1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

8-24-1995

Stelwagon v Tarmac

Precedential or Non-Precedential:

Docket 94-2004

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Recommended Citation

"Stelwagon v Tarmac" (1995). 1995 Decisions. Paper 235.

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

___________ 

No. 94-2004 

___________ 

STELWAGON MANUFACTURING COMPANY 

 Appellee, 

 vs. 

TARMAC ROOFING SYSTEMS, INC., 

 Appellant. 

___________ 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

(D.C. Civil No. 92-cv-01073) 

___________ 

ARGUED MAY 16, 1995 

BEFORE: COWEN, LEWIS, GARTH, Circuit Judges. 

(Filed August 24, l995) 

___________ 

Lawrence D. Berger (ARGUED) 

Ballard, Spahr, Andrews & Ingersoll 

1735 Market Street 

51st Floor 

Philadelphia, PA 19103 

 Attorney for Appellant
2 

David A. Gradwohl (ARGUED) 

Patrick J. Doran 

Pelino & Lentz 

1650 Market Street 

One Liberty Place, 32nd Floor 

Philadelphia, PA 19103 

 Attorneys for Appellee

___________ 

OPINION OF THE COURT 

___________ 

LEWIS, Circuit Judge. 

 Appellant Tarmac Roofing Systems, Inc., ("Tarmac") 

appeals a $1,423,392.50 judgment entered after a jury trial in 

the United States District Court for the Eastern District of 

Pennsylvania on appellee Stelwagon Manufacturing Company's 

("Stelwagon") secondary line price discrimination and state 

breach of contract claims.0 Specifically, the jury found that 

Tarmac had discriminated against Stelwagon on the basis of price 

in violation of section 2(a) of the Clayton Act (commonly 

referred to as the Robinson-Patman Price Discrimination Act), 15 

U.S.C. § 13(a) (1982),0 and, accordingly, that Stelwagon was 

 

0

 Secondary line cases involve discrimination affecting 

competition among customers of the discriminating seller. Barr 

Laboratories, Inc. v. Abbott Laboratories, Inc., 978 F.2d 98, 106 

(3d Cir. 1992); J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 

F.2d 1524, 1526 (3d Cir. 1990). 

0

 Section 2(a) provides in pertinent part: 

 It shall be unlawful for any person 

engaged in commerce, in the course of such 

commerce, either directly or indirectly, to 

discriminate in price between different 

purchasers of commodities of like grade and 
3 

entitled to recover treble damages pursuant to section 4 of the 

Clayton Act, 15 U.S.C. § 15(a).0 The jury also determined that 

Tarmac breached an oral, exclusive distributorship agreement with 

Stelwagon. Although we believe that Stelwagon established a 

prima facie violation of the Robinson-Patman Act, we believe it 

failed to present sufficient proof of actual antitrust damages 

and is, therefore, precluded from recovering damages under the 

Clayton Act. Accordingly, we will vacate the district court's 

judgment insofar as it awards Stelwagon treble damages under 

section 4 of the Clayton Act. We will, however, affirm with 

respect to the breach of contract claim because we believe the 

district court correctly concluded that the contract claim was 

not barred by the Statute of Frauds. 

 

quality, . . . where the effect of such 

discrimination may be substantially to lessen 

competition or tend to create a monopoly in 

any line of commerce, or to injure, destroy, 

or prevent competition with any person who 

either grants or knowingly receives the 

benefit of such discrimination, or with 

customers of either of them. . . . 

0

 Section 4 of the Clayton Act provides: 

 [A]ny person who shall be injured in his 

business or property by reason of anything 

forbidden in the antitrust laws . . . shall 

recover threefold the damages by him 

sustained. . . . 
4 

I. BACKGROUND

 Stelwagon is a wholesale distributor of roofing, siding 

and related construction materials. Its principal customer base 

consists of small to medium-sized roofing contractors located in 

the Philadelphia, Pennsylvania, area. In early 1988, Stelwagon 

entered into an oral, exclusive distributorship agreement with 

Tarmac, a Wilmington, Delaware-based manufacturer of modified 

asphalt products ("MAPs").0 Under the agreement, Tarmac agreed 

not to sell its MAPs to any other distributors in the 

Philadelphia area except for Roofer's Mart, Inc., a pre-existing 

distributor.0 In return, Stelwagon promised to promote and 

develop a market for Tarmac MAPs. 

 In 1988, Stelwagon began actively promoting Tarmac MAPs 

as agreed. In order to build a demand for Tarmac's products, 

Stelwagon refrained from acquiring any new lines of MAPs, and 

ceased aggressive marketing of its other, non-Tarmac MAPs. 

Stelwagon sold Tarmac MAPs without incident in the relationship 

 

0

 MAPs are polyester or fiberglass mats applied by torch or 

hot asphalt which are sold by the roll and principally used to 

cover flat roofs. 

0

 Tarmac insists that the terms of the contract provided for 

sales to Stelwagon and one other distributor, and consequently, 

if Roofer's Mart discontinued selling Tarmac MAPs, Tarmac could 

sell to another distributor. This distinction is significant 

because Roofer's Mart's Philadelphia warehouse burned down in 

late 1989 and Tarmac began selling MAPs to Allied Roofing 

Products ("Allied"), another Philadelphia distributor. 

