DeLong Equipment Co. v. Washington Mills Electro Minerals Corp., 92-8049

• Decision Date: 17 May 1993
• Docket Number: No. 92-8049,92-8049
• Citation: 990 F.2d 1186
• Parties: 1993-1 Trade Cases P 70,248 DeLONG EQUIPMENT COMPANY, Plaintiff-Appellant, Cross-Appellee, v. WASHINGTON MILLS ELECTRO MINERALS CORP., f/k/a Washington Mills Abrasive Co., Washington Mills Ceramic Corp., John T. Williams and Peter Williams, Defendants- Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1186

990 F.2d 1186

1993-1 Trade Cases P 70,248

DeLONG EQUIPMENT COMPANY, Plaintiff-Appellant, Cross-Appellee, v. WASHINGTON MILLS ELECTRO MINERALS CORP., f/k/a Washington Mills Abrasive Co., Washington Mills Ceramic Corp., John T. Williams and Peter Williams Defendants- Appellees Cross-Appellants.

No. 92-8049.

United States Court of Appeals Eleventh Circuit.

May 17, 1993.

William E. Sumner, David A. Webster, Sumner & Hewes, Atlanta, GA, for plaintiff-appellant, cross-appellee.

Paul Webb, Jr., Philip S. Coe, Webb & Daniel, Atlanta, GA, for defendants-appellees, cross-appellants.

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

Before KRAVITCH, Circuit Judge, GODBOLD and OAKES ^*, Senior Circuit Judges.

OAKES, Senior Circuit Judge:

The critical question presented by this case involves a conspiracy between a manufacturer and a favored distributor. The object of the conspiracy was to raise wholesale prices to other distributors, including the plaintiff, on products to be sold to one large customer. It is of some significance that the wholesale price, as raised, was higher than prevailing retail prices. The antitrust law question is whether this conspiracy was a device to force an increase in the resale price, or a vertical agreement to fix the minimum resale price in violation of § 1 of the Sherman Anti-Trust Act, 15 U.S.C. § 1 (1988) (the "Act"). Resale price maintenance agreements are, of course, per se illegal restraints of trade within § 1 of the Act. Absent such per se illegality here, defendants concededly prevail.

This is the third time this court has addressed this case. The second time here, on appeal from a grant of summary judgment for the defendants, this court held that evidence proving such a conspiracy would support a finding of antitrust injury within the line of cases commencing with Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911), extending through Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977), to and including Business Elecs. Corp. v. Sharp Elects. Corp., 485 U.S. 717, 108 S.Ct. 1515, 99 L.Ed.2d 808 (1988). DeLong Equip. Co. v. Washington Mills Abrasive Co., 887 F.2d 1499 (11th Cir.1989), rehearing and rehearing en banc denied, 896 F.2d 560, cert. denied, 494 U.S. 1081, 110 S.Ct. 1813, 108 L.Ed.2d 943 (1990) (DeLong II ). ¹ In Delong II, this court indicated that the essence of the alleged conspiracy between the manufacturer and the favored distributor was to inflate the price of the manufacturer's standard product by labeling it "special" and "charging Pratt [the Pratt & Whitney Aircraft Division of United Technologies Corp., a significant customer] a significantly higher price than Washington Mill's list price for [the] identical [product]." 887 F.2d at 1509. Following this court's ruling in DeLong II, a jury trial resulted in a verdict for the plaintiff distributor against the defendant manufacturer, the favored distributor defendant having settled with the plaintiff after DeLong I. We are now faced with an appeal from the district court's denial of motions for judgment notwithstanding the verdict on the plaintiff-distributor's Sherman Act price-fixing, Robertson-Patman Act price-discrimination and common-law fraud verdicts; with a cross-appeal from the district court's grant of a new trial on Sherman Act damages and Robinson-Patman Act damages; and with an appeal from the awarding to the manufacturer defendant of pre-judgment interest on a counterclaim for outstanding debts.

