Appendix — Kaiser Aluminum & Chemical Corp. v. Bonjorno

A Office - Supreme Court. Us. |

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Q4- hw’ FILED

pret JUN 6 1985

ALEXANCOER tL. STEVAS.

IN THE CLERK

Supreme Court of the United States

October Term, 1984

KAISER ALUMINUM & CHEMICAL CORPORATION and

KAISER ALUMINUM & CHEMICAL SALES, INC.,

Petitioners,

v.

JOSEPH A. BONJORNO, GEORGE M. KERR, and

BARBARA F. CLISBY,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

APPENDIX

RICHARD P. MCELROY

(Counsel of Record)

WILLIAM H. ROBERTS

Blank, Rome, Comisky &

McCauley

1200 Four Penn Center Plaza

Philadelphia, PA 19103-2599

(215) 569-5500

and

DONALD F. TURNER

GARY D. WILSON

Wilmer, Cutler & Pickering

1666 K Street, N.W.

Washington, DC 20006

Of Counsel: Attorneys for Petitioners

DAVID L. PERRY

STEPHEN B. RINGWOOD

Kaiser Aluminum & Chemical Corporation

300 Lakeside Drive

Oakland, CA 94643

PACKARD PRESS / LEGAL DIVISION, 10th & SPRING GARDEN STREETS, PHILA, PA. 19123 (215) 236-2000

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

TABLE OF CONTENTS

Page

A — Opinion of the United States Court of Appeals

for the Third Circuit, Nos. 83-1047 and

83-1079, Sur Petition For Rehearing, and

Statement of Adams, J., Sur Denial of the Pe-

tition for Rehearing In Banc, March 8, 1985. .A-1

B — Opinion of the United States Court ot Appeals

for the Third Circuit, Nos. 83-1047 and

83-1079, filed December 27, 1984.......... A-5

C — Judgment of the United States Court of Ap-

peals for the Third Circuit, Nos. 83-1047 and

83-1079, December 27, 1984.............. A-31

LD — Memorandum and Order of the United States

District Court for the Eastern District of Penn-

sylvania, No. 74-122, entered on June 18,

PE eee er rk Coe LeU Ee eee ee a A-33

k. — Memorandum and Order of the United States

District Court for the Eastern District of Penn-

sylvania, No. 74-122, entered on January 17,

Se at oer era a oer ee A-74

Fk —- Opinion of the United States Court of Appeals

for the Third Circuit, No. 77-1846, May 24,

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APPENDIX A

Opinion of the Court of Appeals Sur Petition for

Rehearing and Statement of Adams, J.. Sur

Denial of the Petition for Rehearing In Banc

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 83-1047 and 83-1079

BONJORNO, JOSEPH A., KERR, GEORGE M., and

CLISBY, BARBARA K.., as Transferees of Liquidation

and Dissolution of Columbia Metal Culvert Co.. Inc..

Appellants and Cross-Appellees

u

KAISER ALUMINUM & CHEMICAL CORPORATION,

KAISER ALUMINUM & CHEMICAL SALES, INC..

ROBERT A. KENNEDY and KENNEDY CULVERT &

SUPPLY COMPANY and ROBERT KENNEDY

Kaiser Aluminum & Chemical Corporation and

Kaiser Aluminum & Chemical Sales, Inc.,

Appellees and Cross-Appellants

Appeal from the United States District

Court for the Eastern District

of Pennsylvania

(D. C. No. 74-0122)

A-1

A-2 Appendix A

SUR PETITION FOR REHEARING

PRESENT: ALDISERT, Chief Judge, SEITZ.

ADAMS, GIBBONS, HUNTER, WEIS, GARTH.

HIGGINBOTHAM, SLOVITER, BECKER.

and ROSENN, Circuit Judges.

The petition for rehearing filed by appellees and

cross-appellants in the above entitled cases having been

submitted to the judges who participated in the decision

of this court and to all the other available circuit judges

of the circuit in regular active service, and no judge who

concurred in the decision having asked for rehearing,

and a majority of the circuit judges of the circuit in reg-

ular active service not having voted for rehearing by the

court in banc, the petition for rehearing is denied.

By the Court

/s/ Seitz

Circuit Judge

DATED: March 8, 1985

Judge Becker would grant rehearing limited to the price-squeeze

issue.

Appendix A A-3

STATEMENT OF ADAMS, J., SUR DENIAL OF THE

PETITION FOR REHEARING IN BANC

I respectfully dissent from the order denying rehear-

ing in banc, because I believe that this case raises a

number of issues of sufficient import to command the

attention of the entire Court.

First, I believe there is a serious question whether

Kaiser’s contentions regarding the applicability of the

Supreme Court’s recent decision in Copperweld Corp. v.

Independent Tube Co., 104 S.Ct. 2731 (1984), have been

properly answered. Copperweld, handed down after the

trial but before the decision of the panel, holds that a

parent and a wholly-owned subsidiary are not considered

separate entities for purposes of a conspiracy charge un-

der section 1 of the Sherman Act, 15 U.S.C. §1. If there

can be no intra-enterprise conspiracy under section 1 of

the Sherman Act, Kaiser asserts that logic dictates a sim-

ilar result under section 2 of the Sherman Act. If Kaiser

is correct, then the propriety of the jury’s verdict which

relied in part on such a conspiracy is called into question.

Second, the bifurcation of the trial resulting in dif-

ferent juries determining liability and damages raises se-

rious questions under the standard set forth by the Su-

preme Court in Gasoline Products Co., Inc. v. Champlin

Refining Co., 283 U.S. 495 (1931). This Court has re-

cently recognized the continued vitality of Gasoline

Products — that retrial of only one issue in a case, such

as liability, is not proper unless “it clearly appears that

the issue to be retried is so distinct and separable from

the others that a trial of it alone may be had without in-

justice.” Id. at 500. In Stanton by Brooks v. Astra Phar-

maceutical Products, Inc., 718 F.2d 553, 576 (3d Cir.

1983), the Court emphasized the danger of separate tri-

als on damages and liability, particularly when there is

evidence, as here, that the first jury reached a compro-

mise verdict. This is illustrated by the fact that the first

jury returned a damage verdict of $5,445,000 when tre-

A-4 Appendix A

bled and the second jury returned a verdict of

$9,567,939 when trebled.

Finally, the substantial expansion of the “price

squeeze” theory of liability also merits attention. Kaiser

has been found guilty of utilizing an unlawful price

squeeze even thougk during the years in question plain-

tiff was purchasing its raw materials from Alcoa and

Reynolds, rather than from the defendant. One essential

element of a price squeeze is monopoly power in the raw

material. See United States v. Aluminum Company of

America, 148 F.2d 416 (2d Cir. 1945). Therefore, it ap-

- pears to be a significant extension of the price squeeze

doctrine to predicate antitrust liability on such a basis in

a case in which the defendant is not selling the raw ma-

terial in question to the plaintiff and there is no evidence

of any conspiracy between defendant and the other sup-

pliers of the raw materials.

Each of these important issues would appear to war-

rant further attention by the entire Court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

(A.O. U.S. Courts. G.M.C. Printing, Phila., Pa. 215-568-4264)

APPENDIX B

Opinion of the Court of Appeals

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 83-1047 and No. 83-1079

BONJORNO, JOSEPH A., KERR, GEORGE M., and

CLISBY, BARBARA K., as Transferees of Liquidation

and Dissolution of Columbia Metal Culvert Co., Inc..,

Appellants and Cross-Appellees

7)

i

KAISER ALUMINUM & CHEMICAL CORPORATION,

KAISER ALUMINUM & CHEMICAL SALES, INC.,

ROBERT A. KENNEDY and KENNEDY CULVERT &

SUPPLY COMPANY and ROBERT KENNEDY

Kaiser Aluminum & Chemical Corporation and

Kaiser Aluminum & Chemical Sales, Inc..,

Appellees and Cross-Appellants

Appeal from the United States

District Court for the

Eastern District of Pennsylvania

(D.C. No. 74-0122)

Argued: September 13, 1983

Before: SEITZ, GIBBONS and ROSENN,

Circuit Judges.

(Opinion Filed: December 27, 1984)

A-5

A-6 Appendix B

Henry T. Reath

Michael M. Baylson (argued)

Eric H. Auerbach

Richard L. Thurston

DUANE, MORRIS & HECKSCHER

1500 One Franklin Plaza

Philadelphia, PA 19102

Attorneys for Appellants and

Cross-Appellees

Richard P. McElroy (argued)

William H. Roberts

Alexander D. Bono

BLANK, ROME, COMISKY & MCCAULEY

1200 Four Penn Center Plaza

~ Philadelphia, PA 19103

Stephen P. Ringwood

KAISER ALUMINUM & CHEMICAL CORP.

Oakland, CA 94634

Attorneys for Appellees and

Cross-Appellants

OPINiON OF THE COURT

SEITZ, Circuit Judge.

I.

The plaintiffs appeal from an order of the district

court partially granting judgment notwithstanding the

verdict which eliminated the largest element of the jury’s

damage award in an antitrust action. The defendants,

Kaiser Atuminum and Chemical Corporation and Kaiser

Aluminum and Chemical Sales, Inc. (collectively “Kai-

ser’) cross-appeal from a judgment entered after a spe-

cial jury verdict finding them in violation of the antitrust

laws. This court has jurisdiction under 28 U.S.C. §1291

(1983).

a

Appendix B A-

Il. BACKGROUND

The plaintiffs were the sole stockholders of thie now

defunct Columbia Metal Culvert Co., linc. (“Columbia”)

which was at one time a fabricator of aluminum drainage

pipe in Vineland, New Jersey. They allege that Kaiser

monopolized the markei for aluminum drainage pipe in

the Mid-Atlantic region of the United States in violation

of sections one and two of the Sherman Act, 15 U.S.C.

§§1 and 2 (1983).

Columbia began to manufacture aluminum drain-

age pipe in 1962. Originally, Columbia purchased all of

its raw materials from Kaiser. The raw material for man-

ufacturing pipe comes in two primary forms: corrugated

aluminum sheet which is rolled and riveted into pipe,

and aluminum coil which is formed into helical pipe by

a spiraling machine. Initially, Columbia purchased only

sheet, but in 1970, it acquired a spiraling machine, and

thereafter produced mostly pipe formed from coil.

In 1972, Columbia and Kaiser had a falling out, after

which Kaiser no longer sold coil to Columbia, which

thereafter purchased its raw materials from Alcoa and

Reynolds. In 1973, Columbia’s best salesman, Robert

Kennedy, left Columbia to become an independant dis-

tributor of Kaiser’s aluminum pipe. At the same time,

Kaiser opened a pipe fabrication plant only a few miles

from Columbia’s. In 1974, Kaiser along with the other

major aluminum producers raised the prices of alumi-

num coil and sheet to roughly the same price that Kaiser

charged for the finished pipe. Throughout this period,

Kaiser produced approximately 80% of all the aluminum

pipe used in Columbia’s geographical marketing region.

The plaintiffs allege that as a result of Kaiser’s con-

duct, Columbia began experiencing financial difficul-

ties, and stopped producing pipe in 1975. Eventually,

Columbia’s assets were sold to a third party in 1978. In

1981, the third party sold the remaining assets of Co-

lumbia to Kaiser.

A-8 Appendix B

This action was first filed in January of 1974 under

section four of the Clayton Act, which gives a private

cause of action under the antitrust laws, alleging, inter

alia, violations of sections one and two of the Sherman

Act. At the first trial in 1977, the district court directed a

verdict for Kaiser at the conclusion of plaintiff's evi-

dence. This court reversed, holding that there was suf-

ficient evidence to permit the case to go to the jury. Co-

lumbia Metal Culvert Co., Inc. v. Kaiser Industries

Corp., 579 F.2d 20 (3d Cir. ), cert. denied, 439 U.S. 876

(1978). A second trial held in 1979 resulted in a jury

verdict for the plaintiffs and an award of damages. The

district court, however, granted in part the defendants’

post-trial motion for a new trial by ordering a trial on

damages only. Bonjorno v. Kaiser Aluminum & Chemi-

cal Corp., 518 F.Supp. 102 (E.D. Pa. 1981). A limited

retrial was conducted in 1981, resulting in a damage

award of $9,567,939 after trebling. The district court

then granted, in part, the defendant’s motion for judg-

ment notwithstanding the verdict, reducing the judg-

ment to $4,651,560.

The plaintiffs appeal the reduction of the damage

award, and the defendants cross-appeal the failure of the

district court to grant a new trial or to grant in full their

motion for a judgment notwithstanding the verdict. We

turn first to the defendants’ cross-appeal.

II. The Doctrine of Intra-Enterprise Conspiracy

The defendants contend that the jury verdict must

be set aside and a new trial ordered because of the recent

decision in Copperweld Corp. v. Independence Tube Co.,

__ US. __, 104 S.Ct. 2731 (1984). In that case, the

Supreme Court held that a parent corporation and its

wholly owned subsidiary cannot be considered separate

entities for purposes of section one of the Sherman Act.

Thus, a parent corporation and its viiolly owned subsid-

iary cannot by themsclves violate that provision which

Appendix B A-9

requires concerted action by at least two participants. Be-

cause the two entities in the section one claim in this

case are the Kaiser Aluminum & Chemical Corporation

(“KACC”) and its wholly owned subsidiary Kaiser Alu-

minum & Chemical Sales, Inc. (“KACSI”), the defend-

ants contend that the finding of liability must be set aside

if the Copperweld rationale is applicable to this case.

This court had previously held that the plaintiff

could proceed with a section one claim based on a con-

spiracy between the parent KACC and its subsidiary

KACSI. 579 F.2d at 33-35. After oral argument was

heard on this appeal, the Supreme Court granted the pe-

tition for certiorari in the Copperweld case. The parties

were asked to submit supplemental briefing on the po-

tential effect of Copperweld. After due consideration, we

decided to defer resolution of this appeal until after the

Supreme Court decided Copperweld.

Having now considered the decision of the Supreme

Court, we believe that it is unnecessary to reach the issue

of the applicability of Copperweld because the damage

award may be sustained solely on the separate section

two verdicts that do not depend on a theory of

iiitra-enterprise conspiracy. Kaiser contends that when a

verdict may rest on either of two claims, one supported

by the evidence and the other not, a judgment thereon

must be reversed. See Simko v. C&C Marine Mainte-

nance Co., 594 F.2d 960 (3d Cir. ), cert. denied, 444 U.S.

833 (1979). The case that Kaiser cites, Simko, rested on

a general verdict in which it is impossible to determine if

a jury found the defendant liable on both grounds or only

one ground. In this case, special interrogatories were

submitted to the jury on each of the theories of liability,

and the jury determined that the defendants violated

both section one and section two of the Sherman Act.

Under these circumstances, we are not required to re-

mand for a new trial solely because the section one claim

may be invalid.

A-10 Appendix B

The defendants argue, however, that the causation

of damages from the monopolization and attempt to mo-

nopolize verdicts are also tainted by the theory of intra-

enterprise conspiracy. The jury returned separate ver-

dicts against the defendants for monopolization, attempt

to monopolize, and conspiracy to monopolize under sec-

tion two. Although the conspiracy verdict, which de-

pended upon an intra-enterprise conspiracy, was sepa-

rately rendered, only a single interrogatory was asked as

to causation of injury. The jury answered “yes” to the

question: “{W]as any such defendants’ monopoly, con-

spiracy to monopolize, or attempt to monopolize as found

by you a material and proximate cause of any injury to

the business or property of the plaintiff?”

The defendants contend that Copperweld must nec-

essarily apply to a section two conspiracy to monopolize,

and since the jury was not asked separate questions on

proximate cause, it is impossible to determine if the jury

found that the injuries were caused by an impermissible

theory of liability. The defendants’ contentions succeed

only if it were possible that the jury could infer that some

of the plaintiffs’ injuries resulted solely from the conspir-

acy and not from the monopolization or attempt to mo-

nopolize. Assuming without deciding that Copperweld

applies to a section two conspiracy, we conclude that it

was not possible for a reasonable jury in this case to find

that injury was caused by conduct pursuant to the con-

spiracy that was not also conduct in furtherance of the

monopolization or the attempt to monopolize.

Specific intent is an element of a conspiracy to mo-

nopolize. Times-Picayune Publishing Co. v. United

States, 345 U.S. 594, 626 (1953); Fleer Corp. v. Topps

Chewing Gum, Inc., 658 F.2d 139, 154 (3d Cir. 1981),

cert. denied, 455 U.S. 1019(1982). Because the jury was

charged that it had to find that there was a specific intent

to monopolize before returning a verdict on conspiracy to

monopolize, the jury necessarily found that both the par-

ent KACC and the subsidiary KACSI had the specific

Appendix B A-11

intent to monopolize the aluminum pipe market. Thus

any concerted activity undertaken in the conspiracy that

could give rise to damages would have been undertaken

with the purpose of monopolization. Because the con-

spiracy defendants are the same defendants in the mo-

nopolization and attempt to monopolize charges, any ac-

tivity in the conspiracy, which must have had the pur-

pose of monopolization. would necessarily be attributa-

ble to the same defendants as part of the monopolization

or attempt to monopolize.

Furthermore, the defendants do not point to any ev-

idence in the record that evinces actions in the conspir-

acy that could give rise to damages and that are not nec-

essarily part of the attempt to monopolize or the monop-

olization. Thus, under the particular circumstances of

this case, we conclude that the jury verdict and award of

damages would be the same even if the jury had not been

instructed that KACC and KACSI could be considered

separate entities.

IV. The Monopolization Claim

A. The Effect of This Court's Decision in 1977

We next turn to Kaiser’s contention that its motion

for a judgment notwithstanding the verdict should have

been granted because the evidence was insufficient to

support the claim of monopolivation or attempt to mo-

nopolize. The plaintiffs argue Uiat Kaiser may no longer

raise this issue because this court had determined on the

appeal from the first trial that there was sufficient evi-

dence of monopolization to go to the jury. Columbia

Metal Culvert Co. v. Kaiser Industries Corp., 579 F.2d

20 (3d Cir.), cert. denied, 439 U.S. 876 (1978).