 Because we believe that the evidence, viewed in the light 

most favorable to the prevailing party, provides a rational basis 

for the jury's factual finding that the terms of the contract 

are, in fact, those terms that Stelwagon allege, we will not 

disturb that finding. See Intermilo, Inc. v. I.P. Enterprises, 

Inc., 19 F.3d 890, 892 (3d Cir. 1994). 
5 

until early 1989, when Stelwagon became aware of sales made to 

several of its competitors in violation of the agreement.0 At 

around the same time, Stelwagon also learned that Tarmac was 

selling MAPs to two competitors -- Standard Roofing Company 

("Standard") and Celotex Corporation ("Celotex") -- at 

preferential prices. Stelwagon first complained to Tarmac about 

these sales, and eventually brought this action in February 1992. 

 At the close of Stelwagon's case, and again at the 

close of all evidence, Tarmac moved for judgment as a matter of 

law. Both of these motions were denied and the case was 

submitted to the jury, which rendered a verdict in Stelwagon's 

favor on both the price discrimination and breach of contract 

claims, and awarded damages in the amount of $2,272,000.0 The 

district court trebled the antitrust damages under section 4 of 

the Clayton Act, and entered judgment for Stelwagon in the amount 

of $3,816,000. Tarmac renewed its motion for judgment as a 

matter of law and, alternatively, for a new trial. The district 

court denied the motions, but granted Tarmac's request for a 

remittitur based on a finding that "the damages awarded by the 

jury in this case are unsupported by the evidence and are grossly 

excessive." Stelwagon Manufacturing Company v. Tarmac Roofing 

Systems, Inc., 862 F. Supp. 1361, 1369 (E.D. Pa. 1994). The 

 

0

 Stelwagon first became aware of Tarmac's sales to Sellmore 

Roofing in Philadelphia, and later learned that Tarmac was 

selling MAPs to BJ Supply Company and Allied Roofing Co., one of 

Stelwagon's principal competitors in Philadelphia. 

0

 The jury awarded Stelwagon $1,500,000 in damages for breach 

of contract and an additional $772,000 for the antitrust 

violation. 
6 

district court reduced the damages award for breach of contract 

to $74,242, and likewise reduced the antitrust damages to 

$450,383.50. After trebling the Robinson-Patman damages, the 

district court entered judgment for Stelwagon in the amount of 

$1,423,392.50. This appeal followed. We have jurisdiction under 

28 U.S.C. § 1291. 

 On appeal, Tarmac challenges the district court's 

denial of its post-trial motions. Specifically, Tarmac claims 

that the judgment should be reversed because Stelwagon failed to 

present sufficient evidence to (1) establish a prima facie

Robinson-Patman violation; (2) prove actual antitrust injury; and 

(3) support the award of damages under the Clayton Act. Tarmac 

also argues that Stelwagon's breach of contract claim is barred 

by the statute of frauds.0 Our review of the district court's 

denial of Tarmac's motion for judgment as a matter of law is 

plenary. Intermilo, Inc. v. I.P. Enterprises, Inc., 19 F.3d 890 

(3d Cir. 1994). The legal foundation for the factfinder's 

verdict is reviewed de novo while the factual findings are 

reviewed to "determine whether the evidence and justifiable 

inferences most favorable to the prevailing party afford any 

rational basis for the verdict." Id., quoting Bhaya v. 

Westinghouse Elec. Corp., 832 F.2d 258, 259 (3d Cir. 1987). 

II. THE ROBINSON-PATMAN CLAIM

 

0

 In the alternative, Tarmac raises various trial errors 

which it argues require reversal. Because of our decision on the 

merits, however, we need not reach the remainder of Tarmac's 

claims. 
7 

 By its terms, the Robinson-Patman Act is a prophylactic 

statute and does not require that the alleged discrimination must 

in fact have harmed competition. J. Truett Payne Company, Inc. 

v. Chrysler Motor Corporation, 451 U.S. 557, 561 (1981). Instead, 

a violation is established upon a showing that "the effect of 

such discrimination may be substantially to lessen competition." 

Id. For the purposes of the Robinson-Patman Act, price 

discrimination means nothing more than a difference in price 

charged to different purchasers or customers of the 

discriminating seller for products of like grade or quality. 

Feeser, 909 F.2d at 1532; see also F.T.C. v. Annheuser-Busch, 

Inc., 363 U.S. 536, 549 (1960). Price discrimination standing 

alone, however, is not illegal per se. Feeser, 909 F.2d at 1532; 

O. Hommel Co. v. Ferro Corp., 659 F.2d 340, 346 (3d Cir. 1981). 

Rather, in order to establish a prima facie violation of section 

2(a), "a reasonable possibility of harm, often referred to as 

competitive injury, must be shown." Feeser, 909 F.2d at 1531. 
8 

 A. Competitive Injury

1. 

