Document zob3wLL26GN835n5LzGjzpBZ6

FILE NAME: WR Grace (WRG) DATE: July 31, 1974 DOC#: WRG090 DOCUMENT DESCRIPTION: 1974 Legal - Venzie Corp versus US Mineral Products Company VENZIE COUP. v. UNITED STATES MINERAL PROD. CO., INC. (,'ite ns .'^2 K. S\j|ip. l;;!) i 1074) 939 A P P E N D IX -- Continued If yes, list such individual: I hereby swear (or affirm ), under penalties of perjury that the fore going information is true and accurate to the best of my knowledge, information and belief. I f u rth e r understand th a t this affidavit is executed as a condition for supplying Mississippi State-owned textbooks to the above named private school, and that full and accurate answers are required by order of the United States D istrict Court, for the N orthern D istrict of Mississippi dated July 25, 1973. in civil action No. \VC 70-53-K, styled Norwood, et al. v. Harrison, et ai. on the docket of the court. T h is ,_______ day o f _____________ _ 197___ Title: Sworn and subscribed to before me this day of , 19 Notary Public My Commission Expires: (SEAL) i Name of School) The VENZIE CORPORATION, and F. M. Vcnzic & Company, Ine. v. UNITED STATES MINERAI. PROD UCTS COMPANV, INC., and William Armstrong & Sons, Ine. Civ. A. No. 71-123. Unitoci States Ilistrict Court, E\ 13. Pennsylvania. July 31, 197-1. Antitrust action against manufac turer of nonasbestos fireproofing spray and its licensee alleging violations of Sherman Anti-Trust Act. The District Court, Higginbotham. J,, held that evidence did not establish that manufac turer and licensee employed unlawful tying arrangements or that there had been illegal territorial division of m ar kets and did not establish that manufac turer and licensee had engaged in con certed refusal to deal with plaintiffs. Order accordingly. I. .Monopolies C=-g(7.5) Evidence, in antitrust action against manufacturer of nonasbestos fireproofing spray and i:- licensee alleg ing violations of Sherman A ntitrust Act, did not establish that n- .nu facturer and licensee employed Ulda :l tying ar- 940 382 FEDERAL SUPPLEMENT rangements and that there had been an illegal territorial division of markets and the imposition of anticompetitive resale restrictions. Sherman Anti-Trust Act, 1 , 2 as amended 15 U.S.C.A. 1, 2. 2. Monopolies 0=28(7.4) Evidence, in antitrust action against manufacturer of nonasbestos fireproofing spray and its licensee alleg ing violation of Sherman Anti-Trust Act. did not establish that manufacturer and licensee which were actuated by in dependent grounds for refusing to sell nonasbestos fireproofing spray to plain tiff corporations engaged in concerted refusal to deal with plaintiffs which were engaged in performing fireproof ing work so as to render manufacturer and licensee liable for treble damages. Sherman Anti-Trust Act, 1, 2 as amended 15 U.S.C.A. 1, 2. 3. Monopolies 0=28(9) Even if there was some concerted activity by manufacturer of nonasLestos fireproofing spray and its licensee not to sell such fireproofing spray to corpo rations engaged in performing fire proofing work in city, where neither the purpose nor the effect of the conduct was so pernicious and anticompetitive as to result in an unreasonable restraint of trade, manufacturer and licensee were not liable for treble damages under anti tru s t laws. Sherman Anti-Trust Act. 1, 2 as amended 15 U.S.C.A. 1, 2. 4. Monopolies 0=28(7.1) In an antitrust action, plaintiff has burden of coming forward with substan tial evidence establishing formation or nature of unlawful agreement rather than resting on mere suspicion or con jecture. 5. Monopolies 0=28(7.3) Parallel business behavior in and of itself or a similar pattern of conduct does not automatically compel, or conclu sively warrant, a finding of a conspiracy or concerted action or other liability un der the Sherman Anti-Trust Act. Sher man Anti-Trust Act, $ 1 as amended 15 U.S.C.A. ; 1. 6. Monopolies 0=12(1.11) Group boycott or concerted refusals to deal create a per se liability ".atier an titru st laws because restraints ir.trir-sicallv are so unduly restrictive and r.n-icompetitive. 7. Monopolies <3=12(1.3) In determining what is the "rele vant market" for purposes of determ in ing if there has been a violation Sherman Anti-Trust Act cromoitmg monopolization of trade, factors to considered are the cross elasticity oi tne demand, similarity of price. aaaDtauuay of product, uses to whicn product is p u t and its general characteristics. Gher man A nti-T rust Act, $ 2 as amenuea 15 U.S.C.A. 5 2. 8. Monopolies 0=12(1.3) In determining whether m anut^c- turer "f nonasbestos fireproofing spray and its iicensee violated Sherman A nti T rust Act prohibiting monopolization of trade, relevant product market encom passed till structural steei fire p ro o fin g products and not merely nonasbestos fireproofing products, where plaintiff corporations could have utilized asbestos hearing fireproofing spray and there was available on the market a num ber cf nonasbestos products which could have been used for structural steel fireproof ing performed by plaintiffs. Sherman A nti-Trust Act. ^ 2 as amended 15 U .3. C.A. S 2. 9. Monopolies 0=17(2.1) Where refusal to deal is unaccompa nied by anticompetitive objectives such as price fixing, territorial division of markets, and attempt at monopolization or group boycotts, a small m erchant should be able freely to engage in a p r i vate enterprise as he sees fit and proper. 10. .Monopolies 0=28(8) Refusal, in a n titru st action ag ain st manufacturer of nonasbestos fireproof ing spray and its licensee alleging viola tions of Sherman Act prohibiting mo nopolization of trade, to give in te r r ratory tha t relevant market include*: ..1 nonasbestos structural fireproi :.:.g products was not error, where three asals aninsimti- relemin 1 of ting > be the ility put heri 15 facray l . om'ing itOS tiff tos ere of ave >ofnan :.s. pa tch of on mt rif,r. .st > i- o- 'K rt- VENZIE COP.P. v. UNITED STATES MINERAL PROD. CO.. INC. 941 r i t e as K.Supp* U3t> ( terroeatories given relating to relevant action against the defendants. United market were adequate. States Mineral Products Company, Inc. 11. Monopolies C=17(2.1) If there is per se liability under Sherman Act because of concerted refus al to deal, reasonableness of defendants' activities is irrelevant. 12. Monopolies 0=28(7.5) Record in an titru st action alleging violation of Sherman Anti-Trust Act prohibiting monopolization of trade es tablished that evidence presented by plaintiffs regarding extent of their dam age was sufficient to support j u r y 's ver dict. Sherman Anti-Trust Act. j 2 as amended 15 U.S.C.A. 2. ( "U S M P 'M and William A rm strong Sons. Inc. ("A rm stro n g "', for certain purported violations of Sections 1 and 2 of the Sherman Act. as amended, 15 l T. S.C. 1* and 2.- Among the pro scribed conduct the Complaint alleged that defendants had ( 1 ) conspired to monopolize or attempt to monopolize the relevant product market of asbestos-free spray fireproofing materials in the Phil adelphia vicinity; (2 ) that defendants had employed unlawful tying a rran g e ments: (3) there had been illegal terri torial (vision of m arkets and the impo sition of anti-competitive resale restric tions: and (4) the defendants had en P e te r H earn and M urray S. Levin, gaged in a concerted refusal to deal. Pepper, Hamilton i Scheetz, Philadel phia, Pa., for plaintiffs. Morris R. Brooke, Drinke, Biddle 4: Reath, Philadelphia, Pa., for United States Mineral Products Co., Inc. Benjamin M. Quigg, Jr., Morgan, Lewis & Bockius, Philadelphia, Pa., for William Armstrong & Sons. Inc. [1] This matter was duly tried to a jury, whereupon a t the conclusion of the presentation of the plaintiffs- evidence both defendants moved for directed ver dicts in accordance with Fed.R.Civ.P. 3 0 ( a i.;i The Court ruic-d th a t on the ev idence adduced by the p laintiffs they had failed to establish a prima facie OPINION ease regarding the tying arrangem ents and tlie territorial division of markets. HIGGINBOTHAM. District Judge. The Court determined further that as suming (iriimndo that either defendant unilaterally possessed monopoly power I. over the asbestos-free spray fireproofing INTRODUCTION materials the plaintiffs clearly had not The plaintiffs, the Venzie Corporation demonstrated th at there was " the willful ( " Venzie" ) and F. M. Venzie Company, acquisition or m aintenance of th a t pow Inc. (" FMV" ), instituted this antitrust er as distinguished from growth or de- 1. 15 I ' . S . C . 8 1 provi i l os i n r i ' l f v . i m p u r r : " livery c o n tr ac t . couihiiiatiuu in the lorn of trust or otherwise, or conspiracy, in re straint of trade or commerce ammo; the '.several States, or w ith 1 foreign nations, is ileelared to he illegal . . . " 2. 15 r . S . r . 8 2 s t a t e s : "livery person whit shall niotuipoli/.e. or a t tempt to monopoli/.e. or eomhine or eonspire with any other person or persons, to mo n o p o l i z e a n y p a r t ot tin* t r a d e o r n u n mcrce among the several Stales, or with f o r e i g n n a t i o n s , s h n l l he d e e m e d guilt.v ot a m i s d e m e a n o r , a n d . ott ,-onvietioii t h e r e o t , s h a l l he p u n i s h e d h.v f i ne not e x c e e d i n g fiitv thousand dollars, or hy imprisonment not e x c e e d i n g o n e y e ar , o r hy hot It s a i d p u n is h me n ts . in I lie discret ion ot the d i i r l . .3. I V . l . K . r i v . r . .V) r e a d s i n p e r t i n e n t p a r t : "(a) Motion for l drooled Verdict: W hen M a d e : KnVi t. A p a r t y w h o m o ve s f o r n directed verdict at the Hose of the evi dence offered hy an opponent may offer evident** in t h e e v e n t t h a t t h e m o t i o n is not g r a n t e d , w i t h o u t h a v i n g r e s e r v e d r Iit* riijhr so to do a n d t o tlit* s a m e e x t e n t a s if the motion had nor ma d e made. A m o tion for a direeted verdict which is not g r a n t e d is not a w a i v e r of t r i a l hy j u r y even thowdi all parties to the uetion have moved for directed verdi' ts. A motion for a d i r e c t e d v e r d h 't s h a l l s t a t e tin* s p e c i f i c grounds therefor. The order of the .m irt ^ r a u f i mvt a m o t i o n t o r a d i r e e t e d v* is effective without ahy ass.-iit of the c r y . " 942 382 FEDERAL SUPPLEMENT velopment as a consequence of a superi or product, business acumen, or historic accident" in contravention of United States v. Grinnell Corp., 384 U.S. 563. 570-571. 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1968). Moreover, insofar as the plaintiffs were arguing that where USMP or Armstrong separately and without agreement refused to deal with the plaintiffs, the Court additionally held that such unilateral refusals to deal were not per se violations of Section 1 of the Sherman Act and defendants were entitled to directed verdicts. The Court reserved its judgment on the conspiracy issues, namely, whether there was a conspiracy to monopolize, a conspiracy to attempt to monopolize or a conspiracy to refuse to deal. Upon com pletion of the defendants' evidence, de fendants renewed their motions for di rected verdicts. In a Memorandum Opinion dictated from the Bench the Court noted that the trial record prepon derated in favor of finding as a matter of law that the relevant product market included all structural steel fireproofing materials rather than solely non-asbestos fireproofing spray products and that plaintiffs had not met their burden of proof in establishing th a t U S M P 's new product was any significant portion of the total structural fireproofing market. The Court, also declared th a t the plain tiffs had not shown that there was any anti-competitive motive or effect rela tive to the defendants' conduct toward the pla intiffs in refusing to dcnl. Notwithstanding the Court's rulings, in the interest of judicial ccor.omv h-'1 Court deemed it feasible to submit the conspiracy and relevant product issues to the jury, since such a procedure would require only an additional two or three days of trial time and could possi bly obviate a second trial encompnssme maybe five or six weeks should an appel late Court disagree with its rulings. Upon submission of the case to the uirv, the jury's answers to specially prepared interrogatories concluded that the rele vant product maraet snouid be limited to only non-asnestos spray fireprooiing products and tnat tne uefenaams hau participated in a concerted refusal to d"nl with the plaintiffs. The ju ry how ever determined that the defendants had r."t conspired to monopolize or conspired to attempt to monopolize the relevant product market. Trebling the damages awarded the plaintiffs, the verdict was recorded in the amount of .i33o,4u2. The defendants have now moved the Court for judgment n. o. v. p u rsu a n t to Fed.R.Civ.P. 5o(b) or in the alterna tive for a r.ew trial, and the plaintiffs have petitioned the Court for the assess ment of reasonable counsel fees in the amount of .r'K)Jj.000 in accordance w ith Section 4 of the Clayton Act, 15 U.S.C. 4. F n i . I i . l ' i v . l ' . ."<) s t a t e s ill r. I.-v.-nit |>:irt : " ( 8 ) M o t i o n l o r .1inlgiiiciit . Vot wi r l >t :11u I- i n g t h e V*rdi<r. W h e n e v e r a m o t i o n t o r a i l i r ect ed v e r d i c t m a d e a t t h e -lost.* of all the evidence is denied or for any reason is n o r g r a n t e d . tin c o u r t is d e e m e d t o h a v e s u b m i t t e d fin* a c t i o n to tin* j u r y s u b j e c t to a hi r e r d e t e r m i n a t i o n of rim i e ^a l *t t i o n s r a i s e d hy tin* m o t i o n . N o t l a t e r Than ] 0 d ays a f t e r e n t ry of j u dg me n t, a parry who has moved fur a directed v n lief m a y m o v e t o h a v e tin* w r d i r t a n d a n y j u d g m e n t e n t e r e d t h e r e o n .set a s i d e a n d to him j ud g me n t e nre re d in accordant-* with his motion for a directed verdict: or if a ve r di c t w a s iiui r e t u r n e d > m h p a r t y , with* i n ! m d a y s ni f. -r t h e j u r y h a s b e e n Ii sh a r i md . m a y m o w t o r j u d g m e n t i o neonlaiirt* w i t h his mo t i o n t o r a d i r e c t e d w n i i r t . A m o t i o n f o r a m*\v t r i a l m a y be joined with this motion, or a new trial m a y he p r a y e d f o r in the* a l t e r n a t i v e . If a w n l i i - t w a s r e t u r n e d th<* c o u r t m a y a l l o w tli' j u d g m e n t t o > i a ml o r m a y r-oju*n th** judy'im-nt a nd e it he r o r de r a n e w tri al or d i r e c t tin nfry of j u d g m e n t a s i f t h e re<| i l - s t f d v r di t ' t h : n | l i v e n d i r e c t e d , J f HO verdict was returned the court may direct the m i r y of .judgment as if the requested ve r di c t h a d Im-.