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

RESPONDENT MCWANE, INC.'S PRE-TRIAL BRIEF

1. Alan Truitt

Thomas W. Thagard III

Maynard Cooper and Gale PC

1901 Sixth Avenue North

2400 Regions Harbert Plaza

Birmingham, AL 35203

Joseph A. Ostoyich

Erik T. Koons

William Lavery

Heather Souder Choi

Baker Botts L.L.P.

The Warner

1299 Pennsylvania Ave., N.W.

Washington, D.C. 20004-2420

Attorneys/or Respondent McWane, Inc.

Dated: August 31, 2012

08 31 2012 
PUBLIC
 

TABLE OF CONTENTS
 

I. INTRODUCTION 1
 

II. THE ALLEGATIONS 6
 

III. FACTUAL BACKGROUND 8
 

A. McWane Made Independent Pricing Decisions 10
 

B. Sigma And Star Made Independent Pricing Decisions 15
 

C. The January 2008 Multiplier Changes 17
 

1. Sigma And Star Independently Decide To Follow McWane's Multiplier Changes
 

When It Suited Their Interests 18
 

2. McWane's January 2008 Customer Letter Announced That The Company Would
 

Continue To Adjust Multipliers To Stay Competitive 19
 

D. McWane, Star, and Sigma Continued Job Pricing Throughout 2008 19
 

E. McWane's Lower June 2008 Multiplier 21
 

1. Sigma And Star Independently Decide To Follow McWane's Lower Multipliers ...... 22
 

F. DIFRA Tons-Shipped Data Did Not "Facilitate" Price Coordination 23
 

G. McWane's Independent Decision to Dramatically Lower All Medium And Large 

Diameter Fittings List Prices In April 2009 25 

1. Star Learns About McWane's List Price Decreases After-The-Fact And Independently
 

Decides to Follow 25
 

2. The "After-the-Fact" Telephone Conversation Between Star And McWane Had No
 

Impact On McWane's Behavior 26
 

H. Domestic Manufacturing Was "Not A Viable Option" For Sigma In Mid-2009 29
 

I. Star Successfully Began Selling Domestic Fittings In 2009 31
 

J. June 2010 Multiplier Increases 32
 

IV. ARGUMENT AND LEGAL ANALYSIS 33
 

A. McWane Independently Determined Its Multipliers In 2008 And Continued Offering Job
 

Price Discounts Throughout The year 34
 

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1. Complaint Counsel's "Conspiracy" Proof Fails As A Matter Of Law 35
 

2. McWane's Decision To Chart Its Own Course In 2008 And Star And Sigma's
 

Decisions To Follow McWane Demonstrate Independent Conduct.. 37
 

B. There Was No Invitation To Collude And The Tons-Shipped DIFRA Data Did Not
 

Facilitate Price Coordination 42
 

C. McWane Objects To The April 2009 and June 2010 Allegations As Outside The Scope
 

Of The Complaint 45
 

1. Addition Of The April 2009 And June 2010 Allegations Is Prejudicial To McWane. 46
 

2. The April 2009 and June 2010 Allegations Are Violations Of Due Process And FTC
 

Rules 48
 

D. McWane Independently Decided To Lower Its List Prices On All Medium And Large
 

Diameter Fittings In April 2009 And Star Independently Decided To Follow 52
 

E. McWane Acted Independently By Changing Its Multipliers In June 2010 54 

F. McWane Did Not Have Monopoly Power. 55
 

1. Domestic And Imported Fittings Constitute A Single Market 58
 

2. Star Was Not Excluded From Supplying Domestic Fittings 58
 

3. McWane Did Not Exclude Sigma From Virtual Domestic Manufacturing 60
 

G. Complaint Counsel Cannot Prove That McWane's Actions Causes "Substantial Injury"
 

To Consumers 62
 

H. McWane Objects To The Admissibility Of Out-Of-Court Competitor Hearsay 63
 

V. REMEDy 66
 

VI. CONCLUSION 66
 

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TABLE OF AUTHORITIES 

CASES 

Page(s) 

Advo, Inc. v. Philadelphia Newspapers, 

51 F.3d 1191 (3d Cir. 1995) 57 

Ahmad v. Furlong, 

435 F.3d 1196 (10th Cir. 2006) .47, 48 

Alvord-Polk, Inc. v. F Schumacher & Co., 

37 F.3d 996 (3d Cir. 1994) 34 

Am. Council ofCertified Podiatric Physicians & Surgeons v. Am. Bd. ofPodiatric 

Surgery, Inc., 

185 F.3d 606 (6th Cir. 1999) 56 

American Key Corp. v. Cumberland Associates, 

579 F. Supp. 1245 (N.D. Ga. 1983) 37 

American Tobacco Co. v. United States, 

328 U.S. 781 (1946) 34, 52 

Aviation Specialties, Inc. v. United Techn. Corp., 

568 F.2d 1186 (5th Cir. 1978) 41 

Bell At!' Corp. v. Twombly, 

127 S. Ct. 1955 (2007) 34 

Bell Atlantic Corp. v. Twombly, 

550 U.S. 544 (2007) 51, 52, 54, 61 

Black & Yates, Inc. v. Mahogany Ass 'n, Inc., 

129 F.2d 227 (3d Cir. 1941) 51 

Blomkest Fertilizer, Inc. v. Potash Corporation ofSaskatchewan, 

203 F.3d 1028 (8th Cir. 2000) 37, 39, 45 

Bourjaily v. United States, 

483 U.S. 171 (1987) 64 

Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 

509 U.S. 209 (1993) 57 

Burlington N R.R. Co. v. Surface Transp. Bd., 

114 F.3d 206 (D.C. Cir. 1997) 57 

- iii ­
PUBLIC
 

Cable Holdings ofGa. , Inc. v. Home Video, Inc., 

825 F.2d 1559 (lIth Cir. 1987) 62 

California Dental Ass'n v. FTC., 

224 F.3d 942 (9th Cir. 2000)	 1 

Catalano, Inc. v. Target Sales, 

446 U.S. 643 (1980) 43 

Christopher v. Harbury, 

536 U.S. 403 (2002)	 49 

Cinderella Career & Finishing Schools, Inc. v. FTC., 

425 F.2d 583 (D.C. Cir. 1970) 1 

City ofMoundridge v. Exxon Mobil Corp., 

409 Fed.Appx. 362 (D.C. Cir. 2011) 36 

City ofMoundridge v. Exxon Mobil Corp., 

429 F. Supp. 2d 117 (D.D.C. 2006)	 35 

Confederated Tribes ofSiletz Indians v. Weyerhaeuser Co., 

411 F.3d 1030 (9th Cir. 2005) 56 

Copperweld Corp. v. Independence Tube Corp., 

467 U.S. 752 (1984)	 34, 52, 54 

Daury v. Smith, 

842 F.2d 9 (1st Cir. 1988)	 50 

Defiance Hosp. v. Fauster-Camron, Inc., 

344 F. Supp. 2d 1097 (N.D. Ohio 2004)	 56 

Dussouy v. GulfCoast Inv. Corp, 

660 F.2d 594 (5th Cir. 1981) (Wisdom, J.)	 48 

E.	 Food Servs., Inc. v. Pontifical Catholic Univ. Servs. Ass 'n, Inc., 

357 F.3d 1 (1st Cir. 2004) 56, 59 

E.1.	 DuPont de Nemours & Co. v. FTC, 

729 F.2d 128 (2d Cir. 1984) 44 

FTC v. Cement Institute, 

333 U.S. 683 (1948) 1, 34 

FTC v. Neovi, Inc., 

604 F.3d 1150 (9th Cir. 2010) 6, 62 

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FTC v. Texaco, Inc., 

393 U.S. 23 (1968) 44 

Gas Utils. Co. ofAlabama, Inc. v. Southern Natural Gas Co., 

996 F.2d 282 (11th Cir. 1993) 62 

Holiday Wholesale Grocery v. Philip Morris, Inc., 

231 F.Supp.2d 1253 (N.D.Ga. 2002) 44 

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

851 F.2d 478 (1st Cir. 1988) (Breyer, 1.) 39, 40, 41 

In the Matter ofDaniel Chapter One, 

2009 WL 48 

In the Matter ofDaniel Chapter One, 

Dkt. No. 9329,2009 WL 871702 (FTC Mar. 9,2009) .47,48 

In re Baby Food Antitrust Litig., 

166 F.3d 112 (3d Cir. 1999) 34,36,38,39,40,42, 43, 52, 53, 61 

In re BeefIndus. Antitrust Litig., 

907 F.2d 510 (5th Cir. 1990) 41 

In re Citric Acid Litigation, 

191 F.3d 1090 (9th Cir. 1999) 40, 44,55 

In re Late Fee and Over-Limit Fee Litig., 

528 F. Supp. 2d 953 (N.D. Cal. 2007) .41 

In re Ruffalo, 

390 U.S. 544 (1968) 49 

Jefferson Parish Hosp. Dist. No.2 v. Hyde, 

466 U.S. 2 (1984) (O'Connor, 1., concurring) 59 

Kost v. Kozakiewicz, 

1 F.3d 176 (3d Cir. 1993) 49 

Kreuzer v. American Academy ofPeriodontology, 

735 F.2d 1479 (D.C. Cir. 1984) 39 

LaFlamme v. Societe Air France, 

702 F. Supp. 2d 136 (E.D.N.Y. 2010) .41 

Lamb's Patio Theatre, Inc. v. Universal Film Exchanges, Inc., 

582 F.2d 1068 (7th Cir. 1978) 37 

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Liu v. Amerco, 

No. 11-2053,2012 WL 1560170 (lst Cir. May 4,2012) .43, 44 

Los Angeles Land Co. v. Brunswick Corp., 

6 F.3d 1422 (9th Cir. 1993) 57 

Market Force Inc. v. Wauwatosa Realty Co., 

906 F.2d 1167 (7th Cir. 1990) 40 

Matsushita Elec. Indus. Co. v. 

475 U.S. 574 (1986) 

Zenith Radio Corp., 

40 

McCree v. SEPTA, 

No. 07-4908,2007 U.S. Dist. LEXIS 4803 (E.D Pa. Jan. 22,2009) .47,48 

Mennonite Bd. ofMissions v. Adams, 

462 U.S. 791 (1983) 48 

Mitchael v. Intracorp, Inc., 

179 F.3d 847 (10th Cir. 1999) 41 

Monsanto Co. v. Spray-Rite Servo Corp., 

465 U.S. 752 (1984) 41 

Mullane V. Central Hanover Bank & Trust Co., 

339 U.S. 306 (1950) 49 

Omega Envt'l. V. Gilbarco, Inc., 

127 F.3d 1157 (9th Cir. 1997) 57 

Orkin Exterminating Co., Inc. V. FTC, 

849 F.2d 1354 (lIth Cir. 1988) 6, 63 

Rayex Corp. V. F. T. c., 

317 F.2d 290 (2nd Cir. 1963) 1 

Reserve Supply Corp. V. Owens-Corning Fiberglas Corp., 

971 F.2d 37 (7th Cir. 1992) 43 

Seeds ofPeace Collective V. City ofPittsburgh, 

453 Fed.Appx. 211 (3d Cir. 2011) 49 

Serfecz V. Jewel Food Stores, 

67 F.3d 591 (7th Cir. 1995) 39 

Sunbeam Television Corp., V. Nielsen Media Research, Inc., 

136 F.Supp.2d 1341 (S.D.Fla. 2011) 62 

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Tampa Elec. Co. v. Nashville Coal Co., 

365 U.S. 320 (1961) 59 

Tops Mkts., Inc. v. Quality Mkts., Inc., 

142 F.3d 90 (2d Cir. 1998) 57 

us. v. Baines, 

486 F. Supp. 2d 1288 (D.NM 2007) 65 

us. v. Benson, 

591 F.3d 491 (6th Cir. 2010) 64 

us. v. Clark, 

18 F.3d 1337 (6th Cir. 1994) 65 

us. v. Lopez-Guitierrez, 

83 F.3d 1235 (10th Cir. 1996) 65 

United States v. American Airlines, 

570 F. Supp. 654 (N.D. Tex. 1983), rev'd on other grounds, 743 F. 2d 1114 (5th Cir. 

1984) 43 

United States v. Syufy Enters., 

903 F.2d 659 (9th Cir. 1990) 59 

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

521 F.2d 1309 (3d Cir. 1975) 34, 39 

Walker v. Thompson, 

288 F.3d 1005 (7th Cir.2002) 50, 51 

STATUTES 

5 U.S.C. § 706(2)(D) 49 

15 U.S.C. § 45(n) 62 

American Reinvestment and Recovery Act of 2009 .4 

FTC Act Section 5 6, 34, 44, 60, 62, 65 

Sherman Act Section 1.. 34, 40, 41, 42, 43, 44 

Sherman Act Section 2 43 

OTHER AUTHORITIES 

16 C.F.R. § 3.15 50 

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Fed. R. Civ. P. 8 50 

Fed. R. Evid. 401-402 64 

Fed. R. Evid. 402 65 

Fed. R. Evid. 403 66 

Federal Rule of Civil Procedure 15(b) .47 

Federal Rule of Evidence 801(d)(2)(E) 63, 64, 65 

Fifth Amendment 48 

FTC Act. (15 U.S.C. § 45(n).) 6 

Rule 3.15 25, 50 

Rule 3.15(a) 47 

Rule 3.41(c) 50 

Rule 3.43(b) 66 

U.S. ITC Publication 3657, Certain Ductile Iron Waterworks Fittingsfrom China .4 

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I. INTRODUCTION 

Complaint Counsel must prove its case by "substantial evidence." FTC v. Cement 

Institute, 333 U.S. 683, 705 (1948); California Dental Ass'n v. FTC., 224 F.3d 942, 957 (9th 

Cir. 2000); Cinderella Career & Finishing Schools, Inc. v. FTC., 425 F.2d 583, (D.C. Cir. 

1970); Rayex Corp. v. FTC., 317 F.2d 290, 292 (2nd Cir. 1963). It cannot. The overwhelming 

evidence at trial will demonstrate that McWane made its own price decisions at all times and did 

not fix prices with Sigma or Star. The overwhelming evidence at trial will demonstrate that 

McWane did not monopolize domestic fittings and did not exclude Star or Sigma. 

No Conspiracy. The overwhelming evidence at trial will demonstrate that McWane was 

not involved in any conspiracy with Sigma or Star. The Court will hear and read hundreds of 

sworn denials, and will see contemporaneous documents demonstrating that McWane made its 

own price decisions. (See Sworn Denials Exh. at 1-8.) In fact, the Court will see that McWane 

consistently kept its published list and multipliers for imported fittings below Sigma and Star 

during the alleged conspiracy. The Court will see that Sigma and Star had no advance 

knowledge of McWane's prices and, when they learned about McWane's prices from customers 

(not McWane), they often expressed surprise and aggravation that McWane was under pricing 

them. The Court will see that Sigma and Star decided, for their own reasons, to follow 

McWane's lower published prices. 

Complaint Counsel's case is thus a follow-the-leader down case. It is also entirely 

circumstantial and built on a series of misconstructions of documents and disregard for the 

testimony. For example, Complaint Counsel points to McWane's letters to its customers and 

Star and Sigma letters to their customers to infer a meeting of the minds. But the evidence will 

show that the companies' letters do not contain the "messages" Complaint Counsel posits, and 
PUBLIC
 

the contemporaneous documents will show that each company was, in fact, uncertain about its 

competitors' behavior and skeptical about the letters. The witnesses will testify that this distrust 

of each others' letters stems from a long history of every company offering discounts and other 

price concessions below the multiplier discounts set out in their letters. 

One example of Complaint Counsel's creativity in drawing inferences upon inferences 

will suffice. Complaint Counsel argues that McWane's May 7, 2008 customer letter contained a 

coded message to Sigma and Star to send in their DIFRA tons-shipped data and, if they did so, 

McWane would announce a multiplier increase (albeit one that the Court will see was 

substantially smaller than McWane's actual raw materials costs increases at the time - - and far 

lower than the multipliers Sigma had already announced and Star had followed). Putting that 

aside, the Court will hear the Sigma and Star witnesses flatly reject Complaint Counsel's 

interpretation and testify that the thought never occurred to them. Star's Vice President of Sales, 

Dan McCutcheon, will testify that: 

Q. And it's your testimony here today that you made no connection between - - is it your 

testimony here today that you made no connection between the submission of your DIFRA data 

and this letter, the May 7th, 2008, letter? 

A. Absolutely none. As a matter of fact, the first time that thought - - I've even heard that was 

today. Of linking that to DIFRA? 

Q. (By Mr. Hassi) Linking this May 7th letter to the need to submit your DIFRA data? 

A. No, sir. 

Q. It's your testimony, sir, that you did not have an understanding that McWane was not going 

to increase prices until you had a report from DIFRA? 

A. Absolutely not. (McCutcheon Dep. at 198: 13-199:4) 

Sigma's CEO, Victor Pais, will likewise flatly reject Complaint Counsel's strained 

interpretation: 

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Q. Sir, you understood, didn't you, that in June of2008 or the Springtime of2008, McWane was 

not going to increase prices on fittings until all of the DIFRA members submitted their data and 

the report was issued? 