 We note initially that as a prerequisite to 

establishing secondary line injury, a plaintiff must "first prove 

that, as the disfavored purchaser, it was engaged in actual 

competition with the favored purchaser(s) as of the time of the 

price differential." Best Brands Beverage, Inc. v. Falstaff 

Brewing Corporation, 842 F.2d 578, 584 (2d Cir. 1987). Moreover, 

to satisfy this "competitive nexus" requirement, it "must be 

shown that, as of the time the price differential was imposed, 

the favored and disfavored purchasers competed at the same 

functional level, i.e., all wholesalers or all retailers, and 

within the same geographic market." Id. at 585. 

 Tarmac claims that Stelwagon failed to show the 

requisite competitive contact with either Standard or Celotex 

and, as a result, did not establish a prima facie violation of 

the Robinson-Patman Act. Specifically, Tarmac argues that 

Stelwagon was not in competition with Standard because Standard 

operated its business outside of the geographical area where 

Stelwagon's principal customer base was located, and that 

Stelwagon was likewise not in competition with Celotex because 

the two companies did not operate at the same functional level, 

i.e., that they did not compete at the same distribution level 

because Celotex is a manufacturer and Stelwagon a distributor. 

The district court rejected these contentions and concluded that 

the record contained sufficient evidence to support a finding 
9 

that both Standard and Celotex were in head-to-head competition 

with Stelwagon. We agree. 

 Standard is a distributor of roofing products and its 

customer base is similar to that of Stelwagon's. Although 

Standard is located in Trenton, New Jersey, there was evidence 

that Standard employed salespeople in Philadelphia and that it 

shipped directly to its Philadelphia customers from south Jersey. 

There was additional evidence that Standard was a principal 

competitor of one of Stelwagon's Philadelphia locations as well 

as Stelwagon's Camden, New Jersey location. In our view, this 

evidence was sufficient to support a finding of competitive 

contact between Stelwagon and Standard. 

 With respect to Celotex, we, too, reject the argument 

advanced by Tarmac that the weight of the evidence supports the 

conclusion that Celotex was not in competition with Stelwagon. 

The basis of Tarmac's argument, as mentioned above, is that the 

two companies were not operating at the same functional level and 

were, therefore, not competing customers for purposes of the Act. 

See F.T.C. v. Fred Meyer, Inc., 390 U.S. 341, 348-49 (1968). 

 It is undisputed, however, that the MAPs sold by 

Celotex, under its own private label, were, in fact, 

"manufactured," that is, made, by Tarmac. It is also uncontested 

that the MAPs Tarmac produced for Celotex were identical to those 

Tarmac sold to Stelwagon except that they did not bear the Tarmac 

label. Although there was evidence that tended to support 
10 

Tarmac's characterization of Celotex as a manufacturer,0 the fact 

that there were conflicts and contradictions is of little 

significance, since the resolution of such inconsistencies is 

peculiarly within the province of the jury. In our view, the 

record as a whole contains sufficient evidence to support the 

jury's finding, in the first instance, as well as the district 

court's conclusion thereafter, that Celotex "was in economic 

reality acting on the same distribution level as Stelwagon." 

Stelwagon, 852 F.2d at 1368. 

2. 

 Once the existence of a competitive relationship has 

been established, "[i]njury to competition is usually shown in 

either of two ways: proof of lost sales or profits, Falls City 

Industries [Inc. v. Vanco Beverages, Inc., 460 U.S. 428, 434-35 

(1983)]; Rose Confections, Inc. v. Ambrosia Chocolate Co., 816 

F.2d 381 (8th Cir. 1987), or under the Morton Salt test, proof of 

a substantial price discrimination between competitors over 

time." Feeser, 909 F.2d at 1535. In this case, the district 

court concluded that "[t]he record . . . contains evidence that 

would support a jury finding of harm to competition under either 

method." Stelwagon, 862 F. Supp at 1368. We thus turn to the 

specific evidence Stelwagon presented at trial to determine 

 

0

 For example, there was testimony from witnesses for both 

parties that Celotex was widely thought of and referred to as a 

manufacturer. In addition, there was evidence that,like a 

manufacturer, Celotex sold the private label MAPs to distributors 

who, like Stelwagon, sold MAPs to contractors and homeowners. 
11 

whether the record is indeed sufficient to support a finding of 

competitive injury. 

(a) Substantial Price Discrimination Over Time 

 It is undisputed that a differential existed between 

the prices Tarmac charged Stelwagon for its MAPs and the prices 

Tarmac charged Standard and Celotex. In addition, Stelwagon 

presented evidence that showed the price differential was 

substantial and that it was in effect for several years. From 

this evidence, we believe the jury was entitled to infer harm to 

competition for, as the Supreme Court stated in Morton Salt, "we 

believe [it is] self-evident [] that there is a `reasonable 

possibility' that competition may be adversely affected by a 

practice under which manufacturers and producers sell their goods 

to some customers substantially cheaper that they sell like goods 

to the competitors of these customers." Morton Salt, 334 U.S. at 

50-51. Because the amount and degree of the price discrimination 

are significant factors to be considered when determining whether 

a price differential is substantial, Feeser, 909 F.2d at 1538, we 

will first address the evidence in this case that pertains to the 

issue of substantiality. 

