Lifschultz Fast Freight v. Consolidated Freightways

• Decision Date: 19 November 1992
• Docket Number: Civ. A. No. 6:87-477-20.
• Parties: LIFSCHULTZ FAST FREIGHT, INC., Plaintiff, v. CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, Yellow Freight Systems, Inc., and Roadway Express, Inc., Defendants.
• Court: U.S. District Court — District of South Carolina

805 F. Supp. 1277

LIFSCHULTZ FAST FREIGHT, INC., Plaintiff, v. CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, Yellow Freight Systems, Inc., and Roadway Express, Inc., Defendants.

Civ. A. No. 6:87-477-20.

United States District Court, D. South Carolina, Greenville Division.

October 29, 1992.

As Amended November 19, 1992.

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Wayne A. Cross and Edward A. McDonald, New York City, A. Camden Lewis, Columbia, S.C., Thomas P. Puccio, New York City, William J. Quirk, Columbia, S.C., for plaintiff.

Steven E. Sigalow, Kathleen B. Burke, Joseph C. Weinstein, Cleveland, Ohio, Fletcher C. Mann and Steven E. Farrar, Greenville, S.C., for Roadway Express, Inc.

Paul R. Duke and S. William Livingston, Jr., Washington, D.C., Charles Porter, Columbia, S.C., for Yellow Freight Systems.

J. Thomas Rosch and Daniel M. Wall, San Francisco, Cal., William A. Coates, Greenville, S.C., for Consolidated Freightways Corp.

MEMORANDUM OPINION

HERLONG, District Judge.

This matter is before the court on the motions filed by the defendants, Consolidated Freightways Corporation of Delaware ("Consolidated"), Yellow Freight Systems, Inc. ("Yellow"), and Roadway Express, Inc. ("Roadway"), for summary judgment. The defendants have also moved to exclude certain testimony. For the reasons stated herein, the court grants the defendants' motions to exclude testimony and for summary judgment.

I. FACTS AND HISTORY

This case arises out of a dispute involving corporations which are, or were at one time, competitors in the trucking industry. The defendants are all motor common carriers.¹ Prior to 1980, the plaintiff, Lifschultz Fast Freight, Inc. ("Lifschultz"), was a freight forwarder.² The main difference between a freight forwarder and a motor common carrier is that a freight forwarder relies on other common carriers to move the freight between cities either by rail, motor, or water. When Lifschultz was a freight forwarder, it generally used railroads to transport freight between cities. In 1980, Lifschultz became a motor common carrier and competed directly against the defendants.

Before 1980, the Interstate Commerce Commission ("ICC"), under the Motor Carrier Act of 1935, strictly regulated motor common carriers and freight forwarders. In this period, the ICC controlled rates that could be charged and restricted price competition. Information on the costs of operation was collected and reviewed by rate bureaus. Rate bureaus are groups of carriers operating in particular regions which are sanctioned by the ICC to develop rate tariffs based upon information on operating costs submitted by its members.³ Based on these tariffs, the ICC set the rates that could be charged. The rate bureaus for freight forwarders were not the same as the rate bureaus for motor common carriers. Rates for freight forwarders were set independently of the rates for motor common carriers. Lifschultz, however, asserts that rates for freight forwarders paralleled and were patterned after the rates for motor common carriers.

The Motor Carrier Act of 1980 deregulated the trucking industry. Since deregulation, there has been far greater price competition in the trucking industry. In fact, many carriers have been unable to compete and have exited the industry since deregulation. This was one of the objectives of the regulatory reform. Enhanced competition was intended to drive inefficient carriers or excess capacity out of the market.⁴ Although the ICC no longer controls rates, it still has regulatory power over the trucking industry. Carriers must file tariffs with the ICC which indicate what rates they are charging. The ICC has maintained the power to investigate complaints about a carrier and to determine the reasonableness or lawfulness of a rate that a motor common carrier proposes to charge. See, e.g., 49 U.S.C. §§ 10321, 10708, 11701, and 11702 (1992).

The portion of the trucking market in question in this case is the carrying of "less than truckloads" ("LTL") of freight. LTL shipments are between 100 and 10,000 pounds. LTL freight must be consolidated with other shipments of LTL freight to fill a truck. The LTL market is defined by shipping routes, called lanes, between cities. A competitor in the LTL market must have a terminal in each city at the ends of the lanes it services. An LTL carrier must also have facilities to pick up the freight and to deliver it to the ultimate receiver of the shipment in the cities at each end of the lanes.

