                                                                 United States Court of Appeals
                                                                          Fifth Circuit
                                                                         F I L E D
                                   In the                                May 17, 2005
                United States Court of Appeals                     Charles R. Fulbruge III
                          for the Fifth Circuit                            Clerk
                              _______________

                                m 04-20125
                              _______________



    EL AGUILA FOOD PRODUCTS, INC.; LA RANCHERA FOOD PRODUCTS, INC.;
   LA RENIA, INC.; ANITA’S MEXICAN FOODS CORP.; LA ESPIGA DE ORO, INC.;
                    GILBERT MORENO ENTERPRISES, INC.,
                        DOING BUSINESS AS LA MONITA;
 LA FAVORITA INCORPORATED; MEX-PRO, INC.; LA TAPATIA TORTILLERIA, INC.;
                           MARBROS LLC,
                        DOING BUSINESS AS EL RANCHO;
                            FOOD-O-MEX CORP.,
             DOING BUSINESS AS EL DORADO MEXICAN FOOD PRODUCTS;
                          R AND M PARTNERSHIP,
                   DOING BUSINESS AS CAPISTRAN TORTILLAS;
                             WALTER MOLINA,
               DOING BUSINESS AS DOS MOLINOS TORTILLA HEAVEN;
CALIFORNIA MEXICAN FOODS, INC.; MEXICAN FOOD SPECIALITIES, INC.; SANITARY
                    TORTILLA MANUFACTURING, LTD.;
                              JFCW, INC.,
                   DOING BUSINESS AS CALIENTE DISTRIBUTORS;
                                  AND
                          LOMPOC TORTILLA SHOP,

                                                Plaintiffs-Appellants,

                                  VERSUS

                       GRUMA CORPORATION, ET AL.,

                                                Defendants,
                                        GRUMA CORPORATION,
                 INDIVIDUALLY DOING BUSINESS AS MISSION FOODS CORPORATION;
                               GRUMA CORPORATION TEXAS;
                               MISSION FOODS CORPORATION;
                          GUERRERO MEXICAN FOOD PRODUCTS, INC.;
                                                       AND
                                         AZTECA MILLING LP,

                                                                     Defendants-Appellees.



                                      _________________________

                              Appeal from the United States District Court
                                  for the Southern District of Texas
                                           m 4:03-CV-427
                                   _________________________




Before DAVIS, SMITH, and                                                             I.
  DEMOSS, Circuit Judges.                                        The nature of this suit and the conduct
                                                             alleged to be anticompetitive are set forth in
JERRY E. SMITH, Circuit Judge:*                              the district court’s opinion,1 so we only briefly
                                                             summarize them here. Plaintiffs challenge
   The plaintiffs in this antitrust suit, seventeen          Gruma’s conduct downstreamSSits efforts to
manufacturers of tortillas, appeal a take-                   obtain shelf and display space in retail outlets
nothing judgment entered in favor of Gruma                   and to induce retailers to promote and adver-
Corporation (“Gruma”), a manufacturer of                     tise its tortillas. Specifically, plaintiffs chal-
tortillas and related food products, two of its              lenge Gruma’s use of marketing agreements
corporate divisions, and a related entity.                   with retailers whereby Gruma pays up-front
Because the plaintiffs failed to offer evidence              fees to retailersSSso-called “slotting fees”SSor
of damages and causation sufficient to sustain               provides other price reductions or financial
a rational judgment in their favor, we affirm.               incentives to obtain (and in part manage) shelf
                                                             space, advertising, and product promotion, as
                                                             well as Gruma’s conduct as it acts as a “Cate-
                                                             gory Captain,” a designation given a particular
   *
     Pursuant to 5TH CIR. R. 47.5, the court has de-
termined that this opinion should not be published
                                                                1
and is not precedent except under the limited cir-               El-Aguila Food Prods., Inc. v. Gruma Corp.,
cumstances set forth in 5TH CIR. R. 47.5.4.                  301 F. Supp. 2d 612 (S.D. Tex. 2003).

