In re Lower Lake Erie Iron Ore Antitrust Litigation
| Decision Date | 27 February 1991 |
| Docket Number | Master File No. MDL 587. |
| Citation | 759 F. Supp. 219 |
| Parties | IN re LOWER LAKE ERIE IRON ORE ANTITRUST LITIGATION. This Document Relates To: All Actions. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
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Howrey & Simon by Richard T. Colman, Robert F. Ruyak, Robert L. Green, Basil C. Culyba, Marcia Press Kaplan, Washington, D.C., for plaintiffs Jones & Laughlin Steel, Inc. (LTV), Wheeling-Pittsburgh Steel Corp. and Republic Steel Corp. (LTV).
Thorp, Reed & Armstrong by William M. Wycoff, Richard Riese, Pittsburgh, Pa., for plaintiffs Nat. Steel Corp. and Sharon Steel Corp.
Jenner & Block by Bruce J. Ennis, Kit Adelman-Pierson, Washington, D.C., and Lawrence R. Velvel, Nashua, N.H., for plaintiffs David Reaney, Ambrosia and Erie.
Cohen, Milstead & Hausfeld by Jerry S. Cohen, Ann C. Yahner, Washington, D.C., for plaintiff Tauro Bros. Trucking Co.
Beery & Spurlock Co., L.P.A. by Elizabeth L. Rabenold, Paul F. Beery, Columbus, Ohio, for plaintiffs Wills Trucking Inc. and Toledo World Terminals.
Squire, Sanders & Dempsey by Kenneth C. Anderson, James V. Dick, Timothy W. Bergin, Washington, D.C., for defendant Bessemer and Lake Erie R. Co.
Pepper, Hamilton & Scheetz by Laurence Z. Shiekman, M. Duncan Grant, Robert E. Heideck, Philip H. Lebowitz, Philadelphia, Pa., for defendant Consol. Rail Corp.
Sidley & Austin by Richard J. Flynn, Lee A. Monroe, Stephen S. Hill, Merinda D. Wilson, Martin Stern, Jill Phillips, Gene Schaerr, Washington, D.C., for defendant Norfolk and Western Ry. Co.
OPINION AND ORDERS ON POST-TRIAL MOTIONS
This multidistrict litigation, in which ten antitrust suits were consolidated in this court for pretrial proceedings, and retained for trial, involves a conspiracy dating from the mid-1950's on the part of a group of defendant railroads (the Penn Central Corporation (Penn Central), the Chesapeake & Ohio Railway Company (C & O), the Baltimore & Ohio Railroad Company (B & O), CSX Corporation (CSX), the Bessemer & Lake Erie Railroad Company (B & LE), the Pittsburgh & Lake Erie Railroad Company (P & LE), Consolidated Rail Corporation (Conrail), the Norfolk & Western Railway Company (N & W), and Norfolk Southern Corporation (Norfolk Southern)) to monopolize the dock handling, storage and land transportation of iron ore along lower Lake Erie. The claims against all defendants except the B & LE were settled or dismissed before or during trial.
The liability phase of the trial commenced on May 9, 1989. The jury returned a verdict on June 19, 1989 in favor of plaintiffs in Wills Trucking, Inc., et al. v. Chesapeake & Ohio Railway Co., et al., Civil Action No. 84-2010 (Wills), C.D. Ambrosia Trucking Co. v. Chesapeake & Ohio Railway Co., et al., Civil Action No. 84-2012 (Ambrosia), Republic Steel Corp. v. Penn Central Corp., Civil Action No. 84-2079 (Republic), National Steel v. C & O Ry., Civil Action No. 84-2134 (National), Jones & Laughlin Steel Inc. v. Penn Central Corp., et al., Civil Action No. 84-2135 (J & L), Wheeling-Pittsburgh Steel Corp. v. Penn Central Corp., et al., Civil Action No. 84-2138 (Wheeling-Pitt), Tauro Bros. Trucking Co. v. Baltimore & Ohio Railroad Co., et al., Civil Action No. 84-2781 (Tauro), Sharon Steel Corp. v. Penn Central Corp., et al., Civil Action No. 84-5562 (Sharon), and Erie-Western Pennsylvania Port Authority, et al. v. Chesapeake & Ohio Railway Corp., et al., Civil Action No. 84-5760 (Erie), and in favor of defendant B & LE in David W. Reaney, et al. v. Chesapeake & Ohio Railway Co., et al., Civil Action No. 84-2722 (Reaney). The damages trial before a different jury began on June 26, 1989, and culminated on July 18, 1989 in verdicts totalling $243.5 million in actual damages. With appropriate trebling under federal law and doubling under state law, the total verdicts amount to $638.5 million.
