DeLong Equipment Co. v. Washington Mills Abrasive Co., 88-8664

Decision Date13 November 1989
Docket NumberNo. 88-8664,88-8664
Citation887 F.2d 1499
Parties1989-2 Trade Cases 68,844 DeLONG EQUIPMENT COMPANY, Plaintiff-Appellant, v. WASHINGTON MILLS ABRASIVE COMPANY, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Eleventh Circuit

William E. Sumner and David A. Webster, Sumner & Hewes, Atlanta, Ga., for plaintiff-appellant.

Paul Webb, Jr. and Philip S. Coe, Webb & Daniel, Atlanta, Ga., for defendants-appellees.

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

Before VANCE and ANDERSON, Circuit Judges, and ATKINS *, Senior District Judge.

ANDERSON, Circuit Judge:

Plaintiff-appellant DeLong Equipment Company ("DeLong") brought this action against Washington Mills Abrasive Company, its wholly-owned subsidiary Washington Mills Ceramic Corporation (collectively referred to as "Washington Mills" unless otherwise noted), B.C.S. Company, Inc. ("BCS"), and several individuals alleging violations of the federal antitrust laws as well as pendent state law claims. The district court granted partial summary judgment in favor of the defendants, and DeLong appeals. Because we find that DeLong has raised genuine issues of material fact regarding several issues, we reverse and remand the case for trial.

A. Facts

Plaintiff DeLong, a Georgia corporation wholly owned by Harold DeLong, is a distributor of vibratory equipment and supplies used to polish and deburr metal parts in industrial manufacturing processes. The key product in this process is an abrasive metal finishing substance known as "media." In the manufacturing process, metal parts for products such as automobiles or airplanes are cut from sheets of metal and placed in vats or tubs containing media. The containers are then vibrated, causing the media to rub against the metal parts, removing any rough edges and giving the piece a polished finish.

Finishing media can be readily available natural products such as corn cobs or sand, or can be specialized products such as liquid chemicals, glass beads, steel balls, ceramic shapes, or plastic chips. The media in this case is known as "preformed ceramic media," and is used, among other things, in the manufacture and refurbishing of jet aircraft engine blades. Preformed ceramic media consists of a blend of clays, sands, and polishing agents which is extruded through metal molds of different shapes, such as cylinders, stars, rectangles, or triangles, cut into the desired size, baked and dried. The material is packed by the manufacturer and shipped either to distributors or directly to end-user customers by common carrier. The role of the distributor is to consult with the user of media and to advise the user of the appropriate equipment, media, vibratory power, speed, and time period.

Washington Mills Abrasive Company, located in North Grafton, Massachusetts, has been in the abrasive finishing business since 1868. Washington Mills is a manufacturer-supplier and occasional distributor of media. 1 Washington Mills's media is manufactured by its wholly-owned subsidiary, Washington Mills Ceramic Corporation, located in Lake Wales, Florida. Washington Mills approved DeLong as a distributor in September 1982. 2

Defendant BCS, located in Thompson, Connecticut, is also a distributor of media, engaged in a business virtually identical to DeLong's. BCS has been a distributor of Washington Mills products since the early 1980s, and was Washington Mills's primary distributor in the northeast during all times relevant to this litigation. 3 Neither DeLong nor BCS manufacture media, but both distribute media manufactured by others, including Washington Mills.

As was its customary practice, Washington Mills did not enter into a written distributorship agreement with DeLong. Generally, Washington Mills distributors purchased media for resale at a wholesale discount of 25% off the list price for media. There was no provision in the arrangement between Washington Mills and DeLong for exclusive territories or franchise areas, and Washington Mills's distributors competed, sometimes vigorously, for end-user customer accounts. As a distributor of Washington Mills products, DeLong, along with all other Washington Mills distributors, received a standard price list showing the size, shape, composition, and price per pound for each kind of "stock" media regularly kept in Washington Mills's inventory. The price list also provided that customers could request specially made media, subject to minimum volume requirements and a requirement that the customer pay for a new die if one was required to produce the media. This "special" media was manufactured at the request of three or fewer customers without sufficient volume to be placed in regular inventory. "Special" media is not an inherently different product from Washington Mills's "stock" media or from media manufactured by other companies.

