Petition — J. Truett Payne Co. v. Chrysler Motors Corp.

82-212

IN THE

SUPREME COURT OF THE UNITED STATES.

October Term, 1982

——

J. TRUETT PAYNE COMPANY, INC.,

a corporation,

Petitioner

V.

CHRYSLER MOTORS CORPORATION,

a corporation,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS,

ELEVENTH CIRCUIT

C. Lez REEvEs

2222 Arlington Avenue, South

Birmingham, Alabama 35205

(205) 933-7111

Counsel for Petitioner

Of Counsel:

Smorx, Prauurr, Frienp, FRrzpMAN,

Hilo & Apo.insky, P.A.

2222 Arlington Avenue, South

Birmingham, Alabama 35205

(205) 933-7111

OEE Vn

QUESTIONS PRESENTED

I. When there is proof that Chrysler discriminated in sales

price against Payne, totaling $81,248 over a 314 year period,

sometimes as much as $300 per car, during each of thirteen

separate rebate programs, does the Fifth Circuit's holding that,

in order to show a violation of Section 2 (a) of the Robinson-

Patman Act, Payne must prove that the result of the price

discrimination is likely to be a severe adverse effect on compe-

tition” with the favored competitior likely to draw sales and

profits from Payne impose an overly strict standard of proof on

Payne, the disfavored competitor, thereby overruling FTC

v. Morton Salt Co., 334 U.S. 37, 50 (1948) and Perkins v.

Standard Oil Company of California, 395 U.S. 642, 648 (1969)

which permit an inference of the adverse effect on competition

when there has been substantial price discrimination?

2. Despite a jury verdict showing that Chrysler Motors

violated Section 2 (a) of the Robinson-Patman Act and despite

proof of substantial price discrimination in a keen competi-

tive market which would have a reasonable possibility of

causing injury to competition, and despite direct proof of a

reduction of market share to the disfavored buyer, J. Truett

Payne Company, did the Fifth Circuit's decision overruling the

jury verdict and directing entry of judgment for Chrysler

Motors ignore the principle in Perkins v. Standard Oil Com-

pany of California, 395 U.S. 642, 648 (1969), which requires

the jury to determine whether or not there was a violation of

Section 2 (a) of the Robinson-Patman Act?

3. Whether evidence showing sustained violations ot Section

2 (a) of the Robinson-Patman Act, together with evidence of

keen competition in the market, relatively small profit margins,

substantial price discriminations sufficient to influence retail

sales prices and cause a decline in the sales and profits of J.

Truett Payne Company so that it eventually went out of busi-

ness, is sufficient to permit a jury to find under the more

lenient standard of proof that Chrysler's violation of the Robin-

son-Patman Act caused injury or damage to the business or

property of J. Truett Payne Company under Section 4 of the

Clayton Act?

4. Whether the evidence showing that Chrysler violated the

Act and J. Truett Payne Company suffered substantial price

discrimination in the amount of $81,248, coupled with evidence

that the increased price was not passed through to Payne's re-

tail customers and with evidence of declining sales and profits,

eventually causing Payne to go out of business when its going

concern value was between $50,000 and $170,000, is sufficient

to permit the jury to find antitrust injury and damages.

-—

TABLE OF CONTENTS

Page

ID ——.———

.. i

Table of Authorities EL w.Q

CO ————

e SENS ns

1 etre cntesnsisintisnepsiizccrniemenmmenenemamen 8

B. The Facts 5

C. Basis for Federal Jurisdiction in Trial Court II

Reasons for Granting the Wriet: 11

I. Summary om — —

II. The Rebates Constituted Price Discrimination

Which Violated Section 2 (a) of the Act, and

the Fifth Circuit's Opinion Imposed an Un-

reasonably Strict Standard of ene n nace

to Competition —

III. The Evidence Showed that Chrysler s Section

2 (a) Violation was the Proximate Cause of

the 171 ee Under Section 4 of the

Clayton — —

A. There was Actual and Direct Proof of

Antitrust Injury — — ae

B. The Price Discrimination and the Market

Conditions in this Case Permit a jury to

Infer Injury to Payne's Busines —— 22

C. The Fifth Circuit's Decision Im an

Unreasonably Harsh Standard of Proving

the Fact of Damage And is Contrary to

the Policy of Enforcing the Antitrust Laus 27

ii

TABLE OF CONTENTS — (Continued)

IV. The Amount of was Proved to an

Estimated 8 Sufficient

Under Section 4 of the Clayton Act

A. Since the Increase Price was Not Passed

Through the Amount of the Price Dis-

crimination Provides a Sufficient Estimate

of the Amount of Damage in the Form

of Lost Profits

a

:

B. The Price Discrimination Also Caused

Damage in the Amount of the Lost

Going Concern Value

Conclusion

Proof of Service

$2

iii

TABLE OF AUTHORITIES

Table of Cases Page

Alterman Foods, Inc. v. FTC, 497 F.2d

993 (Sch Cir. 1974) 14

American Motors Corp. v. FTC, 384 F.2d 247

(6th Cir. 1967) 8 16

8 Car Wash, Inc. v. Standard Oil Co.

(Indiana), 466 F.2d 1163 (7th Cir. 1972) — II. 12, 22

Belliston v. Texaco, Inc., 455 F.2d 175 (10th Cir.),

cert. denied 408 U.S. 928 (1972) 16

Bigelow v. RKO Radio Pictures, Inc.,

27 U.S. 251 (1946) 27, 28

Borden Co. v. FTC, 381 F.2d 175 (Sch Cir. 1967) 15

Bruce Juices v. American Can Co., 187 F.2d 919

5th Cir.), modified on other nds and rehearing

190 F.2d 73 (5th Cir) cert. dismissed

342 U.S. 875 (1951) — —

Century Hardware 1 v. Acme United .

467 F. Supp. 350 (E. D. Wisc. 1979721, 28

ge oe Credit Corporation v. J. Truett Rend

, Inc. v. Chrysler Motors Corporation,

670 575 ke ——— 1,8

Colonial Stores, Inc. v. FTC, 450 F.2d

733 (5th Cir. 1971) 14

Continental Ore Co. v. Union Carbide & Carbon Corp.,

370 U.S. 690 (1962) —

E. Edelmann & Co. v. FTC, 239 F.2d 152

7th Ge. 1956) re)

En Industries, Inc. uv. Texas Co., 240 F 2d 457

(2d Cir.), cert. denied 653 U.S. 965 1957) — 20, 21. 28

Eye Encounter, Inc. v. Contour Art, Ltd., 81 F. R. D.

683 (E. D. N. v. 1979) 16

FTC v. Morton Salt Co., 334 U.S. 37 (1948) — 2, 11, 12, 15

Foremost Dairies, Inc. v. FTC, 348 F.2d 674 (5th

Cir.), cert. denied 382 U.S. 959 (1966) _.11, 13, 14, 15, 16, 25

iv

TABLE OF AUTHORITIES — (Continued)

Table of Cases Page

Gough v. Rossmoor Cor 1 * F.2d 381 (9th Cir.),

cert. denied 440 U.S. (1979) _... we

Great Atlantic & Pacific Tea Co., Inc. v. FTC,

557 F.2d 971 (2d Cir. 197777 . 14

Hanover Shoe v. United Shoe Machinery Corp.,

392 U.S. 481 (1968) — Ya ——— ~

Hanson v. Pittsbur, on Plate Glass Industries, Inc.,

482 F.2d 220 en See ser

1136 (1973) be *. 11. 12, 25

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

471 F.2d 984 (5th Cir. 1973) a

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) 19, 29

J. Truett Co. v. Chrysler Motors corp.

BR EE x 3, 12, 18

Janich Bros., Inc. v. American Distillery Company,

570 F. 2d 848 (9th Cir. 1977) —

Kroger Co. v. FTC, 38 F.2d 1372 (6th Cir. 1971135

R. George Sales Co. v. - iy saat

587 F.2d 266 (5th Cir. 1979) 28

National Dairy Products Corp. v. FTC, 395 F. 2d 517

(7th Cir.), cert. denied 393 U.S. 977 (1968) - 14

Perkins v. Standard Oil nn of California,

395 U.S. 642 (1969) 2. 11, 12, 14, 21, 24

Perma Life Mufflers, Inc. v. International Parts Corp.,

392 U.S. 134 (1968) 24

Reiter v. Sonotone Corp., 442 U.S. 330 (1979) 285

Terrell v. Household Goods Carriers’ Bureau,

494 F.2d 16 (5th Cir.), cert. dismissed 49 U.S.

987 (1974) 28

Zenith Radio Corp. v. Hazeltine Research, Inc.,

395 U.S. 100 (1969) 12, 19, 24, 28

*

TABLE OF AUTHORITIES — (Continued)