-ii d i r e c t e d o r m a y o r d e r n new trial." th 0. JU to f o tl I i' sc c. dc \v Pr V. 48 (1 CP 7f \V 32 av A. (c 83 Si C( 11 C( M 11 F; II fa dc fe ar st fc ai sc 5. iriKfe'Si 1- ^ 1^ VENZIE CORP. v. UNITED STATES MINERAL PROD. CO.. INC. Ci t e ns IS2 P. Si i pp. 0.10 llOT-l) 15.s For reasons here in a fter appearing, the defendants' motions for judgment n. o. v. are Granted. als, including a non-asbestos fireproof ing spray called Cafco Blaze-Shield DC/'F. the product which the defendants refused to make available to the plain 'gS. II. tiffs and thus precinitated this litiga t:hhee HISTORY O F T H E CASE. tion. ues On a motion for directed verdict or The background events of this case ure judgm ent n. o. v. th e Court is obligated f ir s t unfold on October 2, 1969 when th e or to view the entire record in a light most T urner Construction Company ( "T u r n 'S l favorable to the party opposing the mo er" ) awarded FMV the contract to do ing tion, extending to the plaintiff the bene the structural fireproofing work on the pel- fit of every inference which can be rea Philadelphia Electric Company building gs. sonably drawn from the evidence. The at 2301 Market Street in Philadelphia ry. Court is appropriately cautioned th a t it i ''P E " ) . FMV's selection for the p r o j red does not undertake to appraise the ect was oaseu on n s tendering the low die weight or the credibility of the evidence est bid of 8110,000. several weeks later aV- presented in the case. See, e. y,, Brady tu r n e r awarded a second contract to ted v. Southern Ry. Co.. 320 U.S. 470, 479 Vt-nzie for it to perform ail the s t r u c t u r ing 480. 04 S.C't. 232. 234. 88 L.Ed. 230 al fireproofing work on the Fidelity M u -, v :ad C1943) ; Woods v. National Life and Ac tual Girard T rust Building a t 15th and to cident Insurance Company, 847 F.2d 70u, South Penn Square in P h ila d e lp h ia / 7G8 (3d Cir. 1005); Independent Iron " EG" :. In the Fall of 1969 these two Works. Inc. v. United States Steel Corp., projects probably represented the la rge st ed 322 F.2d 050. 001 idlh Cir. 1003) ; Lc-I- .-tructurai reproofing jobs in the City int aware Valley Marine Supply Cu. v. i.f Philadelphia ami had been competi :es American Tobacco Co., 207 F.2d 100. 2v2 tively sougnt a f te r by practitioners of as (3rd Cir. 1961), cert, denied. 300 U.S. the trade. Armstrong, iike other compa 839, 82 S.Ct. 807, 7 L.Ed.2d 843 i 1002) ; nies. had bid on noth of these jobs, cniy Sehad v. Twentieth Century-Fox Film to be rejected because it did not subm it he Corp., IRC F.2d 091. 993 '3 r d Cir. the lowest bid. to 1943) ; Johnson v. J. II. Yost Lumber a- Co., 117 F.2d 53, 57 (8th Cir. 1941/: sevCeoranltempgoorvanerenomusentwalith atgheensceiese--venthtse, `fs McGlinchey v. Baker. 350 F.Supp. 1184, Pennsylvania Department of Environ 1136 (E.D.Pa.1973), and Paletsky v. ;s- Farrell, 54 F.R.D. 407. 469 ' M.D.Pa. mental Resources. A ir Management he 1972). Services of Philadelphia ("A M S " ), an a th the Occupational Radiological Health A brief recitation of the pertinent Section oi Philadelphia-- were conduct facts will be of aid in analyzing and un ing investigations relative 'to the health derstanding the case at bar. ' hazards arising out of the utilization of Plaintiffs Venzie and FMV and do- spray fireproofing m aterials containing fendant Arm strong are all engaged as asbestos. There was a grow ing concern applicators in the lathing, plastering and among governmental officials that un structural fireproofing business. De less asbestos-bearing spray fireproofing fendant USMP. on the other hand, is not products were properly contained, s e ri an applicator but rather manufactures, ous ecological and health risks could re sells and distributes fireproofing m ateri sult. 5. 1 3 IT) p r o v i d e s : " Any win s h a l l In i n j u r e d in Ids business or property by reason of any- f It in t' orliidden in t h e . -Ultimisi l a w s m a y sm* [ l i r * ! or in a n y d i s t r a i n i i i r t o f tin* ( ' i:if*t| S t a i r s m tin; d i s t r i c t in wh i c h fio* d `11*11(| ;i ill It or is found or h i ' ajt' -nt, wi t limit r e s pe c t to tin* m u m : . ' 11 .int r o v e r s y , a n d s h a l r c - ' o v e r t hr* the d a m a g e s by him usi a i t i ci , alai ;.* *st o f ' .int. i i o h n l i i : ^ a r e a s o n a b l e . . t ur Ill'V's f r o . " 382 FEDERAL SUPPLEMENT Since -an asbestos-containing fine- and 17, 1970 for its continued failure to al proofing material would be used by contain the spray fireproofing mate 21 FMV. the Turner-FM V fireproofing rials.8 le' contract for the PE building required On June 23. 1970 spraying operations fi FMV to enclose completely all areas to had reached the tenth floor of the FG ni be spray fireproofed with tarpaulins so building. Due. to Venzie's continuing Pt that asbestos-bearing dust and flakes failure to contain the asbestos-bearing w from the fireproofing spray would not spray the Philadelphia District Attorney cr become air-borne beyond the building initiated a criminal action ag a in st Ven fc lines. FMV was furtherm ore required zie. resulting in a suspension of the cl* to clean up all deposits of fireproofing work on the FG project pending resolu th material after each floor of the building tion of the legal questions. Spraying tc was completed. The Turner-Venzie fire operations were simultaneously stopped proofing contract for the FG building at the PE job as Turner and FMV Ci contained similar provisions with re awaited the outcome of Venzie's iegal w spect to enclosures and cleaning; how difficulties with the City. tc: :gr; ever, special dust control equipment Even though Venzie hau onem aiiy ta would also be needed to minimize the ac submitted a ihd to T u rn er expressly q- cumulation of dust on tiie construction. agreeing to a luu'p containment oi the di In addition to the aforementioned con sprnv fireprooling material for a iump ti tractual terms, the City issued to Venzie sum. Venzie was now able to renegotiate fi and FMV permits for spray fireprooling the contract with Turner wnereoy Ven cc the FG and PE buildings on tiie condi zie would be reimbursed tor costs unu b; tion that, there be 100' j containment of additionally provided a u-_- oi 1 ; foi K the spray fireproofing materials. >-..-mead ami a ; profit. A similar, al rr C Notwithstanding the contractual obli Ici'ii t lull '.vas roac : C'U . vcvii i u rne r 1 gations and the commitments made to eiai FMV with id' c >.Ci!1-T **.;u\VcU IOr t: the City, the plaintiffs did not adhere to u\vT.v;ui aad b twheerier ispsruoemdiseasg.ainsNt uFmMerVousandcitVaetinoznies On mJui tl/ye 21t.o 197th' e Veenr:zmie. pleaded nolo F for violating the City's Air Pollution nronani ii : y the L Istrict Attor- t a Code in failing to contain the fireproof ney's Office and pat id a fir e of 8750.00. s ing materials within the building con An Order was ent red by the Common t fines. The City of Philadelphia in s titu t Pleas Court Judge ermitt: r.g Venzie to t ed an equity action against Venzie and continue applying an a^l: estos-bcaring b Turner on March 20, 1970 relative to the fireproofing material on t te FG build- r FG job to compel total containment of ing. The O rder howe vc r included the r the spray fireproofing materials as had following proviso: u been previously agreed upon when the "Immediately upon approval for use 1 spray perm it had been granted by the in accordance with the stan d ard s set i City. On April 2, 1970 a Stipulation forth under the Philadelphia Fire a was entered and approved by a Judge of Code of a non-asbestos fireproofing the Common Pleas Court of Philadel material, such material shall be used phia. committing Turner and Venzie to for future' fireproofing in place of as r have complete containment of the pray bestos-bearing material." fireproofing material used at the con struction sites. Despite the execution of On August 2S, 1970, upon representation c. this Stipulation. Venzie* received addi to the t 'olirt th:it Venzie eoidd apple and I tional citations on April 30. .June 9, 11 fully contain an asbestos-bearing materi- t 6. All lieugli the se enf e r e er nent a e t i ei i s we r e direeteil primarily against Venzie m il ihe l '(l p r n j e e i . T u r n e r r e i pnr e i l K.M V Pi e e m p l y t h liar l e r i n s *.i tlie e e n s e n t d e r r e e a g r e e d !.. by V e n z i e e n A p r i l 1!, I PTo. F M V a l - e ....... i \ e , | i i i a t i e m , f u r v i e l a t i n g f a y ' s A i r l 'i d l u l e m C e d e b u t t h e r e h a d n e C e i i n p J' eeeed 111gs h r e i i g h t a g a i n s t II. laid tin been ailure to g mate- aerations the FG ntinuing -bearing Attorney nst Ven- of the resol u-praying stopped :d FMV *'s legal riginally xpressJy t of the a lump egotiate b>*-2 md :o-,0 for nilar al Turner wed for led nolo charges t AttorS750.00. Common enzie to bearing I buildled the for use rds set -i Fire roofing o used of as- itation tly and ant uj a., .lie ill been VENZIE CORP. V. UNITED STATES MINERAL PROD. CO.. INC. 045 Ci t e 11s oMJ K. S1 I'p. Wii) (1074) al in accordance with the Order of July partment of Licenses and Inspections of 21. 1970. the foregoing proviso was de the City of Philadelphia C 'D L I" ' and by leted. thus enabling an asbestos spray AMS of the Philadelphia Health D epart fireproofing product to be used indefi ment. nitely on the FG project. D uring this Given that overview, one must also in period of time two other contractors terweave and highlight the salient facts were able to secure similar Court de relating to USMP and Armstrong. crees whereby under conditions calling for complete containment and adequate clean-up procedures, they could complete the fireproofing work utilizing an asbes tos-bearing fireproofing spray. In late March of 1970 USMP gained approval from ULI for one of its prod ucts recently introduced on the market. Though there were several asbestos : -aring spray fireproofing m a te ria ls Though there were sw ift legal ra m ifi "f>nraily available commercially, this cations for any fireproofing applicator product. Cafco Blaze-Shield D C /F who undertook to spray an asbestos-con 1 " D C /K "'. was the first noa-asuestos taining product without adequate con snrnv fireprooiing product to have re R tainment. during the relevant period in ceived ULI approval in the i 'niiaueiphia 4 question there was never any Court o r area. DC/ F. however, nau not a t th a t der, local or state regulation oaniung en time been recognized oy u L i or AMS. tirely the use of an asbestos-bearing Since at least February lfioS, A rm fireproofing spray if It were properly strong has been a iiccnseu applicator of contained. In fact, in a report prcpareu USMP and was thereby entitled to pur I by the Philadelphia Department of chase from USMP an accoustical tile Health Ad Hoc Committee on E nviron nroduct. Cafco Sourui-.''hieiu so. and its if. mental and Occupational Hazards of fireprooiing products, including Cafco Spray Asbestos Fibers, dated August 21. Blaze-Shicid, a forerunner of Cafco i? 1970, it specifically recommended that Blaze-Shieid DC, F. The a greem ents the spraying of asbestos material in formalizing this arrangem ent were non building construction within the City of exclusive in their wording. Though geo- i Philadelphia should not be prohibited un graphicallv the license agreem ents dis til "three months subsequent to U ) the closed that Armstrong would operate in adoption of the regulation, or <2 ) at Philadelphia and the su rro u n d in g coun ir such earlier date on which approved as ties. Armstrong was not expressly pre bestos-free spray fireproofing substi vented from bidding on and accepting tutes are commercially available from at work outside of this catchment area. least two manufacturers." Regulations Nor did the license agreements explicitly prohibiting the use of asbestos in fire preclude Armstrong from using products * proofing materials did not go into effect of other manufacturers, though im plicit V until July 18, 1971, but hv November.,-1. ly USMP had agreed to fulfill all the it 4970 two asbestos-free spray, fireproof- fireproofing needs of Armstrong. r- ing substitutes were commercially nvail- able. " It so happened that in the spring and summer of 1970 A rm stro n g was the only The Philadelphia Building Code's fire licensed applicator of USMP in th e P h il retardation standards required fire adelphia vicinity. Ironically, in the e a r proofing products to have attained 1 hour column, -1 hour beam and 2 hour ly lthiO's USMP had a license agre e m e n t with Venzie but USMP terminated this deck ratings from the Underwriters agreement when Venzie misapplied Uaf- Laboratories, Inc. (" U LI" ). In addi co Blaze-Shield by refusing to apply the tion. a non-asbestos fireproofing spray material as thickly as USMP thought product had to be approved by the Do- necessary for adequate fire p: '.ection.1 7. In thf curly I\M V luni imf yW ln-iii W n / i r I m i f l n T s 1j h1r ;11 i 111^ tin* V- f\ir|n>- i i nr<*r[Mir:ttfiL l l o w ; i n l Wr r / i * \ 'a 'ch l i f e r r iti'iii as it tl.'-n c \ i > t !. '.cns :itri!i;ilc*l with I 'M V . v\,is .i:i of l !ni i 946 382 FEDERAL SUPPLEMENT Thus since that time USMP had not sold Venzie any of its fireproofing products, though it has sold Venzie some of its accoustical tile product, Cafco SoundShield 85. Around early July 1970 in the wake of T u rn e r's and Venzie's increasing legal troubles with the City and the technical difficulties8 encountered in containing lOO^c an asbestos-bearing spray fire proofing product, and furthermore due to the construction delays attendant to these events, Turner decided that it wanted to complete the FG and PE proj ects with a non-asbesto3 spray. The record in this case is uncontro verted that the first instance anyone as sociated with the plaintiffs attempted to purchase D C /F from USMP was on July 6, 1970 when Clyde Marshall C'Marshall" ) of Turner called H arry Gropp ("Gropp" ), the Sales Manager for USMP, and sought to buy DC/F for Turner or the plaintiffs. Gropp's re sponse was "Xo." As reported at the trial: " Q. Now getting to your conversa tion, Mr. Marshall, with Mr. Gropp of United States Mineral Products Com pany on July Gth, did you ask Mr. Gropp specifically whether or not he would sell Cafco D C /F for the Phila delphia Electric job to be applied by F. M. Venzie & Company? "A. You are going back three years. I asked him-- I told him that we had two jobs that needed non-as bestos material. I asked him would he sell it to the subcontractors that were working on these jobs or to Turner. 