Stearns Airport Equi v. FMC Corporation

• Court: Court of Appeals for the Fifth Circuit
• Decided: April 7, 1999
• Docket: 97-10781
• Status: Published

Opinion

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

Nos. 97-10592 & 97-10781

STEARNS AIRPORT EQUIPMENT COMPANY, INCORPORATED,

Plaintiff-Appellant,

versus

FMC CORPORATION,

Defendant-Appellee.

Appeals from the United States District Court for the Northern District of Texas

April 7, 1999

Before GARWOOD, BARKSDALE and STEWART, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiff-appellant Stearns Airport Equipment Co., Inc.

(Stearns) brought this suit against defendant-appellee FMC

Corporation (FMC), claiming FMC had violated the Sherman Act, the

Robinson-Patman Act, and Texas state law. Stearns appeals the

district court’s grant of summary judgment to FMC, and also

challenges certain expenses awarded to FMC as costs. We affirm.

Facts and Proceedings Below

Stearns and FMC are both manufacturers of boarding bridges, the devices that allow passengers to enter and exit passenger

airplanes. Historically, the domestic market has been dominated by

Jetway, a brand previously produced by a division of a company not

a party to this case. In 1994, the Jetway division was purchased

by FMC, which continued its operation. Stearns, a wholly-owned

subsidiary of Trinity Industries, has been producing bridges since

the beginning of the 1980s. Both parties export their bridges

around the world, and about a dozen manufacturers produce bridges

abroad. While foreign competitors have bid on some projects and

sold a handful of bridges here, during the relevant time frame

actual foreign penetration in the North American market was

minimal. The record does show that foreign producers sporadically

expressed interest in the market, and one recently opened up a

sales office in the United States.

FMC and Stearns utilize competing technologies in their

bridges. Stearns relies on hydraulic systems for its bridges,

while FMC uses an electromechanical system. The record

establishes that at least some bridge purchasers felt that there

were substantial differences between the two systems under various

circumstances. In addition, FMC was in the process of developing

and introducing computerized controls in some of its models, called

“smart bridges,” during the relevant time frame. The “smart-

bridge” technology—which had some teething troubles—was

significantly different from the mechanism used by Stearns.

Prior to the mid-1980s, the dominant purchasers of bridges in

2 the United States had been airlines. The airlines had frequently

dealt exclusively with Jetway. However, during that period the

market began to shift and municipal airport authorities became the

primary purchasers of bridges. This shift led to most sales in the

industry being governed by competitive bid processes. After some

initial successes in this new market, Stearns began to lose market

share to FMC. Stearns alleges that its loss of sales to municipal

bidders was the product not of vigorous competition, but rather of

an orchestrated program by FMC to avoid fair competition through a

combination of exclusionary manipulation of municipal bids and

predatory pricing.

Stearns filed an antitrust action against FMC on December 4,

1995. The complaint initially alleged violation of Sections 1 and

2 of the Sherman Act, 15 U.S.C. §§ 1-2, Section 2(a) of the

Robinson-Patman Act, 15 U.S.C. § 13(a), and tortious interference

and unfair competition under state law. The district court granted

FMC’s motion for summary judgment on the Section 1 Sherman Act

claims on May 31, 1996. See Stearns Airport Equipment Co., Inc. v.

FMC Corp., 977 F.Supp. 1263 (N.D. Tex. 1996). Stearns does not

appeal that ruling. Discovery continued on the other claims, and

FMC filed another motion for summary judgment on December 20, 1996.

Stearns requested an extension of time for its response, which was

granted, and also filed a motion under Rule 56(f) to delay summary

judgment until the completion of discovery. The district court

3 denied the Rule 56(f) motion, but allowed discovery to continue

until March 26, 1997, when it granted summary judgment to FMC on

all claims. Stearns moved to reconsider and offered additional

evidence. This motion was denied and this appeal followed.

I. Standard of review.

We review a district court’s grant of summary judgment

employing the same standard it was required to apply in granting

the motion. Dutcher v. Ingalls Shipbuilding, 53 F.3d 723, 725 (5th

Cir. 1995). Summary judgment must be affirmed when the moving

party has identified material facts not in genuine dispute and the

nonmoving party fails to produce or identify in the record summary

judgment evidence sufficient to sustain a finding in its favor

respecting such of those facts as to which it bears the trial

burden of proof. In reviewing the record, we must view all facts

in the light most favorable to the nonmovant. We review questions

of law de novo. Id. We no longer maintain that summary judgment

is especially disfavored in categories of cases. See Little v.

Liquid Air Corporation, 37 F.3d 1069, 1075 n.14 (5th Cir. 1994) (en

banc) (“we reject any suggestion that the appropriateness of

summary judgment can be determined by the case classification.”).

Stearns’ attempt to invoke earlier cases in which we suggested that

summary judgment should be shunned when complex antitrust claims

are involved thus fails.

Stearns on this appeal treats its Robinson-Patman and state

4 law claims as derivative of its Sherman Act section 2 claim.

Accordingly, if we find that summary judgment should be affirmed on

the Section 2 claims, we must also affirm the dismissal of these

claims.

II. Exclusionary Conduct

A violation of section 2 of the Sherman Act is made out when

it is shown that the asserted violator 1) possesses monopoly power

in the relevant market and 2) acquired or maintained that power

wilfully, as distinguished from the power having arisen and

continued by growth produced by the development of a superior

product, business acumen, or historic accident. United States v.

Grinnell Corp., 86 S.Ct. 1698, 1704 (1966). For the purpose of

this summary judgment, we will assume, as the district court did,

that FMC does possess monopoly power in the North American market

for boarding bridges. Exclusionary conduct under section 2 is the

creation or maintenance of monopoly by means other than the

competition on the merits embodied in the Grinnell standard. See

Aspen Skiing Co. v. Aspen Highlands, 105 S.Ct. 2847, 2859 (1985)

(attempting to exclude on grounds other than efficiency); C.E.

Services, Inc. v. Control Data Corporation, 759 F.2d 1241, 1247

(5th Cir. 1985) (quoting 3 P. Areeda and D. Turner, Antitrust Law

p. 626, at 83 (1978)). The key factor courts have analyzed in

order to determine whether challenged conduct is or is not

competition on the merits is the proffered business justification

5 for the act. If the conduct has no rational business purpose other

than its adverse effects on competitors, an inference that it is

exclusionary is supported. See Aspen, 105 S.Ct. at 2860 (finding

failure to offer persuasive business justification “most

significant”). Summary judgment is appropriate in some cases where

defendant’s business justification is unchallenged. See Bell v.

Dow Chemical Co., 847 F.2d 1179, 1185-86 (5th Cir. 1988) (in a

refusal-to-deal case, rejecting contention that Aspen’s procedural

posture indicated that business justification was a matter for the

jury but going on to reject the proffered justification).

Stearns contends that FMC, threatened by the switch of

purchasing from the airlines to municipal airport authorities,

adopted a plan to avoid competition on the merits, and specifically

competition on price. The heart of this alleged plot is contained

in an FMC presentation directed to its marketing and sales

personnel. The presentation urged FMC’s employees to use four

strategies in pursuing sales to municipalities. First, FMC was to

attempt to convince municipalities that they should avoid

competitive bidding and strike a purchase agreement with FMC

directly—so called “sole-sourcing.” Second, if bidding appeared

inevitable, FMC should strive to drive the criteria for the award

away from price alone by requesting various product features be

weighted against cost in the final calculation of the best bid.

