                                                                                                                           Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


8-24-1995

Stelwagon v Tarmac
Precedential or Non-Precedential:

Docket 94-2004




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                   UNITED STATES COURT OF APPEALS
                       FOR THE THIRD CIRCUIT

                              ___________

                              No. 94-2004
                              ___________


         STELWAGON MANUFACTURING COMPANY

                                   Appellee,

                          vs.

         TARMAC ROOFING SYSTEMS, INC.,

                                   Appellant.


                              ___________


          APPEAL FROM THE UNITED STATES DISTRICT COURT
            FOR THE EASTERN DISTRICT OF PENNSYLVANIA

                   (D.C. Civil No. 92-cv-01073)

                              ___________


                        ARGUED MAY 16, 1995

         BEFORE:    COWEN, LEWIS, GARTH, Circuit Judges.

                     (Filed     August 24, l995)

                              ___________


Lawrence D. Berger (ARGUED)
Ballard, Spahr, Andrews & Ingersoll
1735 Market Street
51st Floor
Philadelphia, PA 19103

         Attorney for Appellant



                                   1
David A. Gradwohl (ARGUED)
Patrick J. Doran
Pelino & Lentz
1650 Market Street
One Liberty Place, 32nd Floor
Philadelphia, PA 19103

          Attorneys for Appellee


                              ___________

                        OPINION OF THE COURT
                            ___________



LEWIS, Circuit Judge.

          Appellant Tarmac Roofing Systems, Inc., ("Tarmac")

appeals a $1,423,392.50 judgment entered after a jury trial in

the United States District Court for the Eastern District of

Pennsylvania on appellee Stelwagon Manufacturing Company's

("Stelwagon") secondary line price discrimination and state

breach of contract claims.0    Specifically, the jury found that

Tarmac had discriminated against Stelwagon on the basis of price

in violation of section 2(a) of the Clayton Act (commonly
referred to as the Robinson-Patman Price Discrimination Act), 15

U.S.C. § 13(a) (1982),0 and, accordingly, that Stelwagon was
0
      Secondary line cases involve discrimination affecting
competition among customers of the discriminating seller. Barr
Laboratories, Inc. v. Abbott Laboratories, Inc., 978 F.2d 98, 106
(3d Cir. 1992); J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909
F.2d 1524, 1526 (3d Cir. 1990).
0
      Section 2(a) provides in pertinent part:

               It shall be unlawful for any person
          engaged in commerce, in the course of such
          commerce, either directly or indirectly, to
          discriminate in price between different
          purchasers of commodities of like grade and

                                  2
entitled to recover treble damages pursuant to section 4 of the

Clayton Act, 15 U.S.C. § 15(a).0       The jury also determined that

Tarmac breached an oral, exclusive distributorship agreement with

Stelwagon.    Although we believe that Stelwagon established a

prima facie violation of the Robinson-Patman Act, we believe it

failed to present sufficient proof of actual antitrust damages

and is, therefore, precluded from recovering damages under the

Clayton Act.    Accordingly, we will vacate the district court's

judgment insofar as it awards Stelwagon treble damages under

section 4 of the Clayton Act.    We will, however, affirm with

respect to the breach of contract claim because we believe the

district court correctly concluded that the contract claim was

not barred by the Statute of Frauds.




          quality, . . . where the effect of such
          discrimination may be substantially to lessen
          competition or tend to create a monopoly in
          any line of commerce, or to injure, destroy,
          or prevent competition with any person who
          either grants or knowingly receives the
          benefit of such discrimination, or with
          customers of either of them. . . .
0
      Section 4 of the Clayton Act provides:

                  [A]ny person who shall be injured in his
             business or property by reason of anything
             forbidden in the antitrust laws . . . shall
             recover threefold the damages by him
             sustained. . . .

                                   3
                            I.   BACKGROUND

             Stelwagon is a wholesale distributor of roofing, siding

and related construction materials.      Its principal customer base

consists of small to medium-sized roofing contractors located in

the Philadelphia, Pennsylvania, area.      In early 1988, Stelwagon

entered into an oral, exclusive distributorship agreement with

Tarmac, a Wilmington, Delaware-based manufacturer of modified

asphalt products ("MAPs").0      Under the agreement, Tarmac agreed

not to sell its MAPs to any other distributors in the

Philadelphia area except for Roofer's Mart, Inc., a pre-existing

distributor.0    In return, Stelwagon promised to promote and

develop a market for Tarmac MAPs.

          In 1988, Stelwagon began actively promoting Tarmac MAPs

as agreed.    In order to build a demand for Tarmac's products,

Stelwagon refrained from acquiring any new lines of MAPs, and

ceased aggressive marketing of its other, non-Tarmac MAPs.

Stelwagon sold Tarmac MAPs without incident in the relationship

0
      MAPs are polyester or fiberglass mats applied by torch or
hot asphalt which are sold by the roll and principally used to
cover flat roofs.
0
      Tarmac insists that the terms of the contract provided for
sales to Stelwagon and one other distributor, and consequently,
if Roofer's Mart discontinued selling Tarmac MAPs, Tarmac could
sell to another distributor. This distinction is significant
because Roofer's Mart's Philadelphia warehouse burned down in
late 1989 and Tarmac began selling MAPs to Allied Roofing
Products ("Allied"), another Philadelphia distributor.

