BAKES, Chief Justice.
Intermountain Gas Company appeals a judgment imposing treble damages against it for antitrust violations. In August, 1976, Intermountain Gas Company began selling and installing residential and commercial insulation. On October 1, 1976, Intermountain Gas created an internal non-utility division known as HomeGuard to operate the insulation business. HomeGuard first operated out of Boise, and in February, 1977, Twin Falls and Pocatello offices were established. However, there is also some evidence indicating that business was done in the Twin Falls and Pocatello areas prior to the establishment of separate offices. Competing insulators filed a class action against Intermountain Gas and its officers on January 19, 1977, alleging antitrust violations of I.C. §§ 48-101,
On June 1, 1977, Intermountain Gas transferred all of the equipment being used by HomeGuard to Intermountain Gas Company Properties (IGCP), a separate corporation and wholly owned subsidiary of Intermountain Gas, which thereafter assumed the operation of the insulation business under the HomeGuard name. Intermountain Gas financed IGCP's insulation business by transfers of cash and payment of bills. The boards of directors for both IGCP and Intermountain Gas were the same. The officers for IGCP were also officers of Intermountain Gas. In March, 1978, due to continuing losses claimed to be the result of high overhead, IGCP closed out the insulation business.
The trial was held during May, 1978. At the conclusion of plaintiffs' case in chief, plaintiffs were permitted to amend their complaint to join IGCP as a defendant in the action.
Damages were calculated as follows. The gross sales from the insulation business operated both by Intermountain Gas and IGCP beginning in August, 1976, and ending in March, 1978, were found to be $1,333,316.69. Since the trial court found that the insulation business had been operated at an overall loss of 5.33% totaling $75,137.43 during the entire period, the gross sales figure was increased by that sum to yield what the court apparently concluded should have been a break-even gross sales figure — $1,408,454.12, and that figure in turn was increased by 15%, apparently to obtain a gross sales figure which the insulation business would have achieved had it operated at a profit level which the court felt was reasonable. The resulting adjusted gross sales figure was $1,619,722.24. The court concluded that this figure represented the amount of business which the other insulators had been deprived due to the activities of Intermountain Gas. The court then proceeded to allocate that $1,619,722.24 among the other insulators, apparently on the theory that by violating the antitrust laws the defendant had either forfeited its right to be in the insulation business, or that but for the antitrust violations the defendant would not have obtained any business.
The formula used by the trial court consisted of the court dividing the adjusted gross sales figure, $1,619,722.24, among four submarket pools, i.e., Boise, Nampa, Twin Falls and Pocatello, based upon estimates by those plaintiff insulators who testified as to the proportion of southern Idaho insulation business done in each of those geographical areas. For example, one or more witnesses estimated that the Twin Falls area insulators had about 30% of southern Idaho business. The Twin Falls pool was therefore established as 30% of $1,619,722.24, or $485,916.66. The court then determined the share of each submarket that the testifying plaintiffs
On appeal, Intermountain Gas asserts that neither the law nor the evidence supports a finding of liability under I.C. §§ 48-101, -102, or -104.
The trial court found that "Intermountain conspired with its HomeGuard subsidiary in violation of sections 48-101 and 48-102, Idaho Code."
As a matter of law, no conspiracy was possible between Intermountain Gas and HomeGuard prior to June 1, 1977. HomeGuard was a part of Intermountain Gas, and not an independent entity capable of conspiracy. Precedent firmly establishes that an internal division of a corporation is
In addition, we cannot agree with respondents' assertion that the trial court found a conspiracy between Intermountain Gas and IGCP. Reference to "HomeGuard subsidiary" might be construed to mean IGCP after June 1, 1977, since HomeGuard was a part of IGCP after that time. However, we think the phrase is so ambiguous that to interpret it in such a manner would be mere speculation, particularly in view of the trial court's decision to impose judgment only against Intermountain Gas and not against IGCP. The absence of a judgment against IGCP in fact clearly points to the conclusion that the court found no conspiracy between Intermountain Gas and IGCP. It is generally held that since a conspiracy requires the agreement of at least two individuals, a finding of conspiracy against one defendant cannot be upheld where the other alleged conspirators are tried and absolved of participation in the same proceeding. See, e.g., Morrison v. California, 291 U.S. 82, 93, 54 S.Ct. 281, 286, 78 L.Ed. 664 (1934) (holding in criminal prosecution for conspiracy that "the conviction failing as to the one defendant must fail as to the other"); see generally Annot., 91 A.L.R.2d 700 (1963). In view of the applicable law and the record before us, the trial court's finding that Intermountain Gas conspired in violation of I.C. § 48-101, and -102 cannot be sustained.
