Allied Accessories and Auto Parts Co., Inc. v. General Motors Corp., 85-1989

• Citation: 825 F.2d 971
• Decision Date: 23 July 1987
• Docket Number: No. 85-1989,85-1989
• Parties: , 1987-1 Trade Cases 67,644 ALLIED ACCESSORIES AND AUTO PARTS COMPANY, INC., a Michigan corporation, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, a Delaware corporation, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 971

825 F.2d 971

56 USLW 2145, 1987-1 Trade Cases 67,644

ALLIED ACCESSORIES AND AUTO PARTS COMPANY, INC., a Michigan

corporation, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, a Delaware corporation,

Defendant-Appellee.

No. 85-1989.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 11, 1986.

Decided July 23, 1987.

Jerome D. Frank (argued), Lori Lutz, Shapack, McCullough & Frank, Bloomfield Hills, Mich., for plaintiff-appellant.

John B. Clayton (argued), Gen. Motors Corp., Detroit, Mich., John W. Sibley, Farmington Hills, Mich., for defendant-appellee.

Before ENGEL and JONES, Circuit Judges; and ALLEN, Senior District Judge. ^*

NATHANIEL R. JONES, Circuit Judge.

Allied Accessories and Auto Parts Company, Inc. ("Allied"), appeals the district court's judgment for defendant following a bench trial on its price discrimination claim brought pursuant to the Robinson-Patman Act, 15 U.S.C. Sec. 13 (1982), seeking treble damages under id. Sec. 15. Because the district court erroneously required plaintiff to demonstrate that defendant's price discrimination was the sole cause of plaintiff's lost profits, and because defendant's cost justification analysis was based upon groupings impermissible under United States v. Borden Co., 370 U.S. 460, 82 S.Ct. 1309, 8 L.Ed.2d 627 (1962), we reverse and remand.

Allied is a wholesale distributor of automobile parts and accessories to mass merchandiser retailers. During the years 1972 to 1979, one of Allied's largest retail customers was the K Mart Corporation ("K Mart"). However, Allied had only once, for a few months, sold oil filters to K Mart. Prior to 1978, Campbell Filter Company ("Campbell") had supplied to K Mart oil filters manufactured by Campbell and sold under the K Mart name. Campbell also manufactured the Fram oil filters that K Mart sold.

In 1978, K Mart decided to change its marketing of oil filters. It switched to a policy of selling Original Equipment Manufacturer ("OEM") filters, i.e., oil filters manufactured by automobile companies for the cars they build. K Mart had a policy of buying direct from the manufacturer whenever possible, since that was usually the best way to get the lowest price. For some reason, however, General Motors Corporation ("GM") could not sell direct to K Mart the AC-Delco oil filters manufactured for GM cars. Instead, GM signed a contract with Campbell allowing Campbell to purchase AC-Delco oil filters for the sole purpose of supplying K Mart. This agreement provided Campbell with a price discount 10 percent below warehouse distributor prices. This discount was not made available to Allied.

Several companies submitted bids to K Mart for supplying AC-Delco oil filters. The lowest bid was submitted by Campbell, and the second-lowest bid was submitted by Allied. The bid that was submitted by Campbell was 10 percent lower than plaintiff's bid. K Mart subsequently chose Campbell as its supplier for AC-Delco oil filters.

Allied brought suit in federal district court, alleging that GM's discount to Campbell violated the Robinson-Patman Act. The district court agreed with plaintiff that GM charged different prices for the same goods. It also agreed that Allied and Campbell were competitors, "since Campbell was stepping outside of its prior posture as a manufacturer and becoming a supplier, and offering to supply the same product to K Mart as was plaintiff." J. App. 25. The district court's first basis for disagreement with plaintiff was that the district court did not believe, as plaintiff did, that Allied would have been selected as K Mart's supplier "but for" the difference in price between Allied and Campbell. J. App. 27, 29. The district court found that price was not K Mart's sole consideration in choosing a supplier since "K Mart's policy was to stay with an established vendor. However, in the event a lower price was offered by a new vendor, K Mart policy was to go back to the established vendor to see if the new price could be met." J. App. 28. Because K Mart had previously only dealt regularly with oil filter manufacturers, only a manufacturing company like Campbell could be an "established vendor" for the purposes of this policy. Thus, although a great deal of testimony pointed to price as K Mart's primary consideration, see, e.g., J. App. 147, 148, 306, the district court held that an established vendor like Campbell would have had an advantage even if its price had not initially been lower.

I.

