UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

In the Matter of

MCWANE, INC.,

a corporation, and

STAR PIPE PRODUCTS, LTD.,

a limited partnership.

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PUBLIC

DOCKET NO. 9351

MEMORANDUM OF LAW IN SUPPORT OF

RESPONDENT McWANE, INC.'S OPPOSITION TO AND MOTION TO STRIKE

COMPLAINT COUNSEL'S MOTION FOR PARTIAL SUMMARY DECISION

CONFIDENTIAL

MATERIAL PROTECTED PURSUANT TO

JANUARY 5,2012 PROTECTIVE ORDER ENTERED BY THIS COURT

06 25 2012 
PUBLIC
 

TABLE OF CONTENTS
 

SUMMARY OF ARGUMENT	 1 

SUMMARY OF ALLEGATIONS AND UNDISPUTED MATERIAL 

FACTS	 4 

I. THE COMPLAINT ALLEGED A CONSPIRACY THAT WAS 

"DISBANDED" BY "EARLY 2009" 4 

II. COMPLAINT COUNSEL'S NEWLY MADE-UP CLAIM 

CONTRADICTS THE COMPLAINT 5 

III.	 CC IGNORES SIGNIFICANT EXCULPATORY EVIDENCE THAT 

DEMONSTRATES THAT MCWANE 

......................................5
 

IV. SIGNIFICANT UNDISPUTED FACTS DEMONSTRATE THAT S 

....................................................................................................7 

ARGUMENT 11 

I.	 THE COURT SHOULD STRIKE COMPLAINT COUNSEL'S MOTION 

FOR SUMMARY DISPOSITION OF A MADE UP CLAIM NOT 

CONTAINED IN AND CONTRARY TO THE COMPLAINT 12 

A.	 The Due Process Clause Prohibits The Court From Addressing An 

Allegation Not Contained In The Complaint 12 

B. The FTC Act Prohibits The Court From Addressing An Allegation 

Not Contained In The Complaint	 14 

III.	 THE COURT SHOULD ALSO THE MOTION BECAUSE 

COMPLAINT COUNSEL IGNORES SIGNIFICANT 

EXCULPATORY EVIDENCE, INCLUDING A SWORN DENIAL 

BY THE ONLY WITNESS IT RELIES ON	 18 

....................................................19 

CONCLUSION 23 

11 
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TABLE OF AUTHORITIES 

CASES 

Page(s) 