Third, efforts were to be made to insure that the specifications

6 adopted by a municipality were tailored to fit FMC’s product and

exclude Stearns. Lastly, FMC would “induce complexities in the

bidding process” by suggesting certain certifications and

restrictions be added that worked to the detriment of Stearns.1

Taken together, Stearns argues that these strategies constituted a

deliberate plan to exclude Stearns from competing in the municipal

bridge market, thus harming consumers by robbing them of a true

competitive process.

The key point uniting these allegations is that they all

involved FMC’s attempts to persuade buyers to favor their product

prior to the actual bid. Courts that have considered whether

attempts to convince independent government purchasers to adopt

specifications in their favor prior to bidding are a violation of

the antitrust laws have uniformly found such behavior not to be a

violation. The Ninth Circuit, presented with a claim that a

monopolist’s contacts with county officials and architects led to

the specification of its product prior to a bid rejected the

contention that such contacts violated the Sherman Act. Security

Fire Door Co. v. County of Los Angeles, 484 F.2d 1028, 1030-31 (9th

Cir. 1973). The Security Fire Door court found that there had been

1 While this category is the most ominous sounding, it was functionally identical to the specification effort. In both instances, FMC attempted to get certain features it possessed and Stearns did not—such as electromechanical design, certification from an outside body, or a direct legal responsibility for the product—incorporated in the specifications.

7 no injury to competition through these contacts since the

competitor was free to engage in similar persuasive efforts with

the relevant officials. Competition on the merits was assured as

long as the plaintiff had been “free to tout the virtues of his

particular [product] in an effort to secure favorable

specifications.” Id. at 1031. Other courts have agreed with this

reasoning. See Richard Hoffman Corp. v. Integrated Building

System, 610 F.Supp. 19, 23 (N.D. Ill. 1985) (reversing prior

determination that contractor had violated antitrust laws by

specifying product it distributed when drawing up specifications

used by the county after it was shown competitor had ample

opportunity to challenge specification and tout the virtues of its

product); Superturf, Inc. v. Monsanto Co., 660 F.2d 1275, 1280

(8th Cir. 1981) (“Even if one accepts SuperTurf’s argument that the

adoption of one product’s specifications precludes further

competition, it is also true that SuperTurf is free to press for

the adoption of its own product specifications.”); Triple M Roofing

Corp. v. Tremco, Inc., 753 F.2d 242, 246 (2nd Cir. 1985) (The court

found that defendant’s efforts to inform government of its product,

which led to its being specified by brand in the contract,

“exemplified those expected of an aggressive sales representative.”

It noted that these activities “promote rather than hinder

8 competition.”);2 Whitten v. Paddock Pool Builders, Inc., 508 F.2d

547, 558 (1st Cir. 1974) (endorsing lower court’s finding that

efforts to convince architects to include propriety specifications

in a contract was simply “salesmanship”).

While all of these cases involved section 1 of the Sherman Act

rather than section 2, and several also were in a different

procedural posture than we face here, their logic properly applies

to our inquiry. Under Aspen, we ask in section 2 exclusionary

conduct cases whether the challenged conduct involved competition

on the merits. Security Fire Door and its kin clarified that, in

the municipal bidding context, permissible competition is not

restricted to the bid itself but can also occur in the process of

“selling” specifications and contract forms, when companies “tout

the virtues” of their product. The choice of the consumer can be

expressed in specifications as well as the final bid. See Security

Fire Door, 484 F.2d at 1031. We therefore will examine FMC’s

behavior throughout the municipal contracting process to determine

whether it relied on a superior product or business acumen in

2 Stearns attempts to distinguish Superturf and Triple M because these contracts had an “or equal” clause. This is a distinction without a difference. In these cases, the specifications were for a specific brand. The result of such a specification and the addition of an “or equal” clause is essentially the same as that generated by the general specification here. A contract might say “FMC Bridge or equal” or it might say “electromechanical bridge.” In either case, FMC would meet the specification but Stearns could also qualify by demonstrating it could produce an electromechanical bridge equal to FMC’s.

9 pursuing its goals, or had recourse to methods beyond competition

on the merits.

The first point that separates FMC’s behavior in the

contracting process from section 2 cases of exclusionary conduct is

its economic rationality. Generally, a finding of exclusionary

conduct requires some sign that the monopolist engaged in behavior

that—examined without reference to its effects on competitors—is

economically irrational. When there is no other possible

explanation for an action, there is a strong inference that it was

taken for the purpose of harming competitors rather than otherwise

advancing the monopolist’s business. For example, in the leading

modern case on exclusionary conduct, Aspen Skiing, two companies

ran ski lifts on several different mountains in the same resort

area. Traditionally the companies had honored ski passes that were

good on all mountains. The larger company stopped honoring the

joint passes, instead setting up tickets that only covered its

mountains. This decision violated long-standing industry practice

and “infuriated” the larger mountain’s customers. The Supreme

Court found that the defendant “was apparently willing to forgo

daily ticket sales” to these customers “because it was more

interested in reducing competition . . . by harming its smaller

competitor” and that the logical inference was that the defendant

“was not motivated by efficiency concerns and that it was willing

to sacrifice short-run benefits and consumer goodwill in exchange

10 for a perceived long-run impact on its smaller rival.” Aspen, 105

S.Ct. at 2860, 2861.

In short, Aspen involved a company willingly accepting a real

loss because it represented a relative gain.3 Here, the business

justification—independent of harm to competitors—for FMC’s actions

is obvious: it was trying to sell its product. While Stearns may

feel very much aggrieved at their success, the tactics it complains

of were all fairly simple attempts to generate sales by “touting

the virtues” of its bridges. “Acts which are ordinary business

practices typical of those used in a competitive market do not

constitute anti-competitive conduct violative of Section 2.” Trace

X Chemical, Inc. v. Canadian Industries, Ltd., 738 F.2d 261, 266

(8th Cir. 1984). FMC’s sales efforts produced real, not merely

relative, gains for the company. Certainly we have nothing akin to

the baffling (until the effect on competitors is examined) request

in Great Western that a supplier raise the prices it charged to the

3 Stearns relies heavily on a case in this Circuit without recognizing that it was properly vacated pursuant to a settlement agreement and thus carries no precedential weight. Great Western Directories v. Southwestern Bell Telephone, 63 F.3d 1378, 1386 (5th Cir. 1995), modified, 74 F.3d 613, vacated pursuant to settlement agreement (August 21, 1996), cert dismissed, 117 S.Ct. 26 (August 27, 1996). However, Great Western also involved conduct that harmed the monopolist and could only be understood when one recognized that competitors suffered more severe harm. In Great Western the defendant asked an affiliated supplier to raise prices across the board, raising defendant’s costs but inflicting more pain on its cash-starved competitor. Id. at 1386 (quoting expert economic testimony that such behavior was irrational except as an attempt to cripple competitors).

11 monopolist, or the withdrawal of a valued consumer item in Aspen.

The second distinguishing feature of this case is that all of

the alleged exclusionary conduct required the active approval of

the consumer—the party the Act protects. Aspen and other “refusal-

to-deal” exclusionary cases involve a unilateral decision by the

monopolist. The consumer has no input on a decision that affects

his interest. But here, the decision to sole-source a contract or

adopt a particular specification was always ultimately in the hands

of the consumer. The record indicates that FMC felt itself

obligated to come up with “selling points” to accompany its

strategies. Thus when attempting to obtain a sole-sourcing

agreement, FMC would stress its technological superiority. Having

convinced a municipality on this predicate merits argument, FMC

would then argue that sole-sourcing was a cheaper option since a

full bidding process involved substantial costs and legal

complications. Similarly, when “introducing complexities into the

bidding process” FMC agents were told to point out the advantages

for municipalities in possible product liability actions if outside

certifications were maintained or if independent distributors were

barred from bidding. And the record is full of evidence that FMC

aggressively touted its electromechanical and “smart-bridge”

technology as qualitatively superior to Stearns’ product.

