1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-9-1998

Rossi v. Standard Roofing Inc (Part II)

Precedential or Non-Precedential:

Docket 97-5185

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Recommended Citation

"Rossi v. Standard Roofing Inc (Part II)" (1998). 1998 Decisions. Paper 225.

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Volume 2 of 2 

Filed September 9, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

NO. 97-5185 

JOSEPH ROSSI; ROSSI FLORENCE, CORP.; 

ROSSI ROOFING, INC., 

Appellants 

v. 

STANDARD ROOFING, INC.; ARZEE ROOFING SUPPLY 

CORP.; GAF CORPORATION; ALLIED ROOFING, INC.; 

SERVISTAR CORP.; ROBERT HIGGINSON; HARDWARE 

WHOLESALERS, INC.; WILLIAM HIGGINSON; 

CERTAINTEED CORP.; WOLVERINE CORP.; NAILITE 

CORP.; ESTATE OF ROBERT HIGGINSON; AL ROTH; 

CARY ROTH; JOSEPH LICCIARDELLO; WOOD FIBRE 

INDUSTRIES, INC. 

On Appeal From the United States District Court 

For the District of New Jersey 

(D.C. Civ. No. 92-cv-05377) 

Argued: November 6, 1997 

Before: BECKER, ROTH, Circuit Judges and 

DIAMOND, District Judge.* 

(Filed September 9, 1998) 

_________________________________________________________________ 

* Honorable Gustave Diamond, United States District Judge for the 

Western District of Pennsylvania, sitting by designation. 
Finally, another former employee at Standard, Michael 

Hydro, testified that GAF comprised eighty percent of his 

sales while he worked there and at least five of Standard's 

customers purchased exclusively GAF product. He also 

explained that in 1989 and 1990, a large number of 

townhouse projects were already "spec'd" with GAF 

product, which made it impossible for the roofers to switch 

product lines mid-stream. Thus, anyone who could not 

supply GAF product was effectively barred from bidding for 

these jobs. On the basis of all of this evidence, we believe 

that Rossi has demonstrated that a genuine issue of

material fact exists as to whether GAF product was special, 

and necessary for a distributor like Rossi to successfully 

compete in northern New Jersey. 

Against this background on the roofing market in general 

and GAF 's place in the market in particular, we move to 

the evidence Rossi adduced that GAF used secret rebates 

with several of its biggest distributors in northern New 

Jersey, including Standard, Arzee, and Allied, for that is 

critical to understanding the motivations of Rossi's 

horizontal competitors. Pursuant to this scheme, GAF 

provided these distributors off-invoice, non-volume

discounts on their purchases. These "rebates," assuming 

they were only offered to a few favored distributors as Rossi 

contends, allowed those distributors to sell GAF product at 

or below the prevailing market price (as set by the

distributors who did not receive the discounts) while 

secretly conspiring to pocket the difference. In GAF district 

sales manager Bud Krusa's words, "the less [sic] people 

[who] knew about it [the discounts], the less chance you 

[the smaller distributors] have of getting it[and] dropping 

the entire market price." The most favorable inference we 

can draw for Rossi from Krusa's statement is that if these 

highly secret rebates became widely known, the smaller 

distributors who were not receiving rebates would have put 

pressure on GAF to receive equal treatment, and that this 

shakeup of the market could ultimately destabilize prices, 

lead to a price war, and "drop[ ] the entire market price" for 

GAF product. 

By adducing evidence of the GAF rebate scheme and the 

importance of GAF and GAF product, Rossi transforms

 42 
what might otherwise have been a very difficult (and 

implausible) conspiracy into a realistic opportunity for a few 

cooperating competitors to fix prices and earn substantial 

profits while still operating within what appears to be a 

competitive marketplace. Cf. Brooke Group Ltd. v. Brown & 

Williamson Tobacco Corp., 509 U.S. 209, 239 (1993) 

(holding that a conspiracy to fix supra-competitive prices in 

a market with many variables was implausible because of 

the complexity required to monitor and enforce it) (citations 

omitted). 

We find this case, as it relates to GAF, Standard, and 

Arzee, fundamentally unlike Matsushita. There, the critical 

problem with the conspiracy as alleged was that the

conspirators had been losing large sums of money over a 

period of twenty plus years by undercutting the market in 

the hope of building market share and eventually 

establishing a monopoly. Not only did the Courtfind it 

difficult to distinguish the allegedly predatory pricing 

strategy from actual price competition, but given the 

extremely low chance that the scheme would succeed, the 

Court concluded that the defendants, if they operated in a 

rational manner, had no motive to engage in the conduct 

with which they were charged. In contrast, it is not difficult 

to divine the likely motive of the three distributors, 

Standard, Arzee, and Allied, in boycotting Rossi. As Rossi's 

horizontal competitors, they wanted to rid the market of a 

price-cutting competitor with a reputation for excellent 

service and reliability who had refused to cooperate in their 

price-fixing schemes in the past. Moreover, Rossi is aided in 

asking us to permit the fact finder to draw this inference by 

the strong likelihood that the boycott would actually 

succeed (as evidenced by the results). 

Even if all of this is true, submits GAF, it still does not 

explain why it would make sense for GAF to join the

conspiracy. We agree that GAF 's motive, as the 

manufacturer-supplier, is less obvious than Standard's or 

Arzee's, but ultimately we find it no less compelling. This is 

because Rossi has adduced evidence that Standard, Arzee, 

and Allied possessed substantial economic leverage over 

GAF. Together, they purchased $10.7 million of the $24.1 

million of GAF product sold in New Jersey in 1989, or 

 43 
44.5% of GAF 's total northern New Jersey sales. These 

distributors were not happy about the prospects of Rossi 

entering the market and competing with them, and they 

made their views known to GAF. Complaints and threats 

from three of GAF's largest customers in New Jersey are 

sufficient to establish a rational motive for GAF to engage 

in the concerted conduct that Rossi alleges. For these 

reasons, we do not accept GAF's submission that Rossi's 

conspiracy theory, and the economic motivations behind it, 

are inherently implausible. 

 (2) Circumstantial Evidence Against GAF 

We turn next to the circumstantial evidence that 

supports Rossi's allegations that GAF joined with Standard 

and Arzee (and potentially others) to enforce a market-wide 

boycott of first Rossi Florence and later Rossi Roofing, The 

evidence comes in several forms. First, as we will detail, 

Rossi has adduced evidence that GAF received numerous 

complaints about Rossi's pricing practices while he was at 

Standard and responded to them by asking Rossi to raise 

his resale prices on GAF product. While these complaints 

antedate Rossi entering the marketplace, they are useful 

background information to establish motive and practice. 

See Big Apple BMW, 974 F.2d at 1360-61. 

Second, GAF participated in the group boycott against 

Rossi through monitoring and enforcement activities and 

the implementation of an unprecedented anti-transshipment policy. Third, there is evidence that GAF singled 

out Rossi and acted contrary to its own corporate policy in 

refusing to deal with him (an important factor under 

Monsanto and Matsushita), in that GAF employees testified 

that the company had an "open distribution" policy under 

which they sold to all comers, yet GAF refused to sell to 

Rossi and went to considerable lengths to see that he was 

not able to secure GAF product from other sources. Finally, 

Rossi has also adduced evidence that two of GAF 's 

explanations why it refused to deal with him -- that it had 

adequate distribution in New Jersey and product shortage 

-- were pretextual. 

