Patrick A. Malcolm D/b/a Spar Oil Company and Spar Oilcompany of Georgia, a Corporation, Plaintiffs-appellants, v. Marathon Oil Company, Crown Central Petroleum Corporation,tenneco Oil Company et al., Defendants-appellees, 642 F.2d 845 (5th Cir. 1973)

Patrick Malcolm's former occupation qualifies him as a member of a vanishing breed. From 1965 to 1972 he was an independent gasoline retailer who participated in price wars in south Georgia. By 1972 he had 17 stations and plans for further expansion.

Independent gasoline retailers are considered to be mavericks by major brand wholesalers and retailers, because independents post consistently lower prices than major brand retailers. But even among independent retail businesses Malcolm's operation was unusual. Malcolm's "pricing was the key to (his) business." He sought to charge one to two cents per gallon below the price set by other independents. In order to succeed in this marketing strategy Malcolm cut every conceivable expense. He invested little capital in his stations and offered few of the services found at other stations.

Malcolm's career as a gasoline retailer ended in 1972. In August, his last supplier refused to sell him additional gasoline. Malcolm failed to locate a substitute supplier. In September and October of that year his stations exhausted their gasoline supplies. As a result Malcolm's retail gasoline business abruptly concluded in a manner resembling the demise of many other independent gasoline retailers.

Malcolm, however, did not retire quietly. Even before the exhaustion of his gasoline supplies Malcolm considered filing a lawsuit. Shortly after the closing of his business he acted on those plans. On March 14, 1973 he filed a complaint alleging federal antitrust violations by numerous entities including the five present defendants.

Malcolm believed that powerful interests in the gasoline industry desired and achieved his demise. The defendants, predominately marketers of gasoline, had favored relatively high retail prices of gasoline because high retail prices ensured higher wholesale prices and greater profits at all levels of the distribution chain.¹  Malcolm reasoned that his "price cutting" in the retail market disturbed these defendants and others. He then found evidence of communication among the members of the gasoline industry. In discerning a conspiracy from these facts Malcolm apparently adopted the view of Adam Smith who wrote that: "People of the same trade seldom meet together, even for merriment or diversion but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." A. Smith, The Wealth of Nations 232 (Pelican reprint 1980). This conspiracy which disliked price-cutters, Malcolm alleged, took retaliatory actions against him that violated the antitrust laws in two respects. First he claimed that while he was still in business the defendants conspired to influence the retail market by causing his competitors to drop their prices below his costs. Second, when this first tactic did not drive him from the market, the defendants, Malcolm claimed, conspired with all gasoline suppliers to refuse to sell him gasoline for his stations. For these two alleged antitrust violations Malcolm sought monetary damages.

Malcolm did not succeed in the district court. That court directed a verdict against Malcolm on both counts for two reasons. With respect to each alleged violation the court found that Malcolm had presented insufficient evidence on the fact of injury and the amount of damages. In appealing this ruling Malcolm contends that he did introduce substantial evidence on these questions and that the district court erred in directing a verdict on those grounds.

This Court will limit the scope of its review of this case. The district court ruled the plaintiff's evidence was insufficient only on the issues of injury in fact and amount of damages. That court issued no ruling on whether the defendants violated the antitrust laws. The parties have not fully addressed the alleged conspiracy and substantive violations and, in fact, counsel on both sides agreed in oral argument that because of the scope of the trial court's ruling, this Court must assume that the violations did occur. Thus, this Court will assume that Malcolm sufficiently alleged and proved actions in violation of the antitrust laws and generally will seek only to answer the question: "Given the alleged violations of the antitrust laws, did the plaintiff show substantial evidence of injury and amount of damages?" Upon completion of this review, we believe that the district court erred in ruling that Malcolm introduced insufficient evidence of injury in fact and amount of damages on both claims for antitrust damages.

I. Statement of Facts The Plaintiff's Evidence

This Court must focus on the plaintiff's evidence. To avoid a directed verdict, Malcolm must have presented sufficient evidence to create a jury question with respect to each element of his case. As plaintiff, he must introduce what this Court has called "substantial evidence to create a jury question." Boeing Co. v. Shipman, 411 F.2d 365, 375 (5th Cir. 1969) (en banc). Substantial evidence constitutes "evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions." Id. at 374. The Court, however, should view all the evidence "in the light and with all reasonable inferences most favorable to the party opposed to the motion." Id. Thus, this Court must consider all evidence in such a light, and all statements in this opinion reflect that requirement.

This posture of the case requires that the facts be set out in detail.

