Stelwagon Manufacturing Co. v. Tarmac Roofing System, Inc.
1994 WL 502545, 1994 U.S. Dist. LEXIS 12812, 862 F. Supp. 1361 (1994)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An oral distributorship agreement governed by the UCC is enforceable despite the Statute of Frauds where evidence of trade custom or part performance indicates the contract's existence. A plaintiff establishes a prima facie case of price discrimination by showing a reasonable possibility that a price difference harmed competition, which can be proven by evidence of substantial price discrimination over time or actual lost sales.
Facts:
- In early 1988, Stelwagon Manufacturing Company ('Stelwagon'), a wholesale distributor, entered into an oral, semi-exclusive distributorship agreement with Tarmac Roofing Systems, Inc. ('Tarmac').
- Under the agreement, Stelwagon was to be the exclusive distributor of Tarmac's modified asphalt products ('MAPs') within Philadelphia, with the exception of one pre-existing distributor, Roofer's Mart.
- Stelwagon sold Tarmac's products throughout 1988 and 1989.
- In early 1989, Stelwagon discovered that Tarmac was selling MAPs to its competitors within Philadelphia, including Allied Roofing, in violation of the agreement.
- Tarmac also sold its products to other Stelwagon competitors, such as Standard Roofing and Celotex, at preferential prices lower than those offered to Stelwagon.
- Stelwagon complained to Tarmac about the breach of the exclusivity agreement and the preferential pricing.
Procedural Posture:
- Stelwagon Manufacturing Company sued Tarmac Roofing Systems, Inc. in the U.S. District Court for the Eastern District of Pennsylvania, a federal trial court.
- The complaint alleged breach of contract and price discrimination in violation of the Robinson-Patman Act.
- The case was tried before a jury.
- The trial court denied Tarmac's motions for judgment as a matter of law made during the trial.
- The jury returned a verdict for Stelwagon, awarding $1,500,000 for breach of contract and $772,000 for price discrimination.
- The court trebled the antitrust damages as required by statute and entered a total judgment of $3,816,000 in favor of Stelwagon.
- Tarmac filed post-trial motions renewing its motion for judgment as a matter of law and, alternatively, requesting a new trial or remittitur of the damages.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does sufficient evidence exist to support a jury verdict for breach of an oral distributorship agreement and price discrimination under the Robinson-Patman Act, despite challenges to the contract's definiteness, the Statute of Frauds, and proof of competitive harm?
Opinions:
Majority - Robreno, J.
Yes, sufficient evidence exists to uphold the jury's verdict on liability for both claims. The court found that while the terms of an oral contract must be established by clear and precise evidence under Pennsylvania law, this does not require undisputed evidence, and witness testimony sufficiently supported Stelwagon's version of the agreement. The court rejected Tarmac's Statute of Frauds defense, holding that exceptions applied: 1) evidence of custom and usage of trade in the roofing industry indicated a waiver of the statute's writing requirement, and 2) Tarmac's partial performance, by at times enforcing the exclusivity provisions, demonstrated the existence of the agreement. For a distributorship, which is not easily segmented like a sale of discrete goods, such part performance can validate the entire contract. Regarding the Robinson-Patman Act claim, the court found Stelwagon successfully established a prima facie case. It presented evidence of harm to competition by showing that it competed with distributors like Standard Roofing and Celotex who received more favorable pricing. Furthermore, Stelwagon provided evidence of actual lost sales to these competitors through expert testimony and anecdotal customer statements, which satisfies the requirement for proving antitrust injury. Therefore, the jury's verdict on liability was supported by the record, although the damages awarded were excessive and required remittitur.
Analysis:
This decision reinforces the enforceability of oral distributorship agreements under the Uniform Commercial Code, demonstrating how courts flexibly apply exceptions to the Statute of Frauds like 'custom and usage' and 'part performance' to ongoing commercial relationships. It underscores that conduct by the parties can validate a contract that lacks a formal writing. The case also provides a clear roadmap for plaintiffs in secondary-line price discrimination cases, confirming that harm to competition can be proven through evidence of sustained price differentials or direct evidence of lost sales, thereby lowering the evidentiary bar for getting such a claim to a jury. The court's willingness to admit anecdotal customer statements under the 'state of mind' hearsay exception further aids plaintiffs in proving causation and damages in these complex antitrust matters.
Unlock the full brief for Stelwagon Manufacturing Co. v. Tarmac Roofing System, Inc.