Court Opinion

ID: 8891175
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:15:58.939594+00
Date Added: 2024-06-11T17:07:13.732246
License: Public Domain

Mr. Justice CLARK
(dissenting):
This is the first dissent that I have filed in my several sittings with this Circuit, and it is, therefore, with regret that I find myself in disagreement here. However, the appellant, Mayer Paving and Asphalt Company, has been deprived of a $498,204.00 verdict and judgment by the granting of a motion non ob-stante veredicto, and, in my judgment, the sole ground for such precipitous action is entirely unsupportable. Indeed, if finally sustained, it will operate as a repealer of Section 2(a) of the Clayton Act as amended by the Robinson-Patman Act, 15 U.S.C. § 13(a) (1970), and will severely restrict the holding in Moore v. Mead’s Fine Bread Co., 348 U.S. 115, 75 S.Ct. 148, 99 L.Ed. 145 (1954).
1. I say the ground upon which the motion non obstante veredicto was granted is unsupportable because the learned trial judge misapplied the holding of this court in Borden Company v. FTC, 339 F.2d 953 (7th Cir. 1964). As I read it, Borden is not apposite. In it the Federal Trade Commission indulged itself in a non sequitur, i. e., that since Borden was in interstate commerce, it necessarily followed that all of its products were also in interstate commerce.
*773This Circuit, I submit, correctly held that Borden’s being in interstate commerce was not enough; “it must also be shown that the sale complained of was one occurring in interstate commerce.” 339 F.2d 953, 955. In Borden, there was a complete absence of interstate sales from any of its plants in Ohio and no connection whatever between its local sales in Ohio and its interstate sales. The reversal was based entirely on these facts. 339 F.2d 953, 955.
2. Here exactly the opposite is shown by the record. Mayer’s claim and proof were based on the shipments of crushed limestone by General Dynamics1 from Illinois at discriminatory prices during 1958-1968 to asphalt manufacturers and paving contractors in Illinois and Indiana. The sales were made from five quarries of General Dynamics — all located in Illinois — and one of which was only a few miles from the Indiana border.2 It was the closest source of crushed limestone for operators located in Indiana, especially East Chicago, Hammond, Gary and other nearby cities. A sales office for this quarry was located in LaPorte, Indiana, and a distribution yard at Gary. The record also shows that four Indiana paving contractors purchased over $4.5 million of crushed limestone and other products from General Dynamics which were shipped from its quarries in Illinois during the decade involved in the suit. As the trial judge found, there were “substantial sales of like goods” made by General Dynamics from Illinois quarries to Indiana customers; and the 1968 total sales of General Dynamics were some $29 million which were divided among customers in the two states.
Mayer’s purchases from General Dynamics during the decade involved ran $5.4 million alone. This large volume, it was claimed, resulted from a requirements contract3 required in a credit or loan agreement between General Dynamics and Mayer obligating the latter for a five-year period to purchase 80 percent of its total limestone, etc., requirements from General Dynamics. Although the contract provided for the payment of “current market prices’’ on all orders, the proof revealed that Mayer was charged from 10 cents to 47 cents more per ton than favored customers of General Dynamics. Among its favored customers were the four Indiana operators mentioned, one of whom (A. Metz Inc.) competed with Mayer. Metz paid from 20 cents to 23 cents per ton less than General Dynamics charged Mayer, while Walsh and Kelly’s (at Griffith, Indiana) price from General Dynamics ran as much as 30 cents less than Mayer’s. There were also several General Dynamics’ favored customers in competition with Mayer located in Illinois. For example, the Skokie Valley Asphalt Company (Des Plaines, Illinois) regularly paid between 32 cents to 47 cents less per ton during the damage period for crushed stone supplied by General Dynamics than Mayer was charged. Both the Indiana and Illinois price discrimi-nations were uncontradicted at the trial *774and were clearly deleterious to genuine business competition.
It appears to me that a plain reading of § 2(a) prohibits such discrimination. It provides that if “either or any of the purchases involved in such discrimination are in commerce” then all are prohibited. The majority interprets the all-inclusive phrase “either or any” to apply to sales to Mayer only insofar as the presence of commerce is concerned. Mead’s Fine Bread holds the opposite. Here the allegation and proof, uncontra-dicted, are that some local sales (from the same Illinois quarries) in Illinois as well as interstate ones to Indiana customers were at much lower prices than like sales to Mayer and other Illinois customers. I always thought that this was a practice that § 2(a) was specifically intended to prohibit. Here, while the quarry involved was only a few miles from Indiana, still Illinois customers were charged more for like material than were Indiana ones, without respect to delivery costs, etc. General Dynamics answers that Mayer was not a competitor in Indiana. Although this is not strictly true since it did compete somewhat unsuccessfully with A. Metz Inc., still Mayer was prevented from effectively competing across the border in Indiana because of the higher charges exacted from it. After preventing it from competing, General Dynamics now says that Mayer is deprived of the protections of § 2(a) because he did not compete. Such an interpretation transposes § 2(a) into a tool of discrimination rather than a protection. The result is that interstate competition is lessened and Mayer is destroyed.
3. Strangely enough, the majority relies on the old and honored doctrine of standing to deprive Mayer of its jury verdict and judgment. The majority says: “The customer has standing only to raise and compare those sales which are injurious to his competition.” Mayer does not compete in Indiana, it finds. Under the circumstances here this conclusion which the majority says is critical to its decision is a non sequitur. This record shows that General Dynamics sold all of the four Indiana operators involved in the discriminatory activity at such a lower rate per ton than it sold Mayer that the latter could not compete with them in Indiana. The record also shows that Mayer tried to compete in Indiana with A. Metz but failed. Indeed on one job there Mayer was obliged to sublet and buy the necessary material from a supplier other than General Dynamics. Finally, the record clearly shows that General Dynamics’ action prevented Mayer and other Illinois asphalt manufacturers and paving contractors from competing in Indiana by its discriminatory pricing to favored customers. To hold that Mayer had no standing to sue in such a factual situation is to repudiate the mandate of Congress in § 2(a) and creates a barrier that in the final analysis will operate as a repealer of this important section of the Act insofar as discrimination among customers of the same seller is concerned. The intent of the Congress in this regard is clearly stated by Congressman Utterback, manager of the bill in the House:
“Where, however, a manufacturer sells to customers both within the State and beyond the State, he may not favor either to the disadvantage of the other; he may not use the privilege of interstate commerce to the injury of his local trade, nor may he favor his local trade to the injury of his interstate trade . . . ” 80 Cong.Rec. 9417. (Emphasis supplied).
4. The majority also adopts the argument of General Dynamics that Moore v. Mead’s Fine Bread Co., supra, is inappo-site because it involved primary competition between Moore and Mead. I find nothing in § 2(a) that limits its coverage to primary competition cases. On the contrary, the Act’s purpose was to prevent all discriminatory pricing “where the effect of such discrimination may be substantially to lessen competition . . .” That interstate competition was substantially lessened in the particular geographical situation in*775volved here is without peradventure; that the discriminatory pricing, in the words of § 2(a) “injured, destroyed or prevented” Mayer from competing with “customers” of General Dynamics located in Indiana was found to be true by the jury and was embodied in the judgment entered by the court and now set aside. Section 2(a) says nothing about “primary” or “secondary” lines of competition. Its intent, as stated by its manager, Congressman Utterback, was to condemn all discriminatory pricing “injuring” interstate commerce. To distinguish this case on technical differences between primary and secondary competition is but an arbitrary distinction entirely without a difference on these facts. Rather than excepting from § 2(a) the customers of the seller — as the majority does unless they are competing with one another — for the purposes of determining the presence of interstate commerce — § 2(a) specifically includes them and in the peculiar factual situation here requires, insofar as commerce is concerned, no proof of existing competition among the customers of the same seller. When it comes to the assessment of damages, competition might be crucial. While the factual situation was different in Mead’s Fine Bread, where the interstate operation afforded a treasury for destroying local competition, the thrust of Mead’s Fine Bread also covers this case. Indeed, in Mead it was admitted that the Act covered situations where “interstate commerce is in some other way used to destroy eompetition or is injured or impaired as a result of unlawful acts.” 348 U.S. 115, 119, 75 S.Ct. 148, 150. Here interstate commerce was used and unlawful acts were perpetrated in a continuous pattern for over ten years in sales made in interstate commerce that not only lessened competition but injured, destroyed or prevented Mayer from competing.4
5. General Dynamics makes no further attack on the judgment other than the sufficiency of the proof of damages and its asserted good faith effort to meet competition. There is no evidence in the record supporting the latter claim that would grant General Dynamics forgiveness under the Act. The proof on damages appears, as the jury found, quite sufficient under the decided cases and should not be disturbed.
6. This case was submitted to a jury after three weeks of testimony. No point is made of any error in the instructions or the theory upon which the case was submitted, other than the jurisdictional point as to the existence of interstate commerce about which I have spoken. I find that it has no merit.
The Seventh Amendment provides that “no fact tried by a jury, shall otherwise be re-examined in any Court of the United States,” U.S.Const, amend. VII. As I see it the verdict of this jury should not have been “re-examined” and overturned nor the judgment set aside. It is late enough now to correct this mistake. The original judgment should be reinstated.5

