Opinion ID: 550874
Heading Depth: 1
Heading Rank: 8

Heading: arthur s. langenderfer claim

Text: 113 For the second time a jury has examined the evidence adduced in this antitrust dispute between Langenderfer, a paving contractor, and defendants. At the first trial, the jury found actual damages of $982,117, which we set aside for a new trial. Upon the conclusion of the proof at the second trial, the jury returned a verdict of $1,675,000 (coupled with the NOAP claim) based upon its response to interrogatories to the following effect (as to Langenderfer, a separate corporation): 114 (1) There was a relevant market consisting of limestone, sand, and asphalt used in ODOT and OTC asphalt paving contracts and Langenderfer competed in this market. 115 (2) There was a relevant product market consisting of both ODOT and OTC asphalt paving contracts and Langenderfer competed in these markets. 116 (3) There was a relevant geographic market or submarket for Langenderfer (the 13 counties). 117 (4) Defendants had monopoly power in the relevant markets as to limestone, sand, and asphalt used in ODOT and OTC contracts. 118 (5) Defendants willfully acquired and used monopoly power in each of these relevant markets. 119 (6) Defendant engaged in anticompetitive conduct by making acquisitions to exclude and/or injure competition and increase Johnson's power which he succeeded in doing. 120 (7) Defendants' monopolization caused injury to the business and property of Langenderfer. 121 (8) Defendants had a specific intent to achieve a monopoly on the relevant markets and engaged in anticompetitive conduct to achieve a monopoly. 122 (9) Langenderfer suffered injury to its business or property as a result of defendants' attempt to monopolize. 123 Defendants moved for a judgment notwithstanding the verdict, which was overruled viewing the evidence on behalf of Langenderfer (and other plaintiffs who also obtained a favorable jury verdict) in the light most favorable to plaintiffs, with the district court's statement that the judge's duty is essentially to see that there is no miscarriage of justice. We have heretofore indicated that the district court was in error in failing to direct a verdict, or in refusing to grant j.n.o.v. with respect to other plaintiffs. After full consideration of all of the evidence in the view suggested by the district court, and after reviewing the applicable law, we are persuaded that Langenderfer was entitled to effect a recovery for damages from defendants. 124 In Langenderfer I, as noted by the district court, we held that 125 Brunswick [429 U.S. 477, 97 S.Ct. 690] requires that Langenderfer's injury result either from a lessening of competition due to the acquisitions or from anticompetitive acts made possible by the acquisitions.... [T]he issue of whether Langenderfer's injuries resulted from anticompetitive acts made possible by the acquisitions was properly a jury question. 126 729 F.2d at 1058-59. 127 The jury responded to an interrogatory that defendants made acquisitions to affect competition adversely and, in effect, succeeded in doing so. Our function is to determine whether the jury acted without any substantial or sufficient basis on the evidence in the case, considered favorably from Langenderfer's standpoint, in rendering its substantial verdict. Contrary to plaintiffs' assertions in their brief, we note first that much of the evidence in the case did relate to defendants' bidding practices characterized by various of plaintiffs' witnesses as unrealistically or oppressively low so as, allegedly, to foreclose successful bidding on ODOT and/or OTC jobs by others. The district court did instruct the jury, however, that defendants' profitable bidding does not constitute anticompetitive conduct as a matter of law, and you may not base a verdict on the fact that defendants were able to bid lower than competitors and still make a profit. We believe that the instruction cured improper inferences that might otherwise have been drawn by the jurors to the effect that defendants' asserted predatory pricing practices (bidding too low) were the real basis for Langenderfer's (and other plaintiffs') cause of action for anticompetitive conduct. 128 The district court's jury instructions advised the jury that plaintiffs contended first that defendants were engaged in monopolistic stone pricing. As previously noted, we conclude that plaintiffs' proof in that respect failed as a matter of law. The district court properly included in its jury instructions the following: 129 [I]n deciding whether defendants' limestone market share suggests to you that defendants have monopoly power, you may not combine defendants' market share with France's market share. 130 There was simply no adequate evidence to establish that defendants were engaged in monopolistic stone pricing, or that defendants controlled or attempted to control stone or quarrying in any relevant market claimed by plaintiffs. Nor was there meaningful evidence to show that defendants tied the sale of stone and sand to the sale of asphalt, as contended by plaintiffs at trial. There was no showing that defendants controlled the sources or supply of sand in any relevant market claimed. This was one basis for holding that NOAP failed to prove its claim. 131 The remaining contentions of Langenderfer (and other plaintiffs except Sader), as included in the district court's jury instructions, were 132 (1) price or profit squeezing and cross subsidization; 26 133 (2) leveraging its [Johnson's] position in ODOT and OTC; 134 (3) intimidating, discouraging, coercing and retaliating against competitors. 135 See also supra note 1. 136 Langenderfer's brief tracks its contentions after noting that defendants had stipulated the ODOT/OTC asphalt paving market in the thirteen counties in the Langenderfer I appeal. 