Coastal Fuels of Puerto Rico, Inc. v. Caribbean Petroleum Corp.

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 95-1460

COASTAL FUELS OF PUERTO RICO, INC.,

Plaintiff - Appellee,

v.

CARIBBEAN PETROLEUM CORPORATION,

Defendant - Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Juan M. P rez-Gim nez, U.S. District Judge]

Before

Torruella, Chief Judge,

Watson,* Senior Judge,

and Lynch, Circuit Judge.

William L. Patton, with whom Thomas B. Smith, Kenneth A.

Galton, Ropes & Gray, Rub n T. Nigaglioni and Ledesma, Palou &

Miranda were on brief for appellant.

Michael S. Yauch, with whom Neil O. Bowman, Roberto Boneta

and Mu oz Boneta Gonz lez Arbona Ben tez & Peral were on brief

for appellee.

March 12, 1996

* Of the United States Court of International Trade.

TORRUELLA, Chief Judge. This appeal involves claims of
TORRUELLA, Chief Judge.

price discrimination, 15 U.S.C. 13(a) (1994); 10 L.P.R.A. 263

(1976), monopolization, 15 U.S.C. 2 (1994); 10 L.P.R.A. 260

(1976), and Puerto Rico law tort, 31 L.P.R.A. 5141 (1976),

brought against appellant Caribbean Petroleum Corp. by appellee

Coastal Fuels of Puerto Rico, Inc. After a jury trial, the

district court entered judgment for $5,000,000 -- $1.5 million in

antitrust damages trebled plus $500,000 in tort damages. CAPECO

seeks that the judgment of the district court be reversed and

judgment be granted to CAPECO on all counts, or alternatively,

that the judgment be reversed and the case remanded for a new

trial. We affirm the price discrimination and Puerto Rico law

tort verdicts, as well as the tort damage verdict. However, we

reverse the monopolization verdict, vacate the antitrust damages

verdict, and accordingly remand for further proceedings on price

discrimination damages.

BACKGROUND
BACKGROUND

We relate the evidentiary background in the light most

favorable to the jury verdicts. See Kerr-Selgas v. American

Airlines, Inc., 69 F.3d 1205, 1206 (1st Cir. 1995).

Coastal Fuels of Puerto Rico, Inc. ("Coastal") was

formed in 1989 as a wholly-owned subsidiary of Coastal Fuels

Marketing, Inc. ("CFMI"), a company that ran marine fuel

operations in numerous ports using a staff of sales agents in

Miami, Florida. Caribbean Petroleum Corp. ("CAPECO") owns and

operates a refinery in Bayam n, Puerto Rico, which produces a

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number of fuel products, as well as residual fuel. A principal

use of residual fuel is in the production of "bunker fuel," which

is used by cruise ships and other ocean-going vessels outfitted

with internal combustion or steam engines.

At trial, Coastal introduced testimony and letters

showing that CAPECO had committed to supply Coastal on the same

terms and conditions as other resellers in San Juan, Puerto Rico,

in 1990, but Coastal deferred the start of its operations because

of uncertainty due to the Gulf War. Eventually, Coastal began

business operations in Puerto Rico in October 1991, buying bunker

fuel in San Juan and reselling it to ocean-going liners at berth

in San Juan Harbor. Based on CFMI's experience and reputation,

Coastal produced a business plan which shows that it expected to

reach a sales volume of 100,000 barrels a month, approximately

25-30% of the sales volume in San Juan Harbor. The plan also

shows that Coastal assumed it could obtain an average gross

margin (sales revenues less product costs) of $1.65 a barrel.

In September 1991, CAPECO agreed to charge Coastal

prices based on a formula involving the previous Thursday/Friday

New York market postings, minus discounts that varied by volume.

These prices were to cover the six month period from October 1991

to March 1992. Unknown to Coastal, CAPECO was almost

simultaneously offering Coastal's two competitors in San Juan

Harbor, Caribbean Fuel Oil Trading, Inc. ("Caribbean") and Harbor

Fuel Services, Inc. ("Harbor"), new contracts that gave Caribbean

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and Harbor bigger discounts from the formula price than Coastal

received.1 Trial evidence introduced by CAPECO's own expert

witness quantified the total price discrimination in favor of

Caribbean and Harbor as $682,451.78 for the period from October

1991 to April 1992.

Coastal filed this suit in May of 1992 when it learned

of CAPECO's price discrimination against it. This court affirmed

the district court's denial of a preliminary injunction requiring

that CAPECO end its price discrimination. See Coastal Fuels of

Puerto Rico, Inc. v. Caribbean Petroleum Corp., 990 F.2d 25, 26

(1st Cir. 1993). After Coastal filed suit, CAPECO proposed a new

price formula to Coastal. According to trial testimony

introduced by Coastal, CAPECO basically made a "take it or leave

it" offer, which Coastal took. Expert testimony Coastal offered

at trial contended that competitively significant price

discrimination continued until Spring of 1993, when CAPECO cut

Coastal off entirely.

Additionally, Coastal presented evidence that, while

throughout this period CAPECO would from time to time inform

Coastal that it had no fuel available, in fact, CAPECO had

available fuel. Coastal also presented evidence that it was

1 CAPECO tried to argue below and again argues here, that the
contracts it executed with Caribbean and Harbor were
qualitatively different in their non-price terms and conditions
from CAPECO's arrangement with Coastal, justifying the discounts.
Coastal responds that it was never offered the terms and
conditions that Caribbean and Harbor received. In light of the
jury's verdict for Coastal on the price discrimination claim,
from conflicting evidence such as this, we draw the (reasonable)
conclusion in Coastal's favor.

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discriminated against in terms of the quality of fuel that it

received from CAPECO. Finally, on March 31, 1993, CAPECO

informed Coastal in writing that it would not sell any more

product to Coastal, and shortly thereafter, Coastal went out of

business.

The case was tried to a jury on claims (1) that CAPECO

discriminated in price in violation of Section 2(a) of the

Clayton Act, 38 Stat. 730 (1914) (current version at 15 U.S.C.

13(a)), as amended by the Robinson-Patman Act, 49 Stat. 1526

(1936), and in violation of Section 263(a) of Title 10 of the

Laws of Puerto Rico; (2) that CAPECO monopolized trade or

commerce in violation of Section 2 of the Sherman Act and Section

260 of Title 10 of the Laws of Puerto Rico; (3) that CAPECO

violated Section 5141 of Title 31 of the Puerto Rico Civil Code

by engaging in tortious conduct that injured Coastal; and (4)

that CAPECO committed a breach of contract in violation of

Sections 3371 et seq. of Title 31 of the Puerto Rico Civil Code.

As reflected in the jury's answers to the Special

Interrogatories, the jury found for Coastal on the first three of

these claims, but found for CAPECO on the breach of contract

claim. The jury awarded damages of $1,500,000 for the antitrust

violations combined and $500,000 for the Puerto Rico tort

violation. The antitrust damages were trebled, see 15 U.S.C.

15(a), bringing the total award to $5,000,000.

DISCUSSION
DISCUSSION

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CAPECO argues for a reversal of the district court's

judgment, or alternatively, for a new trial. We address the

arguments for reversal first.

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I. Arguments for Reversal
I. Arguments for Reversal

The first set of issues involves the district court's

denial of CAPECO's motions for judgment as a matter of law under

Fed. R. Civ. P. 50. With respect to matters of law, our review

is de novo. Sandy River Nursing Care v. Aetna Casualty, 985 F.2d

1138, 1141 (1st Cir. 1993).

Seeking judgment as a matter of law, CAPECO has raised

a set of issues on appeal that concern the application of federal

and Puerto Rico law on price discrimination and monopoly, as well

as Puerto Rico tort law, to the facts of this case. With respect

to these issues, we review the court's decision de novo, using

the same stringent decisional standards that controlled the

district court. See Sullivan v. National Football League, 34

F.3d 1091, 1096 (1st Cir. 1994); Gallagher v. Wilton Enterprises,

Inc., 962 F.2d 120, 125 (1st Cir. 1992). Under these standards,

judgment for CAPECO can only be ordered if the evidence, viewed

in the light most favorable to Coastal, points so strongly and

overwhelmingly in favor of CAPECO, that a reasonable jury could

not have arrived at a verdict for Coastal. See Sullivan, 34 F.3d

at 1096; Gallagher, 962 F.2d at 124-25.

A. Price Discrimination
A. Price Discrimination

Section 2(a) of the Clayton Act, amended in 1936 by the

Robinson-Patman Act, makes it

unlawful for any person . . . to
discriminate in price between different
purchasers of commodities of like grade
and quality, where either or any of the
purchases involved in such discrimination
are in commerce, . . . where the effect

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of such discrimination may be
substantially to lessen competition or
tend to create a monopoly in any line of
commerce, or to injure, destroy, or
prevent competition with any person who
either grants or knowingly receives the
benefit of such discrimination . . . .

15 U.S.C. 13(a). A pair of sales at different prices makes out

a prima facie case. See Falls City Indus., Inc. v. Vanco

Beverage, Inc., 460 U.S. 428, 444 n.10 (1983); FTC v. Anheuser-

Busch, Inc., 363 U.S. 536, 549 (1960) ("[A] price discrimination

within the meaning of [the statute] is merely a price

difference.").

