# Appendix — Allied Chemical Corp. v. Daiflon, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1980
- **Citation:** 449 U.S. 33

## Text

IN THE

Supreme Court of the United States

Octoser Term, 1979

ALLIED CHEMICAL CORPORATION, ET AL.,
Petitioners,

Darrton, Inc.,
Respondent.

On Petition for a Writ of Certiorari to the United States
Court of Appeals for the Tenth Circuit

Press or Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C.

IN THE

Supreme Court of the United States

Octoser TERM, 1979

ALLIED CHEMICAL CORPORATION, ET AL.,
Petitioners,

Datrion, Ine.,
Respondents.

On Petition for a Writ of Certiorari to the United States
Court of Appeals for the Tenth Circuit

INDEX TO APPENDIX
Page

. Opinion of the United States Court of Appeals for
the Tenth Circuit, dated December 21, 1979 ...... la

District Court’s Comments and Rulings on Defend-
ants’ Motions for Judgment N.O.V. and for
New Trial, dated May 14, 1979 .............. 23a

B. Judgment and Writ of Mandamus ............... 29a

C. Court of Appeals Order Denying Petition for Re-

hearing and Suggestion for Rehearing En Bane,
SE PE Oy ao Shows oh decd be eeenk eaves 3la

. Court of —— Order Requiring Submission of
“Narrative Statements,” dated August 10, 1979 ... 32a

. District Court Order Announcing Recusal, dated
pe SE ree a ap ey rey er epee 34a

. Statutory Provisions Involved ................4. 38a

G. Memorandum in Support of Motion for Judgment

Notwithstanding the Verdict .................... 39a

. Memorandum in Support of Motion for New Trial 95a

la
APPENDIX A

UNITED STATES COURT OF APPEALS, TENTH CIRCUIT
No. 79-1459
Darton, Inc., Petitioner,
v.

The Honoraste Lutner Bonanon, Judge of the United
States District Court for the Western District of
Oklahoma, Respondent.

Argued and Submitted October 9, 1979
Decided December 21, 1979

Before McWi.uiaMs, Breitenstein and Doyte, Circuit
Judges.

Wiutuiam EK. Doyte, Circuit Judge.

These are proceedings in which Daiflon seeks review of
an order of the district court granting a new trial in an
antitrust case which had been tried to a jury. Daiflon pre-
vailed in that case and recovered a judgment in the amount
of $2.5 million actual damages. Daiflon moved the court
to treble this amount. The court simply ordered entry
of judgment for $2.5 million. The trial court granted a
new trial on all of the issues. See Exhibit A. Daiflon seeks
to prohibit further proceedings except as the same are
necessary in order to enter judgment on the verdict in-
cluding treble damages, and to determine and assess the
costs against the defendants, including attorneys’ fees.

The remedy here sought is pursuant to extraordinary
writ, 28 U.S.C. §1651(a) and Fed.R.App.P. 21. Daiflon
contends that the trial court’s new trial order exemplified
an erroneous practice likely to recur. It calls attention to
the fact that the trial judge, the Honorable Luther Bo-
hanon, had previously dismissed this case for a trivial

2a

reason which necessitated a reversal by this court. In that
instance the judge entered an order of dismissal with pre-
judice for failure of Daiflon to answer one discovery ques-
tion. This order was vacated and the cause was reinstated
by this court. See Daiflon v. Allied Chemical Corp., 534
F.2d 221 (10th Cir.), cert. denied 429 U.S. 886, 97 S.Ct. 239,
50 L.Ed.2d 168 (1976). In essence, the petitioner contends
that the trial judge has a misconception of the scope and
extent of trial court’s authority to grant a new trial.
Daiflon’s position appears to be that the judge acted on the
premise that the trial court’s discretion is virtually un-
limited, und that because of this there exists a likelihood
that there will be a repetition of the present result.

To obtain relief Daiflon must, of course, demonstrate
that its right is clear and indisputable. See Will v. Calvert
Fire Ins. Co., 437 U.S. 655, 662, 98 S.Ct. 2552, 57 L.Ed.2d
504 (1978); State Farm Mutual Automobile Ins. Co. v.
Scholes, 601 F.2d 1151, 1154 (10th Cir. 1979). Daiflon is re-
quired to show that the order was not only erroneous under
normal standards of appellate review, but also that the
ruling is so extraordinary as to evidence arbitrariness and
a clear abuse of discretion.

The record here is a special one which was prepared by
counsel on order of this court once it had been decided
that the case should be reviewed at least to some extent.
There was no transcript filed so the parties were ordered to
prepare simultaneous summaries of the evidence which had
been presented by each side at the trial. This was to have
been in lieu of a transcript.’ Petitioner followed the direc-

‘The pertinent part of our order noted that the court lacked a
transcript of the evidence. In view of that, the parties were di-
rected as follows:

Accordingly, the parties are directed, in lieu of a transcript
of the evidence, to prepare and sign a narrative statement of
the case along the lines provided in Rule 10(d) of the Rules
of Appellate Procedure. Each side shall prepare a summary
of the evidence presented by it at the trial. These summaries

3a

tions of the court fully. It presented a 160-page document
which was fully referenced, and which complied in every
detail with the court’s order. It was not required to sum-
marize the defendants’ testimony at the trial and so it did
not do so, with the possible exception of presenting evi-
dence in some instances that had been brought out by Dai-
flon on cross-examination of defendants’ witnesses. The
petitioner had a right to assume that the defendants would
present in summarized form the testimony of their own
witnesses. The defendants’ statement was relatively brief
and had an argumentative tone and sought to answer peti-
tioner’s reply brief. Essentially, it was a brief and argu-
ment. Only the testimony of one witness was summarized,
and that was not fully presented.’

The facts can be stated briefly. From 1969 to 1972,
Daiflon had engaged in the business of importing refrig-
erant gas from Japan. The gas was repackaged by Daiflon
and resold to both wholesaler and retail contractors and
servicemen in the non-automotive air conditioning indus-
try. This suit was commenced on July 12, 1972, seven years
prior to the instant proceedings. The suit was brought
under the Sherman Act, §§1 and 2, in the United States
District Court for the Western District of Oklahoma. The
defendants named were EK. I. du Pont de Nemours & Co.,
Allied Chemical Corp., Kaiser Aluminum & Chemical Corp.,
Pennwalt Corp., Racon, Inec., and Union Carbide Corp., all
of which manufactured refrigerant gas. In the suit it was
alleged that the defendants had engaged in an unlawful

shall be simultaneously prepared and shall be simultaneously
submitted on or before September 11, 1979.

It was thus plain that an argumentative brief was not being
sought.

?It did not present a summary of the evidence presented by
defendants as called for. To the present day we are in the dark
as to the identity of the defendants’ witnesses and the testimony
which was given by them.

4a

price-fixing conspiracy, the object of which was to exclude
Daiflon from the market. A further allegation was that de-
fendants conspired to monopolize the market and that du
Pont had engaged in monopolization through predatory
pricing and disparagement of Daiflon’s products. There
was testimony presented at the trial that each of the de-
fendants reduced their selling prices for refrigerant gas
in March 1971 by 13%, and that the defendants had fur-
ther reduced the selling prices of two grades of refrig-
erant gas in March 1972. Daiflon ceased doing business in
October 1972. After the cessation of its business, defen-
dants increased their prices to the pre-March 1971 level.

There was testimony that du Pont had approximately
45% of the market; Allied Chemical had approximately
18-20% ; Union Carbide, 12-14% ; Pennwalt, 8-9% ; Kaiser,
7-8% ; and Racon, 2%. Daiflon sold its refrigereat gas in
31 states, although its share of the market was estimated
to be .5% prior to the price lowering of the defendants.
There does not appear to be any quality difference in this
product.

Daiflon’s sales were shown to have increased after it was
formed in 1969 until June 1971, at which time the price
decrease of the defendants was felt and the sales of Dai-
flon reduced from $160,000 to $10,000 in one month. Follow-
ing this, Daiflon was ordered by its bank to liquidate.

In August 1971, the President imposed a ten percent
surcharge on all imported goods and thereby increased the
duty on refrigerant gas from six to sixteen percent. This
continued in effect until December 1971, at which .ime the
dollar was devalued against the yen. Daiflon dit not im-
port refrigerant gas from Japan after August 1971, but
sold it out of its inventory. The defendants maintained
that Daiflon’s failure was duc to the imposition of the im-
port surcharge and to problems in Daiflon’s operations,
and was not due to the defendants’ actions. This was un-

da

doubtedly one of the primary fact issues submitted to the
jury.

After trial, the trial court denied the defendants’ mo-
tion for judgment notwithstanding the verdict. The judge
did not formally vacate the judgment entered in favor of
Daiflon on April 9 in conjunction with the grant of the
new trial. No doubt this was oversight. The defendants
have nevertheless filed a notice of appeal from the judg-
ment and also from the deniai of their motion for judg-
ment notwithstanding the verdict.

It would appear from reading the transcribed oral rul-
ing of the judge that the trial court’s dissatisfaction was
on the basis that the damages were excessive and was on
the further ground that he had erred in the admission of
unidentified exhibits.

The trial court’s main disagreement was with the amount
of the verdict. The judge stated in connection with the new
trial order that the amount of the award shocked him, and
the indications were that he would have been even more
shocked had he ordered the trebling of the damages. The
judge had much less to say about the jury’s conclusion
that the defendants were liable under the antitrust laws.
The main complaint here was that there was not enough
time and effort given to determining the authenticity of
the documents that were received in evidence, and he ex-
pressed a determination to consider them with much
greater care on retrial. At the same time he did not point
out any single document or group of documents which
should not have been received.

Discussion of the Issues

The primary question in the case is whether, in view of
the fact that final judgment or final order is not from a
practical standpoint present in the record, and hence there
is not an adequate remedy at law, an extraordinary writ

6a

ean be employed to review the validity of the order of the
trial court granting a new trial.

In our opinion the trial court merely overlooked formal
vacating of the judgment, and therefore we must assume
that this intended object was carried out since the new trial
was ordered.

The defendants take the position that there is no rem-
edy under an extraordinary writ. The only possibilities,
according to them, are, first, to grant their motion for
judgment notwithstanding the verdict, or, second, to retry
the case. Defendants do not give recognition to possible
use of the writ on the basis of “a clear abuse of discretion,
an abdication of the judicial function, or the usurpation
of judicial power.” Paramount Film Distributing Corp. v.
Cwie Center Theater, Inc., 333 F.2d 358, 361 (10th Cir.
1964), citing La Buy v. Howes Leather Co., 352 U.S. 249,
77 S.Ct. 309, 1 L.Ed.2d 290 (1957). The truth is that the
extraordinary remedy route is limited, but it cannot be
said to be nonexistent.

We take note of the fact that there has been no certifi-
cation pursuant to 28 U.S.C. § 1292(b). This interlocutory
appeal procedure was not a viable possibility. Defendants
suggest that Daiflon should have sought to oust the judge
by means of §§ 144 and 455 of the Judicial Code on the
basis of an affidavit that he was biased and prejudiced.
This procedure has not been pursued by the petitioner as
of the present time at least, and there is nothing in the
record which indicates that such a course had been con-
templated.

It goes without saying that an orthodox appeal pursu-
ant to § 1291 of the Judicial Code is not a possibility be-
cause, as indicated above, there is no final judgment or
final order which could support an appeal. The grant of a
new trial is not a final judgment.’

* See Kanatser v. Chrysler Corp., 199 F.2d 610, 615 (10th Cir.
1952), cert. denied 344 U.S. 921, 73 S.Ct. 388, 97 L.Ed. 710 (1953).

7a

A valid basis for obtaining appellate review is some-
what elusive. Thus, this is not a question of the trial court’s
acting beyond its jurisdiction. This is a recognized excep-
tion to the final judgment rule.* What we are confronted
with is a request for extraordinary review questioning
whether there has been a clear abuse of discretion in grant-
ing the new trial. So, the lack of jurisdiction remedy is out.

There is a concept of finality which had a practical and
nontechnical construction.’ It is, however, no longer a
viable theory. Coopers & Lybrand v. Livesay, 437 U.S. 463,
98 S.Ct. 2454, 57 L.Ed.2d 351 (1978). The concept of piece-
meal review has rendered the death knell threat practically
ineffectual.

General Issuance of a Writ of Mandamus as an Instrument
of Appellate Review

The only remaining alternative is therefore whether
there is some inherent basis to be found within the four
corners of the writ of mandamus. We proceed to that in-
quiry.

The relevant statute, 28 U.S.C. §1651(a), is not itself
narrow and restrictive. It provides:

The Supreme Court and all courts established by
Act of Congress may issue all writs necessary or ap-
propriate in aid of their respective jurisdictions and
agreeable to the usages and principles of law.

* Demeretz v. Daniels Motor Freight, Inc., 307 F.2d 469 (3d Cir.
1962).

5 Kisen v. Carlisle & Jacquelin, 417 U.S. 156, 171, 94 S.Ct. 2140,
40 L.Ed.2d 732 (1974); Cohen v. Beneficial Loan Corp., 337 U.S.
541, 546, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949) ; Gillespie v. United
States Steel Corp., 379 U.S. 148, 153, 85 S.Ct. 308, 13 L.Ed.2d 199
(1964).

8a

So, then, it is a question whether the circumstances here
are agreeable to the usages and principles of law.

Perhaps the area which offers a possibility for review is
supervisory use of the writ of mandamus in accordance
with La Buy v. Howes Leather Co., 352 U.S. 249, 77 8.Ct.
309, 1 L.Ed.2d 290 (1957), and Schlagenhauf v. Holder,
379 U.S. 104, 85 S.Ct. 234, 13 L.Ed.2d 152 (1964). See
generally 16 C. Wright, A. Miller, E. Cooper, KE. Gress-
man, Federal Practice & Procedure § 3934 (1977); Note,
Supervisory and Advisory Mandamus under the All Writs
Act, 86 Harv.L.Rev, 595 (1973). The supervisory aspect
of mandamus has indeed been used in order to review the
granting of a new trial.’ However, the decisions reveal
great reluctance to employ it even for the purpose of
supervision.’

