s money. As the U.S. Steel Administrative Vice
President and Treasurer said after infusion of
$1,225,000 in 1966:
“(t]hey still are dealing in the cement business
with other people’s money.” (App. p. 285)

In October, 1967, Mr. Raggio said Williams Broth-
ers

‘‘was securing about 40% of the Atlanta concrete
market.” (App. p. 292), and wrote:

‘‘Other major producers are unhappy over the
fact that Williams Bros. have closed most of the
important orders for the past year. The recent
price list trends reflect their attitude.” (App. p.
290)

As explained in the affidavit of Walter Dobbins,
this financing gave Williams Brothers an advantage
in both costs and cash flow which was not available

16

to other ready-mix concrete producers, (App. p. 171-
174). The ultimate effect of the U.S. Steel-Williams
Brothers relationship was that Williams Brothers,
as the price leader, was able to price other ready-mix
concrete producers out of the market. As a result,
Southern and several other concrete producers were
forced out of the market.

THE LITIGATION

On the preceding facts it was obvious that the heart
of Petitioner’s case was the tying arrangement viola-
tive of Section | of the Sherman Act, 15 U.S.C. $1,
as this Court declared in Fortner Enterprises v.
United States Steel Corp., 394 U.S. 495 (1969).

Southern also charged the defendants with a viola-
tion of Section 7 of the Clayton Act (because of U.S.
Steel’s right of first refusal to purchase Williams
Brothers Conerete), Section 3 of the Clayton Act (ex-
clusive dealing arrangement), Section 2 of the Clay-
ton Act, as amended, by the Robinson-Patman Act
(discrimination), Section 2 of the Sherman Act (at-
tempt and conspiracy to monopolize and monopoliza-
tion) and Section 1 of the Sherman Act (exclusive
dealing and reciprocity). Southern settled its claims
‘against Williams Brothers and an order of dismissal
was subsequently entered.

Prior to trial U.S. Steel made a motion for partial
summary judgment which the District Court granted
insofar as Southern’s claims of tying, reciprocal deal-

17

ing and exclusive dealing were concerned.* This ruling
of the District Court fatally crippled Petitioner’s case;
yet, because of the final order rule Southern Concrete
was forced to trial. As a result of the partial summary
judgment, the jury was never informed during the
course of the trial that if they found that U.S. Steel
had sufficient economic power with respect to credit
to appreciably restrain free competition in the sale of
ready-mix cement and if a not insubstantial amount
of interstate commerce was affected, then the loans
of U.S. Steel to Williams Brothers, on the under-
standing that Williams Bros. purchase cement from
U.S. Steel, were per se illegal and in violation of
Section 1 of the Sherman Act. As this Court said
in Fortner Enterprises v. U.S, Steel Corp., 394 US.
495 (1969) :
**. . . Although money is a fungible commodity—
like wheat or, for that matter, unfinished steel—
credit markets, like other markets, are often im-
perfect, and it is easy to see how a big company
with vast sums of money in its treasury could
wield very substantial power in a credit market.
Where this is true, tie-ins involving credit can
cause all the evils that the antitrust laws have
always been intended to prevent, crippling other
companies that are equally, if not more, efficient
in producing their own products. . . .” 394 U.S.
at 509.

4The District Court also dismissed Petitioner’s Section 7 of the
Clayton Act claim, holding the right of first refusal did not con-
stitute a merger or acquisition. Southern did not press this claim
nor the claim of Robinson-Patman discrimination.

18

Equally important, the jury, without the knowledge
that U.S. Steel’s credit tie was per se illegal, was
denied an important aid in determining whether U.S.
Steel had the requisite intent to violate Section 2 of
the Sherman Act. As this Court said in U.S. v. @rif-
fith Amusement Co., 334 U.S. 100, 106 (1948):

‘*[A Defendant] usually does not violate Section
2 of the Sherman Act unless he has acquired or
maintained his strategic position, or sought to
expand his monopoly, or expanded it by means
of those restraints of trade which are cognizable
under Section 1. For those things which are
eondemned by Section 2 are in large measure
merely the end products of conduct which vio-
lates Section 1.”

Similarly, the Fifth Circuit has held that evidence
that a defendant dairy cooperative association had
engaged in boycotts illegal under Section 1 of the
Sherman Act was evidence from which a jury could
find an attempt to monopolize in violation of Section
2 of the Sherman Act. North Texas Producers As-
sociation v. Metzger Dairies, Inc., 348 F.2d 189 (5th
Cir. 1965).

In moving for partial summary judgment, U.S.
Steel assumed, arguendo, that its practices with re-
gard to the loans of money to Williams Brothers
were violations of Section 1 of the Sherman Act as
illegal tying or reciprocal dealing arrangements. Nev-
ertheless, the District Court held as a matter of law
that only competitors of U.S. Steel in the sale of
cement, or Williams Brothers, had standing to sue
for damages sustained as a result of the illegal credit

19

tie. This ruling cut the heart out of the both South-
ern’s Section 1 case and the Section 2 case. Conse-
quently, Southern had to proceed to trial and the jury
returned the verdict for U.S. Steel.

Southern then appealed the partial summary judg-
ment to the Fifth Cireuit Court of Appeals. The
Fifth Circuit affirmed the District Court and in
doing so affirmed a rule which is contrary to the
rule in other circuits and which will seriously under-
mine the effectiveness of private enforcement of the
antitrust laws. According to the rule adopted by the
Fifth Cireuit in this case, a private plaintiff must
not only show that he is within the sector of the
economy in which there was a threatened breakdown
of competitive conditions, but also that each specific
antitrust prohibition has as an intended purpose which
is the prevention of the type of injury sustained by
the plaintiff. This result obtains because the Court
went on to hold that the Petitioner lacked standing
because the only reason for the prohibition against
tying arrangements was the exclusion of other cement
sellers and protection of the tied buyer.

REASONS FOR GRANTING THE WRIT
I
SUMMARY
By holding as a matter of law that Southern
lacked standing to recover damages sustained because
of U.S. Steel’s use of a credit tie to create a puppet
competitor, the Court of Appeals has seriously

20

threatened the effectiveness of the private action as
a vital means for enforcing the antitrust policy of
the United States.

In a similar situation this Court said:

“Because these rulings by the Court of Appeals
[holding in pari delicto a defense to a private
action] seemed to threaten the effectiveness of the
private action as a vital means for enforcing
the antitrust policy of the United States, we
granted certiorari.” Perma-Life Mufflers, Inc. v.
International Parts Corp., 392 U. 8S. 134, 136
(1968).

The rule of standing adopted in the instant case
goes far beyond the requirements imposed by any
other Circuit Court decision. If unreviewed, this de-
cision will create a dangerous anomaly in the law,
confusingly conflicting with opinions of other Courts
and of this Court, and it will be an open invitation to
the predatory use of deep pocket vertical integration
through the flagrant implementation of the credit tie.

This case arises in the context of a credit tie, an
issue which this Court has now pending for considera-
tion in Fortner Enterprises, Inc. v. United &tates
Steel Corp., Dkt. No. 75-853. It also raises two issues
of importance from the standpoint of effective anti-
trust enforcement. These issues are:

1. Is there a “duty” concept inherent in See-
tion 4 of the Clayton Act and, if so, what is it?

2. Is there a “‘proximate cause” concept in-
herent in Section 4 of the Clayton Act and, if so,
what is it?

21

Both concepts mentioned above have resulted in ex-
treme confusion and conflict among the Circuit Courts
of Appeals. In a recent opinion, Malamud v. Sinclair
Oil Corp., 521 F.2d 1142 (6th Cir. 1975), the Sixth
Circuit noted :

‘‘The question of a party’s standing to sue under
Section 4 of the Clayton Act has been and con-
tinues to be troublesome to the courts.” 521 F.2d
at 1146.

II

THE CONFLICT AMONG THE CIRCUIT COURTS OF APPEALS
REGARDING “STANDING” TO RECOVER DAMAGES UNDER
SECTION 4 OF THE CLAYTON ACT

The ‘‘troublesome nature” of the questions raised
by this petition for certiorari has resulted in confus-
ing conflicts between the Circuits and in some cases
within the Circuits. To cite some examples:

In the Ninth Circwt: There appears to be a test,
sometimes referred to as the ‘‘target area” test, which

is expressed in the following language:

‘‘He must show that he is within that area of
the economy which is endangered by a breakdown
of competitive conditions in a particular indus-
try.” Conference of Studio Unions v, Loew’s
Inc., 193 F.2d 51, 54-55 (9th Cir. 1951). See also
In re Multidistrict Vehicle Air Pollution, M.D.L.
No. 31, 481 F.2d 122, 127-8 (9th Cir. 1973).

In Karseal Corp. v. Richfield Oil Corp., 221 F.2d
358 (9th Cir. 1955), the Court said,

22

U.S. 1, 5-6, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958). The
seller uses his leverage in the market for the tying
product in order to gain an advantage in the tied
murket. Id. Thus, the buyer is “coerced” into agree-
ing to take a product he does not want in order to
obtain an article he desires, United States v. Loew’s,
Ine., 371 U.S. 38, 45, 83 S.Ct. 97, 9 L.Ed.2d 11 (1962) ;
and the result is that competing sellers in the tied
market are “foreclosed” by the tie-in and competition
“on the merits” in the tied product is prevented. Id.;
Times Picayune Publishing Co. v. United States, 345
U.S. 594, 605, 73 S.Ct. 872, 97 L.Ed. 1277 (1953).°
Thus, the Supreme Court cases make clear that the
area of the economy in which a tying arrangement
threatens a breakdown of competitive conditions is
the market for the tied product and that those who
would be proximately injured by such an arrangement
would be the purchasers® of the tied product and the
sellers of the tied product in competition with the
seller who imposes the tie-in, Similarly, where
in an exclusive dealing arrangement a party binds
himself to purchase a product only from a cer-
tain seller, he is foreclosed from obtaining the
product at a lower price or of higher quality from
other sellers. Thus, competition as to the product is
threatened and the purchaser and other sellers of the

5In Fortner Enterprises v. United States Steel Corp., 394 U.S.
495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969), the Supreme Court
held that an extension of credit by a subsidiary of a manufactur-
ing company conditioned on the borrower’s promise to purchase
the product of the parent company could amount to an illegal
tie-in.

®See note 13, infra.

23

product are injured. A similar analysis applied to a
reciprocal dealing arrangement leads to a conclusion
that purchasers of the products which are the subject
of the arrangement and the competitors for the sale
of such products are the injured parties and competi-
tion as to such products is foreclosed.