All of these arguments made by FMC to its potential customers

may have been wrong, misleading, or debatable. But they are all

12 arguments on the merits, indicative of competition on the merits.

To the extent they were successful, they were successful because

the consumer was convinced by either FMC’s product or FMC’s

salesmanship. FMC—unsurprisingly—wanted to be picked over Stearns

on a contract. Also unsurprisingly, for that purpose it calculated

carefully what kind of specifications would insure that it would

get the contract because Stearns could not bid on a project.4 But

it could not ask municipalities to enter into a sole-sourcing

agreement or specify smart-bridge technology merely by asking them

to hurt Stearns. FMC had to convince the customer that FMC’s

approach was best for the customer, not best for FMC. Inferring an

attempt to circumvent competition on the merits is extraordinarily

difficult when the alleged violator takes the facially rational and

unproblematic step of attempting to sell its product, couches its

arguments to the customer in favor of a sale on the merits of the

product and procedures it recommends, and the consumer agrees.

Without a showing of some other factor, we can assume that a

consumer will make his decision only on the merits. To the extent

a competitor loses out in such a debate, the natural remedy would

4 Stearns continually refers back to FMC documents which indicate that FMC was aware that a certain specification would prevent Stearns from bidding, and was pleased by this fact. Writing a memo saying that you are winning a competition on the merits does not change the fact that it is a competition on the merits. If Stearns reached the bidding stage, calculated its bid, and believed that it could maintain an adequate margin at a price FMC could not match, it would not violate section 2 by expressing its satisfaction with the expected result.

13 seem to be an increase in the losing party’s sales efforts on

future potential bids, not an antitrust suit.

The only factor temporarily obscuring the flaws in Stearns’

argument is the municipal bidding context.5 This is because in the

municipal market, bidding statutes generally forbid considerations

other than price once a certain point in the process has been

reached—municipalities, unlike ordinary consumers, cannot decide at

the last minute to purchase a more expensive but higher quality

product. But we do not find that the form of these statutes

alters the inquiry demanded by Aspen—whether competition is or is

not on the merits. Nor do they indicate that “merit” in municipal

bidding can only be measured in terms of price.6 Competition

5 Apparently, a handful of negotiations between FMC and municipalities may have led to technical violations of the relevant public contracting statutes. Stearns was either silent or half- hearted in complaining to the relevant authorities when these violations occurred. It now attempts to claim that violation of these municipal bidding statutes constitutes a per se antitrust violation. But a major purpose of these state statutes is protection of the municipal taxpayer from corruption—which we have no evidence of (there is nothing to indicate that in any of these instances the municipal authorities were acting in other than what they thought was best for the municipality in respect to the particular purchase being made). The Sherman Act, in contrast, protects the consumer from anticompetitive forces. We decline Stearn’s invitation. “Even a direct contract for the Guilbert system, without any pretense of putting the job out for bid (and thus a clear violation of the competitive bid statute), would not in itself have constituted a restraint of trade under the Sherman Act if the selection of Guilbert had been made in an atmosphere free from anticompetitive restraints.” Security Fire Door, 484 F.2d at 1031. 6 Stearns fails to articulate how under its theory of the case a municipality could ever make a decision to favor quality over price when the higher quality producer has a strong market share.

14 grounded in nonprice considerations such as reliability,

maintenance support, and general quality is competition on the

merits. The municipal bidding process merely mandates a

bifurcation of the consumer’s decision on the merits. During the

first, pre-bid stage the municipality must attempt to insure that

its nonprice considerations are adequately addressed—and sales

efforts at this stage can enlighten a municipal consumer of new

advances. See Triple M, 753 F.2d at 246-247 (alternative

restorative method would have been unknown to contractor without

specification push by supplier, and thus unavailable to ultimate

consumer, the State of Georgia). The bidding itself can only

resolve a limited portion of the merits—the issue of price.

To be sure, if FMC is successful in its initial efforts,

Stearns may be effectively excluded from the final bid.7 But if

The logic of Stearns’ argument would not only make it impossible for an informed municipal consumer to pick FMC’s smart bridge over Stearns’ cheaper bridge, it would also bar a consumer from purchasing aircraft boarding bridges in the first place. Stearns’ expert noted that other methods of boarding passengers on airplanes exist—notably stairs—but bridges are “so superior to these other methods that it has largely displaced them.” This superiority is reflected in the specifications that airports now draw up—all of the contracts at issue specified bridges. Thus even if a stair assembly was cheaper, its manufacturer has been excluded from the final bidding process. But no one would argue that a municipality is forbidden from making this choice, even if Stearns and FMC collectively have a lock on the passenger boarding device market. Nor could it credibly be maintained—without evidence that the bridge manufacturers had corrupted the judgment of the consumer’s agents—that this exclusion was not on the merits. 7 But Stearns complains just as vociferously about FMC’s attempts to include quality as a weighting factor in determining bids—when it clearly could compete, albeit with some recognition of

15 FMC fails in persuading officials or Stearns intervenes, FMC’s

chief selling point is similarly barred from the final

consideration. Municipal contracting will always produce

distortions like this. The central insight of Security Fire Door

and the other section 1 cases is that jockeying over specifications

and bid procedures is a valid form of competition. There is no

indication that anything prevented Stearns from doing the necessary

research and finding what airports were beginning to prepare a

contract, and pushing its arguments at the specifications phase.

We decline to find that FMC violated section 2 of the antitrust law

by vigorously stressing the qualitative merits of its product

during the sole window in which municipalities allowed it to

present these nonprice arguments. This behavior was “simple

salesmanship” that enhanced rather than subverted competition on

the merits. If Stearns was “excluded,” it was excluded by FMC’s

superior product or business acumen.

Of course, this conclusion would be called into question if

there was evidence that the municipal consumer’s agents had been

co-opted by the monopolist to a degree that it could be inferred

the difference in technologies—as it does about bids in which it was barred by a particular specification. And it should be noted that nothing is stopping Stearns from developing smart-bridges and electromechanical technologies that would match the specifications it complains of. While the record indicates that the time and cost involved in retooling make this impractical in regards to a particular bid after its specifications have been announced, in terms of future bids we have no evidence to sustain a finding that Stearns could not begin this process tomorrow and thus expand its ability to compete on such projects.

16 they were not acting in what they thought was the best interest of

the municipality as respects the particular decision being made.

Bribery and threats are not competition on the merits. Several

cases have found violations of section 2 when a monopolist engages

in what appears to be normal competitive behavior, but has

manipulated representatives of the consumer to the point that the

integrity of the decisional process has been violated. See, e.g.,

Indian Head, Inc. v. Allied Tube & Conduit Corp., 817 F.2d 938, 947

(2d Cir. 1987). Thus courts have found that an exclusionary claim

can lie when the monopolist has bribed the officials evaluating the

contract. See Buddie Contracting v. Seawright, 595 F.Supp. 422,

425 (N.D. Ohio 1984) (monopolist previously pleaded guilty to

criminal charges of unlawful interest in a public contract). And

in Indian Head, a manufacturer of traditional metal pipe paid for

the enrollment of hundreds of interested individuals in order to

“pack” a vote of a building association on whether to approve

specification of PVC pipe. Indian Head, 817 F.2d at 947. The

bought voters duly blocked the approval of the competitor’s PVC

product. The Second Circuit found that this behavior constituted

exclusionary conduct—while it might be permissible to argue the

case against PVC before the association, it was impermissible to

buy the jury.