Section 2(a) includes two offenses that differ

substantially, but are covered by the same statutory language. A

"primary-line" violation occurs where the discriminating seller's

price discrimination adversely impacts competition with the

seller's direct competitors. See, e.g., Brooke Group Ltd. v.

Brown & Williamson Tobacco Corp., U.S. , 113 S. Ct. 2578,

2586, reh'g denied, 114 S. Ct. 13 (1993). See generally Herbert

Hovenkamp, Federal Antitrust Policy: The Law of Competition and

its Practice 8.8 (1994). In contrast, a "secondary-line"

violation occurs where the discriminating seller's price

discrimination injures competition among his customers, that is,

purchasers from the seller. See, e.g., FTC v. Sun Oil Co., 371

U.S. 505, 519 (1963); Caribe BMW, Inc. v. Bayerische Motoren

Werke, A.G., 19 F.3d 745, 748 (1st Cir. 1994); J.F. Feeser, Inc.

v. Serv-A-Portion, Inc., 909 F.2d 1524, 1535-38 (3d Cir. 1990),

cert. denied, 499 U.S. 921 (1991). See generally Hovenkamp

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14.6. The theory of injury is generally that the defendant's

lower price sales to the plaintiff's competitor (the favored

purchaser) placed the plaintiff at a competitive disadvantage and

caused it to lose business. Id.

We address first CAPECO's contention that the district

court erred in treating this case as one of secondary-line price

discrimination rather than primary-line price discrimination.

Specifically, CAPECO protests the district court's instruction to

the jury that injury to competition among competing purchaser-

resellers may be inferred from proof of substantial price

discrimination by a producer among competing purchaser-resellers,

an inference appropriate to secondary-line discrimination. See

FTC v. Morton Salt Co., 334 U.S. 37, 50-51 (1948). CAPECO argues

that Coastal is affiliated with an organization that competes

with CAPECO, and therefore this was a primary-line case; as a

result, the Morton Salt inference would not apply.

We do not consider the argument that this is a primary-

line case, because CAPECO has chosen to make this argument for

the first time on appeal. While CAPECO did object to the Morton

Salt instruction at the district court, that objection was

directed at the use of the word "infer" couched in a generalized

attack on the instruction as suggesting a presumption not borne

out by case law.2 We have noted before that "Rule 513 means what

2 We address this distinct argument below.

3 Fed. R. Civ. P. 51 states, in pertinent part, that

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it says: the grounds for objection must be stated 'distinctly'

after the charge to give the judge an opportunity to correct his

[or her] error." Linn v. Andover Newton Theological School,

Inc., 874 F.2d 1, 5 (1st Cir. 1989); see also Jordan v. United

States Lines, Inc., 738 F.2d 48, 51 (1st Cir. 1984). Leaving

aside whether the district court in fact erred in making the

questioned instruction, it seems clear that CAPECO did not set

forth the argument it now advances when it objected to the

instruction at issue. And if CAPECO did intend to express this

argument, it neither advised the district court judge of this

problem in a manner that would allow him to make a correction,

nor informed him what a satisfactory cure would be. Linn, 874

F.2d at 5. Because the argument was thus not preserved, we will

reverse or award a new trial only if the error "resulted in a

miscarriage of justice or 'seriously affected the fairness,

integrity or public reputation of the judicial proceedings.'"

Scarfo v. Cabletron Systems, Inc., 54 F.3d 931, 945 (1st Cir.

1995) (quoting Lash v. Cutts, 943 F.2d 147, 152 (1st Cir. 1991)).

We fail to find such concerns of judicial propriety implicated

here.4

[n]o party shall assign as error the
giving or the failure to give an
instruction unless that party objects
thereto before the jury retires to
consider its verdict, stating distinctly
the matter objected to and the grounds of
the objection.

4 While this court has admitted "occasional" exceptions to the
"raise-or-waive" principle, see National Assoc. of Social Workers

v. Harwood, 69 F.3d at 627-28, the concerns that justify an

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As a result, we analyze this case as one of secondary-

line discrimination. Thus, the theory of injury is that CAPECO

sold bunker fuel to Coastal at an unfavorable price relative to

Harbor and Caribbean, and consequently, competition between

Coastal, Harbor and Caribbean was thereby injured. On appeal,

CAPECO makes three arguments based on what it purports to be

required elements for Coastal's price discrimination damages

claim: first, that the sales in question were not "in commerce"

and so section 2(a)'s prohibitions do not apply; second, that

Coastal failed to make the requisite showing of competitive

injury to prevail; and third, that Coastal failed to carry its

burden of proving actual injury in order to be entitled to an

award of money damages.

1. "In Commerce"
1. "In Commerce"

CAPECO argues, correctly we conclude, that section 2(a)

of the Clayton Act does not apply because in the instant case,

neither of the two transactions which evidence the alleged price

discrimination crossed a state line. Gulf Oil Corp. v. Copp

Paving Co., 419 U.S. 186, 200-201, 200 n.17 (1974). For a

transaction to qualify, the product at issue must physically

cross a state boundary in either the sale to the favored buyer or

the sale to the buyer allegedly discriminated against. See,

e.g., Misco, Inc. v. United States Steel Corp., 784 F.2d 198, 202

exception are not implicated here, see id., 69 F.3d at 627-28

(finding exception given certain circumstances including the fact
that failure to raise issue did not deprive court of appeals of
useful factfinding, and the fact that the issue in question
raises constitutional concerns).

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(6th Cir. 1986); Black Gold Ltd. v. Rockwool Industries, Inc.,

729 F.2d 676, 683 (10th Cir.), cert. denied, 469 U.S. 854 (1984);

William Inglis & Sons Baking Co. v. ITT Continental Baking Co.,

668 F.2d 1014, 1043-44 (9th Cir. 1981), cert. denied, 459 U.S.

825 (1982); S&M Materials Co. v. Southern Stone Co., 612 F.2d

198, 200 (5th Cir.), cert. denied, 449 U.S. 832 (1980); Rio Vista

Oil, Ltd. v. Southland Corp., 667 F. Supp. 757, 763 (D. Utah

1987).

However, this issue is not dispositive, because the

jury found that CAPECO violated the Puerto Rico price

discrimination statute, which is identical to Section 2(a) except

that it contains no interstate commerce requirement.5 CAPECO has

not challenged the district court's supplemental jurisdiction

stemming from Coastal's Sherman Act claims. The relevant statute

states that "in any civil action over which the district courts

5 The relevant language is as follows:

It shall be unlawful for any person,
either directly or indirectly, to
discriminate in price between different
purchasers of commodities of like grade
and quality, where such commodities are
sold for use, consumption, or resale in
Puerto Rico, and where the effect of such
discrimination may be substantially to
lessen competition or tend to create a
monopoly in any line of commerce in
Puerto Rico, or to injure, destroy, or
prevent competition with any person who
either grants or knowingly receives the
benefit of such discrimination, or with
customers of either of them.

10 L.P.R.A. 263 (1976). Furthermore, Puerto Rico law includes a
counterpart for the section 4 of the Clayton Act's authorization
of treble damages. See 10 L.P.R.A. 268 (1976).

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have original jurisdiction, the district courts shall have

supplemental jurisdiction over all other claims that are so

related to claims in the action . . . that they form part of the

same case or controversy." 28 U.S.C. 1367 (1994). In

application, "[i]f, considered without regard to their federal or

state character, a plaintiff's claims are such that [it] would

ordinarily be expected to try them all in one judicial

proceeding, then, assuming substantiality of the federal issues,

there is power in federal courts to hear the whole." United Mine

Workers of America v. Gibbs, 383 U.S. 715, (1966); see Rodr guez

v. Doral Mortgage Corp., 57 F.3d 1168, 1175-76 (1st Cir. 1995)

(interpreting and applying 28 U.S.C. 1367). In the instant

case, the price discrimination claims flow out of the same set of

facts and require the same evidence as the Sherman Act claims.

Because we uphold the district court's jurisdiction over the

Sherman Act claims, see 15 U.S.C. 4 (1994) (investing "[t]he

several district courts of the United States . . . with

jurisdiction to prevent and restrain violations of [Title 15]

sections 1 to 7[,]" which includes the Sherman Act), we also must

conclude that the district court properly exercised supplementary

jurisdiction over the price discrimination claims.

Thus, we conclude that the district court erred in

applying section 2(a) of the Clayton Act to the conduct at issue,

and accordingly reverse that part of its opinion. However, we

find applicable section 263 of the Puerto Rico Anti-Monopoly Act,

10 L.P.R.A. 263. Because section 263 was patterned after and

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is almost identical to section 2(a) of the Clayton Act, as

amended by the Robinson-Patman Act, we look to the jurisprudence

interpreting federal law as a guide in applying the statute.6

Given that the one key difference between the federal and Puerto

Rico statutes is the lack of an "in commerce" requirement in the

Puerto Rico analogue, we conclude that we should interpret

section 263 as intended to extend the provisions of section 2(a)

of the Clayton Act to price discrimination within Puerto Rico,

the situation which we confront in the instant case. Given the

relative lack of applicable section 263 case law and the well-

developed jurisprudence concerning Clayton Act section 2(a), we

will focus on the latter in assessing the price discrimination

claims.

