WILSON, Circuit Judge.
An action under section 7 of the Sherman Anti-Trust Act and section 4 of the Clayton Act (15 USCA § 15) to recover damages resulting from an alleged violation by the defendants of section 2 of the Sherman Anti-Trust Act (15 USCA § 2), prohibiting the monopolizing of, or a combination or conspiracy to monopolize, any part of the trade or commerce between the several states.
At the close of the ease, the defendants’ counsel asked that the court instruct the jury to bring in a verdiet for the defendants upon several grounds, among which are the following:
“The evidence is insufficient to establish that the plaintiff has suffered damage by reason of the acts of the defendants and West Carrollton Parchment Company in pursuance of the combination and conspiracy.”
“The evidence is insufficient to establish that the plaintiff has lost profits because of any acts of the defendants and West Carrollton Parchment Company in combination and conspiracy.”
“The plaintiff is not entitled to a verdiet unless it has. established that it has been damaged by the combination, contract or conspiracy.”
“The plaintiff has not established that the reductions in prices by the defendants were 'any more injurious 1» the plaintiff by reason of any contract, combination or conspiracy than they would have been without such.”
“The evidence .does not warrant a finding that the plaintiff would have sold any more goods under other circumstances than it did sell.”
“The evidence does not warrant a finding that the plaintiff would have sold at higher prices under any other circumstances than those at which it did sell.”
“The plaintiff is not entitled to a verdict unless it has been shown that damages in some amounts susceptible of expression in figures, resulted from the defendants’ acts and these damages must be proved by facts from which their existence is logically and legally inferable and they cannot be supplied by conjecture.”
The record disclosed that prior to 1927 the two defendants, the Paterson Parchment Paper Company of Passaic, N. J., and the Kalamazoo Vegetable Parchment Company of Kalamazoo, Mich., both of which companies transact business in Massachusetts, and are hereinafter referred to as the defendants, together with the West Carrollton Parchment Company of West Carrollton, Ohio, which, for lack of jurisdiction, is not joined in this action, and which will hereinafter be referred to as the Carrollton Company, were the only producers in this country of what is known to the trade as parchment paper, which is used as a protective wrapper for meats, butter, and other foodstuffs.
It also appears from the record that these three companies for many years prior to 1927 maintained an association for the discussion of questions affeeting their mutual interests, holding meetings every two months, at which representatives of such company with their counsel attended and discussed the condition of the trade.
There is m> question but that, prior to the organization of the plaintiff company, the three companies above named had maintained a uniform price for their product, land, while there was some parchment paper imported, enjoyed a practical monopoly of the trade in this country.
All this the plaintiff or those who organized it knew when it entered the field. It does not appear that the condition of the trade and the demand for the product held out any special inducement to a competitor by reason of a prospective increase in the demand, at least over the capacity of the three old companies to supply.
The only hope the plaintiff could have had of acquiring any considerable share of the trade was by either producing a superior quality of paper, by more efficient salesman-. ship, or by reducing prices over those charged by the three companies already in the field.
While the plaintiff claims it did produce a superior grade of paper, and at a less cost, through improved machinery, its first effort to obtain trade was to deal direct with the large packers and jobbers and offer a 5 per cent, discount on the prices then offered by the defendants and the Carrollton Company. Such a policy immediately resulted in a price-cutting war between the three old companies and the plaintiff. The defendants contend that to retain their trade they were forced to meet the prices of the plaintiff ; that they had a right to do this to protect themselves; that they did not so act through a mutual understanding, or agreement; and that a reduction of prices does not result in a restraint of trade, but, on the contrary, encourages it.
The plaintiff concedes, as we understand it, that, if either or both of the defendants, independent of each other, had reduced their prices in order to retain their own trade as against the new competitor, it would have had no ground for action.
What it complains of is that the three old companies, by concerted action and mutual understanding, not only ‘met its prices, but in some instances reduced their prices below those of the plaintiff, in order to prevent the plaintiff from acquiring any part of the trade in parchment paper and for the purpose of maintaining the monopoly which they already had, and which, if not an absolute monopoly, was sufficiently complete, so that, if they conspired together to maintain it, it constituted a violation of section 2 of the Sherman Anti-Trust Act (15 USCA § 2). Buckeye Powder Co. v. E. I. Dupont de Nemours Powder Co. (C. C. A.) 223 F. 881, 888, 889; affirmed in 248 U. S. 55, 64, 39 S. Ct. 38, 63 L. Ed. 123; United States v. E. C. Knight Co., 156 U. S. 16, 15 S. Ct. 249, 39 L. Ed. 325; Addyston Pipe & Steel Co. v. United States, 175 U. S. 211, 221, 237, 20 S. Ct. 96, 44 L. Ed. 136; Standard Oil Co. v. United States, 221 U. S. 1, 61, 31 S. Ct. 502, 55 L. Ed. 619, 34 L. R. A. (N. S.) 834, Ann. Cas. 1912D, 734.
In other words, the plaintiff does not ground its action on a conspiracy to restrain trade under section 1 of the Sherman AntiTrust Aet (15 USCA § 1), though the indirect effect of a monopoly is to restrain trade, but on a conspiracy to maintain a monopoly under section 2 (15 USCA § 2).
