Justia Federal District Court Opinions

Florida Rock Industries ("FRI") appeals from an adverse judgment entered against it in a treble damages action under Sec. 4 of the Clayton Act, 15 U.S.C.A. Sec. 15 (West Supp.1983),¹ and Sec. 1 of the Sherman Act, 15 U.S.C.A. Sec. 1 (West Supp.1983).² A jury found for the plaintiff, Construction Aggregate Transport, Inc. ("CAT"), and awarded damages of $300,000, which the trial court trebled. We reverse and remand for a new trial because the trial court erred in instructing the jury on a theory of per se illegality.³

Construction Aggregate Transport, Inc., a Florida corporation engaged in the hauling of sand, gravel, and other rock material ("aggregate") in Central and Southern Florida, was the brainchild of one, Al Hallowell, who had worked for many years in the trucking business in Florida. The idea upon which CAT was based was a novel one for the aggregate⁴ hauling business in Florida, and involved the use of double trailers. By using these double trailers, which required only one tractor and one driver, rather than the single trailers which were the norm in the aggregate hauling industry, a substantial reduction in costs could be realized.

Hallowell also recognized that most truckers of bulk aggregate use one-way hauls; after delivering their shipment of bulk aggregate they return with an empty load to the aggregate supplier. Obviously, a business which relied on two-way hauling could maximize the use of its equipment and reduce the cost of transporting each trailer of aggregate.⁵

The Florida aggregate industry historically has been geographically divided into two separate markets. Each of these markets is supplied primarily by rock mined within the particular market. One market centers around Brooksville, near Orlando in Central Florida. Aggregate produced in the Brooksville-Orlando market generally constitutes the primary supply for asphalt producers in the Central Florida area. The defendant, Florida Rock Industries, is one of the largest producers of aggregate in the state of Florida, and is one of the primary suppliers in the Brooksville-Orlando market area.⁶ The other geographical aggregate market in the state of Florida centers around the Miami and West Palm Beach area. Thus, the primary sources of aggregate materials used in the production of asphalt in Florida are the rock mines in the Miami market and the Brooksville-Orlando market. Finally, another important facet of the Brooksville-Orlando market is the production of sand materials, also used in the construction industry. Much of this sand is produced at Clermont, due east of Orlando.

At the time that Hallowell conceived the idea of using double trailers, a strong demand existed in the Miami market for the sand produced outside of Clermont in the Brooksville-Orlando market. See Record at 1066. Further, there was a strong demand in the Brooksville-Orlando market for the rock being produced by the Miami mines. According to testimony at trial, no existing hauling outfit had attempted to take advantage of the separation of these two markets. Hallowell therefore determined that the time was ripe for an aggregate trucking outfit which could meet the demand for sand in the Miami and West Palm Beach area and also introduce Miami rock into the Brooksville-Orlando area.

Miami and Orlando lie at opposite ends of a 200-mile north-south stretch of the Florida Turnpike. Hallowell's plan was to pick up sand in the Clermont area west of Orlando and truck it down to the West Palm Beach area alongside the Turnpike. After delivering the sand to his customers in West Palm Beach, he would then drive to the stone mines in the Miami area, load his double trailers with aggregate material and return to the Orlando area, delivering the Miami aggregate to asphalt producers in and around Orlando. Under this plan, CAT's truckers would engage only in two-way hauls. Further efficiencies would be realized by using the double trailers, which could carry twice the normal load.⁷

In the summer of 1977, Hallowell began efforts to implement this plan. First, he persuaded a friend, Dr. Ward, to contribute capital needed for starting up the operation. Dr. Ward contributed $15,000 and, after Mr. Hallowell's own contribution, CAT was able to begin with operating capital of $35,000.⁸

Next Hallowell set about designing the necessary trailers and securing their manufacture. Of critical importance to our narrative is Hallowell's choice of trailer. Rather than selecting the rear dump trailers that were generally used in the bulk aggregate hauling business in Central Florida, Hallowell chose to design his trucking operation around the use of bottom dump or "hopper" trailers. A rear dump trailer is emptied of its contents by tilting the entire trailer unit on a horizontal axis, thus allowing the aggregate to slide out the back door. The result is a relatively concentrated pile of aggregate. Record at 1059. With the hopper trailer, material is emptied through the bottom of the trailer by means of gull-wing type doors. If the driver is careful when unloading, the result will be long, narrow, and neat "windrows" of aggregate material. Generally, regardless of the type of trailer used the purchaser of the aggregate will have to use a "payloader" or "front end loader" to move the deposited material into larger stockpiles. It is possible, however, that this job may take longer and require greater effort when the material has been deposited in windrows by a hopper trailer.⁹

Hallowell next took his design to Walter Harkala of Hardey Manufacturing. Harkala agreed that there was merit to Hallowell's business plan, and after working out the financial details Hardey Manufacturing began to construct the necessary trailers. The manufacturing process proved to be a slow one. Because of the unique design features of the new trailers, in particular the mechanism for opening the gull-wing doors, production of the first set of trailers took approximately six months. Ultimately, Hardey would manufacture three sets of trailers, or six trailers in all. Harkala testified that eventually Hardey would have been able to manufacture 12 to 18 trailers per year. Record at 1042. This capability coincided with Hallowell's goal of putting a fleet of twenty trailers on the Turnpike, capable of delivering 1,000 tons of aggregate a day. Record at 1274.

While the trailers were being manufactured, Hallowell was taking care of other business. At that time, the state of Florida allowed the use of double trailers only on the Turnpike, not on any other state or federal highways. This complicated Hallowell's round trip concept, and necessitated the purchase or construction of a "staging area" at each end of the Turnpike. At the end of each haul, CAT would have to pull off the Turnpike into the staging area, whereupon the two trailers would be unhitched. A tractor would then haul each trailer separately to its delivery destination, and then back to the staging area where it would be exchanged for the other trailer. The same procedure would then be carried out in order to load the two trailers. After loading and rehitching, the double trailer unit would begin its return journey up the Turnpike.¹⁰

Next, Hallowell set about obtaining a Certificate of Public Necessity and Convenience from the Florida Public Service Commission. After failing to secure a 10-county Certificate from a friend, he arranged to purchase a statewide Certificate from the Osceola Construction Company in Pensacola for $25,000. After purchasing two tractors from International Harvester¹¹ and receiving the first set of trailers from Hardey Manufacturing, Hallowell secured approval and licensing from the Turnpike Authority for his equipment and his drivers. By October of 1978, CAT was ready to begin operations.

Because the viability of CAT depended upon its ability to haul to both ends of the Florida Turnpike, the hours of operation of its customers and suppliers were extremely important. In particular, it was critical to CAT's success that there be a customer for Miami rock in the Orlando area that would be able to take deliveries 24 hours a day. Only with the unrestricted delivery schedule at the north end of the "circuit" could CAT hope to maximize the use of two-way hauling and operate at a profit. See Record at 1014-15, 1298-300, 1491-92.

By November of 1978, CAT had lined up customers at both ends of the Turnpike. Typically, CAT would begin a two-way haul by loading its trailers with sand at the north end of the trip. This sand would be supplied by a mine in the Clermont area which would be open 24 hours a day for loading. Once the loaded trailers had been individually shuttled to the staging area on the Turnpike they would be hitched together for the journey south. After a three-hour journey, the sand would be delivered to construction outfits in the West Palm Beach area. CAT's first customer for Clermont sand was Mack Concrete. Later CAT changed over to Rinker Materials Corporation ("Rinker") because of more advantageous delivery hours.

Ideally, CAT would arrive at the Rinker Lake Worth plant in West Palm Beach just as it opened at 7 a.m. After dumping the sand at Rinker, each empty trailer would be shuttled back out to the Turnpike and hitched together for the trip to Rinker's stone mines in the Miami area.¹² Because Rinker's Miami stone operation generally closed its gates at 3:30 p.m., CAT would aim for a noon arrival at the Miami staging area. Here, once again each trailer would be unhitched and shuttled to the Rinker mine one at a time. Loading the trailers in this manner would take approximately two hours, allowing CAT to begin the journey north at approximately 2 p.m. in the afternoon. Because of the distance involved, as well as the time that would be lost in the shuttle maneuver at the staging area at the north end of the Turnpike, rarely could CAT arrive at its north delivery point for Miami rock earlier than 8 p.m. Hence the necessity for a customer at the north end with 24-hour delivery. See Record at 1281-83, 1491-92.

