Kleen Products LLC et al v. International Paper et al, No. 1:2010cv05711 - Document 1375 (N.D. Ill. 2017)

Court Description: ENTER MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 8/3/2017:Mailed notice(wp, )

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Kleen Products LLC et al v. International Paper et al Doc. 1375 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION KLEEN PRODUCTS LLC, et al., Individually and on behalf Of all those similarly situated, Case No. 10 C 5711 Plaintiffs, Judge Harry D. Leinenweber v. INTERNATIONAL PAPER, et al., Defendants. MEMORANDUM OPINION AND ORDER Before the Court are the Motions for Summary Judgment filed by Defendants Georgia-Pacific [ECF No. 1086] and Westrock [ECF No. 1088]. Motions. For the reasons stated herein, the Court grants the It therefore denies as moot the parties’ cross filings for partial summary judgment on the narrower issue of released and untimely claims [ECF Nos. 1114 and 1138]. that with this opinion the Court has disposed Lastly, given both of the parties’ Daubert and summary judgment motions, it denies as moot the requests for hearings on those submissions [ECF Nos. 1272 and 1273]. I. BACKGROUND This case is an antitrust class action in which Plaintiffs accuse Defendants of conspiring to fix prices in violation of Dockets.Justia.com Section 1 of the Sherman Act. Plaintiffs were direct purchasers of containerboard products from Defendant paper companies. They allege 2010 that, between February 15, 2004 and November 8, (“the Class Period”), Defendants engaged in a series of agreedupon actions These to include raise lockstep the price of containerboard announcements of price products. increases and reductions in the supply of containerboard achieved by “cutting capacity, slowing back production, taking plants, and tightly restricting inventory.” Int’l Paper, 306 F.R.D. 585, 589 (N.D. downtime, idling Kleen Prods. LLC v. Ill. 2015) (internal settled. The settling Norampac Holdings quotation marks omitted). All but Defendants two Defendants include Cascades have Canada, Inc., U.S., Inc. (collectively “Norampac”), Packaging Corporation of America (“PAC”), International Inc., and Weyerhaeuser Company. Paper Company, Temple-Inland, Defendants International Paper, Temple-Inland, and Weyerhaeuser settled only after filing for summary judgment. Due to their settlement, their Motions have been denied as moot. See, ECF No. 1365. The two Defendants that remain in the case are GeorgiaPacific and Westrock (f/k/a/ Smurfit-Stone or RockTenn), they have continued to press for summary judgment. case is simple. and Defendants’ They say that Plaintiffs have not carried their burden to show that there was an agreement to fix prices among - 2 - the alleged claim, conspirators. are consistent competition. All with Moreover, of their actions Defendants actions, taken argue in that Defendants permissible the range of permissible competition allowed them – large firms operating in a concentrated industry – is wide. In particular, they point out prices that they may lawfully raise not only because external market forces call for such price increases, but also because their they best interest Defendants, behavior believe once is that to this fellow raise range accounted competitors prices of for, as lawful, may it in According well. find to consciously Plaintiffs’ parallel evidence cannot reasonably show that Defendants conspired. Plaintiffs disagree. They contend that the evidence, when viewed in the light most favorable to them, permits a reasonable jury to find that Defendants were not competing but illegally colluding evidence with to one another. contest Plaintiffs summary judgment. offer the First, following they draw attention to the fact that during the six and a half years of the alleged conspiracy, Defendants – a group that includes both the Defendants that have settled and the two moving Defendants, Georgia-Pacific announced 15 and price Westrock, that increases. have With not one – collectively exception, all Defendants joined each price announcement and around the same time; twelve out of the 15 times, Defendants increased prices - 3 - for identical amounts; and all the increases carried nearly the same effective dates. Second, Plaintiffs show that the price increases came in close temporal proximity to trade association meetings, direct telephone calls, or other communications where Defendants had the agreement with one Defendants opportunity another. reduced strategically, closing to Third, their mills confer or and enter Plaintiffs claim containerboard otherwise into slowing an that production production around the time that they announced their price increases. Table 1 summarizes some of this evidence. It shows the 15 price increases during the Class Period and one predating it. The first column lists the date on which a price increase was first announced and the second the amount of the price increase. The columns thereafter list for each Defendant how many days after the first price announcement it joined the price increase by making its own announcement. Where a Defendant announced a different price than what the first-to-announce firm committed to, its own price increase amount is noted. For example, the table shows that International Paper was the first to announce a price increase of $35.00 on March 31, 2003. Georgia-Pacific followed suit three days later, and a day after that (or four days from the initial announcement) Temple-Inland likewise announced that it was increasing its containerboard prices but by $40.00. - 4 - Table 1: Price Increases during the Class Period Date of First Price Announcement March 31, 2003 January 5, 2004 April 8, 2004 February 14, 2005* September 6, 2005 2 3 4 5 6 7 8 $50 November 28, 2005 February 10, 2006 October 26, 2006* 1 Amount of Price Increase $35 IP GeorgiaPacific TempleInland Westrock Weyerhaeuser Norampac PCA 1st to announce +3 days +4 days +4 days +12 days +7 days Within +17 days $40 +11 days +11 days $40 +14 days +14 days +17 days +11 days $50 Within +14 days +9 days +14 days +18 days +34 days +6 days +11 days +8 days +56 days +11 days $30 Within +34 days 1st to announce +6 days 1st to announce 1st to announce +10 days +7 days +13 days 1st to announce +8 days +7 days +2 days $40 +4 days +3 days +2 days +2 days $40 +3 days +0 day $50 +7 days +7 days +11 days +6 days Within +10 days +46 days +3 days $40 1st to announce +32 days 1st to announce +10 days +35 days 1st to announce +39 days +36 days +34 days Did not announce Did not announce Did not announce +27 days +13 days +10 days 1st to announce +9 days +11 days +10 days $40 +13 days +10 days +2 days +2 days +2 days +12 days 9 March 27, 2007* $40 1st to announce 10 June 22, 2007 $40 to $50 +12 days $40 to $50 Customerspecific price increases +11 days 11 February 1, 2008* May 28, 2008 $50 $40 +3 days +7 days +6 days $55 +1 day +5 days August 28, 2008* November 23, 2009 $60 1st to announce + 7 days 1st to announce +8 days $40 1st to announce +0 day +7 days +8 days 1st among Ds to announce +2 days +8 days +8 days 1st to announce +14 days +4 days +7 days $50 +9 days +11 days 1st among Ds to announce +1 day +2 days +9 days +11 days 12 13 14 15 February 22, 2010 June 29, 2010* 16 $50 to $70 $60 $60 1st to announce +0 day +14 days Notes: • • • • Except where noted, each Defendant’s price increase was for the same amount as the first-to-announce firm’s. The first price increase of March 31, 2003 predates the Class Period. Two of the price increases – those announced by GeorgiaPacific on November 23, 2009 and June 29, 2010 – were led by a non-Defendant. Georgia-Pacific was only the first among Defendants to announce these increases. Six of the price increases, marked with asterisks by the date of the first price announcement, failed. - 5 - • Weyerhaeuser did not announce any price increase after the May 28, 2008 announcement. This was presumably due to the fact that the company sold its containerboard business to International Paper on August 4, 2008. In addition, Plaintiffs put forth a “conduit theory” to explain how Defendants facilitated their conspiracy. According to Plaintiffs, Defendants used communications with industry statements leak confidential to conspirators. Plaintiffs their analysts, earnings and other information assert that calls, to such public their leaks co- allowed Defendants to coordinate their actions and further their pricefixing scheme. the fact In the same vein, Plaintiffs draw attention to that Defendants Plaintiffs contend Defendants to that treat traded such each often among inter-firm other as themselves. trades customers allowed instead of competitors and so freely exchange information among them. Plaintiffs also build a body of expert testimony. Plaintiffs’ Defendants experts, charged Douglas Zona supracompetitive (“Zona”), prices One of opines during the that Class Period while depressing production to levels below that of a benchmark group not suspected of conspiracy. Michael were Harris (“Harris”), inconsistent with contends those of that firms Another expert, Defendants’ in a actions competitive marketplace. A firm competing for business with its rivals, says would Harris, not cut production - 6 - during a period of increased demand or raise prices during an economic downturn, as Defendants did. Harris further focuses on Defendants’ motive for colluding. He points to the fact that the containerboard industry was dominated by a few firms, had high barriers to entry, faced an inelastic demand for its product, and produced a homogeneous product. circumstances, competition Harris Defendants and would attempt to opines tend to collude that, shy to under such from price profits from away reap artificially inflated prices. Defendants do not dispute many of the underlying facts. For example, they do not contest that they made announcements of price increases, closed certain mills, interacted with each other and analysts, engaged in inter-firm trading, and operated in a highly undermine (and the their evidence concentrated inference experts) and adduce considered raising of draw competing Defendants industry. illicit by expert evidence to prices. Instead, agreement introducing that They that For they further seek to Plaintiffs additional testimonies. show they factual instance, independently assert specific business reasons for having attended trade association meetings, made phone calls to each other, publicly disclosed information to analysts, advance and individual traded among defenses. themselves. Georgia-Pacific - 7 - Defendants emphasizes also its high production levels during the Class Period, while Westrock seeks to extricate itself on the basis that its decisions to announce a price increase and reduce supply were approved while it was in bankruptcy. In addition, evidence. They Defendants focus on point the to fact gaps in that, Plaintiffs’ after extensive discovery, Plaintiffs found no evidence to shed light on the substance of Defendants’ supposedly improper communications during the various industry meetings and phone calls. This is despite Plaintiffs having combed through thousands of pages of Defendants’ contemporaneously created records and deposed numerous employees involved in those meetings and calls as well as third parties. As such, Defendants argue that Plaintiffs rely only on speculation to advance the theory that Defendants conspired during these interactions. Plaintiffs, in turn, admit the additional facts but argue that their case withstands Defendants’ attempt at shading the record. by They aim to excuse certain missing pieces of evidence alluding lawsuits. Defendants to Defendants’ prior brushes with antitrust Plaintiffs contend that as a result of such exposure, have learned to conceal their conduct, destroy business records, and generally make it difficult for Plaintiffs to find incriminating evidence. - 8 - Despite the vigorous back-and-forth between the parties and the voluminous record, the general lack of dispute on the underlying facts makes the case ripe for summary judgment. II. SUMMARY JUDGMENT STANDARD AND SUBSTANTIVE ANTITRUST LAW To survive summary judgment on their Sherman Act conspiracy claim, Plaintiffs “must present evidence ‘that tends to exclude the possibility’ independently.” that the alleged conspirators acted Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986); accord Mkt. Force, Inc. v. Wauwatosa Realty Co., 906 F.2d 1167, 1171-72 (7th Cir. 1990). Independent actions include, but are not limited to, the behavior of firms operating in perfectly competitive markets – that is, firms doing business in a market where there are many small firms, with each too small for its decisions to affect the market price. See, In re Flat Glass Antitrust Litig., 385 F.3d 350, 359 (3d Cir. 2004) (citing Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 429, at 206 (2nd ed. 2000)). In such a market, each firm makes its decisions taking price and its competitors’ actions as given. “act in reacting similar to a ways,” “common but Perfectly competitive firms may that is only stimulus,” or external unrelated to their own decisions. because they market are forces See, In re Plasma-Derivative Protein Therapies Antitrust Litig., 764 F.Supp.2d 991, 997 (N.D. - 9 - Ill. 2011) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554 (2007)). Independent actions, however, are not limited just to perfect competition. The concept of independent actions takes on an additional dimension in this case because Defendants are oligopolies, or large firms operating in an industry dominated by few players. See, In re Chocolate Confectionary Antitrust Litig., 801 F.3d 383, 397 