A. Where did you get that impression? 

Q. Did you have that understanding, sir? 

A. I didn't. 

Q. You didn't? 

A. No. 

Q. Did you have any understanding that McWane was waiting to increase prices until after it 

had the DIFRA data and the DIFRA report? 

A. It is so farfetched and ridiculous, what can I say? No, no. 

Q. Did you note at the time that McWane increased prices on the very same day that the DIFRA 

report was issued? 

A. If you say so today, I have to take your word for it, but I was never aware that happened. 

(Pais Dep. at 381 :4-382: 11) 

No Monopolization of Domestic Fittings. Commissioner Rosch has twice dissented 

from the Commission's actions and noted his view that McWane's alleged monopolization of 

domestic fittings involves conduct - - a rebate policy - - that has been "blessed" by several 

Courts of Appeals and does not amount to a violation as a matter of law. (Jan. 4, 2012 Statement 

of Commissioner J. Thomas Rosch.) For good reason. 

First, there is no domestic market for fittings. The Court will hear from witness after 

witness that fittings are fittings. They are commodities that are functionally interchangeable and 

competitive substitutes no matter where they are made. And they are made by dozens of 

foundries all around the world from China to Korea to India to Mexico to Brazil - - and sent to 

the U.S. Indeed, the Court can take judicial notice that the International Trade Commission 

unanimously ruled that fittings from China were being dumped into the U.S. by Sigma and Star, 

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among others, only a few years ago. (U.S. ITC Publication 3657, Certain Ductile Iron 

Waterworks Fittingsfrom China, December 2003.) 

The Court will see evidence that cheap imports have flooded into the U.S. in the last ten 

years and taken the lion's share of the fittings market from long-time U.S. foundries like 

McWane. Domestic manufacturers, like U.S. Pipe, American Cast Iron Pipe, and Griffin Pipe, 

were once vibrant, but have shut down or cut back. 

The Court will hear testimony that McWane has lost substantial market share over the 

last ten years as a result of this flood of cheap imports, and was forced to close its Tyler, Texas 

foundry in 2008. Its last remaining fittings foundry (Union Foundry) in Anniston, Alabama, has 

been operating at a fraction of its capacity for years. 

To be sure, there are still a few municipal engineers and contractors who prefer to buy 

domestic fittings out of patriotism or loyalty to American foundry workers or incentives created 

by statute, but the number has dwindled to a small fraction of the overall specification base. 

Complaint Counsel and its expert witness, Dr. Laurence Schumann, point to the American 

Reinvestment and Recovery Act of 2009 and argue that it required domestic purchases. But the 

Court will see evidence that the ARRA contained exemptions and waivers for imported fittings 

and, in the end, was short-lived (its expired in February 2010 and its effects were over by Fall 

2010) and had only a modest impact on domestic demand. 

Second, overwhelming evidence will show that McWane's September 2009 rebate policy 

did not exclude Star from sourcing and re-selling domestic fittings. Indeed, Star went from idea 

(February 2009) to announcement (June 2009) to selling domestic fittings in less than nine 

months (Fall 2009). In 2010, its first full year selling domestic fittings, Star sold to more than 

• individual distributors, including more than. exclusive distributors, and its sales totaled 

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PUBLIC 

more than. million. Star sold domestic fittings to both of the industry's largest national 

chains, including HD Supply and Ferguson, many of the largest regional chains, including 

WinWater and Dana Kepner, and dozens and dozens of additional distributors. In 2011, Star 

again sold to more than. separate customers and its sales to HD Supply, Ferguson, and many 

others increased year over year over year. Complaint Counsel's own expert, Dr. Schumann, • 

. Not surprisingly, given Star's extraordinary success, he has not quantified any 

injury to Star or to the competitive process. The evidence will, instead, show that McWane's 

September 2009 rebate policy had a pro-competitive effect: it allowed Union Foundry to avoid 

the fate of every other domestic fittings foundry and being cherry-picked into oblivion. 

Third, overwhelming evidence will show that McWane did not exclude Sigma from 

getting into "virtual manufacturing" of domestic fittings. On the contrary, Sigma excluded 

Sigma - - -and for very good reasons. 

. In short, Sigma concluded in mid-2009 that virtual 

domestic manufacturing was not a viable option during the ARRA period for its own, valid 

reasons. The Court will see that Complaint Counsel has no real evidence to the contrary, let 

alone the "substantial evidence" necessary to meet its burden - - which is why it had to ask its 

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expert, Dr. Schumann, to assume that Sigma could have expanded into domestic fittings. By 

definition, that is a concession that the actual evidence is too weak. 

Faced with dire financial straits and no viable option (and with the ARRA clock running), 

Sigma asked to buy domestic fittings from McWane in order to keep its customers happy -- a 

pro-competitive result. And McWane agreed to sell Sigma in order to get 3,000 tons of domestic 

production for its ailing Union Foundry, so it could keep its manufacturing costs in line and stay 

in business and keep its foundry workers employed - - a pro-competitive result. 

No Injury To Consumers. Complaint Counsel must also prove "substantial injury" to 

consumers by substantial evidence under Section 5 of the FTC Act. (15 U.S.C. § 45(n).) 

Substantial injury can be shown through "concrete and quantifiable" findings of fact. See FTC v. 

Neovi, Inc., 604 F.3d 1150, 1157 (9th Cir. 2010); Orkin Exterminating Co., Inc. v. FTC, 849 

F.2d 1354,1364-65 (1Ith Cir. 1988). 

Complaint Counsel's expert, Dr. Schumann, has not quantified any alleged harm to 

consumers from any of the conduct at issue in this case. Moreover, he concedes, that he does not 

even know how consumers would have been injured. For example, he does not know whether 

the alleged conspiracy affected the incidences ofjob pricing (for example, that instead of 10 out 

of 10 customers getting a job discount, only 8 out of 10 would) or whether the amount of job 

pricing was reduced (for example, that the average job discount went from 5% to 4%) or some 

something else altogether. In short, this is guesswork and all he will be able to do at trial is 

repeat his generic ipse dixit. 

II. THE ALLEGATIONS 

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Complaint Counsel alleges that McWane engaged in "two distinct courses of illegal and 

anticompetitive conduct," (1) "a series of agreements with its main rivals...to stabilize and raise 

[f]ittings prices above competitive levels," and (2) an "illegal course of conduct designed to 

protect its dominant [d]omestic [f]ittings position." (CC's Pre-Trial Br. at 11-12.) The 

Administrative Complaint ("Complaint") lays out the following seven counts: 

Count I: McWane restrained price competition in violation of Section One of the 

Sherman Act and Section Five of the FTC Act by unlawfully engaging in a price-fixing 

agreement with Sigma and Star. (CompI. ~64; CC's Pre-Trial Br. at 48.) 

Count II: McWane restrained price competition in violation of Section One of the 

Sherman Act and Section Five of the FTC Act by unlawfully engaging in an unlawful 

information exchange with Sigma and Star through the trade association, DIFRA. (CompI. ~65;

CC's Pre-Trial Br. at 48.) 

Count III: McWane restrained price competition in violation of Section One of the 

Sherman Act and Section Five of the FTC Act by unlawfully inviting Star and Sigma to collude. 

(CompI. ~66; CC's Pre-Trial Br. at 48.) 

Count IV: McWane restrained price competition in violation of Section One of the 

Sherman Act and Section Five of the FTC Act by unlawfully engaging in an agreement with 

Sigma to purposefully eliminate Star from the domestic fittings market. (CompI. ~67; CC's PreTrial Br. at 48.) 

Count V: McWane unlawfully conspired with Sigma to monopolize the domestic 

fittings market in violation of Section One of the Sherman Act. (CompI. ~68; CC's Pre-Trial Br. 

at 48-49.) 

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Count VI: McWane unlawfully monopolized the domestic fittings market through its 

exclusive dealing policy in violation of Section Two of the Sherman Act. (CompI. ~69; CC's 

Pre-Trial Br. at 48-49.) 

Count VII: McWane unlawfully attempted to monopolize the domestic fittings market 

through its exclusive dealing policy in violation of Section Two of the Sherman Act. (CompI. 

~70; CC's Pre-Trial Br. at 48-49.) 

Additionally, Complaint Counsel for the first time last week, in its Pre-Trial Brief, 

alleges that McWane and its competitors also engaged in inappropriate price communications in 

April 2009 and June 2010. (CC's Pre-Trial Br. at 34-36.) Those allegations - - and Complaint 

Counsel's allegations regarding the April 2009 list price which it set out on the last day of fact 

discovery in its Motion For Partial Summary Decision - - are not in the Administrative 

Complaint and counter to the Commission's own interpretations of the Complaint allegations. If 

those issues are tried they will be tried over McWane's strenuous objection, as discussed below 

and in McWane's separate Motion To Exclude Evidence, Or In The Alternative, Motion For 

Continuance, filed today. 

III. FACTUAL BACKGROUND 

Respondent McWane manufactures more than 4,000 individual ductile iron pipe fittings 

in a wide range of diameters, configurations, joints, coatings, and finishes at its last remaining 

foundry in the U.S., the Union Foundry, and in its foundry in China, Tyler Xin Xin. (Tatman IR, 

at 14:11-25,23:4-27:5; see also http://www.tylerunion.com.)] McWane's competitors include a 

number of importers (Sigma, Star, MetalFit, Serampore, NAPAC, and ElectroSteel), and a 

number of domestic foundries (U.S. Pipe, Griffin Pipe, American Cast Iron Pipe Company, and 

I McWane's ductile iron fittings business is known as Tyler Union. 

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Backman Foundry), although several of the domestic foundries have stopped or cut back their 

production in the face of a flood of cheap imports. (See Tatman IH, at 47:3-15.) 

The Court will hear and see overwhelming evidence of independent (and procompetitive) decision-making by McWane throughout the alleged conspiracy period. That 

independent conduct directly contradicts the inferences Complaint Counsel will ask this Court to 

draw from the circumstantial evidence it has cobbled together in an effort to manufacture the 

"plus factors" the case law requires to infer an agreement. Indeed, this independent conduct - ­

these "minus factors" - - overwhelmingly demonstrate that McWane's decisions were 

independent and that there was no conspiracy. For example: 

•	 It is undisputed that there was no express agreement between the alleged coconspirators. The Court will hear Complaint Counsel's own expert concede he 

saw no evidence "that the parties met in some smoke filled room . . . ." 

(Schumann Dep. at 38:7-10.) 

•	 The Court will see contemporaneous documents and hear McWane testimony 

regarding its independent decision-making. 

•	 The Court will and read hundreds of sworn denials from every Sigma and Star 

witness that they discussed and agreed upon prices with anyone from McWane. 

(See Sworn Denials Exh. at 1-8.) 

•	 McWane kept its list prices below Sigma and Star in Winter 2008 and did not 

follow large increases they announced. 

•	 McWane lowered many of its published multiplier discounts in Winter 2008 to 

levels below Sigma and Star's published multipliers. 

•	 McWane kept its published multiplier discounts below Sigma and Star in Spring 

2008 and did not follow larger published multipliers they had announced. 

•	 McWane dramatically lowered its list prices on all medium and large diameter 

fittings in Spring 2009 to prices far below the list prices Sigma and Star had in 

effect. 

•	 McWane continued to offer job price discounts throughout this period, including 

2008. 

•	 McWane continued to offer rebates throughout this period, including 2008. 

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•	 McWane continued to offer price protection throughout this period, including 

200. 

•	 McWane continued to offer a host of other price concessions (including freight 

absorption, extended credit terms, and marketing funds) throughout this period, 

including 2008. 

•	 McWane expanded into large diameter domestic fittings and the government's 

own expert will concede that that this segment was competitive and not impacted 

by any conspiracy. 

•	 McWane sold off inventory into the market. 

•	 McWane did not withhold supply of fittings from the market (and, instead, was 

scrambling to get enough tonnage to keep Union Foundry alive). 

•	 The Court will see evidence that the structure of the market was not conducive to 

price fixing, that major distributors like HD Supply, Ferguson, and TDG had 

significant market or buyer power and routinely obtained price concessions. 

•	 The Court will see evidence that distributors of all sizes routinely demanded and 

received price concessions. 

•	 The Court will see evidence that McWane lost market share steadily throughout 

this period, including 2008. 

•	 McWane's blended fittings prices (i.e., imported fittings or domestic sold to open 

source jobs) declined steadily throughout this period, including 2008. 

•	 McWane's margins on open source fittings declined steadily throughout this 

period, including 2008. 

•	 The Court will see numerous contemporaneous McWane (and Sigma and Star) 

documents - - including the very documents Complaint Counsel tries to use to 

draw its inferences - - that show that each company was uncertain and often 

upset about its competitors' prices. 

•	 The Court will hear that McWane (and Sigma and Star) distrusted each others' 

customers letters and other market intelligence they gained because of a long 

history of each company pricing below its published list and multiplier discounts. 

A. McWane Made Independent Pricing Decisions 

The prices customers ultimately pay for McWane's fittings depend upon multiple tiers of 

discounts, which are commonly employed in the industry. First, McWane issues a list price, 

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which is nationwide and typically only changes every few years. (See Tatman IH, at 32:17­

33:10.) Virtually no customer pays list price. (See McCullough IH at 220:1-7.) Second, 

McWane issues "multipliers," which are region-by-region and, often, state-by-state discounts off 

the list price. (See Tatman IH 32:17-33:10 ("And multipliers will vary by state. They used to 

vary a lot more. Your pricing regions in the country have really compressed. If you look 

historically at our multiplier maps, they have changed a lot").) McWane's multipliers around the 

country differ based on "where the competitive levels are." (Id. at 34:7.) There are also different 

multipliers, in every region and state, for McWane's domestic and foreign or "blended" fittings. 

(Tatman IH at 32:17-34:4; See Jansen Dep. at 265:19-266:1.) Third, McWane offers "job 

prices" or "project prices" which are further discounts off the multiplier discount granted based 

on competition for a specific job. (See Tatman IH, at 37:25-38:5 ("A job price is just a discount 

off published. If it's the State of Texas the published multiplier is a .29 and the customer calls 

up and says, Look, I need a .25; I need a .23, if we give that to him, that's going to be a job 

price."); See McCullough IH at 220:6-7 ("Everything is bought off of a job price.").) Fourth, 

McWane provided additional discounts in the form of rebates. (See Tatman IH, at 201:2-12 

("Tyler Union has a rebate program, and the big national guys kind of have specific rebate 

programs. Most of the people have kind of one generic size fits all. We have rebate on our nondomestic product line. Sometimes we have rebates on accessories, which is like gaskets and nuts 

and bolts and things like that. And we have a rebate on our domestic product line."), 277:5-12 

("These rebates are intended to be incentives to maintain a certain level of volume of business 

with us.").) Fifth, McWane at times provided additional price concessions in the form of 

reductions in freight or credit or other terms. (See Tatman Dep. at 16:3-20.) 

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The evidence will show that McWane has consistently made its pricing decisions 

independently. (See generally Tatman Dep.; Tatman IH.; McCullough Dep.; McCullough IH; 

Jansen Dep.; Page Dep.) McWane Vice President and General Manager Rick Tatman had dayto-day responsibility for the company's ductile iron fittings business. (See Tatman IH at 11.) 

McWane's decisions were based on its assessment of a wide range of factors, and the evidence 

will show that McWane always determined its multipliers independently "based on what's the 

competitive level out there in the marketplace[.]" (Tatman IH, at 44:24-45:1; 109:11-22 ("[i]t's 

an independent decision. You look at everything. You look at your inventory position. You 

look at what you need for volume in your plants. You look at do you think you're losing share 

or gaining share. You look at do you think that you are uncompetitive right now with pricing. 

Do you look at, you know--do you think that you can actually realize any price and still meet 

your volume requirements to run your facility. And you put that all together, and you make a 

judgment call. I wish it was an exact science with an exact formula, and it's just not.").) When 

Mr. Tatman learned from customers that Star or Sigma "put out a letter" announcing a multiplier 

change, he "took those into account along with everything else" and made his own "independent 

decision." (Tatman IH, at 121:12-14; Tatman Dep. at 35:19-36:1 ("Q. And you read them fairly 

carefully to see what you can learn from those letters about what your competitors are saying to 

the marketplace? A. ... It is an input along with a whole host of other things that we look at 

before we make an independent decision on what we're going to do, but we don't put that much 

faith in those letters.").) 

McWane also made independent decisions to provide special job price discounts, below 

its multipliers, on a regular basis. (Tatman Dep. at 26: 10-27:9 ("Q. SO if, for example, you had a 

multiplier in a geographic area that was a .30 -- A. Uh-huh. Q. -- and you or one of your 

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competitors offered a .28, you would call that ajob price? A. We would call that ajob price. Q. 