[6] In the instant case, the tying arrangement’
was the extension of direct and indirect loans (the
tying product) by U.S.S. to Williams Brothers con-
ditioned on the purchase from U.S.S. of cement (the
tied product) by Williams Brothers.’ Similarly, the
challenged reciprocal dealing arrangement’ involves
U.S.S.’s guaranteeing of a loan and/or U.S.S.’s pro-
viding the services of Mr. Millhouse to Williams
Brothers in return for purchase of cement by Wil-
liams Brothers from U.S.S. The exclusive dealing
violation’® arises from the sale of cement on the condi-

7For purposes of this motion U.S.S. assumes arguendo that the
arrangement as to credit and cement purchases from U.S.S. by
Williams Brothers could be termed a tying, exclusive dealing, or
reciprocal dealing arrangement and that it is a violation of the
antitrust laws. "The court’s reference to a tying, exclusive dealing
or reciprocal dealing arrangement between these defendants is
not, of course, a finding or conclusion that the arrangements
between these defendants were such or violated the antitrust laws.

8See Counterstatement of Material Facts in plaintiff’s brief in
opposition at page 9: “. . . UAC was in full agreement with
U.S.S.’s proposed ‘tying arrangement’ to secure 2 captive Atlanta
market for sale of UAC’s cement product. . . .” (Emphasis
added.) It is important to note that in all the briefs submitted
in connection with the motion, the parties assume that cement
and ready-mix concrete are not one and the same, ie. that they
are not interchangeable, and that sellers of cement are not in
competition with sellers of ready-mixed concrete. Thus, the rel-
evant market for cement sales differs from the relevant market
for ready-mixed concrete sales.

®See note 7, supra.
10See note 7, supra.

24

tion or understanding that the purchaser of cement
would not use or deal in the cement of any other
cement producer. In each of these arrangements the
tied product or the product which is the subject of
the agreement is cement. Thus, the area of the econ-
omy threatened with a breakdown of competitive
conditions is cement sales and those who could claim
to be proximately injured by such arrangements by
U.S.S8. are purchasers" of cement from U.S.S. pur-
suant to such an arrangement or competitors of
U.S.S. in cement sales. Since plaintiff nowhere de-
nies the assertions in U.S.S.’s Statement or Material
Facts” that it did not purchase cement from U.S.S.
during the relevant statute of limitations period,"
and that it was never a seller of cement, as distin-
guished from ready-mixed concrete, in competition
with U.S.S./U.A.C., the court finds that it does not
compete in the area of the economy which would be
threatened with a breakdown of competitive condi-

11S¢e note 13, infra.

12Pursuant to Local Court R. 91.72 “[a]ll material facts set
forth in the statement required to be served by the moving party
will be deemed to be admitted unless controverted by the state-
ment required to be served by the opposing party.” We do not
rely solely on the failure of Southern to controvert these asser-
tions, however, as its brief makes clear that it does not contend
that it purchased, directly or indirectly, cement from U.S.S./
U.A.C. during the statute of limitations period, or that it was a
manufacturer or seller of cement at any time.

13Since Southern does not allege that it was either a direct or
indirect purchase of cement from U.S.S./U.A.C., the issue of
whether an indirect purchaser, that is, a purchaser of the product
at a subsequent level in the chain of distribution may recover
for the alleged violations asserted herein is not presented. As a
result, we need not and do not decide herein whether such indi-
rect purchasers could claim to be proximately injured “by rea-
son of” antitrust violations such as the one here in question.

25

tions by the challenged arrangements, cement sales,
and further, finds that it would not be proximately
injured by such arrangements. Thus, applying the
test utilized in the Fifth Circuit to determine whether
a party can allege to be injured “by reason of” an
antitrust violation, and thus has standing to claim
damages pursuant to §4 of the Clayton Act for such
antitrust violation, we find that Southern does not
have standing to seek damages on account of the al-
leged tying, reciprocal dealing or exclusive dealing
arrangements between U.S.S./U.A.C. and Williams
Brothers with respect to U.S.S./U.A.C.’s sale of ce-
ment to Williams Brothers.

[7] We reject the contention made by plaintiff
that the question of causation is necessarily a ques-
tion of fact which cannot be decided on a motion for
summary judgment and must be submitted to the
jury. Plaintiff’s assertions of injury in its brief are
general allegations of injury due to an alleged con-
spiracy between U.S.S. and Williams Brothers to re-
strain trade in and to monopolize the ready-mixed
concrete market; it makes no attempt to specify in-
juries to it due to the alleged tying, exclusive dealing
or reciprocal dealing arrangements. Further, as noted
above, plaintiff has made no attempt to show that it
was a seller of cement or a purchaser of cement from
U.S.S./U.A.C. This fails to satisfy the burden im-
posed on a party opposing summary judgment. Rule
56(e), Fed.R.Civ.P. As stated in First Nat’l Bank v.
Cities Service Co., supra:

To the extent that petitioner’s burden-of-proof
argument can be interpreted to suggest that Rule

26

56(e) should, in effect, be read out of antitrust
cases and permit plaintiffs to get to a jury on the
basis of the allegations of their complaints, cou-
pled with the hope that something can be devel-
oped at trial in-the way of evidence to support
those allegations, we decline to accept it. While
we recognize the importance of preserving liti-
gants’ rights to a trial on their claims, we are
not prepared to extend those rights to the point
of requiring that anyone who files an antitrust
complaint setting forth a valid cause of action be
entitled to a full-dress trial notwithstanding the
absence of any significant probative evidence
tending to support the complaint.

Id. 391 U.S. at 289-90, 88 S.Ct. at 1593.

[8] The court also rejects plaintiff’s contention
that in Terrell III, supra, the Fifth Cireuit Court of
Appeals expanded the class of protected private plain-
tiffs by holding that a private right of action under
§ 4 of the Clayton Act should be recognized when the
plaintiff makes a mere showing that defendants’ al-
leged violation of the antitrust laws had “materially
contributed” to plaintiff’s injuries. The Terrell III
opinion involved an appeal by the defendant from
a trial on damages. Earlier in the action the district
court judge, after a jury verdict in plaintiff’s favor,
had entered judgment on the verdict against this de-
fendant and judgment notwithstanding the verdict
in favor of the individual defendants. On defendant’s
(first) appeal a majority of the original panel in the
Court of Appeals vacated the judgment against the
defendant and remanded the case for a new trial.
Household Goods Carriers’ Bureau v. Terrell, 417

27

F.2d 47 (5th Cir. 1969). Upon rehearing en bane, a
majority of the Court affirmed the district court’s
judgment against the defendant, but reversed for a
new trial on the issue of damages. Household Goods
Carriers’ Bureau v. Terrell, 452 F.2d 152 (5th Cir.
1971) (en banc). In Terrell III the panel reviewed
this subsequent trial on damages. That it did not in-
tend to set forth a new test on standing nor deal with
causation in fact is made perfectly clear in the Ter-
rell III opinion; the Court emphasized that “the en
banc decision establishing liability finally adjudicated
the issue of causation” and that “the decision of this
court sitting en bane at an earlier stage of this same
case represents the law of the case.” 494 F.2d at 19.
The Terrell III Court was thus concerned with the
measure of proof as to amount of damages rather
than causation. As stated in Story Parchment Co. v.
Paterson Parchment Paper Co., 282 U.S. 555, 562, 51
S.Ct. 248, 250, 75 L.Ed. 544 (1931) (and quoted in
Terrell III):

[T]here is a clear distinction between the meas-
ure of proof necessary to establish the fact that
petitioner had sustained some damage and the
measure of proof necessary to enable the jury to
fix the amount. The rule which precludes recov-
ery of uncertain damages applies to such as are
not the certain result of the wrong, not to those
damages which are definitely attributable to the
wrong and only uncertain in respect of their
amount. (Emphasis added.)

See also Shumate & Co. v. National Ass’n of Securi-
ties Dealers, Inc., 509 F.2d 147, 153 (5th Cir. 1975)

28

(“although [the Court is] generally lenient as to evi-
dence required to show the amount of damages in an-
titrust matters once liability is determined, courts do
not permit the fact of damage necessary to prove
liability to be based on speculation.”); Hobart Bros.
Co. v. Maleolm T. Gilliland, Ine., 471 F.2d 894, 901-02
(5th Cir. 1973), cert. denied, 412 U.S. 923, 93 S.Ct.
2736, 37 L.Ed.2d 150.

The court’s conclusion is that plaintiff does not have
standing to claim damages on account of the tying,
exclusive dealing or reciprocal dealing arrangements
between U.S.S./U.A.C.; it is not a ruling on admissi-
bility of evidence with respect to claims which are not
foreclosed by this order, for example, the alleged con-
spiracy to restrain trade in or to monopolize the
ready-mixed concrete and cement markets. Cf. Conti-
nental Ore Co. v. Union Carbide & Carbon Corp., 370
U.S. 690, 82 S.Ct. i404, 8 L.Ed.2d 777 (1962). Rul-
ings on admissibility of evidence as distinguished
from sufficiencies of claims, is best reserved for trial.

We hold that plaintiff lacks standing under § 4 of
the Clayton Act to recover damages “by reason of”
the alleged tying, exclusive dealing or reciprocal deal-
ing arrangements between defendants U.S.S. and Wil-
liam Brothers. To that extent, this portion of the mo-
tion for partial summary judgment is granted.

B. Alleged Conspiracy to Attempt to Monopolize

[9] U.S.S. further seeks partial summary judg-
ment on the ground that Southern cannot assert the
claims that U.S.S. has violated §2 of the Sherman

- — + mer ge SR ET FS

29

Act, by engaging in a “conspiracy to attempt to mo-
nopolize” the production and sale of both cement and
ready-mixed concrete for the reason that such does
not assert a violation of any law. Plaintiff opposes
this portion of the summary judgment motion con-
tending that its charged violation, “conspiracy to at-
tempt to monopolize,” is within the Congressional
intention of §2 of the Sherman Act and that the
violation is distinguishable from the charge of attempt
to monopolize in that it does not require the showing
of specific intent, but, rather is established upon com-
mission of predatory acts pursuant to the alleged
conspiracy to monopolize.
Section 2 of the Sherman Act, 15 U.S.C. § 2, pro-
vides :
Every person who shall monopolize, or attempt
to monopolize, or combine and conspire with any
other person or persons, to monopolize any part
of the trade or commerce among the several
States, or with foreign nations, shall be deemed
guilty of a misdemeanor, and, on conviction
thereof, shall be punished by fine not exceeding
fifty thousand dollars, or by imprisonment not
exceeding one year, or both said punishments,
in the discretion of the court.