Because the key questions in the case involve consideration of issues addressed in this court's last opinion, this appeal thus

                requires consideration of the ancient but venerable doctrine of "the law of the case."   In addition, the case raises questions of sufficiency of proof, injury in fact, and conspiracy.   Problems of interlocutory review are not involved, however, since this court granted petitions for review of all of the issues following district court certification, pursuant to 28 U.S.C. § 1292(b) (1988)
                

I. BACKGROUND

A. Facts:

While the background facts were well set forth in DeLong II, in the interests of easier understanding, we will recount them here. The plaintiff distributor is DeLong Equipment Company ("DeLong"), a Georgia corporation wholly owned by Harold DeLong. DeLong distributes equipment and supplies used to polish and deburr metal parts in industrial manufacturing processes. The critical product in this process, called "media," consists of abrasive materials which are placed in vibratory machinery with the metal parts to be polished and deburred. Media can consist of natural products, such as sand without the backing paper used in sandpaper. The media involved in this case, however, known as "preformed ceramic media," is made from a blend of clays, sands and polishing agents, extruded through metal molds and cut into different shapes, such as cylinders, stars, rectangles or triangles, after which it is baked and dried. The media is packed by the manufacturer and shipped either to distributors such as DeLong or directly to customers. Distributors, as pointed out in DeLong II, not only provide regular and prompt delivery of media and related supplies, but also consult with the end user, helping it select the appropriate equipment, media, power, speed and time to bring the user's product to the correct state of polish.

The manufacturer defendants-appellants and cross-appellees are Washington Mills Electro Minerals Corporation, formerly known as Washington Mills Abrasive Company, located in North Grafton, Massachusetts and in the business since 1868, and its wholly-owned subsidiary Washington Mills Ceramic Corporation, located in Lake Wales, Florida. They are joined in their appeal by the two individual defendants-appellants, officer/owners John T. Williams and Peter Williams (who are not related). For simplicity, we will refer to the Washington Mills Electro Minerals Corp., its officers and its subsidiary collectively as "Washington Mills."

The other primary actor in this case, the BCS Company, Inc. ("BCS"), settled with DeLong before DeLong II. BCS, located in Thompson, Connecticut, is a distributor of media with a business quite similar to DeLong's. Both BCS and DeLong have distributed Washington Mills' products since the early 1980s, and BCS was Washington Mills' primary distributor in the northeastern United States during all times relevant to this litigation. Neither DeLong nor BCS itself manufactures media, but both distribute media manufactured by other companies, including but not limited to Washington Mills. Like other Washington Mills distributors, generally speaking, DeLong and BCS purchased media for resale at a wholesale discount rate of 25% off the retail list price. Since no Washington Mills distributors had exclusive territories or franchise areas, the distributors competed for end-user accounts. They received standard price lists showing the size, shape, composition and price per pound of each kind of "stock" media in the Washington Mills manufacturing inventory. The price list also indicated that customers could request "special" media if they met minimum volume requirements and paid for a new die if one was needed to produce the media.

The specific, key customer involved was the Pratt & Whitney Aircraft Division of United Technologies Corporation ("Pratt"). Pratt, which manufactures aircraft engines and uses ceramic preformed media to polish its jet engine blades, is not a party to this action but, before this case, was one of Washington Mills' largest end-user customers. As one might suspect, Pratt's engineering department tests and approves the use of specific materials in its manufacturing processes and issues specifications used by the purchasing department to solicit There was ample proof at trial to support the allegations in DeLong's complaint that the "special" media involved in this case was actually generic, that is, media that Washington Mills regularly produced and carried in stock, and that this "special" media, sold to the specific customer around whom this case revolves, did not differ in composition from the generic media stocked by Washington Mills. Thus, the evidence is essentially conclusive that it cost Washington Mills no more to produce the "special" media involved in this case than it did to produce its regular line set forth in its standard price list. Pratt, in other words, was duped.

                bids for any given products necessary;  these specifications appear on Pratt product material control dockets ("PMCs").   With exceptions not relevant here, the Pratt purchasing department may only purchase pre-approved items specified on the PMCs from pre-approved dealers and the materials delivered must have the PMC numbers stamped on the box.   The media at issue here, manufactured by Washington Mills for Pratt and known as "special," were approved by Pratt after testing and designated on the appropriate PMCs as "P & W 5,000" (PMC 3175), "P & W 6,000" (PMC 3178) and "P & W 7,000" (PMC 3179).   The testing and approval of the Washington Mills products was done by Pratt engineers in East Hartford, Connecticut, in consultation with William and Robert Biebel of BCS.   James Neal, a Pratt engineer and a friend of the Biebels, obtained the issuance of the PMCs for the "special" Washington Mills media furnished by BCS.   BCS was designated in the Pratt PMC as "manufacturer" and the product was labeled accordingly both by BCS itself and by Washington Mills on empty boxes for the products to be supplied to Pratt
                

At the time Pratt issued its PMC for the purchase of "BCS-manufactured" special media, Washington Mills was selling the very same media generically to BCS for .495 dollars per pound. This price was based on Washington Mills's standard distributors' discount of 25% off its retail price of .66 dollars per pound....