Petition for Writ of Certiorari — Hausfeld v. Ziegler

Supreme Court brief1963

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‘ Wits, Fe Y Of 8 oelED U.S.

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: ‘DEC 7 18h.

TT CLERK: .

4 . . : ; e + ° ; é

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0 OS etme

_ SUPREME COURT OF THE UNITED su,

a OCTOBER TERM, 1962.

VOLASCO PRODUCTS COMPANY. ad VOLU NTEER

ASPHALT COMPANY, -

Rony —— ee

>> Ws ants :

“ LLOYD A. FRY. ‘ROOFING COMPANY,

- Respondent.

"PETITION FOR WRIT OF CERTIORARI

" fo the United States Court of Appeals

- for the Sixth Circuit.

»,

+ Fe

. WM. C. WILSON, |

W. L. AMBROSE, JR.,

Attorneys for Petitioners.

we TORS - C4 Lite,

~ AMBROSE, WILSON & SAULPAW, ose ree ae Pa

Knoxville, Tennessee, re ee as

Of Counsel.

—

Se Lovie Law Puintine Co, Inc. 415 N. Bighth Street, Clitral 1-4477.

f -

x folie a “

° i 7 INDEX..

“tet . — 7 So Page :

Opinions istics ana% er rrr ———— :

“Jurisdiction EPR Ge Cee Ries hee ey re eaters. ee

\s (Questions presented PET aes Wig PO ry me » ;

Constitutions; statutes and rules involved ... sat ve oe:

. Statagient of the case .. ~ cae : + oore a vie eeees 78

I. Summary statement... Cerecon F RY of : ee

IThe facta iu. i...scees Shas WO!

A. Background and waditles me te, . cee ce

B.. Pricing and sales policies of Fry and: other

major companies eaen art Five ve See geeee 14

_C. Competition | in the hocking industry . oe ae .- Dog

D. Cost: of production of asphalt saturated felt 26

: . Petitioners’ damages Cpemeuceca te ee erree ra Saas

= Or -otitioners offe réd te testimony as to. 5 Reeainnen .

_ = based upon their being deprived - of. two-

-qynature years of operation out of their total

corporate BR ac at kn s ahha s bed so geinsed is 2s

Reasons for granting - ‘the. writ [MgREUR KAA deen bimeees .

I. Preliminary statement ca keee Serer. Troe .

‘II. Damages -....: ae Prerrrneee aon eects ate aA

— ~~, Plaintiffs’ “proof as. presented to the jury. Sab duces

' was clearly competent Se eee Pee re ee me

(1) In presenting its evidence as to damages

ay _ from loss of profits, Volasco offered testi-

——- ~*~ -* mony of- its president, testifying from

his knowledge, as an expert accountant, = a?

and from its own records as to_ its

..- Fox and Atlas Building Produets ‘cases

il,

;

normal inerease when free from defend.

ant’s ‘unlawful interference, and _testi-

mony of an.expert accountant and busi-

yess advisor as to its projected or

‘expected volume of sales, and in soing

so plaintiff sought to-and did follow the

_ precedents laiel dewn by this court -

the Eastman Kodak, Bigelow, and ha

Parchment cases and of the. other cir- -

enits in the Rankin, Twentieth-Century

“ye?

ode?

(2) In addition to loss of anticipated profits,

plaintiff was. entitled to recover for an-- °°

jury to its, business, or depreciation ey

the valne of its property, and the Sixtli

Cirenit’s “holding that this element of

damages» was duplicative | is in eonftict

with the degision of this court in the °

e Story P&rchment . ease and with the-

Tenth Cirenit in’ the: Atlas “ieee

Prodiicte cfiie oo. . lo. cc cc cee kee sas ee

-—~

) Defendant’s illegal pricing practices as

to plaintiff ‘s principal produet adversely :

affected sales of other products, mopping . —

asphalt and roof coatings, manufactured

dy plaintiff and it. should be allowed: to

recover the losses thus caused |

Plaintiff should have been permitted to pre-

sent to the jury evidence as to its loss of

profits by heing prevented from entering

upon the ‘mannfacture and sale of shingles

and roll roofing, its. Josses hased upon its |

projected as during a mature vear, and £

the loss in va ,

1 of its business. as a going

ie SR Teas he

Plaintiff cleartt had the intention to go

into the business of niariufacturing and —

jnarketing a full dine of asphalt roofing

products ‘including * shingles ‘and roll

‘roofing and had acquired at Jeast 90 per

cont of the plfit, machinery and equip-

ment neGessary to manufacture shingles:

and ralk roofing but was prevented from

making the 10 per cent additional invest- .

ment, in machinery necessary for these’

. products hy deferidant’s: illegal pricing

‘sales of shingles arid roll roofing wr yere

practices, SO that plaintiff should have ea

heen permitted _ submit to. the (jury

testimony’ as to its losses on ‘projected

date of suit delayed plaintiff at. least

er 2 years in reaching full development or

maturity; ‘plaintiff, therefore, showld

‘actions’ but- should

_ to introduce testi

have been permitted to present to the |

jury testimony ‘as “to its loss. of ‘antici-

- pated profits during two (2) of its, Ze

“nature years, particul ly/‘sinee its total

business life was limited to fifty votirs

Plaintiff should not he limited to testi-

inony concernine the younarener 4 Det ween

the actual investment in its (properties

and the aé ‘tual value of such properties

in presenting its proof mc the injury v

to its business caused by defendant's

ave bean permitted

ony as to the differ-

“ -enee hetween the. going eoncern value

its business would have had but forthe

- Defendant's illegal pricing had ‘as of the ‘y

aetions of the defendant and the actnal

iv: E ee .

. > value of snech hnsiness as ant. the date

_of suit ...... reas Ee un es

IIT. The Appellate. Court erred in tev ersing nie the case ;

on the monopoly issiie .. uewapeneCansn oy me's

_--N. The evidence :is sufficient to. aticnit to the

‘jury the issue-as to the violation by Rrv of

“Section 2 of the Sherman Act, and the Appel-

late Court went ovtside the record to find

+. faets upon. which to hold the evidence in-

sufficient .. 0... eee ciate ea pe eee Ss hirele ok .

- PB. The eourt’s charge, taken as a whole, iwas

adequate on the monopoly. issne; but even if

there) was. error no adequate objection. was

(. The rule of procedure, ‘as applicable in Ten-

/ ..* nesseé to the effect that a general verdict is

ae | i, multiple issne case where one or

“more. issnes are properly submitted: tor the

/ jury. even though another issue is errone-

~onsly snbmitted, controls in a Federal erase

in. Tennessee, particularly if defendant did |

not - request: special verdicts or submission

of interrogatories as provided . by Rule 49

IV. Petitioner, Volunteer Asphalt Company, as the

~ supplier of all asphalt used aby: Volasco,. is not

own losses due to violations of the. -Antitrnst

laws by defendant aimed at Volaseo ........ 5°

I ick ke dees CCE ase a a Re eS 7

Appendix:

- Opinion of the United States Comrt of Appeals for

the Sixth ME 8 ee ct Se hpee ?

Jtitgment of the United States: Cage of Appeals for

the Sixth Cirenuit in Appeal No. 14,545 .......5..

made hv defendant Nearer oie aaa Gis ss te ae wes ’

O65

too remote as.a matter of hae to recover. for its

. ay ; : ; v . t

_Judginent of the United States Court of. Appeals for

the Sixth Cirevit in Appeal No? 14,546...

Judgment of the Uv nited States Court of* Appeals for

. .

- «the ‘Sixth Ciyenit-in Appeal No. 14, 47 ele bes . oe

Sherman Act, See ‘tion Pe rt Pore er ee taka ite

Sherman Act, ‘Section - a pate ence sche fe gn eine es Rn

Clavton Act, Section.2 2 (a) cir) tet ce ga Ane “28a

a ‘layton ae Section 4 SP PP eee re a eee ee ahs |

28 u, s. 0/9079: 4 RASS treeae ic err ee Se Galece sas . 30a

Federal. Rules of Civil Procedure: | ‘

Rutte 49 swab ewes eis ee SRA : [eee Oe co whe Oa

OS AO ES EE Nik iecree ain

ea eras 2a Fh A Ried Ae EOE R2a

United States Constitution, Amendment Seven harara's OO

Tennessee ¢ ‘ode Annotated;: § 20-1 DE eee OVER V cai bs aie)

Testimony of Geor ge (, Krak: Excerpts | PEE OP eee wa

TABLE OF. AUTHORITIES.

Cases; ee HOON se Seer es ety

Allison v. Chandler, 11°Mich. 542 SSUEe: ohne ee ks ae

American Banana Co. v. United Fruit Co. 166 Fed. -

Y61 (2d Cir, 1908) 2.266. .6.. eens ee aa bees Sa ae

American Tobacco Growers v. =e 183° F. Yd 869

(4th ON |) ea Tey Peeee CTE EERE ee ah

Atlantic Coastline R. R. v. om 207 E.. 2d 899 (3th

CWO, Pee \kincasssg Tyee ee ee ee eee ree mt

Atlantic Coastline R. R. v. Smith, 264 F. 2d 498 (6th Wo 3

C7 195B) wc ee eec ence tenets ee gene egyeees 72,704

Atlantie Coastline R. R. v. Tiller, a4 re oy 718 (4th et

Cir. 1944) ........ CELE ES Lee O eT ree Ee Taac*

Atlas: Building Prodicts’ Co. v. Diamond ‘Block ees.

Gravel Co., 269-F. 2d 950 (10th Cir. 1959)... 8588, 47,49

Sid Nee vi

William Goldman-Theatres, Inc. v. Loew le, Inc., 69 F.

Supp: 103 (B. D. Pa. 1946 aff'd 164 F. 2d) (3rd Cir.

1948), cert. denied 334 U. S. 811 (1948) .2..... .eco oe

Guaranty Trust Co. v. York, 326 U. S. 99 (1945) >... 73

Gulf Refining Co. v. Fetchan, 130 F. 2d 129 (6th. Cir.

. 1942) ives She EPR EER ARO Vaveeres Searle ae | |

Harrigon v. Paramount Pictures, Ine., 1 115 F. Supp. ‘

312° (PB. C. EF. D, Pa.), aff’d 211 F.2d 405 (3rd. Cir.

1954),-cert. denied 348 U. S. 828 (1954) 22-002... 81.

Holliday v-: Great’ A & P Tea Company, 256 F. 2d 297:

“(8th Cir, 1958) 2.6.2... SV gkieeoknevecessoaats . 70

Kareeal Corp. v. Richfield, Oil: Corp., 221 FM 358

Sac Cir. eda cS ashes cag cates etn ee sien ye aeeed

Baltimore & 0. R. R. X. _ Re es, , 102, F. 2d 399 oth Cir, \.

- 9988) .... pceutees itn ia nd ka cee aeweeene tween 74, -

Baltimére & Potomac R. R YY, Mackey, 1 157 U.S. ha

(1894) ,...5.-.3..85- la canens jidaveceseveerrxper? 2 GS

Bank of America v. Hyden, 231 F. 2d ms (sth Cir, a

I a ig ee ee ee a eae 79

Bigelow v. R.K. O. Radio Pictures, Ine., 827 U.S. 251 |

GENO sakuexdvee h kveta tra ean bYrcaecs . «83, 41, 47, 50, 82

Byrd v. Blue Ridge Electric Cooperative, 356 TLS.

325 [:. . aerere ela Ns PPP Srey oere ore oe P

Chicago and N. Ww: “Ry. Co. v. Cabin 167 F. 2a

48 (Sth Cir, 1948) 2.02... Sige I EARLRSeGkAnANAS 74

Congress Building Corp,-v. Loew's, Tne,;, 246-F. 2d.

S87 (7th Cir: 1957) 2... Degas ore as 24. 81, 88,85

Eastman Kodak Co. v. Southern Photo Materials €o. a

Rie & OF) err er yer mre: .33, ‘eg si ve

‘rie Raulroad Co. v. ‘Tompkit, 304 U.S. 64 (1938) . 3,74

Filipek v. Moore-McCormack Lines, Ine. 9258 ¥. 2a. 734

) at a ae eee errr re rr. Tees ve awe

Foster v, Moore- MeCormack Lines, Ine., 131 P 2d

MT (2a Cir: 1942), Re PEs Wee FER ee ee Ue

Kobe, Tne..v. * Dempsey Puinp o.,

“Cr. 1952 YY |

Lawlor v. Loewe,

Lawhor:

US, em (1926)

Louisville & Nashville R.

730 (6th: Cir. 1958)

M: altz Vv.

Marvland y.

-. Palmer v.

-Pennsy lvania’ Sugar Riftnings Co. v.

Sax, 134 F. 2d 2

Hoffman,

Refining Co. , 166

W illianr H. Renkin. Co!

1961)

25 T. ‘S

ee ee

318 U.

Fed 2

“

254 (2d Cir.

Tracy v. Finn Fqnipment ¢ Co., 290 VF.

. Breese ewe wane beceeeseeee dan ene cakees 72, 74, re

Triangle’ Conduit & fable ‘Co.

2 (1915)

National Screen Servi Corporation,”

198 F. 2

v. Rochelle,

» (7th Cir. 1943)

Baldwin, 112. U. S. 490 (1884)

109 (1983)

A416 (10th

‘4 adee aa 4 & 2 E48;

American ‘Sugar

1908)

252 F:

6s & *

eit &«

. Associated Bill Posters of:

Miited States and Glainada, 42 F. 2-152 (2d Cir. :

am, Bee eee any Geb Rack Oh 2 Ues chee sg +0 ee

Richfield Oil Corp? v v, Karseal — 271 F. 2d 708 et

(Pth” Cie. -1988) wg. . 2... aekateatciarics -70-

Roth v.. Swanson, 144 F. : Dd 262 (sth (ii. 1944) ei TOE

Stephenson v. ‘Grand Trunk W estatin R. R., 110 F. 2a.

- 401 (1940) ceo Siene Gerd. ee TTT

* Story Parchment Co. ~ Patterson Parchment Paper

Co. 282 TS. 55 (193 1). 3, 33, 41, 47, 48, 49; 00, 32, 0! 8,99

Toit. Ven, Ry. Co. v; Unienstetten 155. Tenn. “285

if Bey ee a eas fac EM eRas taeas can es SS isaiet. ee

a 498 (6th Cir.

National Eleetric

Products Corporation, 152 F.2d 398 (8rd Cire 1945) 55

Twentieth Century- Fox Film ‘Corp. v. Brookside ‘The:

atre Corp., 194 F. 24°846 (8th Cir. 1992) 20... 8, 47, ae

United States. +. Columbian Steel Co. 334 v. &. 495

(|: Tak aces Oe ENE k ERA hae ek 65

United. States v. Swift & Company, 286 U.S. 106 —

|. | Beare Seay NT) OTS SOUT POE eee eae 2. «2

; viil

Ww cinberg v. “Sinclair” Refining Co, 48 F. Supp. 203, |

ra 205 (KE: D. N.Y. 1942) % gee ee ear ey Po oe 32

a\y ilmington Mining Co. v. Fulton, 205 U. S. 60 —

(1906) Perea ine Gw Kenmare te eke EN PE 74, 75, 76

Constitution:

United States Constitution: | :

Seventh Amendment ....-.--++25555+5 apenna wes 5, 47

Rules:' =. * |

Federal Rules of. Civil Procedure: 7

oe Rule 49.52... coe e eee og gveees Seas eo -. 4, 5, 00

ee ere ree re hee a re atts 5,68 |.

. Rule REE aa es fee Tere ee ry meer pa

_ Statutes: ad

Clay ton Act-—_ .

“Section 2 (a) & (b) (5 U. me y * eeee ee testes

Section 4 (15 U.S. C. § i) La bgeo'tt lees oD D2, O,TO, 84

Sherman Act— | soe . G

Sections land 2 (15 Uv. S. C3 & 2) eer 60, G7.

® U.S.C. | . oe

Section 1254 (1) °. Ree ieee, oreetitet se

Section 2072 .....----+++5 aide a larepeeeie Rea ee

Tennessee Code Annotated— : | | as

Section 20-4317 ...... preter’ sug oa Se eaann 4, 5,72

Texts: cel

3 Am. Jug., Appeal & Error, § 1097 .. Ske ones 6S

IN THE.

SUPENE COURT or THE UNITED STATES...

* OCTOBER TERM, 1962.

No. ..-.--+--

VOLASCO PRODUCTS COMPANY and VOLUNTEER:

ASPHALT COMPANY,

Petitioners, |

te LLovD A. FRY ROOFING COMPANY,

Respondent. ;

PETITION FOR WRIT OF CERTIORARI

_ To the United States Court of Appeals =

for the Sixth Circuit. ts

=“

“with : = > _ @ F

To the Honor able Chief Justice and Associate Justicgs of

the Supre me Court of the United States:

Petitioners pray - that a Writ of ¢ fertiorari issue to review,

the judgme mts of the United States Court of Appeals for

- the Sixth ( ‘ireuit: ente red-i in the above -entitled

te mbe ir 12, 1962. ,

ise on Sep

the District Court.

“opinions: BELOW.

The Opinion of the United States Court of Appeals for .

the Sixth Cireuit is reported: in’ 308 F. 2d 383. A” copy of

the Opinion is attached hereto in the Appendix to this

Petition’ at pages la et seq. No opinions were: issued by -

JURISDICTION. -

The judgments of the Court of Appeals for the Sixth

Circuit were made and entered on September .12, 1962, and

copies thereof are appended to this Petition in the Appen-

dix at pages 25a-26a, 27a. The jurisdiction of this Court is’

invoked under. 28 U. S.C. 1254 (1).

QUESTIONS PRESENTED.

1. Whether an Appellate Court by setting aside a dam-

age verdict based on uncontradicted -testimony of two

expert witnesses, both accountants, one in private prac-

tice and the other the President and General ;Manager. of

plaintiff’s business, using approved accounting and_statis-

tical methods and the company’s past experience, its own.

records and their expert judgment, as to the’ company ‘s

projected earnings of which it was deprived by reason of

the violation by defendant of the antitrust laws, by weigh-

ing the evidence and concluding that ‘plaintiff in an effort

to be specific, has indulged in-theories that result in proof

that is speculative, remote and uncertain,"’ has thereby de-

_prived plaintiff of the right to trial by jury: as guaranteed

by the Seventh Amendment?

The Appendix to this Petition is hereinafter referred te by te

FPR iin I ss Ne .

2. Whether plaintiff in an antitrust action is entitled to

recover in addition to loss of profits, depreciation in value

of its property edie to defendant's illegal actions as held

by this court in, Story Parchment Company v. Paterson

Parchment Paper Co., 282 U.S. 555 (1921), and by the

Tenth Circuit in Atlas Building Products Co. v. Diamond

- Block & Gravel 269 F.2d 950 (1959), cert. den. 363

t. &. S42 3. and, 30, ean it recover onty> the difference

between its investment as show n by its books and its actual

value as of the date of suit, or may it recover the difference

hetween such actual’ value as of that date and its value ws

a going congern assuming that there had been no anti

trust v iolation? )

_ Whether plaintiff, admittedly the object of a caleu.

eae and highly successful conspir: nev in violation. of the

antitrust laws, involving discriminatory pricings as to the

principal prodiet! of a line of allied products, may recover

damiiges for loss of profit. onthe entire line of preducts

directly and proximately caused by defendant's illegal”

acts? >. Pas, z -

4. Whether plaintiff, Volasco Prodnets:C ompany, can re

cover; as an element, of damages, losses due to its being

prevented from going into the manufacture ‘of roll roof-

ing “and shingles, where it is. equipped) to manufacture

asphalt saturated felt, mopping asphalt and root coatings

but needs additiénal machinery costing a relatively small

‘amount * to begin. manufacture of roll roofing and shingles,

~~ which ¢ apital and. equipment were readily available, but

is prevented from manufacturing such ditional products

hy antitrust violations of defendant? |

a. W heties plaintiff, a new corporation, just getting

started in the asphalt roofing business and having’ an esti.

mated growth or development period of five vears to reach

its anticipated normal sales volume, which is prevented

from normal srowth by the antitrust violations of defend:

ant so. that its growth period is lengthened, can. recover

in damages for the vears of full normal sales of which: i

was deprived by being delayed in reaching. Ws maturity,

partienlarly since plaintiff's business life is limited to fifty

Ses i. ‘

vears! ° .

aw£

a hether the Issue as to whether defendant alone

‘eu or attempted to monopolize the asphalt roof *

‘ing business was propertly submitted to the jury where the

evidence ‘shows that defendant was the largest manufac.

turer ofeasphalt felt in the United States, that it engaged:

in the: F,

prices in the area of a plant defendant: was trying to buy.