The court agrees with defendant U.S.S. that three
distinct offenses are to be found in this provision: (1)
monopolization, (2) attempt to monopolize, and (3)
combination or conspiracy to monopolize. Plaintiff’s
contention that in United States v. Dunham Concrete
Prod., Inc., 501 F.2d 80 (5th Cir. 1974), the Fifth
Cireuit Court of Appeals recognized the crime of a

30

conspiracy to attempt to monopolize “by failing to
hold that its inclusion in the lower Court’s charges
to a jury was reversible error” is totally without
merit. Dunham involved an appeal from an order
granting a new trial pursuant to 28 U.S.C. § 2255.
The court held that the submission to the jury of a
form for recording their verdict’* which listed as sep-
arate counts “Conspiracy to attempt to monopolize
in violation of Section 2 of the Sherman Act” and
“Conspiracy to attempt to extort”, which form had
been prepared by counsel for defendant, did not
warrant relief from judgment pursuant to § 2255. Aec-
cordingly, it reversed the trial court as to this por-
tion of its order. The Court’s reversal was not based
on a finding that there is a separate crime of “con-
spiracy to attempt to monopolize” in § 2 of the Sher-
man Act. It was based on the finding that the “error
in wording of this form for recording the verdict did
not contribute to [the] conviction.” Jd. at 84 (empha-
sis added).’® It further mentioned that when Govern-
ment counsel objected to the form, “[u]naccountably”
the court adopted it as presented and sent it out with
the jury. There is nothing in the opinion to suggest

14]t is clear from the opinion that the phrase “conspiracy to
attempt to . . .” appeared twice on the form for recording the
jury verdict; the charges to the jury were not the subject of the
appeal.

15The Court stated that “ iracy to attempt to monopolize”
could have only four conceivable meanings: (A) conspiracy to
monopolize, (B) conspiracy to fail to monopolize, (C) attempt
to monepolize and (D) attempt to fail to monopolize. Since mean-
ings B and D are “nonsense” and since the jury had been unable
to agree as to the count which charged a iracy to monop-
olize (meaning A), the Court construed the verdict as finding an
attempt to monopolize. 7d. at 84.

31

that a separate offense exists for “conspiracy to at-
tempt to monopolize”; the entire opinion indicates
that no such crime exists.

Accordingly, insofar as U.S.S. seeks partial sum-
mary judgment on the claim that it conspired to at-
tempt to monopolize the production and sale of cement
or ready-mixed concrete in any geographic market,
the motion is granted.

C. Alleged Acquisition of Stock or Assets

U.S.S. seeks summary judgment in its favor as to
Southern’s claim for damages for an alleged violation
of §7 of the Clayton Act, 15 U.S.C. § 18. The acqui-
sition complained of is alleged to be the “acquisition”
of Williams Brothers by U.S.S. The latter seeks
summary judgment on this issue based on the allega-
tions that it has never pwrchased, possessed, or other-
wise acquired a single share of stock in Williams and
that it has never purchased, possessed or otherwise
acquired any asset of Williams. See U.S.S.’s State-
ment of Material Facts, No. 15 and 16. It argues that
plaintiff’s contention that the right of first refusal as
to Williams Brothers’ stock granted to U.S.S. and
exercisable in the event of default on a loan made by
Trust Company of Georgia to Williams Brothers and
guaranteed by U.S.S., amounts to an “acquisition” of
stock and assets is insufficient as a matter of law.
U.S.S. further contends that even if viewed as an
‘‘acquisition” within the meaning of § 7 of the Clayton
Act, plaintiff was not, and could not, have been dam-
aged by such arrangement.

32

Plaintiff opposes this portion of the motion with
the following contentions:

1. The circumstances surrounding the vertical fi-
nancing and business arrangement existing
between U.S.S. and Williams Brothers were tan-
tamount to vertical integration (a supplier’s ac-
quisition of its customer) and as such indicate a
probability that U.S.S. used and will continue to
use its dominant guarantor’s position as lever-
age to put pressure upon the debtor to substan-
tially lessen competition in the Portland cement
and ready-mixed concrete industries in the rele-
vant geographic markets.

2. This vertical arrangement afforded Williams
Brothers decisive cost advantages in these mar-
kets over its nonintegrated competition, such as
Southern in the purchase of the costliest con-
crete ingredient, Portland cement, which advan-
tages when passed on in the form of lower con-
erete prices to consumers resulted in prices
lower than Southern’s costs, ultimately forced
Southern out of business in October, 1969.

It contends that U.S.S.’s “undue influence” over Wil-
liams Brothers of the “collateral security option to
purchase Williams Brothers’ outstanding stock” is an
“acquisition” within the meaning of §7. It argues
that this arrangement is ipso facto violative of § 7,
but if the court is “not disposed” to enter such a
determination, it is “critical” that the term “acquisi-
tion”, as used in § 7, “encompasses such coercive loan
arrangements and its anticompetitiveness is reserved

8 AR ORS REET) TR EI eR) Te Or

33

for jury deliberation.” Plaintiff stresses that “sum-
mary judgment is manifestly inappropirate on the is-
sues of intent and state of mind necessarily raised
by inquiry into the circumstances surrounding the
creation and operation of this vertical combination.”
Both parties to this motion rely on Metro-Goldwyn-
Mayer v. Transamerica Corp., 303 F.Supp. 1344 (S.D.
N.Y.1969) (hereinafter “MGM”) in support of their
contentions.

[10] Section 7 of the Clayton Act, 15 U.S.C. § 18,
provides, in pertinent part:

No corporation engaged in commerce shall ac-
quire, directly or indirectly, the whole or part of
the stock or other share capital and no corpora-
tion subject to the jurisdiction of the Federal
Trade Commission shall acquire the whole or any
part of the assets of another corporation engaged
also in commerce in any section of the country,
the effect of such acquisition may be substan-
tially to lessen competition, or to tend to create
a monopoly. ...

There can be a claim for money damages, pursuant
to § 4 of the Clayton Act, 15 U.S.C. § 15, for a viola-
tion of §7 of the Clayton Act. Dailey v. Quality
School Plan, Ine., supra; Gottesman v. General Mo-
tors Corp., 414 F.2d 956, 961 (2d Cir. 1969). See
Minnesota Mining & Mfg. Co. v. New Jersey Wood
Finishing Co., 381 U.S. 381, 85 S.Ct. 1473, 14 L.Ed.
2d 405 (1965).

fll, 12] A claim for damages for violation of
§7 presents the questions of whether there has heen
an acquisition of stock or assets within the meaning

34

of §7; if so, whether plaintiff can claim damages on
account of such acquisition; what is the appropriate
section of the country; and whether there is a reason-
able probability of a substantial lessening of compe-
tition. Where there is no “acquisition” of stock or
assets, therefore, the other questions need not be an-
swered and a claim for damages will not lie. See
infra, at note 7 and accompanying text. The words
“acquire” and “assets” are not terms of art or tech-
nical legal language; they are generic, imprecise terms
encompassing a broad spectrum of transactions
whereby the acquiring party may accomplish the ac-
quisition by means of purchase, assignment, lease,
license, or other otherwise. United States v. Colum-
bia Pictures Corp., 189 F.Supp. 153, 181-82 (S.D.
N.Y. 1960).

In the instant case it is not in dispute that in 1965
and 1966 the Trust Company of Georgia (TCG)
granted three loans to Williams Brothers. U.S.S.
agreed with TCG that it would guarantee repayment
of the loan in the event of default by Williams
Brothers. These guarantees were secured by the right
of first refusal to purchase stock of Williams Broth-
ers, a right which was to remain effect only while
there were outstanding balances on the loans.'* Two
of the loans have been repaid in full by Williams
Brothers; and thus, the right of first refusal in the
event of default on these loans no longer exists. The

16.8.8. explains in its brief in support of its motion for par-
tial summary judgment that the option to purchase stock would
come into play only if Williams Brothers notified U.S.S. that a
third party had offered to buy the Williams Brothers’ stock.

35

guarantee with respect to the third loan has been
withdrawn by U.S.S. See U.S.S.’s Statement of Ma-
terial Facts, No. 11, 12, 13 and 14.

[13] It is clear that the right of first refusal in
the event of default was never exercised and will
never be exercised because such right is now non-
existent. Thus, U.S.S. never possessed, in any mean-
ingful sense of the word, the stock of Williams Broth-
ers. The court finds that characterizing the right of
first refusal for the purchase of stock granted to a
guarantor of a loan furnished by a third party as an
“acquisition” within the purview of §7 of the Clay-
ton Act stretches the language of this section to ab-
surd lengths and, further, that such characterization
could have serious deleterious effects on the commer-
cial transactions of corporations and lending insti-
tutions.

As both parties rely to some extent on MGM, supra,
a short discussion of that opinion and a comparison
to the situation here involved is appropriate. In the
MGM case plaintiff M.G.M. sought to enjoin the
defendants from proceeding with a cash tender offer
by Tracy Investment Company for M.G.M. stock. 303
F.Supp. at 1346. The cash tender offer was being
financed by Transamerica Financial Corporation,
whose parent corporation Transamerica Corporation,
owned 99.6% of United Artists Corporation, a major
competitor of M.G.M. The court found that the ac-
quisition by the Transamerica-United Artists group
of working control of M.G.M. stock “would violate”
§7 of the Clayton Act, 303 F.Supp. at 1348 (em-

36

who is only incidentally injured by a violation of
the antitrust laws,—the bystander who was hit
but not aimed at—cannot recover against the
violator.” (emphasis added) 221 F.2d at 363

The rules of proximate cause as developed in tort law
are based on concepts of intervening cause, super-
seding cause and foreseebility.

“*Proximate cause’ or ‘legal cause’ is the name
given to the limitation which the courts have
been compelled to place, as a practical necessity,
upon the actor’s responsibility for the conse-
quences of his conduct. The limitation is nearly
always a matter of various considerations of pol-
icy which have nothing to do with the fact of
causation. The tendency of the courts to state
these considerations in terms of causation often
obscures the real issue involved.” Prosser, Torts,
§ 47 p. 252 (2nd Ed. 1955).

A similar justification has been given for the “stand-
ing” rules in antitrust.

“Tnstead of being merely a collection of technical
rules and doctrines, ‘standing’ is basically the
device by which a court determines whether the
harm alleged by the plaintiff is of a type which
is—or ought to be—entitled to judicial protec-
tion. After all, the chain of causation extends
indefinitely from a given act; and once that chain
is traced the real problem is determining the
point where the chain should be cut off—where
the line should be drawn—in imposing liabil-
ity.” Pollock, Standing To Sue, Remoteness of
Injury, and ‘The Passing-On Doctrine, 32 Anti-
trust L.J. 5, 9 (1966).

37

In application this test means nothing more than
that a plaintiff’s injuries (assuming causation in fact)
were foreseen or foreseeable. In Twentieth Century
Fox Film Corp. v. Samuel Goldwyn, 328 F.2d 190
(9th Cir. 1964), the test was expressed as follows:

“(T]he plaintiff must show that whether or not
then known to the conspirators, plaintiff’s af-
fected operation was actually in the area which
it could reasonably be foreseen would be affected
by the conspiracy.” (emphasis added) 328 F.2d
at 220.

Similarly, in the Western Liquid Asphalt Cases,
the Ninth Circuit applied the foreseeability test in
the following language:

“We think that appellants here are clearly
within the area of the economy which appellees
reasonably could have or did foresee would be
endangered by the breakdown of competitive con-
ditions.” State of Alaska v. Standard Oil of Cali-
fornia, 487 F.2d i391, 199 (9th Cir, 1973).

