Antitrust Law Daily Wrap Up, ANTITRUST—D. Del.: Damages in antitrust case could be based on cumulative, rather than individualized, assessment, (Jun 9, 2014)

By Edward L. Puzzo, J.D.

In assessing damages in an antitrust case, two plaintiffs could use a cumulative view of overall anticipated business rather than an individualized assessment; the federal district court in Wilmington, Delaware has ruled (ZF Meritor LLC v. Eaton Corporation, June 5, 2014, Robinson, S.).

Background. ZF Meritor and Meritor Transmission brought antitrust claims against Eaton Corporation, the leading supplier of heavy-duty truck transmissions in North America. On September 28, 2012, the U.S. Court of Appeals for the Third Circuit (696 F.3d 254, 2012-2 Trade Cases ¶78,078) affirmed the district court's ruling, using a "rule of reason" analysis, that Eaton's conditional-rebate agreements with direct purchasers of its transmissions—sales agreements that incentivized additional sales by giving customers above-cost rebates if they purchased specific percentages of their requirements from Eaton—gave rise to antitrust liability despite the absence of below-cost pricing.

In its February 25, 2013, petition for certiorari to the U.S. Supreme Court, Eaton argued that antitrust liability could not be predicated on the defendant's pricing practices so long as the defendants' prices remained above its costs (the "price-cost" test). However, the Supreme Court denied certiorari and let the appellate court's decision against Eaton stand.

Damages. Prior to the June 23, 2014 scheduled commencement of the trail on damages, Eaton moved for summary judgment, alleging that plaintiffs' damages expert should be required to calculate damages for each plaintiff based on individualized damages, rather than from a cumulative perspective of "overall anticipated business."

Individualized versus cumulative. In the antitrust context, a damages award not only benefits the plaintiff, it also fosters competition and furthers the public interest by imposing the severe penalty of treble damages for antitrust law violations. Calculating the injury from the partial or total exclusion from a market is rarely susceptible to the kind of concrete detailed proof of injury available in other contexts, the court continued. The damages model for a company no longer in business was a calculation of the business' going-concern value as of the time the plaintiff went out of business, plus actual lost profits to that date.

The relationship between plaintiffs ZF Meritor and Meritor Transmission was that of a joint venture, not as affiliates of each other. The court noted that, until this point in the litigation, the record had consistently treated the two plaintiff's injuries as cumulative. The court further noted that all of the plaintiffs' claims arose from the same set of facts surrounding Eaton's anticompetitive conduct.

The court concluded that, despite the general rule that each plaintiff should prove individualized injury and damages, the more lenient standard for antitrust damages should apply in this case. Consequently, the cumulative damages analysis by plaintiffs' expert would be permitted and Eaton's motion for summary judgment was denied.

The case is No. 06-623-SLR.

Attorneys: Joseph C. Schoell (Drinker Biddle & Reath LLP) for ZF Meritor LLC and Meritor Transmission Corporation. Donald E. Reid (Morris, Nichols, Arsht & Tunnell LLP) for Eaton Corporation.

Companies: ZF Meritor LLC; Meritor Transmission Corporation; Eaton Corporation

Cases: Antitrust DelawareNews