Opinion ID: 392844
Heading Depth: 1
Heading Rank: 1

Heading: The Lyman Lamb Case

Text: 3 This litigation commenced in the Eastern District of Louisiana in 1972 as a class action on behalf of plywood purchasers who claimed damages by reason of a price fixing conspiracy involving softwood plywood manufacturers. Numerous similar actions subsequently were filed in various district courts and eventually were ordered consolidated in the Eastern District of Louisiana. In 1976 Judge Cassibry certified the plaintiffs' classes. In re Plywood Antitrust Litigation, 76 F.R.D. 570 (E.D.La.1976). Thereafter, the actions were reassigned to Judge Pointer who, following defendants' motions to decertify the classes, confirmed the prior certification but redefined the class to include only direct purchasers. With the exception of defendants-appellants herein, the class claims against all other defendant softwood plywood manufacturers were resolved prior to trial. 4 Trial commenced on October 16, 1978, on all issues except the amount of damages sustained by individual plaintiffs, intervenors, and class members, and concluded with a special verdict on November 14, 1978. The jury determined that defendants Georgia-Pacific, Weyerhaeuser, and Willamette, together with all other manufacturers of southern plywood, had engaged in a conspiracy in restraint of trade from February 23, 1968, to December 31, 1973 (the damage period), and that the conspiracy caused financial damage to purchasers of southern plywood equal to the amount by which west coast freight (freight computed as though the product were shipped from the west coast) exceeded actual freight charges from southern shipping points (such excess being referred to herein as phantom freight or freight pickup). Similarly, the jury determined that the conspiratorial use of standard weights by manufacturers of western fir plywood during the damage period caused financial damage to purchasers thereof in the amount by which freight charges calculated on the basis of standard weights exceeded the actual freight costs incurred by defendant manufacturers (such excess being referred to herein as underweights). 5 Defendants subsequently moved for judgment notwithstanding the verdict and for a new trial. In a memorandum opinion the district court denied both motions, In re Plywood Antitrust Litigation, 1979-1 Trade Cas. (CCH) P 62,459 (E.D.La.1978), and entered an interlocutory judgment in favor of plaintiffs on the special verdict. The court expressly noted that the evidence was sufficient not merely to create a jury issue but also to cause (the district court), like the jury, to find that there was a conspiracy and that the three defendants were parties to that conspiracy. Thereafter four members of the plaintiff classes, the Lyman Lamb Company and the other three appellees, each moved for summary judgment as to individual damages computed in accordance with the jury's verdict. 1 The district court in a memorandum opinion dated February 14, 1980, granted the motions and subsequently entered pursuant to Fed.R.Civ.P. 54(b) the February 21, 1980 judgments from which all three defendants now jointly appeal in No. 80-3237. 6 Prior to trial plaintiffs moved for entry of judgment against defendants Georgia-Pacific and Willamette for failure to produce various documents during discovery. The district court declined to enter adverse judgments as sanctions but, after briefing and hearing, granted plaintiffs' counsel an award of fees and expenses incurred by reason of the failure of Georgia-Pacific and Willamette to provide the requested discovery. Pursuant to Fed.R.Civ.P. 54(b), the court entered judgment against each of those defendants on February 21, 1980, from which Georgia-Pacific and Willamette respectively appeal in No. 80-3235 and No. 80-3236. 7
8 Synthesizing the statements of the issues contained in the appellate briefs of the parties, we find that the concerns relevant to the disposition of this appeal fall into three general categories: those relating to proof of the existence vel non of a statutory violation; those relating to proof of impact vel non on plaintiffs' business; and those relating to evidentiary admissions and jury instructions by the district court. We deal with each of these categories in turn.