While Malcolm sold gasoline in certain retail markets, the defendant oil companies competed at various marketing levels within the same geographic area. In this area, the defendants operated at the wholesale level, selling gasoline to wholesalers who would sell to retailers.²  In addition, the defendants would also supply gasoline directly to retailers in Malcolm's area. Defendant Crown Central also sold gasoline at the retail level in some cities where Malcolm had stations.

The defendants were not always directly competing with Malcolm at the retail level, but activity at the retail level concerned them. The retail prices indirectly affected the defendants' profits. When retail prices dropped the defendants' wholesale business would suffer. If the defendants' retail customers could not meet the lower prices, the defendants would lose volume. If the defendants cut wholesale prices to allow the retailers to meet low prices, and, thus, retain volume, the defendants' profits margins decreased. As a result, the defendants desired non-depressed retail markets.

The pricing practices of retailers would concern the defendants because of this interrelation of the wholesale and retail markets. Because Malcolm was known as a price-cutter who competed against other retailers of defendants' gasoline, his pricing practices would naturally draw their attention. Defendants Tenneco, Marathon and Crown Central without question recognized Malcolm as a price-cutter in the retail gasoline market. One witness stated that among independents Malcolm's stations were recognized as being among the more aggressive price-cutters.

Although we all in the independent business are somewhat price cutters, some are more than others. And Spar (Malcolm's business) was one of a group that seemed to be more than others.

Testimony was heard that Malcolm's competitors considered his pricing practices a cause of depressed prices and discussed the chances of improving the situation. The discussion included soliciting the aid of Malcolm's last two suppliers in a campaign to persuade Malcolm to raise his prices. In addition, employees of defendant Marathon wrote memoranda indicating their belief that Malcolm's pricing practices contributed to depressed prices. Perhaps the most direct such statement by Marathon came near the end of Malcolm's career in the gasoline retail market when one Marathon employee wrote:

Pat Malcolmb (sic) our old marketing thorn from Ty Ty Georgia who in the past under the Spar brand has contributed to numerous bad market conditions, has closed all his stations. (Emphasis added.)

The defendants, it may be inferred, were happy when Malcolm retired from the retail market.

Proof of unsympathetic thoughts, however, will not entitle an antitrust plaintiff to recover. An antitrust plaintiff must show that the defendants' actions violated the antitrust laws in a manner that gives him standing to sue. At trial, Malcolm attempted to show two types of violations by the defendants and others: 1) a conspiracy to injure Malcolm's business by concerted low pricing among his retail competitors who were pushed into this action by their suppliers, including the defendants; and 2) conspiracy among suppliers, including four defendants, to refuse to sell gasoline to Malcolm in order to drive him out of business. Given the parties' assumption that two violations of the laws occurred, plaintiff Malcolm on this appeal only need show injury-in-fact and amount of damages resulting from the defendants' assumed violations of the antitrust laws.

On the pricing count, Malcolm sought to show that the defendants wanted either to coerce him into raising his price to a "normal" price or to force him out of business by "persuading" competing retailers to drastically reduce their prices.³  Malcolm first sought to show that the defendants employed pricing practices called temporary price allowances. If one of the defendants' customers faced price-cutting competition, the defendants would subsidize his cost of gas to allow him to retain his profit margin while he met the price-cutter's terms. Those favorable arrangements were available to all defendants' retail customers except the initial price-cutter. This practice, Malcolm contended, discouraged potential price-cutters and forced active price-cutters to raise their retail prices.⁴ 

With this mechanism, the defendants, Malcolm alleged, were able to engage in a price-fixing conspiracy. The "normal" price was the price at which dealers could make a living. Prices below normal were depressed. Thus, the defendants and their customers desired normal prices. Such a price level could be maintained because the retailers, fearing punishment through operation of the price allowance system, would obey the "requests" of those representatives of the industry who discouraged deviation from "normal prices." The "normal" price must therefore be viewed as a generally prevailing price that in addition was enforced by the conspirators. And a price-cutter would be viewed as any retailer who set a price below "normal."