Factice of ‘teonditioning the market by lowering

that of 14. price changes in the price of asphalt felt be-

tween February, 1956 and March, 1958, defendayt alone

initiated all but: three, defendant initiated all five gs suchi

changes which. resulted in price increases, that defendant

lowered the pr ice of felt below cost in* the plaintiff” s area

resulting in one inde pendent manutaeturer being Sseaid

out of such area and plaintiff heing excladed from. the

manufacture of additional roofing products, even though

defendant accounted for only 12). per. cent. of national

sales. of asphalt felt?) That is, where all elements of monop

oly are present,is defendant to be held not guilty as a

‘matter of law because it has only 12M% per cent of the

market? Furthermore, ¢ ‘an this question be raised. on

“appeal - where no adequate objection was made to the

Court's charge? | ’

WwW hether the so- called uTwo Issue Rule’ established

eaisensee Statute (Section 20-1517; Tennessee Code

pe uted), to the effect that a general verdict is good in-

a multiple issue Case where there is substantial evidence

to support the verdict on one or more counts even though

insufficient to sustalir on an erroneously submitted issue,

controls in a Federal case, ‘and particularly where the de

fendant fails -to avail himself of the saheamian tore.

quest special verdicts or interrogatories as provided for

by Rule 49, Federal Rules of Civil Procedure,

S Whether the Federal Courts should as a matter of

law deny relief to-the plaintiff, Volunteer. Asphal “Com

pany, for damages ‘suffered by¥ it due to the antitrust vio

lations of the defendant, merely. because plaintiff jis a

supplier and, therefore, *jtoo remote to be compensable’

where plaintiff is a part of an integrated business opera

tion processing asphalt for road and roofing” purposes.

processes for only two customers, one for-road asphalt and ,

Volaseo Products Company for roofing asphalt, processes

all the asphalt used by. Volasco in the manufacture of

asphalt roofing products, and the two plaintitts have iden

teal stock Ownership?

‘Clayton Act (16-U.,

CONSTITUTIONS, STATUTES AND FEDERAL ~

- eodaneed INVOLVED. :

The statutes inv sive are Sections 1 and 2 of the Sher_

man Act 15. U. S. C., SS+, 2)—-Section- (ay. and: (b) a:

the Clayton Act as amended’ by- the Robinson- Patinan

Act (15 UL S. CA. Sf ° = “ (b)),-and Seetion 4 of the

$15) set forth in the Appendix —

hereto at pages 2¢a pty 8 U.S. C., § 2072 set forth in the

Appendix hereto at page, 30a; Tennessee Code Annotated.

Section 20-1317, set forth in. the Appendix at page ola.

-_ Federal Rules of Civil Procedure Numbtrs 49, 51 and 61 ‘*

are involved and are set forth in the Appendix hereto

at pages 30a-31a. The Constitutional provision involved is,

the Seventh Amendment to the Constutiow 6f the Unite f.

“States sot forth in the Appendix at page 30a,

———

STATEMENT OF THE CASE.

SUMMARY STATEMENT.

This aetion was. filed by petitioners ino the Distriet

“Court te recover ‘treble damages under the Sherman Act

and the ¢ ‘ayton Act as amended: The complaint alleges.

that . Volunteer Asphalt Company. (hereinafter hile”

to as “Voliniteer) ix a finer And processor of asphalt for

highway and. roofing Uses having begun Inisiness in 1954.

Volasco Prodnets Company (hereinafter referred tO as

Volasco) began business in) 1955 asa manufacturer of

aephalt roofing products; that the defendant. Lieyd A. Fry

Rooting Company (here ‘inafter referred to as Fry, “or de

fendant) is the largest manutaeturer-of asphalt “pootine -

prodpetsai the United States,‘and that it conspired with

other large manufacturers to restrain trade in the asphalt

roofing: industry; Phat it monopelized or attempted to:

monopolize, or conspired with others to monopolize, trade

‘in the manufacture and sale of asphalt roofing products.

and that it discriminated in the price of its prodicts, hy

reducing prices in the areas served by plaintiff to or helow

cost while keeping prices higher in other areas, thereby

substantially lessening competition and tending to eredte

a monopoly. or to injure or destroy or prevent compe titien

with defendant (R. 29-35). The defendant denied the

material allegations of 1 ie (RL 36-37).

“The Coriplaint was filed on Ayiril 17, i958 (R. 2). the

trial by jury commenced on November. 14. 1960 CR. 51).

At the-conelusion of f plaintiffs’ proof, the Court granted

: Th ¢ abbreviation “R° refers ta the Jom Appendix tilecdl in the

sith Circuit. . Reference to) page numbers therem will ont thie

letter x a

; s

defendant's Motion for a directed verdict as te Volante:

CR. 1580, 2480), and on December 19, 1960, the jury returned

a verdict in favor of the petitioner, Volasco, in the amount

* of $100,000.00 iR. O45), The < ‘onrt tripled the verdfet,

fixed petitioner's attorneys” fees at SOO.Q00.00 and entered

a. judgment in favor of thre. petitioner against the respond?

ent Tor the sum of S60,000000 OR, 2479, 2480). Respondent,

ry, and petitioner, Volunteer, perfected appealseand peti.

tioner, Volasco, a conditional appeal on the question of

damages only, to the Cuited States Court of Appeals tor

the Sixth Cireuit Chersinafter sometimes” referred. to as.

‘Sixth Ci ire nit) (R. 252%, 2523, 25357. re r \ cae a

Tn its Opinion, the Sixth Cirenit held that. there was

sufficient evidenc® t> support the Verdict of the jury on

the issue asx to whether the defendant conbined or con

spired with one or more other nianutacturyts to violste the

awnititrust laws (A, fala). [t further eld, however, that

there was insufficient: ev idence and=that the trial court's

‘charge was Inadequate to submit to the jury the issue. as te

-whether defendant, individually, monopolize the asphalt

roofing industry, and that since the jury re ‘turned a general

verdict and one issue was improperly submitted, the entire

‘verdict must be set‘aside (A. Ta-I4a). The ¢ ‘ourt’ below

awent further and held that plaintiffs’ proof as. to amount

“of its damages was defectiv e oor Saas ate te mm the following:

particulars: .

1. That sinee the -prite discrimination charged to> res -

<pondent was limited to the principal product of the ®t

—tioner, Volasco, that is, asphalt saturated felt, petitioner

could not recover for loss of profits in other roofing prod-

ucts manufactured by it, such as mopping asphalt and roof

coatings (A. 18a).

2. That estimates made by plaintiff's president, himself

a certified public accountant,.and by another certified

. e

' * ~

e public accountant, both of whom had made market studies

and had examined plaintiff's records axte-probable profits

plaintif? would have-earned but for the ‘illegs al ‘actions of.

the respondeyt, Was inproper, the Court stating "We be

lieve that here the plaintiff in an effort to be specific, has

. indulged in‘theories that result m proof three is specnlative,

remete and uucertain’* (A. Toa). ‘

eaeee

—

That the trial court erred ino permitting plaitiff te

introduce evidence as to injury to ity: business in addition

to its loss of profits. becanse it was a duplic ation of lan

ages (AL t4a 16a).

On the appeal ot Votunteer Asphalt) Comygny. the

Court held that although “petitioner, Volunteer, supplied

all asphalt used by Voliseo, vet if ix too remote from the

direct injary.te recover. damages resulting from the Vie

Fation of the antitrust’ laws (A. 19a 23a).

. ‘

“On Volaseo’s conditional appeal, the Appellate Court,

below, although ordering a new trial, heli in effect asa

matter of law that although plaintiff fully intended to vo

into the manufacture of réH reefing and shingles and

nemded oily $150,000,00 worth of additional manufacturing

ory St to enter upon the manufacture of these prod

nets, and although plaintiff was prevented from making

the nee essary investment and going into the production

of such- products by the actions of respondent in violation

of the antitrust laws, vet plaintitt could not have submitted |

“to the jury the questions as to whether re had the intention.

and whether, it had substantially, ac quired the facilities

to manufacture these products and, if so, whether it had

~utfered damages as a result of respondent’ s actions (A.

Nauka). The Appellate Court further sustained the trial”

court's exclosion of petitioner's proffered evidence as. to- i

it~ loss of profits on the theory that it had heen deprived |

“-

. ;

‘

‘ ; -— % Pcs

< Py

8 *

of-two or more quature vears of operation by respondent =.

action (A. 23a:24a). _ ty :

It is respectfully submitted that the: Court—below) cams

mitted error in each of the rulings above listed in’ that

its actions constituted: weighing the ev idence, thus in

vading the prevince of. the jurye in that its refusal 1

permit the introduction’ of evidence amounted to a denial

to petitioner of a jury trial, and in that its rulings on

matters ef law are. in direct conflict’ ‘with rulings upon the

sume. propositions by Courts of Appeals: ‘of other Circuits

and are in conflict with applicable: decisions ef this Court ofr

the same matters, and in that it -has- decided important.

questions ef Federal law, whic ‘h have not been but sheuld™

be settled by this Court... 9° 07° |

THE. Fae "TS. . ae

A. Background and Parties.

The manufacture of asphalt roofing products. ix a vom

paratively simple process (R. 135,136)... In the manu:

facture of asphalt saturated fe ‘It, dry felt. paper -is run

‘through a machine, sprayed, and dipped in. hot asphalt.

dried and rolled up. into rolls of 60 pounds each. There

are two principal grades of asphalt felt, one known as 15

pound: felt and the other as 30 pound felt, thé only differ.

ence being in the weight of the dry felt used in manufac

turing it (R. 90-92). The manifacture of roll roofing and — -

shingles is merely a continuation of this process through -

additions to the felt saturating ee hine whereby ‘the

—sxaturated felt-ix coated with asp and, depending upon

the typeof end product, sprinkled with mica or granules

and either made into roll roofing or cut into the shape of

shingles. (This testimony was inadvertently omitted hy: 7

$+ .

”

Pee et io — Yt} —

the printer from. the Joint Appendix. - It should have

appeared at R.98) It ix printed in the. Appendix hereto at

Vp. J2la-d4a). Nero

‘Other asphalt. roofing sroducts manufactured. ‘and soli

by Volasco are mopping: asphalts used with asphalt felt in

_the construction of Kuilt-up roofs -(R. 84, 645) and roof

coatings of various/grailes, used: primarily in roof mainte-

nance -(R: 86-88% “These products are not-made on ‘the

roofing machiné but are packaged’ in cans or drums (R.

= 242) Be ee Re Be

Sy, SO). ny

_Geor geeY. Krug. a man with a very broad background

of experience in accounting, asa certified: public account-

ant }ith several large nationally known gccountimg firms.

arid with a broad background. of ex fa, in business

(R./55-68, 576-593), together with his brother, J.-A. Krug.

made a study of business opportunities inthe Knoxville

/area- and, after consultation with experts in the asphalt

roofing business and with Shell Oi Company, decided to

vo into the business of handling r, processing, and- selling -

/ road asphalt and a complete ling of: asphalt roofing prod.

lets, (R. 68-74, -76,-77, 612-613). , eee

When plaintiff began business it intended to sell asphalt

roofing within an area extending approximately.” 200 miles

from the C ity ‘of Knoxville (R. 71-72, 1438, .614, 615). The

studies made showed the population of this/ area te be

8,900,000 people, whieh indic ‘ated: there would be a poten--

tial annual market for the sale of 1,601,000 rolls of asphalt

saturated felt (R. 133, 908).

Originally, the business wae a partnership ‘oft the two.

Krug brothers under: the name Tennessee Associates (R. 76,

560, 561). In the year 1954 they organazed Voltinteer

Asphalt Company to conduct this business, acquired land

adjacent to the Fort. Loudon Lake on the Tennessee River

near Knoxville, built docking and storage facilities, stills

¥ .

11 -

and other processing equipment and began their busines’

of storing, processing.and shipping road asphalts and pour

ing and’ selling mopping asphalt for rootiny (CR. 74-78,

89.90, 139141). Their plans included the construction of

a complet® asplmalt roofing plant forthe manufacture of

asphalt: saturated. felt, roll rooting, shingles, vitr igus roof

‘coatings and other asphalt. products (R. 77, 181.188, 139).

: During 1955 for financial reasons, they determined to or-

wanize Volaseo Products Company to carry on the asphalt

roofing phase of the, busigess (R. 141).° A large building

was erected for the roofing business, an asphalt saturating

machine was purchased and installed and plaintiff actually

began. the manufacture and sale of asphalt saturated felt

during October, 1955 (S. u 8, uy D41; Ex, 163, R. 589-540,

2390). z :

Plaintiff employed a silesman in the Fall of 195 with

‘juistruetions to concentrate on the area immediately sur

rounding Knoxville at first and gradually to work out (R.-

495-496, 507, 684-635). At that time plaintiff sought to find

out and follow qhe prices of the major roofing manufac

turers in setting the price it charged’ for saturated fel:

(R: 158). In the Spring of 1956, when it had sufficient cost

information to determine its own prices independently “ot

other manufacturers, it set a price for felt of $2. 25 per voll

_to dealers and $2.15 a roll to large volume ‘buyers (R, 177

1, 212-213). On August 14; 1956, defendant's bulletin

-yviving 7% per cent discount on non-perforated felt) cut

under plaintiff's then going pricé for the product and, from -

. that time forward, plaintiff merely sought, to find ont the

price as established by, the majors and to séll its product

at such prices as they were always lower than $2.25 per

roll (R. 773, and see charton page 24 hereof),

The ‘Lloyd A. Fry Roofing Company was organized in

1983 "hy Llevd A. Fry, Sr. (R. 1912). Tn 1945 defendant

® +e

. ; . >

built four roofing plants, at Houston, Minneapolis, Brooks- ;

ville and Detroit, and a felt mill at Portland, Oregon (R.

” . 1915).% Since 1948 it has acquired by lease, purchase or °

constriction seven roofing plants at the followimg- loca-

tions: San Leandro, California; Robertson, Missouri; York,

Pennsylvania;.Moorehead City, North Carolina; Jackson.

ville, Florida; Irving, Texas; Ft. Lauderdale, Florida, and

Emmaus, Pennsylvania (R. 1489). As of the date_of the

filing of this suit in April; 1958, defendant owned nineteen

roofing plants and fourteen felt mills, strategically located

throughout the United States (R. 154, 155, 1918)... As of

‘the date of trial it was in. the process of. constructing three

additional plants. at Lubbock, Texas;. Atlanta, Georgia, and

Salt Lake City, Utah, and was planning the construction.

of another at Cleveland, Ohio (R. 2059). In addition to:

roofing plants, defendant also. owns eighteen asphalt re- ),

fineries, one at each of its plants except Stroud, Oklahoma,

which supply not. gnly Fey’ s asphalt requirements, but de-

fendant also sells to the other national manufacturers (R. [

2096- 2097, 2102-3). Fry is the largest producer of asphalt

“roofing ‘products ins the United States (R. 558). Asphalt °.

roofing products aré. heavy compared to their. value and

shipping costs represent a very substantial element:of total:

cost of the product to the consumer (R. °70-71, 484, 1478).

A manufacturer, therefore, | has a definite competitive ad-

vantage -in the immediate vicinity of his" own ~_e. (R.

621, 908. 9). '

Defendant has followed the. policy of selling primarily

through very large so- called distributors, including Sears:

Roebuck and Company, anc, prior to 1956, at a price five

to eight per cent. below the price of.his national competi-

tors (R. 1069, 2032). During 1956 Fry changed his sales

poliey and endeavored to-sell at the ‘same price level as his ”

national competitors and granted the distributors a dis-

.count only on direct shipment to dealers (R. 170, 1070,

1127, 1951, 2088-34). On November 1, 1996, however, he

reverted to his prior policy of selling below his mitional

competitors by giving certain of his eustomers ao seeret

rhe 14)

and by extending the distributor discount on wll pure ‘hases

of _ his ‘our (R. 2b).

}

five, per cont vear-end rebate (R. 222-5, 1128.

-) The class of custoniers whieh his ‘ao-eaited distributors

were supposed to sell are described im his price bulletins

as follows; **to retail dealers and/or roofing contractors"

(R. 171): ‘The’ other national manufacturers, while they

- sold to some so-called distributors, also by and large sold

; direetly to retailers and roofingscontractors (Re 1841-44.

~ 1S71-72, TS73-89, 1965-66), and Fry sought: to eriable: his

customers: tos compete with manufacturers (R. 2. ane

see pr ice’ table, post)> W hile this: .eonfliet i 1. marketing

methods existed if various parts of the U sie States (R.

* 1079), it apparently did not tehd to reduce the price ex:

cept in-areas where new or. small -indepenilent roofing

; manufacturers marketed their products (R. 771-2).

During the four fiseal ye irs, 1955 through 198, inclu

" *SIVO, “the defendant earned net. hefore income taxes. a total.

of $17,147,838.00 and, after taxes, $7,958,611.00 (Ex, P26; |

R. 458, 2301) ;,9n w stockholders investment as of October

1B 105 >, of $10, 741,969.00 (Ex. 127; > R. 459, 2805),

The next seven largest. wiodianers in order sare’ the

Ruberoid Company, Certain-Teed - Corporation, , Johns

Manville Corporation, the Flintkote. Company, the Philip

Carey, Manufacturing Company, the Barret Division, Allied

| ‘hemical Company and Bird and Son (R. 556-8). In. fhe

vear* 1954 thie four largest producers accounted for. forty

two per cent of the total shipments of asphalt . roofing

~ products and the eight -largest,companiés accounted for

“sixty-nine per cent of total shipments (R. 1582).

po ¥) |

) a

8. Pricing and Sales Policies.of Fry‘and Other‘ Major

Companies. -_ ;

Prior to plaintiff's sie take Dusiness,. the national

manufacturers of asphalt roofing, other than Fry, had

‘followed’ a pricing system of fo. b. plant prices with -

‘freight added to the point of delivery except that/freight .