      Because we believe that the evidence, viewed in the light
most favorable to the prevailing party, provides a rational basis
for the jury's factual finding that the terms of the contract
are, in fact, those terms that Stelwagon allege, we will not
disturb that finding. See Intermilo, Inc. v. I.P. Enterprises,
Inc., 19 F.3d 890, 892 (3d Cir. 1994).


                                    4
until early 1989, when Stelwagon became aware of sales made to

several of its competitors in violation of the agreement.0     At

around the same time, Stelwagon also learned that Tarmac was

selling MAPs to two competitors -- Standard Roofing Company

("Standard") and Celotex Corporation ("Celotex") -- at

preferential prices.   Stelwagon first complained to Tarmac about

these sales, and eventually brought this action in February 1992.

           At the close of Stelwagon's case, and again at the

close of all evidence, Tarmac moved for judgment as a matter of

law.   Both of these motions were denied and the case was

submitted to the jury, which rendered a verdict in Stelwagon's

favor on both the price discrimination and breach of contract

claims, and awarded damages in the amount of $2,272,000.0    The

district court trebled the antitrust damages under section 4 of

the Clayton Act, and entered judgment for Stelwagon in the amount

of $3,816,000.   Tarmac renewed its motion for judgment as a

matter of law and, alternatively, for a new trial.   The district

court denied the motions, but granted Tarmac's request for a

remittitur based on a finding that "the damages awarded by the

jury in this case are unsupported by the evidence and are grossly

excessive."   Stelwagon Manufacturing Company v. Tarmac Roofing

Systems, Inc., 862 F. Supp. 1361, 1369 (E.D. Pa. 1994).     The


0
      Stelwagon first became aware of Tarmac's sales to Sellmore
Roofing in Philadelphia, and later learned that Tarmac was
selling MAPs to BJ Supply Company and Allied Roofing Co., one of
Stelwagon's principal competitors in Philadelphia.
0
      The jury awarded Stelwagon $1,500,000 in damages for breach
of contract and an additional $772,000 for the antitrust
violation.

                                5
district court reduced the damages award for breach of contract

to $74,242, and likewise reduced the antitrust damages to

$450,383.50.   After trebling the Robinson-Patman damages, the

district court entered judgment for Stelwagon in the amount of

$1,423,392.50.    This appeal followed.    We have jurisdiction under

28 U.S.C. § 1291.

           On appeal, Tarmac challenges the district court's

denial of its post-trial motions.       Specifically, Tarmac claims

that the judgment should be reversed because Stelwagon failed to

present sufficient evidence to (1) establish a prima facie

Robinson-Patman violation; (2) prove actual antitrust injury; and

(3) support the award of damages under the Clayton Act.        Tarmac

also argues that Stelwagon's breach of contract claim is barred

by the statute of frauds.0     Our review of the district court's

denial of Tarmac's motion for judgment as a matter of law is

plenary.   Intermilo, Inc. v. I.P. Enterprises, Inc., 19 F.3d 890

(3d Cir. 1994).     The legal foundation for the factfinder's

verdict is reviewed de novo while the factual findings are

reviewed to "determine whether the evidence and justifiable

inferences most favorable to the prevailing party afford any

rational basis for the verdict."       Id., quoting Bhaya v.
Westinghouse Elec. Corp., 832 F.2d 258, 259 (3d Cir. 1987).

                    II.   THE ROBINSON-PATMAN CLAIM



0
      In the alternative, Tarmac raises various trial errors
which it argues require reversal. Because of our decision on the
merits, however, we need not reach the remainder of Tarmac's
claims.

                                   6
          By its terms, the Robinson-Patman Act is a prophylactic

statute and does not require that the alleged discrimination must

in fact have harmed competition.      J. Truett Payne Company, Inc.

v. Chrysler Motor Corporation, 451 U.S. 557, 561 (1981). Instead,

a violation is established upon a showing that "the effect of

such discrimination may be substantially to lessen competition."

Id.   For the purposes of the Robinson-Patman Act, price

discrimination means nothing more than a difference in price

charged to different purchasers or customers of the

discriminating seller for products of like grade or quality.

Feeser, 909 F.2d at 1532; see also F.T.C. v. Annheuser-Busch,

Inc., 363 U.S. 536, 549 (1960).       Price discrimination standing

alone, however, is not illegal per se.      Feeser, 909 F.2d at 1532;

O. Hommel Co. v. Ferro Corp., 659 F.2d 340, 346 (3d Cir. 1981).

Rather, in order to establish a prima facie violation of section

2(a), "a reasonable possibility of harm, often referred to as

competitive injury, must be shown."      Feeser, 909 F.2d at 1531.




                                  7
                           A.   Competitive Injury

                                 1.