Okay. In the 2007-2008 time frame, did McWane offer job pricing? A. A lot. Q. Was that 

something that you thought was a good idea in the market? A. It is a reaction to the competitive 

environment that's out there."), 109:17-110:8 ("Q. Do you recall in 2008 determining that in fact 

incidents ofjob pricing were decreasing? A. We put out around 500 job prices in 2008. I can't 

tell you what we put out in 2007 because we weren't tracking it, to my knowledge, in 2007. But 

I know for 2008 we put out close to 500 job prices.... I know when Vince keeps a file, from 

memory when I looked at it and scanned it, it appeared to be in the range of 500-ish job prices 

for 2008."); Tatman IB, at 57:13-17 ("Q. And job pricing is an acknowledgement of the fact that 

Tyler Union's published price is above the competitive price in that market? A. A job price is 

always going to be a price level below what your published pricing is."); See Jansen Dep. at 

271:5-8.) McWane granted these lower job prices for a range of reasons, including large 

volumes. (See Tatman IB,. at 37:12-38:9.) It also routinely granted lower job prices if it 

determined it was necessary to meet or beat its competitors. (Id. ("[i]f a big job came up and 

they needed some help, they'd pick up the phone and say, Look, this is a big job. I need a little 

help on this. I had to take it short. What are you going to give me? And you give him a job 

price on that."); Tatman IB, at 41 :4-14 ("we assess where we are from a competitive standpoint 

there and, you know, how far the gap is between what we were publishing and what we were 

having to sell at. Plus we get competitive inputs from our field guys. Every week they tum in a 

file that says where things are going at in the marketplace, where the other guys are quoting jobs 

at, competitive information they get."); McCullough IB at 221:4-18 ("We're constantly 

lowering the prices to compete with Sigma, Star and others"); Jansen Dep. at 253:15-18 ("Q. 

Why did you announce then to the industry that you were intending to not do price -- job pricing 

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in the future? THE WITNESS: I don't believe I'm saying that. We're going to the -- to sell all 

products off our newly published multipliers. We will continue to monitor the competitive 

environment and adjust regional multipliers as required to provide [customers] with competitive 

pricing") (objection omitted).) 

In addition, McWane, at times, absorbed freight costs, extended credit terms, and 

provided other price concessions. (Tatman Dep. at 16:3-20 ("We consider price rebate 

programs. We consider price cash discount terms because essentially they're getting a cash 

discount for paying you on time.... We consider pricing freight allowance terms. We consider 

pricing extended payment terms beyond our standard. We consider pricing job pricing that's 

given out. We're going to consider pricing as any special incentives to a branch. We support 

your advertising. We're going to kick in so much money so you could take your contractors 

fishing. We're going to offset so you stock some local inventory there. You want some help 

with advertising. And so there's a whole--in this industry there's a whole cascade of 

mechanisms that I call price.").) 

McWane' s average blended fittings price ( the price of imported or domestic fittings sold 

for open source jobs) declined steadily and substantially throughout 2008, 2009, and 2010 and 

the business was "break-even[,]" at best. (McCullough IH, at 219: 18-220:7 ("I mean, this is a 

nasty business. It's one of those businesses that like you can see, for us it's a breakeven 

business").) In fact, McWane's average prices during the latter half of 2008 - -during DIFRA's 

brief operations - - were actually lower than its average prices during the first half of the year. 

At the same time, McWane's market share decreased from 2008 to 2010 as Star and Sigma's 

share steadily increased. (Expert Rpt. of Parker Normann ~~82, 88.) Further, McWane's cost to 

buy pig iron, scrap and other raw materials increased by 42% during the first six months of 2008. 

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(Expert Rpt. of Parker Normann ~30 Fig. 2B) As a result, McWane's gross profit margin was 

cut in half in 2008. (Id. at ~~79-80 Fig. 11.) 

B. Sigma And Star Made Independent Pricing Decisions 

The evidence, including testimony from witnesses from both Star and Sigma, will 

demonstrate that both companies made their own, independent price decisions. The evidence 

will establish that McWane personnel did not have any advance discussion of prices or an 

agreement with Star of Sigma. 

Dan McCutcheon, Star's Vice President of Sales, was not on friendly terms with 

McWane and never discussed prices, market share, or any other competitive factors with anyone 

at McWane. (McCutcheon Dep. at 31:25-32:4 ("Q. Did you agree upon with anyone at McWane 

what published multiplier Star was going to put out in the marketplace? A. No, sir.") (objections 

omitted), 34:24-35:5 ("Q.... And in that meeting with Mr. Green and Mr. Page, did you, Mr. 

McCutcheon, agree upon the prices, any price, that Star Pipe was going to charge its customer 

for ductile iron waterworks fittings? A. No, sir.") (objections omitted), 36:4-8 ("Q. (By Mr. 

Ostoyich) And I take it, then, you never agreed with him on a price for ductile iron pipe fittings 

that Star Pipe was offering its customers? A. That's correct.") (objections omitted), 37:20-23 

("Q. All right. At the one discussion you had with Mr. McCullough at McWane, did you and 

Mr. McCullough discuss ductile iron pipe fittings prices? A. No, sir."), 39:14-39:18 ("Q. (By 

Mr. Ostoyich) Did you agree with Mr. Walton on a price that McWane was offering for ductile 

iron pipe fittings? A. No, sir.") (objections omitted), 40:21-41:2 ("Q. Did you agree with Mr. 

Jansen ...? A. I did not agree with Mr. Jansen on pricing on ductile iron pipe fittings.") 

(objections omitted), 41: 18-21 ("Q. Did you and Mr. Tatman discuss ductile iron pipe fittings, 

Mr. McCutcheon? A. No, sir.") (objections omitted).) In fact, Mr. McCutcheon's contact with 

McWane fittings personnel was both limited and perfunctory. (McCutcheon IH. at 255:14-15, 

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257:2-6,257:7-20,260:6-25,261:8-20, 261:21-262:6; McCutcheon Dep. at 39:5-9.) Similarly, 

Star's National Sales Manager, Matt Minamyer, never discussed pricing or marketing strategy 

with any McWane personnel. (Minamyer Dep. at 14:10-15 ("Q. Okay. During the time that you 

were national sales manager at Star, did you have any communications with anyone at McWane 

about pricing or market strategy? A. No.") (objections omitted), 15:17-16:19 ("Q. Okay. Did you 

personally every have an communications with any competitor while you were with Star about 

pncmg. .. ?AN. o..")) 

Sigma's President, Victor Pais, never had any discussions with McWane regarding 

pricing. (Pais IH, at 68:12-17 ("Q. Did you ever discuss prevailing market conditions at either of 

the two different meetings? A. Not at all. Q. Did you discuss your prices or your plans for price 

increases or price cuts? A. Not at all."), 207:6-9 ("Q. I understand, sir. Did you discuss Tyler 

Union's new pricing move with Leon McCullough when you spoke with him on April 28? A. 

No, I did not."), 218: 1-11 ("Q. Did you discuss this plan with Mr. Page in Birmingham? A. No, 

not at all. Q. Did you discuss import pricing at all with Mr. Birmingham? A. Not at all. Q. I'm 

sorry, sir, just to ask a general question to be clear on the record. Did you discuss this plan with 

any of your competitors at this time period by phone, by Email.inperson?A.No. not at all.").) 

Finally, Larry Rybacki, Sigma's Vice President of Sales and Marketing never had any 

discussions with McWane regarding price. (Rybacki Dep. at 91:20-23 ("Q. And did you have 

any communications at all with the companies where you talked about doing a big bold move? 

A. No."), 192: 1-8 ("Q. Did you ever talk to him about pricing? A. Never. Q. Ever talk to him 

about price lists? A. No. Q. Ever talk to him about impending changes to price lists? A. I don't 

recall ever talking about price lists or anything. I don't.").) 

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Tellingly, Complaint Counsel has produced no evidence suggesting that McWane 

communicated its January 2008 or June 2008 multiplier changes (or any of the other alleged 

price increases that Complaint Counsel recently added) in advance to either Star or Sigma. (See 

Complaint Counsel's Objections and Responses to Respondent McWane's First Set of Requests 

for Admissions ("RFA Responses") at 14.) In fact, the evidence will show that McWane never 

directly communicated its multiplier changes to Star or Sigma at all. 

C.	 The January 2008 Multiplier Changes 

McWane announced a multiplier change on January 11,2008 for one simple reason: its 

raw materials prices were increasing dramatically. (Tatman Dep. at 96:21-97:10; CompI. ~30.)

But, it also wanted its published prices to be below Star and Sigma. So, its multiplier change 

was, in fact, a decrease or no change at all in the majority of states from its published multipliers 

in mid-2007 and an increase in only a handful of states. (Expert Rpt. of Parker Normann Fig.l.) 

That strategy, of staying under Sigma and Star published prices, was consistent with 

McWane's conduct before the alleged conspiracy. For example, in the Fall of 2007, Sigma 

reacted to the same increase in raw materials prices by announcing a list price (not multiplier) 

increase to go in effect in January 2008. At the time, McWane made the independent decision 

not to follow Sigma's list price increase. 

Instead, McWane announced a multiplier 

change in January of 2008 because its multiplier changes were "not keeping up with where costs 

[were] going." (Tatman Dep. at 96:21-97:10.) The announced multipliers were higher than 

Sigma and Star's multipliers in some regions, lower in some regions, and comparable in others. 

(Rybacki Dep. at 83: 18-84:6.) 

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1.	 Sigma And Star Independently Decide To Follow McWane's Multiplier Changes 

When It Suited Their Interests 

In early 2008, Star and Sigma were also facing significant cost increases. 

Each company subsequently obtained McWane's January 11 

multiplier announcement from customers 

There was no advance 

coordination or even direct communication between McWane, Sigma, and Star. (McCutcheon 

IH at 441:2-20, 458:19-24; McCutcheon Dep. at 61:6-62:10.) Star and Sigma read McWane's 

customer letter after they got it from customers (and not from McWane). Sigma selectively 

followed McWane and Star rescinded its higher 2007 list price increase. 

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2.	 McWane's January 2008 Customer Letter Announced That The Company 

Would Continue To Adjust Multipliers To Stay Competitive 

The evidence will show that McWane's January 2008 customer letter was not intended as 

and did not serve as a communication regarding job pricing. (Jansen Dep. at 253 :22-23 ("I don't 

think I'm announcing that we're not going to do job pricing.").) The evidence will also establish 

that neither Star not Sigma interpreted the letter to suggest that McWane would stop job price 

discounts and, in any event distrusted McWane and never believed that McWane was likely to 

stop job pricing. 

. Moreover, the face 

of the letter establishes that, contrary to Complaint Counsel's allegations of alleged signaling, 

McWane announced that it would make additional adjustments to its multipliers as would be 

necessary to remain competitive. Indeed, consistent with McWane's letter and as discussed 

below, McWane did not in fact discontinue job pricing after its January 2008 customer letter and, 

in fact, consistently priced below Sigma and Star. 

D.	 McWane, Star, and Sigma Continued Job Pricing Throughout 2008 

The evidence will show that, contrary to Complaint Counsel's claim of conspiracy that 

depends on the theory that McWane, Sigma, and Star coordinated to eliminate or curtail job 

pricing, job pricing by each of three companies (i.e., additional discounting) continued 

throughout 2008. McWane continued to offer "[a] lot" of job pricing and put out close to 500 

job prices in 2008. (Tatman Dep. at 27:3-5, 109:22.) Numerous contemporaneous documents 

from the Sigma and Star sales force report their views that McWane was providing job price 

discounts and leading prices down in 2008. 

RX-037 ("For what it is worth, I was told by [HD Supply, a customer] that Tyler and SIP were at 

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a .26 and only us and Star are holding the .28") ("from my vantage point it appears that 

Union/Tyler was the first of the three fitting manufacturers to move to a .25 from .28").) 

Similarly, Star "didn't stop job pricing" and, in fact, job pricing was "particularly fierce." 

(Minamyer IH, at 31: 17-22,35:9-15.) Customers "routinely" auctioned one supplier off against 

another for specific jobs or large volumes. 

Star's job prices varied day-to-day and job-to-job, 

depending on competitive market conditions. 

As a result, Star's fittings 

business was "not profitable" in recent years and has not been profitable since "before 2008." 

Sigma also continued job discounts and competitive pricing throughout 2008. (Rybacki 

Dep. at 24:14-16 ("pricing is so competitive"), 66:19-67:5 ("It had always been competitive ... 

extremely competitive ... prices eroded very quickly"); Rona IH, at 202: 16-17 ("pricing in the 

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market was very competitive"); Pais IH, at 72:4-10 ("market conditions were tough and very 

competitive ... really cut throat ... intense"), 74:2-7 ("very intense").) At Sigma, pricing was a 

"day-to-day phenomena" and "very dynamic," and they routinely decided to price below their 

multiplier to win specific jobs. (Pais IH, at 73:11-16.) Prices varied "depending upon the costs, 

depending upon the market factors." (Id. at 85:2-23) Thus, the evidence plainly establishes that 

the crux of Complaint Counsel's theory of conspiracy--McWane, Star, and Sigma's alleged 

agreement to eliminate job pricing to raise prices--simply did not happen. The evidence of 

McWane's use of aggressive job pricing and other discounts is, of course, entirely consistent 

with the empirical economic evidence that McWane's pricing declined steadily during this time 

period and until February 2009 by 11.6%.2 

E.	 McWane's Lower June 2008 Multiplier 

In late April 2008, Sigma announced it was increasing its multipliers by a very large 

amount (roughly 40%) due to continued cost increases. (RX-417.) It "hoped" and "prayed" 

McWane and Star would follow3

, but the evidence will show that Star did not have any 

discussions about the increase with anyone from McWane. (Pais Dep. at 92:1-22.) Star did 

follow, but Mc Wane did not. 

Although McWane also faced continued cost 

increases, it internally decided, after learning of the increase letters from customers, that its 

customers would not accept such large increases. (RX-419; Tatman Dep. at 75:20 ("that was too 

high").) As a result, McWane charted its own course and did not follow Star and Sigma. 

(Tatman IH, at 127:5-128:5 ("Although Sigma announced an increase in the range of 20 to 40 

2 Complaint Counsel's primary evidence that job pricing actually decreased is a 1st Quarter 2008 Executive Report. 

(CC's Pre-Trial Br. at 22-23.) This report is based on incomplete data and multiple layers of hearsay. Further, the 

report is an outlier and contrary to other evidence (cited above) that establishes that the report's description ofjob 

pricing by competitors was either wrong or significantly overstated what was actually happening in the marketplace. 

3 The fact that contemporaneous documents establish that an alleged co-conspirator needed to "hope" and "pray" 

that others would follow is, of course, strong evidence contradicting that the parties had an agreement. 

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percent, I don't believe we should follow that.") Instead, McWane announced its own multiplier 

increase on May 7, 2008. (RX-592.) The announced multipliers were different from - - and 

substantially lower than - - Sigma and Star's multipliers in 50 out ofthe 51 states and territories 

across the country. For example, McWane's multiplier in New York was .33 (versus .38 for 

Sigma and Star), McWane's multiplier in Pennsylvania was .40 (versus .48) its multiplier in 

Florida was .28 (versus .35), its multiplier in California was .33 (versus .42), and its multiplier in 

Texas was .30 (versus .35). (MWP-FTC_00015846.) 

1. Sigma And Star Independently Decide To Follow McWane's Lower Multipliers 

Star and Sigma learned of McWane's lower multipliers from customers - - not McWane ­

- and each subsequently decided to rescind its higher multipliers, and instead, to follow 

McWane's lower multipliers. 

There is no evidence of any 

communications between McWane and either Star or Sigma in advance of McWane's multiplier 

announcement. In fact, there is no evidence of any communication between McWane and either 

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Star or Sigma regarding the June 2008 announcement at all. Indeed, had there been any such 

alleged communication on pricing, one would not expect to see the uncoordinated pricing moves 

that actually occurred here where Sigma's attempt to dramatically increase pricing was thwarted 

by McWane's substantially lower prices. 

F. DIFRA Tons-Shipped Data Did Not "Facilitate" Price Coordination 

DIFRA was a short-lived trade association for fittings suppliers that was operational only 

during the second half of 2008. (Brakefield Dep. at 10: 14-19, 11: 10-16.) McWane, Sigma, Star, 

and U.S. Pipe were members. (Id. at 13:19.) One of DIFRA's main purposes was to address 

standardization of technical specifications of fittings in the marketplace, such as product 

configurations, joints, thickness of the fitting, linings, and coatings. (Brakefield Dep. at 25: 17­

26:2 ("there [were] so many different approaches to that, that it needed some housecleaning").) 

DIFRA's operations were overseen by three lawyers, including very experienced antitrust 

counsel, Thad Long, of the Bradley Arant firm in Birmingham, Alabama. (Id. at 14:8-15:12.) 

Following Mr. Long's guidelines, each member began submitting monthly tons-shipped data for 

January through April 2008 (and annual tons-shipped data for 2006-07) to a third-party 

accounting firm, Seller Richardson, in June 2008. (Id. at 66:4-70:6.) Sellers Richardson then 

combined the members' monthly data and sent overall total tons-shipped back to the members 

the following month. (Id. at 39:16-22.) 

