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R.S.E., INC. v. PENNSY SUPPLY

April 14, 1980

R.S.E., INC., d/b/a Harrisburg Asphalt Company
v.
PENNSY SUPPLY, INC.; Bethlehem Mines, A Division of Bethlehem Steel Corp.; Union Quarries, Inc.; Hempt Brothers, Inc.; Silver Springs Construction Co., Inc.; Kimbob, Inc.; Locust Point Quarries, Inc.; Robert M. Mumma, Sr.; Robert M. Mumma, II; Max C. Hempt; Gerald L. Hempt; Harold A. Maxwell; George F. Hempt; Ronald E. Nye; Robert G. Lescallette; 441 Corporation; Bobali Corporation; Gemini Equipment Co., Inc.; Pennsylvania Supply Company; and Pennsylvania Prestressed Corporation d/b/a Adams County Asphalt.



The opinion of the court was delivered by: RAMBO

MEMORANDUM

Before the court is the motion of all defendants except Bethlehem Mines Corporation and Locust Point Quarries, Inc., *fn1" for partial summary judgment on the basis that the undisputed facts indicate that the court lacks jurisdiction over the subject matter of plaintiff's claims of price discrimination in the sale of stone aggregate and in the provision of services or facilities in connection with such sales. (Doc. No. 103).

 Defendants' motion and supporting brief (Doc. Nos. 103 and 104) are directed at the claims in the amended complaint (Doc. No. 27), wherein it is alleged that the defendants sold stone aggregate to plaintiff on terms violating §§ 2(a) and (e) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. §§ 13(a) and (e). (Hereinafter the Act). In response, plaintiff filed a motion to defer ruling on or to dismiss the motion, and at the same time filed a motion for leave to file a second amended complaint. (Doc. Nos. 108 and 110). The court permitted plaintiff an additional sixty days within which to complete discovery on the Robinson-Patman jurisdictional issues and to respond to the motion. (Doc. No. 145; Doc. No. 157, p. 2). The court subsequently granted plaintiff's motion to file a second amended complaint. (Doc. No. 150). After the second amended complaint was filed (Doc. No. 151), plaintiff filed a response to the instant motion addressing it in terms of the allegations in the second amended complaint. (Doc. No. 157). Defendants filed a reply in which it was indicated that the matters alleged in the second amended complaint would not alter their position as far as the motion for summary judgment was concerned. (Doc. No. 168). The magistrate, in his report filed on February 15, 1980, recommended that the defendants' motion be granted.

 In paragraphs 51 through 62 of its second amended complaint, plaintiff alleges, inter alia, that it has been injured in its business and property because certain of the defendants sold stone aggregate to plaintiff at higher prices than they charged plaintiff's competitors, including defendants and non-defendants, in the Harrisburg, Pennsylvania market and elsewhere. (Doc. No. 151). Such sales to plaintiff are alleged to violate § 2(a) of the Act, 15 U.S.C. § 13(a), which provides in pertinent part:

 
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 either or any of the purchases involved in such are in commerce, . . . where the effect of such discrimination may be substantially . . . to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination . . . . (Emphasis supplied).

 In paragraph 63 of its second amended complaint, plaintiff alleges that it has been injured in its business and property as a result of defendants' furnishing preferential services or facilities to plaintiff's competitors, including certain of the defendants, in connection with the sale and offering for sale of stone aggregate purchased for resale or use. With regard to this claim, § 2(e) of the Act, 15 U.S.C. § 13(e), provides:

 The background facts, as set forth in plaintiff's brief, indicate that RSE, Inc. (RSE), d/b/a Harrisburg Asphalt Company and Wellsboro Asphalt Company, plaintiff in this action, is the owner of two plants that manufacture asphaltic concrete; one in Harrisburg, Pennsylvania, and the other in Wellsboro, Pennsylvania. In addition to the manufacture and sale segment of asphaltic concrete business, RSE is also engaged in highway construction and repair, as well as general paving. The paving work consists of two types: (1) cold mix (asphaltic cement and stone mixed by a "moto-paving" machine and applied on the road site in the same operation), and (2) hot mix (asphaltic cement and stone are mixed at an asphalt plant and transported "hot" to the work site for application). RSE also sells stone aggregate. All of the foregoing are based at its plant locations in Harrisburg and Wellsboro, although the administrative offices are in Harrisburg, Pennsylvania.

 RSE was formed in 1968, and was engaged primarily in cold mix work until 1971-72. At that time, RSE constructed its asphalt plant in Harrisburg, Pennsylvania, because of the high price in the area of asphaltic concrete in the Harrisburg area. The Wellsboro plant was acquired later.

 During the four years preceding this litigation, RSE has maintained total sales of approximately $ 3,000,000 per year, although the tonnage of asphaltic concrete manufactured at its Harrisburg, Pennsylvania, location has steadily slipped from its high in 1973 of 72,000 tons to around 50,000 tons in 1977. The Wellsboro tonnage has maintained a level of approximately 50,000 tons throughout the period of its operation.

 RSE owns no source of stone and stone aggregate, although it initially attempted to place its plant at the Fiddler's Elbow Quarry of the D. M. Stoltzfus Company, which also owned quarries at Rheems and Drumgold, Pennsylvania, but was unsuccessful. Stoltzfus subsequently sold out all of its quarries in the Harrisburg area.

 In its sale of stone aggregate in Harrisburg, RSE competes with all of the quarries in the Harrisburg area, which include all of the defendants in this case, to wit: Pennsy Supply, Inc., Hempt Brothers, Inc., Bethlehem Mines Corporation, Union Quarries, Inc., plus 441 Corporation, Bobali Corporation, and Locust Point Quarries, Inc. 441 Corporation is solely owned by Robert M. Mumma, the President of Pennsy Supply, Inc., who also controls Bobali Corporation. 441 Corporation owns and operates a quarry, formerly owned by General Crushed Corporation, operating and trading as Perry Rock, as well as another inactive quarry, Drumgold, acquired from Stoltzfus as was Fiddler's Elbow by Pennsy Supply, Inc. 441 Corporation also trades as Lebanon Rock from the Annville Quarry of Bethlehem Mines Corporation. Union Quarries, Inc., operates the Bonny Brook Quarry as well as the Rheems Quarry, which was another acquisition from Stoltzfus.

 After its asphaltic concrete plant began production in 1972, RSE negotiated a requirements arrangement with Bethlehem Mines Corporation for stone and stone aggregate which it and all other manufacturers require to combine with asphaltic cement in order to manufacture asphaltic concrete or black top. The asphaltic cement or AC 20 utilized by all defendants comes from sources and supplies in Baltimore, Maryland, as does the oil used by RSE for oil and chip road work and moto-paver work.

 In the Harrisburg area, a reliable and geographically close source of stone and stone aggregate is crucial to the ability to compete as transportation of stone is limited by ...


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