'Q. And what did he answ er' "A. Xo. "Q. He said rjg h t then and that he would not sell it" "A. To my recollection, th a t was his answer." During the same telephone conversa tion of July 6th Group however re ferred Marshall to Harrv Schneider C'Schneuier" who was atiiiiateci with USMP. Marshall was further advised that USMP had a franchised aDplicator in Philadelphia. In a letter dated the -ame day. Gropp wrote to Marshall, dis cussing DC. F and again uirecting him to Schneider. When Marshall called Schneider on August -itii. tie was told that USMP had a franchised applicator in Philadelphia ana m at Marsnail should contact them. On July 17. 1970 H ow ard Venzie '"H ow ard" i of FMV, who nad seen DC-'F advertised in the June Iu70 issue of UW/s mid Ciiiiniin. called Schneider of USMP to purenase DC, F. Howard '.old Schneider about T u rn e r 's decision to complete the PE building with a r.onasbestes fireproofing spray. Schneider suggested that Howard contact A rm strong. stating "I am sure they [A rm strong] can work something out for you or make it available." Howard was not expressly told "Xo" but at least the im plication was clear that USMP would not sell him the product. H ow ard in th e past had purchased from USMP Cafco Sound-Shield S5. the accoustical tile product, even though he was not a licen see of USMP. On July 18th Howard called William Armstrong, III, the president of Arm- 8. T h e a s b e s t o s - h e a ri n g e mi s s i o n s inlo t he a j r eot l l d h a v e b e e n m o r e e t l i e i e n t l y eotitaitteii it t h e e x t e r i o r walls ot i h e b u ilding hail been f i r s t e r e c t e d , lint T u r n e r d e r i d n l it di d Hill want to follow that upproneh and ...ti.e tuent ly relied primarily upon the use nf t a r paulins. 9. S c h n e i d e r w a s t h e R e g i o n a l S a i e s R e p r s e n t a n t e tor r s M I * anil operated not out of I `11 I;1111-1i!tia h ut i n . Ma r t l a n d . ' I h e p i a t n l i t i s ei i l i tei ni t h a t t l r o p p ' s .................. . w a s not in l'art a f i r m `' N o " a m i t h a t m a t he tie- ins e s s a r y a p p r o v a l to -ell | u '/ l - ' : - t i unie from Sehnenler. F u rth erm o re , i. :,p .1 p p a t e a t ly di d n o t s pee i t ii a l l y b o t t o m 1 r e in j I to -ell on T u r n e r 's of the pin. tail helllg III rllseil a | ipllva t o : I of I S M l h 'ZNZIE CORP. v. UNITED STATES MINERAL PROD. CO.. INC. 947 c'itr is uce F.su[i|>. 1:'.>71, .-.rone. who told Howard "our franchise fornius us to soil the product." Approx imately around this time Howard also spoke to William D'Arcy of A rm strong about the possibility of obtaining DC/F for the PE project and was apprised that Howard would have to talk to John D'Arcy, Sr. (" D'Arcy, S r." ), Chairman of the Board of Armstrong. next day summaricine that conversation, it stated in pertinent r a n : "After his explaining the importance of seeing their products applied prop erly so as not to damage th eir reoutation. thus re q u irin g a fra n c h ise d 1 i. e,, approved) applicator, he agreed that they should endeavor to help us on our two Philadelphia projects On July 19th. Howard telephoned John D'Arcy. Sr., to follow up on his request of buying D C/F for the PE job. The testimony of Howard was tha t D'Arcy, Sr. " informed me th a t he cannot sell the material. He said `term inate your con tract.' and he will finish it [the P E job] with the right product." At other por tions of his testimony Howard stated: "Mr. D'Arcy, Sr. said he had a f r a n chise with United States Mineral Products and he could not sell the product to me, th a t if I could not sup ply material on the job to term inate my contract and he would finish the project." which are in difficulty. While he u n derstood that his sales manager 1 H ar ry Groppi. who is away for a week, had initiated such action, he reassured me that he would personally exert pressure througn his normal channeis to have Armstrong mane some sort of arrangem ent w ith Venzie." *" Although the exact day couid not be pinpointed, "around the miduie of July, or July 22. somewnere in th a t n e ig h b o r hood." Wes Brown of T u rn er caned Jonn D'Arcy, J r . C'D 'Arcy, J r . " > of A r m strong and asked if Turner couid buy DC/F from Armstrong and turn it over to FMV for use on the PE building. D'Arcy, J r . said he could not sell to Howard again called Schneider of USMP on July 20th or July 21st, inquir ing if he could purchase D C /F from JAM Industries. U S M P 's licensed appli cator in Trenton, New Jersey. Schnei der told him that USMP would discon tinue delivering D C /F to JAM Indus tries if USMP ascertained DC/F was Turner because Turner was r.ot an ap plicator. Evidently during this conver sion. Brown asked if A rm strong would be interested in completing the PE fire proofing job. D 'Arcy, J r .'s response was that he would r.ot be interested since there was another fireproofer on the job. not actually being used by JAM Indus In addition to the other telephone con tries for its own projects. Sometime versations heretofore noted as having the same day of July 20th John Ilanft of occurred on July 20th. on the same day T urner called Jam es P. Verhalen ( " Vcr- D'Arcy, Sr. called Schneider. T h ough halen"), President of USMP. about ac theie are slightly conflicting versions as quiring DC/F. According to an office to the complete substance of th at conver memorandum prepared by Ila n ft the sation. it is agreed tha t D 'Arcy, Sr. ap- 10. T l i e | i l u i n t i l l ' s <>ii 1 n< i llj.-il t i n - 11. 1 1 1 11 r u n v e r s a i ion 1m u n i s t r a t e s t In* r o n s p i r a i o n a mi i ' i t H't nf I 'S M T a m i t i r o e s : " I t w a s (1 1 u t o i lu* j u r y t o J r a w s r v e r a r r a. si ui ahl e i h f e i v n r r s f r o m t e a I>o\r i pmt l at i^iia^e. For o n e thin*, it .seems e l e a r tint r S M F roll hi Hot a r t 0)1 i t s o w n t o M'l I (/]' to tin* p l a i n t i f f s . If it ronhl, tliu wo u h l s r t 'ui ;i . simpler, m o r e a t t r a r t i v e a l t e r n a t i v e t h a n *-\*Ttin^ p r e s s u r e mi A r m s t r o n g J u s t a s A r m s t r o n g r o u h l not >e|| I t l '/ F hr r u i l s r i l s I r u u t 'i l i ' r a ij r r !! 111 { w i t h F S M I * t nr l uui e it. SO it s r r i n s l ' S M I * Was' JlOt ! f e e to a r t on i t s o w n . T h a t W r i u i l r n w a s u;.::iic t " ' \ r r t i-i v s s i i h - <m A rn it ro n h a u l s t o a -rnli.I pr l ' I Ut - Mhl r i li f e T r u e r t Un i t tin* a p proval of both lirfemlaiits was i.nr.ssary t o r e I h r pi a i it I it I s wol l h] ho pe r t u i l t e t i p u n - h a s r I i< \ F f r o m n t h . r.'* ( p l a i t . " * Mrliioramilllll in Opposit e In ill-foil' ' M o t i o n I nr .1 i i i i -Ui . rui N ami/or . .. N e w ' Trial at t i - 7 .) 94S 382 FEDERAL SUPPLEMENT prised Schneider that Turner had ap proached him relative to submitting a proposal to complete the PE project and th a t he, D ' A r c v , Sr., had indicated he was not interested. Schneider also re ported to D'Arcv, Sr. th a t he [Schnei der] had received two calls from Gropp and Hanft regarding the PE project. The divergence comes in th a t D'Arcv, Sr. stated th at the reason for his call to Schneider was not primarily to discuss the PE project but rather to ask him to come to West Chester, Pennsylvania and review problems relating to use of D C /F on the West Chester State Teachers job. the first job on which Armstrong had applied DC/F. On July 21st after a visit to the West Chester State Teachers College site, Schneider had lunch at the Conestoga Inn in Bryn Mawr, Pennsylvania with D'Arcy, Sr,, Don H itner and either Wil liam D'Arcv or D 'Arcy, J r .11 The onh direct testimony in the case was that at this luncheon the West Chester job was discussed. Plaintiffs however argue that the true purpose of the luncheon and the reasonable inference which the jury can draw from the record was that " this luncheon was when D 'Arcy, Sr., D 'Arcy, Jr., and Schneider reconfirmed their companies' agreement not to make D C/F available to plaintiffs. Their ac tions over the next month carried out the agreement-- and with the -htr.r.rd for results.'' Emphasis uddori . (P lain tiffs' Memorandum in G-re-dtion to Defendants' Motion For Judgment X.O.V. a n d /o r For A New Trial .* p ' 1-' H a nft of T u rn e r also called !'>'. \ : w S on July 21st, during which D'Arcy. dr. " insisted that the only way th a t we [Turner] could use Cafco was to have him take over the work on a T M [time and m aterial] basis.'' For the next week communications among the parties were not as treouent. On July 23th Brown of T u rn e r called D 'Arcy, .Jr., requesting a proposal from A rm strong on the P E job. D'Arcy. .Jr. indicated he would have to tniiiK it over and call him back. On the same nay A rm strong caiied L'd.MP. The next nay. July 29th, Brown called Gropp oi U iM P to buy D C/F to furnish to Turner s suocontractors. Gropp aid Gd.MP couid not sell because T u rn e r was not .. pray tireproofing applicator ana Cd.'.IP soid only to approved appiicators. Gropp suggested that Drown contact their ap proved applicator, Armstrong. On July Juth there was a n o th e r call from Armstrong to USMP. The same day D 'Arcy, Jr. called Brown, giving him a proposal for the PE job and say ing that he could start in 5 days and he had enough D C /F to finish the P E jo b .11 11. The p l a i n t i f f s a t t a r h r ons hl crahl * s i g n i f i c a n c e t o w h e t h e r W i l l i a m D 'A r c y o r D 'A r c y . Jr. w a s i n n t t c m l u m - e u t t h a t lunc.. ,oii. W h e n t h e 1*10 a m ! F<i p r o j e c t s w e r e t a k e n o ve r by A r m s t r o n g in lute Aitf/sut W ) . D 'A r c y , J r . w a s i n c h a r g e . M o r e o v e r . D 'A r c y , J r . h a d n o r o n n e r u o n w i t h t h e w o r k beintf n i n i e r t n k e n a t t h e W e s t ( `h e s t e r p r o j e c t . The r e f or : p l a i n t i f f s a s s e r t it w a s p r o p e r f o r t h e j u r y t o i n f e r t h a t D 'Arr.v, J r . 's s l a n t s i n A u g u s t IPTO r o u M he i m p u t e d r* h i m o n J u l y L' l. d'-spitf the fact that o n J u l y J l s t t he 1*K a n d Ft p r n j e e i s w e r e not A rmsi nom's. 12. K v e n a t t h i s sta::*1 of t h e e a s e , t he t 'oiirt is still un aht e to fa t ho m u l.en the initial a ^ r e e n u ' u t h*r w e n Ami. si r mi ^ a m i I 'S M l ' w a s a r t n a i l y f o r m u l a t *-d. 13. 1' 1:mi u id's : i g; dn nl l'iT :ui c. \|>l : i n: i ti ui i l u r f hi s M?riis if e v e n t s : " ' ni J u l y L,s\ K r o w n nskei j D 'A r c y . J r . wln'tlmr Armstrong would submit a pro p o s a l t o c o m p l e t e tin* I 'K b u i l d i m : . I 1 A r c y . J r . <;*1lt*| b a c k o n J u l y with tin.1 l u l l d e t a i l s of a p r o p o s a l . Mur* nit iratii ly, D 'Arey, J r . said A nostrum.: ' vi i hl bi-iiin in five J a y s a m i h a d * not i c h l K */ F In e o t n p l r l e tin* I 'l! j o b ( \ . T . 117>, " i i r Oi t h e l a r g e s t f i r e p r o o f i n g j o b s in 1'liilaili-lphia h i s t o r y . ' Thi s iK! <r ; n a t i m i oiilij Iia\i* Iu11 o b t a i n e d >s11y f r o m I 'S M l ' ill i l It*' r <r Ix.ili ut' ill.- t*-|*pli*.in- a l l s w h i c h o c c u r r e d mi .1 iiIv 'JS a m i J u J v J o ( Vcnxic !]\h. S). A rm str ong didn't have a s i : : mi ii a n t a m o u n t of D ( '/ F in i t s pos- i X . T . ^ 7 ). All uf Mo- I n '/ F n wo u l d us,* wo u l d h a v e t o i ouu* f r o t a lanned ;dded). osition igment t 9). -y, Sr. -y. Sr. at we . have & M ations quent. called : from -y, Jr. : over e day.t day, :sm p spray ` sold Gropp .r ap- r call same iving : sayad he job. a for . Jr. pro* Mi a j f . with siiron i *T), > in ifioii '.Ml* .ills * It lr um VENZIE CORP. v. UNITED STATES MINERAL PROD. CO.. INC. 049 aim. a ;u i i i On in ly :'.lst D'Arcy, Jr. called met all the r.ewssary clearances by the Schnciuor. asking him to come to Phila City of Philadeirhia. delphia the next business day to assist in getting D C /F approved by the City of Philadelphia. On August 3rd and 4th Schneider was in Philadelphia, and. to gether with D'Arcy, Jr., visited the v a ri ous City offices in an effort to expedite the clearance of D C /F. In addition on August 4th Marshall of Turner called Schneider and was told that USMP had a franchised applicator to whom USMP would sell and that Marshall should con tact Armstrong. One other fact - " '" / l i '.. mentioned. Before Monokote MK-4 was approved by the City. Whitman Brothers. !nc. i ``W hitm an" ' and T. J. McGlone .v Co.. Inc. i " McGlone" '. eontractors anti r.nnlicensees of USMP. sought to purchase D C /F from USMP for use on th e ir p ro j ects. After being refused. Whitman and McGlone threatened to sue USM P it: o r der to obtain DC F. Verhale::. the President of USMP. acctuiesceu and. " \e r tr.e oiiioctions of Schneider, agreed On August 17th D C /F was approved to soil them DC F. Tin's series of by the Philadelphia Department of Li events occurred miring .'entemeer aim censes and Inspections and on August October lii7u, thus a lte r noth of the 26th DC/F was approved by the Phila plaintins' contracts nan already ueen delphia Health Department-- AMS. terminated. FMV was formally terminated from the PE job on August 2S, l'JTO and Venzie was released fr.dii the KG job on Augu-i 31. 11>7<>. In each instance the basis for the termination was the inability of plaintiffs to obtain D C/F. Doth FMV and Venzie were replaced by A r m strong.1 1 Finally, on November 4. 107" the ity of Philadelphia approved a new ; rennet by W. Ji. Grace & Co. called .Monokote MK-4. This product, a non-asbe>tos fireproofing spray, then became the sec Thus the jury here was presenteu a case where, among i.'tner things, the record cstaiuisncii Inal >i , L.'.MP would not seil the [product. DC, F. to the p lain tiffs but referred taem insteau to Arm- trong; - -\ !*. ;;-r. two. ed to eil DC i/' to ; iair.l.: l s it oe- `v.-ii its i rar : y l <;.IP prev ented A .vh-n /o wi;h a la Vs u it '/.M l' -i>0 IJL. F to !i.oii-.icciiieii ;.ippii- ators. The : iaiiai 11 .s rA'j'uin urge tha i :he vasonab! 0 I!1!.'.TvIP/U'S to Le draw n fro m ond product a p a rt from D C /F to have his ri'Ci.u'ii a re t hat USM P and A rm - l.'S Ml * . Oil i h e s e f l i r t s it WHS pcrf. '-i !v proper tor thi' jury to infer tlint O ' A m . J r . a m i I ' S . M I ' d i s c u s s e d tin* I 'M p r o p o - a i . t h a t t h e y a g r e e d t o go a f t e r t h e .'oh a g gressively hy telling Brown that work e o u h l be gi n i n fi ve d a y s a m i t h a t I '< V ! was fully available. All of the m-i rs to Philadelphia hy Srhueidcr. luncheons, tele phone 'alls between Armstrong and . I 'S M P . Joint vi s i t s to P i t y of f i ci al s . T u r n er, the architect, etc. must he viewed in light of this a g g r e s s i v e i nt e r e s t in lie- jobs. " I t s h o u l d a l s o he n o t e d th.'tl O A r e y . Sr . nini I ' 'A n-v . J r . e>\ |Mmiii a 11 hit! 1wo o!' ll.e h n m m US | `h-liiioin* <ci 1Is hut \V`ti IAA l l ' a m i A, r i i hl ruin,' *l u r i n g tlm n-h vaut l i me Jll llM.I h :i\ mil' to ijo wi t h f in* `f*l :l T1V*1v Mnai J ' \V`N1 I '!w-t ur j uh iN/r. v * VUiu. ;i ml !