Helmac Products Corp. v. Roth (Plastics) Corp.
| Decision Date | 18 February 1993 |
| Docket Number | Civ. A. No. 84-CV-8225-FL. |
| Citation | 814 F. Supp. 581 |
| Parties | HELMAC PRODUCTS CORPORATION, a Michigan corporation, Plaintiff, v. ROTH (PLASTICS) CORPORATION, a Canadian corporation, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
David A. Ettinger, James K. Robinson, Honigman, Miller, Schwartz & Cohn, Detroit, MI, Thomas J. Kenny, Raymond & Dillon, Southfield, MI, for plaintiff.
Lori Silsbury, Roger K. Timm, Dykema Gossett, Detroit, MI, for defendant.
This lawsuit concerns Helmac's damages for Roth (Plastics)' violation of the Anti-Dumping Act of 1916, Act of September 8, 1916, 39 Stat. 798, 15 U.S.C. § 72 (1980) ("the Act" or "the 1916 Act").
Pending before the Court are the following:
Helmac seeks a default judgment for damages, claiming that Roth's prior document destruction supports such a finding. The Court finds sufficient information remains available for Helmac to demonstrate damages to a jury. For example, Helmac has been able to produce an expert's opinion calculating the damages. Roth has obtained an expert with different views. There is no reason to decide the factual question of damages without recourse to a trial.
Where necessary documents are unavailable, this Order establishes how Helmac can proceed.
Intent is an element of a violation of the Anti-Dumping Act of 1916. Order of July 14, 1992, 814 F.Supp. 560 ("Order"). This Court has already issued a default judgment against Roth for violating the Act. This issue need not be proven at trial to calculate damages. Helmac also argues convincingly that it would unduly burden Helmac given Roth's destruction of documents that might otherwise show intent. The jury will be instructed that the Court has already determined that Roth has shown the requisite intent for liability under the Act.
The incremental damages due to lawful and unlawful pricing must be separated. As even Helmac acknowledges, "as a general principle, courts evaluating amounts of claims have agreed that only damages attributable to unlawful conduct should be recovered." Helmac's Brief on its Damages Methodology at 10.
Helmac contends that since this Court has ruled that the 1916 Act requires proof of intent to injure, then Roth violated the Act even when it set prices at or above cost. This Court cannot determine how damages could be assessed, however, when Roth violated the Act but did not price below cost. The alternative that Helmac posits is to count as damages all lost profits incurred by Helmac as a result of competition by Roth during the years in question.
Nothing in the language of the 1916 Act supports such an outcome, and the public policy implications are considerable. The Act's plain language refers to "a price substantially less than the actual market value or wholesale price." Regardless of how the Act is interpreted, it is somewhat of a stretch to suggest the Act justifies damages when Roth's prices equalled or exceeded average variable cost.
In addition, this outcome seems draconian and inconsistent with the body of foreign trade laws of which the Act is merely one part. See e.g., 19 U.S.C. § 2901(a) (West Supp.1992) ().
Foreign competitors found liable under the Act would be liable for treble damages on the entire effect of their competition in the United States market. The result would surely stifle competition beyond that intended by Congress when it enacted this admittedly protectionist statute. Therefore, this Court shall limit damages to those cases where Roth set prices below average variable cost.
Helmac postulates that as a result of Roth's illegal pricing, a customer might have told Helmac its prices were higher than Roth's, but not by how much. As a result, Helmac would have lowered prices ("price suppression") and lost profits. Helmac claims that "the entire amount of price suppression is still properly viewed as due to Roth Plastics' unlawful activities." Id., at 11.
The Court disagrees for the reasons discussed supra regarding damages for lawful pricing. Only the extent of Helmac's price suppression that is a result of Roth's illegal prices should constitute damages. For example, suppose that Helmac charged $2 per unit and Roth charged $1.50 per unit. Helmac then lowered its price to $1.25 per unit and obtained the contract. First, a jury would determine the extent to which Roth illegally lowered its price, based upon an analysis of Roth's cost data. E.g., the jury might find that Roth illegally shaved .25 cents off the price per unit. Then, the jury would determine what Helmac would have done had Roth's price been set without violation of law, e.g., if Roth's unit had been priced at $1.75. A reasonable jury in this example could find any of the following: that Helmac would not have lowered its price at all; that it would have lowered its price to $1.75 per unit, $1.50 per unit, or any other amount, depending upon the evidence presented of Helmac's pricing decisions. The jury need not presume, as Helmac would have it, that the entire price suppression of fifty cents per unit constitutes damages.
Helmac also claims, however, that Roth's prior destruction of price quotation sheets severely hampers the calculation of price suppression. This Court previously stated that it would not be likely to exclude Helmac's evidence of price suppression if Helmac could not distinguish damages resulting from illegal conduct from losses resulting from legal competition. See Order. The Court's perspective on this issue has not changed, and it therefore allows Helmac to claim as damages the entire amount of price suppression or of the loss of a contract in those cases when Roth's prices are unknown due to document destruction. However, in those cases where Roth price data is available, it would be unreasonable to punish Roth by denying Roth the opportunity to prove that some of Helmac's losses resulted from legal competition.
Finally, the issue remains how the Court will instruct the jury to consider the effect of other factors on the loss of particular Helmac contracts, e.g., problems with Helmac's sales staff or advertising effectiveness. Helmac requests that the Court adopt the "substantial factor" test of Irvin Industries, Inc. v. Goodyear Aerospace Corp., 974 F.2d 241 (2d Cir.1992). The Court agrees that the substantial factor test is a reasonable one to apply, but not in the way that Helmac appears to suggest in its brief, Helmac's Brief 13.
The Court will instruct the jury that Helmac can recover for every contract for which it can show (1) that it charged a lower price to obtain the contract or lost a contract to Roth and (2) that Roth's quotation of an illegal price was a substantial factor in Helmac's loss of the contract or price suppression. The possibility exists that the jury will find that on any particular contract the extent of the Roth illegal price cut was so small, or the mismanagement of a Helmac sales account so extreme, that the Roth illegal pricing did not constitute a substantial factor in Helmac's loss of a contract. In those cases, Helmac will not recover.1
Where the jury does find an illegal price cut to constitute a substantial factor in Helmac's loss, the extent of Helmac's recovery will be (1) in cases where Roth's price data is missing due to document destruction, the entire amount of the loss; (2) in cases where Roth's price data is available, the extent of the loss that the jury attributes to the illegal pricing.2
The total recovery will be trebled in accordance with the statute.
Helmac and Roth offer alternative approaches to defining average variable cost. Since this Court has determined that the average variable cost will play a critical role in calculating damages, this dispute must be resolved. The Court does not believe that oral testimony is necessary on this subject. Both sides have briefed the issue extensively and provided affidavits of experts.
Both legal and factual issues divide the parties over the definition of average variable cost. The legal issues shall be resolved by this Order. The factual issues shall be resolved by the jury. There is no reason why a jury is not competent to determine which expert has analyzed data in a more persuasive manner. No rule of evidence requires this issue to be handled by the Court in an evidentiary hearing; therefore the following issues shall be determined by the jury:
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