Court Denies Summary of Judgment on Plaintiff’s “Weak” Case

Recently, the U.S. District Court for the Western District of Pennsylvania held that a plaintiff’s alleged antitrust conspiracy could go to the jury, denying the defendants’ motion for summary judgment. The court held that “although the evidence tending to exclude independent conduct is weak,” the duty to weigh competing inferences is the province of the fact-finder and summary judgment was not appropriate. Despite the risk to the defendants of the jury misconstruing lawful parallel activity as evidence of a conspiracy, the court denied the defendants’ motion for summary judgment. The did so even though after considering the plaintiff’s and defendants’ respective proffers, the court was “left with the occasional impression that Plaintiff ‘proceeded by first assuming a conspiracy and then setting out to prove it.’”1

Plaintiff’s Claims

The plaintiff in Jeld-Wen, Inc. v. AGC America, et al.2 opted out of a class action settlement against construction flat glass manufacturers that had alleged that the defendants agreed to set prices for a period lasting from June 2002 through February 2005, when the European Commission raided a number of European construction flat glass manufacturers.3 The class plaintiffs’ complaint specifically alleged in part that prior to the start of the alleged conspiracy, there was a history of price competition, including defendants’ failing to maintain higher prices and varying surcharges by region; but that defendants subsequently agreed to “rais[e] prices by identical percentages and charg[e] energy surcharges in virtual lockstep while providing customers with identical charts and justifications for the same.” Their complaint also alleged that the lockstep parallel conduct ceased immediately after the raids in Europe.4 Jeld-Wen alleged similar facts in its opt out case.5

Summary Judgment Standard in Antitrust Cases

To survive a motion for summary judgment, plaintiffs must produce evidence “that tends to exclude the possibility that the alleged conspirators acted independently;” moreover, in judging whether the plaintiff’s evidence is sufficient, “antitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case.”6 In a prior case related to a separate alleged flat glass price-fixing conspiracy, the Third Circuit noted that these standards for antitrust cases are in place to “avoid deterring innocent conduct that reflects enhanced, rather than restrained, competition.”7 As other courts have noted, antitrust law does not place special burdens on plaintiffs facing a Rule 56 Summary Judgment motion. The court’s role in such a motion should be to determine whether the plaintiff’s inference is plausible, i.e. whether the parties have drawn “reasonable, and therefore permissible” inferences.8

In this case, the defendants’ motion for summary judgment argued that the plaintiff failed to present evidence compelling an inference of conspiracy, as opposed to lawful parallel conduct.  It is hornbook law that conscious parallelism, standing alone, is not sufficient for an inference of conspiracy.9  Courts have noted that in an oligopoly, consciously parallel price-setting is common; in concentrated industries, any individual actor must take note of its competitors’ possible responses to any strategic decision.10 The risk of a court or jury erroneously finding agreement rather than conscious parallelism has been termed the “oligopoly problem,”11 and is heightened in a market such as construction flat glass where a small group of defendants controls 75% of the United States market.12 The defendants claimed that their conduct was a product of “oligopolistic interdependence,” where the defendants individually recognized “their shared economic interests and their interdependence with respect to price and output decisions.”13

Standard for Unlawful Conscious Parallelism

Against this background, the court held that plaintiffs were required to show that 1) defendants’ behavior was parallel; 2) defendants were aware of each other’s conduct and this awareness was an element in their decisionmaking;14 and 3) plus factors showing that “rational independent choice is less attractive than concerted action.”15Potential “plus” factors may include motive to enter into a price fixing conspiracy, evidence of action contrary to defendants’ interests, evidence of inappropriate contact between defendants, or the use of facilitating practices such as information exchange.16

