Evergreen Partnering Group v. Pactiv Corporation

United States Court of Appeals
For the First Circuit
No. 15-1839
EVERGREEN PARTNERING GROUP, INC.,
Plaintiff, Appellant,
MICHAEL FORREST,
Plaintiff,
v.
PACTIV CORPORATION; SOLO CUP COMPANY, a corporation;
DOLCO PACKAGING, a Tekni-Plex Company, a corporation;
DART CONTAINER CORPORATION;
AMERICAN CHEMISTRY COUNCIL, INC., an association,
Defendants, Appellees,
GENPAK, LLC., a/k/a Genpack, LLC,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Howard, Chief Judge,
Torruella and Barron, Circuit Judges.
Richard Wolfram, with whom Jan R. Schlichtmann, Orestes G.
Brown and Metaxas Brown Pidgeon LLP, were on brief, for appellant.
John M. Faust, with whom Law Office of John M. Faust, PLLC,
William E. Lawler, III, Ralph C. Mayrell and Vinson & Elkins LLP,
were on brief, for appellees Dart Container Corporation and Solo
Cup Company.
Steven M. Cowley, with whom Duane Morris, LLP, was on brief,
for appellee Dolco Packaging.
Richard A. Sawin, Jr., Richard E. Bennett and Michienzie &
Sawin LLC, on brief for appellee Pactiv Corporation.
Ralph T. Lepore, III, Michael T. Maroney, Benjamin M.
McGovern, Scott A. Moore and Holland & Knight LLP, on brief for
appellee American Chemistry Council.
August 2, 2016
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TORRUELLA, Circuit Judge. Plaintiff-Appellant
Evergreen Partnering Group, Inc. ("Evergreen") appeals a summary
judgment from the United States District Court for the District of
Massachusetts against its Sherman Act section 1, 15 U.S.C. § 1,
claim. Under its business model, Evergreen collected used
polystyrene products, processed them into a recycled polystyrene
resin ("recycled resin"), and sold its resin to converters to use
in a "green foam" line of products. According to Evergreen, the
five largest converters of polystyrene products -- Dart Container
Corporation ("Dart"), Dolco Packaging ("Dolco"), Genpak, LLC
("Genpak"), Pactiv Corporation ("Pactiv"), and Solo Cup Company
("Solo") -- through the trade association American Chemistry
Council ("ACC") (hereinafter referred to collectively as "the
defendants") refused in concert to deal with Evergreen in order to
prevent polystyrene recycling from becoming viable and maintain
their respective market positions. 1 On summary judgment, the
district court concluded that Evergreen failed to present evidence
that tended to exclude the possibility that each polystyrene
manufacturer independently chose not to partner with Evergreen as
required by Matsushita Electric Industrial Co., Ltd. v. Zenith
1 Although Genpak was a defendant in this case, it is not an
appellee. Genpak settled with Evergreen prior to summary
judgment.
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Radio Corp., 475 U.S. 574 (1986). We agree with the district
court's reasoning and affirm.
I.2
A. Industry Overview
Michael Forrest founded Evergreen in 2000. Prior to the
advent of Evergreen, other companies tried to recycle polystyrene
products but had difficulty turning a profit. Evergreen
envisioned that it could succeed where others had failed by
obtaining revenue from three different sources.
2 The facts in this case are taken from the defendants' Local
Rule 56.1 Joint Statement of Undisputed Material Facts, the
Plaintiff's Corrected Local Rule 56.1 Statement of Material Facts,
and, when appropriate, the record. The defendants argue we should
accept all of their facts as true because Evergreen failed to file
a paragraph-by-paragraph response, instead providing its own
counterstatement of the facts. Massachusetts Local Rule 56.1 does
not require paragraph-by-paragraph rebuttal. See McGrath v.
Tavares, 757 F.3d 20, 26 n.10 (1st Cir. 2014). It is sufficient
for the party opposing summary judgment to file a statement of
facts it believes are still under dispute. See id. (finding
plaintiff complied with Local Rule 56.1 by filing own statement of
disputed material facts because "[t]he District of Massachusetts
simply requires '[the] party opposing [a motion for summary
judgment] . . . include a concise statement of the material facts
of record as to which it is contended that there exists a genuine
issue to be tried, with page references to affidavits, depositions
and other documentation.'" (alteration in original) (quoting D.
Mass. L. R. 56.1)). We follow the district court's approach of
accepting any of the defendants' facts Evergreen fails to contest,
but consider any evidence Evergreen has cited as creating a dispute
and draw all reasonable inferences in Evergreen's favor. See
Cochran v. Quest Software, Inc., 328 F.3d 1, 12 (1st Cir. 2003).