The evidence will show that the tons-shipped data did not contain any breakdown of the 

thousands of unique fittings SKUs. Instead, the data was aggregated into broad size-ranges: 2­

12", 14-24", and 30" and greater. (Id. at 39:16-44:7.) Each broad size-range lumped together 

dozens, and perhaps hundreds, of unique SKUs. (Id. at 39:16-22.) The tons-shipped data did not 

contain any geographic breakdown of where in the country the tons were shipped. (Id.) Nor did 

it contain any breakdown of whether the shipments were of domestic or imported fittings. As 

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noted above, fittings multipliers vary region-by-region and state-by-state (and job pnces, 

obviously, vary by job). The tons-shipped data made no such distinction, however. Indeed, the 

tons-shipped data each month did not reliably reflect anything about price or sales -- not even 

when they occurred. (Id. at 39:16-44:7.) Indeed, many jobs do not ship for six months or more 

after they are initially bid. Each sale could thus have occurred anytime over a six month or 

longer period before shipment date. (See RX-053 ("SHIPMENT figures should be used, rather 

than sales, since ... sales could reflect items whose shipping date is so far in the future as not to 

reflect reliably current economic activity in the products").) 

As a result, the tons-shipped data did not give McWane any insight into their 

competitors' prices. (Tatman IH, at 104: 13-17) ("Q. Is it possible to, by comparing your 

monthly sales to your share of the DIFRA data, detect discounting on the part of your 

competitors who are also DIFRA members? A. No."); 107:4-11 ("there's no pricing there"), 

122:7-23 ("The DIFRA data isn't going to give me any sense of how they're pricing"); 

McCullough IH, at 219:15-17 ("DIFRA numbers report nothing as far as prices").) Likewise, 

Star and Sigma did not have any insight into their competitor's prices based on the DIFRA data. 

(McCutcheon IH at 329:5-12 ("No, sir.... Not from what I got, not from what we received, it's 

not possible"); 335: 10-336: I ("DIFRA didn't influence the way we ran our business at all ... 

[o]n the price side"); Pais IH, at 70: 17-20 ("Q. Could you also use the DIFRA data to figure out 

where your prices were in comparison to the prevailing market prices? A. Not at all"); 

Brakefield Dep. (Vol. I) at 37:16-23 ("Q. And was there any exchange of pricing data as part of 

DIFRA? A. No, sir, none that I saw at all.").) 

The evidence will show that the tons-shipped data did not "facilitate" price coordination. 

On the contrary, McWane charted its own course with lower multipliers after receiving the tons24
 
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shipped data in June 2008 -- andjob price discounts grew even more fierce in the second halfof 

2008. (Tatman Dep. at 27:3-5,109:22; Rybacki Dep. at 121:4-122:22.) 

G. McWane's Independent Decision to Dramatically Lower All Medium And Large 

Diameter Fittings List Prices In April 2009 

McWane objects to trial of this late-breaking charge, which was not contained in the 

Complaint or in any amendment under Rule 3.15, but raised by Complaint Counsel on the last 

day of fact discovery in its Motion For Partial Summary Decision. McWane addresses this 

allegation here and, if necessary, at trial over its objection and only to preserve its rights. 

Beginning in the summer of 2008, McWane spent six to eight months internally 

determining how to restructure its 2007 list prices to more closely align its prices with its costs to 

manufacture fittings of different diameters and to make it more competitive against the imported 

fittings of Star and Sigma, which had done particularly well in medium (14"-24") and large 

diameter (30" and above) size ranges. (Tatman Dep. at 44: 18-23 ("So we do list prices when 

necessary, but it's certainly a much deeper level of thought. ... we actually started working on 

[the April 2009 list price change] I believe August-September of 2008"), 45:1-47:22.) The result 

was McWane's dramatically restructured price list, issued by the company on April 14, 2009, 

which lowered McWane's prices significantly on all sizes above 14" and contained only a 

modest increase on 2" -12" fittings. (Id.) McWane expected the net effect across all fittings to 

be relatively flat pricing. 

1.	 Star Learns About McWane's List Price Decreases After-The-Fact And 

Independently Decides to Follow 

The evidence will show that Star learned about McWane's list price decrease from 

customers after the fact. 

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Sigma asked Star not 

to follow McWane's new, lower list prices (prices Sigma considered to be "predatorily low") and 

Star informed Sigma that Star had already decided to follow McWane. (Rybacki Dep. at 297: 17­

20 ("Q. Just so we're clear on the record, when you say predatory pricing," you're saymg 

McWane's prices were too low? A. McWane's prices were at our cost."); 

Moreover, The Administrative Complaint against Sigma 

alleged that Sigma invited McWane and Star to "resume" the alleged collusion but "MeWane 

and Star rejected Sigma's invitation to collude." (Sigma CompI. 38.) The Commission's 

statement in aid of the Complaints reiterated that "Sigma tried to revive the conspiracy by 

attempting to convince McWane and Star to raise their prices and resume exchanging pricing 

data in April 2009. However ... at this point McWane and Star refused Sigma's invitation to 

collude." (January 4,2012 FTC News Release (emphasis added).) 

2.	 The "After-the-Fact" Telephone Conversation Between Star And McWane Had 

No Impact On McWane's Behavior 

Although Mr. McCutcheon did not believe McWane had ever rescinded a list price it had 

announced, his conversation with Sigma "created some uncertainty in my mind." (McCutcheon 

Second Dec. ~16.) Mr. McCutcheon did not want to spend the $25,000 to print and mail his 

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lower, matching list price out if McWane was going to rescind the lower prices and keep its 

older, higher list prices in place. (McCutcheon IH at 258:10-11 ("It cost us about $25,000 to 

print a new price list."); McCutcheon Dep. at 233: 11-13 ("We're getting ready to spend 25 grand 

to print it, and I don't want to have to spend $25,000 and retract it.").) As a result, Mr. 

McCutcheon testified that he called McWane and spoke with Rick Tatman, and in a brief phone 

call, "only want[ed] to know one thing" - - whether McWane was going to rescind the lower list 

prices that McWane had already announced. (McCutcheon Dep. at 43:7-44:10.) In response to 

Mr. McCutcheon's question about the "one thing" he wanted to know, Mr. Tatman said that 

McWane's lower list prices were going into effect shortly- - as the company had already 

informed its customers - - and were not rescinded. (McCutcheon Dep. at 42:13-43:6.) 

The only other words spoken during Mr. McCutcheon's call were a brief joke made by 

Mr. Tatman that he was so confident that McWane would not rescind its lower list prices (having 

never done so before) that if he was wrong, he would personally pay Mr. McCutcheon's costs if 

he had to re-print his voluminous price list. (McCutcheon Dep. at 227:8-233:1 ("Q. And did you 

say to you in words or in substance, "If! retract it, McWane will pay the $25,000 cost"? A. He 

didn't say McWane. He said, "I'll pay the 25" -- it was a laughing matter at the time, joking.... 

We laughed and hung up the phone.") (objections omitted).) Mr. Tatman has testified that he did 

not remember Mr. McCutcheon ever calling him. (Tatman Dep. at 179:20-180: 18 ("Q.... Do 

you recall getting a call from Dan McCutcheon that day, in the interim between those two emails, in which he spoke to you about your list price? A. No, I don't.").) Complaint Counsel has 

not established exactly when this alleged conversation took place. 

The evidence will show that Mr. McCutcheon did not discuss Star's prices or McWane's 

prices with McWane: "At no point did I discuss with Mr. Tatman specific pricing or price 

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levels, nor did we reach any agreement or understanding regarding pricing or price levels." 

(McCutcheon Second Decl. ~18.). McWane did not have any advance notice regarding whether 

or not Star would match McWane's new list prices. (Tatman Dep. at 177:15-23 ("Q. Did you 

know at any point before they put out a letter what they were going to do? A. No. Q. Did you 

have any conversations with anybody at Star about what they were going to do?" A. No.).) 

Indeed, contemporaneous documents demonstrate that Mr. Tatman did not know in advance 

whether Star was likely to follow McWane's lower prices. For example, on April 30, 2009, Mr. 

Tatman opined to his National Sales Manager, Jerry Jansen, that "I think it will be mid-next 

week until the dust settles. Ifthey stick with the old List and a 0.32/0.35 the[n] we should sell 

allot in the Northwest."( TU-FTC-0259568 (emphasis added).) Similarly, Mr. Tatman expressed 

uncertainty when his sales force reported on May 6, 2009 learning of Star's announcement from 

their customers: "It would appear that Star will follow our List and Published multipliers 

(except for PA) on Fittings and Accessories. This was also what Glenn Fielding said was 

communicated to him earlier this week. . . . It will now be very interesting to see what Sigma 

does..."(TU-FTC-0032674) (emphasis added).) 

There is no evidence that McWane did anything in response to Mr. McCutcheon's call. 

Indeed, Complaint Counsel does not even argue that McWane changed its behavior in any way 

as a result of the alleged phone call. As for Star, the phone call had no impact on Star's decision 

to do what it had always done, follow McWane's lower list price. (McCutcheon Second Decl. 

~18 ("At no point did I discuss with Mr. Tatman specific pricing or price levels, nor did we reach 

any agreement or understanding regarding pricing or price levels. The conversation with Mr. 

Tatman did not impact or otherwise influence Star's prior, unilateral decision to follow 

McWane's announced price decrease.").) 

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Complaint Counsel bases its entire inference regarding the telephone conversation on a 

single document, dated April 28, in which Tatman says he is "highly confident" that Star will 

follow. (CC's Pre-Trial Br. at 34.) Although Complaint Counsel puts no date on the 

McCutcheon call, it asks this Court to assume it occurred on April 28th and asks this Court to 

infer a violation simply because, earlier in the day, Mr. Tatman expressed uncertainly about what 

Star would do. Again, Complaint Counsel does not allege that McWane's conduct was in any 

way affected by the call. Indeed, it is undisputed that McWane kept its dramatically lower 

medium and large diameter fittings list prices in effect. McWane believes that there is 

significant evidence that will disprove Complaint Counsel's theory regarding the timing of the 

alleged phone call and accordingly moves today for a continuance to conduct additional fact and 

expert discovery on this issue and the June 2010 issue below. 

H. Domestic Manufacturing Was "Not A Viable Option" For Sigma In Mid-2009 

On September 17, 2009, McWane (through its subsidiary, Tyler Union) entered into a 

short-term Master Distributorship Agreement ("MDA") with Sigma under which Sigma 

purchased Tyler Union Fittings for re-sale during the ARRA period. In the months preceding the 

MDA, Sigma had explored the feasibility of "virtually" manufacturing domestic fittings (i.e., 

buying them from an outside company and re-selling them) and concluded that virtual 

manufacturing was "not a viable option" for at least 18-24 months -- long after the ARRA period 

was over. (RX-284 ~~ 4-15; RX-287 ~~ 3-14; RX-286 ~~ 5-6; Bhattacharji Dep. at 30:24-31:5, 

47:15-21,118:20-119:17,121:20-124:8.) 

The evidence will show that Sigma had not taken the concrete steps necessary to begin 

virtual manufacturing any time soon. (Rona Dep. at 79:7-23 ("I don't recall us making any 

formal plans by this date that we were going to go ahead with domestic manufacturing").) _ 

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It owned no foundries and no 

machining equipment, and did not have any contracts with outside companies to cast or machine 

fittings. (Rona Dep. at 36:21-23; Rybacki Dep. at 130:12-21.) 

Sigma's VP of Engineering believed the 18-24 months it would take to begin virtual 

manufacturing was too late to supply ARRA jobs (which were largely funded between the 

statute's passage in February 2009 and mid-2010) and that virtual manufacturing was thus "not a 

viable option." 

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Because Sigma had no viable option for domestic manufacturing, it approached McWane 

to determine whether it could buy and re-sell Tyler Union domestic fittings. (Tatman IH, at 

211:24-212:6; RX-284 15.) The resulting MDA was negotiated at arms' length over several 

months. The evidence will show that the MDA was pro-competitive because it was the only way 

Sigma was able to satisfy its customers' demand for domestic fittings during the ARRA period, 

and it was a benefit to Sigma's customers. (Rybacki Dep. at 147:21-148:22 ("very good for 

customers"); Prescott Dep. at 35:6-22 ("became very convenient to -- to fill out that shipment 

because we could get domestic and they were the same.").) 

I. Star Successfully Began Selling Domestic Fittings In 2009 

In February 2009, following the passage ARRA, Star began exploring the possibility of 

sourcing and re-selling domestic fittings. In June 2009, Star had announced that it would begin 

selling a full range of small, medium, and large diameter domestic fittings by the end of 2009. 

(See Star's Price List, available online at http://www.starpipeproducts.com/utilities.asp.) Star did 

not build or buy a foundry. Instead, it sourced castings from seven of the 100+ domestic 

foundries that had excess capacity. (McCutcheon Dep. at 8:14-16.) In the Fall of 2009, during 

its ramp-up phase, Star won its first domestic fittings job. 

The evidence will show that Star was quickly successful. In 2010, its first full year with 

domestic fittings, Star sold domestic fittings to more than • separate customers -- including 

more than. exclusive customers -- and its sales topped. million. (Trout Decl. at ~~ 2-5, 8­

9.) Star had nearly. separate customers in 2010 who each purchased _ or more of its 

domestic fittings and its biggest customer that year, Hajoca Corporation, purchased more than 

_. (Trout Decl. at ~~ 2-4, 6, 8, 9.) Star's domestic fittings sales to HD Supply, the 

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largest national chain, topped $500,000. (Trout Decl. at 6; Thees IH at 87: 14-19.) Star's 2011 

sales of domestic fittings also hit • million -- despite a downturn in demand for domestic 

fittings following the end of significant "Buy America" funding under ARRA -- and it again had 

..domestic fittings customers, including. exclusive customers. (Trout Decl. at ~~ 2-4, 8, 9; 

McCutcheon Dep. at 135:17-138:10.) Dozens of distributors increased their purchases of Star 

domestic fittings year over year over year, including the largest national and regional chains like 

HD Supply (more than 230 branches), Ferguson (more than 160 branches), Win Wholesale (43 

waterworks branches), and dozens of large regional chains, such as Dana Kepner (15 branches in 

MT, WY, CO, TX, AZ and NV). 

-

J. June 2010 Multiplier Increases 

As with the April 2009 allegations, McWane objects to the trial of this late-raised claim. 

McWane did not have notice of this claim prior to Complaint Counsel's Pre-Trial Brief filed on 

August 17,2012. As such, McWane did not conduct fact or expert discovery regarding the June 

2010 multiplier changes. However, Complaint Counsel's arguments are entirely circumstantial 

and fail on their face. McWane addresses the issue below over that objection. 

In the summer of 2010, Star announced a price increase for a fittings-related accessory, 

not DIPF. (See CX 1413 at 001.) In June 2010, Sigma crafted and distributed a price increase 

letter to its customers. (CX 1413; Pais Dep. at 372-377; Rybacki Dep. at 210-213.) The letter 

announced increases in the list prices of restrained joint products, Protecto 401 lined products, 

and the net prices on municipal castings. (CX 1413.) The letter also stated that multipliers for 

non-domestic fittings would be revised. (/d.) McWane was unsure whether it would following 

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Sigma's announced multiplier increase. (CX 2442 ("I'm somewhat concerned about following 

Sigma from both a market leadership perception and their judgment on what the proper 

multiplier structure should be. Too large of a published increase would be difficult for both our 

customers and other import competitors to take seriously. "0")') So, it did not. McWane 

announced a multiplier change on June 17,2010. (CX 24400) The announcement proposed 

modest increases in some states, maintaining in other states, and decreasing the multiplier in 

others. (Ido) Star subsequently followed McWane and announced a multiplier change. (CX 

1406, CX 2441.) Sigma followed McWane and Star and announced its multiplier change at the 

end of June. (CX 1396.) There is no evidence that McWane communicated with either Star or 

Sigma in advance of its multiplier change or that McWane had an agreement with Sigma and 

Star to have the same multiplier discounts or to charge the same prices. 

IV. ARGUMENT AND LEGAL ANALYSIS 

Complaint Counsel's arguments ignore the facts the Court will see and hear at trial: 

hundreds of sworn denials of any conspiracy, Star's _-plus domestic fittings customers and its 

quick and robust grab of 10% or more of all domestic fittings sales, and Sigma's financial woes 

in 2009. They ignore the economics: remarkably, they proffer an economic expert who 

performed no empirical and duplicable test of any issue in the case and, instead, simply wants to 

usurp the Court's function and offer his untestable say-so interpretation of the documents and 

testimony the Court will see. And, Complaint Counsel ignores the law. Indeed, the law of 

conspiracy is clear that an overwhelming record of independent decision-making and sworn 

denials cannot be ignored in favor of a handful of strained interpretations of documents. The law 

of monopolization is also clear. It does not protect an inefficient competitor like Star - - which 

the government's own expert will concede at trial was the case - - from the rigors of rebates and 

other price competition it could have matched, but chose not to. 

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A.	 McWane Independently Determined Its Multipliers In 2008 And Continued
 

Offering Job Price Discounts Throughout The Year
 

Count I of the Complaint alleges a "conspiracy" in violation of Section 5 of the FTC Act 

and Section 1 of the Sherman Act. (CompI. ,-r,-r63-64; CC's Pre-Trial Br. at 48.) "The existence 

of an agreement is the hallmark" of a conspiracy claim. In re Baby Food Antitrust Litig., 166 

F.3d 112, 117 (3d Cir. 1999); see 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 of the minds in an unlawful arrangement,,).4 That requires proof that 

defendants discussed and agreed upon "a unity of purpose or common design and understanding, 

or a meeting of minds in an unlawful arrangement." American Tobacco Co. v. United States, 

328 U.S. 781, 810 (1946). Moreover, the agreement must precede the allegedly fixed price. Bell 

Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1966 (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."). A plaintiff fails to show a preceding agreement if it simply establishes that defendants 

had an opportunity to conspire and asks the court to speculate that they must have done so. 