9 Section 1 of the Sherman Act, 15 U.S.C. § 1 (1976), provides that every contract, combination ... or conspiracy in restraint of trade or commerce ... is ... illegal. The term every is not to be taken literally; instead the standard of reasonableness has been adopted to judge the lawfulness of the restraint. Standard Oil Co. v. United States, 221 U.S. 1, 66, 31 S.Ct. 502, 518, 55 L.Ed. 619 (1911). Certain practices, however, have such a pernicious effect on competition, Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958), that they are considered to be per se violations of section 1 of the Sherman Act. Among these practices is price fixing, United States v. Trenton Potteries, 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700 (1927), and the machinery employed to achieve that end is immaterial, United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 210, 60 S.Ct. 811, 838, 84 L.Ed. 1129 (1940). These long-standing principles enjoy full vitality today. See Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 100 S.Ct. 1925, 64 L.Ed.2d 580 (1980). 10 In response to special interrogatories, the jury returned a verdict that defendants were engaged, along with other softwood plywood manufacturers, in a conspiracy to fix prices. Defendants attack the viability of this verdict, asserting that plaintiffs produced no evidence, either direct or circumstantial, of any such conspiracy. Accordingly, they contend that it was error for the district court to deny their motion for judgment notwithstanding the verdict. Our standard for review of that denial by the district court is well known. Considering all of the evidence in the light most favorable to the nonmoving party, 11 If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motions is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury.... (I)t is the function of the jury as the traditional finder of the facts, and not the Court, to weigh conflicting evidence and inferences, and determine the credibility of witnesses. 12 Boeing Co. v. Shipman, 411 F.2d 365, 374-75 (5th Cir. 1969) (en banc). 13 We find that there is substantial evidence, as defined in the quotation above, from which a reasonable jury, both directly and circumstantially, could find the existence of a conspiracy to fix prices. It does not strain credulity that solemnized covenants to conspire are difficult to come by in any price fixing case. Plaintiffs have, nevertheless, unearthed damaging evidence from the mouths, or typewriters, of defendants' own employees. 14 In 1971, James Tweedie, Softwood Plywood Product Manager for Weyerhaeuser, received an internal memorandum from Wayne Marcella, which begins as follows: 15 Jim, my apologies for the delayed response on our various conversations regarding Georgia-Pacific. As you know, at the American Plywood Association meeting in Biloxi, Mississippi I made it a point to spend considerable time with (Georgia-Pacific plywood sales managers) Tom Nash and Bill Fuller. The following outlines the highlights of our conversations which ranged from customer commitments to plywood marketing practices. 16 The memo concludes with the following assurance: The communication channels developed through Tom Nash and Bill Fuller offers (sic ) an opportunity to secure specific competitive information. Therefore, it is my intention to keep this direct contact open through weekly phone conversations. 17 A 1969 memorandum sent to James Tweedie informs him that Georgia-Pacific personnel have adopted the following price basis. Low Crow's less 5% less 3% plus West Coast freight. This applys (sic ) in truck lots (Mill) &/or pick up at the local Columbia warehouse. A 1971 internal memorandum from F. V. Langfitt, Jr., Vice President of Sales, Georgia-Pacific, to Tom Nash reveals the following: Jimmy Schmidt, Sales Manager for Boise (Cascade)'s Southern Pine Mill in North Carolina, was in the office last week and indicated that they are making all of their 1/2 in 3-Ply construction and are selling it all at not to exceed $1.00 under 4-Ply/5-Ply.A 1970 memorandum from K. C. Sisson to R. W. Stewart, both of Weyerhaeuser, contains the following language: 18 We have been attempting to secure information regarding Georgia-Pacific's Intermediate Glue Line and pricing for this product. 19 .... 20 Today I contacted an old acquaintance at Georgia-Pacific's Portland office, Don Martin. Don offered the following information: 21 They are currently manufacturing the Intermediate Glue Line, on their sheathing production at their Corvallis, Oregon mill.... They price the IMG $2.00 to $3.00 under their exterior level. 22 A copy of the memorandum was sent to James Tweedie and Wayne Marcella. 23 In response to a rumor that some manufacturer was deviating from the industry's practice of west-coast-freight pricing, a 1972 Georgia-Pacific memorandum from Mr. Trammel, a Regional Sales Manager, to Winston Purifoy, asks the latter the following question: Tom Mateo advises he has heard of some Arkansas plywood mills shifting to an FOB mill pricing policy. Do you know anything about this? Mr. Purifoy responded as follows: 24 Negative. I had not heard this and called all plants. Big W(eyerhaeuser) is now encouraging their more distant truck customers to make mill pick-ups in return for an allowance. They thus are dropping their truck customers in poor freight gain areas. 25 A 1972 memorandum authored by James Tweedie and directed to L. V. Imhoff begins as follows: 26 As a segment of our southern mill intelligence trip, a visit was scheduled with Winston Purifoy, Vice President-Sales, Southern Plywood-Particleboard, and Bill Fuller, Plywood Sales Manager (both of Georgia-Pacific). It was a very cordial visit and one which was very informative to us. Listed below are some of the subjects discussed and their input. 27 Mr. Tweedie then reports the substance of his communications with the Georgia-Pacific officials regarding pricing, sales practices, and numerous other aspects of Weyerhaeuser's chief competitor's operations. The memorandum concludes with the following appraisal: 28 It was a good exchange and the connection has been made to keep in touch without exposing our individual companies to any risks. Wayne Marcella (Weyerhaeuser) will stay close to Bill Fuller (Georgia-Pacific) and monitor what is happening in the south. With this connection, we should be able to round out our information on this company as it relates to plywood and more especially the south. 29 Without belaboring the point by citation of further examples, the record contains documents from which a reasonable jury could find that defendants and other softwood plywood manufacturers were engaged in a conspiracy to fix prices in violation of section 1 of the Sherman Act. Moreover, we have held previously that proof of a conspiracy under § 1 of the Sherman Act does not require the existence of an express agreement.... It is 'enough that, knowing that concerted action was contemplated and invited, the (defendants) gave their adherence to the scheme and participated in it.'  Gainesville Utilities Dept. v. Florida Power & Light Co., 573 F.2d 292, 300 (5th Cir.), cert. denied, 439 U.S. 966, 99 S.Ct. 454, 58 L.Ed.2d 424 (1978) (citations omitted). The parallel pricing conduct clearly demonstrated in the record plus the numerous items of direct evidence of communication between high-level personnel on pricing policy adequately support the jury's verdict. Cf. id., 575 F.2d at 301 and n.13 (evidence points so strongly to the existence of a conspiracy that reasonable men could not arrive at a contrary verdict).