 44 
 (a) Distributors' Complaints and GAF's Response 

While Rossi worked at Standard, the company received, 

as did Arzee and Allied, the off-invoice, non-volume rebates 

discussed supra. Rossi used these rebates to reduce the 

prices he charged to his customers in an effort to increase 

sales volume; he did not, as his competitors did, retain the 

rebates to increase gross profits. This aggressive pricecutting strategy understandably angered Standard's 

competitors, and several of them complained to GAF about 

Rossi's behavior. Krusa and Licciardello, both then working 

as GAF district sales managers in the New Jersey region, 

frequently called Rossi at Standard and passed along the 

complaints of Arzee, Allied, Passaic Metals and others 

about Rossi's pricing. Krusa and Licciardello also called 

Bob Schaab, the Controller of Standard, to complain that 

Rossi was passing on the discounts given by GAF to 

Standard to his customers. 

Although GAF did not have suggested resale prices, 

Krusa and Licciardello told Rossi to raise his resale prices 

for GAF product. Schaab, relaying GAF's messages, also 

asked Rossi to refrain from passing the GAF rebates to 

Standard's customers. Rossi refused, and vowed to price as 

he saw fit. This evidence suggests several things. First, it 

reaffirms the motives of Rossi's horizontal competitors, 

Arzee and to a lesser extent Standard. Second, it shows 

that a group of distributors (even a group that did not 

include Standard) could wield economic leverage over GAF 

and influence its interactions with recalcitrant distributors. 

Third, it suggests that GAF's course of conduct was to 

curry favor with its larger distributors by doing what it 

could to assist them in stabilizing the market and keeping 

price levels up. 

We agree with GAF that evidence that it succumbed to 

pressure from distributors is not sufficient, by itself, to 

survive summary judgment, since the evidence of 

complaints and threats GAF received from Standard and 

Arzee is not enough in isolation to prove concerted action. 

See Monsanto, 465 U.S. at 763-64 ("[p]ermitting an 

agreement to be inferred merely from the existence of 

complaints, or even from the fact that termination came 

about `in response to' complaints, could deter or penalize 

 45 
perfectly legitimate conduct."); Sweeney, 637 F.2d at 111. 

However, we do not rely solely on these complaints. Rather, 

there is a substantial amount of additional evidence to 

support a finding of an unlawful conspiracy. In this 

circumstance, we are permitted to consider the evidence of 

distributor complaints. See Monsanto, 465 U.S. at 764 n.8 

("We do not suggest that evidence of complaints has no 

probative value at all, but only that the burden remains on 

the antitrust plaintiff to introduce additional evidence 

sufficient to support a finding of an unlawful contract, 

combination, or conspiracy."). 

 (b) Actions in Contravention of GAF Corporate 

 Policy 

GAF's boycott against Rossi appears to be contrary to its 

own corporate policy, particularly in light of the evidence 

adduced of GAF's draconian enforcement and anti-transshipment activities. There is testimony in the record that 

GAF had an open distribution system. Peter Bacchione, 

GAF 's director of marketing and sales and Krusa's superior 

in 1989, testified that GAF never had a closed distribution 

network and never rejected a potential distributor because 

the local market was saturated. Bacchione testified: 

 Q: Do you recall in 1989 whether GAF, with respect to 

 the roofing products that you had responsibility for, 

 had any particular objectives with respect to 

 increasing, decreasing, or otherwise, its distribution 

 channel. 

 A: . . . We always looked to increase our share of 

 business with any distributor. 

 Q: Did GAF have any exclusive distributors for roofing 

 products while you were national sales director? 

 A: No. 

 * * * 

 Q: Wasn't GAF's philosophy to have an open 

 distribution network? 

 * * * 

 46 
 A: Maybe it was -- maybe it was a philosophy. A 

 practice. Whether it was a philosophy that was up on 

 a wall some place, I don't recall that. 

 Q: Was it the practice? 

 A: Generally, we sold on an open basis. There were no 

 exclusivities.14 

This testimony directly contradicts GAF's litigation 

position as stated by Krusa, who has maintained since 

1989 that GAF refused to supply Rossi because it had 

"adequate distribution."15 Krusa is also contradicted by 

Lorraine Campbell, Ruth Rogers, Mary Lou Sperr and Bob 

Tafaro, all of whom worked for Krusa, and all of whom 

testified that Krusa never told them that GAF had adequate 

distribution in New Jersey. Finally, Rossi submits that 

Krusa is contradicted by the fact that GAF supplied 34 out 

of the 39 distributors in northern New Jersey, and only 

refused to sell to three distributors including Rossi Roofing. 

On summary judgment, of course, we need not resolve this 

dispute, but rather grant Rossi all favorable inferences. 

 (c) Monitoring and Enforcement Activities 

GAF, through Krusa and Licciardello, took still more 

steps to ensure that Rossi did not get any GAF product. In 

January 1989, when Droesch told Krusa that he planned to 

buy GAF product through his Florence Corporation in Long 

_________________________________________________________________ 

14. Bacchione appears to contradict himself during his deposition. For 

example, in reference to the decision whether to open up ABC as a 

distributor after Rossi Roofing had gone out of business, Bacchione also 

said: "The concern was not whether or not to open up another 

distributor. The concern was whether or not we had adequate 

distribution, I think was the subject at hand. I think we felt there was 

adequate distribution. . . . There was not a valid reason to open up 

another distributor [next door to Standard]." This contradictory 

testimony leads to two possible conclusions, and on summary judgment, 

we must accept the one most favorable to Rossi. 

15. For example, Krusa allegedly told Droesch in January 1989 that GAF 

would not sell to Rossi Florence in New Jersey because it had adequate 

distribution. In July 1989, when Krusa prevented Rossi from picking up 

an order of GAF product from HWI, Rossi spoke with Krusa who told 

him, "The distribution is filled. GAF requires no other distributors." 

 47 
Island and resell it to Rossi Florence, Krusa told Droesch 

that "he would not allow that and he would not sell me [sic] 

in Long Island if I did that." GAF also warned other 

distributors not to resell its products to Rossi, and there is 

evidence that, on at least one occasion, GAF took steps to 

enforce its boycott. GAF salesmen Sal Granfort and Doug 

Collins warned DiNaso & Sons, a roofing and siding 

distributor located in Staten Island, New York, not to resell 

its product to Rossi. After DiNaso & Sons ignored their 

warnings, GAF raised DiNaso's prices by $1.00/unit,

arguably in retaliation. Similarly, when Rossi contacted 

Stroeber Supply, another northern New Jersey distributor, 

to see if it would sell GAF product to him, Larry 

Hammershock of Stroeber told a Rossi Roofing employee 

that Stroeber had already been told by GAF not to sell GAF 

product to Rossi Roofing. Hammershock defied GAF and 

sold to Rossi Roofing anyway, but at a higher price. 

There is also evidence that GAF extended the boycott to 

buying groups like HWI and Servistar which Rossi began to 

use, in addition to distributors like Stroeber and DiNaso, to 

try to circumvent the GAF boycott.16 To this end, Rossi 

_________________________________________________________________ 

16. Rossi contests the district court's affirmance of an order by the 

magistrate judge, denying his motion to compel GAF to disclose the 

names of the entity or entities that were the subject matter of certain 

conversations between GAF 's in-house counsel Robert Poyourow and 

Krusa on July 27, 1989, August 10, 1989, and January 6, 1990. Rossi 

hypothesizes that several of these discussions centered around HWI and 

Servistar, and he submits that the district court abused its discretion 

when it accepted GAF's description of the "subject matter" of these 

conversations on its privilege log as "absence of a legal obligation to 

sell 

product." We conclude, however, that the district court did not abuse its 

discretion by denying Rossi's motion to compel the name of the entity 

discussed or any other additional information concerning the "subject 

matter" of the conversation catalogued in GAF's privilege log. See 

Rabushka v. United States, 122 F.3d 559, 565 (8th Cir. 1997) (standard 

of review), cert. denied, Rabushka ex rel. United States v. Crane Co., 118 

S. Ct. 1336 (1998). Rule 26(b)(5) only requires that a party claiming a 

privilege "describe the nature of the documents, communications, or 

things not produced or disclosed in a manner that . . . will enable other 

parties to assess the applicability of the privilege or protection." Fed. 