Table of Cases Page

Zwicker v. J. 1. Case Co., 596 F.2d 305

(8th Cir. 1979) 10 r

Statutes and Other Authorities

Barber, The Private Enforcement of the Antitrust

Laws: The Robinson-Patman Experience, 30

Geo. Wash. L. Rev. 181 (1960) 27

Posner, A Statistical Study of Antitrust Enforcement,

13 J. L. & Econ. 365 (1970) 27

Clayton Act § 4, 15 U.S.C.§ 15 11, 22, 27

Robinson-Patman Act § 2 (a), 15

U.S.C. § 13 2, 4, 11, 14, 27, 30

28 U.S.C. § 1254 (1) 5

IN THE

SUPREME COURT OF THE UNITED STATES

NO.

J. TRUETT PAYNE COMPANY, INC.,

a corporation,

Petitioner

v.

CHRYSLER MOTORS CORPORATION,

a corporation,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS,

ELEVENTH CIRCUIT*

Petitioner respectfully prays that a Writ of Certiorari issue

to review the order of the United States Court of Appeals,

Fifth Circuit, 670 F.2d 575 (5th Cir. 1982) entered on March

19, 1982, which reversed the judgment of the District Court

for the Northern District of Alabama awarding to J. Truett

Payne Company, Inc. the sum of Three Hundred Seventy-

Three Thousand Seven Hundred Forty-Two and 44/100

Dollars ($373,742.44) for a violation of the Robinson-Patman

Act in the case of Chrysler Creait Corporation v. J. Truett

Payne Company, Inc. v. Chrysler Motors Corporation, No

77-2331.

In addition, Petitioner respectfully prays that a Writ of

Certiorari issue to review that final order of the United States

Court of Appeals, Fifth Circuit, on April 26, 1982, 677 F.2d 117

(5th Cir. 1982) (En Banc) which overruled and denied Peti-

tioner’s Petition for Rehearing En Banc.

QUESTIONS PRESENTED

1. When there is proof that Chrysler discriminated in sales

price against Payne, totaling $81,248 over a 314 year period,

sometimes as much as $300 per car, during each of thirteen

separate rebate programs, does the Fifth Circuit's holding that,

in order to show a violation of Section 2 (a) of the Robinson-

Patman Act, Payne must prove that the result of the price

discrimination is likely to be a severe adverse effect on compe-

tition” with the favored competitior “likely” to draw sales and

profits from Payne impose an overly strict standard of proof on

Payne, the disfavored competitor, ae overruling FTC

v. Morton Salt Co., 334 U.S. 37, 50 (1948) and Perkins v.

Standard Oil Company of California, 395 U.S. 642, 648 (1969)

which permit an inference of the adverse effect on competition

when there has been substantial price discrimination?

2. Despite a jury verdict showing that Chrysler Motors

violated Section 2 (a) of the Robinson-Patman Act and despite

proof of substantial price discrimination in a keen competi-

tive market which would have a reasonable possibility of

causing injury to competition, and despite direct proof of a

reduction of market share to the disfavored buyer, J. Truett

Payne Company, did the Fifth Circuit's decision overruling the

jury verdict and directing entry of judgment for Chrysler

Motors ignore the principle in Perkins v. Standard Oil Com-

pany of California, 395 U.S. 642, 648 (1969), which requires

the jury to determine whether or not there was a violation of

Section 2 (a) of the Robinson-Patman Act?

3. Whether evidence showing sustained violations of Section

2 (a) of the Robinson-Patman Act, together with evidence of

keen competition in the market, relatively small profit margins,

>

substantial price discriminations sufficient to influence retai.

sales prices and cause a decline in the sales and profits of J.

Truett Payne Company so that it eventually went out of busi-

ness, is sufficient to permit a jury to find under the more

lenient standard of proof that Chrysler's violation of the Robin-

son-Patman Act caused injury or damage to the business or

property of J. Truett Payne Company under Section 4 of the

Clayton Act?

4. Whether the evidence showing that Chrysler violated the

Act and J. Truett Payne Company suffered substantial price

discrimination in the amount of $81,248, coupled with evidence

that the increased price was not passed through to Payne's re-

tail customers and with evidence of declining sales and profits,

eventually causing Payne to go out of business when its going

concern value was between $50,000 and $170,000, is sufficient

to permit the jury to find antitrust injury and damages.

OPINIONS BELOW

The Fifth Circuit's original opinion in this case is reported

at 607 F.2d 1133 (5th Cir. 1979) (Appendix p. 25). After

granting certiorari, the Supreme Court reversed and remanded

the Fifth Circuit in J. Truett Payne Co. v. Chrysler Motors

Corp., 451 U.S. 557 (1981) (Appendix p. II).

On March 19, 1982, the second opinion of the Fifth Circuit

is reported in Chrysler Credit Corporation v. J. Truett Payne

Company, Inc. v. Chrysler Motors Corporation, 670 F.2d 575

(5th Cir. 1982), contained in the Appendix, p. I. On April 26,

1982 the Fifth Circuit overruled and denied the Petition for

Rehearing En Banc, reported at 677 F.2d 117 (5th Cir. 1982),

and set forth at Appendix, p. 10. The Appendix is separately

presented from this Petition.

JURISDICTION

The opinion of the United States Court of Appeals, Fifth

Circuit, reversing the trial court's judgment in this case and

directing entry of judgment for Chrysler was entered cn March

4

19, 1982. Petitioner's Petition for Rehearing En Banc was

denied on April 26, 1982. The jurisdiction of this Court is in-

voked under 28 U.S.C. § 1254 (1). This Petition was filed with-

in ninety days of the Fifth Circuit's order denying a rehearing.

THE STATUTES INVOLVED

The pertinent provisions of the Robinson-Patman Act, 15

U.S.C. § 13, a copy of which in full is set forth at Appendix,

p. 56, is set forth below:

It shall be unlawful for any person engaged in commerce,

where such commodities are sold for us, consumption, or

within the United States or any Territory thereof

District of Columbia or insular pos or other

In addition, 15 U.S.C. § 15 states as follows:

Any person who shall be in injured in his business or

by reason of anything forbidden in the antitrust

ws may sue therefor in any court of the United

itates in the district in which the defendant resides or is

found or has ap agent, without to the main con-

troversy and shall recover three- the damages by him

the cost of suit including a reasonable at-

4

1

1

A. Chronology.

This price discrimination case was tried in the United States

District Court for the Northern Distrct of Alabama, Southern

Division. The jury's verdict of $111,267.78 against Chrysler

Motors Corporation (hereinafter called Chrysler) was

trebled and an attorney's fee added, resulting in a judgment

against Chrysler in the amount of $373,742.44. Chrysler's

Motion for Judgment Notwithstanding the Verdict or for a

New Trial was denied. Chrysler appealed to the Fifth Circuit

on June 15, 1977.

