In Re Flat Glass

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
9-29-2004
In Re Flat Glass
Precedential or Non-Precedential: Precedential
Docket No. 03-2920
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004
Recommended Citation
"In Re Flat Glass " (2004). 2004 Decisions. Paper 265.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/265
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL behalf of itself and all others similarly
situated; SUPERIOR WINDSHIELD
UNITED STATES COURT OF INSTALLATION, INC., on behalf of
APPEALS FOR THE THIRD CIRCUIT itself and all others similarly situated;
JOVI, INC., on behalf of itself and all
others similarly situated, t/a Easton Area
No. 03-2920 Glass; ENGINEERED GLASS WALLS,
INC., on behalf of itself and all others
similarly situated; BAILES GLASS CO.;
IN RE FLAT GLASS INTERSTATE GLASS DISTRIBUTORS,
ANTITRUST LITIGATION INC., on behalf of itself and all others
(MDL No. 1200) similarly situated; ORLANDO AUTO
TOP, INC.; MAYFLOW ER SALES CO.,
BRIAN S. NELSON, d/b/a Jamestown INC., on behalf of itself and all others
Glass Service; MEL’S AUTO GLASS, similarly situated; CARDINAL IG;
INC.; A. WAXMAN & CO., on behalf of REED’S BODY SHOP, INC.; BELETZ
itself, and all others similarly situated; BROTHERS GLASS COM PANY, INC.;
DESIGNER WINDOWS, INC., on behalf COMPLAST, INC.; WESTERN STATES
of itself and all others similarly situated; GLASS, on behalf of itself and all others
MOSES MOORE ALL GLASS similarly situated; GRIMES AUTO
ASPECTS, INC., on behalf of itself and GLASS, INC.; D&S GLASS SERVICES,
all others similarly situated; AAA GLASS, INC.;GEORGE BROWN & SON GLASS
INC., on behalf of itself and all others WORKS, INC.; THERMAL CHEK, INC.;
similarly situated, d/b/a The Glass Doctor; MOBILE GLASS, INC., individually and
THE LURIE COM PANIES, INC.; VSTB as a representative of a class; JELD-WEN,
ENTERPRISES, INC., d/b/a Perfecto Auto INC., an Oregon Corporation; JELD-WEN
Glass & Upholstery and its successors; CANADA LIMITED , a Canadian
PORT CITY GLASS & MIRROR, INC., corporation; JELD-WEN ARIZONA,
on its own behalf and on behalf of all INC., an Arizona corporation; AVANTI
others similarly situated; JOHN HEALY, INDUSTRIES, I N C. , a n A rizona
JR.; COUNTY AUTO GLASS, INC., on corporation; LAKEWOOD CITY GLASS,
behalf of themselves and all others I N C. ;C A R O L IN A MIRROR;
s im il a r l y s it ua te d; G ER A R D J. ALLSTATE INSURANCE COMPANY;
CLABBERS, on behalf of himself and all ALLSTATE INDEMNITY COMPANY
others similarly situated; KIRSCHNER
CORPORATION, INC., t/a Berwyn Glass
Company, on behalf of itself and all others
similarly situated; HARTUNG AGALITE v.
GLASS CO., d/b/a Hartung Glass
Industries; ALL STAR GLASS, INC., on
1
PILKINGTON PLC; PILKINGTON Barrack, Rodos & Bacine
LIBBEY-OWENS-FORD CO., INC.; 2001 Market Street
AFG INDUSTRIES, INC.; GUARDIAN Philadelphia, PA 19103
INDUSTRIES CORPORATION; PPG
INDUSTRIES, INC.; LIBBEY-OWENS- Eugene Spector, Esq.
FORD CO., INC.; ASAHI GLASS CO., Spector Roseman & Kodroff
LT D.; FORD MO T O R CO.; 1818 Market Street
PILKINGTON HOLDINGS; ASAHI Philadelphia, PA 19103
GLASS AMERICA, INC.
Robert N. Kaplan, Esq. (Argued)
UNITED STATES OF AM ERICA Richard J. Kilsheimer, Esq.
(Intervenor in D.C.) Kaplan Fox & Kilsheimer
(D.C. No. 97-mc-00550) 805 Third Avenue
New York, NY 10022
Class Plaintiffs and Grimes Auto Glass,
Michael D. Hausfeld, Esq.
Appellants Cohen M ilstein Hausfeld & Toll
1100 New York Avenue, N.W.
Washington, D.C. 20005
On Appeal from the United States
District Court for the Robert Skirnick, Esq.
Western District of Pennsylvania Meredith Cohen Greenfogel & Skirnick
(Dist. Court No. 97-mc-00550) One Liberty Plaza, 35 th Floor
District Judges: Hon. Donetta W. New York, NY 10006
Ambrose and Hon. Donald E. Ziegler
Counsel for Appellants
Argued: June 22, 2004
Paul M. Dodyk, Esq. (Argued)
Before: NYGAARD, MCKEE and Peter T. Barbur, Esq.
CHERTOFF, Circuit Judges Lawrence E. Buterman, Esq.
Kelly A. Rocco, Esq.
(Filed: September 29, 2004) Cravath, Swaine & M oore
Worldwide Plaza
825 Eighth Avenue
Samuel Issacharoff, Esq. New York, NY 10019
435 West 116 Street
New York, NY 10027
Daniel E. Bacine, Esq. David J. Armstrong, Esq.
2
Dickie, McCamey & Chilcote CHERTOFF, Circuit Judge.
Two PPG Place
Suite 400 This case addresses the recurring
Pittsburgh, PA 15222 question of what quantity and quality of
evidence suffices to create a genuine issue
of material fact as to one particular
Counsel for Appellee PPG element of a claim under Section 1 of the
Industries, Inc. Sherman Act: whether a defendant entered
into an unlawful agreement. Appellants
contend that appellee PPG Industries, Inc.
J. Michael Murray, Esq. (Argued) (“PPG”) conspired with its competitors to
Berkman, Gordon, Murray & DeVan fix the prices of flat glass and automotive
55 Public Square, Suite 2121 replacement glass in the early 1990s. The
Cleveland, OH 44113-1949 District Court granted PPG’s motion for
summary judgment on the ground that
Counsel for Appellee there was insufficient proof of an
Edward Bryant agreement. We will reverse in part, affirm
in part, and remand for additional
proceedings.
Michael S. Sommer, Esq.
McDermott, Will & Emery
50 Rockefeller Plaza
New York, NY 10020 I. Background
Elliot Silverman, Esq. (Argued) A. The Flat Glass and Automotive
McDermott, Will & Emery Replacement Glass Industries
18191 Von Karman Avenue
Irvine, CA 92612 PPG manufactures sheets of glass
through a method called the “float
Counsel for Appellee process.” Molten glass is poured over a
Ronald W. Skeddle bath of higher-density liquid, such as
molten tin. As the glass floats on top of the
bath, it is polished under controlled
temperatures. Finally, the glass is fed into
an “annealing oven” where it gradually
OPINION OF THE COURT cools and hardens. See In re Flat Glass
Antitrust Litigation, 191 F.R.D. 472, 476
n.7 (W.D. Pa. 1999). The glass that PPG
produces through the float process—in
3
various sizes, thicknesses, and tints, see different products may be “fabricated”
Supp. App. 14 n.16; App. 634—is called from flat glass by subjecting it to a variety
“flat glass.” of processes. A substantial amount of flat
glass, for example, is fabricated for use in
PPG and a handful of other automobiles. Flat glass may be molded and
firms— Libbey-Owens-Ford Company combined with other parts to produce
(“LOF,” a subsidiary of the British glass windshields, for example, or side and rear
p r o d u c e r P ilkington L L C) ; A F G window s. Supp. App. 19. Some
Industries, Inc. (“AFG,” a subsidiary of the products—called original equipment
Japanese glass producer Asahi Glass Co.);1 manufacturer products (“OEM” glass
Guardian Industries (“Guardian”); and products)—are fabricated for sale to
Ford Motor Co. (“Ford”)—manufacture vehicle manufacturers for use in new
well over ninety percent of the flat glass v e h i c l e s . O t h e r p rodu cts— calle d
sold in the United States. In 1995, for auto motive replac eme nt glass
example, PPG acco unted for products—are fabricated for sale and use
approximately 28% of domestic flat glass as automotive replacement parts. Supp.
shipments, LOF and AFG each accounted App. 25. These are two separate markets.3
for 19%, and Guardian and Ford each
accounted for 15%. Supp. App. 20.2
3
The parties fail to adequately
Flat glass produced through the
explain the relationship between OEM
float process may be sold “as is,” in which
glass parts and automotive replacement
case it is used primarily in construction.
parts, which plaintiffs describe as
Supp. App. 16. Alternatively, many
“identical in composition.” Plaintiffs’ Br.
4. We gather from the record that they
1
Asahi also owns a company called differ in two important respects. First,
Glaverbel, which was associated with generally (but not always) only one OEM
AFG, and a Canadian-based company glass producer exists for any particular
called Glaverbec. product. Thus PPG alone might produce a
particular windshield that a car
2
A company named Cardinal Glass manufacturer uses in a particular model
Industries (“Cardinal”) accounted for car. In contrast, multiple manufacturers
approximately 3% of domestic flat glass typically produce any one type of
sales in 1995. Cardinal, which is not a automotive replacement part. So PPG,
defendant in this suit, did not produce flat Guardian, and LOF might produce the
glass until 1992, when it purchased a flat automotive replacement part that would
glass manufacturing plant that AFG built replace the OEM product that only PPG
for it. Before that time, Cardinal fabricated produced and sold to the car manufacturer.
products from flat glass it purchased from Second, OEM glass products are sold to a
PPG and others. particular car manufacturer, whereas the
4
The automotive replacement glass products, PPG runs a wholesale
market has a four-tier vertical structure. distribution operation that sells less than
First, manufacturers—the handful of firms truckload quantities to retail installers. Yet
mentioned above—produce flat glass. PPG also sells its products to its
Second, various companies fabricate the downstream competitors. It sells flat glass
flat glass into different types of automotive to autom otive repla cem ent glass
replacement glass products. The major fabricators, and it sells truckload quantities
United States fabricators of automotive of automotive replacement glass products
replacement glass products during the to wholesale distributors.
class period were PPG, LOF, Ford,
Guardian, Saf elite, Vir acon, B. The Alleged Conspiracies
Premier/Hordis, and Chrysler. App. 585.
Thus a number of firms, such as PPG, both In 1993, LOF fired two of its
manufacture flat glass and fabricate it into executives—Ronald Skeddle (LOF’s
automotive replacement glass products.4 President and Chief Executive Officer)
and Edward Bryant (LOF’s Executive
Third, the fabricators sell the parts Vice President, the company’s second-
by the “truck load” to w hole sale highest ranking officer)—and a grand jury
distributors. The wholesale distributors indicted them for conspiracy, mail and
then sell the automotive replacement glass wire fraud, and money laundering. A jury
products in less than truckload quantities eventually acquitted them of the charges,
to the retail installers that sell the products but in the meantime Skeddle and Bryant
directly to car owners. alleged that during the early 1990s LOF
had conspired with its competitors to fix
PPG operates at every level of the the price of the glass products it sold. See
automotive replacement glass market; that In re Flat Glass Antitrust Litigation, 288
is, PPG is “vertically integrated.” In F.3d 83, 86 (3d Cir. 2002).
addition to manufacturing flat glass and
fabricating automotive replacement glass Skeddle and Bryant’s allegations
spurred plaintiffs to file several private
antitrust lawsuits against LOF and its
corresponding identical automotive competitors (PPG, AFG, Ford, and
replacement glass products are sold to Guardian), and the Judicial Panel on
multiple wholesalers and retail installers. Multidistrict Litigatio n eve ntu ally
4 consolidated and transferred the actions to
Automotive replacement glass
the Western District of Pennsylvania. After
fabricators produced approximately
the District Court certified two subclasses
10,000 different automotive replacement
of plaintiffs, see In re Flat Glass Antitrust
glass products. No one fabricator
Litigation, 191 F.R.D. 472, 475 (W.D. Pa.
produced all 10,000. PPG produced
approximately 6,000. App. 585.