Little encouragement for use of writs is to be derived
from the Supreme Court decisions even for supervisory
purposes, although the Supreme Court has approved its
use to review interlocutory orders where the judge being
supervised has “displayed a persistent disregard of the
[Federal] Rules of Civil Procedure” so as to justify exer-
cising supervisory authority to control his conduct,’ or
to confine the trial court to a lawful exercise of its pre-
scribed jurisdiction or to compel it to exercise its author-
ity when it is its duty to do so. See Roche v. Evaporated
Milk Ass’n, 319 U.S. 21, 63 S.Ct. 938, 87 L.Ed. 1185 (1943).
Roche emphasized that mandamus is to be used to aid
appellate jurisdiction by removal of obstacles to an appeal
but not as a substitute for the appeal procedure pre-

®* Grace Lines, Inc. v. Motley, 439 F.2d 1028 (2d Cir. 1971).

TWill v. Calvert Fire Ins. Co., 437 U.S. 655, 98 S.Ct. 2552, 57
L.Ed.2d 504 (1978).

®* Will v. United States, 389 U.S. 90, 96, 88 S.Ct. 269, 19 L.Ed.2d
305 (1967); La Buy v. Howes Leather Co., supra. See also United
States v. Smith, 331 U.S. 469, 67 S.Ct. 1330, 91 L.Ed. 1610 (1947).

9a

scribed in § 1291. Of course there must be no adequate
means at law for gaining review.’ The petitioner has the
burden of showing that his right to the writ is “clear and
indisputable.” "°

Hardship and inconvenience standing alone are, of
course, insufficient under the Roche doctrine. This is not
to say that cost and inconvenience to the petitioner involved
in retrying the case, repreparing it and rediscovering evi-
dence are not entitled to any consideration, but these bur-
dens must be in conjunction with misuse of process or
authority in order to outweigh the roadblock based upon
the policy of avoiding piecemeal review." In Bankers Life
& Casualty Co. v. Holland, 349 U.S. 379, 383, 74 8.Ct. 145,
98 L.Ed. 106 (1953), it was emphasized that the review
that is possible pursuant to extraordinary writs is to be
used only in exceptional cases involving a clear abuse of
discretion or usurpation of judicial power. The Supreme
Court there refused to review by extraordinary writ.

In La Buy v. Howes Leather Co., 352 U.S. 249, 77 S.Ct.
309, 1 L.Ed.2d 290 (1957), the holding condemned the sur-
render by the district court of the power to try the case be-
fore it. The use of an unsupervised master to carry out the
entire trial was condemned. The abdication by the judge of
his official function was held to be a clear abuse of discre-
tion. The recognition given to the scope of the writ in
La Buy and in the Supreme Court’s decision in Schlagen-
hauf v. Holder, 379 U.S. 104, 85 S.Ct. 234, 13 L.Ed.2d 152
(1964) (mandamus used to enforce Rule 35(a) of the Rules

* Kerr v. United States District Court, 426 U.S. 394, 403, 96
S.Ct. 2119, 48 L.Ed.2d 725 (1976).

© Will v. Calvert Fire Ins. Co., 437 U.S. 655, 662, 98 S.Ct. 2552,
57 L.Ed.2d 504 (1978); Bankers Life & Casualty Co. v. Holland,
346 US. 379, 384, 74 S.Ct. 145, 98 L.Ed. 106 (1953).

11 United States Alkali Export Ass’n v. United States, 325 U.S.
196, 202, 65 S.Ct. 1120, 89 L.Ed. 1554 (1945).

10a

of Civil Procedure), do serve as guides to supervisory use
of the writ.’*? Will v. United States, 389 U.S. 90, 88 S.Ct.
269, 19 L.Ed.24 305 (1967), contained some slight enthusi-
asm for use of the writ. It said that such writs may serve
“a vital corrective and didactic function” in the federal
judicial system. 389 U.S. at 107, 88 S.Ct. at 280.

Generally, the more recent cases tend to tighten the re-
strictions. See Kerr v. United States District Court, 426
U.S. 394, 96 S.Ct. 2119, 48 L.Ed.2d 725 (1976), and Will v.
Calvert Fire Ins. Co., 437 U.S. 655, 98 S.Ct. 2552, 57 L.Ed.
2d 504 (1978). The Will case was a plurality decision in
which the main opinion was by Mr. Justice Rehnquist. It
reversed a Seventh Circuit decision granting a writ of
mandamus to overturn a district court’s stay of federal
court proceedings pending the completion of state court
litigation. It was held that the determination as to whether
to defer to state court proceedings rested in the discretion
of the district court, and in such circumstances a litigant’s
right to the writ was not considered to be clear and in-
disputable. Plain abuse of discretion or abuse of power
which add up to mere erroneousness was said not to fur-
nish a basis for interlocutory review by writ. Justice
Blackmun specially concurred in the Rehnquist opinion.
The Burger, Brennan, Marshall and Powell dissent main-
tained that the clear abuse of discretion standard set forth
in La Buy was still a valid basis for issuance of a writ of
mandamus.

Granted that erroneousness does not constitute a valid
ground for issuance of the writ. Nevertheless, it cannot be
said that the clear abuse of discretion standard is repu-
diated. So, therefore, if it is found that there is a disregard
for proper procedure, or misuse of judicial power in the

"* See generally 16 C. Wright, A. Miller, E. Cooper, E. Gress-
man, Federal Practice & Procedure §§ 3934-35 (1977) ; Note, Su-
pervisory and Advisory Mandamus under “ai All Writs Act, 86
Harv.L.Rev. 595 (1973).

lla

trial judge’s conduct, this would constitute a clear abuse
of discretion

If it is founa that there was plain or clear error in the
judge’s evaluation of the facts and that the granting of a
new trial was gross or excessive to the extent that it is
extraordinary, it would seem that vacating the order grant-
ing the new trial would be permissible.

The Tenth Circuit Cases on Use of the Writ for Review

In the Tenth Circuit the extraordinary writs have been
used where there has been a clear abuse of discretion or
where the right to relief is clear and indisputable.”

In Erie v. United States District Court, 362 F.2d 539
(10th Cir. 1963), overruled on other grounds, Liberty Na-
tional Bank & Trust Co. v. Acme Tool Div., Rucker Co.,
540 F.2d 1375 (10th Cir. 1976), the element of hardship
to the petitioner was present. Relief was not granted on
that basis. Usery v. Ritter, 547 F.2d 528, 532 (10th Cir.
1977), approved use of mandamus for the purpose of re-
viewing a district court’s discovery order which had com-
pelled the Secretary of Labor to reveal the identity of in-
formants in an action involving violation of the equal pay
provisions of the Fair Labor Standards Act. In Bruce v.
Bohanon, 436 F.2d 733 (10th Cir. 1970), cert. dented sub
nom, Marathon Ow Co. v. Bruce, 403 U.S. 918, 91 S.Ct
2227, 29 L.Ed.2d 694 (1971), a writ of mandamus was
issued for the purpose of reviewing a pretrial order of the
district judge which had provided that certain of the
claims be tried to a jury and others to the court. Plaintiff

18 State Farm Mutual Automobile Ins. Co. v. Scholes, 601 F.2d
1151, 1154 (10th Cir. 1979); Usery v. Ritter, 547 F.2d 528, 532
(10th Cir. 1977) ; Prop-Jets, Inc. v. Chandler, 575 F.2d 1322, 1324
(10th Cir. 1978); Paramount Film Distributing Corp. v. Civic
Center Theater, Inc., 333 F.2d 358, 361 (10th Cir. 1964) ; Pet Milk
Co. v. Ritter, 323 F.2d 586, 588 (10th Cir, 1963).

12a

had filed a timely demand for jury trial on all issues. This,
of course, was a classic use of the mandamus in a super-
visory Way.

There are other instances in which our court refused to
review interlocutory orders in the absence of a showing of
clear abuse of discretion or abdication of judicial function.
See State Farm Mutual Automobile Ins. Co. v. Scholes,
601 F.2d 1151 (10th Cir. 1979); Prop-Jets, Inc. v. Chand-
ler, supra; Paramount Film Distributing Corp. v. Civic
Center Theater, Inc., supra; Pet Milk Co. v. Ritter, supra.”

On only two occasions have we considered issuance of
the writ in order to review the trial court’s granting of a
new trial. One of these was Kanatser v. Chrysler Corp.,
199 F.2d 610 (10th Cir. 1952). The order in that case was
entered on grounds other than those contained in the mo-
tion for new trial. Also, the order granting new trial was
out of time (six months). Thus, there was a question of
jurisdiction as well as a question of failure to observe the

‘The other circumstances in which this court has ruled on the
propriety of granting or denying extraordinary relief involved the
more traditional function of the writ ‘‘to confine an inferior court
to lawful exercise of its prescribed jurisdiction or to compel it to
exercise its authority .. ..’’ Reche v. Evaporated Mik Ass’n,
supra, 319 U.S. at 26, 63 S.Ct. at 941. E.g., Estate of Whitlock
v. Commissioner, 547 F.2d 506 (10th Cir. 1976), cert. denied 430
U.S. 916, 97 S.Ct. 1329, 51 L.Ed.2d 594 (1977) (mandamus issued
to order Tax Court to comply with previously issued Tenth Circuit
mandate) ; Breckenridge Lands, Inc. v. Sabo, 376 F.2d 840 (10th
Cir. 1967) (denied writ to review new trial order entered within
district court’s jurisdiction) ; Erie v. United States District Court,
362 F.2d 539 (10th Cir. 1963), overruled on other grounds, Liberty
National Bank & Trust Co. v. Acme Tool Div., Rucker Co., 540
F.2d 1375 (10th Cir. 1976) (mandamus issued to compel district
court to dismiss counterclaim filed in interpleader action) ; Ka-
natser v. Chrysler Corp., 199 F.2d 610 (10th Cir. 1952), cert.
denied 344 U.S, 921, 73 S.Ct. 388, 97 L.Ed. 710 (1953) (granted
writ to review new trial order made on grounds outside trial court’s
jurisdiction) ; Tuggle v. Chandler, 199 F.2d 86 (10th Cir. 1952)
(extraordinary relief denied as premature).

13a

procedural rules. Also, the trial court stated that it was
not going to permit a verdict which exceeded $15,000 to
stand. Thus, the circumstances of the Kanatser case dis-
played an arbitrariness that strongly recommended the
supervisory writ. Breckenridge Lands, Inc. v. Sabo, 376
F.2d 840 (10th Cir. 1967), is one in which this court
denied relief in the new trial situation. In that case there
was a lack of any showing of judicial misconduct or clear
abuse of authority.

Consideration of the Cases From Other Circuits in Which Review
of Orders Granting a New Trial Was Sought by Use of an
Extraordinary Writ

From an examination of the decisions of the various
circuits in which extraordinary relief was sought to review
orders granting new trial, it would appear that in the
majority of the cases writs were denied.”*

In each of the cases that are cited below the court
sought to find extraordinary circumstances capable of
justifying issuance of the writ. In the absence of extraordi-
nary circumstances it was held that the general principle
controlled that extraordinary writs cannot be used as
substitutes for the appellate process."

In General Motors Corp. v. Lord, 488 F.2d 1096 (8th
Cir. 1973), the Eighth Cireuit enumerated some circum-

8 General Motors Corp. v. Lord, 488 F.2d 1096 (8th Cir. 1973) ;
Pat Ryan & Assoc., Inc. v. Dupree, 17 F.R.Serv.2d 192 (4th Cir.
1973) (unpublished opinion) ; Thorn v. Parkland Chevrolet Co.,
416 F.2d 95 (4th Cir. 1969); Breckenridge Lands, Inc. v. Sabo,
376 F.2d 840 (10th Cir. 1967); Benton Harbor Malleable Indus-
tries v. International Union, United Automobile, Aircraft and Ag-
ricultural Implement Workers, 355 F.2d 70 (6th Cir. 1966) ; Bigart
v. Goodyear Tire & Rubber Co., 361 F.2d 317 (2d Cir, 1966).

%® General Motors Corp. v. Lord, supra, 488 F.2d at 1099; Benion
Harbor Malleable Industries v. International Union, etc., supra,
355 F.2d at 72-73.

l4a

stances where review by mandamus is proper. They are
as follows:

First, extraordinary circumstances may be present when
the district court’s order was entered without the court
having jurisdiction. Roche v. Evaporated Milk Ass’n, 319
U.S. 21, 26, 63 S.Ct. 938, 87 L.Ed. 1185 (1943).

Second, extraordinary circumstances may be present
where the order under attack is characteristic of an erron-
eous practice which is likely to recur. See, e.g., La Buy v.
Howes Leather Co., 352 U.S. 249, 258, 77 S.Ct. 309, 1
L.Ed.2d 290 (1957); Note, Supervisory and Advisory
Mandamus under the All Writs Act, 86 Harv.L.Rev. 595,
610 (1973).

Third, where the order under attack presents a novel
and important question in which there is a need for guide-
lines which would, if set forth, be useful for the resolu-
tion of similar cases. See Schlagenhauf v. Holder, 379 U.S.
104, 111-12, 85 S.Ct. 234, 13 L.Ed.2d 152 (1964); Note,
Supervisory and Advisory Mandamus under the All Writs
Act, supra, 86 Harv.L.Rev. at 618-19.

The Eighth Circuit recognized the obvious general rule
which is that the grant of a new trial is insufficient with-
out more to justify the use of the writ. We are, of course,
constantly aware of that. The second standard set forth
above, namely that of the presence of extraordinary cir-
cumstances where the order under attack is characteristic
of an erroneous practice likely to recur, is the basis on
which the petitioner seeks relief in the present case.

