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1998-2 Trade Cases P 72,307, 12 Fla. L.
Rehearing Denied Feb. 9, 1999.
Julia Boaz-Cooper, L. Vastine Stabler, Walston, Stabler, Wells, Anderson & Bains, Birmingham, AL, T. Dudley Perry, Montgomery, AL, John C. Hall, Clarence M. Small, Deborah Alley Smith, Rives & Peterson, Birmingham, AL, for Plaintiffs-Appellants.
John M. Johnson, Wynn M. Shuford, Lightfoot, Franklin, White & Lucas, Birmingham, AL, for Plaintiffs-Intervenors-Appellants.
Patricia A. Conners, Asst. Atty. Gen., Tallahassee, FL, for Amicus Curiae States of FL, and others.
Stanley A. Cash, Huie, Fernambuco & Stewart, Birmingham, AL, David E. Everson, Jr., Stinson, Mag & Fizzell, P.C., Kansas City, MO, for Harcros Chemicals.
James C. Barton, Robert S. Vance, Jr., Johnston, Barton, Proctor, Swedlaw & Naff, Birmingham, AL, for Jones Chemical.
J. Mark White, Birmingham, AL, Joel Summer, Van Waters & Rogers, Kirkland, WA, Keith E. Rounsaville, Trenam, Kemker, Scharf, Barkin, Frye & O'Neill, P.A., Tampa, FL, for Van Waters & Rogers.
Tad G. Long, Bradley, Arant, Rose & White, Birmingham, AL, for Industrial Chemicals.
Andrew P. Campbell, Leitman, Siegal, Payne & Campbell, Birmingham, AL, for P.B. & S. Chemical.
Charles David Deep, Deep & Womack, Henderson, KY, for P.B. & S. Chemical.
Before TJOFLAT and COX, Circuit Judges, and WELLFORD*, Senior Circuit Judge.
In the instant case, thirty-nine Alabama municipal entities brought suit in the United States District Court for the Northern District of Alabama, alleging that five defendant chemical companies engaged in a conspiracy to fix prices for repackaged chlorine in Alabama in violation of both federal and state antitrust law. The plaintiffs also asserted claims for fraud under Alabama law. In a memorandum opinion, the district court ruled much of the plaintiffs' evidence inadmissible and granted summary judgment to all five defendants on the antitrust claims and the fraud claims. See City of Tuscaloosa v. Harcros Chems., Inc., 877 F.Supp. 1504 (N.D.Ala.1995). We review the district court's evidentiary rulings, reversing in part and affirming in part. We then review the district court's summary judgment rulings. We reverse the district court's entry of summary judgment with regard to three of the five defendants on the antitrust claims, and remand for further proceedings. We also vacate the district court's entry of summary judgment on most of the fraud claims, and remand for further proceedings.
At the core of the plaintiffs' claims are their allegations that the defendants colluded with each other to set prices for repackaged chlorine distribution contracts. During the period of the alleged collusion, many Alabama municipal entities purchased chlorine by auction.2 An entity seeking to purchase chlorine would solicit sealed bids from companies that had submitted bids in the past. Once the bids were received, the buyer would publicly open the bids and announce what each competitor had bid. The buyer would then award its contract to the lowest bidder. The plaintiffs allege that the defendants submitted sealed bids based on "list prices" previously determined amongst themselves, and in this way allocated the repackaged chlorine contracts as they wished.
Following investigations of the chlorine industry in the Southeast by the United States Department of Justice and the State of Florida,3 Alabama's former Attorney General requested authority from a number of Alabama municipal entities to bring an antitrust action against chlorine companies on their behalf. His successor, however, changed course and declined, on behalf of the state, to participate in the proposed litigation. See Harcros, 877 F.Supp. at 1511 n. 19.
The third count of the complaints asserted that the defendants conspired to restrain trade in violation of Alabama Code § 8-10-1 et seq. (1993). The plaintiffs sought actual damages and $500 in statutory liquidated damages for each instance of injury or damage resulting from the alleged conspiracy pursuant to Alabama Code § 6-5-60 (1993).8 The fourth count of the plaintiffs' complaints asserted fraud claims under Alabama law. See Ala.Code § 6-5-100 et seq. (1993). The plaintiffs sought compensatory and punitive damages for these claims.
After discovery, the defendants moved to exclude the testimony of two of the plaintiffs' three expert witnesses, and to exclude several pieces of evidence that they asserted were inadmissible hearsay. The defendants also moved for summary judgment.
The district court, in a lengthy memorandum opinion, excluded the purported hearsay testimony, see Harcros, 877 F.Supp. at 1518-21, 1538, and much of the plaintiffs' expert testimony. See id. at 1524-30, 1532. The district court then granted summary judgment for the defendants on all claims. See id. at 1521-24, 1532-38. The plaintiffs now appeal, asserting that the district court improperly excluded their proffered evidence and that summary judgment was erroneously entered.
We first review the district court's rulings on the admissibility of the purported hearsay evidence. Rulings on the admissibility of evidence are reviewed for abuse of discretion. See Walker v. NationsBank of Fla. N.A., 53 F.3d 1548, 1554 (11th Cir.1995) ("The admissibility of evidence is committed to the broad discretion of the district court, and the decision to exclude certain evidence will be reversed only upon a clear showing of abuse of discretion."); see also Hines v. Brandon Steel Decks, Inc., 886 F.2d 299, 302 (11th Cir.1989) (applying abuse of discretion standard to hearsay admissibility determination). "A district court by definition abuses its discretion when it makes an error of law." Koon v. United States, 518 U.S. 81, 100, 116 S.Ct. 2035, 2047, 135 L.Ed.2d 392 (1996). Thus, when the district court misinterprets the Federal Rules of Evidence or controlling case law, our review is plenary. Cf. Joiner v. General Elec. Co., 78 F.3d 524, 529 (11th Cir.1996), rev'd on other grounds, 522 U.S. 136, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997).
The factual findings of the district court that underlie its decisions regarding the admissibility of the purported hearsay evidence--such as its findings regarding whether a statement was made in furtherance of a conspiracy, or whether a particular document is a regular business record--are reviewed for clear error. See United States v. Bazemore, 41 F.3d 1431, 1434 (11th Cir.1994); United States v. Turner, 871 F.2d 1574, 1581 (11th Cir.1989). A finding of fact is clearly erroneous when, after reviewing the entirety of the evidence, the reviewing court "is left with the definite and firm conviction that a mistake has been committed." Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948)).
After reviewing the district court's rulings on the admissibility of the purported hearsay evidence, we turn to that court's rulings on the admissibility of the plaintiffs' expert testimony. The Supreme Court recently has clarified the standard of review applicable to appellate consideration of determinations regarding the admissibility of expert testimony. See General Elec. Co. v. Joiner, 522 U.S. 136, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997), rev'g 78 F.3d 524, 529 (11th Cir.1996). In Joiner, the Court noted that a district court's evidentiary rulings are reviewed for abuse of discretion. See id. at ----, 118 S.Ct. at 517. The Court then held that Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), did not alter this long-standing rule in the specific context of expert testimony, and in fact did not address the standard of appellate review of such rulings at all. See Joiner, 522 U.S. at ----, 118 S.Ct. at 517. The Court went on to note that a court of appeals should apply this abuse of discretion standard of review uniformly, without regard to whether the district court ruling under review allowed or disallowed the expert testimony at issue. Id. We therefore review the district court's rulings excluding the plaintiffs' expert testimony for abuse of discretion. To the extent that a ruling of the district court turns on an interpretation of a Federal Rule of Evidence or on the court's decision to apply Daubert, however, our review is plenary. See Joiner v. General Elec. Co., 78 F.3d at 529, rev'd on other grounds, 522 U.S. 136, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997); Carmichael v. Samyang Tire, Inc., 131 F.3d 1433, 1435 (11th Cir.1997), cert. granted sub nom. Kumho Tire Co. v. Carmichael, --- U.S. ----, 118 S.Ct. 2339, 141 L.Ed.2d 711 (1998).
Having examined the district court's evidentiary rulings, we finally proceed to review the district court's entry of summary judgment on the basis of the admissible evidence. This review proceeds de novo. See Southern Card & Novelty, Inc. v. Lawson Mardon Label, Inc., 138 F.3d 869, 873 (11th Cir.1998); Uniforce Temp. Personnel, Inc. v. National Council on Compensation Ins., Inc., 87 F.3d 1296, 1299 (11th Cir.1996). "Summary judgment is proper 'if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.' " Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). "The party seeking summary judgment [must] identify[ ] for the district court those portions of the record 'which it believes demonstrate the absence of a genuine issue of material fact.' " Cohen v. United Am. Bank of Cent. Fla., 83 F.3d 1347, 1349 (11th Cir.1996) (quoting Cox v. Administrator United States Steel & Carnegie 17 F.3d 1386, 1396 (11th Cir.1994) (in turn quoting Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2552)). "There is no genuine issue for trial unless the non-moving party establishes, through the record presented to the court, that it is able to prove evidence sufficient for a jury to return a verdict in its favor." Cohen, 83 F.3d at 1349.
We consider first the district court's rulings regarding the admissibility of testimony that the defendants moved to exclude as inadmissible hearsay. We reverse in part and affirm in part.
The plaintiffs proffered testimony regarding an alleged admission by the late Robert Jones ("Jones"), the former chairman, chief executive officer, and president of defendant Jones Chemicals. Loraine and Peter Cassassa, friends of Jones during the period of the alleged conspiracy, testified in depositions that on several occasions in the mid-1980s, Jones admitted to them that he was at that time involved in fixing chlorine prices in the Southeast. Loraine Cassassa testified that Jones told her that he "got together with the people [who were] submitting the bids and they knew what each other were going to bid before that bid was ever submitted." She also testified that Jones told her that he knew such conduct was illegal, but that "[t]hat's how big business goes." Peter Cassassa gave substantially identical testimony.
The district court excluded the testimony of the Cassassas as "hearsay." See infra note 10; Harcros, 877 F.Supp. at 1518-19, 1538. We conclude that the court erred as a matter of law by making this determination and therefore abused its discretion. Accordingly, we reverse the ruling excluding that testimony.