>]Ol t ) . 'I'll.* j u r y . :is it in** ir ilo. ul.vio uMv .ii.l twit 1>i'1i \ A rrnM irun;: Ir si lini Iliv ill,'it 'in h w t h.- ri* \ |i| :i 1li'" i . :i s t.ii:ii nir to 111*i,t>[* I'TS. ...., t !,, V.'fst t 'iw**t.*r 'il.' .Ann 't rone M'-mur;aiwium M . t . Ti.- /ary laa y prupt-rlv tnu* v.r>noiTi-ij : wiiy >*i much "tiri'ni m er `A'-sc t 'Iwst.T ami su liti!** otwyrn ov**r i*R. one ni rilP till'L'.sr spray firuproofin^' *hs in th" ];i > t o t y M* 1'!. ilwh-Iphia V KMuaily pr opur l ; C, til. j u r y m a y h a v e i nt Vr r . "i that t h u s o r a i l s ''I.*alt p r i m a r i l y w i t h 1*1 a m i 1M; jo!h.S." t P l a n i t i ! !"* Mf t j w j r a t w i u m iti 1tppnsit ion to 1V f r m la in M u t ioni F>r .1 UilipiW lit \ , O . V . a n . i / o r l-'i. r A N e w ' ' J Vi al at P - 1 ` 1'. ) l-h A r m s t r o n g ;:->umi-d i...ili ..f : i,,!,. ,,n m u r e f a v o r a b l e t e r m s i l i . m je.td hia-u *s.r11i - d l a Vo n / i o pit KM V. A ri usi r a n g u o i i n l re- e i d v c e i ps t s p l u s l--.' ; f . i r ' . v . t u n i a n d I ' l ' l pi llil i. As p r e v i o u s l y mite,I, KM V s ri", | - | || i ' i i i i r a i -1 w i t h T u r n e r p r o v i d e d f o r e. plus l " f i f or l o m b i .....I o v e r l o a d a n d r o l i l , T i m i e r ' - ini. i r.iei a u l Vei,. ;e all. i ;, ir eii .Is 11111s I l e i i o e I Ile id a lai .V f p r o ; . ! 950 332 FEDERAL SUPPLEMENT 1 strong agreed to carve out the Philadel by the United States Supreme C.v;rr i- phia vicinity as A rm strong's "exclusive" T heatre E nterprises v. Paramour.; F :'~ ` 1 territory': that USMP could not sell any D. Corp., 34(5 U.S. 537. .V,n. 7; 257. I of its fireproofing products, particularly 259, 98 L.Ed. 273 '195 0 . who;-' '* f DC/F, to any other applicator or party marked that "[t]h e crucial o-r; i7 %s without first consulting w ith A rm w hether [defendants' 1 nrgj.-r '.-; > strong; tha t A rm strong could not sell [plaintiffs) stemmed from imier-runm; D C/F unless it first cleared it with decision or from an agreement, tacit or USMP; that USMP would aggressively express." Now that this Court has once i seek out fireproofing business and chan again had the opportunity to review nel it to A rm strong; th a t the defend thoroughly the instant record, it i< -tiii i1 ants were not unilaterally implementing firmly convinced that the impetus of de a long-standing policy of any type: and fendants' conduct was predicated unon finally that these acts were undertaken each of them acting uniiateraiiv. sepa solely to deprive the plaintiffs of their rately, and not in concert. Each defend contracts so th a t A rm strong m ight be ant was actuated by independent substituted. grounds although the decision-masing process may have manifested itself by a The plaintiffs maintain these infer similarity of behavior. Moreover, even ences are reasonable notwithstanding if the Court concluded mere were some th at Armstrong has been in the fire concerted activity by tile defendants tne proofing business as an applicator for facts, as are borne out oy tais record, 75 years and has never been engaged as clearly do not demonstrate tiiat either a retailer or distributor of fireproofing the purpose nr the i / / . cr of m e conduct products; that there was no economic was so pernicious and anl;-.i>m;,elitive advantage whatsoever to U SM P's selling tha t there con.-eiuicntiy aro.-e an unrea i to Armstrong in lieu of Yenzie or FMY sonable restraint of trade which should or Turner; that USMP had had unfa thereby saddle the -defendants with tre vorable business experiences with Yenzie ble damages under the a n titr u s t laws. in the past, culminating in the te rm ina Cf. Albrecht v. Herald Co., 390 U.S. 145, tion of Venzie's license; tha t USMP at 88 S.Ct. eu9, 19 L.Ed.2d 90S ilOOS); this time sold its fireproofing products American Tobacco Co. v. United States, only to licensed applicators; th a t nei 32S U.S. 781. Go S.Ct. 1123. 90 L.Ed. th e r Armstrong nor USMP in any way 1573 (1941)) : Bergen Drug Co. v. Parke, caused plaintiffs' legal complications Davis d: to ., 307 F.2J 723 (3rd Cir. with the City of Philadelphia; and that 19G2), and Gamco, Inc. v. Providence if USMP had the only available product F ru it d: Produce Bldg., 194 F.2d 484 it was purely a historic accident and due ( 1 st Cir. 1932). to its technological expertise. Construing' the facts most favorably towards the plaintiffs, the Court must conclude that the record when viewed in its entirety does not reasonably support the inferences which the plaintiffs now advance. 14, 5 ] 1'he Court in reach in g this judgment is not unmindful th a t where there are allegations of conspiratorial el ements or clandestine agreements, the plaintifls necessarily might rely heavily on circumstantial or indirect evidence to prove and buttress their case. Theatre III. Enterprises v. Paramount Film 1). Corp.. xuitra. 34n U.S. at 540-341. 74 S.Ct. at DISCUSSION' 2.59 2l)U. Resorting to circum stantial [2,3] One of the troublesome issues emerging from the facts of this ease was superbly and succinctly articulated evidence nonetheless does not wholly re lieve the plaintiffs of their obligation of coming forward with substantial evi dence : u re i than : 'oc tu r Co., s" T went are. 1 behav: patter ly cor findin : ion c man . Pa ran F.2d f dent i Steel Cir. 1 Esso (3rd rine 297 F cert. 867, Penn um Ci P a .19' Broad Trade (N.D. Twent F.Sup [6] Co., 2 C92 ( to hat man . trade latera whom any p nopoh recogi turer businf pende whom may . stance sell." versed fusals fourt in nt Film Ct. 257, 3 it re stion is toward pendent tacit or as once review is still t of ded upon . sepaiefendttendent making if by a r, even e some nts the reco'"' I. ct ctitive unreashould th tre- laws. 3. 145, 1968); States, L.Ed. Parke, 1 Cir. idence d 484 this where ial el- the eavily ice to .catre .'orp., .'t. at Liltin' V t w i- VENZIE CORP. v. UNITED STATES MINERAL PROD. CO.. INC. 31 ('.t> :i s V'- K.Supp. it.".! i '.'7 11 donee establishing the formation or na ture of an unlawful agreement rather than resting on mere suspicion or con jecture. .Johnson v. J. H. Yost Lumber Co., supra, 117 F.2d at 61. Cf. Schad v. Twentieth Century-Fox Film Corn., su under the antitrust laws because the re stra in ts intrinsically are so unduly r e strictive and anti-corn: otitive. See. <. a.. Radiant Burners, Inc. v. Peonies Gas Light & Coke Co.. 364 U .S. tnti, ,;,.sp_,5gQ_ 61 S.Ct. 365. 367. 5 L.Ed.2d 354 1 9 6 1 ': pra, 136 F.2d at 996. Parallel business Klor's Inc. v. Broadway-Hale Stores. I behavior in and of itself or a similar Inc., 359 U.S. 207. 211-212. 79 S.Ct. 705. pattern of conduct does not automatical 709, 3 L.Ed.2d 741 (1959); O tto Milk ly compel, or conclusively warrant, a Co. v. United Dairy F a rm e rs Coop finding of a conspiracy or concerted ac Ass'n.. 3S8 F.2d 769. 797 '3 r d Cir. tion or other liability under the Gher 1967). and Jones K nitting (.'orti. v. Mor man Act. W inchester T heatre Co. v. gan, 361 F.2d 451. 459 (3rd C.r. i960). Paramount Film D istributing Corp., 324 The Supreme Court nas ooserveu now- F.2d 652. 653 (1st Cir. 1963): Indepen ever in White Motor Co. v. Unitisi dent Iron Works. Inc. v. United States States. 7,72 U.S. 253. 261-261. S.Ct. ! Steel Corp., 322 F.2d 656. 661-665 1 9th 696. 701-702. 9 L.Ed.2d 77,6 Te63,. th a t Cir. 1963): Gold Fuel Service. Inc. v. not every n m e n i arrangement, neiween t Esso Standard Oil Co., 306 F.2d 61. 64 a m anufacturer anu a iiisirioutvr re su lt 1 3rd Cir. 1962): Delaware Vuiioy .Ma ed in estaoii.-ning pi r sc iiaum iy. and | rine Sup. Co. v. American Tobacco Co.. *hat rf:e stangami el ine 'sua- reason ' 297 F.2d 199, 2p2 -2 u6 . 3rd Cir. 1.A1 . t't* al'l'ilfU. .vii i .'I'. liuliull ul I cert, (ienied. 369 C.S. t>39. ."2 S.Ct. the business practices aia; tue r e s tr a in t 667. 7 L.Ed.2d 643 (1962:: X orta af rade inherent tncrein musi, b fuily Penn Oil Ji Tire Co. v. Phillips \tro ie - xt'inri'U m v.eigu;:.g ;.:a; a c s e - i n g the ! um Co.. 356 F.Supp. 90S. 922-923 E.D. mnt i-< -t141. i- .mpact ui no p a r tic u la r Pa.1973): United Shoppers Exclusive v. arrangem ent. exc.usive distributor* Broadway-Hale Stores, Inc.. 1966 i 'CII -hiti an :....str:,::oa of -a vertical re Trade Cas. r 71,727 at 62.271 to i 2.272 stra in t vi '.rata- .vaici: has received CX.D.Cal.1965), and United States v. viue.'pm-aii y.aUcnai sanction. Alpha Twentieth Century-Fox Film Corp.. 13,7 Ci.'tf.:). i.v. ef Cai.. Ine. v. Jack Daniel F.Supp. 76, S5 ( S.D.Cal. 1956 >. m - t : . 454 F.2d 442, 452-453 (9th [6] In United States v. Colgate w 1 if- P ' , 2 ; Joseph E. Seagram Sons, ir.c. v. Hawaiian Oke & Liquors, Ltd., Co.. 250 U.S. 300. 39 S.Ct. 465, 63 L.Ed. 416 1 .2u 71, 76-60 (9th Cir. 1969), cert, ! 992 (1919), the Supreme Court sought denied. 7,96 U.S. 1062. 90 S.Ct. 752, 24 to harmonize the provisions of the .vher- L.Ed.2d 755 (1970) ; Ace Beer D is tr ib u man Act invalidating all restraints of tors. Ine. v. Kohn, Inc., 313 F.2d 2S3, trade with the right of a merchant uni laterally to engage in business with 266-267 ( 6th Cir. 1963); P a c k a rd Mo tor Car Co. v. W ebster Motor C a r Co. whom he desires. " In the absence ot any purpose to create or maintain a mo DO U.S.App.D.C. 161, 243 F.2d 418, 420-421 (1957), cert, denied, 355 U.S. nopoly, the act does not restrict the long 622, 76 S.Ct. 29. 2 L.Ed.2d 38 0 9 5 7 ) , recognized rig h t of tra d e r or manufac and Peerless Dental Supply Co. v. W eber tu r e r engaged in an entirely private Dental Mfg. Co.. 283 F.Supp. 286. 239 business, freely to exercise his own inde 290 i E.D. Pa. 1966 ). In S ia y r a m S a n s pendent discretion as to parties with Inc., supra, the Court expressly found whom he will deal; and, ot course, he may announce in advance the circum that absent the existence of an anti-com petitive p u rp o se a n d /o r effect, "the deci stances under which he will refuse to sion of the seller to tra n s fe r hi- b u si sell." Id. at 307, 39 S.Ct. at 466. Con ness from A to B is valid even u r u g h B versely, group) boycotts or concerted re may have solicited the transfe: ':.d even fusal., to deal create a r .-a liability though the seller and B may h. . agreed m 9* 'A -v % m Isv oj rj- * Pi m,4V. i id- 952 3S2 FEDERAL SUPPLEMENT before the seller terminates his dealings with A." 416 F.2d a t 78. The Court acknowledges that the case a t bar does not involve an exclusive deal ership although at all times relevant hereto USMP had only a single fran chised applicator, Armstrong, in the Philadelphia vicinity. But other non-ex clusive dealership settings have gained judicial approval even though the verti cal relationships produced some measur able restriction in competition. Weather Wise Co. v. Aeroquip Corp., 468 F.2d 716, 718 (5th Cir. 1972), cert, denied. 410 U.S. 990, 93 S.Ct. 1505. 36 L.Ed.2d 188 (1973); Ark Dental Supply Co. v. Cavitron Corp., 461 F.2d 1093, 1094 (3rd Cir. 1972); Bushie v. Stenocord Corp.. 460 F.2d 116, 119-120 (9th Cir. 1972); Elder-Beerman Stores Corp. v. F e d e ra t ed Dept. Stores. Inc., 459 F.2d 138. 144-148 ( 6th Cir. 1972), and Tripoli Co. v. Wella Corp., 425 F.2d `.,62. POO-1.'.'); (3rd Cir. 1970), cert, denied, 400 L'.S. 831, 91 S.Ct. 62, 27 L.Ed.2d 62 i l l `7<>). Plaintiffs strenuously maintain mat in many of the cases heretoiore cited, there had been explicit findings that there were other products reasonably in terchangeable or the plaintiffs haul failed to show tha t there were r.o seen alternatives available. Considerable em phasis is placed on language in Lnited States v. Arnold, Schwinn & Co., 368 U. S. 365, 376, 37 S.Ct. 1856. 1S64. 13 L. Ed .2d 1249 (1967), where the Court stated: "At the other extreme, a manufac turer of a product other and equiva lent brands of which are readily avail able in the market may select his cus tomers, and for this purpose he may 'franchise' certain dealers to whom, alone, he will sell his goods. Cf. I nited Slates v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919). If the restraint stops at that point- -if nothing more is involved than vertical `confinement' of the m anufacturer's own sales of the merchandise to select ed dealers, and if competitive products arc readily available to others, the re striction on these facts alone, would not violate the Sherman Act.'' E m phasis added.'1 The ultimate ami pivotal question presented in this case can th erefo re be distilled as follows; Absent an anri-'^mpetitive objective, does a m anufacturer forfeit the right to select his customers if arguably his product is the only one available? That statement of the issue necessarily assumes that in the ease at bar there in fact was onlv one proauct, f'afco PC-'F. thoueh that assumption was. ana still is. vigorously challenged. The above framing of the issue assumes furthermore tnat this recorn does not evidence any unlawful, anti-competitive motive of the defennants. A subsidiary issue in this case is whether the delineation of tne relevant product marKet is a factual ceterm ina'inn-- fading entirely within the prov ince of the jury-- or a .egai ja u g m e n t-- which is defined by tne Court. .Many of tlie 'leading a ntitrust cases nave ueen r.oii-.iury and '.aerefore are not totally dispositive ui tms point, c,. y., L rated States v. Grinr.cd Corp.. 384 U.S. 563. 86 S.Ct. 1696. 16 L.Ed.2d 773 i l h o o i ; Brown Slice Co. v. United States, 370 U.S. 294. 62 S.Ct. 13'.'2. S L.Ed.2d 510 1962!. and United States v. E. I. D u Pont De Nemours to Co., 351 U.S. 377, 76 S.Ct. 994. 100 L.Ed. 1264 (1956). In the non-jury case of Acme Precision Products. Inc. v. American Alloys Corp., 4S4 F.2d 1237, 1245 i 3th Cir. 1973; the Court declared that the definition of the relevant product market was essentially a'fact question subject to the application of certain legal guidelines. [71 Dnl'ont teaches us th a t the touchstone for ascertaining the relevant product market in a Section 2 context is `reasonable interchangeability'' of p ro d ucts. Factors which should be consid ered are the cross-elasticity of demand, tlie similarity of price, the ad;.viabii;ty of products, the uses to which. ' ; ;--od- uct is put, and its g-nerai . . . 1 f i s tic:;. 651 U.S. a t 36" 4-!. ' 76 S.Ct. at 999, lu c e - j -Id. A ` ,t could Em otion e be :om- urer T iers one sue 2 at iuct, tion ged. mes not tive ; is ant ina- of een ally .ted . 