5
1999), plaintiffs reached settlements with simply contend that PPG and its
all defendants except PPG. competitors agreed to raise their prices,
rather than doing so independently and
Plaintiffs allege that PPG and its with no concerted coordination.
competitors conspired to “fix, raise, and
maintain” the prices of flat glass and
automotive replacement glass. The two
alleged conspiracies correspond with the
two subclasses that the District Court
of July 29 or August 1,
certified. See In re Flat Glass Antitrust
1991; September of 1992,
Litigation, 191 F.R.D. at 475. One
all defendants raised their
subclass consists of individuals and
prices within days of each
entities that purchased flat glass or
other by 5-9% with an
products fabricated from flat glass from
effective date of October 1
PPG, LOF, Guardian, Ford, or AFG. The
or October 12; May of
other subclass consists of individuals and
1993, defendants raised
entities that purchased automotive
their prices within days of
replacement glass products from any of
each other by 5.5% with an
those same firms. Id.
effective date of June 7 or
9; October of 1993,
Plaintiffs’ allegations regarding
defendants raised their
price-fixing in the market for flat glass are
prices within days of each
relatively straightforward. Several times
other by 6.5% with an
during the class period, PPG and the other
effective date of October 30
flat glass producers raised their “list
or November 1, 1993; April
prices” for flat glass by the same amount
of 1994 all defendants
and within very close time frames. Within
raised their prices by 5-9%
a twelve-day period in the summer of
with an effective date of
1991, for example, PPG and its
May 1 or 2; August of 1994,
competitors all raised their list prices for
all defendants raised their
flat glass by the same amounts. 5 Plaintiffs
prices by 5-8% with an
effective date of September
19, 1994; March of 1995,
5
The District Court catalogued all defendants raised their
these price increases as follows: prices by 6% with an
effective date of April 3 or
July of 1991, all defendants 11.
raised their prices within
days of each other by 7.5- App. 16 n.4 (internal citations to District
9%, with an effective date Court record omitted).
6
Plaintiffs’ allegations regarding the truckload price used to create the
price-fixing in the market for automotive NAGS price, as did the other [automotive
replacement glass are more complicated. replacement glass] manufacturers.”
According to plaintiffs, PPG and other Plaintiffs’ Br. 33. Thus plaintiffs contend
automotive replacement glass fabricators that PPG and its competitors “had an
used a mechanism, called the “NAGS understanding and acted in concert” to use
Calculator,” to fix prices at supra- the NAGS Calculator to “align their
competitive levels. truckload price lists and stabilize pricing,
and as a benchmark for pricing of
NAGS, which stands for “National [automotive replacement glass] at less-
Auto Glass Specifications,” is a business than-truckload quantities.” Plaintiffs’ Br.
that produced a catalogue called the 30.
“ N AG S C alculator.” Th e N A G S
Calculator supplied an identifying number C. The Present Appeal
for each type of automotive replacement
g l a s s p r o d u c t a n d p ro v i d e d a The District Court granted PPG’s
recommended price for an installer to motions for summary judgment on both of
charge a car owner for the part. NAGS plaintiffs’ price-fixing claims. Before
came up with its recommended price for doing so, the Court circumscribed the
any particular automotive replacement evidence it considered when deciding
glass product by taking a truckload PPG ’s summ ary judgment motions
quantity price of that product and through a series of in limine motions. The
multiplying it by a number (a “multiplier”) Court refused to order Skeddle and Bryant
specific to that product. Generally, NAGS to testify despite their invocation of their
would use the truckload quantity price for Fifth Amendment privileges, for example,
the OEM glass product that the automotive and it also excluded many of Skeddle’s
replacement glass was intended to replace. handwritten notes that plaintiffs argue tend
to implicate PPG in a price-fixing
According to plaintiffs, PPG and conspiracy.
other automotive replacement glass
manufacturers knew the multipliers that Plaintiffs appeal from the District
NAGS used to devise its recommended Court’s summary judgment and certain of
prices. Thus PPG could, and plaintiffs its evidentiary decisions. After addressing
allege did, work backwards from the the applicable legal standards, we first
recommended price to determine the address whether summary judgment was
truckload price that NAGS used in its warranted based on the evidence the
calculation. “If the truckload price used by
NAGS was different from its own
truckload price,” plaintiffs argue, “PPG
then adjusted its truckload price to match
7
District Court considered.6 We conclude Inc., 156 F.3d 452, 461 (3d Cir. 1998)
that the District Court should not have (quoting Business Elecs. Corp. v. Sharp
granted summary judgment on plaintiffs’ Elecs. Corp., 485 U.S. 717, 723 (1988)).
flat glass price-fixing claim, and we Because of their “pernicious effect on
address the District Court’s evidentiary competition and lack of any redeeming
rulings so that the Court can further virtue,” Northern Pac. Ry. v. United
consider what evidence a jury may States, 356 U.S. 1, 5 (1958), these
consider on remand. We affirm summary restraints of trade are “conclusively
judgment on plaintiffs’ automotive presumed to unreasonably restrain
replacement glass conspiracy claim. competition ‘without elaborate inquiry as
to the precise harm [it has] caused or the
II. Discussion business excuse for [its] use.” Rossi, 156
F.3d at 461 (internal citations and
Section 1 of the Sherman Act quotations omitted).
provides that “every contract, combination
in the form of trust or otherwise, or Here, plaintiffs allege that PPG
conspiracy, in restraint of trade or engaged in horizontal price-fixing—i.e.,
commerce . . . is declared to be illegal.” 15 “where competitors at the same market
U.S.C. § 1. Despite its broad language, level agree to fix or control the prices they
Section 1 only prohibits contracts, will charge for their respective goods or
combinations, or conspiracies that services.” United States v. Brown Univ., 5
unreasonably restrain trade. See InterVest F.3d 658, 670 (3d Cir. 1993). Since at
Inc. v. Bloomberg, L.P., 340 F.3d 144, 158 least United States v. Socony-Vacuum Oil
(3d Cir. 2003). Certain restraints of trade Co., 310 U.S. 150 (1940), the Supreme
are per se unreasonable, while others Court has held that such restraints of trade
require more searching analysis under the are per se unreasonable. “Whatever
“rule of reason.” Id. at 158-59. economic justification particular
price-fixing agreements may be thought to
Restraints of trade are per se have,” the Court explained, “the law does
unreasonable when they are “‘manifestly not permit an inquiry into their
anticompetitive’ or ‘would always or reasonableness. They are all banned
a lm o s t a l w a y s t e n d to r e s t r i c t because of their actual or potential threat
competition.’” Rossi v. Standard Roofing, to the central nervous system of the
economy.” 310 U.S. 150, 224 n.59 (1940);
see also Brown Univ., 5 F.3d at 670.
6
We exercise plenary review over
the District Court’s grant of summary
As a result, plaintiffs need only
judgment. See, e.g., InterVest Inc. v.
prove that “the defendants conspired
among each other and that this conspiracy
Bloomberg, L.P., 340 F.3d 144, 158 (3d
was the proximate cause of the plaintiff’s
Cir. 2003).
8
injury.” InterVest, 340 F.3d at 159. PPG tightly compartmentalize the evidence put
does not dispute proximate causation. forward by the nonmovant, but instead
Rather, it argues that it did not agree with should analyze it as a whole to see if it
its competitors to fix prices. supports an inference of concerted action.”
Petruzzi's IGA v. Darling-Delaware, 998
The existence of an agreement is F.2d 1224, 1230 (3d Cir.1993).
“[t]he very essence of a section 1 claim.”
Alvord-Polk, Inc. v. Schumacher & Co., Although these normal summary
37 F.3d 996, 999 (3d Cir. 1994). The judgment principles apply in antitrust
Sherman Act speaks in terms of a cases, an important distinction exists. As
“contract,” “combination” or “conspiracy,” the Supreme Court held in Matsushita
but courts have interpreted this language to Electric Industrial Co. v. Zenith Radio
require “some form of concerted action.” Corp., 475 U.S. 574 (1986), “antitrust law
Id. at 999 & n.1. In other words, there limits the range of permissible inferences
must be a “‘unity of purpose or a common from ambiguous evidence in a § 1 case.”
design and understanding or a meeting of Id. at 588; see also Monsanto Co. v. Spray-
minds’” or “‘a conscious commitment to Rite Service Corp., 465 U.S. 752, 763-64
a common scheme.’” Monsanto Co. v. (1984). In other words, certain “inferences
Spray-Rite Service Corp., 465 U.S. 752, may not be drawn from circumstantial
764 (1984) (quoting Edward J. Sweeney & evidence in an antitrust case.” Intervest,
Sons, Inc. v. Texaco, Inc., 637 F.2d 105, 340 F.3d at 160.7 This higher threshold is
111 (3d Cir. 1980)). imposed in antitrust cases to avoid
deterring innocent conduct that reflects
When faced with whether a plaintiff enhanced, rather than restrained,
has offered sufficient proof of an competition.
agreement to preclude summary judgment,
a court must generally apply the same
summary judgment standards that apply in 7
The “strictures of Matsushita do
other contexts. See Intervest, 340 F.3d at
not apply” when a plaintiff provides direct
159-60. A court shall render summary
evidence of a conspiracy. Petruzzi’s, 998
judgment when the evidence shows “that
F.2d at 1233. That is because “no
there is no genuine issue as to any material
inferences are required from direct
fact and that the moving party is entitled to
evidence to establish a fact and thus a
judgment as a matter of law.” Fed R. Civ.
court need not be concerned about the
P. 56(c). In making this determination, a
reasonableness of the inferences to be
court must “view the facts and any
drawn from such evidence.” Id. In
reasonable inferences drawn therefrom in
addition, “the focus in Matsushita was on
the light most favorable to the party
ambiguous evidence, and what inferences
opposing summary judgment.” Intervest,
reasonably could be drawn from that
340 F.3d at 160. And a court “should not
evidence.” Id. (internal citation omitted).