Under the Federal Rules of Evidence, " '[h]earsay' is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Fed.R.Evid. 801(c). In general, "[h]earsay is not admissible except as provided by [the federal] rules...." Fed.R.Evid. 802. A "statement by [a] party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship," however, is deemed an admission by a party opponent and is excluded from the definition of hearsay. Fed.R.Evid. 801(d)(2)(D); see Zaben v. Air Prods. & Chems., Inc., 129 F.3d 1453, 1456 (11th Cir.1997).
The appellants argue that the Cassassas' testimony ought also to be admitted against the other defendants, on the ground that Jones' purported statements were made "during the course and in furtherance of the conspiracy" and therefore fall within the exemption contained in Rule 801(d)(2)(E). Declarations by one defendant in a conspiracy case may be admissible against other defendants as non-hearsay upon sufficient showing that the statement was made by a co-conspirator during the course and in furtherance of the conspiracy. See Fed.R.Evid. 801(d)(2)(E); Bourjaily v. United States, 483 U.S. 171, 175-76, 107 S.Ct. 2775, 2778-79, 97 L.Ed.2d 144 (1987); United States v. Young, 39 F.3d 1561, 1571 (11th Cir.1994). "For a declaration by one defendant to be admissible against other defendants ..., the [plaintiffs] must establish by a preponderance of the evidence: (1) that a conspiracy existed, (2) that the defendant and the declarant were members of the conspiracy, and (3) that the statement was made during the course and in furtherance of the conspiracy." United States v. Van Hemelryck, 945 F.2d 1493, 1497-98 (11th Cir.1991); see also, e.g., United States v. Byrom, 910 F.2d 725, 734 (11th Cir.1990); United States v. Allison, 908 F.2d 1531, 1533 (11th Cir.1990) (citing Bourjaily, 483 U.S. at 175, 107 S.Ct. at 2778-79). In determining the admissibility of co-conspirator statements, the court may consider both the co-conspirator's hearsay statement and independent external evidence. See Bourjaily, 483 U.S. at 181, 107 S.Ct. at 2781; United States v. Chestang, 849 F.2d 528, 531 (11th Cir.1988).
This circuit applies "a liberal standard in determining whether a statement is made in furtherance of a conspiracy." United States v. Santiago, 837 F.2d 1545, 1549 (11th Cir.1988). The statement need not be necessary to the conspiracy, but must only further the interests of the conspiracy in some way. See United States v. Caraza, 843 F.2d 432, 436 (11th Cir.1988) (per curiam). Statements made to solicit membership or participation in the conspiracy, for example, see United States v. Montes-Cardenas, 746 F.2d 771, 780 (11th Cir.1984), or statements explaining the conspiracy to a new member, see United States v. Reyes, 798 F.2d 380, 384 (10th Cir.1986), are made in furtherance of the conspiracy. The determination of whether a statement is made in furtherance of a conspiracy is a finding of fact subject to review for clear error. See United States v. Ayarza-Garcia, 819 F.2d 1043, 1050 (11th Cir.1987).
Jones' purported statements do not satisfy even this liberal standard. The purported statements were made to friends, who were neither involved in the alleged conspiracy nor invited to participate therein, over drinks or on the golf course. The statements could not have furthered the interests of the alleged conspiracy in any way. A statement that merely discloses the existence of a conspiracy to a non-conspirator, that merely "spills the beans," with no intention of recruiting the auditor into the conspiracy does not further the conspiracy. See United States v. Posner, 764 F.2d 1535, 1538 (11th Cir.1985) (holding that a letter written by a co-conspirator, containing preliminary appraisals of real estate, was not made in furtherance of a conspiracy to overvalue the real estate and thus was not admissible as the statement of a co-conspirator because the letter was not written to conceal the conspiracy and served only to disclose the scheme); see also United States v. Moss, 138 F.3d 742, 744 (8th Cir.1998) (holding that "[a] statement made in furtherance of a conspiracy 'must somehow advance the objectives of the conspiracy, not merely inform the listener of the declarant's activities,' " in order to be admissible under Rule 801(d)(2)(E) (citation omitted)).
We conclude that the district court did not err in finding that Jones' purported statements were not made in furtherance of the alleged conspiracy, and that the Cassassas' testimony is therefore not admissible against the alleged co-conspirators. Because Jones' purported statements were non-hearsay party admissions, however, we conclude that the statements do fall within the exception contained in Rule 801(d)(2)(D), and that the Cassassas' testimony is therefore admissible against Jones Chemicals.
The district court also excluded an affidavit offered by Caine, and provided numerous reasons for doing so. See Harcros, 877 F.Supp. at 1520. Portions of the affidavit, the court stated, were "ambiguous" because "none of [the affidavit] testimony establish[ed] conspiracy." The court also concluded that "[t]he other portions of Mr. Caine's affidavit add[ed] nothing" because they were "inadmissible hearsay" and because the affidavit could not "stand alone."
id. * 561 801(c). No part of Caine's affidavit fits this definition. Caine testifies in his affidavit regarding the withdrawn Mobile bid, bidding practices at Industrial, and bidding practices at Harcros--all matters in which he personally participated or which he personally observed. At no point in theaffidavit does Caine relate any statement made by anyone that constitutes inadmissible hearsay.13 The district court therefore abused its discretion in excluding Caine's affidavit testimony. Consequently, we conclude that this testimony is admissible in its entirety.
[i]n 1987 or 1988, Lloyd found out that Joe Ragusa [ (Harcros' vice-president for the Southeast) ] was getting together with his competitors and fixing the price of chlorine before bids were submitted. Lloyd's reaction to me was that Joe was crazy for doing this and that it was illegal and that he could go to jail.... Lloyd first told me about the price fixing in 1988. We talked about it several times after that.
The proffered testimony is double hearsay; Barbara Krysti relates Lloyd Krysti's account of what Joe Ragusa said.14 Such "hearsay included within hearsay is not excluded under the hearsay rule if each part of the combined statements conforms with an exception to the hearsay rule provided in these rules." Fed.R.Evid. 805; see, e.g., Mahlandt v. Wild Canid Survival and Research Ctr., Inc., 588 F.2d 626, 630 (8th Cir.1978). Because chlorine pricing and sales were within the scope of Joe Ragusa's employment with Harcros, Ragusa's statements to Lloyd Krysti clearly fall within the party admission exception to the hearsay rule.
Lloyd Krysti's statements to Barbara Krysti, however, do not fall within any exception to the hearsay rule. The record establishes that chlorine pricing was not substantially within the scope of Lloyd Krysti's employment. Lloyd Krysti was involved in the pricing and sales of other chemicals and was rarely and only ministerially involved in chlorine sales. Lloyd Krysti did not set prices for chlorine. Indeed, the plaintiffs themselves assert that Joe Ragusa was solely responsible for setting chlorine prices in Alabama, and none of the many Harcros documents in the record indicate otherwise. On the contrary, in a 1984 memorandum, Ragusa severely upbraided several Harcros sales managers who set chlorine prices without his approval.
Because the content of Lloyd Krysti's statements did not concern a matter within the scope of his employment or agency, they do not fall within the party admission exception in Rule 801(d)(2)(D). See Wilkinson, 920 F.2d at 1565-66. In addition, Lloyd Krysti's statements were not made in furtherance of the alleged conspiracy, but "merely informed" Barbara Krysti--a non-conspirator--of the existence of the alleged conspiracy. See Moss, 138 F.3d at 744; cf. Fed.R.Evid. 801(d)(2)(E). Because Lloyd Krysti's statements to Barbara Krysti do not fall within any exception to the hearsay rule, we affirm the district court's ruling excluding the testimony of Barbara Krysti.
We next turn to the district court's rulings on the admissibility of the plaintiffs' proffered expert testimony. The district court excluded the testimony of Perry Garner, a certified public accountant. Garner offered data and testimony regarding costs borne and profits garnered by the defendants in the Alabama chlorine market, and also verified the data included in a database prepared by another of the plaintiffs' experts, statistician James McClave. McClave offered data showing, and testimony regarding the statistical significance of, market shares in the Alabama chlorine market, incumbency rates (i.e., the frequency with which companies retained chlorine contracts with particular municipalities from year to year), the frequency of tie bids in the market, prices bid by the defendants, winning bid prices, and costs borne by the defendants. The district court excluded McClave's testimony, in its entirety, as well. The data compiled by McClave were also used by Dr. Robert Lanzillotti, an economist who offered deposition testimony as well as a report regarding the economic structure of the Alabama chlorine market and the likelihood, from an economic standpoint, that a price-fixing conspiracy existed in that market. The district court criticized Lanzillotti's testimony at length, see Harcros, 877 F.Supp. at 1524-28, 1530-32, but did not exclude the evidence. See id. at 1538. The defendants do not challenge the district court's denial of their motion to exclude Lanzillotti's testimony.
Federal Rule of Evidence 702,15 as explained by the Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 589, 113 S.Ct. 2786, 2794-95, 125 L.Ed.2d 469 (1993), and its progeny, controls determinations regarding the admissibility of expert testimony. Expert testimony may be admitted into evidence if: (1) the expert is qualified to testify competently regarding the matters he intends to address; (2) the methodology by which the expert reaches his conclusions is sufficiently reliable as determined by the sort of inquiry mandated in Daubert;16 and (3) the testimony assists the trier of fact, through the application of scientific, technical, or specialized expertise, to understand the evidence or to determine a fact in issue. See Fed.R.Evid. 702; Daubert, 509 U.S. at 589, 113 S.Ct. at 2794 (holding that "under the [Federal] Rules the trial judge must ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable."); Joiner v. General Elec. Co., 78 F.3d at 529-30, rev'd on other grounds, 522 U.S. 136, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997) (stating that Rule 702 requires that the expert be qualified and that his testimony assist the trier of fact); see also Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1238 (3d Cir.), cert. denied sub nom. Moyer Packing Co. v. Petruzzi's IGA Supermarkets, Inc., 510 U.S. 994, 114 S.Ct. 554, 126 L.Ed.2d 455 (1993) (combining Rule 702's requirements with the reliability requirement in a three-part test for admissibility).
We conclude that the district court abused its discretion in excluding Garner's testimony and therefore reverse that ruling. We further conclude that the district court's interpretations of Daubert and of Rules 104 and 702, which formed the basis for the court's exclusion of the testimony of McClave, were erroneous as a matter of law. We also believe, however, that portions of McClave's testimony lie outside of his competence as a statistician and that the methodology underlying a small portion of McClave's data and testimony is fundamentally flawed, thus requiring the exclusion of those portions of McClave's data and testimony. Accordingly, we affirm the district court's ruling with regard to these portions, but reverse its ruling excluding the remainder of McClave's testimony.