The evidence presented at the liability 1979 trial,

however, differed in several material respects from the

evidence presented at the first 1977 trial. In particular,

the plaintiffs’ evidence at the later 1979 trial significantly

undercut the economic significance of the facts that the

A-12 Appendix B

parent KACC charged its subsidiary KACSI a price for

aluminum sheet and coil that was well below the market

price while at the same time KASCI was selling coil to

independent pipe fabricators at the higher market price.

Kaiser's pricing policies with respect to its subsidiaries

and to independent fabricators were elements of our ear-

lier decision. 579 F.2d at 31.

Because there were material differences in the evi-

dence presented at the two trials, we believe that the

question of the sufficiency of the evidence presented at

the 1979 liability trial is still open for review. See Johnson

vu. Bernard Ins. Agency, Inc., 532 F.2d 1382, 1384 (D.C.

Cir. 1976).

B. Sufficiency of the Evidence of Monopolization

There are two main elements in monopolization:

“( 1) the possession of monopoly power in a relevant mar-

ket, 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

historical accident.” United States v. Grinnell, 384 U.S.

563, 570-71 (1966); Borough of Landsdale v. Philadel-

phia Elec. Co., 692 F.2d 307, 311 (3d Cir. 1982).

Kaiser's contentions on liability in this appeal go to

the question of whether there is insufficient evidence

that its alleged conduct demonstrates the willful acqui-

sition or maintenance of monopoly power. !

In reviewing a record for sufficiency of the evidence,

this court must expose the evidence to the light most

favorable to the non-movant with the advantage of every

fair and reasonable inference. Continental Ore Co. v. Un-

ion Carbide & Carbon Co., 370 U.S. 690 (1962);

1. In this appeal, Kaiser does nec contest that the relevant prod-

uct market is aluminum drainage pipe, or that the relevant geo-

graphic market is the Mid-Adantic states. Nor do any of the issues

raised by Kaiser in this appeal relate to whether it possessed mo-

nopoly power or whether that power was a consequence of a supe-

rior product, skill, or historical accident.

Appendix B A-13

Fireman’s Fund Ins. Co. v. Videfreeze Corp., 540 F.2d

1171 (3d Cir. 1976), cert. denied, 429 U.S. 1053 (1977).

1. Kaiser Attempted to Control Its Competition.

There was evidence that Kaiser attempted to control the

independent fabricators by requiring them to purchase

all of their raw materials from Kaiser. Mr. Bonjorno of

Columbia, and Mr. Arvay of U.S. Aluminum, a South

Carolina fabricator, both testified that Kaiser attempted

to coerce the fabricators into purchasing only from Kai-

ser. There was testimony that Holmes Collins, the Kuiser

manager of the division that manufactured and mar-

keted the aluminum pipe, threatened to open a pipe fab-

rication plant “across the street” from Columbia if it pur-

chased its raw materials from other sources. There were

threats that if Kaiser saw so much as one pound of metal

from another producer that it would terminate its rela-

tionship with Columbia. When Columbia did purchase

aluminum from another company, Kaiser carried

through with its threats by locating a pipe plant only 40

miles from Columbia’s and by refusing to sell any more

coil to Columbia. Finally, there was evidence that

Holmes Collins told Columbia’s owners that Kaiser

would control Columbia's growth and market.

From this evidence, a jury could infer that Kaiser

wanted to control the source of the raw materials for the

independent fabricators and chus, indirectly, wanted to

control the price of independents’ finished pipe. The

mere location of a plant, or the unilateral refusal to deal

may not, by themselves, be antitrust violations. How-

ever, the combination of the threats as well as evidence

that Kaiser’s management had originally requested that

the plant be located elsewhere is evidence from which a

jury could legitimately infer that Kaiser attempted to

control its competition, and failing that, tried to destroy

it.2 Schine Theatres v. United States, 334 U.S. 110, 119

2. Further evidence of Kaiser's attempt to control or exclude

competition lay in the veiled threats that Holmes Collins made to

A-14 Appendix B

(1948) (threat of opening theatres by a monopolist is ev-

idence of intent) (Copperweld, supra, overruled the sec-

tion one charge in Schine, but re-affirmed the section

two charge).

2. Kaiser’s Actions to Destroy Columbia. In addition

to locating a plant near Columbia’s, the plaintiffs allege

that Kaiser engaged in a series of deliberate acts to drive

Columbia out of the pipe market. The most serious claim

is that Kaiser deliberately raised the price of the raw ma-

terials to the same level as the price that it charged for

the finished pipe, thus making it impossible for Colum-

bia to operate at a profit if it sold pipe competitively with

Kaiser. The plaintiffs term this price condition a “price

squeeze.”

The evidence and the record show that for a signif-

icant period of time in 1974, the distributor list price of

Kaiser's aluminum pipe, per pound, was just above, or

even below, the market price for aluminum coil. The

mere existence, however, of a “price squeeze” is not nec-

essarily an antitrust violation. The plaintiff must present

evidence that the defendants deliberately produced the

effect, sufficient to provide a reasonable basis for the jury

to conclude that the “squeeze” was not the result of nat-

ural market forces such as supply and demand or legit-

imate competition. Cf. California Computer Prods. Inc.

v. IBM, 613 F.2d 727, 735 (9th Cir. 1979).

To show that the price squeeze was a deliberate act

on the part of Kaiser, the plaintiffs produced evidence

that Kaiser controlled both the price of the raw material

and the price of the finished pipe, and that Kaiser exer-

cised that power. That Kaiser could control the price of

the finished pipe is evident. By setting the price at which

NOTES (Continued )

Alcoa. Alcoa’s manager testified that Collins stated that “if |Alcoa|

thought that [it] could sit back and enjoy a participation in this ™ar-

ket by merely being a supplier of coil sheet to independent ripe fab-

ricators, |Alcoa| had another thing coming, or some words to that

effect.” App. at 1085.

Appendix B A-15

it sold to distributors, Kaiser effectively controlled the

prices at which the distributors bid to contractors. Fur-

ther, because of Kaiser’s large market share, it was likely

that it or one of its distributors would be bidding on

nearly every job. In this fashion, Kaiser, if it desired,

could keep the prices of the pipe low.

The plaintiffs’ evidence of Kaiser’s control over the

prices of the raw material, aluminum coil, is more prob-

lematic. In part, it lies in understanding the nature of the

market for aluminum coil and sheet used in fabricating

pipe. Prior to 1974, Kaiser and some of the other alumi-

num producers maintained a separate price list, called a

commodity price, for aluminum alloy sold to fabricators

to manufacture pipe. The commodity price was usually

lower than the general or specification price charged for

the same alloy used for other purposes. It was never con-

tended, however, that Kaiser lost money at the lower

commodity price, and KACSI usually reported a profit

from the sale of coil and sheet at the commodity price.

App. at 4674-4824.

Kaiser was not the largest supplier of aluminum coil

or sheet to independent fabricators, although if the alu-

minum used by its own pipe plants were included, it pro-

duced over 80%~ gf the aluminum used for making pipe.

Kaiser contends oe since it was not the dominant force

in the commodity price market for aluminum coil and

sheet, it did not control the prices of the raw materials.

The plaintiffs’ theory, however, was that Kaiser was a

price leader, and that Reynolds and Alcoa, the other ma-

jor aluminum producers, usually followed Kaiser’s pric-

ing strategy. Thus, Kaiser’s prices would determine the

market prices.

The principal evidence in support of this theory was

the testimony of Professor Oliver Williamson, an econo-

mist and expert in antitrust. He testified that the alumi-

num industry was an oligopoly limited to a few major

producers of aluminum, and that in particular lines of

aluminum products, one of the producers became dom-

A-16 Appendix B

inant and set the pricing strategy for the rest of the in-

dustry. He indicated that the other aluminum producers

usually followed the price leader because if an aluminum

producer did not comply, it would not be followed in the

areas where it was dominant. He further indicated that

there were economic studies that tended to show that the

price leadership phenomenon was especially noticable

during the early to mid-1970’s and that aluminum prices

were kept high by the producers during the relevant pe-

riod.

Further, Dr. Williamson testified that he believed

that Kaiser was the dominant firm in setting the prices

for aluminum coil and sheet used in making pipe. Dr.

Williamson’s opinion that Kaiser was the dominant firm

in the aluminum pipe area was buttressed with evidence

that showed that Kaiser was the largest producer of coil

used for pipe, that it was the only major manufacturer

who had an extensive marketing and engineering staff

who actively promoted and studied the uses of aluminum

pipe, and that Kaiser had the largest interest in pipe

prices because it sold over 80% of the aluminum pipe in

the country. If there were price leadership, it would be

most likely that Kaiser set the pricing policies because of

its extensive expertise and investment, rather than

Reynolds or Alcoa who had so little involvement in the

area.

That there was price leadership was supported by

the testimony of Thomas Melrose, a manager at Alcoa,

and Lonsdale Lawrence, an engineer from Reynolds.

Melrose testified that Alcoa did not independently set

prices but followed the prices that Kaiser and Reynolds

set for the corrugated aluminum sheet used for making

pipe Lawrence testified that for corrugated sheet,

Reynolds would follow Kaiser’s announced prices each

tume the prices changed. Although Melrose’s and

Lawrence’s testimony was in reference to corrugated

sheet and not to coil, their testimony confirms Dr.

Williamson’s general observations on the existence of

ena

Appendix B A-17

price leadership in the aluminum drainage pipe raw ma-

terial marker. Further, the evidence indicated that the

prices for coil and sheet as raw materials for pipe did not

differ in material respects. :

Kaiser contends, however, that the plaintiffs’ docu-

mentary evidence on the actual prices charged by the

three major manufacturers failed to show price leader-

ship. In particular, Kaiser points to evidence that on one

occasion Alcoa raised the price of aluminum coil three

days before the effective date of Kaiser’s comparable

price change as proof that Alcoa, and not Kaiser, was the

price leader.

Dr. Williamson testified, however, that a pricing

change did not have to be initiated by the price leader.

Also, Alcoa’s price change, although occurring three

days before the effective date of Kaiser’s change, may

have been made after Kaiser announced its change ei-

ther publicly or privately.

At most, Columbia’s pricing evidence was suscepti-

ble of an inference inconsistent with price leadership.

When contradictory inferences can be drawn from the

evidence, the question should be resolved by the jury

and it is not a matter for the consideration of the court on

a motion for a JNOV. Given that Dr. Williamson’s opin-

ion was well supported by the evidence, we cannot say

that the question of price leadership should not have

gone to the jury.

The next question is whether the evidence shows

that Kaiser deliberately manipulated the coil and pipe

prices to create a squeeze. There was evidence that the

squeeze was not caused by natural market forces.

The most significant evidence of deliberate manip-

ulation of the coil prices was Kaiser’s withdrawal of the

commodity price for coil in January of 1974. This caused

a steep rise in the price of coil from about 38 cents per

pound to about 44 cents per pound. At approximately the

same time, Alcoa and Reynolds raised their coil prices to

the same price levels. Dr. Williamson testified that he

A-18 Appendix B

believed that the price hike was made for “‘stragetic” rea-

sons. Even Kaiser’s manager, Holmes Collins, testified

that the commodity price was withdrawn because Kaiser

no longer wished to sell to independent fabricators.

Thus, Collins’ testimony supported an inference that the

price change was not related to costs but was intended to

affect tne independent competition.

Perhaps some of the strongest evidence that the

price squeeze was deliberate lies in the relationship of

the price of coil charged by Kaiser and its distributor

price for pipe. If the coil prices charged by KACSI truly

reflected the cost of the coil plus a fair return, then the

price of the finished pipe should be higher by at least the

fabrication cost of the pipe. However, the price of the

pipe was often below the price of the coil during the first

six months of 1974. Alternatively, if the price of the pipe

reflected Kaiser’s true costs plus a fair return, then the

price of the raw material should be less by at least the

cost of the fabrication. Thus, either the pipe prices were

too low, or the raw material prices too high.

Further evidence that the price squeeze was delib-

erate lay in the transfer price systeni used by Kaiser. The

transfer price is the price that the parent KACC charged

its subsidiary KACSI for aluminum. The transfer price

was a fixed price per pound that is set once a year and

reflects the projected direct costs of producing the alu-

minum and excludes an allowance for corporate over-

head. As such, the transfer price is usually well below the

market price. Although the transfer price system itself is

not evidence of classic predatory behavior, Kaiser’s sys-

tem permitted KACSI to set coil prices for its competitors

without affecting its pipe costs. Usually, the market price

of the raw materials determines the price of the finished

product. In this case, Kaiser could set whatever market

price it chose for the raw material, within certain limits,

without directly affecting its market price for pipe.

Given these facts, there was sufficient evidence for

the jury to conclude that Kaiser not only possessed the

Appendix B A-19

power to create the price squeeze, but that it exercised

that power to destroy its competition. See United States

v. Alcoa, 148 F.2d 416 (2d Cir. 1945).

There is additional evidence that Kaiser sought to

destroy Columbia by setting up Robert Kennedy as a dis-

tributor. There is evidence that Kaiser extended credit to

Kennedy even though its credit department concluded

that Kennedy’s operation was an “unacceptable credit

risk.” App at 4466. The jury could infer that by going

against the very strong recommendation of its credit de-

partment, Kaiser displayed its intent to drive Columbia

out of business. See Columbia, 574 F.2d at 31. Cf. Grey-

hound Computer v. IBM, 559 F.2d 488, 498 (9th Cir.

1977), cert. denied, 434 U.S. 1040 (1978) (If a jury con-

cludes that a manufacturer possesses monopoly power,

then it would be precluded from otherwise lawful! prac-

tices that exclude competition). Although Kaiser con-

tends that the credit department did eventually approve

of the Kennedy account, the evidence indicates that dur-

ing the first year, Kaiser extended Kennedy up to at least

$78,000 credit secured by no more than Kennedy’s

$25,000 letter of credit and by a security interest in the

accounts receivable, which was not much more than the

security earlier evaluated by the credit department as un-

acceptable. App. at 4466.

Further, contrary to Kaiser’s contentions, we do not

consider that Kennedy’s dismissal as a defendant

renders the evidence of Kennedy’s activities irrelevent to

the monopolization claims against Kaiser. The district

court’s instructions in this regard were fully consistent

with this court’s earlier opinion. See Columbia, 579 F.2d

at 31, 36.

When a monopolist competes by denying a source of

supply to his competitors, raises his competitor’s price for

raw materials without affecting his own costs, lowers his

price for the finished goods, and threatens his competi-

tors with sustained competition if they do not accede to

his anticompetitive designs, then his actions have

A-20 Appendix B

crossed the shadowy barrier of the Sherman Act. See

Handler, Some Unresolved Problems of Antitrust, 62

Colum. L. Rev. 930, 934 (1962). Given the evidence of

Kaiser’s anticompetitive behavior, we hold that there was

sufficient evidence to permit the monopolization claim to

go to the jury.

V. Contradicting Evidence Presented at the

Liability and Damage Trials

Kaiser also contends that a judgment notwithstand-

ing the verdict (JNOV) should have been granted be-

cause the plaintiff produced evidence at the trial on dam-

ages that contradicted the evidence presented ai the li-

ability trial. Kaiser, however, fails to explain the iegal

theory supporting its contention.

Normally, when the evidence is contradictory, a

JNOV is inappropriate. Fireman’s Fund Ins. Co. v.

Videfreeze Corp., 540 F.2d 1171, 1178 (3d Cir. 1976),

cert. denied, 429 U.S. 1053 (1977). The assumption is

that the jury should decide factual issues involving con-

tradictory evidence. In this case, however, no single jury

heard all of the allegedly contradictory testimony.

Kaiser’s argument must be that if a single jury had heard

both the evidence on liability and damages, then that

jury would not have returned a verdict against Kaiser.

Under this theory, however, a JNOV is not the proper

remedy in this case. There was sufficient evidence of

monopolization to go to the jury, even if, as Kaiser con-

tends, the plaintiff's introduced evidence that was incon-

sistent with their theory of liability.

The proper remedy, at best, would be a new trial on

both liability and damages. Kaiser, however, does not ar-

3. Kaiser does not contend on this appeal that there was insuf-

ficient evidence as to any issues, such as specific intent to monop-

olize or a dangerous probability of achieving monopoiy power, that

relate solely to the attempt to monopolize claim. See Coleman Motor

Co. v. Chrysler Corp., 525 F.2d 1338, 1348 (3d Cir. 1975).

teeters

Appendix B A-21

gue for a new trial on the ground that testimony incon-

sistent with the theury of liability was introduced at the

damages trie!.

Even if we were to construe Kaiser’s arguments for

a JNOV as a request for a new trial in the alternative, we

do not believe that substantial justice dictates that a new

trial be ordered. Cf. Scott v. Plante, 641 F.2d 117, 136

(3d Cir. 1981), vacated on other grounds, 458 U.S. 1101

(1982). If the district court committed error, it would

have been in its failure to order a full new trial in 1981

when it ordered the limited retrial on damages. In gen-

eral, the ordering of a new trial is committed to the sound

discretion of the district court. In this case, we cannot

say that the district abused its discretion. The liability

trial was properly conducted and there was no need to

expend further judicial resources retrying liability.

In some situations. however, the seventh amend-

ment right to a jury trial is implicated if the issues in the

separate retrial on damages are so interwoven with the

issues of liability already tried that it is unjust to try the

damages separately. Gasoline Prods. Co. v. Champlin,

283 U.S. 494, 500 (1931). In this case, it might be ar-

gued that the issues are interwoven if the theory of dam-

ages relied upon was inconsistent with the liability the-

ory, thus requiring a single jury to resolve the inconsist-

ency. We believe, however, that the issues are not inter-

woven because the theory of damages was consistent

with the theory of liability.

Kaiser claims that Dr. Bowman, the plaintiffs’ expert

witness at the damages trial, contradicted the theory that

the price squeeze was deliberately caused by Kaiser and

not the result of natural market forces. First, Dr. Bow-

man testified that he could estimate a free market price

for pipe by using the price of coil as a base figure and

then adding to the coil price a certain percentage of the

base figure to account for fabrication costs and a reason-

able profit. In choosing a base figure, Dr. Bowman used

the actual coil prices charged by Alcoa and Reynolds

A-22 Appendix B

from 1973 to 1977. Thus, Kaiser charges, the implication

of Dr. Bowman's testimony is that the coil prices would

have been the same in a free market. However, the the-

ory of liability was not that the prices of the raw materials

were too high, but that Kaiser deliberately caused a price

squeeze condition. The jury did not find that there was

a price conspiracy among Kaiser, Alcoa, and Reynolds.