R. 

Civ. Pro. 26(b)(5). These matters are generally best left to the district 

and 

magistrate courts' discretion. In the circumstances that exist here, we 

will not second guess the courts' conclusion that the description 

provided was adequate to support the privilege claim. 

 48 
joined HWI in July 1989 and placed an order for GAF

product. Membership in HWI ordinarily should have 

allowed Rossi to purchase products from all of HWI's 

suppliers, including GAF. Likewise, GAF normally supplied 

its products to all HWI members, regardless of whether 

they appeared on GAF's own customer list. 

Notwithstanding this, when a Rossi Roofing driver went to 

GAF's facility on July 27, 1989, to pick up the GAF

product ordered through HWI, GAF would not release it. 

After several hours of wrangling over the order, Rossi 

eventually spoke with Krusa, who had given the order not 

to release the GAF product. Krusa told Rossi "I am not 

selling to you. The distribution is filled. GAF requires no 

other distributors." Rossi replied that GAF was not really 

selling to Rossi Roofing, but rather to HWI, to which Krusa 

responded, "We are not selling to you." After this dramatic 

exchange, Dave Heine of HWI remarked that he had never 

seen anything like this in his ten years working at the 

buying group. App. at 2596, 3513. 

In yet another effort to obtain GAF product and 

circumvent the boycott, Rossi used Far Hills Lumber and 

Hardware ("Far Hills"), a start-up hardware store of which 

he was a principal, to place orders through the buying 

group Servistar. See supra S II.B.2.a and infra S II.B.2.c. 

Rossi was able to purchase one order of $30,000 worth of 

GAF product on August 2 and 3, 1989. However, after GAF 

and Standard found out that Rossi had used Far Hills and 

Servistar to get GAF product, see infra S II.B.2.c, GAF 

refused to fill Far Hills' second order for $456 of GAF 

product. 

Rossi has also adduced evidence that GAF and Standard 

coordinated to ensure that Rossi was not getting any GAF 

product. See supra S II.B.2.a. Rossi developed evidence that 

Licciardello of Standard confirmed with Gessner of GAF 

that GAF was not selling to Rossi, and there is evidence 

that, after seeing GAF product in front of Rossi Roofing, 

Licciardello called and was reassured by GAF that the load 

was not for Rossi but bound for Walmart on a Jentar truck. 

See id. In addition, there is the statement made by

Licciardello after he learned that Rossi Roofing had been 

getting GAF product through Far Hills and Servistar that 

 49 
" `that's the last time we're going to be seeing any GAF 

across the street.' They got the -- they were getting the 

loads through [Far Hills], which is [Servistar]. That's how 

Joe Rossi was getting GAF and he's [Licciardello] going to 

put an end to that. `Never going to see another GAF load 

across the street.' " See supra S II.B.2.a. 

 (d) Pretextual Excuses 

Finally, Rossi argues that GAF used pretextual excuses to 

explain why it refused to supply Rossi, and that this use of 

pretext is further circumstantial evidence of the conspiracy 

he alleges. See Fragale, 760 F.2d at 474 (pretextual excuses 

are circumstantial evidence that can disprove the likelihood 

of independent action). The first excuse is that Rossi was 

not needed because GAF had adequate distribution. Rossi 

notes that, despite Krusa's contention that everyone in his 

office knew that he had "adequate distribution" in New 

Jersey, neither his boss, Peter Bacchione, nor his 

employees, Lorraine Campbell, Ruth Rogers, Mary Lou

Sperr, and Bob Tafaro had ever heard of this policy. Even 

Krusa admits that GAF had never refused to fill an order 

through a buying group like Servistar because its 

distribution was allegedly full. 

This "adequate distribution" excuse is just the "flip side" 

of Rossi's contention that GAF was acting in contravention 

of its open distribution policy, and for the same reasons 

that there is a genuine issue whether GAF 's policy was to 

supply all distributors who wished to purchase its 

products, there is also a genuine issue of material fact 

whether the "adequate distribution" justification Krusa gave 

to Rossi was legitimate or simply pretextual. We note again 

that GAF supplied its roofing product to at least 34 of the 

39 distributors in the northern New Jersey marketplace, 

but not to Rossi. 

GAF's second excuse, which Rossi submits was also 

pretextual, was that GAF had a product shortage and

therefore could not supply any new distributors. Rossi 

contends that there is a genuine issue of material fact as to 

the validity of this excuse because Bacchione, GAF's 

national sales manager, testified that he could recall no 

 50 
problems in filling customer orders for GAF product in 

1989, despite the fact that this would have been a matter 

within his job responsibilities. In addition, Rossi argues 

that the only document GAF has been able to produce to 

corroborate Krusa's claim that GAF product was in short 

supply in 1988 and 1989 was a memorandum dated 

August 11, 1989. Rossi submits that this memorandum

should not be considered conclusive for the purposes of 

summary judgment because it was written almost nine

months after GAF had decided not to supply Rossi 

Florence. GAF counters that the memorandum refers to the 

product shortage as a "continuing" issue, and therefore that 

summary judgment is appropriate. 

The critical language in the memorandum is: 

 We continue to have an im-balance of inventory 

 between Baltimore and So. Bound Brook. The lack of 

 warehousing has been a very critical issue, causing the 

 im-balance in inventory. 

 We are receiving more calls, on a daily basis, from 

 customers in the southern half of the district 

 complaining of our lack of product and the congestion 

 of trucks and also the length of time it takes to get 

 loaded at the Baltimore Plant. 

Our reading of the document is that it is ambiguous and 

therefore insufficient to command summary judgment. For 

example, it is unclear whether the memorandum refers to 

an overall GAF product shortage or just a warehousing "imbalance" that was temporarily interfering with delivery to 

the southern half of Krusa's territory. Also, while the 

memorandum refers to the problem as a "continuing" one, 

there is no indication what that means. On summary 

judgment, viewing the evidence in a light most favorable to 

Rossi, he has established a genuine issue of fact whether 

both the "adequate distribution" and the "product shortage" 

excuses were pretextual. 

 (e) Conclusion 

To summarize, we find that Rossi has adduced competent 

evidence that GAF: (1) responded to distributor complaints 

 51 
in the past; (2) singled out Rossi as one of the few 

distributors out of a large number in northern New Jersey 

not to receive GAF product; (3) acted in contravention of its 

own established open distribution policy in dealing with 

Rossi; (4) threatened and punished distributors who resold 

to Rossi; (5) refused to supply Rossi through buying groups; 

(6) implemented an unprecedented policy prohibiting transshipment of GAF product to Rossi; (7) cooperated with 

Standard in monitoring and enforcing the boycott; and (8) 

offered pretextual excuses to explain its behavior.

Examining the totality of this evidence, it is sufficient to 

support a reasonable inference that GAF was acting in 

concert with Standard and Arzee to boycott Rossi. 