There are very few cases in which an extraordinary
writ has been approved for the purpose of reviewing
orders granting a new trial (only three to be exact). These
are Peterman v. Chicago, Rock Island & Pacific Railroad
Co., 493 F.2d 88 (8th Cir. 1974), cert. denied 417 U.S. 947,
94 S.Ct. 3072, 41 L.Ed.2d 667 (1974); Grace Lines, Inc. v.
Motley, 439 F.2d 1028 (2d Cir. 1971); and Kanatser v.

15a

Chrysler Corp., 199 F.2d 610 (10th Cir. 1952), cert. denied
344 U.S. 921, 73 S.Ct. 388, 97 L.Ed. 710 (1953).

In Peterman, the court ordered a new trial sua sponte
and did so outside of the ten-day time limitation provided
in Federal Rules of Civil Procedure 59(d).

In Kanatser, this court ordered a new trial on grounds
which were not stated in the motion six months after entry
of judgment.

The third case, Grace Lines, Inc. v. Motley, supra, ex-
emplifies the second extraordinary circumstance set forth
in Lord, namely the use of supervisory mandamus. In
Grace Lines the trial court had ordered a new trial three
days after declaring a mistrial. Thus, there was misuse
of the Rules of Civil Procedure which precluded the use
by the defendants of Fed.R.Civ.P. 50(b) for judgment
notwithstanding the verdict, which constituted a violation
by the trial court of Rule 50(b). The Second Circuit deter-
mined that it was an appropriate case for review. The writ
of mandamus was used to reinstate the jury verdict.

United States v. Smith, 331 U.S. 469, 67 S.Ct. 1330, 91
L.Ed. 1610 (1947), was relied on by the Second Circuit
in Grace Lines, Inc. In the Smith case the Supreme Court
held that mandamus was proper to vacate an order for
new trial which was made in violation of the Federal Rules
of Criminal Procedure.

The opinion of the Second Circuit in Grace Lines con-
tains a summary of the scope of the appellate court super-
visory authority under the All Writs Act. The conclusion
reached was that ordinarily the order granting a new trial
must await the entry of a final judgment following a new
trial.’" The Second Circuit went on to say that the purpose
of the All Writs Act, 28 U.S.C. § 1651, is to allow the

7 Unless, of course, the trial judge is dissatisfied with the ver-
dict and orders another new trial.

l6a

appellate courts to review by mandamus non-appealable
interlocutory orders which would be the subject of appeal
from a final judgment.

The Grace Lines court explained that supervisory man-
damus is not to be used to authorize indiscriminate use
of prerogative writs as a medium for reviewing inter-
locutory orders. The court concluded that “Mandamus will
lie, in the sound discretion of the appellate court, where
the trial court has exceeded or wrongfully refused to
exercise its judicial power or has committed a clear abuse
of discretion * * * * [I]n such cases the desirability of
present review outweighs the policies which confine ap-
peals to the review of final orders.” 439 F.2d at 1031 n. 2.

It is important to notice that the cases in which relief
has been granted involved errors of law rather than fact.
For example, where the order for new trial was granted
on the basis that damages were excessive, mandamus has
been denied. Pat Ryan & Assoc., Inc. v. Dupree, 17 F.R.
Serv.2d 192 (4th Cir. 1973). See also Benton Harbor
Malleable Industries v. International Union, etc., 355 F.2d
70 (6th Cir. 1966).

In summary, in order to grant relief an appellate court
must find not only that the trial judge’s grant of a new
trial was erroneous, but also that the judge’s conduct of
the litigation was such as to raise a conclusion that the
judge clearly abused his discretion and that appeal is not
an adequate remedy under the circumstances.

Is the Posture of This Case Such That a Writ Should Issue?

Stated differently, does the record establish that the
grant of the new trial was not only erroneous but indeed
served to demonstrate such a clear abuse of trial court
discretion that statutory appeal would not be an adequate
remedy under the circumstances.

17a

In our view the question whether the writ should issue
and the question of entitlement to relief are intermingled.
Thus, if the proof is sufficient to justify the issuance of
the writ, the question whether there is entitlement to relief
will have been determined.

The questions are hard and the answers are also diff-
cult. The retrial will be even more difficult inasmuch as a
new round of discovery is contemplated by the trial court.
There is reason to believe that the trial judge was some-
what dissatisfied with the presentation which was made
by the defendants and that he felt that this should be
changed in the event of a second trial.

The judge is, of course, not in a position of advocacy
and if he does hold the view (and this has to be read
between the lines) that the court should encourage the
development of the defendants’ case, he would be acting
outside of and beyond the authority. The fact that one
side was not prepared to the extent that the court felt it
ought to have been is not a basis for the grant of a new
trial.

The trial court’s rulings and comments on defendants’
motion for judgment notwithstanding the verdict and new
trial are appended hereto, and these comments are cogent
evidence to be considered in making the present determi-
nation. These comments of the trial judge were made on
May 14, 1979, following the arguments on motion for new
trial. At that time the court emphasized that it had only
one object and that was to see that the parties had a fair
trial. The judge proceeded to conclude that a judgment
notwithstanding the verdict in accordance with the motion
of the defendants could not under any circumstances be
granted. The court added: “It would not fit this case at
all.” At the same time the judge concluded that the jury
verdict had to be vacated and that a new trial had to be
granted. The reasons given were, first, that counsel for
the plaintiff was an exceedingly good lawyer and able to

lsa

make a lot out of things that really had no importance.
The court said that Mr. Crawford had the jury in the
palm of his hand almost from the beginning and that the
defendants were put at a great disadvantage because they
did not know what the plaintiff’s evidence was going to be.
The court said that the defendants had opened their files
completely and yet were kept in the dark as to the parts
of the files that the plaintiff would select and use. The
court expressed dissatisfaction with the method for pass-
ing on the authenticity of the exhibits.

The judge continued that although he had complete
appreciation for the work of the jury, the jury needed to
be, and apparently was not, apprised of the magnitude of
the problems inasmuch as the issues were foreign to them
(and perhaps beyond their comprehension). From this it
was concluded that there was not a fair trial. His main
reason is stated as his next point in the informal findings,
that the verdict of $2.5 million indeed was excessive in-
asmuch as the original capital investment was only
$200,000. It should be said at this time that the trial court
was not correct in this statement because the actual initial
capital was $300,000 together with a very substantial line
of credit amounting to approximately $500,000. The court
said that the defendants had a perfect right to meet com-
petition. At the same time the judge said that Daiflon was
insignificant.

The judge went back to the damages and said: “What
are the actual damages? There is nowhere it reaches two
and a half million dollars.” The judge was also depressed
about having to treble the amount of the damages. On this
he said: “Well, here is what the court is going to do.
The Court grants a new trial; and we are going to have
a conference where every exhibit to be used by either side
will be passed on before we ever call a jury.” Actually this
procedure was followed in the proceedings before us, but
undoubtedly from what the judge said it was not pursued

19a

to the full satisfaction of the trial court. In any event, he
was looking forward to a conference for the purpose of
reconsidering the admissibility of all exhibits and for the
purpose of examining the depositions that are to be read
to the jury. On this it should be added that this informa-
tion was fully communicated to the defendants and was
available to the court. It is not up to the litigants to
guarantee that everybody who is interested will read this
material before trial.

The trial court also mentioned that some of the exhibits
which were admitted had been erroneously received. It is
important to mention, however, that the judge does not
specify as to which of these were improperly received and
there is no way to ascertain this. He spoke of proofs of
papers “in the usual course of business, a lot of them were
never identified by the custodian. A lot of them were not
proved. They were just thrown in evidence.” The court
concluded, “Well, the court is absolutely not satisfied with
it. The verdict of the jury, the Court was shocked when
the verdict was read of $2,500,000 based upon the evidence
before that jury, just does not justify that kind of a
verdict.”

It is thus apparent that it is the amount of the verdict
rather than any other factor which caused the judge to
enter the order for new trial. From an examination of
the trial court’s comments it is to be concluded that there
is no rational basis furnished for granting a new trial
other than the magnitude of the verdict.

As far as liability is concerned, the judge indicated his
belief that it was established. If he had doubts about this,
he would have granted the defendants’ motion for judg-
ment notwithstanding the verdict. This was a subject on
which he was positive. He said that this would not be
appropriate under any thinking or analysis. On the sub-
ject of liability, this is not a case in which the evidence

20a

to establish liability is vague and questionable. The evi-
dence supported the conclusion that the several defendants
engaged in a “buccaneering”’ scheme designed to eliminate
the plaintiff as a contender. To be sure, Daiflon’s market
share was relatively small, but the price manipulation and
the timing lends itself to the interpretation that elimina-
tion of Daiflon was an object of the conspiracy. Defend-
ants lowered their prices by 13%, thus foregoing susbtan-
tial profits.

None of the trial judge’s comments were directed to
inadequacy of the evidence to establish the conspiracy that
is charged. Instead the burden of the trial court’s dis-
cussion was on the magnitude of the judgment and the
deficiency of evidence to support it. From the record be-
fore the court, which admittedly is not a full record, it is
not clear that the evidence was insufficient to satisfy the
$2.5 million verdict. However, the cases teach us that
subject only to the limitation of the Seventh Amendment
the trial court’s discretion is most full and complete when
the court is considering a factual question such as dam-
ages. Richardson v. Communications Workers of America,
530 F.2d 126, 129 (8th Cir.), cert. denied 429 U.S. 824, 97
S.Ct. 77, 50 L.Ed.2d 86 (1976); Brown v. Richard H.
Wacholz, Inc., 467 F.2d 18 (10th Cir. 1972).

This court is, in view of this, unwilling to vacate the
trial court’s determination based on possible erroneous
premises which the court entertained on the damages
issue, because the trial court did hear the evidence in its
entirety and hence it is in a much better position to judge
this issue than is an appellate court.

We take a different view, however, of the issue of the
liability of the defendants, and we point out that as to
this element the trial court has given no reason to indicate
that the record evidence was insufficient or that the jury
acted erroneously in making its determination as to lia-

2la

bility. The trial judge offered no rational basis for in-
validating the jury verdict in its entirety. He pointed out
no particular error in law or in the receipt of evidence.
He appeared to have ordered a new trial primarily be-
cause he was shocked at the size of the verdict. By so
doing, the trial court invaded the province of the jury as
the primary trier of fact, cf. Moore v. Shultz, 491 F.2d 294
(10th Cir.), cert. denied 419 U.S. 930, 95 S.Ct. 203, 42
L.Ed.2d 161 (1974), and interfered with Daiflon’s right
to a jury trial under the Seventh Amendment.

[I]t lias long been the rule that a trial judge should
not act merely as a “13th juror” and set a verdict
aside simply because he would have reached a differ-
ent result had he been the trier of fact. Rather, the
judge’s duty is to exercise a more limited judicial
discretion. ... A trial judge is not to interfere with
the verdict, “unless it is quite clear that the jury has
reached a seriously erroneous result.”

Borras v. Sea-Land Service, Inc., 586 F.2d 881, 887 (1st
Cir. 1978).

In summary and conclusion:

Despite the narrowness of the exception which allows
appellate review on extraordinary writ of orders granting
new trial, we are convinced that a case has been made
here for review by supervisory mandamus on the issue
of liability of the defendants to the plaintiff-petitioner.
As we have stated above, we take a different view of the
issue of damages, even though the trial judge went for-
ward on some misconception as to some of the facts. The
question of damages is one of fact, and the cases hold that
the trial court has more discretion in this area than in
the area of liability, which involves a question of or ques-
tions of law.

22a

Therefore, it is our judgment, and it is so ordered, that
the trial court shall restore the verdict of the jury as to
liability of the defendants. The trial court shall therefore
reinstate the verdict insofar as it determines the several
defendants to be liable. Since we are granting a new trial
as to damages, the trial court shall proceed to try that
part of the case. The plaintiff should be allowed to bring
to the attention of the jury all of those matters that have
been previously presented on liability that would have an
effect on damages. It does not appear to be necessary to
re-present this evidence. Most of it can be read to the
jury or the jury could be allowed to see or read exhibits.

The trial court has previously commented on the need
for organizing the evidence prior to further proceedings,
and we do not wish to curtail this activity, but it is our
view that insofar as possible, redetermination of issues
already decided should be avoided so that the actual trial
shall be as simple as possible. We repeat, that evidence
which is relevant and material to the issues, including
that evidence which reveals the nature of the activity of
the defendants which caused the damage, and on the other
side that evidence of the defendants which tends to miti-
gate the damages, should be fully presented.

The one particular part of the evidence which Daiflon
claims it was prevented from developing and which ap-
pears to be relevant is that which concerned Daiflon’s plans
to construct a domestic refrigerant gas manufacturing
facility. The court should carefully consider the bearing
which this evidence might have on the measure of damages,
and if it is shown to have relevance, it should be received.
See Wood Exploration & Production Co. v. Aluminum Co.
of America, 509 F.2d 784 (5th Cir. 1975).

The writ of mandamus shall therefore issue in accord-
ance with the views set forth in the foregoing opinion.

23a
Exhibit “A”

IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE WESTERN DISTRICT OF OKLAHOMA

No. 72-483-B (Civil)
Darvon, Inc., Plaintiff,
vs.
AuuLiep CHEMICAL CorporATION, et al, Defendants.

May 14, 1979

Court’s Rulings and Comment on Defendants’ Motions for
Judgment N.O.V. and for New Trial

Bonanon, District Judge.

Tue Court: Well, the Court concludes that counsel have
concluded your arguments.

Needless to say, the Court has struggled long and with
difficulty over the Court’s problem. You lawyers think you
have problems. I was a lawyer a long time, and you do
have problems. I used to think the courts didn’t have any
problems. They just sat there and took care of those mat-
ters like water off of a duck; but it isn’t true. You stay
awake, You work. You worry.

The Court has one object and only one object, and that
is to see that the parties have a fair trial. No other object,
no other interest, and no other concern.

I have reviewed all of the briefs, reviewed the file, and
studied and analyzed the case as the evidence came for-
ward.