The plaintiff was entitled to show that in a free market,

either the pipe prices would have been higher or the raw

material prices lower during the period of the price

squeeze. In constructing a hypothetical world free of the

defendants’ exclusionary activities, the plaintiffs are

given some latitude in calculating damages, so long as

their theory is not wholly speculative. See Litton Systems

vu. American Telephone and Telegraph Co _, 700 F.2d 785,

822-23 (2d Cir. 1983), cert. denied, U.S. , 104

S.Ct. 984 (1984). Dr. Bowman anchored his theory to the

actual prices of coil over a five year period. If he had con-

structed a hypothetical price for coil to calculate a hypo-

thetical price for pipe, his theory would have been far

more speculative. Under present circumstances, we do

not believe that the implications of Dr. Bowman's testi-

mony were so inconsistent with the plaintiffs’ theory of

liability as to warrant a new trial.

The second set of statements that Kaiser alleges con-

tradicts and disproves the price squeeze theory was a

statement by Dr. Bowman that the free market price of

pipe from 1973 to 1977 would have been “substantially

similar” to the actual prices for pipe charged by Kaiser.

Dr. Bowman, however, testified also that actual pipe

prices were “depressed” and “tended to be lower” than

this hypothetical free market pipe prices. App. at 6520

and 6531. If actual pipe prices were lower than the hy-

pothetical prices, then his testimony was consistent with

the liability theory. The only inconsistency is that Dr.

Bowman appeared to contradict himself when he testi-

fied that the prices were “substantially similar.”

Appendix B A-23

Dr. Bowman's statements are not necessarily incon-

sistent. His statements applied to a five year period of

time. Pipe prices may have been fair over a five year pe-

riod and still have been depressed during the shorter

time period involved in the price squeeze. Further, even

if Dr. Bowman's testimony was internally inconsistent, it

was an inconsistency entirely before the damages jury.

Dr. Bowman's credibility was properly before the dam-

ages jury and is not grounds for a new trial.

VI. Bifurcation of Trial on Liability and Damages

Kaiser next argues that because the liability jury did

not distinguish among the alleged anticompetitive acts

in its determination of causation, the damages jury could

not know from what acts they could attribute damages.

Thus, Kaiser contends, the issues on liability could not

be separately from the issues on damages. We believe

that Kaiser has confused the questions of causation and

calculation of damages. Causation is an element of lia-

bility in this case. See REA v. Ford Motor Co., 560 F.2d

554, 557 (3d Cir.), cert. denied, 434 U.S. 923 (1977).

The liability jury properly found causation from only

those acts which could evince the defendant's willful ac-

quisition or maintenance of a monopoly. See Brunswick

Corp. v. Pueblo Bowling Mat, Inc., 429 U.S. 477, 489

(1977). In finding causation, the jury must find the

nexus between the act and the injury. Once a jury has

properly found causation of antitrust injury from unlaw-

ful activity, however, the damages in this case may be

determined without strict proof of what act caused which

injury as long as the damages are not based upon spec-

ulation or guesswork. MCI Communications v. American

Tel. & Tel. Co., 708 F.2d 1081, 1161 (7th Cir. 1983), cert.

denied, US. __, 104 S.Ct. 234 (1983).

Here, this result follows because it would be ex-

tremely difficult, if not impossible, to segregate and at-

tribute a fixed amount of damages to any one act. The

A-24 Appendix B

plaintiffs’ basic injury was that Columbia was driven out

of business. Further, the theory of the section two vio-

lation here is not that any one act in itself is unlawful, but

that all the acis taken together show the willful acqui-

sition or maintenance of a monopoly which damaged and

forced Columbia out of business. When the antitrust in-

jury is of an indivisible nature, the courts have permitted

a relaxed standard of proof in calculating damages. J.

Truett Payne Co. v. Chrysler Motor Corp., 451 U.S. 557,

565-67 (1981); Continental Ore Co. v. Union Carbide &

Carbon Corp., 370 U.S. 690, 698 (1962). When the an-

titrust injury is of an indivisible nature, and the jury

properly found that that injury was caused by the de-

fendants’ monopolization or attempt to monopolize, and

when the plaintiffs’ proof of damages does not require

distinguishing the various acts by the defendants, then it

is unnecessary to segregate the damages according to

the specific causes, and therefore, the issues in the lia-

bility trial are not so interwoven with the issues in the

damages trial as to require a retrial of both.

VIL. Prejudicial Conduct During the Damages Trial

Kaiser contends that the conduct of the damages

trial was prejudicial to Kaiser because the jury was in-

formed about some of the antico. vetitive acts alleged by

the plaintiff. It is of course necessary, when conducting

a bifurcated trial before two juries, to inform the second

jury about some of the evidence and results of the first

trial. MCI v. American Tel. & Tel. Co., 708 F.2d at 1168.

This is not to say that the second jury was to evaluate or

decide factual issues that were involved in the first trial.

In this case, antitrust matters are extremely complex,

and it would have been unfair not to give the jury some

background material on the trial. Questions of trial con-

duct are committed to the discretion of the trial court.

The trial court attempted to conscientiously balance the

need of the jury to know avout the case and prejudice to

Appendix B A-25

the defendant. We believe that the district court acted in

an exemplary manner in its conduct of an extremely long

and complicated trial and did not abuse its discretion in

permitting the jury to hear some explanation of the find-

ing of liability.

Kaiser also contends that plaintiffs’ counsel repeat-

edly flouted the district court's rules and referred to prej-

udicial matters. The district court, after reviewing the

entire record, concluded that it was not sufficiently prej-

udicial to warrant a new trial. We find no abuse of dis-

cretion. See Pitchford v. Pepi, 531 F.2d 92, 106 (3d Cir. ),

cert. denied, 426 U.S. 926 (1976).

VIIl. The Calculation of Damages

With respect to the separate trial of damages, Kaiser

raises several issues. First, Kaiser contends that its mo-

tion for JNOV should have been granted because the

projected market share analysis used for plaintiffs’ cal-

culation of lost profits failed to account for competition

by other independent pipe fabricators. Kaiser further

contends that the failure of an expert to account for sig-

rificant factors in his analysis was an error of law and

subject to plenary review in this court. Presumably, Kai-

ser must be suggesting that the testimony of plaintiffs

expert is inadmissible because it is unsupported; and if

it were struck, then the remaining evidence would be

insufficient to support the damages verdict and Kaiser

would be entitled to a JNOV.

We note that Kaiser neither raised this issue specif-

ically in a motion for a directed verdict, nor did it object

to the jury instructions on this matter. Thus, Kaiser is

not entitled to a JNOV, nor may it raise this issue on

appeal as an error of law. See infra Section IX, Fed. R.

Civ. P. 50(b), 51; Abraham v. Pekarski, 728 F.2d 167,

172 (3d Cir.), cert. denied, _§_=s=~aU.S. _, 104 S.Ct.

3513 (1984); Herman v. Hess Oil, 524 F.2d 767 (3d Cir.

1975).

A-26 Appendix B

Even if, however, we were to construe Kaiser's mo-

tion for a directed verdict to have raised this question, we

would not hold that the JNOV should have been granted.

The testimony of Dr. Bowman made clear that he was

aware of, and accounted for the presence of other alu-

minum pipe fabricators. His testimony was supported,

and therefore, admissible. At best, Kaiser’s contentions

go to the weight of the evidence and not its admissibility.

That, however, was for the jury. Pitchford v. Pepi, Inc.,

531 F.2d 92, 108-09 (3d Cir. 1976).

As to Kaiser’s remaining contentions on damages,

we have examined the record and conclude that the dis-

trict court did not err in allowing damages for both lost

profits and actual losses; nor did the district court err in

failing to instruct the jury on plaintiffs’ duty to mitigate

damages; nor did the district court err in permitting the

jury to consider damages for lost profits on projected

sales outside of the geographic and product markets stip-

ulated for liability purposes.

IX. The Plaintiffs’ Appeal

The district court granted, in part, Kaiser’s motion

for JNOV as to one aspect of damages. It eliminated the

jury award for diminution of going concern value as in-

appropriate as a matter of law when Columbia had not

literally gone out of business as of the date used in the

damage calculation.

The plaintiffs contend on their appeal that a grant of

a JNOV was improper when Kaiser failed to assert this

ground in its motion for a directed verdict at the close of

all the evidence. See Fed. R. Civ. P. 50(b). Kaiser made

an oral motion for a directed verdict at the conclusion of

all the evidence on damages. Kaiser specifically asserted

three grounds for a directed verdict: (1) the evidence

failed to show that the Columbia was injured by Kaiser;

(2) the damage calculations included projected sales

outside of the stipulated geographic market; and (3)

Appendix B A-27

there was insufficient evidence of a price squeeze. Kaiser

never raised in its motion for a directed verdict the con-

tention that damages based on a diminution of going

concern value may not be awarded in this case.

The specific grounds for a J) NOV must be asserted in

the motion for a directed verdict. Abraham v. Pekarski,

728 F.2d 167, 172 (3rd Cir. ), cert. denied, U.S.

.104S8.Ct. 3513 (1984). If the issue was not raised in the

motion for the directed verdict at the close of all the ev-

idence, it is improper to grant the JNOV on that issue. Id.

See also Mallick v. IBEW, 644 F.2d 228, 233-34 (3rd Cir.

1981); Systemized of New England, Inc. v. SCM, Inc..

732 F.2d 1030, 1035-36 (1st Cir. 1984); U.S. Industries,

Inc. v. Blake Const. Co., Inc., 671 F.2d 539, 548 (D.C.

Cir. 1982).

The requirement that the specific issue be raised

first in the motion for a directed verdict, before the issue

is submitted to the jury, affords the non-moving party an

opportunity to reopen its case and present additional ev-

idence. Lowenstein v. Pepsi-Cola Bottling Co., 536 F.2d

9, 11 (3rd Cir. ), cert. denied, 429 U.S. 966 (1976). Fur-

ther, when a trial court decides an issue after it was prop-

erly submitted to the jury, it may deprive the non-moving

party of his seventh amendment rights. Id.

In this case, Kaiser contends that it raised the issue

in a colloquoy with the district court concerning jury in-

structions. A request for jury instructions may suffice to

fulfil! the requirement that a motion for a directed verdict

be made before granting a JNOV only if it is clear that the

district court treated the request as a motion for a di-

rected verdict and ruled on it as such. Mallick, 644 F.2d

at 224; Lowenstein, 536 F.2d at 11. We have studied the

record in great detail at the places noted in Kaiser's brief

and we can find nothing that would have put the plain-

tiffs or the district court on notice that after all the evi-

dence had been presented Kaiser was raising an issue as

to whether damages for diminution of going concern

value could be awarded. The record shows that Kaiser

A-28 Appendix B

only objected to the wordin, of a jury instruction and

agreed that the instruction on diminution of going con-

cern value could be submitted to the jury after it was

reworded. App. at 7529-31.

Finally, even if, contrary to our conclusion, we were

to assume that Kaiser had properly raised the issue in its

motion for a directed verdict, it was error for the district

court to have ruled for the defendants on this aspect of

the motion for a JNOV. The plaintiffs’ theory at trial was

that damages for diminution of going concern value

could be awarded as of the date that Columbia had ef-

fectively gone out of business. The plaintiffs argued to

the district court tnat Columbia had ceased manufactur-

ing operations prior to May 31, 1977 and would have

gone out of business by that date because of Kaiser’s

anticompetitive activities if Columbia had not received

an Economic Development Administration loan from the

United States Department of Commerce. The loan per-

mitted Columbia to continue operations for a few months

before it ultimately went out of business and liquidated

its assets. The plaintiffs presented evidence to support

their theory and the jury was instructed, without objec-

tion, as to the plaintiffs’ theory.

Kaiser neither submitted contrary jury instructions,

nor did it object to the jury instructions as required by

Fed.R.Civ.P.51. The district court also specifically asked

counsel for Kaiser whether he objected to the plaintiffs’

legal basis for seeking damages for diminution of going

concern value, and Kaiser’s counsel raised no objection

to the submission of the issue to the jury. App. at

7529-7531.4

4. For example. the plaintiffs submitted a proposed jury in-

struction which st. td, inter alia, “An antitrust plaintiff may recover

both lost profits and the value of the business as a going concern as

of the date the business terminated or made effectively dormant by

the actions of defendants.” App. at 5601. Kaiser’s counsel, when

asked by the district court if he hac any objections to the instruction

replied. “I don’t really have an objection to the description of what

— Rite ete eee

Appendix B A-29

By granting Kaiser’s motion for JNOV, the district

court effectively repudiated its own jury instructions

even though Kaiser had not challenged the legality of the

plaintiffs’ damages theory. Having properly submitted

the issue to the jury, it was error to rule on a JNOV that

the plaintiffs, as a matter of law, could not recover for

diminution of going concern value on the ground that

Columbia had not actually liquidated on the date used for

the damages calculation.

We conclude that Kaiser failed to preserve for JNOV

consideration the ground relied upon by the district court

to grant the JNOV, and that the district court incorrectly

decided that the jury determination was erroneous. To

the extent that the district court's order granted the mo-

tion for a JNOV, it will be reversed.

the plaintiff is seeking to do here, your Honor. It is just the way this

is phrased. It is not really an objection to the concept of the charge.”

App. at 7531.

A-30 Appendix B

X. Conclusion

The order of the district court granting in part the

defendant’s motion for a JNOV will be reversed. The

judgment entered by the district court on January 18,

1983 will be vacated and the judgment entered on De-

cember 4, 1981 will be reinstated, and that judgment

will be affirmed.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

APPENDIY C

Judgment of the Court of Appeals

United States Court of Appeals

FOR THE THIRD CIRCUIT

Nos. 83-1047 & 83-1079

BONJORNO, JOSEPH A., KERR, GEORGE M..

and CLISBY, BARBARA K., as Transferrees

in Liquidation and Dissolution of

Columbia Metal Culvert Co., Inc.,

Appellants and Cross-Appellees

v.

KAISER ALUMINUM & CHEMICAL CORPORATION,

KAISER ALUMINUM & CHEMICAL SALES, INC.

ROBERT A. KENNEDY and

KENNEDY CULVERT & SUPPLY COMPANY and

ROBERT KENNEDY

Kaiser Aluminum & Chemical Corporation and

Kaiser Aluminum & Chemical Sales, Inc.,

Appellees and Cross-Appellants

(D.C. Civil No. 74-0122)

ON APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Present: SEITZ, GIBBONS and ROSENN, Circuit Judges

A-31

A-32 Appendix C

JUDGMENT

This cause came on to be heard on the record from

the United States District Court for the Eastern District

of Pennsylvania and was argued by counsel September

13. 1983.

On consideration whereof, it is now here ordered and

adjudged by this Court that the order of the said District

Court, entered January 18, 1983, which granted in part

the defendant’s motion for a judgment n.o.v. be and the

same is hereby reversed. It is further ordered and ad-

judged that the judgment of the said District Court en-

tered January 18, 1983, be and the same is hereby va-

cated and the cause remanded to the said District Court

which is directed to reinstate the judgment entered De-

cember 4, 1981. which is affirmed. Costs taxed in favor

of appellants and cross-appellees. All the above in ac-

cordance with the opinion of this Court.

ATTEST

Clerk

December 27. 1984

ee Ea ee

APPENDIX D

Memorandum and Order of the District Court

June 18, 1981

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOSEPH A. BONJORNO, : CIVIL ACTION

GEORGE M. KERR, JR. and

BARBARA K. CLISBY,

as Transferrees in Liquidation

and Dissolution of Columbia Metal :

Culvert Co., Inc.

v.

KAISER ALUMINUM &

CHEMICAL CORP.

AND KAISER ALUMINUM & .

CHEMICAL SALES, INC. No. 74-122

MEMORANDUM AND ORDER

NORMA L. SHAPIRO, J. JUNE 18, 1981

INTRODUCTION

Post-trial motions in this antitrust litigation are be-

fore the court pursuant to a limited remand order of the

United States Court of Appeals for the Third Circuit. De-

fendants Kaiser Aluminum & Chemical Corp. (“KACC”)

and Kaiser Aluminum & Chemical Sales, Inc. (““KACSI’)

move for a judgment notwithstanding the verdict or, in

the alternative, for a new trial, following a jury verdict in

A-33

A-34 Appendix D

favor of Columbia Metal Culvert Co., Inc. (“Columbia”)!

finding KACC and KACSI in violation of Sections | and

2 of the Sherman Act, 15 U.S.C. §§1 and 2, and award-

ing damages in the sum of $1,815,000. Judgment was

entered for the plaintiff in the trebled amount of

$5,445,000.

Columbia originally brought suit against KACC and

KACSI and former Columbia salesman Robert A. Ken-

nedy and the company he owned, Kennedy Culvert and

Supplv, an independent distributor of culvert and drain-

age pipe manufactured by KACSI. The complaint al-

leged violations of Sections | and 2 of the Sherman Act,

15 U.S.C. §§1 and 2, and Section 3 of the Clayton Act, 15

U.S.C. $15. At the jury trial held before the Hon. Edward

N. Cahn, a directed verdict for all defendants was en-

tered at the close of Columbia’s case on the ground that

Columbia had not made out a prima facie case of con-

spiracy in restraint of trade between KACC/KACSI and

the Kennedy defendants. The district court further

found that the product market was not limited to alumi-

num culvert pipe as Columbia had maintained but in-

cluded culvert pipe whether made from either aluminum

or steel. Since the Kaiser share of the alumixum and

steel culvert pipe market was concededly not significant,

the court held that Kaiser could not have monopoly

power. The court fizcther found that no prima facie vio-

lation of Section 3 of the Clayton Act had been proven.

See, Columbia Metal Culvert Co., Inc. v. Kaiser Alumi-

num and Chemical Corp., Civil Action No. 74-122 (July

20, 1977).