The Court Denies Summary Judgment

In this case, the court denied summary judgment, finding that plaintiffs had presented sufficient facts to allow the case to go before a jury. The court noted that “it is apparent that much of Plaintiff’s evidence, and the inferences arising therefrom, are weak,” and that none of the pieces of evidence by itself tends to exclude independent behavior; but considering the evidence as a whole, and not “compartmentalizing” the evidence, the “constellation of facts” suggested by the evidence could be reasonably interpreted by a jury to show evidence of an agreement to fix prices.17

The court found no direct evidence of conspiracy. But the court’s decision to allow the jury to decide was a result, in part, of evidence showing the tendency of the flat glass industry to maintain supracompetitive prices,18 the undisputed facts of the defendants’ parallel price increases, meetings between defendants, and the plaintiff’s expert testimony. The court’s conclusion was also based on documents that suggested that prices rose even though the defendants perceived declining prices and weak economic indicators, and later documents that suggested the defendants had excess capacity that remained unutilized despite what plaintiffs claimed to be high prices.19

The court noted the defendants’ arguments that price increases were justified by economic conditions, and that the documents proffered by plaintiffs might have plausible alternate explanations, but found that such explanations were not enough to negate the remaining evidence considered as a whole. The court, judging the balance between assessing whether plaintiff met its burden of raising a reasonable inference and the danger that lawful unilateral – but parallel – conduct be misinterpreted by a jury as conspiracy, found that the balance tipped against summary judgment.20 The court held that given the evidence presented, finding in favor of the defendants would have impermissibly placed the court in the position of the fact-finder weighing the competing inferences presented by the parties.

Will Courts Defer to Plaintiffs in Close Cases on Summary Judgment?

Many of the “plus factors” noted by the court – industry conditions, meetings between competitors, parallel price increases, and an expert’s opinion that defendants colluded (countered by the defendants’ expert) – appear to be the sort of circumstantial evidence that courts have often identified as individually insufficient proof of collusion. The court here considered all of the evidence together, however, and allowed all of that evidence to go to the jury.

The court’s conclusion was based in part on Judge Posner’s opinion in In re High Fructose Corn Syrup Litigation (HFCS), in which Judge Posner identified “traps” suggested by the defendants’ motion for summary judgment, including 1) stepping into the jury’s role as fact-finder; and 2) finding that if no single piece of evidence points to conspiracy, then the evidence as a whole cannot defeat summary judgment.21  In particular, the HFCS court noted that the defendants’ arguments of uncontradicted testimony were misleading and inconsistent with the “abundant” overall evidence of conspiracy.22 In Jeld-Wen, the court repeatedly noted that the plaintiff’s claims were “weak” or that they had assumed the existence of a conspiracy, then set out to prove it. The court nevertheless relied heavily on Judge Posner’s warning to avoid “traps” in summary judgment motions and held that the evidence offered by the plaintiffs and defendants presented sufficient competing inferences that it was the jury’s role to interpret the evidence as fact-finder.

This decision shows the burden that antitrust defendants may face when bringing a motion for summary judgment, and how dependent the defendants’ chance are on the judge handling the case.  In some cases, even when a plaintiff’s case is “weak” as noted by the court, its claims may still survive summary judgment and be presented to a jury if they can present sufficient evidence that “tends to exclude” the possibility of independent, parallel action. The key question is how much evidence is “sufficient.” The court in Jeld-Wen was swayed by Judge Posner’s admonition in HFCS to avoid the “trap” of usurping the jury.  But HFCS predates the Supreme Court’s Twombly23 decision.  While Twombly was a decision bearing on the standard for dismissal of an antitrust complaint, the Court’s concern with competing inferences is equally applicable to the summary judgment stage. Twombly discussed what plaintiffs must show to meet this standard – evidence tending to show “parallel behavior that would probably not result from chance, coincidence, independent responses to common stimuli, or mere interdependence unaided by an advance understanding among the parties.”24 Cases like this one are complicated by the fact that lawful, consciously parallel behavior can result in precisely the same supra-competitive pricing as that created by an illegal conspiracy.25 Thus, courts “have been cautious in accepting inferences from circumstantial evidence in cases involving allegations of horizontal price-fixing among oligopolists.”26