Alvord-Polk, Inc. v. F Schumacher & Co., 37 F.3d 996, 1013 (3d Cir. 1994) (affirming grant of 

summary judgment because the "evidence tends to show only an opportunity to conspire, not an 

agreement to do so"); Venzie Corp. v. United States Mineral Products Co., Inc., 521 F.2d 1309, 

1313-4 (3d Cir. 1975) ("an opportunity is significant only if other evidence permits an inference 

that an agreement did in fact exist."). 

4 An agreement under FTC Act Section 5 requires the same proof as an agreement under Sherman Act Section I. 

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

interpret the prohibitions of s 5 as including those restraints of trade which also were outlawed by the Sherman Act, 

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

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1. Complaint Counsel's "Conspiracy" Proof Fails As A Matter Of Law 

McWane witnesses have testified that they made all of their price decisions 

independently, including their decision to issue the January and June 2008 multipliers. (Tatman 

Dep. at 35:11-36:1; Tatman IH, at 121:12-14.) The Star and Sigma witnesses, likewise, have 

testified that they never discussed and agreed upon prices with anyone from McWane. 

(McCutcheon Dep. at 36:9-13 (Q.... never agreed with him on a price for ductile iron pipe 

fittings ... ? A. That's correct.") (objections omitted); McCutcheon IH, at 245:20-246:15 

("nobody said anything about market share"), 256:5-17 ("There was not a conversation about 

that"); Minamyer Dep. at 14: 10-15, 15: 17-16: 19; Minamyer IH, at 14: 13-18, 15: 13-23, 17: 12-17; 

Pais IH, at 68:12-17, 104:6-8, 109:12-15,225:5-13, 110:8-15; Rona IH at 203:4-6,210:25­

211:14,214:25-215:4.) Indeed, in total, the evidence establishes more than 250 sworn denials 

that anyone discussed or agreed upon any price with anyone from McWane. (See Sworn Denial 

Exhibit at 1-8.) The witnesses were clear: they learned about McWane's multipliers from 

customers after the multipliers were announced. 

A plaintiff confronted with sworn denials faces a high burden to overcome them: 

"Facing the sworn denial of the existence of conspiracy, it [is] up to plaintiff to produce 

significant probative evidence by affidavit or deposition that conspiracy existed... " City of 

Moundridge v. Exxon Mobil Corp., 429 F. Supp. 2d 117, 130 (D.D.C. 2006) (emphasis added) 

(citation omitted). In Moundridge, the defendants testified, as here, that they made their price 

and output decisions independently. In the face of this testimony, the plaintiffs proffered 

evidence that defendants had an opportunity to conspire (during a series of industry meetings) 

and pointed to numerous internal documents that they argued suggested a conspiracy. The 

district court granted summary judgment because plaintiffs' factual evidence did not overcome 

the defendants' sworn denials, and in the face of these denials the opinion of plaintiffs' 

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"liability" expert was entitled to "no weight." No. 04-940, 2009 U.S. Dist. LEXIS 123954, at * 

39 (D. D.C. Sept. 30, 2009). The D.C. Circuit affirmed and held that the plaintiffs' "few 

scattered communications" and other evidence "falls far short" of creating a genuine issue of 

material fact. City of Moundridge v. Exxon Mobil Corp., 409 Fed.Appx. 362, 364 (D.C. Cir. 

2011). 

In Baby Foods, the Third Circuit similarly affirmed summary judgment in favor of 

defendants because plaintiffs failed to present significant evidence of a conspiracy sufficient to 

overcome defendants' sworn denials. The Court found direct 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. In re Baby Foods, 166 F.3d at 118-121. 

Unlike Baby Foods, there is no evidence that McWane provided Star or Sigma with proprietary 

pricing information before issuing its January or June 2008 multipliers (or any other pricing 

decision) - - indeed, Complaint Counsel conceded that it lacked such evidence in its answers to 

McWane's Requests For Admission. (See Complaint Counsel's Objections and Responses to 

Respondent McWane's First Set of Requests for Admissions ("RFA Responses") at 14.) 

In Williamson Oil Co. v. Philip Morris USA, the Eleventh Circuit likewise affirmed 

summary judgment in favor of defendants despite 11 consecutive parallel price increases 

announced by every defendant, numerous alleged price "signals" between the defendants 

suggesting a desire to end a price war (and its subsequent end), regular sharing of very detailed 

sales information broken down by company, and an expert's opinion that it all amounted to a 

conspiracy. 346 F.3d 1287 (lIth Cir. 2003). The Court found that the plaintiffs' evidence was 

insufficient to overcome defendants' sworn denials and it would be improper to permit the jury 

"to engage in speculation" in the face of defendants' denials. !d. at 1310. ("None of the actions. 

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.. 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."). 

The Eighth Circuit reached the same conclusion in Blomkest Fertilizer, Inc. v. Potash 

Corporation of Saskatchewan, 203 F.3d 1028 (8th Cir. 2000). The Court affirmed summary 

judgment despite evidence that defendants engaged in "a high level of inter-firm 

communications," including evidence plaintiffs argued demonstrated that the defendants 

"signaled pricing intentions to each other through advance price announcements," and evidence 

that all defendants raised their prices "markedly higher." Id. at 1033, 1037. The Court found the 

evidence insufficient to overcome defendants' denials and "far too ambiguous to defeat summary 

judgment." Id.; see also Lamb's Patio Theatre, Inc. v. Universal Film Exchanges, Inc., 582 F.2d 

1068, 1070 (7th Cir. 1978) (affirming summary judgment because plaintiff had only "its bald 

allegation of conspiracy to refute the sworn affidavit denying a conspiracy"); American Key 

Corp. v. Cumberland Associates, 579 F. Supp. 1245, 1259 (N.D. Ga. 1983) (affirming summary 

judgment because each of the defendants submitted "sworn affidavits denying the existence of 

any contract, combination or conspiracy" and plaintiff failed to "come forward with significant 

probative evidence supporting its allegations of a conspiracy."). 5 

2.	 McWane's Decision To Chart Its Own Course In 2008 And Star And Sigma's 

Decisions To Follow McWane Demonstrate Independent Conduct 

5 Complaint Counsel asks this Court to infer that the parties formed a conspiracy based upon a handful of public 

customer price letters wherein McWane, Sigma, and Star purportedly agreed to "reduce" in some unspecified way 

one of the many types of price concessions each independently offered. These public letters are insufficient to 

establish the inference of a conspiracy as a matter oflaw. Indeed, Complaint Counsel's expert, Dr. Schumann, 

conceded that it is not evident from the letters, or otherwise, the specific amount or number of instances of any 

agreed-upon reduction and, when pressed, conceded that the alleged co-conspirators were not of one mind. 

(Schumann dep. at 190: 11-18, 191 :3-15; 192:8-12, 194: 12-20.) The Court should resist embracing Complaint 

Counsel's unfettered reading of Section 5 to condemn normal and independent price communications with 

customers and follow-the-Ieader pricing behavior. See £.1. du Pont Nemours & Co. v. FTC, 729 F.2d 128, 137-39 

(2d. Cir. 1984) (rejecting Commission's attempt to prove unfair method of competition by labeling company price 

change in oligopolistic market as "signal" or by arbitrarily defining prices as "supra-competitive); Boise Cascade 

Corp. v. FTC, 637 F.2d 573 (9th Cir. 1980) (allegedly similar pricing system adopted by plywood manufacturers 

constituted mere parallel pricing not in violation of Section 5.) 

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The evidence establishes that McWane independently decided to chart its own course in 

January 2008 after Sigma publicly announced a significant list price increase in the Fall of 2007. 

McWane did not change its list price at all and, instead, issued new -- and in many states, lower­

- multiplier discounts. (Tatman IH, at 108:5-109:22, 119:25-121:16, 127:5-128:14, 121:12-14, 

122:2-6; Tatman Dep. at 35:19-36:1; Rybacki Dep. at 83:18-84:6.) Star and Sigma each learned 

of McWane's new multipliers from customers 

. Complaint 

Counsel cannot show this Court any evidence of any direct communication between McWane 

and either Sigma or Star regarding any January 2008 price announcements. 

Undisputed evidence also establishes that although cost increases continued, McWane did 

not follow Star and Sigma's large multiplier increases in the Spring 2008, after McWane learned 

of them, but instead, issued multipliers that differed - - and were lower - - in 50 of the 51 states 

and territories across the U.S. Undisputed evidence establishes that Star and Sigma learned of 

McWane's lower multipliers from their customers (not McWane) and subsequently decided to 

rescind their higher multipliers and, instead, to follow McWane's lower multipliers. Again, 

Complaint Counsel can offer no evidence of any direct communications or anything other than 

unilateral and follow-the-leader pricing action. 

It is well-established that a price increase in the face of raw materials cost increases 

suggests rational independent decision-making, not a conspiracy. Baby Foods, 166 F.3d at 131 

(document showing that "prices were being raised due to market factors, including increased 

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costs in raw materials and packaging" reflected defendant's "competitive behavior and not 

conscious parallelism"). A subsequent decision by other suppliers to follow a price increase, 

likewise, suggests independent decision-making, not a conspiracy. Blomkest Fertilizer, 203 F.3d 

at 1032-33 (affirming summary judgment because "[e]vidence that a business consciously met 

the pricing of its competitors does not prove a violation of the antitrust laws."); Serfecz v. Jewel 

Food Stores, 67 F.3d 591, 600-01 (7th Cir. 1995) (affirming summary judgment because "[t]he 

mere existence of mutual economic advantage, by itself, does not tend to exclude the possibility 

of independent, legitimate action and supplies no basis for inferring a conspiracy"); Kreuzer v. 

American Academy ofPeriodontology, 735 F.2d 1479, 1488 n.12 (D.C. Cir. 1984) (plaintiff must 

provide facts demonstrating that the "acts by the defendants [are] in contradiction of their own 

economic interests"); Baby Foods, 166 F.3d at 129-30 ("[e]ven in a concentrated market, the 

occurrence of a price increase does not in itself permit a rational inference of a conscious 

parallelism") (internal citation omitted); Venzie Corp, 521 F.2d at 1314 ("[t]he absence of action 

contrary to one's economic interests renders consciously parallel business behavior 

'meaningless, and in no way indicates agreement' ."). 

Moreover, the undisputed fact that job price discounts continued throughout this period ­

- "[a] lot," "close to 500 job prices [in 2008]"), "everyday," "constantly," and was "particularly 

fierce" - - underscores the independent nature of each company's decision-making. (Tatman 

Dep. at 27:3-5,109:22; McCullough IH at 72:23-24, 221:3-18; Minamyer IH, at 31: 17-22,35:9­

15).) In Clamp-All Corp. v. Cast Iron Soil Pipe Institute, 851 F.2d 478 (1st Cir. 1988) (Breyer, 

J.), the First Circuit affirmed summary judgment for defendants in a case in which defendants in 

a concentrated market followed each other's list prices, but - - as here - - routinely offered 

discounts off list. The Court held that the fact that suppliers "often set prices that deviated from 

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their price list helps support the inference that the similarity of price lists reflect individual 

decisions to copy, rather than any more formal pricing agreement." Id. at 484. Other Circuits 

agree. See, e.g., Baby Foods, 166 F.3d at 128 ("In an oligopoly ... there is pricing structure in 

which each company is likely aware of the pricing of its competitors"); In re Citric Acid 

Litigation, 191 F.3d 1090, 1103 (9th Cir. 1999) ("Varni has not ... produced evidence tending to 

exclude the possibility that Cargill received these price lists legitimately from customers after 

they were distributed by competitors"); Market Force Inc. v. Wauwatosa Realty Co., 906 F.2d 

1167, 1173 (7th Cir. 1990) ("[i]t is well established that evidence of informal communications 

among several parties does not unambiguously support an inference of a conspiracy.") Finally, 

job pricing is only one factor in the final price paid by a McWane customer. (See Tatman IH at 

32:17-33:10,34:7, 32:17-34:4, 201:2-12; McCullough IH at 220:1-7; Jansen Dep. at 265:19­

266:1; Tatman Dep. at 16:3-20 (discussing list prices, multipliers, rebates, freight and other 

credit terms.).) 

It is well established that "antitrust law limits the range of permissible inferences from 

ambiguous evidence in a § 1 case," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 

574, 588 (1986), and that it is not possible to infer that McWane conspired from the subsequent 

Star and Sigma decisions to follow McWane's multipliers in January and June of 2008. See 

Citric Acid, 191 F.3d at 1102 ("A section 1 violation cannot, however, be inferred from parallel 

pricing alone, nor from an industry's follow-the-Ieader pricing strategy") (internal citations 

omitted). As an initial matter, Complaint Counsel's evidence does not even support its claim of 

parallel pricing. In re Baby Food Antitrust Litigation, 166 F.3d 112, 132 (3d Cir. 1999) 

(affirming summary judgment because undisputed facts "refute rather than support" plaintiffs' 

allegation of parallel conduct and demonstrate that defendants increased prices not 

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contemporaneously, but rather three to six months after each other); In re Beef Indus. Antitrust 

Litig., 907 Fold 510, 514 (5th Cir. 1990) ("When an antitrust plaintiff relies on circumstantial 

evidence of conscious parallelism to prove a §1 claim, he must first demonstrate that the 

defendants' actions were parallel. ...The cattlemen have not done this."); Clamp-All Corp. v. Cast 

Iron Soil Pipe Inst., 851 Fold 478, 484 (lst Cir. 1988) (defendants' many price differences 

"support[ed] the inference that the similarity of price lists reflects individual decisions to copy, 

rather than any more formal pricing agreement."); Aviation Specialties, Inc. v. United Techn. 

Corp., 568 Fold 1186, 1192 (5th Cir. 1978) (affirming summary judgment because plaintiff 

"brought forth no evidence of parallel behavior suggesting an unlawful agreement"); LaFlamme 

v. Societe Air France, 702 F. Supp. 2d 136, 151-153 (E.D.N.Y. 2010) (stating that although "the 

illegal price fixing need not be exactly simultaneous and identical," the "questionable 

allegations of parallel conduct here do not match the brazen parallel pricing, price floors, 

lockstep price increases..." found in cases surviving a motion to dismiss); In re Late Fee and 

Over-Limit Fee Litig., 528 F. Supp. 2d 953, 962 (N.D. Cal. 2007) (dismissing claim because "the 

defendants' fee levels have all followed different pricing paths at different times, not even 

roughly in parallel"). 

Even assuming parallel conduct, parallel pricing is simply ambiguous conduct that is 

consistent with independent decision-making and does not "tend[] to exclude the possibility of 

independent action[.]" Monsanto Co. v. Spray-Rite Servo Corp., 465 U.S. 752, 768 (l984); see 

also Williamson Oil, 346 F.3d at 1300 (affirming summary judgment: "Evidence that does not 

support the existence of a price fixing conspiracy any more strongly than it supports conscious 

parallelism is insufficient to survive a defendant's summary judgment motion"); Mitchael v. 

Intracorp, Inc., 179 F.3d 847, 858 (lOth Cir. 1999) (affirming summary judgment because 

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"ambiguous conduct that is as consistent with permissible competition as with illegal conspiracy 

does not by itself support an inference of antitrust conspiracy under Sherman Act section 1"); 

Baby Foods, 166 F.3d at 122 ("no conspiracy should be inferred from ambiguous evidence or 

from mere parallelism when defendants' conduct can be explained by independent business 

reasons.") Indeed, inferring that McWane conspired because its competitors followed its lower 

prices would turn the antitrust laws on their head. 

B.	 There Was No Invitation To Collude And The Tons-Shipped DIFRA Data Did Not 

Facilitate Price Coordination 

Counts II and III of the Complaint alleges that McWane "invited" Star and Sigma to stop 

job price discounts by sending its January and June 2008 letters to customers and by 

participating in DIFRA's monthly tons-shipped reporting which, it alleges, "facilitated" 

collusion. (Compl. ~~65-66; CC's Pre-Trial Br. at 48.) But the evidence will show that the 

letters did not contain any "invitation" regarding job prices and that the Suppliers distrusted each 

other's price letters and did not expect any supplier to stop job pricing: 

_ The evidence is undisputed that job price discounts continued throughout 2008 and 

accelerated during the Fall of2008 - - during the brief period when DIFRA was operational. The 

witnesses also flatly deny that DIFRA's tons-shipped data suggested anything about their 

competitors' prices: "No, sir" "there's no pricing there," "doesn't give me any sense of how 

they're pricing," "it's not possible," "didn't influence the way we ran our business at all ... on 

the pricing side," "No." (Brakefield Dep. (Vol. I) at 93; McCutcheon IH at 329:5-12,333:11-21; 

Minamyer IH, at 23:4-8.) 