The "expert" testimony of Mr. Perry Garner, C.P.A., is also inadmissible. He is no more qualified than Dr. McClave to testify on opinions based on economic theory. His deposition testimony regarding Van Waters' actual profit margins shows only that he did not consider a number of important cost factors. Significantly, exhibits produced by Mr. Garner have all been produced since his deposition at which time he expressed no opinions concerning the possibility of the existence of or the members of any antitrust conspiracy.
Harcros, 877 F.Supp. at 1532.
In evaluating the district court's reasoning under our three-part test for admitting expert testimony, we begin by concurring with the district court's assertion that Garner was not qualified to render opinions based on economic theory. Nowhere in his extensive testimony, however, did Garner offer any such opinion. As to the testimony that Garner did offer, it seems apparent that he was qualified to provide it.17 With respect to the reliability element, the district court did not identify the "important cost factors" that Garner ostensibly overlooked and that could have affected the reliability of his methodology. Upon review of Garner's testimony, we find that he considered material costs, labor costs, overhead costs, transportation costs, depreciation costs, insurance costs, and a host of other costs. We are at a loss to identify any "important cost factors" that Garner overlooked. Finally, Garner need not have expressed any opinion regarding the existence of any conspiracy in order for his testimony to be admissible under Rule 702; his testimony need only have "assist[ed] the trier of fact to understand the evidence or to determine a fact in issue." Fed.R.Evid. 702. Garner's testimony does so by calculating, compiling, and explaining the costs borne and profits enjoyed by the defendants during the period of the alleged conspiracy; this information would assist the trier of fact in determining whether, for purposes of the antitrust claims, the defendants acted in a consciously parallel fashion18 and whether, for purposes of the fraud claims, defendants' costs impelled price increases. We therefore conclude that the district court abused its discretion in excluding Garner's testimony.
The district court criticized at length the testimony of the plaintiffs' statistician, Dr. James McClave, and ultimately excluded McClave's testimony in its entirety. We hold that the district court excluded McClave's data and testimony on the basis of a legally erroneous interpretation of Rule 702, and that the court abused its discretion in excluding McClave's testimony in its entirety. We conclude, however, that parts of McClave's testimony must be excluded because those parts concern issues that are outside McClave's area of competence as a statistician. We also hold that a small portion of McClave's data and testimony must be excluded because of a flaw in the statistician's definition of the relevant market.
The district court's memorandum opinion offered several grounds for excluding McClave's testimony.19 See Harcros, 877 F.Supp. at 1528-30. Some of these grounds are sufficient to warrant the exclusion of parts of McClave's testimony. As the following discussion demonstrates, however, none of these grounds is sufficient to warrant the exclusion of McClave's testimony in its entirety (as would, for instance, a finding that McClave was not qualified to testify as an expert in antitrust statistics).20 We therefore conclude that the district court abused its discretion in excluding admissible portions of McClave's testimony by ruling that McClave's testimony in its entirety was inadmissible.
McClave's methodology to determine the existence of a conspiracy is his subjective judgment. His subjective judgments, however, cannot be tested. His opinions about whether high losing bids are signals is based on looking at the data using his "experience" and "judgment." He admits there is no statistical test to determine that a high losing bid is a signal. His statistical analysis is not impressive. Having testified, McClave has not made a case under Fed.R.Evid. 104. His statistics show anything but a successful conspiracy.
The district court also erred in relying upon Rule 104 of the Federal Rules of Evidence as support for its exclusion of McClave's data and testimony. Rule 104(b) allows a district court to determine preliminary questions of fact necessary to apply the Federal Rules of Evidence. The rule itself, however, does not provide a ground for the exclusion of any evidence as inadmissible under the Rules. The district court's incorrect use of Rule 104 was apparently rooted in its concern about the reliability of McClave's testimony.23 This concern, however, is properly addressed under Rule 702 and Daubert. See Daubert, 509 U.S. at 589, 113 S.Ct. at 2795. The district court's erroneous reliance upon Rule 104 is thus a second ground for concluding that the court abused its discretion in excluding McClave's testimony in its entirety.
The district court's fundamental criticism of McClave's testimony--that McClave's assertions regarding the existence of a conspiracy in general, and his characterization of certain bids as "signals" to co-conspirators in particular, were outside of his competence as a statistician--is, however, essentially correct. McClave's testimony is admissible only insofar as it assists the trier of fact, through the application of scientific, technical, or specialized expertise, to understand the evidence or to determine a fact in issue. His characterizations of documentary evidence as reflective of collusion, and his characterizations of particular bids as "signals," do not do so, because the trier of fact is entirely capable of determining whether or not to draw such conclusions without any technical assistance from McClave or other experts. In addition, McClave's opinions regarding the legal standards applicable to this case are outside of his competence and must be excluded.
We therefore conclude that most of McClave's testimony (all that is within his competence as a statistician) satisfies the three interrelated requirements for admission under Rule 702: McClave is qualified to testify regarding statistical measurements of events in the Alabama chlorine market during the period of the alleged conspiracy, such testimony will assist the trier of fact, and the methodologies that McClave used in measuring these events are generally reliable. Upon closer review, however, we find that the methodology underlying a small portion of McClave's data and testimony is fundamentally flawed, and that the evidence based thereon is consequently unreliable and must be excluded.
The district court correctly pointed out that McClave's database included data regarding chlorine sales in the Florida panhandle as well as in Alabama.26 See Harcros, 877 F.Supp. at 1528 & n. 57. The inclusion of Florida sales data is problematic because, as the district court pointed out, "[t]he suit alleges a conspiracy in the state of Alabama--not Alabama, the Florida panhandle, and the Southeastern states." Id. Data relevant to allegations of collusive activity in Florida may be used for corroborative purposes, but should not be commingled with data regarding Alabama transactions for purposes of making calculations intended to be used as circumstantial evidence of collusive behavior in Alabama. Including data regarding transactions that were not part of the alleged conspiracy in the database skews any cumulative measurements, such as percentages or frequencies, that depend upon the size and characteristics of the database as a whole and that are intended to describe the alleged conspiracy.
On the other hand, most of McClave's data, as well as the testimony regarding that data, do not suffer from this problem; these data either do not include any information regarding transactions in Florida, include only Florida data that can readily be separated from Alabama data, or are not expressed in percentages or frequencies and thus are not skewed by the inclusion of Florida data. McClave's data regarding the frequency of tie bids and of incumbent bidders retaining contracts, for instance, are for the Alabama market alone, and do not include Florida data; these data, and the testimony based thereon, are thus reliable and admissible. McClave's data on bid prices and on the costs borne by the defendants are not expressed in percentages or frequencies but in mere compilations of prices and costs. Since the Florida data on prices and costs can readily be separated from the Alabama data, the Florida data may be used by the trier of fact for corroborative purposes if they indicate collusive behavior in the Florida panhandle or ignored if they do not. McClave's market share measurements regarding the northern half of Alabama do not include Florida data and are therefore admissible; McClave's measurements of the defendants' respective market shares for the southern half of Alabama and for the Florida panhandle, on the other hand, are skewed by the inclusion of the Florida data and must be excluded.
We now turn to the district court's rulings granting summary judgment in favor of the defendants. We consider the court's rulings on the plaintiffs' antitrust claims,28 and then the court's treatment of the plaintiffs' fraud claims.
We first take up the district court's entry of summary judgment in favor of Jones Chemicals. The district court concluded that summary judgment in favor of Jones Chemicals was warranted because Jones "do[es] not have that much economic power to make a conspiracy stick." Harcros, 877 F.Supp. at 1535. We read this statement as an indication that the district court, viewing the evidence in the light most favorable to the plaintiffs, concluded that the trier of fact could not find for the plaintiffs and against Jones on the basis of the economic and statistical evidence and on the basis of other circumstantial evidence (such as memoranda and other documents that, the plaintiffs assert, indicate attempts by the defendants to establish and maintain the alleged conspiracy). If this was the district court's conclusion, we hold that the court erred for the reasons discussed in part III.A.3, infra.
More importantly, we hold that the entry of summary judgment in favor of Jones Chemicals must be reversed because Robert Jones' admissions to the Cassassas constitute powerful direct evidence that Jones Chemicals was involved in collusive behavior in the Alabama chlorine market during the mid-1980s. In the absence of overwhelming evidence to the contrary (and as discussed infra, we conclude that no overwhelming evidence has been produced by the defendants), the trier of fact could well find in favor of the plaintiffs against Jones Chemicals on the basis of these admissions alone. The district court's entry of summary judgment in favor of Jones Chemicals on the plaintiffs' several antitrust claims is therefore reversed.
was a nonplayer in the "South Alabama" submarket, as defined by plaintiffs, and had only a handful of sales in the North Alabama market. PB & S had no business in South Alabama and the Florida Panhandle area, and won only three bids in North Alabama from 1984-1990. It had a nonexistent market share from 1985 to 1990, the period of the purported conspiracy. PB & S was not a player in sales to municipalities. Plaintiffs have produced no evidence that PB & S was motivated to, participated in, or benefited from a conspiracy.
Harcros, 877 F.Supp. at 1535. The record reflects that Van Waters also had a zero or near-zero market share in Alabama during the period of the alleged conspiracy. See id. at 1527-28. As the district court pointed out, Van Waters' and PB & S' participation in a conspiracy that garnered them zero or near-zero market shares would be irrational. The plaintiffs and their experts assert that Van Waters and PB & S participated in the alleged conspiracy because they were afforded a quid pro quo; these two companies, the plaintiffs assert, were allotted extra chlorine contracts in markets outside Alabama in exchange for their participation in the collusive behavior in Alabama. The plaintiffs have put forward no evidence, however, to show any such quid pro quo or even to show that Van Waters' and PB & S' market shares increased elsewhere. The appellants' case against Van Waters and PB & S thus amounts to an allegation that those two defendants took part in a conspiracy that earned them zero market share and zero dollars. There is no direct evidence against these two, and the circumstantial evidence, including the plaintiffs' expert testimony, does not support the conclusion that Van Waters and PB & S participated in a conspiracy that excluded them from the market. No trier of fact could find against Van Waters and PB & S on such a basis.29 The entry of summary judgment in favor of Van Waters and PB & S on the plaintiffs' antitrust claims is therefore affirmed.