          We note initially that as a prerequisite to

establishing secondary line injury, a plaintiff must "first prove

that, as the disfavored purchaser, it was engaged in actual

competition with the favored purchaser(s) as of the time of the

price differential."   Best Brands Beverage, Inc. v. Falstaff

Brewing Corporation, 842 F.2d 578, 584 (2d Cir. 1987).   Moreover,

to satisfy this "competitive nexus" requirement, it "must be

shown that, as of the time the price differential was imposed,

the favored and disfavored purchasers competed at the same

functional level, i.e., all wholesalers or all retailers, and

within the same geographic market."   Id. at 585.

          Tarmac claims that Stelwagon failed to show the

requisite competitive contact with either Standard or Celotex

and, as a result, did not establish a prima facie violation of

the Robinson-Patman Act.   Specifically, Tarmac argues that

Stelwagon was not in competition with Standard because Standard

operated its business outside of the geographical area where

Stelwagon's principal customer base was located, and that

Stelwagon was likewise not in competition with Celotex because

the two companies did not operate at the same functional level,

i.e., that they did not compete at the same distribution level

because Celotex is a manufacturer and Stelwagon a distributor.

The district court rejected these contentions and concluded that

the record contained sufficient evidence to support a finding




                                 8
that both Standard and Celotex were in head-to-head competition

with Stelwagon.   We agree.

          Standard is a distributor of roofing products and its

customer base is similar to that of Stelwagon's.    Although

Standard is located in Trenton, New Jersey, there was evidence

that Standard employed salespeople in Philadelphia and that it

shipped directly to its Philadelphia customers from south Jersey.

There was additional evidence that Standard was a principal

competitor of one of Stelwagon's Philadelphia locations as well

as Stelwagon's Camden, New Jersey location.    In our view, this

evidence was sufficient to support a finding of competitive

contact between Stelwagon and Standard.

          With respect to Celotex, we, too, reject the argument

advanced by Tarmac that the weight of the evidence supports the

conclusion that Celotex was not in competition with Stelwagon.

The basis of Tarmac's argument, as mentioned above, is that the

two companies were not operating at the same functional level and

were, therefore, not competing customers for purposes of the Act.

See F.T.C. v. Fred Meyer, Inc., 390 U.S. 341, 348-49 (1968).

           It is undisputed, however, that the MAPs sold by

Celotex, under its own private label, were, in fact,

"manufactured," that is, made, by Tarmac.     It is also uncontested

that the MAPs Tarmac produced for Celotex were identical to those

Tarmac sold to Stelwagon except that they did not bear the Tarmac

label.   Although there was evidence that tended to support




                                9
Tarmac's characterization of Celotex as a manufacturer,0 the fact

that there were conflicts and contradictions is of little

significance, since the resolution of such inconsistencies is

peculiarly within the province of the jury.    In our view, the

record as a whole contains sufficient evidence to support the

jury's finding, in the first instance, as well as the district

court's conclusion thereafter, that Celotex "was in economic

reality acting on the same distribution level as Stelwagon."

Stelwagon, 852 F.2d at 1368.

                                  2.

            Once the existence of a competitive relationship has

been established, "[i]njury to competition is usually shown in

either of two ways:    proof of lost sales or profits, Falls City

Industries [Inc. v. Vanco Beverages, Inc., 460 U.S. 428, 434-35

(1983)]; Rose Confections, Inc. v. Ambrosia Chocolate Co., 816

F.2d 381 (8th Cir. 1987), or under the Morton Salt test, proof of

a substantial price discrimination between competitors over

time."     Feeser, 909 F.2d at 1535.   In this case, the district

court concluded that "[t]he record . . . contains evidence that

would support a jury finding of harm to competition under either

method."    Stelwagon, 862 F. Supp at 1368.   We thus turn to the

specific evidence Stelwagon presented at trial to determine




0
      For example, there was testimony from witnesses for both
parties that Celotex was widely thought of and referred to as a
manufacturer. In addition, there was evidence that,like a
manufacturer, Celotex sold the private label MAPs to distributors
who, like Stelwagon, sold MAPs to contractors and homeowners.

                                  10
whether the record is indeed sufficient to support a finding of

competitive injury.

          (a) Substantial Price Discrimination Over Time

          It is undisputed that a differential existed between

the prices Tarmac charged Stelwagon for its MAPs and the prices

Tarmac charged Standard and Celotex.    In addition, Stelwagon

presented evidence that showed the price differential was

substantial and that it was in effect for several years.    From

this evidence, we believe the jury was entitled to infer harm to

competition for, as the Supreme Court stated in Morton Salt, "we

believe [it is] self-evident [] that there is a `reasonable

possibility' that competition may be adversely affected by a

practice under which manufacturers and producers sell their goods

to some customers substantially cheaper that they sell like goods

to the competitors of these customers."    Morton Salt, 334 U.S. at

50-51.   Because the amount and degree of the price discrimination

are significant factors to be considered when determining whether

a price differential is substantial, Feeser, 909 F.2d at 1538, we

will first address the evidence in this case that pertains to the

issue of substantiality.

          Stelwagon presented a report submitted by its expert,

Dr. Martin Perry.0    The report, insofar as it concerned the

substantiality of the price differentials, was based on Dr.