 Stelwagon presented a report submitted by its expert, 

Dr. Martin Perry.0 The report, insofar as it concerned the 

substantiality of the price differentials, was based on Dr. 

Perry's examination of Tarmac's invoices on sales of MAPs 

 

0

 The district court qualified Dr. Perry as expert "in the 

general field of economics and specifically in the field of price 

discrimination, damages flowing therefrom, as well as damages 

flowing from breach of distribution agreements." App. at 476. 
12 

manufactured at its plant in Chester, Pennsylvania. App. at 77. 

The invoices, which included the date of sale, distributor, 

product name, number of rolls and price charged, covered a period 

from 1987 through late 1991 and included sales of six types of 

Tarmac MAPs to Stelwagon and seven other distributors which, at 

the time, resold MAPs in the Philadelphia area.0 App. at 81-82. 

 According to the expert report, between 1988 and 1991, 

Standard received prices ranging from 5 to 20 percent lower than 

the prices charged to Stelwagon and, during this same period, 

Celotex received prices which ranged from 10 to 25 percent lower 

than the prices Tarmac charged to Stelwagon. App. to 88-93 and 

108-122. With respect to APP 4S, the Tarmac product which 

accounted for 40.4 percent of the total unit sales of all 

products included on the invoices, Standard received a 12.5 

percent discount relative to the price paid by Stelwagon, while 

Celotex received a discount of at least 10 percent. App. 81 and 

90-91. Based on these figures, we believe the price differential 

Tarmac offered Standard and Celotex only can fairly be 

characterized as substantial.0

 

0

 Of the seven distributors, we are concerned only with sales 

to Standard and Celotex for the purposes of this appeal. 

0

 Another compelling factor considered by courts in 

determining competitive injury in secondary line cases is the 

duration of the price discrimination. Feeser, 909 F.2d at 1539. 

Generally, the longer the duration, the more likely injury will 

be found. Id., citing Rose Confections, 816 F.2d at 385 (two 

years); Hasbrouck v. Texaco, Inc., 842 F.2d 1034, 1041 (9th Cir. 

1987) (four years). In our view, the four-year period analyzed 

by Dr. Perry's report establishes the requisite duration of price 

discrimination and further supports an inference of competitive 

injury. 
13 

 Because we agree with the district court that Stelwagon 

offered sufficient proof of a substantial price difference over 

time, which alone suffices to establish a violation of the 

Robinson-Patman Act, we need not address the issue of whether 

Stelwagon presented sufficient proof of lost sales or profits 

insofar as such evidence pertains to establishing a violation of 

the Act.0 

B. Antitrust Damages

 As we stated in Feeser, "[d]emonstrating competitive 

injury as part of a prima facie case suffices to support 

injunctive relief and implicates further examination of a 

plaintiff's entitlement to treble damages under section 4 of the 

Clayton Act," Feeser, 909 F.2d at 1531; however, to recover such 

damages, "a plaintiff must establish cognizable injury 

attributable to [the] antitrust violation and some approximation 

of damage." J. Truett Payne, 451 U.S. at 561. In other words, a 

plaintiff must prove a causal connection between the price 

discrimination and actual damage suffered.0 Feeser, 909 F.2d at 

 

0

 As discussed below, we do not believe Stelwagon offered 

sufficient evidence of lost sales or profits to prove actual 

antitrust damages, and is therefore not entitled to treble 

damages under section 4 of the Clayton Act. 

0

 The Supreme Court has described these two requirements 

collectively as "antitrust injury": 

 Plaintiffs must prove antitrust injury, 

which is to say injury of the type the 

antitrust laws were intended to prevent and 

that flows from that which makes defendants' 

acts unlawful. The injury should reflect the 

anticompetitive effect either of the 

violation or of anticompetitive acts made 

possible by the violation. It should, in 
14 

1539, citing Perkins v. Standard Oil Co., 395 U.S. 642, 648 

(1969). Traditionally, however, antitrust plaintiffs have not 

been held to an unduly rigorous standard of proving antitrust 

injury. J. Truett Payne, 451 U.S. at 565. Because 

damage issues in these cases are rarely 

susceptible to the kind of concrete, detailed 

proof of injury which is available in other 

contexts[, t]he [Supreme] Court has 

repeatedly held that in the absence of more 

precise proof, the factfinder 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." Bigelow v. RKO 

Pictures, Inc., [327 U.S. 251, 264 (1946)]. 

See also Eastman Kodak Co. v. Southern Photo 

Materials Co., 273 U.S. 359, 377-79 (1927); 

Story Parchment Co. v. Patterson Parchment 

Paper, Co., 282 U.S. 555, 561-566 (1931). 

J. Truett Payne, 451 U.S. at 565-66, quoting Zenith Radio Corp. 

v. Hazeltine Research, Inc., 395 U.S. 100, 123-124 (1969). 

Although the proof requirements of section 4 are "less than 

stringent," Feeser, 909 F.2d at 1540, there must be some direct 

evidence of injury to support an award of damages. See id.; S&W 

Construction and Materials Co., Inc. v. Dravo Basic Materials 

Co., Inc., 813 F. Supp. 1214, 1221 (S.D. Miss. 1992); Chrysler 

 

short, be "the type of loss that the claimed 

violations . . . would be likely to cause." 