The Fifth Circuit originally held that J. Truett Payne Com-

pany, Inc. (hereinafter Payne) had presented insufficient

proof of cognizable antitrust injury and insufficient proof of

the amount of damages because damage could only be shown

by lost sales and profits, and directed entry of judgment for

Chrysler pursuant to its Motion for Judgment Notwithstand-

ing the Verdict. 607 F.2d at 1137. However, the Fifth Circuit

did not reach the issue of the jury's finding that Chrysler

After granting Payne's Petition for Certiorari, the Supreme

Court reversed and remanded, holding that since the Fifth

Circuit did not reach the issue of whether the Robinson-Pat-

man Act had been violated, then the Court could not tell

whether to apply the more lenient standard of proof available

when the Act had been violated that permits a wronged party

to prove, with a lesser burden, the causation of damage and

amount of that damage. 451 U.S. 557, 568.

On March 19, 1982, the Fifth Circuit held that there was

insufficient evidence for the jury to have concluded the Act

was violated (670 F.2d 575, 581) and also held that Payne had

failed to prove cognizable antitrust injury or the amount of that

injury. On April 26, 1982, the Fifth Circuit denied a rehear-

ing. 677 F.2d 117.

B. The Facts.

The evidence in the trial showed as follows: Payne had been

a -Plymouth retail automobile dealer in Birmingham,

Alabama, since approximately 1944 (TR. 40). Prior to and

during a 314 year period from approximately December 1970

until Payne was forced out of business in May 1974, Payne

ae: with three other Chrysler-Plymouth dealers' in a

LDH 1 —

aon © known as Hall Motor Company, and later changed

market of exceedingly tough competition in Birmingham-

Jefferson County, Alabama. Customers shopping for new cars

compared Payne's prices with each of the other three Chrysler-

Plymouth dealers competing with Payne (TR. 45-46; 124).

From November 1970 through May 1974, Chrysler created

approximately sixteen rebate or incentive programs relating

to the retail sales (non-fleet) of new cars, each program lasting

several months, under which it would make rebate payments to

those dealers on the new cars sold by the four competing

Chrysler-Plymouth dealers in the Birmingham, Alabama

market area. Chrysler unilaterally assigne deach dealer a sepa-

rate and different quota for wholesale purchases and/or retail

sales which each dealer had to satisfy in order to obtain the

rebate payments, The rebate payments Chrysler made to a

dealer on a particular car during a rebate program reduced

the price of the new car purchased from Chrysler by the dealer

and had an effect on and influenced the price charged the

customer by a dealer (TR. 56; 62; 95; 124-125; 256; 617-618).

In almost every rebate program, Chrysler assigned Payne a

higher quota than its competing dealers, and Payne had to

meet that higher quota in order to receive a rebate payment.

Payne had to either purchase more new cars from Chrysler or

sell more new cars in order to obtain a rebate payment from

Chrysler reducing the costs of those cars. Compared to the

other dealers, Payne actually paid more for almost every car

involved in the rebate programs because it could not meet the

high quotas. The total price discrimination against Payne dur-

ing a three and one-half year period of the rebate programs

was $81,248.94. As a result of the higher quotas assigned Payne

and the rebates paid by Chrysler to the other qualifying dealers,

Payne lost sales because it was at a trade disadvantage with

those competing dealers (TR. 65-67; 68-69), Payne could not

meet the low price that the other Chrysler dealers were offer-

ing in the Birmingham market (TR. 91, 124) These rebate

programs in issue were run almost continuously so that almost

every car that was sold at retail by Payne and its competitors

was covered by a rebate program.

7

Because of the price disadvantage at which the rebate pro-

grams put Payne, Payne ended up forcing business in order

to make a sale and was losing some customers because of higher

price (R. 65-69; 91-92; 94-95; 126-127). The price of a new car

is ordinarily composed of two elements: (1) the amount

allowed by a dealer for a used car traded in by the customer.

and (2) the amount charged by th. dealer on the new car.

Many times in order to make a sale of a new car, Payne had

to over-allow on the used car traded in by the customer (TR.

55; 711-712). Payne had to sell at a smaller profit than it could

afford to sell and still compete effectively, and generally it

did not meet the lower prices of the other dealers (TR. 91;

124). Payne was losing customers and sales because of the rebate

programs (TR. 65-67; 68-69; 91-92; 94-95; 1267-127). For the

last five years of its operations, Payne lost money, primarily

because of its losses in the used car operations (TR. 538-539).

There was clear evidence that the price discrimination caused

a drop in Payne's share of the market. The year 1968 is the

base period with which to compare Payne's sales and prolits

during the period of discrimination from 1970-1974 in issue

since the only non-discriminatory year for which there is evi-

dence of Payne's share of the market is 1968. In 1968, Payne

made net profits of $36,140.62 and sold 658 cars at retail

(Pl. Ex. 61). According to Chrysler's own witness, Payne sold

40%, of the total new car market in 1968 (TR. 364), or about

a 31.5% share of the retail (non-tleet) market for 1968. Clearly

then, the price discrimination to the favored dealers caused a

2,478 cars, which is derived from Chrysler's testimony that Payne sold

the total new car market, Given the fact that the other dealers

had fewer fleet sales than Payne, their total during 1971, 1972 and

1973 averaging 13.4% of the market's fleet sales, the retail (excluding

in 1968 would have been approximately 2,089 cars, which

is calculated by using their same average percentage of total fleet sales

. us, Payne would have had a 31.5% share

in a year where there were no dis-

reduction in Payne's share of the retail new car market during

1970 through 1973. In 1970, Payne's share of the retail (non-

fleet) sales of new cars had dropped to 24% of the market; in

1971, it was 26.9%; and in 1972, it was 28%. In 1973, after

Chrysler reduced the fair share for Payne to 25.99%, Payne's

share of the retail non-fleet market increased to 25% (See,

Def. Ex. 31). During the years 1971 and 1972, the Birmingham

market was expanding in the number of retail non-fleet sales,

while Payne's share was declining.

The rebates per car paid by Chrysler to each dealer under

those rebate programis reduced the dealer’s cost on that car

(TR. 138; 527; 618). Dr. Ignatin, an economist, is thoroughly

familiar with the car market in Birmingham and did several

studies about the Birmingham market (TR. 201; 695).

Chrysler's rebate programs reduced competition in the Bir-

mingham market between Chrysler dealers and had an adverse

effect on competition (TR. 222). As a result of the rebate pay-

ment to the competing dealer, Payne could not compete as

well with the other dealers because it got less of a price re-

duction on the cars (TR. 203; 256-257). The rebates actually

injured Payne's business by (1) causing it to lose profits it

would have otherwise made had Chrysler's prices been equal,

and (2) diminishing its ability to compete for sales (TR.

256-258).

The effects of the price discrimination are most evident

when compared to the dealers’ tight profit margins. Profit

margins on the used cars traded in by the customer were very

small, especially when compared to the amount of rebates per

car. The net profits per used car in 1971 ranged from $13 for

Payne to $118 for Vestavia; in 1972, from $27 for Payne to

$90 for Roebuck; in 1973, from $12 for Payne to $142 for

Central (Def. Ex. 31; 40; and 41).

It is well known in the automobile industry that all dealers

discount off list price in setting the retail price of the car for

a customer. Because of these rebate payments, Payne could not

discount its cars from list price as much as it could have if it

9

had received the same rebate per car as the other dealers com-

peting with Payne at that time. Other competing dealers there-

fore did not have to discount their price on new cars as much

as they otherwise would have done had Payne reccived an

equal rebate per car from Chrysler. The effect of the discrimi-

nation against Payne under the Chrysler rebate programs was

to maintain a retail price to a consumer at artificially high

levels. Thus, by reducing the actual competition in the market,

the rebates had an adverse effect on competition and on the

consuming public (TR. 203-204; 205; 222; 255).

The price discrimination from the rebate programs was one

of the causes of Payne's going out of business in May, 1974

(TR. 68-69; 100; 705-706). Without those price discrimina-

tions, Payne's expenses would have been less, it could have

offered more customer-attracting services or advertising (which

the other dealers could do with more rebates and therefore in-

crease their sales), and Payne could definitely have stayed in

business. Evidence of value of the Payne business in May 1974,

when it was forced out of business, ranged between $50,000 and

$170,000. (TR. 75-76; 115-116; 210-218).