On this issue alone, we think there was no error in the refusal of the court to instruct the jury to bring in a verdict for the defendants. Without expressing any opinion as to the soundness of the jury’s conclusion, there was sufficient evidence to go to the jury on the issue of a concerted action by the three old companies.to fix their prices so as to prevent the plaintiff from acquiring any part of their trade. Patterson v. United States (C. C. A.) 222 F. 599; 648, 649; Hitchman Coal & Coke Co. v. Mitchell, 245 U. S. 229, 249, 38 S. Ct. 65, 62 L. Ed. 260, L. R. A. 1918C, 497, Ann. Cas. 1918B, 461.
But, assuming that the jury was warranted in finding for the plaintiff on this issue, it does not necessarily follow that the plaintiff suffered injury. It must be proven. We think the weakness of the plaintiff’s case, and wherein it failed on this branch of the case to establish the burden the law imposed upon it, is in a lack of proof that, by reason of the alleged unlawful acts of the defendants, it has suffered damage through what is termed “loss of profits,” which can be measured and expressed in figures that are not based on speculation and conjecture, or that the damages resulting from the alleged depreciation of its plant was in any measurable degree due to any unlawful acts of the defendants. Keogh v. C. & N. W. Ry. Co., 260 U. S. 156, 165, 43 S. Ct. 47, 67 L. Ed. 183; Jack v. Armour Co. (C. C. A.) 291 F. 741, 745. Upon the entire evidence, the jury should have been instructed to bring in a verdict for the defendants.
The use of the phrase “loss of profits” as the measure of one element of the plaintiff’s damage is not a happy one. The plaintiff’s declaration alleges, and its counsel in their brief contend, that the measure of damage on this phase of the ease is not the loss of actual profits in its business, which it would have made if the defendants had not unlawfully combined to reduce prices, but the difference between the prices it was compelled to sell its products through the alleged unlawful combination, and the prices current in November, 1927, if fair and reasonable. It contends, as the plaintiff did in the ease of Straus et al. v. Victor Talking Machine Co. (C. C. A.) 297 F. 791, that it is not obliged to sue for loss of profits in its business which are not always susceptible of proof. Loss of profits, to form the basis of damages, must be made reasonably certain by proof, or be inferable from proven facts that can form the basis for a rational estimate of their amount and not depend upon uncertainties and mere speculation or conjecture. Central Coal & Coke Co. v. Hartman (C. C. A.) 111 F. 96; McCornick v. U. S. Mining Co. (C. C. A.) 185 F. 748, 751; American Sea Green Slate Co. v. O’Halloran (C. C. A.) 229 F. 77, 80; Keogh v. C. & N. W. Ry. Co., supra. Obviously in the ease at bar there could be no' evidence o-n which to base an estimate of any actual loss of profits during the period the plaintiff operated, based on previous experience, since the plaintiff never operated under what it claims are fair and reasonable prices for a sufficient length of time to furnish a standard, as the plaintiff had in Eastman Co. v. Southern Photo Co., 273 U. S. 359, 378, 379, 47 S. Ct. 400, 71 L. Ed. 684, and the jury were so instructed.
The plaintiff contends, however, that it is entitled, under the rule laid down in Straus et al. v. Victor Talking Machine Co., supra, and Thomsen v. Cayser, 243 U. S. 66, 88, 37 S. Ct. 353, 61 L. Ed. 597, Ann. Cas. 1917D, 322, to recover as damages, and regardless of whether it could prove any actual loss of profits in its business, the difference between the prices at which it was obliged to sell its products by reason of the alleged unlawful combination of the three old companies, and the prices current in November, 1927; and that the prices then current were fair and reasonable, at least, that it does not lie in the mouth of the defendants to contend otherwise, they having established them.
The error in the plaintiff’s contention is the assumption that, but for the alleged unlawful conspiracy of the defendants with the Carrollton, Company, the prices current in November, 1927, would have continued to prevail, assuming them to be fair and reasonable. The plaintiff by shifting its claim for damages from a loss of profits to the difference between the prices at • which it would have sold its goods if no unlawful combination had existed, and the price at which it was compelled to sell its goods, cannot escape the rule that damages cannot be based on conjecture. While, if a wrong has been done, the law permits an award of damages, though not susceptible of accurate measurement, yet the rule still remains, and unimpaired, that they cannot be based on mere speculation. They must be made reasonably certain.
Individuals may in competition lawfully reduce prices below a fair and reasonable level. While the elimination of an unlawful combination may in a broad market reduce excessive prices to a reasonable level, it may not restore subnormal prices to a reasonable level, or keep them there. The artificial pressure removed, free competition between individuals to gain trade may always reduce or keep prices below what is fair and reasonable. The plaintiff had no vested inter-, est in the prices of November, 1927, or any right to complain if lawful competition reduced them below1 a fair and reasonable level.