Zenith Radio Corp. v. Hazeltine 

Research[, Inc.], 395 U.S. [100,] 125 

[(1969)]. 

Brunswick v. Pueblo Bowl-O-Mat, 429 U.S. 477, 489 (1977); see J. 

Truett Payne, 451 U.S. at 489. 
15 

Credit Corp. v. J. Truett Payne Co., Inc., 670 F.2d 575, 581-82 

(5th Cir. 1982). 

 Tarmac claims that Stelwagon failed to show it suffered 

actual antitrust injury as a result of the price discrimination. 

Specifically, Tarmac claims that Stelwagon fell short of proving 

(1) that it actually suffered lost sales and profits; (2) that 

any proven lost sales and profits were caused by Standard and/or 

Celotex receiving favorable prices; and (3) the amount of the 

sales and profits that Stelwagon lost. The district court, 

however, found that "the testimony of Dr. Perry and the anecdotal 

evidence of [Stelwagon's] customer's statements, admitted under 

the state of mind hearsay exception, . . . establish[ed] that 

[Stelwagon] actually lost sales to Celotex and Standard." 

Stelwagon, 862 F. Supp. at 1368. For the reasons discussed 

below, we disagree. 
16 

1. Anecdotal Evidence 

 The district court admitted -- under Federal Rule of 

Evidence 803(3) (and over Tarmac's standing objection) -- the 

hearsay testimony of Stelwagon employees about out-of-court 

conversations with Stelwagon customers. Essentially, the 

testimony was that the customers could and did purchase Tarmac 

MAPs from Standard at prices lower than Stelwagon's prices. 

 Statements that are considered under the exception to 

the hearsay rule found at Fed. R. Evid. 803(3),0 commonly 

referred to as the "state of mind" exception, cannot be offered 

to prove the truth of the underlying facts asserted. Grove Fresh 

Distributors, Inc. v. New England Apple Products Co., Inc., 969 

F.2d 552, 556 (7th Cir. 1992), citing Herman Schwabe, Inc. v. 

United Shoe Machinery Corp., 297 F.2d 906, 914 (2d Cir. 1962). 

The district court, in explaining its decision to allow the 

anecdotal testimony, acknowledged the limited use of evidence 

admitted under Rule 803(3): "statements of [a] customer as to 

his reasons for not dealing with a supplier are admissible for 

the limited purpose, i.e., the purpose of proving customer 

motive, but not as evidence of the facts recited as furnishing 

 

0

 Federal Rule of Evidence 803(3) provides in pertinent part: 

 Then existing mental, emotional, or 

physical condition. A statement of the 

declarant's then existing state of mind, 

emotion, sensation, or physical condition 

(such as intent, plan, motive, design, mental 

feeling, pain, and bodily health), but not 

including a statement of memory or belief to 

prove the fact remembered or believed . . . . 
17 

the motive."0 App. at 255, citing Feeser, 909 F.2d at 1535 n.11; 

United Shoe Machinery, 297 F.2d at 906. Notwithstanding this 

express acknowledgement, it is clear from the district court's 

opinion disposing of Tarmac's motion for judgment as a matter of 

law, that the court considered the customer statements for a 

purpose beyond which they were originally, and properly, 

admitted: 

Stelwagon [] introduced . . . the anecdotal 

evidence of its customer statements, admitted 

under the state of mind exception, see Fed. 

R. Evid. 803(3); J.F. Feeser, 909 F.2d at 

1535 n.11; Kraft Foods, Inc. v. BC-USA, Inc., 

840 F. Supp. 344, 348 (E.D. Pa. 1993), to 

establish that it actually lost sales to 

Celotex and Standard.

Stelwagon, 862 F. Supp. at 1368 (emphasis added). 

 Because the statements properly could not have been 

admitted in the first instance as proof of the fact of the matter 

asserted, we believe the district court's reliance on them as 

proof of actual antitrust damages, in the form of lost sales, was 

in error.0

 

0

 As we stated in Feeser, "the reason why a customer was not 

doing business with a particular seller is relevant in a lost 

profits/sales inquiry and its causal connection to the pricing 

practices of the alleged violator." Feeser, 909 F.2d at 1535 

n.11. Although the customer statements at issue in this case 

clearly were admissible as evidence of why the customers were not 

purchasing Tarmac MAPs from Stelwagon, i.e., because they thought

they could get a better deal elsewhere, the statements were not 

admissible as proof that Stelwagon's customers did, in fact, 

purchase MAPs from one of Stelwagon's competitors. 

0

 We hasten to note that the district court's reliance on 

Feeser in admitting the customer statements was misplaced. 

Although in Feeser we concluded that the district court erred in 

excluding similar anecdotal evidence, we did so in the context of 

an appeal from a summary judgment proceeding. Our de novo review 

of the depositions revealed that Feeser had offered sufficient 

admissible evidence to meet the burden of the nonmovant at 
18 

2. Expert Evidence 

 The only other evidence offered by Stelwagon that 

possibly could have supported a finding of actual injury was the 

expert testimony and report of Dr. Perry. In essence, Dr. 