From November of 1978 until mid-August of 1979, CAT's northern delivery point customer for aggregate rock¹³ transported from Rinker in Miami was Southern Paving Co., which was located just south of Orlando on the Florida Turnpike. Southern Paving's Orlando facilities were open on a 24-hour basis. In June of 1979, CAT received its second shipment of double trailers from Hardey, and began using them in its deliveries between Miami and Orlando. On August 10, however, CAT was terminated by Southern Paving, and had to seek another customer on the northern end of its route which would be open on a 24-hour basis.¹⁴

CAT's first attempts to secure other purchasers of stone in the Orlando area proved fruitless. By late August, however, CAT was able to obtain the business of a customer which was open 24 hours a day, and on August 29 CAT began hauling rock from Rinker in Miami to Basic Asphalt Company ("Basic") in Orlando.

When negotiating with Basic, Hallowell had dealt directly with Scott Carlson, Basic's vice president. According to testimony at trial, Hallowell offered Carlson a shipping price for Miami stone that was $.71 per ton less than what Carlson was paying other trucking outfits for the delivery of stone produced in the Orlando area. According to Hallowell, he and Carlson reached "an understanding or an agreement" that CAT would haul 5,000 tons of rock from Miami--approximately two and one-half months of work. Record at 1290.¹⁵ CAT began hauling rock to Basic almost immediately and continued doing so until CAT was terminated on September 21, 1979.¹⁶ The events surrounding this termination by Basic form the basis for the present controversy.

According to Hallowell, Scott Carlson phoned his home on a Wednesday evening, when he was not home. Upon returning Carlson's call, Hallowell was told not to haul any more material to Basic. Hallowell testified that Carlson said:

Well, I got word from Florida Rock that they don't want us to get any more material out of Miami.... Al, these people came and told me that if I got any more rock out of Miami, they were damn sure going to shut off allocation from Brooksville.¹⁷

Record at 1306. Hallowell then called Ted Baker, the president of FRI and an old friend, who said that he would look into the matter. On Saturday of that week, Baker called Hallowell back and told him that the threat had been a mistake and that Basic had complained about the way that CAT was delivering the aggregate.

According to officials for Basic and FRI, coercion was not involved in the termination of CAT. Rather, Hallowell's choice of hopper trailers instead of rear dump trailers resulted in the inadvertent mixing of different types of aggregate in the unloading areas.¹⁸ Further, there was testimony to the effect that more labor was needed to move the narrow windrows of aggregate deposited by a hopper trailer than would be necessary to move the more concentrated piles left by rear dump trailers.¹⁹ Thus, the defendants' position was that CAT's termination by Basic was merely a business decision based upon CAT's inability to perform as expected.²⁰

The Monday after CAT's termination by Basic, CAT began delivering the stone from Rinker in Miami to the Rinker South Orange Concrete Plant south of Orlando. The substitution of Rinker South Orange for Basic, however, suffered one major flaw: Rinker South Orange closed for deliveries at 5 p.m. Hallowell and his drivers testified that the original concept of one round trip every 18 to 20 hours was impossible under this arrangement. Although on occasion Rinker would remain open beyond 5 p.m., generally CAT was unable to complete its circuit of deliveries. As a result, CAT's drivers would have to lay over for the night in Orlando and make their deliveries at Rinker South Orange in the morning. Each such morning delivery meant a loss of $500 for CAT. See Record at 1324-25.

CAT continued hauling from Rinker in Miami to Rinker South Orange for approximately 8 weeks. During this time, CAT was unable to find another 24-hour customer at the north end of the circuit. Unable to generate enough revenue to continue in business, CAT was forced to return its trailers to Hardey Manufacturing in December.²¹ At approximately the same time, CAT's insurance policies were cancelled. By the end of the year, CAT had ceased all operations.

On March 10, 1980, CAT filed its complaint against FRI alleging violations of Secs. 1 and 2 of the Sherman Antitrust Act. CAT alleged that FRI, as a major supplier of construction aggregate in the Central Florida area, had coerced Basic into an agreement to cease purchasing aggregate hauled by CAT from competing Miami aggregate mines. Subsequently, CAT dropped its Sec. 2 claim against FRI, and proceeded to trial only on the Sec. 1 claim. The case was submitted to the jury on a theory of per se illegality and on April 17 the jury returned a $300,000 verdict for CAT. Damages were trebled pursuant to 15 U.S.C.A. Sec. 15(a) and FRI noticed this appeal.

FRI alleges the following errors: (1) CAT lacked standing to sue under Sec. 4 of the Clayton Act; (2) CAT's failure to show any restraint on interstate commerce deprived the court of subject matter jurisdiction; (3) the court erred in instructing the jury under a theory of per se illegality; (4) the alleged antitrust violation by FRI did not injure CAT or force it out of business; and (5) there was insufficient evidence to support the $300,000 damage award. After a close examination of the record, we conclude that the trial court did indeed err in sending this case to the jury under an instruction on per se illegality. Accordingly, we remand for a new trial.

Section 4 of the Clayton Antitrust Act provides a private cause of action for damages to:

Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws ....

15 U.S.C.A. Sec. 15 (West Supp.1983). Read literally, this provision would confer antitrust standing on business organizations far removed from those areas of the economy actually affected by an anticompetitive act. To eliminate the possibility of remote liability, courts have interpreted the "by reason of" language of Sec. 4 as creating a requirement of standing. The test for standing adopted by this circuit²² is the "target area" test: The plaintiff must show that he is within that sector of the economy which is endangered by a breakdown of competitive conditions in a particular industry. E.g., Associated Radio Service Co. v. Page Airways, Inc., 624 F.2d 1342, 1362 (5th Cir.1980), cert. denied, 450 U.S. 1030, 101 S.Ct. 1740, 68 L.Ed.2d 226 (1981); Larry R. George Sales Co. v. Cool Attic Corp., 587 F.2d 266, 271-72 (5th Cir.1979); Donovan Construction Co. of Minnesota v. Florida Telephone Corp., 564 F.2d 1191, 1192 (5th Cir.1977), cert. denied, 435 U.S. 1007, 98 S.Ct. 1878, 56 L.Ed.2d 389 (1978); Yoder Brothers, Inc. v. California-Florida Plant Corp., 537 F.2d 1347, 1359 (5th Cir.1976), cert. denied, 429 U.S. 1094, 97 S.Ct. 1108, 51 L.Ed.2d 540 (1977); Southern Concrete Co. v. U.S. Steel Corp., 535 F.2d 313, 316 (5th Cir.1976), cert. denied, 429 U.S. 1096, 97 S.Ct. 1113, 51 L.Ed.2d 543 (1977); Tugboat, Inc. v. Mobile Towing Co., 534 F.2d 1172, 1175 (5th Cir.1976); Jeffrey v. Southwestern Bell, 518 F.2d 1129, 1131 (5th Cir.1975); Battle v. Liberty National Life Ins. Co., 493 F.2d 39, 49 & n. 10 (5th Cir.1974), cert. denied, 419 U.S. 1110, 95 S.Ct. 784, 42 L.Ed.2d 807 (1975). See generally Associated General Contractors of California, Inc. v. California State Council of Carpenters, --- U.S. ----, ---- - ---- & n. 33, 103 S.Ct. 897, 907-08 & n. 33, 74 L.Ed.2d 723, 736-37 & n. 33 (1983) (discussing various tests used by courts of appeals).²³ Thus, the task before this court is to identify the area or areas of the economy adversely affected by the alleged anticompetitive act and then to determine whether the claimed injury occurred within those areas. See Yoder Brothers, Inc. v. California-Florida Plant Corp., 537 F.2d at 1359. By engaging in this analysis, we can safely limit the class of potential plaintiffs to those persons who will most adequately vindicate the purposes of the antitrust laws. See Jeffrey v. Southwestern Bell, 518 F.2d at 1131.

The starting point in our analysis is CAT's complaint against FRI. See Yoder Brothers, Inc. v. California-Florida Plant Corp., 537 F.2d at 1359 (standing to sue is preliminary matter to be evaluated upon allegations of complaint).²⁴ According to the complaint, FRI engages in two businesses relevant to our inquiry. FRI is:

A large producer of construction aggregate and sand used in the manufacturing of asphalt and also used in roadbuilding, construction fill and the manufacture of concrete in Florida.

....

Likewise, in addition to owning and operating aggregate and sand mines in Florida, the defendant, FRI, through majority stock interests, controls a significant portion of the hauling industry in Florida; specifically, the aggregate, sand and construction materials hauling business. Upon information and belief, plaintiff says that the defendant, FRI, controls approximately 35% of the hauling industry described above in Florida.

Record at 4.

The complaint describes FRI's alleged anticompetitive actions:

The nature of the economic coercion alleged herein essentially took the form of threating [sic] to cut off the sale and supply of mined aggregate materials to such hauling customers unless they agreed to contract for the hauling of such products only from those aggregate haulers owned or controlled by the defendant FRI.

....

With respect to Basic Asphalt, agents or employees of the defendant FRI coerced Basic Asphalt into a contract, combination or conspiracy to terminate the then extant business relationship between the plaintiff and Basic Asphalt.

