Lafayette Steel Co. v. National Steel Corp.

87 F.R.D. 612, 1980 U.S. Dist. LEXIS 13393
CourtDistrict Court, E.D. Michigan
DecidedJuly 23, 1980
DocketCiv. No. 74-72013
StatusPublished
Cited by2 cases

This text of 87 F.R.D. 612 (Lafayette Steel Co. v. National Steel Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lafayette Steel Co. v. National Steel Corp., 87 F.R.D. 612, 1980 U.S. Dist. LEXIS 13393 (E.D. Mich. 1980).

Opinion

OPINION ON MOTION FOR SUMMARY JUDGMENT

COHN, District Judge.

Before the Court is a motion by defendant Kasle Steel Company (Kasle) for summary judgment on the sole ground that plaintiff Lafayette Steel Company (Lafayette) alleges as an antitrust violation a conspiracy to fix prices in the sale of first operation blanks1 while it claims damages in the sale of brokered steel2 citing Brunswick Corporation v. Pueblo Bowl-O-Mat Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977) as authority. Kasle says that Lafayette in effect claims damages in different markets and under Brunswick may not do so.

Lafayette answers by saying that the antitrust wrong complained of was a price-fixing conspiracy between National Steel Corporation (National) and Kasle coupled with a refusal to sell by National at a time when steel was in short supply citing Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959) as authority, and that the Court must distinguish between the fact of injury or the impact upon plaintiff of defendants’ conduct and the amount of plaintiff’s damage citing 15 Von Kalinowski, Antitrust Laws and Trade Regulation § 115.03[1]:

“There is no established formula for the computation of damages in an antitrust action. Each case presents a particular problem as to the cause of plaintiff’s monetary losses. There are, however, two general rules to bear in mind. First, as indicated earlier, it is essential to distinguish, in private antitrust cases, between the fact of damage and the amount of damage. They are mutually exclusive concepts and are subject to different burdens of proof. The fact of damage relates to the litigants’ standing to sue. The plaintiff must prove with ‘reasonable certainty’ that injury has occurred. On the other hand, uncertainty as to the extent or amount of damages will not bar recovery.” (emphasis in original)

Lafayette asserts it can prove that its loss of profit on brokered steel flowed directly from the complained of wrongful conduct.

Kasle responds by saying that for Lafayette to claim loss of profit on brokered steel it must show that any illegal agreement between Kasle and National restrained an appreciable amount of steel made by steel mills and available to companies like Lafayette for sale to others.

The Court does not agree. Assuming the fact of injury by the wrongdoing, which must be admitted for the purpose of Kasle’s motion, any provable loss directly [614]*614resulting may be claimed as damage. Lafayette’s claim is as if Lafayette included in its computation of loss of profit on the blanking business its losses on the sale of scrap generated by the processing of coil or sheet steel into blanks.3

I.

A.

Lafayette’s initial complaint was filed in July, 1974 against National. It alleged violations of Sections 1 and 2 of the Sherman Act and Section 7 of the Clayton Act, 15 U.S.C. §§ 1, 2 and 18.

In August, 1975 Lafayette filed an amended complaint adding Kasle as a defendant as to the existing claims and also adding a count alleging violation by National of Section 2(e) of the Robinson-Patman Act, 15 U.S.C. § 13(e).

All of the claims but one were subsequently abandoned by Lafayette. The only claim now before the Court is grounded on Section 1 of the Sherman Act, 15 U.S.C. § 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 . . . .”

B.

Lafayette is a wholesaler of steel and a processor of steel products. Prior to 1973 it purchased steel from a number of mills, foreign and domestic, some of which steel it warehoused and resold without processing and some of which steel it processed before reselling. One of the steel products it processed was first blanks. Ninety-five percent of its production of first blanks was sold to the Fisher Body Division of General Motors Corporation. National is a steel producer. One of its customers was Lafayette. It in turn was one of Lafayette’s principal sources of steel. Kasle’s business is similar to Lafayette’s. Kasle began processing first blanks in mid-1973.

C.

Lafayette’s case can be described as follows: 4

Lafayette sold first blanks to the Fisher Body Division at “mill book” or list price for the coil or sheet steel from which the blanks were processed. Lafayette was able to sell at list, even though it incurred additional expense in processing, because it purchased steel from National at a 15% discount from the list price.5

National regularly tried to get Lafayette to raise its prices on first blanks. In 1972 National undertook a study concerning the possibility of getting into the first blank business itself. As part of the study there were extensive discussions between Lafayette and National looking to the purchase by National of Lafayette’s business.

National knew it could not go into the first blank business as long as Lafayette was selling first blanks at list price. National decided to terminate Lafayette in late 1972 as a customer in anticipation of a steel shortage so that Lafayette could not find an alternate source of supply. By this means Lafayette would be eliminated as a competitor in first blanks.

[615]*615At about the same time National and Kasle got together and entered into an agreement6 under which National guaranteed loans to Kasle and guaranteed a source of steel supply to Kasle so Kasle could go into the first blank business using National’s steel. Lafayette, as a consequence of the National-Kasle agreement, was forced out of the first blank business since it could not obtain an alternative source of supply.7

Lafayette describes its theory of damages as follows:

“During the period 1973 and 1974, a period of acute shortage of steel in the United States, LAFAYETTE was not able to go out and cover its steel supply position, and LAFAYETTE was deprived by the cutoff on the part of Defendant NATIONAL of its then-current level of supply plus the 1973 and 1974 increments in supply volume that Defendant NATIONAL was giving to other customers in the area. The value of this lost steel supply, which Plaintiff contends it was deprived of pursuant to a combination and conspiracy between Defendants NATIONAL and KASLE to raise the price at which first operation blanks were sold to General Motors and others, is the measure of Plaintiff’s damages.
Plaintiff . . .

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87 F.R.D. 612, 1980 U.S. Dist. LEXIS 13393, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lafayette-steel-co-v-national-steel-corp-mied-1980.