n.10 (3d Cir. 2015) (defining an oligopoly as a market “in which a few relatively large sellers account for the bulk of the output”) (quoting Areeda & Hovenkamp, ¶ 404a, at 10 (4th ed. 2014)) (internal quotation marks omitted). As a large firm operating among a select few, each Defendant recognizes that its pricing and output decisions affect its competitors, depending on how they react, the market as a whole. Glass, 385 F.3d at 359. and See, Flat Thus, any Defendant acting rationally and independently takes into account the anticipated reactions of the other firms. at 997. See, id.; Plasma-Derivative, 764 F.Supp.2d Independence in this context does not mean ignoring one’s competitors. Accordingly, a firm acting independently may choose to raise prices or lower output because it anticipates (or hopes) that its competitors, likewise acting independently and in their best interests, may follow the same course of action. - 10 - See, In re Text Messaging Antitrust Litig., 782 F.3d 867, 876 (7th Cir. 2015) (noting that a firm may “raise its price, counting on its competitors to do likewise (but without any communication with them on the subject) and fearing the consequences if they do not”). Similarly, a firm may follow a competitor’s lead in pricing and production. See, id. (stating that one can “expect competing firms to keep close track of each other’s pricing and other market behavior” and that such firms “often find it in their self-interest to imitate that behavior rather than try to undermine it”). Such oligopolistic competition differs from perfect competition insofar as the interdependent, oligopolistic firms act in similar ways not only because they are reacting to common, external market conditions but also because they are responding to competition in each other. that such However, similar it behavior is like perfect does not evidence coordination. The kind variously of known interdependent as follow-the-leader However it is conscious strategy, referred conduct is lawful. to, conduct just parallelism, or the described tacit interdependent crucial thing is collusion, parallelism. is that such See, Twombly, 550 U.S. at 553-54 (quoting Areeda & Hovenkamp, ¶ 1433a, p. 236, for the proposition that “[t]he courts are nearly unanimous - 11 - in saying that mere interdependent combination, parallelism or does conspiracy (internal quotation marks Williamson Tobacco 782 required Corp., Messaging, F.3d at not omitted); 509 879 U.S. (“Tacit establish by the Sherman Brooke 209, Act Grp. 227 collusion contract, v. § 1”) Brown (1993); . . . & Text does not violate section 1 of the Sherman Act.”); Reserve Supply Corp. v. Owens-Corning Fiberglas Corp., 971 F.2d 37, 50 (7th Cir. 1992) (“[T]he Sherman Act prohibits agreements . . . [but] individual pricing decisions (even when each firm rests its own decision upon its belief that competitors will do the same) do not constitute an unlawful agreement under section 1 of the Sherman Act.”) (quoting Clamp-All Corp. v. Cast Iron Soil Pipe Inst., 851 F.2d 478, 484 (1st Cir. 1988)) (emphasis in original). Tacit collusion thus is lawful, and this is despite the fact that it may have the same proscribed express collusion. Plasma-Derivative, 764 anticompetitive effects as See, Reserve, 971 F.2d at 50; F.Supp.2d at 997 (“Section 1 of the Sherman Act . . . reaches only conduct which results from an agreement among firms and not independent action which happens to have an anti-competitive effect.”); In re Fla. Cement & Concrete Antitrust Litig., 746 F.Supp.2d 1291, 1310 n.15 (S.D. Fla. 2010) (“All things being equal, an antitrust policy [such as ours] which permits price following - 12 - in an oligopoly will result in higher prices and lower supply[.]”). By tacitly colluding, oligopolistic firms “in effect share monopoly power, setting their level.” Brooke, 509 U.S. at 227; see also, Flat Glass, 385 F.3d at 359-60 prices at a profit-maximizing, (explaining at market may concentrated some length maintain supracompetitive how “firms their in prices a at supracompetitive levels, or even raise them to those levels, without engaging pricing supracompetitively, competitive in any overt conditions, concerted or is above as action”). a level As such, justified consistent with by legal oligopolistic behavior as it is with illicit conspiracy. The bottom line is that lawful independent actions subsume oligopolistic interdependent behavior. Thus, to prevail at summary judgment, Plaintiffs must offer evidence that tends to rule out taking both that firms oligopolies. and Defendants that acted they independently acted as price- interdependently as See, In re Domestic Drywall Antitrust Litig., 163 F.Supp.3d 175, 189-90 (E.D. Pa. 2016) (“For Plaintiffs to create a fact issue about whether Plaintiffs must present possibility of independent Defendants evidence conduct, entered tending to including conduct (e.g., conscious parallelism).”). an agreement, exclude the interdependent Defendants, on the other hand, may argue for both possibilities, pleading that some - 13 - of their actions are independent responses to external market conditions and others are interdependent follow-the-leader strategies. In sum, the Court applies the following summary judgment standard in this antitrust case. It draws every reasonable inference in favor of non-movant Plaintiffs while keeping in mind that “[c]onduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy.” 587-88. “not Matsushita, 475 U.S. at Moreover, “[e]ven on summary judgment,” the Court is required to draw every requested inference” “reasonable ones that are supported by the record.” but only Omnicare, Inc. v. Unitedhealth Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011). The Court does not weigh the evidence, since that is the domain of the jury, but it recognizes that for the case the reach the jury, Plaintiffs must show that there is a genuine dispute of material fact. See, FED. R. CIV. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Plaintiffs must show that “the inference of This means that conspiracy is reasonable in light of the competing inferences of independent action,” where independent action should include oligopolistic interdependent conduct. U.S. at 588. - 14 - be understood to Matsushita, 475 III. The considers summary contest Court judgment evidence is assessed Georgia-Pacific and ANALYSIS the evidence individually individually Westrock to Plaintiffs and against determine bring holistically. to The moving Defendants whether Plaintiffs have carried their burden as to the specific Defendants. See, Alexander v. Phx. Bond & Indem. Co., 149 F.Supp.2d 989, 1000 (N.D. Ill. 2001) (“We will analyze each defendant individually because, even in a conspiracy case, liability remains individual and is not a matter of mass application.”) (citing Kotteakos v. United States, 328 U.S. 750, 772 (1946)); In re Brand Name Prescription Drugs Antitrust Litig., No. 94 C 897, MDL 997, 1996 U.S. Dist. LEXIS 4335, at *1 (N.D. Ill. Apr. 4, 1996) (denying the motions for summary judgment with respect to one class of defendants while granting them to another). Defendants are no longer requesting Since the settling summary judgment, the evidence Plaintiffs offer against them will be considered only to the extent that it is relevant to the moving Defendants’ arguments or a holistic view of Plaintiffs’ case. As against each moving Defendant, the Court examines the evidence as a whole to see if, viewed in the light most favorable to Plaintiffs, “it was more likely that the defendants had conspired to fix prices than that they had not conspired to - 15 - fix prices.” In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 655-56 (7th Cir. 2002); see also, Petruzzi’s IGA Supermarkets v. Darling-Del. Co., 998 F.2d 1224, 1230 (3d Cir. 1993) (“[A] evidence analyze court put it as should forward a by whole not the to tightly nonmovant, see if compartmentalize but together instead it the should supports an inference of concerted action.”) (citing Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962)). The Court thus avoids looking at each piece of evidence Plaintiffs bring in isolation and concluding that “if no single item of evidence presented by the plaintiff points unequivocally to conspiracy, the evidence as a whole cannot defeat summary judgment.” High Fructose, 295 F.3d at 655-56. The Court begins by reviewing the procedural history of this case, which Plaintiffs argue constrains what the Court may do at this stage. A. This case arrives Procedural History at summary judgment after this Court certified it as a class action and the Seventh Circuit affirmed the decision. Plaintiffs rely heavily on the Seventh Circuit’s opinion in arguing why summary judgment is inappropriate here. In particular, they seize on the appellate court’s language that “[t]here was a great deal of evidence designed to show that the - 16 - hypothesis that Defendants had organized a cartel was one that a jury could accept.” Kleen Prods. LLC v. Int’l Paper Co., 831 F.3d 919, 924 (7th Cir. 2016). Since they have now brought this “great deal of evidence,” Plaintiffs press that the case should go to a jury. Plaintiffs’ argument proves too much. It suggests that in affirming class certification, the court of appeals decided the merits of Plaintiffs’ case, concluding that the case was strong enough to be submitted to a jury and so should bypass not only summary judgment but against the Supreme license to engage also a Court’s in certification stage.” directed teaching free-ranging meritorious determining enough whether that This “courts merits flies [have] inquiries at no the Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 466 (2013). is verdict. to go the Since whether Plaintiffs’ case to Rule a jury 23 is not “relevant prerequisites for to class certification are satisfied,” had the Seventh Circuit made such a finding, it would have ranged outside authority to review the issue on appeal. the bounds of its Id. (“Merits questions may be considered to the extent – but only to the extent – that they are relevant prerequisites for to class determining certification whether are the Rule 23 satisfied.”); see also, Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 757-58 (7th - 17 - Cir. 2014) (holding that a class may be certified even if the court would then enter a judgment that exonerates the defendant and thus bifurcating questions). the class certification and merits The Seventh Circuit did not make such an error. This can be seen both in what the court said and what it did not say. In its opinion, the court expressly noted that it was “not saying that any of these points [making up Plaintiffs’ prima facie case] have been proven” but merely that Plaintiffs’ “evidence is enough to support class treatment of the merits.” Kleen Prods., 831 F.3d at 928. The court thus made clear that it was not deciding the merits of Plaintiffs’ case, but only that Plaintiffs may attempt to prove the merits not just for themselves but for the class as a whole. Furthermore, the Seventh Circuit did not rule that should Plaintiffs bring the type of proof they have now introduced, they may proceed directly to trial. the court simply did not say. This comes through in what The court said little about the substance of antitrust law, except as that body of law relates to class certification issues. just once, distinguish fact that at the between only one It mentioned the Sherman Act beginning express of of and these the tacit two opinion; collusion, types of it did not despite the conduct violates antitrust law; it gave short shrift to what continues to be - 18 - Defendants’ main defense, which is that their behavior was explained by “parallel but independent behavior undertaken by firms in a concentrated market”; and it credited facts that it had elsewhere said do not support an inference of conspiracy. Compare, e.g., Kleen Prods., 831 F.3d at 924 (“Communication among the Defendants was easy, thanks to trade associations.”), with Omnicare, plaintiffs to 629 F.3d at pursue 709 (“[C]ourts Sherman Act should claims not merely allow because conversations concerning business took place between competitors [during legitimate activities].”) lower court’s opinion). take were proffered the court evidence (quoting with approval the This would be a strange approach to assessing and the measuring requirements of antitrust law. it strength of Plaintiffs’ against the substantive The more sensible conclusion is that the Seventh Circuit simply did not do what Plaintiffs wish it did: take the case outside of the realm where Defendants may succeed on summary judgment. The Court thus declines Plaintiffs’ invitation to dispose of the current motions based certification opinion alone. on the have generally, uncovered ECF No. no 1230 Circuit’s class Instead, it considers the evidence the parties bring to summary judgment. they Seventh direct Plaintiffs concede that evidence (Pls.’ - 19 - Br.), of at conspiracy. 4 (discussing See the various pieces of evidence to support their case and stating that “Plaintiffs evidence”). present Therefore, extensive and circumstantial strong evidence circumstantial decides this case, and such evidence comes in two forms, “economic evidence suggesting that the defendants were not in fact competing, and noneconomic evidence suggesting that they because they had agreed not to compete.” F.3d at 654-55. were not competing High Fructose, 295 The Court examines these two types of evidence in the sections below. B. Economic Evidence of Conspiracy The Court first tackles the economic evidence. have amassed four categories of such evidence Plaintiffs that they say support an inference that Defendants engaged in a conspiracy. These are: the the market structure of the containerboard industry; lockstep reductions; price and increases; Defendants’ the actions accompanying purportedly taken supply against self-interest. 