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. e du/thir dc ir c uit_2001/87Filed April 23, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-5791

KURT H. EICHORN; WILLIAM J. HUCKINS; T. ROGER KIANG; EDWARD W. LANDIS; ORLANDO NAPOLIT ANO, individually and on behalf of all others similarly situated;

GILBERT G. DALEY; SUSAN H. DIBONA; BETH KING; MICHAEL S. ORATOWSKI;

THOMAS L. SALISBURY; LAWRENCE W ALSH, individually and on behalf of all others similarly situated, Appellants

v.

AT&T CORP; LUCENT TECHNOLOGIES, INC.;

TEXAS PACIFIC GROUP

On Appeal from the United States District Court for the District of New Jersey

D.C. Civil Action Nos. 96-cv-03587 & 96-cv-04674 (Honorable Mary Little Cooper)

Argued December 12, 2000

Before: SCIRICA and AMBRO, Circuit Judges, and POLLAK, District Judge*

(Filed: April 23, 2001)

___________________________________________________ ______________ * The Honorable Louis H. Pollak, United States Dist rict Judge for the Eastern District of Pennsylvania, sitting by design ation.NOEL C. CROWLEY, ESQUIRE

(ARGUED) Crowley & Crowley

10 Park Place Morristown, New Jersey 07960

Attorney for Appellants

JONATHAN E. HILL, ESQUIRE (ARGUED)

KATHY A. LAWLER, ESQUIRE Pitney, Hardin, Kipp & Szuch

P.O. Box 1945 Morristown, New Jersey 07962

JAMES E. TYRRELL, JR., ESQUIRE (ARGUED)

SCOTT L. WEBER, ESQUIRE

Latham & Watkins One Newark Center, 16th Floor

P.O. Box 10174 Newark, New Jersey 07101

Attorneys for Appellees, AT&T Corp. and Lucent Technologies, Inc.

DAVID M. FABIAN, ESQUIRE (ARGUED)

Traflet & Fabian

264 South Street Morristown, New Jersey 07960

Attorney for Appellee, Texas Pacific Group

2OPINION OF THE COURT

SCIRICA, Circuit Judge.

In this appeal from the grant of summary judgment w e must decide whether defendants AT&T Corp., NCR Corp

., Lucent Technologies, and Texas Pacific Group's agre ement to restrict the hiring of certain employees upon Lu cent's sale of Paradyne Corp. was a violation of S 1 of th e Sherman Antitrust Act. We also must decide whether this no-hire agreement which effectively cancelled the p laintiff employees' AT&T pension bridging rights violated S 510 of the Employee Retirement Income Security Act. W e ho ld the no-hire agreement was a valid covenant not to compe te that was reasonable in scope and therefor e not a violat ion of S 1 of the Sherman Act. But also we hold plaintif fs ha ve presented sufficient prima facie evidence of AT&T a nd Lucent's specific intent to interfer e with an ERIS A funded employee pension fund to survive summary judgment o n the ERISA S 510 claim.

I.

In July 1995, AT&T, a long distance telephone and wireless services provider, decided to sell one of its affiliates, Paradyne Corp., a manufacturer of netwo rk access products for the telecommunications industry

. Contemplating the sale, AT&T wanted to ensur e that Paradyne remained a viable entity because A T&T and its other affiliates, including Lucent Technologies, pu rchased many of the network access products Paradyne manufactured. To make Paradyne mor e attractive to buyers as an ongoing business, AT&T adopted a human r esou rce plan that placed restrictions on Paradyne employees ' ability to transfer to other divisions of AT&T ("the Prelim inary Net"). Specifically, the Preliminary Net precluded an employee who voluntarily left Paradyne from being h ired by any other division of AT&T. The pr emise for the hi ring bar was AT&T's belief that one of Paradyne's most marke table assets was its skilled employees. The retention of

3Paradyne's employees, therefore, was considered ess ential

for the sale of Paradyne.

Shortly after adopting the Preliminary Net, A T&T consummated a business reorganization plan resultin g in three independent companies: AT&T, Lucent Technolog ies, and NCR Corp. (the "trivestiture"). As part of the trivestiture, AT&T transferred ownership of Paradyn e to Lucent. Consistent with the Preliminary Net, the Pa radyne employees, now employed by Lucent, were pr ecluded from seeking re-employment at any other AT&T division or

affiliate after the trivestiture.

On July 31, 1996, Lucent sold Paradyne to Texas Pac ific Group. Before closing, Lucent agreed, on behalf of itself and the other former AT&T affiliates, that it would not hire, rehire, retain, or solicit the services of any Para dyne employee or consultant whose annual income exceeded $50,000. This "Pre-Closing Net" was consistent with the understanding that Texas Pacific Group's interest i n purchasing Paradyne was based on its desir e to acq uire the technical skills of Paradyne's employees for a suff icient period of time to ensure a successful transition of ownership.

Once the deal was closed, Lucent and Texas Pacific Group entered a post-closing agreement ("Post-Closi ng Net")

in which Lucent warranted on behalf of itself and t he other AT&T affiliates that for 245 days (8 months) follow ing the sale and the expiration of the Pre-Closing Net, it would not seek to hire, solicit or rehire any Paradyne employ ee or consultant whose compensation exceeded $50,000. The eight month no-hire agreement had the practical eff ect of cancelling the Paradyne employees' accrued pension benefits under their former AT&T pension plans. Und er the AT&T pension plan, employees were entitled to "brid ging rights" which allowed them to retain their level of accrued pension benefits if they left AT&T and r eturned wi thin six months. After six months, the bridging rights expir ed. Employees rehired after the six month period would need five years of employment to regain their pr evious pension levels. Because the Post-Closing Net barred Paradyn e employees from returning to an A T&T affiliate for eight

4months, these employees automatically lost the brid ging

rights they had acquired under their AT&T pensions.

Before the sale was consummated, Texas Pacific Grou p hired an outside consultant to determine the benefi t package it could offer the Paradyne employees. Para dyne's Vice-President of Human Resources, Sherril Claus Me lio, who had previously held the same position when Para dyne was owned by AT&T and Lucent, assisted the consulta nt in drafting various benefit plan proposals. The consul tant concluded that in order to make Paradyne financiall y competitive, Texas Pacific Group could not offer th e same pension package AT&T had previously of fered its employees. Although Melio's exact role in T exas Pa cific Group's decision is disputed, Texas Pacific Group ultimately decided not to offer a defined pension b enefits program to its new employees.