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First, Evergreen would charge an "environmental fee" to
large end users (such as school districts that used polystyrene
food trays in their cafeterias) for collecting their used
polystyrene products. Because these institutions often paid waste
disposal fees to transport their used polystyrene products to
landfills, Evergreen believed they would be willing to pay the
environmental fee. After collecting the used polystyrene
products, Evergreen would transport them to its recycling plants
to process into a recycled resin. Selling this recycled resin to
polystyrene converters would form the basis of Evergreen's second
revenue stream. These converters would use Evergreen's resin to
create new polystyrene products and sell them to customers. As
its third revenue stream (and of particular relevance to its
lawsuit), Evergreen sought to charge converters a commission on
the products sold containing its resin. Evergreen hoped the
commission would keep the price of its resin competitive with
virgin resin and believed the commission reflected the market's
willingness to pay a premium for "green" products. Evergreen also
believed its green foam products would bring the converters new
customers because many of the suppliers of the used polystyrene
products would also be interested in purchasing recycled products.
In furtherance of its goal to produce recycled resin,
Evergreen began setting up its first independent recycling plant
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in Norcross, Georgia, in February 2005. 3 Starting in 2006,
Gwinnett County Public Schools ("Gwinnett Schools"), also in
Georgia, began paying Evergreen to collect its used polystyrene
lunch trays.4
At the same time, Evergreen sought out partnerships with
polystyrene converters. Between 2002 and 2005, Evergreen reached
out to several small polystyrene converters but had little success.
Evergreen then began targeting what it believed to be the five
main national polystyrene converters -- Dart, Dolco, Genpak,
Pactiv, and Solo -- the defendants in this case.
Early on, Dolco and Genpak showed interest in working
with Evergreen. In July 2005, Forrest approached Dolco's General
Manager for the Midwest Division, Norman Patterson, about the
distribution company Sysco's interest in an "Earth Plus" product
line containing Evergreen's resin. Initially, Patterson appeared
receptive and representatives from Sysco, Dolco, and Evergreen met
3 Prior to 2005, Evergreen operated using a slightly different
business model with Boston Public Schools. Participating schools
collected their polystyrene products and processed them into resin
using Evergreen's equipment. Evergreen then purchased this resin
and sold it to polystyrene converters who (with Evergreen's
assistance) used the pellets to make new polystyrene products.
4 Also starting in 2006, Evergreen collected trays from several
other southeastern United States school districts as well as the
Publix grocery store chain. None of these customers ever
purchased products made using Evergreen's recycled resin.
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about a possible deal in November 2005. Dolco made a formal
proposal to Sysco in December and told Evergreen it would be
willing to pay a royalty to use its recycled resin as long as the
relationship could be profitable. Sysco, however, eventually
backed out and the deal fell through.
Additionally, towards the end of 2006, Evergreen met
with Genpak. Genpak began making lunch trays with Evergreen's
resin and submitted a bid to Gwinnett Schools (who was already
paying Evergreen to remove their trays) to supply it with trays
for the 2007-2008 academic year. Gwinnett Schools subsequently
selected Genpak's $16.97 per case bid over Pactiv's $18.97 per
case bid.5
B. The Alleged Conspiracy6
In 2007, Forrest approached Genpak's president, Jim
Reilly, about financing a new Evergreen recycling plant in
California as well as upgrades to Evergreen's Norcross facility.
5 Despite the savings Gwinnett Schools received from having
Evergreen remove its trays, it did not factor this in to its
calculations when selecting a bid. Gwinnett Schools officials
explained that they were obligated to select the lowest bid.
6 Before the district court, Evergreen alleged an alternative
starting date, March 18, 2005, for the conspiracy. The district
court rejected this argument and Evergreen has not advanced it on
appeal. We therefore focus our analysis exclusively on the May
31, 2007, conference call conspiracy claim.
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Reilly told Forrest he should submit his funding proposal to the
Plastics Foodservice Packaging Group ("Plastics Group").
The Plastics Group is a subgroup of the ACC that focused
on promoting plastic foodservice packaging. All five of the
converter defendants were members of the Plastics Group at one
time or another. By 2007, the Plastics Group was particularly
concerned with local and state initiatives to ban polystyrene
products due to the perception that polystyrene was not recyclable.
On May 14, 2007, the Plastics Group held a conference
call with Forrest to discuss Evergreen's intention to expand to
California. About a week later, Forrest submitted two proposals
to the Plastics Group's Senior Director, Michael Levy, requesting
that the Plastics Group help Evergreen expand its operations to
California.7
The Plastics Group held a conference call between its
members on May 31, 2007, to discuss Forrest's proposals.
7 In both proposals, Evergreen requested that the Plastics Group
help Evergreen with the start-up costs for a Los Angeles recycling
facility and financing upgrades to the Norcross facility. One
proposal, totaling $500,000, would also have committed the
Plastics Group's members to helping Evergreen with operating and
maintenance costs as well as to paying commissions on products
sold containing Evergreen's resin. The other proposal, totaling
$3.1 million, would have committed the Plastics Group's members to
purchasing all of the recycled resin Evergreen produced. Forrest
later separately sent a third proposal that requested a $500,000
subsidy and a commitment to purchase a set amount of Evergreen's
resin.