1. Structure of the Containerboard Industry as Motive to Collude Plaintiffs’ evidence on the structure of the containerboard industry, while not uncontested, can be treated as establishing that the “containerboard collusion.” market was conducive Kleen Prods., 831 F.3d at 927-28. - 20 - to successful In particular, Plaintiffs bring evidence to show that Defendants operated in a concentrated industry; that barriers to entry were high; that Defendants sold a standardized, homogeneous product; and that they faced an inelastic demand. However, the value of this evidence to show that an actual conspiracy existed is limited. As the Court explained in its Daubert memorandum opinion, An industry structure is shared by Defendant and nonDefendant firms alike throughout the Class and nonClass Periods. As such, by itself, details of an industry structure cannot show that Defendants conspired during the Class Period any more than they can show that all containerboard firms conspired at all times. Kleen Prods. LLC v. Int'l Paper, No. 10 C 5711, 2017 U.S. Dist. LEXIS 83321, at *51-52 (N.D. Ill. May 31, 2017). In treating the market structure of the containerboard industry as relevant but far from dispositive, the Court is following well-trodden ground. In particular, the Court adheres to the Seventh Circuit’s teaching that, while the structure of an industry may be conducive to cartelization and so offers a motive to the defendants to conspire, such motive alone is “never enough to establish a traditional conspiracy.” Res. Supply, 971 F.2d at 51 (quoting 6 Phillip E. Areeda, Antitrust Law P 1411 (1986)); see, id. (“It is well-established . . . that the mere existence of an oligopolistic market structure in which a small group of - 21 - manufacturers identical engage product (collecting in does cases) consciously not parallel violate (internal the pricing antitrust quotation marks of an laws.”) omitted); Chocolate, 801 F.3d at 398 (stating that “evidence of motive without more does not create a reasonable inference of concerted action”). Moreover, the evidence that Plaintiffs bring does not offer unalloyed support to their case. that the meaning demand that for containerboard Defendants’ sensitive to price. For example, Plaintiffs stress customers products were was not inelastic, particularly As such, when the price of containerboard increases, demand does not drop precipitously, and conversely, when the price of containerboard falls, demand does not increase significantly. Yet while pressing this fact, Plaintiffs also fault Defendants for not cutting prices in response to falling demand during a period of economic downturn dubbed the Great Recession. But the inelasticity of demand is exactly the reason that a price cut would not much help a Defendant’s bottom line, and in fact, may hurt it. In an industry characterized by inelastic demand, cutting prices “will not increase the size of the total market.” (quoting United See, States (E.D. Pa. 1969)). v. Res. FMC Supply, Corp., 971 306 F.2d F.Supp. at 53 n.12 1106, 1139 To the extent that a firm may see increased - 22 - demand when it lowers prices, it mostly will be because the firm is taking customers away from its competitors. market with pressured market a to match shares (explaining producer homogeneous [] that can the and in product, price cut, reduced a thus competitors resulting profit margins” for homogeneous market successfully the However, in a sell at a higher will in for be “static all. Id. product “no price than its competitors; and if a seller attempts to sell at a lower price . . . its competitors will be given the opportunity to meet its lower price, thereby resulting in uniform prices again, but at a lower level; and without any increase in the original seller’s net share of the market”). As such, inelastic demand and homogeneous products explain why Defendants do not compete on price, and this is so even in the absence of an unlawful agreement not to compete. Cf. Text Messaging, 782 F.3d at 876 (stating that “evidence of express collusion might be a high elasticity of demand . . . for this might indicate that the sellers had agreed not to cut prices even though it would be to the advantage of each individual seller to do so until the market price fell to a level at which the added quantity sold did not (emphasis added). - 23 - offset the price decrease”) Similarly, industry was Plaintiffs dominated emphasize by a few that the players, containerboard protected by high barriers to entry, and became more concentrated still during the Class Period. See, e.g., ECF No. 1230 at 25 (“Defendants’ market shares also indicate their ability to conspire. During the Class Period alone, Defendants’ collective market share has increased from 75% of total box production in 2005 to 81% in 2007.”). It is true that “collusion is easier with fewer firms,” Gen. Leaseways, Inc. v. Nat’l Truck Leasing Asso., 744 F.2d 588, 596 (7th Cir. 1984), but this statement applies to collusions of both the lawful and unlawful kind. In particular, with fewer firms, it is easier for Defendants to follow each other’s pricing decisions – and do so without prior agreement. See, Text Messaging, 782 F.3d at 871 (explaining that “the fewer the firms, the easier it is for them to engage in ‘follow the leader’ pricing (‘conscious parallelism,’ as lawyers call it, ‘tacit collusion’ as economists prefer to call it) — which means coordinating their pricing without an actual agreement to do so”); In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 906 F.2d 432, 443 (9th Cir. 1990) (“[A]s the number of firms in a market declines, the possibilities interdependent pricing increase substantially.”). for Thus, to the extent that a concentrated market made it easy for Defendants to - 24 - “share monopoly power” and set supracompetitive prices by lawful means, Defendants might have had little (or less of a) motive to conspire. Brooke, 509 U.S. at 227. In short, the structure of the containerboard industry is a double-edged sword. on to make out The industry features that Plaintiffs rely their case for an antitrust violation also provide Defendants with a ready-made defense that they did not break the law. rest of With this fact in mind, the Court considers the Plaintiffs’ evidence in the context of the containerboard industry as Plaintiffs have described it. 2. Lockstep Price Increases Plaintiffs’ prima facie case for a price-fixing scheme is the fifteen price increases that Defendants announced during the six and half years of the Class Period. Although Plaintiffs describe these announcements as “lockstep,” Table 1 gives a more precise look at these fifteen attempted price increases. In particular, the following is true about Plaintiffs’ prima facie case. First, leader’s the price time that announcement it took varied Defendants widely. In to follow one of a the announcements, three of the six Defendants never did join the leader’s price announcement. Of the three Defendants that joined the announcement, moving Defendant Georgia-Pacific made - 25 - customer-specific price increases rather International Paper’s $40 blanket increase. than follow For the remaining announcements which all Defendants joined, the time it took a Defendant to make a follow-on price announcement ranged from mere hours to no less than 56 days after the leader announced. Within this range, announcements coming within days, closer to one or two weeks, or in about a month’s time are all common. Overall, the pattern of price announcements in this case is less suggestive of “lockstep,” parallel behavior than that found in other price-fixing cases. Thus, at least on this dimension, the case at bar is distinguishable from Titanium Dioxide. See, In re Titanium Dioxide Antitrust Litig., 959 F.Supp.2d 799, 80708, 832 (D. Md. 2013) (denying summary judgment when all five defendants participated in all 25 price increases during the alleged conspiracy period, with the longest gap between the initial price hike and the subsequent increase being, as far as the Court can tell, 20 days). At the same time, it appears even more amenable to summary judgment than cases where courts have granted it. See, e.g., Valspar Corp. v. E.I. du Pont de Nemours & Co., 152 F.Supp.3d 234, 241 (D. Del. 2016) (granting summary judgment even though the defendants “issued 31 parallel price increase announcements nearly - 26 - simultaneously,” with near simultaneity meaning no more than weeks apart) (internal quotation marks omitted). Second, producers Defendants that timed their competitors’. were their not price firm to only increases containerboard to coincide with In fact, two of the fifteen announcements were led by a non-Defendant. first the announce Relatedly, the identity of the changed from announcement to announcement, meaning that no one Defendant led the majority of the announcements. The rotating leadership suggests that Defendants “had the ability to decide independently to initiate a price raise, which the other [Defendant] manufacturers could decide if they would follow.” Res. Supply, 971 F.2d at 54. This cuts against an inference of conspiracy. Id. (affirming grant of summary judgment in such a case). Third, not every Defendant led a price announcement. least one court in this district has treated leaders At and followers differently when examining an antitrust claim based on parallel conduct. See, Alexander, 149 F.Supp.2d at 1005-008 (granting summary judgment to a defendant that represented “a clear example of a tax buyer following the leader” while denying it to another who “cannot argue that it was merely following the leader because it was a leader”). This ruling particular significance for moving Defendant Westrock. - 27 - takes on Although Westrock led two price increases over the entire Class Period, both of these instances preceded the company’s discharge from bankruptcy. Judge Milton Shadur, who presided over the case before it was reassigned to this Court, ruled that Westrock “can be held liable only for its actions taken postdischarge.” 1071, Kleen 1081-82 Prods. (N.D. concurred. See, LLC Ill. 2011) Kleen J.) (stating conduct not give company] will that rise Paper, (Shadur, F.R.D. 306 at Westrock’s antitrust all F.Supp.2d This an of 775 J.). if to absolved be Int’l Prods., (Leinenweber, does v. Court 608-09 “post-discharge violation, liability, despite [the its participation in the pre-discharge conspiracy”), aff’d, 831 F.3d 919, 930 (7th Cir. 2016) (iterating that Westrock’s “liability would be predicated on post-discharge conduct”). Accordingly, in considering whether the case against Westrock should go to the jury, the Court may only look at the company’s conduct after it exited bankruptcy on June 30, 2010 – or conduct conspiracy. within last four months of the alleged During these last four months, Westrock did not lead a price increase. This the leads the It joined one that failed. Court to its next point: the frequent failures Defendants experienced in trying to hike prices. Six out of the fifteen times Defendants announced a price increase, - 28 - they failed to actually increase price. those attempted participated. price increases in This is true even for which all Defendants For instance, Westrock led the February 1, 2008 attempted price increase in which all Defendants followed in a space of less than two weeks. not be implemented. The increase nonetheless could Similarly, Georgia-Pacific was the first among Defendants to announce a higher price on June 29, 2010. International Paper followed that laggard (PCA), only 11 days later. These unsuccessful same day, and the slowest Yet the attempt failed. attempts make the inference Defendants engaged in coordinated action less reasonable. that For if there were unlawful coordination, exposing Defendants to the risk of enormous penalties, one might expect that Defendants would have evidently taken the got. plunge The only for unsuccessful better odds price increases distinguish Defendants’ case from Titanium Dioxide. there rejected the defense of conscious than they also The court parallelism because “that theory contemplates the possibility that a price leader would be forced to rescind decided not follow it.” its increase because competitors Titanium Dioxide, 959 F.Supp.2d at 825 (internal citations omitted). In Titanium Dioxide, “no producer rescinded a price increase during the Class Period.” Id. In contrast, Defendants in this case were “forced to rescind” their - 29 - attempted price increases six times during the Class Period, once because the attempt was not followed and five more times when the alleged conspirators did fall in line. Lastly, the Court could not detect in Defendants’ fifteen price announcements any notable break with their prior practice. While Plaintiffs argue that Defendants were vigorously competing in the period before the alleged conspiracy began, they have not adduced much regarding evidence price on Defendants’ announcements before pattern the Class or practice Period. The dearth of support on this point seriously weakens the inference of conspiracy. See, Twombly, 550 U.S. at 556 n.4 (crediting the position that “complex and historically unprecedented changes in pricing structure made competitors, and support plausible a made at for the no very other inference same time discernible of by multiple reason conspiracy”) would (internal quotation marks omitted); Chocolate, 801 F.3d