The plaintiffs are former Paradyne employees who al lege the Preliminary Net, as well as the Pre and Post-Cl osing Nets, collectively represent an unlawful group boyc ott in violation of S 1 of the Sherman Act. Additionally, they contend the defendants conspired to eliminate their pension benefits thereby engaging in an illegal pri ce fixing

scheme in violation of S 1 of the Sher man Act. Fur thermore, they allege the no-hire agreement, which effectivel y cancelled Paradyne employees' bridging rights under their AT&T pensions, violated S 510 of the Employee Retir ement Income Security Act.

In addressing these claims, the District Court held that plaintiffs failed to prove a violation ofS 1 of the Sherman Act and failed to produce sufficient prima facie ev idence of AT&T and Lucent's specific intent to inter fere wit h an ERISA funded pension plan to support their S 510 cl aim. The court, therefore, granted defendants' motion fo r summary judgment. After the grant of summary judgme nt, plaintiffs filed a discovery motion in connection w ith an anticipated motion for class certification which th e District Court denied. This appeal followed.

II.

The District Court had jurisdiction under 15 U.S.C. S 26 and 29 U.S.C. S 1140 because plaintiffs' claims all ege

5violations of S 1 of the Sherman Antitrust Act and S 510 of

ERISA. We have jurisdiction under 28 U.S.C.S 1291. We exercise plenary review over the District Court's g rant of summary judgment on plaintiffs' antitrust and ERISA claims. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992), cert. denied, 507 U .S. 912 (1993). We exercise plenary review over the Distric t Court's legal determinations concerning class certification and review its factual findings for abuse of discretion . Bogus v. Am. Speech & Hearing Ass'n, 582 F.2d 277, 289 (3d C ir. 1978).

III.

Section 1 of the Sherman Act provides:

Every contract, combination in the form of t rust or otherwise, or conspiracy, in restraint of tr ade or commerce among the several states, or with f or eign nations, is hereby declared to be illegal.

15 U.S.C. S 1 (1994).

Under S 1, unreasonable restraints on trade are prohibited because they inhibit competition within the market. Bus. Elecs. Corp. v. Sharp Elecs. Corp. , 4 85 U.S. 717, 723 (1988); United States v. Brown Univ., 5 F. 3d 658, 669 (3d Cir. 1993). In order to assert a cause of a ction under S 1, plaintiffs must prove they have suffered an antitrust injury that is causally related to the de fendants' allegedly illegal anti-competitive activity. Brunsw ick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). Once there is the finding of antitrust injury, courts ex amine the alleged illegal conduct under one of two distinct t ests: per se violation or rule of reason. Under the per se te st, "agreements whose nature and necessary effect are s o plainly anti-competitive that no elaborate study of the industry is needed to establish their illegality" a re found to be antitrust violations. Nat'l Soc'y of Pr of. Eng' rs v. United States, 435 U.S. 679, 692 (1978). For those activit ies not within the per se invalidity category, courts emplo y the rule of reason test. Under this test, plaintif fs have t he burden of establishing that, under all the circumstances,"the challenged acts are unreasonably r estrictive of co mpetitive

6conditions" in the relevant market. Standard Oil Co . of N.J.

v. United States, 221 U.S. 1, 28 (1911). "An analys is of the reasonableness of particular restraints includes th e consideration of the facts peculiar to the business in which the restraint is applied, the nature of the restrai nt and its effects, and the history of the restraint and the r easons for its adoption." United States v. Topco Assocs., Inc. , 405 U.S. 596, 607 (1972).

A.

We hold the AT&T Preliminary Net was not a violatio n of

S 1 of the Sherman Act. The District Court found th at "as of . . . the date that the Preliminary Net was put into effect . . . , Lucent was a wholly-owned subsidiary of A T &T, and accordingly, the two companies were a singular enti ty that could not conspire to violate the Antitrust laws." Eichorn v. AT&T Corp., CA No. 96-3587, slip op. at *17 (D.N.J. September 10, 1999). In Copperweld Corp. v. Indepen dence Tube Corp., 467 U.S. 752 (1984), the Supr eme Court held the coordinated acts of a parent and its wholly own ed subsidiary cannot themselves give rise to S 1 antit rust violations. The Court reasoned, "[a] par ent and it s wholly owned subsidiary have a complete unity of inter est . Their objectives are common, not disparate; their general corporate actions are guided or determined not by t wo separate corporate consciousnesses, but one." Id. a t 771. Because the Preliminary Net was an inter nal restri ction between a single corporation, AT&T, and its wholly owned subsidiaries, Lucent and NCR, and not an agr eement between separate corporate identities, it was not a violation of S 1 of the Sherman Act. Id. at 769 ("An internal agreement to implement a single unitary fir m's pol icies does not raise the antitrust dangers that S 1 was design ed to police."). Although plaintiffs assert A T&T and Luc ent were not motivated by a single "corporate consciousness" because they were in the process of becoming separa te entities, we believe that during the effective time period of the AT&T Preliminary Net, AT&T and Lucent retained a unified corporate interest for the purpose of antit rust analysis. It was not until AT&T divested all of its stock in Lucent and after the lapse of the Preliminary Net t hat the two companies became completely separate entities.

7As Supreme Court and our precedent make clear, only

anti-competitive actions between competitors give r ise to Sherman Act liability. Copperweld, 467 U.S. at 771; Siegel Transfer, Inc. v. Carrier Exp., Inc. , 54 F.3d 1125 , 1132 (3d Cir. 1995) ("The operations of a corporate enterpri se organized into divisions must be judged as the cond uct of a single actor."); Weiss v. Y ork Hosp., 745 F.2d 7 86, 813 (3d Cir. 1984), cert. denied, 470 U.S. 1060 (1985). As a single entity in a parent subsidiary relationship, the def endants in this case were incapable of conspiring to violate t he antitrust laws through the Preliminary Net agreemen t. Siegel, 54 F.3d at 1132.