This test is substantially the same as that prevalent
in the general tort law of proximate cause where,
assuming causation in fact, the rule has been that a
defendant is responsible for all foreseeable conse-
quences of its action. This is true whether there is a
foreseeable intervening cause or not.

An intervening force has been defined as follows:

“An intervening foree is a foree which is
neither operating in the defendant’s presence,
nor at the place where the defendant’s act takes
effect at the time of the defendant’s act, but

38

comes into effective operation at or before the
time of damage.” McLaughlin, Proximate Cause,
39 Harv. L. Rev. 149,159 (1925).

“An intervening force is one which actively op-
erates in producing harm to another after the
actor’s negligent act or omission has been com-
mitted.” RESTATEMENT, SECOND, Torts, § 441.

“An intervening cause is one which comes into
active operation in producing the result after the
negligence of the defendant.” Prosser, Torts § 44
p. 271 (4th Ed. 1971)

While this Court recognized the limitations by the
Circuit Courts in Hawaii v. Standard Oil Co., 405
U.S. 251, 263, n.14, and this Court may well wish to
impose a requirement of proximate cause, effective
antitrust policy suggests the conflicts among the Cir-
cuits be resolved in favor of the foreseeability analy-
Sis as the most appropriate test for standing.

CONCLUSION

The instant petition presents this Court with an
opportunity to clarify and strengthen the nation’s
antitrust policy by bringing certainty to an area in
which the Circuit Courts have floundered for years.
This case presents the range of possible solutions and
it arises in a context which could well be affected by
this Court’s decisions in Fortner Enterprises, Inc. v.
United States Steel Corp., Dkt. No. 75-853, Bruns-
wick Corporation v. Pueblo Bowl-O-Mat, Inc., Dkt.
No. 75-904 and Tilinois Brick Co. v. State of Illinois,
Dkt. No. 76-404.

39

For all the reasons stated above, Petitioner respect-
fully requests that the Writ of Certiorari issue.

Dated, December 17, 1976.

JOHN H. Boone,
Attorney for Petitioner
Southern Concrete Company

JOHN V. SKINNER, JR.

Eart B. WILson, JR.

SKINNER, WILSON,
BEALs & STRICKLAND

A. Mims WILKINSON, JR.
Law Orrices oF A. Mims WILKINSON
Of Counsel

(Appendices Follow)

| APPENDICES

Appendix A

United States Court of Appeals,
Fifth Circuit.

.
Southern Concrete Company,
Plaintiff-A ppellant,
vs. . No.
75-2987
United States Stee] Corporation,

Defendant- Appellee. ;

Appeal from the United States District Court
for the Northern District of Georgia

Before: GewiIn and AINSworRTH, Circuit Judges,
and Markey,* Chief Judge.

Gewin, Circuit Judge:

In this private antitrust suit Southern Concrete
Company, plaintiff below, appeals from a partial
grant of summary judgment in favor of defendant-
appellee United States Steel Corporation. From the
late 1950’s until 1969 appellant Southern Concrete
was engaged in the manufacture and sale of ready-
mix concrete in the Atlanta metropolitan area; it is
now defunct. Appellee United States Steel Corpora-
tion, through its Universal Atlas Cemew? Division
(hereinafter United States Steel), is a supplier of
cement, a major ingredient of ready-mix concrete, in

*Of the U. S. Court of Customs and Patent Appeals, sitting
by designation.

2

the Atlanta area. In 1965 the principals of Williams
Brothers Lumber Company, a building supplies busi-
ness, decided to enter the expanding ready-mix con-
erete business in Atlanta. Upon learning this, United
States Steel contacted Williams Brothers to solicit
its business.

Thereafter, on three occasions from 1965 through
1967, an Atlanta bank, Trust Company of Georgia,
loaned over $1.25 million to Williams Brothers on
favorable terms; United States Steel agreed to serve
as guarantor on each of Williams Brothers’ three
notes to the bank. These loan guarantees were secured
by rights of first refusal to purchase the stock of Wil-
liams Brothers. These rights of first refusal remained
in effect only while there were outstanding balances
on the loans, Williams Brothers repaid each of the
three loans, and United States Steel never acquired
or purchased any Williams Brothers’ stock. In addi-
tion, on one occasion in 1969 United States Steel made
a direct loan to Williams Brothers, which the latter
repaid. Williams Brothers bought almost all of its
cement requirements from United States Steel. South-
ern Concrete did not purchase any cement from
United States Steel within the period here involved
and never manufactured or sold cement in competi-
tion with United States Steel. Williams Brothers’ ce-
ment business prospered and expanded; Southern

Concrete, on the other hand, went out of business in
1969.

In 1971 Southern Concrete instituted this antitrust
action against both United States Steel and Williams

3

Brothers,’ at whose feet Southern Concrete would lay
the blame for its demise. The favorable financing
which United States Steel had been able to arrange,
Southern Concrete contended, had enabled Williams
Brothers to undersell its competitors and force them
out of business. The complaint set forth a plethora
of alleged antitrust violations’? by the two defendants
including the following, the only claims involved in

this appeal: ;

1. A tying arrangement violative of section 1 of
the Sherman Act, 15 U.S.C. § 1. Southern Con-
erete alleged that United States Steel had
granted lean guarantees (the alleged tying prod-
uct) to Williams Brothers conditioned upon
Williams Brothers’ agreement to purchase ce-
ment (the alleged tied product).®

1Southern Concrete settled its claim against Williams Brothers
on March 28, 1975, and an order dismissing Williams Brothers ©
was subsequently entered.

2—Discriminatory sales of cement to Williams Brothers; conspir-
acy to restrain trade in the production and sale of cement; con-
spiracy to restrain trade in the production and sale of ready-mix
concrete; conspiracy to attempt to monopolize the production and
sale of both cement and concrete in three separate geographic
markets (the Atlanta area, the state of Georgia, and the south-
eastern United States), each constituting a distinct antitrust viola-
tion; conspiracy to monopolize production and sale of both cement
and ready-mix concrete in the three market areas; attempt to mo-
nopolize the production and sale of both cement and ready-mix
concrete in the three market areas; and an achieved monopoly in
the production and sale of both cement and ready-mix concrete in
the three market areas. :

83See Fortner Enterprises v. United States Steel Corp., 394 U.S.
495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969). In Fortner the Su-
preme Court found that the defendants, United States Steel and
its wholly-owned subsidiary had engaged in an unlawful tying
arrangement; the subsidiary had extended credit for purchasing
land (the “tying product”) on the condition that the steel com-
pany’s prefabricated homes (the “tied product”) be purchased for
use on the land. Fortner, however, did not alter the requirements
for standing to challenge an alleged tying agreement.

4

2. An exclusive dealing arrangement violative of
section 3 of the Clayton Act, 15 U.S.C. §14.
Southern Concrete asserted that United States
Steel had sold cement to Williams Brothers on
the condition that Williams Brothers purchase
all its cement requirements from United States
Steel.

3. A reciprocal dealing arrangement violative of
section 1 of the Sherman Act. Southern Concrete
alleged that United States Steel had agreed to
guarantee loans to Williams Brothers if the lat-
ter would agree to purchase cement.

4. A reciprocal dealing arrangement violative of
section 1 of the Sherman Act. Southern Con-
crete alleged that United States Steel had agreed
to provide Williams Brothers the services of one
of its employees (a cement technician), if Wil-
liams Brothers would provide United States
Steel with storage facilities.

After more than three years of discovery, United
States Steel moved for partial summary judgment
with respect to some of the claims asserted by South-
ern Concrete including, inter alia, the four aforemen-
tioned alleged violations of section 1 of the Sherman
Act and section 3 of the Clayton Act. For purposes
of this motion, and on this appeal, United States Steel
assumes arguendo that the alleged violations had oe-
curred; it argues, however, that Southern Concrete
lacks standing under the provisions of section 4 of

5

the Clayton Act to assert these four claims. The trial
court agreed and granted the motion for partial sum-
mary judgment on these claims. The exhaustive opin-
ion of the district court is reported at 394 F.Supp. 362
(N.D.Ga.1975). On the bulk. of its claims, however,
Southern Concrete had a jury trial. After a trial last-
ing approximately three weeks, the jury found in
favor of United States Steel and against Southern
Concrete on every issue.* Southern Concrete has not
appealed from the adverse jury findings. Rather, the
only issue before us on this appeal is whether the
court erred in granting United States Steel’s motion
for summary judgment on the four claims of recip-

‘The case was submitted to the jury by way of special interrog-
atories. The jury found:

1. That United States Steel did not engage in a contract,
combination, or conspiracy to restrain interstate trade in vio-
lation of Section 1 of the Sherman Act;
2. That United States Steel did not monopolize the manv-
facture, sale, and distribution of cement in the Atlanta metro-
politan area in violation of Section 2 of the Sherman Act;
3. That United States Steel did not attempt to monopolize
the manufacture, sale, and distribution of cement in the At-
lanta metropolitan area in violation of Section 2 of the Sher-
man Act;
4. That United States Steel did not combine or conspire to
monopolize the manufacture, sale, and distribution of cement
in the Atlanta metropolitan area in violation of Section 2 of
the Sherman Act;
5. That United States Steel did not monopolize the manufac-
ture, sale, and distribution of ready-mix concrete in the At-
lanta metropolitan area in violation of Section 2 of the Sher-
man Act;
6. That United States Steel did not attempt to monopolize
the manufacture, sale, and distribution of ready-mix concrete
in the Atlanta metropolitan area in violation of Section 2 of
the Sherman Act; ;
7. That United States Steel did not conspire to monopolize
the manufacture, sale, and distribution of ready-mix concrete
in the Atlanta metropolitan area in violation of Section 2 of
the Sherman Act.

6

rocal dealings, exclusive dealings, and a tying arrange-
ment. We affirm.

[1] Section 4 of the Clayton Act, 15 U.S.C. § 15
provides:

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 dis-
trict court of the United States...

Although the statute contains no language of limita-
tion, the Supreme Court has recognized that
[t]he lower courts have been virtually unanimous
in concluding that Congress did not intend the
antitrust laws to provide a remedy in damages
for all injuries that might conceivably be traced
to an antitrust violation.

Hawai v. Standard Oil Co., 405 U.S. 251, 263, 92
S.Ct. 885, 891, 31 L.Ed.2d 184, 193 n, 14 (1973) (cita-
tions omitted). To establish that he has been injured
“by reason of” an antitrust violation within the mean-
ing of section 4, the private antitrust plaintiff must
show that he was within the “target area” of the al-
leged violation. That is, he must “show himself within
the sector of economy in which the violation threat-
enc i a breakdown of competitive conditions.” Jeffrey
v. Southwestern Bell, 518 F.2d 1129 (5th Cir. 1975) ;
Battle v. Liberty Nat’l Life Ins. Co., 493 F.2d 39, 49
(5th Cir, 1974), cert. denied, 419 U.S. 1110, 95 S.Ct.
784, 42 L.Ed.2d 807 (1975); Dailey v. Quality School
Plan, Inc., 380 F.2d 484, 487 (5th Cir, 1967).