Ala. Farm Bureau Mut. Cas. Co. v. American Fid Life Ins. Co., 

606 F.2d 602 (5th Cir. 1979) 17 

American Tobacco Co. v. United States, 

328 U.S. 781 (1946) : 20 

Apex Oil Co. v. DiMauro, 

822 F.2d 246 (2nd Cir. 1987) 23 

Beacon Journal Publishing Co., Inc. v. Gonzales, 

No. 5:05-cv-1396, 2005 WL 2099787 (N.D. Ohio 2005) 14 

Bell At!. Corp. v. Twombly, 

550 U.S. 544 (2007) 18, 19,22 

Blomkest Fertilizer, Inc. v. Potash Corp. ofSaskatchewan, 

203 F .3d 1028 22 

Christopher v. Harbury, 

536 U.S. 403 (2002) 13 

Clamp-All Corp. v. Cast Iron Soil Pipe Institute, 

851 F.2d 478 (1st Cir. 1988) (Breyer, J.) .23 

Copperweld Corp. v. Independence Tube Corp., 

467 U.S. 752 (1984) 19 

Daury v. Smith, 

842 F.2d 9 (1st Cir. 1988) 14 

Farrell v. Einemann, 

CA No. 04-2088,2006 WL 1644826 (D.N.J. 2006) 16, 17 

FTC v. Cement Institute, 

333 U.S. 683 (1948) 20 

Golodner v. City ofNew London, 

No. 3:08-cv-1319, 2010 WL 3522489 (D.Conn. 2010) .14 

In re Baby Food Antitrust Litig., 

166 F.3d 112 (3d Cir. 1999) 20, 22 

In re Hearst Corp., 

80 F.T.C. 1011 (1972) 18 

111 
PUBLIC 

In re Publication Paper Antitrust Litigation, 

CA No. 3:04-md-1631, 2010 WL 5253364 (D.Conn. 2010) .22 

In re Ruffalo, 

390 U.S. 544 (1968) 13 

Karath v. Board ofTrustees, 

No. 3:07-cv-1073, 2009 WL 4879553 (D. Conn. 2009) 14 

King v. Cooke, 

26 F.3d 720 (7th Cir. 1994) 17 

Kost v. Kozakiewicz, 

1 F.3d 176 (3d Cir. 1993) 14 

Mennonite Bd. ofMissions v. Adams, 

462 U.S. 791 (1983) 12 

Mullane v. Central Hanover Bank & Trust Co. , 

339 U.S. 306 (1950) 13 

Parkv. City ofChi. , 

297 F.3d 606 (7th Cir. 2002) 17 

Seeds ofPeace Collective v. City ofPittsburgh, 

453 Fed.Appx. 211 (3d Cir. 2011) 14 

Venzie Corp. v. United States Mineral Products Co., 

521 F.2d 1309 (3d Cir. 1975) 19 

Williamson Oil Co. v. Philip Morris USA, 

346 F.3d 1287 (11 th Cir. 2003) 19 

STATUTES 

15 U.S.C. § 45 15 

15 U.S.C. § 45(b) 15 

American Recovery and Reinvestment Act of 2009 ("ARRA") .4 

ARRA 2, 13, 16, 17 

FTC Act Section 5 20 

FTC Act Section 5 and 1 

Sherman Act Section 1 19, 20, 23 

IV 
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OTHER AUTHORITIES 

16 C.F.R. 3.24(a)(2) 18 

16 C.F.R. § 3.11 15, 

16 C.F.R. § 3.15 16 

Fed. R. Civ. P. 15 17 

Fed.R.Civ.P. 15 (a) 16 

Fed.R.Civ.P. 15 (b) 16, 17 

Fed. R. Civ. P. 56 18 

Federal Rule 56(f) 18 

Federal Rule of Civil Procedure 56(f) 18 

Federal Trade Commission 2, 4 

Fourteenth Amendment 12 

Rule 3.15 2, 16, 17 

Rule 3.24 1, 18 

Rule 3.24(a)(3) 1, 12 

Rule 3.24(a)(4) 18 

United States Constitution 12 

v 
PUBLIC
 

Pursuant to Rule 3.24 ofthe Federal Trade Commission's Rules of Practice, Respondent 

McWane, Inc. ("McWane"), submits this memorandum of law, and the accompanying Separate 

Statement of Undisputed Material Facts ("SOF"), in support of its Opposition and Motion to 

Strike Complaint Counsel's Motion for Partial Summary Decision. 

SUMMARY OF ARGUMENT 

Complaint Counsel- - in what appears to be a first in the 98-year history ofthe Federal 

Trade Commission - - filed a motion for summary decision on "facts" that the Commission's 

Administrative Complaint ("Complaint") does not allege violate FTC Act Section 5 and, indeed, 

are not contained anywhere in the Complaint. To the contrary, they are expressly outside the 

scope of the alleged violation - - and, thus, not subject to adjudication in this proceeding. (See 

Rule 3.24(a)(3).) 

The focus of Com laint Counsel's motion is 

is, on its face, outside the Commission's Complaint: indeed, the 

~laint did not allege any conspiracy related to , did not allege any conspiracy I .,and did not allege any conspiracy to . (SOFJ.:.) 

Instead, it alleged a conspiracy to raise prices through increases in multipliers _ 

and an end to job price discounts in January 2008 and June 2008 (_. (Id.) 

Complaint Counsel's instant motion is thus entirely disconnected from, and contrary to, 

the allegations contained in the actual Complaint. Most notably, the allegations in the actual 

Complaint allege that the conspiracy "disbanded in early 2009[,]" when the passage ofthe 

ARRA Buy-America statute "upset the terms of coordination" which, of course, predates the 

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instant allegations. (Id ("between June 2008 and January 2009"); (SOF 4 ("disbanded in early

2009").)

In short, Complaint Counsel - - implicitly conceding the weakness ofits actual case - ­

has simply made up a new and different case. 1 The Court should strike Complaint Counsel's

motion in its entirety. It is outside the sco e ofthe Commission's case - - indeed, the core

"facts" concerning the were known to the Commission during the

Part 2 investigation and the Commission chose not to include them in its Complaint and, instead,

to allege a conspiracy that ended in early 2009. (SOF ~~ 1-3.) The Complaint has not been

amended by the Commission, and Complaint Counsel did not seek amendment at any time as

required by FTC Rule 3.15. Courts routinely refuse to address motions for summary disposition

that challenge alleged conduct that is outside the scope ofthe complaint. Complaint Counsel's

Ifthe Commission had elected to include the alleged In

made-up violation is beyond the Commission's statutory authority, was not the subject offull

Part 3 litigation, and would violate the due process clause if addressed here.

the Complaint (which it did not), this Court should still deny the motion because it literally

ignores dispositive, excul atory evidence establishing that

To the contrary, testimony and the documents are clear (and

I Complaint Counsel did not move for summary decision on any ofthe allegations actually in the Complaint.

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2 SOF~ 14.

3 Id.

4 Id.

(SOF 14.)

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Complaint Counsel does not address . For that additional 

reason, the Court should deny the motion. Complaint Counsel cannot simply ignore sworn 

testimony that contradicts its argument. The denials are insurmountable and Complaint Counsel 

cannot get around them by simply pretending they do not exist. Instead of addressing the sworn 

facts, Com laint Counsel stretches to suggest something that simply did not occur: 

. (SOF 23.) 

