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DELAWARE VALLEY MARINE SUPPLY CO. v. AMERICAN TOBA

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA


June 9, 1960

DELAWARE VALLEY MARINE SUPPLY COMPANY, Plaintiff,
v.
AMERICAN TOBACCO COMPANY et al., Defendants

The opinion of the court was delivered by: STEEL

Plaintiff seeks treble damages under Sec. 4 of the Clayton Act, 15 U.S.C.A. 15, and an injunction under Sec. 7 of the Act, 15 U.S.C.A. 26, because of alleged violations by defendants of Secs. 1 and 2 of the Sherman Act, 15 U.S.C.A. 1, 2. After denying motions by the defendants for directed verdicts at the close of the evidence, the Court, acting under F.R.Civ.P. 49(a), 28 U.S.C.A., submitted critical fact issues to the jury upon special interrogatories. *fn1" The jury was unable to agree upon an answer to the first interrogatory, and was discharged. Defendants then filed the present motions for judgment under F.R.Civ.P. 50(b) in accordance with their earlier motions for directed verdicts.

Plaintiff was incorporated for the purpose of selling in bond cigarettes and other tobacco products to vessels bound for foreign countries from ports in the Philadelphia area. In bond sales to foreign-bound vessels are not subject to the federal taxes normally imposed upon domestic sales of tobacco products. The business of selling in bond merchandise to vessels is known as the sea stores business.

 Five of the corporate defendants are major cigarette manufacturing companies. The sixth corporate defendant, Lipschutz Bros., Inc., is a distributor in the Philadelphia area of various types of sea stores, including tobacco products manufactured by the five major cigarette companies. Two individual defendants are members of the Lipschutz family who are either stockholders, directors or officers of Lipschutz Bros., Inc. Shortly before trial the defendant Albert Lipschutz died and his administrators were substituted as parties.

 Plaintiff charges that the manufacturing defendants refused to sell it the cigarettes which it needed to engage in the sea stores tobacco business, and that this refusal was the result of a conspiracy among the manufacturing defendants and Lipschutz Bros., Inc., which was designed to create and maintain for Lipschutz Bros., Inc., a monopoly in a substantial segment of interstate commerce. All of the defendants deny that there is any evidence from which the jury could properly find that plaintiff had a 'business' or 'property' required by Sec. 4 of the Clayton Act to qualify plaintiff to sue for treble damages, defendants' refusal to deal with plaintiff was conspiratorial, and plaintiff was damaged either in fact or in ascertainable amount. In addition, Reynolds and Lorillard deny that plaintiff requested them to sell tobacco products to it. The interrogatories submitted to the jury were directed to these issues. The Estate of Albert Lipschutz also asserts that the action abated upon his death.

 On a motion for a directed verdict a case is not lightly to be taken from the jury since it is the recognized trier of the facts. The Court must accept as true all the facts favorable to the plaintiff which the evidence tends to prove and draw all reasonable inferences against the defendants. If the evidence is of such character that reasonable men in an impartial exercise of judgment might reach different conclusions, the case should be submitted to the jury. Makowsky v. Povlick, 3 Cir., 1959, 262 F.2d 13, 14-15. On the other hand, it is essential that, after making due allowance for all reasonable possible inferences favoring the plaintiff, mere speculation be not allowed to do duty for probative facts. Galloway v. United States, 1943, 319 U.S. 372, 395, 63 S. Ct. 1077, 87 L. Ed. 1458. These are the principles which must govern the disposition of defendants' motions.

 Standing to Sue for Treble Damages

 4-6$ Section 4 of the Clayton Act authorizes the recovery of treble damages by any person who is injured in his 'business' or 'property' by reason of anything forbidden by the anti-trust laws. Defendants contend that since plaintiff never actually engaged in business, it had no business within the intendment of Section 4. Defendant's argument necessarily presupposes that when Congress authorized treble damage suits it meant to distinguish between the rights of persons who are put out of business and the rights of persons who are kept out of business by a conspiracy. It is unreasonable to suppose that such a distinction was intended by Congress. The purpose of the anti-trust laws is to promote competition and to prevent its restraint. This purpose is no less thwarted when a person who intends and is prepared to embark in trade is stopped at the outset, than it is when a going business is brought to a standstill. It is as unlawful to prevent a person from engaging in business as it is to drive him out of business. Thomsen v. Union Castle Mail S.S. Co., 2 Cir., 1908, 166 F. 251, 253. The restriction which defendants would place upon the meaning of the word 'business' is unwarranted in the context of its Clayton Act usage.

 Triangle Conduit & Cable Co., Inc. v. National Electric Products Corp., 3 Cir., 1945, 152 F.2d 398 held that Section 4 of the Clayton Act did not require an injury to a specific going business and that if an intention and preparedness to engage in business was shown, this was enough to qualify one injured by an anti-trust violation to treble damage relief. Although the Court of Appeals affirmed the dismissal, it was solely because the proof failed to establish that the plaintiff intended and was prepared to engage in business. The opinion leaves no room for doubt that had an intention and preparedness to engage in business been proven, the Court would have held that the action was maintainable. Identical implications are to be drawn from Wm. Goldman Theatres, Inc. v. Loew's Inc., D.C.E.D.Pa.1946, 69 F.Supp. 103; affirmed 3 Cir., 1948, 164 F.2d 1021; certiorari denied 1948, 334 U.S. 811, 68 S. Ct. 1016, 92 L. Ed. 1742. There, the plaintiff, which had been in the business of exhibiting second-run moving pictures, recovered treble damages because, as a result of a conspiracy by the defendants, it was prevented from exhibiting first-run pictures in a theatre which had never opened. On a record which disclosed that plaintiff intended and was prepared to exhibit first-run pictures, the Court stated that there would be no logic or sound policy for adopting a rigid rule which would preclude the plaintiff from recovering loss of profits simply because it had no established going business in first-run showings.