"[o]n summary judgment the inferences to be drawn from the underlying facts ... must be viewed in the light most favorable to the party opposing the motion." United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). But antitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case. Thus, in Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984), we held that conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. Id., at 764, 104 S.Ct., at 1470. See also [First National Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 280, 88 S.Ct. 1575, 1588, 20 L.Ed.2d 569 (1968) ]. To survive a motion for summary judgment or for a directed verdict, a plaintiff seeking damages for a violation of § 1 must present evidence "that tends to exclude the possibility" that the alleged conspirators acted independently. 465 U.S., at 764, 104 S.Ct., at 1471. [Such plaintiffs], in other words, must show that the inference of conspiracy is reasonable in light of the competing inferences of independent action or collusive action that could not have harmed respondents. See Cities Service, supra, 391 U.S., at 280, 88 S.Ct., at 1588.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986). This circuit applies these observations to section 2 conspiracy claims as well. See Seagood, 924 F.2d at 1573-74.
A specific standard has developed for application to cases, such as the instant case, in which the defendant oligopolists32 assert that evidence seeming to indicate collusion in fact reflects only a pattern of uniform business conduct known as "conscious parallelism." The Supreme Court has defined conscious parallelism as a "process, not in itself unlawful, by which firms in a concentrated market might in effect share monopoly power, setting their prices at a profit-maximizing, supracompetitive level by recognizing their shared economic interests and their interdependence with respect to price and output decisions." Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227, 113 S.Ct. 2578, 2590, 125 L.Ed.2d 168 (1993). In other words, conscious parallelism is the practice of interdependent pricing in an oligopolistic market by competitor firms that realize that attempts to cut prices usually reduce revenue without increasing any firm's market share, but that simple price leadership in such a market can readily increase all competitors' revenues. See Coleman v. Cannon Oil Co., 849 F.Supp. 1458, 1467 (M.D.Ala.1993) (quoting VI Phillip E. Areeda et al., Antitrust Law p 1410b (1986)); VI Areeda, supra, p 1429a-b.
"[I]t is well settled in this circuit that evidence of conscious parallelism [alone] does not permit an inference of conspiracy unless the plaintiff [either] establishes that, assuming there is no conspiracy, each defendant engaging in the parallel action acted contrary to its economic self-interest,"33 Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1456 n. 30 (11th Cir.1991),34 or offers other "plus factors" tending to establish that the defendants were not engaging merely in oligopolistic price maintenance or price leadership but rather in a collusive agreement to fix prices or otherwise restrain trade. See Dunnivant v. Bi-State Auto Parts, 851 F.2d 1575, 1583 (11th Cir.1988);35 Gainesville Utils. Dep't v. Fla. Power & Light Co., 573 F.2d 292, 300-02 (5th Cir.1978); Donald F. Turner, The Definition of Agreement Under the Sherman Act: "Conscious Parallelism" and Refusals to Deal, 75 Harv. L.Rev. 655, 659 (1962) ("Even the fact that competitors have knowingly charged identical prices is a neutral fact in the absence of evidence which would lead one to expect that the prices would have been different if truly independent decisions had been made."). The requirement of "plus factors" is necessary because evidence of consciously parallel behavior alone leaves the circumstantial evidence of collusion in equipoise; consciously parallel behavior by oligopolists does not in itself support an inference of agreement, of "a meeting of the minds," any more strongly than it supports an inference of legal price maintenance or leadership. Thus, this requirement "ensures that unilateral or procompetitive conduct is not punished or deterred." Todorov, 921 F.2d at 1456 n. 30.
The circumstantial evidence in the instant case--that is, the documentary evidence and the plaintiffs' experts' data and testimony--will thus be sufficient to take the price-fixing claims against Harcros and Industrial to trial if it meets the above standard. In sum, the plaintiffs first must produce evidence showing that the defendants engaged in consciously parallel action. Second, the plaintiffs must show "plus factors" that tend to exclude the possibility that the defendants merely were engaged in lawful conscious parallelism. One prominent "plus factor," to which antitrust plaintiffs often take recourse, is a showing that the defendants' behavior would not be reasonable or explicable (i.e. not in their legitimate economic self-interest) if they were not conspiring to fix prices or otherwise restrain trade--that is, that the defendants would not have acted as they did had they not been conspiring in restraint of trade. See, e.g., Theatre Enters., Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537, 540-42, 74 S.Ct. 257, 259-60, 98 L.Ed. 273 (1954).
We hold that the circumstantial evidence adduced by the plaintiffs against Harcros and Industrial satisfies this standard. For all the inadequacies of the record on appeal, it suffers from no shortage of evidence of consciously parallel behavior in the market; most importantly, Garner and McClave's data and testimony reveal that prices in the market moved in a notably parallel fashion during the period of the alleged conspiracy, and that prices uniformly rose during that period much more quickly than the defendants' costs. In addition, the fact that the chlorine-buying municipalities publicly announced the bid submitted by each competitor constitutes evidence that these defendants were conscious of each other's prices during this period.
The necessary "plus factor" is established by the high and rising incumbency rates demonstrated by McClave's data;36 these rates peaked at over 90 percent during the middle of the period of the alleged conspiracy in the southern Alabama submarket, and at nearly 90 percent in the northern submarket, during a period of stable costs, high and rising prices, and high and rising profits.37 Oligopolists behaving in a legal, consciously parallel fashion could achieve high and rising prices, even as costs remained stable, by engaging in price leadership. See VI Areeda, Antitrust Law p 1429, at 176. The odds that they could achieve a price and profit increase and maintain incredibly high incumbency rates--that is, maintain the very same distribution of municipal contracts year after year--are minuscule, however, unless the oligopolists were communicating with one another.38 In sum, this combination of high profits and high incumbency would not be likely to occur if the defendants39 either were vigorously competing with each other or were engaging in competitive price leadership. It would be permissible for a jury to find, therefore, that the defendants were not in fact competing for contracts but were concertedly protecting each others' incumbencies and pushing up prices.
We therefore conclude that the circumstantial evidence produced by the plaintiffs establishes Harcros' and Industrial's consciously parallel behavior in the market for chlorine in Alabama. We further conclude that the evidence of very high incumbency rates in the market during the period of the alleged conspiracy, at a time of high and rising prices and profits but stable costs, establishes the necessary "plus factor" tending to exclude the possibility that the defendants were merely engaging in conscious parallelism. We therefore reverse the district court's entry of summary judgment in favor of Industrial and Harcros on the plaintiffs' antitrust claims.
Finally, we review the district court's entry of summary judgment on the plaintiffs' fraud claims. The plaintiffs brought two types of fraud claims against the defendants. First, the plaintiffs claimed that the defendants committed fraud by sending to the municipal authorities letters apologizing for price increases and claiming that all price increases were the result of increasing costs.40 Second, the plaintiffs asserted that the defendants committed fraud by signing bid documents that included clauses in which the defendants represented to the plaintiff municipalities that the bids being submitted were not the result of collusive behavior.41 The district court tersely rejected the plaintiffs' fraud claims: "Having ruled there is no conspiracy, the court finds there can be no fraud for failure to disclose it." Harcros, 877 F.Supp. at 1537. We first note that this finding is an insufficient ground for granting summary judgment on the claims that arise out of the price increase letters; those claims do not depend upon the existence of a conspiracy because the plaintiffs could potentially prove that the representations made--that price increases were due to cost increases--were false without also proving that the defendants conspired to bring about the referenced price increases by collusive behavior. We therefore vacate the district court's entry of summary judgment as to the fraud claims based on the defendants' letters. We remand for a determination of which claims are supported by evidence of representations by specific defendants to specific plaintiffs. The claims that are supported by the record must go to trial.
Furthermore, because we hold that the plaintiffs' antitrust claims against Harcros, Industrial, and Jones survive summary judgment, we vacate the district court's entry of summary judgment as to all of the plaintiffs' fraud claims with support in the record that are based upon these three defendants' alleged concealment of a price-fixing conspiracy.42 We remand for the district court to determine which of these defendants submitted bid documents containing the allegedly false representations to which plaintiffs, and thus which fraud claims of this second type should go to trial.43IV.
For the foregoing reasons, we REVERSE the district court's exclusion of the testimony of Loraine and Peter Cassassa, REVERSE the district court's exclusion of the affidavit of O.W. Caine, and AFFIRM the district court's exclusion of the testimony of Barbara Krysti. We REVERSE in part the district court's exclusion of the data and testimony of Perry Garner and James McClave, and AFFIRM in part. On the basis of the evidence as it appears now that the admissibility questions are settled, we REVERSE the district court's entry of summary judgment on the plaintiffs' antitrust claims against Jones Chemicals, Harcros, and Industrial. We AFFIRM the district court's entry of summary judgment on the plaintiffs' antitrust claims against Van Waters and against PB & S. Finally, we AFFIRM the district court's entry of summary judgment on the plaintiffs' claim that Van Waters and PB & S made fraudulent representations of non-collusion in bid documents. In all other respects, we VACATE the district court's entry of summary judgment on the plaintiffs' fraud claims against the defendants and REMAND for further proceedings in accordance with this opinion.
Defendant Harcros Chemicals, Inc., is a chlorine repackager organized under the laws of Delaware with its principal place of business in Kansas. Harcros was formerly known as Thompson-Hayward Chemical Co. For purposes of this opinion both Thompson-Hayward and Harcros will be referred to as "Harcros."
Defendant Van Waters & Rogers, Inc., is a chlorine repackager organized under the laws of the State of Washington with its principal place of business in Washington. In 1986, Van Waters & Rogers acquired the Moreland-McKesson Chemical Company. For purposes of this opinion, both companies are referred to as "Van Waters."
Defendant Jones Chemicals, Inc., is a chlorine repackager organized under the laws of the State of New York with its principal place of business in New York.
Defendant PB & S Chemical Company, Inc., is a chlorine repackager organized under the laws of the State of Kentucky with its principal place of business in Kentucky.
Defendant Industrial Chemicals, Inc., a chlorine distributor for defendants Jones Chemicals and PB & S Chemical Company, is organized under the laws of the State of Alabama with its principal place of business in Alabama.
The repackaging, distribution and sale of chlorine in Alabama takes place within the flow of interstate commerce, as is necessary for the plaintiffs to bring this action. See infra notes 5-7. Chlorine is imported into Alabama for repackaging and is then distributed and sold to Alabama municipal entities and to other customers in Alabama and elsewhere.