2. Injury to Competition
2. Injury to Competition

CAPECO's second argument in support of reversing the

price discrimination portion of the judgment is that Coastal

failed to demonstrate injury to competition. As noted above, we

analyze this case as one of secondary-line price discrimination,

6 See Caribe BMW, Inc., 19 F.3d at 753 (1st Cir. 1994)

(interpreting "Puerto Rico's laws as essentially embodying the
jurisprudence relevant to the parallel federal law," where
antitrust plaintiff asserted claims under a Puerto Rico antitrust
law that paralleled its federal antitrust law claim); Whirlpool

Corp. v. U.M.C.O. Int'l Corp., 748 F. Supp. 1557, 1565 n.4 (S.D.

Fla. 1990) (noting that "federal precedents construing the
[Clayton Act, as amended by the] Robinson-Patman Act are
applicable to the interpretation of Section 263" of the Puerto
Rico Anti-Monopoly Act); see also Diario de Sesiones, 1964, Vol.

18, Part 4, pp. 1425-26, 1509, 1512, 1707-09; Arturo Estrella,
Antitrust Law in Puerto Rico, 28 Rev. Jur. del Col. Ab. P.R. 615

(stating that interpretations of the Federal Robinson-Patman Act
are to be looked to in construing section 263).

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and thus Coastal bears the burden of showing injury to

competition between Coastal and its rival bunker fuel resellers,

Harbor and Caribbean. Addressing the burden of the secondary-

line plaintiff, the Supreme Court has stated that

[i]t would greatly handicap effective
enforcement of the Act to require
testimony to show that which we believe
to be self-evident, namely, that there is
a "reasonable possibility" that
competition may be adversely affected by
a practice under which manufacturers and
producers sell their goods to some
customers substantially cheaper than they
sell like goods to the competitors of
these customers.

Morton Salt Co., 334 U.S. at 50. As a result, the Supreme Court

has held that "for the purposes of section 2(a), injury to

competition is established prima facie by proof of a substantial

price discrimination between competing purchasers over time."

Falls City, 460 U.S. at 435 (citing Morton Salt, 334 U.S. at 46,

50-51); see also Texaco, Inc. v. Hasbrouck, 496 U.S. 543, 559

(1990); Monahan's Marine, Inc. v. Boston Whaler, Inc., 866 F.2d

525, 528-529 (1st Cir. 1989) (noting lower burden for antitrust

plaintiff under Clayton Act, as amended by the Robinson-Patman

Act, than under Sherman Act); Boise Cascade Corp. v. FTC, 837

F.2d 1127, 1139 (D.C. Cir. 1988).

CAPECO challenges the district court's finding of

competitive injury in two ways, arguing that the Morton Salt rule

is no longer good law, or alternatively, that the Morton Salt

rule was incorrectly applied in this case. We first address

CAPECO's direct challenge to the vitality of the Morton Salt

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rule, a challenge based on the Supreme Court's opinion in Brooke

Group, 113 S. Ct. 2578. In that case, the Supreme Court ruled

that, because primary-line price discrimination injury is of the

"same general character" as predatory pricing schemes actionable

under Sherman Act section 2, Brooke Group, U.S. , 113 S.

Ct. at 2587, a primary-line injury plaintiff bears the same

substantive burden as under the Sherman Act, that is, the

plaintiff must show that the predator stands some chance of

recouping his losses, id. U.S. at , 113 S. Ct. at 2588.

In so deciding, the Supreme Court implicitly overruled Utah Pie

Co. v. Continental Baking Co., 386 U.S. 685 (1967), in which the

Supreme Court had set forth different standards for primary-line

injury. Brooke Group, U.S. at , 113 S. Ct. at 2587

(explaining that Utah Pie was merely an "early judicial

inquiry").

According to CAPECO, the Supreme Court's recent

emphasis in Brooke Group on reconciling the area of price

discrimination with other antitrust law requires that we find

that the Morton Salt rule no longer is good law. CAPECO notes

that both primary-line and secondary-line price discrimination

are prohibited by the same language of section 2(a) as amended by

the Robinson-Patman Act. Furthermore, CAPECO contends that the

Supreme Court in Brooke Group apparently undercut any reliance on

a principled distinction between the aims of section 2 of the

Clayton Act and other antitrust laws' purported emphasis on

protecting "competition, not competitors," Brooke Group, 113 S.

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Ct. at 2588 (emphasis in original) (citation omitted); see also

Monahan's Marine, Inc., 866 F.2d at 528-29 (not discussing the

Morton Salt rule, but noting that "unlike the Sherman Act, which

protects 'competition not competitors,' . . . the [Robinson-

Patman] Act protects those who compete with a favored seller, not

just the overall competitive process." (emphasis in original)).

Thus, according to CAPECO, precedent that pre-dates Brooke Group

and applies the Morton Salt rule must be reexamined. See, e.g.,

496 U.S. at 544; Falls City, 460 U.S. at 436; Boise Cascade v.

FTC, 837 F.2d 1127, 1153 (D.C. Cir. 1988).

While CAPECO's argument has merit, we join the two

other circuits that have addressed competitive injury in

secondary-line cases since Brooke Group in refusing to disregard

the rule the Supreme Court formulated in Morton Salt, for three

reasons.7 First, the statutory structure that prohibits primary-

line price discrimination "stands on an entirely different

footing" than the statutory scheme that proscribes secondary-line

discrimination. See Rebel Oil Co., 51 F.3d at 1446. Congress

first forbade primary-line price discrimination with the Clayton

7 See Stelwagon Manufacturing Co. v. Tarmac Roofing Systems,

Inc., 63 F.3d 1267, 1271 (3d Cir. 1995) (applying Morton Salt

rule without discussion of Brooke Group); Rebel Oil Co. v.

Atlantic Richfield Co., 51 F.3d 1421, 1446 (9th Cir. 1995)

(noting in dicta that "in holding that a primary-line plaintiff
must demonstrate an injury flowing from an aspect of the
defendant's conduct injurious to consumer welfare, we intend in
no way to affect the standard for antitrust injury in secondary-
line cases"). But see also Bob Nicholson Appliance, Inc. v.

Maytag Co., 883 F. Supp. 321, 326 (S.D. Ind. 1994) (holding that

"we are persuaded that the Seventh Circuit would extend the
reasoning of Brooke Group and require actual injury to

competition").

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Act of 1914, which originally condemned discrimination that might

"substantially . . . lessen competition or tend to create a

monopoly in any line of commerce." Clayton Antitrust Act, 38

Stat. 730 (1914) (codified as amended at 15 U.S.C. 13(a)

(1994)). The statute was intended to prevent large corporations

from invading markets of small firms and charging predatory

prices for the purpose of destroying marketwide competition, and

thus specifically applied only to primary-line injury. See H.R.

Rep. No. 627, 63rd Cong., 2d Sess. 8 (1914); E. Thomas Sullivan

& Jeffrey L. Harrison, Understanding Antitrust and Its Economic

Implications 8.03 (1988).

By contrast, secondary-line discrimination is

forbidden by the Robinson-Patman Act, 49 Stat. 1526 (1936), 15

U.S.C. 13-13b, 21a (1988), which amended the original Clayton

Act's price discrimination proscriptions. Congress clearly

intended the Robinson-Patman Act's provision to apply only to

secondary-line cases, not to primary-line cases. See H.R. Rep.

No. 2287, 74th Cong., 2d Sess. 8 (1936),8 cited in Rebel Oil

Co., 51 F.3d at 1446. In contrast to the Sherman Act and the

Clayton Act, which were intended to proscribe only conduct that

threatens consumer welfare, the Robinson-Patman Act's framers

"intended to punish perceived economic evils not necessarily

8 The Robinson-Patman Act "attaches to competitive relations
between a given seller and his several customers. It concerns
discrimination between customers of the same seller. It has
nothing to do with . . . requir[ing] the maintenance of any
relationship in prices charged by a competing seller." H.R. Rep.
No. 2287, 74th Cong., 2d Sess. 8 (1936).

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threatening to consumer welfare per se." Rebel Oil Co., 51 F.3d

at 1445. See generally Hovenkamp 2.1a. In particular, the

Robinson-Patman Act's amendments to the Clayton Act stemmed from

dissatisfaction with the original Clayton Act's inability to

prevent large retail chains from obtaining volume discounts from

big suppliers, at the disadvantage of small retailers who

competed with the chains. See S. Rep. No. 1502, 74th Cong., 2d

Sess. 4 (1936); H.R. Rep. No. 2287, 74th Cong., 2d Sess. 3-4

(1936); see also Morton Salt, 334 U.S. at 49 ("Congress intended

to protect a merchant from competitive injury attributable to

discriminatory prices"); Rebel Oil Co., 51 F.3d 1421, 1446;

Monahan's Marine, Inc., 866 F.2d at 528-29.

Second, we are persuaded by the reasoning of the Ninth

Circuit's opinion in Rebel Oil Co. that the amendment to the

Clayton Act effected by the Robinson-Patman Act supports the

continued vitality of the Morton Salt rule, even in the face of

Brooke Group's alteration of standards for primary-line price

discrimination. While the Clayton Act only proscribed conduct

that may "substantially lessen competition or tend to create a

monopoly[,]" the new law added the following passage: "or to

injure, destroy, or prevent competition with any person who

either grants or knowingly receives the benefit of such

discrimination, or with customers of either of them." See Rebel

Oil Co., 51 F.3d at 1447. The purpose of this passage was to

relieve secondary-line plaintiffs -- small retailers who are

disfavored by discriminating suppliers -- from having to prove

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harm to competition marketwide, allowing them instead to impose

liability simply by proving effects on individual competitors.