On appeal by Columbia, the Third Circuit reversed

in part and affirmed in part. The Court affirmed the grant

of a directed verdict in favor of the Kennedy defendants

1. Upon liquidation of Columbia, all of its claims, rights and

interest in this litigation were assigned to its shareholders, Joseph A.

Boniorno, George M. Kerr, Jr. and Barbara K. Clisby; the current

named plaintiffs were substituted as parties pursuant to

Fed. R.Civ.P. 25(c) by the court’s Order of May 30, 1980.

Appendix D A-35

on the issue of conspiracy. The Court alse upheld the

district court’s finding that no prima facie case of a

Clayton Act violation had been proven. However, the

grant of a directed verdict in favor of defendants KACC

and KACSI was reversed. The Court held that:

(1) There was sufficient evidence to allow a

jury reasonably to conclude that a relevant market

for Sherman Act purposes was composed of alumi-

num culvert only rather than culvert of either alu-

minum or steel;

(2) There was sufficient <v:dence to go to the

jury on the charge that KACSI and KACC violated

§2 of the Sherman Act by monopolizing or attempt-

ing to monopolize the aluminuii culvert market;

and

(3) There was sufficient evidence to go to the

jury on the charge that KACC and KACSI conspired

in restraint of trade in violation of §1 of the Sherman

Act.

Columbia Metal Culvert Company, Inc. v. Kaiser Alumi-

num & Chemical Corp., 579 F.2d 20, 37 (3d Cir. 1978),

cert. denied, 439 U.S. 876 (1978).

A bifurcated trial before this court resulted in a de-

termination of defendants’ liability in answer to special

interrogatories (attached to this opinion as Appendix A);

the jury found that the relevant product market was for

aluminum culvert pipe, that defendants KACC and

KACSI had monopolized, attempted to monopolize, and

conspired to monopolize this market in violation of Sec-

tion 2 of the Sherman Act; that KACC and KACSI had

conspired in violation of Section 1 of the Sherman Act;

and that Columbia had been injured by the unlawful acts

of KACC and KACSI.

The jury then awarded damages in the amount of

$1,048,000 for lost profits, $710,000 for the destruction

of Columbia as a going concern, and $57,000 for the cost

A-36 Appendix D

of extra metal (relating to Columbia's spiral machine for

making pipe), a total of $1,815,000, which trebled re-

sulted in a judgment of $5,445,000. Following a second

appeal, the case was remanded to the district court for

disposition of post-trial motions.? (Docket Entry #426).

Columbia having won a jury verdict at trial, we consider

the following facts in the light most favorable to plaintiff.

Columbia was a company specializing in the man-

ufacture and marketing of aluminum culvert pipe with a

plant in Vineland, New Jersey. KACC manufactures alu-

minum sheet and coi! from which aluminum culvert

pipe is constructed and conveys these materials to its

wholly-owned subsidiary KACSI, which in turn sells the

sheet and coil to pipe manufacturers such as Columbia.

KACSI also fabricates and sells aluminum culvert pipe

itself in competition with the fabricators to whom it sup-

plies sheet and coil.

These three entities had a successful business rela-

tionship for many years during which Kaiser was

Columbia's main material supplier. Beginning in 1971, a;

four-pronged effort took place to put Columbia out of

business in retaliation for Columbia's placing of alumi-

num orders with Reynolds Aluminum. This

KACC/KACSI effort included a refusal to sell to Colum-

bia, a decision to loeate a new culvert manufacturing

plant within fifty miles of Columbia's plant, setting up

Robert A. Kennedy, Columbia's best salesman, in busi-

ness as an independent distributor of KACSI products,

and a “price squeeze” by KACC and KACSI, accom-

plished by transferring sheet and coil from KACC to

KACSI below cost. This allowed KACSI to make a profit

on sales of pipe at prices which Columbia could not

match; the price of aluminum was increasing and the

supply of the metal was severally limited.

2. A direct appeal was taken because defendants failed to file

post-trial motions timely. The Court of Appeals, upon defendants’

motion, allowed a limited remand to this court to have the benefit of

the trial judge's views upon the issues in contention.

eet ee ee

a

Appendix D A-37

The Kaiser defendants move this court for a judg-

ment notwithstanding the verdict, on the ground that

Columbia produced insufficient evidence to support the

verdict in several material respects. In the alternative,

defendants move for a new trial on the ground that the

verdict was contrary to law, against the weight of the

evidence, and that the court erred in certain evidentiary

rulings, in jury instructions, and in submission of certain

interrogatories to the jury.

In ruling on a motion for judgment N.O.V., “it is the

duty of the trial court to take that view of the evidence

most favorable to the party against whom the motion is

made, and from that evidence, and the inierences rea-

sonably and justifiably to be drawn therefrom, determine

whether or not, under the law, a verdict might be found

for him.” 6A Moore’s Federal Practice §59.08[5} at pg.

59-152 (1979). On the other hand, a motion for new trial,

on the ground that the verdict was against the weight of

the evidence, is addressed to the sound discretion of the

trial court. Id.

POST-TRIAL MOTIONS — LIABILITY

Defendants’ contentions must fail in view of the Cir-

cuit Court's opinion in Columbia Metal Culvert Com-

pany, Inc. v. Kaiser Aluminum & Chemical Corporation,

579 F.2d 20 (3d Cir. 1978), cert. denied, 439 U.S. 876

(1978) and the doctrine of the law of the case.

As noted in Otten v. Stonewall Ins. Co., 538 F.2d

210, 212 (8th Cir. 1976):

This court has repeatedly held that the decision on

former appeal is the ‘law of the case’ on a question

presented in that former appeal, unless the evidence

introduced at the subsequent trial is substantially

different from that considered on the first appeal,

and must be followed in all subsequent proceedings

in such case in both district and appellate courts,

unless the decision is clearly erroneous and works

A-38 Appendix D

rnanifest injustice. (emphasis supplied, citations

omitted ).

See, e.g., United States v. American Bag & Paper Corp.,

609 F.2d 1066, 1067, n.3 (3d Cir. 1979) (determination

by panel of Court of Appeals was law of the case and later

panel was bound by it); Skehan v. Board of Trustees of

Bloomsburg State College, 590 F.2d 470, 482 (3d Cir.

1978), cert. denied, 444 U.S. 832 (1979) (Court of Ap-

peals’ prior opinions were law governing the case with

respect to question of whether it was permissible to re-

mand plaintiff's due process claims to district court and

district court’s observations on remand were of no ef-

fect); Chlystek v. Kane, 540 F.2d 171, 173 (3d Cir. 1976)

(Court of Appeals governed by law oi the case from prior

appeal with respect to whether a substantial federal

question was present); Spock v. David, 502 F.2d 953,

955 (3d Cir. 1974), reversed on other grounds, 424 U.S.

828 (1976) (on essentially the same record as was before

the Court of Appeals prior to remand, both the district

court on remand and the panel of the Court of Appeals on

appeal following remand were bound, with respect to is-

sue decided by the Court of Appeals prior to remand, by

decision on that issue as the law of the case); A.M. Webb

& Co. v. Robert P. Miller Co., 176 F.2d 678, 680-81 (3d

Cir. 1946) (on trial after remand of case, questions set-

tled by Court of Appeals could not be relitigated); Moyer

vu. Aetna Life Insurance Co., 126 F.2d 141, 143 (3d Cir.

1942) (law of case on prior appeal as to sufficiency of the

evidence on certain points precluded reconsideration

thereof upon defendant's appeal of district court denial of

judgment N.O.V. after second trial).

This court is bound by the Third Circuit’s decision

on issves presented and decided explicitly or implicitly in

the prior appeal. See, Todd and Company, Inc. v. SEC,

637 F.2d 154 (3d Cir. 1980). For this reason we reject

Kaiser's initia! contention in its brief in support of post-

trial motions, that because KACSI is “wholly owned and

Appendix D A-39

controlled” by KACC (Defendant's Brief in Support of

Motions at 2), the two corporate entities are incapable of

a conspiracy for lack of the requisite plurality of actors.

The Third Circuit explicitly rejected this argument as

“not well founded in law,” and reaffirmed the viability of

the “intra-enterprise conspiracy theory” as applied to

separa Corporate eniities. Columbia Metal, supra at 33.

See, Cromar Company v. Nuclear Materials and Equip-

ment Carn., 543 F.2d 501, 511 (3d Cir. 1976) (absence

of the appearance of competition between parent corpo-

ration and wholly-owned subsidiary not a bar to Section

1 Sherman Act liability.) This court may not reconsider

that determination.

| A similar fate befalls Kaiser's contention that there

was insufficient evidence to support a finding of an un-

lawful conspiracy between KACC and KACSI, insuffi-

cient evidence to support a finding that KACC or KACSI

) had a specific intent to monopolize or to wilfully main-

) tain monopoly power, insufficient evidence to support a

finding that the relevant product market was aluminum

culvert and drainage pipe alone, and insufficient evi-

dence to support the court’s charge on the price squeeze

issue. The Third Circuit explicitly found the evidence

| sufficient to allow a jury to find for Columbia on each of

these points. Columbia, supra at 37.

The law of the case doctrine precludes a reconsid-

eration of that determination unless the evidence at the

second trial was substantially different from that con-

sidered by the appellate court. Otten, supra. However,

the evidence which the Court of Appeals found sufficient

as to each of these points was substantially repeated in

the second trial.

Product Market

The evidence persuasive to the Third Circuit on the

product market issue, Columbia, supra at 29-31, essen-

tially repeated itself at the second trial. For example,

A-40 Appendix D

there again was testimony that aluminum is a specialty

material’ and that there are specialized vendors of alu-

minum products.’ Several witnesses testified that the

physical properties of the three types of manufactured

culvert pipe, steel, concrete and aluminum, differ signif-

icantly.° Because of these differences, evidence at the

second trial again showed that specifications for con-

struction projects require one type of culvert rather than

another.® From this evidence a jury might infer that dis-

tinct markets exist for aluminum, steel and concrete

pipe, at least from the contractor's point of view. See, Co-

lumbia, supra, at 28.

The record here shows, as did the record before the

Court of Appeals, that a jury would not act unreasonably

in finding that, “patterns of action on the part of engi-

neers who specify the type of culvert to be used establish

aluminum as a separate market.” Columbia. supra at 28.

Again, there is testimony that price was not a crucial fac-

tor in these engineering decisions’ and that the three

culvert products are neither interchangeable nor in com-

petition from an engineering standpoint.*®

3. E.g.,N.T. 2483 (Bonjorno)(*.. . aluminum was always a spe-

cialty product. It was during the sixties, and it was during the early

seventies, and it was at the period and point in time that we're talk-

ing about... .”); N.T. 681 (Arvay) (“.. . aluminum again becomes

a very highly specialized product... .”); See, Plaintiff's Brief in Op-

position to Defendants’ Motions at 9.

4. E.g., N.T. 2848 (specialized in aluminum “as far as a storm

drainage product....”); N.T. 17 (Bonjorno).

5. E.g., N.T. 874, 879, 882-883, 885-886, 888-889, 893-894

(Elam). See, Plair.tiff's Brief in Opposition to Defendants’ Motions at

9.

6. E.g., N.T. 904, 915, 916 (Elam); N.T. 1698 (Price).

7. E.g., N.T. 919 (Elam) (“... you are going to specify that

product in most instances where price is not even a factor . . .”);

N.T. 680 (Arvay)(“. . . as far as the price situation is concerned, that

is not the concern to them... .”); N.T. 1701 (Price); See, Plaintiff's

Brief in Opposition to Defendants’ Motions at p. 8.

8. E.g., N.T. 1408 (Chafin) (“... it [aluminum] has inherent

characteristics which are different from the other materials . . .”’);

08 Fa 8 oe fee

Appendix D A-41

Defendants also argue that steel and aluminum cul-

vert may share the same production facilities as an

indicia of products in the same market for Sherman Act

purposes. The fact that the same production facilities

can be used to turn out steel and aluminum culvert and

even the fact that companies often manufacture both

products is insufficient to preclude the existence of sep-

arate markets as a matter of law; Columbia, supra, at 29

n.30.

Defendants vigorously assert that the evidence does

not support the jury’s finding of an aluminum cuivert

product market. (See, Defendants’ Brief in Support of

Motions at pp. 99-109). Defendants point to extensive

testimony, particularly that of defendants expert, Dr.

Epstein, supportive of their view. But the jury rejected

defendants’ testimony on these points and accepted that

of the plaintiff; the Court of Appeals has already deter-

mined that plaintiff's evidence would reasonably support

such a jury finding.

Thus this court accepts the jury finding of an alu-

minum culvert pipe product market, as sufficiently sup-

ported by the evidence.

Unlawful Conspiracy Between KACC and KACSI

The evidence found sufficient to prove unlawful

conspiracy between the defendants, Columbia, supra at

34-35, was also placed before the jury in the second trial.

Again there was evidence that KACC and KACSI com-

bined to impose a price squeeze. For example, there was

evidence from which the jury could infer that Collins of

N.T. 918 (Elam):

“Q. Now taking your professional group. the Drainage En-

gineers and engineers who design drainage systems and design

culvert and specify different commodities of culvert. in your

opinion, does that group view these products. steel, aluminum

and concrete as interchangeable?”

“A. No, I don’t think they do.”

A-42 Appendix D

KACSI had no part in setting the specification price of

coil, which was a KACC price (N.T. 171, 1972, 1957),

that Collins was chastised by KACC for not getting prices

up high enough (P-950, N.T. 2277, 2281, 2560), that

Collins reported to the Sheet and Plate Division of KACC

(N.T. 2307, 1718-20), that someone higher than Collins

was responsible for the price increase crucial to this lit-

igation (N.T. 1972), that KACC transferred coil to

KACSI below cost (N.T. 1964, P-823) and that Collins’

request for a plant in New Castle, Delaware was ap-

proved by KACC (N.T. 1792, 2114, 2317. 2372, 1976,

P-204, 210). See, Plaintiffs Brief in Opposition to De-

fendants’ Motions at pp. 12-13. From this and other in-

formation adduced at trial, the jury might again infer

that “the pricing policies of KACSI were not independent

... but rather arrived at jointly with KACC.” Columbia,

579 F.2d at 35. Although there was evidence from which

a contrary finding might have been made (see, defend-

ants’ Brief in Support of Motions at pp. 32-59), we find

the evidence was sufficient to support the jury s conclu-

sion that KACC and its wholly-owned subsidiary,

KACSI, conspired in violation of the Sherman Act.

Intent to Monopolize

Defendants argue that plaintiff's evidence was insuf-

ficient to support the jury’s finding that the Kaiser de-

fendants monopolized or attempted to monopolize in vi-

olation of Section 2 of the Sherman Act (see, Defendants’

Brief in Support of Motions at pp. 60-99). Judge Cahni’s

directed verdict for defendants on this issue at the first

trial resulted from his related finding that steel and alu-

minum, rather than aluminum culvert pipe alone, must

constitute the relevant product market. The Third Cir-

cuit, as discussed above, found that it was not unrea-

sonable to conclude that culvert pipe alone constituted a

relevant market, and therefore that “the foundation of

the directed verdict on the §2 count collapses.” Colum-

oe taser

Appendix D A-43

bia, 579 F.2d at 31. The Court of Appeals also stated that

there was sufficient evidence to infer that KACSI, an en-

tity controlling 80% of the market, attempted to drive

Columbia out of business. Columbia, 579 F.2d at 31.

That same evidence persuasive to the Court of Appeals

was presented to the jury at the second trial. Holmes

Collins’ threat to place an aluminum culvert plant near

Columbia if Columbia purchased from Reynolds, and the

later placement of a plant in New Castile, Delaware (N.T.

1228) that was originally planned for Virginia (N.T.

1533, 1540-1541, 1730), were submitted to the jury.

Again, there was evidence that. “transportation of cul-

vert is a significant item of expense for the product in

question and a local manufacturer of culvert has an ad-

vantage over one whose plant is at a distance from the

place of delivery” (Columbia, supra at 31). from which

the jury might infer i») entional harm caused Columbia

by Kaiser’s placement of its plant (N.T. 2317-2318.

2840). Again, an inference could be drawn from evi-

dence that the Delaware KACSI plant sold culvert at

.ower prices than other plants even though Delaware

costs were no lower (N.T 1734, 2544-2545), that KACC

transferred sheet and cecil to KACSI at an accounting

price less than production cost and well below market

price (N.T. 1964, 3654). and that Collins of KACSI ex-

tended credit to Kennedy, formerly a Columbia sales-

man, against the recommendation of the KACSI credit

department (N.T. 1849-1863, 2525-2529. 2842-2849.

2854, 2997, Exhibits P-75, P-24. P-5). The Arvay testi-

mony, specifically noted by the Third Circuit. Columbia.

supra at 31, n.43, again supported plaintiffs theory

(N.T. 719, 729, 752). Finally. an inference that Kaiser

controlled more than 80% of the relevant market was

again reasonably supported by the evidence. | N.T.

73-75, 780, 1261. 180°. 1810. 1814. 2509. Exhibit P-

201). Therefore. the evidence was sufficient to support

A-44 Appendix D

the jury’s conclusion that the defendants monopolized or

attempted to monopolize in violation of Section 2 of the

Sherman Act.

In summary, on the liability issues, the evidence on

retrial was not substantially different from that consid-

ered by the appellate court and must be deemed suffi-

cient to support the jury’s finding in favor of the plaintiff.

Moreover, not only was the evidence sufficient, the court

in the exercise of its discretion does not find the jury’s

determination so against the weight of the evidence as to

shock the conscience of the court. Therefore, a new trial

would be denied on all issues of liability. The court has

carefully considered all other grounds raised by defend-

ants in their motion for judgment notwithstanding the

verdict and, with the exception of ground eleven (11)

relating to damages and discussed infra, determines

them to be without merit.

DAMAGES

The trial of this matter having been bifurcated, after

the jury verdict on liability against defendants, two days

of testimony on damages followed; the jury, again upon

answers to special interrogatories (attached hereto as

Appendix B), then found damages in favor of plaintiff in

these amounts: |) $57,000 for increased costs of metal;

2) $1,048,000 for lost profits; and 3) $710,000 for the

reduction in the value of Columbia as a going concern.

The total damage award by the jury was $1,815,000. The

jury’s award was trebled in accordance with the remedy

provided in Section Four of the Clayton Act, 15 U.S.C.