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The "invitation to collude" Count (Count III) also fails because no court has ever found 

an antitrust violation based upon a one-way" invitation" or "offer" or "attempt" or "signal" to 

collude that was unconsummated. On the contrary, court after court has rejected antitrust 

liability when presented with a one-way offer. Liu v. Amerco, No. 11-2053,2012 WL 1560170, 

(1st Cir. May 4,2012) ("Section 1 of the Sherman Act, however, does not condemn an attempt to 

conspire, nor a solicitation to conspire"); Catalano, Inc. v. Target Sales, 446 U.S. 643, 647 

(1980) (per curium) ("advance price announcements are perfectly lawful"); Baby Foods, 166 

F.3d at 125 ("to survive summary judgment, there must be evidence that the exchanges of 

information had an impact on pricing decisions"), Reserve Supply Corp. v. Owens-Corning 

Fiberglas Corp., 971 F.2d 37, 54 (7th Cir. 1992) (advance announcements of price changes 

"served important purpose" in construction industry because customers "bid on building 

contracts well in advance of starting construction and, therefore, required sixty days' or more 

advance notice of price increases"); United States v. American Airlines, 570 F. Supp. 654, 657 

(N.D. Tex. 1983) (Sherman Act's prohibition of conspiracies "does not reach attempts"), rev'd 

on other grounds, 743 F. 2d 1114, 1119 (5th Cir. 1984) ("our decision that the government has 

stated a claim [under Sherman Act Section 2] does not add attempt to violations of Section 1 of 

the Sherman Act."). 

Courts have also rejected any antitrust liability premised upon the theory that a 

company's decision to participate in a trade association that merely gathers and disseminates 

aggregated tons-shipped data somehow "facilitated" price collusion. Williamson Oil, 346 F.3d at 

1313 (in finding that gathering volume data (like here) was entirely consistent with each 

participant's unilateral self-interest, the Court held that "it is far less indicative ofa price fixing 

conspiracy to exchange information relating to sales as opposed to prices") (emphasis added). 

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In Williamson Oil, the Court found that it was ''plainly beneficial for each individual appellee to 

keep tabs on the commercial activities of its competitors, so the receipt of the information 

concerning their sales does not tend to exclude the possibility of independent action or to 

establish anticompetitive collusion." Id. (emphasis added); Citric Acid, 191 F.3d at 1103 (no 

violation of the antitrust laws where Cargill received "price lists legitimately from customers 

after they were distributed by competitors."). 

Complaint Counsel may cite consent orders the Commission entered on administrative 

complaints about signaling or invitations to collude. But a consent cannot create new law (and, 

indeed, does not even constitute an admission that any law was violated). That is the province of 

the courts, FTC v. Texaco, Inc., 393 U.S. 23, 226 (1968) ("ultimate responsibility for the 

construction of this statute rests with the courts"), and the courts have roundly rejected the 

theory, as discussed above. Indeed, courts have struck down the FTC's expansive interpretation 

of "unfairness" under FTC Act Section 5 when, as here, it attempts to penalize competitive 

conduct based on the "elusive concept" of unfairness which is "often dependent upon the eye of 

the beholder." E.J DuPont de Nemours & Co. v. FTC, 729 F.2d 128, 137-38 (2d Cir. 1984). 

The First Circuit's recent Liu decision recognized in dicta that the FTC had entered consent 

orders prohibiting invitations to collude under Section 5, but did not concern an appeal from a 

Section 5 invitation to collude case. 

There is a good reason for this unanimous rejection of any invitation to collude liability 

in these circumstances: it is consistent with a competitive marketplace. "[I]n competitive 

markets, particularly oligopolies, companies will monitor each other's communications with the 

market in order to make their own strategic decisions." Williamson Oil, 346 F.3d at 1305, citing 

Holiday Wholesale Grocery v. Philip Morris, Inc., 231 F.Supp.2d 1253, 1276 (N.D.Ga. 2002); 

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Blomkest Fertilizer, 203 F.3d 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"); United States v. 

General Motors, 1974 Trade Cas. (CCH) para 75,253 (E.D. Mich. 1974) ("The public 

announcement of a pricing decision cannot be twisted into an invitation or signal to conspire; it is 

instead an economic reality to which all other competitors must react."). 

Any other rule - - particularly if applied to two customer letters with entirely ordinary 

and commonplace language and a plain vanilla trade association volume-gathering practice - ­

would turn the antitrust laws on their head and throttle competitive practices that are widespread 

throughout the economy. 

C.	 McWane Objects To The April 2009 and June 2010 Allegations As Outside The 

Scope Of The Complaint6 

The allegations regarding the April 2009 list price increase and June 2010 multiplier 

increase are beyond the scope of the initial Complaint and should not be considered by this 

Court. Complaint Counsel raised the April 2009 allegations at the close of business on the last 

day of fact discovery in its Motion for Partial Summary Decision filed on June 1, 2012. 

Complaint Counsel raised the June 2010 allegations for the first time on August 17, 2012 in its 

Pre-Trial Brief. The new allegations are clearly beyond the scope of the conspiracy as alleged in 

the Complaint: the Complaint did not allege a conspiracy related to list prices and did not allege 

any conspiracy in 2009 or 2010. The Complaint identified the January and June 2008 multipliers 

as conspiratorial and DIFRA tons-shipped data as a mechanism to facilitate the conspiracy. 

(CompI. ~~ 32-34.) The Complaint did not say anything at all about April 2009 or June 2010. 

(CompI. ~~ 28-38.) Further, the Complaint, on its face, said that the February 2009 passage of 

6 Respondent today files a separate motion requesting that this Court exclude all evidence regarding the April 2009 

and June 20 I0 allegations at trial, or, in the alternative, continue the trial for additional discovery on these issues. 

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ARRA "upset the terms of coordination" and the Commission acknowledged that DIFRA 

"disbanded in early 2009." (CompI. 3; January 4, 2012 FTC News Release, 

http://www.ftc.gov/opa/2012/01/mcwane.shtm..) The Settlement Complaint with Sigma is 

verbatim the same on this description ("[b]eginning in January 2008 and continuing through 

January 2009"), and the Commission's statements in aid of the Complaints both alleged a 

conspiracy between "early 2008 ... and January 2009." (Sigma CompI. 2; January 4, 2012 

FTC News Release.) Moreover, the Sigma Complaint also alleged that Sigma invited McWane 

and Star to "resume" the alleged collusion but "MeWane and Star rejected Sigma's invitation to 

collude." (Sigma CompI. 38.) The Commission's statement in aid ofthe Complaints reiterated 

that "Sigma tried to revive the conspiracy by attempting to convince McWane and Star to raise 

their prices and resume exchanging pricing data in April 2009. However... at this point 

McWane and Star refused Sigma's invitation to collude." (January 4, 2012 FTC News Release 

(emphasis added).) 

1.	 Addition Of The April 2009 And June 2010 Allegations Is Prejudicial To 

McWane 

McWane reasonably relied on the language in the Complaint, the Commission's consent 

orders with alleged co-conspirators Star and Sigma, and the Commission's own public 

statements regarding the alleged conspiracy for its belief that the charged conspiracy continued 

only through January 2009. (January 4, 2012 Statement by FTC; CompI. 3.) Complaint 

Counsel's attempt to constructively amend the Complaint at the eleventh hour prejudices 

McWane by misleading it and causing it to omit various preparations and discovery. 

Specifically, McWane did not conduct any discovery on Star or Sigma's internal decisionmaking process surrounding the April 2009 list price change, or the June 2010 change in 

multipliers, which obviously goes to the heart of Complaint Counsel's late-breaking allegations. 

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The law is clear that the "need for additional discovery" is a sufficient basis for denying 

constructive amendment to a complaint, even where the parties have long known about the 

subject matter involved. In the Matter ofDaniel Chapter One, Dkt. No. 9329,2009 WL 871702 

(FTC Mar. 9, 2009) (Order Denying Respondents' Second Motion to Amend Answer), 

respondents sought to add an affirmative defense via Rule 3.15(a) that the FTC's complaint 

burdened their free exercise of religion contrary to the Religious Freedom Restoration Act. Id. at 

*1. Complaint Counsel opposed the amendment. In response Daniel Chapter One's argument 

that there was no conceivable prejudice to the Complaint Counsel from the amendment because 

the religious issue had been involved in the case, the ALJ stated that the assertion "that allowing 

a new affirmative defense to be added at this point in these proceedings would not require 

additional discovery or delay the trial belies logic and reason." Id. 

Complaint Counsel may argue, based on Ahmad v. Furlong, 435 F.3d 1196 (lOth Cir. 

2006) and McCree v. SEPTA, No. 07-4908,2007 U.S. Dist. LEXIS 4803 (E.D Pa. Jan. 22,2009) 

(both cited in the Commission's Opinion), that because the parties fully addressed the April 2009 

claim in their summary decision papers, there is no real prejudice. As an initial matter, the June 

2010 allegations were not raised as part of Complaint Counsel's Motion for Partial Summary 

Decision. Additionally, although both cases support the proposition that Federal Rule of Civil 

Procedure 15(b) applies at the summary-judgment stage, they both involve situations in which 

both parties acted in ways that demonstrate theirfull notice and acceptance ofthe pleadings that 

were not literally written. Ahmad, 435 F.3d at 1203 ("If [defendants] intended to raise the 

defense and [plaintiff] thought they had, why should a court insist on reading the motion 

differently?"); McCree, 2007 U.S. Dist. LEXIS at *30-31 ("We are persuaded that under the 

circumstances here, Rule 15(b) provides for constructive amendment of the Complaint to include 

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Plaintiffs ADA claim since the parties were on notice of the claim for over a year, litigated the 

claim after Plaintiff asserted it, and addressed the merits ofthe claim in their summary judgment 

briefing." (emphasis added). The parties in Ahmad and McCree both addressed the merits of the 

claim in their summary-judgment filings; McWane has taken every opportunity to argue that it 

cannot do so, particularly with regard to the June 2010 allegations. 

Finally, Complaint Counsel's failure to expressly state in its Complaint important aspects 

of the alleged conspiracy - -aspects that the Commission knew at the time- - is itself a basis for 

denying Complaint Counsel's apparent effort to treat the Complaint more expansively now. In 

the Matter of Daniel Chapter One, 2009 WL at 2 ("[A]bsent special circumstances a party's 

awareness of facts and failure to include them in pleading might give rise to the inference that 

the party was engaging in tactical maneuvers." (quoting Dussouy v. Gulf Coast Inv. Corp, 660 

F.2d 594, 599 (5th Cir. 1981) (Wisdom, 1.)). Complaint Counsel's failure to include the 

allegations in its Complaint, amend the Complaint to reflect the allegations (or to even raise the 

June 2010 allegations in its Motion for Partial Summary Decision) clearly constitutes the type of 

"tactical maneuvers" rejected Daniel Chapter One. 

2.	 The April 2009 and June 2010 Allegations Are Violations Of Due Process And 

FTC Rules 

The addition of these new allegations so late in the proceedings violates the Due Process 

Clause of the Fifth Amendment of the United States Constitution. Due Process "requires ... 

notice, reasonably calculated, under all circumstances, to apprise interested parties of the 

pendency of the action and afford them an opportunity to present their objections." Mennonite 

Bd. ofMissions v. Adams, 462 U.S. 791, 795 (1983). The remedy Complaint Counsel seeks in its 

Complaint 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 

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claims against it. Complaint Counsel's attempt to avoid this fundamental due process 

requirement by raising allegations not contained in -- and contrary to -- the Complaint is a clear 

violation of McWane's due process rights. See In re Ruffalo, 390 U.S. 544, 550-51 (1968) 

("[s]uch procedural violation of due process would never pass muster in any normal civil or 

criminal litigation"); Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950) 

("An 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."); Seeds of Peace Collective v. City of Pittsburgh, 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"); 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."). 

The Court should not consider the newly added allegations because they are violation's 

of the FTC's own rules. See 5 U.S.c. § 706(2)(D) (requiring Courts of Appeals to "hold 

unlawful and set aside agency action, findings, and conclusions found to be . . . without 

observance of procedure required by law ...."). The Commission has never amended its 

Complaint. Indeed, Complaint Counsel has never moved for leave to do so. This Court's 

jurisdiction is limited to the allegations that are actually contained in the Complaint. Even an 

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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).) Complaint Counsel's failure to amend the Complaint 

means that this Court should not consider evidence related to the April 2009 and June 2010 

allegations at trial. 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."). 

McWane is not arguing that the Complaint Counsel had any extraordinary pleading 

burdens-McWane is only asking for the bare minimum of notice pleading under the Federal 

Rules and the Rules of the FTC. 7 "[I]t is enough in pleading a conspiracy merely to indicate the 

parties, general purpose, and approximate date, so that the defendant has notice of what he is 

charged with." Walker v. Thompson, 288 F.3d 1005, 1007 (7th Cir.2002) (emphasis added). 

This has long been the law: 

A general allegation of conspiracy without a statement of the facts is an allegation of a 

legal conclusion and insufficient of itself to constitute a cause of action. Although detail 

is unnecessary, the plaintiffs must plead the facts constituting the conspiracy, its object 

and accomplishment. The plaintiffs have pleaded none of these facts. Neither the date of 

the alleged conspiracy nor its attendant circumstances are set forth. 

7 See Fed. R. Civ. P. 8; FTC Rule 3.41(c) ("Every party, except intervenors, whose rights are detennined under 

§3.14, shall have the right of due notice, cross-examination, presentation of evidence, objection, motion, argument, 

and all other rights essential to a fair hearing."). 

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Black & Yates, Inc. v. Mahogany Ass'n, Inc., 129 F.2d 227, 231-32 (3d Cir. 1941). And 

after Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), which required sufficient factual 

allegations to make claims plausible rather than merely possible, there can be no doubt that the 

absence of sufficient notice of timing is a fatal pleading defect. See id. at 565 n.10 (noting that 

the omission of "time" from the "pleadings" indicated a "lack of notice."). 

The Commission's observation that its rules do not "require Complaint Counsel to set out 

explicitly in the Complaint each and every episode of the allegedly unlawful conduct," Decision 

at 29, is accordingly irrelevant, because McWane's objection is that the Complaint, as now 

interpreted by Complaint Counsel, gives it no basis for understanding the timing of the alleged 

conspiracy. The complaint, as actually written, makes no suggestion that the alleged conspiracy 

extended beyond January 2009, and indeed affirmatively states that it ended then (and the 

Commission's settlements with the other alleged co-conspirators made that reading all but 

inevitable). It certainly gave McWane no "notice [that it] is charged with" alleged violations in 

April 2009 and June 2010. 

The only alternative reading is worse for Complaint Counsel, not better, because the 

alternative reading is that no reliable "indicat[ion]" of an "approximate date," Walker, supra, at 

1007, was provided. Consequently, the Commission's choice of this alternative is puzzling. It 

breezily asserted that the Complaint "contains no allegation as to the end date of the conspiracy, 

or, for that matter, any allegation of the conspiracy ending at all." Decision at 28-29. That point 

supports McWane, not (as the Commission apparently believed) the Complaint Counsel. The 

omission of such basic information as the timing of the conspiracy renders the complaint invalid 

as to anything beyond January 2009. And even if the Commission's decision binds the Court as 

to the April 2009 events, the most recent expansion to June 2010 has no such protection. 

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D.	 McWane Independently Decided To Lower Its List Prices On All Medium And 

Large Diameter Fittings In April 2009 And Star Independently Decided To Follow 

To prove a horizontal price-fixing agreement, Complaint Counsel must come forth with 

facts that demonstrate McWane and Star had an actual advance agreement to fix the price of 

fittings. 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 of minds in an unlawful arrangement") (citation 

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

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

American Tobacco Co., 328 U.S. at 810; In re Baby Food Antitrust 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 McWane made its own decision to 

announce a radical list price decrease (on April 14) and that Star subsequently learned about the 

decrease from its customers and decided to follow (before Mr. McCutcheon called Mr. Tatman). 

Mr. McCutcheon has flatly denied that he discussed prices with Mr. Tatman in his subsequent, 

brief conversation and flatly denied that he agreed to follow McWane. (McCutcheon Dep. at 

31: 18-32:4,43: 19-44:23,32: 11-17,43: 19-44:23; McCutcheon IH at 260:2-3.) 

The conversation was, by Complaint Counsel's own concession, brief and 

inconsequential: McWane did not change its behavior at all, but instead kept its lower list prices 

in place (and continued to offer multiplier discounts and job price discounts). (CC's Mot. for 

Summ. Decision at 1-4 ("brief phone call"), 9 ("Before the McWane/Star Communication, both 

McWane and Sigma had announced their intentions with respect to future prices"). Star did not 

change its behavior at all: it followed McWane's lower list prices just as it had already decided 

to do (and continued to offer multiplier and job price discounts). (Id. at 1 ("Star intended to 

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follow McWane"), 3 ("Star had made the decision to follow any price change actually 

implemented by McWane"), 4 ("Subsequently, Star followed McWane's Announced Price").) 

Complaint Counsel's argument that McWane "guaranteed" it would implement the new 

list prices and offered to pay Star $25,000 if it did not, is simply made-up. Indeed, the word 

"guarantee" is nowhere in McCutcheon's testimony about the brief phone call - - and Mr. 

McCutcheon repeatedly stated that he understood Mr. Tatman's comment that he would 

personally pay for Star's costs if it had to print another voluminous list price to be a joke. 