~was equalized to. that of the competitor ‘with the plant.

nearest to the point of destination (R. 1952). The defend,

ant followed an independent pricing policy, and, for some:

time prior to plaintiff's entry fto the business, was selling

ata flat delivered price, the same price applying threugh-

out the South and East Central states. For example, Fry's

last published price list, prior to plaintiff's selling’ ‘felt

was effective August 1,-1955 (Ex. 28, R. 161);:and under

it the price of asphalt saturated felt was $2.24 petgroll |

delivered to any point in the States at Tennessee, Missis-

xippi, Alabama, Georgia, North and South Carolina, Vir-

yinia, Kentucky, or. Indiana <(R. 158, 162-4, 1505). At

~ the Same time the price of other national manufacturers

under their system would vary throughout this area, but’

‘their delivered price in the Knoxville area was $2.44 per

roll (R. 159, 1952). | | ;

As of Novembér 1, 1955, shortly after plaintiff began

selling felt, the defendant published a new price list under

which-the deliyered price of asphalt saturated felt to any

‘point throughout. the ‘area. indicated was drastically ‘re- -

duced to $1.84 per roll, and the Knoxville price of other

national manufacturers became $2.00 per roll during the

winter (R. 164-7;-Ex. 29, R. 166). | |

During these early months, Volasce found ‘out the price

of the major: manufacturers other than Fry, and began » °

selling at $2.44 a roll and, as the pricé of the niajor man-

ufaecturers was reduced, plaintiff adjusted its price and .

sold at $2.12, $2.11 and $2.00 a roll and then, on one day

‘

tically everyone in the roofing industry, large, small and ~

x, , I

only, “sila at $1. Shon roll (RO167-8; Ex. 1 v6, R. 190). siethe:

‘this entire time, up to late M: weh, 1956, hry wails under:

selling Volateco hy wioht per eent except for the one dav’ s

; _sales at $1.84...

The Asphalt Roofing Indnsiry Burean, an: organization

of roofing nranufacturers, apparently held semi-annual

ineetings, one in the Fall and another in the Spring of

each year, The defendant did not belong to the Bureau

and, prior to October, 1955, its officers had never attended.

a mecting (RL 1144); However. they. were invited to at-

tend a meeting held at the Westchester Golf and Country

Club in Rye, New-York about the middle of October, 1955,

and Mr. Llovd ‘A. Fry. Jr. President of the defendant,

“ittended, participated in A golf match, and attended a

cocktail party, and a dinngr afterwards. «Te insists, how

ever, that he did not attend any of the business <eSS10N=

iR. 12-3 34, 2065). Present on. this oceasion were “prac

otherwise,. including representatives of most of. the na-

tional manufacturers of asphalt roofing products (R. 1152

34), and, Mr. Fry talked and exchanged salutations with

alPot them (R. 1]: se

Effective Sean 19, 1956, after working on it for

sone time, Fry published and issned an entirely new

pricing se shedule (R. 1505-6, 1951-52, 1976-80). This sched

ule, a very complicated document, showed separate prices

for asphalt roofing products for each of twenty differ ont

zones, and each county in each state of the 0 nited States

east of the Réck cy Mountains way assigned a zone number,”

mis order to de ‘termine the price of a product at any point,

oie would look up. in the list of states ‘and counties on

the-back of the price <ehe dule the zone number tea

te the county in which the point was located. Then,

the front part of) the price schedule, one would find oy

posite the name of the product -to: be purchased and under

the zone column the price applicable (Ex. 30, R. 168- 174):

‘Under this price schedule, the counties in which an asphalt

roofing plant of either the defendant’ or any of its com.

“petitors was loc ‘ated were placed in zone 1 or the lowest

price (Ex. 30, RK 175, 1505-6, 2042). Theoretically, the

price inereased in other counties based ‘on the cost of

delivery frém_ the factory ‘point to such surrounding

counties (R. 191-2, 1506). Actually, the price differential

hore little, if any, relation to delivery costs} however, for

the difference in price between Knox County and Johnson

(‘ounty. in» Tennessee, a distance of over 100, miles, was

‘only: 1é per roll while. ‘the difference hetween Franklin

County, where Fry had a plant, and the ‘adjoining county

of Rush in Indiana was 4¢ (R. 176, 193; Ex. 30, R. 168:

Ex. 33, R. 174, 188). Knox County was the nearest factory -

point to Johnson County (R. 175; Ex. 33% R. 188). This

xvstem of pricing continued on until March 3, 1958 (R.

266, 2004; Ex.° 33; Ex. 53, R. 262). Under this pricing

<chedule, Knox County, Tennessee, was fixed as a factory

point and placed in zone 1 for all asphalt roofing products,

although plaintiff’s plant. was the only asphalt roofing

plant withm two hundred seventy-five to five hundred

miles of Knoxyille (R. 132, 141-5, 175, 2042; Ex. 30, R.

169), and plaintiff had just begun business and manu.

factured at thi time only asphalt .saturated felt) and

Opens asphalt, not shingles or roll roofing (R. 90, 140).

This new* pricing plan neneenied a substantial price

increase throughout the industry, and, .under it, the de.

livered price of asphalt saturated felt to distributors in

» Knoxville was $2.16 per roll (R. 168-175, 7@2, Ex. 30),

(As: stated previously, plaintiff, based on its cost, in

April 1956, set a’ price for felt suites the area im. -

mediately surrounding Knoxville at $2.25° per roll to

i eae =

dealers and approximately $2.10 to $2.15 per roll te buvers .

in large qnanitities, Roi. 912.3.)

‘The defendant developed: and initiated this price change

R. 189, 1121, 106, 2041-2). Tmmediately and. effective

the ame dav, that Is February 19. 1956, or within a lan

or so thereafter, all the major roofing manufacturers aban

idoned their former pricing methods and, published > price

lists identical with that’ of the defendant even down te

‘errors contained in it (CR. 190, 2083-342 Ex. 30, R. 10s;

Ex. 95R. 372; Ex96, RL 874: Ky. 97, R367).

This was sue ch n different pric ing system that defendant

hid its plant managers come to Chicago for a meeting

during January, 1956, to have the plan explained to ther

(R. 1511-18, 1980). On February 23, 1% ab, four days after

‘the effective date, J. I. Musico, the nianadger of defendant’ er

“plant at Brookville, Indiana, which plant served Knoxville |

and a large, portion of the surrounding aren (R. 2918-19),

wrote to C. M. MeCling and Company, a "Fry customer

in Knoxville, aparently answering a complaint about thre

pricing OF some compe titor, statifre:

“T know by this time that vou have the new mer.

* -chandising plan which I understand the entire in-

dustry has ‘adopted, and it is with my very honest,

opinion that this will clean up all this mess and [am

sure will he somewh: iMoembarrassing to someone. to

fill all the orders: that they may have) and extend the .

payments nntil April 16. |

. ° > 2 . . e {ii

“Tn view of the new ‘inerchandising) plan, alo ‘not,

think any: further investigation is necessary. T: am of

. ‘the firm opinion that. the Roofing In lustry’ s House

should be, and will be clean, for the first time, ay cer

“tainly there is no ‘reason for any “ich chiseling "

(Emphasis ours.) Pox, 122. RR. S78. 294.) :

€:

During the Spring of 1956, another meeting of the As—

phalt Rooflng Industry. Burean was held, this time at the

Blackstone Hotel in Chicago, and both Mr. Fry, Jr., Presi-

dent of the defendant, and Mr. Fry, Sr... Chairman of the

Board. and Chief Exeentive Officer of the defendant, at-

tended the wocial arene, including cocktail party, and -

dinner OR. 1135, 11237, 2066). Most everyane in the roofing

industry was adie inchiding ‘representatives of Ruber-

oid, Certain-Tecd, Johns- Manville, Philip Carey, Bird

Son, Logan Long. "ml ( ‘elotex’ (R. 1136- BT).

Kitfective hari 9, 1956, defendant published a new price

schedule which was identical with its schedule of) Febru-

ary 19, 1956, except ‘that it corrected errors. in the former

list, and it omitted in tailing the list te dealers, eae

containing’ discounts te distributors (R. 1981, 2042; ex.

R. 180). In this connection, it is: pointed out that in -

February 19, 1956 price list, while Knox. ‘ounty w as listed

us Zone 1 with a price of $2.16 on felt, Blount County,

which adjoins Knox, was listed as zone 7, with a price of

$2.23, while other adjoining counties were zone 2: with a

"price of $2.17 (R. 176). “This listing of Blount County Wiis

apparently an error, and in the April 9th price list, Blount

(County was placed i in zone ?.in line with other surrounding

counties (R. 180)., This same mistake. was contained in

the price list of Ruberoid sent out with letter dated Ebru.

ary 17, 1956, the list of Johns-Manville. sent out with letter

dated February 20, 1956, and of Certain-Teed, effective

February 20, 1956 (RL 371, 373, 376). On April 13, 1956,

Mr. Musite, manager of Fry's Brookville plant, wrote a

letter to House-Hasson Hardware Company, another Fry ~

customer in Knoxville, as follows:

‘*T refer to your letter of April 9 and no doubt by

this time vou have received our. new schedule ane

changes in owr county zone outline. |

" |

faa

19>

You will note that Blount Ceanty is now zone 2

which-puts it in dine and Iam sure that you will find

all other manufacturers quoting on. this. same basis.

It you find anything quite to’ the contrary, ple ase try:

te pick up some tangible evidence and we will duapdle

same ¢Emphasis ours.) (Rx. 124, 1. 4425 2095.)

On April 27, 1996, iw. answer to’a letter from Pe euler

Gaulbe vt Corporation, a large customer of Fry throughout.

the South-Central portion, of the country, passing ona.

Pan from. one, of its customers, Mr, Liovd A, Fre:

. President of defendant, stated: a

“This will acknowledge receipt of your letter dated

April 24th regarding the letter. you have received

from Erst Long with ‘respect: to certain prices being

quoted on Asphalt shies be Bear Brand at Bearden,

Arkansas. —

“I am well aware of the activities of these small

Arkansas manufacturers and I assure you that we are

_ watching them very -closely. As usual, they are tak.

ing advantage temporarily, of an attempt to stabilize

an industry. whieh is feng overdue for some stabiliza

tion from the viewpoint of the wholesalers, dealers,

and roofers. These people are opportunists and are

much like the backwood sawmill operator who hauls

a load of Inmber into any given market aan i annonnees

that he is a dealer,

** Nevertheless, I agree that they. are a thorn in the

side and in due time will be dealt with. :

‘*Please advise Mr. Long that T would appreciate

his patience and support of the. new Mere handising

Plan and Pri¢e Plan for a bit longer beeause there

isa great deal of low-price materials in thé ferritory

which was purchased prior to’ the inerease:: ‘The

market will continue to be unsettled until these in-

;

ventories have furned: = | ele: that his will be’

accomplished within thirty days. At that time, if the

menagerie is not changed there we will take gotrective

action. "* © (Emphasis ours.) iE. 4. R. 201-2 22m).)

The smaller roofing computes | in the. Southwest —,—-~

had names seh tas Bear C ompeyy: Elk Rooting Company.

and. Leopard: Rooting Company, Zo that the industry Fe

ferred to them, collectively, as the ‘tmenagerie’™” CR. 205). .

Kffective June 1, 1956, the defendant and other na

tional mannufactugers issued a revised merchandising plivn

and “price bist (R. 208, 379-87). This pricing schedule

follows the same format as the April 9 list except that

there were two. series of zone numbers’ designated a>

“Schedule A and Schedale By each containing 200 zones.

The B Schedule covered; generally, the Southwest. area

of the country, ‘tthe menagerie aréa’’ CR. 204-5). Under

* this price schedule,.the price of asphalt roofing products

Was increased in the A ‘zone, cov ering most of the country,

but in the B zone area it: remained the same. The price

on — ae tee felt —o from $2.16. a roll to

Knox County, w wisdie the. sprice-in_ zone » Lon the same prod

uct in the B area remained at $2.b6 per roll GR. 205).

Defendant was again the one who devised and established.

this price schedule (R. 206-10, 1507-8)...

Effective August 14, 1956, the defendant issued a bulle

tin applying to the States of Mississippi, Tennessee, Ala

bama, and certain counties in’ Louisiana, Georgia, and

Florida, allowing an’additienal trade discount of seven ans

one-half per cent ‘tou straight truckloads and or straight

“carloads of 15 Tb. and or 20 Ib. asphalt saturated felt (not

perforated)” (R. 210-11). Plaintiff wax not equipped te

manuf teture perforatest felt: but manufactured only nen i

eae A

. ,

. 4

| i wi

“i

‘ Beis |

perforated felt CR, ih 666), Perforated felt is manu

factured by running the regular tel over aorotler contait:

ing needles. whieh punch small holes in it .cR. 212). There

i one determinable additional cost invelved ui the ama

facture of perforated as compared - with hon perlorated

we. Texa.

PaO are tt mitten yee be sat te ert Lae ke ie a { Re eel

eee — 2

The -tirst Mr. Krug isin’ of the -additional seVen and

“one-half per cent discount, which, incidentally, read metel

the price in’ Knoxville, Tetinessee, to $2.05 per-roll to ais

tributors (RR. 212) was shortly after its Annotincement in

August, 1956, through Foy Rooting Company, a handler ot

Fry Rooting (Ro 766, 12842 1850). Ma. Frys dr. stated

that he issued this balleqin to meet competition “as a re

sult of reports that we had from the field that Ruberoid

and other: manufacturers “were quoting these prices: AR.

: 1982-84, W444). However, the Ruberoid Compans

- vranted the seven and one-half per eent discount on tien

perforated felt. by bulletin issued) August 14. 19560 (the

same day as Fry), Johns-Manville hy bulletin issued An

wust 24, 1956, and Pivilin Carey Mannufactuvitt, Compan

hy bulletin issned Auwnst 22. 1956 1 Ro O88, 890, 341). .

During Oetober, 1956, the. Asphalt pipe Tucdustiy

Bure: an held another meeting, Mr. Fry, dr. attended the

social fine tion-connected with the meeting whieh was held

at the Essex House in New York Citw OR. 128). At thie

meeting also, most of the national manufacturers wer

represented including Ruberoid, Certain Teed, Johns

Manville, Flintkote, Philip Carey, Bird and Son CR.

1129-40). . The defendant attended no other funetions of

the Rarcau than the three whieh have heen Jnentioned

herein, that’is, in the Fall of 1955 and. Spring of 1996 and

- October of 1956 CR. 1144, 2066). Although Mr. Fry. re

met with representatives of Rubernid sometime during

OAT to ise use the possibility of mannfacturing produ 1s

for Ruberaid and. buving other preduets from. Ruberoid

tR.. 1145).

Mifective Nove mbe wed. 1956, which is the beginning ot

the defendant's fiseal year, ‘Fry secretly notified most ot

its customers that it. would pay at the end of each fiseal

vear a five per cent: rebate on their total purchases of

asphalt roofing products (R. 222-3. 112 M31): This rebate

was so secret that the customers were: notified by tele

phone or by personal visit py the President of fhe defend

ant, and even the deefndant’s sales manager did not learn

of it until during the. taking cof discovery depositions in

this lawsuit in the Fall of 1959 (R. 1130, 1515-14, 1616,

4x). And defendant’s salesman in this area didn’t learn

oof it until January, 19607 (TR. 1898). These rebates were

paid’ by cashier's checks ‘and not by defendant's own

= cheeks (RR. 223, 1129, 499), and were made to ‘customers -

at the end of the fiseal’ vear exeept that Sears was 9

qnarterly during the year (R. 1522). W hile Mr. Fry,

at first testified this rebate was paid to all his arin

customers, he. finally admitted it was ‘not paid to all (R.

2056-7), bat that it was. paid where competition was keen —

and not paid in areas where competition was not so severe

(R. 2057-8). Distributors in the Knoxville area did receive

Ht Bias HAR. TSHOTSBS) : —

By- price one ZONE SC shettiles effective November 1.1056,

defendant, again changed the. price on asphalt rooting

products including asphait saturated felt (R. 21. 3.17). The

defendant: dev eloped and initiated this price change, and

it was immediately adopted by other inainufaeturers CR,

221.2, 891-2, 398-400, 1509). :

“Under this schedule, the conntry, east of the Rocky

Mountains, was divided. into four different price Zanes

_ designated A, B, C.-and D. The Azone was the highest

priced zone, arid the D zone the lowest with Band © grad

iS |.

vated in between. Knox County, Tennessee, Was placed in’

thee B area, and the distributor. price on asphalt felt) was

set at $2.17 per'roll. This was a decrease of five Gents per

roll based on the June loth price list but represented an

‘inerease of: some ‘twelve gents per roll on non-pertorated.

felt based on the Augtst 14th special bulletin. It repre

sented a still further inerease in the A area, the price. in

zone 1 oof the A area to distributors being $2.24 per roll

as come nared with the former price of $2.22 per rol. The

A area was Tn the northern part of the country, “ineluding

the Chicago arka’ where many of the natiwnal manufac-

turers had plants. The © zone was generally through the

‘deep South. The D zone was the Southwestern part. of

the country, being that area formerly covered by the B

zone in the June 15th price list. and the’delivered price in’

the: 1) zone was redneed from $2.16 te $1.96 (Ex. 38, R.

213-217, 1984-85). Effective with all sales made on and

after November 1, \*56, the additional. five per cent dis.

count should be applied to defendant's published price

making: the zone 1 pric e of felt in the four areas actually

as follows: A-1, $2.13; B-1, $2.06; 0-1, $1290; and D1, $186

(R. 214-15, 217, 228-4). wren -

From this time on during the material period until this

suit. was filed by the plaintiff, there were a number of

price thanges in the asphalt roofing industry, some repre-

senting decreases and others increases in price. The gén

eral trend, however, was a decrease in price in the Knox.

ville area, while in other areas the trend was an increase

(Ex. 125, R. 443-58, 2297). For instance, the price in Knox’

County, Tennessee, was lowered to $1.83 per roll in. Jan.

uary of 1958, whereas in Chicago, Mlinois, where «defend.

“ant and othet major spogecgaeerggys had plants, it was in-

creased to $2.28 per roll (R. 253; 259-60, 452). Also, under:

ca price. schedule issned on- "February 14, 1958, effective

January 27, 1958, “Knoxville, Tennessee, has been elim

inated as a factory point on all asph: alt roofing products,

a 24

- .

®@.4°%

except asphalt saturated: felt’ (x. 54, Re 262). Under

this bulletin the price of asphalt saturated felt owas ‘re-

duced.in Knox County, Tennessee, to $1.65 per roll, while

the price of asphalt) shingles, roll roofing, and similar

products\ Was increased. in the same area (CR. 262, 64).

Volaseo didi hot manufacture roll roofing and shingles (R.

J, ee

w . a

Finally, on Mareh * 3, 1958, defendant changed entirely

its.pricing format and, sy stem; abandonmyg the county zone

system and establishing a uniform list price for its prod.

gts. all over the United States east of the Rocky’ Moun

tains. The list’ price on asphalt saturated felt was set at

$3.60 per roll, and, from this price, varving discounts Were

‘allowed depending upon. the section of the country:In most

cases,’ these discounts applied fo statewide areas. Sepa:

rate discount sheets were dssned for each state, ‘and the.

a discount for the State of Tennessee was fifty:

two per cent plus six per cent,.or a net published dis.

tributor price of $1.62 per roll on. felt and.a net price,

after taking into. aecount defendant's secret vear -end re

bate, af approximately $1.54 per roll (R. 266, 267, 2004, —

MWD).

