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.
SUMMARY JUDGMENT STANDARD
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
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
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
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 ...