See id.; H.R. Rep. No. 2287, 74th Cong., 2d Sess. 8 (1936).

Such legislative intent directly supports maintaining the Morton

Salt rule, which puts into practice Congress' concern with

placing the same burden on secondary-line plaintiffs that other

antitrust plaintiffs face. Thus, the comparison that the Supreme

Court drew between primary-line price discrimination and

predatory pricing in Brooke Group stands on a different, and

stronger, footing than any comparison that could be made between

secondary-line price discrimination and other area of antitrust

law, including, but not only, predatory pricing.

Third, and finally, the holding of the Brooke Group

opinion on its face applies only to primary-line cases, not

secondary-line cases. As a result, given the legislative history

and statutory language distinctions, we will not presume, without

more guidance, that the Supreme Court intended in Brooke Group to

alter the well-established rule that it adopted in Morton Salt.9

Thus, we hold that the Morton Salt rule continues to apply to

secondary-line injury cases such as the present one.

9 While concerns about overenforcement harming overall consumer
welfare may be valid, the Supreme Court retains the option of
speaking further on this issue. See generally Paul Larule,

Robinson-Patman Act in the Twenty-First Century: Will the Morton

Salt Rule Be Retired? 48 S.M.U. L. Rev. 1917, 1927 (1995)

(concluding that "[w]hen an appropriate case comes before it, the
[Supreme] Court may well decide to make the final cut");
Hovenkamp 14.6a (arguing that, after Brooke Group, "a

reinterpretation of Robinson-Patman so as to permit secondary-
line injury only when competition itself is threatened is long
overdue").

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The Morton Salt rule provides that, for the purposes of

secondary-line claims under section 2(a), "injury to competition

is established prima facie by proof of a substantial price

discrimination between competing purchasers over time." Falls

Cities Industries v. Vanco Beverage, Inc., 460 U.S. 428, 435

(1983) (citing Morton Salt, 334 U.S. at 46, 50-51). If the

plaintiff makes such a showing, then "[t]his inference may be

overcome by evidence breaking the causal connection between a

price differential and lost sales or profits." Falls City, 460

U.S. at 435. Barring evidence breaking that connection, however,

"for a[] plaintiff to prove competitive injury under Robinson-

Patman, he [or she] need only show that a substantial price

discrimination existed as between himself [or herself] and his

[or her] competitors over a period of time." Hasbrouck v.

Texaco, Inc., 842 F.2d 1034, 1041 (9th Cir. 1987), aff'd, 496

U.S. 543 (1990).

Here the jury properly inferred prima facie injury to

competition since Coastal produced sufficient evidence before the

jury to conclude (1) that the discrimination in question was

continuous and substantial and (2) that the discrimination

occurred in a business where profit margins were low and

competition was keen. 4 Von Kalinowski, Antitrust Laws and Trade

Regulation 31.04(1). First, the discrimination lasted all 18

months that Coastal was in business, and always exceeded the five

cents per barrel that witnesses testified was competitively

significant. Additionally, there was ample testimony that the

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marine fuel oil business, in which Coastal competed against

Caribbean and Harbor, was characterized by thin margins and

intense competition. At any rate, on appeal, CAPECO does not

make the argument that Coastal failed to produce evidence

required for a prima facie showing of injury to competition under

the Morton Salt rule.

However, CAPECO argues that the Morton Salt inference

was undercut by evidence "breaking the causal connection" between

CAPECO's price discrimination and Coastal's lost sales or

profits, Falls City, 460 U.S. at 435, and showing an absence of

competitive injury, Boise Cascade Corp. v. FTC, 837 F.2d 1144,

1146 (D.C. Cir. 1988). According to CAPECO, overall market

forces depressed the price for bunker fuel more than 30 percent

between late 1991 and early 1992, and it was this fact, rather

than CAPECO's price discrimination, that led to Coastal's demise.

CAPECO points to the admission of Coastal's CEO that Coastal's

sales agents based their price quotes to ships on the prices

being charged by competitors in San Juan and other ports, often

without even knowing the cost of the fuel that was to be

delivered. According to CAPECO, if prices were set when costs

were unknown, then discounts from CAPECO could not have been a

material factor in setting prices.

We reject the argument that this evidence rebuts

Coastal's prima facie showing of price discrimination. In

reviewing the jury verdict, "[w]e are compelled . . . even in a

close case, to uphold the verdict unless the facts and

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inferences, when viewed in a light most favorable to the party

for whom the jury held, point so strongly and overwhelmingly in

favor of the movant that a reasonable jury could not have arrived

at this conclusion." Chedd-Angier Production Co. v. Omni

Publications Int'l Ltd., 756 F.2d 930, 934 (1st Cir. 1985); see

also Rodr guez v. Montalvo, 871 F.2d 163, 165 (1st Cir. 1989);

Castro v. Stanley Works, 864 F.2d 961, 963 (1st Cir. 1989); Brown

v. Freedman Baking Co., 810 F.2d 6, 12 (1st Cir. 1987). Thus, in

this case, the appellants must "persuade us that the facts of

this case so conclusively point to a verdict in [their] favor

that fair-minded people could not disagree about the outcome."

Chedd-Angier Production Co., 756 F.2d at 934.

Here, neither section 2(a), section 263, nor their

attendant case law, requires that the price discrimination in

question be directly factored into the prices that favored and

disfavored purchaser-resellers offered to their customers.

Presumably, regardless of whether these costs were factored

directly into the prices that Coastal offered, or were later

calculated into Coastal's bottom line, these costs affected

Coastal's pricing. Certainly, no argument can be made from this

evidence alone that bunker fuel costs, no matter when accounted

for, were not causally connected to Coastal's lost profits. See,

e.g., Hasbrouck v. Texaco, Inc., 842 F.2d 1034, 1039-41 (9th Cir.

1987), aff'd, 496 U.S. 543 (1990) (finding that evidence that

"some portion" of small extra discounts of 2 -5 on gasoline was

passed on by favored customers sufficient, particularly when

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retail gasoline market was "strongly price sensitive").

Additionally, the fact that Coastal's sales agents operated

without complete knowledge of the prices at which other Coastal

agents were purchasing the bunker fuel that would later be

delivered does not, without more, show an absence of competitive

injury.

3. Actual Injury
3. Actual Injury

CAPECO also contends that Coastal failed to present

adequate evidence of actual injury to support the verdict. On

appeal, CAPECO does not complain that the court's instructions to

the jury on the actual injury requirement were erroneous. Thus,

the only question regarding this issue is whether the evidence

that Coastal presented to the jury was adequate to permit a

reasonable inference of actual injury.

Although we have concluded that Coastal has proved

competitive injury under Title 10, Section 263 of the Laws of

Puerto Rico, in order to collect damages as a private plaintiff,

Coastal must show that CAPECO's offense was a "material cause" of

injury. See Zenith Radio Corp. v. Hazeltine Research, 395 U.S.

100, 114 n.9 (1969); Hasbrouck, 842 F.2d at 1042; Allen Pen Co.

v. Springfield Photo Mount Co., 653 F.2d 17, 21-22 (1st Cir.

1981). Coastal was required to show that, as a result of

CAPECO's price discrimination, it "lost sales and profits."

Hasbrouck, 842 F.2d at 1042; see Allen Pen Co., 653 F.2d 17, 21-

22 (1st Cir. 1981). CAPECO contends that, to do so, Coastal was

required to "indicate and document specific losses of business

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[for Coastal] and corresponding gains by [favored competitors],

or otherwise show that [Coastal's] losses were caused by

[CAPECO's] practices." Foremost-McKesson, Inc. v.

Instrumentation Laboratory, Inc., 527 F.2d 417, 420 (5th Cir.

1976); see also Falls City, 460 U.S. at 437-38 (ruling that

findings based on "direct evidence of diverted sales" "more than

established the competitive injury required for a prima facie

case under section 2(a)").

Assuming arguendo that CAPECO correctly claims that

Coastal needed to show specific losses of business, CAPECO's

argument fails to persuade us.10 CAPECO concedes that a Coastal

employee, Andrew McIntosh ("McIntosh") testified that Coastal was

getting "feedback" from its customers that its prices were not

competitive. Whether or not to credit such testimony is a

decision best left to the factfinder. See Wytrwal v. Saco School

Bd., 70 F.3d 165, 171 (1st Cir. 1995); Flanders & Medeiros, Inc.

v. Begosian, 65 F.3d 198, 204 n.4 (1st Cir. 1995). McIntosh's

testimony, if believed, could lead a jury to reasonably infer

actual injury in the form of lost sales.

CAPECO also contends that because McIntosh's testimony

was based on statements other Coastal employees had made to him,

10 There is conflicting authority for the proposition that a
jury may infer actual injury from circumstantial evidence. See

Continental Ore Co. v. Union Carbide Corp., 370 U.S. 690, 697-700

(1962). However, we need not consider here whether this
standard, which is more favorable to Coastal, applies rather than
the standard that CAPECO advocates, since Coastal actually did
proffer evidence, albeit only employee testimony, that its prices
were causing it to lose business.

