The opinion of the court was delivered by: BRODERICK
Plaintiff, Thermice Corporation (Thermice), brought this action against defendants, Airco, Inc. (Airco), and Vistron Corporation (Vistron), seeking damages, injunctive and declaratory relief for violations of sections 1 and 2 of the Sherman Act, tortious interference with contract, and breach of contract based upon contracts for the sale of CO 2 between Vistron and Thermice and between Vistron and Airco. Airco then filed a counterclaim in which it alleged that Thermice had tortiously interfered with its contractual relations with Vistron. The action was tried without a jury for 6 days from November 30 to December 7, 1981. By the second day of trial Airco and Thermice had settled all claims between them in this litigation, and Thermice voluntarily dismissed with prejudice its remaining claims with the exception of its breach of contract claim as to Vistron. The trial, which had been bifurcated, proceeded solely on the question of whether Vistron had breached its contractual obligations to Thermice. On the basis of the evidence presented at trial, the Court has found that Thermice failed to carry its burden of proving that Vistron breached the contract and will enter judgment for Vistron and against Thermice.
Plaintiff Thermice is a Pennsylvania corporation with its principal place of business in Philadelphia, Pennsylvania and is a wholly-owned subsidiary of Publicker Industries, Inc. Thermice is engaged in the manufacture and the wholesale and retail distribution of liquid and solid carbon dioxide (CO 2). The sole manufacturing facility owned by Thermice currently producing CO 2 is located in Muscatine, Iowa. The remainder of the CO 2 distributed by Thermice is purchased from Vistron, which operates a liquefaction plant in Lima, Ohio; Koch Chemical Company, which operates a liquefaction plant near St. Paul, Minnesota; and, occasionally, on a "spot" or "swap" basis from its competitors.
Vistron is an Ohio corporation with its principal place of business in Cleveland, Ohio and is a wholly-owned subsidiary of Standard Oil Company of Ohio (Sohio). Vistron, then known as Sohio Chemical, was formed in 1955 for the purpose of manufacturing nitrogen compounds for industrial and agricultural uses. In 1956, Vistron constructed a CO 2 plant in Lima, Ohio to purify and liquefy the raw CO 2 gas which is a by-product of the company's ammonio facility. In 1971, Vistron completed a new complex in Lima, which included ammonia, urea, and carbon dioxide facilities.
Since 1971, Vistron has sold the bulk of its liquid CO 2 by-product to Thermice and Airco under long term contracts. Vistron also has made incidental and occasional sales of excess carbon dioxide to Liquid Carbonic Corporation, which sales ceased after May 1978 and are not material to this lawsuit. On occasion, Vistron has also used small portions of its liquid CO 2 production for internal purposes at its Lima plant; such uses also are not material to this litigation.
Airco is a Delaware corporation with its principal place of business in Montvale, New Jersey and is engaged in, among other things, the manufacture and distribution of liquid CO 2. Although originally named as a defendant in this action, the claims and counterclaims asserted by and between Thermice and Airco have been resolved as a result of a settlement agreement entered into by Thermice and Airco during the course of trial.
II. General Facts Relating to the CO 2 Industry
The demand for CO 2 varies greatly with the seasons, the greatest demand occurring in the summer months when the product is in high demand by soft drink manufacturers. However, because the raw CO 2 gas used in the production of liquid CO 2 is a by-product of the manufacture of other unrelated products, the supply varies in accordance with the demand for these main products rather than in accordance with the demand for CO 2 itself. Plant shutdowns and periods of restricted operations at various CO 2 facilities, conditions beyond the control of the CO 2 distributors drawing CO 2 from such facilities, help reduce the total supply of CO 2 available to the industry in the summer months. In addition, the limited storage life and high transportation costs for liquid and solid CO 2 tend to make it impractical to transport CO 2 over long distances. As a result, it is important for distributors to make provisions for a continuous supply of CO 2 within reasonable distance of their market area in order to meet their customers' requirements during periods of high demand when the product is in short supply.
On July 20, 1970, Airco and Vistron entered into a contract for the purchase by Airco of solid and liquid CO 2 to be produced at the Lima facility. The period of the contract was to commence upon the first shipment of CO 2 to Airco and was to end on April 30, 1986. The contract provided for the sale of 84,500 tons of CO 2 to Airco during the first contract year and for increasing annual commitments with a maximum commitment of 117,000 tons in the fifth year of the contract and all ensuing years. Paragraph 6(a) of the contract provided for a "take or pay" penalty in the event Airco should not purchase at least 75% of the annual quantity Vistron was required to make available to Airco. The contract also required Vistron to make available to Airco a maximum of 450 tons of CO 2 per day.
Paragraph 10 of the contract contained the following "allocation" clause:
Allocation : AIRCO understands that VISTRON has concurrent contracts to supply liquid and solid Product (CO 2) from the Facility (the Lima facility). In accordance with these commitments and irrespective of any other provision hereof, VISTRON will apportion to AIRCO sixty-nine (69) percent of the available supply of liquid products.
"Allocation", as used in Vistron contracts, refers to those times when Vistron does not produce or maintain in storage sufficient CO 2 to meet the current demands of its customers. During these allocation periods, the limited amount of available CO 2 being produced by Vistron is apportioned among Vistron's customers, as provided in their respective contracts with Vistron maintaining the right to declare when its plant will go on allocation. Allocation generally occurs when the demand for CO 2 exceeds available supply, during frequent mechanical shutdowns that characterize CO 2 production, or when there is a reduced demand for production of the primary product, the manufacture of which results in the CO 2 by-product.
The Thermice-Vistron contract also contained a take or pay provision requiring Thermice to pay a penalty if it failed to take 80% of its annual commitment. The proposed contract also contained an allocation clause which originally provided:
10. Allocation : THERMICE understands that VISTRON has concurrent contracts to supply liquid and solid carbon dioxide from the Facility to THERMICE and others. In ...