; The price after all diseounts Was $1 G7 t6 $1.90 in Ken-

tucky, $1.79 in Xorth Carolina, $1.79 in South Carolina

(Ix. 53, R. 262, 266-7), The defendant cotdd give no

specific. reason for the low price in’ Tennessee other than

the ‘general. statement that ‘he was meeting competition ee

(R. 2005-6, 2051-56).. e | 7

As of March 3, 1958, no one except defendant Frye had

sold or offered felt- for sale in the Knoxville area at a .

ever as low as $1.62 per ‘roll (R. 2052;:Ex.. 451; R. 217:

2469-78). This price schedule alse was initiated by ie o

fendant (R.°1076-77, 1126) and” followed hy other manu

facturers (R. 452-34). ae :

Pty be

& in ay

A tabulation of prices of. asphalt satamgated felt: under’

the various price lists published by the defendant. from

August, 1955, through Mareh, 18, follows: .

ee ae Exhibit

Date’ Knoxville Rrookville Chicago . Nu Page

S- 1-55 2.24 2.24 3.24 * vs 16h

It. 1-55 184 184 “TSS ue 166

2-19-56 2.16 z gt ee 2.16 30.) «1GN oe

4- 9-56. 2.16 2.16 2.16 ae 1S

6-15-56 2.22 2.22 2.22 36: ° 203

8-1'4-56 - 2.05 222 2.22 37 210 -

1l- 1-56: 2:17 (2,.06€08 . 247 4206) " $26¢¢238) . 3. 213

12-26-56 2.17 (2.06)4 2.17 (2.6) 2.17 (2.06) a0 , 226

2- 4-57 2.00 (1.90) 2.17 (2.06), 2.17 12.06) 41 224

2-16-57 2.09 (1.99) _ 2.29.42.18) 2.29 (2.18) 42 236 |

5- 8-57 . 1.98 (1.88) 2.29 (2.18) 2.29 (2.18) 3- 238.

. ; $ ‘ 6 41

7-18-57 2.03 (1.93) 203 (1.93) 2.28 (2.17) 50 249 .

10- 3-57 1-91 (1.81) _ 2.03 (1.93) 2.28 (2.17) | 258

* J+ 2-58 1,83 (1.74) “+ 2.03 (1.93) 2.28 (2.17) 52 259

1-27-58 1 ‘63 (1.59y 2.03 (1.93) 2.28 (2:17) 4 262 |

3- 3-58 ~ 1.62 (1.54) 1.90 (1.80) fares 435 262

Note: ‘The exhibits are price lists which due to their voluminous nature

- were not printed-in the joint appendix because of the undue experse in

volved. We do not believe the prices Jisted will be disputed.’

nc oct . : es é a

* Figures in parenthesis show net sales price. after the secret

vear-end rebate of five per cent,

_4 Adjoining counties to Knox price reduced to S208 (1.98) UR,

S607 eek : ° o

S The Minois discount sheet was not inclided in’ Exhibir. 53

UR. 267).

«. Competition in the Roofing Industry.

@ ,

The ‘national nianufacturers selling in. the Kuoxville

“area, in ‘addition @ Lloyd A. Fry Roofing Company. were

- the: Ruberoid Company, Certain-Teed Products Corpora

tion, Johns-Manville orporation, the Flintkote: Company.

the Philip-Carey seh iene Company, the Barret Di

vision of Allied Chemical Cothpany, Bird and* Son, Logan

Long, United States. Gypsum Company, and the Celotex

Company (R. 166, 555, 640-42, 18389, 1980), In addition

to: these, the only small or independent companies selling

in the Knoxville area, other than plaintiff, were the Ohio

Paper Company, which, sold felt. only, and, per haps, the.

Palner-Ball Company inccthe Kentneky area. (RE S55-46,

HO6-10). All of the sorealled national or major conmpanies —

“above listed also sold asphalt rooting prodiiets in the Chi

cago and Brookville area and other aréas in which the deé-

fendant sold) GR. 1501-02,°°1925-28y, Prior to 1998, the

Ohio -Paper Company sold a’ very substantial volun ok.

asphalt saturated felf in’ the East Tennessee areas (R. «

1975). Their poliey was to sell at five per cent. below, the

tuajer ccompanies” prices’ (R. 1469). However, when the

priee was’ foreed down to where Ohio was having to sell

for $1.79 per roll in. the winter ef 1957-1958, they pulled

out of the whole area and stopped. selling in Tennessee

(R. 1476)... This price was helow their cost of production :

and. delivery (R 1476-78), :

5 I

1). Cost of Production ‘of Aaphiae Saturated Felt.

Daring the vear 1958: it cost the’ defendant, at. Brook.

ville, Indiana, the plant) supplying Knoxville, between

¥LSTO and $2.207 per roll to produce asphalt) saturated

felt and ship it to Knox County, Tennessee (R. 480-484;

Bix. 2383) Ro 1868, 2409; Ex, 285, R. 1863, 2411; Ex. 256. 2.

1369, 2412). Even assuming the lowest estiniated Cost,

Fry was selling-below cost in Knoxville contintious! eather

October 3, ASTe (See Chart, aupre, p. 2.)

It cost plaintiff, Volaseo, $1.75 per roll ‘just to manufac |

ture felt at its Knoxville plant CR. 486). Mr. Jackson of

Ohio Paper Company estimated that it cost’ his COMPA

$1.57 per réll to produce asphalt felt and 276 per roll te de

_ liver it te Knoxville (R. 1477:78)., }

‘i. Petitioners’ Damages.

~ During Volasco*s: first full vear of sales of saturated: |

felt, its sales grew very rapidly (R. 300907; Ex, 1038.2.

40, 2330; Ex. 164, R. 542, 2331). When prices were rather

iriistically redneed by the defendant in plaintiff's market

:‘¢e

- . . . : ‘ ® .

area be = in the spring oft 1957, plaintif® istrneted

— its’ salesman vot Y@ push’ for sales at a great distance troné

the plant nt to concentrate: on customers: in the VICINIEA

of Knoxville (R507, 633-4). Phaiintitt’s Sales began drap

ping off substantially at this time (Ex. 168. Re od) 2550;

Ex: 164. Ro 34ze.2381) until the spring Of 1958 when de ;

fendantredneed its price on felt in Tennessee to $14 a

roll, and at this time plaintiff, withdrew its salesman from

thre territory and instructed him only to take repeat or

ders trom regular customers and not to attenipt to make

any new sales: as the price was below plaintiff's cost of

produetion OR. 486, 514). Prior te 1954, Mr. Cieorge Krug

had learned that» apparently: the cheapest price in’ the

Kroxville area for asphalt saturated felt) had been $2.00.

per roll during the winter or slow season "(RL 757, 787

1250). :

Mr. en testified that. Volasco suatered Joni: brerea.

sow of the prieing policies of defendant above: described

"CR. 518-15, 896-99); that, based upan the potential mar

_ ket ‘and upon Volasco’ sow) sales records fu the period

before pr ices got so low, but for the actions off ‘the defend

ant? plaintiff would have <old 115,000) rolls of asphalt —

saturated felt in the fiscal vear ehding April 30, Mor,

whereas it actually sold. 78,914 rolls and that it would have

sold 195,000 rolls of felt vai 87,000 drums of: asphalt

in the year ending April 0, 1998, Whereas it actuals

solid 61271 ros of felt or, 50.420. drums of asphalt) bn.

this period CR. 1087-92, 1179, 1235; Ex. 195. R. 1004, 2807:

‘Ex, 196,°R. 1094, 2372; Ex. 190, R. 1092, I3T3). That based:

upon such projected anion, plaintiff? would: have earned:

net.income before taxes of #40. 598.1") in the vear War zee

$96,941.00 in the year 1958, whereas it actually earned

only $12, 820.00) and . $4,483,007 in “these respective vears

and, therefore, suffered a net loss of profits of $1: OLOAGOO |

(R. 1306-14; Ex. 226, R. 1325, 2491: Ex, 227. R. 1825, 2402;

- Fx, 228, R. 1225, 2498). Tw addition. Mr. Krug ealentated

’O

CA]

that the difference bent nthe actual investment in plain-

tiff’s business as shown by its books and its actual value

as of the date of filing suit was $39,901.00. He testified

that the actual investment Was $188,741.00 aiid theoactual

Value, $148, 840.00 (R, 1081-84; Ex. 194, R; TOSS, 2370). This

reduction in value, was due to low earnings caused by

le ‘fendant’s pric ind@polici ‘les (R.- 513-15, 1082).

The re asonableness of Mr. Krug’s s projection as to yol-

ume of sales was cor roborated. by the witness, Bye, an ac.

countant trained: and experienced in. the making of fi- .

nancial and sales: forecasts for businesses (R. 1344, 1386-

1590). Mr. Bye was Assistant Manager, Special Seryices

‘Division of Ernst & Ernst, a large - national accounting

firm (R. 1842). Working under him in collecting infornia-

tion for him were engineers, marketing , specialists and

other, skilled personnel (R. 1341).

Mr. Krug further testified that based . upon projected

sales of Volasco Products Company for the two years end-

ingsApril 17, 1958 (the date suit was filed), had it not

_ been injured by -the antitrust violations of defendant, the

total loss of profit to Volunteer Asphalt Company amounted

to $8,202.22 (R. 1573). The loss of value to Volunteer’s

business as of sed 17, 1958, amounted to. $70,000.00

(R. 1573). i : ; : -

'. Petitionérs Offered Testimony as to Loss of. Profits —

ec. Upon Their Being Deprived of Two. Mature Years .

of Operation “Out of. Their Total Corporate Lives, and

Based Upon Their Being Prevented From Manufacturing

’ a Complete Line of Roofing Products, and Also Injury to

Their Business or Property Based Upon Its Value as a

Going Concern Had it Not —_ Injured’ by Defendant’s

Violations. nae 5 ‘

_The site ‘of petitioners’ planté on Fort Leadon Lake was

xe lected so that asphalt, which is the priticipal r raw mate

“My

rial in the products to be processed and umanufaetired by

petitigners, could be shipped by river barge (R. 74). The

-aetual river frontage portion of the. site selected. was

owned by the Southern Railway Which leased it to) the

plaintiff for a fifty-yvear term (R. 901). The remainder ot

the land involved was purchased outright CR. 901). Dur,

ing the summer of 1955, Volaseo Products | Company

erected a factory building large enough to house a rooting

operation, bought and installed in asphalt felt saturator

which could be expanded into a complete asphalt roofing |

machine by the. addition of certain.units of machinery (R.

“105, 139-40, 508, TOTS- 19, 1156). It was ‘the intention pet

Volasco. Produets Company to install the additions to its

'. felt. saturator required to. make roll roofing and asphalt,

shingles shortly after the aerhied was installed during

-the winter of 1955 and 156 CR, a2, 139 40, 51: ~).. How

ever, due to the pricing policies of the defendant, and

other major “‘hanufacturers of asphalt) rooting products,

plaintiff was delayed in-the installation of the additionad

machinery and entering into the mannfactiie of roll rogt

cing and shingles. (R. 512)...

During the. trial of the case, plaintiff offered evidence:

as tA the damage suffered by it-by reason of the violation

-by the defendant of the aMtitrnsta laws aux follows: ©.

(1) That plaintiff heeause the ey or river front .pof

tion%ot the property on which it operated Was oectipied

only under a fifty. vear lease, had a limited ‘existence’ ot

not more than fifty vears (R. 901); that tlie actions of the

defendant in violation of the antitrust Jaws during the

early stages of plaintiff's deve lopment delaved plaintt.

, reaching its full development and - maturity far two and -

one-half years as of the date suit was filed (R. G02):

that plaintiff. therefore, actually Jost two and one-halt

vears ofs its mature’ jncome rather than the incor

it would have’ earned duvitig “the formative vears OR

— |

we): that its estimated income during a mature year, of

its eXiste nce would be $151,895.00 per vear ou felt (R.

W52), $25,053.00 on- asphalt (R. 974), and $7,014.00 on

coatings (R. 980), a total projected income for a mature

year of” $163,960.00. or ,$409,900,00° for two and one-half

vears (R. 981); (this evidence omits projected income

on the sale of roll roofing and shingles). The Court re-

‘fused to admit any testiniony as to projected | income on -

the miiture year theory to det termine damages “Tue to loss *

“of profits (R.961, 996-7, 1006; 1065) and limited plaintiff

‘to proof of what it estimated it would. have actually

earned between the date it was first injured and the’ date.

of filing of the lawsuit, its growth period (R. 962, 974-78,

1006, 1065). Such estimated: earnings amounted ty only

$137,469.00 (Ex. 228, R. 1825, %403). .

(2) That: plaintiff and its organizers clearly had the

* initention from the beginning to enter upon the manufac.

ture of. 4 complete line of asphalt roofing products includ.

ing: asphalt saturated felt, roll roofing and shingles (R.

77. 132, 139, 512), that all it needed to enter into the mian-

afacture of roll roofing and shingles was the addiiton of

certain items of machinery to its existing plant (Ro 50s

. 10), which ‘additional items .of mac ‘hinery would cost SIXTY

thoasand dollars or, less to install (R. 510); that as of

April 30, 1956. the combined assets of Volunteer Asphalt

Company and - Volaseo Products Company Was .over

$400,000 and.as of the date of trial the amount was around

$700,000 CR. 514; Ex. 160, R. 535, 2827); ‘that Volaseo was

in a position financially at all times between the Fall of

1955 and April 17, 1958 (the date of filing suit) to complete e

the roofing plant (R. 568); that the acts of the defendant

delayed: plaintiff -in earrying ont its program for the

manufacture of a complete line of roofing products ap

proximately two and one-half véars as of the date of

filing the sux (R. - 562, 569, 902); that by heing deprived

of the opportunity to manufacture and sell a complete line

~~,

of asphalt roofing products, tte plaintit as of the dlinte

of filing suit suffer “eda total loss of profits of $069,054.00

(R. 572). The ¢ ‘ourt refused to aflow plaintiff to present

this ‘testimony-as to damages to the jury and it was plaved

in the. record in the absence of the jury (CR. 563- 2).

(3) That plaintiff, Volasco Products Company, but for

the wrongful acts of the defendant would have earned

140,652,005, during the period prior to the date: of filing

suit, that ix April 17, 1958 ¢R. 1107; Ex. 198, R. 110%,

2374) = that based upon such an earnings record, future

erowth, and ether economic “considerations, the value of

OE aimtitt’ s business as a going concern, would have been

a $500,000.00 (R. 1572): that based on plainti ft

ctual earnings record during this period of time and

considering the effect on it of the wrongful actions of the.

defendant, the actual value of plaintiff business: as: of.

said date was $52,500.00 (R.+1572) or a difference of

$447,500.00. The Court refused - to permit this evidenée

as to difference in value to go to the jury, but limited

plaintiff in the proof of damage to its business to evidence

of the difference between the actual investment in. the

business as shown by: its records and the actual value of

the business as of the date of filing suit. This was a differ

enee. of only $89,901.13 CR. 1084, TOT: Rx. 194, R. 1084,

TO). .

ccm et | oe

This amount was later corrected to $137,460.00) (EX DON. IN

1325, 2403). Plaimtiff. did: not offer evidence as to damage to its

Iisines® based upon the full line of products: for the reason that

‘the Court had already excluded that evidence, and it was felt that

this issue could be preserved for the Appellate Court’. cons sidera

Men by offering evidence based upen the loss cof profits wh ‘h. thie.

vonrt id adit

REASONS FOR GRANTING THE WRIT.

PRELIMINARY STATEMENT.

A principal purpose of ad treble damage provision of

the Antitrust laws (15 U: ’. 10) was toe encourage pri-

vate litigants to file suits oo violators, thus supplying

saan ancillary forcé of private investigators to supplement

‘the Department of Justice in law enforcement "’, Weinberg :

v. Sinclair Refining Co., 48 F. Supp. 203, 205 (EK. D. N.Y.

1942); and, ‘‘multiplying the agencies which would help

enforce the Act’’, Maltz v. Sax, 154 F. 2d 2 (7th Cir. 1943).

As stated by this Court,- there is a ‘*publie interest. in

- Vigilant enforeement of the antitrust laws through the

iustrumentahty of the private | tre ble-damage cog ;

.Lawlor v. National Screen Service Corporation, 340 U.

a. BPQ (1926). ©

The preparation of this case for trial consumed two —

years and seven months: after the Complaint’ was filed

(See Docket entries, R. 2-19). The ray itself required

36 calendar days and 24 trial days (R. 51, 2244), resulting

in a trial transcript in excess of 4000 pages: and a joint

appendix in the Court of Appeals consisting of 2538

printed pages. We suggest that the Court will judicially

know that the preparation and _ trial of such “a case, is:

expensive and burdensome, especially ‘for a small kusiness

concer, ,To say the least, the Opinion of the Court. of

Appeals in this cause conflicting as it does with the hold-

ings of other Cireuits and of this Court, particulatly as

“it relates to. proof of, damages, far. from furthering. the

stated (purpose (of the’ treble damage provision of) the

Antitrust laws, is most discouraging to these plaintiffs,

and, if permitted te stand, We Submit its effeet as a pree-

edent would practically put oan end te the bringing ot

treble damage actions.. The rulings of the lower Court

relating to proof of loss of protits and injury to business.

are so restrictive that a plaintiff? would have - little hope

of proving damages, and withott thi- Incentive, suits

would ‘not be filed: Small business, the nmsual ta yet - of.

antitrust violations, cannot afford the luxury of moral

Vietories,

DAMAGES.

A. Plaintiffs’ wreot 1 as presented to the jury was clearly

competent. Pte

(1) In presenting its evidence as to damages from loss

of profits, Volasco offered testimony of its president, testi.

fying from his knowledge, as an expert accountant, and

from its own récords as to its normal increase when free

from defendant’s unlawful interference, and testimony of

an expert accountant and business advisor as to its pro.

jected or expected volume of sales, and in doing so plain

tiff sought to and did follow. the precedents laid down by

this Court -in the Eastman Kodak, Bigelow, and Story .

Parchment cases-and of the other Circuits in the Rankin,

Twentieth-Century Fox and Atlas Building Products cases.

In concluding its disé¢ussion of the plaintiffs’ proof as

“to its loss of profits, the Court. of Sunes made this rather

anomalous and conflicting <taterhent: ‘We heheve that

here the plaintiff. in an effort to, be specific has indulged

in theories that result, in proof that ts speculative, remote

and uncertain.”’ . Then, the Court cites as ‘authority for

iix conclusion, Bigelow v. R. K. O. Radio Pictures, 327

U.S. 251; Story Parchment Co. v. Paterson Co.; 242 U.S.

155; and Eastman Kodak Co. v. Southern. Photo Co., 27"

—

: ch CY

Ps. oo Rar trom supporting the Appellate Court's con.

clusion as to plaintiffs’ evidericé,; we submit that the:

‘eases are the leading Gases supporting plaintiffs” theory

Ueto the iadmissibility of ‘its testimony.

The Court's characterization of plaintiff's evidence a-

thove stated is net an accurate description of it. A read

ing of all of} plaintiff's evidence on damages shows that

the figures finally arrived at were.in reality -judgnent. .

fivures after considering all available information. In the

Witness ’s opinion, they were reasonable in that they were

lower than: “those arrived at by some methods of. deter.

inination and they were higher 4h: an others,

Mr. ~George Kruga certified nablie accountant by pro

fession, who had been actively engagéd in this profession

prior to his’ coming to. Knoxville, and who was likewise

qualified to make and’ experienced in the making of busi

lwss forecasts, that is, the projectiig of future sales and

profits for business organizations based upon market

studies and the experience of the particular business eRe

59-60, 63,135), elearly qualified as an expert witness (R.-

56-68, 576-94). Testifying net only in’ his’ capacity as

an expert in these matters, but also based upon his per.

sdnal experience in the asphalt roofing industry and his

knowledge of Velasco's business, he testified substantially.

as follows: ;

Preliminary studies made prior to their decision to enter

into the asphalt, roofitig business and selection of Knox

ville’as a site, including consideration of. the. location of

competing plants (R. 70, 141-5, 601-11, 615), consideration

of the nature of the. product, that is, its heavy weight as

: compared to value (R. 10, 71), the nature of the product

itself, and the simplicity ’ of: the manufacturing process

(R. 136-7), the advantage which a lecal plant would have

from the standpoint of delivery and service to customers

mR. 2) and the potential ere (R..7 2. F3), indicated

that pr could reasonably expect sufficitut market to sup

ai this type of business (RET a wh: Bw: Da, RL gS,

DUST-SS). Tt was’ based upon these preliminars stndies

wnd after consultations with experts ino the industry Re

HO, TO! OO 600F). that the enterprise Was undertaken. .

