Cool Insulation v. Owens-Corning Fiberglass Corp.

• Decision Date: 08 December 1998
• Docket Number: No. SA-97-CA-138 HG.,SA-97-CA-138 HG.
• Citation: 68 F.Supp.2d 763
• Parties: COOL INSULATION, INC., Plaintiff, v. OWENS-CORNING FIBERGLASS CORP., n/k/a Owens-Corning and Williams Consolidated, Inc., Defendants.
• Court: U.S. District Court — Western District of Texas

68 F.Supp.2d 763

COOL INSULATION, INC., Plaintiff, v. OWENS-CORNING FIBERGLASS CORP., n/k/a Owens-Corning and Williams Consolidated, Inc., Defendants.

No. SA-97-CA-138 HG.

United States District Court, W.D. Texas, San Antonio Division.

December 8, 1998.

Order Granting Clarification December 29, 1998.

Order Denying Reconsideration January 25, 1999.

Richard J. Karam, Law Offices of Richard J. Karam, San Antonio, TX, Bill Palmer, Attorney at Law, Boerne, TX, Robert J. Barrera, Nicholas & Barrera, San Antonio, TX, Paul N. Bartlett, Jr., Law Office of Paul Bartlett, Jr., San Antonio, TX, for Cool Insulation, Inc., plaintiff.

Rand J. Riklin, Goode Casseb Jones Riklin, Choate & Watson, P.C., San Antonio, TX, Joseph Casseb, Goode Casseb Jones Riklin, Choate & Watson, P.C., San Antonio, TX, John Charles Ertman, William I. Sussman, Reboul, MacMurray, Hewitt, Maynard & Kristol, New York City, for Owens-Corning Fiberglas Corporation, defendant.

Stephen P. Allison, Haynes & Boone, San Antonio, TX, for Williams Consolidated, Inc., defendant.

ORDER

H.F. GARCIA, District Judge.

On this day, the Court considered the motion filed by Defendants Owens-Corning and Williams Consolidated, Inc. for summary judgment on the Robinson-Patman Act claims made by Plaintiff Cool Insulation, Inc. Having considered the same, and the response of the plaintiff, the Court is of the opinion that the motion should be GRANTED.

BACKGROUND

From 1993 through 1996, the period at issue, Cool Insulation, Inc. ("Cool") and Williams Consolidated, Inc. ("Williams") were engaged in the business of insulation contracting in and around Austin, Texas. Insulation contractors install insulation for builders of commercial and residential buildings, and engage in a competitive bidding process for the right to install insulation on a particular project or development.

Insulation contractors can purchase insulation from several national manufacturers, including Owens Corning ("Owens"), Certain Teed Corporation, and Johns Manville, as well as two regional manufacturers, Knauf Insulation and Guardian Insulation. During the 1993-96 time period, both Cool and Williams purchased insulation from Owens. However, Cool stopped buying insulation from Owens in mid-1996, and now purchases the majority of its insulation from CertainTeed Corporation. Williams, on the other hand, continues to primarily purchase insulation from Owens.

This action, filed by Cool, alleges that Owens offered Williams better prices and other sales advantages, in violation of the Robinson-Patman Act, that resulted in Cool losing several insulation contract bids to Williams between 1993 and 1996. Yet, for the reasons set forth below, the court finds that Cool's claims must fail as a matter of law.

SUMMARY JUDGMENT STANDARD

Under Rule 56, the party moving for summary judgment must come forward with an initial showing that it is entitled to judgment. S & W Const. v. Dravo Basic Materials Co., 813 F.Supp. 1214, 1218 (S.D.Miss.1992). This burden "may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Once the movant makes a properly supported motion, the burden shifts to the nonmovant to demonstrate the existence of a genuine dispute. Under Rule 56(e), "an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). When summary judgment is requested in the context of antitrust litigation, adherence to this standard is appropriate. See, e.g., Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

ALLEGED VIOLATIONS OF THE ROBINSON-PATMAN ACT

In order to recover treble damages under § 4 of the Clayton Act, "a plaintiff must prove (1) a violation of the antitrust laws, (2) cognizable injury attributable to the violation, and (3) at least the approximate amount of the damage." Chrysler Credit Corp. v. J. Truett Payne Co., Inc., 670 F.2d 575, 579 (5th Cir.1982) (citing Malcolm v. Marathon Oil Co., 642 F.2d 845, 852 (5th Cir.1981); Larry R. George Sales Co. v. Cool Attic Corp., 587 F.2d 266, 270 (5th Cir.1979); Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690, 694 (5th Cir.1975), cert. denied, 424 U.S. 943, 96 S.Ct. 1412, 47 L.Ed.2d 349 (1976); Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 20 (5th Cir.), cert. dismissed, 419 U.S. 987, 95 S.Ct. 246, 42 L.Ed.2d 260 (1974)). The antitrust violation alleged in this case is unlawful price discrimination affecting secondary line competition, "that is, price discrimination by the seller which affects competition among its buyers." Id. As to secondary line competition, § 2(a) of the Robinson-Patman Act "prohibits price discrimination between different purchasers of commodities of like grade and quality `where the effect of such discrimination may be substantially to lessen competition ... or to injure, destroy, or prevent competition' among the purchasers." Id. (quoting 15 U.S.C.A. § 13(a)). "The reasonable possibility of substantially lessening competition ... requir[es] the plaintiff to prove that the result of the price discrimination `is likely to be a severe, adverse effect on competition.'" Id. (quoting Littlejohn v. Shell Oil Co., 483 F.2d 1140, 1144 (5th Cir.1973) (en banc)). Consequently, in order to show a violation of § 2(a), "plaintiff must demonstrate that the likely effect of the alleged price discrimination was to allow a favored competitor to draw significant sales or profits away from him, the disfavored competitor." Id. (citations omitted).