§15; the final judgment in plaintiffs favor is in the

amount of $5,445,000.

Defendants raise numerous objections as to the

award of damages.

="

Rca tony

i Ort aren Carew e fy

See ete cc 0 Sein aca I ea ne a eed nn:

Appendix D A-45

Causation

Defendants argue that plaintiff did not establish the

requisite causal link, under Section Four of the Clayton

Act, between the financial damage suffered by Columbia

and the defendants’ violation of the antitrust laws. De-

fendants assert that they are entitled to judgmert in

their favor if the damages to the plaintiff were caused in

whole or in part by factors other than defendants’ viola-

tions of the antitrust laws.? Defendants assert that

Joseph Bonjorno, Columbia’s chief witness and share-

holder, on cross-examination identified several reasons,

other than defendants’ activities, for losses suffered by

Columbia during the relevant time period. Among those

causes cited by defendants are: the recession in the con-

struction industry,!° a nationwide aluminum shortage, !!

the inability of Columbia to obtain price protection from

suppliers,'2 and the unstable financial condition of

Columbia's chief financial backer, George Kerr. !?

Damages attributable to an antitrust violation are re-

coverable even when factors other than defendant's

wrongful acts alone may have contributed to the

plaintiffs injury. 15 ANTITRUST LAWS AND TRADE

REGULATION §115.01[2] (1978). In this case there

was sufficient evidence, if accepted by the jury, to show

that Columbia’s business decline was caused by Kaiser's

illegal activity. Mr. Bonjorno stated repeatedly, both on

direct and on cross-examination, that the injurv to Co-

lumbia was caused by Kaiser’s illegal activity.!+ He also

stated that in projecting damage figures he had censid-

ered the legal competi.ion of others in the marketplace.

(N.T. 3971). He further stated that the damage projec-

9. See, Defendants’ Brief in Support of Motions tor Jude:nent

N.O.V. or for a New Trial at p. 11 (citing cases).

10. See, N.T. 3903-3905.

11. See, N.T. 3908-3909.

12. See, N.T. 3911-3918.

13. See, N.T. 3919-3920.

14. E.g., N.T. 3864, 3865, 3902. 3904.

A-46 Appendix D

tions did not go beyond a point where it was simply too

difficult to determine “who was responsible for what”

(N.T. 3858). When cross-examined as to other possible

causal factors in Columbia's decline, Bonjorno either as-

serted that these factors were not significant or that

Kaiser’s illegal activity had made Columbia particularly

vulnerable to troubles that, absent such wrongdoing,

would not have created financial problems.!> The jury

had before it, through this adept cross-examination,

those other factors. However, the jury found that

Kaiser's illegal activity caused the financial harm suf-

fered by Columbia. Damages for injury by antitrust vio-

lations may be implied even though other factors may

have contributed to the injury. See, Bigelow v. RKO Ra-

dio Pictures, Inc., 327 U.S. 251, 264-265 (1946); Switzer

Brothers, Inc. v. Locklin, 297 F.2d 39 (7th Cir. 1961),

cert. denied, 369 U.S. 851 (1962). Here, plaintiff did

show, with the requisite reasonable certainty, an injury

in consequence of Kaiser’s conduct. See, Pitchford v.

PEPI, Inc., 331 F.2d 92 (3d Cir. 1976), cert. denied, 426

U.S. 935 (1976). Judgment notwithstanding the verdict

on causation would be improper.

Duplication in Damages Award

Defendants assert that, when the jury returned a

verdict of $1,048,000 for loss of profits during 1974-1977

and $710,000 for the reduction in the value of plaintiff's

business as a going concern as of May 1, 1977, Columbia

was awarded a double recovery for the same loss. De-

fendants’ theory for this duplication argument is not

clear but seerns to include these contentions. Defend-

ants first argue that plaintiff's recovery of lost profits in

this action together with the amount received from the

sale of Columbia’s assets to Howmet in 1977 for

$574,000 fully compensated plaintiff for its losses be-

cause the value of Columbia as a going concern was the

15. E.g., N.T. 3907, 3908, 3910. 3912, 3913

usiihe: univinnioriminaceaniey wma

A oer enh:

CR Rte oP OAS RABE AO rl BS

Wii inascnne ~~

Appendix D A-47

amount received from Howmet at the time of sale. Re-

ceiving damages for business as a going concern under

this theory duplicates the money paid Columbia by

Howmet in 1977 not the lost profits awarded by the jury

at trial. A part of this argument is that either Howmet

paid for Columbia’s total going concern value as of May,

1977 (including goodwill) or that Howmet bought only

C dlumbia’s assets; i.e., all Columbia had left at that time,

as Columbia itself asserts. If the latter is the case, Kaiser

argues that projected lost future profits should not add to

a going concern value since Columbia, defunct as of

1977, could have no future profits.

Defendants next contend that the method of calcu-

lating the damage to Columbia as a going concern

caused a duplication between the two theories of damage

recovery. Defendants state inat the same figures used to

calculate past lost profits, were used to project

Columbia’s profits into the future, post 1977, to arrive at

a going concern value. (A going concern value indirectly

reflects future profits as “{t]he current market value of a

business is, in theory, the discounted present value of

the estimated flow of future earnings.” Glauser Dodge

Co. v. Chrysler Corp., 418 F. Supp. 1009, 1023 (D.N.J.

i976), reversed on other grounds, 570 F.2d 72 (3d Cir.

1977), cert. denied, 436 U.S. 913 (1978) rehearing de-

nied, 438 U.S. 908 (1978).) This, defendants maintain,

©reated an impermissible duplication since the same fig-

wres establish both damage theories.'© Finally, defend-

ants argue that a recovery for going concern value and

lost profits is generally not allowed.

We wil! deal with the last contention first. As noted

in 15 ANTYTRUST LAWS AND TRADE REGULA-

TION §$115.03!1] (1978), “there are three types of dam-

ages that a successful antitrust plaintiff may recover un-

der Section 4: (1} increased costs; (2) lost past net prof-

its; and (3) reduction in the value of the business. Absent

16. See, Detendant’s reply brief at p. 51.

A-48 Appendix D

unique circumstances, these three types are not dupli-

cative of each other.” (emphasis supplied). Numerous

cases support this general proposition. See, Story Parch-

ment Co. v. Patterson Parchment Paper Company, 282

U.S. 555, 561 (1931) (“[t]he trial court submitted to the

jury for consideration only two items of damages, (1) the

difference, if any, between the amounts actually realized

by petitioner and what would have been realized by it

from sales at reasonable prices except for the unlawful

acts of the respondents’ and (2) the extent to which the

value of the petitioner's property had been diminished as

the result of such acts.”); Glauser Dodge Co. v. Chrysler

Corp.. 418 F. Supp. 1009, supra, (involved damages for

both lost profits and going concern value); Eiberger v.

Sony Corp. of America, 622 F.2d 1068, 1081 (2d Cir.

1980) (‘“‘[t}he district court ruled that ABP was entitled to

compensation for two categories of injuries —- lost profits

on sales that were prevented prior to the termination of

its Sony dealership, and the reduction in the value of

ABP’s business resulting from the termination”); Copper

Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575 (Sth Cir.

1980) (lost profits and goodwill loss, determined in part

by reference to potential for future profits); Albrecht v.

Herald Co., 452 F.2d 124 (8th Cir. 1971) (sufficient

compensation included damages in amount of profits

lost prior to the forced sale of the business plus its full

market value, absent the illegal practices). Thus in this

case, absent some unique circumstance, it is clear that

plaintiff is entitled to both the lost past profits as of the

time of the sale to Howmet and the value of the business,

as it would have been absent defendants’ violation of law,

in May of 1977 upon Columbia’s termination.

Defendants claim that the method of calculating go-

ing concern value created duplication in the damages

award since going concern value was calculated, in part,

by using the past lost profit figures in order to project

potential future profits. Defendants assert that this

method allowed plaintiff to recover its lost profits twice.

Appendix D A-49

However, several cases, discussing damages calcula-

tions in the antitrust area, have explicitly or implicitly

endorsed this method of determining going concern

value. For example, in Eiberger, supra, at pp. 1081-1082,

n.25, the court stated:

25. Although it is unclear, Sonam may also be argu-

ing that the district court erred when it included in

the one-year base period figures an amount for prof-

its that ABP would have earned on sales lost 2s a

result of Sonam’s intimidation. Such an argument is

clearly incorrect. ABP is entitled to an award that

covers all of the profits it would have earned but for

Sonam’s violation: these include both the profits lost

while ABP was still an authorized dealer, and the

profits it would hove earned after that point, which

when Capitalized equal ‘going concern’ value of the

lost portion of ABP’s -usiness. See, Farmington

Dowel Prods. Co. v. Forster Mfg. Co., 421 F.2d 61,

30-82 (1st Cir. 1970). To exclude lost profits from

the base period figures used to project the latter com-

ponent would be to reduce plaintiff's award for the

later period precisely because defendant’s intimida-

tion had been successful in the base period. Such a

reduction would obviously be improper. (emphasis

suppiied).

Similarly, in this case, it was appropriate that the calcu-

lation of Columbia’s value as a going concern included as

its base figure, not the past profits depressed by defend-

ants’ violations, but the past profit history as it would

have been but for the violation.

Of similar import is Copper Liquor, Inc. v. Adolph

Coors Co., supra at 579 n.9, where the court described

the calculation of a retail \~unr store’s goodwill value, in

A-50 Appendix D

a case where plaintiff sought both lost profits and good

will!” ,

9. Kelving on the assumption that the store reduced

its markup from 25 percent to 15 percent in 1966,

Green calculated the store’s goodwill value by add-

ing the lost gross profits for each vear of the store's

operation to the net profits for the store as they ap-

peared on the store’s corporate income tax returns.

The sum of lost gross profits and net profits for the

four vears. 1967 to 1971. was identified as adjusted

net income. Adjusted net income, in the amount of

$ 100.046. was divided by the number of vears to ob-

tain average net income. Mr. Green then subtracted

from average net income the store’s return on Capital

computed at 6 percent per vear to derive average net

income after return on investments. This figure.

$21.980. was multiplied by five to arrive at a goodwill

value of $109.899.

Again past lost profits were taken into account in the

figure from which goodwill was projected. Finally, by

way of example. the district court in Glauser, supra at

1023 n.14. made the following observations on this

point:

14. Since the challenged practices continued for

several vears leading up to the elimination of Glauser

Dodge from the marketplace, the plaintiff properly

presented to the jury estimates of the value of the

business as a going concern based upon its actual

performance in prior years and, alternatively, based

upon the earnings which the business would have

had absent the defendants’ unlawful conduct. (em-

thasis supplied ).

17. “Valuing a business's goodwill, of course, is a subjective

determination that takes into consideration factors such as a

business's age. prolit history, customers, and potential for future

earnings.” ‘emphasis supplied). Copper Liquor Co.. supra, at 579

ns

Appendix D A-51

In the instant situation, then, we find no merit to

defendant's contention that the method of computation

used in this case created a duplication.'* Rather, by add-

ing Columbia’s estimated profit figures in those prior

vears and then projecting forward for future profits, Co-

lumbia quite appropriately measured its value as a going

concern from its estimated 1977 condition had there

been no prior Gamage caused by defendants. Necessar-

ily. this method creates a projection based upon a pro-

jection but it is defendants’ prior misdeeds that make

such a formulation necessary.

Finally, we consider defendants’ contention that

Columbia's recovery for going concern value duplicated

the amount received in 1977 when Columbia transacted

its sale to Howmet. Plaintiff asserts that the transaction

with Howmet was a sale of assets only, since Columbia.

having been destroyed as a business by Kaiser, had no

good will value left. Both Bonjorno '° and Dr. Kuehn so

18. Defendants’ cited cases cam be read to support plaintiffs

position. Rea v. Ford Motor Company, 497 F.2d 577 (3d Cir. 1974),

cert. denied, 419 U.S. 868 (1974), involved a finding of double re-

covery under the Automobile Dealer's Act where the damages for

lost future profits did not reflect the fact that plaintiff had sold cer-

tain assets for $60,000. Defendants cite it for that proposition. How-

ever, the couri in Rea, at 587 n.19, stated that “neither the trial

judge’s instructions on damages nor Dr. Staelin’s estimate made

mention of or took into account the benefit 22 Ford received from

the cash. . .” Clearly the Howmet purchase price was taken into

account in this case; defendants’ in their Reply Brief at p. 51 note

Dr. Kuehn’s assumptions regarding the Howmet sale in the going

concern value computation. Also, in Farmington Dowel Products

Co. v. Forster Mfg. Co., 421 F.2d 61 (ist Cir. 1969), supp. order, 421

F.2d 91 (1st Cir. 1979), cited by defendants, the court allowed plain-

tiff to recover both its lost profits to the date it went out of business

and the going concern value of the plaintiff on that date.

19. N.T. 3864 (Bonjorno):

“A. Well, we — as long as we were operating we had our

good name. We had our reputation and our ability to manufac-

ture a high quality product, our ability to work and get our prod-

uct specified. This as all part of Columbia Metal and its good

A-52 Appendix D

testified.2° If this is the case, Kaiser argues that there

was no reasonable prospect that Columbia would have

earned profits in the future. However, Columbia’s value

as a going concern, that is its market value to Howmet,

would certainly have been greater if its goodwill, and

thus its potential for future profit, were intact.2! If

Howmet paid only for tangible assets, Columbia did not

receiv. the worth of its business absent the violation

which destroyed its goodwill. If Columbia indeed had no

reasonable prospect of future profits, that indicates more

damage to Columbia, not less damage to its going con-

cern value.

As an alternative characterization, defendants assert

that whatever intangible value Columbia had, assuming

it had some, was paid for by its 1977 purchase by

Howmet. It was plaintiffs express assumption that

NOTES (Continued )

name in the aluminum culvert pipe industry in the trading area.

and they effectively destroyed this.

Q. Who is they?

A. Kaiser Aluminum.”

20. N.T. 4041 (Kuehn):

“Q. Well, do you make an assumption as to what the actual

vaiue was as a going concern on May 31, 1977?

A. Yes.

Q. What is that?

A. Well, the assumption is that the value of the firm on that

date was limited to physical assets, and consequently that there

was no operating value beyond the sheer value of the assets that

existed.

Q. And based on what you know about this case, is that a

reasonable assumption?

A. Given that — given the actual operation of the firm in

the previous years in the damaged state, I would say yes.”

21. See, Copper Liquor, Inc., supra, at 579 n.8:

“According to Cook’s expert, Wayne Peters, goodwill is the

amount that a purchaser would be willing to pay for a business

over and above the value of the business’s tangible assets. Val-

uing a business’s goodwill, of course, is a subjective determi-

nation that takes into account factors such as potential for fu-

ture profit.” (emphasis supplied).

Appendix D A-53

Howmet bought only tangible assets (N.T. 4041) and

that its projection of “. . . the value of the business was

computed in terms of wiether the rates of return from

the operation of this business in the absence of damage

produced or would have produced a return in excess ot

the profits that might be expected from the tanyible as-

sets alone. In other words, was there additional profit

that would then be attributed to intangibles which would

indicate some value of good will relative to the operation

ot the business.” (N.T. 4039-4040). Compare, Pitchford

v. PEPI, Inc., 531 F.2d 91 (3d Cir. 1975) (failure to de

duct Mr. Pitchford’s salary as a cost of operation from

data used to project potential earnings for the purpose of

evaluating the lost going concern value of Pitchford cre-

ated a double recovery).

On cross-examination, Dr. Kuehn, confronted with

the purchase agreement between Howmet and Colum-

bia, which allocated $16,000 of the purchase price for

intangibles,22 stated that amount should be subtracted

from certain of his estimates, since his projections as-

sumed the Howmet sale involved assets only.2? What-

ever amount was actually received for intangibles must

be subtracted from the estimates to avoid an award of

damages for an amount that is duplicative in the sense

that it has already been recovered.

22. Corporate name and covenant not to compete.

23. N.T. 4149 (Kuehn):

“According to the figure I just saw, the purchase price of the

tangible assets apparently would be $564,000 and conse-

quently, if | understand it correctly, $16,000 should probably be

subtracted from the various estimates presented here on the

bottom lines for both the capitalization at 15% and the capital-

ization at 20%.”

However, Dr. Kuehn also indicated that the two items on the in-

tangibles line of the purchase agreement actually had no worth. See,

N.T. 4146 (corporate name); N.T. 4147 (covenant not to compete).

Fer the cther inadequacies of Dr. Kuehn’s testimony, see N.T.

4018-4019, 4050-4051, 4989, 4092-4093, 4108-4109, 4111.)

A-54 Appendix D

Increase in Metal Costs

Plaintiff claimed damages for lost profits for the

years 1974, 1975 and 1976 but in addition made a spe-

cific claim for extra costs attributable to an increase in

the amount of aluminum coil used in 1971, 1972 and

1973; plaintiff contended this increase in metal cost was

caused by the misrepresentations of defendants con-

cerning the gauge of aluminum Kaiser would continue

to use. The Stamco machine plaintiff installed in the

spring of 1970 utilized a 2-inch gauge because Kaiser

used that gauge; the rest of the industry used a 2%-inch

gauge. Kaiser, which had used 2 inch, then converted to

2%3-inches; plaintiff contends that Kaiser concealed its

intention to do this to put plaintiff at a competitive dis-

advantage. This had been presented to the jury during

the trial on liability, not as an antitrust violation in itself

but as a part of a pattern of conduct from which retali-

atory conduct could be inferred. Plaintiff admitted it

could not isolate damages for other aspects of its proof on

retaliatory conduct but urged that a finding of specific

damages for extra use of coil was appropriate. Because

plaintiff stated to the jury that damages would be

claimed only for 1974, 1975 and 1976, the court was in

error in allowing the extra cost of metal for prior years to

go to the jury as a separate item of damages; that plaintiff

was able to isolate it as a matter of proof (N.T.

3981-3995) is not a sufficient reason to allow it as an

item of damages in the context of the trial as a whole.

Therefore, the award of $57,000 ($171,000 trebled) is set

aside and the defendants’ motion for judgment notwith-

standing the verdict is granted as to that amount.