The organizers then prepared forecasts of ineome similan

to those prepared for use in their proof ot loss of protits

in this’suit, and) such statements were the: basis for the

stockholders making their investment ino this enterprise,

“securing bank financing, and proceeding with their. plans

to locate an asphalt roofing manufacturing plant in Knox

O ville (RO USS. TST, 188; By. 24 (R. TAS, 2297-88),

Mr. Krug haber testified that ih his opinion a business

such ‘as this should under nerma! conditions he expected

to develop tooits normal operating level or maturtty i

live or six vears (R. 904). By the time suit: was filed, the

company had had more than three vears of eXperience Mn

the production. of mopping asphait and more than twe

years in the preduction and sale of asphalt saturated felt

(R89, TOR: Bex. 168, RL 540, DMN). Therefore, hased on

the company's own records and experience during the

early” time of its existence: and prior to the time that

. . . . ro . . = “e -

prices of asphalt felt were forced to below cost inthe Kray.

ville area, Mr. ‘Kritg projected the sales of asphalt fel

by two different methods. In the first place, he projected

these’ sales based om actual sales of felt: during the period

trom October, 1S. to April 197 (the period before price

_ coinpetition heeame se severe), and found that on this,

sales curve the company should reac haa volume of 270,000 °

rolls per vear after 5 or 6 years (R. WO. FX, IS4, Ro 007,

* 2349). His company had more vears of experience in the

sale of mopping asphalt, and he found from the sales ree

ords that sales of this product had increased during the

second: full vear of operation over the first by some 247

percept. Since the company had begun salecof this prod

net in T94, he had two full years of sales experience with

“it prior to the time the. price war: became so severe. By

applying the same percentage of growth te asphalt felt

is his experte nee had shown the company was able to

achieve in hopping wsphalt, he fe und that: the sales curve:

tor asphalt felt indicated total sales of 295.0000 rolls. hy

the end of the fifth vear of operation CR. 905-954; Ex. 184,

: R. 904,. 2549). Both these methods of projecting sales re

~nited in total sales figures thrat tied in ‘very closely) witli

i projection based upon the United States Commerce De

partment Facts for Industry figures on total sales of” ‘felt

as applied to the population of the are within a 2O0-mile

radius of Knowville, assuming that plaintiff could reason,

ably expect to eventually obtain approximately 20) per

cont of the volume withifi that area, This, method i

determination indicated .a total potential of 320,000 rolls

Sper vear CRO 907-908, 942-44)2 0 By the second method of

projecting sales, that is, by applying the same! ratio of

increase to felt as experience had shown the company was

able to produce in mopping asphalt, Mr. Krug estimated

that Volaseo would have. sold 120,006 roll. of felt during

the year ending April. 1997 (R. 1OSS)).

To fasthok corroborate this estimate. the wifness made”.

n study of Volasco’s. sales recotds. and determined that

during the -fikst twelve months of sales cof felt, Octoher

14> through September 156, such Sales aver raged S22.

rolls per eustomer CR. 501-504, 1090). Applying this av

erage te theoeaverage number of accounts which Volasce

sold during the year ending April 1957 .wonld indicate |

total sitles of 115,000 rolls, of felt for that vear CR. 1090),

Ih. fendant’s price ‘cutting in the ‘Knoxville area Began in-

earnest withthe 7!. per cont special discount on non-per

Norated felt-in August 1996 (R. 210-12, 1090) so that Volas — .

co's sales were affected for about half the 1957 fise al Vvear,

ra)

These two methods of projecting sales for the vear ending +

April 1957 having come. ont as close topeach ether, Mr.

Krug felt justified in testifving that but for defendant *s

illegal pricing, Volaseo would have sold 115.0000 rolls of.

felt in fiseat vear TST ORL rH91-92).

As shown by Exhibit) 164° (R. O42. 2B81). the rate of

growth of the. sales of mopping asphalt) dropped + off

drasticatly when the sale ‘of ‘Saturated felt began its sharp |

Pe line during the vear 1997, Having found from a study:

; his customers’ accounts that there wWas'a definite. cor:

a between. the sale of mopping asphalt and saturated

ret CR. 1090), Mr. Krag testified that im-his opinion the

loss in sales of asphalt felt: redneed his, sales of mopping

asphalt during the vear ending, April 1958, and that chad

the sale of saturated felt continued as projected in ae

cordance with Exhibit - 197 ER. TOR, 2573), that the Sale

oof mopping asphalt ‘vilso would have continued along the

sme entve on which it) had started (R. 1091-2; Kx. 197,

R. 1092, 2373). ‘In his conclusion that sales of saturated.

felt. and mopping asphalt go together, Mr. Krug bs jot ,

sti intiated by two of defendant’ < OWN Withesses CR. F629,

1694),

Plaintiff did not begin the manufacture and. sale of root

coatings until during the Year ending April 30, F957, ane

che used the actual sales ‘of this product for the 1957 pre

jection (R. 1104). Therefore, in projecting the sale. of

‘ roof coating for the second vear, the witness applied the

same growth rate as was developed in the sale of asphalt,

to the actual salés figures for the vear 1957 OR. 1105).

This is not adarge item, however (Ex. MOT, RO 1R85, Bau).

Using these’ projected sales figures, Mr. Krug then ap.

plied a reasonable sales price figure te the saturated felt

ot $2.17 per roll (R. 909, 1094, 1270), and the actual ‘wales

price figures to mopping asphalt and coatings to develop

. ‘.

Nan"

- e &. : : ! : , : :

estimated iicomse: statements for the vears ending in. April

Wor and April 1958 (R. 1095, 1104).

; (That the average selling price figure used by the wit-

ness | 1 determining profits on sale of asphalt saturated:

felt . a reasonable: figure is borne out by the fact that

Volasco’s average selling price during the vear “eyding »

April, 1957, even with the. price reductions during that

a Was: $2.13 per roll (R. 1095, 1270-71), and the price

‘Chieago during all the ‘period was never lower than

£2.16 per roll and during most of the period was $2.28 per

roll -that ‘is, before defendant's secret. year-end rebate —

and even with this rebate, it was below $2.17 only three |

months, “See Chart on page 25, supra, and: see R, 1207-9.)

. Krug’s testimony was corroborated by that, of Mr.

Sant hes a certified publie ace ountant with. the national

firm of Ernst & Ernst of Cleveland, Ohio, who likewise

qualified: as an expert aceountant experienced in the mak- ~

ing of forecasts as to future sales and profits for tisiness

(R. 1340-44). Mr. Bye hag aga the problem from a

different viewpoint, that as, by ‘a study of a) comparable

plant and market area to ern of Volasco. The one se-

lected by tim as being most- comparable was that of Fry

at Moorehead City; North Carolina (R. 187985). From

his studies: he also reached “the conclusion that Volasco

could reasonably expect to j achieve a sales velume of

300,000 rolls of felt per vear (R. 1386). Deféndant’s edoun.

Sel conducted) exhaustive “cross-examinafion: of both of

these witnesses, Krug and Bye, on’ every. phase of their

testimony and was unable to diseredit their conclusions ins,

any way, although counsel: had the services of Fry's own

certified public accountant: te advise and counsel with him

«luring the trial (R. 464, 551-52, 1339-40). For example,

“on Cross-examination of Mr. Krag, counsel sought to dis

credit his forecast of future sales by attempting to prepare.

hix own forecast: of Volaseo’s potential sales “based on

“ — itl

Volasco's Ye ‘tual *salys risende ke h: 246. I: M7). “The set

Ness promptly pointed out that coun8el’s chart was in

accurate, howaver, because it developed) projected) sales

efor the vear ending April 1997) of 20,0000 rolls loss’ than

. Volaseo's actual \sales, wherenpon counsel promptly

dgopped that viene 47-1249). TP plaintit®’s spre

Jections and caleulations were so speculative, remote and

uneertain as the Appellate Court has indicated, we wonder °

: eT os

why the’ defendant was nnable by cross-examination to

refute them and why det fenidant lid not produce its own

accountant or some other expert Witness. to explain the

fallacies to the jury. es :

Thé testimony offered by plaintiff? was directly in-line

with that held ky the Court of Appeals of the Second Cir

cuit to be admissible it the case of William H, Rankin Co.

-y. Associated Bill Posters of United States and Canada,

et al, 42 F.2d 152 (2d Cir, 1930), as indicated by the fol.

‘lowing Guotation from that Qpinion at page 5:

“In its proof of damages, Rankin was permitted,”

under objection and“exeeption, to show by ‘the testi

mony of its treasurer and by a compilation he had

made, based on the net profits of the business in it

— and from his knowledge of business conditions when

free of the defendants’ unlawful interference, w hat

- he. considered would have been the normal inerease

of this plaintiff's business from year to vear, Tle was

permitted to estimate on-this Wasis its probable yearly

jeaumin gs from July, 11. to June 30, 191s, anidte-ex

~ plain-how his figures Were arrived at. The facet that

this amount of the plaintiffs damages could not be ex

_ pressed in exact figures did not make thent speenla

tive., There was no speculation as to the fact of ac

tual damage. Its business: had been’ seriously énr

tailed. The defendants had caused the damage, and

_ cannot “be permitted to eseape liability beeause it ts

difficult for the plaintiff to express in terms of cdol-

~ 4)

lars the damages it se salleved. This evidence, whike

purely an estimate and introduced as such, was proof

of a kind as definite and certain ws the subject-matter

admitted. It had te do with what was never actually

earned beeause of the defendagts’ wrongdoing. The

witness testified from his knowledge of the business

history, made his caleulations upon what appears to

‘he a reasonable basis, and the defendants had ample

opportunity .by cross-examination or the offer of their

Own ey idence on the subject to diseredit him ‘and |

show any fallacy, in his reasoning or testimony. What-

ever may be said of its weight and. that, was entirely

for the jury, we have no diffenlty with its admissibil-

ity. Eastman Kodak. Co. Vv. s Baers Photo Material

cane O. SApra, at page 379 of IU. SS. 47 &,. Ct. 400"

‘ ™ »

The holding of the Sixth Cirenit in the instant ease is :

clearly in conttict with that of the Second Cirenit: in’ the

his foreeasts were a LUCSS, Mr. Krug said:

Rankin case... > >

In answer to a question by the Trial Court as te whether

4 .

“No, our answer is based on these -forec usts Qu ant

own experience, Tad we not been undercut in price,

we would have had more. experience to prove these

forecasts. That is, the Wasis of our figures, onr own

experience, here, our forecast” (R. 957).

Plaintiff's. testimony “was afso clearly admissible and

<ubmissible to the Jury under the holdings of this Honor

able Court.

“Damages are tot revideted. uncertain beeanse they

cannot be. caleulated with absolute exactness. [tin

| sufficient if a reasonable basis. of npaccasnomne is ead

forded, although the result he ‘only approxim

\ Eastman Kodak Co. v. Southern Photo Siete’

Co., 2723 U.S. 359, 379 (1927). |

“Juries are allowed’ to het upon ‘probab le gamed anh

JTerential, as well as direet and positive pred, Ane

when from the nature of the case the amount of the

damages cannot be -cestimated with ce rtainty, or only

a part of thenr ean be-so estimated, we ean see ne ob!

jection to placing hefore thie Jury all the facts nied

circumstances of the case having’ any tendency to

show damages,"or their probable amoumit: se as te

« enable them to make the most intelligible and prob

able estimate whieh the nature of the case will per

mit.

. . * . . o .

4 .

" ; ° . . é ca & S AG:

“Arid the adoption of any arbitrary rule in snehon

ease which will relieve the wrongdoer from ainy part

of the damages, and throw the loss upon ihe injurest

GAS would be: little less than legalised. robbery.

Story Parchment Co. v. Paterson Parchment

Paper Co., 282 U.S. .555, S64 and S65 (1981).

o. 4

“<The constant tendency of the Courts is to find

some way in which damages ean be awarded Where a

wrong-has been done. | Diffienlty of ascertainment is

no longer confused with right) of recovery’ for a

proven invasion of the plaintiff's rights? . "

Bigelow y. R. K. 0. Radio Pictures, Inc., °} me bi

> DAL, 265-266 (1946).

In holding that plaintiffs’ proof as to loss of profits was

_ improper, the Appellate Court elearly invaded the province

‘of the Jury in attemtping to. weigh suéh evidence. The

Court seemed ‘to conclude that the testimony Was int.

prooadle because the Court did not agree with the wit

“nesses that a fair basis for projecting the sales of felt was. -

by using Volasco’s actual experience -in the sale of mon:

ping asphalt. ‘In this connection, the Court stated, “Ther?!

‘is no-evidence to support the claim that there is a general

overall pattern that mopping asphalt and felt move in any

« .

partic miler relation to each other” ey 11). ‘In this con

clusion we respectfully beg to differ with the Court of Ap

peals and subniit that. there was ample evidence from

whieh thé Jury. could tind that plaintiff's witnesses were

Yolt do move in a‘relation to each other,

Tn disc ussing the chart showing the sales curve cot

“asphalt felt, asphalt and .roof coating (hx. 164, R. oe,

2331), Mr. Krug testified: “The asphalt and felt, are hor

mally sold together cand the decline in the felt ‘would nit

urally affect the sales curve of the asphatt’’ (R. 546).

He further testified: ‘* Every time the price Was reduced

below the price we were selling we were injured to the

extent we would have to reduce our price to remain con®

petitive so.all that we have sold ‘at the lower price we lost

the difference betWeen the previous price and the hew

price. Also, as many of these discounts and undereutting

in price cime without our knowledge, frequently business

- was ‘lost completely of the customer’ being offered a better

price than our then current price, that he might and did

-place the business with another supplier, so we lost some

business altogether. And. ‘of course, the third thing that

resulted from both, and primarily the second set of sales

where: we did-not sell at all, our other products suffered

because normally they are sold with the félt. So if a man

placed his felt business with another supplier he! would Ie

- very apt to also p rchase his eoatings and hig asphalt from

the other sapplier\ (R51: 3- ol).

Later, he testified: The mopping asphalt shown 6n Ex

hibit 14° showed a very drastic flattening out of its

yrowth. curve, at the sane time the felt sales started de

clining. . «

“8As we know, the sales of) these’ two product s go to,

gether. The decline in ‘the felt sales would adversely affect

the sale of the mopping asphalt (R. 1091).

Minalty dhe stated: |

: Qo Now vou have testified that there as. im went

opinion, a relationship between the wales of asphalt

‘and felt. Towillbask you whether or not vou hawve miade.

any Studies other than those indicated on the chart,

Exhibit 197, to reach that conclusion ?¢

AL Yes, TE believe T me ationed thee that wonldy't

hea relationship. We made a study of a broad section

of our accounts’to determine on the average how much

te Jt is sold with asphalt. | ° pees ee

‘That study indicated that approximately two and

one-quarter roll of asphalt— of felt is sold per roll? ot

asphalt” (R: 1317, 1218). |

Ax further showing that Mi. Krag’. festimony Was tot

_eimply an assumption of dis part, Mr. Joseph Madler, a

witness for the defendant, testified! ogn direct examination:

(), ‘Do you sell both axvhalt saturated felt. ane

eer sy Noe

‘A. As a part of the yoofing line, ves.

“Q Do all of the people who buy veur felt tron :

“you on buy asphalt from you. — rec

-T would sav ves” (R. in ath).

Also, the witness, Ro LL. Steele, a Witness on behalt of

the alefendant, testified on CYOSS-ONATMTMAT LON :

“Qe Mr. Steele, from your experience as a purehias

ing agent, is there anv advantage ina manufactures

having a complete line of asphalt: roofing produc 1s as

against having only one produces sue Was asphalt sat

nrated felt to offer for’sale to its ehatome es? You may

answer, \

“A Yes, sire The mannfacturer dyes have an ad

cuntage in having a complete line of roofing produvt-

7 This Hrondd fead “per demi ot asphalt”

over one who has specialty iter.

“Q. What is the basis for your statement? Why da. .

vou say that! : ‘ eee]

2 N. Each item will so to sell the other one in

relationship te the product CR. 164).

~All of this testimony ‘is further corroborated by the tact

that asphalt felt and mopping asphalt are the two in

wredients, and therefore used together in’ the construction —

of built-up roofs (R. 645, 1447, 1935). . .

further, in holding that in the two years succeeding the

“material | period, that is, the years 1959 and 1960, the: fact

“that asphalt saturated felt. deere: ased in each of those

years While the sale of asphalt increased refuted . Mr.

Krug's claim that sales of asphalt and saturated felt

‘moved jn relation to each ather, the Court was elearly

guilty of usurping the functions of the jury in construing,

; weighing and analyzing the-testimony. © Mr., Xrug “had

very clearly testified, and his entire testimony a yWws, that

the price of mopping asphalt did not substantially. de

crease, Whereas the price ef asphalt saturated felt did de

Crease below cost, and that, for this reason, he instructed

his salesman not to try to sell asphalt saturated felt, but

merely to accept orders for this product from old, estab.

lished customers in order to keep the business (R. 507, 514,

H83-4). Ifesfurther testified, and the exhibits (Ex. 184, R.

2340; Ex. 164.,R . 2331) clearly and dramatically show, that

on the same late that sales of asphalt saturated felt

started their precipitous decline, fhe imerease of sales in

mopping sasphailt likewise abruptly stopped, and sales of

this preduet leveled off (R. 953). Then, too, the fact that

topping asphalt is used for some purposes other than in

built-up roofs would tend to keep sales of that product up

(R. 1284, 1935).: There ix no question on this record, how:

ever, but that if Volaseo’s sales of felt had held up the

{a :

sales of asphalt would dave: increased substantially riots

than they did. ,

In analyzing the testimony of Mr. Sem Bye, the expert

Wwithess on behalf of plaintits, the Appellate Court) sliew

that it did not fully understane qe testimony buat jumped

to conclusions Without taking inte account all of the evi

cence. The Court quoted Mr. Bye's testimony to the effect

that in his opinion it was reasonable to assmime that Vo -

laseo could have reached a volume of 195,000 rolls of telt

by the end of April? 1058. The Court then says: ** Hew he

arrived at this figure is unexplained. He applied ne mathe

matical formula. Heappears to be a fignre arbitrarily taken

outot thin air’ (A. 12). li this statement the Court: was

in error, This witness had already testified as to market

studies which he had made (R. 278-1384) as teca com

parison between the market area served by defendants

7 plant at Moorehead City, North Carolinas, with that served

by plaintiff's plant CR. 1882. 1885) as to a study of the’

volume. of sales, of asphalt saturgted felt at defendants

Moorehead City plant CR. 1385), and that, based upon sueh

studies, in his opinion, ‘Lt would be entirely reasonable

that Volasco would have ‘aw potential of up to, Say, approni

mately 300,000 or more rolls of felt) per vear (R. 1386,

1293). That, based “upon this. potential ard based upon,

Viilasco’s experience and: record: in the sale of mopping

asphalt, it had a second vear potential (that ix, the vear

ending April, 1958) af 194,989 rolls of felt (78,914 rolls of

fell snuultiplied by 147% —see R. 90-and Ex. 168; Ro 2330)

ax compared with Mr. Krug’s estimate of 195,000 rolls +

OR. P8871890). This the figure of 195,000 rolls as testi-

fied to-by Mr. Bye was clearly a judgement fieure based

upon all the factors above set ont and not picked out of

the air: “Mr. Bye did apply a mathematical formula in

verifying his judement. ae :

The Appellate Court. we further submit, unfairly and

improperly assessed the testimony of Mr. Bye when tite, «

‘

page 13 of its Opinion it stated that his estimate was con

ditioned - upon Volasco having an aggressive sales or-

wanization and giving oe service without his knowing

anything about Volasco’s organization or ability to give

serviee (A, 13). And,in saying ‘that ‘tone cannot. sav

Moorehead City’ shipped over 300,000 rolls in’ it year,

therefore. Volaseo in another area even though essentially:

similar vould ship a similar number ofsrolls..* In the

first: plae e, the witness's testimony is much more detailed,

backed up by studies covering population ino the. area,

residential units and commercial industrial buildup in -re-

lation to felt sales, and the final conclusion by this ex

‘pe Tt withess that in his opinion the market for the product

Was ver¥ comparable, particularly in view of the fact that

a. substantial part of it overlapped (R. 1879-1386). — In

making his estimate as to the potential sales of the. com-

“pany during the second year, the witness very clearly

‘conditioned that estimate upon the company: having an ag

ing good service ‘to its customers in the area -(R.

gressive. sales program supported by advertising and giv.