9
We explored “exactly what the high prices, enter its market and force
inferences are circumscribed in a section 1 prices down.” Clamp-All Corp., 851 F.2d
case” in our decision in Petruzzi's. There, at 483. Courts and commentators alike
w e i d en t i f ie d “ t w o i m p o r t a nt have come to regard predatory pricing as a
circumstances underlying the [Supreme] relatively speculative phenomenon,
Court’s decision in Matsushita”: (1) “the particularly when its success requires
plaintiffs’ theory of conspiracy was collusion among multiple firms. See
implausible”; and (2) “permitting an Brooke Group Ltd. v. Brown &
inference of antitrust conspiracy in the Williamson Tobacco Corp., 509 U.S. 209,
circumstances ‘would have the effect of 226-27 (1993). Inferences about predatory
deterring significant procompetitive pricing are also inherently weak because
conduct.’” 998 F.2d at 1232 (quoting In re the behavior of firms engaged in predatory
Coordinated Pretrial Proceedings in pricing would largely mirror how firms in
Petroleum Prods. Antitrust Litig., 906 F.2d a competitive market act: by cutting prices.
432, 439 (9 th Cir. 1990)) (emphasis in See Matsushita, 475 U .S. at 594
Petruzzi’s). In other words, “the Court (“[C]utting prices in order to increase
stated that the acceptable inferences which business often is the very essence of
can be drawn from circumstantial evidence competition.”). Thus inferring from
vary with the plausibility of the plaintiffs’ ambiguous evidence that firms are
theory and the dangers associated with engaging in predatory pricing would “chill
such inferences.” Id.; see also Matsushita, procompetitive behavior.” Petruzzi’s, 998
475 U.S. at 587 (“[I]f the factual context F.2d at 1232.
renders [the plaintiff's] claim
implausible— if the claim is one that In Petruzzi’s, by contrast, the
simply makes no economic sense—[a plaintiff alleged that the defendants
plaintiff] must come forward with more conspired to alloc ate cu sto mers .
persuasive evidence to support [its] claim “[P]laintiff’s theory of conspiracy is not
than would otherwise be necessary.”) implausible,” we explained, rather it made
(citations omitted). “perfect economic sense.” 998 F.2d at
1232. In addition, the challenged activities
The plaintiffs in Matsushita alleged could not reasonably be perceived as
that the defendants conspired to engage in procompetitive. Id. (“After all, refusing to
predatory pricing, the practice by which “a bid on accounts hardly can be labeled as
firm sets its prices temporarily below the ‘very essence of competition.’”)
costs, with the hope that the low price will (quoting Matsushita, 475 U.S. at 594). As
drive a competitor out of business, after a result of those circumstances, we
which the ‘predatory’ firm will raise its concluded that “more liberal inferences
prices so high that it will recoup its from the evidence should be permitted
temporary losses and earn additional than in Matsushita because the attendant
profit, all before new firms, attracted by dangers from drawing inferences
10
recognized in Matsushita are not present.” approximate—and cannot be mistaken
Id.; see also Intervest, 340 F.3d at 162; as—competitive conduct.
Alvord-Polk, Inc., 37 F.3d at 1001 (“[T]he
meaning we ascribe to circumstantial Yet despite the absence of the
evidence will vary depending on the Matsushita Court’s concerns, this Court
challenged conduct.”).8 and others have been cautious in accepting
inferences from circumstantial evidence in
Here, like in Petruzzi’s, plaintiffs’ cases involving allegations of horizontal
theory of conspiracy—an agreement price-fixing among oligopolists. See
among oligopolists to fix prices at a Williamson Oil Co. v. Philip Morris USA,
supracompetitive level—makes perfect R.J., 346 F.3d 1287, 1300-01 (11th Cir.
economic sense. In addition, absent 2003); Blomkest Fertilizer, Inc. v. Potash
increases in marginal cost or demand, Corp. of Saskatchewan, 203 F.3d 1028,
raising prices generally does not 1042-43 (8 th Cir. 2000); In re Baby Food
Antitrust Litigation, 166 F.3d 112, 121-22
(3d Cir. 1999); Clamp-All Corp. v. Cast
8 Iron Soil Pipe Institute, 851 F.2d 478, 484
As one prominent antitrust
(1 st Cir. 1988); Apex Oil Co. v. DiMaurio,
commentator has explained:
822 F.2d 246, 253-54 (2d Cir. 1987); see
also Petruzzi’s, 998 F.3d at 1232-33.9 The
Matsushita spoke in the
basis for this circumspect approach is the
context of a highly
theory of “interdependence.” See Donald
improbable twenty-year-
F. Turner, The Definition of Agreement
long predatory pricing
Under the Sherman Act: Conscious
conspiracy and required
Parallelism and Refusals to Deal, 75 Harv.
high-quality evidence to
L. Rev. 655, 662-63 (1962).
permit such a conspiracy to
be presented to a jury. . . .
However, Matsushita itself
said little about proof
9
requirements in a case A leading antitrust scholar, who
where underlying structural now authors the Areeda treatise, has
evidence indicates that the characterized these cases at least in part as
offense is quite plausible “an unfortunate misinterpretation” of
and would be profitable for Matsushita. Herbert Hovenkamp, The
the defendants. Rationalization of Antitrust, 116 Harv. L.
Rev. at 925 (“[U]nfortunately, many courts
Herbert Hovenkamp, The Rationalization have read M atsushita as requiring a certain
of Antitrust, 116 Harv. L. Rev. 917, 925- quantum evidence of verbal agreement
26 (2003) (reviewing Richard A. Posner, before summ ary judgment can be
Antitrust Law (2d ed. 2001)) . avoided.”).
11
The theory of interdependence engaging in any overt concerted action.
posits the following: In a market with We quote the Areeda treatise at length:
many firms, the effects of any single firm’s
price and output decisions “would be so The first firm in a five-firm
diffused among its numerous competitors oligopoly, Alpha, may be
that they would not be aware of any eager to lower its price
change.” Phillip E. Areeda & Herbert somewhat in order to
Hovenkamp, Antitrust Law ¶ 1429, at 206 expand its sales. However, it
(2 nd ed. 2000). In a highly concentrated knows that the other four
market (i.e., a market dominated by few f ir m s would proba bly
firms), however, any single firm’s “price respond to a price cut by
and output decisions will have a noticeable reducing their prices to
impact on the market and on its rivals.” Id. maintain their previous
Thus when a firm in a concentrated market market shares. Unless Alpha
(i.e., an “oligopolist”) is deciding on a believes that it can conceal
course of action, “any rational decision its price reduction for a time
must take into account the anticipated or otherwise gain a
reaction of the other [] firms.” Id. at 207.10 substantial advantage from
being the first to move, the
The result, according to the theory price reduction would
of interdependence, is that firms in a merely reduce Alpha’s
concentrated market may maintain their profits and the profits of the
prices at supracompetitive levels, or even other firms as well.
raise them to those levels, without
Such “ o l i g o p o li s t i c
rationality” cannot only
10 forestall rivalrous price
“For example, in a market of one
reductions, it can also
hundred sellers of equal size, an expansion
provide for price increases
in output of 20 percent by one of them
through, for example, price
will result in an average fall in output of
leadership. If the price had
only about .2 percent for each of the
for some reason been less
others, so a seller need not worry in
than X [the price a
making his pricing decisions about the
monopolist would charge to
reactions of his rivals.” Richard A. Posner,
maximize profits], firm Beta
Antitrust Law 56 (2nd ed. 2001). But if
might announce its decision
“there are three sellers of equal size, a 20
to raise its price to X
percent expansion in the sales of one will
effective immediately, or in
cause the sales of each of the others to fall
several days, or next season.
by an average of 10 percent—a sales loss
The other four firms may
the victims can hardly overlook.” Id.
12
each choose to follow 1432f, at 232-36; but see Posner, supra, at
Beta’s lead; if they do not 98. Indeed, the Supreme Court has
increase their prices to described conscious parallelism in dicta as
Beta’s level, Beta may be “the process, not in itself unlawful, by
forced to reduce its price which firms in a concentrated market
to their level. Because might in effect share monopoly power,
each of the other firms setting their prices at a profit-maximizing,
knows this, each will supracompetitive level by recognizing
consider whether it is their shared economic interests and their
better off when all are interdependence with respect to price and
charging the old price or output decisions.” Brooke Group Ltd. v.
price X. They will Brown & Williamson Tobacco Corp., 509
obviously choose X when U.S. 209, 227 (1993) (emphasis added).
they believe that it will
m aximize indu stry As a result, we have required that
profits. plaintiffs basing a claim of collusion on
inferences from consciously parallel
Id. at 207-08. behavior show that certain “plus factors”
also exist. See In re Baby Food, 166 F.3d
Despite the noncompetitive nature at 122; Petruzzi’s, 998 F.2d at 1243.11
of such conduct, which we have come to Existence of these plus factors tends to
call “conscious parallelism,” we have held ensure that courts punish “concerted
that the Sherman Act does not proscribe it. action”—an actual agreement—instead of
See In re Baby Foods, 166 F.3d at 121-22. the “unilateral, independent conduct of
There are two primary bases for this competitors.” In re Baby Food, 166 F.3d at
approach, both embodied in a line of
scholarship that started with Donald
Turner in 1962 and continued in large part 11
Thus in order to establish illegal
in Phillip Areeda’s influential antitrust
concerted action based on “consciously
treatise. First, there exists the notion that
parallel behavior, a plaintiff must show (1)
interdependent behavior is not an
that the defendants’ behavior was parallel;
“agreement” within the term’s meaning
(2) that the defendants were conscious of
under the Sherman Act. See Turner, supra,
each other’s conduct and that this
at 663-65; but see Posner, Antitrust Law,
awareness was an element in their
supra, at 94-95. Second, Turner and
decision-making process; and (3) certain
Areeda argued that judicial remedies are
‘plus’ factors.” Petruzzi’s, 998 F.2d at
incap able o f a d d r e s si n g th e
1242, quoted in Intervest, 340 F.3d at 165.
anticompetitive effects of consciously
It is undisputed that the first two
parallel pricing. Turner, supra, at 669-71,
circumstances exist here, and we therefore
Areeda, Antitrust Law, supra, ¶¶ 1432d5-
concentrate on the third and final.