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it was both inadmissible hearsay evidence, see Fed. R. Evid. 802,

and even if admissible, legally insufficient to support a finding

of actual injury. In making this argument, CAPECO cites two

cases, Stelwagon Manufacturing Co. v. Tarmac Roofing Systems,

Inc., 63 F.3d 1267, 1275-76 (3d Cir. 1995), and Chrysler Credit

Corp. v. J. Truett Payne Co., 670 F.2d 575, 581 (5th Cir. 1982).

However, the two cases are inapposite. Apparently unlike the

defendant in Stelwagon, CAPECO did not make a lower court hearsay

objection to the testimony in question. See Stelwagon Mfg. Co.,

63 F.3d at 1275, n.17.

Additionally, the Fifth Circuit's opinion in J. Truett

Payne is distinguishable in a significant manner from the instant

case. In a preceding Supreme Court opinion, the Court noted that

[a]lthough [Payne Co.'s owner] asserted
that his salesmen and customers told him
that the dealership was being undersold,
he admitted that he did not know if his
competitors did in fact pass on their
lower costs to their customers.

J. Truett Payne, Co. v. Chrysler Motors Corp., 451 U.S. 557, 564

(1981). Likewise, Payne Co.'s expert witness did not testify

that the lower costs were passed on in the retail price. Id.

The Court found important the lack of evidence that competitors

passed on discounts to customers. Id. at 564, n.4. On remand,

the Fifth Circuit noted, in finding the evidence insufficient,

that Payne Co.'s witnesses only "spoke to either the supposed or

hypothesized effect of the programs." J. Truett Payne, 670 F.2d

at 581. By contrast, while Coastal offered similar testimony of

feedback about being undersold, it also put forth expert

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testimony that Caribbean and Harbor had fully passed on their

lower costs to the ships purchasing marine fuel. Coastal's

expert testified that "CAPECO gave discriminatory low prices to

Harbor and Caribbean . . . [that] were fully passed on . . . to

the ships purchasing marine fuel." Thus, because Coastal

proffered evidence linking the discounts in question to actual,

not hypothetical, effects, J. Truett Payne is inapposite.

We conclude that, once admitted, this evidence could

have led the jury to reasonably infer actual injury to

competition.

B. Monopolization
B. Monopolization

Section 2 of the Sherman Act, 15 U.S.C. 2, condemns

"every person who shall monopolize, or attempt to monopolize . .

. any part of the trade or commerce among the several States."

Similarly, Title 10, Section 260 of the Laws of Puerto Rico

tracks this language. Claims under this Puerto Rico analogue are

to be analyzed in the same manner as claims under section 2 of

the Sherman Act. See R.W. Intern. Corp. v. Welch Food, Inc., 13

F.3d 478, 486-88 (1st Cir. 1994); Americana Indus., Inc. v.

Wometco de Puerto Rico, 556 F.2d 625, 626-28 (1st Cir. 1977); see

also Pressure Vessels of Puerto Rico v. Empire Gas of Puerto

Rico, 94 JTS 144, *432 (P.R. 1994). To successfully prove a

monopolization offense, a plaintiff must show that (1) the

defendant has monopoly power and (2) the defendant "has engaged

in impermissible 'exclusionary' practices with the design or

effect of protecting or enhancing its monopoly position."

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Hovenkamp 6.4a. On appeal, CAPECO challenges the jury's

verdict that it had monopoly power, and also contends that it did

not engage in impermissible 'exclusionary' practices in order to

protect or gain a monopoly.

To determine whether a party has or could acquire

monopoly power in a market, "courts have found it necessary to

consider the relevant market and the defendant's ability to

lessen or destroy competition in that market." Spectrum Sports

v. McQuillan, 506 U.S. 447, 456 (1993). CAPECO's first argument

is that the jury erred in finding San Juan Harbor as the relevant

geographic market for bunker fuel. In general, the relevant

geographic market consists of "the geographic area in which the

defendant faces competition and to which consumers can

practically turn for alternative sources of the product."

Baxley-DeLamar v. American Cemetary Assn., 938 F.2d 846, 850 (8th

Cir. 1991); see also Tampa Electric Co. v. Nashville Coal Co.,

365 U.S. 320, 327 (1961).

In its monopolization claim, Coastal argued that CAPECO

took steps to drive it out of San Juan Harbor because Coastal is

affiliated with a refinery in Aruba. Coastal apparently had the

capacity to import the residual oil and diesel into San Juan from

Aruba. Coastal also had storage capacity. CAPECO feared, so

Coastal's theory went, that this would allow the refinery in

Aruba to compete with CAPECO and threaten CAPECO's ability to

sell its targeted 10,000 barrels of residual oil per day to

dealers. Coastal's argument is that CAPECO, fearing that

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Coastal's affiliate posed a competitive threat, decided to drive

Coastal out by (1) engaging in price discrimination against

Coastal, (2) discriminating in the provision of residual oil, (3)

discriminating in the quality of the residual oil available, and

(4) threatening to cut off plaintiff entirely, eventually doing

so.

Coastal successfully argued to the jury that the

relevant geographic market was San Juan Harbor, since neither it

nor its competitors, Caribbean and Harbor, could practicably

obtain supplies in San Juan Harbor from anyone other than CAPECO.

Coastal produced evidence that CAPECO made 90% of the sales of

bunker fuel to resellers in the San Juan Harbor market -- and

CAPECO does not dispute this figure on appeal.

CAPECO's main argument regarding monopoly power is that

the choice of San Juan Harbor as the relevant market was

incorrect. Instead, it maintains that because the broader market

for bunker fuel among cruise ships and other vessels plying the

waters of the Caribbean and the southeastern United States

constrains the prices CAPECO can charge resellers in San Juan

Harbor, the proper geographic market should have been defined to

include a much wider area. A larger geographic market would of

course lead to a lower figure for the percentage of sales in the

market made by CAPECO, likely defeating the monopoly power prong

of the monopolization offense.

In assessing CAPECO's argument, we must bear in mind

that "market definition is a question of fact" and "we therefore

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must affirm the jury's conclusion unless the record is devoid of

evidence upon which the jury might reasonably base its

conclusion." Weiss v. York Hospital, 745 F.2d 786, 825 (3d Cir.

1984); see also Rebel Oil Co., 51 F.3d at 1435 (stating that

standard upon motion for directed verdict, judgment

notwithstanding the verdict, and summary judgment is "whether the

jury, drawing all inferences in favor of the nonmoving party,

could reasonably render a verdict in favor of the nonmoving party

in light of the substantive law") (citing Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 249-52 (1986)).

In order to show that CAPECO had monopoly power,

Coastal was required to show that CAPECO had sufficient market

power to raise price by restricting output. IIA Phillip E.

Areeda et al., Antitrust Law 501 (1995). "[S]ubstantial market

power that concerns antitrust law arises when the defendant (1)

can profitably set prices well above its costs and (2) enjoys

some protection against [a] rival's entry or expansion that would

erode such supracompetitive prices and profits." Id. Market

power can be shown through two types of proof. A plaintiff can

either show direct evidence of market power (perhaps by showing

actual supracompetitive prices and restricted output) or

circumstantial evidence of market power. Rebel Oil Co., Inc. v.

Atlantic Richfield Co., 51 F.3d 1421, 1434 (9th Cir.), cert.

denied, 116 S. Ct. 515 (1995). Market power may be proved

circumstantially by showing that the defendant has a dominant

share in a well-defined relevant market and that there are

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significant barriers to entry in that market and that existing

competitors lack the capacity to increase their output in the

short run. Id. Coastal's evidence at trial was of the

circumstantial type and thus the question the parties have

presented on appeal is whether Coastal supplied sufficient

evidence for that CAPECO had a dominant share in the relevant

market.

Before determining market share, however, the relevant

geographic market must be defined.11 Although, "[f]inding the

relevant market and its structure is not a goal in itself but a

surrogate of market power," see Areeda, supra, 531a, "[m]arket

definition is crucial." Rebel Oil Co., 51 F.3d at 1434.

"Without a definition of the relevant market, it is impossible to

determine market share." Id. Proving market definition is the

plaintiff's burden. See H.J., Inc. v. Int'l Tel. & Tel. Corp.,

867 F.2d 1531 (8th Cir. 1989) ("The plaintiff carries the burden

of describing a well-defined relevant market, both geographically

and by product, which the defendants monopolized."); Neumann v.

Reinforced Earth Co., 786 F.2d 424 (D.C. Cir.) ("The plaintiff

bears the burden of establishing the relevant market."), cert.

denied, 107 S. Ct. 181 (1986); M.A.P. Oil Co., Inc. v. Texaco,

Inc., 691 F.2d 1303, 1306 (9th Cir. 1982) ("the proponent of [the

monopolization] theory must identify the relevant product and

11 The plaintiff must also define the relevant product market.
H.J., Inc. v. Int'l Tel. & Tel. Corp., 867 F.2d 1531, 1537 (8th

Cir. 1989). The parties agree that the relevant product market
is residual fuel oil sold by all refineries for use as bunker
fuel for ocean-going vessels.