B. Attempted monopoly.
First, the record discloses that the trial court made no finding that a monopoly had been created by the defendant, and indeed, the record would not have supported such a finding. The trial court did, however, conclude that Intermountain Gas attempted to create a monopoly in violation of I.C. § 48-101 and -102. I.C. § 48-101 addresses only conspiracies or other combinations in restraint of trade. Since we have already concluded that the record does not support a finding that a conspiracy existed, and there is no conclusion by the trial court that there existed any other combination in violation of I.C. § 48-101, we are concerned in this part only with I.C. § 48-102. The basic elements necessary to
1. Findings and Conclusions.
When the court sits as the trier of fact, it is charged with the duty of preparing findings of fact and conclusions of law in support of the decision which it reaches. I.R.C.P. 52(a). Compton v. Gilmore, 98 Idaho 190, 560 P.2d 861 (1977); Matheson v. Harris, 98 Idaho 758, 572 P.2d 861 (1977). The purpose behind requiring the court to "find the facts specially and state separately its conclusions of law thereon" is to afford the appellate court a clear understanding of the basis of the trial court's decision, so that it might be determined whether the trial court applied the proper law to the appropriate facts in reaching its ultimate judgment in the case. Perry Plumbing Co. v. Schuler, 96 Idaho 494, 497, 531 P.2d 584, 585 (1975). The absence of findings and conclusions may be disregarded by the appellate court only where the record is clear, and yields an obvious answer to the relevant question. Perry Plumbing Co. v. Schuler, supra; see, e.g., Clements v. Clements, 91 Idaho 732, 430 P.2d 98 (1967); Call v. Marler, 89 Idaho 120, 403 P.2d 588 (1965); Merrill v. Merrill, 83 Idaho 306, 362 P.2d 887 (1961). Absent such circumstances, the failure of the trial court to make findings of fact and conclusions of law concerning the material issues arising from the pleadings, upon which proof is offered, will necessitate a reversal of the judgment and a remand for additional findings and conclusions, unless such findings and conclusions would not affect the judgment entered, In the Matter of the Estate of Lewis, 97 Idaho 299, 302, 543 P.2d 852, 855 (1975); Perry Plumbing Co. v. Schuler, 96 Idaho at 497, 531 P.2d at 585; and, where there is no evidence which would support further findings material to the judgment, the judgment will simply be reversed, the plaintiff having failed to prove his claim.
In the present case, findings and conclusions concerning the issues of specific intent and dangerous probability were of critical importance since they formed the very essence of the attempted monopoly claim. These issues are complex and, therefore, demand careful analysis of both fact and law in their resolution. We are unable to say from the record before us whether the court below recognized or properly applied the elements of specific intent or dangerous probability in rendering its decision. However, our review of the record requires us to conclude that the evidence in support of these two elements is insufficient to prove a claim that Intermountain Gas was engaged in an attempt to monopolize, and
2. Specific Intent.
Generally, since there is rarely any direct evidence of specific intent to monopolize, its existence may be inferred from anti-competitive conduct of the defendant. See Annot., 27 A.L.R.Fed. 762, 775-85 (1976); Hawk, Attempts to Monopolize-Specific Intent as Antitrust's Ghost in the Machine, 58 Cornell L.Rev. 1121, 1137 (1973); 16B Business Organizations, Von Kalinowski, Antitrust Laws & Trade Regulations § 9.02 (1981). Certainly, any conduct that constitutes a restraint of trade under I.C. § 48-101 would provide a strong basis for inferring specific intent to monopolize. See William Inglis & Sons Baking Co. v. I.T.T. Continental Baking Co., 668 F.2d 1014, 1028 (9th Cir.1982); 27 Annot., A.L.R.Fed. 762 (1976). Nevertheless, a finding that a defendant has engaged in a particular predatory or illegal act, such as selling below cost,
In the present case, the trial court found that "[a]t times HomeGuard sold and installed insulation at prices below their cost of materials and labors... ." (Emphasis added.) However, as noted, supra at n. 15, selling below the simple cost of materials and labor does not establish predatory pricing. Nevertheless, notwithstanding the incorrect standard applied by the district court, the plaintiffs failed to elicit at trial evidence of HomeGuard's cost of doing business. Consequently, there is nothing in the record from which it can be determined that HomeGuard was pricing its sales and
While there was testimony that some of the bid prices upon which HomeGuard was successful in obtaining work were below the cost of materials and labor of some testifying plaintiffs, there was no evidence or finding that plaintiffs' costs were the same as defendant's costs. Without such a showing, evidence of plaintiffs' costs was irrelevant to a claim of predatory pricing by the defendant. Since there is no evidence to support a finding that HomeGuard engaged in predatory pricing, there can also be no inference of specific intent to monopolize on that basis.
The trial court also found that "Intermountain bought fiberglass insulation from Owens Corning in volume lots and then sold it back ... at a profit," and that "Intermountain contracted ... for McBride to haul insulation at ... about 50% of ICC freight rates." If these were predatory or illegal actions they would, of course, aid the trier of fact in drawing an inference of specific intent to monopolize. However, the findings without more do not show illegal or predatory conduct. Furthermore, they do not address the extent of these practices, and it does not appear from the record that the trial court considered them for the purpose of analyzing the question of specific intent to monopolize.