13
122. In other words, the factors serve as irrational assuming that the defendant
proxies for direct evidence of an operated in a competitive market. In a
agreement. competitive industry, for example, a firm
would cut its price with the hope of
The question then becomes, what increasing its market share if its
are “plus factors” that suffice to defeat competitors were setting prices above
summary judgment? There is no finite set marginal costs. Put differently, in
of such criteria; no exhaustive list exists. analyzing this factor a court looks to
See Id.; Areeda, supra, ¶ 1434a, at 241-42. “evidence that the market behaved in a
We have identified, however, at least three noncompetitive manner.” Id.
such plus factors: (1) evidence that the
defendant had a motive to enter into a These two plus factors are
price fixing conspiracy; (2) evidence that important to a court’s analysis, because
the defendant acted contrary to its their existence tends to eliminate the
interests; and (3) “evidence implying a possibility of mistaking the workings of a
traditional conspiracy.” Petruzzi’s, 998 competitive market—where firms might
F.2d at 1244. increase price when, for example, demand
i n c r e a s e s — w i t h i n t e rd e p e n d e n t ,
In the context of parallel pricing, supracompetitive pricing. But since these
the first two factors largely restate the factors often restate interdependence (at
phenomenon of interdependence. We least in the context of an alleged price-
candidly acknowledged as much in In re fixing conspiracy), they m ay not
Baby Food, 166 F.3d at 122. See also suffice—by themselves—to defeat
Areeda, supra, ¶ 1434c1, at 245 summary judgment on a claim of
(“‘[C]onspiratorial motivation’ and ‘acts h o r i z o nt a l p r i c e - fi x i n g a m o ng
against self-interest’ often do no more than oligopolists. 1 2 The most important
restate interdependence.”); Posner, supra,
at 100. Evidence that the defendant had a
motive to enter into a price fixing 12
Neither factor is “strictly
conspiracy means evidence that the
necessary.” In re High Fructose Corn
industry is conducive to oligopolistic price
Syrup Antitrust Litigation, 295 F.3d 651,
fixing, either interdependently or through
655 (7th Cir. 2002). Thus this type of
a more express form of collusion. In other
economic evidence is neither necessary
words, it is “evidence that the structure of
nor sufficient to conclude that sufficient
the market was such as to make secret
proof of an agreement exists to preclude
price fixing feasible.” In re High Fructose
summary judgment, but it is relevant and
Corn Syrup Antitrust Litigation, 295 F.3d
courts should as a general matter consider
651, 655 (7th Cir. 2002). Evidence that the
it.
defendant acted contrary to its interests
means evidence of conduct that would be
We also observe that certain types
14
evidence will generally be non-economic concentrated; there are a handful of sellers
evidence “that there was an actual, and there is no “fringe market” of smaller
manifest agreement not to compete.” Id. at firms. Flat glass is sold primarily on the
661. That evide nce m ay involv e basis of price, and although it may vary in
“customary indications of traditional tint or thickness it is generally a
conspiracy,”or “proof that the defendants standardized product. Importantly, the
got together and exchanged assurances of demand for flat glass was in decline during
common action or otherwise adopted a the start of the 1990s and PPG and its
common plan even though no meetings, competitors had e xces s cap acity.
conversations, or exchanged documents Normally, reduced demand and excess
are shown.” Areeda, supra, ¶ 1434b, at supply are economic conditions that favor
243; see also Petruzzi’s, 998 F.2d at 1244. price cuts, rather than price increases.
There are also high fixed costs in the
We turn to whether plaintiffs here industry. See App. 635. Suffice it to say,
have adduced sufficient evidence of plus the flat glass industry is in many respects a
factors to preclude summary judgment on text book example of an industry
their two separate antitrust claims. susceptible to efforts to maintain
supracompetitive prices. See generally
A. Flat Glass Richard A. Posner, Antitrust Law 69-79
(2d ed. 2001). PPG concedes as much. See
We first note that plaintiffs have Tr. of Oral Argument 21-22.
offered substantial evidence tending to
show that PPG had a motive to enter into Similarly, there is evidence in the
a price fixing conspiracy because record indicating that the price increases
conditions existed in the flat glass industry PPG and its competitors implemented
that were conducive to collusion. As we were inconsistent with competition in the
have described, the flat glass market is industry. In other words, there is evidence
of anti-competitive behavior and that PPG
acted “contrary to its interests.” The entry
of Cardinal into the market, for example,
of “actions against self interest” may do
tends to indicate that flat glass producers
m o r e t h a n r e s t a t e e co n o m i c
were charging supracompetitive prices.
interdependence. For example, non-price
See Posner, supra, at 89 (“The charging of
acts against self-interest, such as
a monopoly price will attract new
apparently unilateral exchanges of
competitors to a market who perceive
confidential price information, cannot
opportunities for unusual profits by reason
simply be explained as a result of
of the abnormally high price.”). More
oligopolostic interdependence. See
important, no evidence suggests that the
Blomkest Fertilizer, Inc., 203 F.3d at
increase in list prices was correlated with
1046-47 (Gibson, J., dissenting).
any changes in costs or demand. Indeed, in
15
July of 1992 a PPG executive noted that argues that plaintiffs cannot establish
“[n]o one . . . believes that demand will be liability as a matter of law for that reason,
robust enough to support a price increase it is simply wrong.13 “An agreement to fix
without significant discipline on the part of
all float producers.” App. 5841. After the
flat glass producers implemented a price 13
PPG argued before the District
increase in September of 1992, the same
Court, for example, that “controlling case
executive noted that “[b]asic supply and
law precludes an antitrust plaintiff from
demand do not support this [1992]
avoiding summary judgment by reliance
increase.” App. 5908.
on evidence relating to list prices.” App.
667. PPG misstates the law. Declining
All the above indicates that the
transaction prices will tend to support a
price increases were collusive, but not
conclusion that competitors did not enter
whether the collusion was merely
into an agreement to fix prices where the
interdependent or the result of an actual
other record evidence also fails to
agreement. We therefore consider whether
sufficiently prove an agreement. See, e.g.,
sufficient “traditio nal” conspiracy
Clamp-All Corp., 851 F.2d at 484 (“[T]he
evidence exists from which a reasonably
fact that [the defendants] often set prices
jury could infer that an agreement existed.
that deviated from their price lists helps
Plaintiffs argue that evidence that PPG’s
support the inference that the similarity of
competitors entered into an agreement—at
price lists reflects individual decisions to
least amongst themselves—tends to show
copy, rather than any more formal pricing
that PPG too entered the same agreement.
agreement.”). Our decision in In re Baby
They also argue that other circumstantial
Food is not to the contrary. In the specific
evidence shows—or at least a finder of
factual setting of that case—involving
fact could infer—that PPG agreed to raise
“hundreds of products” and multiple
the price of flat glass three specific times:
complicated discounts and price
June-July of 1991, September-October of
promotions—we concluded that plaintiffs’
1992, and May-June of 1993.
and their experts’ use of list price data was
insufficient to show that parallel pricing
As a preliminary matter, however,
had occurred. 166 F.3d at 128-29.
we address an argument that pervades
Significantly, the defendants made
PPG’s briefs, both before us and before the
“similar pricing decisions” 15.5% of the
District Court. PPG contends that
time and priced their products differently
regardless of the flat glass producers’ list
84.5% of the time. Id. at 128. The District
prices, the actual transactional prices—that
Court therefore concluded, in a portion of
is, the prices at which flat glass producers
its decision that we cited with approval,
actua lly sold their pro duct t o
that the plaintiffs were “unable to show
customers—declined during the period of
that defendants’ prices moved in a parallel
the alleged conspiracy. Insofar as PPG
fashion. That is true both for list prices
16
prices is . . . a per se violation of the “leniency to corporations reporting their
Sherman Act even if most or for that illegal antitrust activity at an early stage, if
matter all transactions occurred at lower they meet certain conditions.” App. 6459.
prices.” In re High Fructose Corn Syrup, Among the policy’s requirements was that
295 F.3d at 656. the cooperating corporation “report[] the
wrongdoing with candor and completeness
PPG does not—it cannot—seriously and provide[] full, continuing and
contend that the flat glass producers complete cooperation that advances the
increased their list prices with no intention Division in its investigation.” App. 6460.
of affecting transaction prices. “[S]ellers
would not bother to fix list prices if they LOF sought leniency under the
thought there would be no effect on policy in 1995, but the Antitrust Division
transaction prices.” Id. Thus declining concluded that LOF had not been
transaction prices despite an agreement to sufficiently forthcoming with information
fix list prices would constitute a failed of its wrongdoing. “We are surprised that
attempt to fix prices. But a horizontal you consider our proffer, which described
agreement to fix prices need not succeed an agreed upon, across the board price
for sellers to be liable under the Sherman increase for the entire United States,” LOF
Act; it is the attempt that the Sherman Act responded, “to be less than a ‘full and
proscribes. See Socony-Vacuum Oil Co., complete disclosure.’” App. 5003.
310 U.S. at 224 n.59.
LOF’s response to the Antitrust
1. Evidence of an Agreement Division does not directly state that it
Among PPG’s Competitors agreed with PPG to raise prices. But a
reasonable factfinder could infer such an
The District Court concluded that agreement from LOF’s reference to an
the record “undoubtedly evidences that “across the board” price increase. Black’s
several of the settling defendants Law Dictionary defines “across-the-board”
conspired to fix prices.” App. 46. We as “[a]pplying to all classes, categories, or
agree. The most compelling basis for this groups.” Black’s Law Dictionary 24 (7th
conclusion is a document that LOF ed. 1999). One reasonable interpretation of
submitted to the Department of Justice’s LOF’s statement is that LOF agreed with
Antitrust Division in 1995. one or more competitor to increase the
price of all types of flat glass. Another is
The Antitrust Division had a that LOF agreed with all its competitors to
“Corporate Leniency Policy” in effect at increase prices on one or more category of
the time under which the DOJ accorded flat glass. And yet another is that LOF
and transaction prices.” Id.17
agreed with all its competitors to increase 2. The June-July 1991 Increase
the price of all types of flat glass.14
On June 7, 1991, AFG announced
PPG argues that under our decision that it was raising the price of its flat glass.
in In re Baby Food, “the fact that some The price increase was to become effective
other glass producers may have attempted on July 15, 1991. App. 3552. Neither PPG
to fix prices in this case is irrelevant.” PPG nor any of AFG’s other competitors raised
Brief 82. We disagree. Even if LOF’s their prices in response.15
statement—and any other evidence—tends
to show that PPG’s competitors agreed Also on June 7, 1991, top
among themselves to raise prices but does executives from Pilkington’s various
not directly implicate PPG, it is surely not businesses (including LOF) met in the
irrelevant to whether PPG entered an United Kingdom. Minutes from the
agreement. If six firms act in parallel meeting state: “There were indications that
fashion and there is evidence that five of a price increase of approximately 8%
the firms entered into an agreement, for would hold” in the United States. App.
example, it is reasonable to infer that the 3868.
sixth firm acted consistent with the other
five firms’ actions because it was also a A week later, on June 13, 1991, two
party to the agreement. That is especially of LOF’s board members (Tomoaki Abe
so if the sister firm’s behavior mirrored and Mr. M atsumora ) traveled to
that of the five conceded coconspirators. Pennsylvania to play golf with Robert
In some circumstances, to be sure, such Duncan, the Vice President of PPG’s Glass
evidence might not be sufficient alone to Group. The night before they played golf,
defeat summary judgment. See In re Citric Abe’s administrative assistant sent him a
Acid Litig., 191 F.3d 1090, 1106 (9 th Cir. fax relating a message from Glen
1999). But we need not determine whether Nightingale, the Pilkington executive
it can be here, because plaintiffs argue that based in London with responsibility for
additional evidence supports their LOF. 16 The fax stated: “M r. Nightingale
contention that PPG entered into an
agreement. 15
AFG raised the price of its
“pattern glass” by 4%, its “thin glass
products” by 5%, its “gray and bronze
thicknesses” by 9%, and its “4mm-12mm”
14
PPG does not argue that LOF’s also by 9%. App. 3552.
proffer is not admissible, and we therefore
16
assume that it is for purposes of this LOF’s proffer to the DOJ
decision. In any case, however, we would identified Nightingale as an individual
reach the same result even if we did not “involved in the 1992 activities.” App.
consider LOF’s proffer. 5003. It also stated that Nightingale had
18
requests that you call him on Friday PPG’s competitors had actually matched
morning [June 14] before you leave your PPG’s price increase.17
hotel room—it will only take two minutes.