Perry's examination of Tarmac's invoices on sales of MAPs

0
      The district court qualified Dr. Perry as expert "in the
general field of economics and specifically in the field of price
discrimination, damages flowing therefrom, as well as damages
flowing from breach of distribution agreements." App. at 476.

                                  11
manufactured at its plant in Chester, Pennsylvania.    App. at 77.

The invoices, which included the date of sale, distributor,

product name, number of rolls and price charged, covered a period

from 1987 through late 1991 and included sales of six types of

Tarmac MAPs to Stelwagon and seven other distributors which, at

the time, resold MAPs in the Philadelphia area.0    App. at 81-82.

            According to the expert report, between 1988 and 1991,

Standard received prices ranging from 5 to 20 percent lower than

the prices charged to Stelwagon and, during this same period,

Celotex received prices which ranged from 10 to 25 percent lower

than the prices Tarmac charged to Stelwagon.    App. to 88-93 and

108-122.    With respect to APP 4S, the Tarmac product which

accounted for 40.4 percent of the total unit sales of all

products included on the invoices, Standard received a 12.5

percent discount relative to the price paid by Stelwagon, while

Celotex received a discount of at least 10 percent.    App. 81 and

90-91.     Based on these figures, we believe the price differential

Tarmac offered Standard and Celotex only can fairly be

characterized as substantial.0


0
      Of the seven distributors, we are concerned only with sales
to Standard and Celotex for the purposes of this appeal.
0
      Another compelling factor considered by courts in
determining competitive injury in secondary line cases is the
duration of the price discrimination. Feeser, 909 F.2d at 1539.
Generally, the longer the duration, the more likely injury will
be found. Id., citing Rose Confections, 816 F.2d at 385 (two
years); Hasbrouck v. Texaco, Inc., 842 F.2d 1034, 1041 (9th Cir.
1987) (four years). In our view, the four-year period analyzed
by Dr. Perry's report establishes the requisite duration of price
discrimination and further supports an inference of competitive
injury.


                                  12
            Because we agree with the district court that Stelwagon

offered sufficient proof of a substantial price difference over

time, which alone suffices to establish a violation of the

Robinson-Patman Act, we need not address the issue of whether

Stelwagon presented sufficient proof of lost sales or profits

insofar as such evidence pertains to establishing a violation of

the Act.0

                       B.   Antitrust Damages

            As we stated in Feeser, "[d]emonstrating competitive

injury as part of a prima facie case suffices to support

injunctive relief and implicates further examination of a

plaintiff's entitlement to treble damages under section 4 of the

Clayton Act," Feeser, 909 F.2d at 1531; however, to recover such

damages, "a plaintiff must establish cognizable injury

attributable to [the] antitrust violation and some approximation

of damage."    J. Truett Payne, 451 U.S. at 561.   In other words, a

plaintiff must prove a causal connection between the price

discrimination and actual damage suffered.0     Feeser, 909 F.2d at

0
      As discussed below, we do not believe Stelwagon offered
sufficient evidence of lost sales or profits to prove actual
antitrust damages, and is therefore not entitled to treble
damages under section 4 of the Clayton Act.
0
      The Supreme Court has described these two requirements
collectively as "antitrust injury":

                 Plaintiffs must prove antitrust injury,
            which is to say injury of the type the
            antitrust laws were intended to prevent and
            that flows from that which makes defendants'
            acts unlawful. The injury should reflect the
            anticompetitive effect either of the
            violation or of anticompetitive acts made
            possible by the violation. It should, in


                                 13
1539, citing Perkins v. Standard Oil Co., 395 U.S. 642, 648

(1969).   Traditionally, however, antitrust plaintiffs have not

been held to an unduly rigorous standard of proving antitrust

injury.   J. Truett Payne, 451 U.S. at 565. Because
           damage issues in these cases are rarely
           susceptible to the kind of concrete, detailed
           proof of injury which is available in other
           contexts[, t]he [Supreme] Court has
           repeatedly held that in the absence of more
           precise proof, the factfinder may "conclude
           as a matter of just and reasonable inference
           from the proof of defendants' wrongful acts
           and their tendency to injure plaintiffs'
           business, and from the evidence of the
           decline in prices, profits and values, not
           shown to be attributable to other causes,
           that defendants' wrongful acts had caused
           damage to the plaintiffs." Bigelow v. RKO
           Pictures, Inc., [327 U.S. 251, 264 (1946)].
           See also Eastman Kodak Co. v. Southern Photo
           Materials Co., 273 U.S. 359, 377-79 (1927);
           Story Parchment Co. v. Patterson Parchment
           Paper, Co., 282 U.S. 555, 561-566 (1931).

J. Truett Payne, 451 U.S. at 565-66, quoting Zenith Radio Corp.

v. Hazeltine Research, Inc., 395 U.S. 100, 123-124 (1969).