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.
[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.
s8-10-3 Restraint of trade or production; misdemeanor.
Any person or corporation, domestic or foreign, which shall restrain, or attempt to restrain, the freedom of trade or production, or which shall monopolize, or attempt to monopolize, the production, control, or sale of any commodity or the prosecution, management, or control of any kind, class, or description of business or which shall destroy, or attempt to destroy, competition in the manufacture or sale of a commodity shall be guilty of a misdemeanor and, upon conviction, shall be fined not less than $500 nor more than $2,000 for each offense.
(a)Any person, firm, or corporation injured or damaged by an unlawful trust, combine or monopoly, or its effect, direct or indirect, may, in each instance of such injury or damage, recover the sum of $500 and all actual damages from any person, firm, or corporation creating, operating, aiding, or abetting such trust, combine, or monopoly and may commence the action therefor against any one or more of the parties to the trust, combine, or monopoly, or their attorneys, officers, or agents, who aid or abet such trust, combine, or monopoly. All such actions may be prosecuted to final judgment against any one or more of the defendants thereto, notwithstanding there may be a dismissal, acquittal, verdict, or judgment in favor of one or more of the defendants.
Under Alabama law, federal antitrust law "prescribe[s] the terms of unlawful monopolies and restraints of trade as they should ... be administered in Alabama." Ex parte Rice, 67 So.2d 825, 829, 259 Ala. 570 (Ala. 1953); see also McCluney v. Zap Prof'l Photography, 663 So.2d 922, 926 (Ala.1995)(citing Rice for the proposition that federal law relating to monopolization governs actions brought under section 6-5-60). Our discussion of the relevant federal law, see infra part III, therefore applies to and controls our disposition of the plaintiffs' state-law antitrust claims as well as their federal antitrust claims.
First, it is well settled that the Federal Rules of Evidence, not state evidence law, govern the admissibility of evidence in cases in federal court. See Fed.R.Evid. 1101; Johnson v. William C. Ellis & Sons Iron Works, Inc., 609 F.2d 820, 821 (5th Cir.1980). Under the Federal Rules, "it is [not] necessary to show that an employee or agent declarant possesses 'speaking authority,' tested by the usual standards of agency law, before a statement can be admitted against the principal." Wilkinson v. Carnival Cruise Lines, Inc., 920 F.2d 1560, 1565 (11th Cir.1991). Instead, it is necessary that the content of the declarant's statement concern a matter within the scope of his employment or agency. See Fed.R.Evid. 801(d)(2)(D); Wilkinson, 920 F.2d at 1565. The district court therefore erred as a matter of law in holding otherwise.
Second, Rule 801(d)(2)(E) establishes that "a statement by a coconspirator of a party during the course and in furtherance of the conspiracy" is non-hearsay evidence. Fed.R.Evid. 801(d)(2)(E). As discussed below, we agree with the district court's conclusion that Jones' purported statements were not made "during the course and in furtherance of the conspiracy." That the Cassassas' testimony is not made admissible by Rule 801(d)(2)(E), however, does not change the fact that the testimony is admissible as a party admission under Rule 801(d)(2)(D).
[a] memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.
Fed.R.Evid. 803(6). The district court apparently rejected this argument without comment, and the plaintiffs complain of this holding on appeal. On the basis of the inadequate record on appeal, the notation appears not to have been a properly authenticated regular business record. The notation is admissible under Rule 803(6) if it is "[a] memorandum [or] record ... of acts [or] events ... made at or near the time by, or from information transmitted by, a person with knowledge" of the acts in question, and "if it was the regular practice of the business activity to make the memorandum [or] record ... all as shown by the testimony of the custodian or other qualified witness, unless the source of the information or the method or circumstances of preparation indicate lack of trustworthiness." Fed.R.Evid. 803(6) (emphasis added). From the record on appeal, the Caine notation appears not to satisfy the requirements of the business records exception because the record reveals no attempt whatsoever to authenticate the notation, as is explicitly required by Rule 803(6). See Fed.R.Evid. 803(6); United States v. Williams, 837 F.2d 1009, 1013 n. 6 (11th Cir.1988) (proper foundation for admission of 803(6) testimony should include testimony of witness with personal knowledge of how document was compiled); Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1259-60 (11th Cir.1983) (person who actually prepared business record need not testify but other circumstantial evidence and testimony must suggest trustworthiness of documents); United States v. Dreer, 740 F.2d 18, 20 (11th Cir.1984) (proper foundation for admission of business record must sufficiently indicate reliability, including "circumstances surrounding the origin and the nature of the compilation"). The district court rejected the plaintiffs' invocation of the business records exception, however, in the same fashion that it rejected their reliance upon the party admission exception--on the basis of the parties' briefs alone. We therefore could not determine whether the district court erred in concluding that the Caine notation is not admissible under Rule 803(6), even if it were necessary to do so.
We also note that, even if the notation is determined not to be admissible as hearsay, the notation might be admissible as non-hearsay insofar as it is not offered to prove the truth of the matter asserted. See Fed.R.Evid. 801. The Caine notation might be offered for several purposes other than to prove the truth of the matter asserted. The notation merely could not be offered to prove that Caine instructed the Mobile board to withdraw Industrial's bid; the appellants would have to rely on Caine's affidavit testimony and other evidence to support that proposition.
Two statements in the Caine affidavit may have been the cause of the district court's hearsay concerns. In discussing a bid that he participated in submitting to the Mobile Water and Sewer Board in 1987, while employed as a sales representative for Industrial in the Mobile/Dothan area, Caine stated: "Mr. William Welch of Industrial Chemicals told me that, because there was a tie bid and Jones was the incumbent, Industrial needed to bow out gracefully." The following sentence of Caine's affidavit read: "I then communicated that information to Mrs. Whitworth [of the Mobile Board]...."
The alleged statement of Welch to Caine, however, constitutes a non-hearsay admission by a party opponent. See Fed.R.Evid. 801(d)(2)(D). Welch, as president of Industrial, was an agent of the company. In addition, since Welch stated in his deposition that he had sole responsibility for determining chlorine bid prices during a period that included 1987, his statement that Industrial should "bow out" of this particular chlorine bid concerned a matter within the scope of his agency and was made during the existence of that agency relationship. Cf. supra note 9 and accompanying text.
Caine's report of his past statement to Mrs. Whitworth also qualifies as a non-hearsay admission under Rule 801(d)(2)(D). Welch stated in his deposition that Caine was an Industrial sales representative who served the Mobile area during 1987. As such, Caine was an agent of Industrial when he communicated Welch's "bow out" directive to Mrs. Whitworth of the Mobile Board. Communicating a bid (or the withdrawal thereof) authorized by his supervisor to a prospective customer in the Mobile area surely was within the scope of Caine's agency as a sales representative for that area. We express no opinion on whether this statement would constitute inadmissible hearsay if it did not qualify as an admission.
Our review of this circuit's law on point did disclose the following statement from Bolt v. Halifax Hosp. Med. Ctr., 891 F.2d 810, 826 (11th Cir.1990): "The rule in this circuit is that evidence of conscious parallelism does not permit an inference of conspiracy unless the plaintiff establishes that each defendant engaging in the parallel action acted contrary to its economic self-interest." As explained in the preceding paragraph, a showing that the defendant acted contrary to its legitimate economic self-interest, see supra note 33, is sufficient to satisfy the requirement that the plaintiff show "plus factors" beyond mere consciously parallel action. Other "plus factors," however, may also exist.
On a different note, we observe that the district court cited our decision in Helicopter Support Systems., Inc. v. Hughes Helicopter, Inc., 818 F.2d 1530, 1534 & n. 4 (11th Cir.1987), as support for its addition of another prong to the established test for finding an agreement to restrain trade: that the plaintiff is required to "exclud[e] the possibility of independent action on the part of the defendants." See Harcros, 877 F.Supp. at 1532. This citation was erroneous for two reasons. First, the language that the district court relied upon was addressed to plaintiffs who bring distributor-termination claims; that type of claim was not brought in this case. See Helicopter Support, 818 F.2d at 1534 ("[T]he plaintiff in a distributor-termination case must also be able to point to evidence which tends to exclude the possibility that the manufacturer was operating independently in making his determination to terminate the distributor."). In addition, the Helicopter Support language merely restated Matsushita 's requirement (drawn from Monsanto ) that the plaintiff show that an inference of conspiracy is reasonable, i.e., that the plaintiff allege a plausible conspiracy that is sufficiently supported by the circumstantial evidence. See Helicopter Support, 818 F.2d at 1533 (after noting that evidence excluding independent action is required by Monsanto, we stated that, "[i]n short, Monsanto establishes that conduct which is as equally consistent with permissible competition as it is with an illegal conspiracy does not, without more, support even an inference of conspiracy."). Helicopter Support, therefore, does not provide a basis for grafting an additional requirement onto the established test.
Defendant Van Waters astutely points out in its brief that, if the defendants had wished to conspire, it would have been smarter to "rotate incumbencies," i.e., to alter the distribution of contracts from time to time in order to minimize incumbency rates and prevent a holding such as the one we reach today. We agree (although we also point out that such an arrangement likely would have required more explicit, and hence more dangerous, collusion); nonetheless, the high incumbency rates exhibited in the market would not likely have occurred in the absence of some sort of communication among the defendants. Those rates therefore establish the necessary "plus factor."
Although it in no way reflects the wishes of Jones Chemicals, we find it necessary to adjust our selling prices from time to time in order to keep up with the ever increasing cost of staying in business as a reliable source of chemicals.
I hereby affirm I have not been in any agreement or collusion among bidders or prospective bidders in restraint of freedom of competition, by agreement to bid at a fixed price or to refrain from bidding, or otherwise.

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Because none of these conditions are specifically mentioned in the ratings schedule, rating must be done by analogy. Under rating by analogy, the VA must find a closely related condition by considering (1) the functions affected by the conditions, (2) the location of the conditions, and (3) whether the symptoms are similar. These are referred to as the Lendenmann Elements. To find the best analogous rating, a Veteran or Veteran’s representative should look through the entirety of the VA’s Schedule for Rating Disabilities, and not just at the conditions which superficially seem the closest to the Veteran’s symptoms. Sometimes the best analogous conditions may be hidden where you would least expect them to be.