As to Intermountain's dealings with Owens Corning, neither buying in volume nor selling back at a profit is of itself illegal
In the present case, there is no evidence to indicate what measure of Owens Corning fiberglass insulation was available to insulators in the relevant market area. Thus, there is no means of determining whether Intermountain's volume purchases of fiberglass insulation threatened control of the product, thereby making that method of
As far as the McBride contract is concerned, the only evidence on the subject was McBride's testimony, and the testimony of Douglas Lyke, vice-president and general manager of HomeGuard. McBride testified that his company, McBride Insulation, was both a wholesale and a retail distributor of insulation, and that the insulation which it had delivered to Intermountain was from McBride's own stock. Lyke testified that initially HomeGuard purchased insulation from the manufacturer, Fibron, which HomeGuard in turn shipped by means of common carrier; but that later HomeGuard purchased the Fibron manufactured insulation from McBride Insulation, which sold from its own inventory and then delivered the insulation itself.
Private carriage of one's own stock-in-trade is not subject to I.C.C. regulation as long as the transporter's primary business is a non-carrier commercial enterprise, and the carriage is in bona fide furtherance of that primary business. 49 U.S.C. § 303 (1976) (repealed 1978, current version at 49 U.S.C. §§ 10102 & 10524); Red Ball Motor Freight, Inc. v. Shannon, 377 U.S. 311, 84 S.Ct. 1260, 12 L.Ed.2d 341 (1964); Lenoir Chair Co. Contract Carrier Application, 51 M.C.C. 65, 75 (1949), aff'd sub nom. Brooks Transp. Co. v. United States, 93 F.Supp. 517 (D.C.Va. 1950), aff'd 340 U.S. 925, 71 S.Ct. 501, 95 L.Ed. 668 (1951). The trial court in this case found that "Intermountain contracted with McBride Insulation Company, Heyburn, Idaho, for McBride to haul insulation from the west coast." (Emphasis added.) While not explicitly stated, the implication of that finding is that McBride was hauling insulation other than its own stock-in-trade. The evidence in no way supports such a finding. Rather, the evidence clearly indicates that McBride purchased the insulation from Fibron and was therefore hauling its own goods.
The question to be asked in this situation is whether McBride's carriage of the insulation to HomeGuard was in bona fide furtherance of its primary business of wholesale and retail sales of insulation, or whether the carriage was simply a "secondary enterprise with the purpose of profiting from the transportation performed." Red Ball Motor Freight, Inc. v. Shannon, 377 U.S. at 315, 84 S.Ct. at 1263. The court below made no finding on that question. Absent a finding that McBride's carriage of insulation was not in bona fide furtherance of its primary business, it cannot be said that HomeGuard and McBride Insulation were parties to an illegal contract. See, e.g., Taylor v. Interstate Commerce Comm'n, 209 F.2d 353 (9th Cir.1953), cert. denied 347 U.S. 952, 74 S.Ct. 677, 98 L.Ed. 1098 (1954). As a result, there is also no basis in the court's findings concerning the McBride contract which would support an inference of specific intent to monopolize on the part of Intermountain Gas. While this particular question could be remanded to the trial court for further findings, we decline to do so in view of our holding below that there existed no dangerous probability
3. Dangerous Probability.
In addressing a claim of attempted monopoly, the United States Supreme Court, in Swift & Co. v. United States, 196 U.S. 375, 396, 25 S.Ct. 276, 279, 49 L.Ed. 518 (1905), stated the following:
Thus, the rule has been firmly established that in order to prove an attempted monopoly, it is necessary to show not only specific intent to monopolize, but also a dangerous probability that the monopoly will be achieved. See Annot., 27 A.L.R.Fed. 762, 786-89 (1976) (citing profuse authority). To determine whether a defendant is dangerously close to obtaining monopoly power, it is necessary for the court to measure and evaluate the degree of market power which the defendant possesses. Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177, 86 S.Ct. 347, 350, 15 L.Ed.2d 247 (1965); see Annot. 27 A.L.R.Fed. 762, 789-90 (1976). There is, however, no set degree or percentage of market power which must be possessed in order for a defendant to be dangerously close to achieving a monopoly. Rather, in order to determine whether there is a dangerous probability that a monopoly will be achieved, the extent of market power must be evaluated in conjunction with prevailing market conditions, as well as the business policies and performance of the defendant. See 16B Business Organizations, Von Kalinowski, Antitrust Laws & Trade Regulations § 9.01 (1981). As a corollary, it can be stated that a dangerous probability of monopolization by a defendant with a given market power will be much less likely to exist in a very competitive market as opposed to a static market. See, e.g., Blair Foods, Inc. v. Ranchers Cotton Oil, 610 F.2d 665, 668 (9th Cir.1980); United States v. Empire Gas Corp., 537 F.2d 296, 305-08 (8th Cir.1976), cert. denied 429 U.S. 1122, 97 S.Ct. 1158, 51 L.Ed.2d 572 (1977); Yoder Bros., Inc. v. California-Florida Plant Corp., 537 F.2d 1347, 1368-69 (5th Cir.1976), cert. denied 429 U.S. 1094, 97 S.Ct. 1108, 51 L.Ed.2d 540 (1977); Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203, 207 (5th Cir.1969); General Communications Engineering, Inc. v. Motorola Communications & Electronics, Inc., 421 F.Supp. 274, 291-92 (N.D.Cal. 1976).