at 410 (“For a change in conduct to create an inference of a conspiracy, the shift in behavior must be a ‘radical’ or ‘abrupt’ change from the industry’s business practices.”) (citing Toys “R” Us v. FTC, 221 F.3d 928, 935 (7th Cir. 2000)). Indeed, what little evidence there is supports an inference that the parallel price increases were in line with historic behavior. Recall the one price - 30 - announcement initiated by International Paper on March 31, 2003, or about 11 months before the beginning announcement, of far the from Class Period. establishing a This pre-conspiracy baseline from which a “radical” or “abrupt” shift occurred, looks much like its later counterparts. In this episode, Defendants followed International Paper’s lead with an alacrity that they often did not display participated during the in attempted the alleged conspiracy. price increase; All Defendants Georgia-Pacific followed International Paper’s announcement after just 3 days, Westrock within a 17 day thereafter, days. All but and PCA, the one Defendant latest to announced announce, the same increase of $35.00, and the one outlier (Temple-Inland) actually attempted to increase its price by more than the rest of the group. Finally, and perhaps most importantly for companies that allegedly entered into an illegal agreement sometime thereafter, the price increase – without needing any agreement – succeeded. As courts have been persuaded to grant or deny summary judgment based on the extent of continuity with past behavior, these facts favor Defendants. Compare, Chocolate, 801 F.3d at 410 (affirming a grant of summary judgment because “we fail to see why we should infer a conspiracy existed between 2002 and 2007 from behavior that is in fact consistent with how this industry has historically operated”); Valspar, 152 F.Supp.3d at - 31 - 252 (granting summary judgment in a case where “public announcements of price increases and parallel pricing were not historically uncommon in the titanium dioxide industry”), with Alexander, because 149 “the F.Supp.2d speed by at which 1007 all (denying the summary bidders judgment changed from a highly competitive posture to a highly cooperative posture is difficult to reconcile with the idea of independent conduct”); Domestic Drywall, 163 F.Supp.3d at 255-56 (“Given the evidence that job quotes had been a feature in the drywall industry since the 1980s within and weeks that of each all Defendants other in fall eliminated 2011, a this jury practice might be justified in concluding that Defendants’ shift in behavior was radical enough to contribute to the inference of conspiracy.”). In sum, the Court concludes that, even in the context of an industry structure conducive to collusion, the fifteen price increases do not raise an “inference of conspiracy [that] is reasonable in light of the competing inferences of independent action.” Matsushita, 475 U.S. at 588. 3. The Court Supply Reductions as a Means to Support Price Collusion next examines the contention that Defendants restricted their supply over the Class Period. The parties have recently spilled much ink over the importance of this issue, - 32 - with Plaintiffs insisting that supply reductions play only a supporting role in their case while Defendants protest that the reductions lie at the heart of Plaintiffs’ conspiracy theory. Compare, e.g., ECF No. 1230 (Pls.’ Br.), at 2 (“Plaintiffs have always alleged a conspiracy to fix prices, aided by, among other things, numerous supply restrictions; not a conspiracy to reduce capacity.”), with ECF No. 1098 (Defs.’ Br.), at 1 (“Since the outset of this litigation, the crux of Plaintiffs’ Complaint was Defendants’ alleged containerboard capacity.”) marks omitted). across-the-board (internal reductions citation and in quotation With all due respect, the Court thinks the parties are missing the forest for the trees. An agreement to fix prices is not separate or separable from a mutual understanding to reduce output. simple reason that an effort to raise This is for the prices without a corresponding reduction in supply. Court has explained, “[t]he sales of even cannot succeed As the Supreme a monopolist reduced when it sells goods at a monopoly price.” are Eastman Kodak Co. v. Image Tech. Servs., 504 U.S. 451, 470 (1992); accord Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 226 (7th Cir. 1978) (“[A]ll serious attempts to establish a supracompetitive price must necessarily include an agreement to restrict output. Otherwise the monopoly price could never be - 33 - maintained.”) Litig., 743 (as quoted F.Supp.2d in 827, In 869 re Sulfuric (N.D. Ill. Acid Antitrust 2010)). This is because as “firms raise price, the market’s demand for their product will fall, so the amount supplied will fall too.” Leaseways, 744 F.2d at 594-95. Gen. The extent to which demand falls depends on the elasticity of demand, but as long as demand is not perfectly inelasticity, demand falls when price rises. People buy less when they have to pay more – the flip side of which is that when Defendants raised their prices, they sold less. Ergo, they produced less. Of course, Defendants may have been “completely unrealistic” and agreed to attempt price increases without being willing to reduce production. High Fructose, 295 F.3d at 655 (“[P]rice-fixing agreements are illegal even if the parties were completely unrealistic market price.”). in supposing they could influence the In that eventuality, Defendants’ attempt to fix prices would have failed, and their inefficacious conspiracy would not have produced any damages. cold comfort Defendants to Plaintiffs, successfully who inflated The possibility is thus of have built prices and some $3.8 billion in actual damages. a case caused in which Plaintiffs In the alleged conspiracy sub judice then, increased prices and reduced output are two - 34 - sides of the same coin; Plaintiffs cannot argue that Defendants did one thing without committing that they did the other. With this clarification in mind, the Court examines the evidence that Plaintiffs have adduced to show that Defendants cut production over the Class Period. The evidence is quite weak (thus explaining the parties’ dispute over the focus of the case). First, the Court notes that Plaintiffs’ various assertions about how much Defendants should have produced, but did not due Plaintiffs to appear their to conspiracy, argue that if often miss Defendants the mark. forwent some business, declined some customers’ orders, or generally gave up volume, they were acting against their independent self-interest and so likely illicit conspiring. agreement, But, Defendants even may in choose the not absence to chase of an after every business opportunity. The Seventh Circuit has made clear that such disdain for additional business is rational. In the words of the court, “a rational profit-maximizing seller does not care about the number of customers it has but about its total revenues relative to its total costs. If the seller loses a third of its customers because it has doubled its price, it’s ahead of the game because twice two-thirds Messaging, 782 is F.3d greater at 877; than see - 35 - one also, (4/3 > Domestic 3/3).” Drywall, Text 163 F.Supp.3d at 252 n.65 (stating that “evidence that a defendant refused to adjust its list price in order to secure a new customer would not be so probative” of uncompetitive behavior). In other words, Defendants can act in their independent selfinterest even when they turn away business. essentially did so by reducing supply The fact that they does not, by itself, suggest conspiracy. Second, dispute even that within this Georgia-Pacific framework, and Plaintiffs Westrock did not cannot restrict supply by closing any paper mill within the relevant time period (the Class Period for interval for Westrock). Georgia-Pacific and post-bankruptcy Plaintiffs argue, however, that the moving Defendants took “different forms of supply restrictions, including downtime and slowback,” and that it is “irrelevant” how Defendants reduced their supply. ECF No. 1230 at 54. This is not true. A mill closure is a permanent reduction in supply, costly to reverse and likely impossible to do so within a short period of time. temporary, In contrast, easy-to-undo machine downtime measures. A and machine slowback are turned off (downtime) can be switched back on; a machine run at slower speed (slowback) can be ramped up. quickly than the reopening of a - 36 - Both can happen much more closed mill. As such, a Defendant that shuttered its plants – a move Plaintiffs contend was sensible only in furtherance of a conspiracy and not justified by market forces – took much more risk than one that merely slowed production. In other words, a Defendant that closed a mill engaged in “‘perilous leading’.” 02 (“These impossible business to Plasma-Derivative, 764 F.Supp.2d at 1001decisions reverse [to quickly. reduce As capacity] demand would increased, be the defendants would have been left without the ability to bring supply in line with orders. This sort of parallel behavior has been described as ‘perilous leading’ . . . .”) (citing 6 Areeda & Hovenkamp ¶ 1425d). It took actions that, “absent an agreement,” exposed it to “a significant risk that competitors won’t follow.” Id. Such risks make purely interdependent actions unlikely, as the inference is that a firm would not have perilously led without an agreement in place. Id. In contrast, when “supplies can be quickly adjusted,” “firms face little risk in waiting to see how competitors price their products.” 1001. Id. at In such a case, interdependent actions are not unlikely but plausible. The particular form form of supply adopted restriction here by the thus two matters, moving and the Defendants – temporary measures such as downtime and slowback that could be - 37 - “quickly adjusted” – does little to make the inference of conspiracy more reasonable than lawful interdependence. Third, the evidence that Plaintiffs have brought to show supply reductions (of any form) paints quite a mixed picture. For example, the evidence shows that Defendants added new capacity during the Class Period – they bought new mills as well as closed existing ones. supply during the Similarly, while Defendants reduced Great Recession, Plaintiffs admit that at least some of this reduction was justified by the decline in demand. capacity Plaintiffs and also production do not even dispute before the that Defendants conspiracy cut allegedly began and that, as a group, Defendants closed more mills before the Class Period than during it. excuse this anomaly by Plaintiffs nonetheless seek to positing that “capacity closures occurring before the Class Period set the stage for coordinated price increases during the Class Period.” (emphasis in original). ECF No. 1230 at 58 The rationalization hardly strengthens Plaintiffs’ case – if Defendants closed mills before the Class Period despite not having an agreement to do so, then their mill closures during the Class Period do not reasonably give rise to an inference that an agreement has taken place. Moreover, just about everything that Defendants did outside the Class Period can be characterized as “set[ting] - 38 - the stage” for the conspiracy. After all, everything helped Defendants to get to where they were when they purportedly entered into an agreement to fix prices. The complicated picture regarding supply decisions forced Plaintiffs to make the argument that Defendants did not simply restrict supply, but that they restricted supply “relative to demand.” See, e.g., ECF No. 1230 at 45. But Plaintiffs make this argument without presenting data on containerboard demand. Instead they seem to argue that because some of the price increases succeeded, Defendants must have reduced supply over and above the amount justified by changes in demand. The argument thus is supported by little more than the fifteen price increases discussed previously. Plaintiffs’ only other piece of evidence regarding demand is the level of inventories in the industry. Plaintiffs introduce statements indicating that Defendants maintained low inventories, which may suggest that demand outstripped supply and so depleted inventories. inventory – expensive to containerboard carry, and, However, Defendants point out that produced as such, but they not yet sold rationally minimize the amount of inventories in the system. – wanted was to In any case, Defendants do not violate the Sherman Act merely by reducing supply in the hopes of creating scarcity so as to hike prices. - 39 - See, In re Baby Food Antitrust Litig., 166 F.3d 112, 134-35 (3d Cir. 1999) (“Profit is a legitimate motive in pricing decisions, and something more is required before a court can conclude that competitors conspired to fix pricing in violation of the Sherman Act.”); Plasma-Derivative, 764 F.Supp.2d at 997. Moreover, Plaintiffs’ theory that Defendants reduced production “strategically,” or just around the time of the price announcements, is difficult to reconcile with economic reality. As explained supra, Defendants necessarily sell containerboard when they sell them at dearer prices. less Defendants therefore must restrict output whenever they sell at inflated prices. Plaintiffs seem to make an assumption to the contrary, indirectly positing that for the price increases to succeed Defendants needed to depress output only around the time of the price announcements. assumption makes But sense. Plaintiffs If never Defendants explain could have why this sold an unrestricted quantity of containerboard at higher prices, then why would they need to restrict production when they announced higher prices? If they