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May 10, 1990


The opinion of the court was delivered by: William C. Conner, District Judge.


Defendants Conoco, Inc., Conoco (U.K.) Ltd. and Exxon Corporation move for summary judgment pursuant to Rule 56, Fed.R. Civ.P. on the grounds that the claims of plaintiff Transnor (Bermuda) Ltd. ("Transnor") for losses in the Brent Oil market, allegedly totalling $17 million, and lost profit damages on unrelated businesses, allegedly totalling nearly $65 million*fn1 are invalid as a matter of law. For the reasons set forth below, defendants' motion is granted in part and denied in part.


A party seeking summary judgment must demonstrate that "there is no genuine issue as to any material fact." Fed.R. Civ.P. 56(c); Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987); see Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). It must establish that there is a "genuine issue for trial." Id. at 587, 106 S.Ct. at 1356. "In considering the motion, the court's responsibility is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight 804 F.2d at 11. The inquiry under a motion for summary judgment is thus the same as that under a motion for a directed verdict: "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).


In its previous decision denying summary judgment, this Court determined that there were material fact issues as to whether defendants had colluded to trade Brent crude at below-market prices.*fn2 Only a few additional points need be noted here. This is not a case where plaintiff has failed to segregate the amount of the price decline allegedly caused by defendants' tax spinning from other causes of the price decline.*fn3 See e.g. Argus, Inc. v. Eastman Kodak Co., 801 F.2d 38 (2d Cir. 1986), cert. denied, 479 U.S. 1088, 107 S.Ct. 1295, 94 L.Ed.2d 151 (1987) (summary judgment granted because plaintiff failed to refute evidence showing that its lost sales were attributable to independent factors). Transnor's expert witness, Colin Robinson, claims to have considered and discounted other possible explanations for the price decline, including the effect on price of certain OPEC meetings at which there was a discussion of OPEC's intent to increase the supply of oil.*fn4 It appears that Robinson has examined the effect on Brent market prices of the announcements of OPEC's intent to regain market share, and has drawn colorably reasonable inferences therefrom. The weight to be accorded Robinson's opinion is for the jury to determine.

Once the fact of damages, i.e. injury and causation, is established, plaintiff has a lessened burden of proof in showing the amount of its damages. See Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264, 66 S.Ct. 574, 579, 90 L.Ed. 652 (1946); U.S. Football League v. National Football League, 842 F.2d 1335 (2d Cir. 1988). Transnor claims it was prevented from earning $8 million in direct profits from the sale of the two Brent cargoes. This figure derives from profits Transnor estimates it would have made by selling the Brent cargo purchased from Nissho at $25.315 per barrel and the Brent cargo purchased from SITCO at $23.65 per barrel at a market price of $30.75 per barrel, the price Transnor claims it would have obtained absent defendants' alleged market manipulation.*fn5 In addition, Transnor claims that its direct out-of-pocket losses in the Brent market total approximately $9 million, the combined total of damages Transnor asserts it agreed to pay to Nissho Iwai ("Nissho") and Shell International Trading Company ("SITCO") for defaulting on two December contracts to buy Brent Oil for March delivery.

Transnor has presented sufficient evidence from which a jury reasonably could determine the amount of lost profit. In analogous price-fixing cases, the measure of damages is the difference between the actual price paid or received and the price plaintiff would have paid or received in an unmanipulated market, multiplied by the number of units plaintiff bought or sold. New York v. Hendrickson Bros. Inc., 840 F.2d 1065, 1077 (2d Cir. 1988), cert. denied, ___ U.S. ___, 109 S.Ct. 128, 102 L.Ed.2d 101 (1989); Ohio Valley Elec. Corp. v. General Elec. Co., 244 F. Supp. 914, 933 (S.D.N.Y. 1965). One difficulty in such an evaluation lies in establishing what the market price would have been in an unmanipulated market. "Where, however, there is a dearth of market information unaffected by the collusive action of the defendants, the plaintiff's burden of proving damages is, to an extent, lightened, for `it would be a perversion of fundamental principles of justice to deny all relief to the injured person, and thereby relieve the wrongdoer from making any amend for his acts.'" Hendrickson, 840 F.2d at 1077 (quoting Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563, 51 S.Ct. 248, 250, 75 L.Ed. 544 (1931); see also J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557, 566, 101 S.Ct. 1923, 1929, 68 L.Ed.2d 442 (1971) (some measure of uncertainty tolerated because of difficulty in ascertaining "what plaintiff's situation would have been in the absence of the defendant's antitrust violation."). As the Second Circuit Court stated in United States Football League, 842 F.2d at 1379, when the defendant's wrongful conduct has been shown to cause plaintiff to be damaged in an uncertain amount, the defendant bears the risks of that uncertainty. While damages may not be determined based on speculation or guesswork, the plaintiff need not prove its damages with mathematical precision. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 124, 89 S.Ct. 1562, 1577, 23 L.Ed.2d 129 (1969). An antitrust plaintiff need only provide sufficient evidence to support a "just and reasonable" damage estimate. Id. at 123-24, 89 S.Ct. at 1576-77; Bigelow, 327 U.S. at 264-65, 66 S.Ct. at 579-80.