1393) 3°

There was other evidence in the record from: Mr Krug

and others as to the actual sales policies: of the conypany

and its sales efforts (R. 495-508). The vicious nature of

the. price eutting on felt in the Knoxville area is itself tes.

-timony to the effectiveness of plaintiff's sales efforts. it

the jury from this evidence found that Volaséo did have

aggressive sales policies and gave good service, then it

Was entitled to consider the testimony of Mr. Bye as te

its potential’ sales. for the fiseal vear ending in April ot

1048, Tn overruling numerous objections to the testimony

of this witness, the Trial Court carefully peinted out on

more than one oeeasion that the objection went to “the

weight. of the testimony rather than to the competeney :

(R. 1882, 1285, 1391). Tt was not error for the Trial Court

to admit the testimony into evidence for ‘‘all the facts

and cirenmstances of the case having any tendeney to

chow damages or their probable ainount shonld be sub

mitted. to the jury to permit: it to make the mast intel

“ligible and poe estimate which the nature of the tease

will permit’. Story Parchment Co. v. Paterson» Parch-

ment Paper Co., 282 Ul S. 555, 564. ;

Wherefore, it is egecibate inbinitted that the Appel

late Court, ins holding that plaintitl’ s festimony as te

damages was insufficient as a matter cof law, in effect de

‘nied plaintiff a trial by Jury in, violation Jot the Seventh

Ainendnrent to the ¢ ‘onstitution of the U nited States and

_ disregarded. the mandates of this Court. in. the Bigelow,

Story Parchment and Eastman Kodak eases and atteinpt-

fo set up a tule for proof of damages in confliet with that

of other -eireuits, particularly, the Second Cireuit in’ the

ease of Rankin v. Associated Bill Posters, 42 1°. 2d doz.

the Eighth Cirenit in the ease of 20th eres Fox Film

Corp.. v. Brookside Theatre Corp., 14 I. 2d S46, cert. de-

nied 242 U.S. 942 (19: 52), and the Tenth Cirenit in the

case of Atlas eee Products Co. v. Diamond Block and

Gravel Co,, 260 F. 2d 950, cert. denied 363 U.S. 843 (1960).

(2) In addition to loss of anticipated profits, plaintiff

‘was entitled to recover for injury to. its business, or de-

preciation in the value of its property, and the Sixth Cir.

cuit’s holding that this element of damages was duplica-

tous is in conflict with the decision of. this Conet in the —

Story Parchment case and with the. Tenth Circuit in the

Atlas Building Products case. ‘

The Sixth © ireuit in holding that plaintiff was not or

titled to recover for Dijury to its business as well as loss

of profits is holding directly contrary to the holding of this,

Court. in the case. of Story — Co. v. Paterson

Parchment Paper Company, 242 U. 8. 595, and TT

contrary to the holding of the ue Circuit in the ease

-of Atlas Building Products Co. v. Diamond Block & Gravel :

-Co.,-269 F.2d 950. The Sixth Cirenit does cite these cvitses

e q : 4s

and purports to distinguish them from the instant ease.

We submit, however, that the: distinctions relied apon ly

the Court are purely imaginary and not real. It seeks to

distinguish the Story Parchment case by saying that .in

at case the: plaintif? was forced out of business. ~ It is

respectfully submitted that there is ne difference in law

nor in fact as tow hether the plaintiff. closes its business -

oF continues to ‘operate on a limited and curtailed basis

as did Volasco. There is iio question but that. the assets

of Volasco were worth some $389,000.00 less on “April 17.

1958, than had been invested in that company. This was

the testimony, dnd there was no sugared testimony.

Thé Jurvs was entitled to consider it) in arriving at its

verdict. The Appellate: Court in ia this evidence

incompetent is usurping the funetian of the jury and deny-

ing plaintiff a Jury, Trial. in violation of the Seventh

Amendment to the Constitution of the United States. In

stating that plaintiff,-by receiving damages for profits and

an injunction to prevent further illegal pricing, is made

whole is a fallacious assumption’on the part of the Court.”

An award of damages in an antitrust ease is no ‘substi-

tute for actual earned profit. A business operating profit.

ably as a going ¢ concern has its or ganization for’ produe-

tion’ and sales developed, it has good will and customer

relations established and it has eredit standing based on

its history'of earnings. <A business debilitated by anti-

trust injury, ever after an award for its lost profits, is’

still debilitated,- with demoralized sales and production

organizations, no established good wiH and no record of

earnings. - .

‘Suppose plaintiff had ‘heen operating a. dairy, and de-

fendant set about administering a slow poison to plain-

tiff’s dairy-cows which caused them to stop produging

_ milk. Should it be said in such a ease if plaintiff recov.

ered of the defendant its loss of profits because of the re-

dneed production of milk and at the same time seeured an

40 Ps

a 4

injunetion against the defendant from continuing itn At

ministration of poison to the cattle that plaintiiT could not,

also, recover the damage to the cattle, that is, the difference “

between ‘their value as milk producers and their actual

value as of the date of anjury merely beeause the Court

tight sav’ that since defendant is now enjoined, vou ean

vet busy and doctor vour cattle and restore them to health >

nnd to future production.

While-it is true in the Story Parchment case that. de

fondle aut. had closed its business, vet it’ is also true that the

only diffe ‘renee between the damages j in such a case and in’

the case at bar is a difference in degree, and this Court

iy its Opinion allowing damages for injuries to plaintit’~

business relied not one whit upon the fact that plaintitt

hae closed its business.

In attempting to distinguish its Holding in this case

from: the holding of the Tenth Cireuit in the Atlas Build.

ing Products case, the Sixth Cireuit merely stated, ‘* but

. there is no indication-that they overlapped as they do

Shere’? (AL ia). We sulimit that acreading of the Opinion

in the Atlas Building Products case reveals that the

‘situation of the plaintiff in that case is*identical with that

of the plaintiff-in this case. In that case, plaintiff's proof

of damages followed the identical theorysthat plaintiff in

the instant case followed.- In diseussing the two element-

of damages the Tenth Circuit said:

"Tn that regard the jury Was instructed that. in.

determining damages it might consider as one of the

elements, any profits that may. have been lost dys

appellee in its: business; and that it might also conside:

ax another element of damages the extent to which the

value of appellee's profit or the net worth of its assets

had been ‘diminished as a.result of the price discrimi

“nation. The appellant objec ted to this instruction on

the ground that it permitted the jury to assess double

damages for one wrongful act

‘

‘The statute speaks of injury to’ ‘business or prop-

erty’. And see See tion 4+ of the Clayton: Act, 3s Stat.

TRL ID FOS. CCA §15.° And, those words in their

ie a sense have been construed in terms of (1)

the difference, if any, between “the amounts actually

realized by the injuredsparty and what it would have

“reasonably expected tocrealize from sales but for the

unlawful, acts complained af; and (2) the extent to

w hich the value of the petitioner’s property had been

* diminished as a result of such acts. See Story Pareh-

ment Co. v. Paterson, supra; Kobe, Inc. v. Dempsey

Pump Co., supra; Bigelow v. R, K.-O. Pictures, supra.

We think hoth loss of profits. in business and diminish

ment of the assets were proper elements of alamage,

cand the trial nina did not err in so submitting ‘the

case to the jury’ ~ (pp. YS8-999). ne

It is respectfully submitted that the Opinion of the

Sixth Citenit is not only, in direct conflict with the di.

cision of the Court of Appeals of the Tenth Circuit but

is. also in direct conflict with the applicable decisions of

this Court, and,-for these reasons, this Court should “exer:

cise its power of supervision by granting certiorari ‘in this

cause, :

(3) Defendant's illegal pricing practices as to plaintiff” s

principal product adversely affected sales of other prod-

ucts, mopping asphalt and roof coatings, manufactured °

by plaintiff ‘and it. should be allowed to recover the losses

thus caused.

In holding that plaintiff was not entitled to recover for

loss of profits due to decreased sales of mopping @sphalt

und roof coating, the Gourt based its decision on thagrround

that the prices of “these products were not involved in the

~ price Inanipulation on felt sales and, ‘*The evidence does

‘not support Mr. Krug’s statement that sales of these

products decreased eee * with the sales of felt”

‘ +”

(Opinion, 18).. We are not aware that Mr. Krug ever

mad® the statement that the sales of these products de

creased proportionately with the sales of felt. His testi

mony as borhe out by the —_—_ rec cords and ais depic Hoel

on the chart, Exhibit 164 OR. 2831) was that the increase

in sales ‘p mopping asphalt fell off drastically when the

sales of agphalt felt. began: their precipitous decline.

At one point in his testimony in discussing the chart, he

winieds

*t As vou see, avhen the felt oe started decline

ing, the actual asphalt sales leveled ‘off apprec ‘lably.

Their growth was wreatty curtailed) from that point

on’! CR. 992),

He did testify, as hereinabove sti ited, that in his dpinion,

and based apon a study of his own gompany ‘s accounts, *

there was a pretty’ definite ratio between the sales of

mopping asphalt ahd of asphalt) saturated felt during

normat times that is during the period prior to defend:

ant’s illegal price digeriminations. Mr. Krug gave very

cogent reasons: for the sales of mopping? asphalt and root

coatings “not increasing as they normally should have *

increased had not the sales of felt been adversely affected,

for, as he said, he was unable to keep a salesman on the

-road with the price of felt being be below cost of production

and delivery (R. 507, D4 633-0: i). . The only logical re-

sult of such action is-readtvection in sales of ali of plaintitl >

products. If plaintiff's sitlesman is unable to eall on cus

tomers because he cannot.afford to sell the principal prod

uct of the company, then he is not soliciting orders for the

other products either. Det ‘endant’ s actions in violation

of the’ antitrust laws, by: causing plaintiff to reduces its

safes effort, necessarily injured jt in the sale of the other

produets which. it manufactured, -

That there is a relationship between the stiles of asphalt

and felt. or that factors affecting the sales of felt) alse

. eN

. . gary

‘ mia

atfect asphalt, we believt is cleatly shown by our disenssion:

under the previous section of this argument at pages 42a

? to toa, .

In holding that ** plaintiff Was not entitled to recover

for loss of sales on mopping asphalt and coatings” (A. Toa

19a), the ‘Appellate Court does violence to the holding ot .

this Court in the cases of page Kodak Co. v. Southern

Photo Materials Co., 273 U.S. 359, and Story Parchmefit

‘Col v. Paterson Parchment P area Co., 282 UL 8.555.) This

(‘ourt “should grant certiorari and correct the holding of

. the Sixth Cireuit on suc han important juestion of Federal

law for the\losses thus suffered by plaintiff were clearly

an injury to its business or property by reason of a vio-

‘lation by defendant of the antitrust laws.

8. Plaintiff should have been permitted to present to the

jury evidence as. to its loss of profits by being prevented

from entering upon the manufacture and sale of shingles. ~

and roll roofing, its losses based upon its projected sales

during a mature year, and the loss in value of its business

as a going ‘concern. ,

= () Plaintiff clearly had the intention to go into the busi-

ness of manufacturing and marketing a full line of asphalt

roofing products including shingles and roll roofing and had

acquired at least 90 per cent of the plant, machinery and

equipment necessary to manufacture shingles and roll

roofing but was prevented from making the 10 per cent

additional investment in machinery necessary for these _

products by defendant's illegal pricing practices, so that

_ plaintiff should have been ‘permitted to submit to the

jury testimony as to its losses on projected sales of shingles

“and roll roofing. —

The questions here presented are w hether the plaintiff

intended toe go ftnte the’ husiness of manufacturing. roll

ae \

roofing and shingles avd whether it was prepared to en

gage @n that business. ;

On the question of intention, there can be io doubt

under this record, Mr. Krug’s testimony, that they had the

intention from the inception of the business, even prier:

to organization ‘of the plaintiff corporation AR. ahs &

clearly supported by a memorandum dated April 12, }94,

filed ast lh. xh 17 and copied ir the Record ¢R.L 7 133).

They had blue prints prepared of plant layouts including

* refinery, roofing pnt and entire layout (R. 82). Rlue-

print of proposed rootiqe machine was tiled as Exhibit 2

but is not copied in the Joint appendix. Mr, Krug’s testi

mony Was fugther substantinted by a letter which he

wrote the Southern Railway Company on June, 1954,

marked as Exhibit 26 for identifieation (R. 139). from,

‘whieh it appears that as of that date the completion of

the roofing machine by adding :the additional elements to :

‘manufacture the vol roofing and shingles to the felt:

saturator was contemplhited for the winter of 1954-55 CR,

As to whether: it was ‘tprepared’; to engage in that

Pusiness, the evidence, shows that as of*the end of the

fiseal vear,” April 39, 1956, plaintiff, Yolaseo Products

Compatiy, had total assets prior to depreciation of $1H,

W2VG (Kx. 158; Ro 515, 2825). and Volunteer pgp

Company had total assets of $275,543.60 (Ex. 159; R.

2326). While as of the date of trial their ‘combined ASSETS

were $717,249.49 (Bx. 160; R. 535, 9397). In order to

nufacture roll roofing and shingles, it would he neces:

sary. for plaintiff to add certain items :of equipment ane

machinery to its existing saturator, and such additional _

pieces” of equipment would cost $60,000.00 or less to in-

stall (R. 508-10). Thus, to fully equip itself to manufac.

ture roll roofing and shingles, plaintiff or its promoters,

would be required to invest approximately 8 per cent to -

13 per cent additional capital in the business. “The large

inveattnent aly dy made by > plaiptift vould not have been

made had fev not intended to \mannfaeture a complete

line * of: roofing materials ‘(R. 1293). They were abie

financially at all. times’ after- the Fall of 1955 to complete

the roofing plant (R. 568). They had the land, the dock,

the office buildirie,: factory building, the asphalt facilities,

and the saturating machine already .installed and con

‘structed (R. 98-104, 140). All they lacked was the addi-

tion of ‘comparatively minor items in order to be fully

prepared to manufacture roll roofing and shintles. ‘As. to

i &

whether. a person gs’ prepared. to engage in’a busifiess is

“always a. question of degree. Suppose evetything had

been done and all machinery installed, and all that re-.

_ tained to bé done was the installation of a switch to turn

electric current into the machinery. Under these circum-

stances, could it -be said that plaintiff was not ‘‘prepared’’ -

to ‘go into the business? Mr. Krug stafed. their reason |

Lor not. going into the full line as follows:

" *Q. Then why did ‘you. not complete it!

“A. Two reasons, Number one, as SOON as We began

the manufacture ,of saturated felt the price cutting

commengd,gand if that same policy would be applied ~

‘to the other products which we planned to produce.” ”

we -wonld be. forced out of business. We w ‘ould de.

come insolvent, had we attempted: to manufacture the,

complete line. « .

“We gould absorb the losses ‘on _the felt, which

- we have abggrhed since 1959 to date, and are still in

‘business ant r ‘position to carry out this suit. We

_ couldn't have done’ so had we spent the motiey on

“the compléte roofing machinery and made the con:

plete line of roofing produgts. The Josses on the cou _

. plete line would have been so tremendous. The. felt,

is approxithately 15 per cent of the total roofing mar-

_ ket, so the loss om the other 85 per cent’ would have:

been tremendous’ (Ro 5@R-569). i)

‘

a? ” r P . . . ths . » “8 .

items ik not a complicated engineering or manufacturing

} : ii pa °

. ; — « a a . v “ye see

It should) be cledrly” understood ‘that rell roofing ang

shingles are tierely additional, produets -in the asphalt,

rooting Line to those alre ady in production bt the pl: aintift,

that the basie raw-materials with the exception of granules

are the same as utilizéd: in the manufacture of asphalt

saturated felt, and that the-manufacture of these additional

-problem to a company already manufacturing saturated,

‘fedt’: (R. 91-92, 135-37). .

‘But for the illegal. actions’ of the defendant, plaintilf

would have entered into the manufacture of fhese products

(R. 512-13). ;

“4 person has a,legal right to engage Ina lawful

business. If he is unlawfully exchided from exercising

this right, when he is prepared and intends to exer

‘cise it, he suffers an injury for which the law awards ~

damages—he is: ‘injured’ withing the meaning of ‘the

i ‘ederal statute. = :

- Pennsylvania ‘Sugar Refining Co. v. E peanaret

Cir, FOS). ve :

See alxo Triangle Conduit & Cable Co. v. National Elec.,

tric Products. Corporation, 15? F. 2d 398, 400 (3rd Cir,

1945); American Banana Co. v. United Fruit Co., 116 I ‘ed.

261, 264 (2d-Cir. 1908) y William. Goldman Theatres, Inc.

v. Loew’s, .Inc., 69 F. Supp. 103 (EB. D. Pa., 1946), aff'd

164 FL 94 1021 (3rd C ‘i. 1948), cert. den, 334 UL S. Sil:

and American Tébacco Growers v. Neal, IS FL 2d 869

(4th Cir. 19 wun

Petitiamer: Volaseo, | peepetialyr urges: that, under the.

testimony in. this case, the questions should lave been

aa to the jury under proper jnstructions ato

whether plaintiff had the intention and was. prepared to

proceed with the manufacture of roll roofing and shinglés

——,) ‘

~~ and. if ‘so, whether it suffered any damages : asea result.

oF Fry's illegal actions in preventing it from entering ate

- o :

this business.

(2)- Defendat’s illegal pricing had as of the date of |

.. suit delayed plaintiff at least 2 years in. reaching full de.

velopment or maturity; plaintiff, therefore, should have

been permitted to present to the jury testimony as to. its

loss of anticipated profits during two (2) of its mature

“years, particulirly since its total business life was limited |

to fifty years. % Pe rl, ‘

Mr. George Krug explained this theory very suc ‘cinetly

when he ‘testified as follows: Aa | ;

“*Q. You explain to us just how vou arrived at. “it.

if you will. 7 Ae

‘A. Our company has a lease Ww ith Southern: Rail.

way. for 50 years covering all of the lakefront prop.

erty. So that———

‘By Mr. W. ilsan :

“Q. Let me interrupt you right: there to make clear,

What do you mean by the lakefront Sonata ’ Ix: thet.

the property your plant is: located on?