SUMMARY OF ALLEGATIONS AND UNDISPUTED MATERIAL FACTS 

I. The Complaint Alleged A Conspiracy That Was "Disbanded" By "Early 2009" 

Counts 1 and 2 of the Administrative Complaint ("AC") allege that McWane "conspired" 

with Sigma and Star to issue "multiplier" price increases for ductile iron pipe fittings in January 

and June 2008 and to stop their "job price" discounting, beginning in January 2008 and ending in 

"early 2009." (SOF 1.) The conspiracy thus existed only until "January 2009" and 

"disbanded" in February 2009 because "the passage of the American Recovery and 

Reinvestment Act of2009 ("ARRA") in February 2009 ... upset the terms of coordination 

among the Sellers." (SOF 2.) The AC contained 

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II. Complaint Counsel's Newly Made-Up _ Claim Contradicts The 

Complaint 

Nonetheless, Complaint Counsel moves for summary decision 

. (SOF 8.) 

III. CC Ignores Si nificant Excul 

McWaneMade 

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-
 * * * 

-

* * * 

-

* * * 

-

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Indeed, Complaint Counsel's Motion 

concedes the point. (SOF 12 

IV. Si nificant Undis uted Facts Demonstrate That 

Complaint Counsel acknowledges that 

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-

(SOF 23 (objections omitted).)6 

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-


-


(SOF 26.) 

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(SOF 44 (emphasis added) (objections omitted).)

Although Complaint Counsel argues

simply no factual support for that assertion and significant evidence that contradicts it.

ARGUMENT

FTC Rule 3.24(a)(3) provides that a party may only move for a summary decision in its

favor upon all or part "of the issues being adjudicated." The rules does not carve out an

exception for Complaint Counsel to allow it alone to move for summary disposition on issues

that are not being adjudicated. But that is exactly what Complaint Counsel here has done: it

moves for partial summary decision on an allegation that is not contained in the Administrative

Complaint and, in fact, is expressly contrary to the Complaint's allegations. This kind of

8 Notably, Complaint Counsel acknowledges that

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gamesmanship is beyond Complaint Counsel's statutory authority and a clear violation of 

McWane's due process rights. 

I. The Court Should Strike Complaint Counsel's Motion For Summary Disposition 

Of A Made Up Claim Not Contained In And Contrary To The Complaint 

A. The Due Process Clause Prohibits The Court From Addressing An 

Allegation Not Contained In The Complaint 

The Supreme Court has made clear that the Due Process Clause ofthe Fourteenth 

Amendment ofthe United States Constitution protects the life, liberty, and property of all U.S. 

citizens and "requires ... notice reasonably calculated, under all circumstances, to apprise 

interested parties of the pendency ofthe action and afford them an opportunity to present their 

objections." Mennonite Bd ofMissions v. Adams, 462 U.S. 791, 795 (1983). 

The relief Complaint Counsel seeks in its Motion directly affects McWane's interests. 

Accordingly, McWane is entitled to procedural due process, which includes advance notice - ­

prior to the close of discovery - - of the precise claims against it. Complaint Counsel's attempt 

to avoid this fundamental due process requirement by moving for summary decision on 

allegations not contained in - - and contrary to - - the Complaint is a clear violation of McWane's 

due process rights. For example, in In re Ruffalo, 390 U.S. 544 (1968), an attorney was 

informed of new allegations against him for the first time during his hearing. He had no 

opportunity to conduct discovery or prepare an adequate defense. The United States Supreme 

Court found that this violated the fundamental fairness of due process, holding that "[s]uch 

procedural violation of due process would never pass muster in any normal civil or criminal 

litigation." Id at 550-51. 

Fundamental fairness is thus a key element of due process for all proceedings, including 

this one, and courts have long recognized that a party must not only receive notice of the claims 

against it, but the notice must also contain sufficient specificity to allow the party to defend 

itself. See Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950) ("An 

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elementary and fundamental requirement of due process in any proceeding which is to be 

accorded finality is notice reasonably calculated ... [and] notice must be of such nature as 

reasonably to convey the required information."); Christopher v. Harbury, 536 U.S. 403, 416 

(2002) (the elements of the plaintiffs claim(s) "must be addressed by allegations in the 

complaint sufficient to give fair notice to a defendant" ... "the underlying cause of action and its 

lost remedy must be addressed by allegations in the complaint sufficient to give fair notice to a 

defendant."). 

In this case, MeWane had no notice that change would be a 

subject of adjudication. In fact, it was notified the opposite: that the Commission did not allege 

wrongdoing related (which was not mentioned anywhere in the 

Complaint) and, instead, alleged that the conspiracy was "disbanded" in early 2009 when 

Congress passed the ARRA in February. The Complaint was also clearly limited to January and 

June 2008 multiplier increases, not , and job pricing in 2008). 