Stearns has failed to introduce evidence that the independence

of the consumers’ judgment had been tainted by FMC. To bring the

17 case within the ambit of Indian Head, Stearns must allege that

there was a conspiracy or self-interest present strong enough to

overcome our assumption that agents will act with the purpose of

furthering the interest of their principal. To survive summary

judgment, an inference of conspiracy must be backed by evidence

that tends to disprove the assumption of independent action. See

Matsushita Electric Industrial Co. v. Zenith Radio Corp., 106 S.Ct.

1348, 1356-57 (1986) (discussing standard under section 1 of the

Sherman Act). Stearns’ argument is filled with ominous sounding

phrases suggesting that lower-echelon officers of the

municipalities were “induced” by FMC to adopt its nefarious

scheme8, and that the airlines were “friends” of FMC and exerted

pressure on its behalf. But constant repetition does not alter the

fact that Stearns could introduce no evidence of improper, disloyal

motive.

Stearns admitted at oral argument that there was no indication

that the employees of the consumer were driven by anything other

than the desire to obtain the best product possible. As for the

airlines, since they depend on the smooth functioning of bridges to

service their customers, they naturally expressed their preference

to the municipalities. While employees of airlines might indeed

be “friends” of any party that could provide them with reliable

8 And, at oral argument it was asserted that the “inducement” had inevitably led to the officers ending up “in cahoots.”

18 equipment crucial to their business, there was nothing in the

record that indicated that the “friendship” could be traced to

anything other than their belief FMC produced a superior product.

Cf. Instructional System Development Corp. v. Aetna Casualty and

Surety Co., 817 F.2d 639, 647 (10th Cir. 1987) (evidence indicated

company exerted influence on municipality in favor of monopolist as

part of agreement to avoid monopolist challenging it in another

market). Any influence FMC had over these parties was won because

it convinced them of the virtues of its product—it competed on the

merits. Certainly we have no allegations of bribery, and nothing

here is akin to Indian Head, where the method of competition was

more ward boss than businessman.

Ultimately, Stearns does not and cannot claim that it has

been excluded from competing on the merits. Every sales pitch and

every suggestion that FMC made was evaluated by independent

municipal actors who were concerned solely with the merits of the

product they were charged with evaluating. Stearns was free to

engage in identical tactics and tout the virtues of its product.

Stearns is really complaining that its municipal consumers keep

picking the “wrong” product. Thus it introduces evidence that its

technology is sound and FMC’s sales pitches touting its product are

misleading. It appears to be assuming that if FMC’s product was

not objectively superior, then its victories were not on the

merits. But this Court is ill-suited to attempt to judge the

19 relative merits of electromechanical bridges versus hydraulic

bridges. That decision is left in the hands of the consumer, not

the courts, and to the extent this judgment is “objectively” wrong,

the inference is not that there has been a violation of section 2,

but rather that the winning party displayed superior business

acumen in selling its product. See Triple M, 753 F.2d at 246

(success enjoyed by embedding specifications in municipal contract

was “obtained by commercial initiative and skillful marketing”).

Competition, even the maintenance of monopoly, through superior

business acumen is allowed under section 2. See Grinell, 86 S.Ct.

at 1704. Thus regardless of whether its success can be traced to

a “truly” superior product or persuasive business acumen, FMC

competed on the merits and has not engaged in exclusionary conduct.

In the same vein, Stearns attempts to justify its request that

we overrule the consumer’s verdict by claiming that these municipal

consumers are too unsophisticated to make an unguided decision.

Again, this Court is ill-suited to attempt to judge the competence

of municipal purchasing agents. Further, while there was evidence

that FMC believed that the municipalities were less sophisticated

purchasers than the airlines had been, one of Stearns’ main

complaints was that the sophisticated airlines weighed in against

it as well. To the extent municipal officers may have lacked

perfect information, Stearns could have supplied them with the

missing perspective by matching FMC’s sales efforts. The municipal

20 authorities in question must be treated as if they were capable of

running the construction of multi-million dollar airports.

III. Predatory Pricing.

Stearns’ other contention alleges that when the exclusionary

strategy discussed above failed to work, FMC resorted to predatory

pricing of its bridges. Once Stearns has been vanquished by this

combined attack, it is claimed FMC will use its monopoly power to

raise prices again. We find Stearns’ evidence of the existence of

a predatory pricing scheme unconvincing, both because there has

been an inadequate showing that any under-cost bids occurred and

because there has been no showing that recoupment of the putative

FMC losses is possible in the bridge market.

The Supreme Court has expressed extreme skepticism of

predatory pricing claims. The central difficulty with such actions

is that the conduct alleged is difficult to distinguish from

conduct that benefits consumers. See Matsushita, 106 S.Ct. at 1360

(“[C]utting prices in order to increase business often is the very

essence of competition. Thus, mistaken inferences in cases such as

this one are especially costly, because they chill the very conduct

the antitrust laws are designed to protect.”). Moreover, the Court

has noted the consensus among economists that such schemes are

difficult if not impossible to successfully complete and thus

unlikely to be attempted by rational businessmen. See id. at 1357

(“[T]here is a consensus among commentators that predatory pricing

21 schemes are rarely tried, and even more rarely successful.”);

Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 113 S.Ct.

2578, 2590 (1993) (“general implausibility of predatory pricing”);

Cargill, Inc. v. Montfort of Colorado, 107 S.Ct. 484, 495 n. 17

(1986) (“Although the commentators disagree as to whether it is

ever rational for a firm to engage in such conduct, it is plain

that the obstacles to the successful execution of a strategy of

predation are manifold, and that the disincentives to engage in

such a strategy are accordingly numerous.”)

Accordingly, the standard for inferring an impermissible

predatory pricing scheme is high. To succeed, such a claim must

demonstrate both that 1) the prices complained of are below an

appropriate measure of the alleged monopolist’s costs and 2) that

the alleged monopolist has a reasonable chance of recouping the

losses through below-cost pricing. Brooke Group, 113 S.Ct at

2587-88 (establishing unitary standard that includes section 2

claims)9. In other words, before a violation is found, a claimant

9 Stearns attempts to avoid the application of this standard by claiming that here, unlike in Matsushita and Brooke Group, a single defendant with overwhelming market share is involved. While the Court noted that the multi-party nature of the claimed predatory pricing conspiracies (between Japanese electronics manufacturers and large tobacco companies, respectively) increased the irrationality of the claimed conduct, on both occasions the Court indicated that the reasoning of the opinions applies to claims against a single firm. See Brooke Group, 113 S.Ct. at 2590 (schemes are “even more improbable” when multiple firms involved); Matsushita, 106 S.Ct. at 1357 (“These observations apply even to predatory pricing by a single firm seeking monopoly power.”). The basic insight of these cases—that predation as a strategy is so

22 must be able to demonstrate both that there has been a specific

incident of underpricing and that the claimed scheme makes economic

sense. Of course, the Court’s skepticism towards these claims has

not altered the standards for summary judgment. See Eastman Kodak

Co. v. Image Technical Serv., Inc., 112 S.Ct. 2072, 2083 (1992).

But the standard adopted by the Court incorporates this skepticism,

and to survive summary judgment a plaintiff must have evidence that

the predation scheme is economically rational. See id. (“If the

plaintiff’s theory is economically senseless, no reasonable jury

could find in its favor, and summary judgment should be granted.”);

Advo, Inc. v. Philadelphia Newspapers, Inc., 51 F.3d 1191, 1196-97

(3rd Cir. 1995). We find that Stearns has failed to present

evidence to satisfy either prong of this test.