Record at 5-6.

CAT's standing argument apparently is two-fold. First, it argues that because FRI competes for the aggregate hauling business in Central Florida through its wholly owned subsidiary Florida Rock and Tank Lines, Inc. ("Tank Lines") then the relevant sector of the market affected by FRI's acts was the aggregate hauling industry.²⁵ Secondly, CAT argues that because its unique operation made possible the marketing of Miami stone in the Orlando area, its operation was an essential aspect of the aggregate production industry.

FRI contends that any alleged coercion was aimed at the competition in aggregate production and not in aggregate hauling. Thus, FRI argues that insofar as its acts were aimed at eliminating competition from Rinker's Miami stone mines, the sector of the market affected was the production of stone aggregate used in the Florida construction industry.

In our view, FRI characterizes CAT's allegations much too narrowly. The complaint clearly alleges that FRI attempted to eliminate competition from CAT in the aggregate hauling industry. According to the complaint, therefore, one area of the market that would be adversely affected by the alleged conduct of FRI would be the aggregate hauling industry. CAT clearly operated within this market; examination of the complaint thus demonstrates CAT's standing to challenge FRI's alleged anticompetitive behavior.

FRI's contentions, however, appear to rest on two implicit assumptions which should be addressed. First, FRI contends that the evidence introduced at trial belies CAT's claim that the target market was the hauling industry. Rather, FRI suggests, the proof at trial indicated that the target market was the aggregate production industry. As we noted earlier, however, "standing to sue is a preliminary matter, to be evaluated upon the allegations of the complaint." Yoder Brothers, Inc. v. California-Florida Plant Corp., 537 F.2d at 1359. Even were we to go beyond the face of the complaint, we would disagree with FRI's contention. On the one hand, Mr. Hallowell's testimony, described earlier, does suggest that the precise target of FRI's coercion was competition from Rinker's Miami stone mines. Testimony by Walter McFall, the FRI agent who allegedly coerced Basic, suggests a different conclusion. Although McFall denied having threatened to cut off Basic's allocation of FRI rock, he did give his version of a conversation which occurred between himself and Jake Scherf, vice president in charge of production at Basic. According to McFall, CAT's hauling to Basic, and not the source of the rock being hauled, was the starting point for the conversation.²⁶ Thus, the record actually developed at trial is not conclusive, and suggests that both the aggregate production and the aggregate hauling industries were potential targets of FRI's acts.

This ambiguity in the testimony is related, in our view, to the second assumption implicit in FRI's argument: that only one discrete sector of the market may be the target for a particular anticompetitive act. Nothing in our cases, however, requires such a narrow interpretation of the target area test. In fact, the Supreme Court recently sanctioned an analysis of standing which expressly recognizes that different areas of the market may be so closely related that both may be targets of the same anticompetitive act. See Blue Shield of Virginia v. McCready, --- U.S. ----, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982).

Our analysis of standing is aimed at determining whether the plaintiff's injuries are merely indirect, secondary, or remote, id. at ---- - ----, 102 S.Ct. at 2547-49, 73 L.Ed.2d at 159-62; its purpose is to ensure against potentially disastrous recoveries by those only tenuously harmed. Jeffrey v. Southwestern Bell, 518 F.2d at 1131. Few of the cases cited by FRI involve an anticompetitive act aimed at either or both of two closely related markets in which the defendant is engaged.²⁷ FRI, however, clearly has an economic interest in two separate markets: the construction aggregate production industry and the construction aggregate hauling industry. While these markets might generally be viewed as separate for most purposes, in the specific context of this case they are not. Even if FRI's conduct was aimed most directly at restraining competition for the production of aggregate, FRI must have foreseen that the direct effect of such a restraint would be to eliminate an innovative competitor from the field of aggregate hauling--a field in which FRI through its wholly owned subsidiary, Tank Lines, was a dominant factor.

The Supreme Court's recent decision in Blue Shield of Virginia v. McCready, supra, provides strong support for our position. In McCready, a Blue Cross subscriber denied reimbursement for the costs of treatment by a psychologist brought a Sec. 1 claim against her insurer, whose policy it was to reimburse costs incurred only during treatment by a psychiatrist. Although acknowledging that the apparent goal of the conspiracy was to restrict competition by psychologists, the Court nonetheless held that the subscriber had standing to sue. First, the Court looked to the "physical and economic nexus" between the violation and the harm to the plaintiff:

The harm to McCready and her class was clearly foreseeable; indeed, it was a necessary step in effecting the ends of the illegal conspiracy. Where the injury alleged is so integral an aspect of the conspiracy alleged, there can be no question but that the loss was precisely "the type of loss that the claimed violations ... would be likely to cause."

Id. at ----, 102 S.Ct. at 2549, 73 L.Ed.2d at 161 (emphasis added) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977)). Next, the Court turned to an examination of the relationship between the injury alleged and those injuries about which Congress was concerned when it provided private remedies under Sec. 4 of the Clayton Act. Again, the Court focused on the inextricable relationship between the competitive injury the conspirators sought to inflict--elimination of the psychologists as Blue Cross competitors--and the injury suffered by the subscriber--increased costs for psychologists' services. --- U.S. at ----, 102 S.Ct. at 2550-51, 73 L.Ed.2d at 163-64. In our view, it is particularly significant that the Court recognized that the "target area" test does not require a conspiratorial purpose to injure the particular individual bringing suit. Id. at ----, 102 S.Ct. at 2548 n. 15, 73 L.Ed.2d at 161 n. 15.

In the instant case, and on the basis of the Court's reasoning in McCready,²⁸ we cannot say that CAT's injury was too "fortuitous," "incidental," or "remote" to allow for a Sec. 4 action. Rather, whatever the specific motivation behind FRI's act, injury to the aggregate hauling industry, and hence CAT, was a necessary step. Indeed, that FRI's subsidiary, Tank Lines, competed with CAT for the aggregate hauling business in Florida strongly suggests that FRI's goal was the elimination of CAT. Thus, the evidence supports the conclusion that the aggregate hauling industry in Florida was a sector of the economy which was endangered by a breakdown of competitive conditions. See Yoder Brothers, Inc. v. California-Florida Plant Corp., 537 F.2d at 1359-61 (suit allowed by distributor of restricted product where more than one area of economy affected); Tugboat, Inc. v. Mobile Towing Co., 534 F.2d at 1176-78 (union had standing to challenge anticompetitive behavior by owners of tugboats attempting to monopolize tugboat industry).

FRI next contends that the trial court lacked subject matter jurisdiction because CAT failed to demonstrate the necessary restraint on interstate commerce. Absent an adequate showing by the plaintiff that the defendants' conspiracy will result "in restraint of trade or commerce among the several states," 15 U.S.C.A. Sec. 1, the plaintiff's claim must be dismissed.

It is well established that jurisdiction under the Sherman Act does not require that the activities in question actually occur in interstate commerce. See McLain v. Real Estate Board of New Orleans, 444 U.S. 232, 241, 100 S.Ct. 502, 508, 62 L.Ed.2d 441 (1980); Brett v. First Federal Sav. & L. Ass'n, 461 F.2d 1155, 1157 (5th Cir.1972). Rather, the reach of the Sherman Act is coextensive with Congress' power under the Commerce Clause. See McLain v. Real Estate Board of New Orleans, 444 U.S. at 241, 100 S.Ct. at 508; United States v. Southeastern Underwriters Ass'n, 322 U.S. 533, 558, 64 S.Ct. 1162, 1176, 88 L.Ed. 1440 (1944); United States v. Cargo Service Stations, Inc., 657 F.2d 676, 679-80 (5th Cir.1981), cert. denied, 455 U.S. 1017, 102 S.Ct. 1712, 72 L.Ed.2d 135 (1982); Chatham Condominium Ass'n v. Century Village, Inc., 597 F.2d 1002, 1007-08 (5th Cir.1979).²⁹ The cases establish that the Sherman Act was intended to reach activities that "while wholly local in nature, nevertheless substantially affect interstate commerce." McLain v. Real Estate Board of New Orleans, 444 U.S. at 241, 100 S.Ct. at 508 (emphasis added). The jurisdictional requirement of the Sherman Act may therefore be satisfied by proving either that the business activities occurred in commerce or that those activities had an effect on commerce. Id. at 242, 100 S.Ct. at 509. "If it is interstate commerce that feels the pinch, it does not matter how local the operation which applies the squeeze." United States v. Womens Sportswear Association, 336 U.S. 460, 464, 69 S.Ct. 714, 716, 93 L.Ed. 805 (1949); see Hospital Building Co. v. Trustees of the Rex Hospital, 425 U.S. 738, 743, 96 S.Ct. 1848, 1851, 48 L.Ed.2d 338 (1976); Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 195, 95 S.Ct. 392, 398, 42 L.Ed.2d 378 (1974).³⁰

The plaintiff, CAT, is a Florida corporation engaged in business only within the state of Florida. Materials hauled by CAT originated in Florida rock and sand mines, and were delivered to Florida customers for use in construction projects within the state of Florida. The defendant, FRI, also is a Florida corporation, listed on the American Stock Exchange, which also engages in purely intrastate business. FRI produces sand and construction aggregate which are used in the manufacturing of concrete and asphalt. The record does not demonstrate the existence of any customers of either FRI or Basic in states other than Florida. Thus, it is clear that the "in commerce" or "flow of commerce" theory of jurisdiction is not available to CAT. Rather, CAT must rely on the "affecting commerce" branch of Sherman Act jurisdiction.