7

[2,3] To determine whether a particular plaintiff
meets the “target area” test for standing, it is neces-
sary to examine the nature of the specific antitrust
violations of which he complains and to ascertain
what areas of the economy would be affected thereby.
Southern Concrete alleged a tying agreement and
reciprocal dealings violative of Section 1 of the Sher-
man Act, and exclusive dealings violative of Section
3 of the Clayton Act. A tying arrangement is “an
agreement by a party to sell one product but only on
the condition that the buyer also purchases a different
(or tied) product... .” Northern Pac. Ry. v. United
States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545,
550 (1958). The evil inherent in an illegal tie-in “is
the fact that the agreement or the effect thereof less-
ens competition in the tied product.” David R. Mc-
George Car Co. v. Leyland Motor Sales, Inc., 504 F.
2d 52, 58 (4th Cir. 1974), cert. denied, 420 U.S, 992,
95 S.Ct. 1430, 43 L.Ed.2d 674 (1975). See also Times
Picayune Publishing Co. v. United States, 345 U.S.
594, 614, 73 S.Ct. 872, 883, 97 L.Ed. 1277, 1293 (1953)
(“The common core of the adjudicated unlawful tying
arrangement is the forced purchase of a second dis-
tinct commodity with the desired purchase of a domi-
nant ‘tying’ product, resulting in economic harm to
competition in the ‘tied’ market.”) (emphasis added) ;
Wendkos v. ABC Consol. Corp., 379 F.Supp. 15, 17
(E.D.Pa.1974). The anti-competitive effects of tying
agreements are two-fold: “they may force [the party
subject to the tie] into giving up the purchase of sub-
stitutes for the tied product, ... and they may de-

8

stroy the free access of competing suppliers of the
tied product to the consuming market.” United States
v. Loew’s, Inc., 371 U.S. 38, 45, 83 S.Ct. 97, 102, 9
L.Ed.2d 11, 18 (1962). Consequently, the area of the
economy threatened with a breakdown of competitive
conditions because of a tying agreement is the market
for the tied product; and those who will be proxi-
‘ately injured thereby—in addition to the party sub-
ject to the tie—are competitors in the tied product.

[4] In the case before us the alleged “tied” prod-
uct is cement, which Williams Brothers was purport-
edly forced to buy from United States Steel. Southern
Concrete did not sell cement; it sold ready-mix con-
crete. Moreover, Southern Concrete did not purchase
cement from United States Steel. Thus, even if there
did exist a tying agreement obligating Williams
Brothers to buy cement from United States Steel, it
neither restricted the market for Southern Concrete’s
product, ready-mix concrete, nor confined Southern
Concrete’s sources of supply for cement.

In Holleb & Co. v. Produce Terminal Cold Storage
Co., 5 CCH Trade Reg. Rep. 160,346 (N.D.II1.1975),
the court confronted an analogous situation. Holleb,
a distributor of frozen foods, alleged that Produce
Terminal, a competing distributor, had engaged in an
illegal tying agreement by refusing to purchase the
products of a frozen food producer that did not store
its products in Produce Terminal’s public frozen food
warehouse facilities (the “tied product”). The court
found no evidence of a tying agreement, but con-
cluded that even if such an agreement did exist,

9

‘‘it would not be an agreement of which the plain-
tiff could complain. . . . Were plaintiff engaged
in the business of frozen food warehousing, it could
complain of such an agreement, if it existed.” Id. at
66,921. By the same token, had Southern Concrete
been in the cement business and had the market for
its product been restricted because a potential cus-
tomer was required by a tying agreement to purchase
all its cement requirements from a competitor, South-
ern Concrete might well have been injured “by rea-
son of” the agreement within the meaning of Section
4; however, that simply is not the case.

[5, 6] This same type of analysis can be applied
to the other types of antitrust violations alleged by
Southern Concrete: reciprocal dealing and exclusive
dealing. “Reciprocal dealing” generally involves the
use of buying power to secure an advantage in the
sale of one’s products, W. L. Gore & Assoc. v. Carlisle
Corp., 381 F.Supp. 680, 702 (D.Del.1974), or an
inter se agreement to purchase from each other be-
tween two parties who stand on equal footing with
reference to purchasing power, United States v. Gen-
eral Dynamics Corp., 258 F.Supp. 36, 59 (S.D.N.Y.
1966). It has been identified by the Supreme Court
as an anticompetitive practice. FTC v. Consolidated
Foods Corp., 380 U.S. 592, 594, 85 S.Ct. 1220, 1221, 14
L.Ed.2d 95, 97 (1965). The evil attendant upon this
practice is the foreclosure of markets to competitors
through the use of purchasing power. United States
», Airco, Inc., 386 F.Supp. 915, 917 (S.D.N.Y.1974).
The first reciprocal dealing arrangement alleged by

10

Southern Concrete involved Williams Brothers’ pur-
chase of cement in exchange for United States Steel’s
loan guarantees; the second involved Williams Broth-
ers’ providing the steel company with storage facil-
ities in exchange for the services of a cement techni-
cian. Southern Concrete dealt in none of the goods
or services subject to the alleged reciproce’ dealing
agreements. Consequently, even assuming the exis-
tence of such agreements, the market for no Southern
Concrete products was affected as a result thereof,
and Southern Concrete could not have suffered injury
thereby.

[7] Southern Conecrete’s claim of an exclusive
dealing arrangement stands on no better footing.
Under section 3 of the Clayton Act, 15 U.S.C. § 14, it
is unlawful to require a purchaser not to deal with
others as a condition of dealing with the seller. The
obvious vice of such an arrangement is that it both
restricts the purchaser from looking elsewhere for a
more competitive source of supply and excludes the
supplier’s competitors from the purchaser’s business.
In this case Southern Concrete is neither the pur-
chaser subject to this alleged arrangement nor a
competitor of the supplier, United States Steel.
‘*Standing to sue under § 3 of the Clayton Act has not
been extended to those who are neither competitors
of the alleged violating supplier nor themselves re-
tricted purchasers.” Thomas v. Amerada Hess Corp.,
393 F.Supp. 58, 76 (M.D.Pa.1975).

[8, 9] Lastly, throughout this proceeding South-
ern Concrete has failed to specify what injuries, if

11

any, it suffered as a result of the violations alleged. As
the court below recognized, instead of setting forth
“specific facts” in compliance with F.R.C.P. 56(e),
Southern Concrete chose to rely upon

. general allegations of injury due to the
alleged conspiracy between U.8.S. and Williams
Brothers to restrain trade in and to monopolize
the ready-mix concrete market [making} no at-
tempt to specify injuries to it due to the alleged
tying, exclusive dealing or reciprocal dealing
arrangements.

394 F.Supp. at 370. Rather than coming forward with
credible evidence to support its allegation of injury
—the sine qua non for stating a cause of action by
a private antitrust plaintiff, Shumate & Co. v. Na-
tional Ass’n of Sec. Dealers, Inc., 509 F.2d 147, 152
(5th Cir. 1975)—Southern Concrete chose to rely on
the statement by the Supreme Court in Poller vy,
Columbia Broadcasting System, Inc., 368 U.S. 464,
473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458, 464 (1962), that
summary disposition is not favored in antitrust cases.
In Poller the Court was considering charges of con-
spiracy to restrain trade; such charges normally re-
quire proof of specific intent and necessitate trial.
There is no such requirement of proof with regard
to the alleged antitrust violations involved in this
appeal. Capital Temporaries, Inc. of Hartford v.
Olsten Corp., 506 F.2d 658, 667 (2d Cir. 1974). South-
ern Concrete may not “bootstrap [its] hollow claim
of an anticompetitive effect into a triable issue by
relying on” Poller. Conigho v. Highwood Services,
Inc., 495 F.2d 1286, 1292 (2d Cir. 1974), cert. denied,

12

419 U.S. 1022, 95 S.Ct. 498, 42 L.Ed.2d 296 (1974).
Mere conclusory allegations of an antitrust violation
will not suffice to defeat a motion for summary judg-
ment. Solomon v. Houston Corrugated Box Co., Inc.,
526 F.2d 389 (5th Cir. 1976).° ©

AFFIRMED.

5We feel it appropriate to state that this is not the usual sum-
mary judgment case. When the partial summary judgment was
granted there had been extensive discovery and the facts were well
established, as will be seen by reference to the opinion of the dis-
trict court.

13

Appendix B

United States District Court
N. D. Georgia,
Atlanta Division

Civ. A. No. 15378.

Southern Concrete Co.
vs.

United States Steel Corporation, et al.

March 31, 1975

ORDER

RicHarD C. FREEMAN, District Judge.

This private antitrust action was instituted by
plaintiff Southern Concrete Company (hereinafter
“Southern”), a now-defunct subsidiary of Southern
Products Company. From the late 1950’s until Oc-
tober, 1969, plaintiff was engaged in the production
and sale of ready-mixed concrete in the Atlanta area.
The action is brought against United States Steel
Corporation (hereinafter “U.S.S.”) which, through
its Universal Atlas Cement Division (hereinafter
“U.A.C.”), is a major supplier of portland cement,
one of the ingredients of ready-mixed concrete, and

14

against Williams Brothers Concrete, Inc. (hereinafter
“Williams Brothers”), a producer of ready-mixed
concrete in the Atlanta area.’ The action has been
submitted to the court on the motion of U.S.S. for
partial summary judgment; on its motion to strike
the affidavit of Walter B. Dobbins, which affidavit
was submitted with the brief in opposition to the mo-
tion for partial summary judgment; and on U.S.S.’s
second motion for partial summary judgment. In this
order the court will rule on U.S.S.’s first motion for
partial summary judgment and on its motion to
strike. An order on the second motion for partial
summary judgment will be issued forthwith.

I. MOTION FOR PARTIAL
SUMMARY JUDGMENT

U.S.S. seeks summary judgment as to the following
issues for the reasons indicated: (1) Southern lacks
standing under the provisions of §4 of the Clayton
Act, 15 U.S.C. § 15, to assert the claim that U.S.S.
has violated §1 of the Sherman Act, 15 U.S.C. $1,
by engaging in an illegal tying arrangement where
the granting of a loan guarantee (the alleged tying
product) to Williams Brothers’ was conditioned upon
Williams Brothers’ agreement to purchase cement
(the alleged tied product) from U.A.C.; (2) Southern
lacks standing under § 4 of the Clayton Act to assert
the claim that U.S.S. and Williams Brothers have

1The complaint also named Gifford-Hill & Company, Inc. as a
defendant. Pursuant to a consent stipulation filed on December 26,
1973, that party was given until thirty days after final judgment
and final decision on any appeal therefrom as to U.S.S. and Wil-
liams Brothers to respond to the amended complaint.