In March of 1987, Lifschultz filed this action claiming that the defendants had violated the Sherman Anti-trust Act, 15 U.S.C. §§ 1 and 2, by conspiring to eliminate competition in the trucking industry. On September 29, 1988, Lifschultz filed its Second Amended Complaint in which it added four claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., and a claim under the South Carolina Unfair Trade Practices Act ("SCUTPA"), S.C.Code Ann. § 39-5-10 et seq. (Law.Co-op.1976).

Lifschultz's claims are based upon an alleged conspiracy among the defendants and involving the International Brotherhood of Teamsters ("Teamsters"), more commonly known as the Teamsters Union, and upon actions allegedly taken by the defendants in furtherance of this conspiracy. Lifschultz alleges that in the mid 1960s, the Teamster's president, Jimmy Hoffa, decided that concentration of the LTL market in a small number of trucking companies would be in the best interest of the Teamsters. Lifschultz alleges that based upon this determination, in approximately 1965, the Teamsters entered into a conspiracy with the defendants to eliminate competitors from the LTL market. The conspiracy is alleged to have been executed by different tactics at different time periods. In the period prior to deregulation, Lifschultz asserts that the defendants conspired to create a price squeeze to reduce or eliminate the profits of their competitors. The defendants allegedly provided false or misleading information to the rate bureaus. The rate bureaus developed tariffs based upon this information and sent this information to the ICC, which set the rates for the trucking industry. Lifschultz alleges that, although the rates were set above operating costs, they allowed very little profit and were below what the rates should have been without the false or misleading information. The Teamsters then allegedly agreed to give the defendants lower labor costs, to stage strikes against the defendants' competitors, and not to strike against the defendants. This would raise the costs of operations of the defendants' competitors. According to Lifschultz's allegations, this rise in costs combined with small profit levels because of the rates being set artificially low was intended to have, and did have, the effect of reducing or eliminating the profits of the defendants' competitors.

After deregulation in 1980, Lifschultz alleges that the means by which the conspiracy was conducted changed. In this time period, the defendants allegedly worked together to provide false information to the rate bureaus and the ICC which would allow the defendants to charge below cost rates to certain customers and in certain areas of the country. Lifschultz alleges that these rates were part of a scheme of predatory pricing by the defendants and were designed to force the defendants' competitors out of the LTL market.

II. EVIDENCE OF CONSPIRACY

A. Direct Evidence

In its memorandum in opposition to the defendants' motion for summary judgment, Lifschultz states that it has presented the court with "compelling, almost chilling, direct testimony of the organization and operation of the defendants' conspiracy to eliminate competition in the LTL industry."⁵ This "direct testimony" consists of the depositions and affidavits of Ralph Picardo ("Picardo") and Glenn Hall ("Hall"). Lifschultz's claim of an antitrust conspiracy hinges upon the testimony of these two men.

1. Picardo

Picardo has admitted to committing perjury and has been convicted of conspiracy to commit murder. Most of his testimony is based upon statements allegedly made to him over 17 years ago by his associates in the Provenzano Organized Crime Group.⁶ In his deposition, Picardo testified about the existence of a conspiracy between the Teamsters and the three defendants to drive other trucking companies out of business. He asserts that the Teamsters aided the defendants by ensuring labor peace, providing them breaks in arbitration, and allowing the defendants to use nonunion labor. Despite his allegations that the conspiracy was widespread, Picardo failed to name a single employee of the defendants who participated in this conspiracy.

Picardo testified that Yellow gave Teamster officials payoffs to obtain labor advantages. Picardo stated that he was told this by a vice president of Yellow's operation, but he could not supply the name of the Yellow official or the date of the conversation. Picardo testified that he was told by a Teamster shop steward at Roadway that Roadway had paid the steward to obtain favors from the Teamsters. Again, Picardo could give neither the date of the conversation nor the name of the steward who told him. Furthermore, Picardo testified that he actually saw a Roadway shop steward make payoffs to Salvatore Briguglio ("Briguglio").⁷ Nevertheless, Picardo again could not supply the name of the shop steward, the location of the terminal, or the dates of the payoffs. According to Picardo, Briguglio and Armand Faugno⁸ told him that they had received bribes from Consolidated in exchange for labor peace. Picardo told of a meeting where Consolidated officials discussed the conspiracy. Picardo admitted, however, that he was not in the room when the alleged conversation took place but asserts he was told of it later by his associates.

Picardo testified that the Teamsters had created a "hit list" of targeted carriers, which was...