Much of the iron ore processed into steel by the plaintiff steel companies originates in mines located in Michigan, Minnesota and eastern Canada. Iron ore is shipped across the Great Lakes and unloaded at docks along lower Lake Erie in Pennsylvania and Ohio. Many of these docks were owned by the railroads, and were the primary handlers of ore. For many years, the prevailing method of unloading bulk commodities such as iron ore was by means of huletts, which are large cranes affixed to the docks. The huletts lifted bulk commodities such as ore from the ships, known as "bulkers"; the cargo was then either loaded into railroad cars for immediate transport, or transferred into storage. During the period of the conspiracy, rates for these services at all of the railroad docks were identical. The private (i.e. non-railroad) docks in the vicinity were not equipped with huletts, and thus could not compete for iron ore traffic.
In the 1950's, some iron ore producers began to "pelletize" their ore, making possible its transportation via self-unloading vessels. These vessels, as the name implies, were capable of unloading themselves by means of a conveyor belt. With the advent of larger self-unloaders in the 1960's, these ships could carry twice the load carried by the conventional bulkers and could unload themselves more quickly and without special equipment. The railroads, unwilling to lose the profitable iron ore trade and fearful of losing their substantial capital investments in huletts, decided to halt the progress of self-unloader technology, in part by keeping dock-handling rates for self-unloaders artificially high: the railroads charged the steel companies the same dock handing rates for self-unloaders as for bulkers.
Another aspect of the conspiracy involved line haul rates, which are the rates charged by the railroads for transporting ore and other commodities from specific docks to the steel companies' mills. Pursuant to ICC requirements, the rates from the railroad docks to all steel mill customers were identical, irrespective of the distances involved. The plaintiff private docks were effectively precluded from handling ore from the self-unloaders by the railroads' refusal to publish competitive commodity line haul rates from these private docks to the steel mills; and the plaintiff trucking companies (which, not surprisingly, had no access to railroad docks) were therefore unable to compete with the railroads for land transportation. Moreover, the railroads either refused outright to sell or lease to private concerns any property that could be used as an ore dock, or would only sell or lease the property subject to restrictions against such use.
In the liability phase of the trial, the jury found that the B & LE participated in this conspiracy in violation of sections 1 and 2 of the Sherman Act and of Ohio's antitrust law, the Valentine Act, and that at least one overt act in furtherance of the conspiracy occurred after October 13, 1977. This jury further found: (1) that the conspiracy injured the plaintiff steel companies by foreclosing and/or delaying the utilization of self-unloaders and by rendering them unable to use private docks; (2) that the conspiracy injured the Erie plaintiffs by preventing them from subleasing or purchasing Penn Central's ore dock at Erie, Pennsylvania or from having competitive iron ore rates at that dock; (3) that the conspiracy injured Ambrosia by delaying iron ore handling by private docks, which would permit the trucking of the ore; (4) that the conspiracy injured Tauro by foreclosing and/or delaying the utilization of self-unloaders at docks to which trucks would be allowed access, and by preventing steel mills from fully using docks; and (5) that the Wills plaintiffs were injured by, among other things, the railroads' refusal to lease or sell dock properties without restrictions, preventing Wills from engaging in an iron ore business at Toledo, Ohio and from providing a trucking service in combination with its dock services. Finally, the jury found that the railroads took affirmative steps to conceal the conspiracy.
The legal and factual issues involved in this litigation are numerous and complex. They involve such matters as whether defendant's activities were exempt from antitrust scrutiny at the time they occurred; whether plaintiffs have "antitrust standing" to assert their various damage claims; whether some or all of plaintiff's claims are barred as indirect, under the doctrine of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977); whether plaintiffs can maintain antitrust claims under Ohio's Valentine Act; whether some or all of plaintiffs' claims, under federal law or state law, are time-barred; and, of course, whether various aspects of the juries' verdicts are adequately supported by the evidence.
Many of the legal issues were addressed pre-trial at various stages, see, e.g., Pretrial Orders Nos. 4, 11, and 49, but must be re-visited in light of the more complete factual development at trial.
It is a fair generalization to state that, throughout the trial, doubtful issues were resolved in favor of submitting claims and defenses to the jury for specific factual findings. Thus, as to any issue where the correctness of this court's pretrial rulings was fairly debatable, the parties were permitted to develop the factual record. This approach has had two notable impacts upon my assessment of post-trial briefing: a particular award is not automatically invalid merely because it is arguably inconsistent with some aspect of a pretrial ruling — the goal is to achieve the correct disposition of the issue. Conversely, aspects of the jury verdicts should not automatically be regarded as unassailable because the issue was submitted to the jury and there is evidence to support it — again, the ultimate question is whether the correct result has been reached.
Railroad rates and charges which are subject to the jurisdiction of the Interstate Commerce...
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Table Of Cases
...Cir. 1998) ....................................................................... 130 In re Lower Lake Erie Iron Ore Antitrust Litig., 759 F. Supp. 219 (E.D. Pa. 1991) .................................................................. 144 In re Lower Lake Erie Iron Ore Antitrust Litig., 99......