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geographic markets as a threshold requirement"). Although

Coastal has properly pointed out that the question of market

definition is one of fact for the jury, a plaintiff must present

sufficient evidence from which a reasonable jury could find the

existence of the proposed relevant market. Cf.

Flegel v. Christian Hosp. Northeast-Northwest, 4 F.3d 682 (8th

Cir. 1993) (affirming grant of summary judgment on grounds that

there was insufficient evidence to support plaintiffs' proposed

market definition).

A market may be any grouping of sales whose sellers, if

unified by a hypothetical cartel or merger, could profitably

raise prices significantly above the competitive level. If the

sales of other producers substantially constrain the price-

increasing ability of the hypothetical cartel, these others are

part of the market. Areeda, supra, 533b; see also Rebel Oil

Co., 51 F.3d at 1434 (relying on Professor Areeda's formulation

of the test for the relevant market). "The definition of

relevant market depends upon economic restraints which prevent

sellers from raising prices above competitive levels." H.J.,

Inc., 867 F.2d at 1537.

Coastal and CAPECO have presented two competing

conceptions of the relevant market. Coastal argues, and the jury

found,12 that the relevant market was the market for residual oil

12 The jury answered "yes" to the special interrogatory asking
"Did Coastal establish that there is a relevant market comprising
of the sale of residual fuel oil or diesel to bunker fuel
resellers in the port of San Juan and that CAPECO has monopoly
power in the relevant market?"

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for bunker fuel in San Juan. Coastal presented evidence that

resellers in San Juan (Harbor, Caribbean and Coastal) purchased

90% of their supplies for bunker fuel from CAPECO. CAPECO, in

contrast, has argued that the relevant market is broader,

consisting of all sales of residual oil for bunker fuel in the

Caribbean and Southeastern United States. Our review of the

issue leads us to conclude that it would be unreasonable for a

juror to infer from the evidence presented that the sales of

residual oil for bunker fuel outside of San Juan should be

excluded from the relevant market.

The residual oil CAPECO sells is blended with diesel

into bunker fuel and sold by resellers like Coastal, Harbor and

Caribbean to large ocean-going vessels. Residual oil refiners

and bunker fuel resellers exist throughout the Caribbean and

Southeastern United States. The parties agree that the ocean-

going vessels can choose to refuel from whatever supplier in the

Caribbean and Southeastern United States offers the best terms as

to price, quality and dependability. The market for bunker fuel

is therefore extremely fluid and competitive, as the parties

agree.

Coastal argues that, because of this competition,

margins for resellers are razor thin and it is virtually

impossible for a reseller in San Juan, like Coastal, to obtain

residual oil from anyone other than CAPECO. Transporting

supplies from other refineries, such as the refinery Coastal is

affiliated with in Aruba, would increase the cost of the fuel to

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such an extent (transportation costs, import taxes, risk of price

changes, and storage costs) that it is not an economically viable

alternative. (Of course, this is, it might be observed, somewhat

inconsistent with the theory that CAPECO was so afraid of the

'threat' from Coastal and its Aruba affiliate, that it drove

Coastal out of business.) Consequently, Coastal argues,

resellers of bunker fuel must purchase from CAPECO when they do

business in San Juan. In Coastal's view, the San Juan resellers'

inability to purchase from suppliers outside of San Juan makes

San Juan the relevant market.

We do not agree. The touchstone of market definition

is whether a hypothetical monopolist could raise prices. See

Rebel Oil Co., 51 F.3d at 1434. Although a reseller based in San

Juan may have nowhere else to turn to in San Juan for its fuel,

Coastal did not produce sufficient evidence that this meant

CAPECO has the ability to restrict supply and raise prices in San

Juan to supracompetitive levels. Indeed, the evidence points in

the other direction. CAPECO cannot sell its residual oil for

bunker fuel unless it does so at a price at which the resellers

will be able to sell the fuel to its ultimate consumers, the

ocean-going vessels. Those ocean-going vessels can go anywhere

in the Caribbean and Southeastern United States to get their

bunker fuel. If CAPECO were to raise its prices to the

resellers, the resellers could not offer the bunker fuel to the

ocean-going vessels at competitive prices and the ocean-going

vessels would simply get their fuel at another port.

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Given these facts, the immobility of the resellers does

not mean that CAPECO could maximize profits by raising prices

significantly above the competitive level. Raising prices in San

Juan would repel the ultimate consumers, who would seek other

suppliers. The resellers would either stop purchasing residual

fuel or cease business, or both. CAPECO would then lose its

ability to sell its residual oil for bunker fuel and this would

redound to the benefit of CAPECO's competitors. While under most

circumstances the immobility of the resellers would be of

considerable importance in defining the market, it does not

control here where the mobility of the ultimate consumers

protects the immobile resellers. Cf. Ball Memorial Hosp., Inc.

v. Mutual Hosp. Ins., Inc., 784 F.2d 1325 (7th Cir. 1986)

(Easterbrook, J.) (relevant market for purposes of health

insurance coverage to Indiana consumers was "regional or

national" not simply Indiana, even though Indiana consumers could

not get insurance from any source other than defendant doing

business in Indiana; the mobility of potential rivals to the

defendant protected the consumers whose mobility was restricted).

Under the circumstances here, defining the market as San Juan is

too narrow. It does not capture the likelihood of expanded sales

by CAPECO's rivals in the event that CAPECO were to raise prices

in San Juan.

Once the relevant market is defined to include a

geographic region larger than San Juan (i.e., the Caribbean and

Southeastern United States), Coastal has not satisfied its burden

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of showing that CAPECO had a dominant market share. While

Coastal might, at least in theory, have shown that all refineries

throughout the Caribbean and the Southeastern United States

behaved like a cartel and priced their residual oil to capture

the transportation and other costs of getting oil from sources

outside the local ports, it has not done so here and it has

failed to produce evidence sufficient for a reasonable jury to

infer that such was the case. In short, Coastal has not shown

that CAPECO had monopoly power over the relevant market. Cf.

Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 886-87 (9th Cir.

1982) (secondary-line price discrimination under Robinson-Patman

Act does not necessarily violate Sherman Act), cert. denied, 103

S. Ct. 1777 (1983). Accordingly, Coastal's monopolization claims

fail under both section 2 of the Sherman Act and Title 10,

Section 260 of the Laws of Puerto Rico and we reverse the

monopolization verdicts. We note that because we affirm the

price discrimination verdict, the reversal on the monopolization

theory, by itself, leaves unchanged the amount of antitrust

damages awarded, subject to our discussion on damage evidentiary

sufficiency in Part I.D., infra.

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C. Puerto Rico Law Tort
C. Puerto Rico Law Tort

CAPECO also challenges the judgment on Coastal's claim

under 31 L.P.R.A. 5141 ("Article 1802").13 CAPECO claims that

Coastal was required to allege and prove the elements of a

recognized tort, and failed to do so. According to CAPECO,

because the Supreme Court of Puerto Rico has recently declined to

rule that violation of an antitrust statute will also necessarily

give rise to a violation of Article 1802, the violation of an

antitrust statute does not give rise to a per se violation of

Article 1802. See Pressure Vessels of Puerto Rico, 94 JTS 144,

*438-39. Additionally, CAPECO challenges the sufficiency of the

evidence supporting the judgment on this issue. CAPECO asks for

a reversal of the verdict on these grounds.

CAPECO's arguments may well have merit. However, we

need express no opinion regarding CAPECO's arguments as CAPECO

waived them by failing to object to the jury instructions

regarding the Article 1802 claim. See Linn v. Andover Newton

Theological School, Inc., 874 F.2d 1, 5. These are not simply

technical requirements. By failing to object to the jury

instructions, CAPECO denied "the judge an opportunity to correct

his error," assuming that CAPECO rightly contends that an error

13 Article 1802 states, in pertinent part, that:

[a] person who by an act or omission
causes damage to another through fault or
negligence shall be obliged to repair the
damage so done.

Id.

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was made. Id. While CAPECO may correctly contend that antitrust

violations do not fall within the scope of Article 1802, the

district court's jury instructions were not strictly limited to

antitrust offenses. It is entirely possible that, had an

objection been made, the district court could have charged the

jury with antitrust offenses as an Article 1802 ground separately

from other Article 1802 grounds that may have applied in the

present case. For example, it could have charged the jury with

tortious interference with contractual relations, since CAPECO

may well have intentionally complicated, via its refusal to deal,

Coastal's efforts to meet its obligations to deliver bunker fuel.

See General Office Products Corp. v. A.M. Capen's Sons, Inc., 780

F.2d 1077, 1081 (1st Cir. 1986) (noting that even in the absence

of a contract, liability may be incurred under other judicial

principles) (citing General Office Products Corp. v. A.M. Capen's

Sons, Inc., No. 0-84-278, Trans. Op. at 6-7 (P.R. June 29,

1984)). By failing to object to the instructions in question,

CAPECO has deprived us of factual findings that would aid in the

resolution of these issues. Because of the generality of the

instruction, we conclude that evidence existed of CAPECO's

possibly tortious conduct sufficient for the jury to reasonably

reach the verdict that it did.