The Court has concluded that the Court cannot, under
any circumstances, grant judgment NOV, it just would not
fit this case at all.

The Court further concludes and holds that the Court
must vacate, and does vacate, the jury verdict.

24a

The Court must and does grant a new trial.

I say this to you, Mr. Crawford, you are an exceedingly
good lawyer, and you make a lot out of things that are
really not important, as I view it from this evidence; but
you had this jury in the palm of your hand almost from
the beginning.

The Court finds and holds that the defendants were put
at a great, great disadvantage, when you march into court
on the day of trial, and I believe it was on Friday, and
the time before the trial the defendants were complaining
about not knowing what your evidence was going to be,
what your documents were going to be.

Now the Court ordered the defendants, and they worked
with you in good faith, and they opened their bowels and
bared their chest and you got out of their files literally
hundreds of exhibits. They were kept in the dark as to
which ones of these you were going to use until Friday
before the trial, and then the Court made certain orders,
and we started the trial with literally dozens and dozens of
exhibits that were not agreed to; and the Court had been
open during all this period of time, after it came back, for
the purpose of settling any issue; and the defendant came
to me and said, “We are not getting this, we are not getting
that out of the plaintiff, and what these exhibits are going
to be.”

The pretrial order was pretty plain: Everyone would
know exactly what exhibits would be offered and what
would not be offered.

Then the question of whether or not they were compe-
tent was never tried. We started this case with the defend-
ant in the dark, and the Court in the dark; and the failure
to get together on these exhibits put an exceedingly hard
load on this Court, to say “This is in; this is out.” And try
the case day to day, hear the evidence, the Court gets tired
just like lawyers do.

25a

When the Court goes home at night, we can’t do much
more than say, “Well, I’m tired. I’ve got to go to sleep,
get some rest for the next day’s work” And that’s what
happened.

The Court has full and complete appreciation for the
work of the jury in this case, and full regard for their
stability in the solving of problems of this kind; but not-
withstanding this appreciation and deep regard and con-
cern with the work of the jury, the jury in order to do
their functions must be adequately apprised of the tre-
mendous problems. These kinds of cases are not easy cases,
and particularly not easy for jurors where the issues are
completely foreign to them. They don’t understand about
this gas business. After weeks of work they get to where
they do.

The Court finds that there was not a fair trial, and this
Court has a duty to see that there is a fair trial. The Court
has no love for the defendants and no love for the plain-
tiffs in this case, but there was not a fair trial, say from
beginning to end.

The Court would be less than honest if the Court let this
verdict stand. The Court would be somewhat of a coward
to let this verdict stand, under all of the evidence and all

of the things that happened before and during the trial
of the case.

Furthermore, the Court would be exceedingly lazy if he
let it stand and refused to try the case again. It’s a lot of
work. The Court could easily say, “Well,. let the verdict
stand,” and get out of the work; but this is not my duty.
It’s work. Of course it’s work, but the Court must shoulder
its responsibility as long as I sit on the bench.

When you consider the verdict, two and a half million
dollars—when you consider that this company started
out with a capital investment of $200,000 to get into a
business that runs into the millions, it would be just like

26a

me going out here and saying, “I’m going to go into the
oil business, and I’m going to get a block and drill a well,
on $100,000.”

Why, you couldn’t even get started.

The $200,000 that the plaintiff had wasn’t enough to
really get them started into breaking into this business, as
long as the defendants were concerned about their busi-
ness.

The defendants had a perfect right to meet competition,
and for them not to meet competition is to deny them free
enterprise.

This is what they did in places, but they did it in rare
places, in Alabama, Houston, maybe in Oklahoma City—
some little places where they met competition, but gener-
ally Daiflon was insignificant; and the Japanese treatment
by this country, the surtax, and the exchange of the dollar
—this had a tremendous amount of effect upon what hap-
pened to this plaintiff.

You can consider the earnings, 1969, 1970, 1971. If you
consider the earnings, 1969, 1970, 1971, there is no basis
upon these earnings by the company to project that they
lost $2,500,000. Their earnings during these years were
insignificant to say that builds into a judgment, a verdict,
of two and a half million dollars.

What are the actual damages? There is nowhere it
reaches two and a half million dollars.

Now the Act provides that where you find a conspiracy,
and it is operation, why, for punishment the Court adds,
triples it; but you can’t say there’s two and a half million

dollars in damages from the years 1969- 1970 and 1971
operation.

Well, here is what the Court is going to do. The Court
grants a new trial; and we are going to have a conference

27a

where every exhibit to be used by either side will be passed
on before we ever call a jury.

I am going to take time. We are going to have a con-
ference. We can’t have it this month. I don’t think we can
have it next month. I am moving my quarters right away
up to the Fifth Floor, and I'll have in the future the Cir-
cuit court room up there; but I am going to set a date
and a time when it is reasonably agreeable to counsel, and
we are going over every exhibit. We are going to match
it with the rules of evidence, and if it is admissible, we
are going to put it over here; if it is not admissible we
are going to put it over here, so to speak. These that are
admissible, would be admitted. There will be no argument
before the jury. There will be no time delay. There will be
no headaches for the Court to pass upon as to what ex-
hibits are to be received in evidence and what are not to
be received in evidence.

Those that are to be received in evidence, and the depo-
sitions that are to be reread to the jury, we will know
what they are and know where we are going from the very
beginning.

Now I assume that the parties may, but I am going to
ask now, do the parties want any further discovery, and
if so, how much time do you want for discovery, or do you
want to think about it and talk to the Court about it a little
later on—a period of discovery. We are going to have a
fixed time for further discovery.

I think perhaps we should either pass upon the great
volume of exhibits before we go into further discovery,
or vice versa. I don’t know which would be the best—
whether the egg before the chicken or the chicken before
the egg; but you’ve got to have some discovery.

Some of these exhibits that the Court admitted, the
Court erred in it. We erred seriously, and we erred be-
cause of the pressure that was put on the Court to conduct

28a

a trial and to pass two hundred, three hundred exhibits,
and the right to be admitted or not was wholly unfair to
the Court. Just not fair to the Court. I sat here in this
court room. We spent two hours passing on exhibits, and
by the flip of the thumb I said, “This is in” and “This is
not.” I didn’t know what I[ was talking about, because
whether or not these exhibits come within the pale of the
rule or not, why, there is no proof to show it.

These proofs of papers in the usual course of business,
a lot of them were never identified by the custodian. A lot
of them were not proved. They were just thrown in evi-
dence,

It is not every piece of paper that you get out of a de-
fendant’s file that’s admissible just because it has some
inference about some question.

Well, the Court is absolutely not satisfied with it. The
verdict of the jury, the Court was shocked when the ver-
dict was read of $2,500,000 based upon the evidence before
that jury, does not justify that kind of a verdict.

So does anyone have anything further to say? As quick
as I can get settled down, why the Court will give you
notice and we will begin shaping this case so that we can
have a trial that the Court can say is and was a fair trial.
The verdict may be more under new evidence than that
allowed. It may be less. I don’t know, don’t care; but I
will know in my own mind that there was a fair trial, and
that these exhibits will not be a headache to the defendant,
they will not be a headache to the Court. We can hear the
evidence and let the jury hear the story, or the arguments
and evidence on both sides.

If anyone has anything further to say, the Court will
hear you. Otherwise we will take a recess until further
notice through the Clerk.

(The proceedings are adjourned.)

29a
APPENDIX B

UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

November Term—December 21, 1979

Datrton, Inc., Petitioner,
vs.

Tue Honoraste Lutuer Bouanon, Judge of the United
States District Court for the Western District of
Oklahoma, Respondent.

JUDGMENT AND WRIT OF MANDAMUS

No. 79-1459
(D.C. No. CIV 72-C-483-B)

Before The Honorable Robert H. McWilliams, Circuit
Judge, The Honorable Jean S. Breitenstein, Circuit
Judge, and The Honorable William KE. Doyle, Circuit
Judge hace,

This cause came on to be heard on the narrative state-
ments of the case filed by petitioner and respondent along
lines provided in Rule 10(d) F.R.A.P. pursuant to order
of court as a result of a petition for writ of mandamus
and/or Writ of Prohibition seeking review of an order of
the United States District Court for the Western District
of Oklahoma granting a new trial in an antitrust case
which had been tried to a jury. The cause was argued by
counsel.

Upon consideration whereof, it is ordered that the judg-
ment of the trial vacating the verdict of the jury as to
liability of the several defendants is reversed and that the
writ of mandamus shall issue:

30a

Therefore, it is our judgment, and it is so ordered, that
the trial court shall restore the verdict of the jury as to
liability of the defendants. The trial court shall there-
fore reinstate the verdict insofar as it determines the sev-
eral defendants to be liable. Since we are granting a new
trial as to damages, the trial court shall proceed to try
that part of the case. The plaintiff should be allowed to
bring to the attention of the jury all of those matters that
have been previously presented on liability that would
have an effect on damages. It does not appear to be neces-
sary to re-present this evidence. Most of it can be read to

the jury or the jury could be allowed to see or read ex-
hibits.

The trial court has previously commented on the need
for organizing the evidence prior to further proceedings,
and we do not wish to curtail this activity, but it is our
view that insofar as possible, redetermination of issues al-
ready decided should be avoided so that the actual trial
shall be as simple as possible. We repeat, that evidence
which is relevant and material to the issues, including that
evidence which reveals the nature of the activity of the
defendants which caused the damage, and on the other
side that evidence of the defendants which tends to miti-
gate the damages, shuulu be fully presented.

The one particular part of the evidence which Daiflon
claims it was prevented from developing and which ap-
pears to be relevant that which concerned Daiflon’s plans
to construct a domestic refrigerant gas manufacturing
facility. The court should carefully consider the bearing
which this evidence might have on the measure of dam-
ages, and if it is shown to have relevance, it should be re-
ceived. See Wood Exploration & Production Co. v. Alumi-
num Co. of America, 509 F.2d 784 (5th Cir. 1975).

The writ of mandamus shall therefore issue in accord-
ance with the views set forth in the foregoing opinion.

/3s/ Howarp K. PHi.uips,
Howard K. Phillips, Clerk

3la
APPENDIX C
January Term—March 5, 1980
No. 79-1459

Darton, Inc., Petitioner,
vs.

Tue HonorasLe Luruer Bounanon, Judge of the United
States District Court for the Western District of
Oklahoma, Respondent.

Before Honorable Oliver Seth, Chief Judge, Honorable
Jean S. Breitenstein, Honorable Robert H. McWil-
liams, Honorable James E. Barrett, Honorable Wil-
liam E. Doyle, Honorable Monroe G. McKay, Honor-
able James K. Logan and Honorable Stephanie K.
Seymour, Circuit Judges

This matter comes on for consideration of the petition
of respondent for rehearing and suggestion for rehearing
en bance.

Upon consideration whereof, it is ordered:

1. The petition for rehearing is denied by Circuit Judges
McWilliams, Breitenstein and -Doyle, the panel to whom
the case was argued and submitted.

2. The Clerk having transmitted the suggestion for re-
hearing en banc to the members of the panel and the judges
of the Court who are in regular active service (except
Judge William J. Holloway, Jr., who is recused and who
did not participate) and no judge in regular active service
nor judge who was a member of the panel that rendered
the decision sought to be reheard having requested a vote
on the suggestion, the suggestion for rehearing en banc is
denied. Rule 35, Federal Rules of Appellate Procedure.

/3/ Howarp K. Putuirs
Howrd K. Phillips, Clerk

32a
APPENDIX D
May Term—Avuaust 10, 1979

Before Honorable Robert H. MeWilliams, Honorable Jean
S. Breitenstein, and Honorable William E. Doyle, Circuit
Judges.

No. 79-1459

Darton, Inc., Petitioner,
VS.

Tue Honoraste Lutuer Bouanon, Judge of the United
States District Court for the Western District of Oklahoma,
Respondent.

The matter is before this Court on the petition of Daiflon,
Ine. seeking a writ of mandamus or a writ of prohibition
against the respondent trial judge, the Honorable Luther
Bohanon.

On May 14, 1979, the trial court herein entered its order
granting a new trial to all of the defendants in the above-
entitled case. This order also set aside a very substantial
jury verdict.

The matter has been extensively briefed, and the briefs
include statements of the case. However, this Court is
asked to judge the exercise of discretion on the part of
the trial judge without having a record or a statement of
evidence with which to measure the action taken by the
trial court.

Accordingly, the parties are directed, in lieu of a tran-
script of the evidence, to prepare and sign a narrative
statement of the case along the lines provided in Rule
10(d) of the Rules of Appellate Procedure. Each side shall
prepare a summary of the evidence presented by it at the
trial. These summaries shall be simultaneously prepared
and shall be simultaneously submitted on or before Sep-
tember 11, 1979.

33a

This matter shall be orally argued and presented by
counsel to Division I of this Court in Denver, Colorado,
on Tuesday, October 9, 1979, at 10:00 a.m.

It is the further order of the Court that proceedings in
the appeal of the defendants from the judgment entered
and from the order denying the motion for judgment not
withstanding the verdict entered in this action on May 14,
1979, (presently Undocketed Appeal No. 24 in this Court)
are suspended pending the disposition of the petition for
writ of mandamus or prohibition.

/s8/ Howarp K. Pxt.urps
Howard K. Phillips
Clerk

34a
APPENDIX E

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA

No. CIV-72-483-B

Dairion, Inc., Plaintiff,
Vs.

Auuiep CuemicaL Corporation, et al, Defendants.

ORDER
Filed April 7, 1980

The court has reviewed its notes of the evidence and
testimony in the above-entitled cause and the briefs of the
parties, and has carefully considered the substance and
tenor of the circuit court’s opinion in Daiflon, Inc. v. The
Honorable Luther Bohanon, No. 79-1459 (10th Cir. Dee.
21, 1979).

