170 F.3d 518 (5th Cir. 1999), 97-10592, Stearns Airport Equipment Co., Inc. v. FMC Corp.

Docket Nº:97-10592, 97-10781.
Citation:170 F.3d 518
Case Date:April 07, 1999
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 518

170 F.3d 518 (5th Cir. 1999)



FMC CORPORATION, Defendant-Appellee.

Nos. 97-10592, 97-10781.

United States Court of Appeals, Fifth Circuit

April 7, 1999

Page 519

[Copyrighted Material Omitted]

Page 520

Robert W. Kantner, Brian D. Hail, Baker & Botts, Dallas, TX, for Plaintiff-Appellant.

Layne E. Kruse, Fulbright & Jaworski, Houston, TX, Hugh Gottschalk, Otten, Johnson, Robinson, Neff & Ragonetti, Denver, CO, for Defendant-Appellee.

Appeals from the United States District Court for the Northern District of Texas.

Before GARWOOD, BARKSDALE and STEWART, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiff-appellant Stearns Airport Equipment Co., Inc. (Stearns) brought this suit against defendant-appellee FMC Corporation (FMC), claiming FMC had violated the Sherman Act, the Robinson-Patman Act, and Texas state law. Stearns appeals the district court's grant of summary judgment to FMC, and also challenges certain expenses awarded to FMC as costs. We affirm.

Facts and Proceedings Below

Stearns and FMC are both manufacturers of boarding bridges, the devices that allow passengers to enter and exit passenger airplanes. Historically, the domestic market has been dominated by Jetway, a brand previously produced by a division of a company not a party to this case. In 1994, the Jetway division was purchased by FMC, which continued its operation. Stearns, a wholly-owned subsidiary of Trinity Industries, has been producing bridges since the beginning of the 1980s. Both parties export their bridges around the world, and about a dozen manufacturers produce bridges abroad.

Page 521

While foreign competitors have bid on some projects and sold a handful of bridges here, during the relevant time frame actual foreign penetration in the North American market was minimal. The record does show that foreign producers sporadically expressed interest in the market, and one recently opened up a sales office in the United States.

FMC and Stearns utilize competing technologies in their bridges. Stearns relies on hydraulic systems for its bridges, while FMC uses an electromechanical system. The record establishes that at least some bridge purchasers felt that there were substantial differences between the two systems under various circumstances. In addition, FMC was in the process of developing and introducing computerized controls in some of its models, called "smart bridges," during the relevant time frame. The "smart-bridge" technology--which had some teething troubles--was significantly different from the mechanism used by Stearns.

Prior to the mid-1980s, the dominant purchasers of bridges in the United States had been airlines. The airlines had frequently dealt exclusively with Jetway. However, during that period the market began to shift and municipal airport authorities became the primary purchasers of bridges. This shift led to most sales in the industry being governed by competitive bid processes. After some initial successes in this new market, Stearns began to lose market share to FMC. Stearns alleges that its loss of sales to municipal bidders was the product not of vigorous competition, but rather of an orchestrated program by FMC to avoid fair competition through a combination of exclusionary manipulation of municipal bids and predatory pricing.

Stearns filed an antitrust action against FMC on December 4, 1995. The complaint initially alleged violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2, Section 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a), and tortious interference and unfair competition under state law. The district court granted FMC's motion for summary judgment on the Section 1 Sherman Act claims on May 31, 1996. See Stearns Airport Equipment Co., Inc. v. FMC Corp., 977 F.Supp. 1263 (N.D.Tex.1996). Stearns does not appeal that ruling. Discovery continued on the other claims, and FMC filed another motion for summary judgment on December 20, 1996. Stearns requested an extension of time for its response, which was granted, and also filed a motion under Rule 56(f) to delay summary judgment until the completion of discovery. The district court denied the Rule 56(f) motion, but allowed discovery to continue until March 26, 1997, when it granted summary judgment to FMC on all claims. Stearns moved to reconsider and offered additional evidence. This motion was denied and this appeal followed.