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Evergreen alleges that during this conference call, the defendants
not only rejected funding Evergreen's proposals, but also agreed
that no individual converter would enter any deal with Evergreen
that involved the payment of commissions. In addition, Evergreen
alleges that at this meeting the defendants agreed to promote a
sham competitor called Packaging Development Resources of
California, LLC ("PDR") -- a California-based polystyrene recycler
whose business model relied entirely on selling its recycled resin
and had no commission component -- to block Evergreen's access to
polystyrene end users.
C. Events After the Alleged Conspiracy Began
Following the May 31, 2007, conference call, Levy
notified Forrest that the Plastics Group had rejected all of his
proposals. Forrest submitted two additional proposals to the
Plastics Group, which were also rejected. Without funding,
Evergreen did not build a California recycling plant.
In the intervening months, Evergreen continued to
negotiate with the defendants to try to obtain an agreement that
included both the purchase of resin and the payment of commissions.
Genpak and Dolco entered a joint funding agreement with Evergreen
in July 2007, each agreeing to provide Evergreen with $75,000 and
to purchase any "acceptable quality" resin that Evergreen produced
for $0.85 per pound but rejecting any commission requirement.
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Evergreen also began negotiations with Solo. Solo purchased resin
to test in May 2008 but stated it would not accept any deal that
included a commission payment. In addition, Pactiv and Dart
tested samples of Evergreen's resin throughout 2008 and 2009
without reaching an agreement.
Evergreen also found itself largely unable to attract
customers who would pay Evergreen to remove their waste products
or pay a premium for polystyrene products containing recycled
resin. Although Genpak bid to supply Gwinnett Schools with trays
containing Evergreen's resin for the 2008-2009 school year, it
raised its price. Pactiv, in contrast, lowered its bid and won.
No further purchase agreements between Evergreen, Genpak, or Dolco
were executed.
In May 2008, Evergreen shut down its Norcross facility
and opened a smaller recycling plant in Lawrenceville, Georgia.
Evergreen subsequently shut down the smaller plant in October 2008
and ceased operations.
II.
In May 2011, Evergreen and Forrest filed a complaint in
district court alleging that the defendants agreed to boycott
Evergreen in violation of section 1 of the Sherman Antitrust Act,
15 U.S.C. § 1. The district court granted the defendants' motion
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to dismiss, which Evergreen (but not Forrest) appealed to this
court.
We reversed in Evergreen Partnering Group v. Pactiv
Corp. ("Evergreen I"), 720 F.3d 33 (1st Cir. 2013). Our opinion
highlighted several facts that we viewed, if proven, as sufficient
"to establish a context for plausible agreement in the form of
industry information and facilitating practices." Id. at 48.
These facts included Evergreen's allegations that the polystyrene
industry was "highly concentrated"; that the defendants'
membership in the Plastics Group served "as a facilitating
practice"; and that the defendants' behavior appeared to be against
self-interest -- both because Evergreen claimed its business model
was cost-neutral and because PDR was a sham competitor. Id. at
48-50. Accordingly, we vacated and remanded to the district
court. Following discovery, the defendants moved for summary
judgment, which the district court granted. This timely appeal
followed.
III.
The crux of Evergreen's claim is that the defendants
conspired to prevent its recycling model involving commission
payments from becoming viable by universally rejecting any
agreements that involved commissions and blocking its access to
other customers through the promotion of PDR. Evergreen argues
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that these actions constitute a group boycott prohibited by section
1 of the Sherman Act.
"Section 1 [of the Sherman Act] may be violated 'when a
group of independent competing firms engage in a concerted refusal
to deal with a particular supplier, customer, or competitor.'"
Id. at 42 (quoting González–Maldonado v. MMM Healthcare, Inc., 693
F.3d 244, 249 (1st Cir. 2012)). Section 1 "reaches only
'agreements'" and "does not reach independent decisions, even if
they lead to the same anticompetitive result as an actual agreement
among market actors." White v. R.M. Packer Co., 635 F.3d 571, 575
(1st Cir. 2011).
These antitrust principles influence our review on
summary judgment. We review a district court's summary judgment
decision de novo. Id. In order to survive summary judgment, a
plaintiff "must establish that there is a genuine issue of material
fact as to whether [defendants] entered into an illegal conspiracy
that caused [plaintiff] to suffer a cognizable injury."
Matsushita, 475 U.S. at 585-86 (citing Fed. R. Civ. P. 56(e)).
"Where the record taken as a whole could not lead a rational trier
of fact to find for the non-moving party, there is no 'genuine
issue for trial.'" Id. at 587 (quoting First Nat'l Bank of Ariz.
v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).
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"[W]e 'draw[] all reasonable inferences in favor of the
non-moving party while ignoring conclusory allegations, improbable
inferences, and unsupported speculation.'" Alicea v. Machete
Music, 744 F.3d 773, 778 (1st Cir. 2014) (second alteration in
original) (quoting Smith v. Jenkins, 732 F.3d 51, 76 (1st Cir.