Dr. Ignatin used a capitalized stream of profits method in

giving his opinion that the business was worth $170,000.

Chrysler's expert economist, Dr. Geisel, agreed that Doctor

Ignatin's second method of valuing the busines by capitalizing

the profit stream is a correct method of valuing a business

(TR. 601, 603). Dr. Ignatin testified there was price discrimi-

nation against Payne from all but three rebate programs. He

calculated for each program how much more money the

favored dealers received on a per car basis than did Payne under

that same program, as well as the amount of discrimination

resulting to Payne in each program (See, Pl. Ex. 37-53; TR.

140-184; 222-223; App. 36-53). In thirteen out of sixteen rebate

programs, Payne was disfavored and damaged“ since it did not

receive as great a rebate per car as did the more favored dealers

in that program. During the 314 year period in issue, the total

See results of those rebate programs in the Appendix, pp. 36-53.

10

amount of price discrimination against Payne on the auto-

mobiles it sold during this period was $81,248.94 (TR. 191).

Eight of the sixteen rebate programs established quotas

based on a dealer's fair share as defined by Chrysler. The

“fair share” ultimately became the basis of the “quota” to be

attained before any rebate is paid to the dealer under the

majority of the rebate programs. According to Chrysler, fair

share represents the percentage of the total Birmingham

market of auto sales which a dealer “should” attain. It was uni-

laterally set by Chrysler and remained in effect until changed

by Chrysler (TR. 296-332). The “fair share” percentages as-

signed to each dealer during 1970 through 1972 were as fol-

lows: Payne — 40.19%; Bessemer — 12.99%; Central Motors —

25.77%; Roebuck — 21.05%, (Pl. Ex. 36).

Bessemer Chrysler-Plymouth relocated from Bessemer to

Vestavia in May 1971. Chrysler knew that by moving Bessemer

Chrysler-Plymouth to Vestavia and into Payne's trading zone,

the re-location would take away some of Payne's customers and

business (TR. 358-359), but Payne had to suffer with a forty

percent “fair share quota until Chrysler got around to re-

allocating this quota in 1973 (TR. 434). Payne's new “fair

share was reduced to 25.99%, effective in 1973 (TR. 319-

$21). The new “fair shares” of each dealer as of January 1973

were: Payne — 25.99%; Roebuck — 25.16%; Central —

25.43%; Vestavia — 23.42% (Pl. Ex. 36).

The purpose of the rebate programs was to gain a larger

share of the car market for Chrysler compared to its competi-

tors by allowing it to sell more cars to its dealers (TR. 444, 448,

479). These rebate programs contained, for the most part, a

wholesale objective program or a retail objective program or,

allocated to each dealer on the basis of its assigned fair share

of the Birmingham market (TR. 449-450; 465; 488-491). The

jury obviously found the fair share unfair and unreasonable to

Payne.

C. Basis for Federal Jurisdiction in Trial Court.

This case was brought in the trial court under the Robinson-

Patman Act, 15 U.S.C. § 13, and under Section 4 of the Clayton

Act, 15 U.S.C. § 15, which permit a suit in the United States

District Court by any person who shall be injured in his busi-

ness or property as a result of anything forbidden in the anti-

trust laws, and specifically the Robinson-Patman Act.

REASONS FOR GRANTING THE WRIT

i, Summary.

The Fifth Circuit's decision improperly substitutes its judg-

ment on the facts for that of the jury, and severely undermines

private plaintiffs’ rights to enforce the Robinson-Patman Act.

It imposes an unreasonably strict standard of proof for showing

violation of the Robinson-Patman Act and for showing causa-

tion of antitrust damage and the amount of that damage. The

Fifth Circuit's opinion requires that a disfavored competitor

must prove that the price discrimination is “likely to be 2 severe

adverse effect on competition” and that the “likely eftect” of

the price discrimination is to permit the favored compctitor to

draw sales and profits away from the disfavored competitor. 670

F.2d at 580. It ignores the evidence which clearly would permit

a jury to find violation of the Act and conflicts with the follow-

ing decisions of the United States Supreme Court and

other Circuit Courts of appeal which have held that a

jury is entitled to infer a violation of the Act and in-

jury to the plaintiff when the plaintiff has been disfavored

by substantial price discriminations in a market of keen com-

petition: Perkins v. Standard Oil Company of California, 395

U.S. 642, 648 (1969); FTC v. Morton Salt Co., 334 U.S. 37, 50

(1948); Hanson v. Pittsburgh Glass Industries, Inc., 482 F.2d

220, 227 (5th Cir. 1973), cert. denied, 414 U.S. 1136; Bargain

Cur Wash, Inc. uv. Standard Oil Co. (Indiana), 466 F.2d 1163

(7th Cir. 1972); E. Edelmann & Co. v. FTC, 239 F.2d 152; (7th

Cir. 1956); Foremost Dairies, Inc. v. FTC, 348 F.2d 674, 680

(5th Cir.) cert. denied, 382 U.S. 959 (1966).

12

The decision below should be reviewed because it errone-

ously substitutes the court's own judgment of the facts (i.¢.,

that there was no price discrimination which could possibly

have adversely affected competition or injured Payne) in the

face of clear evidence from which the jury could determine

directly, or by inference, that there was substantial price dis-

crimination in the context of keen competition causing Payne

to lose a large part of the market share it had before the dis-

crimination and causing injury to the consumers by maintain-

ing an artificia!ly high sale price.

Since there was a violation of the Act, the more lenient

standard of proving antitrust injury and the amount of damages

is applicable and should have been applied by the Fifth Cir-

cuit as set forth in this Court's earlier opinion in J. Truett

Payne Co. v. Chrysler Motors Corp., 451 U.S. 557. 565-568

(1981). The market in which Payne competed was one of

exceedingly tough competition where customers compared the

prices of the various competing automobile dealers. The

amount of the price discrimination of the various automobiles

on which Chrysler reduced the price to Payne's competitors

was substantial, sometimes as much as $300 per car.* Since the

price discriminations were substantial compared to the dealer's

profit on a typical sale, Payne's business showed losses during

the relevant time of price discriminations and a profit in 1968

when there was no price discrimination, and a loss of market

share after the price discrimination, then the Fifth Circuit

should have permitted the jury's finding of a violation of

the Act and antitrust damages to stand. FTC v. Morton Salt

Co., supra at 50; Zenith Radio Corp. v. Hazeltine Research,

Inc., 395 U.S. 100, 124 (1969); Perkins v. Standard Oil Com-

pany of California, 395 U.S. 642, 648 (1969); Bargain Car

Wash, Inc. v. Standard Oil Co. (Indiana), 466 F.2d 1163, 1174

(7th Cir, 1972); Hanson v. Pittsburgh Plate Glass Industries,

Inc., 482 F.2d 220, 227 (5th Cir. 1973) cert. denied 414 U.S.

“See for example Plaintiff's Exhibit 52, attached to the Appendix at

p. 51.

1136; Foremost Dairies, Inc. v. FIC, 348 F.2d 674, 680 (5th

Cir.) cert. denied, 382 U.S. 959 (1966).

The Fifth Circuit refused to apply the principles of the above

cited cases. In effect, the Fifth Circuit has continued to look

for proof of lost sales or profits resulting from the price dis-

crimination in order to prove a violation of the Act. 670 F.2d

at 580. This reasoning overlooks the crucial fact that, during

the 31% years of price discrimination, Payne was reducing its

sales price, over-allowing on its used car trade-ins in order to

maintain its sales volume, and not passing on its increased costs

to its cus: mers. Thus there would not have been a substantial

loss of market share during the price discrimination. But there

would have been a substantial loss (which in fact occurred in

Payne's business) and a lessening of Payne's capital position

and ability to compete against its competitors. Also, the court

ignored the evidence showing a large decline in Payne's

market share since 1968, a year where there was no price dis-

crimination. These latter facts were proved, as well as the fact

that the price discrimination was one of the factors causing

Payne to go out of business. (See, ¢.g., TR. 97-100; 706). At

the time Payne went out of business, its going concern value

was between $50,000 and $170,000, thereby meaning that the

jury had adequate grounds for assessing damages of $111,247.48.

