Kaiser Cement Corporation v. Fischbach and Moore, Inc., et al.
793 F.2d 1100 (1986)
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Rule of Law:
To prevail on an antitrust claim, a plaintiff must establish both a violation of the antitrust laws and an actual injury attributable to that violation. A failure to provide significant probative evidence of injury is fatal to the claim and warrants summary judgment for the defendant.
Facts:
- In 1979, Kaiser Cement Corp. (Kaiser) invited bids for electrical construction work at its Permanente, California cement plant.
- Three companies submitted bids: The Howard P. Foley Company (Foley), Fischbach & Moore, Inc. (Fischbach), and Roy M. Butcher Electric.
- Kaiser awarded the contract to Foley.
- The contract specified that the work was to be completed in ten and a half months, but it actually took 24 months.
- Foley initially anticipated expending 67,000 man-hours but ultimately used 216,000 man-hours to complete the project.
- Foley claimed that Kaiser breached the contract through poor coordination and frequent changes, causing the extra costs and delays.
Procedural Posture:
- Foley filed an action in state court to compel arbitration as required by its contract with Kaiser.
- The action was removed to federal district court, which ordered arbitration between Kaiser and Foley.
- The arbitration panel awarded Foley $330,998 for change orders and $3,455,206 for delay and disruption.
- Three days before the federal district court confirmed the arbitration award, Kaiser filed a separate antitrust action in the same court against Foley and others.
- In the antitrust action, the district court granted Foley's motion for summary judgment, finding that Kaiser could not establish any injury.
- Kaiser (appellant) appealed the grant of summary judgment to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Can an antitrust plaintiff survive a motion for summary judgment without providing specific evidence of injury, particularly after a prior arbitration proceeding awarded the defendant an amount deemed to be fair compensation for the work performed?
Opinions:
Majority - Beezer, Circuit Judge
No. A plaintiff in an antitrust action cannot survive summary judgment without establishing an actual injury attributable to the alleged antitrust violation. Here, even assuming a price-fixing conspiracy existed, Kaiser failed to demonstrate it was injured. Foley met its burden for summary judgment by introducing evidence that the prior arbitration award represented a fair price for the work performed, irrespective of the original bid. The burden then shifted to Kaiser to rebut this with specific facts showing injury, which it failed to do. The court reasoned that injury is the sine qua non (essential element) for recovery under the Sherman Act, Cartwright Act, RICO, and fraud. Because the arbitration panel determined the fair compensation for Foley's work, and Kaiser offered no significant probative evidence to show it paid an amount in excess of the fair market value for the services, there was no genuine issue of material fact regarding damages.
Analysis:
This decision underscores the critical importance of proving actual damages as a distinct element in antitrust litigation. It establishes that a determination of fair value in a prior proceeding, such as a contract arbitration, can create a significant evidentiary barrier for a subsequent antitrust claim based on bid-rigging. The ruling places a heavy burden on plaintiffs to produce specific, compelling evidence of overpayment, rather than relying on the mere existence of a conspiracy to infer damages. This makes it more difficult for plaintiffs to proceed with antitrust claims when the underlying transaction was also the subject of a separate dispute resolution process that quantified the value of the goods or services provided.