In McLain v. Real Estate Board of New Orleans, supra, the Supreme Court discussed at length the appropriate analysis under the "affecting commerce" test. "[I]t is not sufficient merely to rely on identification of a relevant local activity and to presume an interrelationship with some unspecified aspect of interstate commerce." 444 U.S. at 242, 100 S.Ct. at 509. Rather, the plaintiff must allege and prove that the relevant local activity "has an effect on some other appreciable activity demonstrably in interstate commerce." Id. Further, the plaintiff must demonstrate that the local activities "as a matter of practical economics" have a not insubstantial effect on the interstate commerce involved. Id. at 242-46, 100 S.Ct. at 509-11. See also Hospital Building Co. v. Trustees of the Rex Hospital, 425 U.S. at 743-47, 96 S.Ct. at 1851-53; Gulf Oil Corp. v. Copp Paving Co., 419 U.S. at 202, 95 S.Ct. at 402.³¹

In our view, CAT introduced substantial evidence of its relationship with interstate markets. For example, the steel used to fabricate the trailers purchased by CAT was fabricated in Pennsylvania.³² The mechanism used to connect CAT's double trailers, called a "fifth wheel" or "dolly," was produced in Holland, Michigan. Further, the purchase of trailers by CAT was financed by the Ford Motor Credit Co., a national corporation. See McLain v. Real Estate Board of New Orleans, 444 U.S. at 245, 100 S.Ct. at 510; Hospital Building Co. v. Trustees of the Rex Hospital, 425 U.S. at 743-45, 96 S.Ct. at 1851-52; United States v. Employing Plasters Ass'n, 347 U.S. 186, 187-88, 74 S.Ct. 452, 453, 98 L.Ed. 618 (1954); Heille v. City of St. Paul, 671 F.2d 1134, 1136-37 (8th Cir.1982); Western Waste Serv. v. Universal Waste Control, 616 F.2d 1094, 1097 (9th Cir.), cert. denied, 449 U.S. 869, 101 S.Ct. 205, 66 L.Ed.2d 88 (1980). Finally, the two tractors purchased by CAT to haul its double trailers were manufactured out of state by International Harvester. See Appellant's Brief, at 26; Record at 1034-38. Plaintiff's exhibit number 11 demonstrates that the sale of these tractors was financed by the International Harvester Credit Corporation pursuant to a retail contract between IHCC and CAT. This exhibit, a notice of repossession and private sale, originated in IHCC's Atlanta office. See Brett v. First Federal Sav. & L. Ass'n, 461 F.2d at 1157.

The foregoing evidence demonstrates that the local conduct of the defendant with regard to the plaintiff will have a substantial effect on interstate markets. In particular, we note that at the time that CAT ceased operations it possessed but two tractors and three sets of double trailers. As envisioned, however, CAT ultimately would have had a need for at least 20 trailer units as well as a corresponding number of tractors with which to haul those units, and the financing with which to purchase the tractors and trailers. If FRI was indeed responsible for the demise of CAT, then it necessarily follows that FRI is equally responsible for the decrease in demand for the tractors and trailers which CAT would have consumed. In our view, this presents the likelihood of a not insubstantial effect on interstate commerce. See Hospital Building Co. v. Trustees of the Rex Hospital, 425 U.S. at 743-46, 96 S.Ct. at 1851-53 (defendants' efforts to block relocation of plaintiff hospital adversely affects interstate commerce with regard to medicines and supplies purchased by hospital); Western Waste Serv. v. Universal Waste Control, 616 F.2d at 1097.

In addition to the foregoing argument, CAT has pursued a second theory of jurisdiction. According to CAT's complaint:

Florida Rock and its subsidiaries currently have gross sales of more than $90 million, a substantial amount of which consisted of sales of concrete, concrete products, sand, aggregate, road base materials, and hauling services used in the construction of roads, highways, airports and intercoastal waterways in Florida and other states, used in interstate travel and commerce. Monies used in the purchase of such products and materials for construction of roads, highways, and airports are, in large part, Federal funds, collected and redistributed in interstate commerce. Sales of Florida Rock products, and utilization of said materials and services, have a direct, substantial effect upon interstate commerce.

Record at 2. Thus, CAT argues that the use of FRI's products in instrumentalities of interstate commerce gives rise to jurisdiction under the Sherman Act. Further, at trial there was testimony that FRI's co-conspirator, Basic, had since 1978 been a supplier of construction materials for federally funded road projects. Record at 1553-54. In addition, CAT introduced uncontroverted evidence that it had transported to an asphalt plant in Florida rock that ultimately was used in the construction of Interstate 95. Finally, rock hauled by CAT to Southern Paving was used in the construction of Orlando International Airport. Record at 1275-76. Thus, the evidence demonstrates that the defendant and the plaintiff engage in the production and transportation of materials which are necessary components of instrumentalities of interstate commerce.

In other statutory contexts, the Supreme Court has relied upon this "instrumentalities" theory to uphold the scope of Congress' regulatory enactments. See Mitchell v. C.W. Vollmer & Co., 349 U.S. 427, 428-30, 75 S.Ct. 860, 861-62, 99 L.Ed. 1196 (1954) (repair of facilities of interstate commerce is activity in commerce within meaning of Fair Labor Standards Act); Alstate Construction Co. v. Durkin, 345 U.S. 13, 15-16, 73 S.Ct. 565, 566-67, 97 L.Ed. 745 (1953) (production of road surfacing products for local use in interstate highways constitutes interstate commerce because of relationship to instrumentality or facility of commerce). See also City of Fort Lauderdale v. East Coast Asphalt Corp., 329 F.2d 871, 873 (5th Cir.) (conspiracy to fix prices of materials used in construction of interstate highways has necessary effect on commerce under Sherman Act), cert. denied, 379 U.S. 900, 85 S.Ct. 187, 13 L.Ed.2d 175 (1964). Because the Sherman Act sweeps as broadly as the commerce clause allows, CAT's argument would seem to have merit.

Both parties, however, have devoted much attention to the Supreme Court's decision in Gulf Oil Corp. v. Copp Paving Co., supra. Copp had its genesis in the Ninth Circuit's decision in In re Western Liquid Asphalt Cases, 487 F.2d 202 (9th Cir.1973). In the Asphalt Cases, the plaintiffs, processors of asphaltic concrete, brought claims against producers of asphaltic oil under Secs. 1 and 2 of the Sherman Act, Secs. 3 and 7 of the Clayton Act, 15 U.S.C.A. Secs. 14 & 18 (West Supp.1983), and Sec. 2(a) of the Robinson-Patman Price Discrimination Act, 15 U.S.C.A. Sec. 13(a) (West Supp.1983). The Ninth Circuit analogized the case to Alstate Construction Co. v. Durkin, supra, in which the Supreme Court held that businesses engaged in the local production of road surfacing products for local use in interstate highways were operating in commerce because of their relationship to an instrumentality or facility of interstate commerce. See 487 F.2d at 205. After concluding that the production of materials used in the construction of interstate highways was "in commerce" for purposes of the Sherman Act, the Ninth Circuit went on to hold that the same activities also were in commerce for purposes of the Robinson-Patman and Clayton Acts. See id. at 206. In granting certiorari, the Supreme Court limited its inquiry to whether jurisdiction was established under the Robinson-Patman and Clayton Acts. See 419 U.S. at 193, 95 S.Ct. at 397. Significantly, the Robinson-Patman Act and Secs. 3 and 7 of the Clayton Act contain jurisdictional language that, read literally, is much narrower than that contained in the Sherman Act; each provision restrains the anticompetitive conduct only of persons "engaged in commerce." See generally Comment, 21 Vill.L.Rev. 721 (1976) (discussing jurisdictional elements under the various antitrust acts). In reversing the Ninth Circuit's finding of subject matter jurisdiction under the Robinson-Patman and Clayton Acts, the Court held that only anticompetitive action actually occurring "within the flow of interstate commerce" is actionable. 419 U.S. at 195, 95 S.Ct. at 398. The Court thus disavowed the Ninth Circuit's use of a test focusing on the relationship of the defendant's activities to an instrumentality of interstate commerce.

