Dimmitt Agri Industries, Inc. v. CPC Intern. Inc.

Citation679 F.2d 516
Decision Date02 July 1982
Docket NumberNo. 80-2065,80-2065
Parties1982-2 Trade Cases 64,820 DIMMITT AGRI INDUSTRIES, INC., a Texas corporation, Plaintiff-Appellee, v. CPC INTERNATIONAL INC., Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Baker & Botts, Theodore F. Weiss, Jr., Robert J. Malinak, Houston, Tex., for defendant-appellant.

Witherspoon, Aikin & Langley, James Witherspoon, Hereford, Tex., Joseph M. Alioto, Lawrence Appel, San Francisco, Cal., for plaintiff-appellee.

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

Before GEE, RUBIN and GARZA, Circuit Judges.

GEE, Circuit Judge:

This is an appeal from the district court's denial of the defendant's motion for judgment n. o. v. after a jury verdict of monopolization under the Sherman Act. Because we find that the section 2 monopolization verdict cannot, as a matter of law, stand, we reverse and remand for a new trial.

Sixty-six years ago, the United States charged a defendant, Corn Products Refining Company, with combining illegally in restraint of trade and monopolizing in violation of sections 1 and 2 of the Sherman Act. 1 Then District Judge Learned Hand, in an opinion long familiar to students of antitrust law, United States v. Corn Products Refining Co., 234 F. 964 (S.D.N.Y.1916), appeal dism'd, 249 U.S. 621, 39 S.Ct. 291, 63 L.Ed. 805 (1919) (hereinafter cited as Corn Products ), found the defendant guilty of the various antitrust offenses alleged. Specifically, the court found that the defendant had combined into an organization that conspired to monopolize and restrict commerce in the manufacture and sale of starch, glucose, grape sugar, and various syrups by, inter alia, agreeing to sell the various products at unreasonably low fixed prices, thereby preventing new competitors from entering the field and driving out those already engaged in the business. The evidence of monopolizing intent presented to the court consisted of internal memoranda by the officers of the defendant company, acknowledging their belief that Corn Products Refining "had entire control over the price at which the product should be sold." Id. at 992. The court had this to say about the nature of such evidence:

The officers of the Corn Products Refining Company apparently had a custom of communicating with each other by typewritten, unsigned memoranda. Apparently it was often difficult for them to interview each other personally, and the affairs of the company were discussed between them by means of these memoranda with the utmost frankness. The documents were never intended to meet the eyes of any one but the officers themselves, and were, as it were, cinematographic photographs of their purposes at the time when they were written. They have, therefore, the highest validity as evidence of intention, and, although in many instances Bedford attempted to contradict them, his contradiction only served to affect the general credibility of his testimony. In the face of these memoranda, which for some strange reason were preserved, there can be no question in my mind of the continuous and deliberate purpose of the Corn Products Refining Company, by every device which their ingenuity could discover to maintain as completely as possible their original domination of the industry. That they recognized the impossibility of an absolute exclusion of other glucose and starch manufacturers is true enough, for they were minutely advised as to all conditions of the industry. But, while recognizing this inability, they in no wise conceded among themselves that their conduct could not have, and should not have, a depressing influence upon the growth of any competition. In considering the various devices adopted for that purpose, I shall paraphrase the memoranda in detail; but at the outset it is important to remember Id. at 978.

that permeating the whole of their conduct, certainly down to the year 1912, there runs the intent which I have mentioned, an intent the execution of which it is the precise purpose of the anti-trust act to foil.

Despite the passage of time (or perhaps because of it), the officers of Corn Products Refining, now CPC International Inc. ("CPC"), have not learned the perils of incriminating internal memoranda. Students of antitrust law may consequently be excused a feeling of dEeja vu upon reading the facts in this case. This appeal grows out of a jury verdict finding section 2 Sherman Act monopolization in a private antitrust suit by Dimmitt Agri Industries, Inc. ("Dimmitt") against CPC. Dimmitt is a farmers' cooperative that constructed a corn wet milling plant in the Texas panhandle and, in late 1970, commenced the manufacture of cornstarch and, later, corn syrup. CPC, a Delaware corporation headquartered in New Jersey with production plants in various foreign countries, is the largest producer in the national corn wet milling market. In late 1972, Dimmitt was allegedly "forced out" of the corn wet milling market, and Amstar Corporation, the nation's largest sugar producer, took over operation of Dimmitt's plant in 1973. In 1974, Dimmitt sued CPC and others in the corn wet milling industry. All defendants except CPC settled before trial. Dimmitt's allegations and causes of action against CPC are similar to those involved in the 1916 case discussed above. Dimmitt alleged five antitrust theories: (1) a price-fixing conspiracy under section 1, Sherman Act; (2) conspiracy to monopolize, (3) attempt to monopolize, (4) monopolization, all under section 2, Sherman Act; and (5) illegal price discrimination under the Robinson-Patman Act.

