710 F.2d 752 (11th Cir. 1983), 81-5693, Construction Aggregate Transport, Inc. v. Florida Rock Industries, Inc.

Docket Nº:81-5693.
Citation:710 F.2d 752
Party Name:CONSTRUCTION AGGREGATE TRANSPORT, INC., a Florida corporation, Plaintiff-Appellee, v. FLORIDA ROCK INDUSTRIES, INC., a Florida corporation, Defendant-Appellant, Florida Crushed Stone, a Florida corporation, Defendant.
Case Date:July 29, 1983
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 752

710 F.2d 752 (11th Cir. 1983)

CONSTRUCTION AGGREGATE TRANSPORT, INC., a Florida

corporation, Plaintiff-Appellee,

v.

FLORIDA ROCK INDUSTRIES, INC., a Florida corporation,

Defendant-Appellant,

Florida Crushed Stone, a Florida corporation, Defendant.

No. 81-5693.

United States Court of Appeals, Eleventh Circuit

July 29, 1983

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Carlton, Fields, Ward, Emmanuel, Smith & Cutler, C. Timothy Corcoran, III, Tampa, Fla., William B. Sullivan, Washington, D.C., for defendant-appellant.

Schwartz & Wilson, Herbert T. Schwartz, Gainesville, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before VANCE and ANDERSON, Circuit Judges, and SCOTT [*], District Judge.

R. LANIER ANDERSON, III, Circuit Judge:

Florida Rock Industries ("FRI") appeals from an adverse judgment entered against it in a treble damages action under Sec. 4 of the Clayton Act, 15 U.S.C.A. Sec. 15 (West Supp.1983), 1 and Sec. 1 of the Sherman Act, 15 U.S.C.A. Sec. 1 (West Supp.1983). 2 A jury found for the plaintiff, Construction Aggregate Transport, Inc. ("CAT"), and awarded damages of $300,000, which the trial court

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trebled. We reverse and remand for a new trial because the trial court erred in instructing the jury on a theory of per se illegality. 3

I. FACTS

Construction Aggregate Transport, Inc., a Florida corporation engaged in the hauling of sand, gravel, and other rock material ("aggregate") in Central and Southern Florida, was the brainchild of one, Al Hallowell, who had worked for many years in the trucking business in Florida. The idea upon which CAT was based was a novel one for the aggregate 4 hauling business in Florida, and involved the use of double trailers. By using these double trailers, which required only one tractor and one driver, rather than the single trailers which were the norm in the aggregate hauling industry, a substantial reduction in costs could be realized.

Hallowell also recognized that most truckers of bulk aggregate use one-way hauls; after delivering their shipment of bulk aggregate they return with an empty load to the aggregate supplier. Obviously, a business which relied on two-way hauling could maximize the use of its equipment and reduce the cost of transporting each trailer of aggregate. 5

The Florida aggregate industry historically has been geographically divided into two separate markets. Each of these markets is supplied primarily by rock mined within the particular market. One market centers around Brooksville, near Orlando in Central Florida. Aggregate produced in the Brooksville-Orlando market generally constitutes the primary supply for asphalt producers in the Central Florida area. The defendant, Florida Rock Industries, is one of the largest producers of aggregate in the state of Florida, and is one of the primary suppliers in the Brooksville-Orlando market area. 6 The other geographical aggregate market in the state of Florida centers around the Miami and West Palm Beach area. Thus, the primary sources of aggregate materials used in the production of asphalt in Florida are the rock mines in the Miami market and the Brooksville-Orlando market. Finally, another important facet of the Brooksville-Orlando market is the production of sand materials, also used in the construction industry. Much of this sand is produced at Clermont, due east of Orlando.

At the time that Hallowell conceived the idea of using double trailers, a strong demand existed in the Miami market for the sand produced outside of Clermont in the Brooksville-Orlando market. See Record at 1066. Further, there was a strong demand in the Brooksville-Orlando market for the rock being produced by the Miami mines. According to testimony at trial, no existing hauling outfit had attempted to take advantage of the separation of these two markets. Hallowell therefore determined that the time was ripe for an aggregate trucking outfit which could meet the demand for sand in the Miami and West Palm Beach area and also introduce Miami rock into the Brooksville-Orlando area.