Defendant Peter Williams is the president and controlling shareholder of Washington Mills. Defendant John Williams, no relation to Peter, is general sales manager of Washington Mills as well as an officer of the corporation. Defendant Hans van der Sande was Washington Mills's southeast regional sales manager 4 during the time material to this action. He was responsible for processing orders and arranging shipments to distributors, and also dealt with distributor complaints. Defendant Robert Baldauf was regional sales representative for Washington Mills in the southeast. Baldauf visited dealers, ascertained their product needs, and transmitted this information to van der Sande at Washington Mills's home office.

Pratt & Whitney Aircraft Division of United Technologies Corporation ("Pratt") is not a party to this action, but its role has been crucial throughout. Pratt is one of Washington Mills's largest end-user customers. Pratt manufactures aircraft engines, and ceramic preformed media are used in the production of jet engine blades. Pratt's engineering department tests and approves the use of certain materials in its manufacturing process and issues specifications used by its purchasing department in soliciting bids for these products. These specifications appear on product material control dockets, or "PMCs." Except for extraordinary situations not relevant here, Pratt's purchasing department may only purchase items specified on the PMCs, and materials delivered to Pratt must have the PMC number stamped on the box. PMCs are important to Pratt because it wants to ensure that both the product which was tested and the supplier of that product remain constant. Pratt considers the PMC number an attestation that the product is identical to the product that Pratt approved for its manufacturing process. Pratt not only buys media for its manufacturing of jet engine blades, but also instructs other companies purchasing Pratt engines to use the same media in refurbishing engine blades.

In the late 1970s and early 1980s, Pratt was planning a new production facility. Initially the facility was to be located in the northeast, but Pratt ultimately built the plant in Columbus, Georgia in 1983. In the years preceding Pratt's construction of its Columbus facility, Pratt engineers in Connecticut had engaged in a business relationship with BCS. BCS was a supplier of tumbling media and other products to Pratt's East Hartford, Connecticut plant at that time. Defendants William Biebel and his son, Robert Biebel, were the principals of BCS who dealt with Pratt's engineers. During Pratt's development process of a new jet engine to be manufactured in Georgia, BCS helped Pratt test vibratory equipment and tumbling media until a satisfactory process was found. After testing media from several manufacturers, including Washington Mills, James Neil, a Pratt engineer, requested that a PMC be issued for three of the Washington Mills media furnished by BCS during the development process.

This PMC specified BCS as the "manufacturer" of the media, and identified various media as "BCS Specials." William Biebel of BCS testified that BCS tried to have an end-user customer approve a product with the BCS label rather than the manufacturer's label. This labeling ensured that BCS would retain the sales of the product and not be undercut by a competing distributor of the same media.

Initially, Washington Mills distributed its media to Pratt's Columbus plant through BCS. Pratt required a twenty-four hour commitment for delivery to the Columbus plant, however, and BCS did not have facilities nearby to service the plant properly. When it became aware of BCS's inability to service Pratt in Columbus, DeLong became attracted to the lucrative account.

DeLong received an invitation to bid in 1982 which listed BCS as the manufacturer of the media, and DeLong informed Pratt that BCS did not manufacture media but was a distributor like DeLong. Harold DeLong asked for a sample of the media in question, and his examination of the media suggested that it was stock media manufactured by Washington Mills. DeLong repeatedly complained to Washington Mills that the higher priced media being sold to Pratt was exactly the same as Washington Mills's stock media, and that therefore the price should have been lower.

DeLong made a bid in response to Pratt's 1982 invitation, and was the successful bidder. DeLong leased a warehouse in Columbus, and supplied Washington Mills's media to Pratt until Washington Mills terminated its distributorship in August 1985.

B. Procedural History

After being terminated by Washington Mills, DeLong brought this action in February 1986, alleging violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1, 2; section 2 of the Clayton Act as amended by section 1 of the Robinson-Patman Act, 15 U.S.C. Sec. 13(a); section 3 of the Clayton Act, 15 U.S.C. Sec. 14; and various violations of Georgia law, including breach of contract, tortious interference with business relationships, fraud, deceit, and...

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