                                                        2
product manufacturer by a retailer enabling the          Gundlach, to opine on the causal link between
manufacturer to assist the retailer in display           Gruma’s challenged conduct and the damages
and promotional operations.2 Plaintiffs charge           claimed; Gruma renewed its objection to his
Gruma with exclusive dealing in violation of             testimony, and after another proffer and
section 1 of the Sherman Act and section 3 of            examination, the court excluded Gundlach
the Clayton Act, monopolization and                      from testifying.
attempted monopolization in violation of                     The plaintiffs having no admissible evidence
section 2 of the Sherman Act, price discrimi-            of antitrust damages or causation on which a
nation in violation of the Robinson-Patman               verdict could be based, the court dismissed the
Act, and violations of state antitrust laws.             jury. Gruma moved for judgment as matter of
                                                         law and moved the court to consider its
   Before trial, Gruma moved for summary                 pending motion for summary judgment.
judgment, contending that plaintiffs could not,          Thereafter, in a published opinion, the court
as a matter of law, establish any antitrust              articulated its reasons for excluding the
violations. Gruma also moved to exclude, on              experts and granted a take-nothing judgment
Daubert grounds,3 the plaintiffs’ designated             in favor of Gruma, concluding that plaintiffs’
expert witnesses on damages and causation.               claims for money damages and injunctive relief
The district court did not rule on Gruma’s               fail as a matter of law.
summary judgment motion before trial; it
entered an order indicating the motion would                                     II.
be carried with trial. The court summarily                   Because the district court granted Gruma’s
denied the motions to exclude but reserved the           motion for summary judgment and its motion
right to reconsider the question on a renewed            for judgment as a matter of law, our review is
objection at trial.                                      de novo, and we may affirm on any basis
                                                         supported by the record.4 Private antitrust
   The case proceeded to trial before a jury.            liability under § 4 of the Clayton Act requires
After plaintiffs presented their fact witnesses,         a plaintiff to show (1) a violation of the anti-
they offered their damages expert, Kenneth               trust laws, (2) the fact of damage, and (3)
McCoin, to opine on the profits allegedly lost           some indication of the amount of damage.
as a consequence of Gruma’s challenged                   E.g., Nichols v. Mobile Bd. of Realtors, Inc.,
conduct. Gruma renewed its Daubert objec-                675 F.2d 671, 675-76 (5th Cir. 1982). The
tion, and after a complete proffer and extended          fact of damage requirement is one of causa-
voir dire examination, the court sustained the           tion; the plaintiff must show that the defen-
objection and excluded McCoin from                       dant’s unlawful conduct was a material cause
testifying. Plaintiffs then called their expert on       of injury to its business. If the requisite causal
causation and antitrust injury, Gregory                  link is proven, “a more relaxed burden of proof
                                                         obtains for the amount of damages than would

   2
    See FEDERAL TRADE COMMISSION STAFF
                                                            4
REPORT, SLOTTING ALLOWANCES IN THE RETAIL                     See Hugh Symons Group, plc v. Motorola,
GROCERY INDUSTRY 12-13 (Nov. 2003).                      Inc., 292 F.3d 466, 468 (5th Cir. 2002); Phillips
                                                         ex rel. Phillips v. Monroe County, 311 F.3d 369,
   3
    See Daubert v. Merrell Dow Pharms., Inc.,            373 (5th Cir. 2002); LLEH, Inc. v. Wichita
509 U.S. 579 (1993).                                     County, Tex., 289 F.3d 358, 364 (5th Cir. 2002).

                                                     3
justify an award in other civil cases.” Eleven                the alleged antitrust injury and irrelevant
Line, Inc. v. N. Tex. State Soccer Ass’n, 213                 insofar as it was not in any respect anchored to
F.3d 198, 207 (5th Cir. 2000). Though                         the specific agreements or marketing practices
relaxed, the standard for proving the quantum                 challenged by plaintiffs. See id. at 624-26.
of damages is not without bounds, for antitrust
damages may not be determined by guesswork                       A district court has broad discretion in
or speculation; “we must at least insist upon a               deciding to admit or exclude expert testi-
‘just and reasonable estimate of the damage                   mony,6 and excluding McCoin’s testimony was
based on relevant data.’” Lehrman v. Gulf Oil                 anything but an abuse of discretion. Indeed,
Corp., 464 F.2d 26, 46 (5th Cir. 1972)                        McCoin made no effort to demonstrate the
(quoting Bigelow v. RKO Radio Pictures, 327                   reasonable similarity of the plaintiffs’ firms and
U.S. 251, 264 (1946)).5                                       the businesses whose earnings data he relied
                                                              on as a benchmark.7 Similarly, McCoin did not
                     III.                                     consider whether the plaintiffs’ firms were
   We do not pause to consider the district                   even capable of handling the excess capacity
court’s conclusion that the plaintiffs failed, as             the projected rates of return necessarily entail.
a matter of law, to establish any harm to                     Moreover, by characterizing all variances
competition rather than competitors in any                    between the trade association earnings data
properly defined market and thus any violation                and plaintiffs’ respective earnings as “lost
of the antitrust laws. Instead, affirmance is                 profits,” no allowance was made for losses
compelled on more narrow grounds: the fail-                   caused by any other factorSSincluding, for
ure of proof on damages and causation.                        example, reductions in shelf space attributable
                                                              to other dominant firms or new entrants into
                       A.                                     the relevant markets, the plaintiffs’ own failure
    To prove actual damages, plaintiffs chiefly               to compete for shelf space on the terms sought
relied on McCoin’s damages model. He used                     by retailers, and their lack of capacity or
a yardstick measure of lost profits whereby he                efficiency relative to other firms.
compared plaintiffs’ sales history with sales
data and growth projections from trade associ-                   In any event, even if McCoin’s testimony
ation studies of national tortilla markets; he
applied a uniform gross margin to each of the
plaintiffs’ firmsSSthe major assumption being                    6
                                                                  See Gen. Elec. Co. v. Joiner, 522 U.S. 136,
that, absent Gruma’s illegal conduct, each of                 142 (1997); Guy v. Crown Equip., 394 F.3d 320,
the plaintiffs would have performed to the rate               325 (5th Cir. 2004).
of the market as a whole. See El-Aguila, 301                     7
                                                                    Cf. Eleven Line, 213 F.3d at 208 (“An anti-
F. Supp. 2d at 624 n.14. The district court
                                                              trust plaintiff who uses a yardstick method of de-
found this model wholly unreliable insofar as it
                                                              termining lost profits bears the burden of demon-
attributed all of the measured lost profits to                strating the reasonable similarity of the business
                                                              whose earnings experience he would borrow.”);
                                                              Lehrman v. Gulf Oil Corp., 500 F.2d 659, 667
   5
     Plaintiffs do not brief any salient differences          (5th Cir. 1974) (“Although allowances can be
in the requirements under state law, opting to tie            made for differences between the firms, the busi-
the fate of their state law claims to their federal law       ness used as a standard must be as nearly identical
claims.                                                       to the plaintiff’s as possible.”).