Courts routinely refuse to address claims beyond the scope of complaints, holding that it 

is unfair and prejudicial for plaintiffs to attempt to "amend" their complaints after-the-fact during 

summary judgment briefing. Daury v. Smith, 842 F.2d 9, 15 (1st Cir. 1988) ("We will not 

rewrite plaintiffs complaint to contain a count that was not included in it. ... No motion was 

made to amend the complaint. We do not think our duty to liberally construe the pleadings gives 

a plaintiff the license to amend the complaint by memorandum in the district court and by brief 

in the appellate court."); Golodner v. City ofNew London, No. 3:08-cv-1319, 2010 WL 3522489 

at *9 (D.Conn. 2010) (granting defendant's motion for summary judgment, the court refused to 

address plaintiffs' allegations that were "beyond the scope ofthe complaint", holding that a 

"plaintiff cannot amend his claim through a response to summary judgment"); Karath v. Board 

ofTrustees, No. 3:07-cv-1073, 2009 WL 4879553 at *3 (D. Conn. 2009) ("The Court will not 

permit plaintiff to amend his complaint by implication in response to summary judgment"); 

Beacon Journal Publishing Co., Inc. v. Gonzales, No. 5:05-cv-1396, 2005 WL 2099787 at *2 

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(N.D. Ohio 2005) (in granting summary judgment for the defendant, the court noted that "the 

relief Plaintiff requests in its [reply brief] is beyond the scope ofthe Complaint. The Court, 

therefore, will not address Plaintiffs allegations"). 

This is not a novel rule. It applies to all courts in all jurisdictions. For example, appellate 

courts have similarly refused to consider factual allegations made for the first time in appellate 

briefs as a matter of fundamental fairness. See Seeds ofPeace Collective v. City ofPittsburgh, 

453 Fed.Appx. 211,215 n.3 (3d Cir. 2011) ("we do not consider factual allegations made in 

Three Rivers' brief but not pleaded in the complaint"); see Kost v. Kozakiewicz, 1 F.3d 176, 183 

n.4 (3d Cir. 1993) ("We firmly reject appellants' attempt to augment the factual record relevant 

to their claims by the voluminous inclusion in their briefs on appeal of facts not alleged in their 

complaint or otherwise properly appearing in the record.") 

By moving for summary decision on an the - - which the Complaint 

expressly alleges occurred after the alleged conspiracy "disbanded" - - Complaint Counsel is 

simply attempting to bully McWane regarding a that the Commission has 

implicitly decided was lawful. McWane did not have notice of any alleged wrongdoing and did 

not conduct full discovery on the alleged . This Court should thus strike 

Complaint Counsel's motion for partial summary decision as improper under the due process 

clause. 

B. The FTC Act Prohibits The Court From Addressing An Allegation Not 

Contained In The Complaint 

In the FTC's administrative process, the Commission itself is responsible for deciding 

on the content ofAdministrative Complaints. (15 U.S.C. § 45; 16 C.F.R. § 3.11.) While the 

Commission has delegated authority to various subordinate units, like the Bureau of 

Competition, the Commission retains final authority as to whether any complaint shall issue and 

must vote on the content of any issued complaint. (16 C.F.R. § 3.11.) In this case, the 

14 

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Commission voted to issue a Complaint that specifically alleges that the conspiracy ended in 

early 2009. (AC ~~ 1-3, 32-36.) Under Section 5(b) of the FTC Act, the Commission can issue 

a complaint "[w]henever the Commission shall have reason to believe that any such person, 

partnership, or corporation has been or is using any unfair method of competition[.]" (15 U.S.C. 

§ 45(b).) 

All pertinent information cited in Complaint Counsel's motion regarding McWane's 

was obtained during the staffs Part 2 investigation and was thus 

fully known to the FTC staff, the Commission, and Complaint Counsel before this litigation 

began. The Commission affirmatively chose not to include allegations regarding 

_ in its Administrative Complaint. Because the Commission had all information 

regarding the alleged when it voted on the Complaint, it implicitly 

concluded that there was no "reason to believe" that a violation ofthe lawhad occurred during 

that time period. (Id) 

The Commission has never amended its Complaint. Indeed, Complaint Counsel has 

never moved for leave to do so. Thus, Complaint Counsel has no statutory authority to move for 

summary decision on an allegation that is beyond the scope of - - and contrary to - - the 

Complaint. Moreover, this Court's jurisdiction is limited to the allegations that are actually 

contained in the Complaint. Even an amendment under Rule 3.15 - - which, again, Complaint 

Counsel has never requested - - is permissible "only if the amendment is reasonably within the 

scope of the original complaint or notice." In addition, of course, a motion to amend must be 

sent to the Commission itself: "Motions for other amendments of complaints or notices shall be 

certified to the Commission." (16 C.F.R. § 3.15 (emphasis added).) None of that is applicable 

here, however, because Complaint Counsel has never bothered to file a motion to amend the 

Complaint. Had it done so, this still would be beyond its statutory authority because allegations 

relating to are clearly not "reasonably within the scope of the 

original complaint" when the AC specifically stated that the conspiracy "disbanded" in "early 

15 

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2009" with the February 2009 enactment ofthe ARRA. (AC ~~ 2-3,36; 16 C.F.R. § 3.15.)

Thus, any amendment would have to be certified to the Commission.