Perry's testimony with respect to Stelwagon's lost sales and 

profits mirrored the conclusions published in his report, which 

summarizes the methodology used to estimate Stelwagon's losses as 

follows: 

In order to forecast the lost sales of MAPs 

by Stelwagon as a result of the price 

advantage of other distributors, we begin 

with the year 1988 when Stelwagon first 

successfully introduced Tarmac's products in 

the Philadelphia metropolitan area. But for 

the price advantage of other distributors, we 

assume that Stelwagon's sales of MAPs would 

have followed a pattern similar to 

Stelwagon's sales of other products 

(excluding MAPs). . . . For this reason, we 

use Stelwagon's sales of other products to 

forecast the sales of MAPs. . . . From this 

forecast, we then calculate the lost sales of 

MAPs in the years following 1988. These lost 

sales can be converted into lost profits by 

applying Stelwagon's markup on these 

products. 

App. at 96; see also App. at 479-481, 491-93. 

 In other words, based on the assumption that but for 

Tarmac's price discrimination, Stelwagon's sales of MAPs would 

have tracked its sales of non-modified products, Dr. Perry 

 

summary judgment. Feeser, 909 F.2d at 1535. Presumably, Feeser 

would have been able to produce the customers themselves at 

trial. Accordingly, the rule in this circuit is that hearsay 

statements can be considered on a motion for summary judgment if 

they are capable of being admissible at trial. Petruzzi's IGA 

Supermarkets, Inc. v. Darling-Delaware Company, 998 F.2d 1224, 12 

34 n.9 (3d Cir. 1993), citing Feeser, 909 F.2d at 1542. 
19 

concluded that Stelwagon lost $257,000 in profits as a result of 

Tarmac's illegal pricing policy. App. at 501. 

 Tarmac's challenge to Dr. Perry's testimony and report 

is twofold: first, Tarmac argues that the expert evidence should 

have been excluded because it was "speculative, not based on 

actual facts and data, and [because] any probative value [was] 

substantially outweighed by [its] prejudicial effect." 

Appellant's Br. at 43. Second, Tarmac claims that the expert 

evidence "did not constitute a `legally sufficient evidentiary 

basis' for the judgment rendered below." Appellant's Br. at 33. 

Although we do not agree with Tarmac's contention that the 

district court erred in admitting Dr. Perry's testimony, or in 

failing to strike the testimony in response to a motion by Tarmac 

at the conclusion of the direct examination, we do agree that, 

standing alone, the expert's opinions, as reflected in his 

testimony and report, are insufficient to support the finding of 

actual damage. 

 Significantly, Dr. Perry's analysis failed to 

sufficiently link any decline in Stelwagon's MAPs sales to price 

discrimination. The sales may have been lost for reasons apart 

from the price discrimination -- reasons that Dr. Perry's 

analysis apparently did not take into account. For example, the 

evidence showed that Stelwagon had higher overhead costs than its 

competitors. In addition, there was undisputed evidence that 

Stelwagon experienced other business complications during the 

relevant time period. In 1988, for example, Stelwagon terminated 
20 

a vice-president, two territorial managers and three key 

employees for their part in an embezzlement scheme. 

 We recognize, of course, that "[i]f some of 

[plaintiff's] injury was attributed to the price discrimination, 

[the defendant] is responsible to that extent." Falls City, 460 

U.S. at 437; Feeser, 909 F.2d at 1537. In this case, however, 

the only evidence directly linking the Robinson-Patman violation 

to any decline in sales and profits Stelwagon may have 

experienced is the anecdotal testimony of Stelwagon employees 

that, as discussed above, should not have been admitted as proof 

of lost sales' profits. Not only did Stelwagon fail to offer any 

documentary evidence as to the effect of the discrimination on 

resale prices, it also failed to identify a single lost 

customer.0 As a result, Stelwagon's claim for damages under 

section 4 of the Clayton Act must fail. See Feeser, 909 F.2d at 

1540 (proof requirements of section 4 are satisfied by direct 

evidence of lost sales, evidence that the substantial price 

discrimination reflected in the resale prices of Feeser and the 

favored competitors directly resulted in Feeser losing certain 

sales and losing profits on others, and expert report outlining 

the magnitude of the price difference). 

 

0

 In Feeser, upon which the district court relied in 

admitting and crediting the customer statements, we expressly 

noted that "[t]he evidence we find most persuasive is that of the 

customers of Feeser, corroborating the sales personnel's 

testimony, that the reason Feeser lost sales was because its 

prices for Serv-A-Portion products were not competitive". Feeser, 

909 F.2d at 1537. 
21 

 Having concluded that Stelwagon failed to present any 

direct evidence of lost sales or profits caused by the 

discriminatory pricing, we will reverse the district court's 

judgment insofar as it concludes that the record contains 

sufficient evidence to support an award of damages under section 

4 of the Clayton Act.0

III. BREACH OF CONTRACT CLAIM

 In addition to the Robinson-Patman claim, Stelwagon 

brought a state action for breach of contract based primarily on 

Tarmac's MAPs sales to one of Stelwagon's principal competitors, 

Allied Roofing, in violation of the exclusive, distributorship 

agreement between the parties. Tarmac argues that enforcement of 

the contract is barred by the statute of frauds because the 

agreement was never reduced to writing and because none of the 

statute's exceptions apply. Specifically, Tarmac argues that the 

district court erred in concluding (1) that Stelwagon established 

a waiver of the statute by a showing of custom in the industry, 

and (2) that the performance exception removed the 

distributorship contract from the statute's protection. 