Nevertheless, and notwithstanding Twombly, the fact that the industry was highly concentrated and that the defendants had meetings were important to the court.  Some of the alleged meetings, which were nominally to discuss industry issues such as patent or technology issues, coincided with announcements of price increases.  The plaintiffs also alleged that there were “secret” meetings about which notes were not kept.27  Commentators have noted that the “plus factors” have, in some cases, been applied as an “evidentiary catchall,” when plaintiffs allege “a constellation of pieces of evidence that, taken as a whole, create the necessary inference,28 although this treatment of “plus factor” evidence predates Twombly and may not meet its heightened standards.29 When, however, there are meetings among the defendants and documents that tend to support the plaintiffs’ theory, even if those documents may be rebutted by other evidence from the defendants, some courts may find that a “weak” case will be sufficient to survive a motion for summary judgment.

This decision will likely be appealed by the defendants and will be worth following. As the court noted, this was a close case and the defendants could have been granted summary judgment. The Third Circuit has usually been willing to give plaintiffs some leeway but the Supreme Court’s more stringent requirements for pleading and proof of conspiracy will also be relevant.

Endnotes    (↵ returns to text)
  1.  Jeld-Wen, Inc. v. AGC America, et al., No. 11-cv-00658 (W.D.Pa.).
  2.  No. 11-cv-00658 (W.D.Pa.).
  3.  In re Flat Glass Antitrust Litigation (II), 2009 WL 331361 (2009).
  4.  Id.
  5.  Response to Defendant’s Motion for Summary Judgment, Dkt. No. 74, No. 11-cv-00658 (W.D.Pa., Filed 7/11/2012).
  6.  Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).
  7.  Nelson v. Pilkington PLC (Flat Glass I), 385 F.3d 350, 357 (3d Cir. 2004).
  8.  In re Ethylene Propylene Diene Monomer Antitrust Litig., 681 F. Supp. 2d 141, 167-68 (D. Conn. 2009).
  9.  Theatre Enterprises v. Paramount Film Distributing Corp., 346 U.S. 537 (1954).
  10.  Flat Glass I, 385 F.3d at 359.
  11.  Id.
  12.  In re Flat Glass (II), 2009 WL 331361 (2009).
  13.  Jeld-Wen, No. 11-cv-00658 (W.D.Pa. 11/1/2012).
  14. Jeld-Wen, No. 11-cv-00658 (W.D.Pa. 11/1/2012) (citing Flat Glass I, 385 F.3d at 360 n. 11).
  15.  Id. (quoting Lum v. Bank of Am., 361 F.3d 217, 230 (3d Cir. 2004).
  16.  Jeld-Wen, No. 11-cv-00658 (W.D.Pa. 11/1/2012)
  17. Jeld-Wen, No. 11-cv-00658 (W.D.Pa. 11/1/2012).
  18.  Id., (citing Flat Glass I, 385 F.3d at 361 (3d Cir. 2004).
  19.  Jeld-Wen, No. 11-cv-00658 (W.D.Pa. 11/1/2012).
  20. Id.
  21.  295 F.3d 651 (7th Cir. 2002).
  22.  Id. at 655.
  23.  Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
  24.  Twombly, 550 U.S. at 557 n. 4
  25. Flat Glass I, 385 F.3d at 357-59  (3d Cir. 2004).
  26.  Id. At 358.
  27.  Response to Defendant’s Motion for Summary Judgment, Dkt. No. 74, No. 11-cv-00658 (W.D.Pa., Filed 7/11/2012).
  28. William H. Page, “Communication and Concerted Action,” 38 Loy. U. Chi. L.J. 405, 416-17 (2007).
  29.  See, e.g., Twombly, 550 U.S. at 565 n.11; See also In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 349 (3d Cir. 2010).
Joseph Adamson

Joseph Adamson