The trial court is charged in the aforesaid Opinion of
the United States Court of Appeals for the Tenth Circuit
(hereinafter Opinion) with perhaps being an advocate in
favor of the defendants. The circuit court arrives at this
conclusion, in part, by reading between the lines.’ Further,
the trial court is charged for oversight in failing to enter
a formal order’ and for not giving sufficient reason for
vacating the jury verdict as to the matter of liability.’
From this perspective, it seems perfectly clear to this
court that considerable reason and justification for the
granting of the motion can be found in the transcript ap-
pended to the circuit court’s opinion. Clarification of the

? Opinion at 6 and 18,
? Opinion at 6.
® Opinion at 22.

35a

trial court’s reasons, other than given, would have gladly
been furnished upon request.

The trial court, in sustaining the defendants’ motion for
new trial, noted:

(a) that there had not been a fair trial; *

(b) that the court confessed error in admitting cer-
tain exhibits, to which the court after this period of
reflection contends substantially affected the rights of
the parties.’ Said exhibits were not properly identified
for admission under Rule 803(6), Federal Rules of
Evidence.

The trial court saw and heard all the evidence (approxi-
mately four weeks of trial) and had a clear understand-
ing of the evidence and issues before the jury; and based
upon what the trial court knew, it had to, in honesty,
grant defendants’ motion for new trial as to all issues.
The court unequivocably stated that to permit the verdict
to stand and not grant a new trial, the court would be dis-
honest and cowardly.* What more can a judge say regard-
ing his feelings that a new trial was required? The court
observed that if it did not grant a new trial, it would have
been exceedingly lazy." What more can a judge say to show
his feelings that a new trial was essential for justice to
be done in this case?

This court specifically noted that it had no interest in
who won or lost the case, but only in seeing that each
party was afforded a fair trial, and that the ends of jus-
tice were met. This trial court has never in 19 years on
the bench ever favored one party over another.

* Appendix to Opinion at 4.
* Appendix to Opinion at 7.
* Appendix to Opinion at 4.
* Appendix to Opinion at 5.

36a

Nor can the court candidly state that its refusal to grant
defendants a judgment notwithstanding the verdict (Judg-
ment N.O.V.) should be considered any proof of the lia-
bility of the defendants, as urged by the cireuit court."

This court is ordered to accept the verdict of the jury
as to liability of defendants and to try the case again as
to the amount of damages. The district court does not set
to review and reverse the judgments of the court of ap-
peals.” A district court is required to follow the mandate
of a court of appeals and may not take action inconsistent
with it.’®

If this court were to retry the cause on the basis of the
mandate, for the reasons hereinbefore stated, it could not
be satisfied with the result. The court is passionately con-
vineed that the issue of liability has not been proven,
though there exists some evidence otherwise. Further, any
verdict of damages must be founded upon a totality of
the evidence—including that evidence bearing upon the
question of liability.

This court is not moved to any degree by the personal
charges made by plaintiff counsel in its mandamus action
before the circuit court; nor is this court moved by the
threats in plaintiff counsel’s letter of March 26, 1980. The
question of the trial court's bias and prejudice was
squarely before the circuit court in the mandamus action,
and the request to remove the trial court from this case
was denied, or at least not acted upon, distinguishing this
case from Webbe v. McGhie Land Title Co., 549 F.2d (10th
Cir. 1977) and the United States v. Ritter, 540 F.2d 459
(10th Cir. 1976). This court had desired to wait until all
appellate issues had been settled before withdrawing, but

* Opinion at 21,
® Lacob v. United States, 59 F.R.D. 329 (N.D. Ill. 19738),

Paull v, Archer Daniels-Midland Co., 313 F.2d 612 (5th Cir.
1963).

37a

time did not permit in light of the correspondence of coun-
sel, which is filed with the Clerk of the Court. If this court
tried this case again, the provisions of 28 U.S.C.A. § 455
and § 144 would not be violated, and it is not because of
these threats that this court withdraws, but rather because
of the mandate.

This court respectfully withdraws from this cause and
asks to be relieved from all duties in connection there-
with. Said withdrawal is not based upon any feeling of
prejudice or interest, accusations intimated in the circuit
court’s opinion and in the charges—pro and con—in the
correspondence between counsel and the court. Said re-
quest of withdrawal is based wholly upon the reasons
herein stated.

Ir Is So Orperen.
Dated this 7th day of April, 1980.

/s/ LutHer Bouanon
United States District Judge

38a
APPENDIX F

Statutory Provisions Involved
All Writs Act, 28 U.S.C. 1651(a) :

(a) The Supreme Court and all courts established
by Act of Congress may issue all write necessary or
appropriate in aid of their respective jurisdictions
and agreeable to the usages and principles of law.

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

Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or com-
merce among the several States, or with foreign na-
tions, is declared to be illegal. Every person who shall
make any contract or engage in any combination or
conspiracy hereby declared to be illegal shall be
deemed guilty of a felony, and, on conviction thereof,
shall be punished by fine not exceeding one million
dollars if a corporation, or, if any other person, one
hundred thousand dollars, or by imprisonment not
exceeding three years, or by both said punishments, in
the discretion of the court.

Section 2 of the Shern.an Act, 15 U.S.C. § 2:

Kvery person who shall monopolize, or attempt to
monopolize, or combine or 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 felony, and, on
conviction thereof, shall be punished by fine not ex-
ceeding one million dollars if a corporation, or, if any
other person, one hundred thousand dollars, or by
imprisonment not exceeding three years, or by both
said punishments, in the discretion of the court.

39a
APPENDIX G

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA

Civil No. 72-C-483-B

Darrion, Inc., Plaintiff,
Vv.

Auuiep CuemicaL Corporation, et al., Defendants.

MEMORANDUM IN SUPPORT OF MOTION FOR JUDGMENT
NOTWITHSTANDING THE VERDICT

TABLE OF CONTENTS

Es Re TOE FN 5a 5 oii ved es eae eae nn 2°

II. Plaintiff Failed To Produce Substantial Evidence
of Monopolization or Attempted Monopolization
ff OE pr eee ry rrr ree ere 4)

A. The Relevant Market Is National in Scope .. 6

B. Plaintiff Failed To Show that Du Pont Pos-
sessed Monopoly Power in the Relevant Mar-
| OP ee een Te re Peer eee 9

1. Du Pont’s Market Share Is Such As To
Preclude a Valid Finding of Monopoly

UE 8 dick scene es acs ha a oe ea ees 9
2. Du Pont Lacked Power To Control Prices

or Exclude Competitors ................ 16

* Page reference refer to pages of memorandum as originally
filed. Bracketed numbers in text also refer to pages of memoran-
dum as originally filed.

III.

IV.

40a

C. There Is No Evidence of the Exercise by Du
Pont of Monopoly Power ....:scenvevssepes

D. Plaintiff Also Failed To Produce Substantial —

Evidence of Attempted Monopolization by Du
POR. oo pckcwew pane ced eee eee eee

Plaintiff Failed to Produce Substantial Evidence
Of CORMPITOON ic vic os see shan eee eeeeeeeees

A. The List Price Reduction First Implemented
by Du Pont in March 1971 Was the Product of
Competition Rather than of Conspiracy .....

B. There Was No Other Credible Evidence At
Trial of the Alleged Conspiracy ............

1. The opportunity to conspire .............
2. Market intelligence activities ............
3S. Dietribwtiem matteree ooc i cc ncévsctccvss
4. Late 1972 price increases .............65.

All Defendants Are Entitled To Judgment Be-
cause of Plaintiff's Failure To Prove Impact and
IMG 56 os 0 ceda4 hee ee eke ee

A. Gup Was Not Competent To Introduce the
Conelusions of Another Expert (Iskander) ..

B. Gup’s Damage Theory Improperly Assumed a
Daiflon Sales Price Prevailing During De-
fendants’ Alleged Conspiracy To Raise Prices

C. Gup’s Damage Theory Falls Also Because He
Was Completely Wrong About One of The
Most Important Facts—The Market Share
that Daiflon Actually Had Attained—Under-
lying His Theory ..... PORT ET Te Pes ae

D. Gup’s Damage Theory Rests on the Patently
Untenable Assumption that Daiflon Would

21

27

31

45

45

4la

Have Performed Like a Broad Spectrum of
Big American Companies in All Their Opera-
EDOM e Crore a cha wxkh bi hi Aa SRR RO 47

Ki. Even If Gup Had Been Right in Everything
Klse, He Did Not Take Into Account the
Import Surcharge and the Devaluation of the
Dollar, Which Eat Up All of Daiflon’s As-
sumed Net Income With Something To Spare 50

re er Ue ea ee oe 52

The legal standards applicable to a motion for judg-
ment n.o.v. are well settled. Although entitled to all rea-
sonable inferences, plaintiff still has the burden of estab-
lishing a prima facie case in responding to a motion for
judgment n.o.v. Barnett v. Life Ins. Co. of the Southwest,
562 F.2d 15, 17 (10th Cir. 1977). An antitrust plaintiff is
not entitled to go to the jury, and cannot support a favor-
able verdict, “on the basis of speculation, surmise or con-
jecture.” Independent Iron Works, Inc. v. United States
Corp., 177 F.Supp. 748, 746 (N.D. Cal. 1959), aff’d, 322
F.2d 656 (9th Cir.), cert. denied, 375 U.S. 922 (1963). As
the Supreme Court pointed out in Galloway v. United
States, 319 U.S. 372, 395 (1943):

“|T }he essential requirement is that mere speculation
be not allowed to do duty for probative facts, after
making due allowance for all reasonably possible in-
ferences favoring the party whose case is attacked.”

Furthermore, the question presented by a motion for
judgment n.o.v. is not

“whether there is no evidence supporting the party
against whom the motion is made, but whether there

42a

is evidence upon which the jury could probably find
a verdict for that party.”

[2] Yazzie v. Sullivent, 561 F.2d 183, 188 (10th Cir, 1977).
This means that a jury verdict can be sustained only if
there is substantial evidence to support it—that is, “ ‘such
relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.’” Janich Bros., Inc. v.
American Distilling Co., 570 F.2d 848, 853 n. 2 (9th Cir.
1977), cert. denied, 99 S.Ct 103 (1979), quoting from
Washington v. United States, 214 F.2d 33 (9th Cir.), cert.
denied, 348 U.S. 862 (1954).

The essential findings challenged in this motion are (1)
that defendants engaged in an unlawful conspiracy to
drive plaintiff out of business, (2) that defendant Du Pont
monopolized, or attempted to monopolize, the non-automo-
tive replacement market for refrigerant gas and (3) that
plaintiff suffered damages in the amount of $2,500,000 as
a consequence of such unlawful acts. As demonstrated be-
low, plaintiff has failed to produce a substantial evidence
showing either that the defendants, or any one of them,
violated some provision of the antitrust laws or that plain-
tiff has suffered measurable damages as a result of acts
attributable to any of the defendants. Such failure of proof
requires that judgment n.o.v. be entered for defendants.

I. The Background Facts

Plaintiff, Daiflon, Inc., was formed for the purpose of
importing refrigerant gas from Japan, repackaging this
gas in smaller cylinders, and selling it in the United States.
Jarter, Tr. 147. Daiflon commenced operations in early
1969, imported refrigerant gas until August 1971, and
made its last sale in October 1972. Carter, Tr. 99, 104.

Daiflon’s Japanese supplier was unable to provide it
with adequate amounts of gas in 1969 and 1970; neverthe-

48a

less, at no time during its existence did Daiflon ask any
of the defendants—the domestic manufacturers of refrig-
erant [3] gas—to sell it any grade of gas. Carter, Tr. 148,
343. Mr. Richard Carter, plaintiff’s president, testified
that by early 1971 Daiflon’s supply problems had been
solved, and that Daiflon then had a viable business. Carter,
Tr. 103. The value of the business at that time, as reflected
in a contemporaneous stock sale as well as in statements
and analyses that were not prepared for purposes of this
litigation, was $200,000. Carter, Tr. 254; MeDonald, Tr.
523, 554, 572-576; Def. Exh. Nos. 7, 8.

In August 1971, the President of the United States im-
posed a 10 percent surcharge of all imports from Japan
and other countries. Carter, Tr. 176-177; Def. Exh. No. 6.
The effect of the surcharge of Daiflon’s importing business
was “disastrous.” Carter, Tr, 213. Daiflon did not place
any orders for refrigerant gas with its Japanese supplier
after that time. Carter, Tr. 214-215. This surcharge re-
mained in effect until December 1971, when it was replaced
by new exchange rates involving the dollar, the Japanese
yen and other currencies. As of December 15, 1971, the
devaluation of the dollar as against the Japanese yen had
the effect of increasing by some 17 percent the cost of im-

ported Japanese goods, including refrigerant gas. Brad-
field, Tr. 28.

Mr. Carter and Mr. R. D. McDonald, the primary in-
vestor in Daiflon, testified that, even before these cost in-
creases, Daiflon’s costs were higher than those of the
domestic manufacturers. Carter, Tr. 154-155; MeDonald,
Tr. 586-587. During the four years of its existence, Daiflon
sold a total of some 2.4 million pounds of refrigerant gas,
which was less than 14 of one percent of the total sales of
refrigerant gas in the United States during that period.
Hibdon Direct, Tr. 34; Def. Exh. No. 91. At no time did
Daiflon realize a profit on its refrigerant gas business.
Carter, Tr. 275-285.

44a

[4] The defendants are the six domestic manufacturers
of refrigerant gas. Du Pont was the first entrant into this
business. Until 1949 patents covering refrigerant gas pro-
ducts legally precluded the sale of refrigerant gas in the
United States by any other person. After the original pat-
ents expired, the other defendants entered this business.
Allied Chemical was the first new entrant, in 1952; Racon
was the last of the defendants to commence the manufac-
ture and sale of refrigerant gas, doing so in 1965. In 1977,
Union Carbide ceased manufacturing refrigerant gas. Hib-
don Direct, Tr. 11-12; Pl. Exh. No. 1113, pp. 15-16.