There is, we think, this difference in applying the rule invoked by the plaintiff in the Victor Talking Machine Case and in the case at bar. In that ease, the Victor Company, by agreement with others, designated as distributors, refused to supply machines to any dealer unless he first agreed to enter into a certain license agreement with the Victor Company, which the plaintiffs refused to do. As a result they were obliged to' go out and pay excessive prices for Victor goods to supply the demand of their trade. • Here the seller complains of prices unlawfully reduced. The jury in the Victor Talking Machine Case found that the plaintiffs otherwise could have bought in the open market the goods they sold during the period covered by the writ at the prices at which the Victor Company distributors sold to other dealers, and therefore the court held its damages were reasonably certain of computation. In the case at bar, the question of at what prices the plaintiff’s product would have been sold, if there had been open competition, no unlawful combination, was not presented to the jury; on the contrary, the jury must have understood from the instructions given that, if they found that the November prices were fair and reasonable and would have been maintained but for the alleged unlawful acts of the defendants, the measure of damages would be $20,000, the difference between the November prices and the prices at which the goods were sold. In this respect we think the charge was defective and must have misled the jury as to the measure of damages on this phase of the case.
Obviously, without an agreement between the three old companies, there is no certainty that the prices of parchment paper in November, 1927, would have remained stable under the conditions the plaintiff would have had to meet. With only three competitors besides the plaintiff, and each free to fix any price it saw fit to retain its trade, and with a limited market, there is no ground on whieh it can be reasonably inferred that the plaintiff, during the few months it was able to continue in business, would have sold any definite amount of paper, or, if it did, that,, following the initial concession by the plaintiff of 5 per cent, to the large buyers of parchment paper, the prices of November, or any prices above those actually received,. would, have prevailed. On the contrary, it is, we think, a moral certainty that, according to nature’s first law, each of the three old companies, if no combination had existed, in order to hold their trade, would at least have met every reduction in price made by the plaintiff to gain trade, if they did not openly reduce their prices below the prices hied by the plaintiff, as independently they lawfully could do. That ’ the- defendants would, independently of each other, act upon this rule of self-preservation, is not mere conjecture, but a rule of action of which the courts often take cognizance.
Juries may, it is true, upon sufficient evidence, determine what fair and reasonable prices will be in open competition in a broad market; but the plaintiff, even if there had been no unlawful combination by the defendants, did not have a broad, open market in which to dispose of its product. Without any such unlawful interference, it would have been compelled to dispose of its product in the same restricted market which the old companies were already fully supplying, and to meet any prices the old companies individually saw fit to make. Nothing could be more certain than that each of the old companies would in any event use every lawful means to retain their own trade as against the new competitor; and nothing more conjectural than the result.
That, under such conditions, the November prices would have been maintained, and the plaintiff would have sold the same amount of its product at those prices, or that it would have sold any more goods than it did sell or at any higher prices, is pure speculation, with all the reasonable probabilities to the contrary.
As to the element of damages from the depreciation of its plant, it appears from the record that, when the plaintiff company organized, it had a paid-in capital of $204,-000, and later obtained a credit at the local bank of $75,000, or, in other words, it had in available cash $279,000 to establish a business in a field which it knew was already pre-empted by well-established companies.
Its plant alone before its product could be put on the market eost $235,000, or approximately $30,000 more than its paid-in capital. It appears from the testimony of its treasurer that on June 1, 1928, two months before it was obliged to close down, it had not paid for its land, plant, and equipment by approximately $25,000; and two months later, after it had been in actual operation less than eight months, five of which it was running at about half capacity, it owed the local bank $70,000 and the company which supplied it with paper $65,000. Unless its stock on hand of about $8,000 and its bills receivable largely exceeded its bills paya/hie, other than those above mentioned, which is not a reasonable inference from the testimony, its assets in eight months of operation had shrunk more than $100,000.
It is obvious that the plaintiff did not have sufficient capital to meet the situation it faced, even if there had been no conspiring together by its competitors and there had been open competition; and that its failure was inevitable either from lack of capital or inefficient management or both. Even $20,000- more in receipts, which is the plaintiff’s own estimate of the maximum amount it would have received if the November prices had prevailed over what it did receive, could not have enabled it to meet its obligations and prevent the attachment and closing of its plant by its creditors; but the plaintiff has not shown that it actually suffered any loss of receipts from the sale of its goods, by reason of any unlawful interference by the defendants.
The plaintiff has not, therefore, sustained the burden of proving that it has suffered any measurable damage from the reduced prices at which it was compelled to sell its product by reason of the alleged unlawful conspiracy of the defendants, or that the subsequent depreciation of its plant was due in any measureable degree to any violation of section 2 of the Sherman Anti-Trust Act (15 USCA § 2) by the defendants. Buckeye Powder Co. v. E. I. Dupont de Nemours Powder Co., supra; Noyes v. Parsons (C. C. A.) 245 F. 689, 696; Locker v. American Tobacco Co. (C. C. A.) 218 F. 447; Jack v. Armour Co. (C. C. A.) 291 F. 741, 745.
•Upon the first assignment of error, viz. that the judge below refused to direct a verdict for the defendants, the judgment of the District Court is vacated, and judgment is entered for the defendants, with costs in both courts.
The judgment of the District Court is vacated, and the case is remanded to that court, with directions to enter judgment for the defendants, with costs in both courts.