We note that fibromyalgia, which involves ‘widespread musculoskeletal pain and tender points’ and is specifically named as a condition for which presumptive service connection may be granted, appears to be at least as equally analogous as arthritis to Mr. Stankevich’s condition.
The Court found that Fibromyalgia (DC 5025) was just as analogous as DC 5003. Incidentally, DC 5025 does not have the same disqualifying requirements that DC 5003 have.
Veterans and their representatives should always find an analogous DC that awards them the highest rating for their set of symptoms, as long as it meets the three Lendenmann elements detailed above: function, location, and symptoms. For the chronic cough claim, the VA may want to assign one of the codes from DC 6510 to DC 6514, which require “One or two incapacitating episodes per year of sinusitis requiring prolonged (lasting four to six weeks) antibiotic treatment, or; three to six non-incapacitating episodes per year of sinusitis characterized by headaches, pain, and purulent discharge or crusting” for a rating of 10%. A careful and thorough Veteran or Veteran’s representative will have looked throughout all of § 4.97 and came upon codes DC 6834 through DC 6839, which only require “minimal symptoms such as occasional minor hemoptysis or productive cough” to warrant a rating of 30%.
The Veteran’s testicular claim is more difficult because DC 7525, for epididymitis, really is the closest regarding the Lendenmann Elements within the genitourinary system. The problem is that epididymitis involves inflammations and infections of the epididymis tubes and is rated as a urinary tract infection, which requires “Long-term drug therapy, 1-2 hospitalizations per year and/or requiring intermittent intensive management” for a rating of 10%, and “Recurrent symptomatic infection requiring drainage/frequent hospitalization (greater than two times/year), and/or requiring continuous intensive management” for a rating of 30%. Because varicoceles are usually due to faulty valve mechanics and not infections, it is unlikely that a Veteran suffering from a varicocele will ever have the necessary symptoms for service-connection under DC 7525. What a Veteran or representative should do is look under 38 C.F.R. § 4.104, the cardiovascular system, because it deals with diseases of the arteries and veins – which is what a varicocele is. DC 7120, Varicose Veins, lists the appropriate symptoms and a much more accessible rating schedule.
The function affected, anatomical localization or symptomatology of an…illness cannot be analogous if the [VA] applies that rating criteria to require objective evidence of a diagnosed disability (here, x-ray evidence of arthritis).
This is because the Veteran should not have to prove arthritis when he or she does not actually have arthritis; he or she only has a condition analogous to arthritis.
When a Veteran files a claim seeking service-connection for a disability and receives a denial or a low rating, the Veteran or Veteran’s representative should look through the VA’s Schedule for Rating Disabilities to ensure that the VA utilized the proper code, taking into consideration the three Lendenmann Elements and the requirement to assign the higher of two ratings.
Tod is a service-connected Veteran of the United States Army and a partner at the law firm of Grimes Teich Anderson, LLP, in charge of the firm’s Veterans Law section. His firm has offices in North and South Carolina, and his Veterans practice is national.
 Lendenmann v. Principi, 3 Vet. App. 345, 350-51 (1992).
 19 Vet. App. 470 (2006).
 38 C.F.R. § 4.71a (DC 5003).
 38 C.F.R. § 4.97 (DC 6510-6514).
 38 C.F.R. § 4.97 (DC 6834-6839).
 Powell v. West, 13 Vet. App. 31, 34 (1999).
 Stankevich, 19 Vet. App. at 472.

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In Ford Motor Company v. Washington, 2012 Ark. 354 (“Ford II“), the Arkansas Supreme Court addressed whether a party’s statement in its notice of appeal that it abandons all pending but unresolved claims is effective as a dismissal against a stray party. Ford II is the Court’s opinion on a petition for rehearing, so before examining that case, we need to discuss the original case first.
We addressed the case of Ford Motor Company v. Washington, 2012 Ark. 325, (“Ford I“) in a previous blog post. As discussed in that post, the plaintiff in that case sued three parties: the driver of a vehicle, the manufacturer of the vehicle, and the dealership that sold the vehicle. The plaintiff settled with the driver, and an order was entered dismissing the driver with prejudice. The plaintiff moved for a voluntary nonsuit against the dealership, and the motion was granted orally, but no order was ever entered dismissing the dealership.
In Ford I, the plaintiff prevailed at the trial level against the manufacturer, but when the manufacturer appealed, the Arkansas Supreme Court refused to hear the appeal for lack of a final order. (Although not mentioned in Ford I, the Ford II opinion indicates that both parties filed notices of appeal/cross-appeal.) The Arkansas Supreme Court held that the nonsuit against the dealership was ineffective because there was no written order dismissing the dealership. In response to this decision, the plaintiff and the manufacturer-defendant jointly petitioned the Court for a rehearing, basing their argument on Searcy County Counsel for Ethical Gov’t v. Hinchey, 2011 Ark. 533.
In Hinchey, the plaintiffs alleged that the county judge had sold a piece of equipment to two buyers without following the statutory requirements for such a sale. The lawsuit named both the county judge and the buyers as defendants. The county judge filed a motion for summary judgment, which was granted. The plaintiffs appealed, but the Arkansas Supreme Court refused to hear the appeal because the circuit court’s order granting the county judge’s motion for summary judgment did not dismiss the complaint against the buyers.
This amendment will cure a recurring finality problem. Too often–after the parties have paid for the record, filed it, and filed all their briefs on appeal–the appellate court will discover that what appears to be a final order or judgment is not final because a pleaded claim, counterclaim, or cross-claim remains unadjudicated. This kind of stray claim destroys finality and renders an otherwise final order or judgment unappealable. E. g., Ramsey v. Beverly Enters., Inc., 375 Ark. 424, 291 S.W.3d 185 (2009); Rigsby v. Rigsby, 340 Ark. 544, 11 S.W.3d 551 (2000); Brasfield v. Murray, 96 Ark. App. 207, 239 S.W.3d 551 (2006). These stray claims often appear to have been forgotten by the parties or abandoned even though no order resolved them. It wastes parties’ and courts’ scarce resources to have two appeals in these situations.
In Hinchey, the Arkansas Supreme Court stated that if the plaintiff had included this statement in its notice of appeal, the statement “would have operated as a dismissal with prejudice of its claim against [the buyers],” meaning there would have been a final order and the court would have been able to hear the appeal.
With this background in mind, we now move back to a discussion of Ford II. In Ford II, the plaintiff had included the required abandonment language in its notice of cross-appeal. Therefore, both parties argued that the language operated as a dismissal of all of the plaintiff’s claims against the dealership.
The result of this decision is that even if an appealing party includes the abandonment language (from Rule 3(e)(vi) of the Arkansas Rules of Appellate Procedure–Civil) in its notice of appeal, stray parties must have been dismissed in writing in order for the order to be final. The abandonment language simply will not operate to dismiss stray parties from a lawsuit.

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This Court has power to allow costs in original actions and in any action between states, the successful state may ask for costs or not, as it sees fit, and there is no absolute rule that, in boundary cases, the costs are divided. Costs therefore are allowed to the defendant in this suit in which the plaintiff alleged serious pecuniary damage and framed its bill like the ordinary bill of a private person to restrain a nuisance.
The solicitor's fee of $2.50 for each witness examined before the examiner and admitted in evidence was properly allowed as fees for depositions under § 824, Rev.Stat.
The question involved in the motion is stated in the opinion.
$5,650 paid to the special commissioner.
$3,776.37 for taking down and transcribing the testimony of defendant's witnesses, etc.
$720 solicitors' fees, viz., $20 for attendance at final hearing and $2.50 for each deposition taken and admitted in evidence, in accordance with Rev.Stat. § 824.
The plaintiff objected to the allowance, and the clerk referred the matter to this Court.
The only question of detail concerns the last item. The main objection is to the allowance of any costs at all. The power of the court to allow costs is not disputed. Pennsylvania v. Wheeling & Belmont Bridge Co., 18 How. 460. The former decree in this case allowed them, and, in the stipulation for the appointment of a special commissioner, the parties agreed that the costs should be "taxed by the court on the final disposal of the case, to be paid in such manner as the court may at that time, determine." But it is said that it is inconsistent with the dignity of a sovereign state to ask for costs; that, in boundary cases, costs have been divided, and that the suit was not for a pecuniary interest, but only the performance of the duty of a sovereign to its citizens, for which no costs should be imposed.
their jurisdiction was in doubt. So far as this point is concerned, there is no reason why the plaintiff should not suffer the usual consequence of failure to establish its case.
The only item specially discussed is the charge of $2.50 for each witness examined before the examiner, on the footing of "depositions" mentioned in Rev.Stat. § 824. There seems to have been some difference of opinion in the lower courts as to whether testimony given before an examiner could be treated as a deposition. See Strauss v. Meyer, 22 F. 467; 1 Foster's Fed.Prac., 3d ed., 727, § 330. In favor of so treating it are Ferguson v. Dent, 46 F. 88; Hake v. Brown, 44 F. 734; Ingham v. Pierce, 37 F. 647; The Sallie P. Linderman, 22 F. 557; Stimpson v. Brooks, 3 Blatchf. 456. See also St. Matthew's Sav. Bank v. Fidelity Casualty Co., 105 F. 161, 162-163. The words of the statute are broad enough to embrace the testimony, unless they are taken very strictly, and the trouble to the parties in having to visit different places was similar to that caused by the taking of depositions adverted to by Judge Treat in Strauss v. Meyer. The case is quite distinct from that of testimony taken in court and reduced to writing by a reporter. We are of opinion that the item may be allowed.


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Vespers (Večernje) service was celebrated Sunday, March 5, 2007, the second Sunday of Lent. Our V. Rev. Milutin Veljko officiated together with V. Rev. Vasilije Tomic and V. Rev. Ljubomir Rajic of St. Sava Church in Toronto, V. Rev. Mihailo Doder and V. Rev. Prvoslav Puric of All Serbian Saints Church in Mississauga, and V. Rev. Zlatibor Djuraševic of Sts. Peter and Paul Church in Oakville, assisted by Deacon Ivan Radovic. Our Bishop, the Right Rev. Bishop Georgije, Episkot Dositej Britansko-Skandinavski, graced our church community. The acclaimed “Kir Stefan Srbin” Choir, under the directorship of Jasmina Vucurovic, accompanied the beautiful and inspiring evening service. Lenten dinner followed the service and was enjoyed by more than eighty congregants and guests.