It is undisputed that refrigerant gas is a homogeneous,
fungible product—that is, the gas produced by any defend-
ant is chemically identical to the gas produced by any other
defendant. Rose, Deposition 47; Hibdon Direct, Tr. 10, 23-
24. The economic implication of this fact is also undis-
puted. The economists who appeared were unanimous in
stating that, because of the homogeneous nature of refrig-
erant gas, one would expect substantial similarity in re-
frigerant gas prices among the defendants. The reason is
that no purchaser would pay any defendant more for its
refrigerant gas than it had to pay to obtain the refrigerant
gas of any other defendant. Hibdon Direct, Tr. 10-11, 24;
Gup., Tr. 1075-1077; Jadlow, Tr. 1169, 1172-1173.

This did not mean, however, that there was no price
competition among the defendants. On the contrary, while
the list prices of each defendant were similar, there was
substantial discounting off list prices. Hibdon Direct, Tr.
28-29. In addition, there were other competitive activities
that affected the prices paid by various of the defendants’
customers. This price competition was intense throughout
the 1969-1972 period, throughout the United States. Hib-
don Direct, Tr. 9, 20, 28-29, 36-38.

[5] Plaintiff's claim is that it was forced to begin liqui-
dating its business operations in August 1971 because of
a 13 percent reduction in the defendants’ list prices in the

45a

spring of 1971. Carter, Tr. 110-112; MeDonald, Tr. 538,
597. It claims that this general reduction in list prices was
the result of a conspiracy among the defendants to drive
it out of business. It also claims that Du Pont’s pricing

practices independently violated Section 2 of the Sherman
Act.

We begin by showing that plaintiff tendered no evidence
to support the latter claim. We then show that there was
also a complete failure of proof on the conspiracy issue.
Finally, we show the lack of any probative evidence to
support any award of damages to Daiflon, much less the
jury’s determination that plaintiff’s damages were $2,500,-
000 before trebling.

Il. Plaintiff Failed To Produce Substantial Evidence of Monopoli-
zation or Attempted Monopolization by Du Pont

The essential elements of a monopolization charge are
“(1) the possession of monopoly power in the relevant
market and (2) the willful acquisition or maintenance of
that power as distinguished from growth or development
as a consequence of a superior product, business acumen,
or historic accident.” Pacific Engineering & Production
Co. v. Kerr-McGee Corp., 551 F.2d 790, 791 (10th Cir.),
cert. denied, 434 U.S. 879 (1977), citing United States v.
Grinnell Corp., 384 U.S. 563 (1966). A case of attempted
monopolization, by contrast, requires “proof [1] that the
defendant’s conduct was motivated by specific intent to
monopolize and [2] that a dangerous probability of mo-
nopoly power existed.” /bid., citing EF. J. Delaney Corp.
v. Bonne Bell, Inc., 525 F.2d 296 (10th Cir, 1975), cert. de-
nied, 425 U.S. 907 (1976). Plaintiff’s proof with respect to
each of [6] these elements fell far short of the required
showing. Indeed, the evidence at trial absolutely precluded

a finding of monopolization or attempted monopolization
by Du Pont.

46a

A. The Relevant Market Is National in Scope

Plaintiff’s expert economist, Dr. Joseph Jadlow, testified
that, in his opinion, the relevant market “would probably
be the non-automotive aftermarket for refrigerant gas.”
Judlow, Tr. 1158. This is the market in which Daiflon sold
refrigerant grades 11, 12 and 22. Carter, Tr. 321. Du Pont
did not dispute that conclusion—and the Court’s instruc-
tions, as well as the special verdict form that was sub-
mitted to the jury, reflected the parties’ agreement that
the relevant product market consists of refrigerant gas
used in the non-automotive replacement market.

The only evidence on the question of the geographic
scope of the relevant market established that it was a
national market. Dr. Jadlow so testified (Tr. 181):

“Q. Now, I believe you defined the relevant market,
as you view it, as the non-automotive replace-
ment market for refrigerant gas.

af Me lla

“Q. That would be a product market throughout the
United States?

"7"

Dr. Jadlow’s testimony on this issue was consistent with
the testimony of company witnesses whose depositions
were read by plaintiff. Mr. Robert Wright, Marketing
Manager for Refrigerants at Du Pont, testified that Du
Pont refrigerants are distributed to the non-automotive
replacement market on a national basis and that Du Pont’s
list prices apply throughout the United States. E.g.,
Wright, Deposition 194-198. Representatives of Allied
Chemical, Union Carbide and Kaiser also testified that the
refrigerant distribution policies of their respective com-
panies encompassed the entire United States—and with
the [7] exception of instances involving isolated competi-
tive offers to individual customers, that their company

47a

pricing policies reflected national, rather than regional,
marketing conditions.’

The evidence at trial thus showed a national market for
refrigerant gas used for non-automotive replacement pur-
poses. As in United States v. Grinnell Corp., supra, 384
U.S. at 576, the evidence in this case was of a business
“operated on a national level,” with “national planning”;
each of the defendants had “a rational schedule of prices
* * * and terms,” which occasionally were “varied to meet
local [competitive] conditions”; indeed, in light of the
evidence at trial, only a national market “reflects the re-
ality of the way in which [the defendants, including Du
Pont] built and conducted their [replacement refrigerant]
business.” See also, e.g., Tampa Elec. Co, v. Nashville Coal
Co., 365 U.S. 220, 327 (1961); Standard Oil Co. v. United
States, 337 U.S. 293, 299 n. 5 (1949); United States v. Em-
pire Gas Corp., 5387 F.2d 296, 304 (8th Cir. 1976), cert.
denied, 429 U.S. 1122 (1977); Castlegate, Inc. v. National
Tea Co., 34 F.R.D. 221, 223 (D. Colo, 1963).

There was no competent evidence at trial of a market
having a more limited geographic scope. Although Mr.
Carter and Mr. Bus Adams testified that plaintiff sold its
replacement refrigerant products in approximately 31
states at various times during the 1969-1972 period (Carter,
Tr. 603; Adams, Tr. 647-648), that testimony was totally
insufficient to establish that the relevant market was lim-
ited to those states.

In assessing claims that a particular market is limited
to a specific region or locality, the courts have [8] focused
on two factors: (1) the extent to which the defendants are
unable, as a practical matter, to sell the relevant product
outside the region or locality because of high transporta-
tion costs and (2) the extent to which buyers are unable to

‘E.g., Regan, Deposition 19-24; Napoli, Lx position 7, 131, 152;
Sorensen, Deposition 20-23.

48a

go to sellers located outside the region or locality to obtain
the product. E.9., United States v. Philadelphia Nat'l
Bank, 374 U.S. 321, 357 (1963); Tampa Elec. Co. v. Nash-
vile Coal Co., supra, 365 U.S. at 327; Honeywell Ince. v.
Sperry Rand Corp., 1974-1 Trade Cas. {| 74,874 (D. Minn.
1973); Case-Swayne Co, v. Sunkist Growers, Inc., 369
F.2d 449, 456 (9th Cir. 1966), cert. denied, 387 U.S. 932
(1967). There was no evidence in the present case that
transportation costs prevented any of the major sellers
of refrigerant gas from selling that product in other than
the states in which plaintiff actually made sales, Neither
was there evidence showing that individual purchasers were
unable to obtain refrigerant gas from other than regional
or local sources. The evidence was, in fact, to the contrary
—that is, there was ample testimony showing that most
wholesalers of refrigerant gas purchased from one or more
of the defendants, each of which operated on a national
seale. See, e.g., Lynn, Deposition 19-21; Dailey, Deposition
19. ‘

In short, if plaintiff intended at trial to carve out a
regional market for the purpose of its monopolization
and attempted monopolization claims against Du Pont, it
failed to accomplish that objective.’

* During discussions with the Court in connection with the
framing of instructions, Mr. Gregory, one of plaintiff’s counsel,
appeared to suggest that the jury could infer from the fact that
plaintiff actually had sold refrigerant in 31 states that the relevant
market is limited to those states. That suggestion is, of course,
untenable. If the suggestion were accepted, an antitrust plaintiff
could concentrate its sales efforts in those local areas in which a
high percentage of the sales were being made by a particular com-
pany—and, by means of such manipulation, make the target com-
pany vulnerable to a monopolization charge, The test for the geo-
graphic component of the relevant market focuses on market
realities; for good reason, the efforts of an individual plaintiff
to limit its claim to areas having no separate economic significance
are entitled to no weight. See, ¢c.g., Telex Corp. v. International

49a

[9]

B. Plaintiff Failed To Show That Du Pont Possessed Monopoly
Power in the Relevant Market

Monopoly power is defined generally as the “power to
control prices or to exclude competitors” in a relevant
market. /’. g., Telex Corp. v. International Business Ma-
chines Corp., supra, 510 F.2d at 914. Whether a particular
antitrust defendant possesses monopoly power often in-
volves a complicated factual inquiry, requiring an assess-
ment of the strength and vigor of the defendant’s com-
petitors as well as the existence of barriers to entry that
might prevent new firms from entering the market. No
such inquiry is required here, however, because the size of
Du Pont’s market share during the period of plaintiff’s
existence absolutely precludes, as a matter of law, a valid
finding of monopoly power.

1. Du Ponv’s Market Suare Is Sucw As To Prec.LupEe
A Vauip Finpina or Monopoty Power

The courts have held on numerous occasions that “con-
trol of less than 50 pereent of the relevant market is by
itself sufficient evidence that monopoly power does not
exist.” J. von Kalinowski, Antitrust Laws and Trade
Regulation §8.02[2], pp. 8-34 and 8-34.1 (1979 ed.). In
fact, in those instances in which the Supreme Court has
sustained findings of monopoly power, the market shares
involved have [10] ranged from a minimum of 70 percent
(United States v. Paramount Pictures, Inc., 334 U.S, 131

_ ee ee eee

Business Machines Corp., 510 F.2d 894, 917 (10th Cir, 1975),
cert. dismissed, 423 U.S, 802 (1976).

Of course, if this Court should conclude that the relevant market
is limited to the 31 states in which plaintiff sold refrigerant gas
at some time during the period of its existence, that conclusion
would not benefit plaintiff since there was no evidence, of any
sort, of Du Pont’s market share in those states. See discussion at
pp. 12-15 infra.

50a

(1948)) to a high of 90 percent (Standard Oi Co. v.
United States, 221 U.S, 1 (1911)). As the Supreme Court
explained in l/nited States v. United States Steel Corp.,
251 U.S. 417, 444 (1920), in discussing the significance of
a substantially larger market share than plaintiff estab-
lished here:

“The power attained was much greater than that pos-
sessed by any one competitor—it was not greater
than that possessed by all of them. Monopoly, there-
fore, was not achieved, * * *”

Accord, e.g., Holleb & Co. vy. Produce Terminal Cold Stor-
age Co., 582 F.2d 29, 33 (7th Cir. 1976) (monopolization
claim rejected since, even assuming the appropriateness of
the market plaintiff had alleged, plaintiff failed to prove
that defendant “had a dominant share exceeding 60% of
the market”); T'win City Sportservice, Inc, v. Charles O.
Finley & Co., 512 F.2d 1264, 1274 (9th Cir. 1975) (50 per-
cent market share insufficient to establish monopoly
power); Telex Corp. v. International Business Machines
Corp., supra, 510 F.2d at 915-16, 919 (36.7 percent of the
relevant market “is insufficient to justify any inference or
conclusion of market power”, and further quoting with
approval, “something more than 50% of the market is a
prerequisite to a finding of monopoly”); White Bag Co.
v. International Paper Co., 1974-2 Trade Cas. {| 75,188 (4th
Cir. 1974) (tabulation of cases revealed monopoly power
is found only when share of relevant market is 70 percent
or more) ; Continental Baking Co. v, Old Homestead Bread
Co., 476 F.2d 97, 104 (10th Cir.), cert. denied, 414 U.S.
975 (1973) (“[I]t is fairly clear that a market share of
fifty-one percent would not constitute monopoly power.”) ;
Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203, 207
n. 2 (Sth Cir. 1969) (“It appears that something more than
50% of the market is a prerequisite [11] to a finding of
monopoly.”); United States v. Aluminum Company of
America, 148 F.2d 416, 424 (2nd Cir. 1945) (Over 90 per-

Sla

cent of the velevant market “is enough to constitute a
monopoly; it is doubtful whether sixty or sixty-four per-
cent would be enough; and certainly thirty-three percent
is not.”); Nankin Hosp. v. Michigan Hosp. Service, 361 F.
Supp. 119, 1209 (#.D. Mich. 1973) (market share below 50
percent insufficient to show monopoly power).

The evidence at trial showed that Du Pont’s share of
the non-automotive refrigerant gas replacement market
during the 1969-1972 period was approximately 40 percent.
That is well below the 50 percent figure that, in the Tenth
Circuit as elsewhere, has been held “by itself” to be “suf-
ficient evidence that monopoly power does not exist.”’ Von
Kalinowski, Antitrust Laws and Trade Regulation, supra.
The most reliable evidence of Du Pont’s market share
during the relevant period is probably the Du Pont Busi-
ness Plan, which was prepared for internal use by Du Pont
in November 1971. Du Pont’s share of the non-automotive
refrigerant gas replacement market is estimated in the
Business Plan to have been 39 percent as of 1971. Pl, Exh.
No. 1113, p. 18. This is consistent with the estimate of
Du Pont’s market share contained in the Marketing Plans
of Pennwalt for the years 1971 and 1972; according to the
Pennwalt Marketing Plans, Du Pont’s share of the replace-
ment market in 1971 was approximately 40 percent and in
1972 was approximately 38 percent. Pl. Exh. No. 4146, p. 5;
Pl. Exh. No, 4196, p. 4.°

Although there was no evidence that Du Pont’s share of
the refrigerant gas replacement market approached 50
percent during the 1969-1972 period, one of the jury’s
[12] findings, as reflected by the special verdict form, pur-
ported to find to the contrary. Verdict Form, Finding No.
3. This finding cannot be sustained in view of the total

*It also is consistent with the estimate of Du Pont’s market
share provided by officials of Allied Chemical, Kaiser, Union Car-
bide and Racon, Regan, Deposition 96; Sorenson, Deposition 158 ;
Napoli, Deposition 125; Knopf, Deposition 96.