We next turn to plaintiffs' claim that the Pre and PostClosing Nets, collectively referred to as the no-hi re agreement, represent an illegal gr oup boycott and a horizontal price fixing conspiracy under S 1 of the Sherman Act. Plaintiffs allege Lucent, AT&T and T exas Paci fic Group horizontally competed for the plaintiff employees' technical skills and services. As competitors, they ar gue, t he defendants conspired to suspend competition for pla intiffs' technical services with the purpose and the ef fect of locking them out of the labor market. See Anderson v. Shipo wners Ass'n of the Pac. Coast, 272 U.S. 359 (1926) (agree ment between most shipowners on Pacific coast to deny employment to any seaman who did not register with association was violation of S 1 of Sher man Act); Law v. Nat'l Collegiate Athletic Assoc., 134 F.3d 1010 (10 th Cir.) (NCAA rule limiting salary of basketball coaches wa s per se violation of S 1 of Sherman Act), cert. denied, 525 U.S. 822 (1998). By locking them out and effectively cancell ing their entitlement to AT&T pension rights, plaintif fs arg ue the defendants conspired to fix the cost of labor in th e market. In support, plaintiffs cite several Supr eme Court cases that hold horizontal group boycotts and price fixing con spiracies are per se violations of the Sherman Antitrust Act. See FTC v. Super. Ct. Trial Lawyers Assoc., 493 U.S. 411, 4 22 (1990); Arizona v. Maricopa County Med. Soc'y , 457 U.S. 332, 344-45 (1982); Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 7-8 (1979).

But the facts here are substantially dif ferent fro m the classic per se horizontal price fixing and gr oup b oycott

8conspiracies the Court has generally found to be pe r se

antitrust violations. Broad. Music, Inc. , 441 U.S. at 8 ("Easy labels [like price fixing] do not always supply rea dy answers."). Because of the fact specific inquiry re quired to assess antitrust liability under the Sherman Act, w e will address each prong of the S 1 analysis.

B.

Private plaintiffs pursuing claims under S 1 of the Sherman Act have standing when they suf fer an anti trust injury that is causally related to the defendants' allegedly illegal anti-competitive activity. Brunswick, 429 U .S. at 489. The Supreme Court has described antitrust injury as injury

of

the type the antitrust laws were intended to pr event

and that flows from that which makes defenda nts' acts unlawful. The injury should reflect the anti -competitive

effect either of the violation or of anti-co mpetitive acts made possible by the violation. It should, i n short, be the type of loss that the claimed violations . . . would be likely to cause.

Id. (internal quotes omitted).

It is well established that an antitrust injury r e flects an activity's anti-competitive effect on the competiti ve market. Atlantic Richfield Co. v. USA Petroleum Co., 495 U. S. 328, 344 (1990) ("The antitrust injury requir ement . . . ensures that a plaintiff can recover only if the loss stems from a competition-reducing aspect or ef fect of the defen dant's behavior.") (emphasis in original). W e have consis tently held an individual plaintiff personally aggrieved by an alleged anti-competitive agreement has not suffer ed an ant itrust injury unless the activity has a wider impact on th e competitive market. See, e.g., City of Pittsburgh v . West Penn Power Comp., 147 F.3d 256, 266-67 (3d Cir. 199 8) (holding action that did not lessen competition in a "marketplace" was not antitrust injury); Barton & P ittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 182 (3d Cir. 1997) (the determination of whether a party ha s suffered an antitrust injury "depends on how the ma rket is defined"); Brader v. Allegheny Gen. Hosp. , 64 F.3d 869 (3d

9Cir. 1995). While a plaintiff may have individually suffered

an injury as a result of defendants' actions, the a ntitrust laws were designed to protect market-wide anticompe titive activities. Atlantic Richfield, 495 U.S. at 338 (qu oting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1902) ("The antitrust laws were enacted for the protection of competition, not competitors.") (emphasis in origin al)); see also Les Shockley Racing, Inc. v. Nat'l Hot Rod Ass 'n., 884 F.2d 504, 508 (9th Cir. 1989) (holding plaintiffs m ust "plead and prove a reduction of competition in the market in general and not mere injury to their own positions as competitors").

In dismissing plaintiffs' antitrust claims the Dist rict Court stated,

Plaintiffs apparently argue that the injury to competition is that they are prevented fr om providing their services to AT&T, Lucent or its affili ates. Put simply, the antitrust laws are not concer ne d with injury to competitors (here the plaintif fs) , but with injury to competition. That these plaintiffs are prevented from working at AT&T , Lucent or t heir affiliates for the limited time period durin g which the pre-closing and post-closing nets were in ef fect is not an injury to competition. In our view, plain tif fs' allegations of economic injury to themselves misperceive the nature of the injury which i s required

to be established in order to sustain a clai m under

Section 1 of the Sherman Act.

Eichorn, CA No. 96-3587, slip op. at *20-21 (intern al citations omitted).

While employees who are precluded fr om selling the ir labor have not necessarily suffered an antitrust in jury, "employees may challenge antitrust violations that are premised on restraining the employment market." Phi llip Areeda & Herbert Hovenkamp, Antitrust Law P 377a ( rev. ed. 1995) (footnotes omitted); see also Brian R. He nry, `Sorry, We Can't Hire You . . . We Promised Not To' : The Antitrust Implications of Entering Into No-Hir e Ag reements, 11-Fall Antitrust 39 (1996) ("Most courts consideri ng the issue have held that employees suffer `injury' reco gnized by

10the antitrust laws when their employment opportunit ies are

restricted by a no-hire agreement between potential employers, and thus have standing to sue the entity imposing such a provision."). As a leading treatise on antitrust states:

Antitrust law addresses employer conspiracie s controlling employment terms precisely becau se they tamper with the employment market and thereb y impair the opportunities of those who sell t heir services there. Just as antitrust law seeks to pr ese rve the free market opportunities of buyers and sellers o f goods, so also it seeks to do the same for buyers and sellers of employment services. It would be perverse in deed to hold that the very object of the law's solic itude and the persons most directly concerned--per haps th e only persons concerned--could not challenge the r estraint.

* * *

An employee overcomes the primary hurdle to standing when he shows that the alleged violation res trains competition in the labor market. Of course, he must still show injury-in-fact that was proximate ly caused by the violation and, in damage cases, that can be quantified without undue speculation.

Areeda & Hovenkamp, supra, at P 377c (footnotes omi tted).

In Anderson, the Supreme Court held that a seaman, on behalf of himself and other members of the seamen's union, could sue an association of most of the shipowners in the region when the shipowners' association adopted und uly strict regulations governing employment. 272 U.S. a t 359. The Court found the shipowners' agreement violated the antitrust laws because the regulations pr evented t he "free exercise of the rights" of the seamen to engage in trade and commerce. Id. at 363 (quoting United States v. Colg ate & Co., 250 U.S. 300, 307 (1919)). Because unr egister ed seamen were precluded from working on any associati on ship, which constituted the majority of the ships i n the region, they suffered an injury pr otected under th e antitrust laws.