Particularly forceful is the evidence that GAF prohibited 

distributors from trans-shipping GAF product to Rossi and 

that GAF prevented Rossi from purchasing its products 

from buying groups. These actions simply do not make 

sense in light of GAF's asserted justifications for its 

behavior vis a vis Rossi. For example, if there were truly a 

product shortage in northern New Jersey, presumably GAF 

would then have cut off supply to all Servistar and HWI 

members who were not on GAF's approved customer list to 

ensure that its larger distributors like Standard and Arzee 

would not suffer from the short supply. Yet, GAF supplied 

Far Hills, also an entity that was not on GAF's customer 

list, until it discovered that Far Hills was under Rossi's 

control. Moreover, the product shortage excuse is not 

consistent with GAF's claim that it unilaterally 

implemented a policy precluding trans-shipment of product 

at the distributor level. Assuming that GAF product was 

scarce, GAF would understandably want to ensure that its 

favored distributors received it ahead of all others. However, 

once GAF decided how it would allocate among its approved 

distributors whatever amount of GAF product existed, it is 

difficult to conceive of a legitimate reason why GAF would 

care whether that distributor used the product or resold it 

to Rossi Roofing at a profit. 

Additionally, the product shortage justification does not 

explain why GAF would sell Droesch as much GAF product 

as he wanted in Long Island but would not allow him to 

trans-ship that product to New Jersey. Similarly, it is hard 

 52 
to comprehend why GAF would continue to fill $30,000 

orders, obviously commercial-sized purchases, to buying 

group members in northern New Jersey, if it was truly 

believed that it had adequate distribution in that market. 

One explanation of this behavior is that GAF was acting in 

concert with Standard, Arzee, and Allied to boycott Rossi 

and force him out of business. 

For the reasons described above, Rossi has met his 

burden of adducing evidence that tends to exclude the 

possibility of independent action, and hence we will reverse 

the district court's order granting summary judgment in 

favor of GAF. 

 c. Servistar 

In contrast to the defendants discussed above, we will 

affirm the district court's grant of summary judgment in 

favor of Servistar because Rossi has failed to introduce 

either direct or circumstantial evidence that tends to 

exclude the possibility that Servistar acted independently 

rather than joining the conspiracy against Rossi. 

Servistar's involvement in this case stems from its refusal 

to honor Rossi's second purchase request for $456 of GAF 

product on August 11, 1989. Rossi had already obtained a 

little over $30,000 of GAF product on August 8 and 9, 

1989, via his Far Hills account with Servistar, which was 

resold to Rossi Roofing. Two days later, when Rossi

attempted to order a second batch, Servistar did notfill it, 

claiming that GAF had cut Far Hills off from obtaining GAF 

product. Rossi contends that after he received thefirst 

order of GAF product, Standard and Arzee discovered how 

he had circumvented the blockade, notified GAF, and that 

GAF then enlisted Servistar to join the group boycott and 

cut off this new avenue of supply. Rossi offers three pieces 

of evidence to support this allegation: (1) a discussion he 

had with Jim Cherbonneau of Servistar in which 

Cherbonneau told him that GAF did not want Servistar to 

ship its product to Rossi and that GAF would not supply 

Rossi through his Servistar account;17 (2) Servistar's 

_________________________________________________________________ 

17. Cherbonneau told Rossi, "GAF called, they knew where the product 

was going. They had filled their needs in that area, and [ ] they do not 

want us to ship to you." 

 53 
curious and sudden change of mind, selling Rossi $30,000 

of GAF product one day and refusing a minuscule $456 

order two days later; and (3) Servistar's use of the allegedly 

pretextual excuse that Far Hills had credit problems to 

justify its refusal to deal. 

Rossi's only direct evidence, the phone conversation with 

Cherbonneau, is not evidence of Servistar's conspiratorial 

involvement. Cherbonneau said that "GAF would not sell 

product to Servistar to go to -- through [Far Hills] to me." 

Cherbonneau's statement, while not precluding concerted 

action, is evidence only of a unilateral decision by GAF to 

not supply Rossi through any means (or a multilateral 

conspiracy that did not include Servistar). Additionally, it is 

undisputed that Servistar could not force GAF to supply it 

or its members with GAF product. Unlike other products 

Servistar supplied, Servistar neither stored GAF product in 

its warehouses nor had the contractual right to compel GAF 

to supply the product. The Servistar-GAF purchasing

agreement did not obligate GAF to accept all of Servistar's 

members' orders. 

Because Servistar provided GAF product to its members 

on what is known in the industry as a "drop shipment" 

basis, it had no control over whether its suppliers would 

actually deliver their products to its members. The"drop 

shipment" relationship between Servistar and GAF meant 

that when a Servistar member placed an order with 

Servistar for GAF product, Servistar would forward that 

order to GAF. The member would then go to the GAF 

warehouse to pick up the GAF product directly from GAF, 

not Servistar. GAF then would invoice Servistar for the 

purchase, and Servistar would pay GAF. Subsequently, 

Servistar would collect the amount due from its member. 

Using this "drop shipment" purchasing method, Servistar 

assists its members by: (1) negotiating group discounts 

from manufacturers, and (2) acting as the guarantor of its 

members' credit to those manufacturers. Thus, Servistar's 

role did not include pre-purchasing and warehousing of 

GAF product, and it had virtually no say over which of its 

members GAF chose to supply. 

Under these circumstances, Rossi's claim that "at the 

request of GAF, Servistar refused to fill Far Hills' next order 

 54 
for $450 because Far Hills had resold it to Rossi Roofing," 

is not supported by Rossi's own testimony. As described 

above, according to the undisputed evidence, GAF did not 

have to conspire with Servistar to boycott Rossi Roofing 

because GAF did not need Servistar's acquiescence to 

prohibit Far Hills or Rossi Roofing from buying its product 

through Servistar. Since there is no evidence that Servistar 

could overrule a unilateral GAF decision to refuse to supply 

a Servistar member, we cannot reasonably infer on the 

basis of such ambiguous evidence that Servistar and GAF 

agreed to refuse to sell to Far Hills. See International 

Logistics Group Ltd. v. Chrysler Corp., 884 F.2d 904, 907 

(6th Cir. 1989) (no credible conspiracy is alleged where a 

manufacturer imposing distribution restraints does not 

need agreement or acquiescence from its distributors in 

formulating marketing conditions for its product); 6 Phillip 

E. Areeda, Antitrust Law P 1402b4 (1986) ("discussions, 

suggestions, recommendations, and the giving of 

information do not indicate any conspiracy where the actor 

imposing the alleged restraint does not wish or need the 

acquiescence of the other party or any quid pro quo from 

him"). 

Similarly, Rossi's allegation that Servistar made no effort 

to require GAF to fill the order of its member Far Hills does 

not support his theory of conspiracy. Without direct 

evidence (or other strong circumstantial evidence) of 

concerted action by Servistar and GAF, we cannot draw an 

inference of an unlawful conspiracy from the equivocal 

nature of Servistar's decision not to make what would most 

likely have been a futile effort to encourage GAF to sell to 

Rossi. Servistar's refusal to disrupt its relationship with 

GAF because GAF unilaterally (from Servistar's perspective) 

refused to deal with Rossi is clearly "as consistent with 

permissible competition as with illegal conspiracy," 

Matsushita, 475 U.S. at 588 (citations omitted), and is not 

evidence of a "conscious commitment to a common 

scheme." Monsanto, 465 U.S. at 764. We note in this regard 

that there is no evidence that Servistar was on notice that 

GAF was part of a conspiracy to boycott Rossi Roofing. 

Thus, from Servistar's point of view, this was simply a 

unilateral refusal to deal. Indeed, even if Servistar did know 

that GAF was involved in an unlawful group boycott, its 

 55 
decision to continue relations with GAF would still not rise 

to the level of concerted action. 