He seemed rather firm. . .” App. 3890. On July 2, 1991, a Ford executive
sent an email to his regional managers
Two weeks later, on June 28, 1991, stating that “[w]e must have total support
PPG announced a 7.5-9% price of this industry pricing action and focus
increase—an amount different than the our attention on implementing the price
price increase AFG announced on June 7, increase in an intelligent manner. The
but notably approximately 8%— to be actions being taken are important to the
effective July 29, 1991. App. 5833. PPG’s industry and will improve the commercial
competitors eventually followed suit with glass profitability.” App. 3553. As of that
virtually identical price increases, to be day, however, neither LOF nor Guardian
effective either July 29 or August 1, 1991. had announced a price increase. They
Ford announced its price increase on July announced increases on July 8 and July 9,
1, app. 3472; LOF announced its price respectively.
increase on July 8, app. 3474; Guardian
announced on July 9, app. 3482; and AFG A PPG internal document dated
rescinded its June 7 increase and September 6, 1991 stated that the “price
announced a price increase in line with increase was implemented without any
PPG’s on July 10, app. 3551. problems.” App. 5831. A similar
document, dated September 3, 1991, stated
A copy of PPG’s June 28, 1991 that “[t]he industry price increase was
announcement produced from the files of implemented in August by all primary
John Frazier (manager of PPG’s
Knoxville, Tennessee branch) contains a
typewritten note on it stating: “ALL 17
PPG on the other hand argues
OTHER MAJOR GLASS SUPPLIERS
that there is evidence suggesting that
ARE CONCURRENTLY RAISING
someone typed the note on the June 28
PRICES THE SAM E PERCENTAGE.”
announcement after its competitors
App. 5833. Evidence suggests that Frazier
announced their price increases. PPG is
received this document, together with the
undoubtedly correct; this document’s time
typewritten notation, sometime before
frame is a disputed fact and a finder of fact
could reasonably reach the conclusion
PPG urges us to draw. But a fact finder
“discussions with [an AFG executive] that could also reasonably conclude the
resulted in a price move.” App. 5004. opposite, and it is black letter law that we
Nightingale invoked his Fifth Amendment must draw all reasonable inferences in
privilege against self incrimination when plaintiffs’ favor at this point in the
plaintiffs sought to depose him. proceedings.
19
manufacturers, although varying degrees 1992, effective Oct. 1, 1992, with
of protection were offered by our increases of 9% on clear and tinted glass
competition.” App. 5731. An internal LOF and 5% on “Eclipse” glass. App. 3628. A
document from November of 1991, few weeks later, on July 24, 1992, Joseph
however, stated that the “[p]rice increase Hudson— PPG’s Eastern Zone Manager
of 8/19/91 is unraveling at several key for Flat Glass Products, app. 5908—
acco unts d u e t o A F G /G laverbec/ noted: “No one, however, believes that
Guardian’s failure to hold the line on demand will be robust enough to support a
pricing and PPG’s price protected annual price increa se w ithout s ignificant
contracts through the year end.” App. discipline on the part of all float
1712. producers.” App. 5841.18
To summarize: AFG raised its
prices, but no one followed suit. LOF 18
A fuller excerpt from the cited
executives expressed their opinion at a portion of the record states:
board meeting that an 8% increase in flat
glass prices would “hold.” Two board Glaverbec appears to have
members met with a PPG executive one quieted down just a bit in
week later. Two weeks after the meeting, terms of new aggressive
PPG raised its flat glass prices by pricing, seemingly for the
essentially the same amount that LOF first time to be content with
executives thought would “hold.” An current absurdly low prices.
internal PPG memorandum, which might Significantly, for the first
have been produced prior to any other firm time, Glaverbec is reported
announcing an increase in its flat glass to have said that their tank is
prices, states that other flat glass producers sold out. All producers,
were “concurrently raising prices the same including PPG, continue to
percentage.” The flat glass manufacturers react sele ctive ly to
initially felt that the price increase had Glaverbec’s pricing and
gone successfully, but they later felt it was attempt to protect selected
unsuccessful because at least some of customers and selected
them failed to “hold the line.” markets.
3. The September-October 1992 Discussion and rumors
Price Increase surrounding a possible price
increase later in the year are
A July 1, 1992 entry in the pocket
widespread in the market
calendar for a Ford Regional Sales
place. No one, however,
Manager indicated that LOF was going to
believes that demand will be
announce a price increase on Sept. 22,
robust enough to support a
20
In September of 1992, however, the Fair, I also had the
competitors announced a 5-9% price opportunity to meet with
increase: AFG announced its price Russ Ebeid of Guardian
increase on September 15, 1992, to be who assured me that they
effective October 1, app. 3545; Guardian were fully supportive of the
announced a price increase on September price increase proposition.
21, to be effective October 9, app. 3547; Clearly, this could make
LOF announced on September 22, to be quite a difference to your
effective October 1, app. 3476; and both results if the price increase
PPG and Ford announced their prices can stick.
increases on September 23, to be effective
October 12, app. 3475, 3549. On App. 3895. This excerpt was removed
September 24, AFG changed the effective from a later version of the letter. App.
date of its price increase from October 1 to 7194.19
October 12. App. 3550.
Finally, during the same time period
Between September 22 and in September of 1992, PPG’s Hudson
September 26, 1992, soon after the price reiterated his July comment that a price
increases were announced, sen ior increase would not be consistent with
executives from the various competitors market conditions. According to Hudson,
(PPG, Ford, Guardian, and Pilkington) “[b]asic supply and demand do not support
attended a “Glass Fair” meeting in this [1992] increase.” App. 5908.20
Germany. A Pilkington executive reported
the following in a letter to LOF’s Skeddle: 19
Even if this statement does not
I was pleased to learn during unambiguously tend to show that flat glass
the Glass Fair that an producers agreed ahead of time to raise
attempt to raise prices by prices, it at least tends to show that there
9% in the United States had was an agreement to maintain higher
been initially supported by prices despite competitive demands (i.e. to
a ll s u p p l ie r s i n t h e “make it stick”).
marketplace. During the 20
The full excerpt from the record
reads:
price increase Certainly the hot topic on
without significant the pricing front is the
discipline on the part industry increase announced
of all float producers. during September to be
effective in October. Basic
App. 5841. supply and demand do not
21
To summarize: A Ford Regional or June [of 1993] of about 5 or 6%.” App.
Sales Manager was aware of the precise 3720, 3456, 3458-59. Teat reported this to
date when LOF was going to announce a superiors at LOF with pricing authority.
price increase almost three months ahead App. 3721-23, 3456-58.21
of time, as well as the precise amounts of
the increase. A PPG executive believed LOF’s preliminary budget for fiscal
that the market would not support a price year 1994, dated January 21, 1993, refers
increase. Nonetheless, PPG and its to a “May-June ‘93 price increase.” App.
competitors raised their prices by the same 6432. Similarly, an LOF “CEO’s Review
amount, all within eight days of each Report” from March 30, 1993 stated that
other. Soon after the price increases were there would be “a U.S. domestic price
announced, executives from the various increase in the May-June timeframe.” App.
flat glass producers attended a trade show 4031.22 And LOF’s revised budget (dated
at which a executive from Guardian
assured an executive from Pilkington that
Guardian was “fully supportive of the 21
price increase proposition.” Kennedy was an officer and
director of AFG. Although Teat did not
4. The May-June 1993 have pricing authority, his precise position
Price Increase at LOF is unclear from the record.
22
A fuller excerpt stated:
In December of 1992, AFG’s Roger
Kennedy told LOF’s Roger Teat that AFG
A price increase has been
was “considering another increase in May
initiated in Eastern Canada
by PPG to be effective
March 22; 7% increase for
support this increase, all clear, uncased product
so it will require (2.3mm through 6.0mm)
discipline on the part and a 9% increase for clear
o f e a c h c a s e d p r o d u c t . It is
manufacturer. anticipated that this increase
G l a v e r b e c , will be a lead into a U.S.
Guardian’s mirror domestic price increase in
operations and the May-June timeframe.
AFG’s distribution LOF is follow ing the
arm are keys to the Canadian lead and including
success of the heavy clear and tint product
increase. with the increase.
App. 5908. App. 4031.
22
April 5, 1993) also referred to a “May- After the price increases went into
June price increase.” App. 4669.23 effect, John M usser (from PPG) reported
that “[t]he price increase of 5.5%
A few months later, on April 16, announced in early May by all major float
1993, A F G fa xe d t o P P G a producers for an implementation on or
“prepublication” copy of its May 17, 1993 about June 7 has had the effect of
5.5% price increase announcement (to be stabilizing prices.” App. 5906.25 In a
effective in June). App. 6369.24 It also
faxed a copy to Guardian. App. 3711.
25
A fuller excerpt stated:
PPG announced a 5.5% price
increase on May 12, 1993, almost a week
The price increase of 5.5%
before AFG was going to announce its
announced in early May by
price increase. App. 5840. The rest of
all major float producers for
PPG’s competitors quickly followed suit.
an implementation on or
LOF, AFG, and Ford announced five days
about June 7 has had the
later, on M ay 17, 1993. App. 3477, 3708,
effect of stabilizing prices.
3478. Guardian announced on May 19,
Overall customer reaction to
1993. App. 6105.
the increase has been
favorable, particularly in the
mirror and distributor/
23
In addition, Ford’s business plan fabricator segments. Sash
(dated April 29, 1993) also referred to a accounts who are not price
5% price increase. App. 3698. Under the protected are resisting the
heading “Possible Opportunities and increased [sic], to a degree.
Improvements,” it stated: “A 5% market The modest amount of the
price increase spurred by cyclical recovery increase, the perceived cost
with increased industry capacity utilization justification for the increase,
would increase profits by almost $3 and the firmness to date of
million.” App. 3697-98. a l l f lo a t p r o d u ce r s,
however, are all positive
24
PPG urges that AFG did not send factors which project that
the fax on April 16, 1993, arguing that the the announced prices will
most likely explanation for the date’s hold. The highest degree of
appearance on the fax is that the fax uncertainty resides on the
machine malfunctioned. PPG is free to West Coast, which has the
make this argument to a jury, but surely a lowest level of industry
reasonable finder of fact could infer that capacity utilization.
the date on the fax means that it was sent
on that day. App. 5906.
23
similar vein, an LOF report (dated June 21, that would enable a reasonable jury to
1993) stated: “Price increase is in effect reject the hypothesis that the defendants
from all major manufacturers. We are foreswore price competition without
monitoring the market to make sure that all actually agreeing to do so.” In re High
stick to the rules and will report any and Fructose Corn Syrup, 295 F.3d at 661
all information we hear about.” App. 3732. (citing Matsushita, 475 U.S. at 488).
PPG’s Central Zone Manager, First, there is the evidence—
Thomas Merlitti, stated on June 25, 1993 including LOF’s assertion that there was
that “[t]he price increase implemented in an “across the board” agreement to
June remains firmly in place as all major increase prices—that PPG’s competitors
flat glass producers are holding firm.” entered into an agreement. And viewed
App. 3507. And Hudson of PPG reported: collectively and holistically, there is
“The increase which was effective June 7 evidence tending to show that PPG was a
has been a nearly complete success.” App. party to an agreement to raise the price of
5794. flat glass on three occasions.