Again, this is not a novel rule -- the requirements under the Federal Rules ofCivil

Procedure are the same. Parties have long been required to either obtain written consent ofthe

opposing party, or to move the court for leave to amend, ifthey wish to litigate claims beyond

. the scope ofthe complaint. See Fed.R.Civ.P. 15 (a) ("party may amend its pleading only with

the opposing party's written consent or the court's leave"); Fed.R.Civ.P. 15 (b) (requiring

consent ofthe parties for the Court to treat issues not raised in the pleadings as ifthey had been

included).

In addition, a party seeking to amend must do so in a timely manner, i.e., before the close

of discovery. Attempts to "amend" a complaint - - without ever a formal motion to amend - - by

simply tossing a new claim into a summary judgment brief are routinely denied. In Farrell v.

Einemann, CA No. 04-2088,2006 WL 1644826 (D.N.J. 2006), a plaintiffraised a claim for the

first time in its summary judgment brief. The court refused to rule on the claim, holding that

"the parties seem to have moved on to litigating a claim which is absent from the Complaint ...

this Court will not ... rule on a claim which has not been stated in the Complaint." Id. at *2.

The court went on to note that Federal Rule ofCivil Procedure 15(b) prevented it from treating

issues not raised in the pleadings without consent ofthe parties. Id.; Fed. R. Civ. P 15(b).9

Even assuming arguendo that Complaint Counsel had the statutory authority seek leave

to amend the complaint (which they do not), they should not be permitted to do so in such an

improper and after-the-fact manner. They should have followed Rule 15, but did not. Ifthey

had followed the Commission's rules and requested leave to amend the Complaint, the motion

should still have been denied. Under Rule 15, a court may deny leave to amend ifthere is undue

delay, bad faith, dilatory motive, undue prejudice to the opposing party, or ifthe amendment

would be futile. See Park v. City ofChi., 297 F.3d 606, 612-13 (7th Cir. 2002). "[T]he longer

9 Federal Trade Commission Rule 3.15 is substantively identical to Fed. R. Civ. P. 15.

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the delay, the greater the presumption against granting leave to amend." King v. Cooke, 26 F.3d 

720, 723 (7th Cir. 1994) (internal quotation marks and citation omitted). Here, there is both 

undue prejudice and undue delay. McWane has been operating under the assumption that the 

Complaint meant what it said: that the alleged conspiracy was limited in time to 2008 and was , 

"disbanded" in "early 2009" when ARRA was enacted in February (and also that it was limited 

to 2008 multiplier increases and job prices, 

Again, the pertinent facts related to McWane' s were 

obtained by FTC staff during its Part 2 investigation and were, thus, known to the Commission 

(which chose to exclude them from its Complaint) and to Complaint Counsel- - which chose not 

to move to amend the Complaint. Discovery is now closed. While a party may move for 

summary decision at any time, as a general rule summary judgment should not be granted until 

the party opposing the motion has had an adequate opportunity to conduct discovery. Ala. Farm 

Bureau Mut. Cas. Co. v. American Fid. Life Ins. Co., 606 F.2d 602 (5th Cir. 1979). Indeed, 

Federal Rule of Civil Procedure 56(f) expressly gives a defendant facing a summary judgment 

motion before the close of discovery the opportunity to oppose the motion in order to complete 

discovery. The provisions of FTC Rule 3.24 governing the standards for summary decision are 

virtually identical to the provisions of Fed. R. Civ. P. 56, governing summary judgment in the 

federal courts. In re Hearst Corp., 80 F.T.C. 1011, 1014 (1972) ("Rule 3.24(a 4 tracks Federal 

Rule 56(f)"). Because the Commission's Complaint told McWane that its 

• was not at issue in the case, it has not had a full opportunity to conduct discovery on 

Complaint Counsel's new allegation. Summary decision should be denied and the Court should 

strike Complaint Counsel's made-up motion. 

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III. The Court Should Also The Motion Because Complaint Counsel Ignores 

Significant Exculpatory Evidence, Including a Sworn Denial By the Only Witness it 

Relies On 

Complaint Counsel's made-up claim, flatly contradicted by the testimony and other 

evidence in this case, falls far short of showing that there is "no genuine issue as to any material 

fact regarding liability or relief[.]" 16 C.F.R. 3.24(a)(2). To the contrary, the evidence is not 

only highly disputed (thus showing significant "genuine issues" as to material facts), it is 

If this were a real claim in the case, those undisputed facts 

judgment in McWane's/avor. Indeed, Complaint Counsel concedes 

Instead, the Supreme Court and every Circuit have repeatedly dismissed cases 

challenging parallel, follow-the-Ieader conduct because that, by itself, does not suggest any 

preceding agreement. See, e.g., Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) 

("when allegations of parallel conduct are set out in order to make a § 1 claim, they must be 

placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct 

that could just as well be independent action") (emphasis added); Williamson Oil Co. v. Philip 

Morris USA, 346 F.3d 1287, 1310 (11th Cir. 2003) ("None ofthe actions ... that appellants label 

'signals' tend to exclude the possibility that the primary players in the tobacco industry were 

engaged in rational, lawful, parallel pricing behavior"); Venzie Corp. v. United States Mineral 

Products Co., 521 F.2d 1309, 1314 (3d Cir. 1975) ("The absence of action contrary to one's 

economic interests renders consciously parallel business behavior 'meaningless, and in no way 

indicates agreement. "'). 