729 F.2d at 1052-1053. We conclude that this thirteen-county ODOT/OTC asphalt paving market is established. Langenderfer then claims that defendants' alleged monopoly over OTC/ODOT work extended to various submarkets and gave defendants anticompetitive leverage over asphalt paving work for counties, municipalities, townships, etc. In light of our previous detailed discussion about defendants' sand and stone operations, the relevant product markets are ODOT and turnpike asphalt paving contracts and the supply of asphalt used therein, but not the supply of approved construction materials, such as stone and sand, which Langenderfer essentially obtained from its own sources, its sister corporation NOAP, and others. Plaintiffs concede that the market for ODOT/OTC work is distinct from that done for counties, townships, municipalities and private parties. Plaintiffs' Brief at 7; see Burton MacRitchie's testimony. 137 Because we are concerned with respect to Langenderfer, not with defendants' stone and sand operations (which the proof failed, as a matter of law, to show were either monopolies or involved any dangerous probability of becoming monopolies), we will consider the asphalt and asphalt paving aspects of the case as proved by Langenderfer. 138 We conclude that defendants may not be held liable for antitrust conduct to the extent that, as asphalt paving contractors, they acquired additional limestone and/or sand sources which added to their efficiency and ability to submit profitable low bids on public highway contracts. Burton MacRitchie testified that during the time defendants began to expand and integrate their operations, he, as part owner and a principal in Langenderfer, desired to do the same when opportunities presented themselves. Arthur Langenderfer, the majority stockholder, however, declined to take advantage of such business opportunities, and MacRitchie conceded this was a bad business decision. Defendants' low bidding, of course, in a real sense, inured to the benefit of the public and extended over many years in the relevant market. We have found previously no proven predatory pricing by defendants. There is no substantial evidence that defendants refused to deal with Langenderfer (or other plaintiffs) in respect to limestone or sand sources except on rare occasions where defendants themselves needed to utilize these materials in their asphalt production and paving with respect to successful bids. Defendants' stone prices were competitive with France, the largest producer in the relevant market, and were not substantially different from prices charged by plaintiffs themselves, although such prices varied from one geographic area to another. 139 The acquisitions by defendants proved by Langenderfer were set out in Langenderfer I. The first pertinent acquisition other than quarrying or asphalt paving contracting or asphalt, as such, was the 1961 acquisition of C.P. Calaway, a bridge contractor. Nothing in this acquisition, however, would tend to show elimination of an asphalt paving contractor competitor, nor does it relate to control over asphalt supply or the concrete and road metal market, in our view. The acquisitions which might reasonably be deemed to bear upon asphalt paving competition began in 1969 with Price Companies. Mr. Price testified that his company was only a very minor competitor with defendants' one plant at Parkertown, near the eastern boundary of the relevant market area. Price sold one of his asphalt plants in the Toledo area to another party, and it was Price who contacted defendants to buy his asphalt paving business. Defendants met his asking price for the business in the eastern fringe of the thirteen-county area and required that he sign a noncompetition agreement. Defendants also agreed to buy sand from Price as a part of the package, with a right of first refusal in the event of a proposed sale of the sand operation. 27 It is difficult, under all the circumstances, to find the Price acquisition to be anticompetitive with respect to Langenderfer's operations located some considerable distance away. There is no indication that Price was ever in substantial competition with Langenderfer, and Price retained, and still operates, his sand production facilities. 140 The first significant paving contractor acquisition by defendants was Ohio Engineering Co., which conducted about one-half of its operations in the thirteen-county area (the southeast portion) and one-half outside (Crawford, Hardin, Allen, and Marion Counties including Delaware). Ohio Engineering operated plants situated on National Lime & Stone's property in Findlay, Hancock County, when acquired by defendants in 1970, and one at Carey, Wyandot County. (Other Ohio Engineering Co. asphalt plants were situated south of the relevant market area but later moved within that area.) Ohio Engineering had been closely allied with National Lime & Stone Co., and it was a competitor of defendants on rare occasions. Ohio Engineering Co. was purchased in 1970 and subsequently operated as a division of defendants. 141 In 1971, defendants acquired Creager, a competitor that was failing and ultimately was acquired by defendants for $1 plus the debt it owed for materials and supplies. No reason is shown why other parties, including plaintiffs, might not have acquired Creager for a nominal price in 1971 had any of them sought to do so. While this may be deemed to be acquisition of a failing competitor, a nonunion operator, it is of little practical or legal effect since it is clear that had no acquisition been made, Creager would have ceased to do business entirely. That competitor would simply have gone out of business in 1971. Creager, in other words, without dispute, was not a viable competitor in any sense when acquired in 1971. 