15

violated §1 of the Sherman Act by engaging in re-
ciprocal dealings wherein U.S.S. agreed to supply a
loan guarantee to Williams Brothers if the latter
would agree to purchase cement from U.A.C.; (3)
Southern lacks standing under §4 of the Clayton
Act to assert the claim that U.S.S. violated § 3 of the
Clayton Act, 15 U.S.C. § 14, by selling cement to Wil-
liams Brothers on the condition that Williams Broth-
ers not use or deal in the cement of any other cement
producer; (4) Southern lacks standing under the pro-
visions of §4 of the Clayton Act to assert the claim
that U.S.S. and Williams Brothers have violated §1
of the Sherman Act by engaging in reciprocal deal-
ings wherein Williams Brothers agreed to provide
storage facilities to U.S.S. if U.S.S. would agree to
provide the services of one Roy Millhouse to Williams
Brothers; (5) Southern cannot assert the claims that
U.S.S. has violated § 2 of the Sherman Act, 15 U.S.C.
§ 2, by engaging in a “conspiracy to attempt to mo-
nopolize” the production and sale of both cement and
ready-mixed concrete in any geographic market for
the reason that such does not assert a violation of
any law; (6) U.S.S. has not violated §7 of the Clay-
ton Act, 15 U.S.C. §18, by aequiring the stock or
assets of Williams Brothers since it is undisputed
that U.S.S. has never acquired any stock or assets
of Williams; (7) U.S.S. has made no discriminatory
sales to Williams in violation of §2 of the Clayton
Act, as amended by the Robinson-Patman Act, 15
U.S.C. §13(a), since Southern has at no relevant
time purchased cement from U.S.8.; and, (8) U.S.S.
cannot have violated §2 of the Sherman Act by (a)

16

monopolizing and (b) attempting to monopolize the
production and sale of ready-mixed concrete for the
reason that it would be impossible as a matter of law
for U.S.S. to be found to have attempted to monopo-
lize or to have monopolized a product which it nei-
ther manufactures nor sells. In compliance with Local
Court R. 91.1 and 91.72, U.S.S. has filed a brief in
support of its motion and a separate short statement
of the material facts as to which it contends there is
no genuine issue to be tried. It has also attached to
the motion two affidavits in support thereof.

In response plaintiff has filed a lengthy brief in
opposition to the granting of any portion of the
motion for partial summary judgment. This brief in-
cludes a counterstatement of facts necessary to de-
termine the issues presented by the motion. The
affidavit of Walter B. Dobbins was filed several days
later “for use as evidence” in opposition to U.S.S.’s
motion for partial summary judgment.

[1] Included in plaintiff’s brief in opposition to
the partial summary judgment motion is an extensive
dissertation on the “judicial standards governing ser-
iatim summary dispositions sought by the instant
motion.” It has cited extensive case law for the fol-
lowing propositions: (1) summary judgment is to be
very carefully employed when a jury trial has been
requested; (2) the court must construe all allegations
in the light most favorable to the opposing party,
(3) summary judgment should not be granted if
there are conflicting inferences from the uncontested
facts, (4) on a motion for summary judgment the

17

court can only decide if there are issues to be decided,
and (5) the moving party must shoulder the burden
to establish the absence of genuine material facts. The
court agrees with these propositions* and is aware of
the requirements of Rule 56, the heavy burden on the
movant, and the importance of a jury trial. However,
the court also agrees with the assertion of U.S.S. that
summary judgment can be appropriate as to claims
under the antitrust laws, and that the burden im-
posed on the moving party by Rule 56(¢)* applies to
parties seeking relief under the antitrust laws as well
as any other civil action. First Nat’l Bank v. Cities
Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 20 L.Ed.
2d 569 (1968). See also Searer v. West Michigan
Telecasters, Inc., 381 F.Supp. 634 (W.D.Mich.1974).

2With respect to the proposition that the court can only decide
if there are issues to be decided, plaintiff’s brief stresses that if
the court determines on a motion for summary judgment that
material issues of fact exist, it cannot decide the fact issues at
that time, even if the adverse party is unlikely to prevail at trial
as to that issue. We agree. As Rule 56(d), Fed. R.Civ P. itself
makes clear, however, if on a motion for summary judgment
under Rule 56 judgment is not rendered upon the whole case
or for all the relief asked and a trial is necessary, the court
shall if practicable, ascertain what material facts exist without
substantial dispute; upon the trial of the action the facts so speci-
fied are deemed established.
Rule 56(e) provides, in pertinent part:
When a motion for summary judgment is made and sup-
ported as provided in this rule, an adverse party may not
rest upon the mere allegations or denials his pleading,
but his response, by affidavits or as otherwise provided in
this rule, must set forth specific facts showing that there is
a genuine issue for trial. If he does not so respond, sum-
mary judgment if appropriate shall be entered against him.

18

A. Claims as to Illegal Tying Arrangements,
Reciprocal Dealings, and Exclusive Deal-
ings between Defendants U.S.S. and Williams
Brothers

U.S.S. contends that Southern cannot assert a claim
for damages on account of tying arrangements re-
ciprocal dealings or exclusive dealing arrangements
between U.S.S. and Williams Brothers pursuant to
§4 of the Clayton Act because it is not within the
limited class of persons who could raise such a claim.
U.S.S. contends that the only persons who could raise
such a claim are the competitors of U.S.S./U.A.C.
and the customers of U.S.8S./U.A.C. which are sub-
ject to the alleged restraint. It contends that there is
no dispute that U.S.S., through U.A.C., is a producer
and supplier of cement and has sold, and does sell,
cement to Williams Brothers; that U.A.C. has never
produced or sold ready-mixed concrete in competition
with Southern; that Southern has never manufac-
tured or sold cement in competition with U.A.C.; and
that Southern has not purchased cement from U.A.C.
within the period of limitations. See U.S.S.’s State-
ment of Material Facts, No. 1, 3, 4, 5, 10. U.S.S.
further contends that plaintiff could not have been
“injured in his business or property by reason of”
these alleged violations within the meaning of § 4 of the
Clayton Act. It sets forth the main test or standards
used by the various Courts of Appeals to determine
whether a particular action or claim may be asserted
under 44 and asserts that Southern cannot pursue
these claims against U.S.S. under these tests.

19

Southern contends that whether or not the tying,
exclusive dealing and reciprocal dealing arrangements
of defendants “were a substantial factor in causing
damages” claimed by plaintiff is a question of fact
and, thus, not susceptible to summary disposition. It
argues that §4 of the Clayton Act is to be given a
liberal construction and that it is within the “zone
of protected interests”* contemplated by that section.
It defines the interests which it seeks to protect as
follows:

its rights to purchase gray Portland cement and
other ready-mixed concrete ingredients, along
with the services incidental to the purchase of
these goods; and thereby to produce and sell
ready-mixed concrete in a market unaffected by
unlawful restraints.

Plaintiff argues, that in Terrell v. Household Goods
Carriers’ Bureau, 494 F.2d 16, 20 (5th Cir. 1974)
(hereinafter “Terrell III”), the Fifth Circuit Court
of Appeals expanded the class of protected private
plaintiffs by holding that a private right of action
under § 4 of the Clayton Act should be recognized
when the plaintiff makes a mere showing that defend-
ant’s alieged violation of the antitrust laws had
“materially contributed” to plaintiff’s injuries. Plain-
tiff further contends that it is within the sector of
the economy threatened hy defendant’s practices,
which area he seeks to define as the production and
sale of ready-mixed concrete in the Atlanta Metro-
politan market area.

4See Association of Data Processing Service Organizations, Inc.
v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970).

20

[2-4] Section 4 of the Clayton Act authorizes a
private plaintiff to sue for injuries sustained as a
consequence of an antitrust violation. Battle v. Lib-
erty Nat’l Life Ins. Co., 493 F.2d 39, 48 (5th Cir.
1974). This section provides:

Any person who shall be injured in his busi-
ness or property by reason of anything forbidden
in the antitrust laws may sue therefor in any
district court of the United States in the district
in which the defendant resides or is found or has
an agent, without respect to the amount in con-
troversy, and shall recover threefold the damages
by him sustained, and the cost of suit, including
a reasonable attorney’s fee. (Emphasis added.)

By the terms of §4, therefore, two criteria must be
satisfied before standing is established: the plaintiff
must show that he has suffered injury to “business or
property” and he must show that his injuries were
incurred “by reason of” the defendant’s illegal ac-
tivities. Battle v. Liberty Nat’l Life Ins. Co., supra;
In re Multidistrict Vehicle Air Pollution M.D.L. 31,
481 F.2d 122, 126 (9th Cir. 1973). And see Dailey v.
Quality School Plan, Inc., 380 F.2d 484, 487 (5th Cir.
1967). While § 4 is to be accorded a liberal construc-
tion, see Mandeville Island Farms, Inc. v. American
Crystal Sugar Co., 334 U.S. 219, 68 S.Ct. 996, 92
L.Ed. 1328 (1948), it does not accord a right of
action to every person who may have felt some
“ripple effect” of the violation. Billy Baxter v. Coca
Cola Co., 431 F.2d 183, 187 (2d Cir. 1970). The Su-
preme Court has acknowledged that the lower federal
courts have been virtually unanimous in concluding

21

that Congress did not intend the antitrust laws to

provide a remedy in damages for all injuries that

might conceivably be traced to an antitrust violation.
Hawaii v. Standard Oil Co., 405 U.S. 251, 262 n. 14,
92 S.Ct. 885, 31 L.Ed.2d 184 (1972). In In re Multi-
district Vehicle Air Pollution M.D.L. 31, supra, the
various limitations employed by the Courts of Ap-
peals are set forth. We need not apply each of those
tests to the claims addressed by this portion of the
summary judgment motion; in this circuit a plaintiff
who asserts that he has suffered injuries “by reason
of” the defendants’ illegal activities must show that
he is “within the sector of the economy in which the
violation threatened a breakdown of competitive con-
ditions and that he was proximately injured there-
by.” Battle v. Liberty Nat’l Life Ins. Co., supra at
49; Dailey v. Quality School Plan, Ins. supra at 487
quoting South Carolina Council of Milk Producers,
Ine. v. Newton, 360 F.2d 414 (4th Cir. 1966).