The factual record, developed in the course of an eight-week trial before a jury, was extensive. Thousands of pages of documentary exhibits were introduced, and 35 witnesses testified, either personally or by deposition. Despite the nearly 6,000-page transcript of proceedings, the underlying theory of plaintiff Dimmitt's case was straightforward and strikingly similar to that of the 1916 proceeding: essentially, Dimmitt alleged that CPC fixed unreasonably low prices in order to exclude competition, especially Dimmitt, from the national markets for cornstarch and corn syrup. Like the government in 1916, Dimmitt purported to demonstrate its case through the defendant's own incriminating internal memoranda, and, as in the earlier proceeding, the tactic proved ultimately successful. The case was submitted to the jury on special interrogatories on all five antitrust theories. 2 The jury found for CPC on all theories except the crucial monopolization claim. It found that "during the relevant CPC's appeal focuses on one crucial distinction between the 1916 proceeding and the litigation here. Much of that earlier case was devoted to evidence of the market share in the glucose and starch trade controlled by Corn Products Refining Company. 3 In the proceedings under review here, the parties did not focus on market share.

time period, the defendant CPC monopolized a relevant market in violation of Section 2 of the Sherman Act" and that this violation was a proximate cause of injury to Dimmitt's business. The court trebled the damages awarded by the jury and added attorneys' fees. Judgment for Dimmitt was entered for $5.3 million. The limited amount of documentary evidence presented suggests that during 1971 and 1972, the time period in which Dimmitt was competing in the corn wet milling industry, CPC's maximum possible market shares in the narrowest markets alleged by Dimmitt were: 25 percent in the national cornstarch market and 17 percent in the national corn syrup market. The narrow issue presented for our review, as stated in defendant's judgment n. o. v. motion, is whether a defendant with such a low market share can, "as a matter of law, have monopoly power, the essential prerequisite for a jury finding of monopolization."

I. PROPERLY RAISED?

At the outset, we are met by Dimmitt's contention that CPC's "market share" argument is not properly before us because it was not raised in CPC's earlier motion for directed verdict. Under Fed.R.Civ.P. 50(a), "(a) motion for directed verdict shall state the specific grounds therefor." If a motion for directed verdict is denied, a party may move within ten days after entry of judgment "to have the verdict in any judgment entered thereon set aside and to have judgment entered in accordance with his motion for a directed verdict ...." Fed.R.Civ.P. 50(b) (emphasis added). The law on point is well established:

A motion for judgment notwithstanding the verdict, like a motion for directed verdict, must state the grounds on which it was made. Since it is technically only a renewal of the motion for directed verdict made at the close of the evidence, it cannot assert a ground that was not included in the motion for a directed verdict.

Wright & Miller, Federal Practice & Procedure: Civil § 2537 (1971) (footnotes omitted). Accord Sulmeyer v. Coca Cola Co., 515 F.2d 835, 846 (5th Cir. 1975), cert. denied, 424 U.S. 934, 96 S.Ct. 1148, 47 L.Ed.2d 341 (1976); House of Koscot Development Corp. v. American Line Cosmetics, Inc., 468 F.2d 64, 67-68 (5th Cir. 1972).

In this case, CPC's motion for directed verdict alleged, inter alia, that: "with respect to monopolization there is no evidence that CPC possessed monopoly power in any relevant market, much less that CPC deliberately acquired or maintained such power." CPC's subsequent j. n. o. v. motion is, in our view, only a more detailed version of this "no evidence of monopoly power" ground for vacating the verdict. CPC's motion for j. n. o. v. stated, inter alia:

A defendant with a market share of no more than 21 percent cannot, as a matter of law, have monopoly power, the essential prerequisite for a jury finding of monopolization. In other words, whatever other evidence of monopoly a plaintiff may have, a defendant cannot possibly, as a matter of law, "control prices or exclude competition" if its market share is as...

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