30 Section 4 of the Clayton Act, 15 U.S.C. § 15 (1976), provides that any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor ... and shall recover threefold the damages by him sustained. To prevail in an antitrust action, a plaintiff must show both an injury to his business resulting from the defendants' wrongful actions, and some indication of the amount of the damage done. See Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 20 (5th Cir. 1974). These two elements of impact may be characterized as fact of damage and measure of damage. 31 As to the former element, defendants contend that plaintiffs failed to meet their burden of proving the fact of damage with certainty. Certainty, however, was not the burden of persuasion that plaintiffs had to meet. To satisfy the first element of impact, plaintiffs had only to persuade the jury by a preponderance of the evidence that defendants' price fixing conspiracy injured them in their business or property. E. g., Gainesville Utilities Dept. v. Florida Power & Light Co., 573 F.2d at 294 n.3, 304-05. 32 Fact of damage is a question of the sufficiency of the evidence. Terrell v. Household Goods Carriers' Bureau, 494 F.2d at 20. Where, as here, plaintiffs prove a statutory violation in the form of a price fixing conspiracy with respect to a homogeneous or fungible product that was marketed in a similar manner throughout the country, it is not unlikely that plaintiffs also will be able to prove by a preponderance of the evidence that purchasers of the product in question were injured in their property or business. See Alabama v. Blue Bird Body Co., 573 F.2d 309, 324 (5th Cir. 1978). Indeed, an independent review of the record before us reveals substantial evidence from which a reasonable jury could find that present plaintiffs were thusly injured when they purchased softwood plywood from these defendants and their co-conspirators. Plaintiffs' expert economic witness so testified at trial, in contraposition to the testimony of defendants' expert witness. The jury accepted the credibility of the former and rejected that of the latter. We find no basis for disturbing the jury's verdict on appeal. 33 Defendants also argue that there was insufficient evidence to support plaintiffs' claimed measure of damages, i. e., the amount of phantom freight and underweights paid by plaintiffs to defendants. We disagree. As we recently held in Malcolm v. Marathon Oil Co., 642 F.2d 845, 858 (5th Cir. 1981), once anti-trust plaintiffs have proved the fact of damage, their burden on proving the measure of damages becomes lighter. The amount of damage may be shown by just and reasonable inference with juries voting upon the probable and inferential as well as upon direct and positive proof. Id. (citing Terrell v. Household Goods Carriers' Bureau, 494 F.2d at 23-24). In fact, given proof of the fact of damage, proof of losses which border on the speculative is allowed in order to facilitate the policy of the anti-trust laws. Id. (citing Hobart Bros. Co. v. Malcolm T. Gilliland, Inc., 471 F.2d 894, 903 (5th Cir.), cert. denied, 412 U.S. 923, 93 S.Ct. 2736, 37 L.Ed.2d 150 (1973)). 34 Plaintiffs' expert witness testified that if competition had been at work in the plywood industry during the damage period, it would have eliminated the ability of defendant plywood manufacturers to realize additional revenue in the amount of the phantom freight charged on the sale of southern plywood. Likewise, plaintiffs' economist testified that the effect of the conspiratorial use of underweights in the delivered pricing of western plywood was to increase the price paid by buyers by the amount of those underweights. The jury chose to accept the testimony of plaintiffs' economist and to reject the contrary testimony of defendants' economist. Based on the evidence in the record before us, we cannot say that it was unjust or unreasonable for the jury to so conclude. Bigelow v. RKO Radio Pictures, 327 U.S. 251, 264-65, 66 S.Ct. 574, 579, 90 L.Ed. 652 (1946). 35 Finally, defendants argue that it was reversible error for the district court even to submit the question of measure of damage, as distinct from that of fact of damage, to the jury. In its pretrial order of March 27, 1978, the district court advised all parties that trial was set for October 16, 1978, over one-half year later, upon all issues except the following, which are severed for subsequent trial as appropriate: (1) amount of damages sustained by individual plaintiffs, intervenors, and class members. Plaintiffs went to trial contending that the alleged conspiracy caused them injury in the form of overcharges for phantom freight and underweights. Defendants tried to convince the jury that their pricing system caused no economic injury to anyone. The jury, agreeing with plaintiffs and disagreeing with defendants, returned its special verdict upholding plaintiffs' theory. Having failed to persuade the first jury that their challenged practices caused damage to no one, defendants now seek the opportunity to convince a different jury that some other measure of damages is appropriate. 