To summarize: AFG and LOF PPG urges us to take a different
discussed a May-June 1993 price increase approach. It appears to propose that we
during the preceding December, and LOF consider each individual piece of evidence
accounted for such an increase in its and disregard it if we could feasibly
forthcoming budget. In April, AFG faxed interpret it as consistent with the absence
to PPG a copy of the increase it planned to of an agreement to raise prices. With
announce on May 17. PPG announced an regard to the announcement that stated “all
identical increase on May 12, and the rest oth er major glass suppliers a re
of the flat glass producers followed with concurrently raising prices by the same
identical price increases. LOF was percentage,” for example, PPG argues that
“monitoring the market to make sure that the “facts suggest that the notation was
all stick to the rules.” The flat glass placed on the announcement after all glass
producers all “held firm,” and executives produc ers had is sued their
from the firms generally considered the announcements.” PPG Br. 25 (emphasis
price increase a “success.” added). Similarly, PPG contends that the
“most likely explanation” for the date that
5. Analytical Summary appears on an AFG price announcement
found in PPG’s files “is that the date stamp
The above evidence is sufficient to mechanism malfunctioned.” PPG Br. 43.
provide a finder of fact with a basis to We echo the Seventh Circuit’s admonition
reasonably conclude that PPG agreed with in In re High Fructose Corn Syrup that the
the other flat glass producers to raise “statement of facts in the defendants’ brief
prices. Put differently, there is “evidence combines a recital of the facts favorable to
24
the defendants with an interpretation plans. Notably, these scraps of evidence of
favorable to them of the remaining foreknowledge were not correlated to any
evidence; and that is the character of a trial actual concerted price increase activity
brief rather than of a brief defending a among all competitors.
grant of summary judgment.” 295 F.3d at
655. PPG’s arguments are well-suited for We made two salient points in
an argument before a jury, but they are reviewing this evidence and rejecting the
irrelevant to our consideration in the inference of agreement. First, we noted
present posture of this case. that price discussion among low level sales
people has little probative weight; we
Alternatively, PPG appears to distinguished the far different situation
contend that we should disregard certain where upper level executives have secret
categories of evidence, from various conversations about price. Id. at 125 & n.8
periods of time, because such evidence (“Evidence of sporadic exchanges of shop
does not in isolation lead inexorably to the talk among field sales representatives who
conclusion that PPG entered into an lack pricing authority is insufficient to
agreement. Tr. of Oral Argument 25. PPG survive summary judgment.”). Second, and
argues, for example, that competitors’ more important, we emphasized that “there
possession of each others’ price increase must be evidence that the exchanges of
announcements or meetings among information had an impact on pricing
competitors’ executives cannot suffice to decisions.” Id. at 125. The reason for this
preclude summary judgment. To be sure, requirement is that exchanges of price
the mere presence of such evidence does information may be compatible with
not require a court to deny summary competition, because they may “‘increase
judgment. In In re Baby Food, we economic efficiency and render markets
observed that “[w]e do not believe that the more, rather than less, competitive.’” Id.
m e r e p ossession o f com petitiv e (quoting United States v. United States
memoranda is evidence of concerted Gypsum Co., 438 U.S. 422, 443 n.16
action to fix prices.” 166 F.3d at 126. But (1978)). The In re Baby Food plaintiffs
the price-exchange evidence in In re Baby simply could not correlate information
Food was far less compelling than in this exchanges with specific collusive
case. The In re Baby Food plaintiffs relied behavior. Rather, they made the more
upon testimony of competitors’ price amorphous claim that the exchanges of
information gathered by low-level sales information “impacted the market as a
employees in unsystematic fashion. whole.” Id.Plaintiffs pointed to a few competitors’
memos in sales files, but there was no The exchanges of information here,
evidence of how the documents got there. by contrast, are qualitatively different from
Additional evidence documented some those in In re Baby Food, particularly
awareness of competitors’ price increase when considered in the context of other
25
evidence. First, there is evidence tending price behavior were followed by actual
to show that the exchanges occurred at a price changes. The inference of concerted
higher level of the flat glass producers’ rather than interdependent action is
structural hierarchy. Second, and more therefore stronger. In other words, these
importantly, a finder of fact could facts take the exchanges of pricing
reasonably infer that the flat glass information outside the realm of “mere
producers used the information to possession.” In re Baby Food, 166 F.3d at
implement collusive price increases; that 126.
is, “the exchanges of information had an
impact on pricing decisions.” A court must We need not speculate as to
look to the evidence as a whole and whether something less than the evidence
consider any single piece of evidence in in this record—two rate increases, for
the context of other evidence. See Big instance, rather than three— would suffice
Apple BMW, Inc. v. BMW of North to deny summary judgment. The evidence
America, Inc., 974 F.2d 1358, 1364-65 (3d here, in its totality, is sufficient to go to a
Cir. 1992), cited in In re Baby Food, 166 jury.
F.3d at 124. So, for example, there is
evidence that AFG faxed to PPG a copy of B. Automotive Replacement Glass
a planned future increase that it had not
announced publicly, PPG announced an As described above, PPG and other
identical increase before AFG, and the rest automotive replacement glass producers
of the flat glass producers followed with supplied NAGS with their truckload list
identical price increases. It would take no prices for various automotive replacement
stretch of the imagination for a fact finder glass products. NAGS would select a
to infer from this evidence—one piece of particular truckload price—usually the
which is PPG’s possession of a truckload price of the identical OEM glass
“competitive memoranda”—that PPG product—to devise recommended retail
engaged in concerted action to fix prices. prices for the products. NAGS devised the
recommended price by using a particular
In sum, here the exchanges of “multiplier” for each type of product.26
information are more tightly linked with The glass producers knew the multipliers
concerted behavior and therefore they NAGS used, and were able to calculate
appear more purposive. Several of the key backwards to the truckload price that
documents emphasize that the relevant NAGS had utilized. The producers would
price increases were not economically then align their truckload list prices with
justified or supportable, but required
competitors to hold the line. Others
suggest not just foreknowledge of a single 26
The multiplier for domestic
competitor’s pricing plans, but of the plans
windshields, for example, was 4.06. App.
of multiple competitors. Predictions of
2980.
26
the price that NAGS had used. As a result, devised depicts the process. It indicates
the automotive replacement glass that producers gave their truckload prices
producers often increased their prices in to NAGS, NAGS selected a particular
parallel fashion.27 truckload price, the producers issued a
“new pricing schedule adjusted to
Plaintiffs argue that the evidence NAGS,” and as a result “industry pricing
shows that PPG and other automotive stabilize[d].” App. 4939.
replacement glass producers agreed to
raise their prices. They provide evidence We understand why the NAGS
that although it was against PPG’s official Calculator would raise suspicion in
policy, PPG provided its truckload pricing plaintiffs’ minds, and why plaintiffs would
information to NAGS. Plaintiffs also refer seek discovery regarding PPG’s use of the
to the NAGS website, which at one point calculator. Cf. Areeda, supra, ¶ 1435g, at
stated: “[M]anufacturers were in conflict 264-65 (discussing the use of “pricing
over their published list prices. As a manuals”). But publication of pricing
neutral party NAGS was asked to assign information can have a pro-competitive
list prices to NAGS part numbers, effect. As we note above, we should
establishing the NAGS List Price.” App. therefore hesitate to rest on inference of
6444-45.28 In addition, a chart that LOF improper collusion from this ambiguous,
or even pro-competitive, fact. See, e.g., In
27
re Baby Food, 166 F.3d at 126; Petruzzi’s,
PPG, Ford and LOF increased 998 F.2d at 1232. After conducting
the price of windshields by 7% and discovery, plaintiffs have failed to adduce
tempered parts by 8%, for example, in sufficient evidence to create a genuine
February-March of 1992. App. 5913, issue of material fact. First, there is no
5917, 7184. Similarly, in January- evidence that PPG or any other
February of 1992 they increased automotive replacement glass producer
windshield prices by 9% and tempered exerted influence over the truckload prices
parts by 10%. App. 4899, 7192, 7187. that NAGS selected to formulate
28
A fuller excerpt states: recommended prices. And there is no
In the 1950s, manufacturers
were in conflict over their discounting and were based
published list prices. As a on manufacturers’ truckload
neutral party NAGS was prices. NAGS started
asked to assign list prices to publishing the part numbers
NAGS part numbers, with prices, establishing the
establishing the NAGS List ‘NAGS calculator’.
Price. These prices reflected
the industry practice of App. 6444-45 (emphasis added).
27
evidence—unlike the evidence we challenge the District Court’s ruling on
described above regarding flat glass list appe al. We review the Co urt’ s
prices—that the automotive replacement determination for an abuse of discretion.
glass manufacturers agreed to adjust their See United States v. Castro, 129 F.3d 226,
list prices according to the NAGS 229 (1 st Cir. 1997).
recommended price. We will therefore
affirm summary judgment on this claim. As a general matter, a court should
allow a witness to invoke his Fifth
C. Evidentiary Rulings Amendment privilege only if the hazard of
incrimination is “substantial and ‘real,’
The District Court excluded several and not merely trifling or imaginary.”
categories of evidence before it decided United States v. Apfelbaum, 445 U.S. 115,
PPG’s motions for summary judgment. 128 (1980) (citation omitted). Yet “the
Plaintiffs appeal from four of the District trial judge should order the witness to
Court’s evidentiary determinations. We answer questions only if it is perfectly
address them in turn.29 clear, from a careful consideration of all
the circumstances in the case that the
answer cannot possibly tend to incriminate
1. Fifth Amendment the witness.” United States v. Washington,
318 F.3d 845, 856 (8 th Cir.), cert. denied,
When plaintiffs sought to depose 124 S. Ct. 251 (2003) (internal quotations
Skeddle and Bryant—the former LOF and citations omitted); see also United
executives who were charged with crimes States v. Yurasovich, 580 F.2d 1212,
and who alleged that LOF engaged in 1215-16 (3d Cir. 1978) (“To support a
illegal antitrust activity—they both contempt citation for a refusal to testify on
asserted their Fifth Amendment privilege Fifth Amendment grounds . . . it must be
against self incrimination. The District ‘Perfectly clear from a care ful
Court denied plaintiffs’ motion in which consideration of all the circumstances in
they urged the Court to compel Skeddle the case, that the witness (who invokes the
and Bryant to testify. Plaintiffs now privilege) is mistaken, and that the
answer(s) cannot Possibly have such a
tendency to incriminate.’”).
29
We do not address the District
Plaintiffs argue that the Court erred
Court’s other evidentiary rulings, such as
because (1) all relevant statutes of
its decision to exclude the transcript of
limitations have run; and (2) the relevant
Skeddle’s grand jury testimony. Plaintiffs
prosecutorial authorities have stated that
opine that the District Court erred when it
they do not intend to bring criminal
excluded the testimony, but they do not
charges against Skeddle or Bryant. It is
appeal from that decision. Plaintiffs’ Br.
irrelevant, however, that prosecutorial
18.
