# Appendix — Kaiser Aluminum & Chemical Corp. v. Bonjorno > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_0306%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1985 - **Citation:** 474 U.S. 811 ## Text A Office - Supreme Court. Us. | ~~ A} i > 7 - 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, WE eee e aes eek eens cea een A-117 - *6@. +2 eo. « : a ew = ay 2) —— rls Cy” 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 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. 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- The evidence of non-local 5. The stipulated area extended north through Rhode Island, south through Northern Virginia, and west through eastern Penn- sylvania. A-104 Appendix E sales which was the basis of plaintiffs’ projections un- deniably extended beyond the geographic area agreed to by the parties for the purpose of determining liability. But it was not agreed to as a limitation on plaintiffs’ dam- age estimates. As long as there was some evidence that Columbia would have made sales beyond that geo- graphic area, as there was, plaintiffs were entitled to have the jurv consider those estimated sales. Pitchford. supra at 108-09. Defendants contend that whatever the actual losses or lost profits, for all practical purposes, Columbia's busi- ness was terminated prior to 1977 so that damages could not in any event be awarded beyond 1975. This issue was vigorously pursued on examination and cross-exam- ination ef witnesses for both sides and argued to the jury thereatier. The jury was instructed to award damages only for those years during which it was reasonable for Columbia to have continued to operate its business for purposes other than the claim of damages in suit. (N.T. 1540-41). The jury had an adequate basis upon which to decide the length of time for which damages might be awarded to plaintiff. Defendants aiso contend that the judgment should be set aside because plaintiffs’ theory of damages and the evidence adduced t6 support it contradicted the theory of liability based upon a “price squeeze.” Among the joint activities of defendants relied on by plaintiffs at the trial on liability was a “price squeeze” by which KACC raised the price of aluminum sheet sold to other fabricators; aluminum sheet was transferred to KACSI at a price that permitted KACSI to sell Kaiser fabricated culvert at a low price with which other fabricators could not complete. That is, the difference between the price of the raw ma- terial charged by Kaiser and others, such as Alcoa, pre- sumed to follow 1s lead, and the price charged for the finished product by Kaiser made it impossible for other companies not vertically integrated to sell the finished product competitively. “lei Appendix E A-105 In this trial on damages. the calculations of plaintiffs’ expert on prices in a free and open market tended t« con- tradict the “price squeeze” theory. The prices he used for raw material (aluminum coil) were the actual prices charged by Alcoa in 1974-77 at which time it allegealy followed the lead of Kaiser. He used these prices to es- tablish a fair selling price in a freely competitive market: those prices were admittedly nearly identical to the av- erage direct selling price actually charged by Kaiser in the damage period. (N.T. 1478-80). Plaintiffs’ expert also testified that the relationship between metal cost and the selling price of culvert pipe in a free and open market would have been 65% of sales; Columbia’s financial statements for the year 1970 through 1975 showed a raw material cost approximating 65% of sales in each vear. Thus, plaintiffs’ evidence at the retrial on damages cast some doubt on a “price squeeze’ as the basis for liability. But a “price squeeze” was just one of a number of activities relied upon by plaintiffs at the first trial from which liability might have been found. There was suffi- cient evidence from which a jury might have inferred that KACSI: attempted to drive Columbia out of busi- ness; threatened to place a piant near Columbia if it pur- chased raw material from other than Kaiser and then later opened a plant in Delaware that had originally been planned for Virginia; charged lower prices from that plant, particularly in southern New Jersey; and extended credit to a former salesman of Columbia against the rec- ommendation of KACSI’s credit department. A jury find- ing on the anticompetitive significance of each of these acts was not requested and no special interrogatories were submitted as to which of the alleged categories of activities violated the Sherman Act or caused antitrust injury to Columbia. At the first trial plaintiffs estimated damages by us- ing 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 A-106 Appendix E highway construction during the damages period. Method D (P-3013) projected Columbia's sales by utiliz- ing defendant Kaiser's nationwide sales, while Method E (P-3014) used Kaiser sales from the New Castle, Dela- ware plant only. Method F (P-3011) relied upon Joseph Bonjorno’s estimates of Columbia's potential sales and profits were it not for defendant's wrongdoing. At the time the post-trial motions were decided it did not appear liability and damage issues were inextricably interwo- ven. The trial on damages and liability had been bifur- cated by agreement of the parties, so that there seemed little basis to believe the jury verdict would have been the result of compromise on the liability and damage issues. Because the liability and damage issues seemed suffi- ciently distinct and severable, a new trial on damages only was deemed fair to both parties and was so ordered. But cf., Northeastern Telephone Co. v. American Tele- phone & Telegraph Co., 651 F.2d 76 (2d Cir. 1981) (plaintiffs’ failure to prove five of six alleged exclusionary activities