Malcolm recalled several instances where his competitors went beyond merely meeting his prices. He testified that in several instances the "price-fixing" conspiracy caused Malcolm's competitors to lower retail prices in order to punish him for his failure to enter the conspiracy and raise his prices to normal. He gave several examples of dramatic price drops in areas where his stations were located. In these instances, he testified that: a price would prevail in the market before he entered, he would enter at a price one to two cents below the prevailing price, and his competitors⁵  would cut their prices to a level equal to or lower than his price.⁶  In some of these instances, Malcolm's competitors lowered their prices beneath Malcolm's costs.⁷  He stated that in the time period just before the time period for which he claimed damages the price drops below his cost often occurred simultaneously at every location where he had a station. Malcolm sought to tie these price drops to "price fixing" conspiracy through his testimony that an alleged conspirator threatened to keep retail prices down at all Malcolm's locations unless Malcolm raised his prices to normal. In addition, Malcolm testified that one of his suppliers, an alleged conspirator, revealed the conspirators' strategy by stating that:

(T)hey just wouldn't allow (Malcolm) to sell under the market (at Thomasville) and (that Malcolm) would have to go up to the normal price (in Thomasville) in order to get the prices up everywhere.

These statements occurred prior to the damage periods. But they may still be used to show the conspirators' intent in the later period. Furthermore, Malcolm testified that one of his competitors told him that prices would soon rise but "they were going to go back down" unless Malcolm raised his prices. From this evidence Malcolm asserts that he presented a jury issue on fact of injury resulting from the "price-fixing" conspiracy's assumed unlawful "predatory pricing" tactics.

To complete his presentation on his claims arising under the pricing practices of the price-fixing conspiracy, Malcolm sought to demonstrate the amount of damages caused by such practices. Malcolm's lawyers prepared worksheets detailing Malcolm's revenue and expense figures at nine stations which suffered depressed prices for the appropriate period. They then sought to compare the actual revenue figures with the revenue figures that would have obtained if the defendants had not caused the prices to drop and Malcolm could have followed his policy of setting his prices at one to two cents below the normal price.⁸  The difference represents Malcolm's claimed "lost profits" that resulted from the conspirators' pricing practices.

Malcolm admits that his calculations are not precise. The prices admittedly varied within these periods. Malcolm's records did not include daily prices, and, thus, his comparisons are based on average monthly prices. In addition, all the calculations are based on the assumption that Malcolm would have retained the same market share if the conspiracy did not exist and normal prices prevailed.

When the defendants' pricing practices failed to discourage him, Malcolm alleged that they unlawfully refused to sell him gasoline, a second antitrust violation. The defendants refused to deal with the plaintiff.⁹  Assuming, as we must on this appeal, that this refusal constituted an antitrust violation, Malcolm must then show that the refusal caused him injury.

Malcolm attempted to show that the defendants' refusal to deal was a material cause of his business' demise. He presented a lengthy narrative of his story concerning how he ran out of gasoline. The story began on June 15, 1972, when Malcolm's Hawkinsville station burned because of the actions of a gasoline delivery truck driver who carelessly unloaded gasoline. Malcolm waited thirty days for his gasoline supplier, Hi-Octane, to pay for the damage to his station. The supplier never acknowledged this responsibility, and Malcolm turned to another supplier. Malcolm had sufficient funds to pay off his account at Hi-Octane but he refused to pay his account apparently because of this dispute.

Malcolm's substitute supplier was Stone's. This relationship began on July 15, 1972 and encountered its first difficulty soon thereafter. On August 4, 1972, Stone's threatened to cut Malcolm off on August 15 if he did not settle his overdue account at Hi-Octane. This threat was repeated on August 11. On August 12 or 13, a representative of Stone's, Malcolm testified, talked with him again and told him that he should raise his prices. Then on August 23, Stone's offered to accept Malcolm's leases and put Malcolm on Stone's payroll. Malcolm rejected this offer to "buy him out." Stone's terminated Malcolm's supply on August 31.¹⁰ 

Malcolm's business then disintegrated. From August 31 to the middle of October, Malcolm's stations exhausted their gasoline supplies. On September 2, Malcolm wrote his lessors that his inability to obtain gasoline necessitated his closing of his stations and prompted his intention to file an antitrust suit. He discussed the possibility of a lawsuit with his attorneys sometime during the month. Malcolm's stations soon began closing. By September 15, at least half of them had closed, although the last station did not close until the middle of October. At the end of September or early in October, Malcolm called additional gasoline suppliers to obtain gasoline. These calls were placed to several suppliers including the four defendants that are gasoline suppliers. Each of the defendants either refused to sell him gasoline or failed to return his calls. Malcolm had similar bad luck in the other calls he made. In addition to these gasoline suppliers that he admitted contacting, there were other uncontacted suppliers known to him. From this evidence,¹¹  Malcolm contends that he created a jury question over whether the defendants' assumed unlawful refusals to deal led to his failure to get gasoline and the consequent closing of his retail gasoline business.