A. Recoupment

We begin by examining the possibility of recoupment. This

inquiry is really into the economic rationality of the challenged

unlikely to reap rewards that it should not be inferred easily, and that such an inference should be especially shunned since it is so hard to disentangle from the type of vigorous price competition that the antitrust laws seek to promote—is not altered when only one defendant is involved. See American Academic Suppliers v. Beckley-Cardy, Inc., 922 F.2d 1317, 1319-21 (7th Cir. 1991) (affirming summary judgment for single defendant on section 1 predatory pricing claims by noting lack of evidence that defendant could have hoped to recoup losses incurred during alleged scheme). The size of defendant’s market share may of course be relevant in determining the ease with which he may drive out a competitor through his scheme—but it does not, standing alone, allow a presumption that this can occur. Nor does market share tell us anything about the problem of new entrants preventing the sustained charging of supra-competitive prices necessary for recoupment.

23 conduct. If there is no likelihood of recoupment, it would seem

improbable that a scheme would be launched. Given the high error

cost of finding companies liable for cutting prices to the

consumer, the court should thus refuse to infer predation. See

Matsushita, 106 S.Ct. at 1360 (summary judgment is appropriate if

recoupment is unlikely and the monopolist thus had no motive to

engage in the alleged activity unless proper direct evidence of the

scheme is introduced). To achieve the recoupment requirement of

Brooke Group, a claimant must meet a two-prong test. First, a

claimant must demonstrate that the scheme could actually drive the

competitor out of the market. Second, there must be evidence that

the surviving monopolist could then raise prices to consumers long

enough to recoup his costs without drawing new entrants to the

market. Brooke Group, 113 S.Ct. at 2589.

1. Possibility of eliminating Stearns

In examining whether an alleged scheme could actually succeed

in eliminating a competitor, we must look to “the extent and

duration of the alleged predation” and the parties’ relative

strength. Brooke Group, 113 S.Ct. at 2589. Stearns has only

attempted to introduce evidence of underpricing in five bids spread

out over four years, and in four of these cases the bids were for

only two bridges apiece. A Stearns executive admitted that there

are an average of 60-100 bidding opportunities—usually for many

more than two bridges—annually in the domestic market alone. Yet

24 Stearns contends that this rare and intermittent underpricing could

somehow bring it to its knees. It certainly has not yet—Stearns

remains in the market—and it is difficult to see how these rare,

isolated incidents could have a serious effect on its health.

Boarding bridges constitute only forty percent of Stearns’

business—it also produces baggage-handling equipment—and its

corporate parent is a strong company.

Stearns claims that “even small amounts of predation are not

permissible under the antitrust laws.” This is true in an abstract

sense, but in applying the concept to this case Stearns completely

ignores the insight of Matsushita and Brooke Group—unless there is

a showing of reasonably possible success using the scheme, there is

no predation. “If market circumstances or deficiencies in proof

would bar a reasonable jury from finding that the scheme alleged

would likely result in sustained supracompetitive pricing, the

plaintiff’s case has failed.” Brooke Group, 113 S.Ct. at 2589. If

FMC’s pricing cannot drive Stearns out of the market, then it will

never have a chance to charge supracompetitive prices, let alone

sustain those levels.

Stearns relies on a case in which this Court found allegations

of predation involving only five service contracts could survive

summary judgment. C.E. Services, Inc. v. Control Data Corp., 759

F.2d 1241, 1247 (5th Cir. 1985). We initially note that this case

was decided under different legal standards. Not only did Control

25 Data predate the Supreme Court’s renewed examination of predation

claims that began in Matsushita, but it also came before the

Court’s contemporaneous clarification of the summary judgment

threshold. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317

(1986); Liquid Air Corporation, 37 F.3d at 1075 (acknowledging this

Circuit’s incorrect application of Rule 56 prior to Celotex). But

to the extent Control Data remains persuasive, it highlights

Stearns’ failure to meet its burden under Brooke Group. While

Control Data involved predation in only five contracts, these were

the plaintiff’s only service contracts at the time. The loss of

these contracts led to the plaintiff’s immediate bankruptcy.

Control Data, 759 F.2d at 1243. Here, of course, only five bid

opportunities are involved, in a market where 240-400 such chances

were available during the alleged predation. Stearns is citing a

case in which one hundred percent of the relevant bids were below-

cost to support an allegation that below-cost bidding in—at

most—two percent of the bids constituted predation.

Stearns’ response is to plead that the predation must be

understood in light of the exclusionary conduct—predation is FMC’s

backup strategy. But this begs the question. If FMC had engaged

in exclusionary conduct, Stearns would win in any case. But as

discussed above, we find that the challenged conduct is

permissible. Stearns has introduced no evidence that its survival

is threatened by the sales lost to the rare, sporadic predation

26 that it alleges, and does not claim that the continuation of below-

cost bids at this level—two percent at most—will drive it out of

business. Instead, it claims that it faces ruin because of FMC’s

pursuit of tactics we have found unobjectionable, coupled with the

alleged rare predation. We decline to find predation when there

has been no showing that the alleged below-cost pricing campaign

was of a sufficient duration and extent to independently force

Stearns out of the market and there has been no other valid claim

of antitrust-impermissible conduct.

2. Barriers to entry

Even if Stearns had advanced evidence that the alleged

predation could drive it out of the market, it has failed to meet

the second prong of the recoupment test. A competitor must be able

to not only eliminate its competitors through predation, but also

be able to maintain supracompetitive prices long enough to recoup

the losses it incurred in the predation campaign. If barriers to

entry in an industry are low, new entrants into the industry will

appear when the monopolist raises its prices, and the net effect of

the campaign will be a loss to the predator and a windfall for

consumers who paid the subcompetitive predatory price. See C.A.T.

Industrial Disposal, Inc. v. Browning-Ferris Industries, Inc., 884

F.2d 209, 211 (5th Cir. 1989); Advo, 51 F.3d at 1200 (“Such futile

below-cost pricing effectively bestows a gift on consumers, and the

Sherman Act does not condemn such inadvertent charity.”).

27 Stearns claims that recoupment will be possible because the

industry’s high barriers to entry prevent the emergence of new

challengers if FMC succeeds in disposing of Stearns. This would

seem rather difficult to credit. The record shows that a large

number of foreign firms produce bridges, and one of the most

recently successful was formed only in the 1980s. Putting aside

the lack of evidence that new American entrants could not take up

the standard if Stearns falters, it would seem probable that these

already established foreign manufacturers would leap into the

United States market if FMC began to charge supracompetitive

prices. There was no evidence of special industry conditions such

as special tariffs or domestic purchase limitations on

municipalities that would block such an entry.

Stearns asks the court to infer the existence of entry

barriers from the historical lack of success foreign firms have had

in the domestic market. This is irrelevant. “In evaluating entry

barriers in the context of a predatory pricing claim, however, a

court should focus on whether significant entry barriers would

exist after the merged firm had eliminated some of its rivals,

because at that point the remaining firms would begin to charge

supracompetitive prices, and the barriers that existed during the

competitive conditions might well prove insignificant.” Cargill,

107 S.Ct. at 494 n.15. Once FMC’s alleged plot has succeeded,

according to Stearns’ logic it will raise prices. The question is

28 what will stop foreign firms from appearing on the scene, pointing

out to municipalities the supracompetitive prices, and providing

an alternative. The only specific barriers to foreign entry

mentioned by Stearns are transportation costs, manufacturing costs,

and the “demonstrated ability of the dominant firm to charge

supracompetitive prices.”