and lack of certainty that jury based its verdict exclusively on the one remaining practice required ali findings on liability set aside; a partial new trial limited to redetermination of damages held improper unless it clearly appeared the issue to be retried was distinct and separable ). Notwithstanding the vigor with which plaintiffs’ urged the unassailability of their damage evidence on their motion for reconsideration (later withdrawn), at the damage retrial plaintiff proffered a different expert and a different method for calculation of Columbia's hypothet- ical share of a freely competitive market. This new tes- timony on damages if heard by the liability jury might have influenced it to reject or discount the contention of a “price squeeze” by the Kaiser defendants. But this cir- cumstance certainly does not compel the entry of judg- ment in defendants’ favor notwithstanding the verdict. At most it reflects the unforeseen difficulties arising from a limited retrial on damages. Since the court rules now Appendix E A-107 only on post-trial motions concerning the retrial on dam- ages, this consideration is for the Court of Appeals. The court has considered all other arguments for the entry of judgment notwithstanding the verdict and found them to be without merit. MOTION FOR NEW TRIAL When a party moves for judgment notwithstanding the verdict or in the alternative for a new trial, and the court grants judgment notwithstanding the verdict, it is imperative that the court rule on the new trial request so that the litigation will not be needJessly protracted if the judgment is thereafter vacated or reversed by the appel- late court. Fed. R.Civ.P. 50(c); 15 Wright & Miller, Fed- eral Practice and Procedure §2539 (1971). Defendants advance four grounds for a new trial: that the conduct of plaintiffs’ witnesses and counsel was prejudicial and im- proper; that the verdict was against the weight of the evidence; that the verdict was excessive; and that legal errors were committed throughout the trial. Plaintiffs’ counsel and witnesses during the retrial made some remarks irrelevant to damages issues and prejudicial to Kaiser. Notwithstanding extended discus- sion with counsel prior to trial and admonitions to coun- sel duiing the trial, the findings on liability were over- stated or referred to unnecessarily. The testimony of plaintiffs’ principal witness conveyed resentment of Kai- ser which was not surprising. It seems that a trial limited to damages presented difficulties to counsel for both par- ties. But these were lapses from perfection in the course of lengthy, complex and vigorously contested proceed- ings. After reviewing the record as a whole and the in- structions to the jury to consider only the issues on dam- ages without prejudice or bias, we are of the opinion that the conduct of plaintiffs’ counsel and witnesses does not warrant a new trial on damages. A-108 Appendix E A new trial may be granted on the ground that the verdict is against the weight of the evidence. Nevcle, supra; 6A Moore’s Federal Practice ©59.08[{5| (1982). In terms of the amount of damages awarded, a new trial may be granted when the damages assessed by the jury are “so unreasonable as to offend the conscience of the Court.” Murray v. Fairbanks Morse, 610 F.2d 149, 152 (3d Cir. 1979). Stated either way, such a motion for a new trial is within the sound discretion of the court. Id. at 153. In exercising its discretion, the court may weigh the parties’ evidence instead of looking only to whether the verdict winner has introduced sufficient evidence on each essential element to preclude judgment as a matter of law. Moore’s Federal Practice, supra. Greater scrutiny of a verdict is called for when the trial is “complicated and deals with a subject matter not lying within the or- dinary knowledge of jurors.” Lind v. Schenley Indus- tries, Inc.. 278 F.2d 79, 90-91 (3d Cir. 1960). Even on a motion for a new trial judicial discretion must be exercised in a manner consistent with plaintiff's right to a trial by jury. The court may not substitute its own judgment for that of the jury merely because the judge as the finder of fact might have reached a different conclusion. That well established principle is not obvi- ated simplv because the trial is bifurcated. (Neither a trial nor an appellate court has the au- thority to substitute its judgment for that of the jury and thus usurp the jury's function as the principal finder of fact. Collins v. Signetics Corp., 605 F.2d 110, 115 (3d Cir. 1979). At the prior trial this court was guided by that prin- ciple. Based on the law of the case determined by the Court of Appeals, it found that evidence sufficient to sup- port the jury’s conclusion that defendants monopolized or attempted to monopolize the relevant product market in violation of Section 2 of the Sherman Act. The jury's Appendix E A-109 determination on liability was not so against the weight of the evidence as to shock the conscience of the court. But the deficiency in plaintiffs’ proof of damages con- vinced the court that the verdict as to damages should not stand. The evidence presented by the damage wit- nesses was incomplete, confusing and lacking in proba- tive value and the factual basis for the estimates of losses was not made clear by the testimony. Since the damage award on that inadequate record had to be vacated. no explicit statement as to excessiveness was deemed nec- essary to the decision. After a retrial on damages at which plaintiff offered a different expert on damages and a new theory of the measure of damages or at least a new wav of calculating damages, the court is faced with a difficult question: if plaintiff could not substantiate an untrebled award of $1,815,000 at the first trial on dam- ages, what is the effect of an untrebled