CAPECO also challenges the sufficiency of the evidence

supporting the Article 1802 findings. However, CAPECO has waived

review here of this argument too by failing to move at any time

for a judgment as a matter of law on this ground under Fed. R.

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Civ. P. 50(a), see Wells Real Estate, Inc. v. Greater Lowell

Board of Realtors, 850 F.2d 803, 810 (1st Cir. 1988)

("[a]ppellate review may be obtained only on the specific ground

stated in the motion for directed verdict").14

As a result of CAPECO's failure to preserve its

arguments for review on appeal, we affirm the judgment on the

Article 1802 claim.

D. Sufficient Evidence on Damages
D. Sufficient Evidence on Damages

CAPECO also argues that Coastal's evidence on damages

was inadequate as a matter of law, and therefore, the jury's

verdict on damages must be reversed. In particular, CAPECO

argues that, as a new market entrant, Coastal was required to use

the "yardstick" method of estimating damages.

With respect to the issue of how accurately damages

must be measured, "there is a clear distinction between the

[relatively high] measure of proof necessary to establish that [a

plaintiff] has sustained some damage and the [relatively low]

measure of proof necessary to enable the jury to fix the amount."

Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S.

555, 562 (1931). In the antitrust context, "the most elementary

conceptions of justice and public policy require that the

wrongdoer shall bear the risk of the uncertainty which his own

14 In 1991, Rule 50 was amended, and the term "judgment as a
matter of law" was adopted "to refer to preverdict" (directed
verdict) and "postverdict" (judgment notwithstanding the verdict)
"motions with a terminology that does not conceal the common
identity of two motions made at different times in the
proceeding." See Fed. R. Civ. P. 50 advisory committee's note.

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wrong has created." Bigelow v. RKO Radio Pictures, 327 U.S. 251,

256 (1946). Nonetheless, the plaintiff must still produce

evidence from which the jury can make a just and reasonable

inference. Wells Real Estate, Inc. v. Greater Lowell Board of

Realtors, 850 F.2d 803, 816 (1st Cir.), cert. denied, 488 U.S.

955 (1988).

Citing Home Placement Service v. The Providence Journal

Co., 819 F.2d 1199 (1st Cir. 1987), CAPECO argues that Coastal

was required to use the yardstick method for calculating lost

profits, rather than the "before-and-after" method. Id. at 1205-

06. Under the yardstick approach, the plaintiff attempts to

identify a firm similar to the plaintiff in all respects but for

the impact of the antitrust violation. Hovenkamp 17.6b2. By

contrast, under the "before-and-after" method, the court looks at

the plaintiff's business before the violation occurred, during

the violation period, and after the violation ended, and

estimates the amount by which the violation reduced the

plaintiff's profits. Id. 17.6b1.

We conclude that whether a yardstick record must be

used ultimately requires an appraisal of the reliability of a

firm's track record, and the length of that track record is one

factor to consider. The plaintiff in Home Placement Services had

operated as planned only weeks before the alleged violations

began. Home Placement Services can best be read as demonstrating

both the type of situation in which a yardstick method is

preferable, and the factors that should go into a court's

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evaluation of the comparability of the yardstick firm or firms

with the plaintiff.15

Ultimately, the proper method should be determined by

the district court in accord with the facts of the situation. In

this case, the district court will have exactly that opportunity,

since we must vacate the district court's damages award and

remand for further proceedings. The district court charged the

jury with an instruction to find an amount for "antitrust

damages," comprising awards for both price discrimination and

monopolization claims.16 Because we reverse the monopolization

verdict, if left to stand, the jury's antitrust damages award

would likely constitute an excessive recovery. In coming to its

conclusion, the jury may well have weighed harms resulting from

conduct that was pleaded with respect to the monopolization

offense (e.g. refusal to deal with a customer, lying, etc.) but

would have been additional to harms resulting from price

discrimination, the claim we uphold. Furthermore, were we to

15 We note in passing that the plaintiff-appellant in Home

Placement Services was challenging the district court's award of

nominal damages and instead sought damages based on a yardstick
analysis; the appeals court upheld the nominal damages finding
because the evidence was "not 'sufficient to get the Court beyond
the guessing stage.'" Id. at 1209 (quoting William Goldman

Theatres, Inc. v. Loew's, Inc., 69 F. Supp. 103, 106 (E.D. Pa.

1946), aff'd, 164 F.2d 1021, 1022 (3d Cir. 1947), cert. denied,

334 U.S. 811 (1948)).

16 We understand the difficult choice that the district court
faced. As a practical matter, it would be difficult, if not
impossible, for a juror to segregate antitrust damages due to a
monopolization offense but not due to illegal price
discrimination from antitrust damages due only to price
discrimination, where as here, the facts and conduct involved in
both allegations greatly overlap.

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allow the verdict to stand despite our reversal of the

monopolization verdict, there would exist the strong likelihood

that the jury had granted Coastal a duplicative recovery under

monopolization and tort law, for injury caused by the same

conduct, such as refusal to deal and lying. The law "abhors

duplicative recoveries." Dopp v. HTP Corp., 947 F.2d 506, 517

(1st Cir. 1991) (vacating damage award for, among other reasons,

"a strong likelihood that the remedies thus far conferred

overlap"). Thus, we find that the district court's award rests

on an error of law. See Adams v. Zimmerman, No. 94-2161, slip

op. at 17, F.3d , , (1st Cir. 1996) (stating that a

"district court's award is reviewed for an abuse of discretion

unless it relies on an erroneous legal determination"). As a

result, we must vacate the antitrust damage award of $4.5 million

($1.5 million trebled), and remand for further proceedings.

II. Arguments for a New Trial
II. Arguments for a New Trial

In addition to its arguments for reversal of the

district court's findings, CAPECO makes several arguments for

reversal of the district court's denial of its motion for a new

trial.

"The authority to grant a new trial . . . is confided

almost entirely to the exercise of discretion on the part of the

trial court." Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33,

36 (1980), cited in Wells Real Estate, Inc. v. Greater Lowell Bd.

of Realtors, 850 F.2d 803, 810 (1st Cir. 1988). "Only abuse of

discretion will trigger reversal of a denial of a motion for new

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trial." Vel zquez v. Figueroa-G mez, 996 F.2d 425, 427 (1993).

In reviewing for abuse of discretion, we must bear in mind that

the trial court's discretion is quite limited concerning motions

for new trials. "A trial judge may not upset the jury's verdict

merely because he or she would have decided the case

differently." Id.

A. Duplicative Judgment
A. Duplicative Judgment

In support of its request for a new trial, CAPECO

argues that the damages awards constituted an impermissible

double recovery. CAPECO contends that both Coastal's antitrust

and tort claims were grounded in the same set of acts. Because

we vacate and remand the antitrust damages for further findings

on price discrimination damages, we construe CAPECO's argument

that price discrimination and tort damages would constitute

duplicative damage recoveries, see Borden v. Paul Revere Life

Ins. Co., 935 F.2d 370, 382 (1st Cir. 1991) ("recovery against a

defendant under one tort theory precludes any duplicative

recovery for the same damages under some other tort theory"), and

so a new trial or remittitur is required, see Dopp v. HTP Corp.,

947 F.2d 506, 516 (1st Cir. 1991).

We reject this argument for three reasons. First,

CAPECO failed to object to the form or content of the special

interrogatories to which the jury answered. Second, CAPECO may

well have waived its right to raise this issue here, since it

failed to raise the issue in a timely manner with the trial

court. Previously, we have held that a defendant may not argue

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verdict inconsistency if he or she failed to object "after the

verdict was read and before the jury was discharged." See

McIsaac v. Didriksen Fishing Corp., 809 F.2d 129, 134 (1st Cir.

1987). This rule is grounded in the realization that "to decide

otherwise would countenance 'agreeable acquiescence to

perceivable error as a weapon of appellate advocacy.'" Id.

(quoting Merchant v. Ruhle, 740 F.2d 86, 92 (1st Cir. 1984)).

The same concern should make us hesitate to consider arguments

about verdict redundancy that were similarly not put forth below.

Finally, "[a] special verdict will be upheld if there

is a view of the case which makes the jury's answers consistent."

McIsaac, 809 F.2d at 133. As we have noted above, Coastal may

have had a legitimate Article 1802 claim apart from any overlap

with antitrust law. Had CAPECO chosen to object to the district

court's instructions, the district court may have corrected this

problem. Accordingly, giving the district court the benefit of

the doubt, had it responded to a timely objection by CAPECO and

given an Article 1802 instruction that did not overlap with

antitrust claims, the jury's damages verdicts on tort and

antitrust claims could have been consistent. Even assuming,

arguendo, that CAPECO correctly asserts that such overlap

occurred, to grant CAPECO a new trial now on the basis of

duplicative recovery would allow it to avoid the result of its

own failure to object to the Article 1802 instruction.

B. CAPECO's Experts
B. CAPECO's Experts

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Additionally, CAPECO argues that the district court's

refusal to allow its two experts, Dr. Jorge Freyre ("Dr. Freyre")

and Dr. El as Guti rrez ("Dr. Guti rrez"), to testify was based

on a fundamental error of law and was an abuse of discretion that

requires that we reverse the district court and order a new

trial.

In order to evaluate CAPECO's contentions, we must

review the district court's orders leading up to the exclusion of

the relevant testimony. The district court's June 22, 1993

Scheduling Order stated that "[t]he parties will announce the

names and qualifications of their experts by October 1, 1993."

