Opinion ID: 467494
Heading Depth: 2
Heading Rank: 1

Heading: The Problem of Causation--Antitrust Injury

Text: 33 Santa Fe argues that Farley failed to establish an antitrust injury. In order to recover treble damages under section 4 of the Clayton Act (15 U.S.C. Sec. 15), Farley must establish that its injuries were caused by reason of the defendants' unlawful competition. MCI Communications Corp. v. American Telephone & Telegraph Co., 708 F.2d 1081, 1161 (7th Cir.), cert. denied, 464 U.S. 891, 104 S.Ct. 234, 78 L.Ed.2d 226 (1983); see Dolphin Tours, Inc. v. Pacifico Creative Service, Inc., 773 F.2d 1506, 1509 (9th Cir.1985). As the Supreme Court set forth in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977): 34 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. 35 (Emphasis in original). 36 Farley must establish that the unlawful activities of Santa Fe were a material cause of at least some of its injury, rather than the injury being wholly attributable to other factors. See Dolphin Tours, 773 F.2d at 1510. The difficulty in this case, as will be outlined further below, is that Farley presented proof of damages in terms of the profit and amount of shipping business they would have achieved but for the existence of defendant Santa Fe's Plan V arrangement. Farley did not show what damages were attributable to the illegally contracted portion of Santa Fe's Plan V business. Thus the issue of proximate causation is raised before us. 37 By failing to request a directed verdict at the close of all the evidence, Santa Fe lost its right to challenge the sufficiency of the evidence. Thus the issue before us is whether Farley presented any evidence of some injury attributable to unlawful competition by Santa Fe. 38 Farley insists the references at trial to Plan V were invariably references to the illegal scheme to avoid the ICC-approved tariff rates. Farley seeks to support that assertion by arguing that no true Plan V ever existed. To some extent, Farley's assertion is correct. A true Plan V arrangement would have been a special joint rail-truck rate, approved by the ICC, which was to be divided between a railroad and a motor carrier. Instead, the Santa Fe Plan V was established under the Rocky Mountain Motor Tariff Bureau, a truck tariff publishing bureau operating under the authority of the ICC. Even though some of the transportation of goods under the Santa Fe Plan V was accomplished through rail transportation, Santa Fe was applying a pure truck rate for the full distance. The result was that a legitimate charge made by Santa Fe for its loose Plan V arrangement would be even more expensive than a true Plan V arrangement, as the Santa Fe Plan V tariff rate failed to account for the less expensive rail rates generally applied in piggyback shipping. 39 However, there was nothing illegal about the Santa Fe arrangement on its face. Whether it was a true Plan V or a loose Plan V, had Santa Fe charged the proper tariff, its conduct would have been perfectly legal. To the extent that the Santa Fe Plan V, by itself, deprived Farley of business, Farley has not suffered an antitrust injury. Instead, Farley has suffered antitrust injury only to the extent, if any, that Santa Fe's illegal undercutting of the tariff rate caused Farley to lose business. 40 In addition, Farley argues that as Plan V rates, particularly when actually charged at the truck shipping rate, were higher than Plan IV rates, which Farley offered, the only way Santa Fe could be competitive and gain any business was if all of its shipping business was at the illegitimate lower rate. 41 As counsel for Santa Fe pointed out at oral argument, comparing Plan V and Plan IV rates is nearly tantamount to comparing apples and oranges. Plan V provided door-to-door service from a shipper's loading dock to the recipient's loading dock. A Plan IV customer paid a lower rate but only received rail service and had to make other arrangements for shipment to and from the railroad yard. In addition, Plan V was more advantageous for those with partial loads as it allowed combination of several loads in a single truck trailer, whereas Plan IV required the customer to provide a fully loaded trailer at the railroad ramp. Plan V also could provide a better rate in some instances for lighter loads as the Plan V rate was based upon the actual weight of a trailer, whereas Plan IV had minimum rates per trailer. Thus, for certain customers, taking all factors into account, it was indeed more economical to utilize Plan V than Plan IV. It is important to note that Santa Fe was not the only carrier to offer the Plan V arrangement, indicating that there was at least some demand for Plan V service by shippers contracting with legitimately operated carriers. In fact, Farley itself had used Plan V service on limited occasions. 42 However, upon careful review of the record in this case, we find we cannot attribute all of Santa Fe's burgeoning Plan V business to those shipping customers for whom the arrangement was advantageous. Even though Santa Fe charged higher truck rates, exceeding that even of a true Plan V joint truck-rail rate, Santa Fe's rates were so low as to lead Farley's customers to complain about Farley's Plan IV prices in comparison to those of shipping agents doing business with Santa Fe. Some of this rate competition had to be due, at least in some small part, to Santa Fe's deviation from the lawful tariff rates. Indeed, a former Santa Fe employee testified that the purpose of the scheme to falsify the weight and composition of cargo was to arrive at a rate lower than that possible under Plan IV. 43 In addition, it appears that up to 75 percent of Santa Fe's business was with shipping agents/associations who participated in the illegal scheme, thus infecting a substantial portion of Santa Fe's business with the unlawful deviation from the required tariff rate. 3 44 In light of these factors, it is reasonable to conclude that some of the business diverted from Farley to shipping agents working with Santa Fe was due to the unlawful competition. Although this is very weak evidence of proximate cause, it provides an adequate demonstration of antitrust injury in this case, particularly in light of Santa Fe's inability to challenge the sufficiency of the evidence on appeal. Under these circumstances, the weaknesses in the evidence on causation instead go to the sufficiency of proof on the amount of damages. See Dolphin Tours, Inc. v. Pacifico Creative Service, Inc., 773 F.2d 1506, 1510-11 (9th Cir.1985).