2013)). Moreover, "antitrust law limits the range of permissible
inferences from ambiguous evidence in a § 1 case." Matsushita,
475 U.S. at 588. "[A] plaintiff seeking damages for a violation
of § 1 must present evidence 'that tends to exclude the
possibility' that the alleged conspirators acted independently."
Id. (quoting Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752,
764 (1984)). "Such evidence could 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.'" White, 635 F.3d at 577
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 577 n.4 (2007)).
"[C]onduct as consistent with permissible competition as with
illegal conspiracy does not, standing alone, support an inference
of antitrust conspiracy." Matsushita, 475 U.S. at 588.
IV.
Evergreen first claims that the record shows that the
Plastics Group decided during the May 31 call to favor PDR to
Evergreen's detriment, providing unambiguous evidence of
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conspiracy. This in turn, Evergreen argues, bolstered the
inferences that could have been drawn from all of the ambiguous
evidence it presented.
Evergreen relies primarily on a deposition statement
made by Robert Kingsbury of Dow Chemical8 that the Plastics Group
"wanted to pick a winner" during the May 31, 2007, conference call.
Evergreen argues that Kingsbury's statement must be interpreted as
meaning that the Plastics Group intended to pick PDR as the winner
and, conversely, Evergreen as the loser -- i.e., the defendants
agreed to promote PDR to Evergreen's detriment to deny Evergreen
access to end users of polystyrene products.
We agree with the district court that, when read in
context, Kingsbury's statement does not have the meaning Evergreen
ascribes. The full context of Kingsbury's deposition testimony
is as follows:
Q: Did you have any agenda when you were on
the [Plastics Group], as the representative of
Dow, that you favored one company or one idea
over the other?
A: No.
Q: Did you give everybody a fair shot --
A: Absolutely.
Q: -- for their proposals --
8 Dow Chemical is also a member of the Plastics Group. Evergreen
did not name it as a defendant to this suit.
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A: Absolutely.
Q: -- and their submissions?
A: Absolutely. We wanted to pick a winner.
Everybody wants to pick the winning horse.
We do not think Kingsbury's statement about picking a winner can
reasonably -- let alone unambiguously -- be construed as meaning
that the Plastics Group decided to throw its support behind PDR to
Evergreen's detriment during the conference call. In context,
Kingsbury's statement cannot be interpreted as referring to
winners and losers in any kind of anticompetitive sense. Rather,
Kingsbury simply meant that the Plastics Group wanted to support
proposals that would be successful -- i.e., those that would be
successful in combating polystyrene bans by showing that
polystyrene was recyclable.
Our interpretation of Kingsbury's statement is not
changed by other statements cited by Evergreen that it interprets
as showing that Senior Director Levy maneuvered to position PDR
favorably before the May 31 call. Evergreen first claims that in
documents leading up to meeting, Levy described PDR more favorably
as an "opportunity" while Evergreen was referred to as simply
having a "proposal." It also cites an email it views as showing
that Levy instigated the placement of a favorable (and misleading)
story about PDR in a trade newspaper prior to the May 31 call; in
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that same email, Levy stated he wanted to "ease our guys into
getting interested and making contact with . . . PDR." Finally,
Evergreen cites minutes from a March 2007 Plastics Group meeting
stating that it discussed "what to do with [Evergreen]."
Reviewing these documents, we do not think a reasonable
factfinder would view them as supporting an inference of favoritism
towards PDR. With respect to the "opportunity" language, Levy's
correspondence shows that he was still familiarizing himself with
PDR and hoping to learn more about their business. Unlike
Evergreen, PDR, as of May 2007, was not seeking assistance from
the Plastics Group such that it had no formal "proposal" to
consider. The use of the word "proposal," however, made sense
with respect to Evergreen given that Forrest had submitted funding
proposals. Moreover, all of the documents Evergreen points us
toward state that PDR would be discussed at a separate meeting,
and nothing in the record contradicts this.
With respect to the favorable and misleading9 article
about PDR, we note that Evergreen fails to cite any evidence
9 We accept Evergreen's contention that a reasonable factfinder
could conclude the article was misleading. One of PDR's founders,
Tom Preston, stated at his deposition that the article portrayed
PDR as further along in its operations than it was at the time.
Nonetheless, because Evergreen cannot tie this article to the
Plastics Group, let alone cite any facts showing the
misrepresentations were deliberate, we do not find the fact it was
misleading supports an inference of conspiracy.
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showing that anyone from the Plastics Group was involved with the
article. At most, the email Evergreen cites shows that Levy
approved of a non-Plastics Group member's idea to put PDR in touch
with the trade newspaper. Without more, it would be pure
speculation to conclude that the favorable news story about PDR
was intended to sabotage Evergreen.