could not sell such quantities, then why would they increase production in between price announcements (the non-strategic times)? In short, Plaintiffs’ theory of the case leaves more questions unanswered than the Court would think is appropriate at this late stage in the proceeding. - 40 - Lastly, even accepting all these shortfalls, Plaintiffs have not actually shown that the moving Defendants restricted supply. expert Plaintiffs’ evidence of supply reduction comes from the report of Douglas Zona. Zona, however, conducted an analysis of all the Defendants’ aggregate supply over the Class Period. Taken at face value, his analysis shows that Defendants, as a group, reduced their capacity during the Class Period over and above reductions predicted for a benchmark group not accused of conspiracy. But the analysis is mum as to any one Defendant within this group. light on capacity whether during Georgia-Pacific the relevant time In particular, it sheds no and Westrock period. reduced Indeed, their Georgia- Pacific has shown that its own capacity during the Class Period was higher than that of the benchmark group not suspected of conspiracy. Westrock, taking a different tack, argues that its one supply reduction made after its discharge from bankruptcy was planned months in advance, while it was still in bankruptcy, was approved by third parties overseeing its restructuring, and reflected routine, scheduled maintenance of its machines. Even if the Court discounts these explanations, then still the burden is on Plaintiffs to show that this reduction – the only one relevant for Westrock’s liability in the case – deviated from the non-conspiracy benchmark. This, Plaintiffs have not done as - 41 - their expert’s analysis focused on the entire Class Period (as well as all Defendants). Plaintiffs seem to fall back on the position that even if they have not shown that the moving Defendants restricted supply, then still this is not fatal to their case. proposition, said: Plaintiffs cite High Fructose, where For this the court “Maintenance of excess capacity discourages new entry . . . and also shores up a cartel by increasing the risk that its collapse will lead to a devastating price war ending in the bankruptcy Fructose, of some 295 or F.3d all at of the 657. former However, cartelists.” Plaintiffs High cite this language without having introduced any evidence indicating that entrants to the containerboard industry were deterred or that there was Period. excess Again, capacity the time in the for industry plausibility during the pleading Class has now passed. Plaintiffs have committed to a particular theory of the case, for which they must bring evidence raising a genuine dispute of material fact if they wish to go the jury. FED. R. CIV. P. 56(a); Celotex, 477 U.S. at 322-23. For these reasons, the Court is of the view that Plaintiffs have not made a case allowing for a reasonable inference that Defendants scheme. restricted supply to facilitate their price-fixing This finding is near fatal to their conspiracy claim. - 42 - 4. Acts against Self-Interest as Evidence of Collusion Nonetheless, the Court pushes ahead and considers the rest of Plaintiffs’ evidence, evidence. Plaintiffs collusion because independent In point they this to acts appear self-interest. last Some category that of economic suggest illegal contrary of these to Defendants’ actions have been alluded to previously, including the fact that Defendants raised prices during the Great Recession, and conversely, that they cut production in a period of high demand preceding the recession. However, courts unambiguously have found suggests that behavior neither against of these actions self-interest. See, Plasma-Derivative, 764 F.Supp.2d at 1001 (“It is also critical to repeat that an allegation that firms raise price or decrease supply at a time when demand is increasing would not necessarily suggest the firms are acting pursuant to an agreement. behavior need independent not be, as self-interest.”); plaintiffs Res. argue, Supply, 971 Such contrary F.2d at to 52-53 (“[W]e are unpersuaded by [the plaintiff’s] argument that the economically rational action for Owens-Corning and CertainTeed during a time of reduced demand necessarily would have been to cut price in order to increase Section III.B.1. - 43 - sales.”); see also, supra, Ultimately, the Court does not see why it would be more rational or reasonable for Defendants to have adopted this course of behavior as cartelists locked in an illegal agreement than as independent acting firms. For example, Plaintiffs assert that Georgia-Pacific had such low inventories during a period of high demand that its employees voiced concerns that “we may not have customers left to raise our prices to if we do not get some paper.” ECF No. 1230 at 81; ECF No. 1280 ¶ 165; ECF No. 1227, Ex. 398. lack of customers Georgia-Pacific would was part However, the low inventories and the present of a a problem whether conspiracy. or not Georgia-Pacific needed paper to sell, and it needed customers to sell it to, whether or not it was conspiring. worried that the company had The fact that an employee was neither does not make it more likely that Georgia-Pacific was unlawfully colluding with fellow Defendants. Perhaps Georgia-Pacific had bad business planning, but this is not what this antitrust action is about. a statement by a Westrock customer complaining Likewise, about the company’s 2010 price increase indicates nothing conspiratorial. The customer had written to Westrock: “You still suck. This increase will put your customers in bankruptcy, then what will you do?” ECF No. 1230 at 83; ECF No. 1280 ¶ 175; ECF No. 1277, Ex. 416. Certainly, the customer was unhappy, but incurring a - 44 - customer’s wrath possibility Westrock or with was risking any acting his price as business increase a seems a regardless cartelist or distinct of whether opportunistically increasing its price when its competitors did so. Parenthetically, the Court notes that, to the extent Plaintiffs are relying on the Great Recession to argue that the demand curve for containerboard shifted inward during this time, then a shift in demand hit Defendants colluding or acting as price takers. whether they were If it were irrational for Defendants to have raised prices during the Great Recession, then Defendants acted irrationally regardless of whether they were cartelists or competitive rivals. Besides price and output, Plaintiffs also highlight another aspect of Defendants’ businesses: among Defendants’ firms. such inter-firm sometimes trading. bought the trades of containerboard Defendants admit that they engaged in That containerboard is, from their alleged conspirators included. that they had legitimate reasons instead of producing their own. they admit that they other paper companies, However, Defendants assert for making such purchases In particular, they claim that it was sometimes cheaper to buy from a competitor than to make the containerboard customer. internally and ship it to a far-flung Plaintiffs, in turn, concede that such decisions are - 45 - not in themselves suspect. See, Univ. Life Ins. Co. v. Unimarc, Ltd., 699 F.2d 846, 852 (7th Cir. 1983) (“Firms constantly face ‘make-or-buy’ decisions – that is, decisions whether to purchase a good or service in the market or to produce it internally – and ordinarily the decision, whichever way it goes, raises no antitrust question.”) (as quoted in Sulfuric Acid, 743 F.Supp.2d at 857-58)). Nonetheless, seizing on language from High Fructose, Plaintiffs contend that the “possibility” exists that Defendants were using the trades F.3d at to “shor[e] Fructose, 295 659. posited a very arises. their context in Seventh cartel. which Circuit, High As the court hypothesized: specific The up” such a however, possibility But if the firm could supply its customer (remember there was a lot of excess capacity in the HFCS industry during the period of the alleged conspiracy) and at a lower cost than its competitor would charge, why would it buy from the competitor rather than expanding its own production? The possibility that springs immediately to mind is that this is a way of shoring up a sellers’ cartel by protecting the market share of each seller. Id. (emphasis “springs in original). immediately satisfied: to mind” The only cartel when possibility two conditions thus are (1) the firm could supply its customer, as would be the case if there was a lot of excess capacity in the industry, and (2) the firm could do so - 46 - at a lower cost than its competitor. Plaintiffs conditions existed here. Defendants shuttered have not shown First, that either Plaintiffs’ capacity and of these claim maintained low that inventories actually makes it plausible that Defendants sometimes could not supply their own customers and would prefer to buy from their competitors. See, High Fructose, 295 F.3d at 659 (“The firm would rather buy from a competitor to supply its customer than tell the customer to buy from the competitor, lest the customer never return.”). Second, Plaintiffs have provided no information on Defendants’ production costs so as to allow the Court to assess how much it would have cost Defendants to make the containerboard that they actually bought. As such, the Court cannot infer that, for the transactions where Defendants made inter-firm trades, it would have been cheaper for them to produce containerboard internally. told the Court materialized in whether this the case. each other over cartel Were alleged cartelists protected? vis-à-vis Lastly, Plaintiffs have not the possibility market actually shares of the At the least, were they stable the Class Period? Plaintiffs inexplicably gloss over the point. The against Court is Defendants’ thus not convinced self-interest. that This the is trades regardless were of whether it looks at the trades from the buyer’s perspective, as - 47 - discussed in the point of view. evidence preceding paragraphs, or from the seller’s Plaintiffs introduced one piece of documentary suggesting that they sold to each other. Defendants priced below market when If true, this would indicate that the seller was acting irrationally because one presumably would not sell for less what one could get more for. Cement, 746 F.Supp.2d inter-firm trades at 1314 “have But, see, Fla. how legitimate a (explaining low prices business on strategy explanation as well”). The evidence, however, falls short of establishing such below-market pricing. The evidence here consists of an email dated from July 29, 2008 an employee counterpart at International Paper. of Westrock does Defendant not in implicate this Georgia-Pacific, case. As to his See, ECF No. 1230 at 9, n. 34; ECF No. 1231 ¶ 163; ECF No. 1227, Ex. 396. thus to Westrock, the the The email other moving communication predates the company’s discharge from bankruptcy and so does not shed light on whether Westrock joined or rejoined the conspiracy after that date. It is therefore of little value. Nonetheless, document. Westrock asked the Court has perused It found this, too, wanting. employee Westrock to acknowledged “price that protect” - 48 - the content of the In the email, the International one of its Paper orders had from a recently announced Ex. 396. Westrock price increase agreed. of As Id. $55.00. part ECF of its No. 1227, concession, however, Westrock then requested that “IP in similar support, forgo the $40/ton increase effective August 1st.” Id. proposed for the SBS business The email thus shows that Westrock and International Paper bargained with each other, as might any firms not suspected of conspiracy. Moreover, that International Paper appears to have bargained successfully and gotten itself a discount raises discounts off no red list flags price since, were a as common Plaintiffs occurrence admit, in the containerboard industry. In sum, the Court finds that the economic evidence is not sufficient to permit a reasonable jury Defendants worked together to fix prices. to conclude that Even in the context of a containerboard industry as Plaintiffs have described it, Defendants’ decisions trade each with to other increase remain as competition as with conspiracy. prices, reduce consistent with supply, and permissible The Court next asks whether adding the non-economic evidence to the mix changes the picture. C. Non-Economic Evidence of Agreement The Court conspiracy. now See, considers Flat Glass, the 385 non-economic F.3d at 361 evidence (“The of most important evidence will generally be non-economic evidence that - 49 - there was an actual, manifest agreement not to compete.”) (internal quotation marks omitted) (as quoted in Standard Iron Works v. Arcelormittal, 639 F.Supp.2d 877, 894-95 (N.D. Ill. 2009)). actions Such evidence includes the opportunities to collude, indicating that the opportunities were seized, and Defendants’ own incriminating statements. 