II. The Rebates Constituted Price Discrimination

Which Violated Section 2(a) of the Act, and the Fifth

Cireuit’s Opinion Imposed An Unreasonably Strict

Standard of Proving Injury to Competition.

The Fifth Circuit held that no violation of the Act was

because of a dearth of “documentary” evidence show-

ing a possibility of lessening competition, the only evidence

proved being a 4%, drop in Payne's market share in 1972. How-

ever, Payne proved much more than that as seen from the evi-

dence cited below!

All witnesses testified that the rebates reduced the dealers’

cost of new automobiles (TR. 256, 617-618). Those reductions,

— Gute tenn endhdgnestithedey the dentaty dletaioas

to their customers off the list price, the favored dealers dis-

enjoying the price discrimination were insulated from the com-

petitive forces in the market and did not have to compete as

ability to compete. (TR. 203-204; 255-257).

Payne was caused to lose a large share of the market by the

rebate programs. In 1968, Payne had 31.5% of the retail market

when there was no price descrimination. It dropped two 25%

by 1973 after 4 years of the price discrimination.

At the very least, the evidence was sufficient for the fact

finder to infer the possibility of injury to competition, there-

by showing a violation of the Act. Perkins v. Standard Oil Com-

pany of California, 395 U.S. 642, 648 (1969); Great Atlantic

& Pacific Tea Co., Inc. v. FTC, 557 F.2d 971, 980-8) (2d Cir.

1977); Alterman Foods Inc. v. FTC, 497 F.2d 993, 999 (5th

Cir. 1974); Colonial Stores, Inc. v. FTC, 450 F.2d 733, 739-40

(5th Cir. 1971); Kroger Co. v. FTC, 38 F.2d 1372, 1378-79 (6th

Cir. 1971); National Dairy Products Corp. v. FTC, 395 F.2d

517, 522 (7th Cir.) cert. denied, 393 U.S. 977 (1968). As pointed

out by the Fifth Circuit in Foremost Dairies, Inc. v. FIC, 348

F.2d 674, 680 (5th Cir.), cert. denied 382 U.S. 959 (1966),

injury may be inferred even if the favored customer did not

undersell his rivals, for a substantial price advantage can en-

large the favored buyer's profit margin or enable him to offer

attractive services to his customers; see also National Dairy

Products Corp. v. FTC, supra at 522.

Another element of damage to Payne and hence to competi-

tion, is that the price discrimination in the rebate programs

was a cause of Payne's business closing. When a city the size of

15

Birmingham loses a dealer which had been profitable for over

twenty years until about 1969 (See Def. Ex. I. p. 35). and whose

slow decline resulted after the institution of price discrimi-

nation in the rebate programs, there must have been an adverse

effect on competition. In Foremost Dairies, Inc. v. FTC, 348

F.2d 674 (5th Cir. 1965), the court held that the possibility of

competitive injury may be inferred when there is evidence

that the price differential is substantial enough to cut into the

purchaser's profit margin and the price reduction afforded by

the discrimination would permit the buyer a significant saving

and have an effect on the decisions of the customers in the

market. Dr. Ignatin and Mr. Payne testified that buyers of

automobiles do a lot of price comparison since a car is such a

high priced item (TR. 45-46; 124; 665). With the rebates as

high as $300 on a particular program (See, for example, Pl.

Ex. 52; App. 51), it can easily be seen that such a price re-

duction could aid a dealer's profit margin substantially and in-

fluence the consumer in buying from the favored dealer.

The trial judge properly charged the jury on the various

elements of a prima facie § 2 (a) violation (TR. 795-799), and

that the amount of price discrimination was not automatically

the amount of any damages it might assess (TR. 805-806). The

the Act requires. The statute only requires that the price dis

criminations have a “reasonable possibility” that one of the

proscribed effects wil! occur. FTC v. Morton Salt Co., 334 U.S.

87, 46 (1948); Borden Co. v. FTC, 381 F.2d 175 (5th Cir.

16

nation. See Zwicker v. J. 1. Case Co., 596 F.2d 305, 308, (8th Cir.

1979); Belliston v. Texaco, Inc., 455 F.2d 175, 178 (10th Cir.),

cert. denied 408 U.S. 928 (1972); Bye Encounter, Inc. v. Con-

tour Art, Ltd., 81 F.R.D. 683, 690 (E.D.N.Y. 1979).

customers substantially cheaper than it sells the goods to the

U.S. 37, 50 (1948):

a reasonable possibility that competition was injured from

Assuming the average dealer cost of a car to be about 53,500.“

the rebates varied from slightly under 1% to over 8% of the

dealer cost. Thus, there should be no question that when one

‘An approximate average from the cost of sales on the third

page of each Dealer Financial Statement, Pl. Ex. 17

17

dealer, Payne, almost always received less rebates per car, there

exists a reasonable possibility of lessening competition in gen-

eral and of injuring Payne's ability to compete with the other

dealers. The normal laws of price and demand in the market

place insure that will occur.

Proof that the Fifth Circuit applied the wrong standards to

determine if there was a violation of § 2 (a) of the Act is shown

in the Court's convoluted reasoning that the average difference

in the rebate payments over the relevant period amounted to

only $11 per car between the best performing dealer and the

worst one. 670 F.2d at 581. This piece of information is abso-

lutely useless since the dealers’ inventory of new cars turned

over about every sixty to ninety days (TR. 60; 82-83) and

Chrysler was paying a different rebate on different model cars

which varied from program to program, each program lasting

only two or three months. The dealers were competing during

each program when the rebate that each received on each car

would have been extremely important in determining the ulti-

mate resale price. Therefore, the fact that over a 3½ year

by the total number of different model cars, was an $11 differ-

ence between the highest and lowest performing dealer is an

average of meaningless figures since it is not within a con-

temporaneous time frame and does not relate to rebates on cars

of like grade and quality.

The sales price from Chrysler to each dealer for a car of like

grade and quality during a simultaneous time frame (the run-

ning of the rebate program) is the crucial issue for determining

whether or not price discrimination exists. It is during the

running of each program that Payne will suffer when the com-

petitors are able to undersell Payne or use the rebates for cus-

tomer attracting devices such as advertising, incentives to sales-

men, etc.

Chrysler paid larger rebates in some programs for the sales

of higher priced cars, and Payne soi more higher priced cars

(Chrysler and Imperial) than did the other dealers, getting

large rebates in those programs. Therefore, Payne's total rebates

over the 314 year period would have been increased somewhat

by the fact that it did well on the higher priced cars; but it was

also competing in sales of lower priced cars on which it did not

receive nearly the same per car rebates during that 314 year

period. Therefore, the so-called “average” of the rebate pay-

ments per automobile is irrelevant for purposes of price dis-

crimination. What is clear from the evidence is that Payne's

business was severely injured from the rebated price discrimi-

nation during each program since there was much more than

an $11 difference per car during each program.“

III. The Evidence Showed That Chrysler’s Section 2 (a)

Violation Was the Proximate Cause of the Injury to

Payne Under Section 4 of the Clayton Act.

A. There Was Actual and Direct Proof of Antitrust Injury.

The Fifth Circuit erroneously took away the jury's decision

that there was antitrust injury. After proving a violation of

§ 2 (a) o fthe Robinson-Patman Aci, Payne's burden of proving

the violation caused damage under § 4 of the Clayton Act, and

the amount of that damage, is somewhat lessened. J. Truett

Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 568 (1981).

The impact of the higher price from Chrysler to Payne cannot

be measured only in terms of exactly how many sales were lost

or “could have been made” by Payne had the price trom

Chrysler to Payne been equal to the price offered by Chrysler

to the other competing dealers. Proving the number of lost

sales is very difficult at best, extremely expensive, and some-

times cannot be done with the number of variables involved.

See Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977); Hanover

Shoe v. United Shoe Machinery Corp., 392 U.S. 481 (1968).

For example, in Pl. Ex. 42, (Appendix 41), which shows the results

of the rebate program “Winter Profit Days“, from November 21, 1971

through January 31, 1972, Payne received no rebates on the various model

cars covered in that program, while the other dealers received rebates

of $35.00 to $130.00 per car model.

Rather, proof of damage can be shown by other means such as

substantial price discrimination over a substained period, de-

clining sales and profits, loss of market share compared to a

period where there was no price discrimination, failure of

Payne to pass through to the customers the amount of the

price discrimination, and Payne's going out of business.

Furthermore, Payne need not show that Chrysler's price dis-

crimination was the sole cause of the damage to its business,

Payne need only show that Chrysler's illegal conduct was a

material cause of some damage. Zenith Radio Corp. v. Hazel-

tine Research, Inc., 395 U.S. 100, 114 n. 9 (1969); Continental

Oil Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 702

(1962).

The following direct proof, some of which has not been

pointed out to this Court by Prior briefs, proved competitive

injury caused by the price discrimination:

(1) Payne went out of busness because it had to pay the

higher costs of the price discrimination (TR. 68-69; 706).

(2) Payne lost substantial numbers of sales and profits

caused by the price discrimination. In 1968 when there was

no price discrimination, Payne sold 658 new cars at retail and

made a net profit of $36,140.62. (Pl. Ex. 61). In the years

after that, its sales were always far less and it always lost money.

In 1968, Payne had approximately 31.5% of the retail new car

market (see footnote 2, supra), and its percent of the market

diminished in future years with the advent of the price dis-

crimination. This critical evidence has never before been

pointed out to this Court.

(3) An economist testified that the Chrysler rebate pro-

grams had caused, in fact, an injury to competition by making

consumers pay a slightly higher price for cars because Payne's

competitors did not have to reduce their prices below list

price quite at far as they would otherwise have done had Payne

not been charged a higher price from Chrysler on the cars.

This hurt Payne's ability to compete in this tough market (TR.

203-204), eventually being a cause of its demise. Chrysler's re-

bate programs reduced competition in the Birmingham market

between the various dealers, had an adverse effect on com-

petition in the market (TR. 222), caused Payne not to com-

pete as well with the other dealers as it could have done had it

received the same price reduction on the cars (TR. 256-257).

The rebates actually injured Payne's business by causing it to

lose profits it would otherwise have made had the cost of the

cars been the same to all of the dealers and by diminishing its

ability to compete (TR. 256-258).

(4) Payne had to “over-allow” on the used car trade-ins in

order to obtain new car business. This over-allowance is a form

of lost profits. It also had to reduce the gross profit margin on

the new cars sold in order to obtain the new car sales (TR.

65-67; 91-92; 126-127). Because of the “over-allowing” on trade-

ins Payne lost money on its used car operations (TR. 97-100;

538-539; 593-599) which caused the line of credit extended by

Chrysler Credit Corporation to be withdrawn and Payne

ceased business. Because of the lower prices from Chrysler to

Payne's competition during the rebate program, Payne lost

sales to its competitors which could undersell Payne (TR.

69-70).

(5) The Dealer Financial Statements during the relevant

period of 1970 through 1974 (Pl. Ex. 17-35; 61) support the

fact that Payne did not pass through its higher costs to the

customer in the form of a higher sales price because Payne

had to “over-allow” on used car trade-ins in order to obtain

business, thereby showing a loss of profits in the used car

portion of the business resulting from the price discrimination.

See, e. g., Enterprise Industries, Inc. v. Texas Co., 240 F.2d 457,

459-60 (2d Cir.), cert. denied, 353 U.S. 965 (1957). Chrysler's

own employee, Mr. Eric Lindenberg, testified that he noticed

that Payne's used car operation was the primary area where

Payne lost money, compared to the other dealers (TR. 538-

539). The evidence introduced to the jury clearly shows that

Payne absorbed most of the higher costs suffered by the price

discrimination, and thereby lost profits. Although never

pointed out to this Court before, the dealers’ average gross

profits of both the used and new car business (Def. Ex. 31;

App. 54-55) show that Payne was lowest in profit margin and

customer:

AVERAGE GROSS PROFIT (NEW AND USED CARS)

Date Payne Hall Motor Roebuck Central

1971 494 676 567 499

1972 548 590 588 537

1973 543 592 625 645

Since Payne had the lowest gross profit margin because of the

price discrimination, it is clear that it did not pass on its

higher costs for the cars to its customers. In such a case the

amount of the price discrimination is the minimum amount

of damage in the form of lost profits. Century Hardware Corp.

v. Acme United Corp., 467 F. Supp. 350 (E.D. Wisc. 1979);

See Enterprise Industries, Inc. v. Texas Company, 240 F.2d

457 (2d Cir.) cert. denied, 353 U.S. 965 (1957).

(6) Chrysler was guilty of a substantial price discrimination

against Payne in the amount of $81,248.94 (TR. 191). There

was keen competition in the market (TR. 45-48) and large

rebate payments to Chrysler's competitors, sometimes as much

as $300 per car. (See, e.g., Pl. Ex. 52, App. 51). Net profit

margins were generally low on the used cars and new cars,

sometimes smaller than even the amount of the price discrimi-

nation per car.

Perkins v. Standard Oil Company of California, 395 US.

642, 648 (1969), established the basic principle applicable to

jury verdicts under § 4 of the Clayton Act. This Court held

that if there is some evidence in the record to support an in-

ference of causation, the ultimate conclusion as to what the

evidence proves is for the jury's determination (Id. at 648).

In Perkins, there was no evidence that specific lost sales were

caused by the price discrimination. The evidence showed that

there was substantial price discrimination, that the defendant

passed on the price advantage, at least in part, to the plaintiff's

competitors, that the plaintiff's business was losing money,

and that Perkins complained to Standard officials of his com-

petitor's price advantage.

Like Perkins in the instant case there was evidence of sub-

stantial price discrimination which lowered the cost of Payne's

competitors’ cars, that Payne's business was losing money and

that Payne ha lked to Chrysler officials about adjusting his

quotas and fal share” which caused the quotas to be so high

(TR. 73-74). The fact that Payne was over-allowing on used

cars, was not passing through the increased price, could not

meet its competitors’ lower prices and that Payne's share of the

market had been substantially diminished since 1968, were

certainly sufficient evidence to uphold the jury's verdict find-

ing antitrust injury.

B. The Price Discrimination and the Market Conditions in

this Case Permit a Jury to Infer Injury to Payne s Business.

In Bargain Car Wash, Inc. v. Standard Oil Co. (Indiana),

466 F.2d 1163, 1174 (7th Cir. 1972), the court held that a jury

could properly infer injury under Section 4 of the Clayton Act

in the following situations:

[1] . . . a price differential that influences prices

(Morton Salt Company))

[2] ...a price differential that exists in the context of keen

competition and tight profit margins (E. Edelmann Com-

pany)

[3] or a substantial and sustained price differential be-

ween competing resellers (National Dairy Products Corp.)

The instant case has evidence supporting all three alternatives

above in addition to the direct proof of injury mentioned

y.

Under § 4 of the Clayton Act, this court should permit proof

of a prima facie case showing the fact of injury in the amount

of the price discrimination when there is evidence of a sus-

tained and substantial price discrimination in a market of keen

competition where the discrimination could affect retail prices.

There is nothing particularly evil or new in this. An even

lesser burden of proof for a plaintiff exists in “attempt to

monopolize” cases w the element of “dangerous prob-

ability” is inferred from specific intent and that specific intent

can be inferred from proof of predatory or anti-competitive

conduct which unreasonably restrains trade. Gough v. Ross-

moor Corp., 505 F.2d 381, 390 (9th Cir.) cert. denied, 440 U.S.

936 (1979); Janich Bros., Inc. v. American Distillery Company,

570 F.2d 848, 854 (9th Cir. 1977). Therefore, in the instant

case, the jury properly inferred injury to Payne's business. The

comports with the Supreme Court's holding in this case that

Payne's burden of proving injury is less when Chrysler has

violated the Act.