In Strobl v. New York Mercantile Exchange, 582 F. Supp. 770 (S.D.N.Y. 1984), aff'd, 768 F.2d 22 (2d Cir.), cert. denied, 474 U.S. 1006, 106 S.Ct. 527, 88 L.Ed.2d 459 (1985), a case involving the downward price manipulation on the potato futures market, the court rejected defendant's motion for judgment notwithstanding the verdict because the court found that the jury could have determined damages based primarily on expert testimony as to what the market price would have been absent the manipulation, based on market prices two years earlier, under generally similar market circumstances, although with somewhat different demand/supply factors. In the case at bar, Robinson has provided an expert opinion, not only segregating the causes of the price decline, but comparing prices during and after the period of the alleged conspiracy as well. See Ohio Valley Elec. Corp., 244 F. Supp. 914 (plaintiff compared prices before, during and after price-fixing conspiracy to show damages caused thereby). Robinson explains that he does not find that standard statistical analysis aids in this analysis, so he examines price information on the basis of subperiods. For example, Robinson examines prices between April 15 and early June, 1986 when the incentive for tax spinning was allegedly absent, as well as prices between June and late August. Robinson's method thus comports with methods used by experts in other price-fixing cases and it is the jury's function to assess the weight of his testimony.

Defendants assert that Transnor's claim for $9 million in breach of contract damages is impermissibly speculative as a matter of law because Transnor's obligation to pay the breach of contract damages is dependent upon the outcome of the instant lawsuit. See Zenith Radio Corp v. Hazeltine Research, Inc., 401 U.S. 321, 339, 91 S.Ct. 795, 806, 28 L.Ed.2d 77 (1971) (future damages not recoverable if the fact of their accrual is speculative). The issue presented is whether these damages are past damages which have fully accrued or future damages which have not yet accrued.

At the time of its default, Transnor incurred potential liabilities to SITCO and Nissho by virtue of its breach of two contracts to buy Brent oil. This does not mean, however, that Transnor will actually discharge these liabilities so that they may become elements of the damages in this case. While this Court does not dispute Transnor's proposition that damages are determined at the time they are sustained, the existence of potential liabilities does not automatically translate into actual damages suffered.

Transnor instituted the present action on or about February 29, 1986. On May 15, 1987, SITCO obtained a judgment in Bermuda against Transnor in the amount of $5,383,693, the full amount SITCO lost from Transnor's default. Thus, Transnor has incurred a definite liability to SITCO and, by the same token, suffered damages in the amount of that judgment. Transnor and SITCO, an alleged co-conspirator in the present case, thereafter signed a June 13, 1988 agreement, providing that in exchange for Transnor's dismissing its claims against SITCO in the present case, Transnor could delay payment of the $5,383,693 until Transnor's total proceeds from any source exceeded $20 million. This Court rejects defendants' argument that this settlement agreement allows Transnor to recover damages which are contingent upon the result in this case. That Transnor's obligation to pay under the settlement agreement does not accrue unless its recovery against the remaining defendants exceeds $20 million does not mean that no damages were sustained. The price which Transnor paid for the deferred accrual was to forgo its claim against SITCO as an alleged co-conspirator, in addition to assigning to SITCO any recovery between $20 million and $25,383,693.

As to Transnor's contract to buy Brent Oil from Nissho, the only indication of any liability of Transnor thereon is a telegram from Nissho dated February 24, 1986 in which Nissho informed Transnor of its intent to hold Transnor liable. Transnor argues that Nissho agreed to postpone Transnor's "obligation" to pay its $5 million debt until this litigation is completed in a September 1988 unsigned written agreement. Examination of the agreement, however, shows that it specifies certain conditions precedent which must be fulfilled before the agreement takes effect. For example, the agreement requires Transnor's directors to approve and affix Transnor's seal to the agreement along with the signature of two of Transnor's directors. Transnor's shareholders are also required to hold a special shareholder meeting and unanimously pass a "ratification resolution." Transnor presents no evidence that any of the conditions precedent were fulfilled, and the missing signatures suggest that they were not. While Nissho may believe Transnor owes it money, and Transnor may also believe it, see Plaintiff's Surreply Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment on Damage Issues at 16, Transnor has suffered no damages at this point, except for the $1,080,000 already paid to Nissho as partial payment of the debt running from its default.

Transnor's reliance on Minpeco, S.A. v. Hunt, 718 F. Supp. 168 (S.D.N.Y. 1989), for the proposition that the Nissho agreement is irrelevant to the damages in this suit is misplaced. In Minpeco, the district court rejected the defendants' argument that the plaintiff's judgment should be reduced, before trebling, by the amount of the plaintiff's loan that was assumed by the state of Peru, since it was part of the plaintiff's claimed loss. The Court reasoned that:

  Reduction of the damages to reflect Peru's assumption
  of the loan would fail to hold the defendants
  responsible for the losses they caused [plaintiff]
  and permit them to escape liability for their acts
  because others chose to or had to aid the injured

Id. at 183. Transnor argues that Peru's assumption of the loan does not differ significantly from Nissho's agreement to extend Transnor's time to pay the sums owed on account of Transnor's breach of contract. However, Minpeco's loans obtained to cover margin calls and to close forward and futures positions were clearly an existing damage suffered, unlike the present situation where Nissho has neither obtained a judgment against Transnor nor obtained full payment from Transnor for its breach of contract. Since Minpeco becomes relevant only after actual damages are shown, its holding is of no assistance to Transnor at present.

This does not mean that Transnor can never recover the Nissho damages. In Zenith, 401 U.S. 321, 91 S.Ct. 795, the Supreme Court explained that holding future damages too speculative is equivalent to holding that a cause of action has not yet accrued. Once a cause of action accrues, the plaintiff can then bring suit within the statute of limitations. Thus, if Nissho obtains a judgment ...

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