While Anderson was decided many years befor e the

11Supreme Court detailed the antitrust injury r equir ement in

Brunswick,1 several courts since Brunswick have fou nd that no-hire agreements which preclude employees from se eking employment from a third party employer can give ris e to antitrust injury. In Cesnick v. Chrysler Corp. , 49 0 F. Supp. 859 (M.D.Tenn. 1980), plaintiffs who wer e preclude d from seeking re-employment at Chrysler when their divisi on was sold to a third party suffered an antitrust injury. The Court

reasoned that it "must conclude that the market for employee skills is a market subject to the pr ovisi ons of the

Sherman Act." Id. at 864.

More recently in Roman v. Cessna Air craft Co., 55 F.3d 542 (10th Cir. 1995), the Court of Appeals for the Tenth Circuit held that a plaintiff precluded from seekin g employment as an airplane engineer with the Cessna Aircraft Company because of an agreement between Ce ssna and the Boeing Company not to hire each other's eng ineers suffered an antitrust injury. The Court r easoned t hat plaintiff

alleged that competition in the market for h is services as an employee had been directly impeded by defendants' agreement not to compete for eac h other's employees. He further alleges that he was in jur ed by

___________________________________________________ ______________

1. Several other courts prior to Brunswick held th at employees barred from seeking employment from a thir d party employe r because of a nohire agreement have standing to litigate aS 1 claim . See, e.g., Radovich v. Nat'l Football League, 352 U.S. 445 (1957) (coac h precluded from working in National Football League because of agr eement among all of the teams in the league had standing); Quinonez v. Nat'l Assoc. of Secs. Dealers, Inc., 540 F.2d 824 (5th Cir. 1976) (plaint iff who was fired by securities dealer and was unable to find employment with another securities dealer because of agreement among dealer firms not to hire an employee who was discharged by another fir m suffer ed sufficient injury to proceed with antitrust claim); Tugboat, Inc. v. Mobile Towing Co., 534 F.2d 1172, 1176 (5th Cir.) ("Ther e can be little d oubt that an employee who is deprived of a work opportunity has been inju r ed . . . because the selling of one's labor is a commercial interest."), reh'g denied, 540 F.2d 1085 (5th Cir. 1976); Nichols v. Spencer Int'l Pres s, Inc., 371 F.2d 332 (7th Cir. 1967) (plaintiff prohibited from seeking employment at competing employer because of agreement between emp loyers in industry not to hire each other's employees suf fer ed injury sufficient to bring antitrust claim).

12that agreement because it prevented him fr o m selling

his services to the highest bidder . . . . W e believe this is sufficient to allege antitrust standing.

Id. at 545; see also Law, 134 F .3d 1010 (coach who se opportunities in employment market were impair ed b y agreement among members of NCAA to limit the maximu m compensation paid to coaches suffered antitrust inj ury).

In a similar manner, plaintiffs her e allege they h ave been precluded from selling their services to three comp anies within the industry, NCR, AT&T and Lucent, and that the no-hire agreement interfered with their ability to attain pension benefits. Because the no-hire agr eement di rectly impeded plaintiffs' ability to sell their labor to at least three companies within the competitive market and ef fect ively cancelled their AT&T pension benefits, we believe t hey have standing to litigate their S 1 claims. Roman, 55 F. 3d at 545. To the extent the District Court held that plaintif fs did not suffer an antitrust injury and lacked standing to l itigate their S1 claims, it was in error.

C.

Plaintiffs contend on appeal that the no-hir e agre ement was a group boycott and a horizontal pricefixing conspiracy. See Klor's v. Broadway-Hale Stores, Inc ., 359 U.S. 207, 211 (1959). As direct competitors for the ir labor, plaintiffs argue, the defendants enter ed the no-hi re agreement as part of a concerted effort to lock the m out of employment and decrease labor costs by eliminating pension benefits. See Nat'l Soc'y of Pr of. Eng'rs, 435 U.S. at 692 (quoting United States v. Container Corp. of Am ., 393 U.S. 333 (1969) ("[A]n agreement that`interfere[s] with the setting of price by free market forces' is illegal on its face.")). Plaintiffs maintain that group boycotts and horizon tal price fixing schemes between competitors are per se viola tions of the antitrust laws because these agreements ar e ma nifestly uncompetitive and are "naked restraints of trade . . . [that have] no purpose except stifling of competition." W hite Motor Co. v. United States, 372 U.S. 253, 263 (1963 ); see also N. Pac. Ry. Co. v. United States, 356 U.S. 1, 19-20 (1958). In support, they cite NCAA v. Bd. of Regent s of the

13Univ. of Okla., 468 U.S. 85, 100 (1984), wher e the Supreme

Court stated,

Horizontal price fixing . . . [is] or dinari ly condemned as a matter of law under an `illegal per se' ap pr oach because the probability that these practices ar e anti- competitive is so high . . . . In such circu mstances a restraint is presumed unreasonable without i nquiry into the particular market context in which it is found.

While plaintiffs contend the no-hire agr eement was per se illegal because it was a horizontal group boycott a nd a price fixing conspiracy, we can find no support within th e relevant case law for this label. Br oad. Music, In c., 441 U.S. at 8 ("Easy labels do not always supply r eady answ ers."). The per se illegality rule applies only in those ca ses where the business practice in question is one, which on its face, has "no purpose except stifling of competition." Wh ite Motor Co., 372 U.S. at 263; see also N.W. Wholesale Stati oners, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 28 4, 289-90 (1985) (per se rule confined to limited types of an ticompetitive practices); Larry Muko Inc. v. S.W . Pa . Bldg. and Const. Trades Council, 670 F.2d 421, 429 (3d. Cir.) ("Generally the application of the per se rule has been limited to those `classic' boycotts in which a gr o up of business competitors seek to benefit economically b y excluding other competitors from the marketplace.") , cert. denied, 459 U.S. 916 (1982). The Supreme Court has been cautious in extending the per se approach to claims that fall outside certain previously enumerated categori es of liability. See, e.g., Bd. of Regents of the Univ. o f Okla., 468 U.S. at 100 n.21 ("Judicial inexperience with a par ticular arrangement counsels against extending the r each o f the per se rules."); Broad. Music, Inc. , 441 U.S. at 2 0 n.33 ("The per se rule is not employed until after considerabl e experience with the type of challenged restraint.") ; Maricopa County Med. Soc'y, 457 U.S. at 344 ("Experience wit h a particular kind of restraint enables the Court to p redict

with confidence that the rule of reason will condem n it."). Because of the fact specific inquiry involved in an titrust analysis, the Supreme Court has recognized that cla ims not within established categories of antitrust liabilit y are more appropriately analyzed under the rule of r eason wh ere

14courts can balance the effect of the alleged anti-c ompetitive

activity against its competitive purposes within th e relevant product and geographic markets.