There was other supporting evidence of the fact of antitrust

injury. Payne's share of the market of the new car market

dropped substantially from 31.5% in 1968 to 24% in 1970; to

26.9% in 1971; to 23% in 1972; to 25% in 1973’ During the

time when Chrysler used “fair share to determine quotas and

rebates, Payne's share dropped from 27% in 1971 to 23% in

1972. Payne's sales rebounded somewhat to 25% at the end of

1973, but only because the rebate programs had been running

for over two years since Vestavia Chrysler had moved into

Payne's trading zone and the quotas (after January 1973, based

only on prior rate of travel) were less exaggerated against Payne

than they were in 1971 and 1972.

In the instant case, Payne was partially excluded from the

new car sales market by virtue of the price discriminations,

The new care sales (excluding fleet) of each of the competing dealers

is shown in the following chart:

— SS — —

payne 658 9 502 7786 5067

Vestavia 262 369 568 549

Central 521 467 585 399

Roebuck A. eS |

Totals: 2069» 1729 2086 2494 2268

Payne % of Market: 51.5% 24% 26.9% 23.1% 25%

causing it to lose sales (TR. 65-67; 91-92; 94-95; 126-127).

Payne also showed a loss of profits in the amount of the price

discrimination since it did not pass through its increased costs

to the ultmate customers. Because it did not pass on the higher

prices, Payne always had the lowest gross profits even though

it sold many more higher priced cars such as Imperials and

Chryslers. Therefore, in this case there was ample evidence to

permit a jury to find direct proof of injury or to infer injury

to Payne from the price discrimination.

The Supreme Court has discussed in some detail the fact that

a jury may conclude by inference that damage has occurred to

an antitrust plaintiff and the limits of the burden of proof

demanded of an antitrust, plaintiff:

The trial and appellates courts alike must also observe the

limits of the burden of proof which may be de-

manded of a treble-damaged plaintiff who seeks recovery

for injuries from a partial or total exclusion from a market;

and issues in these cases are rarely susceptible of

the kind of concrete detailed proof of injury which is

available in other contexts. The Court has repeatedly held

1 , the fact finder

— 22 as a matter reasonable inference

Nr acts and their

tendency to injure pa plaintiffs’ business, and from the evi-

——— — coe

to be attributable to uses, that defendants’ wrong

ful acts had caused damage to the plaintiffs.

Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100, 124

(1969). [Emphasis added]. See also, Perkins v. Standard Oil

Company of California, 395 U.S. 642, 648 (1969).

Justice Clark recognized in Bargain Car Wash, supra, that

specific lost sales need not be proved when he cited the con-

curring opinion of Justice White in the case of Perma Life

Mufflers, Inc. v. International Parts Corp., 392 U.S. 154, 143

(1968):

e

fendant “materially contributed” to plaintiffs injury

or “substantially contributed notwithstanding other factors

contributed also”.

Bargain [plaintiff] must show a causal connection between

the price discrimination and the injury it suffered, but

this does not require proof of loss of specific sales.

466 F.2d at 1174 [emphasis added].

In the instant case, the Supreme Court reversed the Frith

Circuit's former holding that damage can only be shown by

proof of specific lost sales and lost profits. There would have

been no need for reversal if the correct result had been reached

even though an erroneous standard had first been applied by

the Fifth Circuit. Thus, the Supreme Court has recognized in

this case, by implication, that damage may be proved from price

discrimination without a showing of specific lost sales and

profits. However, the Fifth Circuit continues to look for specific

proof of lost sales or profits.

In FTC v. Morton Salt Co., supra at 48, the Court recognized

that a merchant is injured when compelled to pay a higher price

than his competitors. Supreme Court has recently held that a

private consumer, under § 4 of the Clayton Act, is injured in

his business or property when he pays more for a product than

he legally should. Reiter v. Sonotone Corp., 442 U.S. 330

(1979). Payne also showed it paid more, did not raise its resale

prices, and thus was injured under § 4.

Even the Fifth Circuit has often recognized that the facts

of certain price discrimination cases will support an inference

of causation. Hanson v. Pit'sburgh Plate Glass Industries, Inc.,

482 F.2d 220, 227 (5th Cir. 1973), cert. denied 414 U.S. 1136

(1973) (private case); Foremost Dairies, Inc. v. F.T.C., 348

F.2d 674 (5th Cir.), cert. denied 382 U.S. 959 (1966); Bruce’s

Juices v. American Can Co., 187 F.2d 919 (5th Cir.), modified

on other grounds and rehearing denied 190 F.2d 73 (5th Cir.),

cert. dismissed, 342 U.S. 875 (1951) (private case). In Fore-

most Dairies, Inc. v. F.A.C., 348 F.2d 674 (5th Cir.), cert. denied

382 U.S. 959 (1966), the court considered whether the F. I. C.

could properly infer the probability of injury to the customers

of Foremost if they did not receive certain price reductions. In

that case, the evidence showed that the rebates were not passed

through the purchaser to the ultimate consumer so as to reduce

the price of the product. Even though there was no resulting

ice reduction to the consumer, the court held that if the re-

bate, which in effect was a price reduction to the purchaser, is

sufficient to afford that purchaser a significant savings, and it

would, if reflected in the resale price to the consumer, have a

noticeable effect on the decision of the consumer to purchase,

then an inference of injury [to competition] may be properly

indulged.” (Jd. at 680). The court held that it was unnecessary

that there be evidence to prove that the favored customer

actually undersold his com >etitor rivals. The substantial! price

advantage given by the rebates could afford the favored buyer

a material capital advantage by enlarging his profit margin or

enabling him to offer customer-attracting services which gave

him substantial advantage over his competition. Jd.

In E. Edelmann and Company v. F. T. C., 239 F.2d 152, (7th

Cir. 1956), the court held that a price differential, in the con-

text of keen competition and tight profit margins, furnishes

sufficient evidence to support a conclusion that all require-

ments for damage under the Robinson-Patman Act are present.

In the instant case, the profit margins were very small when

compared with the large rebates potentially available under the

rebate programs, which sometimes amounted to several

hundred dollars per car (See Pl. Ex. 52 and 53; App. 51-52).

Mr. Justice Jackson recognized what is patently obvious

when price discrimination has occurred. He stated this prin-

ciple succinctly during the argument of the Morton Sait case:

Lr eee ee less in

profit, less to carry on t

United States Law Week, vol. 16. no. 36, pp. 3276-77 (March

16, 1948). Even if the favored competitor did not reduce its

price to the consumer, the disfavored competitor is damaged

because he loses his opportunities to reduce his price (by the

amount of the price discrimination) and undersell the favored

27

competitor, and maximize his profits and sales. Since Payne

proved a substantial price discrimination, which it did not pass

through to its customers, and which injured competition and

caused it to lose its market share and diminish its profits,

eventually going out of business, it has proved damage under

§ 4 of the Clayton Act. It need not prove by a sale by sale

analysis that the favored dealers reduced their prices to the

consumer because of the price favoritism.

C. The Fifth Circuit's Decision Imposes an Unreasonably

Harsh Standard of Proving the Fact of Damage and Is Con-

trary to the Policy of Enforcing the Antitrust Laws.

The Supreme Court has long encouraged the private enforce-

ment of the antitrust laws through practical and reasonable

damages rules requiring only a reasonable estimate of the

cause and amount of injury. Bigelow v. RKO Radio Pictures,

Inc., 327 U.S. 251, 265 (1946). Despite clear Congressional in-

tent to encourage private enforcement of the Act, statistics

show that it has failed woefully. From 1936 to 1961, there

were III private cases brought, but damages entered for the

plaintiff in only six. Barber, The Private Enforcement of the

Antitrust Laws: The Robinson-Patman Experience, 30 G.W.