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Complaint Counsel's made-up claim is entirely dependent on

, whose testimony on this issue FTC staff and the Commission obtained during the

Part 2 investigation - - and decided not to include in the Complaint - - and which Complaint

Counsel had from the beginning ofthis litigation and decided not to move to amend and add to

the Complaint. That alone warrants this Court denying the motion. In addition, though, even the

partial discovery taken on this issue shows facts quite different from the picture Complaint

In short, Com laint Counsel ignores substantial evidence and testimony that

rice-fixing agreement, Complaint Counsel must come forth with

facts that demonstrate

•. Twombly, 550 U.S. at 557 ("preceding agreement"); Copperweld Corp. v. Independence

Tube Corp., 467 U.S. 752, 771 (1984) (conspiracy requires proof of "unity of purpose or a

common design and understanding or a meeting ofminds in an unlawful arrangement") (citation

omitted).lo That requires proofthat defendants discussed and agreed upon "a unity of purpose or

a common design and understanding, or a meeting ofminds in an unlawful arrangement."

American Tobacco Co. v. United States, 328 U.S. 781, 810 (1946); In re Baby Food Antitrust

.10 An agreement under FTC Act Section 5 requires the same proof as an agreement under Sherman Act Section 1.

See, e.g., FTCv. Cement Institute, 333 U.S. 683, 691-92 (1948) ("soon after its creation the Commission began to

interpret the prohibitions ofs 5 as including those restraints oftrade which also were outlawed by the Sherman Act,

and that this Court has consistently approved that interpretation ofthe Act").

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Litig., 166 F.3d 112, 117 (3d Cir. 1999) ("The existence of an agreement is the hallmark" of a 

conspiracy claim). 

At most, Complaint Counsel's evidence shows that 

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as lawful: 

"the record demonstrates that their testimony, at most, can be characterized as an 

exchange of information that each entity had already independently decided to follow the 

price increase announced by IP on February 10,2003. A jury could not reasonably 

interpret the cited testimony as proof of an agreement to raise, fix or stabilize future 

prices" ... "at most, Korhonen simply communicated SENA's decision after it had been 

made. That communication cannot have affected the decision UPM had already made to 

follow" 

In re Publication Paper Antitrust Litigation, CA No. 3:04-md-1631, 2010 WL 5253364 at *8 

(D.Conn.2010) 

In Baby Food, the Court found evidence lacking even though there was evidence that 

defendants notified each other of price increases before announcing them to customers and 

regularly exchanged sales information. Baby Food, 166 F.3d at 117. Unlike Baby Food, here it 

is undisputed that (l) 

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Courts have made clear that an after--the-fact communication, without more, is not 

evidence of a price-fixing agreement even when it actually addresses prices. Blomkest Fertilizer, 

Inc. v. Potash Corp. ofSaskatchewan, 203 F .3d 1028, 1034 (8th Cir. 1999) (affirming summary 

judgment because "[e]vidence that a business consciously met the pricing ofits competitors does 

not rove a violation ofthe antitrust laws."). It is hard to understand 

- - could somehow 

suggest a "preceding agreement." Twombly, 550 U.S. at 557. 

Court after court has held that no inference of conspiracy can be drawn from the afterthe-fact decision by one company to follow another company's price. Id at 1036 ("evidence that 

the alleged conspirators were aware of each other's prices, before announcing their own prices, is 

nothing more than a restatement of conscious parallelism, which is not enough to show an 

antitrust conspiracy"); Clamp-All Corp. v. Cast Iron Soil Pipe Institute, 851 F.2d 478, 484 (1st 

Cir. 1988) (Breyer, J.) (affirming summary judgment for defendants in a case in which 

defendants in a concentrated market followed each other's list prices, holding that "the price lists 

still show no more than what defendants concede: that each firm, acting individually, copied the 

price list ofthe industry leader. A firm in a concentrated industry typically has reason to decide 

22 

FTC Docket No. 9351 

McWane, Inc.'s Opposition to 

Complaint Counsel's Motion for Partial Summary Decision 
PUBLIC 

(individually) to copy an industry leader" ... "such individual pricing decisions (even when each 

firm rests its own decision upon its belief that competitors will do the same) do not constitute an 

unlawful agreement under section 1 ofthe Sherman Act"); Apex Oil Co. v. DiMauro, 822 F.2d 

246, 253-54 (2nd Cir. 1987) ("parallel conduct alone will not suffice as evidence of such a 

conspiracy, even if the defendants 'knew the other defendant companies were doing likewise. "'). 

Moreover, it would be particularly perverse - - and contrary to Supreme Court and 

uniform Courts of A peals case law - - to infer that 

Complaint Counsel does not cite any case for that novel proposition, 

and none exists. 

CONCLUSION 

For the reasons discussed herein, the Court should strike Complaint Counsel's motion 

for summary decision on a claim that is not contained in - - and contrary to - - the Complaint. 