Although the proof requirements of section 4 are "less than

stringent,"   Feeser, 909 F.2d at 1540, there must be some direct

evidence of injury to support an award of damages.   See id.; S&W

Construction and Materials Co., Inc. v. Dravo Basic Materials

Co., Inc., 813 F. Supp. 1214, 1221 (S.D. Miss. 1992);      Chrysler



           short, be "the type of loss that the claimed
           violations . . . would be likely to cause."
           Zenith Radio Corp. v. Hazeltine
           Research[, Inc.], 395 U.S. [100,] 125
           [(1969)].

Brunswick v. Pueblo Bowl-O-Mat, 429 U.S. 477, 489 (1977); see J.
Truett Payne, 451 U.S. at 489.


                                14
Credit Corp. v. J. Truett Payne Co., Inc., 670 F.2d 575, 581-82

(5th Cir. 1982).

          Tarmac claims that Stelwagon failed to show it suffered

actual antitrust injury as a result of the price discrimination.

Specifically, Tarmac claims that Stelwagon fell short of proving

(1) that it actually suffered lost sales and profits; (2) that

any proven lost sales and profits were caused by Standard and/or

Celotex receiving favorable prices; and (3) the amount of the

sales and profits that Stelwagon lost.   The district court,

however, found that "the testimony of Dr. Perry and the anecdotal

evidence of [Stelwagon's] customer's statements, admitted under

the state of mind hearsay exception, . . . establish[ed] that

[Stelwagon] actually lost sales to Celotex and Standard."

Stelwagon, 862 F. Supp. at 1368.    For the reasons discussed

below, we disagree.




                               15
                     1.   Anecdotal Evidence

          The district court admitted -- under Federal Rule of

Evidence 803(3) (and over Tarmac's standing objection) -- the

hearsay testimony of Stelwagon employees about out-of-court

conversations with Stelwagon customers.   Essentially, the

testimony was that the customers could and did purchase Tarmac

MAPs from Standard at prices lower than Stelwagon's prices.

          Statements that are considered under the exception to

the hearsay rule found at Fed. R. Evid. 803(3),0 commonly

referred to as the "state of mind" exception, cannot be offered

to prove the truth of the underlying facts asserted.   Grove Fresh

Distributors, Inc. v. New England Apple Products Co., Inc., 969

F.2d 552, 556 (7th Cir. 1992), citing Herman Schwabe, Inc. v.

United Shoe Machinery Corp., 297 F.2d 906, 914 (2d Cir. 1962).

The district court, in explaining its decision to allow the

anecdotal testimony, acknowledged the limited use of evidence

admitted under Rule 803(3):   "statements of [a] customer as to

his reasons for not dealing with a supplier are admissible for

the limited purpose, i.e., the purpose of proving customer

motive, but not as evidence of the facts recited as furnishing


0
      Federal Rule of Evidence 803(3) provides in pertinent part:

               Then existing mental, emotional, or
          physical condition. A statement of the
          declarant's then existing state of mind,
          emotion, sensation, or physical condition
          (such as intent, plan, motive, design, mental
          feeling, pain, and bodily health), but not
          including a statement of memory or belief to
          prove the fact remembered or believed . . . .


                                16
the motive."0    App. at 255, citing Feeser, 909 F.2d at 1535 n.11;

United Shoe Machinery, 297 F.2d at 906.    Notwithstanding this

express acknowledgement, it is clear from the district court's

opinion disposing of Tarmac's motion for judgment as a matter of

law, that the court considered the customer statements for a

purpose beyond which they were originally, and properly,

admitted:
             Stelwagon [] introduced . . . the anecdotal
             evidence of its customer statements, admitted
             under the state of mind exception, see Fed.
             R. Evid. 803(3); J.F. Feeser, 909 F.2d at
             1535 n.11; Kraft Foods, Inc. v. BC-USA, Inc.,
             840 F. Supp. 344, 348 (E.D. Pa. 1993), to
             establish that it actually lost sales to
             Celotex and Standard.

Stelwagon, 862 F. Supp. at 1368 (emphasis added).

             Because the statements properly could not have been

admitted in the first instance as proof of the fact of the matter

asserted, we believe the district court's reliance on them as

proof of actual antitrust damages, in the form of lost sales, was

in error.0
0
      As we stated in Feeser, "the reason why a customer was not
doing business with a particular seller is relevant in a lost
profits/sales inquiry and its causal connection to the pricing
practices of the alleged violator." Feeser, 909 F.2d at 1535
n.11. Although the customer statements at issue in this case
clearly were admissible as evidence of why the customers were not
purchasing Tarmac MAPs from Stelwagon, i.e., because they thought
they could get a better deal elsewhere, the statements were not
admissible as proof that Stelwagon's customers did, in fact,
purchase MAPs from one of Stelwagon's competitors.
0
      We hasten to note that the district court's reliance on
Feeser in admitting the customer statements was misplaced.
Although in Feeser we concluded that the district court erred in
excluding similar anecdotal evidence, we did so in the context of
an appeal from a summary judgment proceeding. Our de novo review
of the depositions revealed that Feeser had offered sufficient
admissible evidence to meet the burden of the nonmovant at


                                  17
                        2.   Expert Evidence

           The only other evidence offered by Stelwagon that

possibly could have supported a finding of actual injury was the

expert testimony and report of Dr. Perry.      In essence, Dr.

