691 F.2d 818 (6th Cir. 1982), 81-3266, Richter Concrete Corp. v. Hilltop Concrete Corp.
|Citation:||691 F.2d 818|
|Party Name:||RICHTER CONCRETE CORPORATION, the Collinwood Shale Brick and Supply Company, Plaintiff-Appellant, v. HILLTOP CONCRETE CORPORATION, et al., Defendants-Appellees.|
|Case Date:||October 27, 1982|
|Court:||United States Courts of Appeals, Court of Appeals for the Sixth Circuit|
Argued July 30, 1982.
[Copyrighted Material Omitted]
Gene I. Mesh, Cincinnati, Ohio, for plaintiff-appellant.
Jacob K. Stein, Gerald Simmons, Murray S. Monroe, Thomas C. Hill, Taft, Stettinius & Hollister, Cincinnati, Ohio, for defendants-appellees.
Before EDWARDS, Chief Judge, and ENGEL and CONTIE, Circuit Judges.
CONTIE, Circuit Judge.
This appeal involves a private anti-trust action brought by the Richter Concrete Company against Hilltop Basic Resources, Inc. and Marquette Cement Company. During 1972-74, the relevant time period for this action, Richter and Hilltop were producers of ready-mix concrete in the Cincinnati area while Marquette supplied cement in that same area.
In its complaint, Richter alleged that: (1) Hilltop violated Section 2 of the Sherman Act, 15 U.S.C. § 2, by attempting to monopolize the ready-mix concrete market in the Cincinnati area; (2) Hilltop and Marquette violated Section 2 of the Sherman Act, 15 U.S.C. § 2, by conspiring to monopolize the ready-mix concrete market; (3) Hilltop and Marquette violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring to restrain trade; and (4) Hilltop and Marquette violated state antitrust laws.
At the close of Richter's case, both defendants moved for directed verdicts pursuant to Rule 50 of the Federal Rules of Civil Procedure. Senior District Judge Timothy S. Hogan granted these motions from the bench and later issued an extensive opinion and order detailing the reasons for his decision. 1 On appeal, Richter contends that its claims should have gone to the jury. For the reasons stated below, we affirm the judgment of the district court.
While the relevant time period for Richter's antitrust claims against Hilltop and Marquette is 1972-74, it is necessary to address events prior to 1964 in order to understand this action.
During the years 1961-63, the Richter Concrete Company (a predecessor to the plaintiff), and Hilltop 2 were the two largest producers of ready-mix concrete in the Cincinnati market, with each having an approximate market share of 31%. During that same time period, Marquette supplied cement to various ready-mix concrete producers in the area, including Richter and Hilltop.
In early 1964, Richter was acquired by a wholly-owned subsidiary of the Mississippi River Fuel Corp. (River Fuel), a large conglomerate which had recently entered the cement production industry. The acquisition alarmed both Hilltop and Marquette. Hilltop feared that the financial power of a large national corporation such as River Fuel would strengthen Richter's position in the market and cut into Hilltop's market share. Marquette's concern was more immediate-since Richter's new parent company also owned a cement producer, Marquette would certainly lose a major buyer in the Cincinnati market.
As a result of their respective concerns, Hilltop and Marquette entered into negotiations in 1964 whereby Hilltop sought to strengthen its financial position and increase its market share, and Marquette sought to assure itself of a buyer for its cement. The parties eventually reached an agreement (the 1964 Agreement) which provided that: (1) Marquette would guarantee certain loans in order to allow Hilltop to make necessary improvements; (2) Marquette would supply and Hilltop would purchase from Marquette at least 37.5% of Hilltop's cement requirements at market prices; and (3) Marquette would bear one-half of Hilltop's total pre-income tax operating losses sustained over a three-year period.
With regard to this loss-makeup provision, it is important to note that Hilltop had to suffer losses company-wide before the provision could be invoked. For example, if the Cincinnati ready-mix division suffered a loss but the company enjoyed an overall profit, no reimbursement would be paid.
With the loans guaranteed by Marquette, Hilltop enjoyed a prosperous five year period with its share of the Cincinnati market growing to a high of 44% in 1969. Richter did not fare as well during the same period. In 1967, the Federal Trade Commission ruled that the acquisition of Richter by River Fuel violated the Clayton Act and River Fuel was ordered to sell Richter. The company was finally sold in 1972 and, in that same year, began operations in the form in which it brought this suit. Between 1964 and 1972, the plaintiff's predecessor, under the ownership of River Fuel, had seen its share of the Cincinnati market decrease from 27% to 17%.
Therefore, the competitive situation in 1972 had changed considerably from what it had been in 1964. Richter was now under new management and was no longer a dominant force in the market while Hilltop appeared to be as strong as ever. Richter, in its new form, was also no longer a captive customer for cement. The change in the market led Marquette to seek to withdraw from the 1964 Agreement with Hilltop. Whereas Marquette found the 1964 Agreement to be burdensome in 1972, Hilltop was not willing to make substantial changes. The loan guarantees and the loss-makeup provision (though never invoked) provided Hilltop with financial stability. Hilltop did agree, however, to reduce its cement purchases from Marquette, since Marquette found the requirement that it sell 37.5% of Hilltop's cement needs to be unprofitable.
For the relevant time period of October 1972 (when "new" Richter, the plaintiff in this action, entered the market) to July 1974, the Cincinnati ready-mix concrete market was fiercely competitive. Entry into the market, at least on a small level, was fairly easy and this fact further sharpened already keen competitive bidding. The influx of non-union companies into the market further increased price competition as these companies were able to under-bid union companies such as Hilltop and Richter.
Hilltop and Richter both sold their concrete at a price below their average total costs during the relevant time period. Richter sold its concrete at an average price of $19.95 per cubic yard while incurring an average total cost of $22.39 per cubic yard. Hilltop sold its concrete at an average price of $18.80 per cubic yard while incurring an average total cost of $19.88 per cubic yard. The parties stipulated that although Hilltop was selling at a price below average total cost, its price was above average variable cost. 3
As might be expected from the fact that they sold their product below average total cost, both Hilltop and Richter lost money during the relevant time period. These losses were further exacerbated by a strike by mixer drivers in the summer of 1974. The new Richter company, which had lost money under River Fuel's management and continued to lose money in its new form, publicly announced its closing in August 1974. In announcing its closing, Richter blamed high costs, labor disputes and low sales volume for its failure. Hilltop's losses in Cincinnati during that same time period were great enough to cause a company-wide loss for the three-year period. Accordingly, in late 1974, Hilltop invoked the loss-makeup provision of the 1964 Agreement for the first time. Following litigation between Marquette and Hilltop, the loss-makeup provision was held to be valid and Marquette paid one-half of Hilltop's losses for the three-year period.
During the period 1972-74, Hilltop's market share in the Cincinnati market dropped from 40% to 30%. By 1977, its market share had declined to 20% and Hilltop, like Richter before it, sold its assets.
The issue before the court is whether the district court correctly directed verdicts in favor of the defendants. The standards for considering a directed verdict are well-settled. The court is "bound to view the evidence in the light most favorable to (the non-moving party) and to give it the benefit of all inferences which the evidence fairly supports, even though contrary inferences might reasonably be drawn." Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 696, 82 S.Ct. 1404, 1409, 8 L.Ed.2d 777 (1962). If the plaintiff "does not present enough evidence within his case-in-chief to support a reasonable finding in his favor, a...
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