To collect damages for the assumed unlawful refusal to deal, Malcolm attempted to introduce evidence supporting an assessment of damages for the loss of his business. He testified that he made a bona fide effort to obtain an alternative supply of gasoline and from this fact he infers that he offered evidence of his intent to continue the operation of his stations. Evidence of his intent was supported, he argues, by his testimony that he had opened five new stations in 1972 and that he planned to open four additional stations when he was forced out of business. In addition, he points to several leases, some with unexpired terms of several years. And finally, he testified that he did not intend to sell his stations after building up volume. From this evidence, Malcolm believes that he gave the jury a basis for concluding that his business would have continued for some undetermined period into the future. Malcolm also provided an estimate of his profits per period in order to complete his proof on amount of damages suffered on the closing of his business. His accountant, Allen, testified concerning Malcolm's profits for the first eight months of 1972. In the course of business in 1972, Allen prepared profit worksheets for Malcolm's operations. Allen testified that Malcolm had a net profit for those eight months, with the last three months' profits offsetting losses in the first five months. These figures, Malcolm contends, provide his best estimate of the operation's future profitability.

II. Evaluating the Appropriateness of a Directed Verdict for the Defendants

Malcolm's claim to damages arises under section 4 of the Clayton Act which provides that:

Any 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.

15 U.S.C. § 15. As with any private plaintiff proceeding under section 4, Malcolm "must prove (1) a violation of the antitrust laws, (2) cognizable injury attributable to the violation, and (3) at least the approximate amount of the damage." Chrysler Credit Corp. v. J. Truett Payne, Inc., 607 F.2d 1133, 1135 (5th Cir. 1979), cert. granted, --- U.S. ----, 101 S. Ct. 70, 66 L. Ed. 2d 20 (1980).¹²  We recognize that there are often no neat dividing lines between the elements of proof required to obtain a damage award for antitrust violations. See Pollock, The "Injury" and "Causation" Elements of a Treble-Damage Antitrust Action, 57 Nw.U.L.Rev. 691, 694-95 (1963); Note, Private Treble Damages Antitrust Suits: Measure of Damages for Destruction of All or Part of a Business, 80 Harv. L. Rev. 1566, 1573 (1967) (hereinafter cited as Harvard Note). See also Terrell v. Household Goods Carriers Bureau, 494 F.2d 16, 21 (5th Cir. 1974). Nevertheless, the posture of this case forces an assumption of antitrust violations and an inquiry into the causal connection of such assumed acts to matters of damage. To avoid the directed verdict on the grounds given by the trial court, Malcolm need show he introduced substantial evidence of injury caused by the alleged violations and the amount of damages.¹³ 

A. "Predatory Pricing" to Enforce a "Price Fixing" Conspiracy

Malcolm's first claim presents a damage theory that is, as he labels it, counter-intuitive. He claims he was injured by a price-fixing conspiracy that included the defendants. Indeed, Malcolm presented evidence tending to show the existence of a price-fixing conspiracy, although we do not pass on whether this evidence was sufficient to create a jury question with respect to the defendants. A conspiracy to fix retail prices is undoubtedly an antitrust violation.¹⁴  But, without more, a retailer in such a market could only with difficulty prove injury to his business by the conspirators' raising of retail prices, because such a retailer would obviously benefit if retail prices increase. See Harvard Note, supra, at 1573.

Malcolm, however, makes additional claims. He alleged and attempted to show at trial that in further violation of the antitrust laws the defendants belonged to a conspiracy that used "predatory pricing" in the retail markets to injure Malcolm and other price-cutters.¹⁵  Given this enforcement mechanism, a retail price-fixing conspiracy could easily injure retailers such as Malcolm. Predatory pricing is clearly an antitrust violation.¹⁶  Predatory pricing differs from healthy competitive pricing in its motive: a predator by his pricing practices seeks "to impose losses on other firms, not garner gains for itself."¹⁷  Assuming that such action occurred in this case¹⁸  Malcolm has more to prove in order to show his right to recover antitrust damages.

Assuming the existence of predatory pricing violations, Malcolm should encounter relatively less difficulty in proving an antitrust injury resulting from unlawful conduct of this sort.

If predatory pricing occurs it will most likely harm honest competitors within the markets where the predatory prices are posted. The very purpose of predatory pricing is to cause injury to a competitor's business. In cases where the defendants' acts are motivated by intent to injure the plaintiff, the inferential leap to the finding of fact of damage, is not great. Indeed, one court has found it to be virtually nonexistent:

Such damage need not be made patent item by item as on a balance sheet. The mere unlawful combination over a period of time to eliminate competition is proof of damage.

