Volasco Products Company v. Lloyd A. Fry Roofing Company

• Decision Date: 12 September 1962
• Docket Number: No. 14545-14547.,14545-14547.
• Citation: 308 F.2d 383
• Parties: VOLASCO PRODUCTS COMPANY, Plaintiff-Appellee, v. LLOYD A. FRY ROOFING COMPANY, Defendant-Appellant. VOLUNTEER ASPHALT COMPANY, Plaintiff-Appellant, v. LLOYD A. FRY ROOFING COMPANY, Defendant-Appellee. VOLASCO PRODUCTS COMPANY, Plaintiff-Appellant, v. LLOYD A. FRY ROOFING COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

308 F.2d 383 (1962)

VOLASCO PRODUCTS COMPANY, Plaintiff-Appellee, v. LLOYD A. FRY ROOFING COMPANY, Defendant-Appellant.

VOLUNTEER ASPHALT COMPANY, Plaintiff-Appellant, v. LLOYD A. FRY ROOFING COMPANY, Defendant-Appellee.

VOLASCO PRODUCTS COMPANY, Plaintiff-Appellant, v. LLOYD A. FRY ROOFING COMPANY, Defendant-Appellee.

Nos. 14545-14547.

United States Court of Appeals Sixth Circuit.

September 12, 1962.

COPYRIGHT MATERIAL OMITTED

William C. Wilson, Knoxville, Tenn. (W. L. Ambrose, Jr., Ambrose, Wilson & Saulpay, Knoxville, Tenn., on the brief), for Volasco Products Co. and Volunteer Asphalt Co.

Burton Y. Weitzenfeld and Samuel Weisbard, Chicago, Ill. (Kahn, Adsit & Arnstein, Chicago, Ill., on the brief), for Lloyd A. Fry Roofing Co.

Before CECIL and O'SULLIVAN, Circuit Judges, and BOYD, District Judge.

CECIL, Circuit Judge.

These appeals are from the United States District Court for the Eastern District of Tennessee, Northern Division. Volasco Products Company and Volunteer Asphalt Company, as plaintiffs, brought an action against Lloyd A. Fry Roofing Company, defendant, charging it with violation of the anti-trust laws, to their damage. The parties will be referred to as plaintiffs and defendant, as they were in the District Court, or as Volunteer, Volasco and Fry.

The action arises under the Sherman Act and the Clayton Act, Title 15 U.S. C.A. §§ 1-27. The particular sections of the Sherman Act involved are sections 1 and 2 (Title 15, §§ 1 and 2) the pertinent parts of which are as follows: Sec. 1 "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." Sec. 2 "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, * * *."

Sections 2(a) and 2(b) of the Clayton Act, as amended by the Robinson-Patman Act (Sections 13(a) and 13(b), Title 15 U.S.C.A.) are invoked by plaintiffs and so far as pertinent read as follows: Sec. 2 (a) That "It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, * * * where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered: * * * And provided further, That nothing herein contained shall prevent price changes from time to time * * * in response to changing conditions affecting the market for or the marketability of the goods concerned."

Sec. 2(b): "Upon proof being made, at any hearing on a complaint under this section, that there has been discrimination in price or services or facilities furnished, the burden of rebutting the prima-facie case thus made by showing justification shall be upon the person charged with a violation of this section, and unless justification shall be affirmatively shown, the Commission is authorized to issue an order terminating the discrimination: Provided, however, That nothing herein contained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor."

Under section 4 of the Clayton Act (Section 15, Title 15 U.S.C.A.) any person who is injured in his business or property, by reason of anything forbidden in the above quoted anti-trust laws, may sue for damages in a District Court of the United States and recover threefold the damages sustained, together with costs and a reasonable attorney fee.

The plaintiffs are corporations organized and existing under the laws of the state of Tennessee and doing business in that state, with headquarters at Knoxville. Both corporations are owned by the same stockholders and have the same officers. Volunteer was organized in 1954 for the purpose of operating an asphalt refinery for both road and roofing asphalt. Volasco was organized in 1955 for the purpose of manufacturing asphalt roofing materials, including asphalt saturated felt, asphalt roll roofing, and asphalt shingles. Volunteer had been operating its refinery since 1954 and Volasco had been manufacturing and selling saturated felt, as well as some other asphalt roofing products since 1955. Volasco never got into production of roll roofing and asphalt shingles.