‘*A. Part of the plant is located on it. but’ it: is’

_ where the’ docks are located, and we could hot receive.

asphalt by river without the lakefront property, and

the cheap transportation of asphalt to the plant 1 ix the

economic basis for the plant. — |

“*Q. Then there is other property which your com

pany: does own outright, is that correct? °° oy

;2- “*ASPhat is correct: - “9 =,

¥ Q.-But that property, does it or -not have aceess--

to the lake? | 0 ’

AL The property we own dows not have Aaceess to

: the lake.

—~ wi

: x ;

: Q. Except ae ross: this Souther u Railway property +

‘*A. That is correet.

e. Proceed. Bek a F har a

“A. So we fegard that as the-Jife of the corporit

tion. Every new company ix yoing to havesa growth -

“period, based on our own growtli during the relatively

limited period that we had experienced before the,

price war got sO severe—-— , = Fines ”

+ eo a e.: . _ Ae ;

‘A. Plus the growth, and growth in’ the asphalt

sales which were. not, so seriously reduéed, 1 believe

this type of business would reach its maturity in“five

to six years. We ‘have spefit . about that much time:

up to 1960 in developing the business, but rather than

‘reaching maturity we are. back practically where we

i started: in felt. So that af we are successful in this

suit, we are going to have to start all over again tn

building the business so it will be another five vears .

before we reach our maturity, , ;

: “In effect then, we are going te’ have 10-years of

our 30 year corporate life, taken up by growing pains,

- rather than the normal five.” For that reason, 1 feel

the two and a half years that we have lost between*

‘5 and 58, we have lost it forever as far as our ma-

ture earnings are —— We will not have that

gmany véears left: Pa

“Our projections, therefore, are based ou what we

feel we would earn w hen we reac h approximately our

full. growth” (R. 900-902). 6 oN

income suffered

ved of two and. gne-half

at $163,960.00) per vear ord

Mr. Krng then estimated the’

by his company by being ‘de

vears of its’ mature . life

- $409,900.00.-(R. 966-98

As stated by Judge Christianey in the case of Allison

11 Michigan 342, 550-556, quoted with ap-

—

| . ve > : ’ op

proval by this.Court, in the.case’of Story Parchment Com-

pany v. Paterson seen isn Company, a2. S

Nie, OOF: ek SERA

jury all the facts and ci “umstances of the case, havi if

any ‘tendency to ‘Show damag®s, their probable

amount;

The. Appellate, Court: éa hold‘ that Volaseo, could: re-

cover damages suffered after the date of suit proximately

caused by wrongful acts of defendant before the complaint

-. We ean see no sitet ' to placing before the

was filed (A: 16a-19a). Plaintiff's mature- vear coneept or.

theory of damages fits exactly - irito this category ‘as under

it” plaintiff is seeking to recover’ two and- one- half lost

vears of profit of which it was deprived by defendant’ >

violation of the antitrust laws prior ‘to daté of suit: See

's Lawlor Vv. Loewe, 235 U. S. 522, 586 (1915); 20th Century.- -

Fox Film Corp. v. Brookside Theatre Corp., ‘194 F. 2d 846,

cort. denied 343 U. Ss. "942 (8th Cir. 1952).

—

(3) Plaintiff should not be limited to testimony concern-

ing the difference between the. ‘actual investment in its

properties and the actual value ‘of such properties in pre-

- senting’ its proof as to the injury to its business or prop-

= erty caused by defend§nt’s uctions but should have been.

permitted to introduce testimony as to the difference be-

tween the going concern value its business would have had

but for the actions of the defendant: and the actual value

of such business as of the date of suit. ;

As an ‘abstract proposition it. is clear that plaintiff in

an antitrust action should recover in addition toe loss of. -

profits which it may he able to show, damages to the ex-

font <of the difference between. w hat its business would~

have beep worth had it not been: interfered with’ and its

actual value after such interference. In ruling upon plain:

tiff’s evidence as to the extent of damages to its business.

Ld ° e

the Court should not have limited the proof to the differ.

ence between the actual investment in the company and ity

actual value after being damaged by antitetist violations.

While the actual inveatmegt . in a cotnpart ix one of the

ctors considered m determining the reai value of w cone,

pahyNit is ‘not .the only ge and, in the busigiess com |

munity, it sis frequently considered the least important,

The proven earnings record of a business property is the

most important oe at its value as business

men aequire business properties primarily. for their future

earnings and not to liquidate them. The earnings hasis: is

most, frequently used because the: actual investment: in a.

property doeg not always show ther eal value of a busi-

or hail:

_ -. decisiéns in Anilding or acquiring its propeTties so.that

“the red] value of these items may be morf oF less than ft

‘actual’ investment. It likewise may Have acquired. \

ness. The business may have miade excellent, goed.

tangible: assets of substantial value w hie h are not reflec ae

an the books as part of the actual investment. EK cas

of these items. would be the: dev elopment of a competent

and. successful sales organization, an experienced and ef |

ficient manufacturing organization, varions products, pat” “

ents, franchises, ete.. As the earnings, record of a’ com

pany reveal how effectively these items are put together

in the operation—of-the—business, it more clearly reflect» en

the value of these assets.

In an antitrust’ action any evidence bearing upon the

probable loss in valiv, or loss of value to‘a business due to @

actions of dofendardy in violation of the antitrust law

shonld be submitted to the jury, to ‘enable it to reac Ch suoh

reasonable aitd ptobable estimate of damages as thev think

will _produce adequate coninensation.- Story Parchment ~*

Co. v. Paterson Parchment Paper. Co., 282 v. S. 555, AGH.

An evaluation of a business on an earnings bai for

determining damages or injuries toa business due to anti

“

me, ee ge

= e.'% °o a - *

earnings has a value apart from the earnings themselves,

even’ though: such: earnings are. withdrawn ‘trom the busi-

‘ness. An-award of dantages for loss of . profits is no spb-

stitnté for the earnings. record, itself .as such da@ages ;

would have no meaning to Investors who were looking to |

the future.fer their earnings and a return of their: invest-.

, trust violations’ is not duplicating an award for damages

“dye to loss of profits. A business with a proven recofd of |

-ment. A business would have to redevelop its sales organi-,

zation, its customers and suppliers’ relationships, its.

manufacturing and research organization, and again prové

.s ability to make a profit hefore the. — of its — tv

Would she restored. ;

4 “ee

wae

THE CASE OF THE MONOPOLY ISSUE.

A. The evidence is sufficient to submit to the jury the

THE APPELLATE COURT. ERRED IN| REVERSING

issue as to the violation by Fry of Section 2 of the Sher-:

to find facts. upon which to hold the evidence insufficient.

The Court’ of Appeals very accurately and very suc-

“cinetly stated the law of monopolization on page 8 of its

Opinion in the following language:

‘Section 2 of the Sherman Act (Section 2, Title 1 15,

U.S. C.) provides ‘that it is a violation of the law for

‘a person to monopolize or to attempt to monopolize,

persons to monopolize any part of the trade or ‘com-

meree_ among the several. states.

"<The essentials of monopolization are, thie. power rie

- raise or fix prices, to eliminate competition. at will,

or to unreasonably restrict competition, and. the intent

or for a person to. combine“or conspire with any other

ter eXErcise ny power. PEnited ‘States v. DuPont &

Co. 3538 U.S. . 586, 502; United States v. DuPont &

“Co, 301 “ae S. 377; 389; American Tabacco Co. v..

Vnited’ States, 32 U. S.-7S81, Sli: United “States v.

> Griffith, 334 8. 100, 107.7 ;

m . . ‘ ‘ i SS. ; . oe

We respectfully submit, however, that the Court failed

to apply, properly the lay as thus enunciated to the evi.

dence in this ease, al er aS

- Defendant is the largest producer of ‘asphalt roofing

products in the United States. While agreeing witli this”

statement, the Court of Appeals on page & of, its Opinio

° volunteered the further statement, ‘‘It was not. the largest

“gompany, manufacturing this product 2. °° (A. Ta). T his

“statement of the Court of Appeals is uot laser by the

record in this case ,and, for whatever dts worth, ap

parently was taken from defendant's Britt, im the. Appellate

Court. In its Main Brief, defendant stated on page 15,”

‘While defendant has’ 19 plants, its net assets are less

~ than $20, 000,000.00) CEx. 130). ‘and it competes: with many

larger national companies. In its. Reply Brief, Volaseo

pointed out that Exhibit 130 shows total assets of the:

e defendant to-he $28,000,000.00 and stated, “while the size

of its national competitors does not. appearin this record

Ay Faced with a to total lack of evidence in the record,

defendant was in-no wjse daunted, and in its Reply Briet

stiited on page 3, ‘{In anv event Fry's competitors include

such bigger corporations as Johns-Manville, Celotex, Allied

Chemical, Ruberoid, Certain- Teed, Flint-Kote, Philip

Carey, U. S. Gypsum, and, Bird & Son. Judicial notice

7 x

of their.sizes ¥s anorepiiate. ‘Yhese. are shown in reading ——

own an Te

financial yu Aicaiienson-shick ten” tadlaens community

° ‘relies, While plaintiff claims Frv has $28,940,759.00 total

“assets) Moodv’s Industrials (1957) shows that Bird. the

suiallest of the above rained competitors of Frv, has

nenete amounting to ov ér $40,000,000.00, and Allied Che TT

— (--

—

eal, the largest, has assets of over $750,000, 000,00, Six of —.

the nine have more than twice Fry’ s total assets."" :

- This case’ was ‘presented to the jury on the evidence

produced at the trial. There was no evidence -as -to thy

size of Fry's competitors. Without such ev idence, it ix

ho more appropriate for the Courts to take ‘judicial

know ledge" of finaneial statements that may be contained

in some financial publication than it would be. for this

Court ‘to take judicial knowledge of the size of a corner

_ grocery based upon a Dun & Bradstreet report presented

for the first time in an appellate brief. The Appellate

Court found as a fact that Fry was not the largest com- -

pany - manufacturing asphalt felt although there was no

evidence before the Trial Court and the jury upon which

either of them could have made such” a finding. -Ev idence

- should ne more he supplied by the Appellate Court, than,

“evidence supporting plaintiff's position. Plaintiff is en: \. |

titled to have this case considered on the evidence and

‘only on the. evidence which was submitted to the jury.

Any other rule deprives plaintiff of a trial by jury.

—~"" rv has ‘nineteen roofing “plants: located . stategically oe

4 throughout the country, being as many plants as its next

two largest competitors have combined. Ruberoid Com-

pany has eleven plants and Certain-Teed Products Corpo- a

ration has eight-plants (R. 556-58). - Defendant séld twelve’ te,

and one-half per cent of the total national sales of asphalt

saturated felt in the vear’ 1958 (R. 157). As of October

31, 1958, defendant had total assets of $28,024, 752.00 (Ex.

" 430). We submit that defendant’ s size both physically atid: a)

financially is sufficient to. carry with it an. opportunity ‘for

abuse that is not to’ be ignored when the opportunity “

proven to have been utilized in the past. United States v. i

Swift & Company, 286 U, S. 106, 116 (1932). ase

id Mr. Lloyd Pty Fry, ‘ r, defendant’ s president, in his.

Jetter: of Apmly2t, 1956, i Peaslee-Gaulbert stated . that .

Sy °

on /

® ‘ : f . ° . :

SR a ng ne eR ee ge ge

> P = a. . , : .

. se

these national coneerns (

°° e

the minal roofing - manufacturers in the Southwest were ws

thorn’ in the side, that defendant was wate hing them.

: closely, that in due time: they would: be dealt: with’ aid

‘that if they didn't get in Jine within thirty days, “we w Wh

take corrective action.” - As of une 15, 1956, the corree-

tive action’ was’ apparently, “begun. when the price was

_ raised over the country except in. the Southwest.° Mr.

Llovd A. Fry, Sr., the f Chief Executive Officer, Chairman

of the Board; ‘and owners of: ‘ninety (90)" per cent of the —

tottl capital stock of defendant CR. 189, 1490, 1916), while’

negotiating for the purchase of Marvel Roofing Products,

Ine; an asphalt roofing business of Albuquerque, iNew

Mexico, in late 1957 or early 1958” (R. 1026-27), indicated

that. he engaged. in the ‘practice of “conditioning the

market”

Fry was responsible for the low prices in the =" el area.

Was confirmed by the Ww itness,.Cox (R. 1030, 1040). :

Mr. Fry, Jr, de eudant’ s president, visited the pa “s

of The Piedmont Company near Atlanta, and Sunset at Lf

Lubbock, Texas, where prices “had been lowést, to soy

about buying: them. Failing, to buy these plants, defe a

ant is building plants of its own jut Lubbock and AManta

(R. 2059-60). oo “ ae ee A

Of the ‘fourteen pricé changes Syletween Feyfflary 1956

and March 1958, defendant alone initrated all but ‘three

(R. 2045- 46), Five of these price changes represented

‘price increases in the Knoxville area and defendant alone

- initiated all five of, these changes. | The price of asphalt

saturated felt -has remained high Ahroughont the entire

period of time in the € ‘hicago area where defendant oom

petes’’ with all of* the nations

in-the Knoxv ile area; indice

manufacturers w hich sell

ing that ite is able to control ,

1501 2: i€, 125, Re HB, 2207 ),

by- reducing the price of asphalt roofing products

in a. given ‘area (R. 1028- 29). _He admitted, or bragged |

“that he was responsible for lowering the price of such.

" produets in n Marvel’ s territory: (R. 1027). The ‘fact, ‘that:

Ja"

; -— 34 . : = a -

2 : rr ’

od - . S ®

Defendant’ has been successful, in excluding plaintiff,

s “

from the manufacture and sale of asphalt. shingles in fe (oat

Knoxville area A(R. O12-1 3), and has greatly .reduced_ at<.

sales. of ‘felt i the area served by ‘its ase (Re 5T4; Ex.

t64, R. of2, 2 2331).

awe - %

By foreing the price of papal ‘saturated. felt in’ the

Knoxville area below gTT) | per roll, defendant was suecess. !

fulian elimix ing Ohio Paper C sre asa, ene 4 in?

__that-area. (R. 1476): :

Mey Thus, we submit that. there is more, ‘than inte evi-

denee in this’ record. to warrant submission to the jury.

of. the. issue as to whether defendant aldtie had monopol-

ized tlhe “ale of asphalt. ‘saturated felt. in the Knoxville.

‘area. ex ses | . xe

Defendant has saevdets to control prices in both

"the Knoxville and the New Mexico area as well as in the

Chieago and othér areas in-the United States, Its intent

to-contre? such pr ices to: accomplish its own aims has been

clearly -shown., Not only has its power to exclude ‘competi-

, tors been show but it) has. actually accomplished. such

exclusion, Undéf the proof in this.case, defendant has =. *

developed monopolistic control over the asphalt roofing

industry - in the United States not Just in ‘the Knoxville

>< Bree. :: ' :

: Under the cireumstances of this case, the fact that? Pry,

alone, had only. twelve and one-half. per cent of. the ‘as: — ut

phalt saturated. felt business in thie” United States i<tot

2 determinative on the question of w hether’ ‘it “actually had

| a monopoly or had monopoly powgs er. “As has been shown,

asphalt roofing produets are Sotanaratively heavy in rela-

- tion to their value, and, therefore, transportation hecomes

“a major item of expense (R. 612, 1478). Fry through the

- location of its plants throughout the United States was

. «able to.use this factor to the fullest extent in foreing ‘its

will as to prices tipon all other manufacturers of asphalt

; * 3 ae 2 1 oe \

— ee ee ee ee

ae rare ‘. 2 4h

- roofing products. it could | pick. any competitor, lower

prices around that competitor's plant or plants to. the

point where they were unprofitable and yet. itself, remain

ina profitable position by raising prices near its other

plants in areas far distantfrom such competitor’ s, plants.

Lnder such circtiastanees, the percentage of the market

; Salowed by -Fry has little or no hearing upon its de facto

’

. *nopépoly power, ° . a

“*The relative effect of percentage eommand of a x market

varies with the setting in’ which that factor ix placed."

United: ‘States v. Columbian Steel Co., 334.0. S495, 528 _ .

E1947). a. .

| The: Couit hdl held that since plaintiff has charged:

and: proven. that. Fry conspired to. monopolize, ‘*In the

light of that. evidence we think the plaintiff failed to

make a prima facie case that defendant alone had the

“power to monopolize the industry on asphalt saturated .

felt."' In this connection we would comment that there ;

'~ is no conflict whatsoever between the charge of. monopoli.

. zation and conspiracy to monopolize. The “conspiracy .

could be and,. we submit, in this ease: was used to make

defendant’s Inonopoly power more ‘complete. and more

easily. and surely exerted. In’the second place, there was *

no burden ae the plaintiff below to ‘‘make a prima

‘facie case’’. All that plaintiff was obligated to do was

to éatablish; to’ the satisfaction of the jury, by a prepon.

deranee of the evideneé, that defendant had monopoly

power, | ,

. B. The Court's charge, taken as a whole, was adequate

on the monopoly issue, but even if there was error no -

adequate objection was made by defendant.

‘y A reading of the -Court’s entire charge ‘to the j jury in

this cause shows that: it ik’ very fair, clear, and complete..

The charge covers every*phase of the case and states the

<w**

~ fil, ;

issues té be-considered by fhe jury very clearl¥ and con-

-cisely. With specific reference ‘to .those portions’ of. the.

charge dealing with. the monopoly ‘issue, we would point

ou® that the Court first quoted the statiite (R: 219).

Later in ‘its charge, the Court set forth. ‘the issvies te- he

determined by the jury and clearly differentiated betw een, .

the conspiracy, monopoly, and price discrimination issnes

(R. 2195). Thereafter, in specifically “and definitely _Sat-

ing the. issues, the Court stated with referenvé to “the

monoply question as follows: \ nie

3 “Second—this - -is the sécond issue—:_ Did the -de-

fendant, alone’ or in combination with other roofing

manufacturers, monopolize or attempt to monopolize °

the sale.of asphalt: roofing, products in ‘the, above. area

by fixing prices of such produets in said area lower

than. prices fixed in other non-competing areas in: vio-.

lation of the Anti- Trust Laws; and if so, did plaintiff

sustain damages asa direct and’ proximate result. of

such alleged violation of the Anti-Trust Laws?

“**Tf you. answer that issue yes, again your verdict”

would be for the plaintiff on this count of* the com-

plaint, which is the monopoly count.’ ‘But ‘if yousan-

“swer that’ issue no, your verdict awould Le. for the

defendant on the monopoly count of the complaint“

(R. 2196),

Contrary to the cinfevones from the Appellate Cowrt’s

statement that: a) summing up in hie charye on monopoly,

the Trial Court defined conspiracy. without relating it) te

monopoly, and that the Court thus confused the jury “as

fo the difference between monopoly with and without con--

spiracy, we submit that the Court explained. the difference

very carefully. Prior to defining conspiracy, the ‘Court:

‘stated: : teen

“There are various ways in which the Sherman and

Clayton, Acts as amended may be ‘violated by | which

- ower er Oe ° “ —

“ngpolize and monopoly by. a

MZ 3

.~ « . . . a g i my,

- > .

“trade and commerce, can be. restraimed. Such acts may

Again; in defining the term monopolize, we submit. the

take the form of conspiraey, monopolizing and, price,

discrimination. Those are forms in Which commerce _

_ has been restrained. A combination fo supipress, com

petition or >to monopolize: or attempt To monopoliz®

the asphalt roofing business is an illegal combination.

Under Section 2 of the Sherman Act, there may be a:

monopoly or an attenrpt to monopolize without a con.

spiracy to do either’? (R. 2199,” tS —

Court clearly differentiated hows conspiracy to” mio:

statement of the C ourt on this subject follows: on

“The term ‘monopolize as used in ‘Section 2.of the.