28
authorities have stated that they do not the “Queen’s File,” to a grand jury
intend to prosecute Skeddle or Bryant. See empaneled in the spring of 1996 to
Matter of Special Federal Grand Jury, 819 investigate Skeddle’s (and others)
F.2d 56, 58 (3d Cir. 1987) (“[A] promise allegations of wrongdoing in the flat glass
by the government not to use the testimony industry.30
to be compelled, even if approved by a
court, does not strip the recipient of the PPG filed two separate in limine
protection of that privilege.”). And motions seeking to exclude both
Skeddle and Bryant have sufficiently categories of notes, and the District Court
refuted plaintiffs’ statute of limitations granted its motions because it determined
argument. To be sure,“if a prosecution for that the notes contain “multiple levels of
a crime, concerning which the witness is hearsay” and did not fall within any
interrogated, is barred by the statute of exception to the hearsay rule. App. 47-48,
limitations, he is compellable to answer.” 56-58. “[W]e review the district court's
Brown v. Walker, 161 U.S. 591, 598 decisions to admit or exclude evidence for
(1896). But, contrary to plaintiffs’ abuse of discretion, although our review is
assertion, Skeddle and Bryant have plenary as to the interpretation or
identified several state statute of application of a legal standard underlying
limitations that have not run. In Michigan, such a decision.” Robinson v. City of
for example, a defendant’s absence from Pittsburgh, 120 F.3d 1286, 1293 (3d Cir.
the state tolls the statute of limitation for 1997) (citations omitted).
certain of the state’s antitrust laws. See
Mich. Comp. Laws. Ann. §§ 445.781, a. Non-Queen’s File Notes
767.24(5). The District Court did not
abuse its discretion by declining to compel Plaintiffs argue that many portions
Skeddle and Bryant to testify. of Skeddle’s notes tend to support their
contentions that PPG agreed with its
competitors to increase prices on at least
2. Skeddle’s Notes two of the three occasions we discussed
above. With respect to the June-July 1991
Over the course of the litigation, price increase, plaintiffs reference a May
plaintiffs obtained a large collection of 31, 1991 note that states: “Glen
Ronald Skeddle’s handwritten notes. The
notes fall into two general categories:
notes that LOF provided to plaintiffs 30
There is apparently some amount
during discovery and notes that the DOJ of overlap between the two categories of
produced to plaintiffs pursuant to an order notes: LOF had already produced a
of the District Court. App. 10746, 11154. portion of the notes that plaintiffs also
Skeddle originally provided the latter obtained as part of the Queen’s File. App.
notes, which the parties have come to call 11154 n.3.
29
[Nightingale] heard that Glaverbec wants App. 4581. Another note also ostensibly
to move upwards in N.E. Reg’s.” App. memorializing a conversation Skeddle had
4567. Similarly, a note that plaintiffs argue with Glen Nightingale states that
Skeddle wrote no later than May of 1991 Nightingale met with AFG’s Dee
states that Jim Collins, a PPG Regional Hubbard. The note mentions an
Sales Manager, “mentioned that PPG is “incremental increase” and states that
looking at the possibility of an inc this “AFG will lead—before Labor Day.” App.
summer.” App. 3938. 3891.
With regard to the September- Similarly, a note from a meeting
October 1992 price increase, plaintiffs Skeddle had with LOF board member
refer to notes that purportedly memorialize Tomoaki Abe and dated November 17,
conversations Skeddle had with Glen 1992 contains the notation: “Mtgs. w PPG,
Nightingale, of Pilkington. First, a note Guardian re lic’g, prices, etc.” App. 10602.
dated February 6, 1992 provides: “Clearly Finally, a note that plaintiffs contend
Glen has had discussions w AFG, memorializes a July 13, 1992 conversation
Guardian, & probably indirectly w PPG with Nightingale states:
(crystal tower) re price increases, and is
asking me now to supply him info so that Glen then related his
he can initiate more detailed discussions inf or ma tion on N orth
with his contacts.” App. 3877. And a note American flat glass pricing
that plaintiffs contend pertains to a — the info came from
meeting Ske ddle h ad w ith G len Hubbard of AFG, and the
Nightingale on April 29, 1992 states: top guy at Glaverbel (Asahi)
who control Glaverbec in
Glen indicated he would Canada, [illegible] controls
make contacts w AFG and AFG in the states.
Glaverbel/Glaverbec to see
if he could get them to agree The indication is that new
to come off their silly low “ t a rg e t s ” h a v e b e e n
prices and if he could established for AFG and
initiate a general price Glaverbec in Canada @
increase w/in the next 2 ~7% above recent
months. experience—letters will be
forthcoming to the general
He indicated he would get mkt place explaining new
back to me to indicate his prices as follows:
findings/effect following his
calls. [chart omitted]
30
These prices should go into corroborated by t he ‘to tal ity o f
effect 17th July. circumstances’ in the case,” id.; and (4) the
declarant had personal knowledge (i.e., he
Glen then related that perceived the facts to which the statement
Hubbard & he have “talked” relates), see United States v. Ammar, 714
and have together convinced F.2d 238, 254 (3d Cir. 1983); 5 Jack B.
PPG to take the lead in Weinstein et al., Weinstein’s Federal
putting up the price by ~7% Evidence § 804.06[4] (2d ed. 2003). 31 The
with letter to go out in Sept.
92, to take effect Oct. 1,
1992—with PPG taking the 31
Federal Rule of Evidence
lead.
804(b)(3) provides:
App. 3893.
(b) Hearsay exceptions. The
following are not excluded
Plaintiffs argue that these
by the hearsay rule if the
statements are admissible because they are
declarant is unavailable as a
statements of coconspirators under Federal
witness:
Rule of Evidence 801(d)(2)(E) and
....
therefore not hearsay. Alternatively, they
(3) Statement against
argue that even if the statements are
interest. A statement which
hearsay they are admissible as statements
was at the time of its
against interest under Federal Rule of
making so far contrary to
Evidence 804(b)(3).
the declarant's pecuniary or
proprietary interest, or so far
We first consider whether the
tended to subject the
District Court erred in concluding that the
declarant to civil or criminal
statements were not admissible as against
liability, or to render invalid
interest under Rule 804(b)(3). A hearsay
a claim by the declarant
statement is nonetheless admissible if (1)
against another, that a
“the declarant is unavailable as a witness,”
reasonable person in the
United States v. Boyce, 849 F.2d 833, 836
declarant's position would
(3d Cir. 1988); (2) “the statement is so far
not have made the statement
contrary to his pecuniary, proprietary or
unless believing it to be
penal interest that ‘a reasonable person in
true. A statement tending to
the declarant's position would not have
expose the declarant to
made the statement unless believing it to
criminal liability and
be true,’” id. (quoting Fed. R. Evid.
offered to exculpate the
804(b)(3)); (3) “the trustworthiness and
accused is not admissible
reliability of the statemen t [is]
unless corrobora ting
31
second and third requirements are Skeddle’s statements: (1) actual events did
“somewhat redundant” and often require not occur precisely as the notes indicated
“‘a sensitive analysis of the circumstances they would (e.g., PPG did not “lead” the
in which the statement was made and the September 1992 price increase); (2)
precise nature of the statement.’” Boyce, Skeddle’s notes tend to implicate others
849 F.2d at 836 (quoting United States v. besides himself; and (3) Skeddle may not
Palumbo, 639 F.2d 123, 127 (3d Cir. have written the notes contemporaneously
1981)); see also United States v. Moses, with the events he described in them. App.
148 F.3d 277, 280 (3d Cir. 1998) (“This 10748-50.
determination must be made ‘by viewing
[the statement] in context’ and ‘in light of The first two factors do not
all the surrounding circumstances.’”) sufficiently impugn Skeddle’s statements.
(quoting Williamson v. United States, 512 To the contrary, discrepancies between
U.S. 594, 603-604 (1994)). Skeddle’s statements and later actual
events could tend to reinforce their
Here, the District Court concluded veracity; statements that exactly mirrored
t h a t S k e d d l e’s state m e n t s w e r e what occurred would arguably be more
inadmissible because they “have not been suspect. And there is no per se rule that
corroborated by the totality of the statements implicating another person in
circumstances.” App. 47. Because this was misconduct are not against the interest of
the total of the District Court’s analysis, the declarant. See Moses, 148 F.3d at 280.
the precise basis for this conclusion is We do not agree with PPG’s assertion that
unclear. In its in limine motion before the the statements, which relate the
District Court, PPG appears to have inculpatory statements of his superiors
offered three reasons why the totality of (such as Nightingale), do not also
the circumstances do not corroborate inculpate Skeddle. Skeddle was the
President of LOF at the time of the alleged
conspiracy. Discussions to increase prices
circumstances clearly and Skeddle’s knowledge of those
indicate the discussions blanket him with antitrust
trustworthiness of liability. Indeed, such liability likely forms
the statement. the basis for Skeddle’s invocation of his
Fifth Amendment privilege against self
Fed. R. Evid. 804(b)(3). We note that the incrimination.
Confrontation Clause raises some
additional issues about admissibility of We agree, however, that a finding
such testimony in a criminal case, but that Skeddle’s notes were not
those concerns are irrelevant in this civil contemporaneous would support a
case. See Crawford v. Washington, 123 S. conclusion that the statements are not
Ct. 1354 (2004). reliable or corroborated by the
32
circumstances. Skeddle left LOF under a rulings in light of our decision and more
cloud of mutual disaffectio n. fully explain any bases for its rulings.32
Consequently, documenting LOF
wrongdoing during a time when LOF was Similarly, we will also remand the
alleging that Skeddle himself had engaged District Court’s determination that the
in wrongdoing would tend to impugn statements in Skeddle’s notes were not
Skeddle’s motives and therefore also the statements of co-conspirators. “In order for
reliability of the statements. But it is not an out-of-court statement to be admissible
clear that the District Court excluded pursuant to Rule 801(d)(2)(E), the district
Skeddle’s notes because it found that they court must find by a preponderance of the
were not contemporaneous. Moreover, it is evidence that: (1) a conspiracy existed; (2)
not clear that the record supports such a the declarant and the party against whom
conclusion; on their face, many of the the statement is offered were members of
notes give no indication that they were ex the conspiracy; (3) the statement was made
post fabrications. in the course of the conspiracy; and (4) the
statement was made in furtherance of the
The District Court’s summary conspiracy.” United States v. Ellis, 156
disposition of PPG’s in limine motion
hinders our ability to determine whether it
abused its discretion. Cf. Becker v. ARCO 32
In this regard, the District Court
Chemical Co., 207 F.3d 176, 181 (3d Cir. should determine whether, because the
2000) (“Where, however, the district court statements at issue were diary entries,
fails to explain its grounds for denying a Skeddle believed that they would be seen
Rule 403 objection and its reasons for by anyone. This may bear on whether they
doing so are not otherwise apparent from qualify as statements against interest.
the record, there is no way to review its See Zenith Radio Corp. v. Matsushita
discretion.”). Since we conclude that a Electric Industrial Co., 505 F. Supp. 1190,
jury could find an agreement existed even 1259-60 (E.D. Pa. 1981), issue aff’d In re
absent Skeddle’s notes and we would Japanese Electronic Products Antitrust
remand on that basis alone, we believe the Litigation, 723 F.2d 238, 300 (3d Cir.
best course is to allow the District Court to 1983), rev’d on other grounds sub. nom
consider these evidentiary matters in the Matsushita Electric Industrial Co. v.
first instance. We will therefore remand Zenith Radio Corp., 475 U.S. 574 (1986).
the District Court’s determination that We do not categorically hold that diary
Skeddle’s statements were not against self entries cannot satisfy the requirements of
interest so that the Court can consider its Rule 804(b)(3), see Walker v. Lockhart,
763 F.2d 942, 951 n.18 (8th Cir. 1985) (en
banc), but we do believe that a searching
inquiry is appropriate here, In re Japanese
Electronic Products, 723 F.2d at 300.