As to the March 2007 meeting, the full agenda item in
the meeting minutes states, "What to do with [Evergreen], Recycling
Professionals & Timbron regarding these recycling pilot programs
and taking it further? . . . timing? [sic] Or How [sic] do we
make it work as a long term solution." We do not believe a
rational factfinder could conclude that this item suggested the
Plastics Group was considering sabotaging Evergreen. Rather,
these minutes simply state the Plastics Group discussed whether or
not to provide support to several polystyrene recyclers, including
Evergreen.
After reviewing the context surrounding the May 31,
2007, conference call, we do not view Kingsbury's statement as
direct evidence of a conspiracy against Evergreen. Without this
statement, Evergreen's argument that the Plastics Group, in fact,
favored PDR over Evergreen is considerably weakened. Evergreen
claims that the Plastics Group prevented it from obtaining access
to polystyrene end users who could either supply used polystyrene
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products (which Evergreen could recycle into resin) or purchase
polystyrene products containing Evergreen's recycled resin. All
Evergreen cites, however, is evidence that the Plastics Group
introduced PDR to polystyrene users -- there is no evidence that
the Plastics Group discouraged these users from working with
Evergreen, let alone maneuvered to block Evergreen's access. We
note that antitrust laws allow trade associations to make
nonbinding recommendations about businesses and products. See
Consol. Metal Prods., Inc. v. Am. Petroleum Inst., 846 F.2d 284,
292 (5th Cir. 1988) ("We hold that a trade association that
evaluates products and issues opinions, without constraining
others to follow its recommendations, does not per se violate
section 1 when, for whatever reason, it fails to evaluate a product
favorably to the manufacturer."). We do not view the Plastics
Group's action as improper and therefore reject Evergreen's
contention that it presented unambiguous evidence of conspiracy.
V.
Evergreen acknowledges that all other evidence it cites
is not direct but argues that, taken together, this evidence
creates a reasonable inference of conspiracy. Evergreen begins
with citing the fact that each of the converter defendants refused
to pay commissions on any products sold containing Evergreen's
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recycled resin and argues each converter had economic motive to
collude.
We have previously stated that, in the context of price-
fixing schemes, "[m]ere parallelism . . . does not even create a
prima facie conspiracy case." White, 635 F.3d at 580. This
principle is equally applicable to group boycotts -- that is to
say, universal refusals to deal alone are insufficient to support
an inference of conspiracy. Moreover, even if "in isolation, [a]
defendant's refusal to deal might well have sufficed to create a
triable issue," "the refusal to deal ha[s] to be evaluated in its
factual context." Matsushita, 475 U.S. at 587 (citing First Nat'l
Bank of Ariz., 391 U.S. at 277).
Our decision in Evergreen I hinged in large part on our
presumption that the defendants' refusal to deal with Evergreen
was economically irrational. See Evergreen I, 720 F.3d at 50
(citing In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 321-
22 (3d Cir. 2010)). In its complaint, Evergreen alleged that its
model was "cost-neutral," that the commissions it requested were
"standard in the industry," and that "shifting to recycled
polystyrene would have produced abundant savings to customers and
resulted in a higher volume of customer sales due to the
attractiveness of potential savings and environmental benefits."
Id. Evergreen no longer makes any of these contentions. Instead,
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Evergreen argues that the defendants opposed its business model
because the defendants "did not want to pay more for recycled resin
than for virgin resin" and its business model involving commissions
would disrupt the defendants' respective market shares if it became
viable.10
This theory, however, acknowledges that any agreement
with Evergreen would cause the defendants to incur additional
costs. The defendants' desire to avoid these costs is especially
understandable in light of the overwhelming evidence that they
each experienced significant quality problems with Evergreen's
resin. Both Dolco and Genpak, defendants who entered into a
funding agreement with Evergreen, complained to Evergreen that its
resin had a bad odor; Genpak's Patterson also notified Evergreen
10 We decline to address the defendants' argument that Evergreen's
conspiracy claim is economically irrational, which would, in turn,
require Evergreen to present stronger conspiracy evidence. See
Matsushita, 475 U.S. at 596-97 ("Lack of motive bears on the range
of permissible conclusions that might be drawn from ambiguous
evidence: if petitioners had no rational economic motive to
conspire, and if their conduct is consistent with other, equally
plausible explanations, the conduct does not give rise to an
inference of conspiracy."). We acknowledge the defendants' point
that driving a viable recycler such as Evergreen out of business
would be a risky proposition given that some local governments
could respond by banning polystyrene outright. Nonetheless, there
may be a colorable argument that the defendants feared that local
governments would instead mandate the use of recycled products,
and would thus wish to prevent any expensive recycling methods
from becoming viable.
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that its resin had high levels of bacterial contamination.11 Dart,
Solo, and Pactiv also tested Evergreen's resin between 2008 and
2009 and found it did not meet their standards. Where the
challenged conduct is "as consistent with permissible competition
as with illegal conspiracy," a plaintiff "must present evidence
that 'tends to exclude the possibility' that the alleged
conspirators acted independently." Matsushita, 475 U.S. at 588
(quoting Monsanto, 465 U.S. at 764); see also AD/SAT, Div. of
Skylight, Inc. v. Associated Press, 181 F.3d 216, 235 (2d Cir.