86 o); 570 510 Du77, In ion P-. he he Iiy on he nt is di- kjgjtj VENZIE CORP. v. UNITED STATES MINERAL PROD. CO.. INC. Oil.* ;i> r . S u p p . {.':** :'.Ti Shoc, where the Court was explicating the parameters of Section 7 of the Clay ton Act. it recognized that the relevant product market could consist of a sub market for antitrust purposes. materials and combination of materials instead of being limited solely to non asbestos fireproofing svrav materials. The Court is in agreem ent with th a t contention. "The boundaries of such a submar ket may be determined by examining such practical indicia as industry or public recognition of the submarket as a separate economic entity, the prod uct's peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized ven dors." .",70 L'.S. at 225. S2 d.Ct. at 1521. The Court in >i n until likewise ouuu that in a Section 2 matrix there cuiiiu exist submarkets, out it noteu m rtuer tha t it would be permissible to cuuuur.e "in a sinvie mar.,et a nunuier ui u.ti ent products or services v. acre tnat lunation reflects commercial rca.u. 284 L'.S. at 572. so s..Ct. at 1704. Throughout the trial u: the mm.ml case, the defendants adopted the position that the relevant product market should include all structural steel iireprooim e F irst, it is clear th a t p la in tiff could have utilized an asbestos-bearing, direct-to-steel fireproofing spray had there been lOO'T containm ent of the air-borne emissions. Except for the presence of asbestos, those products are reasonably intercnanreaole witn Cafco DC. F. Secondlv. there were generally avaiia- ble on the mantel a num ner or non-as- i.osios I'^montitious ann m em orane prod- . couid nave noon useu for t : . " mi steel ; n v p rooi inc. These - rejects r-ertormeu essentially the luen- : a: -tioii .iiiu tae cost per sq u a re fim-prooiing one men tnicic was t';--x:mat.-!.v m e .-ante. a lthough the '.npiication costs may nave oeen th re e ` iriK's as expensive as a non-as : 1 . Ct. ..t : .jvpr- .'ray or an l.-11 1 1 a ; ::x-prooiinji sp ray . -cji .c!. u Z -*Oo--*t 1 J, <0 S : 12-1"ID. dome of those prod- ! C ..MLU ti.e following c h a r t : Product t ulum.n Ratine .>ui:a N a t'l Gypsum Co. Gypsolbe i Types G. G-2, and G-2 >. U. S. Gypsum Co. Structolite (Types R and S i Gypsum board or tile (various manufacturers) Fiber board (various manufacturers) Vennieiilite nr perlite plaster ( various ni l'rs. > Johns-.Manville !>laze-t 'I'ete hr. 1 hr. 4 hr. 4 hr. 4 hr. 1 hr. 4 hr. 4 hr. .iCoicnl O. , ::ai mi: r-er r `hick .1 : .12 Result Partially finished structural member >5 ' > -1 ! A5 f Is tO55 applied to metal lath .bS-.IO 954 5S2 FEDERAL SUPPLEMENT During the relevant period in question there were no other non-asbestos fire proofing spray products th a t had received both ULI and AMS a pproval xcort for Cafco DC/F. The following interrogatories were submitted to the jury for their 'term ina tion of the relevant product market: " (1) DO YOU FIND THAT TH E RELEVANT PRODUCT MARKET WAS NON-ASBESTOS SPRAY (DIRECT TO STEEL)PRODUCTS? " (2) DO YOU FIND THAT TH E RELEVANT PRODUCT MARKET WAS ASBESTOS AND NON-ASBESTOS SPRAY (DIRECT TO STEEL) PRODUCTS ? " (3) DO YOU FIND THAT T H E RELEV A N T PRODUCT MARKET WAS ALL STRUCTURAL STEEL FIRE . PROOFING PRODUCTS (INCLUDING SPRAY AND NON-SPRAY. ASBESTOS AND NON-ASBESTOS. GYPSUM BOARD, TILE, METAL LATHE AND PLASTER. ETC.)?" VMS. NOYES NO_ YES. NO The jury answered "Yes" to interrogato ry ( 1 ). [8] The Court believes-- irrespective of w hether it should be a factual or le gal determination--that given the record in this case the relevant product market should have encompassed all structural steel fireproofing products if the stand ards of DuPont. Brown Shoe, and Gn'nnell are followed. All the reasonable in ferences inescapably point to such a con clusion. Courts generally have cast serious doubts on the existence of a relevant product market which is comprised of only a single product. DuPont, supra, 351 U.S. a t 380-381. C.9-1- tU-4, 76 S.Ct. at 990, 1006-1012; Acme Precision Prod ucts, Inc. v. American Alloys Corp., su pra, 484. I'.2d a t 1212-1214: Bendix Corp. v. Balax, Inc., 471 F.2d 149, 101 (7th Cir. 1972); Eldor-Beerman Stores Corp. v. Federated Dept. .Stores. Inc., su pra, 459 F.2d at 119; Industrial Bldg. Materials. Inc. v. Interchenucal Corp.. 437 F.2d 1330. 1344 (9th Cir. 1971); 11. E. Fletcher Co. v. Rock of Ages. Corp., 326 F.2d 13. 15, 17 (2d Cir. 1903), and Paddington Corp. v. Major Brands, Inc.. 359 F.Supp. 1211. 1219 n. 5 iW.D.Okl. 1975). Cf. Bushic v. Su-nocum Curp.. upra, 4Go E.2d at 1 2 1 . |9 I When* a refusal to uoai as tore is unaccompanied by an anti-competitivc objective such as price-fixing, territorial division of markets, an attempt at mo nopolization or group boycotts, a small merchant should be able freely to engage in a private enterprise as he sees fit and proper. US.UP is not a public utility or a large conglomerate. If USMP occu pied the i "sition cf a monopolist it was " `.'.rust" into that position solely because of its ingenuity, industriousness and historic accident. F o r U S M P 's f o r tu i tous development of a superior product, a Tnainiiucturor should not be rewarded with an antitrust suit when it thereby failed to abandon and disavow its past long-standing business procedure of sell ing through licensed applicators. W eather Wise Co. v. Aeroqtiip Corp., sttprn, 168 F.2d a t 718; A rk Dental S up ply Co. v. Cavitron Corp., supra, 161 F. 2d at 1094; Tripoli Co. v. Wcdla Corp.. .uipni, 425 E.2d at 936-939, and United Shoppers Exclusive v. Broadway-Hale Stores, Inc., supra, 1966 CCH Trad( a s . \r 71.727 at 82,27.3 and 82,275. 2 COUP. v. UNITED STATES MINERAL PROD. CO.. INC. 955 i it**a* >N- I-'.SuMi. il'.*T41 While Armstrong gained financially fendants to which pir se liability a t by Turner's decision to complete the tached or the restraint of trade caused, fireproof in? work on the ? E and FG thereby was so unreasonable ''ecause projects with a non-asbestos fireproof there was only a single product, this ing spray, Arm strong in no manner Court would then find th at d efendants' sought to influence Turner's arriving at remaining objections are without merit. that decision. Armstrong, like Venzie There would be no need for a soeivui and FMV, was an applicator of fire trial and the Court of Appeals couid proofing products and was not a distrib reinstate plaintiffs' verdict. utor. It would indeed be an anomalous result of the antitrust laws to require a [101 One of the USMP's reasons ns non-wholesaler or non-retailer drastically to alter its established business policies and operations by compelling it to be come a distributor and then require it to sell those products to competitors when for 75 years it has not been engaged as a retailer or distributor. See cases cited in preceding paragraph. The Court's review of the instant to why it deems there snouia ne a new trial is that there snomd nave oeeii a fourth interrogatory suomittou to tin? jury in their ascertaining tne relevant product market. On page not "I tins Opinion, supra, tne Court includes tne three interrogatories which were given t ) the jury. I'S M i' ur.--s Gnu a io u r ta interrogatory should have oeen leiiuereu record and the applicable legal authori and that one would ;une been "mi r.on- ties impels it to conclude that the rea asbestos structural fireproofing prod sonable inferences which the jury couui ucts. wnetiicr uirect-to-stuei spray, ce- draw are tha t there was no concerted re mctmuuu.s or m.c.mnrano. ' -v-.cn a re fusal to deal and th a t the relevant prod quest was made t> tr.e e v a r t ny noth ue- uct market was all structural steel : ireproofing products. Furthermore. 1; de feiiuants prior to the Court's final d r a f t ing of tr.e interrogatories. The Court fendants did act in concert they wore rejected the request during trial and not motivated by the accomplishment ot still heiievc.s the three in te rro g a to rie s an anti-competitive objective nor was there any unreasonable restraint m given to the jury wore adequate. The relevant product market issue was trade. Accordingly, in the Court's view, hweiicd on at g re a t length by all the the plaintiffs' verdict must be set aside : a r t i e . s in this case and thoroughly cov- and the defendants are entitled to judg . red a the ('large of the Court. T he ment n. o. v. ;ury was fully apprised of the technical ami financial differences of all the fire ' IV. proofing products. It was the j u r y 's be lie:'Chat only non-asbestos spray direct- ALTERNATIVE RULINGS to-stoel products should constitute the An appellate Court might conclude that my reading and construction ot the relevant market. A related objection propounded by record were too myopic and that tile record did substantiate the jury thid US.M1' is that the jury did not d e te r mine w hether Spraydon Type 11--L) or J ings. Therefore, the Court is addition and Airotherm -100 were available as ally ruling on the remaining objections competing products. These two prod of the defendants. If a reviewing ('emi t ucts were non-asbestos, dircct-to-stcel determines that the record supports fireproofing sprays generally avails: ie plaintiffs' inferences and that there was during the summer of 1070, but neither a concerted refusal to deal by the de had attained a -1 hour column r a tin e by 956 382 FEDERAL SUPPLEMENT ULI. It thus would have been necessary to have used a combination of other products in order to fireproof the col umns of the respective buildings. The jury therefore would have had to have answered " Yes" to interrogatory (31 tiefore either Spravdon II-D or J and Airotherm 400 could have been considered as competing alternatives. [11] Another objection of the de fendants is that there was no findintr by the jury that the conduct of the defend ants was unreasonable and that such a finding was necessary. If there is per se liability because of the concerted re fusal to deal, the reasonableness of the defendants' activities is irrelevant. Lamb Enterprises, Inc., v. Toledo Blade Co.. 461 F.2d .'00. 517 Oth Cir. l'.'72\ cert, denied. 4u9 U.S. iOul. `.'3 S.Ct. 5.25, 34 L.Ed.2d 262 (1972). [12] The final objection is '.:..A there was insufficient evidence .resent ed by the plaintiffs regarding the extent of damages sustained Ly them. A rm strong challenges the use of four esti mates offered by plaintiffs' export rela tive to computing a portion of plaintiffs' damages. An analysis of the entire record leads the Court to the conclusion that there was adequate evidence upon which the jury could base its verdict without indulging in speculation or con jecture. Zenith Radio Corp. v. Haz-Itine Research, Inc., 395 U.S. 100. 123 125, 89 S.Ct. 15C2. 1576-1577. 23 I,.Ed. 2d 129 (1969); Bigelow v. RKO Radio Pictures, 327 U.S. 251. 262-266. 66 S.Ct. 574, 579-580, 90 L.Ed. 652 (1946). and Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 378-379. 17 S.Ct. 400, 405, 71 L.Ed. 684 (1927). In these alternative rulings, the Court reserves making any judgment us to the amount of attorneys' fees. If the ver dict s h o u l d b e r e i n s t a t e d , this C o u r t will then award plaintiffs' counsel reasonable compensation pursuant to Section 4 <>! the Clayton Act. FIDELITY STANDARD LIFE INSUR ANCE COMPANY. Plaintiff, v. FIRST NATIONAL RANK * TRUST COMPANY OF VIDA LI A. (4F.ORC.IA. Defendant and Third Party Plaintiff, v. SECURITY MUTUAL CASUALTY COM PANY. Third Party Defendant. Civ. A. No. 674-8. United States District Court. S. U\ '. L-oggia. Swasnsnoro Division. Plaintiff brought action for enf 'iTcment of a Louisiana stale court judgment. P ianuiff moveu tor sumrr.a- ."augment, i ne District Court. LawI'iiref Judge, held that wnere record demonstrated tnat jurisaictionai cuestion was ralseti uuu iu.iv .ligated in Louisiana state court, ^eicn u an t couid not routiealo j urisa,clior.ai issue as to applicability of long-arm statute; that Louisiana juugmciil .os.-essod requisite of finaiuy wmch required recognition and enforceability thereof under full ; iith ami credit clause, despite pendency of appeal in Louisiana; and th a t conten tion that loan agreements on which Lou isiana judgment was based were pro cured fraudaient transactions related to fraud intrinsic in nature and was not sufficient to keep federal district court from according full faith and credit to Louisiana judgment. Plaintiff's motion for summary judgment granted. I. J u d gm en t C=>8 2 8 ( 1) A judgment proved in manner pro vided by statute enacted p u rsu a n t to full faith and credit clause of Federal Con stitution is entitled to receive same force, recognition and effect in any United States court as it would receive in courts of state where judgm ent as IXSUR. iff. - TRUST EORGIA, laintiff, TY COMlant urt. for -en- ite court ' summa- u**-- v- _re suictional litigated ant could i ue as to j te; that ' requisite i cognition 1 ider full I pendency t conten- i lich Lou- 1 ere pro- : s related ; was not ; ict court :redit to . ummary 1er pro t to full a| r e ^ . _. j ny *-.eivc nt was FIDELITY STAND. L. I. CO. v. FIRST N. 3. & T. CO. OF VIDALIA, GA. 957 fit** a? F.Suim. 1!:71t rendered. U.S.C.A.Const. art. 4, 1 ; 23 8. Judgment 0=823(3.16) U.S.C.A. ;; 1733. Louisiana judgment possessed req 2. Judgment 0=813 When a court is called on to enforce a foreign judgment, it may properly ex amine basis for jurisdiction of court in which judtrment was entered, but extent of inquiry into jurisdiction is limited. U.S.C.A.Const. a rt. 4, S 1: 23 U.S.C.A. 1728. uisite of finality which required recog nition and enforceability thereof under full faith and credit clause, despite pen dency of appeal ;:i Louisiana, w here Louisiana judgment was subiect to en forcement in Louisiana. U.S.C.A.Const. art. 4. 8 1; 23 U.S.C.A. i 1733: L S A C.C.P. arts. 2037. 2123. 2124. 2252. 3. Evidence 0=82 There is a presumntion in favor of regularity of j augment of court of origi nal jurisdiction. 4. Judgment 0=828(3.30) Where suit was brougnt in federal district court in Georgia to enforce a Louisiana state court judgment, and record demonsirateu tiiat junsuicliun.u question was raised and lady dtigated in Louisiana state court, defendant cutiiii not in federal court relitigate jurisdic tional issue as to applicability .. lor.garm statute. U.S.C.A.Const. art. ;. j 1 ; 23 L .S.t_A. 1*33 ; N'ation.ii Lana .let, 12 U.S.C.A. s '.'L 5. Judgment 0 3 1 3 In the case of collateral attack on judgment of another court tvs; c-etiitg j u risdiction over defendant's person, once it is shown that such issue was fully liti gated in original court, binding effect must be accorded to same under full faith and credit clause. U.S.C.A.Const. art. 4. 