33
F.3d 493, 496 (3d Cir. 1998).33 statements in Skeddle’s notes were made
in the course of and in furtherance of a
Here, the District Court determined conspiracy of which the declarant and PPG
that plaintiffs had not satisfied the second were members. See United States v.
requirement. It concluded that the McGlory, 968 F.2d 309, 334 (3d Cir.
statements in Skeddle’s notes were not 1992) (citing Bourjaily v. United States,
admissible as co-conspirator statements 483 U.S. 171, 175 (1987)); 5 Jack B.
because “plaintiffs have failed to adduce Weinstein et al., Weinstein’s Federal
sufficient evidence that PPG was a co- Evidence § 801.34[6][a] (2d ed. 2003).
conspirator in the alleged price-fixing And it was the District Court’s role to
conspiracy.” App. 48.34 In other words, determine whether plaintiffs satisfied their
although the Court concluded that there burden. See Bourjaily, 483 U.S. at 175;
was evidence that a conspiracy existed, see Ammar, 714 F.2d at 247 n.5. In making
app. 46, it found that there was insufficient this factual determination, a district court
evidence that PPG was a party to the is not bound by the rules of evidence. See
conspiracy. Bourjaily, 483 U.S. at 178-79; Fed. R.
Evid. 104(a). Thus a district court can
It was plaintiffs’ burden to show by consider hearsay and other inadmissible
a preponderance of the evidence that the evidence. See McGlory, 968 F.2d at 334.
And it must consider the content of the
33
alleged coconspirator statement as well,
There is no requirement that the although the statements require
declarant be speaking from personal independent corroboration. See Fed. R.
knowledge. See United States v. Ammar, Evid. 801(d)(2)(E) (“The contents of the
714 F.2d 238, 254 (3d Cir. 1983); 5 Jack statement shall be considered but are not
B. Weinstein et al., Weinstein’s Federal alone sufficient to establish . . . the
Evidence § 801.23[2] (2d ed. 2003). existence of the conspiracy and the
34
The District Court characterized participation therein of the declarant and
the admissibility of coconspirator the party against whom the statement is
statements as an “exception to the hearsay offered . . . .”).
rule.” Rules 803 and 804 set forth
exceptions to the hearsay rule; that is, they The Court’s summary disposition
explain when statements are admissible again hampers our review of its decision
even though they qualify as hearsay. Rule for an abuse of discretion, however, which
801(d), however, sets forth statements that is the standard of review we must apply to
are admissible because they do not its Rule 801(d)(2)(E) determinations. See,
constitute hearsay, including statements e.g., United States v. Local 560 (I.B.T.),
“by a coconspirator of a party during the 974 F.2d 315, 337 (1992). Insofar as the
course and in furtherance of the Court based its determination on a
conspiracy.” Fed. R. Evid. 801(d)(E). conclusion that there was insufficient
34
evidence from which a jury could tending to implicate PPG in a price-fixing
conclude that PPG entered into an conspiracy, and can further explain any
agreement to fix prices, the District Court bases it might have for its reasoning.35
erred for the reasons we set forth above.
But simply because a jury could find by a Finally, we note that many of the
preponderance of the evidence that PPG notes contain multiple levels of hearsay.
entered into a conspiracy, it is not the case See, e.g., Carden v. Westinghouse Elec.
that the District Court must find that Corp., 850 F.2d 996, 1001-02 (3d Cir.
plaintiffs showed by a preponderance of 1988); Fed. R. Evid. 805. One note states,
the evidence that PPG entered into an for example, that Nightingale “related”
agreement. Any particular factual that he and an AFG executive “convinced
determination requires making a number PPG to take the lead in putting up the price
of more particularized factual by ~7% with letter to go out in Sept. 92, to
determinations and weighing the relevant take effect Oct. 1, 1992—with PPG taking
importance of those determinations. And the lead.” App. 3893. The note itself
two factfinders could feasibly reach (Skeddle’s statement) and Nightingale’s
different conclusion, especially under a assertion that he convinced PPG to take
preponderance of the evidence standard. the lead in increasing prices are both out-
To be sure, however, “the Federal Rules of-court statements that plaintiffs seek to
of Evidence are to be liberally construed use to prove the truth of the matter
in favor of admissibility.” United States v. asserted. Either or both might be
Pelullo, 964 F.2d 193, 204 (3d Cir. 1992). admissible as statements of coconspirators
as well as statements against interest.
Because we will remand plaintiffs’ Again, we think the District Court should
flat glass price fixing claim for further make these determinations in the first
proceedings, we again conclude that the instance, taking into account our
best course is to remand the District
Court’s determination that the statements
in Skeddle’s notes were not coconspirator 35
PPG argues that the District
statements. See In re Japanese Electronics Court concluded that the statements in
Products Antitrust Litigation, 723 F.2d Skeddle’s notes were not in furtherance of
238, 263 (3d Cir. 1983) (remanding Rule any conspiracy, ostensibly because—as
801(2 )(E) determination to be PPG argues—Skeddle did not create the
reconsidered), rev’d on other grounds sub. notes at the same time as the events he
nom. Matsushita Electric Industrial Co. v. purports to describe in them. But nothing
Zenith Radio Corp., 475 U.S. 574 (1986). in the Court’s decision indicates that this
Thus the District Court can consider was a basis for its determination that the
whether the statements in Skeddle’s notes statements were inadmissible. The District
are coconspirator statements with the Court will surely consider PPG’s
benefit of our discussion of the evidence arguments in this regard on remand.
35
discussion in this opinion. decision. Cf. United States v .
Himmelwright, 42 F.3d 777, 781 (3d Cir.
b. Queen’s File Notes 1994) (looking to whether bases for
district court’s decision was “apparent
The District Court concluded that from the record” where the court did not
the statements in the Queen’s File notes, explain the grounds for its decision). PPG
like the statements in the other Skeddle argued that most of the notes in the
notes, were not ad missible as Queen’s File “were written after Mr.
coconspirator statements because Skeddle’s termination as chief executive
“plaintiffs have failed to adduce sufficient officer of LOF on May 10, 1993, when he,
evidence that PPG was a co-conspirator in Edward Bryant (then LOF’s head of
the alleged price-fixing conspiracy.” App. manufacturing operations), and Darryl
57. It also concluded that the statements Costin (then LOF’s head of technical
were hearsay and the Queen’s File was not operations) were fired amidst allegations
admissible under the statement against of actionable self-dealing.” App. 11154.
interest exception because “the statements Many of the notes appear, on their face, to
contained therein are not contrary to support PPG’s contention. They are
Skeddle’s pecuniary or penal interest” and written in the third-person, for example,
because “the documents’ trustworthiness and they refer to events that post-date
and reliability are questionable given the Skeddle’s termination. See, e.g., Supp.
totality of the circumstances.” App. 57.36 App. 437. One note, for instance, refers to
the “summer of 1993” in the past tense.
Since this was the sum of the App. 11154.
District Court’s reasoning, we turn to
PPG’s arguments before the District Court If the District Court concluded that
to discern the bases for the Court’s the notes were not contemporaneous, it
could have concluded that the statements
contained therein were not in furtherance
36
The District Court also concluded of a conspiracy or corroborated by the
that the Queen’s File and non-Queen’s totality of the circumstances; that is, it
File notes did not fall within the business could have concluded that the statements
records exception of Rule 803(6). App. were not admissible as coconspirator
47, 56-57. And the Court found that the statements or statements against interest. If
“Queen’s File does not qualify as an we could conclude that the District Court
admission by a party opponent under excluded all the Queen’s File notes on that
Rules 801(d)(2)(A), (B), (C), or (D).” basis, we would affirm the District Court’s
App. 57-58. Plaintiffs do not argue that decision. But PPG concedes that not all
the District Court erred in these the Queen’s File notes appear to be non-
determinations, and we therefore do not contemporaneous. See PPG Br. 94, Tr. of
address them. Oral Argument 46. We will therefore
36
remand the District Court’s decision to plaintiffs, at “opportune times” for price
exclude the Queen’s File notes for the fixing.
same reasons we remand its determination
to exclude Skeddle’s other notes. We The District Court concluded that
think it best for the District Court to have while the evidence constituted “other bad
the opportunity to make these evidentiary acts” evidence under Federal Rule of
determinations with the benefit of our Evidence Rule 404(b), it was admissible
discussion here. for other acceptable purposes (e.g. motive,
opportunity, or intent). Yet the Court
3. Evidence Concerning excluded the evidence because it
OEM Glass determine that the evidence’s probative
value was substantially outweighed by the
As we explained above, PPG and danger of unfair prejudice. App. 54-55.
others fabricated flat glass into products This is a standard Rule 403 balance, which
for use in automobiles. Some of those we review with “substantial deference.”
products—called “original equipment McQueeney v. Wilmington Trust Co., 779
manufacturer” gla s s (“ O EM F.2d 916, 922 (3d Cir. 1985).37
glass”)—were fabricated for use in new
automobiles. Others were fabricated for
use as automotive replacement parts. The While evidence that PPG and LOF
latter products—called automotive conspired together in the OEM market
replacement glass—are the same as OEM would be relevant to plaintiffs’ claim that
glass products, but the markets for the two PPG also conspired to fix prices in the
are distinct. market for flat glass, see In re High
Fructose Corn Syrup, 295 F.3d at 661
In order to prove that PPG (noting that defendant conceded to having
conspired to fix the price of flat glass,
plaintiffs offered evidence that they argue 37
shows that PPG conspired with LOF to fix PPG also argues that we should
the price of OEM glass products. affirm the District Court’s decision
Specifically, plaintiffs argue that meetings because a reasonable jury could not
and conversations occurred between conclude that PPG committed the “other
Edw ard Bryant— w ho was LOF’s bad acts”—conspiring in the OEM
Executive Vice President in charge of the market—that plaintiffs argue tend to show
firm’s flat glass, automotive replacement that PPG conspired to fix the prices of flat
glass, and OEM businesses—and Frank glass. See Huddleston v. United States,
Archinaco (the head of PPG’s automotive 485 U.S. 681, 689 (1988). The District
replacement glass and OEM businesses). Court did not exclude the OEM glass
These meetings and discussions were evidence on that basis, however, and we
private and occurred, according to need not address PPG’s argument since
we affirm on other grounds.
37
fixed prices on related products during the
same time frame as the alleged
conspiracy), Areeda, supra, ¶ 1421, at 145,
plaintiffs’ evidence here is not particularly
probative of any OEM glass conspiracy.
The weakness of this evidence also
mitigates any danger of unfair prejudice.
But we cannot say that the District Court
abused its discretion in weighing these
countervailing considerations, and we will
therefore affirm the Court’s decision to
exclude the OEM glass evidence.
III. Conclusion
We will affirm the District Court’s
decision granting summary judgment on
plaintiffs’ claim that PPG conspired to fix
the prices of automotive replacement
glass. We conclude, however, that there is
sufficient evidence in the record—not
taking into account evidence the District
Court excluded— from which a reasonable
jury could find that PPG conspired to fix
the prices of flat glass. We will therefore
reverse the District Court’s judgment and
remand for further proceedings. In
addition, we will affirm the District
Court’s decisions declining to compel
Skeddle and Bryant to testify and
excluding evidence regarding OEM glass.
But we will remand the Court’s decision to
exclude Skeddle’s notes so that the Court
can consider its ruling in light of our
opinion here and have a further
opportunity to explain the bases for its
decisions.
38