Without direct evidence with respect to Servistar, we 

must also consider whether Rossi's conspiracy theory is 

plausible, and whether inferring concerted action under 

these circumstances would have the effect of deterring 

significant procompetitive conduct. See Petruzzi's, 998 F.2d 

at 1233. Both of these considerations militate against 

inferring concerted action with respect to Servistar. Apart 

from the evidence discussed above that it would be 

unreasonable to infer that Servistar would conspire with 

GAF to do what GAF could do unilaterally (i.e. refuse to 

release GAF product to Rossi from GAF warehouses), it is 

similarly implausible that GAF, an extremely minor 

Servistar supplier, could "pressure" Servistar, a billion plus 

dollar buying cooperative, into joining the group boycott of 

Rossi Roofing, a small start-up roofing and siding 

distributor. Similarly, Rossi has adduced no evidence of a 

motive for Servistar to join the conspiracy. See Matsushita, 

475 U.S. at 596-97. Nothing in the record indicates that 

Servistar had any reason to support a conspiracy to

increase or stabilize wholesale roofing prices in New Jersey, 

and, to repeat, there is simply no evidence of GAF leverage 

over Servistar.18 

Perhaps most importantly, inferring a conspiracy from 

the slim circumstantial evidence would have the effect of 

deterring Servistar's significant procompetitive conduct in 

this as well as many other markets. As a wholesale 

purchasing cooperative, Servistar bolsters competition and 

increases economic efficiency by aggregating small 

purchasers thereby permitting them "to achieve economies 

of scale in both the purchase and warehousing of wholesale 

supplies, and also ensur[ing] ready access to a stock of 

goods that might otherwise be unavailable on short notice. 

The cost savings and order-filling guarantees enable smaller 

retailers to reduce prices and maintain their retail stock so 

_________________________________________________________________ 

18. Sales of GAF product through Servistar, estimated at about $2.5 

million, comprised only 12% of Servistar's total roofing purchases on 

behalf of its members and an insignificant fraction of Servistar's one 

billion plus national purchases in 1989. 

 56 
as to compete more effectively with larger retailers." 

Northwest Wholesale Stationers, 472 U.S. at 295. If we were 

to permit an antitrust violation to be inferred under the 

facts of this case, it would significantly impact the ability of 

Servistar to continue its procompetitive actions in the 

market. 

Because Servistar could not compel GAF to sell to Far 

Hills, Servistar's only option in response to GAF's decision 

not to supply Far Hills would have been to somehow bring 

pressure to bear on the roofing manufacturer. Such action 

would undoubtedly adversely affect all Servistar members 

nationwide who were receiving improved pricing for GAF 

product through Servistar, especially if it led to the 

restriction or cessation of Servistar's purchasing agreement 

with GAF. Indeed, inferring concerted action in these 

circumstances could encourage Servistar to terminate 

relationships with every supplier that refused to sell to a 

particular Servistar member. This would deter Servistar's 

procompetitive activities and deny Servistar's members the 

significant benefits of cooperative membership. 

Finally, Rossi submits that Servistar offered a pretextual 

excuse to explain its decision not to supply Far Hills with 

GAF product. Pretextual excuses, as noted, can disprove 

the likelihood of independent action. See Fragale, 760 F.2d 

at 474. Rossi challenges Servistar's explanation that it 

refused to supply the second order of GAF product to Far 

Hills because of Far Hills' credit problems. Although it 

appears that there are genuine issues of fact concerning 

Far Hills' credit-worthiness and its impact on Servistar's 

decision to refuse Rossi's second order of GAF product,19 

considering Servistar's lack of motive to conspire, GAF's 

lack of any leverage over Servistar, and the fact that GAF 

did not need to enlist Servistar's help to boycott Rossi, this 

_________________________________________________________________ 

19. On the one hand, the record indicates that Servistar refused Far Hills 

credit on August 15, 1989, even though Far Hills had only used $30,755 

of its outstanding $75,000 credit limit and no payments were yet due. 

On the other hand, Servistar contends that it extended the $75,000 

credit limit to Far Hills for the purpose of funding hardware purchases, 

not roofing supplies. According to Servistar's forceful rejoinder, the 

initial 

order of $30,755 was an error, and after it was discovered, Servistar 

unilaterally determined not to permit it to happen again. 

 57 
slim reed of pretext is simply not enough. In view of the 

procompetitive role Servistar plays in the market generally 

and concerned that we do not "chill the very conduct the 

antitrust laws are designed to protect," Matsushita, 475 

U.S. at 594, we conclude that Rossi has not met his burden 

here in opposing summary judgment, and therefore we will 

affirm the district court's order granting summary judgment 

in favor of Servistar. 

 d. Wood Fiber 

Like GAF, Wood Fiber manufactures roofing products,

including Structodek FS, which is widely used in certain 

commercial roofing applications. Unlike GAF, however, 

Wood Fiber is only tangentially involved in the alleged 

conspiracy with its activity centering around a single 

incident in which Rossi was frustrated in his attempt to 

purchase approximately $5,000 worth of Structodek FS. We 

will affirm the district court's grant of summary judgment 

in favor of Wood Fiber because, as with Servistar, Rossi has 

failed to introduce evidence that tends to exclude the 

possibility that Wood Fiber acted independently rather than 

joining the conspiracy against Rossi. 

On June 6, 1989, Rossi Roofing ordered Structodek FS 

from Wood Fiber for its customer, Star Roofing. Wood Fiber 

quoted a price and a shipping date of July 5th to Rossi 

Roofing. On June 27, 1989, Karl Loser, Wood Fiber's sales 

representative in New Jersey, called and told Rossi

Roofing's Mike Issler that Wood Fiber would notfill the 

order. As a result, Rossi Roofing lost the order for 

Structodek FS from Star Roofing. Rossi claims that Loser 

told him that Wood Fiber was being pressured by Standard 

and Arzee not to sell to him and that there was a"problem" 

with his pricing. Loser also told Issler that Wood Fiber had 

previously sold product to a small distributor on Long 

Island and suffered when Allied canceled orders in 

retaliation. Loser testified that he wanted to supply Rossi 

Roofing, but that his concerns that Rossi Roofing's

competitors would retaliate "influenced" his decision not to 

supply Rossi Roofing. 

Based upon these facts, Rossi asks us to infer that Wood 

Fiber participated in a conspiracy to boycott Rossi Roofing 

 58 
because it gave in to pressure and fear of retaliation by 

several of its distributors. It is well established that this 

kind of evidence, by itself, is legally insufficient to prove a 

conspiracy. See Monsanto, 465 U.S. at 763-64; Sweeney, 

637 F.2d at 111. In Sweeney, the plaintiffs contended that 

"the retailers' acts of complaining and [the defendant's] 

reaction to the complaints constituted concerted action in 

restraint of trade." Sweeney, 637 F.2d at 110. We rejected 

that argument and noted that "even if the appellants had 

demonstrated that [the defendant's] actions were in

response to these complaints, such evidence alone would 

not show the necessary concerted action." Id. Similarly, in 

Monsanto, the Supreme Court opined that "[p]ermitting an 

agreement to be inferred merely from the existence of 

complaints, or even from the fact that termination came 

about `in response to' complaints, could deter or penalize 

perfectly legitimate conduct." 465 U.S. at 763. Thus, the 

Court held that " `[t]o permit the inference of concerted 

action on the basis of receiving complaints alone and thus 

to expose the defendant to treble damage liability would 

both inhibit management's exercise of independent 

business judgment and emasculate the terms of the 

statute.' " Id. at 764 (quoting Sweeney, 637 F.2d at 111 

n.2). 

We have explained at length supra why the claims 

against Standard, Arzee, and GAF survive, notwithstanding 

these precedents. However, because Rossi has not adduced 

evidence of anything other than the fact that Wood Fiber 

may have responded to pressure and threats from Standard 

and Arzee, we cannot infer the existence of concerted action 

involving Wood Fiber. The evidence adduced against Wood 

Fiber stands in stark contrast to the evidence against GAF. 