Sufficiency of the Evidence as to Amount of Damages

We recognize that once the fact of injury has been

proven, the burden on the antitrust plaintiff to establish

the “precise amount of damages is not as great as in

other kinds of lawsuits.” 15 ANTITRUST LAWS AND

Appendix D A-55

TRADE REGULATION §115.01{2] at 115-5(1978). See,

J. Truett Payne Co. Inc. v. Chrysler Motors Corporation,

49 U.S.L.W. 4516 (1981); Copper Liquor Inc. v. Adolph

Coors Co., 624 F.2d 575 (Sth Cir. 1980) (less rigid stand-

ard of proof with respect to amount of damages caused by

an antitrust violation); Hobart Brothers Co. v. Malcolm

T. Gilliland Inc., 471 F.2d 894, 902 (5th Cir. 1973), cert.

denied, 412 U.S. 923 (1973) (“JiJn an anti-trust case the

burden on the plaintiff to prove the amount of damages

is less severe than the burden to prove the fact of

injury ....”); South-East Coal Company v. Consolida-

tion Coal Company, 434 F.2d 767, 796 (6th Cir. 1970),

cert. denied, 402 U.S. 983 (1971), rehearing denied, 404

U.S. 877 (1971) (“The antitrust cases are legion which

reiterate the proposition that, if the fact of damages is

proven, the actual computation of damages may suffer

from minor imperfections. ..”). However, a plaintiff

must offer proof as to the extent of injury, showing that

the damage involved is measurable in dollars. See, Deak-

tor v. Fox Grocery Company, 475 F.2d 1112 (3d Cir.

1973), cert. denied, 414 U.S. 867 (1973). Further courts

have stated repeatedly that the measure of damages may

not be based upon mere guesswork, speculation. or con-

jecture. E.g., Bigelow v. RKO Radio Pictures, Inc.,

supra; Story Parchment Co. v. Paterson Parchment Pa-

per Co., supra; Delaware Valley Marine Supply Co. v.

American Tobacco Co., 184 F. Supp. 440 (E.D. Pa.

1960), affd, 297 F.2d 199 (3d Cir. 1961), cert. denied,

369 U.S. 839 (1962).

Although plaintiff did show econ. mic injury in con-

sequence of defendants’ conduct, the evidence pre-

sented by Columbia as to the actual dollar amount of

damages suffered was so deficient as to require a new

trial on damages only. The evidence presented by

Columbia’s two damages witnesses, Bonjorno and

plaintiff's expert witness on damages, Dr. Alfred Kuehn,

was incomplete, confusing and generally lacking in pro-

bative value. The factual basis of the projections, predic-

A-56 Appendix D

tions and calculations presented by them was never clear

from the testimony.

Plaintiff estimated damages sustained in lost profits

and in the decline in value of the business as a going

concern by using four projection Methods (Methods C,

D, E, and F). Method C (P-3012), projected Columbia's

sales based upon government figures on new housing

starts and new highway construction during the dam-

ages period. Method D (P-3013) projected Columbia’s

sales by utilizing defendant Kaiser’s nationwide sales,

while Method E (P-3014) used Kaiser sales from the

New Castle, Delaware plant only. Method F (P-3011) re-

lied upon Joseph Bonjorno’s estimates of Columbia’s po-

tential sales and profits were it not for defendants’

wrongdoing.

The testimony of an antitrust plaintiff who is an

owner or officer of the damaged business may be suffi-

cient to support a jury verdict on damages where the

owner is qualified by experience and position to make

damages estimates. See, generally, Zenith Radio Corp. v.

Hazeltine Research, 395 U.S. 100, 122, 23 L.Ed.2d 129,

89 S.Ct. 1562 (1969) (Zenith’s officers, experienced

businessmen, testified that repressive effects on Zenith

were due to patent pool; no basis in record for refusing to

accept testimony of the two officers as probative evi-

dence); Greyhound Computer v. International Business

Machines, 559 F.2d 488, 507 n.41 (9th Cir. 1977), cert.

denied, 434 U.S. 1040 (1978) (most of the damages tes-

timony came from Greyhound’s president; where the

record reflects his competency and the factual basis for

his conclusion, an interested witness may testify as to

the amount of damage and it is for the jury to determine

the weight to be accorded his testimony); Kestenaum v.

Falstaff Brewing Corp., 514 F.2d 690 (5th Cir. 1975),

cert. denied, 424 U.S. 943 (1976) (wholesale

distributor’s estimation of good will value of his business

admissible in antitrust suit as an owner is competent to

give his opinion on the value of his property; weight and

Appendix D A-57

credibility given owner’s testimony is generally for the

jury); Flintkote Co. v. Lysfjord, 246 F.2d 368, 394 (9th

Cir. 1957), cert. denied, 355 U.S. 835 (1957) (“We do not

hold or imply that a jury verdict could not be upheld un-

der any circumstances solely on the testimony of the

plaintiffs. We hold only that if they are qualified to make

these estimates, the record must show their competency

and the factual basis upon which they rest their conclu-

coms: . . .).

But an inexperienced owner using purely specula-

tive bases for his estimations of daniage may provide tes-

timony of such minimal probative force as to warrant a

judge’s refusal to submit the issue to the jury. See, Del-

aware Valley Marine Supply Co. v. American Tobacco

Co., 184 F. Supp. 440 (E.D. Pa. 1960), aff'd, 297 F.2d

199 (3d Cir. 1961, cert. denied, 369 U.S. 839 (1962). It

follows that such testimony would justify the grant of a

new trial in the exercise of the court’s discretion.

We do not find that Mr. Bonjorno was an inexperi-

enced owner who was not qualified to make damage es-

timates. Bonjorno started Columbia in 1959 and per-

formed proprietary, managerial and sales functions from

Columbia’s beginning until its assets were sold in 1977.

However, we do find the record insufficient in establish-

ing the requisite factual basis for Bonjorno’s estimates so

that the jury could make a rational determination as to

their accuracy.

For example, Bonjorno estimated Columbia’s return

on sales at 17.6% for 1974, 12% for 1976 and 8% for

1977, all significantly higher than that of any previous

year of Colu mbia’s operation; the previous high was only

5.8%. Boniorno’s explanation for this increase demon-

strates the minimal evidence upon which this five mil-

lion dollar verdict rests:

N.T. pp. 3959-3960:

“Q.

A.

A.

Appendix D

What was the reason why you projected so

much greater profitability in 1974 than you

had experienced in your entire history?

A number of reasons, Mr. McElroy.

Number one, we would have had a much

lower metal cost due to the new configuration.

The fact that we were making standard corru-

gated pipe meant that the material costs would

be down by approximately 4 to 5%.

All right.

We now were in a position to offer perforated

pipe made on our own perforating mill, which

would have been a highly profitable product,

also, and would have given us an access to other

markets.

It would have also given us a much higher

percentage of profit in those areas that were re-

mote to southern New Jersey, because the

prices were better in areas away from southern

New Jersey than they were in the southern New

Jersey area, so that we felt we would have a sub-

stantially greater margin of profit on the sales

that we projected.

So that you would have increased your profita-

bility from 2.6% to 17.6% in one year? That’s an

increase of 15%.

I thought that was reasonable.”

N.T. pp. 3958-3959

“Q.

A.

You've projected, in 1974, $1,805,569 in sales

and you have an income of $318,683.

Do you know what that percentage is?

It looks like its around 15%. I’m not sure with-

out calculating it.

A.

Appendix D A-59

It is 17.6%. 17.6%.

Now, on Exhibit 3062 is there any vear in

which return on sales exceeded 10% ?

No, there is not.

Is there anv vear in which it exceeded 5% ?

No, there is not.

Isn't there one? 1971?

3.8. I'm sorry.

5.8% and that was the best vear, 5.8?

Yes.

And vet, you projected an income of 17.6%

here?

Yes.”

Also troubling was Bonjorno’s estmate as to the

pounds of metal sold in 1973 by Columbia, a critical fig-

ure since 1973 was the base year selectea by the plaintiff

as his starting point for all other damage calculations and

projections. Although Bonjorno did state a figure before

the jury (N.T. 3932: “{a|]pproximately, I think they are

about 2.3 or 2.4 million pounds, approximateiy.”), the

basis in fact or source of the figure was never explained.

(N.T. 3932-3942). For exaniple, at N.T. 3933,

“<Q.

~

A.

And did you make a compilation for this trial so

you could present it to the Court and jury of

what the number of pounds were of metal that

Columbia sold in 1973?

No.

Didn’t counsel or anybody — wasn’t anybody

assigned to go through the records to find out

exactly what the total number of pounds was?

It’s possible, but I didn’t do it.

A-60 Appendix D

Q. And you are unaware of anybody else doing it?

A. It’s possible that counsel may have done it. | am —

sorry. maybe I misunderstood your question.

Q. My question was, do you know whether any-

body did it or not?

A. I don’t know specifically.

That the jury was unpersuaded by the Bonjorno tes-

timony is plain from its damage verdict on lost profits

which virtually cuts the Bonjorno estimate in half. The

Bonjorno testimony of his hopes and aspirations fails to

provide evidence of facts from which the jury’s calcula-

tion may be logically and legally inferred.

There are similar problems regarding the damages

testimony of the expert, Dr. Kuehn. Again, the problem

of the pound figure for 1973 without a source appears.

“Q. Why did you convert it back to pounds?

A. Only to provide a base number for the subse-

quent calculation of other ratios.

Q. But the number of pounds doesn’t represe it

what Columbia actually sold in 1973, does it?

| —

Q. That vou calculated.

A. Since lam not sure that anyone knows precisely

what te pounds are, it probably doesn’t repre-

sent accurately, but it’s the calculation that was

obtained this way and which Mr. Bonjorno con-

sidered a fairly accurate estimate of what the ac-

tual figure was during that period.

Q. Did you review any of Columbia’s books and

records to determine whether or not your esti-

mate of the number of pounds sold by Columbia

for fiscal year ending May 1, 1973, was accurate

or not?

os al

Appendix D A-61

A. I reviewed some records, but to the best of my

knowledge — I am not sure whether one can

determine precisely whether it’s accurate or not.

I certainly didn't establish that it’s accurate.”

(N.T. 4092-4093) (emphasis supplied).

The confusion with regard to that particular figure was

merely symptomatic of the general confusion and ill-

preparedness of the witness, which was admitted by

plaintiffs attorney in his closing argument to the jury:

Dr. Kuehn I think was poorly prepared to defend that

basic computation that he gave vou. It took him too

long and he should have been better prepared. (N.T.

4197).

While recognizing the importance of expert testi-

mony in antitrust proof of damages, 16 A.L.R. Fed. 14,

22 (1973),24 and the fact that Dr. Kuehn qualified as one

competent to offer an opinion in such matters, we de-

termine that the illusion of complete accuracy created by

graphs, charts, and garbled expert testimony created a

speculative verdict in this case. See, Herman Schwabe,

Inc. v. United Shoe Machinery Corp., 297 F.2d 906. 912

(2d Cir. ), cert. denied, 369 U.S. 865 (1962) (“The leap

required to derive any rational conclusion from the

expert’s data was too great to allow a jury to take.”’).

Of the methods for calculating plaintiff's damages.

we have already considered Method F that relied upon

the estimates of Joseph Bonjorno. Method C, that pro-

jected Columbia's sales based upon government figures

on new housing starts and new highway construction,

was completely repudiated by the testimcny of plaintiff's

24. “Measure and Elements of Damages Under 15 USCS §15

Entitling Person Injured in His Business or Property by Reason of

Anything Forbidden in Federal Antitrust Laws to Recover Treble

Damages.”

A-62 Appendix D

expert. Dr. Kuehn could not explain the relevance, if any

existed, of these figures to Columbia's business or to its

losses:

“Q. And the Federal Government publishes statis-

tics on new highway construction?

Data are published on both, ves.

On both what?

Highway construction and housing.

Orw

Now, the highway construcivion, that’s new

highways, isn’t it?

“af

That's correct.

That does not include reconstruction. mainte-

nance or repair, does it?

©

That's correct.

And the housing starts are new housing starts?

It's based on new housing, ves.

Or €& &

That would not include reconstruction or repair

of existing storm sewers, for example?

That’s correct.

©

Now, do vou know what percentage of

Columbia’s business was in new highway con-

struction?

I believe very little.

Q. Most of it was, in fact, in reconstruction and

maintenance, wasn’t it?

A. That’s my understanding.

Q. Do you know whether there is any relationship

between new highways and the use of culverts?

A. Well, new highways and aluminum culvert?

Appendix D A-63

Q. Any culvert?

I would assume there is some.

>

Q. You assumed it?

A. Yes, because at least most highways I see, you

know, there tends to be some culverts.

Q. And that’s what you based your estimation of

damages on, your assumptions, that when you

go along the highway you see some culverts

along the road?

A. I used this method as the first of four methods

since certain data were here I certainly didn’t

think it was pertect.

I thought it might be related, but that is pre-

cisely why in my explanation of which of the

various methods I preferred I listed this as prob-

ably the poorest of the four methods.

I don’t consider this necessarily a very good

index.” (N.T. 4050-4051) (emphasis supplied).

The remaining two methods, utilizing Kaiser nationwide

sales (Method D) and Kaiser New Castle sales (Method

E.), were never adequately explained to the jury. (N.T.

4018-4019).

Although the “yardstick” measure of an antitrust

claimant’s lost profits, under which the claimant recov-

ers the difference between his net profits during the

damage period and the net profits earned in a compara-

ble business unaffected by antitrust violations, is a valid

method of estimating damages, 16 A.L.R. Fed. 14, 45

(1973), in this instance the evidence presented was in-

sufficient to establish that the entities used were truly

comparable or that the estimates were adjusted to reflect

the differences between the businesses compared. See,

Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251

A-64 Appendix D

(1946): William Goldman Theatres, Inc. v. Loew's, Inc.,

69 F. Supp. 103, affirmed, 164 F.2d 1021 (3d Cir. 1946).

Lapses of this nature are frequent in Dr. Kuehn’'s

testimony. Kuehn never could explain how the compar-

isons in Methods D and E. were made in view of the fact

that Columbia operated on a fiscal year and Kaiser op-

erated on a calendar vear. (N.T. 4057-4068). Kuehn

maintained that the calendar vear/fiscal vear problem

would make little difference. however he admitted that

he had never calculated it to so determine. (N.T. 4089).

Kuehn relied upon the 17.5 normal mark-up of former

Columbia salesman. Robert Kennedy. in order to calcu-

late Kaiser's average selling price per pound: however.

this figure was not of record in the testimony on damages

or liabilitv. Kuehn had difficultv explaining why his cal-

culation of damages for cost of goods sold included a var-

iable cost equal to 11.17% of sales. (N.T. 4108-4109),

why an interest expense factor of 7.5% was utilized, and

how such interest rate was calculated. (N.T. 4111).

Although Dr. Kuehn’s confusion is apparent from a

reading of the transcript (N.T. 4003-4150), a reading

does not make plain the great difficulty this witness had

in responding to questions. On numerous occasions, Dr.

Kuehn was unable to answer an inquiry without refer-

ring to documents, was unable to find the appropriaie

figure within the relevant document, and when a figure

was located unable to state how it was calculated or why

it was used. All of this shuffling of paper and accompa-

nving long silences occurred before the jury. At one

point it was necessary to call a luncheon recess in order

to give Dr. Kuehn sufficient time tc answer a question

posed upon cross-examination. The total effect was that

of a witness who did not know what he was talking

about; therefore, the jury could only rely upon charts and

figures, the factual basis for which had not been ade-

quately established or explained.

We also recognize that a flexible standard of proof

applies where the defendant's wrong doing, here the de-

ee ee ee ee

ee

Appendix D A-65

struction of plaintiff's business, had made it impossible,

as a practical matter, for the plaintiff to produce a more

precise figure, see, Bigelow, supra at 262-266, but in this

case the brief trial on damages seemed almost an after-

thought following the extended trial on_ liability.

Plaintiff's action was originally instituted in 1974. The

delay occasioned by the directed verdict for defendants at

the end of the plaintiffs case at the first trial and the

subsequent appeal prior to the instant trial on remand

may be responsible for some of the deficiency in proof. It

seemed obvious to the court that plaintiff's expert, 2 well-

qualified and experienced witness, must have under-

stood the basis for his conclusions when they were ini-

tially stated. However, on the witness stand as of the date

of this trial, Dr. Kuehn was unable to explain, at least in

an unconfused manner, the derivation of his figures or

their basis in fact notwithstanding the time provided to

him by the court for this purpose. Whatever the reasons

for this inability, the trial court is convinced that the jury

verdict could only be a product of confusion and specu-

lation.

Mindful of the delay that has occurred since the lim-

ited remand, and the economic loss occasioned to plain-

tiff thereby in the erosion of the morey judgment due to

the difference between legal interest and the market

rate, we are reluctant to incur even further delay and

have considered whether the delay itself is a reason not

to disturb the verdict of the jury. We also gave serious

consideration to ordering a remittitur, an action within

the trial court’s discretion where a jury awards an

amount the court deems excessive. 15 ANTITRUST

LAWS AND TRADE REGULATION §115.03[2] at p.

115-70 (1978); however, no reasoned basis could be

found for setting an appropriate figure. The deficiency in

plaintifi's proof of damages convinces the court that the

verdict as to damages should not stand.

Where there is no substantial indication tat liability

and damage issues are inextricably interwoven or that

A-66 Appendix D

the jury verdict was the result of compromise of liability

and damage questions, a second trial on the damages

alone is proper. See, Wagner v. Reading Co., 428 F.2d

289 (3d Cir. 1970); Darbrow v. Brown, 255 F.2d 610 (3d

Cir. 1958); 11 Wright and Miller, Federal Practice 2nd

Procedure §2814 (1973). In this bifurcated trial, it is

clear there was no compromise of liability and damage

questions. The separateness of the trials is also substan-

tial indication that liability and damage issues are not

inextricably interwoven. The court has also considered

whether hearing the evidence on liability is necessary to

persuade the jury to award damages in an adequate

amount and is convinced that the case on liability can be

stated to the jury with the facts and inferences most fa-

vorable to plaintiff, consistent with the verdict in its fa-

vor. Both the plaintiff and defendants will benefit from

this opportunity to present damage testimony to the jury

in a clear and unconfusing fashion. In any event, fair-

ness to the defendant requires no less.