52a

absence of record evidence to support it. Indeed, the find-
ing could only have been based on the mischaracterization
of market share evidence by plaintiff’s counsel during
closing arguments.

At two points during his closing argument, plaintiff’s
counsel stated that there was evidence that would support
a finding that Du Pont’s share of the refrigerant gas
replacement market exceeded 50 percent. Near the outset
of his argument, plaintiff’s counsel referred to a Union
Carbide document that, according to counsel, “shows that
Du Pont’s share of the 22 market was 53 percent * * *.”
Crawford, Tr. 1494. But plaintiff made no effort to estab-
lish by evidence at trial that the relevant product market
was limited to grade 22 refrigerant gas; there was no
evidence at all tending to show that it would be appropriate
to treat any single type of refrigerant gas as a relevant
market, and plaintiff’s counsel never even argued that
issue to the jury. Moreover, the Union Carbide document
relied upon by plaintiff's counsel was not limited to the
non-automotive replacement market. Rather, it dealt with
market share for all end uses in the aggregate—which
means that it included fluorocarbons sold as aerosol pro-
pellants, foaming agents, solvents and resins, in addition
to refrigerant gas sold to original equipment manufac-
turers and for replacement purposes. Pl. Exh. No. 4500,
p. 5. Accordingly, the 53 percent market share figure re-
ferred to by counsel cannot support any finding that in the
non-automotive replacement market Du Pont had a greater
than 50 percent share of any or all refrigerant gas sales.

Plaintiff’s counsel also relied during closing arguments
on the testimony of Mr. Bus Adams for the proposition
that Du Pont’s share of the relevant market during the
[13] 1969-72 period exceeded 50 percent. According to
counsel :

“Now, one thing about Mr. Adams[’] testimony that
I wanted to testify to, or I want to advise you of and

53a

request that you consider, is that Mr. Adams stated
that he traveled throughout these whole 31 states and
Puerto Rico, and you know that he did, * * * but he also
testified that he understood the territory. he under-
stood the competition, and his estimate was that Du
Pont had over 50 percent of the refrigerant gas after-
market in that market area, in that relevant market,
and there has been no testimony in this matter to refute
that, and it stands unrefuted, and it’s the truth.”
Crawford, Tr. 1507.

The testimony by Mr. Adams referred to was not accu-
rately described by counsel, and, in any event, the testi-
mony is both irrelevant and demonstrably unreliable. As
already noted, there is no basis for concluding that the
relevant geographic market for the purpose of this case is
anything but national in scope. But, in addition, the cross-
examination of Mr. Adams demonstrated beyond perad-
venture that Mr. Adams’ statements concerning Du Pont’s
market share amounted to no evidence at all, much less
substantial evidence. During cross-examination, Mr.
Adams testified as follows:

“Q. Now, you testified yesterday as to the apparent
comparative volume of refrigerant gas of Du
Pont as compared to the sales volume of the other
defendants.

Was that testimony based on any survey that you
conducted?

“A. No, sir, it came from individuals that I knew from
the past years.

“Q. Was this an individual at Pennwalt that told you
that?

“A. No, sir.
“Q. Individual at Du Pont?
“A. No, sir.

54a

“Q. Individual in any one of these companies?

“A.

It was an individual of some of your largest dis-
tributors.,

[24] “Q. * * * So it’s information that came to you

cA

“Q.
sad .

“Q.

ad.
“Q.

6A

“().
“4,

from some customers; is that right?
Yes, sir.
All customers or just some?

Oh, I would say I could name you about three or
four.

. Is that the basis for your testimony?

. Well, observing is very good.

I asked whether you went into the backroom of
wholesalers or contractors’ offices and counted up
the number of Pennwalt cylinders, the number of
Carbide cylinders, and that’s how you decided.
Did you do that?

No. I did not go back and count them, no, sir.

Did you ask people that you ealled on where they
bought their refrigerants from?

I may or I may have not.
You don’t remember?
No, sir.”

Adams, Tr. 772-774.

Following this exchange, plaintiff’s counsel asked Mr.
Adams on redirect to estimate Du Pont’s market share in
the area in which Daiflon was operating. Mr. Adams re-
sponded as follows:

“T would say du Pont’s sales [were] over 50 percent
of the customers that I called on, and I talked to
presidents of the companies that told me what pur-
chases they bought.” Adams, Tr. 775.

o0a

It is thus apparent that plaintiff’s counsel mischaracter-
ized Mr. Adams’ testimony in suggesting that Mr. Adams
had stated that Du Pont “had over 50 pertent of the
refrigerant gas after-market” in the 31 states in which
plaintiff actually made refrigerant gas sales during the
1969-1972 period. In fact, Mr. Adams’ testimony was that
Du [15] Pont’s sales were “over 50 percent of the custo-
mers that [he] called on” (Adams, Tr. 775)—a group that
hardly amounts to a relevant market. Moreover, it is diffi-
cult to conceive of less reliable evidence of Du Pont’s sales
to even these isolated, and unnamed, customers than is
provided by Mr. Adams’ testimony.

Mr. Adams conceded on cross-examination that his mar-
ket share estimate was not based on any survey he had
undertaken or on conversations he had had with repre-
sentatives of any of the defendants. Although he appeared
at one point to testify that his estimate was based on con-
versations with three or four Du Pont customers concern-
ing their own purchases, he stated subsequently that he
did not remember whether he had asked people on whom
he called for information as to the sources of their re-
frigerant purchases. It is, of course, impossible to recon-
cile this statement with Mr. Adams’ statement on redirect
examination that he had “talked with presidents of the
companies that told me what purchases they bought.”
Adams, Tr. 775. Finally, although Mr. Adams suggested
that his estimate of Du Pont’s market share might be based
on “observing” (Tr. 773), he later testified that he did not
go into the backroom of wholesalers or contractors and
count the number of cylinders in stock from the various
manufacturers.

In short, although the mischaracterization by plaintiff’s
counsel of Mr. Adams’ testimony may explain the jury’s
finding that Du Pont’s share of the non-automotive refrig-
erant gas replacement market exceeded 50 percent during
the 1969-1972 period, the testimony itself is a wholly inade-

56a

quate predicate for an antitrust verdict. The only credible
evidence in the present record of Du Pont’s share of the
relevant market places it at approximately 40 percent. As
a matter of law, a market share of 40 percent is insufficient
to permit a finding a monopoly power.

[16] 2. Du Pont Lackep Power To ControL Prices Or
EXxcLupe CoMPETITORS

Of course, even if one assumes, contrary to the evidence,
that Du Pont’s share of the relevant market during the
1969-1972 period was greater than 50 percent, that would
not necessarily mean that Du Pont possessed monopoly
power. Once a company’s market share has been shown to
exceed 50 percent, the law reyuires that an assessment be
made to determine whether, in view of other industry
characteristics, the company has the power “to control
prices or to exclude competition.” Telex Corp. v. Inter-
national Business Machines Corp., supra, 510 F.2d at 914.
Kven if Du Pont’s minority market share is ignored, the
evidence at trial showed conclusively that Du Pont did not
possess any such power.

A company cannot be said to have monopoly power over
price unless it has the power to charge prices for its
products substantially without regard to competitive con-
ditions and without having to take into consideration the
prices of its competitors’ products. EF. g., Continental Bak-
ing Co. v. Old Homestead Bread Co., supra, 476 F.2d at
104; Cole v. Hughes Tool Co., 215 F.2d 924, 938 (10th Cir.
1954). To put the matter another way, a company does not
have monopoly power over price unless it has substantially
unbridled discretion to charge a premium for its products
—and thereby, at its option, to reap monopoly profits.
E.g., Janich Bros., Inc. v. American Distilling Co., supra,
570 F.2d at 856; Pacific Engineering & Production Co. v.
Kerr-McGee Corp., supra, 551 F.2d at 797. If, on the other
hand, there is—as Dr. Jadlow, plaintiff’s economic expert,

o7a
testified—“price competition, true price competition, * * *
that is not a monopoly market.” Jadlow, Tr, 1186.

[17] The present record is devoid of any evidence tend-
ing to show that Du Pont had sufficient market power to
be able to charge prices for its refrigerant products in
the non-automative replacement market without regard to
the prices charged by its competitors. In fact, the evidence
showed overwhelmingly that any effort by Du Pont to
charge a higher price than any of its competitors would
have resulted in lost sales and market share by Du Pont—
hardly the kind of penalty a monopolist would suffer. Thus,
one of the options discussed in the Du Pont Business Plan
for 1971 was to “[i]nerease prices and/or resist lower
prices offered to key accounts by competition.” This option
was rejected by Du Pont because, as stated in the Business
Plan, “[a]ttempts to increase prices or resist lower com-
petitive price offerings at this time would lead to a loss in
market position and have a detrimental effect on long-term
earnings.” Pl, Exh. No. 1113, p. 21.

This assessment of Du Pont’s lack of significant market
power was echoed by numerous witnesses at trial. Mr.
Robert Wright of Du Pont testified, for example, that one
of the primary reasons Du Pont lowered its list prices for
replacement refrigerants in March 1971 was that “it was
quite evident that we were not competitive at a number of
wholesalers, and as such [Du Pont] was being penalized
in penetration * * *.” Wright, Deposition 187. So far as the
March 1972 price decrease, initiated by Allied Chemical,
was concerned, Mr. Wright observed that “we would have
been very pleased to have been able to get the price up,
and at least gain some of our profit back. Competitive
conditions certainly precluded this, in our best judgment.”
Td, at 114; [18] see also O’Donnell, Deposition 36-41; Hib-
don Direct, Tr. 10-11, 24.*

* Plaintiff’s counsel argued at length in his closing arguments
that Du Pont was a ‘‘price leader’’ in the refrigerant gas in-

58a

An alternative way of looking at a company’s market
power, suggested by plaintiff’s expert economist, Dr. Jad-
low, is to assess the extent to which the company is subject
to “price competition, true price competition.” Jadlow,
Tr. 1186. The existence of vigorous price competition is,
of course, inconsistent with the possession of monopoly
power over price. If a company must adjust its prices
downward in response to lower-price competitive offerings
in order to avoid a loss of sales, that company lacks the
kind of control over prices that is encompassed by the
phrase “monopoly power.” £.g., Telex Corp. v. Interna-
tional Business Machines Corp., supra, 510 F.2d at 914.

There was overwhelming evidence at trial of vigorous
price competition in the sale of replacement refrigerants,
and undisputed evidence of Du Pont’s vulnerability to that
competition. In addition to acknowledging Du Pont’s in-
ability to “increase prices and/or resist lower prices offered
to key accounts by competition” without a significant loss
of sales and market share, the Du Pont Business Plan
clearly spells out Du Pont’s intentions as of November
1971 to compete actively with the other sellers of refrig-
erant gas on the basis of price, service to customers and
technical innovation. Pl. Exh. No, 1113, pp. 19-21. The
[19] Business Plan also summarizes the kind of ecompeti-

dustry. E.g., Crawford, Tr. 1364. In fact, however, of the five
major list price changes that occurred during the 1969-1972 period,
Du Pont was the first company to implement only one—in March
1971. Wright, Deposition 91, 98, 113-116; O’Donnell, Deposition
44-45; Napoli, Deposition 148. In addition, both Mr. Wright and
Mr. O’Donnell testified that it was Du Pont’s policy not to offer
to sell to individual customers at prices below list unless Du Pont
was meeting a competitive offer. Wright, Deposition 52-53 ; O’Don-
nell, Deposition 29-30. Finally, the evidence was undisputed that
Du Pont could not charge a higher price for its refrigerant gas
than its competitors without losing sales and, consequently, market
share. Pl. Exh. No. 1113, p. 21; Hibdon Direct, Tr. 24.

59a

tion Du Pont faced in the replacement market for refrig-
erant gas from the other American manufacturers:

“Allied * * * emphasizes special price deals coupled
with intensive personalized entertainment. Union Car-
bide * * * and Pennwalt * * * focus on special price
deals motivated by their need to fill expanded ca-
pacity. Racon also uses price deals in an attempt to
move their mix to a high cylinder/bulk ratio. Kaiser
uses incentive trips to gain business.” Jd. at 13.

If Du Pont had possessed monopoly power, as alleged by
plaintiff, it would not have been concerned about price
competition from other companies—and there would have
been no reason for Du Pont to resolve to compete on the
basis of price, service to customers or technical innovation.

The Du Pont Business Plan is not alone in providing a
sense of the competition Du Pont faced during the 1969-
1972 period. The Du Pont Monthly Report for December
1970 observed, for example, that “[t]he decline in sales
to wholesalers [during 1970] was due to competitive deals
which we were reluctant to meet until mid-year. These in-
cluded extended terms, rebates, discounts, and LTL’s at the
truckload price.” Pl. Exh. No. 1296, p. 2. The Monthly
Report for January 1971 commented: “There is continuing
deterioration of prices in the marketplace due to increased
competitive rebates.” Pl. Exh. No. 1297, p. 3. The Report
for July 1971 contained a similar observation: “Price ero-
sion continues in the wholesale market.” Pl. Exh. No. 1303,
p. 1. Finally, the Monthly Report for November 1971 indi-
cated that the vigorous competitive activity, centering on
price, that had been described in the earlier reports had
not abated: “Competition is fierce. They have upgraded
their personnel and they are continuing to offer selected
and special deals.” Pl. Exh. No. 1090, p. 2.