For example, Rossi has not adduced any evidence that 

Wood Fiber offered pretextual excuses, or prohibited transshipment of its product, or engaged in monitoring and 

enforcement of the alleged boycott. Without some additional 

evidence, a fact finder may not infer that Wood Fiber 

entered into an agreement to boycott Rossi Florence or 

Rossi Roofing, and therefore we will affirm the district 

court's order granting summary judgment in favor of Wood 

Fiber. 

 59 
III. PROXIMATE CAUSE AND ANTITRUST INJURY 

Having determined that Rossi has adduced sufficient

evidence of a conspiracy to satisfy the first prong of the 

prima facie case with respect to the Standard defendants, 

the Arzee defendants, and GAF, we now consider whether 

Rossi has adduced sufficient evidence to satisfy the fourth 

prong, "that the plaintiffs were injured as a proximate 

result of that conspiracy." Tunis Bros., 763 F.2d at 1489.20 

The district court concluded that even if Rossi had

established the existence of an agreement, his claim still 

would fail because he had not established that the business 

losses he suffered were in any way related to that 

conspiracy. See Rossi v. Standard Roofing, Inc., 958 F. 

Supp. 976, 991 (D.N.J. 1997). The court determined that 

Rossi's allegations -- that the defendants prevented him 

from obtaining GAF and other roofing products he needed 

to compete and thereby stopped him from opening Rossi 

Florence and ultimately forced Rossi Roofing out of

business -- are unsupported in the record. The district 

court also concluded that Rossi's damages expert, Regan R. 

Rockhill, CPA, based his report upon unfounded 

assumptions that would force a trier of fact to use

"guesswork and speculation" in determining what, if any, 

injury Rossi suffered as a result of the defendants' actions. 

See id. The court criticized the Rockhill Report for being 

nothing more than an impermissible "but for" damage

model that erroneously ignored several important factors, 

including failing: (1) to consider that Rossi had no 

experience running his own business; (2) to analyze

specifically what products were needed to assure a 

successful distributorship; and (3) to engage in any 

analysis of what harm, if any, was caused by the alleged 

antitrust violations as opposed to other factors, such as 

Rossi's management style or general business conditions. 

See id. 

The district court accordingly held that Rossi had not 

presented sufficient evidence of damages such that a 

_________________________________________________________________ 

20. As explained above, because Rossi's allegations qualify for per se 

treatment, the second and third prongs of the four-part antitrust prima 

facie case are conclusively presumed. See supra S II.A. 

 60 
reasonable inference could be made connecting the injury 

with the defendants' conduct. For the reasons we will 

explain, we disagree with the court's conclusion that Rossi 

has not identified a genuine issue of material fact with 

regard to the proximate cause and damages element of his 

prima facie case. 

To recover damages, an antitrust plaintiff must prove 

causation, described in our jurisprudence as "fact of 

damage or injury." See Danny Kresky Enters. Corp. v. 

Magid, 716 F.2d 206, 209 (3d Cir. 1983). It is not necessary 

to show with total certainty the amount of damages 

sustained, just that the antitrust violation caused the 

antitrust injury suffered by the plaintiff. See Amerinet, Inc. 

v. Xerox Corp., 972 F.2d 1483, 1493 (8th Cir. 1992); Danny 

Kresky, 716 F.2d at 211 ("the standard of causation

requires only that plaintiff prove that defendant's illegal 

conduct was a material cause of its injury"). As the 

Supreme Court explained in Zenith Radio Corp. v. Hazeltine 

Research, Inc., 395 U.S. 100, 114 n.9 (1968) (citations 

omitted) (emphasis in original): 

 [Plaintiff's] burden of proving the fact of damage under 

 S 4 of the Clayton Act is satisfied by its proof of some 

 damage flowing from the unlawful conspiracy; inquiry 

 beyond this minimum point goes only to the amount 

 and not the fact of damages. It is enough that the 

 illegality is shown to be a material cause of the injury; 

 a plaintiff need not exhaust all possible alternative 

 sources of injury in fulfilling his burden of proving 

 compensable injury under S 4. 

Once causation is established, the jury is permitted to 

calculate the actual damages suffered using a " `reasonable 

estimate, as long as the jury verdict is not the product of 

speculation or guess work.' " In re Lower Lake Erie Iron Ore 

Antitrust Litig., 998 F.2d 1144, 1176 (3d Cir. 1993) (citing 

MCI Communications Corp. v. American Tel. & Tel. Co., 708 

F.2d 1081, 1161 (7th Cir. 1983)) (other citations omitted). 

Thus, in antitrust cases, there are ultimately two related, 

but distinct, inquiries to establish antitrust injury. First, 

the plaintiff must prove the fact of antitrust injury, as part 

of his prima facie case; then, he must make a showing 

regarding the amount of damages, in order to justify an 

 61 
award by the trier of fact. Concerning the former, courts 

apply the ordinary standard of proof, but with respect to 

the latter, the standard is somewhat relaxed. See In re 

Lower Lake Erie Iron Ore, 998 F.2d at 1176 ("[t]he relaxed 

measure of proof is afforded to the amount, not the

causation of loss -- the nexus between the defendant's 

illegal activity and the injuries suffered must be reasonably 

proven.") (citations omitted); see also Bigelow v. RKO Radio 

Pictures, 327 U.S. 251, 264-65 (1946) (holding that when 

the plaintiff cannot prove his damages by precise 

computation, the jury "may make a just and reasonable 

estimate of the damage based on relevant data, and render 

its verdict accordingly"). 

Under these standards, Rossi's antitrust claim does not 

suffer from the infirmities claimed by the district court. At 

the threshold, it is important to note that we need only 

concern ourselves with the first element of antitrust injury, 

causation. At this procedural juncture, reviewing the 

district court's grant of the defendants' motions for 

summary judgment, we are not, as we would be upon 

reviewing a jury verdict, determining whether a plaintiff has 

brought forth sufficient evidence to justify the actual 

damages awarded. Rather, here, all we are concerned with 

is whether Rossi has established that the defendants' 

"illegal conduct was a material cause of [his] injury." Danny 

Kresky, 716 F.2d at 211; see also Zenith Radio, 395 U.S. at 

114 n.9. 

We find two sources of evidence sufficient for Rossi to 

demonstrate fact of injury or causation: (1) evidence of 

specific lost transactions based upon Rossi's inability to 

purchase product; and (2) the Rockhill Damage Report. We 

discuss these in turn. 

We have already explained that there is ample evidence 

in the record that Standard, Arzee, and GAF conspired to 

deny Rossi access to GAF product and prevent him from 

competing in the roofing and siding business in northern 

New Jersey. See supra S II.B.2.a & b. Also, there is evidence 

that, with a few exceptions, the defendants successfully 

prevented Rossi from obtaining GAF product. See id.

Moreover, there is evidence that GAF product was highly 

desirable, if not critical, to Rossi's target customers. See 

 62 
supra S II.B.2.b(1). Finally, several of Rossi's former 

customers from his Standard days, including Sean Coffey, 

Francis Doherty, John Feher, Albert Logan, and Melvin 

Stanley, have testified that they would have done business 

with Rossi Roofing if he had had access to the necessary 

products, primarily GAF product. 

This evidence is enough by itself to satisfy Rossi's burden 

on causation for the purposes of summary judgment. Rossi 

has put forth evidence that the defendants' alleged

conspiracy unlawfully prevented him from obtaining GAF 

product, and that he lost multiple sales as a result. Thus, 

if Rossi can successfully prove the existence of the 

conspiracy, he will have proved fact of injury. The case 

before us is not analogous to Van Dyk Research Corp. v. 