 Although, in general, the statute of frauds acts as a 

bar to the enforcement of oral agreements, it is well settled 

that such agreements may be taken out of the statute of frauds if 

there is evidence to establish that the agreement was made. M. 

Leff Radio Parts, Inc. v. Mattel, Inc., 706 F. Supp. 387, 394 

 

0

 Because of our conclusion on the issue of Stelwagon's 

entitlement to damages under the Clayton Act, we do not reach 

Tarmac's argument that the amount of damages is unsupported by 

the evidence. 
22 

(E.D. Pa. 1988). This rule promotes the underlying purposes of 

the statute of frauds: to prevent perjury and fraud, Simplex 

Precast Industries, Inc. v. Biehl, 149 A.2d 121, 123 (1959), and 

to prevent parties from escaping their legal obligations. M. 

Leff Radio Parts, 706 F. Supp. at 394. 

 Stelwagon's contract claim survives Tarmac's statute of 

frauds challenge based on the established doctrine that part 

performance of an indivisible contract will take the whole 

contract out of the statute of frauds. W.I. Snyder Corp. v. 

Caracciolo, 541 A.2d 755, 779 (Pa Super. 1988). "We conclude it 

is appropriate for Pennsylvania to follow the weight of authority 

in this area and rule that part payment of an indivisible 

contract takes the entire contract outside of the requirements of 

the Statute of Frauds." Id.

 We agree with the district court's conclusion that 

Stelwagon's exclusive dealing agreement with Tarmac was 

indivisible. Any other conclusion renders Stelwagon and Tarmac's 

agreement meaningless. If the contract was divisible by time or 

by shipments, Tarmac would only have obligated itself to deal 

exclusively with Stelwagon so long as it chose to do so.0 Nor is 

 

0

 The lack of a definite date on which the agreement ends 

does not determine Stelwagon's claim. 13 Pa. Cons. Stat. Ann. 

§ 2204(c) preserves a contract even if one or more terms are 

indefinite as long as there is a "reasonably certain basis for 

giving an appropriate remedy." 13 Pa. Cons. Stat. Ann. § 2309(b) 

states "Where the contract provides for successive performances 

but is indefinite in duration it is valid for a reasonable time 

but unless otherwise agreed may be terminated at any time by 

either party." Tarmac has never argued that it terminated the 

exclusive dealership arrangement nor that the four-year period of 

exclusivity by Stelwagon was not reasonable. 
23 

there any way to limit the agreement by geographic area without 

doing violence to the jury's conclusion that the exclusive 

dealing agreement between Tarmac and Stelwagon covered the whole 

Philadelphia area. Once Tarmac granted Stelwagon an exclusive 

distributor contract, albeit orally, and acted on it, that 

agreement could only be enforced as a whole or not at all. 

 Moreover, the record reflects more than sufficient 

evidence of Tarmac's part performance. From 1988 to 1989, Tarmac 

honored the exclusive distributor contract. Tarmac forbade 

Sellmore Roofing, one of Stelwagon's competitors, from selling 

Tarmac MAPs in Philadelphia after Stelwagon alerted Tarmac to 

Sellmore's sales. Tarmac refused to sell MAPs to Bradco, a 

Philadelphia roofing supplier, because of its contract with 

Stelwagon. These performances validate Stelwagon's claim that an 

exclusive distributor contract existed. Hence, Stelwagon's 

contract claims should not be barred by the statute of frauds and 

the jury's award of damages for that claim must be affirmed.0

IV. CONCLUSION

 For the reasons set forth above, the district court's 

denial of Tarmac's motion for judgment as a matter of law will be 

affirmed insofar as it pertains to Stelwagon's breach of contract 

claim. We will also affirm the district court's finding that 

Stelwagon successfully proved that Tarmac's discriminatory 

pricing scheme violated the Robinson-Patman Act; however, because 

 

0

 Because of our decision on the issue of part performance, 

we need not address the parties' arguments with respect to usage 

of trade. 
24 

we do not believe that Stelwagon offered sufficient proof of 

actual antitrust damages, we will vacate that portion of the 

district court's judgment that upholds the jury's award of 

damages under section 4 of the Clayton Act, and remand the case 

for entry of judgment consistent with this opinion. 

_________________________ 
25 

Stelwagon Manufacturing Co. v. Tarmac Roofing Supply, Inc., No. 94-2004. 

GARTH, Circuit Judge, concurring, 

I agree that Stelwagon's antitrust verdict cannot stand and that Stelwago

entitled to breach of contract damages. I write separately because I have some 

differences with Judge Lewis with respect to his analysis regarding Celotex Corpora

I am also of the opinion that the issue of damages as it arose from Stelwagon's rel

with Standard should be explained. Those differences and that explanation do not c

a difference in result. 

