Virginia Vermiculite v. W.R. Grace & Co.—Conn.

Decision Date24 May 2001
Docket NumberNo. CIV. A. 395CV00015.,CIV. A. 395CV00015.
Citation144 F.Supp.2d 558
CourtU.S. District Court — Western District of Virginia
PartiesVIRGINIA VERMICULITE, LTD., Plaintiff, v. W.R. GRACE & CO.—CONN., and the Historic Green Springs, Inc., Defendants.

Roger Scott Martin, Charlottesville, VA, Jane Champion Clarke, David Zev Izakowitz, Woods, Rogers & Hazlegrove, P.L.C., Charlottesville, VA, for Virginia Vermiculite, Ltd.

Thomas Eugene Albro, Patricia D. McGraw, Tremblay & Smith, Charlottesville, VA, David S. Copeland, Randolph S. Sherman, Eric L. Aaronson, Kaye, Scholer, Fierman, Hays & Handler, New York, NY, for W.R. Grace & Co. — Conn.

Michael Eugene Derdeyn, McGuire, Woods, Battle & Boothe, Charlottesville, VA, Charles H. Montange, Seattle, WA, Sara Lee Gropen, Rae H. Ely & Associates, Louisa, VA, Jane Champion Clarke, Woods, Rogers & Hazlegrove, P.L.C., Charlottesville, VA, for the Historic Green Springs, Inc.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

MICHAEL, Senior District Judge.

With the consent of the parties, the court tried this case without a jury. The trial began on September 11, 2000, and ended on October 2, 2000. Having thoroughly considered all of the evidence and testimony, the court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).

Inevitably, in a case as complex as that at the bar, some findings of fact involve mixed questions of fact and law. In those instances, findings of fact and conclusions of law have been stated as a unit as an aid to following the flow of information and the impact of that flow on the conclusions of law. By main strength and awkwardness, the fact matters and the law conclusions could have been separated, but it is thought that the sometimes combined usage herein, and occasional repetition thereof, are more conducive to the proper flow of the opinion's analysis.

JURISDICTION

The court has original jurisdiction over this civil action pursuant to 15 U.S.C. §§ 15, 22, 26, and 28 U.S.C. §§ 1331, 1337, 1367.

ISSUES PRESENTED

The issues presented are as follows:

1. Whether the plaintiff, Virginia Vermiculite, Limited ("VVL"), proved by a preponderance of the evidence that the remaining defendant, The Historic Green Springs, Incorporated ("HGSI"), conspired to monopolize in violation of the Sherman Act and Virginia Antitrust Act. See 15 U.S.C.A. § 2 (West 1997 & Supp.2000); Va.Code Ann. § 59.1-9.6 (Michie 1998 & Supp.2000).

2. Whether VVL proved by clear and convincing evidence that HGSI conspired to injure VVL in its reputation, trade, business, or profession, in violation of the Virginia Conspiracy Act. See Va.Code Ann. §§ 18.2-499, -500 (Michie 1996 & Supp. 2000).

FINDINGS OF FACT

1. VVL is a Virginia limited partnership engaged in the business of mining, processing, and selling a mineral known as vermiculite. (Stipulation of Facts (Aug. 23, 2000) ("Stip.") ¶ 1.)

2. W.R. Grace & Co.-Conn. ("Grace") is a Connecticut corporation engaged in the supply of specialty chemical, construction, and container products servicing the food, consumer products, petroleum refinery, and construction industries. One of Grace's businesses is engaged in the mining, processing, and selling of vermiculite. (Stip.¶ 2.) Grace was a defendant in this and two previously consolidated cases, but reached a settlement with VVL immediately prior to trial. On the first day of trial, the court endorsed the settlement and dismissed Grace from all three actions.

3. HGSI is a Virginia nonprofit corporation dedicated to the preservation of the Green Springs National Historic Landmark (the "District" or "Landmark District"). (Stip.¶ 53.)

4. The Landmark District is located in Louisa County, Virginia. It covers an area of approximately 14,000 acres, and is roughly the shape of an oval basin seven miles long and five miles wide. (Def.'s Trial Ex. ("DTX") 92.)

5. The Landmark District was designated a national landmark because it contains a wide variety of historic homes in a clearly-defined rural landscape. (Trial Transcript ("Tr.") at 2134-35.)

6. The Landmark District also contains substantial deposits of vermiculite.

7. Vermiculite is a naturally-occurring, mica-like mineral found in the ground. (Stip.¶ 3; Pl.'s Trial Ex. ("PTX") 383 at 16772.)

8. Mining is accomplished by the "open pit" method using bulldozers, draglines, and backhoes. The topsoil is removed and stockpiled for later reclamation. (PTX 383 at G16786; Tr. at 122-23, 179-84.)

9. When vermiculite is mined, the ore is taken to a processing plant or mill relatively close to the mining site, and processed to remove moisture, rock, dirt, dust, extraneous material, and small particles of vermiculite that are not saleable (collectively, the "tailings"). (Stip.¶ 4; Tr. at 121-23, 140.)