Acknowledging this judicial hesitance to extend the per se rule to new categories of antitrust claims, we n ote there are no Supreme Court cases nor any federal cases th at have applied the per se rule in similar factual circumstances. The only two federal cases that have analyzed similar group boycott and price fixing cla ims have held that no-hire agreements executed upon the sale of a corporation are analyzed under the rule of r eason. Coleman v. Gen. Elec. Co., 643 F. Supp. 1229, 1243 (E.D. Te nn. 1986), aff 'd, 822 F.2d 59 (6th Cir. 1987); Cesnick , 490 F. Supp. at 866-67. In Coleman, the 3M Corporation sol d its ceramics division to General Electric. 643 F . Supp . at 1243. After closing, 3M and General Electric enter ed an agreement in which 3M warranted that it would not r ehire any employee who voluntarily accepted a job with Ge neral Electric. Several ceramic division employees br oug ht suit alleging a group boycott that was per se invalid un der S 1 of the Sherman Act. Disagreeing, the court reasoned that "courts have refused to apply the `gr oup boycott' designation where the effect is not to drive out co mpetition but to achieve some other goal, whether or not the goal withstands the rule of reason analysis." Id. (citin g Smith v. Pro Football, Inc., 593 F.2d 1173, 1177-78 (D.C. Ci r. 1979)). Because the agreement only precluded the plaintiffs from selling their services to one corporation, the cour t held it only had a "de minimus impact on the employment mar ket in general," and the per se rule was "wholly inappl icable."

Id.

Similarly in Cesnick, former employees of Chrysler' s NonAutomotive Air Conditioning Division sued underS 1 when Chrysler sold the division to the Fedders Corporati on and agreed not to rehire its employees. 490 F. Supp. at 866. Although plaintiffs characterized the agr eement as a group boycott and a per se violation of S 1, the court st ated, "[i]n the absence of any Supreme Court cases based on fac ts similar to those of this case, this Court will not accept the proposition that any conduct that can be characteri zed as a group boycott is a per se violation." Id. The cou rt reasoned the Chrysler-Fedders'

15agreement was designed to increase the likel ihood that

Fedders would enjoy the services of the expe rienced AirTemp employees, an obviously sound busine ss purpose. To the extent that the agreement ef fectively restrained competition between Chrysler and Fedders for employee services, a competition whose e xistence is entirely conjectural, that effect was incide ntal as well

as de minimus.

Id. at 866-67.

Cognizant that there are no Supreme Court cases hol ding no-hire agreements entered upon the legitimate sale of a business to a third party are per se antitrust viol ations,2 and recognizing that the only two federal courts th at have addressed the issue have declined to apply the per se rule, we hold the no-hire agreement here is more appropri ately analyzed under the rule of reason. As several court s have recognized, the per se rules of illegality ar e the exception to antitrust analysis and are only employed in certain recognized categories. DeLong Equip. Co. v. Washing ton Mills Abrasive Co., 887 F.2d 1499, 1506 (11th Cir. 1989), cert. denied, 494 U.S. 1081 (1990).

The District Court properly characterized the no-hi re agreement as a common law covenant not to compete. As we discuss, courts have uniformly found that covena nts not to compete should be examined under the rule of r e ason. See, e.g., McDonald v. Johnson & Johnson, 722 F.2d 1370 (11th Cir.), cert. denied, 469 U.S. 870 (1984); Con sultants & Designers, Inc., v. Butler Serv. Group, Inc. , 720 F.2d 1553 (11th Cir. 1983); Aydin Corp. v. Loral Corp., 718 F .2d 897 (9th Cir. 1983); Lektro-Vend Corp. v. Vendo Co., 66 0 F.2d 255 (7th Cir. 1981), cert. denied, 455 U.S. 921 (19 82). Therefore, we will analyze plaintif fs' claims unde r the rule

of reason so we can examine the effect of the defen dants' agreement within the wider context of its competiti ve

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2. Similarly, we can find no cases in which a no-hi re agreement entered into upon the sale of a business to a third party t hat resulted in the

loss of employee benefits was found to be a horizontal p rice fixing conspiracy. See Broad. Music, Inc., 441 U.S. at 9-10 (quoting T opco Assocs., Inc., 405 U.S. at 607-08 ("It is only after considerable expe rience with certain business relationships that courts classify them as per se violations.")).

16purposes and its impact on the relevant pr oduct an d

geographic markets.

D.

Under the rule of reason, we look at the totality o f the circumstances surrounding an alleged anti-competiti ve activity, including facts peculiar to the relevant business, to determine the "nature or purpose" of the allegedly illegal restraint. Topco Assocs., Inc., 405 U.S. at 607. "T he finder of fact must decide whether the questioned practice imposes an unreasonable restraint on competition, t aking into account a variety of factors, including specif ic information about the relevant business, its condit ion before and after the restraint was imposed and the restraint's history, nature and ef fect." State Oil Co. v. Khan, 522 U.S. 3, 10 (1997) (citing Maricopa, 457 U.S. at 342). In applying this test, we examine the competitive sign ificance of the alleged restraint to determine whether it ha s an anticompetitive effect on the market and is an unr easo nable

restraint on trade. Tunis Bros. Co. v. Ford Motor C o., 952 F.2d 715, 722 (3d Cir. 1991), cert. denied, 505 U.S . 1221 (1992). In this regard, covenants not to compete ex ecuted upon the sale of a business to a third party ar e g enerally not recognized as antitrust violations. See Bus. El ecs. Corp., 485 U.S. at 730 n.4 ("The classic ancillary r estra int is an agreement by the seller of a business not to compet e within the market."); Nat'l Soc'y of Prof 'l Eng'rs, 435 U .S. at 689; Lektro-Vend Corp., 660 F.2d at 265 ("The recognized benefits of reasonably enforced noncompetition cove nants are now beyond question."). As early as 1899, court s have recognized that covenants not to compete ar e not v iolations of S 1 of the Sherman Act because,

It [i]s of importance, as an incentive to in dustry and honest dealing in trade, that, after a man h a[s] built up a business with extensive good will, he shou ld be able to sell his business and good will to the be st advantage, and he could not do so unless he could bind himself by an enforceable contract not to engage in the same business in such a way as to pre vent injury to that which he was about to sell.