Fox West Coast Theatres Corp. v. Paradise Theatre Building Corp., 264 F.2d 602, 608 (9th Cir. 1958). In this case, given the assumption of predatory pricing conduct, Malcolm's business would be directly injured by depressed market prices. Regardless of a businessman's reaction to predatory pricing some injury will almost certainly follow: if he retains his price he will lose volume and if he lowers his price he will have a smaller margin of profit on each unit sold.¹⁹  His total revenues, and hence profits, will usually decrease in a depressed market.²⁰  Malcolm, in this case, provided the district court and jury with evidence of injury caused by the violation when he testified that a particular price generally prevailed, on his entry to the market he set a slightly lower price, and after his entry into the market his competitors dropped to a predatorily low price.²¹  This evidence easily translates into a finding of lost revenue and, hence, profits for Malcolm's business. By this evidence, Malcolm offered proof that the price was often below what he, in his business judgment, obviously believed was his profit-maximizing price in a competitive market; hence, he offered proof that he was in fact injured²²  by these low prices.²³  The district court's ruling on this point accordingly must be reversed.

Once beyond the question of fact of damage, the antitrust plaintiff's task is eased. The antitrust plaintiff's burden of proving the amount of damages is lighter than the burden of proving injury in fact. See Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 562, 51 S. Ct. 248, 250, 75 L. Ed. 544 (1931); Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 23-24 (5th Cir. 1974). Often the nature of the violation makes calculation of damages difficult. "In such (a) case, while the damages may not be determined by mere speculation, it will be enough if the evidence show(s) the extent of the damages as a matter of just and reasonable inference, although the result be only approximate." Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563, 51 S. Ct. 248, 250, 75 L. Ed. 544 (1931). The amount of damage may be shown by just and reasonable inference with juries voting upon the probable and inferential as well as upon direct and positive proof. Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 23-24 (5th Cir. 1974); Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264, 66 S. Ct. 574, 579, 90 L. Ed. 652 (1946). In fact, given proof of the fact of damage, proof of losses which border on the speculative is allowed in order to facilitate the policy of the antitrust laws. Ford Motor Co. v. Webster's Auto Sales, Inc., 361 F.2d 874, 887 (1st Cir. 1966); Hobart Brothers Co. v. Malcolm T. Gilliland, Inc., 471 F.2d 894, 903 (5th Cir. 1973). And estimates may be based on assumptions so long as the assumptions rest on adequate bases. Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 24 (5th Cir. 1974); Hobart Brothers Co. v. Malcolm T. Gilliland, Inc., 471 F.2d 894, 902 (5th Cir. 1973). The estimate of the amount of damages may even suffer from minor imperfections. Id. at 903. Each sale and the amount of loss on the transaction need not be shown; averages may be used to show that the plaintiff generally lost money over a period of time. See Bray v. Safeway Stores, Inc., 392 F. Supp. 851, 863-65 (N.D. Cal. 1975). And a non-expert's testimony regarding the past sales volume and profit margin may be used to measure damages. See Copper Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575, 580-81 (5th Cir. 1980) (Coors II) . The defendant is not relieved of liability just because the plaintiff does not show the exact volume and price figures possible within the damage period. Id. at 581. As the Coors II Court stated: "To hold otherwise 'would enable (the defendant) to profit by (its) wrongdoing at the expense of (its) victim.' " Id. at 581 (quoting Bigelow v. RKO Radio Pictures, 327 U.S. 251, 264, 66 S. Ct. 574, 579, 90 L. Ed. 652 (1946)).

Guided by these principles indicating a lenient standard of proof, this Court must reverse the district court's directed verdict which was made in the belief that the plaintiff's evidence on the amount of damage was insufficient. Malcolm's proof of the amount of damage was not precise. But assuming that a plaintiff has offered sufficient evidence of the fact of damage, a directed verdict against that plaintiff on the amount of damages is proper only in the most unusual circumstances. Malcolm's proffered evidence offered a comparison of actual revenues with the revenues possible absent the defendants' actions.²⁴  This comparison is the essence of proof of damage. Malcolm presented evidence of his monthly average prices rather than evidence of his actual daily prices. But the use of averages is acceptable. Built into the average monthly price figure is every instance when Malcolm decreased his price beneath the "one to two cents below normal price" that was his desired level. These instances are the times when Malcolm was forced to lower his prices.²⁵  The specific instances, about which Malcolm testified, constituted only examples of the pricing actions that Malcolm has alleged to be unlawful. The full range of the allegedly unlawful activity then is mirrored in Malcolm's average monthly prices. As Malcolm's prices track the market prices,²⁶  a comparison of these figures with the potential revenues if "normal" prices prevailed would constitute the heart of a plaintiff's proof of the amount of damages in a case such as this one. The directed verdict on this ground was improper.