1. G. Judgment 0=815 A judgment of a state court in or der to be given full faith and credit in another jurisdiction must be a final judgment adjudicating the litigation in a conclusive manner. U.S.C.A.Const. art. 4. s 1. Judgment 0=813 General ruie is that full faith and c r ed i t lines not have to ue accorded a judgment where the coiiaterai attack is wised on its procurement tn ro u g n fraud, 'it im tvaenment 01 foreign ju o g m e n t is limited 10 existence ui ir a u u m a t is ex- ".unsic in its nature, m a t is. ir a u a pre venting one from having a reai contest `h" <mt based on conuuet or activities <i<:e or the court proceedings them- '"Ivos. U.S.C.A.i oust. a rt. 1. 10. Judgment 0=508 intr:::>;e irauu .s ur.uvuiiir.g as ba sis oi eonaterai att.icx uii ju d g m e n t, and intrinsic irauu consists of fraudulent " is tb.at ; ertain to an issue involved in " iggia: action -.vnich was litigated or ""Id nave neon litigated therein. U.S. 1LA.Const, art. 4, j 1. 11. Judgment 0=823(3.20) ( ontention that loan agreem ents on which Louisiana -tote court judgm ent was based were procured by fraudulent transactions related to fraud intrinsic in nature and was thus insufficient to keep lederal district court in Georgia from according lull faith and credit to Louisi ana judgment, where intrinsic fraud al leged could have boon subject m a tte r of defense in litigation in Louisiana. U.S. C.A.Const, art. 4. S 1 ; 28 U.S.C.A. 1733. 7. Judgment C=!)2X T h e M n u l i t y ol* t h e j u d g m e n t ot ' a state court, the enforcement of which is sought in another jurisdiction, depends on the law of the state in which judg ment was originally entered. U.S.C.A. (.'oust. art. 4. S 1. Dow X. Kirkpatrick, II (.lore Bird Howell) Atlanta, Ga., for Fidelity Standard Life Ins. Co. Paul W. Calhoun, Jr,. V I . F irst National Bank y dalia. Ga.. for . of Vi- arched is had n the i have ric reiacts. ase of "iiCOU- '>4), in did a ^ the atingf :o be ating showlaws, n the iportWest show at 1 I ne of vits). ' fedfend- indiause warthis ding isent hich iuse. of a is of nbra . 45 tited (3rd ites, 177 )banot of- nitpbc. in VENZIE COUP. v. UNITED STATES MINERAL PROD. CO.. INC. 1309 ` Cite us 531 F.2d 1309 (1975) :he premises to be searched." United Slates v. Eisner, 297 F.2d 595, 597 (6th Cir. 1962), cert, denied, 369 U.S. 859, 82 S.Ct. 947, 8 L.Ed.2d 17 (1962). Jr., J., 382 F.Supp. 939, rendered juderment for the defendants, and plaintiffs appealed. The Court of Appeals, Seitz, Chief Judge, held that absent evidence W'e find, therefore, that the affidavits o f a showing of acts by defendants in showed sufficient probable cause at the contradiction of their own economic in time issued to warrant a reasonably pru terests and satisfactory demonstration of dent person in believing that an offense motivation to engage in a concerted re was being or had been committed on the fusal to deal with the plaintiffs, the evi premises to be searched, that the partic ular items to be seized would be found on the premises to be searched, and that the search warrant thus met the require ments of the Fourth Amendment. Be cause we hold the search warrant valid, we need not reach the question of whether the exclusionary rule was prop erly applied. The decision of the district court is reversed and the case remanded. dence of the defendants' parallel busi ness behavior did not establish concerted refusal to deal; that the ban on resale imposed on the defendant contractor by the manufacturer was not a per se viola tion of the Sherman Act; and that the manufacturer's policy of soiling fire proofing spray only to licensed applica tors who in turn sold only on an applied basis did not amount to an liiegai tying arrangement. Affirmed. The VENZIE CORPORATION, and F. M. Venzie & Company, Inc., Appellants, v. UNITED STATES MINERAL PROD UCTS COMPANY, INC. and William Armstrong & S o n s Inc., Appellees. No. 71-1995. United States Court of Appeals, Third Circuit. Argued April 17, 1975. Decided Aug. 27, 1975. Fireproofing contractors brought ac tion against competitor and against manlllaclurer of n o n a s b o s to s fireproofing spray alleging violations of the Sherman Anti-Trust Act. The United States Dis trict Court for the Eastern District of Pennsylvania. A. Leon Higginbotham, 1. Courts <s=4U6.5(10) In determining if district court erred in granting jud g m e n t n. o. v.. Court of Appeals is required, as is district court, to view evidence and all reasonable in ferences therefrom in light most, favor able to party against whom judgment was painted. 2. Monopolies <0=17(2.1) In absence of showing of acts l>v defendants in contradiction of their own economic interest and satisfactory dem onstration of motivation to engage in concerted refusal to deal, defendants' parallel business behavior was insuffi cient to establish concerted refusal to deal. Sherman Anti-Trust Aet, 1 15 U.S.C.A. 1. ' 3. Moni>i>olies c = 17(2.1) Where by fireproofing contractors' trade practice no contractor engaged in reselling fireproofing obtained from manufacturer, ban on resales imposed b\manufacturer was not per se violation of Sherman Act. Sherman Anti-Trust Aet 1, 15 U.S.C.A. l. 1. M o n o p o lie s 0 = 1 7 ( 2 .5 ) Fireproofing spray manufacturer's policy of si lling spray only to licensed r-$P* -*/,''m.'''ij-UA?;&'/'***S>S.;'-J ' ' v r^- jar& & s 1310 521 FEDERAL REPORTER. 2d SERIES applicators who in turn sold only on an applied basis did not amount to illegal tying arrangem ent, in that seller of "ty ing" product had no economic interest in market for the "tied" product and did not receive commission on sales of prod uct. Sherman A nti-Trust Act, 1, 15 U.S.C.A. 1. 5. Monopolies =17(2.5) Tying agreements are unlawful where tying product possesses sufficient economic power so as to appreciably re strain competition in tied product m ar ket and where not insubstantial amount of commerce is affected by arrangem ent. Sherm an A nti-Trust Act. S 1. 15 U.S. C.A. 1. 6. Monopolies => 17(2.5) Tying agreements are treated as per se antitrust violations because they serve no purpose oilier than suppression of competition. Sherman Anti-Vrusi Act, 1, 15 U.S.C.A. 5 1. P e te r Hearn. .Murray ,5. Levin. Ken neth I. Levin, i 'hiiadelpnia. i 'a., for a p pellants; Pepper, Hamilton Cc ScheeLZ, Philadelphia, Pa., of counsel. Benjamin M. Qulgg. Jr.. Stepnen W. Armstrong, Philadelphia, I'a.. for Wil liam Armstrong & Sons. Inc.; Morgan. Lewis & Bockius, Philadephia, Pa., of counsel. Morris R. Brooke, Philadelphia, Pa., for United States Mineral Products Com pany, Inc.; Drinker, Biddle i Roath, Philadelphia, Pa., of counsel. Before SEITZ. Chief .Judge, and RO SENN and WEIS, Circuit .Judges, OPINION OF THE COURT SEITZ, Chief Judge. Plaintiffs, the Vonzie Corporation and F. M. Vonzie & Company, Inc.1, appeal from an order granting defendants mo tion for judgm ent ri. o. v. on their claim of a concerted refusal to deal. In their I. A l t h o m i h pi n i i t i l t '. s i c i n d e p e n d e n t i iimp. i- m e s a n d in t " i ` 1. mp ' i m e >nit i .n o . r s . II.en interests in uns ............. .il. 1h e t e h complaint, plaintiffs asserted that de fendants United States Mineral Products Company, Inc. ("Mineral") and William A rm strong & Sons, Inc. (" A rm strong") had by agreem ent refused to sell a fire proofing material to plaintiffs in viola tion of Section 1 of the Sherman Act. Plaintiffs also attack an order of the district court directing a verdict for de fendants on their claim that defendants had illegally tied the sale of the fire proofing product of Mineral to the pur chase of the application services of Arm strong. Plaintiffs and defendant Armstrong are competing fireproofing contractors in Philadelphia. In late 1969. plaintiffs were awarded contracts to fireproof two buildings in Philadelphia for which the general contractor was Turner Construc tion Company ( " T u r n e r "). A rmstrong's bids mi the projects w ere rejected. The contract for eacn job specified that aso.-stos -pray fireproofing be used, and : i.iintiffs otilained permits from the City f Philadelphia conditioned upon their promise that there would be no visible missions outside the building perime ters. Shortly alter plaintiffs began spraying on one of the projects, a civil suit was filed by the city Department of Health in .March 1970 as a result of emissions of spray from the building. The suit was resol veil by a stipulation th a t specified strict containment and clean-up proce dures. F u rth e r violations of the c ity's Air Pollution Code through additional emissions led to the filing of a criminal suit against one of the plaintiffs by the Philadelphia District Attorney's office on J u n e 2.'i. 1970. A fte r that plaintiff pleaded nolo contendere on July 21, 1970, to a charge of creating a public nuisance, an order was entered permitting further use of asbestos spray on the project only il the e xterior walls ol the l > m l l m g w e r e I u st constructed. The order also reipiircd the substitution of a non-ashestos w , will rclt-r in t l i c ni i u l l c c t i v c l y ! i . i Hi;:h< mt t i n s . j ' i ni '>m . alainiilts that de1 Products i William mstrong") ell a fire- in violaman Act. r of the t for de fendants the firethe purof Arm- rmstrong .actors in plaintiff roof two hich the 'onstrucP*4 's ..e mat assed, and the City on their o visible perime- spraying suit was f Health ssions of suit was specified > proceie city's uiitional criminal by the ffice on ilaintiff T. 1970, aisanco, further ct only ir were Iso >.... offs >. VENZIE CORP. v. U N ITED STA TES M IN E RA L PROD. CO.. INC. 1 3 1 1 Ci t o a s a l'l i- M IJutl I l!' ..n xrr bearing spray as soon as such a product was approved for use. Because Turner regarded erection of the exterior walls as unfeasible and be cause Turner rejected alternates to spray fireproofing such as gypsum hardboard or metal lath and plaster, plaintiffs be gan to search for a non-asbestos spray product to be used on both projects. The only asbestos-free spray product then on the market that met the fire retardation standards of the Philadelphia Building Code was Cafco DC/F. Devel oped by defendant Mineral in 1968-69. D C/F had been approved by Underwrit ers Laboratories, a national testing con subsequent inquiries addressed, w it dur ing the month of July. Mineral main tained the posture th a t it .-.'id o n i v to its licensed applicators and `hat inquiries should he addressed 'n Armstrong. Plaintiffs' proposal to purchase DC/F from a Mineral licensee in New Jersey was met with a warning that Mineral would terminate shipments to that com pany if it found that the :'lrenroonng materials vvere not being used directiv by the licensee. Armstrong's position regarding sales to plaintiffs was unequivocal tnrougnout plaintiffs' negotiations. Around J u l y 30. both the president ami enairman of the cern, for column, beam and deck fire retardation standards equivalent to those of the Philadelphia Code in March 1970. Mineral sold its fireproofing only through licensees in order, according to Mineral, to insure high quality applica tion. Although the company hud given no exclusive territorial licenses anil hud previously licensed other Philadephia fironroofers, Armstrong was the sole Min eral licensee in Philadelphia in the sum mer of 1970.- A predecessor of both plaintiffs hud been a Mineral licensee, but neither plaintiff had been authorised to apply Mineral fireproofing since a dis pute between Mineral and the predeces sor company in 1903. Throughout the month of .buy 1970, plaintiffs and Turner bombarded defend ants with requests to purchase I)('/F for plaintiffs' use. The first contact was a Ju ly 0, 1970. telephone call hy T u rn e r'1-1 director of purchasing to Mineral's gen eral sales manager. The Turner repre sentative was told that Mineral would not sell to Turner and that Mineral had a Dhiladelphiu llecnsce. hut was also ad vised to contaet Mineral's Philadelphia sales representative. The conversation was followed by a letter from Mineral describing DC/F in some detail and giv ing the telephone number of the Phila delphia representative who might be contacted for further information. In board of Armstrong told plaintiffs that A rm strong couul not soil D C /F because its franenise foruuue resale of the prod uct. Armstrong, in .tecum witn the trade practice, hud never soui fireproof ing materials. Unco it was clear tiiat plaintiffs could not obtain DC, F, T u rn e r anproached Armstrong tor a nid on both projects, iieeause lite contractor felt this was the oniv way to obtain the product. Turner accepted one bid prepared on Julv 30 widen contained percentages for over head and pr<dit described by one of its officials as "unusually high" and which gave a margin of profit greater than plaintiffs would have received under their contracts. A similar hid was later accepted for the second project. Plain tiffs' contracts were terminated. Once A rm strong had subm itted a bid to T urner, M ineral's Philadelphia re p re sentative visited the city on A ugust 3, 11 and 18 for the purpose of obtaining final city approval for DC/F. Formal approv al was g ra n te d on A ugust IS. 1970, a f te r it was determined that D C /F was suit able for the lightweight concrete Turner was using. i'laintifls filed this suit for losses in curred as a result of the termination of their contracts Iieeause of their inability to purchase DC/F. They alleged, inter n//'n, tha t d efendants had violated Sec- 2 . In .Sc[>ti-Mili"i .mil <>i t oi l e r I'.iTO. M i n c i . i l , un i V r itiFc.it "I . m u t i n ' . i Mill. In i i i m U t v . > o i l i e r I ' tnl . i tl> 11 .1ii.i ni i ni iirr. i i tmoi ss i n h.imiiil!,- k , f i r e . I " " ' ........ 1312 521 FEDERAL REPORTER. 2d SERIES tion 1 of the Sherman Act by: (1) en g aging in a concerted refusal to sell D C /F to plaintiffs and (2) illegally tying the purchase of A rm strong's services to the purchase of Mineral's fireproofing.3 At the conclusion of plaintiffs' evi dence, the district judge directed a ver dict in favor of defendants on the tying claim. At the close of all the evidence, the court denied defendants' motion for a directed verdict on the refusal to deal claim and presented the case to the jury. In answer to special interrogatories the jury found (1 ) that defendants had en gaged in a concerted refusal to deal with plaintiffs and (2) that plaintiffs had sus tained combined damages of :>112,l;>4. The district court, however, enured ju d g m e n t for uefenuants n. o. v. on m e ground that "the reasonable inferences which the jury could draw are that there was no concerted refusal to deal . . . ." Even if the defendants nao acted in concert, the court r.eid mere was no Sherman Act violation oecause "they were not motivated by the accom plishment of an anti-competitive oujictive nor was there any unreasonaoie re stra in t of trade." 