I. 

 I agree with the majority that proof of actual competition is critical to 

of a Robinson-Patman second line price discrimination claim. Maj. Op. typescript a

As Judge Lewis' opinion states, actual competition requires proof of both functiona

geographic competition -- proof that "the favored and disfavored purchasers compete

the same functional level, i.e., all wholesalers or all retailers, and within the s

geographic market." Id. (quoting Best Brands Beverage, Inc. v. Fallstaff Brewing C

842 F.2d 578, 584 (2d Cir. 1987)). 

I cannot agree however that Celotex competed with Stelwagon. Celotex sol

private label MAPs, which were manufactured by Tarmac, in various parts of the east 

including Philadelphia. But unlike Stelwagon, Celotex sold to distributors, not to 

roofing contractors. Thus, Celotex sold to Stelwagon's competitors, not Stelwagon'
2 

customers. That is to say, Celotex operated at a different functional level than 

Stelwagon, i.e. one functional level above Stelwagon. 

 Keenan, Stelwagon's President, testified that Celotex sold almost exclusi

other distributors and repeatedly offered to sell to Stelwagon. App. 299-300. Not 

the 163 Celotex customers identified at trial was proven or even alleged to be a ro

contractor. App. 138-46. 

Despite this evidence, Stelwagon claims that it competed with Celotex bas

Keenan's hearsay testimony that Celotex had once sold directly to Alper Roofing, a 

contractor. App. 302-03.0 Keenan had previously testified that manufacturers occas

sold directly to contractors for large jobs. App. 300. I cannot agree that eviden

one sale sufficed to permit the jury to conclude that Celotex competed on a general 

with Stelwagon. 

 Nor does the record reveal that the price discount received by Celotex vi

§ 2(b) of the Clayton Act. See Texaco v. Hasbrouck, 496 U.S. 543, 571 (1990).0 Th

 

0

I understand footnotes 16 and 17 to state that Keenan's hearsay testimony 

admissible at trial for the limited purpose of showing motive only. If indeed Stel

had produced at trial the customer who made the statement to Keenan, that testimony 

certainly have been admissible. Short of producing the actual declarant at trial, 

however, Keenan's testimony was still hearsay and thus had to satisfy a hearsay exc

(here Fed. R. Evid. 803(3)). It was accordingly admissible but limited to proof of 

motive. 

Stelwagon introduced evidence that other contractors bought Celotex's pro

but Stelwagon did not produce evidence that those contractors purchased the MAPs di

from Celotex. The fact that a consumer may buy Dole canned goods from Foodtown does 

mean that A & P, Foodtown's competitor, is also Dole's competitor. 

0

 In Texaco, Hasbrouck had purchased gasoline for his retail station at a price wh

exceeded that which Texaco had sold to two distributors. These distributors had th

to retail stations which they owned and to independent retail stations. 496 U.S. at 

51. The Court concluded that the distributors' mixed functions, the evidence of 

intentional price discrimination by Texaco, and the amount of the discount as compa
3 

record here is devoid of evidence of Celotex's costs as compared with any price dis

received. There is no evidence of the prices Celotex charged its customers, and th

no evidence in the record that Celotex operated both as a distributor as well as a 

supplier in Philadelphia. This failure of proofs distinguishes Stelwagon's claims 

those discussed in Texaco. Hence, on this record, I could not hold that Celotex co

with Stelwagon. 

Despite this disagreement with the majority, I concur in Judge Lewis' opi

that Stelwagon failed to produce evidence of actual competitive injury -- that is, 

evidence of actual lost sales. I therefore agree that we must reverse Stelwagon's 

antitrust verdict on that account. 

Even if I had not concluded that Stelwagon had failed to prove actual ant

injury, I would still vote to reverse Stelwagon's verdict because Stelwagon failed 

quantify its damages adequately. While the burden of proving damage in an antitrus

is reduced, see J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 565-67 

the damages alleged must arise from whatever injury to competition has been demonst

Stelwagon's proof at trial established that Standard Roofing Supply compe

with Stelwagon only for sales out of Stelwagon's Comly (North Philadelphia) and Cam

New Jersey warehouses. Despite this, Stelwagon sought to quantify its damages only 

respect to the combined sales of all six of its warehouses. Stelwagon never broke 

its sales separately for the Comly and Camden locations. Given that Standard compe

only with those two warehouses, however, Stelwagon's combined sales figures could n

 

the actual costs incurred by the distributors sufficed to prove a price discriminat

claim. Id. at 572-73. 
4 

did not provide an adequate basis to quantify any damage which resulted from the fa

prices Standard received. 

It would be impermissibly speculative to extrapolate from Stelwagon's ove

sales figures, which Stelwagon entered into evidence, the particular damage to Stel

that may have resulted from price discrimination at Stelwagon's Comly and Camden 

locations. 

II. 

Having expressed my reservations about the majority's opinion as to wheth

Celotex competed with Stelwagon and the quantification of damages, I nonetheless re

same result as the majority has. Accordingly, I concur in the judgment reversing 

Stelwagon's verdict on the Robinson-Patman claim and affirming Stelwagon's verdict 

contract claim.