B. Refusal to Deal by the Price-Fixing Conspiracy

Malcolm sought to prove that when the conspiracy's predatory actions failed to drive him out of business, the conspirators turned to sterner measures. The conspiracy allegedly refused to sell Malcolm any gasoline needed for his stations.²⁷  This action, Malcolm claims, put him out of business, because it dried up his supply of his only product, gasoline.

The alleged antitrust violation lay in the concerted refusal of the defendant-suppliers and others to sell any gasoline to Malcolm. A unilateral refusal to deal is not unlawful. See United States v. Colgate & Co., 250 U.S. 300, 39 S. Ct. 465, 63 L. Ed. 992 (1919). Poor credit may constitute a defendant's proof that the refusal to deal was a unilateral rather than conspiratorial decision. See Scott Medical Supply Co. v. Bedsole Surgical Supplies, Inc., 488 F.2d 934, 938 (5th Cir. 1974); Coughlin v. Capitol Cement Co., 571 F.2d 290, 301 & n.22 (5th Cir. 1978). Furthermore, concerted activity in refusing to deal is not unlawful but concerted activity that is based on an illegitimate motive is forbidden.

(A concerted) refusal to deal becomes unlawful when it produces an unreasonable restraint on trade, i. e., if there is an anticompetitive purpose or effect in selecting those with whom one will deal. A refusal to deal may not be used as a device to achieve some anticompetitive goal such as to acquire a monopoly, or to fix prices, or to establish market dominance and drive out existing competitors, or to aid the enforcement of unlawful resale price restrictions and territorial allocations, or to increase the seller's own market dominance, or to enforce a boycott, or to promote the predatory practices of the seller. This requirement of illegitimate purpose or effect marks the distinction between concerted activity which is an innocent aspect of business and concerted activity which is inimical to competition.

Aladdin Oil Co. v. Texaco, Inc., 603 F.2d 1107, 1115 (5th Cir. 1979) (footnotes omitted). For example, suppliers and retailers may not combine together to refuse to deal with a troublesome retailer in order to drive out that maverick. E. A. McQuade Tours, Inc. v. Consolidated Air Tour Manual Committee, 467 F.2d 178, 186-87 (5th Cir. 1972); see Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S. Ct. 705, 3 L. Ed. 2d 741 (1959).

This Court need not decide whether Malcolm has proven that the defendants' refusal to deal constitutes an antitrust violation. Because the trial court did not direct a verdict on this ground both sides have assumed, without conceding, that the defendants' refusal was an antitrust violation. This Court will assume that the defendants' refusal was unlawful and review the district court's action only on the causation and damage grounds.

Malcolm, as a private plaintiff, must prove that the defendants' actions caused his injuries. In this case in order to claim lost future profits as damages, he must prove that the defendants' refusal to deal caused him to close his gasoline stations.

The general standards for a plaintiff's proof of causation are clear. Malcolm need not show that the refusal to deal was the sole cause of the loss of his business. See Response of Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307, 1321 (5th Cir. 1976); Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 20 (5th Cir. 1974); Ford Motor Co. v. Webster's Auto Sales, Inc., 361 F.2d 874, 885 (1st Cir. 1966). He need only show that the defendants' illegal conduct was a material cause of some damages. See Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 114 n.9, 89 S. Ct. 1562, 1571 n.9, 23 L. Ed. 2d 129 (1969).

(A) plaintiff need not exhaust all possible alternative sources of injury in fulfilling his burden of proving compensable injury under § 4 (of the Clayton Act, 15 U.S.C. § 15).

Id. If some suppliers refused to sell Malcolm gasoline for valid reasons and the defendants' unlawful refusal eliminated other potential sources of gasoline, the defendants could nevertheless be liable to Malcolm.

Those basic principles are simple to apply in this case. Malcolm attempted to show that his last supplier, Stone's, was a part of the conspiracy and its refusal to deal was unlawful. The defendants claim that Stone's refused to sell to Malcolm because of his poor credit and there was no evidence that Malcolm would have been cut off if he had paid his debt. If the defendants are correct, Stone's refusal was lawful. Malcolm, however, offered evidence that Stone's was a conspirator in the unlawful concerted refusal to deal. In any event, we need not determine this fact question because we assume that the violation alleged by Malcolm did occur. But even if the refusal of Stone's was lawful, this fact would not, under the principles outlined above, excuse subsequent unlawful refusals by the defendants. Nor would it decrease the compensable injury suffered by Malcolm, because the subsequent refusals by the defendants would still be necessary to put Malcolm out of business. If the defendants had sold Malcolm gasoline at that time he could have remained in business. And, thus, those refusals would be a "material cause" of that injury. The arguments of the defendants paraphrase the district court's order and share the order's mistaken premise that the antitrust violation must be the sole cause of the defendant's injury.