1999) (per curiam) (stating where "the challenged conduct of each
. . . defendant is as consistent with the defendant's legitimate,
independent business interests as with an illegal combination in
restraint of trade" a plaintiff must "submit evidence tending to
exclude the possibility that the defendants acted
independently.").12 As a result, Evergreen was required to produce
11 We also note that Evergreen received complaints from Dolco
before the conspiracy allegedly began, weakening any inference
that these complaints were post hoc justifications.
12 Evergreen also contends that Reilly referred Forrest's funding
proposals to the Plastics Group as a "way of maintaining group
course of action." In light of the resin quality issues, however,
Reilly may have been acting independently, referring Forrest
because Genpak did not want to bear the investment risk alone.
Evergreen has not presented evidence that tends to exclude this
possibility of independent action.
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evidence that tends to exclude the possibility of independent
action.
VI.
We thus now turn to the "plus factors" Evergreen alleges
support an inference of conspiracy. Plus factors are "proxies for
direct evidence of an agreement." Evergreen I, 720 F.3d at 46
(quoting In re Flat Glass Antitrust Litig., 385 F.3d 350, 359-60
(3d Cir. 2004)). Nonetheless, "many so-called plus factors simply
'demonstrate that a given market is chronically non-competitive,'"
without explaining whether agreement is the cause. White, 635
F.3d at 581 (quoting Michael D. Blechman, Conscious Parallelism,
Signalling and Facilitation Devices: The Problem of Tacit
Collusion Under the Antitrust Laws, 24 N.Y.L. Sch. L. Rev. 881,
898 (1979)). More persuasive is "'traditional' conspiracy
evidence of the type that helps to distinguish between conscious
parallelism and collusion," such as communications between
defendants. Id. at 583.13
The production of traditional conspiracy evidence seems
particularly important in Evergreen's case because we agree with
the district court that there is substantial evidence inconsistent
13 We note that the concentrated nature of the polystyrene market
falls within the former category of evidence of an anticompetitive
market.
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with conspiracy: specifically, the continued purchase of
Evergreen's resin by several of the defendants. In July 2007,
Evergreen entered into a contract with Dolco and Genpak granting
them exclusive rights to use any resin produced by Evergreen's
Norcross facility for egg cartons and school trays, respectively.
Additionally, Solo purchased 15,000 pounds of resin from Evergreen
for testing. Evergreen argues that this conduct is nonetheless
consistent with conspiracy because Plastics Group members agreed
not to deal with Evergreen on a specific term (commission payments)
and antitrust law does not require a complete boycott. Even if
this is correct, Dolco, Genpak, and Solo's resin purchases would
be irrational if a conspiracy in fact existed. Regardless of
whether the funds came from commission payments or resin purchases,
these agreements allowed Evergreen to continue operations. Such
an outcome seems inconsistent with the alleged conspiratorial end
of preventing Evergreen from being viable and disrupting the status
quo. In order to survive summary judgment, Evergreen needed to
produce more evidence than simply pointing to the fact that the
polystyrene market was anticompetitive.
As discussed below, Evergreen argues many so-called-
plus-factors make its conspiracy claim viable: statements it views
as reflecting animus towards recycling and its business, the
existence of a trade association, and PDR's "sham" status. This
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evidence, however, viewed in context, is either not traditional
conspiracy evidence or does not have the meaning Evergreen ascribes
to it.
A. Industry Animus
Evergreen argues that it presented evidence showing that
the polystyrene industry was anti-recycling and therefore the
converter defendants had motive to conspire. The defendants argue
that this evidence is largely inadmissible hearsay contained in
either unverified documents or Forrest's affidavit.14 Even if we
considered this evidence, we have previously rejected "motive to
conspire" standing alone as sufficient. White, 635 F.3d at 582.
"[E]vidence showing defendants have 'a plausible reason to
conspire' does not create a triable issue as to whether there was
a conspiracy." Id. (quoting Matsushita, 475 U.S. at 596-97); see
14 This evidence consists of (1) a 2005 article posted on the
ACC's website stating polystyrene recycling was infeasible;
(2) minutes from a March 18, 2005, Plastics Group meeting asking
whether the industry could "win out" against its critics without
having to recycle; and (3) representatives of Pactiv and Dart
standing up during the middle of a 2005 Plastics Group meeting and
stating they did not want to recycle. The district court found
both the minutes and Forrest's statements regarding the 2005
meeting inadmissible. We agree that the notes are not subject to
Federal Rule of Evidence 801(d)(2)'s business records exception
because they were not authenticated. We also agree with the
district court's conclusion that Forrest's statements about what
Patterson heard at the 2005 Plastics Group meeting are being used
for the truth of the matter asserted and do not fit into any
hearsay exception.