17United States v. Addyston Pipe & Steel, 85 F . 271, 280 (6th

Cir. 1898), modified, 175 U.S. 211 (1899).

In this vein, courts have characterized covenants n ot to compete executed upon the legitimate transfer of ow nership of a business as ancillary restraints on trade. Id. ; see also Bus. Elecs. Corp., 485 U.S. at 730 n.4; United Stat es v. Empire Gas Corp., 537 F.2d 296, 307 (8th Cir. 1976) ("Covenants not to compete executed in conjunction with the purchase of a business allow the pur chaser to obtain the value of the good will for which he has paid.") , cert. denied, 429 U.S. 1122 (1977). So long as these cove nants are reasonable in scope, there is no antitrust viol ation under the rule of reason. See, e.g., Syntex Labs., Inc., v. Norwich Pharmacal Co., 315 F. Supp. 45, 56 (S.D.N.Y

. 1970) ("[I]t is hornbook law that a covenant not to compete ancillary to the sale of a business (or part of a b usiness), when reasonably limited to time and territory, does not fall within the prohibitions of the Sherman Act."), aff 'd, 437 F.2d 566 (2d Cir. 1971).

The District Court found,

In our view, the pre-closing and post-closin g nets at

issue here are a subset of common law covena nts not to compete. Moreover, it is clear that the n o-hire agreements imposed restrictions which wer e "ancillary to legitimate transactions," and thus proper ly considered an ancillary restraint.

Eichorn, CA No. 96-3587, slip op. at *23 (internal citation omitted).

We agree that the no-hire agr eement was not an

unreasonable restraint of trade underS 1 of the She rman Act. Frackowiak v. Farmers Ins. Co., Inc. , 411 F. Supp. 1309, 1318 (D.Kan. 1976) ("Numerous Courts have recognized the general rule that agreements not to compete, entered into in conjunction with the ter mination o f employment or sale of a business, do no offend the federal antitrust provisions if they are r easonable in dur ation and geographical limitation."). The primary purpose of the nohire agreement was to ensure that T exas Pacific Gr oup, as the purchaser of Paradyne, could retain the skilled services of Paradyne's employees. Although the no-hir e agre ement

18precluded the employees from seeking employment at an

AT&T affiliate for 245 days, the primary purpose of the agreement was not anti-competitive. Contrary to pla intiffs' assertions, we can find no evidence to support thei r claim that the no-hire agreement was executed for the imp roper purpose of restraining trade and the cost of labor in the telecommunications industry. The primary purpose of the no-hire agreement was to ensure the successful sale of Paradyne to Texas Pacific Group which r equired wor kforce continuity.3 Any restraint on plaintiffs' ability t o seek employment at AT&T and any effect on their pension bridging rights was incidental to the effective sal e of Paradyne.

Because the no-hire agreement was a legitimate anci llary restraint on trade, we must determine whether the e ight month restriction from employment at an A T&T affil iate

was reasonable or whether it went further than nece ssary to ensure the successful transition of ownership. C esnick, 490 F. Supp. at 868 (quoting Syntex Labs. , 315 F. Supp. at 56) ("The question in every case [involving a coven ant not to compete ancillary to the sale of a business] is whe ther the restraint is reasonably calculated to pr otect the legitimate interests of the purchaser in what he has purchased , or whether it goes so far beyond what is necessary as to provide a basis for the inference that its real pur pose is the fostering of monopoly.").

We do not think the eight month restriction on reemployment at an AT&T affiliate was unr easonably b road. It is reasonable to believe Texas Pacific Group wou ld require the technical skills of these employees for at least this eight month period, if not longer, to ensure a successful transition of ownership from Lucent.

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3. Plaintiffs contend the true motive of the no-hir e agreement was not work force continuity but eliminating pension benef its to reduce Texas Pacific Group's costs. They argue that if work forc e continuity were really the motive, Texas Pacific Group could have offered enhanced benefits packages to entice the work force to remain with Pa radyne rather then simply agreeing to cancel their AT&T pension benefi ts. But the existence of alternative means to achieve a legitimate busine ss goal does not in

itself mean the defendants' chosen course of action was uncompetitive and improper.

19Furthermore, the no-hire agr eement only precluded the

plaintiffs from working at Lucent or an A T&T affil iate. The employees were free to leave Texas Pacific Group an d seek employment elsewhere within the telecommunications industry. Significantly, there is no evidence in th e record to support plaintiffs' claim that AT&T was the only em ployer in the market to whom they could sell their service s. As the District Court found, there are over twenty other telecommunications firms that compete for plaintiff s' technical services. Furthermore, the market for pla intiffs with more generalized educational and work backgrou nds includes "a vast number of jobs" nationwide. Eichor n, CA No. 96-3587, slip op. at *27-28 n.17.

Therefore, we hold the no-hire agr eement was not a n unreasonable restraint on trade. As an ancillary co venant not to compete, the no-hire agreement was reasonabl e in its restrictions on the plaintiffs' ability to seek emp loyment elsewhere. Nat'l Soc'y of Prof 'l Eng'rs, 435 U.S. at 689. While the no-hire agreement essentially barred the plaintiffs' ability to retain their desirable AT&T pension benefits, S 1 of the Sherman Antitrust Act is not t he appropriate vehicle here for redr ess. In formulati ng their claim in antitrust parlance, plaintiffs have argued their inability to work at their former jobs was a manife stly uncompetitive restraint on trade within the r eleva nt market. We disagree. In order to advance their anti trust claim, plaintiffs are forced to define narrowly the relevant market affected by the defendants' activity as,

potential employers within a 35 mile radius of Holmdel/Middletown with the capacity and cap ability of employing or utilizing large numbers of p ersons with specialized experience in high speed data communications equipment of the sort Paradyn e develops and makes . . . who can provide con tinuity of the pension benefits which have accrued to [ plaintiffs] under the AT&T and/or Lucent pension plans.

Eichorn, CA No. 96-3587, slip op. at *29-30 n.18.