Complaint Counsel cannot simply ignore those facts. Accordingly, the Court should 

strike Complaint Counsel's made-up motion (or, at a minimum, deny it because there are 

genuine issues ofmaterial disputed fact). 

23 

FTC Docket No. 9351 

McWane, Inc.'s Opposition to 

Complaint Counsel's Motion for Partial Summary Decision 
PUBLIC

Dated: June 25,2012

lsi J. Alan Truitt

1. Alan Truitt

Thomas W. Thagard III

Maynard Cooper and Gale PC

1901 Sixth Avenue North

2400 Regions Harbert Plaza

Binningham, AL 35203

Phone: 205.254.1000

Fax: 205.254.1999

atruitt@maynardcooper.com

tthagard@maynardcooper.com

lsi Joseph Ostoyich

Joseph A. Ostoyich

William Lavery

Baker Botts L.L.P.

The Warner

1299 Pennsylvania Ave., N.W.

Washington, D.C. 20004-2420

Phone: 202.639.7700

Fax: 202.639.7890

joseph.ostoyich@bakerbotts.com

. william.lavery@bakerbotts.com

Attorneysfor Respondent McWane, Inc.

24

FTC Docket No. 9351

McWane, Inc.'s Opposition to

Complaint Counsel's Motion for Partial Summary Decision
PUBLIC
 

CERTIFICATE OF SERVICE 

I hereby certify that on June 25, 2012, I filed the foregoing document electronically using 

the FTC's E-Filing System, which will send notification of such filing to: 

Donald S. Clark
 

Secretary
 

Federal Trade Commission
 

600 Pennsylvania Ave., NW, Rm. H-l13
 

Washington, DC 20580
 

I also certify that I delivered via hand delivery a copy ofthe foregoing document to: 

The Honorable D. Michael Chappell
 

Administrative Law Judge
 

Federal Trade Commission
 

600 Pennsylvania Ave., NW, Rm. H-11O
 

Washington, DC 20580
 

I further certify that I delivered via electronic mail a copy ofthe foregoing document to: 

Edward Hassi, Esq.
 

Geoffrey M. Green, Esq.
 

Linda Holleran, Esq.
 

Thomas H. Brock, Esq.
 

Michael L. Bloom, Esq.
 

Jeanine K. Balbach, Esq.
 

1. Alexander Ansaldo, Esq.
 

Andrew K. Mann, Esq.
 

By: /s/ William C. Lavery 

One of the Attorneys for McWane 

25 

FTC Docket No. 9351 

McWane, Inc.'s Opposition to 

Complaint Counsel's Motion for Partial Summary Decision 
PUBLIC

UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

Inthe Matter of

MCWANE, INC.,

a corporation, and

STAR PIPE PRODUCTS, LTD.,

a limited partnership.

)

)

)

)

)

)

)

)

-------------)

PUBLIC

DOCKET NO. 9351

STATEMENT OF MATERIAL FACTS AS TO WHICH THERE IS NO GENUINE

DISPUTE IN SUPPORT OF RESPONDENT MCWANE, INC.'S OPPOSITION AND

MOTION TO STRIKE COMPLAINT COUNSEL'S MOTION FOR SUMMARY

DECISION, AND RESPONSE TO COMPLAINT COUNSEL'S STATEMENT OF

UNDISPUTED FACTS

CONFIDENTIAL

.MATERIAL PROTECTED PURSUANT TO

JANUARY 5, 2012 PROTECTIVE ORDER ENTERED BY THIS COURT

1

FTC Docket No. 9351

Statement of Material Facts in Support of

McWane, Inc.'s Opposition to CC's Motion for Summary Decision
PUBLIC
 

TABLE OF CONTENTS
 

I.	 The Complaint Alleged A Conspiracy To Raise Multipliers (And Stop Job Price 

Discounts) That Was By 3 

II.	 Complaint Counsel's New Claim Regarding Is Not 

Contained In The Complaint 3 

III.	 Undisputed Testimony Demonstrates That 

.................................................................5 

IV.	 Significant Undisputed Facts Demonstrate That 

..............................................................6 

V.	 There Is Geniune Dispute As To The Following "Facts" From Complaint 

Counsel's Statement Of Undisputed Facts 14 

2 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC 

Pursuant to Rule 3.24 of the Federal Trade Commission's Rules of Practice, Respondent 

McWane, Inc. ("McWane"), submits this Statement of Material Facts as to Which there is no 

Genuine Dispute ("SOF"), in support of its Opposition and Motion to Strike Complaint 

Counsel's Motion for Partial Summary Decision. 

There is no genuine dispute as to the following facts: 

I.	 The Complaint Allege~acyTo Raise Multipliers (And Stop Job Price 

Discounts) That Was__By 

1. Counts 1 and 2 of the Administrative Complaint ("AC") allege that McWane 

"conspired" with Sigma and Star to issue "multiplier" price increases for ductile iron pipe fittings 

in January and June 2008 and to stop their "job price" discounting, beginning in January 2008 

and ending in "early 2009." (See CC's Motion, Tab 1 AC ~~ 2-3.) 