FRI admits that technically the Court's holding was limited to the narrower bases for subject matter jurisdiction which exist under the Robinson-Patman Act and Secs. 3 and 7 of the Clayton Act. The Court clearly was concerned with Congress' intent when utilizing the "in commerce" language in those provisions. The Court cautioned that the plaintiff:

[w]ould have us expand the concept of the flow of commerce by incorporating categories of activities that are preceptibly connected to its instrumentalities. But whatever merit this categorical inclusion-and-exclusion approach may have when dealing with the language and purposes of other regulatory enactments, it does not carry over to the context of the Robinson-Patman and Clayton Acts. The chain of connection has no logical end point. The universe of arguably included activities would be broad and its limits nebulous in the extreme.... More importantly, to the extent that those limits could be defined at all, the definition would in no way be anchored in the economic realities of interstate markets, the intensely practical concerns that underlie the purposes of the antitrust laws.

In short, assuming, arguendo, that the facially narrow language of the Clayton and Robinson-Patman Acts was intended to denote something more than the relatively restrictive flow of commerce concept, we think the nexus approach would be an irrational way to proceed. The justification for an expansive interpretation of the "in commerce" language, if such an interpretation is viable at all, must rest on a congressional intent that the acts reach all practices, even those of local character, harmful to the national marketplace.

Id. at 198-99, 95 S.Ct. at 400 (emphasis added). However, as the Supreme Court has made clear, just such an expansive interpretation was intended by Congress under the Sherman Act. See Hospital Building Co. v. Trustees of the Rex Hospital, 425 U.S. at 743 n. 2, 96 S.Ct. at 1852 n. 2 (decisions by Court have permitted reach of Sherman Act to expand along with expanding notions of Congressional power); Alstate Construction Co. v. Durkin, 345 U.S. at 14-16, 73 S.Ct. at 566-567.

FRI argues, however, that the Court's reasoning necessarily implicates jurisdiction under the Sherman Act because the Court counseled against relying on "nominal connections between commerce and activities that may have no significant economic effect on interstate markets." 419 U.S. at 199, 95 S.Ct. at 400. During the course of its ruling, the Court clearly dismissed the instrumentality theory as a basis for satisfying the "in commerce" language of the Robinson-Patman Act and Secs. 3 and 7 of the Clayton Act. Nonetheless, the impact of Copp on Sherman Act jurisdiction is far from clear. Without deciding whether Secs. 3 and 7 of the Clayton Act would admit of an "affecting commerce" theory the Court declared that effects on commerce could not be presumed from the mere use of materials in the production of instrumentalities of commerce. Id. at 202, 95 S.Ct. at 402. This holding, though technically limited to Secs. 3 and 7 of the Clayton Act, casts some doubt on reliance on a relationship to instrumentalities of commerce under the Sherman Act. It casts some doubt on what would otherwise seem to be a logical approach in applying the "affecting commerce" theory in the Sherman Act context, namely to consider effects on interstate instrumentalities as one kind of effect on commerce; or in other words to consider the instrumentalities theory as a subset of the "affecting commerce theory."³³

Whether or not Copp places limits on a litigant's ability to claim jurisdiction under the Sherman Act through relationships to instrumentalities of interstate commerce is, in the last analysis, not necessary to resolve this case.³⁴ As we concluded above, CAT sufficiently demonstrated an effect on commerce by virtue of injury to interstate markets resulting from the defendant's alleged activities. We thus proceed to the merits of this dispute.

FRI's next contention is that the trial court erred in submitting this case to the jury under a theory of per se illegality.³⁵ The complaint reveals that CAT's theory of liability was that FRI and Basic created and enforced a boycott aimed at driving the plaintiff out of business. Record at 6. At the charge conference conducted by the trial court, CAT thus argued that the case should be submitted to the jury under an instruction on per se illegality; under such an instruction CAT would not need to prove an anticompetitive effect in a relevant product and geographic market. See Muenster Butane, Inc. v. Stewart Co., 651 F.2d 292, 295 (5th Cir.1981) (under rule of reason plaintiff must demonstrate anticompetitive effect in relevant market). Rather, the finding by the jury that FRI conspired with Basic to terminate CAT's services would suffice to support a verdict against FRI.³⁶

FRI, on the other hand, submits that this case involves, at most, either an exclusive dealing arrangement between Basic and FRI or a requirements contract whereby Basic agreed to purchase all of its rock supplies from FRI. Incidental to such an agreement would be the termination of CAT's services as a transporter of rock from Rinker's competing mines in the Miami area. Under either of these theories a rule of reason instruction would have been required.

Since Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911), the Sherman Act prohibition against "every" agreement in restraint of trade has been interpreted by the federal courts to forbid only "unreasonable restraints." Id. at 59-60, 31 S.Ct. at 515; see United States v. Realty Multi-List, Inc., 629 F.2d 1351, 1362 (5th Cir.1980). However, in Standard Oil as well as subsequent cases the Supreme Court has declared some restraints "inherently unreasonable" or "per se unlawful." Thus:

there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.

Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958); See Continental TV v. GTE Sylvania, Inc., 433 U.S. 36, 50, 97 S.Ct. 2549, 2557, 53 L.Ed.2d 568 (1977). The Supreme Court has stressed, however, that "per se rules of illegality are appropriate only when they relate to conduct that is manifestly anticompetitive." 433 U.S. at 49-50, 97 S.Ct. at 2557.

To date, the rule of per se illegality has been applied to the following types of competitive restraints: horizontal and vertical price fixing agreements, see United States v. Socony Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940); Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911); horizontal division of markets between competitors, see Timkin Roller Bearing Co. v. United States, 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951); tying arrangements, see Northern Pacific Ry. Co. v. United States, supra; and concerted refusals to deal or group boycotts. See Fashion Originators Guild of America v. FTC, 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949 (1941). Proof of the foregoing types of restraints results in automatic condemnation solely because of the obvious restrictive effects on competition. CAT contends that the restraint involved in the case before this court falls within that category of restraints referred to as concerted refusals to deal or group boycotts.³⁷

It is well established that a merchant, whether he be a manufacturer, distributor, wholesaler, or retailer, may choose with whom he will do business and with whom he will not do business; such action generally does not violate the antitrust laws. Thus, the manufacturer can deal or not deal with customers "for reasons sufficient to itself." Eastern States Retail Lumber Dealers' Ass'n v. United States, 234 U.S. 600, 614, 34 S.Ct. 951, 955, 58 L.Ed. 1490 (1914); Universal Brands, Inc. v. Philip Morris, Inc., 546 F.2d 30, 33 (5th Cir.1977). This sort of arrangement, referred to as "exclusive dealing," does not give rise to antitrust liability without proof of actual competitive injury. Implicit in the freedom to deal exclusively with one merchant, of course, is the freedom to refuse to deal with a competitor of that merchant. Again, such a unilateral exercise of business judgment is free from scrutiny in the absence of proof of competitive harm, or other underlying illegal behavior. See Packard Motor Car Co. v. Webster Motor Car Co., 243 F.2d 418, 420 (D.C.Cir.), cert. denied, 355 U.S. 822, 78 S.Ct. 29, 2 L.Ed.2d 38 (1957). When the merchant goes beyond this unilateral choice, however, and combines with other merchants to deal or not to deal only with a specific customer, the legal consequences are vastly different. Such an agreement between independent merchants is known as a "concerted refusal to deal" and is generally subject to the per se rule of illegality. See Radiant Burners v. Peoples Gas Light & Coke Co., 364 U.S. 656, 81 S.Ct. 365, 5 L.Ed.2d 358 (1961) (per curiam); Klor's v. Broadway-Hale Stores, 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741 (1959); Fashion Originators Guild v. FTC, supra.

CAT contends that this is precisely the type of agreement which was entered into between FRI, the rock supplier, and Basic, the purchaser of the rock. By conspiring not to utilize the services of CAT in hauling aggregate material, FRI and Basic would thus be guilty of a boycott of, or concerted refusal to deal with CAT.