Miami and Orlando lie at opposite ends of a 200-mile north-south stretch of the Florida Turnpike. Hallowell's plan was to pick up sand in the Clermont area west of Orlando and truck it down to the West Palm Beach area alongside the Turnpike. After delivering the sand to his customers in West Palm Beach, he would then drive to the

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stone mines in the Miami area, load his double trailers with aggregate material and return to the Orlando area, delivering the Miami aggregate to asphalt producers in and around Orlando. Under this plan, CAT's truckers would engage only in two-way hauls. Further efficiencies would be realized by using the double trailers, which could carry twice the normal load. 7

In the summer of 1977, Hallowell began efforts to implement this plan. First, he persuaded a friend, Dr. Ward, to contribute capital needed for starting up the operation. Dr. Ward contributed $15,000 and, after Mr. Hallowell's own contribution, CAT was able to begin with operating capital of $35,000. 8

Next Hallowell set about designing the necessary trailers and securing their manufacture. Of critical importance to our narrative is Hallowell's choice of trailer. Rather than selecting the rear dump trailers that were generally used in the bulk aggregate hauling business in Central Florida, Hallowell chose to design his trucking operation around the use of bottom dump or "hopper" trailers. A rear dump trailer is emptied of its contents by tilting the entire trailer unit on a horizontal axis, thus allowing the aggregate to slide out the back door. The result is a relatively concentrated pile of aggregate. Record at 1059. With the hopper trailer, material is emptied through the bottom of the trailer by means of gull-wing type doors. If the driver is careful when unloading, the result will be long, narrow, and neat "windrows" of aggregate material. Generally, regardless of the type of trailer used the purchaser of the aggregate will have to use a "payloader" or "front end loader" to move the deposited material into larger stockpiles. It is possible, however, that this job may take longer and require greater effort when the material has been deposited in windrows by a hopper trailer. 9

Hallowell next took his design to Walter Harkala of Hardey Manufacturing. Harkala agreed that there was merit to Hallowell's business plan, and after working out the financial details Hardey Manufacturing began to construct the necessary trailers. The manufacturing process proved to be a slow one. Because of the unique design features of the new trailers, in particular the mechanism for opening the gull-wing doors, production of the first set of trailers took approximately six months. Ultimately, Hardey would manufacture three sets of trailers, or six trailers in all. Harkala testified that eventually Hardey would have been able to manufacture 12 to 18 trailers per year. Record at 1042. This capability coincided with Hallowell's goal of putting a fleet of twenty trailers on the Turnpike, capable of delivering 1,000 tons of aggregate a day. Record at 1274.

While the trailers were being manufactured, Hallowell was taking care of other business. At that time, the state of Florida allowed the use of double trailers only on the Turnpike, not on any other state or federal highways. This complicated Hallowell's round trip concept, and necessitated the purchase or construction of a "staging area" at each end of the Turnpike. At the end of each haul, CAT would have to pull off the Turnpike into the staging area,

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whereupon the two trailers would be unhitched. A tractor would then haul each trailer separately to its delivery destination, and then back to the staging area where it would be exchanged for the other trailer. The same procedure would then be carried out in order to load the two trailers. After loading and rehitching, the double trailer unit would begin its return journey up the Turnpike. 10

Next, Hallowell set about obtaining a Certificate of Public Necessity and Convenience from the Florida Public Service Commission. After failing to secure a 10-county Certificate from a friend, he arranged to purchase a statewide Certificate from the Osceola Construction Company in Pensacola for $25,000. After purchasing two tractors from International Harvester 11 and receiving the first set of trailers from Hardey Manufacturing, Hallowell secured approval and licensing from the Turnpike Authority for his equipment and his drivers. By October of 1978, CAT was ready to begin operations.

Because the viability of CAT depended upon its ability to haul to both ends of the Florida Turnpike, the hours of operation of its customers and suppliers were extremely important. In particular, it was critical to CAT's success that there be a customer for Miami rock in the Orlando area that would be able to take deliveries 24 hours a day. Only with the unrestricted delivery schedule at the north end of the "circuit" could CAT hope to maximize the use of two-way hauling and operate at a profit. See Record at 1014-15, 1298-300, 1491-92.

By November of 1978, CAT had lined up customers at both ends of the Turnpike. Typically, CAT would begin a two-way haul by loading its trailers with sand at the north end of the trip. This sand would be supplied by a mine in the Clermont area which would be open 24 hours a day for loading. Once the loaded trailers had been individually shuttled to the staging area on the Turnpike they would be hitched together for the journey south. After a three-hour journey, the sand would be...

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