Xerox Corp., 478 F. Supp. 1268 (D.N.J. 1979), a case upon 

which the district court relied, where the plaintiff failed to 

prove fact of injury primarily because it could not show that 

it lost even a single contract based upon the alleged 

unlawful practices of the defendant. See 478 F. Supp. at 

1327. 

In the same vein, Amerinet is not availing to the 

defendants either. In Amerinet, the Eighth Circuit 

concluded that the plaintiff had not shown antitrust injury 

or causation in large part because statements and 

assertions by its own damage expert "strongly suggest[ed] 

. . . that [plaintiff's] decline was caused at least partly by, 

if not substantially or mainly by, other factors than 

[defendant's] alleged antitrust violations." Amerinet, 972 

F.2d at 1495 (noting that the plaintiff's damage expert 

admitted that the plaintiff was in a period of decline prior 

to the defendant's alleged antitrust violations). In addition, 

the plaintiff in Amerinet was only able to show that, at 

most, the allegedly illegal activity was "one factor among 

many, and not a controlling or major factor" in specific 

potential clients' decisions not to purchase from the 

plaintiff. Id. at 1497. Therefore, the Eighth Circuit held that 

the plaintiff had not adduced sufficient evidence of element 

of causation to enable it to withstand summary judgment. 

Here, Rossi's evidence is more substantial than in either 

Van Dyk Research or Amerinet. Rossi has proffered evidence 

from five specific customers that they would have 

 63 
purchased GAF product from Rossi if he had been able to 

sell it to them, and Rossi's inability to consummate those 

sales (leading to a loss of business and therefore injury) is 

a direct result of the alleged antitrust violation-- the group 

boycott. In addition, Richard Droesch, Rossi's partner in 

the failed Rossi Florence venture, backed out of that 

venture at least in part based upon his understanding that 

the company would not be able to get the products it 

needed, particularly GAF product, to compete successfully 

in the market. For all these reasons, we believe that the 

record supports Rossi's allegations that he suffered 

antitrust injury, and that it was caused by the defendant's 

allegedly unlawful actions. 

The district court also utterly rejected Rossi's damage 

expert, holding that his report was nothing more than a 

"but for" damage model that failed as a matter of law to 

support Rossi's damage allegations. We believe, however, 

that the Rockhill Report, when combined with the 

testimony concerning the five lost sales, is indicative of a 

larger pattern of loss and helps Rossi demonstrate 

causation. Thus, while the other damage evidence is

enough alone to satisfy Rossi's summary judgment burden, 

for the guidance of the district court on remand, we 

nonetheless consider the Rockhill Report. 

A typical "but for" damage model, like the one in Southern 

Pacific Com. Co. v. American Tel. & Tel. Co., 556 F. Supp. 

825 (D.D.C. 1983), aggregates the defendant's alleged 

violations and creates a hypothetical calculation projecting 

the plaintiff's profits and losses "but for" the defendant's 

antitrust violations. In Van Dyk Research, for example, this 

estimate was based upon an internal "task force" report 

created by the plaintiff projecting its own future 

performance. See 478 F. Supp. at 1327. The plaintiff then 

compares this hypothetical figure with its actual 

performance to calculate its damages. Courts usually 

highlight two problems with models created using this 

methodology. 

First, they do not attempt to measure the particularized 

effects of any specific alleged illegal practices, but rather 

rely on an aggregation of injury from all factors. See 

Southern Pacific, 556 F. Supp. at 1092. Second, their 

 64 
hypothetical "but for" calculations usually rely upon 

unrealistic ex ante assumptions about the business 

environment, such as assumptions of perfect knowledge of 

future demand, future prices, and future costs that tend to 

overstate the plaintiff's damage claim. See id. at 1092-93 

(pointing out many difficulties not caused by the 

defendants that negatively impacted plaintiff's profitability 

yet were not accounted for in the "but for" damage model). 

Thus, using a "but for" damage model arguably makes it 

impossible for the trier of fact to determine what, if any, 

injury derived from the defendant's antitrust violations as 

opposed to other factors, and courts sometimes reject such 

models as the basis of either causation or amount of injury. 

See Southern Pacific, 556 F. Supp. at 1090, 1098; Van Dyk 

Research, 478 F. Supp. at 1327. 

The Rockhill Report is in many respects a "but for"

damage model because it does not deal with the 

particularized effects of specific injuries, but rather 

aggregates all of Rossi's damages into one figure. Relying on 

Van Dyk Research and Southern Pacific, defendants argue 

that all "but for" models should be precluded as a matter of 

law from serving as a basis for antitrust causation and 

damage calculation. We do not agree with the defendants' 

reading of these cases (and, at all events, are not bound by 

them), which we conclude only stand for the proposition 

that some, not all, "but for" models are too speculative and 

must be precluded as a matter of law. The Rockhill Report, 

as we shall see, is much less speculative and does not 

suffer from many of the flaws in the damage models 

discussed in Van Dyk Research and Southern Pacific, and 

thus it is not comparable with them. 

Rockhill made two major assumptions in calculating the 

damages Rossi suffered because of his inability to procure 

products. First, he estimated that Rossi Florence and/or 

Rossi Roofing would have achieved the same pattern of 

sales revenues (and revenue growth) beginning in 1989 and 

extending to 2008 that ABC's Morristown sales branch 

actually achieved from 1990-1993, operating out of the 

same location, with Rossi as branch manager. Rossi makes 

a strong argument that this estimate took into account the 

poor general business conditions that existed at the time, 

 65 
as well as any other extrinsic factors not related to the 

defendants' alleged boycott, because Rockhill based his 

estimate upon actual sales figures Rossi was able to 

achieve competing against the same firms, selling the same 

products at the same location to the same customers under 

the actual business conditions that existed at the time.21 

The second major assumption in the Rockhill Report is that 

Rossi would have been able to manage Rossi Florence and 

Rossi Roofing in the manner that he had run Standard's 

Morristown branch from 1974-1987. Rockhill used 

Standard's Morristown branch financial statements to 

develop 14-year averages for cost of sales, payroll expenses, 

equipment expenses, and administrative expenses (as a 

percentage of total sales) and applied them to the sales 

estimate. This kind of estimate, while perhaps not one upon 

which we would base our own personal investment 

decisions, nevertheless is sufficient to establish causation 

(especially when considered in conjunction with thefive lost 

transactions).22 

(Text continued on page 68) 

_________________________________________________________________ 

21. Defendants also complain that it is inappropriate to use sales figures 

Rossi achieved working for ABC, a major national chain, to estimate the 

revenues that Rossi Florence or Rossi Roofing would have achieved 

without the boycott. This position has some force and is certainly an 

appropriate argument to advance before the trier of fact; however, it is 

not uncontroverted. There is ample evidence in the record that wholesale 

roofing and siding sales has a strong local accent, and that after price, 

service and reliability are the next most critical factors in customers' 

purchasing decisions. Rossi had a long track record in northern New 

Jersey, and several witnesses testified that they would patronize Rossi 

regardless of whom he worked for, as long as he carried the product they 

needed at a competitive price, because he provided the best service. 

Thus, it is not clearly evident that Rossi's salesfigures with ABC (or 

Standard) would necessarily be higher than with Rossi Roofing. 