(McCutcheon Dep. at 233:14-234:1 (objections omitted) ("Q. And did you say to you in words 

or in substance, "If! retract it, McWane will pay the $25,000 cost"? A. He didn't say McWane. 

He said, "I'll pay the 25" -- it was a laughing matter at the time, joking.... We laughed and hung 

up the phone.".) Indeed, the conversation was so non-substantive, Mr. Tatman did not even 

recall it. 

Complaint Counsel admits that the alleged conversation was an after the fact 

communication about a price change and that it had no effect on McWane's behavior or Star's 

behavior. (CC's Pre-Trial Br. at 33-34 (stating that the telephone call occurred after McWane 

announced its new list prices and Star announced that it would also change its price list).) Courts 

have uniformly upheld that these types of after the fact communications are lawful. 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 (1) that 

McWane's April 14th list price announcement lowered its list prices on all fittings above 12," (2) 

that Star independently decided to follow the lower prices, and (3) the alleged phone call was 

after McWane's announcement and after Star's decision to follow. 

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Here, Complaint Counsel, at most, alleges that Mr. McCutcheon called McWane after 

McWane independently decided to lower its list prices and announced them to customers and 

after Star had independently decided to follow McWane's lower prices. The brief phone call did 

not address prices at all and did not result in any agreement that Star would follow McWane's 

lower list prices, according to Mr. McCutcheon. Moreover - - by Complaint Counsel's own 

concession - - the call had no effect on McWane's decision. (CC's Motion at 9 ("Before the 

McWane/Star Communication, both McWane and Sigma had announced their intentions with 

respect to future prices").) 

Complaint Counsel knows full well that the record shows ample evidence that McWane 

and Star both continued to offer multiplier discounts and job prices below their list prices 

throughout 2009. It cannot duck those facts by characterizing its made-up claim as per se illegal. 

(CC's Pre-Trial Brief at 65 ("In addition, McWane's April 2009 exchanges of assurances on 

price with Star is also per se unlawful.").) Moreover, it would be particularly perverse - - and 

contrary to Supreme Court and uniform Courts of Appeals case law - - to infer that McWane's 

independent decision to lower its list prices can magically be transformed into a wrong by 

Mc Wane simply because Star independently decided to follow - - but called to ask about a wild 

rumor that McWane might rescind its lower prices. Complaint Counsel does not cite any case 

for that novel proposition, and none exists. 

E. McWane Acted Independently By Changing Its Multipliers In June 2010 

Complaint Counsel's allegations regarding the June 2010 multiplier increases strain 

credibility. As noted above, to prove a horizontal price-fixing agreement, Complaint Counsel 

must prove that McWane, Star, and Sigma had an actual advance agreement to fix the price of 

fittings. 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 

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

omitted). Inexplicably, Complaint Counsel alleges both that McWane illegally excluded Star 

from the market for domestic fittings beginning in 2009 (CompI. ~~68-70; CC's Pre-Trial Br. at 

48-49.) and illegally conspired with Star (the alleged "victim") to raise prices in June of the 

following year. (CC's Pre-Trial Br. at 34-36.) 

It's clear from the June 2010 allegations that all that is truly alleged (for the first time in 

Complaint Counsel's Pre-Trial Brief) is follow-the-Ieader activity that was prompted by public 

announcements to customers. First, Complaint Counsel resuscitates the same unconvincing 

arguments regarding "signaling" in the price letters (Id.) In reality, the price letters cited by 

Complaint Counsel are clear and unambiguous. Additionally, Complaint counsel acknowledges 

that the initial Star announcement didn't even relate to fittings. (Id.) Second, the June 2010 

allegations take place two years after the supposed "Tatman Plan" was implemented. Finally, 

there is absolutely no evidence of any direct communication between McWane, Sigma, and Star 

regarding the June 2010 announcements. The June 2010 multiplier changes are classic followthe-leader behavior and not a violation of antitrust laws. See Citric Acid, 191 F.3d at 1102. 

F. McWane Did Not Have Monopoly Power 

Complaint Counsel, in Counts V-VII, allege that McWane conspired to monopolize, 

attempted to monopolize, and actually monopolized the market for domestic fittings by 

excluding Star. (CompI. ~~68-70; CC's Pre-Trial Br. at 48-49.) McWane's alleged 

monopolization -- that is, its purported ability to control competition and pricing -- is wholly 

belied by Plaintiffs' allegations that, during the very period that McWane was at the height of its 

unlawful exercise of monopoly power with market shares of nearly 100%, entry barriers were 

minimal or nonexistent, Star successfully entered into and quickly expanded its share of the 

domestic DIPF market, and McWane's domestic market share dropped. Star's successful 

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expansion into selling domestic fittings affirmatively disproves any allegations that McWane 

exercised monopoly power and excluded Star from competing. 

Complaint Counsel's argument that McWane's high market share is determinative of 

monopoly power is incorrect as a matter of law. (CC's Pre-Trial Br. at 81.) Courts uniformly 

hold that high market share alone is not dispositive of market or monopoly power. See Eastern 

Food Servs., Inc. Pontifical Catholic Univ. Servs. Assoc., Inc., 357 F.3d 1, 6 (1st Cir. 2004) ("A 

defendant's high share is only a presumptive basis for inferring market power (entry barriers to 

the market may be very low); accord Am. Council ofCertified Podiatric Physicians & Surgeons 

v. Am. Bd. ofPodiatric Surgery, Inc., 185 F.3d 606,623 (6th Cir. 1999) ("market share is only a 

starting point for determining whether monopoly power exists, and the inference of monopoly 

power does not automatically follow from the possession of a commanding market share"); 

Defiance Hosp. v. Fauster-Camron, Inc., 344 F. Supp. 2d 1097, 1113 (N.D. Ohio 2004) ("market 

share is only a starting point for determining whether monopoly power exists."). Indeed, courts 

recognize that "[m]arket share... does not raise an inference ofa dangerous probability of market 

power if there are low entry barriers or other evidence of the defendant's inability to control 

prices or competitors." Confederated Tribes of Siletz Indians v. Weyerhaeuser Co., 411 F.3d 

1030,1034 (9th Cir. 2005). 

Complaint Counsel cannot demonstrate that there are "significant barriers to entry" into 

the domestic fittings market sufficient to demonstrate that McWane had monopoly power. 

Complaint Counsel argues that new entrants into the fittings market "must develop a supply 

chain and stocking yards throughout the United States, expertise in design engineering, a 

marketing force, and relationships with Distributors that will carry its products." (CC's Pre-Trial 

Br. at 7.) As a successful importer of DIPF, Star plainly had the necessary expertise, marketing 

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force, and relationship with distributors. Complaint Counsel implicitly acknowledges the 

weakness of its barriers argument by claiming that "McWane's Exclusive Dealing policy 

represents the most significant barrier to entry... " (Id. at 82) Indeed, the purported barriers here 

are no greater for a new entrant than an incumbent and, as a matter of law, do not constitute true 

"barriers" precluding competitive entry. See Burlington N R.R. Co. v. Surface Transp. Bd., 114 

F.3d 206, 214 (D.C. Cir. 1997) (Surface Transportation Board's definition of entry barriers as 

"those costs that a new entrant must incur that were not incurred by the incumbent" was 

reasonable); Los Angeles Land Co. v. Brunswick Corp., 6 F.3d 1422,1428 (9th Cir. 1993) ("The 

fact that many lenders do not understand the bowling market does not mean that the capital costs 

for new entrants and incumbents in the market differ, or that it is any more difficult for new 

entrants to obtain financing than incumbents"); see also Richard A. Posner, The Chicago School 

ofAntitrust Analysis, 127 U. Pa. L. rev. 925, 945 (1979). 

In its first full year with domestic fittings, Star had more than. customers, including 

more than. exclusive domestic customers, and. million in sales. Star's huge (and often, 

exclusive) customer base and significant sales are dispositive here. Brooke Group Ltd. v. Brown 

& Williamson Tobacco Corp., 509 U.S. 209, 226 (1993) ("[W]here new entry is easy ... 

summary disposition of the case is appropriate"); Advo, Inc. v. Philadelphia Newspapers, 51 

F.3d 1191, 1202 (3d Cir. 1995). It is well-established that actual entry of a new competitor or 

actual expansion by an existing competitor "precludes a finding that exclusive dealing is an entry 

barrier of any significance" Omega Envt'l. v. Gilbarco, Inc., 127 F.3d 1157, 1164 (9th Cir. 

1997), and easy entry conditions "rebut inferences of market power." Tops MIas., Inc. v. Quality 

MIas., Inc., 142 F.3d 90, 99 (2d Cir. 1998). Thus, Star's actual successful entry -- the fact that it 

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has been able to source a full line of domestic fittings and bid for jobs across the country -­

conclusively shows that McWane did not (and could not) exercise monopoly power. 

1. Domestic And Imported Fittings Constitute A Single Market 

"Market definition involves identifying the products to which consumers are willing and 

able to substitute as a result of a change in price or product characteristics." (Expert Rpt. of 

Parker Normann, Ph.D. at ~43.) Complaint Counsel, in reliance on the testimony of Dr. 

Laurence Schumann, claims that "[t]his case involves two antitrust product markets: (1) Fittings 

and (2) Domestic Fittings sold for use in projects with Domestic-only specifications." (CC's 

Pre-Trial Br. at 54, 55-56.) However, both domestic and imported fittings are frequently sold to 

"the same distributors, sold for the same end use .. .in every state in the country." (Normann Rpt. 

at ~46.) As noted in Dr. Normann's expert report, the ITC determined in December 2003 that 

DIPF imported from China were used interchangeably with domestic DIPF. (ld. at 50-51 (citing 

U.S. ITC Publication 3657, Certain Ductile Iron Waterworks Fittings from China, December 

2003, p.6.).) Additionally, sellers of imported DIPF regularly lobby to "flip" the specifications 

of a particular waterworks product from domestic to open. (Normann Rpt. at ~55 (quoting 

McCutcheon IH at 96:5-18.).) Finally, much of the demand for domestic DIPF stems from 

preference for domestic product and not from binding legal requirements. (Normann Rpt. at 

~58.) As a result, and contrary to Complaint Counsel's claims, imported and domestic DIPF 

constitute a single product market. (ld. at ~52.)

2. Star Was Not Excluded From Supplying Domestic Fittings 

Respondent is unable to find a single case in the history of the federal antitrust laws in 

which a supplier with more than. customers, including more than. exclusive customers, in 

58
 
PUBLIC 

its first year in the market segment was considered "excluded." Complaint Counsel essentially 

argues that Star did not achieve all the success it hoped and dreamed for (CC's Pre-Trial Br. at 

86 (" ... Star had difficulty making sufficient sales to realize cost efficiencies or justify operating 

a foundry of its own.")) - - but the antitrust laws do not guarantee that. They only ensure that a 

company has the opportunity to compete - - and it is undisputed that Star, with _-plus 

domestic fittings customers in its first year (and .-plus exclusive customers), had that by any 

definition. United States v. SyufY Enters., 903 F.2d 659, 664 (9th Cir. 1990) ("[T]he nature of 

competition is to make winners and losers.") 

Star's 11+ domestic fittings customers (and • exclusive domestic customers) 

disprove Complaint Counsel's allegation that McWane's rebate policy excluded Star. True, 

long-term exclusive deals - - and the rebate policy was not one, for the reasons set out by 

Commissioner Rosch - - are only problematic if they "foreclose competition in a substantial 

share of the line of commerce affected." Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 

327 (1961). To foreclose competition in a substantial share of the affected line of commerce, the 

exclusive deals must "foreclose so large a percentage of the available ... outlets that entry into 

the concentrated market is unreasonably constricted," E. Food Servs., Inc. v. Pontifical Catholic 

Univ. Servs. Ass 'n, Inc., 357 F.3d 1, 8 (1 st Cir. 2004), and significant sellers are "frozen out of a 

market by the exclusive deal." Jefferson Parish Hosp. Dist. No.2 v. Hyde, 466 U.S. 2,45 (1984) 

(O'Connor, 1., concurring). Neither Complaint Counsel nor its expert offers any evidence of 

what percentage of the market Star was allegedly foreclosed from, let alone that the percentage 

was "substantial," and therefore cannot satisfy its burden of proof. Indeed, the evidence 

establishes that, as per Star's meteoric rise in the alleged domestic market, the market was wide 

open. 

59 
PUBLIC 

McWane's rebate policy on its face could not constitute exclusive dealing "as a matter of 

law" and has been "blessed" by several Courts of Appeals - - as Commissioner Rosch set out in 

his separate statement disagreeing with the Part 3 action against McWane. Moreover, there was 

a perfectly legitimate reason for McWane to have the policy: to ensure that the last remaining 

foundry dedicated to domestic fittings in 3"-24" diameters would have enough volume to stay in 

business in the face of a long-term flood of cheap imports coming into the U.S. from Korea, 

China, India, Mexico, Brazil, and elsewhere. Union Foundry was only operating at a fraction of 

its rated capacity at the time (and still is). 

Here, more than • significant waterworks distributors across the country are already 

buying Star's domestic fittings. By definition, Star was not "frozen out" of access to them and 

was not foreclosed. (Aug. 9, 2012 Statement of Commissioner J. Thomas Rosch at 5 ("Thus, the 

fact that Star attained a 10 percent share of domestic-only DIPF market-from zero share-in less 

than three years...undermines Complaint Counsel's basic theory that McWane alleged 

"exclusive dealing" practices made entry difficult or ineffective.").) The fact that Star may not 

have sold as much product as it hoped and dreamed it would (or as soon as it would have liked) 

is irrelevant. 

3. McWane Did Not Exclude Sigma From Virtual Domestic Manufacturing 

In Count IV, Complaint Counsel alleges that the MDA between McWane and Sigma 

constituted a violation of Section 5 of the FTC Act and Section One of the Sherman Act by 

eliminating Sigma as a potential entrant into the domestic fittings market. (CompI. ~67; CC's 

Pre-Trial Br. at 73.) McWane will introduce evidence that virtual domestic manufacturing was 

"not a viable option" for Sigma in mid-2009 for at least 18-24 months. It had huge debt, little 

cash, and sharply declining sales. It had already breached debt-to-earnings covenants with its 

banks and was in danger of doing so again. 

60 
PUBLIC
 

It did not own 

foundries or machine shops and had no contracts with third-party companies to cast or machine 

fittings. Its board and its banks did not authorize it to exceed its capital expense limits, nor to 

proceed with virtual domestic manufacturing. It simply had no viable option in the middle of 

2009 to participate in domestic jobs during the ARRA period (February 2009-mid-2010). The 

evidence will also establish that, without the MDA with McWane, Sigma would have been 

unable to supply its customers with domestic fittings at all during ARRA. (Rybacki Dep. at 

141 :6-9; Pais IH at 158:13; Bhattacharji Dep. at 121 :20-124:8.) 

Buy-sell arrangements among competitors are commonplace and not alone 

anticompetitive, an act in furtherance of maintaining or enhancing alleged monopoly power, or 

an agreement among competitors to do something illegal. This Court should not infer a 

conspiracy from Sigma's reasoned business decision not to virtually manufacture domestic 

fittings. Twombly, 550 U.S. at 569 (holding that a company's failure to expand beyond its 

traditional business and enter a new segment of the market was inconsistent with its self-interest 

and was not suggestive of any anticompetitive scheme); In re Baby Food Antitrust Litigation, 

166 F.3d 112, 127 (3d Cir. 1999) (affirming summary judgment for defendants in part because 

company's decision not to enter a market was "more plausibly explained as an exercise of 

independent business judgment"). The MDA was pro-competitive, as it allowed domestic 

ductile iron pipe fittings to reach more distributors and expanded the purchasing options 

available to end users. Customers even acknowledged that the MDA was beneficial to them, as 

it provided them additional access to the domestic fittings they needed. (See Prescott Dep. at 

61
 
PUBLIC 

35:6-22 ("became very convenient to -- to fill out that shipment because we could get domestic 

and they were the same.").) 

Case law makes clear that a party is not an "actual potential competitor" unless it has 

taken "affirmative steps to enter the business" and has an "intention" and "preparedness" to do 

so. Gas Uti/so Co. ofAlabama, Inc. v. Southern Natural Gas Co., 996 F.2d 282, 283 (11th Cir. 

1993) ("Inquiry into procedures is insufficient to establish preparedness ...party must take some 

affirmative step to enter"); Cable Holdings ofGa. , Inc. v. Home Video, Inc., 825 F.2d 1559,1562 

(11 th Cir. 1987) (requiring "an intention to enter the business" and a "showing of 

preparedness"); Sunbeam Television Corp., v. Nielsen Media Research, Inc., 136 F.Supp.2d 

1341, 1354 (S.D.Fla. 2011) ("a would-be purchaser suing an incumbent monopolist for 

excluding a potential competitor ... must prove the excluded firm was willing and able to supply 

it but for the incumbent firm's exclusionary conduct"). Sigma had not taken the necessary steps 

to become a virtual manufacturer. It was thus not an actual potential competitor for domestic 

jobs during the ARRA period - - and was not excluded by McWane. 

