Summary
The Seventh Circuit affirmed summary judgment for Georgia-Pacific LLC and WestRock CP, LLC in a Sherman Act § 1 class action alleging a conspiracy to increase containerboard prices and restrict output. The court held that the purchasers’ economic and circumstantial evidence did not sufficiently rule out lawful independent oligopolistic behavior or establish an agreement necessary for antitrust liability.
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Questions Presented
- Whether the purchasers presented sufficient direct or circumstantial evidence of an agreement to restrain trade under § 1 of the Sherman Act to survive summary judgment.
- Whether parallel price increases, production restrictions, interfirm communications, and employee statements, considered collectively, tended to exclude the possibility of independent lawful oligopolistic behavior.
- Whether evidence showed that WestRock rejoined an alleged conspiracy after receiving a bankruptcy discharge.
Holdings
- The purchasers did not present enough evidence for a reasonable trier of fact to find that Georgia-Pacific and WestRock entered into an agreement restraining trade; their evidence did not tend to exclude the possibility of lawful independent action or tacit collusion.
- Parallel price increases, including rapid following of a price leader, do not by themselves establish a Sherman Act § 1 agreement because such conduct may result from rational independent self-interest in an oligopoly.
- Evidence of WestRock's alleged participation before its bankruptcy discharge did not establish that WestRock rejoined the alleged conspiracy after discharge, and therefore could not support liability for the post-discharge period.
Key quotations
“at the summary judgment stage a § 1 plaintiff’s offer of conspiracy evidence must tend to rule out the possibility that the defendants were acting independently.” (7)
“The Purchasers needed evidence that would allow a trier of fact to nudge the ball over the 50-yard line and rationally to say that the existence of an agreement is more likely than not.” (8)
“While no single piece of information may win the day, the whole may be greater than the sum of its parts in tending to exclude the possibility of conscious parallelism.” (9)
“it is not a violation of antitrust law for a firm to raise its price, counting on its competitors to do likewise (but without any communication with them on the subject)” (11)
“Because the evidence proffered by the Purchasers does not tend to exclude the possibility that Georgia-Pacific and WestRock engaged only in tacit collusion, we AFFIRM the judgment of the district court.” (24)
Factual background
The purchasers alleged that containerboard manufacturers coordinated fifteen attempted price increases and reduced output between 2004 and 2010. The industry was a concentrated oligopoly with inelastic demand, high barriers to entry, and frequent interfirm communications. Georgia-Pacific generally used reversible production slowdowns and acquired a mill, while WestRock closed mills and reduced capacity, including conduct occurring before its bankruptcy discharge. The court concluded that the evidence, considered in the aggregate, did not permit a reasonable jury to find that either defendant engaged in an actionable agreement rather than lawful conscious parallelism.
Procedural history
The purchasers filed a putative class action in September 2010, and the district court consolidated it with related actions, denied motions to dismiss, and certified a nationwide class in March 2015. The Seventh Circuit affirmed class certification without addressing the merits in Kleen Products LLC v. International Paper Co., 831 F.3d 919 (7th Cir. 2016). After discovery, settlements by other defendants, and cross-motions for summary judgment, the district court granted summary judgment to Georgia-Pacific and WestRock and entered partial final judgment under Federal Rule of Civil Procedure 54(b). The Seventh Circuit affirmed.