The record is clear that the product market involved in this case, i.e., sales and installation of insulation, was a highly competitive one, having low barriers to entry, and that under even a liberal assessment of HomeGuard's market power in the area, it was insufficient to support a finding that there existed a dangerous probability of monopolization. Appellants point out that the record discloses that HomeGuard had at most 24% of the insulation market, and the respondents have not challenged that figure. After reviewing the evidence, we agree that liberally construing the record, HomeGuard could have had not more than 24% of the insulation market
4. The Griffith case.
The respondents argue that under United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941,
In Griffith, four affiliated corporations operated movie theaters in several states. With minor exceptions, the movie theaters of the affiliated corporations did not compete with each other. In 62% of the towns in which these corporations operated, there was no competition. The corporations asserted their combined influence to obtain very favorable contracts with film distributors, including exclusive rights to first and second run movies in the particular area. The effect in those towns where there was competition was that competitors were foreclosed from competing. Thus, the defendants employed their original monopoly power to obtain control in the film distribution market and then funneled the benefits back to strengthen their theater monopoly.
In reviewing the Griffith case, two points should be noted. First, the Griffith defendants used their monopoly power at the theater level to acquire advantage or control within the distribution chain of the relevant theater product, i.e., films. Second, the defendants were successful in achieving a restraint of trade, i.e., exclusive film rights, within an additional market of that same film distribution chain. In first analyzing the situation, the Supreme Court said the following:
Respondents place great weight on this language. However, immediately thereafter the Court went on to state:
Thus, it is clear that the Court recognized the necessity of showing specific intent in attempted monopoly cases.
The Court then further stated that the trial court found no intent or purpose to restrain trade or to monopolize, and thus the question before it was "whether a necessary and direct result of the master agreements was the restraining or monopolizing of trade within the meaning of the Sherman Act." 334 U.S. at 106, 68 S.Ct. at 945 (emphasis added). In effect, the issue was whether the requirement of specific intent was either unnecessary or satisfied by the detrimental results obtained by the defendants. Although it appears clear from the opinion that there was at least a restraint of trade, there was no statement as to whether the actions of the defendants accomplished a monopoly in the additional market of film distribution. The Court, however, did make the following conclusion:
Assuming that the Court meant only to find a restraint of trade rather than an actual monopoly in the additional market of film distribution, it appears that the Supreme Court considered the attempted monopolization elements of specific intent and dangerous probability to have been met under the particular circumstances.
This conclusion is also supported by the more recent decision in Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973), where the United States Supreme Court applied Griffith to uphold a § 2 violation of attempted monopoly. Otter Tail was a public utility selling electricity at both wholesale and retail levels. Several communities had endeavored to establish their own electric power distribution systems. However, Otter Tail refused to sell wholesale electric power to cities that it had previously served at the retail level. Otter Tail also refused to permit the use of its transmission lines to move (or wheel) electric power purchased from other bulk distributors of electric power to the cities in question.
Initially, the Court held that while Otter Tail's legal monopoly in the electric power market constituted an exception to the application of the antitrust laws, misuse of that monopoly power was subject to antitrust regulation. Then, in upholding the § 2 violation, the Court stated the following:
The Court mentioned neither specific intent nor dangerous probability. It merely gave citation to Griffith. It seems clear, however, that the same factors involved in Griffith were also applicable to Otter Tail: (1) the defendant possessed monopoly power which (2) was used to accomplish a restraint on trade, i.e., refusal to deal, and (3) the restraint was employed within the distribution chain of the product market, i.e., electric power. See also Hawk, Attempts to Monopolize — Specific Intent as Antitrust Ghost in the Machine, 58 Corn.L.Rev. 1121, 1156 (1973).
In applying these criteria to the present case, we conclude that the Griffith standard is not applicable. The first factor, monopoly power, is of course present as in Otter Tail, due to Intermountain's legal monopoly in the product market of natural gas. However, as discussed earlier, the record in this case is lacking in both proof and findings supporting an accomplished restraint of trade. Finally, unlike the situations in Griffith and Otter Tail, HomeGuard's insulation business was not an activity in a market which was part of the same distribution
The respondent further argues in essence that Intermountain's legal monopoly as a distributor of natural gas gives it great financial leverage which automatically subjects it to the Griffith standards.
C. I.C. § 48-104.
The trial court concluded that "Intermountain violated section 48-104, Idaho Code, by selling at a loss, by cornering the output of Owens Corning, and by its contract with McBride Trucking." As to cornering the market, we have previously determined that the evidence is insufficient to support such a finding. Similarly, as also discussed earlier, the court's findings do not support a conclusion that the McBride contract was illegal. See Part II(B)(2), supra. That leaves the trial court's conclusion that Intermountain sold at a loss in violation of I.C. § 48-104.