. Throughout my dissent I have adopted the designation “General Dynamics” given by the majority to the appellees and cross-appellants. Originally the company was known as Material Service Corporation; General Dynamics Corporation obtained the assets of Material Service in 1959 and the latter was operated as a division of General Dynamics, known as Material Service Division. In 1969 the latter was re-incorporated as a wholly owned subsidiary.

. The five quarries were Riverside, Federal, Stearns, Romeo and Thornton. The latter was regarded as the largest commercial quarry in the world and is located a few miles from the Indiana border at the intersection of the Tri-State.

. The contract was dated April 15, 1957, and its original draft provided that Mayer would purchase all of its requirements from Material Service Corporation for the ensuing five years but the final draft was changed to 80 percent of Mayer’s requirements. The consideration was a loan or line of credit for $300,000 made by Material Service Corporation. The validity of such an arrangement is suspect. See my opinion in Twin City Sportservice, Inc. v. Charles O. Finley & Co., Inc., 365 F.Supp. 235, U.S.Dist.Ct., N. Dist.Cal. (1972).

. The majority also emphasizes that the “pattern for the growth of monopoly” found to be present in Mead’s Fine Bread is nonexistent here. While this is true, we must remember that § 2(a) was also specifically aimed at discriminations which may “substantially . . . lessen competition 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.”

. With reference to the counterclaim of General Dynamics, I agree with the majority that it should be affirmed.