Rossi v. Standard Roofing, Inc.
| Decision Date | 09 September 1998 |
| Docket Number | No. 97-5185,97-5185 |
| Citation | 156 F.3d 452 |
| Parties | 1998-2 Trade Cases P 72,274 Joseph ROSSI; Rossi Florence, Corp.; Rossi Roofing, Inc., Appellants v. STANDARD ROOFING, INC.; Arzee Roofing Supply Corp.; Gaf Corporation; Allied Roofing, Inc.; Servistar Corp.; Robert Higginson; Hardware Wholesalers, Inc.; William Higginson; Certainteed Corp.; Wolverine Corp.; Nailite Corp.; Estate of Robert Higginson; Al Roth; Cary Roth; Joseph Licciardello; Wood Fibre Industries, Inc. |
| Court | U.S. Court of Appeals — Third Circuit |
Harold E. Kohn, Joanne Zack (Argued), Michael J. Boni, Kohn, Swift & Graf, Philadelphia, PA, Jonathan D. Clemente, Clemente, Dickson & Mueller, Morristown, NJ, for Joseph Rossi, Rossi Florence Corp., Rossi Roofing, Inc.
Robert C. Heim (Argued), Joseph A. Tate, Christine C. Levin, George G. Gordon, Dechert, Price & Rhoads, Philadelphia, PA, Sheldon
M. Finkelstein, Shirley B. Whitenack, Hannoch Weisman, NJ, for GAF Corporation.
Stuart M. Kuritsky (Argued), Bursik, Kuritsky & Giasullo, West Orange, NJ, for Arzee Supply Corp., Alvin Roth and Cary Roth.
Steven M. Richman (Argued), Paul J. Ferdenzi, Gallagher, Briody & Butler, Princeton, NJ, for Wood Fiber Industries, Inc.
Stephen F. Ban (Argued), Springer, Bush & Perry, Pittsburgh, PA, David K. Delonge, Schumann, Hanlon, Doherty, McCrossin & Paolino, Jersey City, NJ, for Servistar Corporation.
Joel N. Kreizman (Argued), Evans, Osborne, Kreizman and Bonney, Little Silver, NJ, for Standard Roofing, Inc., William Higginson, the Estate of Robert Higginson and Joseph Licciardello.
Before: BECKER, ROTH, Circuit Judges and DIAMOND, District Judge. *
This appeal from the grant of summary judgment in favor of antitrust defendants presents a familiar pattern. A dealer irritates his competitors and their principal supplier through his aggressive price discounting practices. The other dealers complain to the supplier, who, to placate the aggrieved dealers, agrees not to sell any product to the dealer. The "boycotted" dealer then brings a Sherman Act suit, 15 U.S.C. § 1 et seq., in federal court. The alleged conspiracy involves a number of the plaintiff's competitors, and the refusal to deal is said to have become a group boycott, which can be a horizontal antitrust violation with per se antitrust implications; the supplier, notwithstanding its vertical relation to the plaintiff, is said to have become a co-conspirator.
The present case arose out of the rough and tumble roofing and siding materials distribution business in northern New Jersey, where several favored roofing and siding distributors were concerned that the entrance of a new price cutting competitor could destabilize the market and substantially cut into their profit margins. The principal players in this drama are plaintiffs Joseph Rossi, and his two successive roofing and siding distribution businesses, Rossi Florence Corp. ("Rossi Florence"), and Rossi Roofing, Inc. ("Rossi Roofing"); defendants Standard Roofing, Inc., ("Standard") and Arzee Supply Corporation ("Arzee"), two of Rossi's chief competitors, and several of their key officers; and defendant GAF Corporation ("GAF"), the manufacturer that supplied the most important product in the market. Minor roles were played by defendants Wood Fiber Industries, Inc. ("Wood Fiber"), another roofing and siding manufacturer, and Servistar Corp. ("Servistar"), a national purchasing cooperative and reseller of roofing and siding products.
Following discovery, the district court granted summary judgment for all defendants on the ground that plaintiffs had failed to adduce sufficient evidence to meet the demanding standard of proof in the antitrust context established by the Supreme Court's jurisprudence. The court also relied on plaintiffs' alleged failure to demonstrate causation and damages. While we agree with the district court that Rossi cannot survive summary judgment as to Servistar and Wood Fiber, we believe that the record is sufficient to enable Rossi to survive summary judgment on the antitrust claims as to Standard, Arzee, the individual defendants associated with those firms, and GAF.
The Supreme Court's jurisprudence in the area of concerted refusals to deal teaches that not every situation in which a distributor is cut off at the behest of his competitors constitutes a group boycott entitled to per se treatment. Otherwise, legitimate efforts by manufacturers to impose reasonable rules limiting intra-brand competition would be outlawed and the beneficial effects such actions have on inter-brand competition would be lost. Moreover, the distinction between vertical and horizontal restraints would blur. These concerns, however, are not implicated here, in view of both the price-related orientation of the alleged offending conduct of the key defendants and the sheer scope and draconian modus operandi of the alleged conspiracy.
The jurisprudence also renders it difficult for an antitrust plaintiff to prove that the manufacturer and distributors conspired, typically because it is difficult for the plaintiff to demonstrate that what the manufacturer or supplier did was inconsistent with independent action or that the claimed conspiracy makes economic sense. In this case, however, at least at the summary judgment stage, that burden is surmounted by the presence of certain direct evidence of conspiracy as well as: (1) evidence that GAF acted against its consistent policy (and hence ostensibly against its own interest) in refusing to sell (and seeing to it that others did not sell) GAF products to Rossi; (2) evidence of pretext in connection with GAF's efforts to explain away the foregoing; (3) evidence that the major suppliers had sufficient leverage over GAF to induce it to so act; and (4) the quite graphic and extensive nature of the statements and actions of various defendants directed towards eliminating Rossi as a price-cutting competitor who passed secret rebates onto his customers and thereby threatened to de-stabilize the market. We also discern genuine issues of material fact on causation and damages, and this too precludes summary judgment on the antitrust claims against the key defendants.
Although the district court's order granting summary judgment on the antitrust claims regarding GAF, Standard, Arzee, and their corporate officers must be reversed, it must be affirmed as to Servistar and Wood Fiber, since Rossi has failed to overcome his burden of showing that either Servistar's or Wood Fiber's actions tended to exclude the possibility of independent action on their part. More specifically, Rossi has failed to put forth any evidence of Servistar's motive to conspire; as we shall explain, Servistar's relationship to GAF was far different from that of the distributor defendants. Rossi has also failed to show that the other defendants had any leverage over Servistar with which they could have coerced it to join the conspiracy. With respect to Wood Fiber, the only evidence Rossi has been able to adduce is that Wood Fiber may, on one or two occasions, have responded to pressure and threats from Standard and Arzee by not selling to Rossi, and hence this record is insufficient to satisfy the standards...
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