Dance in Folk Group "Sumadija"
Folk Dance Group Sumadija invites all interested children older than 4 to join us in learning the first steps of Serbian dances and tradition through the fun interaction with your peers.
Our practices take place every Friday, starting at 7 o'clock. We welcome new members throughout the school year.
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Send us your text and photos about interesting events.
St. Arsenije Sremac Serbian Orthodox Church Choir is in need of expanding its membership and choral sections to include new members who are interested in becoming regular church-goers, with experienced or musically talented voices. They're inviting you to learn to sing the unique Eastern Orthodox liturgical music, in a nurturing and most welcome learning atmosphere.
Please contact: Lepa Jankovic at 905-852-4660 , or Svetozar Jovanovic at 905-668-1141.
Serbian Language School in Oshawa (E. A. Lovell) has 24 students in ages 4 to 14. The school is on Saturdays, 9a.m. to 11.30a.m.
The students learn Cyrillic, Serbian history and geography, and Serbian culture and tradition.
Through play, and using attractive and accessible approach, the pupils learn biographies of important Serbs and events that marked history of Serbian nation.
Do not forget an annual support (parohijal) - 2005 is almost gone!
If you haven't yet done, please, pay $100 in the name of help for normal work of your church school congregation.

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THE THOMAS BARLUM. THE JOHN J. BARLUM. DETROIT TRUST CO.
These are suits in admiralty to foreclose two mortgages given by the Barlum Steamship Company upon the vessels Thomas Barlum and John J. Barlum, respectively. The mortgages purported to be preferred mortgages under the Ship Mortgage Act 1920. 41 Stat. 1000—1006, 46 U.S.C. c. 25, §§ 911—984 (46 USCA §§ 911—984). The mortgagor, appearing as claimant, contended that the admiralty was without jurisdiction. The District Court overruled that contention and, finding that all the requirements of that Act had been met, entered decrees of foreclosure and sale. 56 F.(2d) 455; 2 F.Supp. 733. In the case of the John J. Barlum the decree provided for the recovery by certain seamen, intervening libelants, of amounts due for wages, as preferred maritime liens. The Circuit Court of Appeals reversed the decrees, holding that the suits should have been dismissed for the want of jurisdiction. 68 F.(2d) 946. This Court granted certiorari. 292 U.S. 619, 54 S.Ct. 717, 78 L.Ed. 1476.
Prior to the enactment of the Ship Mortgage Act 1920, the admiralty had no jurisdiction of a suit to foreclose a mortgage on a ship. Bogart v. The Steamboat John Jay, 17 How. 399, 402, 15 L.Ed. 95; Schuchardt v. Babbidge (Ship Angelique), 19 How. 239, 241, 15 L.Ed. 625; People's Ferry Co. v. Beers, 20 How. 393, 400, 15 L.Ed. 961; The Lottawanna, 21 Wall. 558, 583, 22 L.Ed. 654; The Eclipse, 135 U.S. 599, 608, 10 S.Ct. 873, 34 L.Ed. 269; The J. E. Rumbell, 148 U.S. 1, 15, 13 S.Ct. 498, 37 L.Ed. 345.1 If jurisdiction in the admiralty of the present suits is to be maintained it must be by reason of the application and validity of the provisions of the Ship Mortgage Act.
Subdivision (e) of subsection D provides that a mortgage which includes property other than a vessel 'shall not be held a preferred mortgage' unless there is provision for the separate discharge of such property by the payment of a specified portion of the mortgage indebtedness; subdivision (f) of subsection D makes provision for the case of a mortgage covering more than one vessel. And where a mortgage covers property in addition to vessels the Act is not to be construed as authorizing a proceeding in rem in admiralty to enforce the rights of the mortgagee in respect to such property. Subsection N,4 46 U.S.C. § 954 (46 USCA § 954).
An examination of the provisions of the Act leaves no room for doubt that the subject of mortgages of vessels, and, in particular, the priority which should be assigned to them in relation to other liens, was under the close scrutiny of the Congress in determining its policy. But, among all the minute requirements of the Act, we find none as to the application of the proceeds of loans which such mortgages secure. No condition is imposed as to the purposes for which the moneys are lent. While the Congress took care to make distinct provision for cases where a mortgage covers property other than a vessel, no distinction is made as to the status of mortgages of vessels by reason of an intention to devote the borrowed moneys to uses other than maritime. We are not at liberty to imply a condition which is opposed to the explicit terms of the statute. It is enough, so the statute says expressly, that the mortgage is upon a vessel of the United States, that it is a valid mortgage, that it is made in good faith, that it is disclosed by proper indorsements on the vessel's documents and is duly recorded, and that the other conditions, specified in detail, are met. Such a mortgage upon a vessel documented under the laws of the United States, the Congress has undertaken to regulate with respect to priority of lien. If the conditions so laid down are fulfilled, the mortgage is to be a 'preferred mortgage' with all the incidents which the Act attaches to it, including that right to bring foreclosure in admiralty. To hold that a mortgage is not within the Act which the Act itself states is within it, is not to construe the Act but to amend it. The question of policy—whether different terms should have been imposed—is not for us. We may not add to the conditions set up by Congress any more than we can subtract from them. They stand, as defined, precise and complete.
We see nothing in the general purpose of the act which can be deemed to restrict the natural meaning and effect of its language. Rather, the general purpose emphasizes that meaning and effect. The Ship Mortgage Act is a part of the Merchant Marine Act 1920 (41 Stat. 988). Its declared purpose is 'to provide for the promotion and maintenance of the American merchant marine.' The Congress, in its wisdom, decided upon the means to achieve that object and set forth its conclusions in the terms of the statute. The legislative history of the statute shows the controlling considerations. The report of the Senate Committee on Commerce pointed out that 'mortgage security on ships' was 'practically worthless'; that it was proposed to 'make it good except as to certain demands that should be superior to everything else, such as wages'; and that it was desired to have 'our people and capital interested in shipping and shipping securities.' Sen. Rep. No. 573, 66th Cong., 2d Sess., p. 9. The bill, with this purpose, was developed in conference. The managers on the part of the House of Representatives, in their statement accompanying the report of the Committee of Conference, observed that by the enlarged provisions of the bill 'the mortgagee under a mortgage upon a vessel of the United States is made more secure in his interest in the vessel than he is under existing admiralty law,' and, referring to the plan of 'creating a preferred mortgage,' added that 'the preferred status arises upon the recording of the mortgage as a preferred mortgage and its indorsement upon vessel's documents.' There is no suggestion of any requirement as to the use, intended or actual, of the moneys borrowed upon the faith of the mortgage security. H.R. No. 1102, 66th Cong., 2d Sess., p. 34; H.R. No. 1107, 66th Cong., 2d Sess., p. 31.5 The measure was enacted in the terms thus proposed.
2. The validity of the grant of jurisdiction. The Congress rested its authority upon the constitutional provisions extending the judicial power 'to all cases of admiralty and maritime jurisdiction' and conferring upon the Congress the power to make all laws which shall be 'necessary and proper' for carrying into execution all powers 'vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.' Article 3, § 2; article 1, § 8, par. 18.7 This authority was not confined to the cases of admiralty and maritime jurisdiction in England when the Constitution was adopted. Waring v. Clarke, 5 How. 441, 457, 458, 12 L.Ed. 226. The limitations which had been imposed upon the high court of admiralty in the course of its controversy with the courts of common law were not read into the grant. But the grant presupposed a 'general system of maritime law' which was familiar to the lawyers and statesmen of the country, and contemplated a body of law with uniform operation. The Lottawanna, 21 Wall. 558, 574, 575, 22 L.Ed. 654. The Constitution did not undertake to define the precise limits of that body of law or to lay down a criterion for drawing the boundary between maritime law and local law. Id. Boundaries were to be determined in the exercise of the judicial power in recognition of the purpose of the grant. 'No State law can enlarge it, not can an act of Congress or rule of court make it broader than the judicial power may determine to be its true limits.' The St. Lawrence, 1 Black, 522, 527, 17 L.Ed. 180. The framers of the Constitution did not contemplate that the maritime law should remain unalterable. The purpose was to place the entire subject, including its substantive as well as its procedural features, under national control. From the beginning the grant was regarded as implicitly investing legislative power for that purpose in the United States. When the Constitution was adopted, the existing maritime law became the law of the United States 'subject to power in Congress to alter, qualify or supplement it as experience or changing conditions might require.' Panama Railroad Co. v. Johnson, 264 U.S. 375, 385—387, 44 S.Ct. 391, 393, 68 L.Ed. 748. The Congress thus has paramount power to determine the maritime law which shall prevail throughout the country. The Lottawanna, supra, page 577 of 21 Wall., 22 L.Ed. 654; Butler v. Boston Steamship Co., 130 U.S. 527, 557, 9 S.Ct. 612, 32 L.Ed. 1017; Ex parte Garnett, 141 U.S. 1, 13, 11 S.Ct. 840, 35 L.Ed. 631; Southern Pacific Co. v. Jensen, 244 U.S. 205, 215, 37 S.Ct. 524, 61 L.Ed. 1086, L.R.A. 1918C, 451, Ann. Cas. 1917E, 900; Crowell v. Benson, 285 U.S. 22, 39, 52 S.Ct. 285, 76 L.Ed. 598; United States v. Flores, 289 U.S. 137, 148, 149, 53 S.Ct. 580, 77 L.Ed. 1086. But in amending and revising the maritime law, the Congress necessarily acts within a sphere restricted by the concept of the admiralty and maritime jurisdiction. The Belfast, 7 Wall. 624, 641, 19 L.Ed. 266; Panama Railroad Co. v. Johnson, supra; Crowell v. Benson, supra, page 55 of 285 U.S., 52 S.Ct. 285, 76 L.Ed. 598.