This date was modified subsequently to December 1, 1993. In

compliance with this order, CAPECO named C sar Figueroa

("Figueroa") and Rafael Mart nez-Margarida ("Mart nez-

Margarida"). On March 1, 1994, pursuant to a motion by new

counsel for Caribbean, the district court modified the previous

order and issued a revised scheduling order stating "all experts

are to be announced by March 30," and also specifying that expert

reports to be used "during each party's case-in-chief" were to be

exchanged on June 3, 1994, and that expert rebuttal reports were

to be exchanged on July 1, 1994. Upon CAPECO's June 1 motion,

the date for reports to be exchanged was extended by an "Omnibus

Order" to ten days after service of that order, dated August 15,

1994. On August 29, 1994, Coastal delivered to CAPECO expert

reports prepared by Dr. Sherwin and Dr. Zalacain, and CAPECO

provided Coastal with an expert report prepared by Figueroa.

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These experts were deposed between September 9 and September 14,

and thereafter CAPECO retained experts Dr. Freyre and Dr.

Guti rrez ostensibly as rebuttal witnesses under Fed. R. Civ. P.

26(a)(2)(C). CAPECO informed Coastal on September 20, 1994, that

it had retained Dr. Freyre as a rebuttal witness, and similarly

informed Coastal of Dr. Guti rrez on or about October 4, 1994.

CAPECO informed the district court about Dr. Freyre and Dr.

Guti rrez on October 5, 1995.

The district court instructed CAPECO to produce

Dr. Freyre and Dr. Guti rrez and to make them available for

depositions. On October 5 and October 6, Coastal filed motions

in limine to exclude Dr. Freyre and Dr. Guti rrez, respectively,

on the theory that neither witness could properly be

characterized as a "rebuttal" witness within the meaning of Rule

26(a)(2)(C), and thus both should have been disclosed previously.

After oral argument, the district court granted Coastal's motion

and excluded the testimony of Dr. Freyre and Dr. Guti rrez. The

district court, upon CAPECO's admission that it planned to use

Dr. Freyre and Dr. Guti rrez in its case-in-chief, noted that

"you got a problem with my orders because you have not complied

with my orders insofar as Freyre and Guti rrez [are] concerned,"

apparently referring to the previous scheduling order deadline

for experts in the case-in-chief to be disclosed.

CAPECO argues (1) that because the Omnibus Order did

not provide a deadline for the exchange of rebuttal expert

reports, no scheduling order applied, and therefore the

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disclosure of Dr. Freyre and Dr. Guti rrez was controlled by Rule

26(a)(2)(C);17 and (2) that the district court misconstrued Rule

26(a)(2)(C) to signify that a defendant cannot offer testimony to

"contradict or rebut" under Rule 26(a)(2)(C). We need not

consider whether the district court in fact misconstrued Rule

26(a)(2)(C), because, for three reasons, we find no abuse of

discretion in its exclusion of these witnesses as rebuttal

witnesses. First, at no time did CAPECO ever seek leave of the

court to announce the names of experts not disclosed by

December 1, 1993, as originally required, or by March 30, 1994,

as permitted by the trial court. CAPECO's motion of June 1

sought extension principally due to alleged noncooperation by

Coastal in discovery, making CAPECO's experts' task difficult to

complete by the deadline then in effect. We cannot conclude, as

CAPECO does, that the Omnibus Order's extension rendered all

other orders unbinding. Because CAPECO did not ask for its

extension on the grounds it now argues, the district court could

not have had such an effect in mind, nor was it given an

opportunity to consider such effect. A trial court may "readily

exclude a witness or exhibit if some previous order had set a

deadline for identification and the proponent [has], without

adequate excuse, failed to list the witness or exhibit." Fusco

17 Rule 26's schedule concerning the duty to disclose
information concerning expert witnesses and their opinions may be
altered by the court. See Fed. R. Civ. P. 26(a)(2)(C) (setting

forth schedule of disclosure of expert testimony "[i]n the
absence of other directions from the court or stipulation by the
parties").

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v. General Motors Corp., 11 F.3d 259, 265 (1st Cir. 1993); see

also Freund v. Fleetwood Enter., Inc., 956 F.2d 354 (1st Cir.

1992).

Additionally, we cannot agree that the district court's

March 1, 1994, Scheduling Order was necessarily superceded, given

that that order scheduled trial for October 24, 1994, and in

fact, trial began on that date. The proximity in time between

CAPECO's attempts to bring in Dr. Freyre and Dr. Guti rrez and

actual trial casts doubt on any argument that CAPECO was somehow

misled into thinking that previous Scheduling Orders did not

apply. Finally, even assuming that CAPECO is correct that the

Scheduling Order's provisions regarding rebuttal witnesses had

been superceded and thus Rule 26(a)(2)(B) applied, the district

court might still have enforced its previous deadlines regarding

experts in the case-in-chief. For better or for worse, at oral

argument on October 21, 1994 (three days before trial was to

start), counsel for CAPECO identified Dr. Freyre and Dr.

Guti rrez as witnesses in its case-in-chief.18

Given the circumstances, we cannot conclude that the

exclusion of the testimony of Dr. Freyre and Dr. Guti rrez was an

abuse of discretion warranting a new trial.

C. CAPECO's Meeting Competition Defense
C. CAPECO's Meeting Competition Defense

18 At one point in the oral argument over Coastal's motion in
limine to exclude Dr. Freyre and Dr. Guti rrez, the court asked
"And when are you going to bring them?" To this question,
counsel for CAPECO directly responded, "We are going to use
[them] in our case [in] chief."

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CAPECO also argues that the district court should have

given jury instructions on the affirmative defense of meeting

competition. Section 2(b) of Clayton Act, as amended by the

Robinson-Patman Act, permits a defendant to rebut a prima facie

case of violation by showing that its lower price "was made in

good faith to meet an equally low price of a competitor." 15

U.S.C. 13(b). The "meeting competition" defense can be raised

only by a defendant who responds in good faith to the believed

lower price of a competitor. United States v. United States

Gypsum Co., 438 U.S. 422 (1978), appeal after remand, 600 F.2d

414 (3d Cir. 1979), cert. denied, 444 U.S. 884 (1979).

We need not consider CAPECO's argument that it believed

in good faith that it was responding to a competitive threat

posed by Coastal in combination with its parent CFMI, because we

conclude that even assuming that Coastal and CFMI were a single

entity, they do not constitute a competitor in the same specific

area as CAPECO, see Falls City, 460 U.S. at 448. In Falls City,

the Supreme Court concluded that Congress intended the meeting

competition defense "to allow reasonable pricing responses on an

area-specific basis where competitive circumstances warrant

them." Id. at 448. Here, the district court could reasonably

conclude that the defense did not apply, since there was a lack

of evidence, beyond CAPECO's own employees' testimony about what

they believed to be the case, that CFMI offered lower prices on

bunker fuel in San Juan than CAPECO. See Rose Confections, Inc.

v. Ambrosia Chocolate Co., 816 F.2d 381, 391-93 (8th Cir. 1987)

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(ruling defense rejected where seller relied on "assumption or

speculation" without verification that competitor's prices were

in fact lower). Therefore, we do not find abuse of discretion in

the district court's denial of a new trial based on its refusal

to issue a jury instruction on the meeting competition defense.

D. CAPECO's Puerto Rico Law Tort Counterclaim
D. CAPECO's Puerto Rico Law Tort Counterclaim

CAPECO contends that the district court erred in

dismissing its counterclaim grounded in Article 1802, 31 L.P.R.A.

5141. According to CAPECO, it was a compulsory counterclaim

and was thus not barred by the one year statute of limitations,

at least to the extent of defeating the main claim.

We reject CAPECO's argument for two reasons. First, in

opposition to Coastal's motion for summary judgment on the

counterclaim, it failed to inform the district court of the

theory it now advances, that it is entitled to recoupment

notwithstanding the statute of limitations. Additionally, the

gist of CAPECO's counterclaim argument was that the threat posed

by Coastal and CFMI allegedly working in concert forced CAPECO to

give Harbor and Caribbean discounts, costing CAPECO potential

profits. Given that we uphold the district court's finding that

these discounts were illegal price discrimination, it appears at

least doubtful under Puerto Rico law that CAPECO can collect for

any lost profits thereby incurred. See, e.g., Rubio-Sacarello v.

Roig, 84 D.P.R. 344, 351 (P.R. 1962) (stating, in a contract

context, that one who is guilty of illegality cannot bring an

action). As a result, we fail to find abuse of discretion by the

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district court in its decision not to grant a new trial on this

basis.

CONCLUSION
CONCLUSION

Coastal succeeded below on three claims: price

discrimination, monopolization and tort. CAPECO's failure to

make the points below that it now argues on appeal hamstrung its

attempt to obtain reversal of the price discrimination and tort

claims. But the definition of relevant market Coastal espoused

could not be reasonably adopted by the jury, since this

definition was legally insufficient in neglecting to account for

downstream constraints on the proposed monopoly, and in failing

to draw on sufficient evidence regarding those constraints.

For the foregoing reasons, the judgment of the district

court is affirmed in part, reversed in part, and remanded.

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