22. For the guidance of the district court on remand, we note that the 

Rockhill Report satisfies the relaxed Bigelow standard of proof for 

estimating the amount of damages under which: 

 the jury [may] conclude as a matter of just and reasonable 

inference 

 from the proof of defendants' wrongful acts and their tendency to 

 injure plaintiffs' business, and from the evidence of the decline 

in 

 prices, profits and values, not shown to be attributable to other 

 causes, that defendants' wrongful acts had caused damage to the 

 plaintiffs. . . . [When] [ ] tortious acts . . . preclude[ ] 

ascertainment 

 66 
 of the amount of damages more precisely, by comparison of profits, 

 prices and values as affected by the conspiracy, with what they 

 would have been in its absence under freely competitive conditions 

 . . . we [have] held that the jury could return a verdict for the 

 plaintiffs, even though damages could not be measured with the 

 exactness which would otherwise have been possible. 

 In such a case, even where the defendant by his own wrong has 

 prevented a more precise computation, the jury may not render a 

 verdict based on speculation or guesswork. But the jury may make 

 a just and reasonable estimate of the damage based on relevant 

 data, and render its verdict accordingly. In such circumstances 

 `juries are allowed to act on probable and inferential as well as 

 [upon] direct and positive proof.' Any other rule would enable the 

 wrongdoer to profit by his wrongdoing at the expense of his victim. 

 It would be an inducement to make wrongdoing so effective and 

 complete in every case as to preclude any recovery, by rendering 

the 

 measure of damages uncertain. 

Bigelow, 327 U.S. at 264 (internal citations omitted). 

In Bigelow, the Supreme Court upheld a jury's damage award based 

upon a comparison of the plaintiff's actual profits with the 

contemporaneous profits of a competing theater with access to first-run 

films, which were illegally denied to plaintiff theater by a group of 

conspiring film distributors. See J. Truett Payne Co., Inc. v. Chrysler 

Motors Corp., 451 U.S. 557, 566 (1981) (explaining Bigelow). The Bigelow 

plaintiff had also adduced evidence comparing his actual profits during 

the conspiracy with his profits when he had been able to obtain first-run 

films. See id. This was enough to uphold the jury's verdict. Similarly, in 

Zenith Radio, the Supreme Court permitted the plaintiff, who had been 

the victim of an illegal campaign against importers attempting to bring 

new products into Canada, to estimate its damages by comparing its 

market share in the United States (where it competed freely) with its 

market share in Canada (where it was the target of unlawful 

distribution-disrupting tactics). See 395 U.S. at 116 n.11 & 124-25. 

Finally, we have held that "plaintiffs must be free to select their own 

damage theories as long as they are supported by a reasonable 

foundation." Danny Kresky, 716 F.2d at 213 (upholding a market share 

damage calculation approach in which the plaintiff argued that had it 

not been for the defendants' antitrust violations, it would have been able 

to achieve a percentage of the excluded market segment equal to the 

percentage of the market it enjoyed in the rest of the market generally). 

Compared with these cases, Rossi's damage estimation is far less 

 67 
On the subject of the Rockhill Report, we add that the 

defendants' criticism that the report is flawed as a matter 

of law because it improperly mixes data using "a variety of 

sources including the historic operations of Standard; ABC 

actual data; input from Mr. Rossi; and judgment" is

unavailing. Rockhill used actual data to support his 

estimates, and thus they are based upon a "reasonable 

foundation." See Danny Kresky, 716 F.2d at 213. We do not 

suggest that Standard's problems with the report are 

baseless, only that they constitute genuine issues of 

material fact and should also be argued before the trier of 

fact. 

Finally, the defendants attack the evidence supporting 

Rossi's assertion of damages on several other bases. 

Defendants submit that Rossi Florence and Rossi Roofing 

failed because: (1) they were start-up operations, (2) they 

were founded during one of the worst recessions ever to hit 

the New Jersey housing market, (3) Rossi, as a manager, 

failed to control his costs, and/or (4) Rossi worked on other 

ventures to the detriment and ultimate failure of both 

companies. One or more of these reasons, particularly the 

theory that it was the recession, not a conspiracy, which 

mortally wounded Rossi's business efforts, might explain 

Rossi's failure in the roofing and siding business in 

northern New Jersey, and could conceivably result in a 

verdict for the defendants at trial. They are, however, 

unavailing to the defendants at this stage of the case 

because they all involve factual disputes that need to be 

resolved by the trier of fact, not by this court on a motion 

for summary judgment. 

_________________________________________________________________ 

speculative. The sales revenues (at least for the first few years of the 

ten 

year estimate) were exactly those that Rossi actually achieved while 

working as ABC's branch manager at the same location. Thus, the jury 

here need not even speculate whether the comparison market (or 

location) is similar enough to serve as a basis for its damage estimate, 

as the jury had to in Bigelow and Zenith Radio. Similarly, both the sales 

and expenses are based on real world numbers, not pure conjecture by 

an optimistic new competitor. These numbers may or may not accurately 

represent what Rossi Florence or Rossi Roofing would have done had it 

stayed in business, but they are clearly not mere speculation or wishful 

thinking, as was the case in Van Dyk Research and Southern Pacific. 

 68 
Standard also argues that Rossi failed to establish

causation because an essential element in causation

involves proving that there are no comparable substitutes 

for the desired product -- here, GAF product. See ElderBeerman Stores Corp. v. Federated Dep't Stores, Inc., 459 

F.2d 138, 148 (6th Cir. 1972). This is another factual issue 

that Standard may argue to the jury. As we have explained 

above, we are satisfied that Rossi's own testimony and that 

of several of his witnesses are sufficient to establish that 

GAF product was, for practical purposes, unique and highly 

desired in this market. See supra S II.B.2.b(1). 

In sum, Rossi has established a prima facie case of

antitrust injury with respect to Standard, Arzee, and GAF. 

He has adduced evidence of specific lost transactions 

showing causation or fact of injury, which is bolstered by 

an expert damage report that is not overly speculative as a 

matter of law. The combination of this evidence, while not 

conclusive, provides enough of a foundation that an

eventual finder of fact would be justified in making a "just 

and reasonable inference" of the damages Rossi may have 

suffered as a result of the defendants' allegedly unlawful 

activities. 

IV. STATE LAW TORTIOUS INTERFERENCE 

 WITH CONTRACTUAL AND PROSPECTIVE 

 CONTRACTUAL RELATIONS 

The district court dismissed Rossi's state law tortious 

interference claims against defendants with no discussion. 

It very well may be, as some of the defendants suggest, that 

the district court concluded when it dismissed Rossi's state 

law claims that Rossi had not shown any wrongful or

intentional conduct designed to interfere with alleged 

contractual or prospective contractual relationships. If that 

is the case, then based upon our disposition here, the state 

law claims will likely have to be reinstated with respect to 

the Standard defendants, the Arzee defendants, and GAF 

since we have found that there is sufficient evidence of their 

participation in an unlawful conspiracy to boycott Rossi. 

However, the district court may have had some other

reason for dismissing these claims of which neither we nor 

the parties before us is aware. Our jurisprudence requires 

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district courts in this circuit to accompany grants of 

summary judgment with an explanation sufficient to permit 

the parties and this court to understand the legal premise 

for the court's order. See Vadino v. A. Valey Eng'rs, 903 

F.2d 253, 257-60 (3d Cir. 1990). We will therefore reverse 

the district court's order dismissing the state tortious 

interference claims against all defendants and remand 

them to the district court for further consideration and 

explanation consistent with this opinion. 

V. CONCLUSION 

For the foregoing reasons, we will affirm the district 

court's judgment on the federal antitrust issues with 

respect to Servistar and Wood Fiber, but reverse on those 

issues with respect to the Standard defendants, the Arzee 

defendants, and GAF. We will also reverse the district 

court's judgment dismissing the state claims with respect 

to all defendants. The case will be remanded for further 

proceedings consistent with this opinion. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

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