2S2 F.Supp. o:;9. doo (E.D.Pa.1974). from Mineral under its franchise con tract except on an applied basis: and (2) a more recent agreement aimed at plain tiffs and supplementing the prohibition on resale under which Mineral also agreed not to sell to plaintiffs for the purpose of forcing plaintiffs from the Turner jobs so th at defendant A rm strong could replace them. With regard to these claims, although plaintiffs were not required to demon strate the formation of any express agreement and althoueh they could rely on an inference of the existence of an agreement from circumstantial evidence, they .--till had the buruen of adducing sufficient evidence from which the jury cotiid conclude, on the basts of reasona ble inferences anu not mere speculation, that defendants' refusals to deal with them were the product of concerted ac tion between them. Assuming for the moment that Mineral had placed resale restrictions on Armstrong, we snail first treat the sufficiency of plaintiffs' evi dence to establish that any resale limita tion was supplemented by a concerted refusal to deal inspired by the anti-com petitive motive of substituting Arm strong for plaintiffs on the Philadelphia vrojc-cls. [1] Our function is to determine if the district court erred in granting ju d g ment n. o. v. In this task, we are re quired, as was the district court, to view the evidence and all reasonable inferenc es therefrom in the light most favorable to plaintiffs. Plaintiffs urge us to treat the directed verdict on the tying claim only if wo sustain the judgm ent n. o. v. on the charge of a concerted refusal to deal. Evidence o f Concerted A ctivity o f I>cfendants Plaintiffs urge* th a t their inability to purchase Cafeo was the product <>f two agreements between defendants: (1 ) a general restriction that Armstrong could not sell fireproofing which it purchased .1. Avrrecnient .\'ot to Sell to Plain tiffs Plaintiffs cite a number of items of evidence from which they argue the jury could reasonably have inferred the exist ence of a conspiracy between defendants to withhold D C/F from them in order 1 that Armstrong might be substituted on the Turner jobs. We shall treat the items seriatim and then cumulatively. In dem onstrating the opportunities for creation of an agreement, plaintiffs point to the fact that numerous tele phone calls were made between defend ants in July and A ugust 1970, th a t de fendants adm itted to a .July 20th dii-us.-oti concerning plaintiffs' inquiries to each of them, and th a t on July 21, 1970, 3. Pl a i nt i f f s a l s o c h a r g e d t h a t f!>t e n d o n 1s li.nl c o n s p n e d t o m o n o p o l i / i - a m i I. ,0 n s m . | ,, . p i <1 the maikcl lor non-.e.besto.s In .-po ame. 111 !>" I' llll.lilelphl.l I h . V <.1 uppral fn im i h r tr'-sdlijihin M thos e issues in de lcnd- ;ints` f.ivor VENZIE COUP. v. UNITED ST A T E S M IN ERA L PROD. CO.. INC. 1 3 1 3 ichise con- Cite a s 21 l\L\! '.` v'J i is; and (2) officials of defendants met for lunch. a time-and-material basis." Arm strong d at plain- Defendants explain the telephone calls made such statem ents even though Min prohibition ' and luncheon meeting as relating to a eral had granted it no exclusive territori nerai also job at West Chester State Teachers' Col al license for the Philadelphia area. fs for the from the . lege where Armstrong was applying Plaintiffs urge that a permissible infer D C /F for the first tim e.4 Although de ence to be draw n from these expressions ant Arm- I fendants denied that they had discussed of confidence th at Mineral would not . although to demon y express could rely nee of an evidence, adducing 1 the jury i i plaintiffs or the Turner jobs except on July 20 and denied th a t any under standing was reached during that con versation. plaintiffs argue the jury could have disbelieved defendants and conclud ed that during the course of the tele phone conversations and luncheon meet ing, defennants reached an agreement not to seii to plaintiffs. permit any other company to apply DC/F was that Armstrong was relying on an agreem ent with Mineral th a t Min eral would not sell to plaintiffs. However, the reasonaDleness of plain tiffs' inference from Armstrong's state ments cannot be judged apart from the factual context in wmen the statem ents v, re tnaile: A rm strong had been a Min- i f reasona- v While the jury was free to disregard t:u fireproofing licensee for five ye a rs eculution, the defendants' testimony tiial no agree and was its oniy Philadelphia licensee a t deal with ment of any Kind was formulated during he time, plaintiffs were not Mineral li :erte * 'c the course of these contacts, mere disbe censees. ami Mineral sold oniy to its li - -ie , lief c o u l d n o t rise to l l '. e l e v e l ol p o s i t i v e censees. Viewed in this co n tex t, we can- \ esale proof of agreem ent to sustain plaintiffs' v>t "oe now from these s ta te m e n ts the shall first burden of proving conspiracy, r'urtr.er- jury could do mure than speculate th a t tiffs' evi- more, w n l i e pro.,;' of c o n t a c t s b e t w e e n an agreement with Mineral to boycott ile limita- the manufacturer ami its licensee d u r i n g plaintiffs may have given rise to A rm concerted the crucial summer period may d e m o n strong's a.-.-ertions that it would be the anti-corn- strate an opportunity for formation of a o n i y contractor in Philadelphia which ng Arm- conspiracy, such an opportunity is signif could obtain D C/F. The inference th a t I dadelphia icant o n l y if other evidence p e r m i t s a n Armstrong.- oificials were relying on inference that an agreement d id in fact knowledge "l Mineral's selling practices to Plain- exist. Thus, it is necessary to r e v i e w is so much stro n g er th a n an inference i that they spoke with knowledge of an } plaintiffs' other evidence before the im portance of the contacts between defend agreem ent not to sell to plaintiffs as to items of ants and the inferences the jury might make it unreasonable to draw sup;>ort the jury legitimately draw therefrom may he de for a theory of conspiracy from these he ex at termined. .statements. I tendants Plaintiffs also seek support for their in order In this regard, plaintiffs point to Arm conspiracy theory from the eager assist luted on strong's replies to their inquiries as indi ance Mineral gave A rm strong in secur real the cating the existence of an agreement be ing city approval for D C/F once A rm lively. tween defendants. On July 20, A rm strong had hid on the T u rn e r projects lilies for 'i a m t i f f s >us teledofendthal de ) ihsciisririe stro n g 's chairman advised Ven/.ie to te r minate its eontrael so that Armstrong could " finish it with the right product." and on July 21 he told Turner's general superintendent for one job that the only way Turner "could use |I)(7 F | was to have | Annstrnrig| take over the work on and from an assurance' given Turner by A rm stro n g on J u ly ISO th a t it could begin work in 5 days and would have enough I)('/F to complete the first project. 1 laintills argue that A r m stro n g 's confi dence about its supply of nO /H could only have been obtained from contact .0 . 4. Pl . i ml i t l s d t . t w sit p p n r t t o r t h e i r ( o n s p i r i u y . i s Mi mr i l l i m i Unii ni A u t i s t i . . -,rr,rifinii t h e o r v liiim the b i d lh.it There w.ts P-siiniimv -mi Uh- l u i n r i | >i i i|i c t -, \ \ v . .ould be 4 a p p e a l th.ir ....... p 11 >i ei | >.1nr a t h e I n n e h e n n '.' is in Ull'A.il 1 '[>!!'Il f.1111 iji II,; , .ittach i ili-lcnd- A r n r . t i o m ; e l t u i . i l 'Ah o li.nl mi ( s ,i u u-ct i on DiiV si ; : ui t u .nu-r l o Ih- [ i r . . ; i indi - w i t h t h e W e s t ( l e wt e l ,, 11, w h i c h u . i s .111e e eil I .' \ l d u . i l I.r t-i 11111HI 11 b i s Nt.iU . ,r 1<J70 t h e l i b )eCl ot t h e m e e t i n g . Ih. lt otlli l.il l. iler b.it k t u Ih* l.i 11* >t tilt- !un< la .. 1314 521 FEDERAL REPORTER. 2d SERIES with Mineral and that the jury could have inferred that the defendants agreed then to go after the jobs aggressively and to inform Turner that work could begin in five days. They argue th a t all contacts between defendants and the vis its by Mineral's Philadelphia representa tive to Philadelphia "must be viewed in light of this aggressive interest in the jobs." But even though there was con tact between defendants at this time, this evidence proves nothing other than th a t Mineral acted in its own interests to obtain Philadelphia approval for its prod uct after a licensee had submitted a bid on a major Philadelphia project and that it indicated the extent of supplies availa ble for shipment to the licensee. file jury could not reasonably have inicrreu an agreement to boycott plaintiffs from such evidence nor could it have conclud ed that all Mineral's precious actions were colored by its willingness to assist Armstrong at this time. Finally, plaintiffs rely to a substantial degree on what they describe as the "cu riously evasive behavior" of Mineral in referring callers to Armstrong even though Armstrong was an applicator and not a seller of fireproofing. For exam ple, on Ju ly IT, Mineral's Philadelphia representative told plaintiffs that Arm strong would " work something out or make it available to you." On July 20, Mineral's president emphasized to Turn er the importance of using a franchised applicator in order that their products were properly applied so as not to dam age their reputation and promised lie would "personally exert pressure . . . to have Armstrong make some sort of arrangem ent with Ven/.ie." I'laintilfs argue that from this language the jury could have inferred that Mineral could not deal without Armstrong s permission. Otherwise, they say, it would have been much simpler for Mineral to sell directly to plaintiffs rather than referring the caller to Armstrong. These statements must also be judged :in their context. Since Mineral tradi tionally sold uniy to its licensees, we find nothing inconsistent in its refusal to sell and the referral of callers to a licensee which could sell the product on an ap plied basis. However, Mineral's appar ent willingness that Armstrong "make [DC/F] available" does appear inconsist ent with its arguments respecting the need for application by its trained licen sees. The question then becomes wheth er this inconsistency was sufficient to justify the jury in finding consniracy. m We must conclude that this incon sistency, even wncn viewed m light of the other evidence to wmcn namtiffs point, is insufficient to m eet tneir bur den of proving conspiracy. Apart from evidence tnal each defendant refused to deal with tnem and tn a t a t least by the ime of tiie telephone conversation be tween defendants on Juiv 40 each was aware of the other's actions, plaintiffs relied on the circumstantial evidence out lined anove a.i proof of agreem ent. Their evidence does not. noWcVer, in vade two i .'.'ii.cii'o generally considered critical m c.-iaiMisiung conspiracy from evidence ol paraocl business behavior: il) a snowing oi acts by d efendants in contradiction of their own economic in terests, Dc.';i ware 1 a/,'ey Marine Su/ip/v Co. v. Am erican Tobacco Cu.. 297 F.2d 199 (3rd Cir. 1961), cert. denied. 369 U.S. 839, 82 S.Ct. S67. 7 L.Ed.2d 843 (1962); and (2) satisfactory demonstration of a motivation to enter an agreement, First A'at'l Bunk v. Cities Service Co.. 391 U.S. 253. 287, 88 S.Ct. 157.5. 20 L.Ed.2d 569 (196.8). Tile absence of action contrary to one's economic interests renders consciously parallel business behavior "meaningless, and in no way indicates agreement. . . T urner, 77io Definition o f Agreement Under lhi Sherman Act: Conscious Parallelism and Befusals to Deal. 75 llarv.L .Rev. 655. 681 ( 1962). In this case, A rm stro n g 's refusal to sell was wholly consistent with its historv as an applicator and not a seller of fireproof ing and was in line with the trade prac tice as testified to by plaintiffs' witness es. Furl hermnre, although Mineral's re fusal to deal meant that it bypassed the opportunity to make substantial sales to a licensee on an apil's apparng "make inconsistcting the ned licencs whethficient to nspiracy. .his incon i light of plaintiffs heir bur>art from efused to st by the ation beoach was plaintiffs cnce ' -'t u in insidered icy from Ijchavior: dants in .omic in -? Supply 297 F.2d 369 U.S. 1 (1962); ion of a nt. First 391 U.S. l.2d 569 to one's hsciously lingless, ucinent. lion o f n Act: s.ils to >'2 >. In <-11 was ' :ts an cproof- ]>r e- cd the ales to VENZIE CORP. V. U N IT E D S T A T E S M IN E R A L PROD. CO.. INC. 1 3 1 5 Ci t e us ."iCl F . 2 J 1309 11 a non-licensee, such action was consistent with its history of insuring proper appli cation of its products by selling only through trained licensee-applicators. Critical also is a showing of a motiva tion to conspire against plaintiffs, for in the absence of a demonstration of how it would benefit a party to refuse to deal, the requisite inference of conspiracy does not follow from a mere coincidence of refusals to deal. First N a t 'l Bank, su pra. Plaintiffs find evidence from which motivation may be inferred in the fact th a t under its 1965 license a e re e m en t with Mineral, Armstrong was committed to purchase ail its requirements of m a chine applied fireproofing from Mineral. Although the agreement contained no limitations on Mineral's Phiiaueipniu saies, plaintiffs argue that the jury eouid have inferred m at as a quid pro quo for the requirements provision, Mineral hud agreed to seli to applicators in Philudeipnia only with the concurrence of Arm strong. The record contains no evidence other than the requirements contract itself from which the jury could infer the ex istence of any agreement giving Arm strong general veto lower over Mineral's Philadelphia sales. The absence of any other evidence pointing to such an agree ment convinces us that the jury could not reasonably have found such an agreement to exist and could not have concluded that Armstrong exercised a veto lower over sales to plaintiffs pu r suant to a ire-existing commitment by Mineral. Furthermore, this ease was tried on the theory that defendants en tered a specific conspiracy in reaction to certain events in the sum m er of 1970 with a definite purpose: "to gain the [Turner] jobs for Armstrong." Plaintiffs do not suggest any way in which the requirements contract might have moti vated Mineral to. enter such an agree ment to oust plaintiffs, and no connec tion is apparent to us. Plaintiffs' failure to demonstrate a benefit that would motivate Mineral to agree to refuse to deal with plaintiffs is underscored by the absence of evidence from which the jury could reasonably have inferred that there was such a sub stantial possibility that Arm strong would obtain the Turner jobs if plaintiffs could not iurcha.se D O /F th a t Mineral would decline definite sales to plaintiffs in the hope of securing such a result. Al though plaintiffs testified that they con veyed their "predicament" to Mineral as early as Ju ly 17, and a lthough d e fe n d ants were aw are of the city's crackdown on ashestos sDrav oroducts. nothing in the record demonstrates that either de fendant was or snouia have been aware that DC/F was the only product that Turner eouid or wouid use on the projects. Indeeu, internal Turner memo randa show tnut us late as Juiy 24, Turn er made a tentative decision to recom mence work on one ouuding with a com bination of piaster anu anotner asbestosfree spray that met tne Philadelphia fire standards except for columns. Turner's decision to use oniy DC/F was not made until some time after that date. The viability <>:' .