Although the district court's factual conclusion that price was not the sole basis for K Mart's decision is not clearly erroneous, the district court was incorrect in its assumption that Allied must show that GM's price discrimination was the sole cause of its failure to receive the K Mart account. In Zenith Corp. v. Hazeltine, 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969), the Supreme Court noted that in order to demonstrate damage under 15 U.S.C. Sec. 15, "[i]t is enough that the illegality is shown to be a material cause of the injury; a plaintiff need not exhaust all possible alternative sources of injury in fulfilling his burden of proving compensable injury...." 395 U.S. at 114 n. 9, 89 S.Ct. at 1571-72 n. 9 (emphasis added). The Seventh Circuit in Bohack Corp. v. Iowa Beef Processors, Inc., 715 F.2d 703 (7th Cir.1983), relied on Zenith in approving the following jury instruction:

The plaintiff does not claim nor is he obligated to prove that the violation was the sole and only cause of the loss of profit. It must, however, show that the violation played a substantial part in bringing about or causing the loss of sales and the loss of profit.

* * *

* * *

Plaintiff need not show that the price discrimination was a more substantial cause of injury than any other....

Id. at 711 n. 9.

Apparently the trial judge's application of an erroneous legal standard on causation may have been induced by arguments the plaintiff made in its own trial brief, wherein it indicated that it intended to show that "to the extent that any logical questions would exist with regard to either the injury or the damages, these questions all arise out of a situation created solely by General Motors' wrongdoing in price discrimination." This and another reference in its brief that plaintiff would prove that it would have obtained A-C Delco oil filter sales "but for" GM's price discrimination, combined with its failure to cite the correct standard, indicates that the plaintiff may have been the author of its own downfall. Nevertheless, this fact is insufficient to permit us to let the trial court's decision stand without a remand and a reconsideration in accordance with what is now well agreed to be the proper standard of law. We believe it would be error here for us to reevaluate the evidence and findings in the light of the proper legal standard, as this would be precisely the type of appellate fact-finding which the Supreme Court abjured in Pullman-Standard v. Swint, 456 U.S. 273, 293, 102 S.Ct. 1781, 1792, 72 L.Ed.2d 66 (1982). Swint does, of course, excuse the normal obligation to remand where an application of the correct legal standard to the record permits only one resolution of the factual issue. Id. at 292, 102 S.Ct. at 1792. Here, however, while the trial court's factual finding regarding causation is not clearly erroneous, we are unable to hold that the trial judge, considering the evidence in the light of the law as it properly is, would invariably conclude that plaintiff had not established causation. We therefore remand this issue for further consideration by the district court according to the correct legal standard.

II.

If on remand the district court were to find that GM's 10 percent discount to Campbell was a material cause of Allied's failure to receive the K Mart account, plaintiff would still be unable to recover damages if we were to affirm the district court's holding that:

Taking into account defendant's assertions of inaccuracies and inability to reflect true damages, the court concludes that an accurate finding of damages would be merely speculative. The Court is unable to determine a proper allocation of plaintiff's operating expenses, a proportionately fair reduction occasioned by defendant's lower price discount in 1981, and an accurate determination of lost profits. The Court therefore declines to find that damages are ascertainable.

J.App. 32-33. However, a remand on the causation issue is not futile, because we hold that the district court has clearly applied too stringent a standard for proof of damages in this case. The Tenth Circuit has succinctly summarized the degree of certainty required to prove damages in an anti-trust case:

If the plaintiff has demonstrated some damage, the actual amount need not be proven to the same degree of certainty. King & King [Enterprises v. Champlin Petroleum Co., 657 F.2d 1147, 1158 (10th Cir.1981), cert. denied, 454 U.S. 1164, 102 S.Ct. 1038, 71 L.Ed.2d 320 (1982) ]. "[A] plaintiff is not to be held to a rigid standard of proof regarding the amount of damages, since in such cases economic harm is frequently intangible and difficult to quantify." Id. at 1157.

"[W]hile the damages may not be determined by mere speculation or guess, it will be enough if the evidence show [sic] the extent of the damages as a matter of just and reasonable inference, although the result be only approximate. The wrongdoer is not entitled to complain that they cannot be measured with the exactness and precision that would be possible if the case, which he alone is responsible for making, were otherwise." Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563, 51 S.Ct. 248, 250, 75 L.Ed. 544 (1931).

World of Sleep, Inc. v. La-Z-Boy Chair Co., 756 F.2d 1467, 1478 (10th Cir.), cert. denied, 474 U.S. 823, 106 S.Ct. 77, 88 L.Ed.2d 63 (1985). See also Los Angeles Memorial Coliseum Comm'n v. NFL, 791 F.2d 1356 (9th Cir.1986) (plaintiff need only provide sufficient...