10. To transport the ore from the mine to the processing mill, mining companies typically load the ore onto multi-ton dump trucks, which then carry the ore to the mill. (E.g., Tr. at 969; PTX 383 at G16786.)

11. For example, at VVL's South Carolina operations, the trucks must travel an average distance of ten to fifteen miles from the mining site to the mill. (Tr. at 969.) Grace's average haul distance is twelve miles. (PTX 383 at G16786.)

12. The result of the processing operations at the mill is vermiculite concentrate, which is separated by grade according to the size of the flakes. (Stip. ¶ 5.)

13. The United States grading system classifies vermiculite into various size ranges, including grades 3, 4, and 5, (Stip.¶ 6), grade 3 being coarser than the finer grades, 4 and 5. (PTX 11A-11G.)

14. Most applications for vermiculite require that the concentrate be heated in a process known as "exfoliation" or "expansion." This process causes the vermiculite to expand or pop in much the same way as popcorn pops when heated. (Stip.¶ 7.)

15. Vermiculite is fireproof, and is used in a variety of horticultural, agricultural, industrial, and construction applications. (Stip.¶ 8.)

16. Some of the applications for expanded vermiculite include the production of lightweight concrete, soil mixes, fertilizers, masonry block insulation, and sprayon fireproofing. (Stip.¶ 9.)

17. Vermiculite is mined in a limited number of specific locations throughout the world, including the United States, China, Brazil, Australia, and Russia, and certain countries in Africa. It is imported primarily from companies doing business in South Africa and China. (Stip.¶ 10.)

18. In the United States, commercially-viable reserves of vermiculite ore have been mined only in Virginia, South Carolina, and Montana. (Tr. at 169-71, 1395-96; PTX 117.)

19. The three largest participants in the world-wide vermiculite industry are the South Africa-based Palabora Mining Company ("Palabora"), Grace, and VVL. (Stip.¶ 11.)

20. Palabora is the largest single producer of vermiculite in the world, and currently has twenty-five years' worth of reserves (or, "mining rights") in Africa. (Stip.¶ 12.)

21. Grace and VVL are the second-and third-largest vermiculite producers in the world, respectively. (Stip.¶ 13.)

22. VVL owns mining rights, conducts mining operations, and operates vermiculite processing plants in Virginia and South Carolina. (Stip.¶ 15.)

23. VVL's South Carolina operation, Carolina Vermiculite ("CVC"), is a division of VVL; it is not a separate corporation. (Tr. at 888.)

24. CVC does not process any vermiculite mined in Virginia. (Stip.¶ 16.)

25. Grace currently conducts mining operations only in South Carolina. Grace previously mined in Montana (but ultimately closed those operations), and never mined in Virginia. (Stip.¶ 18.)

26. Grace sells and uses vermiculite internally, and also sells both vermiculite concentrates and expanded vermiculite to third parties. (Stip.¶ 21.)

27. Grace and VVL primarily sell their vermiculite in North America, although Grace also exports some vermiculite outside of North America. (Tr. at 152-53, 1346-50, 1374; PTX 76 at G015524, G015598; PTX 383 at G16770, G16778-83.)

28. At least 2,000,000 tons of vermiculite reserves in South Carolina remain unleased by any mining company. (Stip.¶ 20.)

29. North American vermiculite concentrate sales for 1991-1998 are shown in Table 1. (Stip.¶ 14.)

30. In the 1960s, Grace was mining in Montana and in South Carolina, and believed it would need a "third mill" to replace depleting reserves or to add to existing reserves. (Stip.¶ 23.)

31. Grace had a number of core businesses that were dependent upon vermiculite, and deemed it prudent to increase its vermiculite holdings on the East Coast. (DTX 138 at G003120.)

32. To that end, Grace acquired substantial mining rights in Louisa County throughout the 1970s, either by buying properties containing vermiculite, or by leasing land from Louisa County property owners. Grace initially acquired the Louisa County reserves with the intent to mine them. Grace also purchased land that did not contain vermiculite reserves because of the land's logistical benefit to Grace's future mining operations. (Stip.¶ 24.)

33. Two of those Louisa County property owners were Millard Fillmore Peers, Jr. ("M.F. Peers"), and his wife, Norma Peers (collectively, the "M.F. Peerses"). (Stip.¶ 25.) The M.F. Peerses were plaintiffs in the previously-consolidated cases against Grace, but those cases were dismissed when Grace settled with the M.F. Peerses and with VVL.

34. M.F. Peers testified at trial. His testimony was credible, unrefuted, and subject to virtually no cross-examination.

35. Mr. Peers was born in the District in 1913, and has lived there for seventy-five years. His father was a career farmer, and purchased 1300-1400 acres in Louisa County in the 1920s. His father often used his land for commercial purposes, such as by selling gravel from the river bed to be used in concrete, and by leasing his property to be used as an airport landing strip and as a drag strip. (Tr. at 496-509.)

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