For the above reasons a new trial as to damages only

is granted. An appropriate Order accompanies this Mem-

orandum.

PN dai ON Raden ih

oh ee ee

=

Appendix D A-67

IN THE UNITED STATES Dis | [CT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

COLUMBIA METAL : CIVIL ACTION

CULVERT CO., INC.

V.

KAISER ALUMINUM &

CHEMICAL CORP.

and KAISER ALUMINUM & =:

CHEMICAL SALES, INC. NO. 74-122

INTERROGATORIES TO BE ANSWERED BY THE JURY

1. (a)Do you find from the evidence

that there was a conspiracy be-

tween Kaiser Aluminum & Chem-

ical Corp. and Kaiser Aluminum

& Chemical Sales; Inc. in unrea-

sonable restraint of trade? YesX No __

(b) If your answer to 1(a) is yes, was

the conspiracy in unreasonable

restraint of trade a material and

proximate cause of any injury to

the business and property of

plaintiff? YesX No _

2. (a)Do you find from the evidence

that the relevant product market

was: |CHECK ONE ONLY!

(i) aluminum culvert and drain-

age pipe? X

(ii) metal culvert and drainage

pipe, including pipe made of

steel and aluminum?

A-68

Appendix D

(iii) culvert and drainage pipe, in-

cluding pipe made of steel,

aluminum and concrete?

(b) If you find the relevant product

market was (ii) metal culvert and

drainage pipe, including pipe

made of steel and aluminum, or

(iii) culvert and drainage pipe, in-

cluding pipe made of steel, aiumi-

num and concrete, you should not

answer questions 3 or 4; you have

concluded your deliberations.

3. If you find in answer to Interrogatory

2 that the relevant product market

was (i) aluminum culvert and drain-

age pipe, do you find from the evi-

dence:

(a) that Kaiser Aluminum & Chem-

ical Corp. or Kaiser Aluminum &

Chemical Sales, Inc. monopolized

the aluminim culvert and drain-

age pipe market in that it had the

power to control prices or exclude

competition in the relevant geo-

graphic area which was willfully

acquired or willfully maintained?

or

(b)that Kaiser Aluminum & Chem-

ical Corp. or Kaiser Aluminum &

Chemical Sales, Inc. conspired

with regard to aluminum culvert

and drainage pipe to control

prices or to exclude competitors in

the relevant geographic market?

or

YesX No _

Yes X No _

Appendix D A-69

(c) that Kaiser Aluminum & Chem-

ical Corp. or Kaiser Aluminum &

Chemical Sales, Inc. attempted to

monopolize the aluminum culvert

and drainage pipe market with

the specific intent to obtain power

to control prices or to exclude

competitors and committed an act

in furtherance of monopolization

which had a dangerous probabil-

ity of achieving monopolization? Yes X No _

4. If your answer to 3(a), (b), or (c) was

ves, was any such defendants’ mo-

nopoly, conspiracy to monopolize, or

attempt to monopolize as found by

you a material and proximate cause

of any injury to the business or prop-

erty of plaintiff? - YesX No |

You have now completed ycur deliberations.

The Foreperson will place his/her signature on the

signature line below and add the date, and the jury

will return to the Courtroom.

/s/ FLORA EIKENKOETTER

Foreperson

Date: ___ 8/16/79

A-70 Appendix D

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

COLUMBIA METAL : CIVIL ACTION

CULVERT CO., INC.

¥.

KAISER ALUMINUM &

CHEMICAL CORP.

and KAISER ALUMINUM &

- CHEMICAL SALES. INC. : NO. 74-122

INTERROGATORIES TO BE ANSWERED BY THE JURY

1.

In what amount, measured in dollars and cents, de

you find from the evidence that Defendants caused

damage to Plaintiff by reason of an increase in the

usage of aluminum coil in 1971, 1972 and 1973?

State such amount; or “None” in the

following blank according to your find-

ing. $ 57,000

In what amount, measured in dollars and cents, do

you find from the evidence that Defendants caused

damage to Plaintiff by profits lost for the years from

June 1, 1973 through May 31, 1977?

State such amount; or “None” in the

following blank according to your find-

ing. $1,048,000

Nee ASS

Appendix D A-71

3. In what amount, measured in dollars and cents, do

you find from the evidence that Defendants caused

damage to Plaintiff by reduction in the value of Co-

lumbia as a going concern as of May 1, 1977?

State such amount; or “None” in the

following blank according to your find-

ing. S 710,000

/s/ FLORA EIKENKOETTER

Foreperson

5:30 p.m.

KINDLY ADVISE THE MARSHAL WHEN YOU

HAVE COMPLETED DELIBERATIONS.

A-72 Appendix D

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DiSTRICT OF PENNSYLVANIA

JOSEPH A. BONJORNO, : CIVIL ACTION

GEORGE M. KERR, JR.

and BARBARA K. CLISBY,

as Transferrees in Liquidation

and Dissolution of Columbia

Metal Culvert Co., Inc.

Vv.

KAISER ALUMINUM &

CHEMICAL CORP. AND

KAISER ALUMINUM &

CHEMICAL SALES, INC. NO. 74-122

ORDER

AND NOW, this 17th day of June, 1981, the Court

of Appeals having granted a remand for the purpose of

determining Kaiser’s Motion for Judgment Notwith-

standing the Verdict and Motion for New Trial filed by

Kaiser, it is hereby ORDERED that:

1. Plaintiff's Motion for Leave to File a Supplemen-

tal Brief is GRANTED.

2. The motion of defendants Kaiser Aluminum &

Chemical Corp. and Kaiser Aluminum & Chemical

Sales, Inc. for Judgment N.O.V. is GRANTED with re-

spect to the jury award of $57,000 in response to Inter-

rogatory One as to damages and otherwise DENIED.

3. The Motion of defendants for a New Trial is

GRANTED as to damages only.

4. A pre-trial/status conference will be held on July

17, 1981 at 1:00 p.m. to consider preparation of a case

Appendix D A-73

stated on liability and any other further proceedings, in-

cluding a special listing for trial, provided the Court of

Appeals does not grant the pending motion to revoke the

limited remand.

BY THE COURT:

NORMA L. SHAPIRO

APPENDIX E

Memorandum and Order of the District Court

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOSEPH A. BONJORNO, : CIVIL ACTION

GEORGE M. KERR, JR.

and BARBARA K. CLISBY,

as Transferrees in Liquidation

and Dissolution of Columbia

Metal Culvert Co., Inc.

U,

KAISER ALUMINUM &

CHEMICAL CORP. AND

KAISER ALUMINUM & :

CHEMICAL SALES, INC. NO. 74-122

MEMORANDUM AND ORDER

NORMA L. SHAPIRO, J. JANUARY 17, 1983

INTRODUCTION

Before the court are post-trial motions arising out of

a retrial on damages only in this antitrust litigation. Fol-

lowing the entry of judgment for plaintiffs on the jury’s

answers to four special interrogatories in the trebled

amount of $9,567,939, defendants Kaiser Aluminum &

Chemical Corp. (‘“KACC”) and Kaiser Aluminum &

Chemical Sales, Inc. (“KACSI”) moved for a judgment

notwithstanding the verdict or, in the alternative, for a

new trial on both liability and damages.

A-74

Appendix E A-75

Plaintiff Columbia Metal Culvert Co., linc. (““Colum-

bia’), a liquidated corporation (interest in this litigation

has been assigned to the present plaintiffs, its former

shareholders), originally brought an action against

KACC and KACSI, former Columbia salesman Robert A.

Kennedy and his company, Kennedy Culvert and Sup-

ply, in which it alleged violations of Sections 1 and 2 of

the Sherman Act, 15 U.S.C. §§1 and 2, and Section 3 of

the Clayton Act, 15 U.S.C. §14. A detailed description of

the specific actions complained of and the procedural

history of this case is contained in the Memorandum ac-

companying the Order of June 17, 1981 published at 518

F. Supp. 102 (E.D.Pa. 1981).

At the first trial before The Hon. Edward N. Cahn,

judgment in favor of defendants was entered on defen-

dants’ motion for a directed verdict at the close otf

Columbia’s evidence on the grounds that Columbia, for-

merly a manufacturer and distributor of aluminum cul-

vert pipe, had not established a prima facie case of con-

spiracy in restraint of trade between KACC and KACSI

or between either and Kennedy, proved that Kaiser had

monopoly power in the relevant product market, or es-

tablished a prima facie violation of Section 3 of the

Clayton Act. The Third Circuit affirmed the grant of a

directed verdict as to Kennedy but reversed as to KACC

and KACSI, except on the Clayton Act count. Sufficient

evidence was presented to allow a jury to decide the rel-

evant product market, whether KACC/KACSI had mo-

nopolized or attempted to monopolize that market, and

whether KACC and KACS|! conspired in vioiation of Sec-

tions 1 and 2 of the Sherman Act.

On remand and transfer to the docket of this court,

there was a bifurcated trial by jury. The jury found on

answers to special interrogatories that the relevant prod-

uct market was aluminum culvert and drainage pipe,

that KACC and KACSI had monopolized and attempted

to monopolize the relevant product market, that KACC

and KACSI had conspired in violation of Sections 1 and

A-76 Appendix E

2 of the Sherman Act, and that Columbia had been in-

jured by the unlawful acts of KACC and KACSI. Dam-

ages awarded in the amount of $1,815,000 were trebled

and judgment entered in favor of plaintiffs for

$5,445,000. Following a direct appeal (because defen-

dants post-trial motions were untimely filed), the case

was remanded to this court by the Court of Appeals for

disposition of Kaiser’s motions for a judgment notwith-

standing the verdict or in the alternative for a new trial.

We denied Kaiser’s motions for judgment notwith-

standing the verdict or a new trial as to liability because

the evidence at retrial was not substantially different

from that previously held adequate by the Court of Ap-

peals; the jury’s determination was not so against the

weight of the evidence as to shock the conscience of the

court. 518 F. Supp. at 102. However, judgment notwith-

standing the verdict was granted as to the first interrog-

atory on damages (awarding defendants $57,000 for

Columbia’s increased usage of aluminum coil in

1971-73). Id. at 114. A new trial was granted on the sec-

ond and third interrogatories, awarding $1,048,000 in

lost profits from 1973 to May 31, 1977 and $710,000 for

loss of going concern value thereafter.

Plaintiffs had presented only two damages wit-

nesses, plaintiff Bonjorno himself and an expert, Dr.

Alfred Kuehn. The record was found insufficient to es-

tablish the requisite factual basis to allow the jury to

make a rational determination of the accuracy of

Bonjorno’s testimony. Jd. at 115. Dr. Kuehn’s testimony

was found confused and confusing. “The total effect is

that of a witness who did not know what he was talking

about; therefore, the jury could only rely upon charts and

figures, the factual basis for which had not been ade-

quately established or explained.” Id. at 118. In sum,

plaintiffs’ evidence created a speculative verdict on dam-

ages. Id. at 117. Because the damages aiid lability issues

were +») inextricably interwoven, and there was no in-

dication that the jury verdict was the result of compro-

<n t babi Bes tn Lae

Appendix E A-77

mise on the liability and damage questions, retrial on

damages only was ordered. Id. at 119.

The parties were requested to state their positions on

procedure for a fair retrial on damages. Defendants had

conceded at the argument on post-trial motions follow-

ing the first trial that the court had the power to retry on

damages only, but after the nv w trial on damages was

granted, defendants argued that it would violate their

constitutional right to trial by jury. However, counsel for

defendants actively participated in discussions on the

damage trial proced::re.

At the outset of the damage trial, the court informed

the jury of their duties. Because a jury in an antitrust

matter must award only those damages that flow from

the antitrust injury, see, 518 F. Supp. at 109, the opening

statement was designed to acquaint the jurers with the

nature of the antitrust violations that had been found.

The jurors were told the parties, the businesses they

were or are engaged in, the product and geograovhic:-mar-

kets involved, the antitrust laws the prior jury had found

violated, the purpose of those laws, and the types of lia-

bility evidence presented at the prior trial. Finally, the

liability interrogatories and answers of the prior jury (518

Fk. Supp. at 119, App. A) were read to the damage jury.

(N.T. 20-25).

Upon the conclusion of this opening statement,

counsel for plaintiffs made opening remarks not only on

the evidence to be presented by plaintiffs during the re-

trial but also the liability evidence that had been pre-

sented during the prior trial. To provide the jury with an

understanding of the activities that gave rise to liability,

plaintiffs’ counsel was permitted to list the tvpes of ac-

tivities by KACC and KACSI relied on by plaintiff to es-

tablish liability at the first trial: that defendants refused ’

to sell raw materials to Columbia; located a new culvert

manufacturing plant within forty miles of Columbia's

plant to retaliate against Columbia for buying materials

from another supplier; set up Kennedy, the former Co-

A-78 Appendix E

lum via salesman, to compete with Columbia; instituted

a “price squeeze,” in which Kaiser raised the price of the

aluminum needed to fabricate culvert but sold fabricated

culvert at a constant price; and induced Columbia to buy

a machine suitable for use only with Kaiser products un-

less modified at significant expense. (N.T. 32-41). Coun-

sel for defendants responded to plaintiffs’ statement on

liabii‘tv in his opening remarks. (N.T. 53-56).

The jury, answering four special interrogatories on

damages (attached hereto as Appendix A), awarded

plaintiffs $728,000 for actual losses, $742,520 for lost

profits on the sale of alusisinum culvert pipe, $80,000 for

lost profits on the sale of flat corrugated aluminum sheet,

and $1.638.793 tor the diminution in the value of the

business. Judgment in the trebled amount of $9,567,939

was entered on this special verdict. Kaiser defendants

have again filed post-trial motions. Judgment notwith-

standing the verdict is sought on the grounds that: the

retrial on damages was improper because the jury was

unable to award damages flowing only from the antitrust

injurv; damages awarded for lost profits duplicated dam-

ages for actual losses (Int. 2); the profit projections were

unsupported by evidence and artificially enhanced by

plaintiffs’ use of an improper geographic area and un-

derstatement of certain expenses; and the plaintiffs’ con-

tentions in the trial on damages contradicted their con-

tentions on the price squeeze in the trial on liability. De-

fendants also contest the period for which an award of

damages on actual losses and lost profits was permitted.

Defendants claim that damages awarded for lost profits

from the intended sale of flat corrugated sheet (Int. 3)

were speculative. Defendants claim also that allowing

damages for loss of the value of a going concern (Int. 4)

was improper because Columbia did not prove it ever ac-

tually terminated business during the damage period.

Defendants contend that in any event the damage tor

loss of going concern value was overstated and was

based on assumptions not supported by the evidence.

ee

ee 2 rn 2. ee

Appendix E A-79

Defendants move in the alter:.ative for a new trial on

the grounds that the retrial on damages only was im-

proper and prejudicial; the conduct of plaintiff's counsel

was inflammatory; the court erred in its evidentiary rul-

ings, charge and form of special verdict; and finally that

the amount of the verdict was grossly excessive, shock-

ing to the conscience, and the product of jury bias

against defendants. Defendants’ alternative motion for a

new trial on damages only is denied. Defendants’ motion

for judgment notwithstanding the verdict is denied with

regard to damages awarded in response to Interrogato-

ries 1, 2 and 3 and granted as to damages awarded in

response to Interrogatory 4. As a result, the jury’s award

is reduced by $1,638,793 (Int. 4) and the award remain-

ing is in the total amount of $1,550,520. Therefore, when

trebled, plaintiffs are entitled to entry of judgment in the

amount of $4,651,560.

RETRIAL ON DAMAGES ONLY

KACC and KACSI (hereinafter referred w collec-

tively as “Kaiser’”) object to the retrial on damages only

ordered by the court on June 13, 1981 upon granting in

part its motion for new trial. Kaiser contends that be-

cause it did not hear the evidence on liability, the damage

jury was unable to determine which, if any, of the losses

that Columbia suffered were actually caused by the an-

titrust violation. That such causation was required is

clear. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429

U.S. 477, 489 (1977) (“Plaintiffs must prove antitrust

injury, which is to say injury of the type ... that flows

from that which makes defendants’ acts unlawful. . . .”’).

However, the retrial procedure utilized did not in and of

itself preclude rational jury determination of damages

caused by the antitrust violations found by the previous

jury.!

i. In his opening statement, Kaiser's counsel “assured” the

jury that Kaiser did not violate the antitrust laws or “any other law”

A-80 , Appendix E

The Third Circuit has expressly approved the use of

a retrial on antitrust damages in Pitchford v. PEPI, Inc..,

531 F.2d 92 (3d Cir. 1975). cert. denied, 426 U.S. 935

(1976); other cases in the Third Circuit are collected in

plaintiffs’ brief at Appendix C.? In that case the Court of

Appeals found legal error in plaintiffs calculations of

damages and remanded to the district court for a new

trial on damages only. 531 F.2d at 107-09. We cannot

presume that the Court of Appeals ordered a procedure

that was per se violative of the rights of antitrust defen-

dants. Pueblo, supra was decided after Pitchford, supra,

but it was not the first case to hold that damages must be

caused by defendant's antitrust violations and it may be

assumed that the Court of Appeals was cognizant of a

causation requirement when Pitchford was decided. Ze-

nith Radio Corp. v. Hazeltine Research, Inc., 395 U.S.

100 (1969). for example. decided vears before the re-

mand tor a damage trial in Pitchford, referred explicitly

to the “necessary causal relation between the [violator’s}

conduct and the claimed damages. .. .” Zenith, supra at

125.

Detendants never requested that special interroga-

tories as to the alleged anticompetitive acts complained

NOTES (Continued )

notwithstanding che prior jurv’s determination of liabilitv. (N.T. 52).

Kaiser continues to ubject to the prior jurv’s determination of lia-

bility. Indeed. Kaiser seemed to protest the very mention of the pre-

vious liability verdict to the damage jury. ( Defendants’ Brief at 22).