1. Trade Association Meetings, Phone Calls, Inter-Firm Trades, and Public Messages as Opportunities to Collude Plaintiffs press that Defendants had many opportunities to collude as they particular, interacted Plaintiffs frequently point to with trade one another. association In meetings, phone calls among Defendants, and inter-firm trades as channels by which thereby Defendants enter into could an communicate agreement to with fix each prices. other and Relatedly, Plaintiffs advance a theory in which Defendants used their own public statements and industry analysts as “conduits” to signal to each other and coordinate their price and supply decisions. Before delving into each of the above, the Court notes that “the mere parallel evidence.” opportunity business to conspire, conduct, is even not in the necessarily context of probative Weit v. Cont’l Ill. Nat'l Bank & Tr. Co., 641 F.2d 457, 462 (7th Cir. 1981); see also, Brand Name, 1999 U.S. Dist. LEXIS 550, at *46 (“[E]vidence of the opportunity to conspire, - 50 - alone, is not sufficient to sustain a Section 1 Sherman Act claim.”). In particular, when the opportunities to conspire coincide with regular means of conducting legitimate businesses, the Court is mindful not to deter the one in its effort to root out the other. With this said, the Court examines the regards to the first communication venue: meetings. evidence with trade association As the Seventh Circuit has said, “[m]ere membership in a trade association, attendance at trade association meetings and participation in trade association activities are not, in and of themselves, antitrust laws.” condemned or even discouraged by the Moore v. Boating Indus. Assos., 819 F.2d 693, 712 (7th Cir. 1987) (internal quotation and alteration marks omitted); see also, In Litig., 999 F.Supp.2d rejects the suggestion re 777, that Chocolate 804 (M.D. the Confectionary Pa. 2014) contemporaneous Antitrust (“The court presence of defendants’ officers at a trade association meeting permits an inference of conspiracy.”), aff’d, 801 F.3d 383 (3d Cir. 2015); In re High Fructose Corn Syrup Antitrust Litig., 156 F.Supp.2d 1017, 1040 (C.D. Ill. 2001) (“Membership in a trade association and participation in its activities, without something more, does not tend to exclude the possibility of legitimate, legal activity . . . .”), rev’d on other grounds, 295 F.3d 651 (7th - 51 - Cir. 2002). Plaintiffs participation in However, contend they trade acknowledge associations that the is proximity that Defendants’ legitimate of the activity. meetings to Defendants’ price announcements suggests that Defendants came to an agreement during the meetings. In the next section, the Court examines closely Plaintiffs’ contention that the price association meetings. announcements coincided with trade For now, it is important to note two things. One, a likely effect of inferring conspiracy from mere temporal proximity of a trade association meeting and a price announcement is to stop corporate officers from attending such meetings. Imagine an executive trade association meeting. who contemplates going to a The executive does not know (unless he really is conspiring with his competitors) whether any one of those competitors may be getting ready to announce a price change sometime during, shortly before, or shortly after the meeting. The executive, however, likely prizes his company’s ability to follow that change should one materialize. If his doing so after having attended a meeting arouses suspicion of illegal collusion, then the executive may forego all meetings. The same goes for an executive who knows that he is planning a price change, since this executive - 52 - cannot prevent his competitors from following his lead. The result is to turn what all parties agree is a legitimate activity – attendance in trade association meetings – to something that corporate officers may all avoid. Two, the chilling effect on lawful conduct is mitigated to the extent that something more required to infer conspiracy. seems to the Court to be than temporal proximity is The most natural “something more” evidence of the communications exchanged at these meetings. little to offer on that front. substance of the But Plaintiffs have Besides the price increases themselves, Plaintiffs bring nothing to suggest that Defendants discussed pricing during their various interactions. Under such circumstances, to infer that an agreement to fix prices was born out of Compare, the In trade re association Dairy Farmers of meetings Am., appears Inc. imprudent. Cheese Antitrust Litig., 801 F.3d 758, 763 (7th Cir. 2015) (affirming a grant of summary judgment to the defendants when “Appellants have not pointed to a single communication that suggests a meeting of the minds to fix prices”), with In re Publ’n Paper Antitrust Litig., 690 F.3d 51, 65 (2d Cir. 2012) (reversing a grant of summary judgment when “it is undisputed that in private phone calls and meetings — for which no social or personal purpose has been persuasively identified — Tynkkynen - 53 - shared UPM’s pricing strategies with Korhonen and both men disclosed to each other their companies’ intentions to increase prices before those decisions had been publicly announced”). The same rationale applies to the phone calls among the various employees at Defendants’ companies. Again, the next section discusses in detail the frequency of these calls. But the mere fact that Defendants were in constant communication with one another does not, without more, suggest that Defendants agreed to fix prices. See, Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 762 (1984) (“[T]he fact that a manufacturer and its distributors are in constant communication about prices and marketing strategy does not alone show that the distributors are not making independent pricing decisions.”); Mkt. Force, 906 F.2d at 1173 unreasonable agreement.”). (“If the business exchange behavior, of then information . . . is it is not an not illegal This is particularly so when the defendants have legitimate reasons to talk to one another – as Defendants in this case do being each other’s customers and suppliers. This customer-supplier attack next. relationship is what Plaintiffs Plaintiffs charge that Defendants are each other’s “best customers, an arrangement they used to pass information along to each other.” ECF No. 1230 at 34. First, there is nothing inherently suspicious about competitors also being each - 54 - other’s customers, or even each other’s largest customers. See, Dairy Farmers, 801 F.3d at 760-61 (affirming a grant of summary judgment in a case where “[a]lthough the two [defendant] companies were competitors, DFA was also one of Schreiber’s main suppliers, and Schreiber was one of DFA’s largest customers”). As for the accusation that Defendants “pass[ed] information along to each other,” Plaintiffs have not pointed out how the information that was passed along supports an inference of conspiracy. In coming to this conclusion, the Court examined the communications Plaintiffs have highlighted in their brief that involved either Westrock or Georgia-Pacific. The one communication to which Westrock was a party is an email from a Westrock See, ECF No. 1230 at 71; ECF No. 1231 ¶ 120; ECF No. 1227, Ex. 318. The email employee informed to a Temple-Inland Temple-Inland of employee. Westrock’s latest price increase; it is dated July 1, 2010 – the same date as Westrock’s public announcement of its price increase – and contains the same information as the public announcement. As such, the email merely conveyed publicly available information, and the Court cannot see how that is improper. Cf. Publ’n Paper, 690 F.3d at 65 (finding noteworthy the fact that the defendants “disclosed - 55 - to each other their companies’ intentions to increase prices before those decisions had been publicly announced”). As for Georgia-Pacific, the communications between the company and the other Defendants consisted of information needed to trade, e.g., price, quantity, and time frame for delivery. See, ECF No. 1230 at 24; ECF No. 1219 ¶ 48 & Ex. 74-75. exchange of this information would be more worrisome The if Plaintiffs had presented evidence that the trades should not have happened – but Section III.B.4. they Since have the not done underlying so. See, exchanges supra, are not suspect, the passing of information to permit such exchanges to occur likewise does not raise an inference of illicit coordination. Plaintiffs also dwell on Georgia-Pacific’s failed merger talks with International Paper, charging that “GP and IP were using merger discussions as a pretext to collude.” at 71. Plaintiffs are merely speculating ECF No. 1230 that Defendants colluded during these interactions, as the evidence to support the inference that anything specific to containerboard prices or production was exchanged during these talks is thin to nil. Finally, Defendants analysts Plaintiffs used to leak their raise own a public confidential “conduit” statements information - 56 - theory, to and their whereby industry alleged conspirators. According to Plaintiffs, the leaks served as signals to co-conspirators to raise prices or reduce supply, thereby coordinating the conspirators’ activities and facilitating the conspiracy. With respect to the analysts, the Court notes that Defendants should not be held accountable for what these third parties said unless Defendants were somehow responsible for the content of the analysts’ communications. Yet, many of the analysts’ statements Plaintiffs highlight involve neither moving Defendants, and none of the statements implicate Westrock in the period after its bankruptcy. Even were Defendants the lumped See, ECF No. 1230 at 73-77. statements together, to then be aggregated still the and of bulk all the communications could not have reasonably facilitated anything. For example, Plaintiffs assert that, “Following Defendants’ 2003 and early 2004 supply restrictions, Mr. Wilde announced that inventories were at ‘an extremely lean level,’ enabling Defendants to implement their June 2004 price increase.” No. 1230 at 74. Wilde, about an the There is no suggestion from this alone that analyst level ECF that of Plaintiffs inventories focus from one heavily of the on, learned Defendants. Likewise, there is no indication that low inventories constitute confidential information that - 57 - needed to be “leaked.” Furthermore, economic Defendants fact increases. that were presumably reductions output aware of the allowed basic for prices Each had already restricted supply; all that was left was to raise prices. The Court does not see how Wilde’s statement “enabl[ed]” Defendants to do anything they were not already prepared to do. Finally, statements. the To Court the examines extent that Defendants’ Plaintiffs own argue public that such statements are improper because they disclose “granular details and public commitments to other Defendants,” ECF No. 1230 at 7778, the support for that argument is an expert report that has been excluded in large part by the Court’s Daubert ruling. Kleen Prods., 2017 U.S. Dist. LEXIS 83321, at *84-91. See, As the record now stands, Defendants have presented expert testimony that the information consistent with their revealed in disclosure their obligations, have little to rebut that testimony. fact that Defendants public statements and is Plaintiffs Without such rebuttal, the listened to their competitors’ communications cannot raise an inference of illicit collusion. “Competitors in concentrated markets watch each other hawks,” even when they are not violating antitrust law. Messaging, 782 F.3d at 875. - 58 - like Text 2. Price Increases around Communications as Evidence of Opportunities Seized Even though the price increases and the communications were not sufficient on their own to raise a reasonable inference of conspiracy, the two together may cross that threshold. Or so the Text Messaging court has said. See, Text Messaging, 782 F.3d at 878 (noting that opportunities for the defendants’ executives to meet privately “would be more compelling if the immediate sequel to any of simultaneous these price meetings increase had by been the a simultaneous defendants”). or near- Plaintiffs thus try to shoehorn the facts of this case into the language of Text Messaging, arguing that Defendants’ price increases often happened “simultaneous[ly]” or “near-simultaneous[ly]” with their having exchanged phone calls, attended trade association meetings, or received reports from industry analysts. The Court examines these types of communications one by one to determine whether “the immediate sequel to any of [them]” had been a price increase. Id. The conclusion the Court comes to is that, given how frequently these communications took place, it would be more of a surprise if a price increase did not happen sometime around one of them. To take the trade association meetings first: there were 505 such meetings during the 2,458-days long Class Period. - 59 - See, ECF No. 1350. This means that there was, on average, a trade meeting every five days during the Class Period. Plaintiffs object that some of these meetings should not be counted because they are and/or not . . “relevant . based [Plaintiffs] on, lack inter alia, evidence subject that two Defendant representatives attended or participated.” n.1. The “illegal Court wonders conspiracy” what such subject that matter Plaintiffs meeting’s subject matter is not relevant. is can matter or more Id. at 1 relevant tell to when a Nevertheless, going strictly by Plaintiffs’ count, there were still 263 meetings during the Class Period, or about a meeting every 10 days. (The Court recognizes that the meetings are not uniformly distributed in between the start and end date of the Class Period, but the approximation is close enough. Moreover, because some meetings lasted more than one day, more days included a meeting than this calculation suggests.) With these many meetings, it would be an anomaly if some of the price increases did not happen close to a meeting date. As such, the fact that some of them did raises no inference anything of untoward having taken place at the adopts the meeting. This reasoning conclusion of the holds court in whether Valspar, Titanium Dioxide, as Plaintiffs wish. - 60 - the as Court Defendants urge, or In Valspar, the plaintiff made much of the fact that the “vast majority” of the defendants’ price increases