Of particular application here is the language of I.C. § 48-104 which prohibits the selling of "any article or product at less than its fair market value, or at a less price than it is accustomed to demand or receive therefor in any other place under like conditions." (Emphasis added.) The clause plainly applies only to the sale of an "article or product." The sale of services is not included within the statutory language. In the present case, plaintiff sought to apply this prohibition to the "sales and installations of insulation." (Emphasis added.) Similarly, the court found that "[a]t times HomeGuard sold and installed insulation at prices below their cost of materials and labor." (Emphasis added.) The evidence in
Furthermore, I.C. § 48-104 prohibits the selling of "any article or product at less than its fair market value," not "at a loss", as expressed by the trial court. Market value has been defined as the price that a reasonably prudent purchaser would pay for the relevant product under the market conditions prevailing at the period of time in question. State ex rel. Moore v. Bastian, 97 Idaho 444, 448, 546 P.2d 399, 403 (1976). Fair market value may, of course, be less than cost, as recent traders in gold and silver boullion can attest. Thus, even assuming that HomeGuard was guilty of "selling at a loss," such a finding would not constitute a violation of the provisions of I.C. § 48-104 which prohibits the selling of "any article or product at less than its fair market value... ."
While "selling at a loss" might be one factor for a court to consider in determining whether or not specific intent exists to drive a competitor out of business, as in the case of an attempted monopoly under I.C. § 48-102,
A. Standard of Proof.
There are three essential elements in every private antitrust action: (1) a violation of the antitrust law, (2) direct injury to the plaintiff from such violations, and (3) damages sustained by the plaintiff. Therefore, a finding of a violation by itself does not result in liability. Windham v. American Brands, Inc., 565 F.2d 59, 65 (4th Cir.1977), cert. denied 435 U.S. 968, 98 S.Ct. 1605, 56 L.Ed.2d 58 (1978). While the fact of injury must be established with reasonable certainty,
Based upon the standards set out in the foregoing authorities, there was no justification in the present case for the trial court's determination that the gross revenues of the defendant Intermountain Gas Company and IGCP provide a reasonable foundation for calculating the lost profits of plaintiffs. Such a method of figuring damages assumes, without any support in the record, that the HomeGuard operation would not have won any portion of the insulation market absent antitrust violations. Furthermore, it assumes that the plaintiffs had the capacity to assimilate all of the business which HomeGuard performed, and that plaintiffs would have won that business over other insulators who chose not to participate in this action. There is simply no evidence in the record to demonstrate a relationship between HomeGuard's sales figures and plaintiffs' damages so as to support a conclusion that HomeGuard's income was the equivalent of plaintiffs' lost profits.
Nevertheless, even first assuming such a method of proving damages is permissible in this case, still there were fundamental errors in its application. Foremost, is the trial court's failure to distinguish the revenue of Intermountain Gas Company prior to June 1, 1977, from the revenue of IGCP after June 1, 1977. No finding was made that IGCP was merely the alter ego of Intermountain Gas, and therefore not a separate entity,
Turning to the use of defendant's sales figures as a basis for calculating plaintiffs' lost profits, only two cases appear to have permitted the use of the defendant's sales figures in determining damages to the plaintiff due to defendant's antitrust violations. In the first case, Cherokee Laboratories, Inc. v. Rotary Drilling Services, Inc., 383 F.2d 97 (5th Cir.1967), the Court permitted a projection of lost profits using the defendant's total sales figures. However, later in Household Goods Carriers Bureau v. Terrell, 417 F.2d 47, 53 (5th Cir.1969), that same court refused to permit that method of proof of damages, holding that, "Cherokee does not authorize plaintiff to assume defendant's sales figures without other evidence in support [of] such a proposition.
It is clear that the present case does not involve a defendant which has replaced its only competitor as the sole distributor in the market. In fact, the situations in Cherokee and in the case at bar could hardly be more distinguishable. The record in the present case discloses that the insulation market during the relevant time period was rapidly expanding and very competitive due to the increased cost of heating resulting from the energy crisis. It also reveals that HomeGuard was merely one of a number of new competitors entering the insulation market and that even with HomeGuard's entry into the market the sales of most insulators continued to increase. The evidence indicates that HomeGuard lost many of its own bids to competitors and that plaintiffs lost jobs to competitors other than HomeGuard.