2. According to the Complaint and statements by the Commission, the alleged 

conspiracy existed only until " and _ in February 2009 because "the 

passage of the American Recovery and Reinvestment Act of 2009 ("ARRA") in February 2009 . 

. . upset the terms of coordination among the Sellers." (See CC's Motion, Tab 1 AC ~3

(emphasis added); January 4, 2012 Statement by Federal Trade Commission, 

http://www.ftc.gov/opa/2012/01lmcwane.shtm); (See CC's Motion; Tab 1 AC 36 ("January 

2009").) 

II.	 Complaint Counsel's New Claim Regarding Is Not 

Contained In The Complaint 

3. In its Motion for Partial Summary Decision, Complaint Counsel _ 

3 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

-


4. The Complaint did not 

Instead, it alleged a conspiracy to raise 

prices through increases in multipliers and an end to job price 

discounts in January 2008 and June 2008 _. (See CC's Motion, Tab 1 AC ~~ 32-24.) 

5. 

. (See CC's Motion, Tab 1 AC ~~ 2-3.; See CC's Motion, Tab 3 _ 

6. 

4 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

7. 

8. 

) 

III. 

9. 

5 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

.) 

10. 

11. 

12. 

_.)13.

IV. 

14. 

6 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

15. 

16. 

7 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

17. 

18. 

19. 

8 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, 1nc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

20.
 

21. 

22. 

23. 

9 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc. 's Opposition to CC's Motion for Summary Decision 
PUBLIC
 

24. 

25. 

26. 

10 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

-


27. 

28. 

30. 

31. 

11 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

32.
 

-

33. 

34. 

35. 

-

36. 

12 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

37.
 

38. 

39. 

40. The undisputed facts also show 

13
 

FTC Docket No. 935 I
 

Statement of Material Facts in Support of
 

McWane, Inc. 's Opposition to CC's Motion for Summary Decision
 
PUBLIC 

V.	 There Is Genuine Dispute As To The Following "Facts" From Complaint Counsel's 

Statement Of Undisputed Facts 

Pursuant to Rule 3.24, Complaint Counsel submitted a Statement of Undisputed Facts 

with its Motion for Partial Summary Decision. Respondent McWane Responds as follows. 

McWane believes that while Complaint Counsel has mischaracterized or skewed a number ofthe 

"facts" cited, for reasons explained in more detail supra, there is genuine dispute as to the 

following paragraphs in Complaint Counsel's Statement: 

41. 

The 

testimony cited does not support the statement. 

42. 

43. 

This statement mischaracterizes the document -- _ 

14 

FTC Docket No. 9351 

Statement of Material Facts in Support of 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision 
PUBLIC
 

FTC Docket No. 9351
 

Statement of Material Facts in Support of
 

McWane, Inc.'s Opposition to CC's Motion for Summary Decision
 

15 
PUBLIC

Dated: June 25, 2012

/s/ J. Alan Truitt

1. Alan Truitt

Thomas W. Thagard III

Maynard Cooper and Gale PC

1901 Sixth Avenue North

2400 Regions Harbert Plaza

Birmingham, AL 35203

Phone: 205.254.1000

Fax: 205.254.1999

atruitt@maynardcooper.com

tthagard@maynardcooper.com

Is. Joseph Ostoyich

Joseph A. Ostoyich

William Lavery

Baker Botts L.L.P.

The Warner

1299 Pennsylvania Ave., N.W.

Washington, D.C. 20004-2420

Phone: 202.639.7700

Fax: 202.639.7890

joseph.ostoyich@bakerbotts.com

william.lavery@bakerbotts.com

Attorneysfor Respondent McWane, Inc.

16

FTC Docket No. 9351

Statement ofMaterial Facts in Support of

McWane, Inc.'s Opposition to CC's Motion for Summary Decision
CERTIFICATE OF SERVICE 

I hereby certify that on June 25, 2012, I filed the foregoing document electronically using 

the FTC's E-Filing System, which will send notification ofsuch filing to: 

Donald S. Clark
 

Secretary
 

Federal Trade Commission
 

600 Pennsylvania Ave., NW, Rm. H-l13
 

Washington, DC 20580
 

I also certify that I delivered via hand delivery a copy ofthe foregoing document to: 

The Honorable D. Michael Chappell
 

Administrative Law Judge
 

Federal Trade Commission
 

600 Pennsylvania Ave., NW, Rm. H-110
 

Washington, DC 20580
 

I further certify that I delivered via electronic mail a copy ofthe foregoing document to: 

Edward Hassi, Esq.
 

Geoffrey M. Green, Esq.
 

Linda Holleran, Esq.
 

Thomas H. Brock, Esq.
 

Michael L. Bloom, Esq.
 

Jeanine K. Balbach, Esq.
 

J. Alexander Ansaldo, Esq.
 

Andrew K. Mann, Esq.
 

By: /s/ William C. Lavery 

One ofthe Attorneys for McWane 
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