                                                          4
had been admitted, it would not have provided                2d at 620-24. We cannot say this was an
a sufficient basis on which the jury could have              abuse of discretion, for the record indicates
arrived at a reasonable and just estimate of                 that Gundlach did not examine sales data from
actual damages.8 And the plaintiffs did not                  retailers in the relevant markets to determine
present additional evidence sufficient to prove              whether space allocation among the various
damages. Because plaintiffs failed to offer                  brands was disproportionate to their sales, nor
substantial evidence on which a principled                   did he attempt to tie space allocation to retail-
award of money damages could be based, the                   ers with which Gruma had marketing agree-
district court did not err in granting judgment              ments or paid slotting fees, or to quantify
in favor of Gruma on the claims for money                    either the extent of exclusivity Gruma alleg-
damages.                                                     edly obtained or the extent of market foreclo-
                                                             sure allegedly caused by Gruma’s challenged
                        B.                                   conduct.10 Moreover, Grundlach failed ade-
   Nor did plaintiffs provide sufficient evi-                quately to account for alternative causes of
dence to demonstrate that Gruma’s conduct                    plaintiffs’ reduction in shelf space, most
was a material cause of actual or threatened                 notably their failure to compete for shelf space
damage (much less of the sort the antitrust                  by offering similar incentives to reduce the net
laws were designed to prevent).9 To prove                    price paid for tortillas by retailers as well as
causation, plaintiffs relied primarily on Gund-              the growing success of retailers’ own private
lach, whose view was that Gruma’s marketing                  lines of tortillas.
agreements and practice of paying slotting fees
resulted in exclusivity and permitted                           Beyond their designated expert, plaintiffs
preferential shelf-space and display positions in            point to circumstantial evidence and argue that
a manner inconsistent with sales and thus                    the jury could have inferred causation.
restricted competitors from the market.                      Though jury inferences of causation are in
                                                             some instances permissible, “the required
   The district court did not question Grund-                causal link must be proved as a matter of fact
lach’s qualifications but excluded his testimony             and with a fair degree of certainty.” Alabama
because his opinions amounted to abstract                    v. Blue Bird Body Co., 573 F.2d 309, 317 (5th
conclusions not adequately grounded in the                   Cir. 1978). And this is especially so where
facts of the case. See El-Aguila, 301 F. Supp.               plaintiffs admittedly lost shelf space (and thus
                                                             sales) because of salient factors distinct from
                                                             the challenged conduct such as increasing
   8
     Cf. MCI Communications v. Am. Tel. & Tel.               competition in the tortilla category and their
Co., 708 F.2d 1081, 1162 (7th Cir. 1983) (“When              refusal even to seek shelf space in some retail
a plaintiff improperly attributes all losses to a
defendant’s illegal acts, despite the presence of sig-
nificant other factors, the evidence does not permit
a jury to make a reasonable and principled estimate
of the amount of damages. This is precisely the
type of speculation or guesswork not permitted for
                                                                10
antitrust jury verdicts.”) (internal marks omitted).                Cf. Joiner, 522 U.S. at 146 (stating that a
                                                             district court “may conclude that there is simply
   9
     See 15 U.S.C. § 26; Cargill, Inc. v. Monfort,           too great an analytical gap between the data and
Inc., 479 U.S. 104, 113 (1986).                              the opinion proffered”).

                                                         5
outlets where Gruma’s products were sold.11

   In sum, because plaintiffs failed to present
substantial evidence demonstrating that Gru-
ma’s conduct was a material cause of its actual
or threatened injury as well as evidence on
which a jury could base a reasonable award of
money damages, their claims fail as a matter of
law. Accordingly, the judgment in favor of
defendants is AFFIRMED.




   11
      Cf. Taylor Pub. Co. v. Jostens, Inc., 216
F.3d 465, 485 (5th Cir. 2000) (requiring tighter
demonstration of causation where other factors
contributed to plaintiff’s losses).

                                                   6