In the second case, Rangen, Inc. v. Sterling Nelson & Sons, 351 F.2d 851 (9th Cir.1965), cert. denied 383 U.S. 936, 86 S.Ct. 1067, 15 L.Ed.2d 853 (1966), which is relied on by respondents, the plaintiff, Sterling Nelson, was found to have been excluded for four years from participation in competitive bidding to supply fish feed to the State of Idaho due to the defendant's bribing of a public official in violation of Section 2(c) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(c) (1964). The trial court found from the evidence presented that during the relevant four year period in which Rangen had obtained the Idaho contracts for fish feed, three other competitors, including Sterling Nelson, had also bid for the Idaho business. It was also found that subsequent to discovery of the bribery, and its elimination, Sterling Nelson won the next bid. On the basis of that evidence, the court concluded that Sterling Nelson would have obtained 25% of the Idaho business obtained by Rangen, and was entitled to damages based upon 25% of Rangen's sales of fish feed to the State of Idaho during that four year period. Sterling Nelson was not awarded damages based upon Rangen's total sale of fish feed to all of its customers, but rather only on the basis of the specific account which it identified as being lost through Rangen's violations. Thus, Rangen does not justify the appropriation of HomeGuard's total sale figures as a basis for calculating plaintiffs' damages.
Notwithstanding the use of an improper measure of lost profits by the trial court, the plaintiffs have also failed to provide an evidentiary foundation to enable a reasonable determination of damages under any legally acceptable measure. Herman Schwabe, Inc. v. United Shoe Machinery Co., 297 F.2d 906 (2d Cir.1962), cert. denied 369 U.S. 865, 82 S.Ct. 1031, 8 L.Ed.2d 85 (1962). To meet the minimum requirement of proof in market exclusion cases in which lost profits are sought, the plaintiff must normally produce evidence falling into one of the following categories: (1) comparison of plaintiff's performance before and after the wrongful conduct under otherwise similar conditions, Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 66 S.Ct. 574, 90 L.Ed. 652 (1947); Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 376-78, 47 S.Ct. 400, 404-05, 71 L.Ed. 684 (1927); Pacific Coast Agricultural Export Ass'n v. Sunkist Growers, Inc., 526 F.2d 1196, 1206-07 (9th Cir.1975), cert. denied 425 U.S. 959, 96 S.Ct. 1741, 48 L.Ed.2d 204 (1976); (2) comparison of performance of plaintiff's business, with comparable business in an unrestrained market otherwise comparable to plaintiff's market, Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969); Bigelow v. RKO Radio Pictures, Inc., supra; Richfield Oil Corp. v. Karseal Corp., 271 F.2d 709, 714-15 (9th Cir.1959), cert. denied 361 U.S. 961, 80 S.Ct. 590, 4 L.Ed.2d 543 (1960); or (3) loss of specific business or customers, Herman Schwabe, Inc. v. United Shoe Machinery Corp., 297 F.2d 906, 913 (2d Cir.1962), cert. denied 369 U.S. 865, 82 S.Ct. 1031, 8 L.Ed.2d 85 (1962); Rangen v. Sterling Nelson & Sons, supra; Murphy Tugboat Co. v. Ship Owners and Merchants Towboat Co., 467 F.Supp. 841, 863 (N.D.Cal. 1979), aff'd 658 F.2d 1256 (9th Cir.1981).
The record reflects no effort on the part of the plaintiffs to prove damages under any of these or comparable theories. In fact, none of the plaintiffs so much as made an estimate, reasoned or unreasoned, as to how much money they lost due to the alleged antitrust violations by the defendant. The testimony of Ron Pope, a Twin Falls insulator, is representative and graphically illustrates the lack of evidence on the subject of damages:
Another Twin Falls insulator, Gene Hamilton, similarly testified as follows:
Additionally, one of the named representatives of the class, Bud Moore, failed to testify or present any evidence at all. In sum, there is nothing in the record, including the exhibits, to provide a reasonable foundation for calculating lost profits of the plaintiffs. Because of that failure in proof of damages, judgment should have been entered in favor of the appellant.
Plaintiffs sought certification as a class action under I.R.C.P. 23(b)(1)(B) and (b)(3)
The one thing that is evident from the district court's certification order is that class members were given the opportunity to opt out of the suit. Since the right to opt out attaches only to class members involved in a Rule 23(b)(3) class action, and not to class members in 23(b)(1) or (b)(2) actions, see I.R.C.P. 23(c)(2) and (c)(3); see also 3B Moore's Federal Practice ¶ 23.55 (1980), it can only be assumed in this case that class action certification was under Rule 23(b)(3). However, the circumstances of this case make it an improper subject for class action status under the requirements of I.R.C.P. 23(b)(3).
I.R.C.P. 23(b)(3) premises certification upon findings that "the questions of law or fact common to the class members predominate over any questions involving individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." In the present case, the common questions of law and fact focus upon whether the defendant committed antitrust violations. However, proof of an antitrust violation is only one facet of an action for civil damages under I.C. § 48-114. That section predicates civil liability upon a showing that a person has been "injured in his business or property by any other person or persons by reason of anything forbidden or declared to be unlawful by this chapter." Consequently, not only proof of an antitrust violation is required for a plaintiff to prevail under I.C. § 48-114, but also proof of individual injury, proximate cause, and damages. As was stated in Windham v. American Brands, Inc., 565 F.2d 59, 66 (4th Cir.1977), cert. denied 435 U.S. 968, 98 S.Ct. 1605, 56 L.Ed.2d 58 (1978), "While a [private antitrust] case may present a common question of violation, the issues of injury and damage remain the critical issues in such a case and are always strictly individualized."