142 With respect to Ohio Turnpike contracts awarded during the relevant period, plaintiffs' exhibit 69 reflects that Langenderfer bid successfully on one joint venture with Johnson from 1967 through 1969, during which time defendant Johnson won one other bid. In 1970 and 1971, Langenderfer was unsuccessful on one bid each year, whereas Johnson was successful on one bid each year. Johnson was the only successful OTC bidder on three jobs in 1972, Langenderfer unsuccessfully bidding on two. On the other hand, Langenderfer was successful on its one bid in 1973, Johnson on two of three; in 1974, there were no bids and in 1975, both Langenderfer and Johnson were successful in one of two bids. In 1976, Johnson was successful in its one ODOT bid, but lost to Langenderfer on the one competitive bid in 1977, apparently the last time Langenderfer bid on OTC projects. In sum, from 1973 through 1977 Langenderfer was successful on three of its five OTC bids and Johnson was successful on four of seven, but the latter won on the larger jobs. This evidence of plaintiffs, standing alone, is insufficient to establish monopolistic control of the OTC market by defendants from 1967 through 1977. During this same period, two other paving contractors bid successfully on OTC jobs, and there were a number of other bidders. This data of plaintiffs indicates, if anything, that Langenderfer became more active from 1973 through 1977 and was relatively more successful than it had been before that time on OTC bids. 143 According to plaintiffs' exhibit 70, defendants' share of the Ohio ODOT market decreased from 1966 through 1968 (down to 29 percent), but then increased dramatically in 1969 to 73 percent. During this period, Langenderfer's market share (approximately 3 percent of its own bids) remained relatively constant (up to 8 percent in 1968). In 1971, defendants' market share of the ODOT contracts dropped to 11.8 percent while Langenderfer's was 11.4 percent. Through 1971, then, there is clearly no statistical showing, as a matter of law, that defendants had monopoly power or likelihood of monopoly power in the ODOT market. Plaintiffs' exhibit 71 reflects that Langenderfer's dollar amount bid successfully on contracts (ODOT and OTC) in 1971 was over $814,000, which was more than double the average of the comparable dollar amounts won from 1968-1970. Langenderfer's 1971 amount constituted a higher market share of ODOT and OTC contracts (8.7 percent) than it realized even in 1968 (6.4 percent), the year in which it realized its highest pretax net income. This would demonstrate no monopoly threat by defendants in 1971 even after the acquisitions of Price, Ohio Engineering and Creager. Excluding the year 1969, which seems to be an anomaly, 28 defendants' average annual market share of the Ohio ODOT contract market from 1966 through 1971 was 34.6 percent, and there were numerous serious competitors, including Langenderfer, in that market. This is an entirely insufficient basis for a monopolization showing through 1971, especially since the defendants' share was decreasing in 1970 and 1971 with respect to ODOT asphalt paving business. 144 For the years following 1971 and until Langenderfer went out of business, plaintiffs' exhibit 70 reflected the following as to ODOT market share: 29 145 In contrast to the years through 1971, the above data, accompanied by the paving contractor and asphalt plant acquisitions made in 1970, 1971, and 1972, are sufficient to indicate that Langenderfer may reasonably have proved the cause of action alleged, coupled with the defendants' high percentage of ODOT winning bids from 1973 until Langenderfer's termination of business, and other circumstances of defendants' growing economic power. We reach this conclusion being mindful at the same time of this statement by a prominent authority in this respect: There is substantial merit in a presumption that market shares below 50 or 60 percent do not constitute monopoly power. Areeda & Hovenkamp, Antitrust Law, Sec. 518.3 (1988 Supp.). 146 Langenderfer charges not only monopolization but also attempted monopolization for the pertinent period preceding its going out of business. There is evidence, as previously noted in Langenderfer I, that defendants intended to eliminate competition and dominate the market. 729 F.2d at 1054. We recognized also in Langenderfer I that Johnson attained economies of scale which enabled it to operate at a much lower cost per paving project than its competitors. 729 F.2d at 1058. Langenderfer has, we believe, made a sufficient factual showing to support the essence of the jury's finding that Langenderfer suffered injury by reason of defendants' conduct and that such injury resulted in significant part from a lessening of competition due to acquisitions or from 'anti-competitive acts made possible' by the acquisitions. Langenderfer I at 1058. We do not find that plaintiffs have made any required showing of monopolistic pricing in stone and sand, as noted, but acquisitions, elimination of competition, and other anticompetitive conduct by defendants, referred to also in Langenderfer I, support an award for Langenderfer. We find also that an interstate commerce nexus has been established based on the proof submitted. 147 Although monopolistic pricing in stone and sand was not established, acquisitions by defendants of quarry sites coupled with the use of lengthy non-competition agreements and other circumstances did foreclose production and efficient use of such quarries and limestone by Langenderfer and others as competitors of defendants. Plaintiffs point also to the comparative size and economic power of defendants, particularly from and after 1970, to support their argument in this respect. The jury is entitled to look at the whole picture with respect to allegations and evidence of Sherman Act Sec. 2 violations. American Tobacco Co. v. United States, 147 F.2d 93, 106 (6th Cir.1944), aff'd, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946). 148 We conclude, although the issue is a very close one, that Langenderfer has presented sufficient proof for a reasonable jury to find defendants guilty of unlawful monopoly or attempted monopoly and anticompetitive acts in asphalt paving contracting in the northwest Ohio relevant market area in OTC and ODOT work during the 1973-1978 period.