Story Parchment Company v. Paterson Parchment Paper Company et al.
282 U.S. 555 (1931)
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Rule of Law:
When a defendant's wrongful act causes damages, the defendant cannot escape liability merely because the amount of damages cannot be calculated with mathematical precision. If the fact of damage is certain, a plaintiff may recover damages based on evidence that provides a just and reasonable inference as to the amount.
Facts:
- Prior to the petitioner, Story Parchment Co., entering the market, the three respondent companies enjoyed a substantial monopoly and maintained uniform prices for vegetable parchment paper.
- Story Parchment Co. entered the market with an efficient plant and began producing a superior quality of paper.
- After Story Parchment Co. began its business, the respondent companies combined and conspired to maintain their monopoly.
- In furtherance of the conspiracy, the respondents sold their paper at prices below a fair profit, and eventually below the cost of production.
- This price-cutting by the respondents caused a substantial reduction in the market price for vegetable parchment paper.
- Story Parchment Co. was injured in its business and property as a result of the respondents' price-cutting conspiracy, leading to lost profits and depreciation in the value of its plant.
Procedural Posture:
- Story Parchment Co. sued Paterson Parchment Paper Co. and two other companies in federal district court (trial court) for damages under the Sherman Anti-Trust Act.
- A jury returned a verdict in favor of Story Parchment Co. for $65,000.
- The district court entered a judgment for Story Parchment Co. for treble damages ($195,000) as required by the Act.
- The respondents appealed the judgment to the U.S. Circuit Court of Appeals.
- The Circuit Court of Appeals vacated the judgment, ruling that Story Parchment Co. had not met its burden of proving recoverable damages.
- The Circuit Court of Appeals remanded the case with directions to enter judgment for the respondents.
- Story Parchment Co. petitioned the U.S. Supreme Court for a writ of certiorari, which was granted.
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Issue:
Does a plaintiff's inability to prove the amount of damages with absolute certainty preclude recovery in an antitrust action where the fact of damage is certain and is the result of the defendant's wrongful acts?
Opinions:
Majority - Justice Sutherland
No. A plaintiff's inability to prove the exact amount of damages does not preclude recovery where the defendant's wrongful act has caused the uncertainty. The court distinguished between the certainty required to prove the fact of damage and the certainty required to prove the amount. Where the tort itself makes it impossible to ascertain damages with precision, it would be unjust to deny all relief to the injured party. The wrongdoer, who is responsible for creating the situation, is not entitled to complain that damages cannot be measured with exactness. It is sufficient if the evidence shows the extent of the damages as a matter of just and reasonable inference, even if the result is only an approximation. The risk of uncertainty should be borne by the wrongdoer, not the injured party.
Analysis:
This case establishes a foundational principle in antitrust and tort law regarding the standard of proof for damages. By creating a distinction between the certainty of the fact of damage and the certainty of the amount, the decision prevents wrongdoers from benefiting from the uncertainty their own actions create. This precedent significantly lowers the evidentiary bar for plaintiffs seeking damages in complex economic cases, such as antitrust violations or unfair competition, where precise calculation of 'but-for' profits is often impossible. The 'Story Parchment' rule ensures that victims have a viable path to recovery, influencing damage calculations in American jurisprudence for decades.