Neither party has been able to bring to our attention a case involving the somewhat unique relationships between supplier, customer and transporter which are present in this case. Nonetheless, in our view the agreement here does not sufficiently resemble those arrangements which have been considered to be illegal per se in other cases. First, it is important to remember that a concerted refusal to deal essentially is an agreement among two or more parties that each will engage in an individual refusal to deal with a particular customer or customers. In the case before us, however, we have only one business entity refusing to deal with the plaintiff: the ultimate customer of FRI's rock, Basic Asphalt. That FRI may have instigated Basic's refusal to deal does not create the plurality of "refusals" necessary for the arrangement to be called a group boycott. Compare Radiant Burners v. Peoples Gas Light & Coke Co., 364 U.S. at 659-60, 81 S.Ct. at 367 (refusal by association comprised of gas companies and gas burner manufacturers to sell gas to purchasers of plaintiff manufacturer's gas burner was illegal per se as a group boycott); Klor's, Inc. v. Broadway-Hale Stores, 359 U.S. at 212-13, 79 S.Ct. at 709-10 (agreement by manufacturers to sell only to defendant department store and not plaintiff's department store constituted group boycott); Fashion Originators Guild v. FTC, 312 U.S. at 465-66, 61 S.Ct. at 706 (refusal by manufacturers of textiles and original design dresses to sell to retailers purchasing "copycat" designs from competing manufacturers constituted illegal group boycott); with Abadir & Co. v. First Mississippi Corp., 651 F.2d 422, 426-28 (5th Cir.1981) (manufacturer's agreement with one dealer not to sell to other dealer did not constitute group boycott); Red Diamond Supply, Inc. v. Liquid Carbonic Corp., 637 F.2d 1001, 1004-07 (5th Cir.) (conspiracy between manufacturer and distributor not to deal with plaintiff distributor did not constitute group boycott), cert. denied, 454 U.S. 827, 102 S.Ct. 119, 70 L.Ed.2d 102 (1981); Daniels v. All Steel Equipment, Inc., 590 F.2d 111, 113 (5th Cir.1979); H. & B. Equipment Co. v. International Harvester, 577 F.2d 239, 245-46 (5th Cir.1978); Oreck Corp. v. Whirlpool Corp., 579 F.2d 126, 131-32 (2d Cir.) (en banc) (manufacturer's termination of plaintiff-dealer at behest of competing dealer was not a group boycott), cert. denied, 439 U.S. 946, 99 S.Ct. 340, 58 L.Ed.2d 338 (1978); Universal Brands, Inc. v. Philip Morris, Inc., 546 F.2d at 33-34 (no per se violation for manufacturer or supplier to agree with distributor to give him exclusive franchise unless part of an illegal boycott); Packard Motor Car Co. v. Webster Motor Car Co., 243 F.2d at 420-21 (manufacturer's termination of small dealers at request of large dealer was exclusive dealing arrangement and not illegal per se). Thus, the touchstone of an illegal group boycott or concerted refusal to deal is the agreement between two or more merchants not to deal with another merchant when, in the absence of such an agreement, the conspiring merchants would normally have been free to deal with that merchant.

In the instant case, FRI does not itself arrange for or hire businesses to transport rock from its mines to its customers. Therefore, regardless of whether CAT's termination was the result of an agreement between FRI and Basic, there exists only one refusal to deal: that between Basic and CAT. The foregoing analysis of the alleged arrangement thus suggests that it is much closer to a unilateral refusal to deal. If so, then CAT's allegation of conspiracy between FRI and Basic would be subject to rule of reason analysis. See Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961); Standard Oil Co. v. United States, 337 U.S. 293, 69 S.Ct. 1051, 93 L.Ed. 1371 (1949).

Aside from whether the agreement between FRI and Basic fits into the classic group boycott arrangement, however, the case law surrounding restraints on trade provides an alternative type of analysis. This analysis distinguishes between restraints which are horizontal in nature and those which may be considered vertical in nature. See generally Continental TV v. GTE Sylvania, 433 U.S. at 54-59, 97 S.Ct. at 2559-2562.³⁸ Horizontal combinations are cartels or agreements among competitors. Such agreements generally restrain competition among enterprises at the same level of distribution. Vertical restraints, on the other hand, are generally agreements between persons or firms occupying different levels in the chain of distribution of a specific product. Muenster Butane, Inc. v. Stewart Co., 651 F.2d at 295.³⁹ As such, the effect of a purely vertical restraint will be to restrain competition at a level other than that from whence the restraint was initiated.⁴⁰ The classic example of a per se violation is an agreement between:

Competitors at the same level of the market structure to allocate territories in order to minimize competition. Such concerted action is usually termed a "horizontal" restraint, in contradistinction to combinations of persons at different levels of the market structure, e.g., manufacturers and distributors, which are termed "vertical" restraints.

United States v. Topco Associates, 405 U.S. 596, 608, 92 S.Ct. 1126, 1133, 31 L.Ed.2d 515 (1972) (emphasis added).

CAT contends that the restraint involved in this case is horizontal rather than vertical in nature. Specifically, it argues that the "horizontal aspect" necessary to bring this case within the rule of per se illegality is provided by FRI's aggregate hauling subsidiary, Tank Lines, which competes at the same market level as CAT. According to this argument, it is irrelevant that the parties to the alleged conspiracy are arranged in a completely vertical configuration so long as FRI competes with CAT through its trucking subsidiary. In our view, this argument is without merit.⁴¹

The case law demonstrates that there are several types of arrangements which may be characterized as horizontal, thus warranting the per se prohibition. First is the arrangement in which two or more businesses all operating at the same level in the chain of distribution agree to do business with one customer to the exclusion of a competitor of that customer. See Klor's, Inc. v. Broadway-Hale Stores, 359 U.S. at 207-10, 79 S.Ct. at 705-08. It is not necessary for the target of the boycott to operate at the same market level as the conspirators; the danger lies in allowing an entire industry, as opposed to an individual merchant in that industry, to restrict the sale of its goods thereby potentially restricting output at the cost of increased prices to the consumers.⁴² See also Com-Tel, Inc. v. DuKane Corp., 669 F.2d 404 (6th Cir.1982).

Another type of horizontal arrangement prohibited outright by the Sherman Act is that in which two or more merchants agree to sell their goods to a customer conditioned upon that customer's refusal to purchase goods manufactured by a competitor of the merchants. See Fashion Originators Guild v. FTC, 312 U.S. at 461-63, 61 S.Ct. at 705-06. In this situation, both the parties to the agreement and the target of the agreement occupy the same relative level in the chain of distribution. Again, such a restraint on trade directly implicates concerns for an industry's ability to restrict output by reducing the number of competitors.

Finally, the ban on horizontal restraints encompasses purportedly vertical arrangements which are actually horizontal agreements in disguise. See United States v. Topco Associates, 405 U.S. at 608-12, 92 S.Ct. at 1133-35. In such situations, businesses at the same market level, most often distributors, seek to have restraints imposed upon them by their supplier or manufacturer. The actual goal of such an arrangement, however, may be to organize among themselves how the distributors will carry on their respective operations.⁴³ Such an agreement represents one of the most dangerous threats to competition, since it can have few purposes other than requiring the manufacturer to restrict output. See R. Bork, The Antitrust Paradox 389 (1978) (retailers who agree to horizontal restraint not desired by manufacturer are almost certainly attempting to restrict output for sake of monopoly gains). See generally L. Sullivan, Antitrust Sec. 83 (1977) (discussing various types of boycotts).

The foregoing examples of horizontal activity condemned by the antitrust laws all have one feature in common: they involve agreements between more than one entity at the same level of the market. The key to per se illegality in such cases, therefore, is not the relationship of the target to the members of the conspiracy.⁴⁴ Conversely, that one of the conspirators may operate as a direct competitor of the plaintiff is not dispositive. See Oreck Corp. v. Whirlpool Corp., 579 F.2d at 131 (Whirlpool, manufacturer, at instigation of Sears, retailer, terminated its sales of vacuum cleaners to Oreck, who functioned at the same level as Sears). In fact, if it were true that participation in the conspiracy by an entity which operates on the plaintiff's market level were sufficient to establish that horizontal aspect necessary for per se illegality, then the category of horizontal restraints would completely swallow the category of vertical restraints. For example, every exclusive dealing agreement between manufacturer and customer, though vertical as between its members, necessarily involves the exclusion of an entity which operates on the same market level as either the customer or the manufacturer. To declare that such an arrangement is therefore horizontal in nature would convert all restrictions such as vertical territorial agreements into per se violations. Such a result is directly contrary to the holding in the Sylvania case. See 433 U.S. at 58-59, 97 S.Ct. at 2561-2562.

CAT argues that the cases involving manufacturer-distributor chains should not control. While these arrangements are slightly different from the one involved here, such differences should not lead us to embark on a completely novel analysis of horizontal restraints.⁴⁵ In our view, the finding of an absence of a horizontal aspect in this case is well supported by precedent. See, e.g., Abadir & Co. v. First Mississippi Corp., 651 F.2d at 424-26;⁴⁶ Red Diamond Supply, Inc. v. Liquid Carbonic Corp., 637 F.2d at 1004-07 (conspiracy between manufacturer and distributor to exclude plaintiff-distributor not a horizontal agreement merely because manufacturer also conducts limited operations at plaintiff's level of the market); Daniels v. All Steel Equipment, Inc., 590 F.2d at 113 (conspiracy between manufacturer and dealer to eliminate plaintiff-dealer does not constitute horizontal boycott); H. & B. Equipment Co. v. International Harvester, 577 F.2d at 245-46 (conspiracy between manufacturer and distributor horizontal only when source of conspiracy is combination of distributors).