Ot course. informing the damage jury of the prior determination of

liability was a necessary first step in a retrial on damages to ensure

that the damages. if any were found, flow from the antitrust viola-

tions. The court made strenuous. although not altogether success-

ful. efforts to limit reference to the issues resolved at the liability

phase to the bare minimum required for the jurv to understand and

determine the damage issues. ‘Defendants’ Brief 18-60; Plaintiffs’

brief, 26-54).

2. It has only recently been reported that the Court of Appeals

for the Seventh Circuit has awarded a new tnal on dameges only in

the MCI-AT&T antitrust litigation. Philadelphia Inquirer, January

13, 1983.

Appendix E A-81

of by plaintiffs be submitted to the liability jury. (Defen-

dants’ Brief at 14-15, 23-24). Kaiser claims that the dam-

age jury could not know which of the five alleged

anticompetitive practices compiained of by plaintiffs

were actually relied upon by the jury that found it liable.

But plaintiffs’ economist did not attempt to and did not

have to distinguish between actual losses caused by the

various types of anticompetitive practices. Whether

plaintiffs’ losses were caused by one or more of the

anticompetitive acts was immaterial on the damages is-

sue so long as the jury was presented with competent

evidence to prove the extent of plaintiffs’ losses caused

by Kaiser’s impairment of the free and open market in

aluminum culvert pipe. Plaintiffs’ evidence was so di-

rected. (See, e.g., N.T. 509, 542, 548, 596). The charge to

the jury made clear that the jury could only award dam-

ages for injury caused by Kaiser’s conduct in the market:

You are not to presume just because Columbia

suffered financial losses or went out of business that

all such losses are caused by Kaiser. The plaintiff, as

I said, must prove those financial losses are setbacks

that were caused by Kaiser and establish some rea-

sonable basis in the evidence for the damages that

you find.

Similarly it follows from that that you should not

award ylaintiffs damages for losses caused not by

Kaiser but by conditions in the economy in general

or a recession in the construction industry, alumi-

num shortage, a lack of price protection for long-

term requirement contracts.

You may also consider whether or not plaintiffs’

calculations should have taken into account poor

business judgment or poor management. Some cor-

porations suffer losses solely because of their own

inadequate financial capitalization. You can’t award

plaintiffs damages for all its losses if you find that

A-82 Appendix E

Columbia was under capitalized, that is that there

was a lack of sufficient working capital and that

losses were suffered as a result of that, because un-

der such circumstances Columbia’s financial inad-

equacies rather than Kaiser’s conduct would have

caused some portion of the losses.

(N.T. 1531-32).

Even if there were a serious question raised as to the

propriety of a new trial on damages only, defendants

waived objection to this procedure. Before issuing the

June 17, 1981 Order granting the retrial, defendants

spoke in favor of the concept. Addressing the court’s

question during supplemental oral argument on the

post-trial motions on December 29, 1980, counsel for

Kaiser stated:

... With respect to the grant of a new trial with

respect to damages alone, obviously, in our submis-

sion, the cases would support that kind of remedy.

As to the mechanics upon the new trial, it seems

to me, Your Honor, that there would, of necessity,

simply be more to the trial than a review of the

charts, testimony of Dr. Kuehn, or whomever the

plaintiff wished to put on as a fact witness or expert

witness. It seems to me there are additional matters

relevant to damages and the amount of damages

which also go to questions of causation. Those, as we

have addressed in our post-trial briefs, deal with con-

ditions in the marketplace that may have impacted

upon Columbia’s volume of sales, and hence on the

amount of profit that it would have earned even as-

suming the existence of violations of the antitrust

laws by Kaiser which also impacted upon Columbia.

With respect to liability, I believe that it would be

sufficient to inform the jury that a verdict on liability

has been established; that a jury has found that that

re ee ee

Appendix E A-83

violation of the antitrust laws caused some damage

to Columbia, and it would be up to the jury to de-

termine what the extent and amount of that damage

was, and I believe that a trial could occur.

Docket Entry No. 510, N.T. 406. Defendants, having

supported a new trial on damages before the jury’s award

at such trial was known, should not be permitted to ob-

ject to the procedure itself just because its outcome is not

to their liking.

But even if defendants are correct that a limited re-

trial on the issue of the amount of damages was so pre}j-

udicia! to Kaiser as to constitute reversible error, the

remedy can certainly not be a judgment notwithstanding

the verdict in favor of defendants; at most defendants are

entitled to a retrial on both liability and damages. That

remedy does not lie with this court at this time. Follow-

ing a bifurcated trial on liability and damages on remand

from the Court of Appeals, this court denied a motion for

a judgment notwithstanding the verdit on liability; judg-

ment notwithstanding the verdict was granted as to one

item of damages in the amount of $157,000 and a new

trial granted as to the award of damages for lost profits

($1,048,000) and destruction of Columbia as a going

concern ($710,000). But, that new trial was as to dam-

ages only for the reasons stated in the court’s Opinion of

June 18, 1981. At this juncture, the power of this court

is limited to granting a new trial again on damages only.

This was called to the attention of counsel frequently in

the course of the trial in trying to assure fair proced’res

and prevent yet another retrial. (N.T. 97-99; 976-978).

Therefore, the court concludes that defendants’ objec-

tions to a limited retrial on damages are only to preserve

them for the Court of Appeals which, of course, has the

power to order a new trial on liability and/or damages.

A-84 Appendix E

JUDGMENT NOTWITHSTANDING THE VERDICT

The standard in this Circuit for the entry of judg-

ment notwithstanding the verdict is clear. The court

must interpret the evidence in the light most favorable to

the verdict winner, and may grant the motion only if that

evidence and the reasonable inferences to be drawn

therefrom fail to support the verdict as a matter of law.

Neville Chemical Co. v. Union Carbide Corp., 422 F.2d

1205, 1210 (3d Cir.), cert. denied, 400 U.S. 826 (1970).

See also, Hahn v. Atlantic Richfield Co., 625 F.2d 1095,

1098-99 (3d Cir. 1980), cert. denied, 450 U.S. 981

(1981); Kademenos v. Equitable Life Assurance Society,

513 F.2d 1073, 1074 (3d Cir. 1975); 6A Moore’s Federal

Practice §59.08[5] at 59-152 (1979). A directed verdict

may be entered on only one or a combination of jury find-

ings if a special verdict has been returned in accordance

with Fed.R.Civ.P. 49(a). See, Franklin Music Co. v.

American Broadcasting Cos., Inc., et al., 616 F.2d 528

(3d Cir. 1979); Fox v. Kane-Miller Corp., 398 F. Supp.

609, 649 (D.Md. 1975), affd, 542 F.2d 915 (4th Cir.

1976).

Defendants concede this standard but contend that

the court should enter judgment n.o.v. because the ver-

dict is contrary to the evidence and unsupported in the

record; that is, there is but one reasonable conclusion as

to the proper judgment. Defendants argue this persua-

sively and well. Defendants’ brief makes an excellent

closing speech to the jury; the problem is that the jury

heard it and nonetheless decided for plaintiffs. With the

exception of damages for loss of value of a going concern

discussed below, there is no error of law during the trial

or in the court’s charge to the jury on damages (N.T.

554) that would justify setting aside that verdict. The

charge was fair and clear although relatively brief be-

cause it commented little on the evidence argued in de-

tail by able counsel for both sides. But it touched on and

Appendix E A-85

left to the jury all but one of the matters of which de-

fendants now complain in asserting a right to judgment

notwithstanding the verdict.

The Supreme Court stated in Zenith, supra:

Trial and appellate courts alike must also observe the

practical limits of the burden of proof, which may be

demanded of a treble damage plaintiff who seeks re-

covery for injuries from a partial or total exclusion

trom a market; damage issues in these cases are

rarely susceptible of the kind of concrete, detailed

proof of injury which is available in other contexts.

395 U.S. at 123. Accordingly, in an antitrust case, dam-

ages need not be proven with exactness or precision:

rather, “the wrongdoer shall bear the risk of uncertainty

which his own wrong has created.” Bigelow v. RKO Ra-

dio Pictures, Inc., 327 U.S. 251, 264 (1946). The court

does not have the prerogative of drawing inferences from

facis within the exclusive province of the jury that are

contrary to its findings without usurping the functions of

the jury as a fact finding body. Story Parchment Co. v.

Paterson Parchment Paper Co., 282 U.S. 555, 566

(1931). It was for the jury tc determine the weight of the

evidence and the credit to be given the witnesses, expert

or otherwise; it has given its verdict accordingly. To set

this verdict aside except for clear error of law would im-

permissibly intrude on the role of the jury in an antitrust

trial.

DUPLICATION OF ACTUAL LOSSES

AND LOST PROFITS

Kaiser contends that the award for hypothetical lost

profits (Int. 2) duplicates the award for actual losses (Int.

1). Kaiser argues that these two types of losses are “ir-

reconcilably contradictory and mutually exclusive.” (De-

fendants’ Brief at 64). See, William Goldman Theatres,

Inc. v. Loew’s, Inc., 69 F. Supp. 103, 105 (E.D.Pa. 1946)

A-86 Appendix E

aff'd, 164 F.2d 1021 (3d Cir. ), cert. denied, 334 U.S. 811

(1948). In William Goldman Theatres, the plaintiff was

unable to obtain first-run movies for his leased theater

because of defendants’ conspiracy to restrain trade. 150

F.2d 738, 742 (3d Cir. 1945). The district court declined

to award out-of-pocket expenses actually incurred by

plaintiff in connection with an alternative use of the

premises in addition to the lost profits from the hypo-

thetical operation of the business from which plaintitf

was excluded by defencant’s conduct. 69 F. Supp. at

105. Plaintiff's actual losses from the ineffective effort to

mitigate damages were not causally connected with the

losses from the intended use for which antitrust dam-

ages were awarded. See, 69 F. Supp. at 105. —

However, Columbia was in business throughout the

damage period as a culvert fabricator and distributor. To

the extent it would have made profits in a free and open

market, the antitrust laws provide compensation. Co-

lumbia incurred actual losses while running the busi-

ness it contended it would have operated profitably but

for the illegal conduct of the defendants. Plaintiffs’ dam-

ages would have been reduced had Columbia actually

made a profit during the damages period, and so plain-

tiffs may recover the net losses that were actually in-

curred in addition to the profits they would have made.

Had Columbia made a profit, that sum would have been

subtracted from hypothetical lost profits to arrive at the

true measure of harm to Columbia. Pitchford, supra at

109. But plaintiffs suffered a loss rather than a profit and

are entitled to subtract this negative figure from the hy-

pothetical lost profits proved. (See, N.T. 55-56). The re-

sulting calculation, the addition of actual losses to lost

profits, is necessary to make plaintiffs whole.

LOST PROFITS ON ALUMINUM CULVERT PIPE

Plaintiffs utilized a market share theory to calculate

their hypothetical lost profits during the damage period.

Appendix E A-87

Plaintiffs’ expert economist, Dr. Gary Bowman, calcu-

lated the amount of aluminum culvert pipe actually sold

in the relevant market and then calculated the propor-

tion of sales Columbia would have made absent an an

antitrust violation. He sought to establish the number of

pounds of culvert Columbia would have sold in a free and

open market and multiplied that number by the esti-

mated revenues Columbia would have received per

pound. From this estimate of gross revenues he sub-

tracted his estimate of Columbia’s total expenses if there

had been a free and open market. This type cf analysis is

proper in a case in which plaintiffs were deprived from

competing freely in a particular product and geographic

market, and the injured party need not produce the

“kind of concrete, detailed proof of injury which is avail-

able in other contexts.” Zenith, supra at 116, 123-35.

An expert opinion on relevant dasnages issues is not

enough to satisfy the plaintiffs’ burden on damages un-

less that opinion is based on relevant data and the as-

sumptions behind the opinion are shown to be realistic

so that the jury has a rational basis for its decision. In re

IBM Peripheral EDP Devices Antirust Litigation, 481 F.

Supp. 965, 1012, 1020 (N.D.Calif. 1979). Plaintiffs pre-

sented expert testimony on all elements of the market

share theory, their estimates of the size of the local mar-

ket at issue, Columbia’s share of the local and non-local

markets assuming free and open competition, and

Columbia’s expenses in a free and open market; there- |

fore, the record did not force the jury to engage in im-

permissible speculation.

Defendants argue that the jury’s award of plaintiffs’

claims for lost profits must be set aside because plaintiffs’

projection of lost profits on the sale of aluminum culvert

pipe is based upon assumptions unsupported and con-

tradicted by the evidence in that:

A-88 Appendix E

a. the volume of sales in the so-called “local area”

are deliberately overstated, contrary to the evi-

dence in the record:

b. plaintiffs’ proof on damages improperly deviated

from the stipulated relevant geographic market;

and

c. plaintiffs’ projections of profits on the sale of alu-

minum culvert pipe were artificially and improp-

erly enhanced by understating certain expenses.

The first step in estimating what a defunct business

would have sold in a free and open market was to esti-

mate the overall volume of the market. Plaintiffs’ expert

chose to use two geographic markets: local and non-

local. The local, or “Vineland,” selling market was the

area covered by the approximately 150-mile radius sur-

rounding Vineland, New Jersey, the location of

Columbia’s plant. The non-local market was the remain-

der of the geographic market for which plaintiffs seek

damages. Plaintiff's stated rationale for using two mar-

kets was that Columbia would have commanded a sig-

nificantly greater proportion of sales in the local rather

than non-local area — 50% rather than 30%.

Thus, if plaintiffs’ estimate of the number of pounds

sold in the local market was too high because it took into

account pounds that were sold in the non-local market,

the figure for the total number of pounds of pipe sold by

Columbia would be inflated, since the local poundage is

multiplied by .5 but the non-local by .3. It is plaintiffs’

burden to put into evidence a reasonable and rational

estimate of the size of the market. Schwabe, Inc. v.

United Shoe Machinery Corp., 297 F.2d 906, 911-12 (2d

Cir. ), cert. denied, 369 U.S. 865 (1962). Where conflicts

as to credibility exist as to certain estimates, they are to

be resolved by the jury.

Defendant points out that Dr. Bowman used figures

for the so-called “local market” that included non-local

ema tae ig ae oo

Appendix E A-89

sales although Dr. Bowman asserted to the contrary.

(N.T. 609). Under cross-examination, Dr. Bowman

stated that he obtained his estimate of local market sales

by adding sales from Kaiser’s New Castle, Delaware

plant to Columbia’s Vineland sales. This approximately

150-mile local sales area included all of New Jersey, De!-

aware, most of Maryland, approximately the eastern

third of Pennsylvania and very small portions of Virginia,

West Virginia, and New York. Ex. D-150 (Map of East-

ern United States with 150-mile radius of Vineland de-

lineated). Kaiser introduced uncontradicted deposition

testimony that New Castle sales include sales from the

entire state of “Virginia, West Virginia, Maryland, Dela-

ware, New Jersey, Pennsylvania.” (N.T. 886). Dr. Bow-

man used an “adjusted territory pounds” figure and then

assumed that included only sales within the local area

(N.T. 610); Kaiser argues the invalidity of that asssump-

tion. Kaiser’s evidence tends to establish that significant

sales were made outside the local area that Dr. Bowman

considered the local market; Dr. Bowman admitted that

if such were the case, his figures would have to be ad-

justed. (N.T. 611). Kaiser argues that because the jury

had no basis upon which to adjust Dr. Bowman’s inflated

figures, Dr. Bowman’s opinion on the total pounds of cul-

vert sold by Columbia permitted the jury to speculate as

to the total size of the market.

But Dr. Bowman told the jury he divided the entire

market into two shares basically for two reasons: Colum-

bia would have made more sales in an area closer to its

plant, and Kaiser data from its New Castle and

Schenectady plants was available. The local market fo-

cused on Kaiser sales areas and was not strictly speaking

an area within a 150-mile radius of Vineland, New Jersey

as defendants contended. Since Kaiser was the domi-

nant selling force in the total market, Kaiser sold most of

the aluminum culvert pipe, and the Kaiser data provided

a natural factual basis for the computation of the market.

On plaintiffs’ proof of its damages from Kaiser’s violation

A-90

Appendix E

of antitrust laws, Kaiser does not have standing to com-

plain about its data not providing a precise “geographical

fit” to the relevant geographical market in this case.

Q.

A.

Why did you pick those two areas? Why did you

make that division?

Generally speaking the reason for making any

division if you divide an overall market area into

subareas you get a somewhat more accurate

projection. That is the share of the market Co-

lumbia would have had in the near areas is big-

ger than it would have had in the further away

area. The reason I chose those two areas is that

that is the way Kaiser's statistics were broken

down. It was convenient. They had figures for

sales to what they called the New Castle area,

and they had sales outside of that that I called

sort of loosely the non-local area which also may

be called the Schenectady area. Since I couidn't

breakdown Kaiser’s figures any other way and I

had Mr. Bonjorno available to tell me how his

sales broke down between the two areas as de-

fined by Kaiser it was convenient to use those

two breakdowns rather than a breakdown of the

overall market into two submarkets.

Once you had decided to make that breakdown,

what was the first thing you then did with the

data you had available?

Once I had the breakdown I wanted to see what

kind of market share each of the companies

would have had, specifically what market share

Columbia would have had over the period ’74

through °77.

Did you attempt to determine what volume had

actually been sold in each of those areas?

Appendix E A-91

A. Yes, ' did. | described that earlier. i'm sorry, that

is cleaitv the first step. You have to know how

much was sold in each of the areas over the pe-

riod.

(N.T. 305-6; Dr. Bowman).

Plaintiffs contend that, even if their estimate of total

pounds sold in the local market was inflated by overstate-

ment of the size of that market, Kaiser could have intro-

duced its own data demonstrating the size of the local

market. (Plaintiffs’ Brief at 69). Defendants chose in-

stead to attack the credibility of plaintiffs’ evidence at

trial and its adequacy post trial. But once the jury has

determined the credibility issues adversely to defendants

only the issue of adequacy remains and the standard of

proving damages is liberal. Bigelow, supra. That stan-

dard has been met if plaintiffs’ expert is to be believed.

To determine the number of pounds of aluminum

culvert pipe Columbia would have sold absent Kaiser's

antitrust violations, Dr. Bowman multiplied the total

poundage that would have been sold by all companies by

his estimate of Columbia’s share cf t

This text is long and has been trimmed here. Open the source document for the complete record.