APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 78-2003).
Adams, Becker and Van Dusen, Circuit Judges.
VAN DUSEN, Senior Circuit Judge.
Plaintiff, American Bearing Company, Inc. ("American"), appeals from the district court's order of May 26, 1982, denying the motion of defendant, Litton Industrial Products, Inc. ("Litton"), for a judgment notwithstanding the verdict but granting a new trial. Plaintiff commenced this action for product defamation, monopolization, and attempted monopolization, predicating its claims on the dissemination of an allegedly false Litton memorandum that evaluated an American product. A jury found Litton liable for monopolization and attempted monopolization in violation of section 2 of the Sherman Act, 15 U.S.C. § 2 (1976), but not for product defamation. The jury awarded American $958,691., which amount the court trebled. See the Clayton Act, 15 U.S.C. § 15 (1976 & Supp. IV 1982). Ruling on Litton's post-trial motions, the court, pursuant to Fed. R. Civ. P. 50(b), set aside the jury verdict and ordered a new trial. See American Bearing Co. v. Litton Industries, Inc., 540 F. Supp. 1163 (E.D.Pa. 1982). At the end of the second trial, the district court granted defendant's motion for a directed verdict at the close of plaintiff's case on liability and entered judgment for defendant on March 9, 1983 (5794a). We affirm.*fn1
American, a New Jersey corporation, manufactures and sells, among other things, bearings for use in construction and industrial applications. Litton, a Delaware corporation, manufactures a wide variety of industrial products and equipment; its Merriman division manufactures and sells bearings for use in construction and industrial applications. Both companies manufacture a slide bearing used in electrostatic precipitators and baghouses, types of industrial air pollution control equipment.
Slide bearings are engineered items that are specified and fabricated on a job-by-job basis. They are manufactured in a variety of sizes from a variety of materials, including bronze, meehanite, steel, and Teflon, to meet the builders' specifications. Builders typically specify the parameters at which the bearings will be required to operate and manufacturers of bearings submit bids for those of their bearings that will meet the specifications. Specifications are normally stated in terms of temperature, pressure, and coefficients of friction.*fn2 Slide bearings are positioned at the structural support points of precipitators and baghouses to permit the structural supports to move freely in response to the expansion and contraction of steel columns.
Until 1975, American manufactured a slide bearing called the "Tetra-slide" bearing; the Tetra-slide bearing, however, could not meet the design specifications for precipitators and baghouses. At this time, Litton held patents on two structural support bearings, "Lubrite F" and "Lubritemp," which were used extensively in precipitators and baghouses.*fn3 American, realizing the potential profit in designing bearings for precipitators and baghouses, attempted to design a bearing that would meet the specifications of builders but would not infringe Litton's patents (247a-52a, 414a-15a). American developed such a bearing, designated it the "Hi-Load" bearing, and eventually patented it. American marketed its bearing as one appropriate for use in high temperature precipitator and baghouse structural support applications. As part of its marketing strategy, American distributed sales samples, measuring two inches by two inches, to potential purchasers in the air pollution control industry.
Litton learned in early 1976 that one of its slide bearing customers, the Carborundum Company ("Carborundum"), was considering the purchase of American's "Hi-Load" bearing (714-15a, 723-25a). The specifications for the Carborundum job required that the bearing be able to withstand 3000 pounds of pressure per square inch ("p.s.i.") and 400 degrees F. temperature. Doubting that American's Hi-Load bearing was capable of meeting the specifications, Litton tested one of American's samples.*fn4 After conducting the test,*fn5 Litton drafted a memorandum that concluded: "Therefore it is our opinion that this bearing cannot function at the specified load and temperature conditions" (2438a). During the next four years, Litton furnished copies of the memorandum to its salesmen without restricting its distribution. Litton, in fact, disseminated the memorandum to purchasing agents and engineers at several pollution equipment manufacturing companies (442-47a).
Finding itself unable to sell the "Hi-Load" bearing, American initiated this suit on June 15, 1978, alleging that the test memorandum was false and that Litton's publication of the memorandum constituted product defamation. Moreover, American asserted that Litton attempted to monopolize, and did monopolize, the market for slide bearings between 1976 and June 15, 1978, in violation of section 2 of the Sherman Act.
Trial commenced on May 19, 1981. American sought to establish its claims by presenting the testimony of four expert witnesses. American's first expert, J. Albert Hudson,*fn6 explained generally the structure and purposes of precipitators and baghouses. One of Hudson's most important contributions was his testimony that there is an average cost ratio of 0.003 or 0.3% between the cost of slide bearings installed in the precipitators and baghouses and the costs of the precipitators and the baghouses themselves.*fn7 American's second expert, Robert W. McIlvaine, testified to national sales statistics for precipitators and baghouses that utilize an inlet gas temperature of 250 degrees or higher. He estimated that the aggregate dollar amount of precipitator and baghouse sales for the years 1976 to 1983 was $3,180,900.00.*fn8 (796a, 2465a).
Dr. Gary W. Bowman, an Associate Professor of Economics at Temple University, was American's final expert witness. He presented economic testimony to the jury, defined product and geographic markets, estimated the market shares of American and Litton, and estimated the damages American suffered from 1976 to 1983. Dr. Bowman defined "thermal" bearings as bearings which operate with a 3% coefficient of friction while exposed to temperature of 400 degrees F. and pressure of 3000 p.s.i. (1263a, 1335a). He gave his opinion that a separate market exists for thermal bearings for use in the support structures of baghouses and precipitators and opined that the market was nationwide. Dr. Bowman was unable to ascertain directly American's damages. Instead, he attempted to calculate damages indirectly by utilizing the sales statistics presented by McIlvaine and the cost ratio presented by Hudson.*fn9 Dr. Bowman determined the size of the total market for slide bearings simply by multiplying the sales statistics (2465a) by the cost ratio of 0.0003 (2719a, 1266-67a). The multiplication process led Dr. Bowman to conclude that from 1976 to 1983 the aggregate sales for the nationwide market for slide bearings capable of operating at 3000 p.s.i., 400 degrees F., with a 3% coefficient of friction, totaled $9,542,700. ...