Opinion ID: 550874
Heading Depth: 1
Heading Rank: 3

Heading: m & b claim

Text: 31 M & B has been in the asphalt paving business in several Ohio counties since about 1957. According to plaintiffs' exhibit I and the record, it has a base of operations only in Seneca County, Ohio, where it has maintained one or two asphalt plants over the approximately twenty-five years of its existence prior to the filing of this antitrust action in December 1983 against defendants. Seneca County is located in the extreme southeast corner of the thirteen-county relevant market as determined by the jury at trial. 32 In its brief in this cause, M & B maintains that over the entire relevant time period, it has bid in six counties. Its chief financial officer and one of its two principal operators, Robert M. Chesebro, however, testified that during the twenty year period up to 1980, it did 95 percent of its work in Seneca County and in adjacent Sandusky County. 5 Throughout, its base of operations remained in these two counties. 33 M & B's plant and an available quarry at Bloomville are very near adjacent Huron and Crawford Counties, outside the thirteen-county area. M & B also bid and did work in Erie, Huron, and Crawford Counties, the latter adjacent to Seneca County to the south and east (Erie County is adjacent and east of Sandusky County). Chesebro testified he very seldom operated in Wyandot County. Plaintiffs' map identifying batch plants, stone quarries, and sandpits in the area in question in this litigation reflects that defendants have never had a single plant, quarry or sandpit located in Sandusky and Seneca Counties. It reflects, on the other hand, that during the relevant period there were two independent quarries located in Sandusky County, both available to M & B. There have been three quarries located in Seneca County, two of which were controlled by defendants' primary stone supply competitor, France Stone, and one belonging to Basic, which was the principal source for M & B until M & B acquired operating control of it in 1984. Chesebro conceded that the three largest quarries in the area of his operation were France, National Lime & Stone, and Sandusky Crushed Stone. 34 Plaintiffs also have a quarry at Rising Sun, very near both Sandusky and Seneca Counties, and there have been two other independent quarries located just south of the Seneca County line. There were no figures produced showing the sand production in these two counties of base operations of M & B. No sandpits in the two counties are reflected on plaintiffs' exhibit 1. Since early 1984 at least, M & B has had its own supply of stone and sand, and it sells sand and limestone to other contractors. There is simply no proof whatever that defendants control or have any monopoly power over the supply of stone and sand in the area in which M & B operated from 1980 to the date of trial. 6 35 The district court, in its jury instructions, presented M & B's alternative contention as to a relevant geographic submarket to be Seneca, Sandusky, Ottowa, Wood, Hancock, and Wyandot Counties, apparently those six counties in which it had submitted bids. There was insufficient evidence in the record to establish defendants' monopoly or attempted monopoly status in such a submarket, or that M & B was a real and active competitor in this submarket or in a two-county submarket during the relevant period. Two examples: (1) defendants had no quarry or sand facility in Seneca, Sandusky, Hancock, and Wyandot Counties in the southeast portion of the thirteen-county alleged relevant market or submarket areas; France and other independents had eleven quarries in these four counties; (2) plaintiffs and others operated six asphalt plants and defendants operated two in these four counties. 36 M & B claims that it was competing in a relatively free and open competitive market in its two-county area from 1966 to 1970. In those five years it earned, without control of any quarry or stone source, an average of less than $16,000 a year. During the years 1980 through 1986, for which it seeks damages for alleged anticompetitive conduct, it earned an average of over $16,000 in actual profits a year. Five of the six years after 1979 were profitable, and there was an increase in profit each year from 1982 through 1985. The loss year, 1981, when revenues were abnormally low, was due, in part, to the bankruptcy of a large contractor customer. In 1981, plaintiffs' exhibit 152AA reflects that M & B claimed damages of over $124,000 in 1981 because it suffered a loss instead of realizing the same 2.7 percent of pretax profit it realized on much lower revenues in the 1966-70 period. This loss is not explained in any fashion by M & B, and it defies reason and logic to assume that its entire 1981 loss, almost $77,000, plus another claimed amount of $47,000, was attributable somehow to defendants' low bidding practices in the southeast part of the thirteen-county area claimed by plaintiffs to be the relevant market. 