[20] Additional insight into the extent of competitive
activity, and of Du Pont’s lack of control over the market

60a

price of refrigerants, during the period of plaintiff’s ex-
istence also is provided by the competitive price authoriza-
tion forms (“CPA’s”) that plaintiff chose to offer into
evidence. The mere existence of those CPA’s, which record
price deals reported by wholesalers to have been offered
by Du Pont’s competitors and decisions by Du Pont to
meet these offers to avoid losing business, is inconsistent
with the notion that Du Pont possessed monopoly power
over price. Moreover, even a cursory examination of the
CPA’s that are in evidence confirms that Du Pont faced
intensive price competition from all of the other American
manufacturers of refrigerants—and that Du Pont was well
aware that it would lose sales in the event it refused .o
lower its prices to meet competitive offers. E.g., Pl. Exh.
Nos. 1117, 1119, 1120 and 1121 (price competition at Baker
Brothers from Allied, Pennwalt and Union Carbide); Pl.
Exh. No. 1154 (price competition at Harry Alter Company
from Kaiser, Allied, Union Carbide and Pennwalt) ; rr.
No. 1163 (price competition at Refrigeration Supplies from
Racon, Allied, Pennwalt and Kaiser); Pl. Exh. No. 1164
(price competition at Solar Supply from Union Carbide,
Pennwalt and Allied); Pl. Exh. 1166 (price competition at
Standard Brass from Union Carbide and Kaiser); PI.
Exh. Nos. 1179, 1180 and 1181 (price competition at Tersco
from Allied and Union Carbide); Pl. Exh. Nos. 1182-1185,
1189, 1192 and 1194 (price competition at Waugh Brothers
from Pennwalt, Racon, Allied and Union Carbide).

It defies reason to maintain, in the face of all this evi-
dence, that Du Pont possessed monopoly power over the
market price of replacement refrigerants—that it had
[21] the power to price and sell refrigerant gas in the
replacement market without regard to the activities of its
competitors. The simple fact, which was clearly and un-
disputably evidenced ai trial, is that Du Pont did not have
monopoly power over the price of refrigerant gas.

It is equally clear that Du Pont lacked the power to
exclude competitors or prospective competitors from the

6la

non-automotive replacement market for refrigerant gas.
Once the original refrigerant gas patents expired in 1949,
any barriers to entry that remained did not prevent the
other defendants in this case from beginning to produce
and sell refrigerant gas. There was no evidence at trial that
Du Pont attempted to prevent any of the defendants from
entering the refrigerant gas business—or, even more
importantly, any evidence that it would have had the
power to do so had it made the effort. The fact that Allied
Chemical, Union Carbide, Pennwalt, Kaiser and Racon
were able successfully to enter the refrigerant gas busi-
ness prior to the time plaintiff began to import refrigerant
gas from Japan shows conclusively that entry was possible
so long as the potential entrant was not subject to dis-
abling operating problems and diseconomies. Indeed, the
presence of these competitors—all of which, with the excep-
tion of Racon (which was only in fluorocarbons), were
large multi-product companies (Hibdon Direct, Tr. 12)—
is fatal to any claim that Du Pont had the power to exclude
competitors from the non-automotive replacement market
for refrigerant gas.

C. There Is No Evidence of the Exercise by Du Pont of
Monopoly Power

A further defect in plaintiff’s individual monopolization
claim against Du Pont stems from the fact that the pos-
session of monopoly power, of itself, does not violate [22]
the antitrust laws. Before a monopolization claim can be
sustained, there must be a showing that monopoly power
was employed unfairly. E.g., Pacific Engineering & Pro-
duction Co. v. Kerr-McGee Corp., supra, 551 F.2d at 791;
Telex Corp. v. International Business Machines Corp.,
supra, 910 F.2d at 926-27. As in the Pacific Engineering
case, the “essential unfair means” alleged here relates to
what plaintiff has characterized as “predatory pricing.”

62a

According to plaintiff's president, Mr. Richard Carter,
the lowering of list prices in March 1971 effectively
“stopped” plaintiff’s sales of refrigerant gas. Carter, Tr.
196. Mr. Carter also testified that it was not until June
1971 that the full force of that price decrease was felt in
the marketplace—and that plaintiff did not order any
refrigerant gas from Japan after that time because plain-
tiff was unable, because of the price decrease, to sell the
refrigerant gas plaintiff already had in storage. Carter,
Tr, 197-198. Although plaintiff apparently continued to sell
small quantities of refrigerant gas until October 1972, Mr.
R. D. MeDonald testified that in August 1971 The United
States National Bank in Galveston, which had loaned sub-
stantial operating capital to plaintiff, instructed plaintiff
to begin an “orderly liquidation” of its operations. Mc-
Donald, Tr. 538, 597. As plaintiff’s counsel explained the
situation in his closing argument:

“For six months they just went like a house afire.
From January of ’71 to June of ’71, they did great.
They did great.

* . *

“And then in June of ’71, the handle was turned off,
and it stopped. Didn’t have any more customers.

“They were out, and they realized they were out, and
the bank advised them to go through whatever they
called it, an orderly liquidation or something of that
nature.

[23] “They were through. They had been driven out.”
Crawford, Tr. 1386, 1388.

The question that must be considered, then, is whether—
assuming arguendo that Du Pont had monopoly power—
Du Pont’s decision in March 1971 to reduce its list prices
for refrigerant gas in the non-automotive replacement mar-

63a

ket constituted an “unfair means” of competition. The
evidence at trial permits but one answer: that is, that the
March 1971.list price reduction represented entirely rea-
sonable, and permissible, competitive behavior by Du Pont.

There was extensive testimony concerning the nature of
and the reasons for the March 1971 price reduction. Al-
though Du Pont announced to the trade that it was reduc-
ing its list prices by 13 percent, the reduction amounted
in fact to only eight percent. The reason is that, in imple-
menting the reduction, Du Pont eliminated the five percent
prompt payment discount that it previously had been
allowing. Wright, Deposition 98, 194-198; O’Donnell, Depo-
sition 44-45. Moreover, at least 50 percent of Du Pont's
customers already were purchasing at the reduced price
because of price competition Du Pont had encountered at
those accounts from the other defendants. Wright, Depo-
sition 197; O’Donnell, Deposition 45. The Du Pont execu-
tives responsible for the price reduction understood that
customers who already were purchasing at the reduced
prices would react unfavorably to extension of the lower
terms to other customers (e.g., Pl. Exh. No. 1042), but they
concluded that a lowering of Du Pont’s list prices was
nevertheless required by competitive conditions.

As explained by Mr. Wright and Mr. O’Donnell, the
March 1971 price reduction represented an effort on Du
Pont’s part to stop the loss of sales and erosion of market
position that had been occurring. As stated by Mr. Wright,
Du Pont’s Marketing Manager for Refrigerants:

[24] “(When I joined the [Freon Products] group in
the fall of ’70, it was quite evident that we were not
competitive at a number of wholesalers, and as such
were being penalized in penetration; a as long as
that volume was not great in penalty, ana the prices
maintained themselves, we still were making good
money, but as soon as the volume began to eat away
to the point that our plants were running at such a

64a

rate that all of the distributives that I mentioned were
beginning to be constant on a smaller group of pounds,
then the profits began to tumble.” Wright, Deposition
188,

Mr. Wright and Mr. O’Donnell also testified that although
they were aware of Daiflon’s existence as of March 197],
that fact did not play any role in the decision to reduce
Du Pont’s list prices. Wright, Deposition 198-199; O’Don-
nell, Deposition 92. That is hardly surprising since not one
of the CPA’s that were received in evidence mentioned
Daiflon as the source of a competitive offer to one of Du
Pont’s customers; and, as noted previously, Daiflon sold
only 2.4 million pounds of refrigerant gas during the four
years of its existence, which was less than 4 of one percent
of the total sales of refrigerant gas in the United States
during that period. Discussion at p. 3 supra. The competi-
tion that led Du Pont to reduce its list prices in March
1971 was from the other defendants, not from Daiflon.

Furthermore, there is no evidence whatsoever, that as a
result of the March 1971 price reduction, Du Pont was
selling its refrigerant gas below either its fully allocated
cost or its marginal or incremental costs. Neither is there
any basis for finding that Du Pont was making other than
a reasonable profit on the sales it made pursuant to the
March 1971 list price reduction; indeed, the undisputed
evidence was that Du Pont would have sacrificed short-
term profits had it not reduced its list prices at that time.
In sum, in light of the competitive conditions that existed
as of March 1971, the decision by Du Pont to reduce its
list prices constituted “rational, competitive behavior.”
Pacific [25] Engineering & Production Co, v. Kerr-Mc-
Gee Corp., supra, 551 F.2d at 797.°

‘The testimony of Mr. Wright indicating that Du Pont made
some below-cost sales of refrigerant gas in mid-1972 is of no as-
sistance to plaintiff. Although plaintiff’s counsel failed to mention
the fact in his arguments to the jury, Mr. Wright testified that,

65a

The fact that the lowering of Du Pont’s list prices may
have made life more difficult for Daiflon does not make
Du Pont’s actions unlawful.® As the court of [26] appeals

although below fully-allocated cost, each of those sales was above
Du Pont’s marginal and average variable costs. Wright, Deposi-
tion 193-194. Mr. Wright testified additionally that the sales be-
low fully-allocated cost were made to meet competition from the
other defendants, not Daiflon, following the list price reduction
first made by Allied Chemical in March 1972. Id. at 114. Finally,
any such sales are, in any event, irrelevant to this case since, as
already noted, plaintiff’s position at trial was that it was driven
out of business by the events of mid-1971, and that the ‘‘orderly
liquidation’’ of plaintiff’s operations that was ordered at that time
by The United States National Bank in Galveston was virtually
complete by mid-1972. £.g., Crawford, Tr. 1386, 1388.

* This would be true even if there were evidence, which there is
not, that this was Du Pont’s intent. Under the law in this Circuit,
as elsewhere, sales made by a company above its fully-allocated
costs (at the very least) are conclusively presumed to be lawful.
E.g., Pacific Engineering & Production Co. v. Kerr-MeGee Corp.,
supra, 551 F.2d at 795-97.

Thus, the statements of plaintiff’s counsel during closing argu-
ments focusing on Pl. Exh. No. 1066, a trade report written by a
Du Pont salesman in Birmingham, Alabama, were wholly beside
the point. The portion of that exhibit relied upon by counsel reads
as follows: ‘‘Mr. Gennett is causing quite a stir in the Birming-
ham area. He is passing on the 13% discount that we offered in
order to combat the Japanese refrigerant.’’ Since there was no
evidence that any sales made by Du Pont pursuant to the March
1971 list price reduction were below Du Pont’s fully-allocated
costs, such sales would not have been unlawful (or have had any
relevance to plaintiff’s monopolization or attempted monopoliza-
tion charges), even if made ‘‘to combat the Japanese refrigerant.’’
Moreover, there is no evidence that the writer of the trade report,
a salesman in the field, had any knowledge concerning Du Pont’s
intent in reducing its list prices in March 1971. Finally, we submit
that the quoted portion of the trade report cannot sensibly be con-
strued as plaintiff’s counsel has suggested. As Professor James
Hibdon stated, when shown the report by plaintiff's counsel: ‘‘Du
Pont apparently had given a 13% discount which Mr. Gennett
received, and what he is doing is passing on that discount in order
that he can meet the Japanese competitor.’’ Hibdon Direct, Tr.
29-30.

66a

for this Circuit pointed out in Atlas Building Products Co.
v. Diamond Block & Gravel Co., 269 F.2d 950, 954 (10th
Cir. 1959), cert. denied, 363 U.S. 843 (1960): “Antitrust
legislation is concerned primarily with the health of the
competitive process, not with the individual competitor
who must sink or swim in competitive enterprise.” Because
plaintiff’s costs were admittedly higher than those of the
defendants, including Du Pont (McDonald, Tr. 586-587),
plaintiff was uniquely vulnerable to competition. But, un-
fortunately for plaintiff, neither the antitrust laws “nor
any social value compels the sheltering of an individual
competitor, at the expense of the public interest, from the
competitive process.” International Air Indus., Inc, v.
American Excelsior Co., 517 F.2d 714, 721 (5th Cir.), cert.
denied, 424 U.S. 943 (1975), quoted approvingly in Pacific
Engineering & Production Co. v. Kerr-McGee Corp., supra,
551 F.2d at 799; accord, e.g., Hanson v, Shell Ou Co., 541
F.2d 1352, 1358-59 (9th Cir. 1976), cert. denied, 429 U.S.
1074 (1977); Atlas Building Products Co. v. Diamond
Block & Gravel Co., supra, 269 F.2d at 956.

Contrary to plaintiff's contentions at trial, nothing in
Section 2 of the Sherman Act prohibits “price changes
which are within a ‘reasonable’ range, up or down.” Telex
Corp. v. International Business Machines Corp., supra,
510 F.2d at 927. That was all that was shown here: a rea-
sonable, and moderate, list price reduction by Du Pont
in response to competitive conditions. As the court of ap-
peals concluded recently in Pacific Engineering & Produc-
tion Co. v. Kerr-McGee Corp., supra, 551 F.2d at 795 quot-
ing from Union Leader Corp. v. Newspapers of New Eng-
land, Inc., 180 F. Supp. 125 (D. Mass.), modified, 284 F.2d
582 (Ist Cir. 1960), cert. denied, 365 U.S. 833 (1961):
“¢'T|ntending the natural consequences of acts which are
in all respects lawful, does not constitute the ‘exclusionary
intent’ [27] that is a prerequisite for finding a violation
of section 2 [of the Sherman Act].’”

67a

D. Plaintitf Also Failed To Produce Substantial Evidence of
Attempted Monopolization by Du Pont

The fundamental defect of plaintiff’s attempted monop-
olization claim against Du Pont is that it confuses compe-
tition, which the law encourages, with the kind of preda-
tory conduct that is of concern under the antitrust laws.
From the closing argument of plaintiff’s counsel, one would
suppose that it is unlawful to engage in price competition,
to try to prevent continued inroads by expanding compe-
titors, or to try to meet competition in the marketplace.
Indeed, plaintiff’s position a

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_2466%3A2. Public record. Not legal advice.