-.uvn a combination as a n al ternative to D C /F is de m onstra te d by the fact that the columns on the other building were in fact fireproofed with a plaster compound. Furthermore, Turner had made contacts pointing to purchase of the alternate spray until it appeared that there was some question whether the product had been tested on the type of concrete Turner was using and wheth er the product must lie tumped a f te r ap plication. Even after Turner settled on DC/F, tests for its effectiveness on the particular concrete had to be conducted before it was approved for use. In sum, plaintiffs established parallel refusals to deal, contacts between a m anufacturer and its licensee during the crucial time period, confidence by Arm strong th a t it alone would lie able to secure I)C/F, Mineral's active assistance to Armstrong once the latter had sub mitted a bid to Turner, and M ineral's seemingly inconsistent behavior in hint ing that Armstrong might make DC/F available to plaintiffs. However, they failed to prove any conduct ntrarv to Mineral's economic interests .::d do not mini to any factors which v. .id moti- 1316 .'>21 FEDERAL REPORTER. 2d SERIES - vate Mineral to agree in 1970 to refuse to sell to plaintiffs. Giving plaintiffs ev ery legitimate inference in their favor from the evidence, we must conclude that they failed to adduce sufficient facts from which the jury could reason ably have inferred the existence of an agreement under which Mineral bound itself not to sell to plaintiffs in order to force them from the T urner jobs. We find the evidence was insufficient to per mit the jury to reject the conclusion that Mineral's refusals of plaintiff's offers to purchase were the result ol' independent business judgment exercised consistently with its economic interests. B. Resale Restrictions on Arm strong Plaintiffs also urge that resale restric tions were imposed upon A rm strong oy Mineral, and that such restrictions them selves constituted per se violations of Section 1 of the Sherman Act. They rely for support on the sta te m e n t in United States v. Arnold, Schwinn w Co., 388 U.S. 365, 379, s7 S.Ct. 1656, ls65, Is L.Ed.2d 1249 (1967) tha t "it is unreason able without more for a m anufacturer to seek to restrict and confine areas or per sons with whom an article may he trad ed after the manufacturer has parted with dominion over it." They argue that Mineral's w arning th a t it would term i nate sales to a Xew Jersey licensee if that company resold to plaintiffs demon strates that Mineral would act to enforce such an unlawful restriction on resales. [3] A rm strong's license agreem ent with Mineral contains no prohibition on resale. However, in refusing to sell D C/F to plaintiffs, officials of Arm strong twice stated that its franchise forbade resale of Mineral's fireproofing. Despite the absence of a written resale restriction, we agree with plaintiffs that this evidence would justify the ju ry in concluding th a t a ban on resales by Armstrong did in fact exist by agree ment between defendants. That the jury may have found such an agreement to exist does not, however, mean that antitrust liability must inevi tably follow. This court, sitting in banc, has previously limited the language of Schwinn relied on by plaintiffs to its fac tual context of restrictions on resales by bicycle distributors. Tripoli Co. v. Wella Co'rp., 425 F.2d 932 (3rd Cir. 1970), cert, denied, 400 U.S. 631. 91 S.Ct. 62, 27 L.Ed.2d 62 (1971). Furtherm ore, we are mindful of the Suprem e C o u rt's adm oni tion in W hite M otor Co. v. U nited States. 372 U.S. 253. 83 S.Ct. 696. 9 L.Ed.2d 738 (1963) th a t it is necessary to assess the actual imnact of vertical re strictions on comnetition before deciding whether they have such a "pernicious ef fect on competition and lack . . . any redeeming virtue" that they should : <_ classified as per se violations of Sec tion 1 of the Sherman Act. The nature of the business of defend an t A rm strong and its competitors is most iiersuasive that any restrictions on its resale of fireproofing had no anti competitive effect that couiu give rise to per se antitrust ability. The record makes it cicar taut contractors such as Armstrong are consumers, not distribu tors, of fireproofing products wnich they purenase for use in connection with the saie of their application services. Plaintil is do not dispute th at .-Armstrong has never sold fireproofing since it entered the fieid in 1950. More significantly, even the president of Yenzie attested to the fact that the trade practice among fireproofing contractors is th at no one, including plaintiffs, engages in reselling fireproofing, although loans of material are sometimes made "to help out com petitors if they are short." We are unable to discern how Miner a l's a tte m p t to limit A rm strong to acting as an applicator and not a seller of its fireproofing could unreasonably restrain competition when in fact there is no competition among fireproofing contrac tors in the resale of fireproofing m ateri als. We are not here concerned with restrictions on sales by distributors or retailors in tho buinc-.H selling, and thus find Schwinn inapplicable to this fact situation. Since we have found that the ,>. >dence was insufficient for a reasonable ury to rnguage of to its facresales by o. v. Wella 1970), cert. CL 62, 27 re, we are .'s admoniv. United CL 696, 9 jeessary to ortical ree deciding nicious ef- ley should ns of Sec* if defend- etitors is -ictions on j i p --<ti : to h record s such as distribu- hich they with the s. Plain- trong has t entered lificantly, .tested to e among . no one, reselling material out com- v Miner to acting or of its restrain e is no eontrac- matori ed with ilors or ng, and to - .nee jury to Cite us 021 i'.2J t conclude that defendants' refusals to deal with plaintiffs were the product of an agreement not to sell to plaintiffs and that any general restrictions on re sales by A rm strong did not violate the The c r i t i c a l !ficie:vy in plain tiffs' ef forts to prove an a'.egal tie-in is th a t they have failed to establish a factual pattern that falls within the definition of arrangements which the Supreme Sherman Act, we must conclude that the Court has declared illegal per se. Mineral district court properly entered judgment did not offer to sell to plaintiffs condi n. o. v. for defendants on plaintiffs' con tioned on their use ol' A rm stro n g 's serv spiracy claim. Because of our disposition ices as an applicator: Mineral refused to of the issue of agreem ent between de sell to plaintiffs under any circumstances fendants, we need not reach plaintiffs' since they were not licensees. M ineral's arguments respecting definition of the response was a refusal to deal, not a relevant product market. conditioned agreement to deal. In Unlawful Tying Arrangement adopting sue a position, wnicn plaintiffs do not here urge was me product of any [4] Because we have concluded that agreem ent witn A rm strong. Mineral w as the district court did not err in granting merely exercising its ngiit protected un judgm ent n. o. v., it is necessary that we der tile doctrine of l niieit n a t e s v. Col tre a t plaintiffs' claim th a t error was gate w ( 250 C.S. -alt*. S.Ct. 4G5, 63 commuted when the court directed a l.-i-ai. !,`.,2 I l1.1!1.). lo refuse uniiateraiiy to verdict for defendants on their enarge of dcai witn any present or |*ilential cus an illegal tie-in. In this aspect of their tomer. case, piaintiffs argue th a t Minerai's pen- CV o i o J i , Y l o l U ' c U S n 1 . i j 1 il'S who in turn .-old only on an applied amounted to a tying arrangement ..r.der which the purchase of ilC, V was permit ted only if Armstrong's application s e r v ices were also bought. Kurtnermoiv. plaintiffs have cited us ' no l i e - :. . .:. .. men. .s tic-re, the seiier "l `. la- .ng product i.iui no eco nomic uurc.'i in .ue mar.-tcl for tile `tied product of was not a t east receiv ing a commission on > a , e s of the product.'' Our research has revealed [5,6] The Supreme Court has defined only cases holding to the contrary. See, a tying arrangem ent as "ail agreement e. g.. Crawford Transport Co. v. Chrysler by a party to sell one product but only Corp.. 338 I'.2d `.134 (6th Cir. lOtJ-4>, cert, on the condition th a t the buyer also pur denial. 380 U.S. 054. >5 S.Ct. 10S8, 13 chases a different (or tied) product." L.Ed.2d 072 (10G5); Miller Motors Inc. v. Northern Pacific Ry. v. United Stales. Ford Motor Co., 252 F.2d 1-41 (4th Clr. 356 L.S. 1 , 5, 78 S.Ct. 514, 2 L.Ed.2.1 545 1957). The record in this case fails lo (1958). Such agreements are unlawful establish any effort by Mineral to use its where the tying product possesses suffi economic position as the m anufacturer of cient economic power so as to appreci I)C/K to invade and dominate the fire J ably' restrain competition in the tied proofing application business and does j product market and a "not insubstantial" not demonstrate any interest of Mineral ! a m ount of commerce is affected by the in A rm strong except to insure proper a p Ii Ij arrangem ent. Id. a t G, 78 S.Ct. 514. plication of its products when purchased Tie-ins are treated as per so antitrust violations because they serve no purpose1 other than the suppression of competi tion. Id. by others. The absence of a direct in te r est in tile tied produel m arket leaves open the possibility of a nonpredatory justification for requiring sales only 5. The c.inc <itcil t)V p l a i n t i !1s t o r du* p m p u s i - tioii t h a ``r e p a r d l e s s o w h o is t h e p r u v u l r r ol t h e Ued p r o d n c l o r s ervice, a tie-in r c q n n e - ritei.t -a!! I; is ri-'- - a i n e n i . d ' - i t a h l e <ei np- ti- t i v e Itecl' . .' ' l 'elUI r;, | /i t t u/int: l ' n. C. i . l Ae/ l s S t e e l C,>. I K IJ 71. M n : D.l'a. lt>7:t). m- voKt-,1 a s ell er ol dit- t s i n g p i o U u c t w l i o a l s o solil lie l i e d s e r v i c e s a n d us*d u s l e v e r a u e uvet llie p u r e ol t he t v n i e p r o d u i t tri t o r c e tlie j i tion. tsel l o l o o - p o u->i- ol a l u n i p e l i t o r s s e r v le e. -n . i.v ^ < V'* - . - -i-*t?t . -'._Cjr. i "V; -- ^ ' ' 1318 521 F E D E R A L R E PO R T E R . 2d SE R IE S through Armstrong and distinguishes this situation from the solely anti-com petitive arrangem ents which have l>een branded as per se antitrust violations. To tuiopt plaintiffs' position would rev olutionize the antitrust field. Every re fusal by a franchisor to deal with one not a franchisee would automatically lead to a per se violation of the Sherman Act if the franchisor's product possessed the "desirability to consumers'' or "uniqueness" which have been found suf ficient to establish the necessary eco nomic power of the tying product. Unit ed S ta te s v. L oew s. Inc., 371 U.S. 33, 83 S.Ct. 97. y L.Pal.2d 11 (1932). It would, moreover, amount to a substan tial undercutting of tiie Colgate ioctrine validating unilateral refusals to deal in the absence of a mono|>olisiic purpose. Neither precedent nor policy suggests that such a reordering of the antitrust implications of business behavior is in order. The district court aid not e rr in directing a verdict for defendants on plaintiffs' tying claim. The ju d g m e n t of the district court wiil be affirmed. UNITED STATES of America. ' Appellee. v. Robert Wayne JOHNSON, Appellant. No. 75-1937. Uniteli S l a t e s I'o u r l of Appeals, Ninth (,'ircuit. Aug. 21, l `.)7f>. Defendant was convicted in the United States District Court for the Dis trict of Arizona, William C. Frey, ,]., of knowingly and intentionally importing marijuana and possessing marijuana with the intent to distribute, and he ap pealed. The Court of Appeals, Sneed, Circuit Judge, held that government wit ness' testimony that all information con tained in handw ritten notes he made concerning the arrest and interview of defendant was transferred to case report turned over to defense counsel did not relieve trial court of duty of conducting requested inquiry as to whether notes constituted a producible statement under the Jencks Act so that its failure to con duct such an inquiry constituted error. Vacated and remanded. 1. Criminal Law =>627.6(4) Individual notes and reports of government agents who testify for the government, made in the course of a criminal investigation, are the proper subject of inquiry and may be subject to production under Jencks Act. 18 U.S. t.'.A. 35UU. 35u0(e;(l). 2. Criminal Law c=>627..3(5) It is function of trial c ourt to d e te r mine whether notes of government agent who testifies for government, made in course of criminal investigation, constitute a "statem ent" within meaning of Jencks Act and whether notes relate to subject m atter to which witness testi fied and are thus producible. 18 U.S. C.A. 3500, 3500(b, c). 3. Criminal Law g=>627.6(4) Handwritten notes regarding the ar rest and interview of defendant, made by arresting d ru g enforcement adm inis tration agent who was government w it ness, constituted a producible "s tate ment" under the Jencks Act if notes were adopted or approved by agent. 18 U.S.C.A. 3500, 35001cill).* 1. Criminal Law =>627.0(5) Uovcrnment witness' testimony that all information contained in h an d w ritten notes lie made concerning arre st and in terview of defe n d a n t wa- ;n s f e r r e d to case report turned iwer ` :':nse coun sel did not relievi .-a: " >f d u ty of conducting reqm a : : .y as to