Fry is a corporation organized under the laws of Delaware, is doing business in Tennessee and is the largest manufacturer of asphalt roofing products in the United States. It owns and operates nineteen plants strategically located throughout the United States. Its closest plants to Knoxville are at Memphis, Tennessee, and at Brookville, Indiana. The defendant, with seven other large companies, does approximately sixty-five percent of the business in the United States in asphalt roofing, siding, felts and shingles.

Briefly stated, the plaintiffs charged that the defendant cut prices in the Knoxville area, where the plaintiffs did business, below the plaintiffs' prices, while at the same time it maintained higher prices in territory outside of plaintiffs' limited field of operations. They also charged that the defendant combined and conspired with other large manufacturers of asphalt products to engage in an identical pricing program, for the purpose of creating a monopoly and destroying competition.

The issues as presented by the complaint are substantially and briefly, as follows: 1. Did the defendant Fry conspire with one or more other manufacturers of roofing products to fix prices in violation of the anti-trust laws within an approximately 200-mile radius of Knoxville, Tennessee? 2. Did the defendant alone or in combination with other roofing manufacturers, monopolize or attempt to monopolize the sale of asphalt roofing products in the above area by fixing prices of such products in the area lower than prices fixed in other non-competing areas, in violation of the anti-trust laws? 3. Did the defendant, during the relevant period, discriminate in prices between two or more purchasers of asphalt roofing products on a geographic basis by charging purchasers within the approximate 200-mile radius of Knoxville area a lesser price than purchasers outside that area, the effect of which discrimination may have been substantially to lessen competition, to create a monopoly or to injure, destroy or prevent competition, in violation of the antitrust laws? And if the defendant did so discriminate in prices within the relevant area, did it do so in good faith to meet an equally low price of its competitors? 4. Did the plaintiffs suffer damages as a direct and proximate result of any of the alleged violations of the anti-trust laws by the defendant?

The case was tried to a jury and a verdict was returned in favor of the plaintiff Volasco Products Company in the sum of One Hundred Thousand Dollars ($100,000). The District Judge trebled this amount and gave judgment to the plaintiff Volasco Products Company for Three Hundred Thousand Dollars ($300,000), plus Sixty Thousand Dollars ($60,000) attorneys' fees. (Section 15, Title 15 U.S.C.A.) The District Judge also entered an order of injunction against the defendant enjoining it from further violation of the laws in respect to the matters charged in the complaint. The defendant appealed and this appeal is number 14545 on the docket of this Court. At the close of the plaintiffs' testimony, the trial judge directed a verdict in favor of the defendant and against the plaintiff Volunteer Asphalt Company. Volunteer appealed and its appeal is number 14546 in these appeals. Hereinafter the term "plaintiff" will be used in the singular to mean Volasco. The District Judge ruled against Volasco on certain items and claims of damages and it appealed, which appeal is number 14547 on the docket.

We will proceed first with the defendant's appeal. One of the first assignments of error for discussion relates to the first issue stated above and raises the question of whether there was sufficient evidence of conspiracy to submit that issue to the jury.

A review of the record discloses that there was substantial evidence bearing on this issue. When Volasco began manufacturing asphalt saturated felt, in October 1955, it set its price in line with that of the major roofing manufacturers, which was $2.44 per roll. At this time, Fry's price was $2.24. Effective November 1st of that year, Fry reduced its price in the Knoxville area to $1.84 per roll. Volasco then adjusted its price lower and sold at $2.12, $2.11, $2.00 and for one day at $1.84.

On February 19, 1956, Fry published a new price schedule with a new method of marketing, involving an intricate system of zoning. On this schedule, the price at Knoxville was fixed at $2.16 per roll. All of the major roofing manufacturers, effective on February 19th or a day or two thereafter, abandoned their former pricing methods and adopted the Fry plan with its schedule of prices. They published price lists substantially identical with that of Fry, even down to an apparently erroneous zone classification of Blount County, subsequently changed by Fry. (Ex. 95, 96, 97.)

From February...