Law Rev. 181, 191-192 (1960). Also, Posner, A Statistical Study

of Antitrust Enforcement, 13 J. L. & Econ. 365, 383 (1970),

wherein the number of Robinson-Patman Act private cases

which have been tried and won by the plaintiff are listed for

several years:

1964 170 Tried; 8 Won

1965 90 Tried; 16 Won

1966 107 Tried; 17 Won

1967 79 Tried; 13 Won

1968 79 Tried; I Won

This woeful failure of private enforcement of the Act will be

continued if this Court permits the Fifth Circuit to substitute

its judgment for that of the jury s

IV. The Amount of Damage Was Proved to an

Estimated Degree of Certainty Sufficient Under

Seetion 4 of the Clayton Act.

A. Since the Increase Price Was Not Passed Through, The

Amount of the Price Discrimination Provides A Sufficient

Estimate of the Amount of Damage in the Form of Lost

Profits.

Payne did not pass through the higl r prices charged it by

Chrysler as shown by the fact that Payne's profits on both new

and used car sales combined were already the lowest of any of

the four dealers. Undisputed testimony and the financial

records of Payne established that it overallowed on used car

trade-ins in order to get sales. Since Payne had the lowest gross

profits because of price discrimination, it is clear that it did

not pass on its higher costs for the cars to its customers. Also,

unrefuted testimony shows the rebates were not passed on to

the customers (TR. 85). In such a case, the amount of the price

discrimination can be the amount of the damage. Enterprise

Industries v. Texas Co., supra at 459-460; Century Hardware

Corp. v. Acme United Corp., supra. Chrysler has heavily relied

on the Enterprise case which held that increased cost (the price

discrimination) to the purchaser is not a direct damage unless

the plaintiff proves that the increased cost was absorbed, and

not passed on to the customers, thus reducing profits.

Courts have held in numerous cases that, after showing an

injury to the business resulting from the violation of the anti-

trust laws, the plaintiff has 4 lesser burden of proof in showing

the amount of damage. Zenith Radio Corp. v. Hazeltine Re-

search, 395 U.S. 100 (1969); Bigelow v. RKO Radio Fictures,

327 U.S. 251, 264 (1946); Terrell v. Household Goods Carriers’

Bureau, 494 F.2d 16, 23-24 (5th Cir. 1974), cert. dismissed, 49

U.S. 987 (1974). All the plaintiff must do after showing injury

resulting from violation of the antitrust laws is to show “some

indication of the amount of the damage done.” Larry R. George

Sales Co. v. Cool Attic Cop. 587 F.2d 266, 270 (Sch Cir, 1979).

In fact, the Fifth Circuit follows the well established principle

that permits evidence that “borders on the speculative” in order

to estimate damages in an antitrust case. Hobart Brothers Co.

v. Malcolm T. Gilliland, Inc., 471 F.2d 984, 904 (5th Cir

1973).

Once the fact of damage is established, the jury should be

allowed to consider the amount of price discrimination as an

indication of the measure of damages. The Court permits a

much more liberal rule in Sherman Act cases. In Hanover

Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 494

(1968), the Court held that, in suing under § | of the Sherman

Act, a purchaser is injured in at least the minimum amount of

the illegal overcharge. See also Illinois Brick Co. v. Illinois,

434 U.S. 720, 724 (1977). In both the price fixing overcharge

case and the price discrimination case there is an illegal over-

charge. The gravamen of the violation in both cases is that the

plaintiff has been charged too much and should be compen-

sated for the overcharge. There is no statutory basis for distin-

guishing between a price overcharge and price discrimination

in the instant case where Payne was caused to lose a share of

the market. Hanover Shoe should be applicable to permit a

jury to at least consider the price discrimination as the amount

of damage, even if not automatically becoming the amount of

damage.

Payne proved $81,248 of price discrimination. This is in

itself a minimum estimate of the amount of lost profit damages

since Payne did not pass through its increased costs to the cus-

tomers. To require that a plaintiff demonstrate the specific

amount of lost sales or profits would require an economic

analysis even more complicated than that rejected by the Court

in Hanover Shoe. While there were only two parties involved

in Hanover Shoe, a Robinson-Patman case normally involves

numerous parties. A plaintiff in a Robinson-Patman Act case

would be forced to analyze the effects of the price discrimi-

nation on (1) his own pricing decisions (2) the effect of that

price discrimination on the pricing decisions of all his favored

who are not even properly parties to the lawsuit,

and (3) the sales and profits of everyone.

Payne is not arguing that the amount of price discrimination

is under § 2 (a) of the Robinson-Patman Act gives rise to “auto-

matic damages. The Supreme Court rejected the contention

that proof of price discrimination under § 2 (a) automatically

entitles the victim to damage in a minimum of that amount.

But the “automatic damage” argument was a proximate cause

argument, not really an amount of damage argument. The

Court has not prohibited a court or jury from considering the

amount of the price discrimination as an estimate of the dam-

ages once the violation has been found to have caused actual

antitrust injury under § 4 of the Clayton Act. Once the fact

of damage has been proved, the total amount of price discrimi-

nation can be a proper minimum estimate of damages since the

profit in Payne's sales was reduced by the amount of the price

discrimination because Payne did not pass its higher costs

through to the customer.

B. The Price Discrimination Also Caused Damage in the

Amount of the Lost Going Concern Value.

caused Payne another separate category of damage redressable

under the Robinson-Patman Act: the loss of the going concern

value of Payne's business. Payne could not exactly measure the

reduction of profits except in the minimum amount of the

price discrimination. However. there is a direct measurement

of the loss of the going concern value of the business. Evidence

of the value of Payne ranged from $50,000 to $170.000. Clearly,

this injury to Payne is exactly the type of loss and damage that

the Robinson-Patman Act was designed to compensate. Sub-

stantial evidence showed the amount of that damage. Once the

price discrimination was shown to have an adverse effect on

competition, and on Payne's business, then that certainly per-

mits the jury to award $111,000 in damages based on lost going

concern value alone.

The Fifth Circuit took the entire case away from the jury,

basically because of no proof of specific lost sales or profits. Its

holding does not permit a jury to infer injury to competition

and infer injury to the business of Payne. There was evidence

of substantial and sustained price discrimination, keen compe-

tition in the market, tight profit margins, Payne's loss of market

share compared to 1968, loss of profits by over-allowing on its

used cars, and testimony from an economist that the price dis-

crimination injured Payne in its ability to compete with other

dealers and also injured competition in general because the

consumer would have to pay slightly higher prices that it other-

wise would have paid absent the price discrimination.

Payne is not contending that price discrimination, coupled

with other corroborating evidence, automatically infers injury.

Chrysier is free to show that the disfavored purchaser was not

injured in any way by the discriminatory prices. The rule

Payne seeks is to merely permit a fair decision from a jury

which may infer injury from the evidence presented in this

case.

This Court should reverse the Fifth Circuit and reinstate the

jury verdict.

Respectfully submitted,

C. Lee REEves

Attorney for J. Truett Payne Co.

Stork, Permutr, Frienp, FrigpMAn,

Hep & Apo.insky, P.A.

2222 Arlington Avenue, South

Alabama 35205

933-7111

Of Counsel

I. C. Lee Reeves, attorney for J. Truett Payne Company, Inc.,

a corporation, Petitioner herein, and a member of the Bar

of the Supreme Court of the United States, do hereby certify

that on the day of July, 1982, I served three copies of the

above and foregoing Petition for Writ of Certiorari to the

Supreme Court of the United States, together with three

Appendices thereto, by mailing and deposting same in the

United States Post Office or mail box, with first class postage

prepaid, in a duly addressed envelope, to The Honorable J.

Ross Forman, III, 1600 Bank for Savings Building, Birming-

ham, Alabama 35203, attorney for Chrysler Motors Corpo-

ration, a corporation.

It is further certified that all parties required to be served

have been served.

This he day of July, 1982.

C. Lee REEves

Attorney for J. Truett Payne

Company, Inc., Petitioner

2222 Arlington Avenue South

, Alabama 35205

(205) 938-7111