Certainly where the facts of injury and damages break down into what may be characterized as "virtually a mechanical task, capable of mathematical or formula calculation," the task of proving individual injury and damage is simplified, with the result that common questions of antitrust violations will predominate, and a class action may be the superior method of adjudicating the claims. Windham v. American Brands, Inc., supra; see, e.g., Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir.1975), cert. denied 429 U.S. 816, 97 S.Ct. 57, 50 L.Ed.2d 75 (1976).
Thus, where the issues of injury and damages do not lend themselves to such mechanical
In the present case the claims of plaintiffs are not susceptible of proof by any set method of mathematical or formula calculation. Rather, each plaintiff's claim of lost profits rests in fact upon highly individual traits of each business. There are many factors, particularly in this case, which would have a bearing upon each plaintiff's claim of injury and lost profits, including for example, volume of business, overhead, geographical area of competition, types of insulation work performed, and the character of other competition in the area. Such factors, plus the condition of rapid expansion in the insulation market itself, all point to the conclusion that proper proof of injury and damages for each plaintiff in this case would be highly individualized and would require separate proceedings for fair adjudication. Furthermore, the problem is exacerbated in the instant case due to the allegation of multiple antitrust violations. See Windham v. American Brands, Inc., 565 F.2d at 67. For example, it is clear that the claims of selling below cost and of cornering the market in fiberglass are distinct, requiring different proof of violation, as well as injury and damages, and that such claims may not necessarily be common to all of the potential class members. In addition, the efficiency of a common trial on liability is questionable in this case since much of the evidence of antitrust violations would have to be repeated in each mini-trial on injury and damages for the purpose of establishing individual proximate cause. It is therefore our conclusion that individual questions predominate over those common to the potential class members, and that a class action is not superior to other available methods for the fair and efficient adjudication of the claims in this case.
Consequently, in view of our conclusion that this case was not properly certified as a class action, only those plaintiffs who were designated class representatives or those who have presented evidence and failed to prove their case below, see n. 6, supra, are bound by this decision.
McFADDEN and DONALDSON, JJ., concur.
SHEPARD, J., dissents without opinion.
BISTLINE, Justice, dissenting.
The district court found that "Homeguard was wholly financed by Intermountain initially out of its General Fund which included retained earnings from the utility function and from which dividends to Intermountain stockholders were to be paid." In other words, Intermountain was using state sanctioned, essentially guaranteed monopoly dollars to compete in an unregulated
Although Southern Blowpipe was decided in 1966, the same paucity of case law on this precise issue persists today.
The majority states that the "leverage" given IGCP by its use of monopoly dollars "is not uniquely held by monopolists," and concludes that such leverage "does not necessarily present a greater danger than would the use of the same financial power by a non-monopolist." The majority here confuses the issue by assuming that the danger is posed only by the amount of money used as leverage. The problem, however, stems not only from the amount of money, but also from its source. If regulated utilities, which have a virtually guaranteed income, are allowed to use ratepayer dollars
The fact that a utility is not allowed to include non-utility costs in the costs used to calculate its allowable rate of return does not mean that rates will not ultimately be affected by utility speculation in secondary markets. A utility certainly has discretion as to how it allocates retained earnings,
As one commentator explains, "[a] Griffith[
Although I would hold as a matter of law that regulated utilities may not use ratepayer dollars to directly compete in secondary markets, I will assume for the sake of argument that such competition is permissible so long as no attempt at monopoly is made in the secondary market. The monopoly's preferred position in the primary market then affects only the quantum of proof required to show an attempt.