Cool recognizes that in order for there to be discrimination between purchasers violative of § 2(a) "`there must be actual sales at two different prices to two different buyers.'" M.C. Mfg. Co., Inc. v. Texas Foundries, Inc., 517 F.2d 1059, 1065 (5th Cir.1975), cert. denied, 424 U.S. 968, 96 S.Ct. 1466, 47 L.Ed.2d 736 (1976) (quoting Jones v. Metzger Dairies, Inc., 334 F.2d 919, 924 (5th Cir.1964), cert. denied, 379 U.S. 965, 85 S.Ct. 659, 13 L.Ed.2d 559 (1965)). In pursuing that claim, Cool asserts that Williams was granted lower prices on various materials by Owens than those granted to Cool, thus allowing Williams to secure more jobs. However, in a strikingly similar case, the court dismissed a Robinson-Patman Act claim. See Olympia Co., Inc. v. Celotex Corp., 597 F.Supp. 285 (E.D.La.1984), aff'd & remanded on other grounds, 771 F.2d 888 (5th Cir.1985), cert. denied, 493 U.S. 818, 110 S.Ct. 73, 107 L.Ed.2d 39 (1989). In Celotex, Olympia, a roofing contractor, claimed that it was the losing bidder on a number of projects in the New Orleans area because Celotex, a roofing materials manufacturer, was offering Olympia's competitor, Standard-Taylor Industries, Inc., more favorable prices. Holding that no violation of the Robinson-Patman Act was implicated, the court stated:

... the Act protects purchasers in competition with one another at the time of the purchases; it is irrelevant that the companies may have entered into competitive bidding, or that the successful bidder was ultimately able to obtain prices below those offered to its competitors in the bidding process.

Olympia Co., 597 F.Supp. at 297 (citation omitted). Thus, even if Owens sold to Williams at prices below those offered to Cool in the bidding process, there was no violation.

Likewise, in S & W Const., the court held that although S & W Construction and Materials Co., Inc. and Coast Materials were competitive bidders on three street projects in the City of Gulfport, Mississippi, they were not competitive "purchasers" as required by the Robinson-Patman Act because S & W could have received the business for those jobs only if Coast had first defaulted. S & W. Const., 813 F.Supp. at 1220. It was the bids in competition, not the subsequent sales. Id. See M.C. Mfg., 517 F.2d at 1066-68 (both plaintiff and plaintiff's rival were bidding for a government contract; rival was low bidder and purchased from defendant; plaintiff and its rival not "purchasers in competition" because only the one winning the government contract would buy). Consequently, bids alone cannot form the basis for Cool's Robinson-Patman Act claim. S & W Const., 813 F.Supp. at 1220. Once Williams was awarded a bid, and became the primary contractor, it was assured of the right to fulfill the requirements of the job regardless of any discrepancy in the prices later charged Williams or any competitor, including Cool. Id. This conclusion is further supported by the fact that the affidavit of Kevin Weinrich no where states that Cool purchased insulation from Owens for the "lost jobs" in the tables prepared by Dr. Hubble.

Additionally, under Robinson-Patman, "`[i]njury to a competitor is not the test; the test is injury to competition.'" Id. (quoting Lloyd A. Fry Roofing Co. v. F.T.C., 371 F.2d 277, 281 (7th Cir.1966)). Injury to competition is usually shown in either of two ways: proof of lost sales or profits. See Falls City Indus. Inc. v. Vanco Beverage, Inc., 460 U.S. 428, 434-35, 103 S.Ct. 1282, 1288, 75 L.Ed.2d 174 (1983); Rose Confections, Inc. v. Ambrosia Chocolate Co., 816 F.2d 381 (8th Cir.1987). In this case, however, there is no direct evidence of lost sales or profits caused by discriminatory pricing. First, there is no evidence before the court that had Owens not given Williams a "low" price on the numerous projects cited in Dr. Hubbard's tables, Cool would have received the project as the alternate bidder. Nor is there evidence that without these allegedly "low" prices Williams would not have received the bid, or would have possibly defaulted on the project. Yet, there is evidence that...