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also Golden Bridge Tech., Inc. v. Motorola, Inc., 547 F.3d 266,
272 (5th Cir. 2008) ("[C]ommon dislike is not the same as an
explicit understanding to conspire, so we accordingly review [the
plaintiff's] claim under the stricter standard required for
circumstantial evidence."). The defendants' desire to avoid
recycling speaks only to their motive to conspire and is thus
insufficient.
We give more consideration, however, to evidence
Evergreen claims shows that representatives of the converter
defendants were told not to deal with Evergreen. If this evidence
were admissible and Evergreen's inferences reasonable, it would
fit within the traditional conspiracy evidence we described in
White. These statements, however, are largely inadmissible
hearsay or taken out of context. "'It is black-letter law that
hearsay evidence cannot be considered on summary judgment' for the
truth of the matter asserted." Hannon v. Beard, 645 F.3d 45, 49
(1st Cir. 2011) (quoting Dávila v. Corporación de P.R. Para La
Difusión Pública, 498 F.3d 9, 17 (1st Cir. 2007)). Evergreen uses
a claim that a representative of the distribution company Eastern
Bag told Forrest that Solo's president and CEO said that he "was
told by [his] people not to work with Evergreen or Forrest" for
this purpose. Yet, this statement is not corroborated by the
declaration of Solo CEO Robert Korzenski. What Korzenski recalled
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was that he instructed his staff to work through the distributor
and not deal with Evergreen directly because he believed the
distributor had a better relationship with Evergreen and his staff
had reported Forrest had a difficult personality. Because
Forrest's affidavit relaying the words of a declarant is the only
evidence that Solo's president was told not to work with Evergreen,
we may not consider it as evidence.15 See Fed. R. Evid. 801. For
similar reasons, we reject Evergreen's claim that a representative
of the distribution company Sodexo told Forrest that Pactiv "sent
an e-mail to Sodexo threatening to reduce their annual rebates" if
they worked with Evergreen. This statement is hearsay and
Evergreen fails to cite any admissible evidence in the record to
support it.
Evergreen also cites statements by Dolco that it
believes suggest that Dolco was susceptible to anti-recycling
pressure by Pactiv and Dart.16 Even if we accepted Evergreen's
15Evergreen attempts to corroborate Forrest's affidavit by citing
the deposition testimony of Eastern Bag representative Kenneth
Rosenberg. During the deposition, Rosenberg was shown a copy of
Evergreen's complaint, which stated that "Solo's president and
CEO, Bob Korzenski, told Eastern Bag and Paper's president,
Meredith Reuben, that he had been told by his people not to work
with Evergreen or Michael Forrest." Rosenberg stated he
"remember[ed] [Korzenski] saying something similar, or that they
didn't want to work with him or something." Rosenberg's testimony
is unhelpful because it is also hearsay.
16 This evidence consists of (1) Forrest's affidavit stating that
Patterson told Forrest that Dolco "did not want to compete against
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statements at face value, its evidence does not show "a tacit or
express agreement," but merely that one alleged conspirator "might
be rendered more pliable." White, 635 F.3d at 585. And, as we
stated above, evidence that a market is anticompetitive -- such as
the ability of a few large competitors to exert pressure on other
competitors -- is not sufficient at the summary judgment stage.
Finally, Evergreen alleges that Genpak engaged in
various behaviors when dealing with Gwinnett Schools suggesting
that it was reluctant to bid with its tray made from Evergreen's
resin against Pactiv. Evergreen claims Reilly (unsuccessfully)
tried to retract Genpak's first bid for the Gwinnett Schools
contract in 2007.17 Evergreen also cites the deposition testimony
Pactiv" after a November 2005 meeting among Dolco, Evergreen, and
Sysco; (2) a December 2005 draft proposal to Sysco that stated
Dolco was not in the "Pactiv style business" and if it was, Pactiv
"could run [Dolco] underground with ease"; and (3) the deposition
testimony of Dolco's Director of Operations Gaffe Villegas,
acknowledging that Pactiv was larger than Dolco and "a big company
can do a lot of harm to a smaller company." We note that the
latter two statements, when read in context, actually create an
inference against conspiracy. Both the proposal and Villegas
state that Dolco could not compete against Pactiv on cost or volume
-- before mentioning Pactiv, the proposal states that "the 'Earth
Plus' products give both [Evergreen] and Dolco the opportunity to
provide environmentally responsible packaging along with some
stock product sales," suggesting that Dolco viewed recycling as a
way to differentiate its products to successfully compete against
Pactiv. Even if any of this evidence was admissible, we also note
that Evergreen fails to cite any evidence contradicting statements
made by Dolco representatives that the Earth Plus line fell through
because Sysco backed out.
17 The district court declined to accept this contention as true
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of Gwinnett Schools official Brad Coury stating that he felt Reilly
was reluctant to "battle against another competitor" when asked
about Genpak's interest level in supplying Gwinnett Schools with
trays for the following school year. Although Genpak's last-
minute attempt to withdraw its bid is potentially suspicious, as
stated above, Genpak experienced problems with Evergreen's resin.