[5] Clearly, to determine the sector of ‘the econ-
omy in which an antitrust violation threatened a
breakdown of competitive conditions and to determine
who can be considered to be proximately injured by
an antitrust violation, the court must look to the
nature of the antitrust violation itself. A tying
arrangement may be defined as an agreement by
a party to sell one’s product but only on the
condition that the buyer also purchase a different
(or tied) product, or at least agrees that he
will not purchase that product from any other sup-
plier. Northern Pac. Ry. Co. v. United States, 356

22

U.S. 1, 5-6, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958). The
seller uses his leverage in the market for the tying
product in order to gain an advantage in the tied
market. Jd. Thus, the buyer is “coerced” into agree-
ing to take a product he does not want in order to
obtain an article he desires, United States v. Loew’s,
Inc., 371 U.S. 38, 45, 83 S.Ct. 97, 9 L.Ed.2d 11 (1962) ;
and the result is that competing sellers in the tied
market are “foreclosed” by the tie-in and competition
“on the merits” in the tied product is prevented. Id.;
Times Picayune Publishing Co. v. United States, 345
U.S. 594, 605, 73 S.Ct. 872, 97 L.Ed. 1277 (1953).°
Thus, the Supreme Court cases make clear that the
area of the economy in which a tying arrangement
threatens a breakdown of competitive conditions is
the market for the tied product and that those who
would be proximately injured by such an arrangement
would be the purchasers® of the tied product and the
sellers of the tied product in competition with the
seller who imposes the tie-in. Similarly, where
in an exclusive dealing arrangement a party binds
himself to purchase a product only from a cer-
tain seller, he is foreclosed from obtaining the
product at a lower price or of higher quality from
other sellers. Thus, competition as to the product is
threatened and the purchaser and other sellers of the

5In Fortner Enterprises v. United States Steel Corp., 394 U.S.
495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969), the Supreme Court
held that an extension of credit by a subsidiary of a manufactur-
ing company conditioned on the borrower’s promise to purchase
the product of the parent company could amount to an illegal
tie-in.

6See note 13, infra.

eS

23

product are injured. A similar analysis applied to a
reciprocal dealing arrangement leads to a conclusion
that purchasers of the products which are the subjec:
of the arrangement and the competitors for the sale
of such products are the injured parties and competi-
tion as to such products is foreclosed.

[6] In the instant case, the tying arrangement’
was the extension of direct and indirect loans (the
tying product) by U.S.S. to Williams Brothers con-
ditioned on the purchase from U.S.S. of cement (the
tied product) by Williams Brothers.* Similarly, the
challenged reciprocal dealing arrangement’ involves
U.S.S.’s guaranteeing of a loan and/or U.S.S.’s pro-
viding the services of Mr. Millhouse to Williams
Brothers in return for purchase of cement by Wil-
liams Brothers from U.S.S. The exclusive dealing
violation’® arises from the sale of cement on the condi-

7For purposes of this motion U.S.S. assumes arguendo that the
arrangement as to credit and cement purchases from U.S.S. by
Williams Brothers could be termed a tying, exclusive dealing, or
reciprocal dealing arrangement and that it is a violation of the
antitrust laws. The court’s reference to a tying, exclusive dealing
or reciprocal dealing arrangement between these defendants is
not, of course, a finding or conclusion that the arrangements
between these defendants were such or violated the antitrust laws.

8See Counterstatement of Material Facts in plaintiff’s brief in

opposition at page 9: “. . . UAC ©» im full agreement with
U.S.S.’s proposed ‘tying arrangement’ » secure a captive Atlanta
market for sale of UAC’s cement product. . . .” (Emphasis

added.) It is important to note that in all the briefs submitted
in connection with the motion, the parties assume that cement
and ready-mix concrete are not one and the same, i.e. that they
are not interchangeable, and that sellers of cement are not in
competition with sellers of ready-mixed concrete. Thus, the rel-
evant market for cement sales differs from the relevant market
for ready-mixed concrete sales.

®See note 7, supra.
10See note 7, supra.

24

tion or understanding that the purchaser of cement
would not use or deal in the cement of any other
cement producer. In each of these arrangements the
tied product or the product which is the subject of
the agreement is cement. Thus, the area of the econ-
omy threatened with a breakdown of competitive
conditions is cement sales and those who could claim
to be proximately injured by such arrangements by
U.S.S8. are purchasers’ of cement from U.S.S. pur-
suant to such an arrangement or competitors of
U.S.S. in cement sales. Since plaintiff nowhere de-
nies the assertions in U.S.S.’s Statement or Material
Facts’® that it did not purchase cement from U.S.S.
during the relevant statute of limitations period,"
and that it was never a seller of cement, as distin-
guished from ready-mixed concrete, in competition
with U.S.8S./U.A.C., the court finds that it does not
compete in the area of the economy which would be
threatened with a breakdown of competitive condi-

11S¢e note 13, infra.

12Pursuant to Local Court R. 91.72 “[a]ll material facts set
forth in the statement required to be served by the moving party
will be deemed to be admitted unless controverted by the state-
ment required to be served by the opposing party.” We do not
rely solely on the failure of Southern to controvert these asser-
tions, however, as its brief makes clear that it does not contend
that it purchased, directly or indirectly, cement from U.S.S./
U.A.C. during the statute of limitations period, or that it was a
manufacturer or seller of cement at any time.

18Since Southern does not allege that it was either a direct or
indirect purchase of cement from U.S.S./U.A.C., the issue of
whether an indirect purchaser, that is, a purchaser of the product
at a subsequent level in the chain of distribution may recover
for the alleged violations asserted herein is not presented. As a
result, we need not and do not decide herein whether such indi-
rect purchasers could claim to be proximately injured “by rea-
son of” antitrust violations such as the one here in question.

25

tions by the challenged arrangements, cement sales,
and further, finds that it would not be proximately
injured by such arrangements. Thus, applying the
test utilized in the Fifth Circuit to determine whether
a party can allege to be injured “by reason of” an
antitrust violation, and thus has standing to claim
damages pursuant to § 4 of the Clayton Act for such
antitrust violation, we find that Southern does not
have standing to seek damages on account of the al-
leged tying, reciprocal dealing or exclusive dealing
arrangements between U.S.S./U.A.C. and Williams
Brothers with respect to U.S.S./U.A.C.’s sale of ce-
ment to Williams Brothers.

[7] We reject the contention made by plaintiff
that the question of causation is necessarily a ques-
tion of fact which cannot be decided on a motion for
summary judgment and must be submitted to the
jury. Plaintiff’s assertions of injury in its brief are
general allegations of injury due to an alleged con-
spiracy between U.S.S. and Williams Brothers to re-
strain trade in and to monopolize the ready-mixed
concrete market; it makes no attempt to specify in-
juries to it due to the alleged tying, exclusive dealing
or reciprocal dealing arrangements. Further, as noted
above, plaintiff has made no attempt to show that it
was a seller of cement or a purchaser of cement from
U.S.S./U.A.C. This fails to satisfy the burden im-
posed on a party opposing summary judgment. Rule
56(e), Fed.R.Civ.P. As stated in First Nat’] Bank v.
Cities Service Co., supra:

To the extent that petitioner’s burden-of-proof
argument can be interpreted to suggest that Rule

26

56(e) should, in effect, be read out of antitrust
cases and permit plaintiffs to get to a jury on the
basis of the allegations of their complaints, cou-
pled with the hope that something can be devel-
oped at trial in the way of evidence to support
those allegations, we decline to accept it. While
we recognize the importance of preserving liti-
gants’ rights to a trial on their claims, we are
not prepared to extend those rights to the point
of requiring that anyone who files an antitrust
complaint setting forth a valid cause of action be
entitled to a full-dress trial notwithstanding the
absence of any significant probative evidence
tending to support the complaint.

Id. 391 U.S. at 289-90, 88 S.Ct. at 1593.

[8] The court also rejects plaintiff’s contention
that in Terrell III, supra, the Fifth Circuit Court of
Appeals expanded the class of protected private plain-
tiffs by holding that a private right of action under
§ 4 of the Clayton Act should be recognize’1 when the
plaintiff makes a mere showing that defendants’ al-
leged violation of the antitrust laws had “materially
contributed” to plaintiff’s injuries. The Terrell III
opinion involved an appeal by the defendant from
a trial on damages. Earlier in the action the district
court judge, after a jury verdict in plaintiff’s favor,
had entered judgment on the verdict against this de-
fendant and judgment notwithstanding the verdict
in favor of the individual defendants. On defendant’s
(first) appeal a majority of the original panel in the
Court of Appeals vacated the judgment against the
defendant and remanded the case for a new trial.
Household Goods Carriers’ Bureau v. Terrell, 417

27

F.2d 47 (5th Cir. 1969). Upon rehearing en banc, a
majority of the Court affirmed the district court’s
judgment against the defendant, but reversed for a
new trial on the issue of damages. Household Goods
Carriers’ Bureau v. Terrell, 452 F.2d 152 (5th Cir.
1971) (en banc). In Terrell III the panel reviewed
this subsequent trial on damages. That it did not in-
tend to set forth a new test on standing nor deal with
causation in fact is made perfectly clear in the Ter-
rell III opinion; the Court emphasized that “the en
banc decision establishing liability finally adjudicated
the issue of causation” and that “the decision of this
court sitting en banc at an earlier stage of this same
ease represents the law of the case.” 494 F.2d at 19.
The Terrell III Court was thus concerned with the
measure of proof as to amount of damages rather
than causation. As stated in Story Parchment Co. v.
Paterson Parchment Paper Co., 282 U.S. 555, 562, 51
S.Ct. 248, 250, 75 L.Ed. 544 (1931) (and quoted in
Terrell III):

[T]here is a clear distinction between the meas-
ure of proof necessary to establish the fact that
petitioner had sustained some damage and the
measure of proof necessary to enable the jury to
fix the amount. The rule which precludes recov-
ery of uncertain damages applies to such as are
not the certain result of the wrong, not to those
damages which are definitely attributable to the
wrong and only uncertain in respect of their
amount. (Emphasis added.)

See also Shumate & Co. v. National Ass’n of Securi-
ties Dealers, Inc., 509 F.2d 147, 153 (5th Cir. 1975)

28

(“although [the Court is] generally lenient as to evi-
dence required to show the amount of damages in an-
titrust matters once liability is determined, courts do
not permit the fact of damage necessary to prove
liability to be based on speculation.”) ; Hobart Bros.
Co. v. Malcolm T. Gilliland, Ine., 471 F.2d 894, 901-02
(5th Cir. 1973), cert. denied, 412 U.S. 923, 93 S.Ct.
2736, 37 L.Ed.2d 150.

The court’s conclusion is that plaintiff does not have
standing to claim damages on account of the tying,
exclusive dealing or reciprocal dealing arrangements
between U.S.S./U.A.C.; it is not a ruling on admissi-
bility of evidence with respect to claims which are not
foreclosed by this order, for example, the alleged con-
spiracy to restrain trade in or to monopolize the
ready-mixed concrete and cement markets. Cf. Conti-
nental Ore Co. vy. Union Carbide & Carbon Corp., 370
U.S. 690, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962). Rul-
ings on admissibility of evidence as distinguished
from sufficiencies of claims, is best reserved for trial.

We hold that plaintiff lacks standing under § 4 of
the Clayton Act to recover damages “by reason of”
the alleged tying, exclusive dealing or reciprocal deal-
ing arrangements between defendants U.S.S. and Wil-
liam Brothers. To that extent, this portion of the mo-
tion for partial summary judgment is granted.