The defendants next claim that their refusals could not have caused the demise of Malcolm's business because their refusals followed Malcolm's decision to terminate his business as indicated in a letter written in early September. This is a fact question and does not entitle the defendants to a directed verdict. Malcolm testified that he wrote the letter under the impression that Stone's refusal to deal had put him out of business. He also testified that later he genuinely sought gasoline to keep his business alive. This letter obviously does not strengthen Malcolm's case but it does not permit a directed verdict against him. An inference may be drawn from the evidence that after writing the letter, Malcolm changed his mind and legitimately sought gasoline to keep his still viable business alive.

The defendants further argue that their refusal in any event did not cause the exhaustion of Malcolm's gasoline supply, because Malcolm failed to contact all known alternative suppliers of gasoline. They contend that this evidence shows that Malcolm voluntarily abandoned his business and the alleged illegal refusals did not cause his business' demise.²⁸ 

Language in some opinions seemingly supports the defendants' contentions. The Court of Appeals for the Sixth Circuit has stated that:

An essential element in attempting to establish the fact of damage because of exclusion from a specified source of supply is the lack of an alternative comparable substitute for the desired merchandise.... In Ace Beer Distributors, Inc. (v. Kohn, 318 F.2d 283 (6th Cir. 1953)) this Court said at page 287: "There is no allegation or contention that the beer of other breweries was not just as available in that area after the change of distributors as it was before."

Elder-Beerman Stores Corp. v. Federated Department Stores, Inc., 459 F.2d 138, 148-49 (6th Cir. 1972). In commenting on Elder-Beerman, the Court of Appeals for the Fourth Circuit has stated that the case "stands for the uncontroversial principle that a § 4 plaintiff, like any other, must prove actual injury in order to recover." Lee-Moore Oil Co. v. Union Oil Co., 599 F.2d 1299, 1305 (4th Cir. 1979). This view would be premised upon the notion that a refusal to deal by some suppliers could not close a business that can avoid the effects of the concerted refusal by turning to another supplier. If such a business closes, under this reasoning, it would be because of the plaintiff's failure to tap alternative sources and not because of the concerted refusal to deal.²⁹ 

We agree that in a refusal-to-deal case, a plaintiff who bypasses an obviously adequate alternative supplier should not recover for the loss of his business. But we do not agree that a plaintiff, seeking to recover damages because of an unlawful refusal to deal, must show a lack of an alternative supply.

Malcolm claims that the conspiracy foreclosed him from purchasing gasoline supplies. If a retailer is unlawfully denied his sole product by his supplier and others he would quickly be out of business unless he took further action. The end of his business in any event would be causally linked to the refusal. Thus, the refusal has in fact injured the retailer.

But an antitrust victim must seek to minimize the amount of his damages. A victim of an unlawful refusal to deal must attempt to locate suitable substitutes for the denied goods. In such a case, this Court has articulated that concept: "An antitrust plaintiff has a duty to mitigate damages." Golf City, Inc. v. Wilson Sporting Goods Co., 555 F.2d 426, 436 (5th Cir. 1977).³⁰  He must take "reasonable steps to merchandise substitute (goods)." Borger v. Yamaha International Corp., 625 F.2d 390, 399 (2d Cir. 1980). If the victim takes such steps but fails to find an alternative source, the amount of damages would not be decreased by the mitigation efforts. If he finds an alternative source, he may still be injured if he would have been better off without the refusal, but the amount of damage would be reduced. See note 29 supra.

In any event, Malcolm prevails on this issue. Even if Malcolm was under a "duty" to minimize his damages the defendants were not entitled to a directed verdict, because the "burden of showing that the victim of tortious conduct failed to minimize his damages rests with the wrongdoer." Tennessee Valley Sand & Gravel Co. v. M/V Delta, 598 F.2d 930, 933 (5th Cir. 1979) (citing Golf City, Inc. v. Wilson Sporting Goods Co., 555 F.2d 426, 436 (5th Cir. 1977)). The defendants must show that the injured party's conduct was unreasonable and aggravated the harm. Id. at 933. The defendants did no more than establish that Malcolm failed to contact a few known suppliers of gasoline. They did not establish that those dealers could or would have sold Malcolm the needed product in sufficient quantities to keep his business alive. The defendants, thus, did not prove a failure to mitigate damages.