All imports will face transportation costs. However, domestic

producers will also incur some analogous costs shipping products

from their plants to end users. For transport costs to represent

a true barrier to entry, there must be a showing that in a

particular industry the costs incurred by new entrants

significantly exceed the transport costs incurred by the

monopolist. While the record indicates that costs of exporting in

the industry are substantial, we have no evidence of the costs to

FMC of shipping its bridges around the country. Moreover,

transport costs have not prevented both Stearns and FMC from

successfully competing in Europe and Asia against native bridge

manufacturers. Stearns’ expert admitted this, noting that in many

of these cases the American companies shipped components over to be

fabricated by local sub-contractors. It is unclear why a foreign

corporation could not use the same strategy in the American market,

and we have no evidence of how much this practice might affect

costs. The evidence in the record is for the export of complete

bridge units. The report relied on by Stearns’ expert also noted

that foreign manufacturers are intimidated by customer satisfaction

29 with Stearns and FMC—a situation which would likely change when

Stearns is gone and FMC raises its prices. In any case, Stearns’

expert also admitted that a foreign firm could circumvent the

transport issue entirely by setting up manufacturing plants in the

United States.10 Given the large percentage of world sales America

represents, it would not seem unreasonable to assume that they

would do so once FMC began to raise prices.

Stearns’ briefs referred to “other costs,” which appears to

refer to its expert’s brief mention of manufacturing costs and the

airlines’ familiarity with FMC’s “brand.” Stearns’ expert conceded

that manufacturing setup was not particularly onerous in the

industry. “The principal barrier to entry into the North American

PBB business is not the scale of manufacturing required.” New

entrants to a market will always face these kinds of entry costs.

They will also always face barriers stemming from consumer inertia

and unfamiliarity with its products. “New entrants and customers

in virtually any market emphasize the importance of a reputation

for delivering a quality good or service. . . . [Plaintiff’s

argument that reputation is entry barrier], without some limiting

principle (that it fails to supply), implies that there are

barriers to entry, significant in an antitrust sense, in all

markets.” Advo, 51 F.3d at 1201-02. The question is not whether

10 “[I]f transportation costs were the only problem, firms from overseas could set up manufacturing facilities here in North America.”

30 there are barriers to entry, but rather whether the barriers in a

particular industry are large enough to trigger judicial concern.

See Matsushita, 106 S.Ct. at 1348 n.15 (noting lack of evidence

that entry into the market was “especially” difficult); Cargill,

107 S.Ct. at 494 n.15 (issue is whether barriers are

“significant”). There was no evidence presented that industrial

set-up costs or the costs associated with overcoming consumers’

settled preferences created unusual barriers to entry in the bridge

market.11

The barrier to entry that Stearns’ expert focused on was the

same conduct that gave rise to exclusionary conduct claims. Just

as the core of the claimed predation threat to Stearns’ survival

was in actuality a restatement of these claims, Stearns’ allegation

here is merely another attempt to repackage these same allegations

as a barrier to entry. Since FMC can “induce” municipalities and

FMC’s “friends” in the airline industry to ignorantly (though

honestly) act against their own economic interests, it is claimed

that new competitors will be scared off. We have discussed above

that the conduct at issue did not violate the antitrust laws. It

was merely vigorous competition, and the ultimate consumer of the

11 Richard Pell, a former employee of FMC whose testimony is critical for all of Stearns’ predatory pricing claims, was quite emphatic that FMC could not rely on barriers to entry to protect it from competition. “There will always be a competitor to Jetway. There may be short periods when there aren’t; but if they manage to put Stearns out of business, for example, within two years, there will be another bridge manufacturer competing with Jetway.”

31 product at all times retained the power of choice.12 We decline to

find this unobjectionable conduct constitutes a barrier to market

entry. Moreover, while outside observers may indeed hesitate when

viewing FMC’s current success in wooing municipalities, the whole

theory of predation postulates that FMC’s behavior will

significantly change once Stearns is eliminated. When FMC is

charging supracompetitive prices, its quality arguments will become

less persuasive. A competitor could either match the quality

standards that FMC has convinced the municipalities to adopt and

underbid, or show them that the quality differential that

justified adoption of certain specifications at a lower price

cannot serve to mandate the same result at the supracompetitive

price.13

12 Summary judgment is appropriate when an ill-reasoned expert opinion suggests the court adopt an irrational inference, or rests on an error of fact or law. See Matsushita, 106 S.Ct. at 1360 n.19 (expert opinion on predation has little probative value in light of economic factors that indicate expert’s scenario is irrational); Bell, 847 F.2d at 1184 (affirming decision of district court on the question of market power, since expert imprecisely defined the market, which led to a legal error in his conclusion). Here, Stearns’ expert rested his conclusion on an error of law—he assumed FMC’s efforts to sell its products violated section 2 of the Sherman Act. 13 Stearns places great reliance on its claim that when Stearns does not bid on a project, FMC’s bids are significantly higher. It directs the court in particular to two instances involving very small projects in which FMC came to the bid armed with two proposals. When Stearns failed to bid, it used its higher bid and pocketed the other proposal. Insofar as we are asked to infer from this that the lower, unused bid was predatory, we note that there is no evidence showing the unused bid was below cost. If these isolated episodes are relied on to show FMC’s intent and ability to charge supracompetitive prices, we note that the antitrust laws

32 B. Below-Cost Pricing

The above analysis, which we find determinative, assumes

arguendo that all of Stearns’ allegations of below-cost pricing

were supported by evidence. Strengthening our above conclusion and

providing an independent ground for rejecting Stearns’ claim is our

support for the district court’s conclusion that Stearns had not in

fact put forth evidence of below-cost pricing. Under Brooke Group,

a claimant must demonstrate that the prices at issue were below an

appropriate measure of its rival’s costs. Brooke Group, 113 S.Ct.

at 2587-88 (declining to resolve conflict among circuits over what

constitutes a proper measure of cost, but finding only below-cost

prices can lead to liability). Stearns incorrectly relies on cases

in this Circuit predating Brooke Group, in which we left open the

possibility that prices above a monopolist’s variable costs could

be predatory under certain circumstances. See, e.g., Adjuster

Replace-A-Car, Inc. v. Agency Rent-A-Car, Inc., 735 F.2d 884, 889-

91 (5th Cir.1984) (allowing for predation when prices were above

cost but barriers to entry in an industry were high). The district

court case from which Stearns extracts its predatory pricing

standard was decided in the same month as, but before, Brooke

cannot protect consumers from the inadequacies of a competitor. A new entrant to the market may not be as cavalier about letting business opportunities pass as Stearns was in these instances. Of course, documentation of these incidents would seem to provide Stearns an excellent—albeit apparently unused—tool to persuade municipalities that overreliance on FMC is not in their best interest.

33 Group. See Continental Airlines, Inc. v. American Airlines, Inc.,

824 F.Supp. 689 (S.D.Tex. 1993) (discussing pricing above variable

cost but below short-run profit maximizing price). In the wake of

Brooke Group’s clarification of the standard, a plaintiff must show

pricing below the standard this Court has long embraced as an

appropriate measure of cost—average variable cost. See Adjuster,

735 F.2d at 891 (pricing below cost is pricing below average

variable cost); International Air Industries, Inc. v. American

Excelsior Co., 517 F.2d 714, 724 (5th Cir. 1975) (embracing

commentator’s proposal of average variable costs).