award of $3,189,313 at this trial? The record on retrial was different and more fully developed. The evidence was sharply in conflict: the is- sues were pointedly raised by the direct testimony and extensive cross-examination. Almost all of Bonjorno’s statements on the financial history of his company, the state of the market for the years in question, his future intentions and the prospects of Columbia required cred- ibility determinations. The implausibility of deeming Co- lumbia an operating business between 1975 and 1977 was effectively raised. The witnesses on behalf of plain- tiffs were subject to impeachment for lack of knowledge. prejudice against Kaiser or interest in the outcome of the case. The assumptions of plaintiffs’ expert o1 the size of the market, Columbia's projected 50% share of a local market and 30% of the entire market were challenged as ignoring viable competitors, inflating revenues and de- flating expenses. But all of this was placed before the jury by a fair charge; its role as factfinder in weighing the contradictory evidence and inferences and in drawing the ultimate conclusions as to the facts cannot properly A-110 Appendix E be ignored. Whether the trial judge would reach the same conclusions is irrelevant. So long as evidentiary support for their jury findings exists, “we perceive the resolution of the conflicting claims as the traditional re- sponsibility of the jury.” Lehrman v. Gulf Oil Corp., 500 F.2d 659 (5th Cir. 1974), cert. denied, 420 U.S. 929 (1975). Therefore the court must refuse to set aside this verdict as excessive and respect the role of the jury in judging the credibility of the witnesses, assessing the weight given to expert opinions and resolving conflicting evidence. Two judges have previously taken these questions from a jury. At the initial trial, a verdict was directed for defendants at the end of the plaintiffs’ case on the ground that the evidence was insufficient to establish a market composed of aluminum cv’ vert pipe or a monop- olization of the relevant culvert pipe market and there was insufficient evidence of conspiracy in restraint of trade. The Court of Appeals reversed and remanded for trial. Following that trial, judgment on the verdict in fa- vor of plaintiffs on liability and damages was set aside and a new trial ordered on damages only. Now this court is requested to set aside a second award of damages by another jury. “Courts rarely grant a new trial after two verdicts upon the facts in favor of the same party.” Louisville & Nashville Railroad Co. v. Woodson, 134 U.S. 614, 623 (1980). Wright and Miller, commenting on this dictum in Federal Practice and Procedure, Vol. 11 §2803 at p. 35, observes: Of course there is no question but that a third trial may be ordered when the second trial, like the first, has been marred by a legal error. The more difficult question is whether the trial court may set aside suc- cessive verdicts as excessive, or against the weight of the evidence. That the power to do so exists seems perfectly clear, but it is equally clear that it is a power Appendix E A-111 to be exercised only in the most exceptional cases. When two juries have reached substantially. the same result, the possibility of a miscarriage of justice is very slight. [Footnotes omitted]. The usual circumstances weighing against the ex- ercise of discretion in ordering a third trial on damages were well expressed by the trial judge in Frank v. At- lantic Greyhound Corp., 177 F. Supp. 922 (D.D.C. 1959), aff'd, 380 F.2d 628 (D.C. Cir. 1970): When a new trial is granted on the ground that the verdict is contrary to the weight of evidence, or on the ground that the damages awarded by the jury are excessive or inadequate, the trial judge takes this ac- tion to prevent what he finds to be a miscarriage of justice. This step is taken only in exceptional cases, as great weight must ordinarily be accorded to the verdict of a jury. If a second jury arrives at the same result as did the first, the trial judge may well pause - before setting aside the second verdict. Under such circumstances the parties have had two trials. The fact that two juries in effect agreed is entitled to a great deal of significance. Bearing in mind that a mo- tion to set aside a verdict of a jury on the facts should be sparingly granted under any circumstances, a fortiori a second verdict reaching substantially the same result on practically the same evidence should greatly increase the hesitancy of the Court to award another trial. The possibility that a miscarriage of justice has resulted is greatly diminished under such circumstances. After all, there must be some point at which the granting of new trials in the same case should ordinarily stop. It may well be that if an- other new trial were granted, the same result would again be reached by a third jury. 177 F. Supp. at 923. A-112 Appendix E Here these circumstances are not present. The first new trial on damages was granted because there was a lack of an evidentiary basis for expert estimates not just because the verdict was against the weight of the evi- dence. Moreover, on retrial plaintiffs (perhaps because of the inadequate testimony of their previous damage ex- pert), presented not only a different expert but a different theory of damages or at least a far different method for its calculation. So there has not been a second verdict reaching the same result on practically the same evi- dence. But a trial judge should still pause before setting aside this second verdict because of the peculiar proce- dural posture of this case. The court’s discretionary grant of a new trial is now limited to retrial on damages only. Defendants strenuously object to [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_0306%3A2. Public record. Not legal advice.