Spartan Concrete Products, LLC v. Argos Usvi, Corp., 070519 FED3, 18-1942
|Opinion Judge:||HARDIMAN, CIRCUIT JUDGE.|
|Party Name:||SPARTAN CONCRETE PRODUCTS, LLC, Appellant v. ARGOS USVI, CORP., f/k/a CARICEMENT USVI, CORP.|
|Attorney:||Christopher A. Kroblin [Argued] Kellerhals Ferguson Kroblin Attorney for Appellant Howard Feller [Argued] Nicholas J. Giles Casey E. Lucier McGuireWoods Attorneys for Appellee|
|Judge Panel:||Before: CHAGARES, HARDIMAN, and RESTREPO, Circuit Judges.|
|Case Date:||July 05, 2019|
|Court:||United States Courts of Appeals, Court of Appeals for the Third Circuit|
Argued December 11, 2018
On Appeal from the District Court of the Virgin Islands (Civil Action No. 3-15-cv-00004) District Judge: Honorable Curtis V. Gómez
Christopher A. Kroblin [Argued] Kellerhals Ferguson Kroblin Attorney for Appellant
Howard Feller [Argued] Nicholas J. Giles Casey E. Lucier McGuireWoods Attorneys for Appellee
Before: CHAGARES, HARDIMAN, and RESTREPO, Circuit Judges.
HARDIMAN, CIRCUIT JUDGE.
This appeal stems from a dispute over the sale of ready-mix concrete in the U.S. Virgin Islands. Appellant Spartan Concrete Products, LLC, which operated on St. Croix, sought to displace a company called Heavy Materials as the sole provider of ready-mix concrete on St. Thomas. Upon entering the St. Thomas market, Spartan started a price war with Heavy Materials that caused financial losses to Spartan while Heavy Materials retained its dominant position. After three years of fierce competition, the companies reached a truce by which they went their separate ways with Spartan agreeing to sell on St. Croix while Heavy Materials would keep selling on St. Thomas.
Following the truce, Spartan brought this lawsuit against Appellee Argos USVI, Corp., a bulk cement vendor. The crux of Spartan's case is that Argos, which supplied the cement necessary to make the ready-mix concrete, violated § 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a), by giving Heavy Materials a 10 percent volume discount during the price war. Spartan claimed Argos caused its losses and eventual departure from St. Thomas by offering the discount to Heavy Materials alone. The District Court disagreed and, following a bench trial, entered judgment for Argos because Spartan failed to prove it suffered antitrust injury. The Court also denied Spartan leave to amend its complaint to include two tort claims, finding undue delay and prejudice. Because Spartan failed to establish antitrust injury, and the District Court did not abuse its discretion in denying leave to amend, we will affirm both orders.
The relevant facts begin in 2010, when Spartan expanded its ready-mix concrete sales from St. Croix to St. Thomas and St. John. For the next three years, Spartan competed fiercely with Heavy Materials-the only other seller of ready-mix concrete on St. Thomas.
Argos was the only vendor of bulk cement on St. Thomas during this period of competition between Spartan and Heavy Materials. Argos sold cement to both companies, but gave Heavy Materials-which accounted for, on average, 77 to 80 percent of Argos's bulk sales between 2010 and 2013- a 10 percent volume discount. Spartan claims that this discount gave Heavy Materials such a competitive advantage on St. Thomas that Spartan had to cease operations there.
Spartan frequently reduced its prices to compete with Heavy Materials, which precipitated a price war between the two companies. As a result, Spartan's market share on St. Thomas rose to nearly 30 percent by the end of 2011. Spartan's former minority owner and operations manager, Rodgers Bressi, testified that Spartan started the price war with the goal of obtaining a monopoly on St. Thomas and/or St. Croix. Warren Mosler, Spartan's majority owner, planned for Spartan to incur short-term harm during the price war and "eventually recoup its losses." App. 633-34. Bressi also testified that Mosler wanted to pressure Heavy Materials to sell its business to Spartan. The owner of Heavy Materials, Doug Gurlea, testified that a pattern emerged: each time Spartan would broach "[t]he subject of purchasing [Heavy Materials's] concrete operations" and Heavy Materials declined the overtures, "[t]here would be, within days, a price decrease that . . . Spartan would initiate." App. 722.
After a few years, the price war became unsustainable, so Spartan and Heavy Materials struck a deal. In December 2013, they agreed that Spartan would withdraw from St. Thomas and Heavy Materials would stop competing on St. Croix. This arrangement was memorialized in two documents: (1) an assignment of Spartan's lease to Heavy Materials for a concrete plant on St. Thomas; and (2) a requirements supply agreement under which Spartan would purchase all of the aggregate needed to produce concrete on St. Croix from Heavy Materials, which in turn agreed "not to supply ready-mix concrete on the island of St. Croix." App. 847. So as of December 2013, each company had a monopoly on one of the islands.
Spartan incurred significant losses during the price war with Heavy Materials. Spartan's management consultant, Michael Pede, estimated that the company's total losses during its three years of operation on St. Thomas were $3, 807, 587.95. Spartan argues that Argos's discount to Heavy Materials made Spartan uncompetitive on St. Thomas. During the three years of competition, cement costs accounted for 12.8 percent of Spartan's $13.2 million in costs. Because it did not receive the 10 percent discount given to Heavy Materials, Spartan incurred an additional $181, 429, representing 1.4 percent of its total costs. Pede admitted that Spartan reduced its costs in several categories, such as labor, other materials, and transportation, by 5 percent. During the competitive period, Spartan also wrote off more than $345, 000 in bad debts from customers.
In January 2015, about a year after its truce with Heavy Materials, Spartan sued Argos for engaging in price discrimination in violation of § 2(a) of the Robinson-Patman Act, 15 U.S.C. § 13(a). Spartan Concrete Prods., LLC v. Argos USVI, Corp., 2017 WL 2462824, at *1 (D.V.I. June 7, 2017).
Argos and Spartan appeared before Magistrate Judge Ruth Miller for a pretrial conference in April 2015. Judge Miller ordered the parties to propound written discovery by the end of May with initial written discovery to be completed by the beginning of October that same year. But over the next several months, the parties repeatedly missed Judge Miller's deadlines for conducting initial discovery. In December 2015, Judge Miller ordered the parties to submit a joint proposed discovery schedule the next month. The parties also missed this deadline and did not comply until February 2016. Judge Miller then entered a trial management order stating in part that all written discovery would be responded to by the end of the month and fact discovery would be completed by mid-August. In July, Spartan served Argos with a second request for production of documents. Argos objected and responded one month later.
In October 2016, Spartan moved to amend its complaint to include two additional claims against Argos: intentional interference with business relations and civil conspiracy. Spartan asserted that Argos's response to the second request for production and discovery production by non-party Heavy Materials showed both Argos's intentional interference with Spartan's business relations and its conspiracy with Heavy Materials to force Spartan out of business.
In November 2016, a month after Spartan sought leave to amend, Argos also moved to amend its answer, seeking to add counterclaims against Spartan and individuals associated with Spartan for antitrust violations. It based these claims on deposition testimony suggesting that Spartan and Heavy Materials conspired to divide the ready-mix concrete market between St. Thomas and St. Croix.
In February 2017, four months after its first motion to amend, Spartan filed a second motion to amend, seeking to add to the proposed amended...
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