occurred “within 30 days before or after a General Committee meeting of the TDMA.” F.Supp.3d at 246-47. Valspar, 152 The Delaware district court found that unpersuasive since “the meetings of the TDMA General Committee occurred quarterly,” which means that “Valspar’s logic would find suspect any announcement which occurred in eight out of twelve months.” Id. at 247. court. Id. “This proves too much,” said the In contrast, the Maryland court in Titanium Dioxide laid store by the fact that “88 percent of the price increase announcements . . . came within 30 days of a General Committee meeting of the TDMA.” Titanium Dioxide, 959 F.Supp.2d at 809. Here, the Court is not dealing with quarterly meetings. Instead, the evidence is that two or more of the Defendants had a meeting every 10 days or so. that 100% of the price A meeting every 10 days means increase announcements certainty, happen within 10 days of a meeting. standard coming of Valspar within days or Titanium of a Dioxide meeting are will, with By either the then, announcements nothing unusual or noteworthy. Focusing on Georgia-Pacific and Westrock in particular, the Court can association discern no attendance pattern and their - 61 - in the pricing Defendants’ behavior to trade suggest conspiracy. instances This is true even when the Court sets aside all the in which the moving Defendants attended a trade conference but took no pricing decision afterwards and focuses only on those times in which the companies did make a price announcement. which Within this universe, out of the fifteen times in Georgia-Pacific preceded by the meeting, and made company eight a price having were announcement, attended without any seven were a trade association such prior attendance. Thus, the company was as likely to announce a price increase after a period in which it did not attend a trade conference as when it did. Put differently, there is no connection between Georgia-Pacific’s trade association participation and its price announcements. As for association discharge. Westrock, meeting one in of its the officers period attended after its a trade bankruptcy Georgia-Pacific and International Paper had already made their price announcements before the meeting took place, and Temple-Inland announced on the Westrock followed the day after. same day as the meeting. Westrock brings documentary evidence to argue that it contemplated the price increase weeks before the precipitated meeting, by Temple-Inland’s and that the Georgia-Pacific, announcements and - 62 - decision to International not any announce was Paper, and illicit exchanges during the meeting. Even if the Court disregards the explanation, it must recognize that to infer conspiracy from this evidence alone participation. would chill Moreover, the Westrock’s inference trade would association be based on nothing more than temporal proximity between two things that the law allows Westrock to do: price increases. attend trade conferences and follow The chilling effect seems especially biting in this instance as the initial price announcements happened before the meeting. The Court thus hesitates to infer conspiracy from the timing of events alone, especially when that timing does not appear out of the ordinary. Its hesitation is doubled with regard to the phone calls, since there were even more phone calls than submitted trade evidence association that over meetings. a thousand Plaintiffs phone calls have were exchanged among the seven Defendants over the six and a half years of the alleged conspiracy. See, ECF No. 1213, Ex. 2. Again, with these many calls, whenever Defendants announced a price increase, the announcement will be near a phone call. Still, the Court has attempted to put on its most conspiratorial-minded hat in reviewing the specific calls that Plaintiffs highlight in their brief. But even so attired, the Court of cannot make out an inference - 63 - conspiracy from what Plaintiffs have cobbled together. First, many instances of the calls highlighted were too remote from the time of the price announcement to simultaneous.” who as being “simultaneous” or “near- Second, the pattern as to who called whom and actually thereafter count ended was a up announcing total a mixed-bag. price And, increase finally, shortly there were simply too many phone calls for any particular call to be out of the ordinary. The Court concludes that the timing of the events is insufficient to reasonably raise an inference of conspiratorial agreement. The Court’s conclusion is bolstered by the fact that Plaintiffs have introduced no evidence as to the substance of these talks. Ill. 2014) See, Text Messaging, 46 F.Supp.3d 788, 806 (N.D. (“Although communications plaintiffs involving reference defendants that the are existence temporally of near some of the pricing changes at issue here, they offer nothing other than speculation about the substance of these talks. . . . This is insufficient to give rise to a dispute of material fact on a price-fixing claim.”), aff’d, 782 F.3d 867 (7th Cir. 2015); supra, Section III.C.1. In fact, all persons deposed “uniformly denie[d] discussion of any agreement or understanding.” 641 F.2d at 462-63. but that is not a Weit, The denials, of course, are self-serving, reason to discount - 64 - them altogether. Id. (putting “significance [on] the sworn testimony compiled during eight years of depositions which uniformly denies discussion of any agreement or understanding as to the interest rate to be charged”). make his Not only is it axiomatic that “[a] plaintiff cannot case just by asking the jury to disbelieve the defendant’s witnesses,” High Fructose, 295 F.3d at 655, but also Plaintiffs believed have in not this shown case. why No the witnesses documentary should evidence, not be sworn statements of alleged co-conspirators, or naked inconsistencies in their own accounts impugn the deponents’ testimonies. The areas where Plaintiffs do have something “other than speculation about the substance” of the talks are the public announcements where Defendants allegedly signaled to their coconspirators and used analysts as conduits for their messages. Text Messaging, 46 F.Supp.3d at 806. However, as discussed in the previous section, the substance of these communications is entirely Section consistent III.C.1. with Two independent permissible actions. events – talks See, supra, and price- following – put together does not transmogrify into conspiracy. 3. Incriminating Words Suggesting Agreement Plaintiffs try again, this time pointing to Defendants’ own words not as evidence of leaks or signals, but as more direct evidence of an agreement. Defendants’ - 65 - statements incriminate them in this Defendants way were if they aware of show an any of the agreement to following: fix prices; (1) (2) Defendants were exhorting others to join an agreement; or (3) Defendants were manifesting assent to an agreement. Fructose, 295 F.3d at 654, 662-63. See, High In contrast, Defendants’ statements do not run afoul of antitrust law if they merely express the speakers’ awareness that they shared an economic interdependence with their fellow competitors. After all, since it is legal to act as a tacitly colluding oligopolist, it cannot be illegal – or evidence of illegal conduct – to say one is acting or ought to act as a tacitly colluding oligopolist. Put differently, since Defendants may take independent actions in recognition of interdependence “their with shared respect economic to price interests and output and their decisions,” they may also say that they recognize their “shared economic interests and their interdependence with respect to price and output decisions.” Viewed in Brooke, 509 U.S. at 227. this light, the supposedly incriminating statements that Plaintiffs highlight appear “as consistent with permissible Matsushita, competition 475 U.S. at as with 587-88. The illegal most conspiracy.” damning statement Plaintiffs have culled from the extensive record appears in a 2005 Westrock document. It says: - 66 - “Pricing is between competitors, the customer has little to do with the outcome.” ECF No. 1225, Ex. 9. From this, Plaintiffs would have the Court infer that Westrock, as well as other Defendants, did price with their competitors. The Court cannot do so for several reasons. First, the document has little probative value with regard to any Defendant other than Westrock since there is no evidence that any other Defendant was even aware of, much less adopted, the statement. Second, it is not certain that the document can implicate even Westrock. not The document predates Westrock’s bankruptcy and was prepared by Westrock’s employees, coming presentation by a third-party consulting company. not clear what the statement actually conveyed. instead from Third, it is Insofar as the quotation suggests that large players in a concentrated industry can affect the market price, that is neither untrue nor anything that has not publicly been said. If, instead, the statement constitutes advice to Westrock to price “between competitors,” then its meaning is as consistent with a message to collude tacitly as it is to conspire. In particular, the Court sees nothing in the statement to suggest that it should be read as “enter into an agreement with your competitors to fix prices,” as opposed to, “price as your competitors do.” - 67 - Nor do Plaintiffs much advance the ball by pointing to Defendants’ use of the words “discipline,” “rationalization,” or “good behavior.” According “rationalization” refer to to Plaintiffs, supply “discipline” restrictions, while and “good behavior” indicates that Defendants are exercising “discipline.” But for the same reason that independently restricting supply is not unlawful, it is not unlawful for Defendants’ employees to talk about doing so either. Of course, if Defendants had crossed the line into encouraging their competitors to exercise discipline, then their talk would become actionable conduct (or at least indicate that a conspiracy was afoot). is no evidence that this happened. that Plaintiffs “discipline,” have internal documents. these documents pontificated on Defendants etc. only in discussed their own, There is no evidence that Defendants shared with the In the voluminous record introduced, “rationalization,” However, there their competitors desirability of or otherwise industry-wide publicly discipline. Defendants’ words thus never strayed into territory suggesting agreement. Cf. In re Domestic Airline Travel Antitrust Litig., 221 F.Supp.3d 46, 62-63 (D.D.C. 2016) (“Defendants made public statements about their own commitment to capacity discipline as well as the importance of maintaining the capacity discipline within the industry. Defendants’ discussion of the need for - 68 - capacity discipline within the industry as a whole is notable because it involves more than a mere announcement of Defendant’s own planned course of conduct.”). It is true that there is hearsay evidence that GeorgiaPacific’s CEO gave a presentation in which he told the audience that the industry must “not make agreements where customers receive all of the benefits and the suppliers are not paid for any of it” and must “learn to say ‘no’ on deals when they are not profitable.” the ECF No. 1230 at 79. presentation, proffered evidence and the that the newspaper CEO made A newspaper reported on clipping the is comment. Plaintiffs’ Georgia- Pacific is correct that the newspaper clipping is hearsay. See, Eisenstadt v. Centel Corp., 113 F.3d 738, 742 (7th Cir. 1997) (finding a newspaper article to be hearsay, or “an out-of-court statement offered to prove the truth of its contents – to prove, that is, that Centel or its investment bankers made the comments attributed to them”). Moreover, Plaintiffs have not offered a hearsay exception to allow the evidence to be considered. Id. (stating that, with some exceptions not applicable here, “hearsay is inadmissible in summary judgment proceedings to the same extent that it is inadmissible in a trial”). The Court nonetheless puts all this aside and asks whether the comments, - 69 - assuming that Georgia-Pacific’s CEO made them, allow for an inference of conspiracy. The Court concludes that they do not. The CEO’s comments do not rise to a level where they constitute an offer to enter an agreement to fix prices. 