Clamp-All Corp. v. Cast Iron Soil Pipe Institute

Citation851 F.2d 478
Decision Date04 January 1988
Docket NumberNo. 87-1697,CLAMP-ALL,87-1697
Parties1988-1 Trade Cases 68,115, 7 U.S.P.Q.2d 1429 CORPORATION, Plaintiff, Appellant, v. CAST IRON SOIL PIPE INSTITUTE, et al., Defendants, Appellees. . Heard
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Richard S. Harrell, Washington, D.C., with whom Ronald E. Harding and Weston, Patrick, Willard & Redding, P.A., Boston, Mass., were on brief, for plaintiff, appellant.

John J. Curtin, Jr., with whom William G. Southard, Jody E. Forchheimer, Eve Jacobs-Carnahan, Bingham, Dana & Gould, John M. Harrington, Jr., Thomas H. Hannigan, Jr., Ropes & Gray, Alan R. Hoffman, M. Eric Schoenberg, Lynch, Brewer, Hoffman & Sands, Mark W. Pearlstein, Goodwin, Procter & Hoar, Boston, Mass., Henry P. Sailer, Elizabeth Foote, Covington & Burling, Washington, D.C., John E. Tener, Theodore Tucci and Robinson & Cole, Hartford, Conn., were on brief, for defendants, appellees.

Andrew M. Higgins and Casner, Edwards & Roseman, Boston, Mass., on brief, for defendant, appellee American Brass & Iron Foundry.

Before CAMPBELL, Chief Judge, BREYER and SELYA, Circuit Judges.

BREYER, Circuit Judge.

The plaintiff in this antitrust action, Clamp-All Corporation, sued the Cast Iron Soil Pipe Institute ("CISPI") and several of its members, charging that they had unlawfully restrained trade in (or monopolized or attempted to monopolize) the sale of hubless pipe couplings by means of improper pricing, improper behavior in respect to "quality-certification" provided by state and private organizations, and other improper trade practices. 15 U.S.C. Secs. 1 & 2 (1982), 15 U.S.C. Sec. 1125(a) (1982). The district court granted defendants' motion for summary judgment on the pricing (and certain other) counts, and, after hearing all the plaintiff's evidence, directed a verdict in defendants' favor; the plaintiff appeals. We have examined the lengthy record and conclude that the district court was correct. No reasonable jury could have found facts sufficient to show a violation of the antitrust laws. We therefore affirm the court's judgment.


To understand this highly fact-based appeal, one must keep in mind the following background:

1. Hubless couplings are used to join segments of pipe, such as water pipe or sewer pipe.

2. Several different manufacturers have made, and still make, various kinds of pipe couplings. The old fashioned method of joining segments of pipe apparently was to make one end slightly larger than the other, and then to fit the small end of one segment into the large end of the other. The larger opening was called the "hub" and the smaller end the "spigot." We think they looked about like this:


The newer method of joining pipe segments keeps both ends the same size. A sleeve fits around the two ends to be joined and a metal band holds the sleeve in place.

3. CISPI is a trade association of pipe manufacturers, all of whom sell, and many of whom also make, a particular type of coupling known as a CISPI coupling. It consists of a simple sleeve of the sort described. It fits between lugs each placed a bit away from the end of each pipe segment (perhaps they help hold the sleeve in place). We think the CISPI coupling looks something like this:


CISPI introduced hubless couplings to the market in 1963. CISPI controlled the patent on its coupling until 1984, licensing CISPI members to make and sell it.

4. Clamp-All is one of several firms that make competing pipe couplings. The Clamp-All and CISPI couplings appear quite similar, but the list price of Clamp-All's coupling is typically four to five times that of CISPI's, and the Clamp-All coupling will outperform the CISPI coupling in certain respects: it is wider, which makes it more secure and enables it to withstand greater water pressure; it is made of more durable (and more expensive) materials; and it is somewhat easier to install.

5. Exactly what share of the total market for water pipe couplings (outside of Massachusetts) CISPI couplings account for is a matter in dispute. Everyone agrees that CISPI's share is large, but they agree, too, that several companies other than Clamp-All and CISPI members sell a significant number of couplings. Inside Massachusetts, where Clamp-All had a monopoly for several years because only its coupling met the state's performance standard, Clamp-All controls about 65 percent of the coupling market.