As the majority notes at one point in its opinion, a predatory pricing act such as selling below cost may form the basis for an inference of specific intent in an attempt to monopolize. The trial court specifically found that HomeGuard (IGCP) was selling below cost, yet the majority refuses to accept this finding, stating that evidence of the plaintiffs' costs is insufficient. According to the majority, evidence of the defendants' costs is the only method of proving that a defendant sold below cost. It is news to me, and may surprise some members of the bench and bar, that trial courts may not rely on circumstantial evidence to find a particular fact — which is clearly what the court did in this case in regard to the question of whether the defendant was selling below cost. The cost of materials and labor to the defendant may have been less than the cost of materials and labor to the plaintiffs, but once the plaintiffs put on their case this was a matter of proof for the defendant. In the absence of such proof, the trial court was free to conclude that defendant's costs would roughly approximate the costs of plaintiffs for the same items. It may or may not surprise the bench and bar to find the Court drawing different inferences from the evidence presented than did the trial court, despite the occasionally invoked rule concerning deference to the findings of trial courts on factual matters. See Dalton v. South Fork of Coeur d'Alene River Sewer District, 101 Idaho 833, 623 P.2d 141 (1980); Javernick v. Smith, 101 Idaho 104, 609 P.2d 171 (1980); Higginson v. Westergard, 100 Idaho 687, 604 P.2d 51 (1979); Buckalew v. City of Grangeville, 100 Idaho 460, 600 P.2d 136 (1979); Roemer v. Green Pastures Farms, Inc., 97 Idaho 591, 548 P.2d 857 (1976); Prescott v. Prescott, 97 Idaho 257, 542 P.2d 1176 (1975); Comish v. Smith, 97 Idaho 89, 540 P.2d 274 (1975); Pierson v. Sewell, 97 Idaho 38, 539 P.2d 590 (1975); Planting v. Board of County Commissioners, 95 Idaho 484, 511 P.2d 301 (1973), Hollandsworth v. Cottonwood Elevator Co., 95 Idaho 468, 511 P.2d 285 (1973); Johnson v. Joint School District No. 60, Bingham County, 95 Idaho 317,
Although the majority downplays the significance of the trial court's finding on this particular predatory pricing practice because of the lack of evidence on or analysis of defendant's inventory and dates of purchase, this does not preclude the trial court from finding as it did. The defendant's inventory and dates of acquisition and sale might be relevant if, for example, there were a possibility that the defendant had overstocked and was selling below cost merely to reduce inventory. The short length of time in which defendant competed in this particular market, however, makes such a possibility extremely unlikely. Furthermore, it is apparent that the trial court included both product and installation costs in determining whether IGCP sold below cost. Labor is unquestionably a "cost" in the insulation business, since installation is frequently tied to the product. Thus, even accepting the majority's unreasonably narrow definition of "product" as used in I.C. § 48-104, the fact that IGCP's overall retail business, which included installation services, operated at a loss, at a minimum supports the court's finding that IGCP sold below "cost." As to whether the record will support an inference that a dangerous probability of monopoly occurred, I refer again to Professor Hawk.
At a minimum, the degree of proof of "dangerous probability" required to show an attempt by an existing monopoly to capture a secondary market should be less than the degree required to prove attempt by a non-monopoly. The record provides such proof in this case. To my mind there will always be a dangerous probability that an existing, state-sanctioned monopoly will succeed in an attempted monopolization (providing an attempt is otherwise shown), simply by virtue of its preferred position in its primary market. See, e.g., Union Carbide & Carbon Corp. v. Nisley, 300 F.2d 561, 568 (10th Cir.1962), cert. dismissed, 371 U.S. 801, 83 S.Ct. 13, 9 L.Ed.2d 46.
The majority's analysis of the damage award will seem inconsistent to some. The majority rejects the trial court's findings on liability on the theory that no conspiracy could have existed between Intermountain Gas and IGPC because they were so closely linked, but then criticizes the trial court because of its "failure to distinguish the revenue of Intermountain Gas Company prior to June 1, 1977, from the revenue of IGCP after June 1, 1977. No finding was made that IGCP was merely the alter ego of Intermountain Gas... ." In any event, it is the use of monopoly funds to compete that causes the damage in this case, and there is no contention that IGCP did not continue to use Intermountain's monopoly funds after it was separately incorporated.
The 15% profit figure supplied by the trial court is very reasonable — even conservative for the retail business, and the majority cites no cases which hold that incorporating a reasonable percentage profit based on known and proven sales figures is improper. The majority's citation to Household Goods Carriers' Bureau v. Terrell, 417 F.2d 47 (5th Cir.1969), is inapposite. No sales figure were proven there — the amount of sales was simply guesstimated. In this case the record does disclose actual sales, and Household Carriers' does not bar application of a reasonable profit percentage to those figures in the calculation of damages. As the majority notes but then ignores, "[w]hile the fact of injury must be established with reasonable certainty, a less rigid standard of proof is imposed with respect to the amount of damage caused by an antitrust violation, because economic harm in such actions is difficult to quantify." (Footnote omitted.)
Since Intermountain Gas qua Homeguard qua IGCP was improperly in the insulation business to begin with, using total sales as a method of calculating plaintiffs' lost profits certainly was reasonable. Any inquiry into the share of the market which Intermountain would have captured in the absence of forbidden practices is therefore unnecessary. And since the majority's primary objection to the class certification under I.R.C.P. 23(b)(3) is the speculative nature of individual damages, once it is seen that the
Submarket Lost Net Profits Trebled DamagesBoise (1) $ 18,039.66 $ 54,118.98 Nampa (2) 44,279.15 132,837.45 Twin Falls (4) 65,598.75 196,796.25 Pocatello (3) 54,665.62 163,996.86 ___________ ___________ Total $182,583.18 $547,794.54
Plus costs and attorney fees in the amount of $51,000.
It should be noted that none of the plaintiff witnesses were insulators from the Idaho Falls area.
Joseph Becker, a Pocatello insulator, testified as follows:
Dale Chappell, a Nampa insulator, testified as follows:
"(1) the prosecution of separate actions by or against individual members of the class would create a risk of
"(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or... .
(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action."