~ Sherman -Act_means the joint acquisition or mainte

-nance by the members of a conspiracy of: the power to

control and doriinate ‘interstate trade, and commerce ®

_ Hr a commodity to such an extent that they are ably

LAS i group to’ exelude/ actual and potential competitors ;

from the field, accompanied with. the gener Al purpose

ngle individual. The full

to exercise ‘such power. .But it is not neePssary that :

there hea conspiracy or combination on the ‘part, of

one party w ith another or others ‘in order to violate:

Scetion 2 of the Sherman Act. Any individual or cor:

poration alone ‘may, offend agaifist the provisions of

Section’2 of the Sherman Act: by monopolizing or

attempting. to monopolize interstate, trade ar c¢om-

.- merece"? (R..2208). a ey oe ee

* Iother words, here the Court has said- that in order for

an individual to monopolize: he must ‘have ‘the “power, to

contre) and dominate mterstate trade and commerce in a

commodity to such an extent that he is able to exclude —

actnal' and potential Competitors from the field, accom. -

panied with the general purpose to exereise such’ power,"

Py .

Is3

: o— FS :

Again we + submit that, as a matter of law, the Court’. —

charge taken as a whole -(the’ statements herein quoted,

taken together. with the ‘other statenients contained in the

charge: and dealing with the: subject of monopoly, which, :

in order to conserye space, we do not copy in this petition)

\cis an excellent and adequate charge. In determining

whether there is érror in’ the charge the Court ‘will look |

_ tothe entire charge and not alone to isolated portions of

it. See hese yi & Potomac Railroad Co. v. Mackey, 157.

. USS. 72, 86-87 (1894) 3 Am. .Jur., Appeal & Error, < N AM.

Regardléss of any imperfections Ww hich may be eiieind

out in the Trial Court's ‘charge on the question of monopoly

wand attempt to monopolize (and could any reasonable mind

upon, the face of- the recard arrive at the decision that the

‘jury found ‘that the defendant individually monopolized,

hut found-that the defendant was not guilty on any other

count or issue?), the defendant should not have been

heard to complain ofthe charge in this particular—that is,

the <uhinission of the question of ‘alone monopolizing*

for the reason that the defendant made no proper and

underst: andable objection pointing out the ourt’ s error as

required by Rule 51. This rule provides that “No party,

may assign as error the giving or the failure to” gixe 3 ‘an

instruction unless ‘he objects thereto before the jury retires

to consider its verdict, stating distinetly the matter to

which he: objects and the grounds of his ee, (Emi:

phanis ours, y 2 ‘ ‘ ; or

The “portion of the dates critic ized by the Appellite

Court has been set out above,

The entire objection: to: this portion of the charge ix at

short paragraph re ading as follows:

“Mro W citzenfeld: We. Phject 4 to the charge because

the charge as given did not. separate monopolization

orattempted monopolization individually as charged.

son or persons to monopolize’

were

ee etme GO -

Srof that nionopolization or attemptest monopolization

allegedly. resulted from a conspiracy, and in that re

spect. we subinitothe charge to the jury ix confusing”

(Ro 2224): Aes c

It is respectfully submitted that the foregoing language

can in no way be said to have been sufficient to alert the

Court’ to the fact. that counse! thought that there was in-

sufficient evidence to go to, the jury on-the quéstion of the

defendants having alone ac complished >a nionopoly.. Hf,

‘indeed, counsel did have that thenght in mind, then we

submit the language. used in his objection appears more to

have heen used to disguise his thonght than to conve Vit.

It was the duty of counsel, if it was his position that there

was insuffic ‘ient evidence to support: this issue, to say. SO,

-and a failure to be explicit in this regard bars. the defend

sant from thereafter ‘ attacking the instructions of the

_ Court.

It would ‘appear also frem an examination of the «por.

‘tions Of.the Court’s charge on the;monopoly issue that the

Courtein drafting its —? had in mind the alterna

tive nature of Section’ 2 ‘of the. Sherman Anti-Trust Act,

which prov ides: thad ‘Every person, who shall monopolize

or attempt to monopolize*’ shall be guilty, and that’ every

person who shall ‘‘combine or conspire with any other per

shall be guilty. - * 4,

In other words, the offense may be by reason of? indi-

vidual monopoly or attempt to eqepponte, or that by rea-

son of a combination or conspiracy. Evidently,.from the

| language of the objection to this portion of the charge, this

same thought lay \in the mind of’ counsel for the defenflant,

. and, if this be true, then it certainly cannot he stated that

the ground upon which ‘the. instructions were held erro

neous by. Appellate Court were called to the attention of

the’Trial Indge. ; :

: Mt

: ee enum are

Olijections to a charge oe mee ‘must: be. sufficiently

_ spec 3 to bring into focus the precise nature of the alleged

error.” ‘ Paimer v. Hoffman, 318 US. 109, 119 (1948).

We beHeve the rule is well stated inthe ease of Holliday

v. Great A. & P. Tea Co., 256 F. 2d 27, 302 (Sth ( ir. 1dsy,

and is pertinént to this subject.

The objections interposed, in the instant, case did |

not distinetly. state any. grounds for the objections.

The trial court. was giver’ .no opportunity to correct

“or cure any possible defect or error in the «instructions

as given. The objections do not even tell us the mat- ~~

ter to which they object in the: questioned instrue-

tions and certainly’ do not state the grounds of their

so-called objections. This is an appellate. court and

before we can properly say that the trial-court was in

error that court must have been given an opportunity

10 pass upon the question, Alleged errors cannot ‘for

the first time be urged in this court.’ .

. In the case of Richfield Oil Corp. v. Karseal ‘Corp., 7

KL 2d 709, 422 (9th Cir. 19: a), the Court said:

6 purpose of the Rule is to give the court.

a chance to: correct an erroneous instruction. an the:

law.. Though viewed realistically, we might hazard a

guess: that it would have been a difficult task, even by

stating distinetly the grounds of the objection, to have

caused the court to changé its previously announced:

position. Nevertheless, to preserve the question on

appeal, not only’ should the objection have been made, °

but the’ grounds thereof should’ have been distinctly

stated."

In any event this whole discussion of. defendant ‘‘alone

monopolizing” is not of much importance in view of the

overwhelming evidence on conspiracy, combination. and:

. ; ®

price discrimination. If any errer was committed in sub-

mitting this issue, it should - be disregarded because it

would: net have affected the substantial rights of the

parties (Rule 61, Federal Rules - Civil Procedure).

‘The rule of procedure, as ‘cians in Tennessee, to

a effect that a gencral verdict is good in a multiple

-issue case where one or more issues~ are properly sub-

mitted to the jury,even though another issue is erroneously

- submitted, controlAin a’ Federal case in Tennessee, par-

ticularly if defendant did not: request special verdicts or

submission of interrogatories as “provided by Rule 49.

The Court f Appeals. announced a reyver sal in the fol

lowing language:

“The judgn ent of the District Court must be re-

versed for the’ reasons, that there is no evidence .of

monopoly in. the relevant area by the «defendant, in-

dividually, and for the failure of the: trial judge to

adequately instruct the jury on the issne invalved”

( . GA, Ia).

\ 5

| "Previously, the court had reviewed the record on fhe

charge that defendant had conspired to. violate: the aniti-

trust: laws and had concluded: i

“We . conclade that the trial judge's’ instructions

‘to. the jury, on the law of conspiracy, were correct

and that the evidence as herein reviewed was sufficient

to take the case to. the jury @ that issue’* (AL 9a ).

The time- honored practice in» Tennessee in hoth: the

State and Federal. Courts is to submitythe issues of fact

in a law ease to the jury for a general verdict. While

there is no specific rule to the contrary, special verdicts

and interrogator ies are employed, almost universally, only

* jin the separate Chancery ‘Courts of Tennessee,"

—- |{ .

Section 20-1317, of ‘Tennessee Code Annotated provides:

“* Verdict: Applied to Good Count. ;

“Tf any'counts in a declaration are good, a verdict.

for entire damages shall we applied to sne ‘h good

counts (Deriv. Act 1801, Ch. 6) See, 68).

7 ts , ;

At the tinte of the triakin the instant ease, December,

1960, the attitude of the Sixth Cireuit Court of Appeals

toward: the general verdict in Federal. trials in Tennessee

Was ds announced in the’ cases gf Louisville and Nashville

- Railroad Company v. Rochellé, 252 F. 2d 730 (6th Cir:

1958),.and: Atlantic Coastline Railroad v. Smith, 264 F. Yd

428 (6th°Cir. 1959). In each case the Court held. that in

Federal Court tigation in Tennessee, the s0- called Ten:

hessee ** two issue’’ statute controlled and a eeneral vey:

“dict would be upheld insthe event substantial evidence

snpported one or.more counts of. the declaration. No mens

fio) Was made. in these cases of the rule heing rte alge

only in diversity eases, ‘

° Subsequent to the trial of the instant case, the ‘Sixth

Cireuit. had for consideration an appeal in the case of

Tracy v. The Finn Equipment Company, 290 F. 2d 498

(Gth Cir. 1961), likewise appealed from the United States -_

District Court for. the Eastern District of Tennessee,

Northern Division. That cause involved a two count dec

laration seeking damages for personal injuries onthe basis

"of breach’ of implied warranty and negligence, respectively.

Subsequent to the trial of thecause and a verdict in favor

of the plaintiff, the Trial Court, being conviriced that he ‘

chad been in error’ in’ submitting the issue of breach ‘of .

warranty to the jury,,entered an Order sustaining the

defendant's “Motion for New -Trial which he thereafter’

aniended, by allowing an interlocutory appeal to the plain-

tiff. The cause was appealed cand on May 9, 1961, the

Sixth Circuit issued its opinion reversing the lower court.

and directing the entry of a judgment for the plaintiff

upon the verdict.

This reversal was based upon the Court’ s \aRproval of

the application ‘of the Tennessee statlite (supra) validit-

ing general verdicts upon the good counts despite the

erroneous submission of an ‘issue, the Court say mig:

“While the Act is in this. respect procedural, the

United States Supreme Court has postulated-a poliey

that in diversity’ cases the .t federal courts niust follow

even the procedural. rules of the state in| which ‘it

sits where an application of a different: rule would —

| cause aysubstantial likelihood. of a different result had

the matter been tried in the state court. In Guaranty ,

Trust Co. v. York, 326 U.S. 99, the Court indicated

the broad effectto be given to Erie Railroad Company

Me ‘Tompkins, . 304 U.S. 64. That case involved a

‘snit brought in the district court, with jurisdiction

based entirely upon diversity of citizenship, to ev-

force in equity a state created right. There it) was

said: ay |

- ‘But since a federal. court adjudic ating a State ere

ated right solely because of the. diversity of citizen

—~ ship of the parties is for that | purpose, in effect, t, only

anothér court of the state, it cannot afford recovery

if the right to recover is made tdnavailable* by: the

State nor ean it ‘substantially ‘affect the enforceine ~ ae

of the right.as given by the State:

Tn Byrd v. v. Blue Ridge ‘Electric Cooperative, Bob -

-UoS. 525, the Court agreed that the, Erie case sup.

ported the broad concept of Guaranty Trust Company,

supfa, that the federal court should conform as near

as may be to state rules, ‘even’ of form | and mode,

where the state rules may bear substantially on the

- question as to w hether litigation would come out one |

ae ‘74

wav in the federal court and another way in the state

court.”” |

The deeision in the Finn case was the -first pronounce-

ment by..the Sixth Circuit that the application of the

aforesaid Tennessee statute might he limited to diversity

lis

euage:. ‘

* **The plaintiff Volasco claims that the ‘two issue’

rule. ix applicable. in Tennessee and that, if other

issues. were properly Submitted to the jury there can

be no reversal because of an error in the submission ;

-of one issue: The plaintiff cites two cases from the

‘Sixth Cireuit, in support of this theory. ——— d

‘Nashville Railroad Company v. Rochelle, 252 F.

730, C. A. 6, and Atlantic Coastline Railroad ae.

v. Smith, 264 F. 2d 4 2d 428, C. A-6-—Phexe cases < are both -

liv -ersity cases tried in Tennessee where the two-issue

_rnle prevail: (Tenn. Cen. Ry. Co. v. Umenstetter, 155.

Tenn. 235) and under Erie v. Tompkins, 304 U.'S. (4.

the District Court must follow the substantive law

of the state. Tennessee and Ohio are the only state~

in the Sixth Circuit to follow this rule. This case is

tried under federal law w here the ‘two issue’ “rule is

not applicable. ‘Wilmington Mining Co. v. Pulton, DD

U.S. 60, 78, 79; Baltimore and. 0. R. Co.’ v. Reeves,

10 F. 2d 329, 330, C. A. 6; Chicago and N. W. Ry. Co. -

v. Garwood, 167 F, 2d 848,857, C. A. 8: Both v. Swan-

son, 145 F. 2d 262, 269, (% A. &; Atlantic Coastline Ry.

Co. v. Tiller, 142 F. 24718, C- A. 4.°' :

‘The principal reliance of the Court of - Avneals for

precedent in the above decision is. the case: of Wilmington

hh tie —instant—case; iii Court of ar aciaad ot een

_ the contention of the plaintiff that the two-issue . rule.

required the verdicy to be pheld. in the following lan-

‘Mining’ Co. Vv. Fulton, 205 v: S60 (1907). Tn that cuse

‘the Enited States Supreme Court, speaking through Mr.

Justice White, construed. the Illinois stitute which pro

vided that a general verdict would not be reversed on

the ground a defective count had. been submitted, if one:

or more other. counts be ‘snfficient to sustain, to mean only,

that ‘the verdicts would not be set aside, where the un

"supported counts were not vital. The Court eited as ae

hasis for. this decision two Illinois cases w hich the ¢ Couyt™

deemed té support its construction. Interestingly enough,

the Wilmington case was a negligence action remeved to

the Federal Court from the Illinois State Court becanse:

ot diversity of citizenship and if deemed anthority upon

the subject, the Sixth C irenit is “greatly in error as te w h: at’

is. ——* j os =

It will: be noted from the above excerpt from the cs

of the Court of, Appeals that it categorically classifies the

Tennessee statutes as ‘tthe substantive law of the7st: ite.

Whereas, in’ the Finn case (supra), ‘the Sixth Cirenit

le rmed it procedural. re wr

This holding is in direct confliet with. the heldings of

other cirenits, .

-The Se venth Cireuit (1940) in the case of Stephenson v.

‘Grand Trunk Western R. R. Co., 110 F.2d 401, has spe

/ cifieatly held that the Hlineis statute making veneral

"verdict good if supported | by good counts despite the sab

Hission of defective counts, is applicable in the trial ot

cases in the Federal Courts. of THinois, saying:

Thus we face oppasing rules anil must decide

whether’ to follow that set forth in the Wilmington

" euse, or the one. as announced hy the Snpreme Court

of Hlinois; and we conelude that the latter is cot

trolling. It is our judgment that the question involved

‘js ont of practice or procedure, in which the statute or

D -,:

7 cree pot a ii

decision of the state court must. be followed. Ww e think

Wwe are justified in refusing to follaw the Court in the .-

‘Wilmington « ‘asedecause the Supreme Court of Tlinois, ;

so farias the ¢ ‘ourts’ Gpinion discloses, had not decidéd.

tlie question . at that time and because the subsequent

decision of the state court renders the rule announced

in the Wilmington. case inapplicable.”

“The decision of the Seventh Cireuit is. hased on the

view which we helieve to he the majority view that rhtes

and. Statutes applicable to: the inethod of conducting a

trial are’ _ procedural rather than substantive. and. that

e the Federal Rules of « ‘ivil Procedure are silent, a»

in this case, the. practice and proceditre . followed. in the

state where the Federa] Court sits’ shall control. See

Atlantic Coastline R.' Co. v. Dixon, 207 FL dd 899 (5th Cir.

1953). -In, that case, which arose. ander the Federal, Em-

ployers’ Liability ‘Act, the Fifth Cireuit. held that magters

respecting the remedy and admission of evidence, il

not govertied by the Fede ra¥Rules of Civil Procedure, will

he governed hy the law of the place of trial.

Indeed, it would appear. that the Sixth Cireuit. may:

the instant cause be in conflict with its own views, See

Gulf Refining Co. v. Fetschan, 130 F. 2d 120 (6th Cir.

1942), where the Court said: ’

**Rule 49 (b) of the Rules. of Civil Procedure’ pro

vides that when the general verdict and answers are

harmonious, the Court shall direct: the entry of the

ind: rent upon the verdict .and answers. The: failure

to answers interrogatories is not fatal where the gen..

eral, verdiot.can be supported on other facts or where

_ answers to such questions, favorable to the party

against whom judgement is rendered, would not neces:

sarily render the judgment erroneons."*

An examination of the cases relied upon by the. Sixth

Cirenit in rejecting ‘the application af the “Two Tssne

. Rule” in the instant case reveals a clear ent conflict he

tween Cireuit C ourts of Appeal on this question,

The only case cited, by the Court from the Sixth C ireuit.

is : Baltimore and Ohio R. Co. v. Reeves, 10 F.2d 329 (1924).

This case is a diversity: case where the Sixth-€ ‘irenit: set

aside a verdict where one of the issnes ‘submitted was hot

supported. The ¢ ‘ourt in its opinion did not refer to any

state dor saying merely: “This i is the established Foderal—

i Atlantic Coastline R. e: v. ‘Tiller from the aii

Cirenit, 142 F. 2d 718 (1944). ° The Kighth Cirenit: cases

“were both, from Minnesota and. in the case of Roth v.

Swanson, 145 F. 2d 262 (8th ir. (1944), being the earlier

of the two, the Eighth Cite uit cited as authority for its

decision a Minnesota, CANE, indic “ating it. was following it

state: rule. ae a

. i

In- the Tiller case (supra), the Fourth. Cire Wt set aside

a -general verdict w here one of the issues was improperly

<ubmmitted “shocause - the. gene vality of the verdict renders

it oe eel to determine Japon whic h theory the, jury

tased it.’” As authority in the Tiller chse, the Fourth.

Circuit cited the case of ‘Maryland: v. Baldwin, an IsX4. —

decision of the Enited States Supreme Court, 112 Uys.

| 490, and five cases from the Eighth Circuit. Thus, it would .

appear that the decision on this question’ in the instant

case not only conflicts with previous holdings of the Sixth

Cirenit and apparently follows decisions of the Fourth and

Kighth Circuits but also conttie ‘ts with the holding of the

‘Seventh Cireuit in the Stephenson case (supra) and the

Fifth Cirenit. in the Dixon case (supra) and we beliete

also with’ the reasoning of -the Second Cirenit. hereinafter

referred to. ~ 49 Ton . : e

We urge that the impeachment of the general verdict in

this canse of the grounds set out is in direct violation of

\ >

eS ;

Rule 49 of. the F veal Rules of Civil | Procedure. wail |

conflict. with the spirit of the rules as embodied in Rule 1 1

to the effect’ that-‘‘They shall be construed -to secure the

just, apecdy’ and inexpensive determination of every ac-

tion.’*: This. is -true because ‘it’ lay within the power of

the defendant at the trial of this cause’ and. at- the time

of the subinission of the case to the jury upon a general

Verdict, to resolve. any doubts as to the basis upon w hich

3. “the jury ‘premised its verdict by requesting the Court to

require the jury-to render special verdicts ora general,

verdict accompanied Dy aliswers to interrogatories as pro-

vided by Rule 49-

complain of the Submiss

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