Perry's testimony with respect to Stelwagon's lost sales and

profits mirrored the conclusions published in his report, which

summarizes the methodology used to estimate Stelwagon's losses as

follows:
           In order to forecast the lost sales of MAPs
           by Stelwagon as a result of the price
           advantage of other distributors, we begin
           with the year 1988 when Stelwagon first
           successfully introduced Tarmac's products in
           the Philadelphia metropolitan area. But for
           the price advantage of other distributors, we
           assume that Stelwagon's sales of MAPs would
           have followed a pattern similar to
           Stelwagon's sales of other products
           (excluding MAPs). . . . For this reason, we
           use Stelwagon's sales of other products to
           forecast the sales of MAPs. . . . From this
           forecast, we then calculate the lost sales of
           MAPs in the years following 1988. These lost
           sales can be converted into lost profits by
           applying Stelwagon's markup on these
           products.
App. at 96; see also App. at 479-481, 491-93.

           In other words, based on the assumption that but for

Tarmac's price discrimination, Stelwagon's sales of MAPs would

have tracked its sales of non-modified products, Dr. Perry



summary judgment. Feeser, 909 F.2d at 1535. Presumably, Feeser
would have been able to produce the customers themselves at
trial. Accordingly, the rule in this circuit is that hearsay
statements can be considered on a motion for summary judgment if
they are capable of being admissible at trial. Petruzzi's IGA
Supermarkets, Inc. v. Darling-Delaware Company, 998 F.2d 1224, 12
34 n.9 (3d Cir. 1993), citing Feeser, 909 F.2d at 1542.


                                 18
concluded that Stelwagon lost $257,000 in profits as a result of

Tarmac's illegal pricing policy.      App. at 501.

          Tarmac's challenge to Dr. Perry's testimony and report

is twofold:    first, Tarmac argues that the expert evidence should

have been excluded because it was "speculative, not based on

actual facts and data, and [because] any probative value [was]

substantially outweighed by [its] prejudicial effect."

Appellant's Br. at 43.   Second, Tarmac claims that the expert

evidence "did not constitute a `legally sufficient evidentiary

basis' for the judgment rendered below."      Appellant's Br. at 33.

Although we do not agree with Tarmac's contention that the

district court erred in admitting Dr. Perry's testimony, or in

failing to strike the testimony in response to a motion by Tarmac

at the conclusion of the direct examination, we do agree that,

standing alone, the expert's opinions, as reflected in his

testimony and report, are insufficient to support the finding of

actual damage.

          Significantly, Dr. Perry's analysis failed to

sufficiently link any decline in Stelwagon's MAPs sales to price

discrimination.   The sales may have been lost for reasons apart

from the price discrimination -- reasons that Dr. Perry's

analysis apparently did not take into account.       For example, the

evidence showed that Stelwagon had higher overhead costs than its

competitors.   In addition, there was undisputed evidence that

Stelwagon experienced other business complications during the

relevant time period.    In 1988, for example, Stelwagon terminated




                                 19
a vice-president, two territorial managers and three key

employees for their part in an embezzlement scheme.

             We recognize, of course, that "[i]f some of

[plaintiff's] injury was attributed to the price discrimination,

[the defendant] is responsible to that extent."     Falls City, 460

U.S. at 437; Feeser, 909 F.2d at 1537.    In this case, however,

the only evidence directly linking the Robinson-Patman violation

to any decline in sales and profits Stelwagon may have

experienced is the anecdotal testimony of Stelwagon employees

that, as discussed above, should not have been admitted as proof

of lost sales' profits.     Not only did Stelwagon fail to offer any

documentary evidence as to the effect of the discrimination on

resale prices, it also failed to identify a single lost

customer.0    As a result, Stelwagon's claim for damages under

section 4 of the Clayton Act must fail. See Feeser, 909 F.2d at

1540 (proof requirements of section 4 are satisfied by direct

evidence of lost sales, evidence that the substantial price

discrimination reflected in the resale prices of Feeser and the

favored competitors directly resulted in Feeser losing certain

sales and losing profits on others, and expert report outlining

the magnitude of the price difference).




0
      In Feeser, upon which the district court relied in
admitting and crediting the customer statements, we expressly
noted that "[t]he evidence we find most persuasive is that of the
customers of Feeser, corroborating the sales personnel's
testimony, that the reason Feeser lost sales was because its
prices for Serv-A-Portion products were not competitive". Feeser,
909 F.2d at 1537.


                                  20
          Having concluded that Stelwagon failed to present any

direct evidence of lost sales or profits caused by the

discriminatory pricing, we will reverse the district court's

judgment insofar as it concludes that the record contains

sufficient evidence to support an award of damages under section

4 of the Clayton Act.0

                 III.    BREACH OF CONTRACT CLAIM

          In addition to the Robinson-Patman claim, Stelwagon

brought a state action for breach of contract based primarily on

Tarmac's MAPs sales to one of Stelwagon's principal competitors,

Allied Roofing, in violation of the exclusive, distributorship

agreement between the parties.   Tarmac argues that enforcement of

the contract is barred by the statute of frauds because the

agreement was never reduced to writing and because none of the

statute's exceptions apply.   Specifically, Tarmac argues that the

district court erred in concluding (1) that Stelwagon established

a waiver of the statute by a showing of custom in the industry,

and (2) that the performance exception removed the

distributorship contract from the statute's protection.