36 This court has already established the principle that, in a bifurcated proceeding, the issue or issues to be tried separately in the second trial must be so distinct and separable from the others that a trial of it or them alone may be had without injustice. Such a rule is dictated for the very practical reason that if separate juries are allowed to pass on issues involving overlapping legal and factual questions the verdicts rendered by each jury could be inconsistent. Alabama v. Blue Bird Body Co., 573 F.2d at 318. See Gasoline Products Co. v. Champlin Refining Co., 283 U.S. 494, 51 S.Ct. 513, 75 L.Ed. 1188 (1931); Swofford v. B & W, Inc., 336 F.2d 406 (5th Cir. 1964), cert. denied, 379 U.S. 962, 85 S.Ct. 653, 13 L.Ed.2d 557 (1965). 37 In reaching a decision on plaintiffs' theory of injury, the jury necessarily had to resolve plaintiffs' claim that defendant manufacturers' addition of west coast freight to the selling price of southern pine plywood shipped from southern mills, and their use of standard weights in the pricing of western fir plywood, increased those prices. Allowing a second jury to consider some alternative measure of damage preferred by defendants would unavoidably involve reconsideration of those issues, an outcome impermissible under Blue Bird. At present, the issue remaining before the district court involves only the mathematical computations that must be performed upon the transactional details of the individual purchasers and purchases. Resolution of those issues, whether by jury, court, or stipulation, will not implicate the integrity of the original jury verdict. We find no error in the district court's bifurcation procedure or in its submission to the jury of the measure of damage. Cf. In re Corrugated Container Antitrust Litigation, 1980-81 Trade Cas. (CCH) P 63,669 (S.D.Tex.1980) (jury permitted to determine liability, impact, and measure of damage, with exact dollar amounts of damage awards to be computed later). 38
39 The remainder of defendants' issues in appeal No. 80-3237 of the Lyman Lamb case deal with the admission of certain evidence and with certain instructions by the district court to the jury. First, defendants complain that the court committed prejudicial error by allowing plaintiffs to introduce the findings of an Administrative Law Judge adopted by the Federal Trade Commission in an opinion concluding proceedings against these and other plywood manufacturers pursuant to section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 (1976). 2 We disagree. 40 The district judge carefully and extensively edited from those findings any finding that indicated or tended to indicate the Commission's conclusions or the outcome of the proceedings. He also edited the findings to eliminate any possible prejudice to defendants. The findings that were admitted were limited to historical and objective descriptions of the industry, production statistics, and industry practices. They neither stated nor implied that the practices were or were not collusive or anticompetitive in origin, operation, or effect. Moreover, the admitted findings were simply cumulative in nature. With insignificant exceptions, the admitted findings were supported by independent evidence in the record. 41 The court carefully instructed the jury that the findings were the result of an inquiry into the pricing practices in the plywood industry, the outcome and results of (which) really are not of significance or consequence here to this case. He also stated that they were not binding upon the jury, but that they may be received as evidence instead of, for example, having a witness testify to those matters or instead of having a document introduced to show it. It is simply evidence to be considered by you along with all the other evidence in the case. 42 We also conclude that it was not an abuse of the district court's discretion to admit the findings under Fed.R.Evid. 803(8)(C). Cf. Chandler v. Roudebush, 425 U.S. 840, 863 n.39, 96 S.Ct. 1949, 1960, 48 L.Ed.2d 416 (1976) (administrative findings with respect to employment discrimination claim admissible); Lloyd v. American Export Lines, Inc., 580 F.2d 1179, 1183 (3rd Cir.), cert. denied, 439 U.S. 969, 99 S.Ct. 461, 58 L.Ed.2d 428 (1978) (findings in Decision and Order of Coast Guard hearing examiner admissible); United States v. School District of Ferndale, 577 F.2d 1339, 1354-55 (6th Cir. 1978) (findings of Department of Health, Education, and Welfare hearing examiner in school-segregation fund-termination proceeding admissible). Furthermore, defendants came forward with no evidence sufficient to impugn the