In contending for a rule of per se illegality, both CAT and the district court relied on the former Fifth Circuit's decision in E.A. McQuade Tours, Inc. v. Consolidated Air Tour Manual Committee, 467 F.2d 178 (5th Cir.1972), cert. denied, 409 U.S. 1109, 93 S.Ct. 912, 34 L.Ed.2d 690 (1973). In McQuade, a group of airlines published a consolidated listing of available tour programs in the Caribbean. On at least two occasions the airlines, through their tour manual committee, refused to list the plaintiff's tours in their programs and instead listed tours by a competitor. Although the court refused to apply a rule of per se illegality on the facts before it, the opinion contains dicta which tend to support CAT's argument. First, the court cited Klors as a case "involving vertical combinations among traders at different marketing levels, designed to exclude from the market direct competitors of some members of the combination." Id. at 186. Actually, however, the conspiracy or combination in Klors included both vertical and horizontal agreements. While one of the conspirators, Broadway-Hale, was a retailer, and thus vertical with respect to the other conspirators, the remaining conspirators were all suppliers and horizontal with respect to each other. Second, the court summarized the case law dealing with collective refusals to deal in a manner which suggests that the primary consideration is whether exclusionary or coercive conduct has occurred:

In all of these cases, the touchstone of per se illegality has been the purpose and effect of the arrangement in question. Where exclusionary or coercive conduct has been present, the arrangements have been viewed as "naked restraints of trade," and have fallen victim to the per se rule.

Id. at 187. In our view, however, this dictum in McQuade does not survive the Supreme Court's decision in Continental TV, Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). Sylvania makes it clear that the "touchstone" of per se illegality is not the presence of exclusionary conduct in the particular case but rather is the market impact of the kind of restrictions in question. See id. at 50-59, 97 S.Ct. at 2557-2562.⁴⁷ "Departure from the rule of reason standard must be based upon demonstrable economic effect rather than ... upon formalistic line drawing." Id. at 58-59, 97 S.Ct. at 2561-2562.⁴⁸

CAT attempts to bolster its argument by citation to the Sixth Circuit's recent decision in Com-Tel, Inc. v. DuKane Corp., supra. Com-Tel involved a boycott initiated by one distributor which pressured its manufacturer, which in turn enforced the boycott among other distributors. The plaintiff, a competing distributor which was thereby barred from purchasing products from either the manufacturer or the boycotting distributors, brought suit, alleging a concerted refusal to deal. The Sixth Circuit held that the boycott in question was horizontal in nature, thus warranting an instruction on per se illegality. The court declared that the acquiescence, or participation by other distributors in the plan not to sell goods to the plaintiff provided the horizontal aspect necessary for per se illegality. 669 F.2d at 412-14. Although the court noted that some commentators had suggested that the presence of one conspirator, i.e., the initiating distributor, at a level horizontal to the plaintiff would provide a sufficient horizontal aspect, the court expressed no opinion as to the validity of such a proposition. See id. at 412-13 & n. 16.

In our view, CAT reads Com-Tel too broadly. The defendant there had argued that more than one conspirator, or "numerosity," was required at each market level of the boycott. The court's lengthy discussion of the numerosity issue was therefore aimed only at showing that the existence of a boycott does not depend upon the specific market level at which the boycott occurs; so long as there exists an agreement among competitors at some level, there will be a sufficient horizontal aspect. Thus, the key inquiry when determining whether a particular arrangement is horizontal or vertical is not the presence of a conspirator on the plaintiff's market level ("horizontal" to the plaintiff) but whether the conspiratorial agreement is between entities which are horizontally arranged at some level in the market.⁴⁹

We therefore conclude that the arrangement in question cannot be labeled a horizontal restraint of trade.⁵⁰ This result, however, does not necessarily dictate a rule of reason analysis. As the Supreme Court noted in Sylvania, particular types of vertical restrictions may nonetheless require per se prohibition. See 433 U.S. at 58, 97 S.Ct. at 2561. We agree with FRI that the arrangement here is much closer to a unilateral refusal to deal than it is to a horizontal boycott. However, if the evidence will sustain a finding that FRI's conduct falls under one of the categories of per se illegality set forth earlier in this opinion, we need not remand for a new trial.⁵¹

As discussed earlier, the conspiracy alleged is unique in that the evidence suggests it was aimed at two different targets. One target was FRI's competitor in rock production, Rinker. The other target was CAT's innovative transportation operation which made possible the sale of Rinker stone in the Orlando market. By coercing Basic to exclude CAT's trucking operation, FRI could restrict the importation of its competitor's stone. Similarly, by discouraging its customers from purchasing stone from Rinker, FRI could restrict competition in the aggregate hauling industry, thus potentially benefiting its subsidiary, Tank Lines. In our view, the particular arrangement involved is quite similar to a tying arrangement: for purposes of this lawsuit, FRI's stone, upon which Basic was dependent, would be the tying product, while the tied product would be the transportation of this stone.⁵²

If we examine the policies behind the prohibition on tying agreements, we see that the arrangement in the instant case directly implicates those policies. The primary concern is the restriction of competition in the market for the tied product. See Kypta v. McDonalds Corp., 671 F.2d 1282, 1284 (11th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 127, 74 L.Ed.2d 109 (1982); Southern Concrete Co. v. United States Steel Corp., 535 F.2d at 316-17. Tying arrangements are thus discouraged because:

They deny competitors free access to the market for the tied product, not because the party imposing the tying requirements has a better product or a lower price but because of his power or leverage in another market. At the same time buyers are forced to forgo their free choice between competing products.

Fortner Enterprises v. U.S. Steel Corp., 394 U.S. 495, 498-99, 89 S.Ct. 1252, 1256, 22 L.Ed.2d 495 (1969); see International Salt Co. v. United States, 332 U.S. 392, 396-98, 68 S.Ct. 12, 15-16, 92 L.Ed. 20 (1947); Heatransfer Corp. v. Volkswagenwerk, A.G., 553 F.2d 964, 975-77 (5th Cir.1977), cert. denied, 434 U.S. 1087, 98 S.Ct. 1282, 55 L.Ed.2d 792 (1978). In the case at bar, FRI threatened to cut off its supply of rock to Basic unless Basic terminated the hauling services of CAT. Therefore, if CAT's allegations are true, FRI attempted to transfer its market power in the aggregate supplying industry over to the aggregate hauling industry. The effect of this transfer would be to erect a barrier against competition in the tied industry, i.e., hauling; this barrier is prohibited by the Sherman Act.⁵³

As noted earlier, tying arrangements are among those rare categories of cases subject to a rule of per se illegality. See Kentucky Fried Chicken v. Diversified Packaging, 549 F.2d 368, 374 (5th Cir.1977). On the other hand, the specific application of the per se rule in such cases is somewhat unique. Normally, automatic condemnation under the per se rule occurs merely upon a finding that the defendant engaged in the restrictive conduct alleged; proof of anticompetitive effect in a relevant market need not be demonstrated. Tying arrangements, however, are subject to a special qualification that the party enforcing the tying agreement must have "sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product." Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 6, 78 S.Ct. 514, 518, 2 L.Ed.2d 545; see Bob Maxfield, Inc. v. American Motors Corp., 637 F.2d 1033, 1037 (5th Cir.), cert. denied, 454 U.S. 860, 102 S.Ct. 315, 70 L.Ed.2d 158 (1981); Heatransfer Corp. v. Volkswagenwerk, A.G., 553 F.2d at 975; Carpa, Inc. v. Ward Foods, Inc., 536 F.2d 39, 47-49 (5th Cir.1976); Driskill v. Dallas Cowboys Football Club, Inc., 498 F.2d 321, 323 (5th Cir.1974). As the Supreme Court pointed out in Northern Pacific, the economic power which must be demonstrated need not rise to the level of monopoly power or even dominant power in the market. See 356 U.S. at 11, 78 S.Ct. at 521. "Even absent a showing of market dominance, the crucial economic power may be inferred from the tying product's desirability to consumers or from its uniqueness in its attributes." Fortner Enterprises v. U.S. Steel Corp., 394 U.S. at 503, 89 S.Ct. at 1258. Thus, "the proper focus of concern is whether the seller has the power to raise prices, or impose other burdensome terms such as a tie-in, with respect to any appreciable number of buyers within the market." Id. at 504, 89 S.Ct. at 1259.