We believe this narrow market definition is inappro priate. As we recently stated, "[t]he outer boundaries of a product market are determined by the reasonable interchange ability

20of use or the cross-elasticity of demand between th e

product itself and substitutes for it." Queen City Pizza, Inc., v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3d Cir. ) (quoting Brown Shoe Co., 370 U.S. at 325), r eh'g denied, 12 9 F.3d 724 (1997), cert. denied, 523 U.S. 1059 (1998). "Th e test for a relevant market is not commodities [in this case technical jobs] reasonably interchangeable by a particular pl aintiff, but `commodities [technical employees] r easonably interchangeable by consumers [technology companies] for the same purposes.' " Id. at 438 (quoting United St ates v. E.I. DuPont Nemours and Co., 351 U.S. 377, 395 (195 6)). Additionally, we have said "the relevant geographic market is the area in which a potential buyer may rational ly look for the goods or services he or she seeks." Pa. Den tal Assn. v. Med. Serv. Assn. of Pa., 745 F.2d 248, 260 (3d C ir. 1984), cert. denied, 471 U.S. 1016 (1985); see also Broker age Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 4 94, 515 (3d Cir. 1998). This geographic market must"conform to commercial reality." Acme Mkts., Inc. v. Wharton Ha rdware & Supply Corp., 890 F. Supp. 1230, 1239 (D.N.J. 199 5) (citing Brown Shoe Co., 370 U.S. at 336).

By defining the market so narrowly that it only inc ludes the defendants, plaintiffs' proffer ed geographic a nd product markets are unrealistic.4 The market for the plaint iffs' labor is much broader. We agree with the District Court t hat the

relevant market is not limited to AT&T and its affi liates but rather includes all those technology companies and network services providers who actively compete for employees with the skills and training possessed by plaintiffs.5

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4. Plaintiffs argue they are under no obligation to define the relevant product and geographic markets because the defendan ts' conduct per se

violated the antitrust laws. See Jefferson Parish H osp. Dist. No. 2 v. Hyde, 466 U.S. 2, 15 (1984). Because we find this c ase is governed under the rule of reason, plaintiffs necessarily ha ve the affirmative burden of proving the relevant pr oduct and geograp hic markets affected by the defendants' alleged uncompetitive activity. Ideal Dairy Farms Inc. v. John LaBatt, Ltd., 90 F.3d 737, 743 (3d Cir. 199 6) (holding plaintiffs must present evidence from which rational person co uld conclude the relevant markets are actually what plaintiffs alleg e them to be). 5. As previously noted, the District Court found th ere are over twenty companies that compete for employees with plaintif fs' technical skills. Additionally there are a "vast number of jobs" nati onwide for plaintiffs with more generalized work and educational experien ce. Eichorn, CA No. 96-3587, slip op. at *27-28 n.17.

21Because market realities reflect that the no-hire

agreement did not have a significant anti-competiti ve effect on the plaintiffs' ability to seek employment withi n this

broader telecommunications market nor that itfixed the cost of labor in the industry, we conclude it was n ot an

antitrust violation under the rule of reason. 6 The antitrust laws were not designed to protect every uncompetiti ve activity, but rather only those activities that hav e anticompetitive effects on the market as a whole. Broad . Music, Inc., 441 U.S. at 23 ("Not all arrangements among a ctual or potential competitors that have an impact on price are per se violations of the Sherman Act or even unr easona ble restraints."). While plaintiffs' loss of their pens ion benefits gives us pause, we believe they can seek redr ess t hrough other statutes more adequately suited to their inju ry than

S 1 of the Sherman Antitrust Act.7 Chambless v. Mas ters,

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6. Plaintiffs also attempt to characterize defendan ts' activity as an illegal exercise of relational market power. See Sullivan & Grimes, The Law of Antitrust: An Integrated Handbook S 2.4e2iv (2000); Warren S. Grimes,

Market Definition in Antitrust Claims: Relational M arket Power and the Franchisor's Conflict of Interest, 67 Antitrust L.J . 243 (1999). They contend AT&T offered a unique pension benefits prog ram that essentially locked the plaintiffs into working for them. See Ea stman Kodak Co. v. Image Technical Services, 504 U.S. 451 (1992). Clai ming that AT&T was the only telecommunications company within the indu stry that offered such an extensive benefits program, plaintif fs mai ntain they were prevented from seeking employment at any other comp any, since to do so would result in the loss of valuable pension ben efits. According to

this argument, the no-hire agreement that precluded plai ntiffs from working at an AT&T affiliate prevented them fr om working a t the only company within the industry where they could receive these unique benefits. See, e.g., Aspen Skiing Co. v. Aspen Highlands Skiing Co rp., 472 U.S. 585 (1985); FTC v. Texaco, Inc., 393 U.S. 223 (1968). C entral to plaintiffs' argument is the contention that the AT&T pension be nefits are unique in the industry. We see no evidence for this in the record. Therefore, we

need not address whether to extend the r elational market power analysis

to the facts of this case.

7. Although the no-hire agreement ef fectively canc elled the plaintiffs' AT&T benefits, these plaintiffs were free to seek e mployment elsewhere in the industry where pension benefits may have bee n available. But even though defendants' activity was not a pricefix ing conspiracy under the Sherman Act, it may give rise to liability unde r S 510 of ERISA where a different analysis is involved.

22Mates & Pilots Pension Plan, 772 F.2d 1032, 1042 (2 d Cir.

1985) ("To the extent that the . . . [plaintiff 's antitrust claim] is based on diminished retirement benefits, it is essentially an ERISA matter."), cert. denied, 475 U .S. 1012 (1986).

IV.

We now turn to whether the no-hir e agreement, whic h effectively cancelled plaintiffs' A T&T pension bri dging rights, violated S 510 of ERISA. Section 510 of ERI SA provides:

It shall be unlawful for any person to disch ar ge, fine, suspend, expel, discipline or discriminate a gainst a participant or beneficiary for exercising an y right to which he is entitled under the provisions of the employee benefit plan . . . for the purpose of interfering with the attainment of any right to which su ch participant may become entitled under the pl an.

29 U.S.C. S 1140 (1994).

Congress enacted S 510 "primarily to prevent unscrupulous employers from discharging or harassin g their employees in order to keep them fr om obtaini ng vested pension benefits." DeWitt v. Penn-Del Direct ory Corp., 106 F.3d 514, 522 (3d Cir. 1997). W e have held an employer violates S 510 when it acts with the speci fic intent to interfere with an employee's right to benefits. DiFederico v. Rolm Co., 201 F.3d 200, 204-05 (3d Cir . 2000). To prove a prima facie case under S 510 a plaintif f must sh ow (1) that an employer took specific actions (2) for the purpose of interfering (3) with an employee's attainment of pe nsion benefit rights. Gavalik v. Cont'l Can Co., 812 F.2d 834, 852 (3d. Cir.), cert. denied, 484 U.S. 979 (1987). We h eld in DiFederico that once a plaintiff makes a prima faci e showing, the employer has the burden of articulatin g a legitimate non-discriminatory reason for his conduc t. Then, the burden shifts back to the plaintiff to show tha t the employer's rationale was not pre-textual and that t he

cancellation of benefits was the "deter minative in fluence" on the employer's actions. DiFederico, 201 F .3d at 205.