B. Alleged Conspiracy to Attempt to Monopolize

[9] U.S.S. further seeks partial summary judg-
ment on the ground that Southern cannot assert the
claims that U.S.S. has violated §2 of the Sherman

— oe a

29

Act, by engaging in a “conspiracy to attempt to mo-
nopolize” the production and sale of both cement and
ready-mixed concrete for the reason that such does
not assert a violation of any law. Plaintiff opposes
this portion of the summary judgment motion con-
tending that its charged violation, “conspiracy to at-
tempt to monopolize,” is within the Congressional
intention of §2 of the Sherman Act and that the
violation is distinguishable from the charge of attempt
to monopolize in that it does not require the showing
of specific intent, but, rather is established upon com-
mission of predatory acts pursuant to the alleged
conspiracy to monopolize. |
Section 2 of the Sherman Act, 15 U.S.C. § 2, pro-
vides :
Every person who shall monopolize, or attempt
to monopolize, or combine and conspire with any
other person or persons, to monopolize any part
of the trade or commerce among the several
States, or with foreign nations, shall be deemed
guilty of a misdemeanor, and, on conviction
thereof, shall be punished by fine not exceeding
fifty thousand dollars, or by imprisonment not
exceeding one year, or both said punishments,
in the discretion of the court.

The court agrees with defendant U.S.S. that three
distinct offenses are to be found in this provision: (1)
monopolization, (2) attempt to monopolize, and (3)
vombination or conspiracy to monopolize. Plaintiff’s
contention that in United States v. Dunham Concrete
Prod., Inc, 501 F.2d 80 (5th Cir. 1974), the Fifth
Circuit Court of Appeals recognized the crime of a

30

conspiracy to attempt to monopolize “by failing to
hold that its inclusion in the lower Court’s charges
to a jury was reversible error” is totally without
merit. Dunham involved an appeal from an order
granting a new trial pursuant to 28 U.S.C. § 2255.
The court held thai the submission to the jury of a
form for recording their verdict’* which listed as sep-
arate counts “Conspiracy to attempt to monopolize
in violation of Section 2 of the Sherman Act” and
“Conspiracy to attempt to extort”, which form had
been prepared by counsel for defendant, did not
warrant relief from judgment pursuant to § 2255. Ac-
cordingly, it reversed the trial court as to this por-
tion of its order. The Court’s reversal was not based
on a finding that there is a separate crime of “con-
spiracy to attempt to monopolize” in § 2 of the Sher-
man Act. It was based on the finding that the “error
in wording of this form for recording the verdict did
not ecntribute to [the] conviction.” /d. at 84 (empha-
sis added).'® It further mentioned that when Govern-
ment counsel objected to the form, “[u]naccountably”
the court adopted it as presented and sent it out with
the jury. There is nothing in the opinion to suggest

14Jt is clear from the opinion that the phrase “conspiracy to
attempt to .. .” appeared twice on the form for recording the
jury verdict; the charges to the jury were not the subject of the
appeal.

15The Court stated that “ iracy to attempt to monopolize”
could have only four conceivable meanings: (A) conspiracy to
monopolize, (B) conspiracy to fail to monopolize, (C) attempt
to monopolize and (D) attempt to fail te monopolize. Since mean-
ings B and D are “nonsense” and since the jury had been unable
to agree as to the count which charged a ee to monop-
olize (meaning 1), the Court construed the verdict as finding an
attempt to monopvlize. Id. at 84.

31

that a separate offense exists for “conspiracy to at-
tempt to monopolize”; the entire opinion indicates
that no such crime exists.

Accordingly, insofar as U.S.S. seeks partial sum-
mary judgment on the claim that it conspired to at-
tempt to monopolize the production and sale of cement
or ready-mixed concrete in any geographic market,
the motion is granted.

C. Alleged Acquisition of Stock or Assets

- U.S.S. seeks summary judgment in its favor as to
Southern’s claim for damages for an alleged violation
of §7 of the Clayton Act, 15 U.S.C. §18. The acqui-
sition complained of is alleged to be the “acquisition”
of Williams Brothers by U.S.S. The latter seeks
summary judgment on this issue hased on the allega-
tions that it has never purchased, possessed, or other-
wise acquired a single share of stock in Williams and
that it has never purchased, possessed or otherwise
acyuired any asset of Williams. See U.S.S.’s State-
ment of Material Facts, No. 15 and 16. It argues that
plaintiff’s contention that the right of first refusal as
to Williams Brothers’ stock granted to U.S.S. and
exercisable in the event of default on a loan made by
Trust Company of Georgia to Williams Brothers and
guaranteed by U.S.S., amounts to an “acquisition” of
stock and assets is insufficient as a matter of law.
U.S.S. further contends that even if viewed as an
‘‘acquisition” within the meaning of § 7 of the Clayton
Act, plaintiff was not, and could not, have been dam-
aged by such arrangement.

32

Plaintiff opposes this portion of the motion with
the following contentions:

1. The circumstances surrounding the vertical fi-
nancing and business arrangement existing
between U.S.S. and Williams Brothers were tan-
tamount to vertical integration (a supplier’s ac-
quisition of its customer) and as such indicate a
probability that U.S.S. used and will continue to
use its dominant guarantor’s position as lever-
age to put pressure upon the debtor to substan-
tially lessen competition in the Portland cement
and ready-mixed concrete industries in the rele-
vant geographic markets.

2. This vertical arrangement afforded Williams
Brothers decisive cost advantages in these mar-
kets over its nonintegrated competition, such as
Southern in the purchase of the costliest con-
crete ingredient, Portland cement, which advan-
tages when passed on in the form of lower con-
crete prices to consumers resulted in prices
lower than Southern’s costs, ultimately forced
Southern out of business in October, 1969.

It contends that U.S.S.’s “undue influence” over Wil-
liams Brothers of the “collateral security option to
purchase Williams Brothers’ outstanding stock” is an
“acquisition” within the meaning of 47. It argues
that this arrangement is ipso facto violative of § 7,
but if the court is “not disposed” to enter such a
determination, it is “critical” that the term “acquisi-
tion”, as used in § 7, “encompasses such coercive loan
arrangements and its anticompetitiveness is reserved

33

for jury deliberation.” Plaintiff stresses that “sum-
mary judgment is manifestly inappropirate on the is-
sues of intent and state of mind necessarily raised
by inquiry into the circumstances surrounding the
creation and operation of this vertical combination.”
Both parties to this motion rely on Metro-Goldwyn-
Mayer v. Transamerica Corp., 303 F.Supp. 1344 (S.D.
N.Y.1969) (hereinafter “MGM7”) in support of their
contentions.

[10] Section 7 of the Clayton Act, 15 U.S.C. § 18,
provides, in pertinent part:

No corporation engaged in commerce shall ac-
quire, directly or indirectly, the whole or part of
the stock or other share capital and no corpora-
tion subject to the jurisdiction of the Federal
Trade Commission shall acquire the whole or any
part of the assets of another corporation engaged
also in commerce in any section of the country,
the effect of such acquisition may be substan-
tially to lessen competition, or to tend to create
a monopoly. ...

There can be a claim for money damages, pursuant
to § 4 of the Clayton Act, 15 U.S.C. § 15, for a viola-
tion of §7 of the Clayton Act. Dailey v. Quality
School Plan, Inc., supra; Gottesman v. General Mo-
tors Corp., 414 F.2d 956, 961 (2d Cir. 1969). See
Minnesota Mining & Mfg. Co. v. New Jersey Wood
Finishing Co., 381 U.S. 381, 85 8.Ct. 1473, 14 L.Ed.
2d 405 (1965).

[11, 12] A claim for damages for violation of

§7 presents the questions of whether there has been
an acquisition of stock or assets within the meaning

34

of §7; if so, whether plaintiff can claim damages on
account of such acquisition; what is the appropriate
section of the country; and whether there is a reason-
able probability of a substantial lessening of compe-
tition. Where there is no “acquisition” of stock or
assets, therefore, the other questions need not be an-
swered and a claim for damages will not lie. See
infra, at note 7 and accompanying text. The words
“acquire” and “assets” are not terms of art or tech-
nical legal language; they are generic, imprecise terms
encompassing a broad spectrum of transactions
whereby the acquiring party may accomplish the ac-
quisition by means of purchase, assignment, lease,
license, or other otherwise. United States v. Colum-
bia Pictures Corp., 189 F.Supp. 153, 181-82 (S.D.
N.Y. 1960).

In the instant case it is not in dispute that in 1965
and 1966 the Trust Company of Georgia (TCG)
granted three loans to Williams Brothers. U.S.S.
agreed with TCG that it would guarantee repayment
of the loan in the event of default by Williams
Brothers. These guarantees were secured by the right
of first refusal to purchase stock of Williams Broth-
ers, a right which was to remain effect only while
there were outstanding balances on the loans.'* Two
of the loans have been repaid in full by Williams
Brothers; and thus, the right of first refusal in the
event of default on these loans no longer exists. The

161).$.S8. explains in its brief in support of its motion for par-
tial summary judgment that the option to purchase stock would
come into play only if Williams Brothers notified U.S.S. that a
third party had offered to buy the Williams Brothers’ stock.

35

guarantee with respect to the third loan has been
withdrawn by U.S.S. See U.S.S.’s Statement of Ma-
terial Facts, No. 11, 12, 13 and 14.

[13] It is clear that the right of first refusal in
the event of default was never exercised and will
never be exercised because such right is now non-
existent. Thus, U.S.S. never possessed, in any mean-
ingful sense of the word, the stock of Williams Broth-
ers. The court finds that characterizing the right of
first refusal for the purchase of stock granted to a
guarantor of a loan furnished by a third party as an
“acquisition” within the purview of §7 of the Clay-
ton Act stretches the language of this section to ab-
surd lengths and, further, that such characterization
could have serious deleterious effects on the commer-
cial transactions of corporations and lending insti-
tutions.

As both parties rely to some extent on MGM, supra,
a short discussion of that opinion and a comparison
to the situation here involved is appropriate. In the
MGM case plaintiff M.G.M. sought to enjoin the
defendants from proceeding with a cash tender offer
by Tracy Investment Company for M.G.M. stock. 303
F.Supp. at 1346. The cash tender offer was being
financed by Transamerica Financial Corporation,
whose parent corporation Transamerica Corporation,
owned 99.6% of United Artists Corporation, a major
competitor of M.G.M. The court found that the ac-
quisition by the Transamerica-United Artists group
of working control of M.G.M. stock “would violate”
§7 of the Clayton Act, 303 F.Supp. at 1348 (em-

36

phasis added), and thus, that the existing Financial-
Tracy loan arrangement “pose[d] a threat of viola-
tion of § 7.” 303 F.Supp. at 1349 (emphasis added).
The court granted M.G.M. preliminary injunctive re-
lief restraining defendants from further proceeding
with the tender offer until the Financial-Tracy’ loan
agreement was terminated or amended to provide
that any M.G.M. shares acquired by Tracy would
not be delivered or pledged with Financial, its par-
ent Transamerica, or any of their affiliates. 303 F.
Supp. at 1354.

The MGM ease is distinguishable from the actio.
sub judic

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1047%3A1. Public record. Not legal advice.