Ideally, an inquiry into whether a monopolist had sold his

product below cost would look at the true marginal cost—we would

attempt to discover the precise cost to the firm of producing the

extra product that it is alleged to have sold below cost. But

because the true marginal costs of production are difficult to

generate, this Court attempts to estimate them by using average

variable costs. See id. at 724. In this analysis, we attempt to

distinguish between costs that are fixed—at least over the short

term—and costs that vary with the amount produced. See Adjusters,

735 F.2d at 889. Thus salaried labor costs, rent or depreciation

on real estate, and certain capital expenses are considered fixed.

But inputs like hourly labor, the cost of materials, transport, and

electrical consumption at a plant will vary, and are relevant to a

predation inquiry.

34 This Court has found that judgment as a matter of law is

appropriate when a plaintiff fails to adequately specify how the

challenged pricing undercuts the defendant’s variable costs.

“Plaintiffs did not offer any evidence respecting [Defendant’s]

variable and fixed costs of operation. Rather, plaintiffs

interpreted [Defendant’s] admission that it had suffered ‘a net

loss from operations’ to be effectively an admission of predatory

pricing. This was a costly error.” Adjusters, 735 F.2d at 891

(affirming J.M.L. for defendants). Here, Stearns has similarly

erred. It has largely rested its allegation on evidence that FMC

may have bid at a “negative margin” without exploring the

relationship between variable costs, fixed costs, and profits.

Stearns has barely attempted to sort out what these costs may

have been on the projects in question. Its expert’s opinion for

the most part completely ignored the legal standard embraced by

this Court and instead opted to engage in a comparison of what FMC

bid for the Washington airport project when it was proposing a sole

source contract and what it charged when the project went to

competitive bid against Stearns.14 That the cost of the competitive

14 It must be noted that the expert relied on an erroneous interpretation of the law regarding predatory pricing. The opinion clearly indicated that the expert believed the law of this Circuit allowed a finding of predation when prices are above a firm’s variable costs but below a “short-run profit maximizing price.” As we explained above, this position is no longer tenable in the wake of Brooke Group. This error may explain, but does not excuse, the expert’s failure to address the question of variable cost. In affirming summary judgment, we may disregard the conclusions of an

35 bid was lower is evidence that the airport authority was wise to

reject the sole-sourcing proposal. It is not evidence of a bid

below variable cost.

For the bulk of the challenged bids, Stearns’ only evidence

was FMC’s risk memorandum on the challenged projects. The record

indicates, and Stearns was eager to point out when they were used

against it, that these documents are of little utility in

estimating the true costs of a project. Nevertheless, they are the

only evidence Stearns could produce that even suggested the costs

FMC incurred on the projects. On one of these documents, Stearns

claims it has found its smoking gun—a note on the bottom that part

C of the project would run at a negative operating margin of 3.7%.15

But this allegation is undermined by the fact that the table from

which the margin is drawn includes a section for general and

expert opinion grounded in an error of law. See Bell, 847 F.2d at 1184. 15 A threshold problem with this allegation is that even if part C was bid below-cost, Stearns has not alleged that the project as a whole was unprofitable. In an analogous case, we rejected an argument that price cuts in the original equipment market could be examined in isolation when the evidence indicated that the replacement market and original equipment market were inseparable. Stitt Spark Plug Co. v. Champion Spark Plug Co., 840 F.2d 1253, 1256 (5th Cir.1988) (“[A]ny meaningful comparison of price and cost must encompass Champion’s sales to both markets. Stitt’s evidence did not demonstrate that Champion’s practices were ‘predatory’ across both markets.”). Here, the fact that FMC may have chosen for internal reasons or salesmanship purposes to shift costs in this manner is not objectionable without a showing that the project as a whole was not priced above its variable cost. When a company has a “buy one, get one free” promotion, it would be incorrect to look at the nominal price of the “free” product—zero—and infer predation from this fact.

36 administrative expenses (“G&A”). FMC contends that G&A is one of

several categories in which profits are allocated. If this is

correct, then the negative margin referenced in the document

indicates only that a portion of the project failed to meet a

benchmark profit target, not a bid below cost—variable or

otherwise. Resolution of the G&A question is also critical for the

other challenged projects, for which the sole basis for Stearns’

charges of below-cost pricing is the fact that the G&A percentage

was reduced from its customary eighteen percent to ten percent.

FMC has produced evidence indicating that G&A is not a

variable cost. The risk memorandum contained allocation categories

for G&A, markup, and margin. FMC produced affidavits that stated

all three of these categories were expected profit on a deal, and

in other sections of the Washington risk memorandum G&A and margin

are combined and collectively referred to as margin. An

examination of the risk memoranda supports the conclusion that

these categories were at the least not a variable cost.16 Material,

manufacturing, and engineering were separate cost sections in the

memorandum, and these categories describe the bulk of the variable

costs one would expect on a project like this. Both the material

16 Even if we were to simply disregard FMC’s affidavit, there is nothing inherent in the term “general and administrative” that automatically allows an inference that this category was a variable cost. Administrative costs may involve the work of salaried workers not subject to overtime—which over the short term is a fixed cost. And as a catch-all category G&A would seem a natural place to allocate a percentage of long term fixed costs—like rent and the salary of the CEO—for internal accounting purposes.

37 and manufacturing section contained percentage increases for

overhead. Thus after calculating the labor costs for a project,

the memorandum added a separate charge of 265% of labor costs for

manufacturing overhead. These overhead projections would seem to

be a logical place to find the full variable costs of the

project—including things like sales expenses.

Stearns nevertheless claims that G&A represents a variable

cost, not a profit margin or an internal allocation of fixed costs.

The difficulty with this assertion is that nothing supports it. We

have no attempt by Stearns to refute the credible evidence FMC has

put forth that removes G&A from the realm of variable costs. As

noted earlier, although Stearns’ expert mentioned the concept of

variable cost in passing, he erroneously concluded that it was

unnecessary to address it. He thus spent most of his argument on

a tangent that is irrelevant to our central inquiry. At no point

did the expert explain what G&A represented or state that it was a

variable cost. In its briefs, Stearns could only restate its

contention that G&A did not constitute profits. And, Stearns has

not offered a coherent explanation of what G&A represents if it

does not represent profits, let alone evidence that (or to what

extent) it is a variable cost to FMC.

Slightly more concrete evidence in favor of Stearns comes from

the testimony of Richard Pell. Mr. Pell, a former employee of FMC,

testified in his deposition that FMC’s marketing department and its

accountants maintained separate books. As an executive in

38 engineering, he reported that several times his department’s

estimate of its costs on projects were lowered by the marketing

department prior to a bid. The net result was that his department

experienced frequent cost overruns on projects trying to meet the

artificially low projection enshrined in the bids. It appears from

the record that these costs might be viewed as variable costs.

However, we are not concerned here with reviewing the

interoffice politics or internal cost allocations of FMC. Stearns

failed to develop Mr. Pell’s testimony or explain how manipulation

of the engineering variable cost could have rendered an entire

project—or even a discrete portion of one—below variable cost.

While one of Mr. Pell’s objections was that this kind of behavior

could lead to losing money on a project, he could not and did not

opine that any of the projects he worked on were on the whole below

variable cost. Stearns did not provide us with any evidence that

the understating of cost on the engineering projects in question

was severe enough to cancel out the ten to eighteen percent G&A

profits they generated. The risk memorandum that we have indicates

that engineering costs were a relatively minor cost compared to

materials and manufacturing.