Genpak may have been reluctant to commit to supplying a product
when it had concerns about its quality. We perceive its
reluctance to compete against Pactiv as being equally consistent
with conspiracy as independent action such that it does not tend
to exclude the possibility of independent action. We therefore
view Evergreen's motive evidence as a whole to be insufficient to
create an inference of conspiracy.
B. Trade Association as Means to Collude
As an additional plus factor, Evergreen cites our
statement in Evergreen I that trade association "meetings between
defendants have the potential to enhance the anticompetitive
effects and likelihood of uniformity caused by information
because the only evidence cited by Evergreen was Forrest's
affidavit and an e-mail saying Forrest told someone Genpak
retracted its bid. This conclusion impermissibly weighs evidence
at the summary judgment stage. Although Matsushita places limits
on the inferences courts may draw from ambiguous evidence, it does
not change the summary judgment standard that courts "may neither
evaluate the credibility of witnesses nor weigh the evidence."
Hicks v. Johnson, 755 F.3d 738, 743 (1st Cir. 2014).
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exchange." Evergreen I, 720 F.3d at 49 (alteration and internal
quotation marks omitted). Although the existence of a trade
association remains a plus factor, a defendant's mere
participation in one does not create a triable issue. See In re
Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186, 1196
(9th Cir. 2015) ("[M]ere participation in trade-organization
meetings where information is exchanged and strategies are
advocated does not suggest an illegal agreement."); In re Travel
Agent Comm'n Antitrust Litig., 583 F.3d 896, 911 (6th Cir. 2009)
("[A] mere opportunity to conspire does not, standing alone,
plausibly suggest an illegal agreement because [the defendants']
presence at such trade meetings is more likely explained by their
lawful, free-market behavior.").
C. PDR's "Sham" Status
Finally, Evergreen cites to the Plastics Group's
promotion of a "sham" competitor. In Evergreen I, we stated PDR's
sham status "would be particularly telling because the alleged
conduct goes beyond rejecting a new entrant in favor of the
benefits of the status quo." 720 F.3d at 48. Evergreen, however,
has failed to produce evidence creating a reasonable inference
that PDR was a sham.
Evergreen contends that PDR was not actually operational
and landfilled the trays it collected. Evergreen first cites
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documents that it interprets as showing that PDR did not produce
resin despite entering into agreements with Pactiv and Dart between
2006 and 2008. Evergreen also cites deposition testimony by one
of PDR's founders, Tom Preston, admitting that PDR landfilled the
lunch trays it collected (rather than turning them into a recycled
resin) and its converter partners were never able to sell a product
containing its resin. Evergreen further cites observations of
PDR's facility by both Forrest and Levy in 2007 finding it
padlocked and nonoperational.
We start by addressing Preston's deposition testimony.
All this testimony establishes is that PDR landfilled trays when
it first started operating and again when it began shutting down.
As explained by Preston, the trays had a limited time frame in
which they could be converted into resin. Beginning in 2006, PDR
collected trays from the San Diego Unified School District. But
because PDR did not have the capacity to process all of the trays
and turn them into resin within the given time period, it had to
landfill many of the trays it collected. Preston also
acknowledged, that in late 2008, PDR was again landfilling most of
the trays it collected because it was running a "skelet[al]
operation." These statements about PDR's start-up and end stages
do not create a reasonable inference that PDR was never
operational.
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Similarly, even accepting as true that PDR showed no
signs of activity when Forrest and Levy visited (in May 2007 and
June 2007 respectively), two nonoperational days alone do not
create a reasonable inference that PDR was never operational,
particularly when all other evidence in the record shows that PDR
produced recycled resin.18 PDR produced resin for Dart to test in
both 2006 and 2007, the latter batch of which was of sufficiently
high quality that Dart entered into a purchase agreement. PDR
subsequently produced 500 pounds of resin that Dart used to create
sample plates and containers. Similarly, billing records show
that Pactiv received at least 11,000 pounds of recycled PDR resin
in August and September of 2008. PDR admitted that it experienced
difficulties in scaling up its operations to create large enough
batches for commercial sales. Nonetheless, nothing in the record
suggests that Pactiv and Dart did not work with PDR in good faith
or that PDR's scaling problems were inevitable. We therefore
conclude that a reasonable factfinder could not find that PDR was
a sham.
Viewing, in combination, all the admissible evidence
that the parties submitted, and drawing all reasonable inferences
in Evergreen's favor, we conclude that Evergreen has failed to
18 The record establishes that PDR was still in the start-up phase
in 2007 such that PDR did not operate every day.
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provide evidence that suffices to raise a reasonable inference of
unlawful action.
VII.
Because we find no genuine issue of material fact as to
whether a conspiracy existed, we need not go further and address
the defendants' various alternative bases for affirmance. For the
foregoing reasons, we affirm the district court's grant of summary
judgment.
Affirmed.
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