trustworthiness of the proffered findings. See Melville v. American Home Assurance Co., 584 F.2d 1306, 1316 (3rd Cir. 1978). Defendants' arguments on this issue fail. 43 Defendants also complain about the court's charge to the jury in two particulars. First, they contend that it was improper even to give the jury an instruction on the meaning of the term contract as it is used in section 1 of the Sherman Act, since supposedly there was no evidence in the record of any contract containing, referring to, or suggesting an agreement to use west coast freight or standard weights. Our examination of the record, however, discloses examples of exactly the sort of document whose existence defendants deny memoralizations of agreements mutually to preserve freight pickup (phantom freight) on intercompany sales for resale, and even offers to contract for intercompany sales, guaranteeing certain levels of freight pickup, for the expressly stated reason of doing everything possible to stabilize prices, especially in those markets close to the plant where the offeror was experiencing price cutting. It was not error for the court to instruct the jury on the meaning of the term contract as used in section 1 of the Sherman Act. 44 Finally, defendants contend that the court charged the jury that it could consider contracts between manufacturers and opportunity contacts in themselves as evidence of a conspiracy. We do not read the record in this way. The learned district judge charged the jury that these transactions, these contracts, in and of themselves are not illegal. Indeed, they may be vehicles for fostering competition. Phrasing in the conjunctive, he then charged that such matters may also be conduct that, when viewed on their own and in the light of the other evidence, indicate that there were agreements, express or implied, reached between manufacturers that they would use, in selling plywood to others, West Coast freight or standard weights. The learned judge then proceeded at length to stress that intercompany sales agreements and trade meetings were not in and of themselves evidence of illegality under the Sherman Act. We are convinced from a careful reading of the entire charge that it was, in substance, correct. Associated Radio Service Co. v. Page Airways, Inc., 624 F.2d 1342, 1358 (5th Cir. 1980), cert. denied, 450 U.S. 1030, 101 S.Ct. 1740, 68 L.Ed.2d 226 (1981). See Andry v. Farrell Lines, Inc., 478 F.2d 758 (5th Cir. 1973) (if charge viewed as a whole correctly instructs on the law, even though portion be technically imperfect, no harmful error is committed). 45
46 Defendants Georgia-Pacific and Willamette have taken separate appeals from judgments entered by the district court imposing sanctions for their failure to cooperate fully in discovery. In the case of Georgia-Pacific, the failure related to monthly tabulations, known as invoice registers, that recorded freight pickup (phantom freight) realized by the company on each individual sale. With respect to Willamette, the failure related to comparable tabulations of underweights realized on shipments of western fir and southern pine plywood. Each party was fined $10,000 plus certain minor expenses. 47 Fed.R.Civ.P. 37(d) provides in pertinent part that (i)f a party ... fails ... to serve answers or objections to interrogatories ... the court in which the action is pending on motion may make such orders in regard to the failure as are just. Plaintiffs moved for judgment against each of these defendants on the basis of its failure forthrightly to reveal the existence of the subject documents, despite several discovery attempts to ascertain their existence. The district court declined to grant judgment against defendants, but instead imposed the far lesser sanction of awarding to plaintiffs' counsel a reasonable if somewhat conservative estimate of their expenses incurred in ultimately ferreting out the documents. 48 Our standard for reviewing the propriety of these sanctions is whether the district court abused its discretion in imposing them. National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642, 96 S.Ct. 2778, 2780, 49 L.Ed.2d 747 (1976). On the facts of this case and after a careful review of the record, including the hearing on the motion, we cannot say that we are left with the definite and firm conviction that the district court committed a clear error of judgment in the conclusion it reached after its weighing of the relevant factors. See Dorey v. Dorey, 609 F.2d 1128, 1135-36 (5th Cir. 1980). Cf. Airtex Corp. V. Shelley Radiant Ceiling Co., 536 F.2d 145, 154-55 (7th Cir. 1976) (under appropriate circumstances, evasive and incomplete answers to interrogatories are tantamount to no answers at all). We affirm the judgment of the district court awarding to plaintiffs' counsel discovery sanctions against Georgia-Pacific and Willamette. 49