23The crucial threshold issue in this case is whether

defendants AT&T and Lucent8 had the specific intent to interfere with the Paradyne employees' pension bene fit rights or whether the cancellation of the bridging rights was merely an incidental by-product of the sale of Para dyne. DeWitt, 106 F.3d at 523 ("[E]mployee must show that the employer made a conscious decision to interfer e wi th the employee's attainment of pension eligibility or add itional benefits."). Plaintiffs allege the no-hir e agreeme nt and its eight month restriction on re-employment was enacte d for "the direct and immediate objective and with the si ngular purpose of eliminating the Paradyne pensions." In s upport of their claim, plaintiffs argue the eight month re striction on re-employment is suspiciously close to the six m onth vesting period of the AT&T pension plan and that th is temporal proximity provides circumstantial evidence that the cancellation of the benefits was a motivating f actor in the timing of the no-hire agreement. Additionally, they point to the role of Paradyne's Vice-Pr esident of Human Resources in proposing Texas Pacific Group's ultima te pension package for the Paradyne employees. Plainti f fs also cite a confidential memorandum between Larry Knoch and Linda Roussau of Lucent Technologies, which acknowl edges the eight month restriction in the no-hir e agreeme nt had the practical effect of cancelling the Paradyne emp loyees' pension rights. Finally, plaintiffs point to the ec onomic

benefits that both Lucent and AT&T received from th e nohire agreement, specifically that neither defendant was required to pay for pension benefits, as evidence o f specific intent to interfere with an ERISA pension plan in v iolation of S 510. Turner v. Schering-Plough Corp., 901 F.2d 335, 348 (3d. Cir. 1990) (savings to an employer that result from employees' termination might be viewed as a motivat ing factor sufficient to satisfy the intent element ofS 510 liability).

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8. In their complaint plaintiffs did not allege tha t Texas Pacific Group violated S 510 of ERISA. App. at 92a, 157a ("Plaint iffs demand judgment . . . declaring the refusal of AT&T and Lucent to e mploy members of the Class until after the expiration of their pension b ridging rights to be in violation of ERISA section 510, 29 U.S.C. S 1140.")

.

24Although the District Court found this evidence

insufficient to support a finding of specific inten t to interfere with the plaintiffs' benefit plans,9 Eich orn, CA No. 96-3587, slip op. at *9-12, we believe at this stag e of the proceedings plaintiffs have presented sufficient

circumstantial evidence of intent to inter fere wit h their pension rights to create a genuine issue of materia l fact.10 Turner, 901 F.2d at 347 ("Employee may show [a viol ation of S 510] . . . by circumstantial evidence."). As w e held in DeWitt, "[i]n most cases, . . .`smoking gun' eviden ce of specific intent to discriminate does not exist. As a result, the evidentiary burden in these cases may also be s atisfied by the introduction of circumstantial evidence." 10 6 F.3d at 523 (quoting Gavalik, 812 F.2d at 851). Of course w e express no opinion whether plaintiffs will prevail at trial under the preponderance of evidence standar d for S 510 claims. DiFederico, 201 F.3d at 205 ("[If] employer carries its burden, the plaintiff then must persuade the co urt by a preponderance of the evidence that the employer's

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9. In its initial order granting summary judgment o n the antitrust claims, the District Court found plaintiffs pr oduc ed enough evidence to survive a motion for summary judgment on the ERISA claim. Upon reconsideration, the District Court reversed its po sition stating it improperly relied on circumstantial evidence that t he defendants experienced an overall economic gain from the no-hi re agreement and sale of Paradyne. In re-examining the r elevant cas e law, the court said the proper inquiry should focus on the r eduction i n actual benefit expenses caused by the termination of employees, ra ther than a broader assessment of the overall financial impact of ter m ination on the employer's business. See Clark v. Coates & Clark , 990 F.2d 1217, 1224 (11th Cir. 1993) ("[M]easures designed to reduce co sts in general that

also result in an incidental reduction in benefits expenses do not suggest discriminatory intent."). We agree with the Elevent h Circuit. But we hold that plaintiffs have produced sufficient evidence t hat both AT&T and Lucent received a direct and substantialfinancial g ain from the cancellation of pension benefits, namely they wer e relieved from paying large sums for the pension benefits of the several Paradyne employees affected by the agreement.

10. We believe a genuine issue of material fact exi sts only with the Pre and Post-Closing Nets' effect on the Paradyne emplo yees' pension rights. Because the Preliminary Net did not prohibit plaint iffs from receiving their pension benefits as employees of Lucent T ech nologies, it did not

violate S 510 of ERISA.

25legitimate reason is pre-textual."). Because plaint iffs have

submitted sufficient prima facie evidence to withst and defendant's motion for summary judgment, we will r everse and remand for further proceedings.

V.

Plaintiffs contend the District Court err ed when i t denied their motion for additional discovery for a contemp lated

motion for class certification on their ERISAS 510 claim. In denying plaintiffs' motion the District Court state d, "[W]e do not find that . . . Third Circuit[ ] . . . [precede nt] requires this Court to keep this matter open so that plainti f fs may engage in discovery and motion practice on the issu e of class certification when the underlying claims have been dismissed with prejudice." Eichor n, CA No. 96-3887 , slip op. at *18. Because we hold plaintiffs have submitt ed sufficient prima facie evidence to support their ER ISA S 510 claim, we believe they may be entitled to additiona l discovery to pursue a possible motion for class cer tification. Accordingly, we direct the District Court on remand to address plaintiffs' motion for additional discovery and any future motion for class certification under the req uirements of Fed. R. Civ. P. 23(c).

VI.

For these reasons, we will affirm the District Cour t's dismissal of plaintiffs' antitrust claims. W e will reverse the grant of summary judgment on plaintiffs' ERISAS 510 claims. We will also reverse the Court's order deny ing plaintiffs' motion for additional discovery for an anticipated class certification motion and, on remand, direct t he

District Court to address this issue in accor dance with the requirements of Fed. R. Civ. P. 23(c).

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

26