The Congress began the exertion of this authority at an early date. In the Judiciary Act of 1789, the Congress conferred upon the district courts of the United States exclusive jurisdiction of all seizures under the laws of impost, navigation, or trade of the United States, where the seizures were made on navigable waters within the respective districts. Section 9, 1 Stat. 76, 77; Waring v. Clarke, supra, page 458 of 5 How., 12 L.Ed. 226; The Margaret, 9 Wheat. 421, 427, 6 L.Ed. 125. By the Act of June 19, 1813, 3 Stat. 2, the Congress declared that a vessel employed in a fishing voyage should be answerable for the fishermen's share of the fish caught, upon a contract made on land, in the same form and to the same effect as any other vessel is liable to be proceeded against for the wages of seamen. Waring v. Clarke, supra. Important illustrations of the exercise of congressional power are found in the Limitation of Liability Act of 1851, 9 Stat. 635, enacted for the purpose of encouraging investment in shipbuilding, by limiting the venture of shipowners to the loss of the ship itself, or her freight then pending, in cases of damage occasioned without the owner's privity or knowledge (Norwich Co. v. Wright, 13 Wall. 104, 20 L.Ed. 585; Hartford Accident & Indemnity Co. v. Southern Pacific Co., 273 U.S. 207, 214, 47 S.Ct. 357, 71 L.Ed. 612); the extension, by the Act of June 26, 1884, § 18, 23 Stat. 57, 58 (46 USCA § 189), of the admiralty jurisdiction to proceedings for the limitation of liability, so as to include damages by a vessel to a land structure (The Plymouth, 3 Wall. 20, 18 L.Ed. 125; Cleveland Terminal R.R. Co. v. Steamship Co., 208 U.S. 316, 28 S.Ct. 414, 52 L.Ed. 508; Richardson v. Harmon, 222 U.S. 96, 101, 106. 32 S.Ct. 27, 56 L.Ed. 110); the Act June 23, 1910, 36 Stat. 604, providing for a maritime lien for repairs or supplies furnished to a vessel in her home port, to be enforced by a proceeding in rem (The General Smith, 4 Wheat. 438, 443, 4 L.Ed. 609; The St. Jago de Cuba, 9 Wheat. 409, 420, 6 L.Ed. 122; The J. E. Rumbell, 148 U.S. 1, 12, 13 S.Ct. 498, 37 L.Ed. 345; Piedmont Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1, 11, 41 S.Ct. 1, 65 L.Ed. 97); the Act of March 30, 1920, 41 Stat. 537 (46 USCA §§ 761—767), providing for jurisdiction in admiralty of suits for damages from death caused by wrongful act and occurring on the high seas (The Hamilton, 207 U.S. 398, 28 S.Ct. 133, 52 L.Ed. 264; Western Fuel Co. v. Garcia, 257 U.S. 233, 243, 42 S.Ct. 89, 66 L.Ed. 210; Lindgren v. United States, 281 U.S. 38, 48, 50 S.Ct. 207, 74 L.Ed. 686); the Seamen's Act of 1915, § 20, 38 Stat. 1185 (Chelentis v. Luckenbach Steamship Co., 247 U.S. 372, 384, 38 S.Ct. 501, 62 L.Ed. 1171); the Merchant Marine Act of 1920, § 33, 41 Stat 1007, amending section 20 of the act of 1915 (46 USCA § 688), thus bringing, in relation to seamen, into the maritime law, rules drawn from the Federal Employers' Liability Act, 45 USCA §§ 51—59 (Panama Railroad Co. v. Johnson, supra; Engel v. Davenport, 271 U.S. 33, 35, 46 S.Ct. 410, 70 L.Ed. 813; Panama Railroad Co. v. Vasquez, 271 U.S. 557, 559, 46 S.Ct. 596, 70 L.Ed. 1085; Northern Coal Co. v. Strand, 278 U.S. 142, 147, 49 S.Ct. 88, 73 L.Ed. 232); and the Longshoremen's and Harbor Workers' Compensation Act 1927, 44 Stat. 1424, 33 USCA §§ 901—950 (Nogueira v. N.Y., N.H. & H.R.R. Co., 281 U.S. 128, 50 S.Ct. 303, 74 L.Ed. 754; Crowell v. Benson, supra).
Of special significance, in relation to the present question, are the Acts of 1884 and 1910, supra. By the former, the admiralty jurisdiction in limitation proceedings was enlarged so as to embrace the liability for a nonmaritime tort. Although the damaged structure was on land, the injury was due to the operation of the vessel, and it could not be said that the Congress had stepped beyond the limits of its authority to amend the law in furthering its policy to encourage investments in ships. Richardson v. Harmon, supra. Compare The Blackheath, 195 U.S. 361, 367, 368, 25 S.Ct. 46, 49 L.Ed. 236. The Act of 1910 created a lien to be enforced in rem for repairs or supplies to vessels in their home ports. The state of the law as it existed be fore that enactment was fully described in The J. E. Rumbell, supra. For repairs or supplies furnished to a vessel in a foreign port, a lien was given by the general maritime law and could be enforced in admiralty, but for repairs or supplies in the home port, no lien existed, or could be enforced in admiralty under the general law, independently of local statute. When the statute of a State gave a lien to be enforced by process in rem against the vessel for repairs or supplies in her home port, that lien, being similar to the lien arising in a foreign port under the general law, was deemed to be in the nature of a maritime lien and therefore could be enforced in admiralty, and, in such case the enforcement of the lien was within the exclusive jurisdiction of the courts of the United States sitting in admiralty. The result was that where necessaries were furnished to a vessel in her home port, the vessel could not be sued in the federal courts under the general maritime law, for that law was not deemed to confer a lien, and could not be sued in a state court for that court could not enforce the lien created by the state law, but the lien so given might be enforced in admiralty.8 The Act of 1910 abolished the artificial distinction between repairs and supplies in a home port and those in a foreign port. While it created a lien where, in the absence of local provision therefor, none had theretofore existed, the change was not deemed to be inconsistent with the general principles of the maritime law and it effected a substitution of a single federal statute for the conflicting state statutes. Piedmont Coal Co. v. Seaboard Fisheries Co., supra. The Act of 1910 also provided that it should not be necessary 'to allege or prove' that credit was given to the vessel; previously, supplies furnished to the vessel at the home port, or on the owner's order, were presumed to be furnished upon his personal credit and created no lien. Id.
The significance of this suggestion cannot be overlooked. The fact that mortgages on ships had not been considered to be maritime contracts was not conclusive as to the constitutional authority of the Congress to alter or supplement the maritime law in this respect, and thus to extend the admiralty jurisdiction, 'as experience or changing conditions might require,' while keeping within a proper conception of maritime concerns. The ship, documented under the laws of the United States, is the instrumentality of our maritime enterprise, the prime object of our maritime policy. The ship 'from the moment her keel touches the water' becomes 'a subject of admiralty jurisdiction'; she acquires personality; she becomes competent to contract, is individually liable for her obligations, and is responsible for her torts. Tucker v. Alexandroff, 183 U.S. 426, 438, 22 S.Ct. 195, 201, 46 L.Ed. 264. The existence of the ship, the investments which make that existence possible, is the necessary postulate of maritime liens. We cannot fail to regard the encouragement of investments 'in shipping and shipping securities'—the objective of the Ship Mortgage Act—as an essential prerogative of the Congress in the exercise of its wide discretion as to the appropriate development of the maritime law of the country. The regulation of the priorities of ship mortgages in relation to other liens, and the conferring of jurisdiction in admiralty in order to enforce this regulation, are appropriate means to that legitimate end.
The enlargement of the cognizance of mortgages of ships, in the admiralty courts in England, nearly one hundred years ago, to which the Court referred in the Bogart Case, was to remedy an evil which had been found to exist. The purpose was 'to enable the Court to exercise its ordinary jurisdiction to the full extent.'10 That Act applied whenever the ship was 'under arrest by process issuing from the high court of admiralty' or the proceeds of a ship so arrested had been brought into the registry of the court, and the court was invested with 'full jurisdiction to take cognizance of all claims and causes of action of any person in respect to any mortgage of such ship or vessel, and to decide any suit instituted by any such person in respect of any such claims or causes of action respectively.' 3 & 4 Vict., c. 65, secs. 3, 4. These provisions were expanded by later legislation. The admiralty court in England has jurisdiction in respect of any mortgage duly registered according to the provisions of the Merchant Marine Act 1894, 'whether or not the ship or proceeds are under the arrest of the Court, and such jurisdiction may be exercised by an action in rem or in personam.' Roscoe's Admiralty Practice (5th Ed.) p. 51.
See, also, The William D. Rice, Fed. Cas. No. 17,691, 3 Ware, 134, 136; The Martha Washington, Fed. Cas. No. 9,148, 3 Ware, 245, 251; The Sailor Prince, Fed. Cas. No. 12,219, 1 Ben. 461, 466; Morgan v. Tapscott, Fed. Cas. No. 9,808, 5 Ben. 252; Britton v. The Venture (D.C.) 21 F. 928; The Gordon Campbell (D.C.) 131 F. 963, 965; The Clifton (C.C.A.) 143 F. 460, 463; The Conveyor (D.C.) 147 F. 586, 589; The Rupert City (D.C.) 213 F. 263, 266.
See Benedict's Admiralty (5th Ed.) §§ 87, 88.
See The Neptune, 3 Hagg. 129 (132).
See, e.g., The Netherlands, Maritime Law, Code of Commerce, 1838; France, Act of July 10, 1885, and Decree of June 18, 1886; Belgium, Laws of August 21, 1879, June 12, 1902, February 10, 1908, and September 4, 1908; Denmark, Maritime Law of April 1, 1892, Act 103 of April 29, 1913, also Act 57 of April 1, 1892; Italy, Maritime Law, Code of Commerce of 1883, and Mercantile Marine Code. 1866, as amended; Norway, Maritime Law of July 20, 1893, as amended by Acts of May 4, 1901, July 13, 1917, and July 9, 1920. See, Constant, 'The Law Relating to the Mortgage of Ships,' Appendix A; 'The Progress of Continental Law in the 19th Century,' Georges Ripert, Maritime Law, Continental Legal History Series, p. 399.
The validity of the Act was not questioned in Morse Dry Dock & Repair Co. v. Northern Star, 271 U.S. 552, 555, 556, 46 S.Ct. 589, 70 L.Ed. 1082, and its validity has been assumed in several decisions in the lower federal courts. See The Egeria (C.C.A.9th) 294 F. 791; The Northern No. 41 (D.C.S.D. Fla.) 297 F. 343; The Red Lion (D.C.E.D.N.Y.) 22 F.(2d) 329; National Bank v. Enterprise Marine Dock Co. (C.C.A.4th) 43 F.(2d) 547; Consumers Co. v. Goodrich Transit Co. (C.C.A.7th) 53 F.(2d) 972.