37 The proof in this case demonstrates, moreover, that on several state asphalt paving jobs since 1980 in which M & B was the only bidder, it claims to have lost money. Chesebro also admitted that his company always lost money on state work. It would seem illogical and unreasonable, then, to blame defendants for continuing losses on state turnpike work after 1980 under these circumstances, particularly in light of the fact that M & B has had, since 1984, its own source of stone and sand entirely independent of defendants' sources which are located outside of the area in which M & B does from 90 percent to 95 percent of its work and has its base of operations. 38 It does not carry the day on the issue of proving a relevant market within the thirteen-county area of northwest Ohio for M & B to argue that it is a potential competitor in the majority of the thirteen counties in which it has not operated at all for some thirty years of its existence at the time of the trial. M & B, as pointed out, has done work and has been an actual competitor with defendants, both before and after 1980, in basically only two counties. Contrary to M & B's assertions, we believe City of Cleveland v. Cleveland Electric Illuminating Company, 734 F.2d 1157, 1166-67 (6th Cir.), cert. denied, 469 U.S. 884, 105 S.Ct. 253, 83 L.Ed.2d 190 (1984), is of no comfort to M & B's contention about the proper relevant market in this case. The market selected must both 'correspond to the commercial realities ' of the industry and be economically significant. Id. at 1167 (quoting from Brown Shoe Co. v. United States, 370 U.S. 294, 336-37, 82 S.Ct. 1502, 1530, 8 L.Ed.2d 510 (1962)) (emphasis added). The commercial realities here indicate strongly that M & B is neither an actual nor potential competitor in defendants' area of service and operation in and beyond the thirteen counties of northwest Ohio. Like the plaintiff in City of Cleveland, M & B presented no evidence that it planned to compete for business outside of Seneca and Sandusky Counties and areas immediately adjacent thereto. 39 The evidence is also undisputed that during the period from 1980 on there came about increased competition in the immediate area of concern to M & B in the form of additional, substantial competitors in the marketplace for asphalt paving. M & B had little actual competition with Price Construction Co. when its assets were acquired in 1969 by defendants. 7 The elimination of Price and defendants' acquisition of Ohio Engineering Co. were more than offset by the emergence of Miller and Gerken as serious competitors in the area. Erie Blacktop, another asphalt paving contractor, concededly also came into the M & B bailiwick--Seneca and Sandusky Counties--after 1980 from time to time to bid on projects in which M & B was interested. After 1980, in jobs in which M & B and defendants bid, M & B was the successful bidder in four of six projects. 40 It is not controverted but that M & B's bids on a number of jobs during the relevant period exceeded the State Engineer's estimate for these jobs. It is also not controverted that M & B's proportion of success on bids submitted on ODOT and OTC work in its area of operations did not decrease after 1980 in comparison to earlier periods. There is also no substantial evidence that the number of bidders decreased from 1979 through the time of trial. This would clearly indicate that M & B was not foreclosed, nor were others, from bidding on the asphalt work which is the subject matter of this controversy. It may also indicate that M & B's costs, even after acquiring its own quarry source, are higher than other competitive bidders in the marketplace. This evidence (and other proof in the record) indicates a failure to prove dangerous probability of success of monopolization by defendants in the area in which M & B operated or that competitors were driven from the market even after acquisitions were made by defendants. It does reflect that the real basis of complaint by M & B was the low bids submitted by defendants which plaintiffs characterize as predatory bidding or pricing. It should also be noted that this practice of low and successful bidding by defendants has extended over twenty years in northwest Ohio--some indication that it is not a short-range procedure designed to raise prices later, as indicated by plaintiffs' experts. 41 With respect to M & B's claims, we deem it appropriate to note the recent comments of another court which dealt with Sec. 2 antitrust claims: 42 The dangerous probability element of the attempted monopolization offense reflects the well-established notion that section 2 of the Sherman Act governs single-firm conduct only when it threatens actual monopolization. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 767, 104 S.Ct. 2731, 2739, 81 L.Ed.2d 628 (1984). The Sherman Act protects competition, not competitors, and does not reach conduct that is only unfair, impolite, or unethical. United States v. American Airlines, Inc., 743 F.2d 1114, 1119 (5th Cir.1984), cert. dismissed, 474 U.S. 1001, 106 S.Ct. 420, 88 L.Ed.2d 370 (1985). As we recently emphasized in Ball Memorial Hospital, Inc. v. Mutual Hospital Insurance, Inc., 784 F.2d 1325 (7th Cir.1986), 43 [c]ompetition is a ruthless process. A firm that reduces costs and expands sales injures rivals--sometimes fatally. The firm that slashes costs the most captures the greatest sales and inflicts the greatest injury. The deeper the injury to rivals, the greater the potential benefit. These injuries to rivals are by-products of vigorous competition, and the antitrust laws are not balm for rivals' wounds. 44 Id. at 1338. 45 This is not to say that injury to rival firms cannot ever lead to injury to consumers and that section 2 of the Sherman Act cannot be used to prevent such injury. But section 2 46 must be used with the greatest caution. Action that injures rivals may ultimately injure consumers, but it is also perfectly consistent with competition, and to deter aggressive conduct is to deter competition. Thus, the plaintiff faces a stiff burden in any section 2 litigation. 'It is not enough that a single firm appears to restrain trade unreasonably, for even a vigorous competitor may leave that impression. For instance, an efficient firm may capture unsatisfied customers from an inefficient rival, whose own ability to compete may suffer as a result. This is the rule of the marketplace and is precisely the sort of competition that promotes the consumer interests that the Sherman Act aims to foster. In part because it is sometimes difficult to distinguish robust competition from conduct with long-run anticompetitive effects, Congress authorized Sherman Act scrutiny of single firms only when they pose a danger of monopolization. Judging unilateral conduct in this manner reduces the risk that the antitrust laws will dampen the competitive zeal of a single aggressive entrepreneur.'  47 Id. (quoting Copperweld Corp. v. Independence Tube Cob, 467 U.S. 752, 767-68, 104 S.Ct. 2731, 2739-40, 81 L.Ed.2d 628 (1984)). 48 Indiana Grocery, Inc. v. Super Valu Stores, Inc., 864 F.2d 1409, 1413-14 (7th Cir.1989) (footnotes omitted). 49 In summation, then, we conclude that M & B failed to prove that it was realistically an economically significant competitor or potential competitor in the thirteen-county area claimed to be a relevant market; nor did it establish any claimed submarket in which defendants were shown to be actual or potential monopolists. There was also a failure of proof as to unfair competition or attempted monopoly by defendants in the principal area of operation of M & B. The undisputed material facts do not show that defendants have had a dangerous likelihood of success in the elimination of competition in M & B's area of operations since 1980. On the contrary, M & B has acquired control of a quarry site and has enjoyed increasing profits over the last four years for which proof was available through 1986. M & B did not show that it ever depended upon defendants as a significant source of sand or asphalt stone or other asphalt components, or that defendants discriminated against it in pricing products or in not affording it competitive discounts. Defendants, indeed, had no quarry or sand source in the primary area of M & B's operations--Seneca or Sandusky County. M & B cannot reasonably claim the benefit of the testimony of plaintiffs' experts that defendants' alleged excessive profits on the stone level worked a price squeeze on M & B. The primary evidence submitted by M & B, on the other hand, was the same type of predatory pricing evidence which was relied upon by Langenderfer in its original trial against defendants and found by this court to be insufficient in Langenderfer I, 729 F.2d 1050, to establish a cause of action as a matter of law under Sec. 2 of the Sherman Act. M & B's attorney, in his closing statement to the jury, asked for $339,000 in damages for profits lost. The jury awarded M & B $350,000 in damages. 50 Under these circumstances, we must REVERSE the award pursuant to the jury verdict rendered to M & B. It follows that the award of attorneys fees and costs, based upon the judgment for M & B as a prevailing party, must also be reversed and set aside. M & B, of course, is therefore entitled to no injunctive or equitable relief.