          Although, in general, the statute of frauds acts as a

bar to the enforcement of oral agreements, it is well settled

that such agreements may be taken out of the statute of frauds if

there is evidence to establish that the agreement was made.    M.

Leff Radio Parts, Inc. v. Mattel, Inc., 706 F. Supp. 387, 394

0
      Because of our conclusion on the issue of Stelwagon's
entitlement to damages under the Clayton Act, we do not reach
Tarmac's argument that the amount of damages is unsupported by
the evidence.

                                 21
(E.D. Pa. 1988).   This rule promotes the underlying purposes of

the statute of frauds:    to prevent perjury and fraud, Simplex

Precast Industries, Inc. v. Biehl, 149 A.2d 121, 123 (1959), and

to prevent parties from escaping their legal obligations.    M.

Leff Radio Parts, 706 F. Supp. at 394.

          Stelwagon's contract claim survives Tarmac's statute of

frauds challenge based on the established doctrine that part

performance of an indivisible contract will take the whole

contract out of the statute of frauds.   W.I. Snyder Corp. v.

Caracciolo, 541 A.2d 755, 779 (Pa Super. 1988).   "We conclude it

is appropriate for Pennsylvania to follow the weight of authority

in this area and rule that part payment of an indivisible

contract takes the entire contract outside of the requirements of

the Statute of Frauds."   Id.

          We agree with the district court's conclusion that

Stelwagon's exclusive dealing agreement with Tarmac was

indivisible.   Any other conclusion renders Stelwagon and Tarmac's

agreement meaningless.    If the contract was divisible by time or

by shipments, Tarmac would only have obligated itself to deal

exclusively with Stelwagon so long as it chose to do so.0    Nor is


0
      The lack of a definite date on which the agreement ends
does not determine Stelwagon's claim. 13 Pa. Cons. Stat. Ann.
§ 2204(c) preserves a contract even if one or more terms are
indefinite as long as there is a "reasonably certain basis for
giving an appropriate remedy." 13 Pa. Cons. Stat. Ann. § 2309(b)
states "Where the contract provides for successive performances
but is indefinite in duration it is valid for a reasonable time
but unless otherwise agreed may be terminated at any time by
either party." Tarmac has never argued that it terminated the
exclusive dealership arrangement nor that the four-year period of
exclusivity by Stelwagon was not reasonable.


                                 22
there any way to limit the agreement by geographic area without

doing violence to the jury's conclusion that the exclusive

dealing agreement between Tarmac and Stelwagon covered the whole

Philadelphia area.    Once Tarmac granted Stelwagon an exclusive

distributor contract, albeit orally, and acted on it, that

agreement could only be enforced as a whole or not at all.

             Moreover, the record reflects more than sufficient

evidence of Tarmac's part performance.        From 1988 to 1989, Tarmac

honored the exclusive distributor contract.       Tarmac forbade

Sellmore Roofing, one of Stelwagon's competitors, from selling

Tarmac MAPs in Philadelphia after Stelwagon alerted Tarmac to

Sellmore's sales.    Tarmac refused to sell MAPs to Bradco, a

Philadelphia roofing supplier, because of its contract with

Stelwagon.    These performances validate Stelwagon's claim that an

exclusive distributor contract existed.       Hence, Stelwagon's

contract claims should not be barred by the statute of frauds and

the jury's award of damages for that claim must be affirmed.0

                           IV.   CONCLUSION

             For the reasons set forth above, the district court's

denial of Tarmac's motion for judgment as a matter of law will be

affirmed insofar as it pertains to Stelwagon's breach of contract

claim.   We will also affirm the district court's finding that

Stelwagon successfully proved that Tarmac's discriminatory

pricing scheme violated the Robinson-Patman Act; however, because


0
      Because of our decision on the issue of part performance,
we need not address the parties' arguments with respect to usage
of trade.


                                  23
we do not believe that Stelwagon offered sufficient proof of

actual antitrust damages, we will vacate that portion of the

district court's judgment that upholds the jury's award of

damages under section 4 of the Clayton Act, and remand the case

for entry of judgment consistent with this opinion.
_________________________




                               24
Stelwagon Manufacturing Co. v. Tarmac Roofing Supply, Inc., No. 94-2004.



GARTH, Circuit Judge, concurring,

          I agree that Stelwagon's antitrust verdict cannot stand and that Stelwago

entitled to breach of contract damages.    I write separately because I have some

differences with Judge Lewis with respect to his analysis regarding Celotex Corpora

I am also of the opinion that the issue of damages as it arose from Stelwagon's rel

with Standard should be explained.    Those differences and that explanation do not c

a difference in result.



                                              I.