At trial, however, CAT pursued only the "concerted refusal to deal" theory of liability, and did not introduce evidence of FRI's ability to raise prices with respect to an appreciable number of its customers. As a result, the trial court did not instruct the jury as to the need to find that FRI possessed sufficient market power to restrain competition in the market for the tied product. See Heatransfer Corp. v. Volkswagenwerk, A.G., 553 F.2d at 977-78 & n. 12 (example of per se instruction for tying arrangement); Carpa, Inc. v. Ward Foods, Inc., 536 F.2d at 49 (same). Thus, even if CAT was entitled to proceed under a theory of tying, a question we do not decide, the judgment for CAT must be reversed and the cause remanded to the district court for a new trial.⁵⁴

Under Sec. 4 of the Clayton Act, a private plaintiff who has demonstrated a violation of the Sherman Act also must prove "an injury to his business resulting from the defendant's wrongful actions, and some indication of the amount of the damage done." Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690, 694 (5th Cir.1975) (quoting Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 20 (5th Cir.1974), cert. denied, 419 U.S. 987, 95 S.Ct. 246, 42 L.Ed.2d 260 (1974)), cert. denied, 424 U.S. 943, 96 S.Ct. 1412, 47 L.Ed.2d 349 (1976); see J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 561-63, 101 S.Ct. 1923, 1926-27, 68 L.Ed.2d 442 (1981); Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100, 114-15 & n. 9, 89 S.Ct. 1562, 1571-72 & n. 9, 23 L.Ed.2d 129 (1969); Bigelow v. RKO Radio Pictures, 327 U.S. 251, 264-65 (1946); Chrysler Credit Corp. v. J. Truett Payne Co., 670 F.2d 575, 581 (5th Cir.) (on remand from 451 U.S. 557, 101 S.Ct. 1923, 68 L.Ed.2d 442 (1981)), cert. denied, --- U.S. ----, 103 S.Ct. 212, 74 L.Ed.2d 169 (1982). FRI's final contentions are that CAT failed to introduce sufficient probative evidence of the fact of injury, and that CAT's evidence with regard to the quantum of damages resulting from the alleged injury was insubstantial. Regarding the damages issue, FRI specifically objects to the reliance by plaintiff's expert on a "pro forma" prepared by Hallowell when testifying as to CAT's profitability. In our view, CAT did introduce "substantial evidence" that FRI's actions, assuming they violated the Sherman Act, resulted in cognizable injury to CAT's business enterprise. See Malcolm v. Marathon Oil Co., 642 F.2d 845, 846-48 (5th Cir.), cert. denied, 454 U.S. 1125, 102 S.Ct. 975, 71 L.Ed.2d 113 (1981). Further, we think that plaintiff introduced barely enough evidence as to damages to withstand a directed verdict. See Boeing v. Shipman, 411 F.2d 365, 374-75 (5th Cir.1969) (en banc). Because we remand for a new trial for other reasons, see supra Section IV, we need not determine whether appellants should have been granted a new trial solely on the damages issue. Moreover, given the complexity of this case, the possibility that the plaintiff at retrial will rely on new theories with regard to liability, and the deficiencies discussed below in CAT's evidence with respect to damages, we would in any event decline to exercise our discretion to order a new trial only as to liability.⁵⁵ We take the opportunity below, however, to express our concern over the apparent weaknesses in CAT's evidence with regard to damages. See Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957, 999 (5th Cir.1976).

Our first task is to determine whether there is a causal relation between the alleged antitrust violation and an injury to plaintiff's business. Copper Liquor, Inc. v. Adolph Coors Co., 509 F.2d 758, 759 (5th Cir.) (per curiam), denying petition for rehearing, 506 F.2d 934 (5th Cir.1975). The plaintiff must introduce substantial probative facts demonstrating that some damage flowed from the unlawful conspiracy. Zenith Radio Corp. v. Hazeltine Research, 395 U.S. at 123-25, 89 S.Ct. at 1576-77; Jot-Em-Down Store (JEDS), Inc. v. Cotter & Co., 651 F.2d 245, 247 (5th Cir.1981) (causation must be proved by sufficient evidence); Malcolm v. Marathon Oil Co., 642 F.2d at 848 (requiring evidence of such quality and weight that reasonable and fairminded men in the exercise of impartial judgment might reach different conclusions); Shumate & Co. v. National Ass'n of Securities Dealers, Inc., 509 F.2d 147, 152-53 (5th Cir.) (incumbent upon plaintiff to produce some credible evidence to support allegations of injury), cert. denied, 423 U.S. 868, 96 S.Ct. 131, 46 L.Ed.2d 97 (1975). On the other hand, "it is enough that the illegality is shown to be a material cause of the injury; a plaintiff need not exhaust all possible alternative sources of injury in fulfilling his burden of proving compensable injury under Sec. 4." Zenith Radio Corp. v. Hazeltine Research, 395 U.S. at 114 n. 9, 89 S.Ct. at 1571 n. 9; see Foremost-McKesson v. Instrumentation Laboratory, 527 F.2d 417, 420 (5th Cir.1976) (plaintiff must present substantial evidence that illegal practices by defendant were material cause of plaintiff's injuries); Terrell v. Household Goods Carriers' Bureau, 494 F.2d at 20 (where damages may have been caused by number of factors plaintiff need not prove defendant's actions were sole proximate cause; plaintiff must only show with fair degree of certainty that defendant's conduct materially contributed to injury).

FRI advances three arguments to demonstrate that CAT was not injured by its alleged anticompetitive acts. First, FRI contends that Basic's limited purchases of stone subsequent to its termination of CAT demonstrate that Basic soon would have terminated CAT without any prodding by FRI.

According to Hallowell, he and Scott Carlson of Basic had an understanding whereby CAT would deliver 5,000 tons of Miami rock to Basic. At CAT's current rate of delivery, this would have generated approximately two to two and one-half months of hauling. Hallowell believed that this length of time with a 24-hour customer would allow CAT to establish itself on a firm footing. Hallowell also testified that at the time he met with Carlson he was accompanied by one of his drivers, Charles Justice. Justice corroborated this testimony, and also testified as to the 5,000-ton agreement between Hallowell and Carlson. Carlson, on the other hand, denied the existence of an agreement involving 5,000 tons, and could not recall the presence of anyone other than Hallowell during their negotiations. This testimony, however, is undercut by the testimony of one of Basic's own employees, Robert Peters, who stated that Hallowell had been accompanied by another man.

FRI contends that the evidence at trial refutes CAT's claim of an understanding to deliver 5,000 tons to Basic. From the time that CAT was terminated until the end of 1979, a period of approximately three months, Basic received a total of only eight shipments of rock, totaling approximately 200 tons; all were delivered the last three days of November, and all were purchased from FRI. Thus, FRI argues that even though CAT was forced to use Rinker South Orange, a non 24-hour customer, as its northern terminus, this changeover resulted in greater revenues for CAT than it would have earned had it not been terminated by Basic.

The record, however, establishes that during the relevant time period rock produced in the Brooksville-Orlando market was in short supply.⁵⁶ CAT's introduction of Miami rock into the Brooksville-Orlando market was the only alternative to rock produced in that market. Moreover, it was uncontroverted at trial that Basic had a continual debt problem with FRI; Basic's debt at the time of the events in question was variously estimated at from $90,000 to $150,000.

Our examination of the record persuades us that there is a sufficient basis for rejecting FRI's contention. As discussed above, Carlson's recollection of the events surrounding the hiring of CAT was contradicted in at least one significant regard by the testimony of a fellow employee.⁵⁷ Further, the evidence of rock shortages in the Brooksville-Orlando market, combined with Basic's position as a substantial debtor of FRI, could lead a reasonable juror to conclude that Basic's subsequent course of dealing with FRI is not indicative of how it would have behaved had it continued to enjoy a steady supply of cheaper rock from the Miami area. See Associated Radio Serv. Co. v. Page Airways, Inc., 624 F.2d at 1362.

FRI next argues that even if CAT had not been terminated by Basic it soon would have been terminated at the south end of its circuit by its sand customer, Rinker. According to John Dicks, Rinker's Regions Operations Manager, Rinker did not anticipate a long-term relation with CAT, and Hallowell had been aware of this. Dicks stated that Rinker normally purchased its sand directly from the Miami market. In his view, Miami sand was a better grade than that produced in the Clermont area. He further testified that Rinker's reason for bringing in Orlando sand was a temporary shortage in the Miami supply. Thus, as soon as it would be able to, Rinker intended to switch back over to the Miami supply.⁵⁸ The evidence is clear, however, that until CAT collapsed it was still transporting sand south to Rinker's West Palm Beach plant and was still transporting rock north from Rinker Miami to Rinker South Orange. Finally, FRI's argument as to the probability that CAT would have been terminated by Rinker may well be relevant to the quantum of damages for which FRI is liable. It does not, however, have any bearing on the loss of revenue CAT may have suffered during the remaining two months of its operations, during which time Rinker remained its customer. Thus, this argument by FRI has no bearing on the fact of injury issue.