654. See, High Fructose, 295 F.3d at Instead, the comments reflect what firms in the industry likely all knew and what this Court, and others, have said: there is a trade-off between price and volume. If firms want to raise prices, they have to produce less, sell less, and thereby say “no” to customers. It should not be a mark of conspiracy to say what is true, already known by the audience, and articulated by countless third-party analysts, academicians, and jurists alike. The Court is further persuaded by the fact that the CEO made this comment as part of a public speech given at a trade association made up primarily of customers. While it is the case that “Defendants cannot rely on the public or semi-public nature of trade meetings to immunize their statements from antitrust scrutiny,” Standard Iron, 639 F.Supp.2d at 897 (citing Richard A. Posner, Antitrust Law (2d ed. 2001), at 170), the context of a statement aids in its interpretation. In determining whether certain words shade towards an inference of illegal conduct or innocuous behavior, the Court may consider - 70 - the forum in which they were uttered. nature of the speech and the In this case, the public likely audience make it unreasonable to think of the statement as an offer to conspire. After six years of extensive discovery, more than a hundred depositions, and millions of documents produced in discovery, the statements that Plaintiffs were able to gather simply are not incriminating. compares these This is all the more evident when the Court statements to those found in cases where the courts have ruled that summary judgment was inappropriate. In High Fructose, for instance, the Seventh Circuit reversed the lower court’s grant of summary judgment when the record showed that the defendants had said things like “[w]e have an understanding within the industry not to undercut each other’s prices”; “our competitors are our friends”; and “every business I’m in is an organization,” whereby “organization” appeared to mean “price-fixing conspiracy.” High Fructose, 295 F.3d at 662- 63 (internal quotation marks omitted). See also, Flat Glass, 385 F.3d at 363 (reversing a grant of summary judgment when, among other things, one of the defendants had previously made an “assertion that there was an ‘across the board’ agreement to increase prices”); (discussing the Sulfuric various Acid, statements 743 F.Supp.2d referencing an at 858-59 “agreement” between the defendants); Titanium Dioxide, 959 F.Supp.2d at 829 - 71 - (noting, inter alia, a statement to the effect that “we have competition on board for the Oct 1 price increase announcement”) (internal quotation marks omitted). Plaintiffs’ evidence falls far from such powerful, incriminating statements. To recap, the Court has now considered the evidence, economic and non-economic alike, that must “‘tend[] to exclude the possibility’ independently.” that the Matsushita, alleged 475 U.S. conspirators at 588. acted Despite the abundance of evidence and the favorable light in which it is viewed, the inference of independent action remains as reasonable, if not more so, than that of conspiracy. D. Indeed, when The Evidence That Was Not There the Court considers the evidence that is missing from the case, conspiracy becomes the less likely of the competing inferences. In an alleged conspiracy that spanned six and a half years, involved seven Defendants of varying sizes and strategic positions, included fifteen price increase attempts during both years of prosperity and recession, and subsumed wide variations in how quickly or willing Defendants were to follow a price increase or reduce their supply, there is no evidence of a single instance in which a Defendant was punished for deviating from the conspiracy. - 72 - In fact, there is no evidence of a punishment mechanism at all. for This is troubling to Plaintiffs’ case for cartelization, “[g]ame absent theory some teaches enforcement us that a mechanism cartel cannot because incentives to cheat are too great.” survive otherwise the Petruzzi’s, 998 F.2d at 1233 (citing Richard A. Posner, Economic Analysis of Law, 265-66 (3d ed. 1986); George J. Stigler, A Theory of Oligopoly, in The Organization Matsushita, prices in of 475 Industry U.S. turns depends conspirators. . . .”); (crediting the at 39, 592 on (1968)); (“Maintaining the Titanium parties’ 42-44 continued Dioxide, position that also, supracompetitive cooperation 959 “a see F.Supp.2d credible of the at 817 punishment mechanism to penalize cheaters is an important component of a cartel”) (internal quotation marks omitted). A punishment mechanism is crucial for another reason as well: it helps to distinguish illicit express collusion from lawful tacit collusion. With express collusion, there is prior agreement to act a certain way; with tacit collusion, there is only expectation or hope that a competitor will act, and fear that it will not. When there is See, Text Messaging, 782 F.3d at 876, 879. agreement and a conspirator breaches the agreement, one would expect punishment to follow; when there is only flimsy hope and the always-present fear, punishment seems - 73 - less likely. With no punishment, or even a mechanism to punish, the inference tends toward no agreement. Plaintiffs attempt to excuse the lack of evidence, not just on this point but also more generally, by arguing that Defendants are experienced with antitrust litigation and so know to destroy evidence. The Court cannot credit such a position, especially given that the evidence to support it is ambiguous at best and Plaintiffs have had extensive discovery to uncover even that which Defendants wish to hide. Court does not know what to do More pragmatically, the with wholesale evidence has been destroyed. the contention that What should the Court assume has been gotten rid of during the six and half years of conspiracy? How devastating should shredded evidence to have been? the Court speculate the This is not a case where a single document, or even several related documents, are alleged to have been destroyed, and the Court could make an adverse inference as to what the missing evidence would have shown. Cf. Text the Messaging, allegation is 782 that F.3d at several 873 emails (noting have that, been where deleted, “the plaintiffs would be entitled to have the jury instructed that it could consider the deletion of the emails to be evidence (not conclusive of course) of the defendants’ . - 74 - . . guilt”). An adverse inference would be meaningless where, as here, there is no anchor as to what the Court should be inferring. In sum, when the Court considers both the evidence that has been presented and that which is missing, Plaintiffs’ case falls even further from the mark necessary to survive summary judgment. E. Before it shuts The Evidence as a Whole the door on this litigation, the Court takes a step back and looks at Plaintiffs’ conspiracy claim and the evidence supporting it as a whole. See, e.g., Omnicare, 629 F.3d at 720 (examining the evidence in toto). In particular, the Court asks how the claim measures up to precedents from this circuit. See, Chocolate, 801 F.3d at 412 (adopting a similar approach). The most relevant Seventh Circuit authorities with which to compare this case are High Fructose and Text Messaging. These two Plaintiffs’ cases own are matter. factually Both and cases legally involved antitrust claim at the summary judgment stage. in both matters, structure was as here, “conducive operated to in successful an similar a Section to 1 The defendants industry collusion.” whose Kleen Prods., 831 F.3d at 927-28; High Fructose, 295 F.3d at 656-57 (taking note of the fact that the high fructose corn syrup (HFCS) market had “few sellers,” that defendants accounted for - 75 - “90 percent of the sales of the product,” and that the product was “highly standardized” and had “no close substitutes”); Text Messaging, 782 F.3d at 871-72 (similar). In both cases, the defendants made parallel price increases (although the pattern was tighter in High Fructose) and took actions that were argued to be against their self-interest. See, High Fructose, 295 F.3d at 659 (“There is evidence that defendants bought HFCS from one another even when the defendant doing the buying could have produced the amount bought at a lower cost than the purchase price.”); Text Messaging, 782 F.3d at 871 (noting “the seeming anomaly of a price increase in the face of falling costs”). Yet High Fructose and Text Messaging resulted in divergent outcomes. lower Judge Posner, who wrote both opinions, reversed the court’s grant of summary defendants in High Fructose. judgment in favor of the Thirteen years later, he affirmed a similar grant in Text Messaging. Whatever are the differences that drive the different outcomes in the two cases, they are not the economic evidence. As Judge Posner acknowledged in High Fructose, the decision to reverse the lower court’s grant of summary judgment in that case was not based on the economic evidence since “all of this evidence is consistent with the hypothesis that [the defendants] had a merely tacit agreement, which at least for purposes of - 76 - this appeal the plaintiffs concede is not actionable under section 1 of the Sherman Act.” High Fructose, 295 F.3d at 661. Moreover, the non-economic evidence of conspiracy was at points stronger in Text Messaging, the case in which the Seventh Circuit affirmed summary judgment in favor of the defendants. For instance, the Text Messaging plaintiffs had brought evidence regarding opportunities to conspire that was absent from High Fructose. In particular, the Text Messaging complainants, like Plaintiffs in this case, pointed to “the trade association of which the defendants were members” and argued that they “were forums in which officers of the defendants met and conspired to raise [] prices.” Text Messaging, 782 F.3d at 878. The Seventh Circuit credited this evidence, but ultimately found that it offered “insufficient collusion.” support for the charge of express Id. at 878-79. Nonetheless, the non-economic evidence in High Fructose won the case for the plaintiffs, and the crucial piece of evidence came from words, the what the evidence defendants to show had said. “that there In Judge was an Posner’s explicit agreement to fix prices” consisted of things like: One of Staley’s HFCS plant managers was heard to say: “We have an understanding within the industry not to undercut each other’s prices.” - 77 - A Staley document states that Staley will “support efforts to limit HFCS pricing to a quarterly basis.” Presumably the reference is to efforts by its competitors. The president of ADM stated that “our competitors are our friends. Our customers are the enemy.” A director of Staley was reported to have said that “every business I’m in is an organization” . . . [where] it appears that “organization” meant pricefixing conspiracy. High Fructose, 295 F.3d at 662-63 (emphasis and alteration marks removed). As such, the evidence that cost the High Fructose defendants so dearly was their loose lips. The defendants in Text Messaging did not make such incriminating statements, and the grant of summary judgment to them was appropriate. See, generally, 295 F.3d 867. The Court concludes that Messaging than High Fructose. this case lies closer to Text Here, like in Text Messaging but unlike High Fructose, Defendants have said nothing that can be reasonably construed as acknowledgment of an agreement. supra, Section III.C.3. the dispositive Fructose, then If, as appears to be the case, this is difference the See, Court between should Text grant Messaging summary and High judgment for said, what consistent with Defendants on this basis alone. More Defendants still, in besides this case what they have done - 78 - have is (not) “as permissible competition as with illegal conspiracy” and their conduct cannot “support an inference of antitrust conspiracy.” Matsushita, 475 U.S. at 587-88. In particular, Plaintiffs have adduced no evidence that Defendants took actions that they would have refrained from but for the fact that they were conspiring. This is true whether the Court looks at the price increases, the accompanying supply reductions, or the timing of those actions as correlated to various communications. “[Z]ero plus zero equals zero,” and for something more to be added to that equation, it must be some quantum of probability more unlikely for Defendants to have done all of the things they did, absent agreement, than for them to have done any one of those things. High Fructose, 295 F.3d at 655. But in this case, the supply reductions add no implausibility to the price increases, since one cannot sell for more without selling less. The timing of the actions also proves to be of little value, as Defendants seem to have talked all the time, and Plaintiffs either have no evidence of what was said or were forced to resort to statements that constituted nothing more than Defendants’ articulation of the economic reality of their industry. Plaintiffs have amassed a wealth of evidence, but the evidence is only such that it’s “absence would tend to negate - 79 - both” express and tacit collusion but its “presence [did] not point unerringly to express collusion.” F.3d at 87. lawful Indeed, in light of the competing inference of behavior, the express collusion. to Defendants. Text Messaging, 782 evidence did not point reasonably to Summary judgment must therefore be granted See, Omnicare, 629 F.3d at 720-21; Weit, 641 F.2d at 464 (“When a District Court has afforded the parties [] years of unlimited discovery, the parties have designated the evidence on which they will rely at trial, and the Court has had an opportunity to review the evidence and concludes that no reasonable jury could return a verdict for plaintiffs, judicial economy mandates that summary judgment be entered.”). This case highlights the difficulty of attempting “to prove illegal collusion without witnesses Messaging, 782 F.3d at 879. to an agreement.” Text Most of all, it accentuates the limit of the Sherman Act, which “imposes no duty on firms to compete vigorously, or for that matter at all.” Id. at 873. The Act allows Defendants to engage in anticompetitive behavior and requires only that they do so without prior agreement. Id. at 876 (“[I]t 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) and fearing the consequences if they do not.”). - 80 - The law thus only requires Defendants to competitors. gamble on the the of trusting their The gamble paid off in this case. III. For consequences reasons stated CONCLUSION herein, Defendants’ Motions Summary Judgment [ECF Nos. 1086 and 1088] are granted. for The Cross Motions for Partial Summary Judgment [ECF Nos. 1114 and 1138] are denied as moot, as are the Motions for Daubert and summary judgment hearings [ECF Nos. 1272 and 1273]. IT IS SO ORDERED. Harry D. Leinenweber, Judge United States District Court Dated: August 3, 2017 - 81 -

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