          I agree with the majority that proof of actual competition is critical to

of a Robinson-Patman second line price discrimination claim.    Maj. Op. typescript a

As Judge Lewis' opinion states, actual competition requires proof of both functiona
geographic competition -- proof that "the favored and disfavored purchasers compete

the same functional level, i.e., all wholesalers or all retailers, and within the s

geographic market."    Id. (quoting Best Brands Beverage, Inc. v. Fallstaff Brewing C

842 F.2d 578, 584 (2d Cir. 1987)).

          I cannot agree however that Celotex competed with Stelwagon.     Celotex sol

private label MAPs, which were manufactured by Tarmac, in various parts of the east

including Philadelphia.    But unlike Stelwagon, Celotex sold to distributors, not to

roofing contractors.    Thus, Celotex sold to Stelwagon's competitors, not Stelwagon'




                                              25
customers.    That is to say, Celotex operated at a different functional level than

Stelwagon, i.e. one functional level above Stelwagon.

          Keenan, Stelwagon's President, testified that Celotex sold almost exclusi

other distributors and repeatedly offered to sell to Stelwagon.       App. 299-300.   Not

the 163 Celotex customers identified at trial was proven or even alleged to be a ro

contractor.    App. 138-46.

          Despite this evidence, Stelwagon claims that it competed with Celotex bas

Keenan's hearsay testimony that Celotex had once sold directly to Alper Roofing, a

contractor. App. 302-03.0     Keenan had previously testified that manufacturers occasi

sold directly to contractors for large jobs.       App. 300.   I cannot agree that eviden

one sale sufficed to permit the jury to conclude that Celotex competed on a general

with Stelwagon.

          Nor does the record reveal that the price discount received by Celotex vi

§ 2(b) of the Clayton Act.     See Texaco v. Hasbrouck, 496 U.S. 543, 571 (1990).0    The
0
          I understand footnotes 16 and 17 to state that Keenan's hearsay testimony
admissible at trial for the limited purpose of showing motive only. If indeed Stel
had produced at trial the customer who made the statement to Keenan, that testimony
certainly have been admissible. Short of producing the actual declarant at trial,
however, Keenan's testimony was still hearsay and thus had to satisfy a hearsay exc
(here Fed. R. Evid. 803(3)). It was accordingly admissible but limited to proof of
motive.

          Stelwagon introduced evidence that other contractors bought Celotex's pro
but Stelwagon did not produce evidence that those contractors purchased the MAPs di
from Celotex. The fact that a consumer may buy Dole canned goods from Foodtown does
mean that A & P, Foodtown's competitor, is also Dole's competitor.
0
   In Texaco, Hasbrouck had purchased gasoline for his retail station at a price wh
exceeded that which Texaco had sold to two distributors. These distributors had th
to retail stations which they owned and to independent retail stations. 496 U.S. at
51. The Court concluded that the distributors' mixed functions, the evidence of
intentional price discrimination by Texaco, and the amount of the discount as compa


                                               2
record here is devoid of evidence of Celotex's costs as compared with any price dis

received.    There is no evidence of the prices Celotex charged its customers, and th

no evidence in the record that Celotex operated both as a distributor as well as a

supplier in Philadelphia.    This failure of proofs distinguishes Stelwagon's claims

those discussed in Texaco.    Hence, on this record, I could not hold that Celotex co

with Stelwagon.

            Despite this disagreement with the majority, I concur in Judge Lewis' opi

that Stelwagon failed to produce evidence of actual competitive injury -- that is,

evidence of actual lost sales.   I therefore agree that we must reverse Stelwagon's

antitrust verdict on that account.

            Even if I had not concluded that Stelwagon had failed to prove actual ant

injury, I would still vote to reverse Stelwagon's verdict because Stelwagon failed

quantify its damages adequately.     While the burden of proving damage in an antitrus

is reduced, see J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 565-67

the damages alleged must arise from whatever injury to competition has been demonst
            Stelwagon's proof at trial established that Standard Roofing Supply compe

with Stelwagon only for sales out of Stelwagon's Comly (North Philadelphia) and Cam

New Jersey warehouses.   Despite this, Stelwagon sought to quantify its damages only

respect to the combined sales of all six of its warehouses.    Stelwagon never broke

its sales separately for the Comly and Camden locations.    Given that Standard compe

only with those two warehouses, however, Stelwagon's combined sales figures could n


the actual costs incurred by the distributors sufficed to prove a price discriminat
claim. Id. at 572-73.


                                               3
did not provide an adequate basis to quantify any damage which resulted from the fa

prices Standard received.

          It would be impermissibly speculative to extrapolate from Stelwagon's ove

sales figures, which Stelwagon entered into evidence, the particular damage to Stel

that may have resulted from price discrimination at Stelwagon's Comly and Camden

locations.



                                            II.

          Having expressed my reservations about the majority's opinion as to wheth

Celotex competed with Stelwagon and the quantification of damages, I nonetheless re

same result as the majority has.   Accordingly, I concur in the judgment reversing

Stelwagon's verdict on the Robinson-Patman claim and affirming Stelwagon's verdict

contract claim.




                                             4