Basically, Clamp-All charges that its relative lack of success outside Massachusetts is due to various anti-competitive (indeed, anti-Clamp-All) practices employed by CISPI members; otherwise, says Clamp-All, its sales record elsewhere would resemble its record in Massachusetts. The CISPI defendants deny all anti-competitive behavior; they add that Clamp-All's Massachusetts success reflects Clamp-All's own, partly successful, efforts to convince certifiers and regulators to keep the less expensive CISPI coupling out of the state.

Our concern here is with Clamp-All's charges, not CISPI's. We have proceeded to evaluate the legal merits of Clamp-All's many different claims as follows. First, we have read the record, marshalling the evidence in respect to each charge. Second, we have assumed a set of facts as favorable to Clamp-All, in respect to each charge, as the evidence will reasonably permit. See Goldstein v. Kelleher, 728 F.2d 32, 39 (1st Cir.), cert. denied, 469 U.S. 852, 105 S.Ct. 172, 83 L.Ed.2d 107 (1984). Third, we have determined, as a matter of law, see 2 P. Areeda & D. Turner, Antitrust Law p 315b (1978) [hereafter Areeda & Turner], whether that version of the facts reveals a violation of the antitrust laws; whether, for example, it shows predatory pricing, Matsushita Electric Industrial Co. v. Zenith Radio Corp. 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), or an "unreasonable restraint of trade," Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911).

We conclude that the facts do not show an antitrust violation. To explain our conclusions, we shall group Clamp-All's many charges into three categories: those concerning pricing practices, those concerning CISPI efforts to influence certification standards, and those concerning allegedly unreasonable marketing practices.


The significant evidence that we have found in respect to CISPI's pricing practices consists of the following:

1. The defendants published identical list prices for various products including couplings. One defendant testified that the prices on the list established a "defined differential" among different sizes of pipe, couplings, and related equipment.

2. Two CISPI firms, Tyler and American Brass & Iron Foundry ('AB & I'), firms that were defendants in this case initially, but which were no longer defendants at the time of trial, had price lists that showed "returns" to the firm to be less than "costs." To be more specific, the Tyler price list, in respect to "hubless couplings," showed in the column entitled "Return FOB Taylor" ".67," and in the column entitled "average unit cost," the figure ".78." In respect to AB & I's couplings, the evidence was conflicting. Although the category marked "Sales" was lower than that marked "Cost," the category marked "Unit Price" was higher than that marked "Unit Cost."

3. Two witnesses testified that Tyler's president once said at a CISPI meeting in 1981 that Tyler, the industry price leader, would not raise its prices until Central Foundry went out of business. A month later, Central Foundry did go out of business; Tyler then raised its prices, and the other CISPI members followed Tyler's lead.

4. Clamp-All's expert testified that CISPI members gave discounts on a geographical basis, which discounts did not reflect delivery cost differences, but, rather, reflected a "multiple basing point pricing scheme."

We conclude that this evidence does not show unlawfully low prices, prices that could hurt Clamp-All. Clamp-All comes closer to showing unreasonably high CISPI prices, but any such showing may reflect no more than an industry concentrated enough for each firm to set prices "interdependently" (each firm, aware that competitors will quickly match price cuts, may keep its prices high); and higher than competitive prices help Clamp-All rather than hurt it. See Matsushita, 475 U.S. at 583, 106 S.Ct. at 1354. We now consider each of Clamp-All's pricing claims in greater detail.

a. Clamp-All suggests that this evidence shows unlawful "predatory pricing." As we explained in detail in Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227 (1st Cir.1983), however, "predatory pricing" occurs when a firm sets its prices temporarily below its costs, with the hope that the low price will drive a competitor out of business, after which the "predatory" firm will raise its prices so high that it will recoup its temporary losses and earn additional profit, all before new firms, attracted by the high prices, enter its market and force prices down. Id. at 232-35; see Matsushita, 475 U.S. at 588-95, 106 S.Ct. at 1357-61. We said that ordinarily the measure of a "predatory price" is price below "incremental cost." Barry Wright, 724 F.2d at 232-33. That is to say, the addition to total cost (to the firm) of producing and selling additional output would exceed the return from selling that additional output.

The evidence in the record is insufficient to show such pricing by defendants here. For one thing, the product price lists from Tyler and AB & I contain no explanation about what the numbers on them mean. Indeed, Tyler's list refers to a vast number of different products and contains many products in respect to which the number in the "NET FOB" column is lower than that in the "AVERAGE UNIT COST" column. Yet, the plaintiffs do not argue that Tyler was pricing large numbers of its...

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