 It is unnecessary to review the decisions in other circuits since this Court's action is governed by the Triangle Conduit decision. It may be noted in passing, however, that statements in American Banana Co. v. United Fruit Co., 2 Cir., 1908, 166 F. 261, 264 and in Pennsylvania Sugar Refining Co. v. American Sugar Refining Co., 2 Cir., 1908, 166 F. 254, 260 are consistent with the Triangle Conduit opinion.

 Since one who is prepared and intends to carry on a business is entitled to maintain a treble damage action when a conspiracy prevents him from doing so, the status of plaintiff to sue is clear. The record is replete with evidence which would support a finding that plaintiff was prepared and intended to enter the sea stores business and would have done so but for defendants' refusal to sell it cigarettes. Indeed, on the present motions defendants made no serious contention to the contrary but restricted their argument primarily to the proposition that because plaintiff never actually carried on any business it had no status to maintain a treble damage action.

 Since ample evidence exists from which the jury could have found that plaintiff had a 'business' within the meaning of Section 4, it is unnecessary to consider whether the plaintiff had 'property' within the meaning of that Section.

 Damages

 Defendants assert that no evidence exists from which a jury could properly find that plaintiff sustained any damage from the alleged conspiracy. For purposes of the discussion which follows, it will be assumed that defendants did in fact conspire to keep plaintiff out of business. *fn2"

 Story Parchment Co. v. Paterson Parchment Paper Company, 1931, 282 U.S. 555, 563, 51 S. Ct. 248, 75 L. Ed. 544 seemingly affirmed the rule that although the fact of damage must be shown, without any element of uncertainty, to be definitely attributable to the wrong, a dollar value may be assigned to an injury even if some uncertainty exists as to its amount. Later cases, such as Bigelow v. RKO Radio Pictures, 1946, 327 U.S. 251, 66 S. Ct. 574, 90 L. Ed. 652 are said to have clarified Story Parchment, and today, in this Circuit at least, there is the same liberality permitted in proving the fact of damages as exists in proving the amount of damages. Noerr Motor Freight v. Eastern Railroad Presidents Conference, D.C.E.D.Pa.1957, 155 F.Supp. 768, 834, affirmed 3 Cir., 1959, 273 F.2d 218. Nevertheless, there has never been any relaxation of the rule laid down in Bigelow v. RKO Radio Pictures, supra, 327 U.S. at page 264, 66 S. Ct. 574, that a jury is entitled to assess damages only if relevant data exists from which it can make a just and reasonable estimate, and it will not be permitted to render a verdict based on a guess simply because a defendant by its own wrong may have prevented a more precise computation. The fact that the amount of a plaintiff's damages cannot be expressed in exact figures does not necessarily make them speculative. Estimates which are as definite and certain as the subject matter admit are enough if there is a reasonable basis for the verdict. Rankin Co. v. Associated Bill Posters, 2 Cir., 1930, 42 F.2d 152, 155.

 In three Supreme Court decisions jury verdicts were sustained in treble damage actions on the basis of evidence of prior business success of either the plaintiff or its predecessor. Eastman Kodak v. Southern Photo Co., 1927, 273 U.S. 359, 47 S. Ct. 400, 71 L. Ed. 684, Story Parchment Co. v. Paterson Parchment Paper Co., supra, and Bigelow v. RKO Radio Pictures, supra. But the absence of prior business history will not defeat a recovery if other satisfactory proof of damages is adduced. Wm. Goldman Theatres, Inc. v. Loew's, Inc., supra; Flintkote v. Lysfjord, 9 Cir., 1957, 246 F.2d 368, 392. In the Goldman case a judgment for treble damages was sustained upon proof of hypothetical profits which the plaintiff claimed it would have made if the conspiracy had not prevented its theatre from opening. Since the plaintiff at bar had no business history upon which it could base an estimate of future earnings, it was of necessity compelled to rely upon a hypothetical profit theory. Plaintiff contends that there is ample evidence from which the jury could have found that plaintiff would have operated profitably and would have earned $ 68,650 during the damage period. n3 This figure is based upon the assumption that, but for the conspiracy, plaintiff would have made sales to (1) vessels in the Port of Philadelphia, (2) Piranian, a ship's chandler, and (3) Seafarers' Sea Chest Corporation, with resultant net profit computed as follows: (A) Sales to vessels in Port of Philadelphia (1750 vessels at $300 per vessel) $525,000 (B) Sales to Piranian, a ships chandler 10,000 Gross Sales $535,000 Profit ratio of 15% on gross sales $ 80,250 (C) Profit on sales to Seafarers' Sea Chest Corporation (9,000 cases at $2 per case) 18,000 Gross Profits $ 98,250 Less Expenses of doing business 29,600 Net Profit $ 68,650

19600609

© 1992-2004 VersusLaw Inc.



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