The sections of Stearns’ expert testimony that even hinted at

FMC’s costs suffer from a similar defect. Dr. Eads testified that

on the Washington project FMC eliminated its inflation adjustment,

thus incurring the risk that the company’s costs would be higher

than anticipated for the sections of the project occurring in the

39 years following the initial bid. Assuming arguendo that the risk

that inflation will exceed the return FMC receives on its capital

over the life of the project is a variable cost, Dr. Eads was

silent as to the amount of the “cost” of this risk. He also

claimed that FMC’s bid on the maintenance section of the contract

was suspect because it was much lower than the analogous bid by

Stearns. Of course, the mere fact that a producer can or does

charge less than a competitor does not indicate below-cost pricing.

The opinion was silent as to what variable costs FMC could expect

to incur providing maintenance and how the bid was below them.

Because Stearns has failed to raise a genuine issue of

material fact regarding both its exclusionary conduct and predatory

pricing claims under the Sherman Act, summary judgment on these

claims must be affirmed. This result also mandates affirmation of

the summary judgment on Stearns’ Robinson-Patman and state law

claims, which are urged on appeal only derivatively of the Sherman

Act claims.

IV. Denial of Discovery motion.

Stearns contends that the district court erred in denying its

Rule 56(f) motion to suspend summary judgment pending the

completion of discovery. We review the denial of a Rule 56(f)

motion for abuse of discretion. See, e.g., Fontenot v. Upjohn

Company, 780 F.2d 1190, 1193 (5th Cir. 1986). Such motions are

generally favored, and should be liberally granted. See

40 International Shortstop, Inc. v. Rally’s Inc., 939 F.2d 1257, 1267

(5th Cir. 1991). However, to justify a continuance, the Rule 56(f)

motion must demonstrate 1) why the movant needs additional

discovery and 2) how the additional discovery will likely create a

genuine issue of material fact. Krim v. Banctexas Group, Inc., 989

F.2d 1435, 1442 (5th Cir. 1993). On appeal, we will not consider

justifications for granting a continuance that were not presented

with the original motion. See Solo Serve Corp. v. Westowne

Associates, 929 F.2d 160, 167 (5th Cir. 1992).

We begin our analysis by pointing out that this case had been

pending for over fifteen months prior to the district court’s entry

of final judgment in favor of FMC. The section 1 claim, on which

the district court had entered summary judgment earlier, required

almost identical factual support as the claims at issue here. The

record indicates that Stearns had reviewed over half a million FMC

documents and had also subpoenaed documents from twenty municipal

airport authorities. It had also conducted several depositions of

key FMC employees. While the district court’s scheduling order had

indicated that the final deadline for discovery was April 30, 1997,

the order clearly contemplated summary judgment prior to that date,

since its cutoff for the filing of such motions was almost two

months prior to the discovery cut-off. Stearns also delayed filing

its Rule 56(f) motion until the time its response to FMC’s summary

judgment motion was due, a deadline that the district court had

41 already extended at Stearns’ request.

The district court denied Stearns’ motion because it lacked

specificity in identifying the needed discovery. On review of the

record, we cannot say that this ruling constituted an abuse of

discretion. Stearns’ motion specifically requested a stay pending

the deposition of several FMC executives. The motion explains that

all of the proposed deponents were in a position of authority and

were connected to several documents relied on by Stearns. Stearns

argued that deposing these parties was necessary because “Stearns

expects that the depositions will provide evidence on a number of

topics, including FMC’s predatory and exclusionary conduct, FMC’s

strategies to avoid competitive bidding and price competition, the

relevant product and geographic markets in this case and the

barriers to enter this market.” If these depositions proved

fruitful, Stearns put the court on notice that it might pursue

additional depositions of bridge customers which would develop

“testimony on topics including the market, FMC’s predatory conduct,

and the injuries to Stearns and competition caused by FMC’s

predatory conduct.”

While Stearns’ motion indicated how the desired discovery was

in a quite general sense relevant to the case, the district court

did not abuse its discretion in finding that the motion lacked

needed specificity. The movant must be able to demonstrate how

postponement and additional discovery will allow him to defeat

summary judgment; it is not enough to “rely on vague assertions

42 that discovery will produce needed, but unspecified, facts.”

Washington v. Allstate Insurance Co., 901 F.2d 1281, 1285 (5th Cir.

1990). See also Krim, 989 F.2d at 1441 (must demonstrate how

discovery will lead to genuine issue of fact). Here, Stearns’

exclusionary conduct claims required either 1) a showing that the

conduct at issue could not be justified by FMC without reference to

its effect on its competitors or 2) a showing that the employees

and agents of consumers of bridges and those with influence on them

had somehow had the independence and integrity of their judgment

clouded by external forces so that we may not assume that their

decisions in FMC’s favor were intended by them to be in the best

interests of their employers. The motion fails to identify how

further discovery could prove either of these points. It does not

claim, for example, that further depositions will reveal that the

airlines and airport staff were bribed or otherwise driven by

anything other than their perceptions of the merits of the product

when they recommended FMC bridges or specifications to the

municipal authorities.

The motion is also unhelpful in detailing how the predatory

pricing claims could be saved from summary judgment. The crucial

issue of FMC’s variable costs is not even hinted at in the motion.

With regards to recoupment, while the motion does mention barriers

to entry, the predatory pricing claim required not only a showing

of such barriers, but also a demonstration that the extent and

43 duration of the alleged below-variable cost pricing was sufficient

to drive Stearns from the market. There is nothing specific in the

motion suggesting that evidence of more below-variable cost pricing

would have been revealed by additional discovery.

Stearns claims that the district court’s ruling was an abuse

of discretion because concurrent with the denial of its motion, the

court allowed FMC to exceed the ten deposition limit imposed by the

Federal Rules. These are separate issues. FMC indicated that the

requested depositions were necessary to preserve the testimony of

parties who would not be available to testify at trial. We cannot

say that the granting of an unrelated request transforms the

district court’s proper exercise of judgment into an abuse of

discretion.

V. Taxation of Costs

The district court awarded FMC costs under 28 U.S.C. § 1920

and Rule 54(d)(1). On appeal, Stearns does not challenge the award

itself, but rather attacks the inclusion of certain deposition and

photocopying costs. Costs related to the taking of depositions and

the copying of documents are allowed if the materials were

necessarily obtained for use in the case. This Court reviews a

lower court’s allowance of costs for clear abuse of discretion,

granting the lower court “great latitude in this determination.”

Fogleman v. ARAMCO, 920 F.2d 278, 285-86 (5th Cir. 1991).

The record indicates that the lower court exercised oversight

44 over FMC’s claimed costs, striking from its bill of costs items

such as mini-transcripts and computer copies. Stearns’ challenge

to the deposition costs is grounded in the fact that certain

depositions were not used in FMC’s summary judgment filings. It

thus claims that they were merely for general discovery and not

necessary to the case. But we have indicated that it is not

required that a deposition actually be introduced in evidence for

it to be necessary for a case—as long as there is a reasonable

expectation that the deposition may be used for trial preparation,

it may be included in costs. Id. at 285. We are satisfied that

the district court did not abuse its discretion in finding the

depositions in question could be expected to be used at trial.

Stearns’ challenge to FMC’s photocopying charges must also

fail. While we have indicated that multiple copies of relevant

documents may not be charged to an opponent, we have never held

that a district court may not award a litigant the cost of

preparing a single set of the documents in a case. See id. at 286.

The district court did not abuse its discretion in approving these

costs.

Conclusion

We find that summary judgment in favor of FMC on the Sherman

Act claims was warranted. Accordingly, we also affirm the summary

judgment on the derivative Robinson-Patman and state law claims.

We do not find that the district court abused its discretion in

45 denying Stearns’ Rule 56(f) continuance motion and in its

determination of costs.

For the reasons stated above, the judgment of the district

court is

AFFIRMED.