I. Standard of review.

We review a district court's grant of summary judgment employing the same standard it was required to apply in granting the motion. Dutcher v. Ingalls Shipbuilding, 53 F.3d 723, 725 (5th Cir.1995). Summary judgment must be affirmed when the moving party has identified material facts not in genuine dispute and the nonmoving party fails to produce or identify in the record summary judgment evidence sufficient to sustain a finding in its favor respecting such of those facts as to which it bears the trial burden of proof. In reviewing the record, we must view all facts in the light most favorable to the nonmovant. We review questions of law de novo. Id. We no longer maintain that summary judgment is especially disfavored in categories of cases. See Little v. Liquid Air Corporation, 37 F.3d 1069, 1075 n. 14 (5th Cir.1994) (en banc) ("we reject any suggestion that the appropriateness of summary judgment can be determined by the case classification."). Stearns' attempt to invoke earlier cases in which we suggested that summary judgment should be shunned when complex antitrust claims are involved thus fails.

Stearns on this appeal treats its Robinson-Patman and state law claims as derivative of its Sherman Act section 2 claim. Accordingly, if we find that summary judgment should be affirmed on the Section 2 claims, we must also affirm the dismissal of these claims.

Page 522

II. Exclusionary Conduct

A violation of section 2 of the Sherman Act is made out when it is shown that the asserted violator 1) possesses monopoly power in the relevant market and 2) acquired or maintained that power wilfully, as distinguished from the power having arisen and continued by growth produced by the development of a superior product, business acumen, or historic accident. United States v. Grinnell Corp., 384 U.S. 563, 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1966). For the purpose of this summary judgment, we will assume, as the district court did, that FMC does possess monopoly power in the North American market for boarding bridges. Exclusionary conduct under section 2 is the creation or maintenance of monopoly by means other than the competition on the merits embodied in the Grinnell standard. See Aspen Skiing Co. v. Aspen Highlands, 472 U.S. 585, 105 S.Ct. 2847, 2859, 86 L.Ed.2d 467 (1985) (attempting to exclude on grounds other than efficiency); C.E. Services, Inc. v. Control Data Corporation, 759 F.2d 1241, 1247 (5th Cir.1985) (quoting 3 P. Areeda and D. Turner, Antitrust Law p. 626, at 83 (1978)). The key factor courts have analyzed in order to determine whether challenged conduct is or is not competition on the merits is the proffered business justification for the act. If the conduct has no rational business purpose other than its adverse effects on competitors, an inference that it is exclusionary is supported. See Aspen, 105 S.Ct. at 2860 (finding failure to offer persuasive business justification "most significant"). Summary judgment is appropriate in some cases where defendant's business justification is unchallenged. See Bell v. Dow Chemical Co., 847 F.2d 1179, 1185-86 (5th Cir.1988) (in a refusal-to-deal case, rejecting contention that Aspen's procedural posture indicated that business justification was a matter for the jury but going on to reject the proffered justification).

Stearns contends that FMC, threatened by the switch of purchasing from the airlines to municipal airport authorities, adopted a plan to avoid competition on the merits, and specifically competition on price. The heart of this alleged plot is contained in an FMC presentation directed to its marketing and sales personnel. The presentation urged FMC's employees to use four strategies in pursuing sales to municipalities. First, FMC was to attempt to convince municipalities that they should avoid competitive bidding and strike a purchase agreement with FMC directly--so called "sole-sourcing." Second, if bidding appeared inevitable, FMC should strive to drive the criteria for the award away from price alone by requesting various product features be weighted against cost in the final calculation of the best bid. Third, efforts were to be made to insure that the specifications adopted by a municipality were tailored to fit FMC's product and exclude Stearns. Lastly, FMC would "induce complexities in the bidding process" by suggesting certain certifications and restrictions be added that worked to the detriment of Stearns. 1 Taken together, Stearns argues that these strategies constituted a deliberate plan to exclude Stearns from competing in the municipal bridge market, thus harming consumers by robbing them of a true competitive process.

The key point uniting these allegations is that they all involved FMC's attempts to persuade buyers to favor their product prior to the actual bid. Courts that have considered whether attempts to convince independent government purchasers to adopt specifications in their favor prior to bidding are a violation of the antitrust laws have uniformly found such behavior not to be a violation. The Ninth Circuit, presented with a claim that a monopolist's contacts with county officials and architects led to the specification of its product prior to a bid rejected the contention that such contacts violated the Sherman Act. Security Fire Door Co. v. County of...

To continue reading