Even if the burden was on Malcolm, he would still prevail on this point. Requiring an antitrust plaintiff to prove such a negative as a lack of alternative supply places too great an obstacle in the way of antitrust recovery. The greatest burden that reasonably could be placed on him would be the burden to show the reasonableness of his mitigation efforts. And even if Malcolm had that burden, we would hold that he has met this burden by introducing evidence of his efforts to obtain alternative suppliers of gasoline. This proof consisted of Malcolm's testimony that his numerous calls to gasoline suppliers failed to secure him any gasoline. The district court's ruling on this point accordingly, must be reversed.

The district court also directed a verdict against Malcolm for a failure to offer substantial evidence of the amount of damage. We must disagree with the district court's judgment.

Many of our statements regarding the amount of damage from the prior count are again applicable. Once the "fact of damage" is proved a lower standard of proof controls the proof of "amount of damage." See Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 20-21 (5th Cir. 1974). Various formulations of the standard by the Supreme Court support the notion of a lessened standard.

(T)he jury may make a just and reasonable estimate of the damage based on relevant data .... In such circumstances "juries are allowed to act on probable and inferential, as well as upon direct and positive proof."

Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264, 66 S. Ct. 574, 579, 90 L. Ed. 652 (1946) (quoting Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 564, 51 S. Ct. 248, 251, 75 L. Ed. 544 (1931)). This relaxed standard is based on a recognition of the difficulty in reconstructing events that might have happened but for the defendant's unlawful conduct. It is appropriate that if there is uncertainty, the defendant should bear the burden of that uncertainty because his unlawful actions created it.

Malcolm sought to recover his lost future profits. The relaxation of standards of proof are particularly appropriate in cases where the finder of fact must estimate lost future profits. When "damages must be assessed so as to approximate the future profits of a business, a court and a jury necessarily enter into the realm of the imprecise and the uncertain." Lehrman v. Gulf Oil Corp., 464 F.2d 26, 45 (5th Cir. 1972).

On this issue Malcolm's evidence of past profits sufficed to create a jury issue regarding the amount of damages suffered in the form of lost future profits. Evidence of past earnings is generally acceptable proof on this issue. Ford Motor Co. v. Webster's Auto Sales, Inc., 361 F.2d 874, 887 (1st Cir. 1966). His evidence consisted of the business' profit record for the last eight months. Surely a longer history would ordinarily be desirable but on the facts of this case, it may not have been either desirable or appropriate. Malcolm's profit records were prepared in the ordinary course of business by his accountant who testified regarding their accuracy. The records were not reflective of a remote isolated period in the middle of Malcolm's business history they reflected Malcolm's performance over the eight months period just preceding the demise of his business. In addition, records of the business' earlier performance were not nearly as relevant given the expansion of Malcolm's business from 12 stations at the beginning of 1972 to 17 stations in August of 1972 when he lost his gasoline supplier.³¹  Because of these circumstances, we believe that Malcolm's proof of his profit over his last eight months of business sufficed to create a jury question on his lost profits.³² 

Even assuming the past profits are a sufficient basis for projection of lost future profits, the defendants argue that the plaintiff's case is fatally flawed because he gave no evidence of how long he would have stayed in business. But these other arguments are also without merit. This Court has previously found evidence of future duration of a business to be inferable from evidence of a plaintiff's age, health and desire to remain in business. Lehrman v. Gulf Oil Corporation, 500 F.2d 659, 670-71 (5th Cir. 1974). Malcolm offered comparable evidence. He testified that his plans for future expansion were cut short by the defendants' refusal to deal. In addition, he testified that he was making a bona fide effort to locate gasoline.³³  Moreover, Malcolm introduced evidence of several long-term leases that indicated his intentions to remain in business.³⁴  Thus, the jury could infer that Malcolm would have stayed in business but for the refusal to deal.

Under these facts, we believe that Malcolm introduced sufficient evidence to create a jury question on the issue of amount of damages resulting from the defendants' unlawful refusal to deal, and the district court's ruling must be reversed.

Conclusion

We hold that with regard to both counts, Malcolm introduced substantial evidence of causation and amount of damage. This holding rests partially upon the assumption that Malcolm produced substantial evidence to prove the antitrust violations he alleged. But we offer no present opinion regarding whether Malcolm actually produced sufficient evidence for a jury to conclude that the defendants violated the antitrust laws in a manner that gives standing to Malcolm. Instead we merely reverse the order of a directed verdict for the reasons that were argued to this Court and the trial court.

REVERSED and REMANDED for proceedings not inconsistent with this opinion.