G.	 Complaint Counsel Cannot Prove That McWane's Actions Causes "Substantial 

Injury" To Consumers 

Under Section 5 of the FTC Act, a challenged practice or act is only "unfair" if it "causes 

or is likely to cause substantial injury to consumers which is not reasonably avoidable by 

consumers themselves and not outweighed by countervailing benefits to consumers or to 

competition." 15 U.S.C. § 45(n). Complaint Counsel has not -- and cannot -- demonstrate 

"substantial harm" as a result of McWane's conduct as alleged in the Complaint. Courts have 

held that the substantial harm can be show through "concrete and quantifiable" findings of fact. 

See FTC v. Neovi, Inc., 604 F.3d 1150, 1157 (9th Cir. 2010) ("The district court acknowledged 

that the number of fraudulent items created could not be definitively quantified, but it also said 

62
 
PUBLIC
 

that more than half of the total value of all the checks drawn... came from accounts later frozen 

for fraud. That concrete and quantifiable finding is sufficient to show substantial harm... ") 

(emphasis added); Orkin Exterminating Co., Inc. v. FTC, 849 Fold 1354, 1364-65 (lIth Cir. 

1988) ("The Commission's finding of "substantial" injury is supported by the undisputed fact 

that Orkin's breach of its pre-1975 contracts generated, during a four-year period, more than 

$7,000,000 in revenues from renewal fees to which the Company was not entitled."). 

In contrast, Complaint Counsel's expert witness did not even attempt a statistical analysis 

of the fittings market during the alleged conspiracy or during McWane's alleged monopolistic 

behavior. (Rebuttal Expert Rpt. of Laurence Schumann, PhD at ~8 ("I concluded that given 

these problems, any statistical work I might undertake, irrespective of whether it appeared to 

support the Complaint or not, necessarily would be unreliable.").) As a result, Complaint 

Counsel's assertions that McWane's conduct resulted in "restrained competition and led to 

higher prices for both imported and domestically produced DIPF" is utterly baseless. (CompI. 

~7.)

H. McWane Objects To The Admissibility Of Out-Of-Court Competitor Hearsay 

Communications between only alleged co-conspirators Star and Sigma, and not Mcwane, 

are not admissible against McWane. 8 Complaint Counsel bases its entire argument for 

admissibility on Federal Rule of Evidence 801 (d)(2)(E). (CC's Pre-Trial Br. at 52-54; Fed. R. 

Evid. 801 (d)(2)(E) (a statement is not hearsay if it is offered against an opposing party and "was 

made by the party's coconspirator during and in furtherance of the conspiracy.").) Complaint 

8 In it's brief, Complaint Counsel does not clearly specify the statements it seeks to admit. (CC's Pre-Trial Br. at 53 

(generally referring to Sigma and Star's statements before and during DIFRA and the alleged price fixing 

conspiracy), n266 (referring to the general factual bases of the challenged conduct).) However, Part II of Complaint 

Counsel's Brief refers to an alleged communication between Victor Pais (Sigma) and Dan McCutcheon (Star) 

whereby Pais explained that "if both firms kept their actual prices close to McWane's published price, then McWane 

would 'treat us better and we could live happily ever after.' " (Id. at 21.) This statement is inadmissible for the 

reasons described above. 

63 
PUBLIC 

Counsel's argument is incorrect for two reasons. First, Complaint Counsel cannot prove the 

existence of a conspiracy between the declarants (Star and Sigma) and McWane by a 

preponderance of the evidence as required under the Rule. Bourjaily v. United States, 483 U.S. 

171, 176 ("when the preliminary facts relevant to Rule 801 (d)(2)(E) are disputed, the offering 

party must prove them by a preponderance of the evidence") (1987). Second, even assuming the 

applicability of Rule 801 (d)(2)(E), the statements are not automatically admissible simply 

because they are not hearsay. (See Fed. R. Evid. 401-402 (Relevance); 403 (Prejudice).) 

Complaint Counsel cannot meet its burden of proving the existence of a conspiracy to 

reduce job pricing and illegally tons-shipped data between McWane, Sigma, and Star. The 

overwhelming evidence at trial will show that the conspiracy as alleged by Complaint Counsel 

simply did not exist. Complaint Counsel concedes that the hearsay statements themselves are not 

sufficient to prove a conspiracy by a preponderance of the evidence. (CC's Pre-Trial Br. at 53 

(" ...this Court may consider the proffered co-conspirator statements themselves, along with 

other hearsay and non-hear say evidence, when determining whether a conspiracy existed 

between McWane, Sigma, and Star.").) In Bourjaily v. United States, the Supreme Court did not 

hold that the hearsay statements alone were sufficient evidence to prove a conspiracy between 

the petitioner and the declarant by a preponderance of the evidence. (Bourjaily, 483 U.S. at 181 

("We need not decide in this case whether the courts below could have relied solely upon 

[declarant's] hearsay statements to determine that a conspiracy had been established by a 

preponderance of the evidence.")) Instead, the Court noted that the hearsay statements at issue 

were "corroborated by independent evidence." Bourjaily, 483 U.S. at 180. 

Since Bourjaily, other courts have held the party offering the hearsay statements must 

also have independent evidence to support the existence of a conspiracy. (US. v. Benson, 591 

64
 
PUBLIC
 

F.3d 491, 501 (6th Cir. 2010) (citing Us. v. Clark, 18 F.3d 1337 (6th Cir. 1994) for the 

proposition that "proof of the defendant's knowledge and participating in the conspiracy must be 

supported by independent, corroborating evidence other than co-conspirator hearsay."); Us. v. 

Baines, 486 F. Supp. 2d 1288, 1294 (D.NM 2007) (quoting Us. v. Lopez-Guitierrez, 83 F.3d 

1235,1242 (lOth Cir. 1996) (" ...the proffered co-conspirator statement alone is not sufficient to 

establish the existence of a conspiracy...[t]he government must also submit some 'independent 

evidence linking the defendant to the conspiracy. "')).) The independent evidence --or lack 

thereof-- in this case proves that there was no conspiracy. There was no direct communication 

between McWane and either Sigma or Star regarding pricing. McWane did not follow its 

competitors multiplier increases in January 2008 and June 2008. (Rybacki Dep. at 82:17-83:7; 

Tatman IH 127:5-128:6.) Aggressive job pricing continued throughout 2008. (Tatman Dep. at 

27:3-5, 109:22; Rybacki Dep. at 69:18-70:13; RX-037; Minamyer IH at 31:17-22, 33:10-16, 

35:9-15; McCutcheon IH at 54:18-55:5; Rybacki Dep. at 24:14-16; Rona IH at 202:16-17; Pais 

IH at 73:11-16.) McWane's prices, profit margin, and market share all decreased throughout 

2008. (Normann Expert Rpt. ~~27-28 (prices); ~~79-80 Fig. 11 (profit margin); ~~82, 88 

(market share).) Because Complaint Counsel cannot meet its burden that a conspiracy actually 

existed between McWane, Star and Sigma, communications between Star and Sigma are not 

admissible against McWane under Rule 801 (d)(2)(E). 

Complaint Counsel simply assumes, without justification, that if the communications 

between Star and Sigma clear the hearsay hurdle, they are automatically admissible. 

Conversations and communications between Star and Sigma --without McWane-- are completely 

irrelevant and of no pro regarding whether McWane entered into an illegal agreement with either 

company in violation of Section 5 of the FTC Act and are therefore inadmissible. (Fed. R. Evid. 

65
 
PUBLIC
 

402; FTC Rule 3.43(b).) Even if relevant to Complaint Counsel's allegations, any probative 

value of the statements is vastly outweighed by their prejudicial impact. (Fed. R. Evid. 403.) 

V. REMEDY 

The proposed remedies are moot or otherwise flawed as a matter of law. The evidence at 

trial will show that the proposed remedy as stated in the Notice of Contemplated Relief is 

unwarranted and moot because (1) ARRA expired more than a year ago; (2) DIFRA has ceased 

operations and its information-gathering and dissemination activities ended more than three 

years ago; (3) the MDA between McWane and Sigma was terminated in September 2010 and the 

parties no longer have a buy-sell relationship; (4) McWane's rebate policy was changed in 2011 

and communicated to customers; and (5) Complaint Counsel has no evidence that any of the 

foregoing are likely to reoccur. Finally, any remedy based on the April 2009 or June 2010 

allegations constitute a violation of Due Process for the reasons discussed above. 

VI. CONCLUSION 

For the foregoing reasons, Complaint Counsel will be unable to establish that McWane 

violated Section Five of the FTC Act as alleged in the Complaint. This Court should deny the 

relief sought by the Notice of Contemplated Relief. 

66
 
PUBLIC
 

J. 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 

Dated: August 31, 2012 

/s/ Joseph A. 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 

Attorneys for Respondent Me Wane, Inc 

67
 
 

PUBLIC 

CERTIFICATE OF SERVICE 

I hereby certify that on August 31, 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-113 

Washington, DC 20580 

I also certify that I delivered overnight delivery a copy of the 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 of the 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_____

 William C. Lavery 

 Counsel for McWane, Inc. 

68
 
McCutcheon 2nd 

Declaration 

This exhibit has been 

marked Confidential 

and redacted in its 

entirety 
MWP-FTC_00015846 

This exhibit has been 

marked Confidential 

and redacted in its 

entirety 
Schumann Rebuttal 

Report 

This exhibit has been 

marked Confidential 

and redacted in its 

entirety 
Sworn Denials Exhibit 

This exhibit has been 

marked Confidential 

and redacted in its 

entirety 
Trout Declaration 

This exhibit has been 

marked Confidential 

and redacted in its 

entirety 
From: 

Sent: 

To: 

Subject: 

Rick Tatman <rtatman@tylerunion.com>
 

Wednesday, May 6, 2009 9:51 PM
 

McCullough, Leon (McWane Executive Vice President)
 

<lmccullough@c1owvalve.com>; Walton,Thomas (McWane Sf. Vice President)
 

<twalton@MH-Valve.com>
 

FW: New Multiplier - Star Pipe Products
 

It would appear that Star will follow our List and Published multipliers (except for PA) on Fittings and Accessories. 

This was also what Glenn Fielding said was communicated to him earlier this week. 

Also note that they were not going to follow our Joint Restraint (TufGrip) List which had some fairly minor 

changes. You can make your own assessment to what the message is there.
 

I would expect their new List to post to the Web within a few days.
 

We will probably send out our new TufGrip multipliers sometime next week.
 

It will now be very interesting to see what Sigma does. They've been doing a lot of line item net pricing lately so
 

they may continue that mode for a period of time ....although I think they will ultimately have to follow suite.
 

Richard (Rick) Tatman 

VP&GM TylerlUnion 

McWane Waterworks Fittings Division 

(903) 882-2440 

rtatman@tylerunion.com 

www.tylerunion.com 

From: Star Pipe Products [mailto:marketing@starpipeproducts.com] 

Sent: Wednesday, May 06,20096:58 PM 

To: Michalek, Ed H [Ferguson] - 1716 NEWINGTON_WATERWORKS 

Subject: New Multiplier - Star Pipe Products 

May 4, 2009 

RE: - Price List Change for A WWA Fittings (See change in effective date) 

- State Multiplier Letterfor A WWA Fittings 

- Effective May 12th, 2009 

To Our Valued Customers in the states of 

ME, VT, NH, MA, RI, CT, NY, NI, DE, MD, VA, WV, NC, SC, GA, FL, PR, AL, MS, 

TN, KY, OR, IN, IL, MI, WI, MN, lA, MO, AR, LA, TX, OK, KS, NE, SD, ND, WY, 

Confidential TU-FTC-0032674 
CO,NM,PA 

The following multipliers will be effective May 12th, 2009 and will be applicable to the 

upcoming new AWWA "Utility Fitting, Accessories, andFabricator Products" Price List 

UPL09.0I that is also effective May 12th, 2009. 

Our current "Joint Restraint Products" Price List will remain unchanged (JRPL. 08. OlE). 

Product Description New Multiplier 

• 3" - 48" Utility Fittings CllO & CI53 .25 

• 3" - 48" Accessories ClIO and CI53 .25 

• P40I LinedFittings CALL * 

• 3" - 48" Joint Restraint Products No Change
 

(* please contact your local Star representative for pricing)
 

The new Price List and associated new multipliers will be effective May 12th. The new 

Price List will be on the website shortly @ www.StarPipeProducts.com. Hard copies will 

be distributed upon request by our sales and customer services departments. 

Please contact your Territory Managers to inform them ofexisting quotations and annual 

contracts before May 12, 2009. 

We remain committed to earning your business. 

Regards, 

Matt Minamyer 

National Sales Manager 

Star Pipe Products 

This message was sent from Star Pipe Products to edward.michalek@Ferguson.com. It was sent 

from: Star Pipe Products, 4018 Westhollow Pkwy, Houston, TX 77082. You can modify/update your 

subscription via the link below. 

'@::"Manage your subscription 

Confidential TU-FTC-0032675 
From: jjansen@tylerunion.com 

Sent: Thursday, April 30, 20092:37 PM 

To: Rick Tatman <rtatman@tylerunion.com> 

Subject: Re: Fowler/Sigma 

Really, I loved it that in FL Star says to use our list and a .24. They just can't be the same. 

Also, we thought we had 3 tmckloads at .23 for Summit in Mississippi for big Gulf Coast job but Sigma came in this week with a .20. 

Its all 6-12". They have now taken a several huge jobs down there at .20 or lower. 

Jerry
 

------Original Message-----­


From: Rick Tatman
 

To: Jerry Jansen
 

ReplyTo: Rick Tatman
 

Subject: RE: Fowler/Sigma
 

Sent: Apr 30, 2009 2: 17 PM
 

Glenn Fielding said yesterday that Star was using our List. 

I think it will be mid next week until the dust settles. 

If they stick with old List and a 0.32/0.35 the we should sell allot
 

in the Northwest
 

Richard (Rick) Tatman
 

VP&GM Tyler/Union
 

McWane Waterworks Fittings Division
 

(903) 882-2440 

rtatman@tylemnion.com
 

www.tylemnion.com
 

-----Original Message----­

From: jjansen@tylemnion.com [mailto:jjansen@tylemnion.com]
 

Sent: Thursday, April 30, 2009 1:52 PM
 

To: Rick Tatman
 

Subject: Fw: Fowler/Sigma
 

Fyi. I've heard from Tom Frank and Mike now that said Star isn't
 

having a new list. I heard from Ruffin that Star was in with HD
 

Orlando yesterday and said use a .24 off our new list.
 

Who knows? We will soon find out. 

Jerry 

------Original Message-----­


From: mlsnyder503@aol.com
 

To: Jerry Jansen
 

ReplyTo: mlsnyder503@aol.com
 

Subject: Fowler/Sigma
 

Sent: Apr 30,2009 12:48 PM
 

Confidential TU-FTC-0259568 
Nelson got a letter from Sigma which stated Sigma will stay on current 

price pages and hold a .35. He spoke with Star yesterday who said they 

will stay on current price pages and will offer a .32 

Sent from my Verizon Wireless BlackBerry 

Sent from my BlackBerry Smartphone provided by Alltel 

Sent from my BlackBerry Smartphone provided by Alltel 

Confidential TU-FTC-0259569 
From: Mike Walsh 

Sent: Friday, June 25, 201009:14:04 AM 

Mike Roy; Susan Van Hook; Kevin Flanagan; Richard Hueth; Ken Stephenson; To: Harry Bair; Julie Bell 

Subject: FW: New Sigma Price Increase Letter 

Attachments: Sigma Price Increase 6-24-2010.pdf 

We need to get this letter out today. Each of you need to handle your respective customers. MW 

From: Iryb446150@aol.com [mailto:lryb446150@aol.com] 

Sent: Thursday, June 24, 2010 5:24 PM 

To: Iona Shenoy; Chris King; Mike Walsh; AI Richardson; Greg FOx; David Pietryga; Mitchell Rona; Steve 

Goodwyn 

Subject: New Sigma Price Increase Letter 

FYI 

Cindy Dayotas 

Sigma / Allcast Corporation 

Iryb446150@aol.com 

SIGTP00005143 

CONFIDENTIAL-FTC Docket No. 9351 

FOIA Exempt/Protected by Court Order 

CX 1396-001
:ESIGMA Your Fitting Choice... 

June 24, 2010 

To: Sigma Customers in the following territories: 

MA, CT, ME, VT, NH, Rl, NY, NJ, DE, MD, VA, WV, NC, SC, 

GA, FL, AL, MS, TN, KY, OH, IN, IL, MI, WI, MN, lA, MO, AR, 

LA, TX, OK, KS, NE, SD, ND, WY, CO, NM, CA, AZ, ill, and 

Puerto Rico 

Re: The New Multipliers take effect July 1,2010. 

Dear Sigma Customers, 

As I stated in my previous letter about the rising costs of producing product 

overseas, we at Sigma Corporation will be increasing our multipliers to a .29 in the 

above mentioned tenitories. The new multipliers will be off our current list prices 

and will be as follows: 

.29 for MJ Push On and Flanged Fittings C110 and C153 (3"- 48") 

.29 for Glands and Accessories (3"- 48") 

P.O.A. 401 lined and any other special coated Fittings. 

Our Domestic Fitting prices remain in effect. 

All annual municipal bid contracts will be honored per the terms ofthe contract. 

Any job quoted prior to today's letter will be honored through July 31, 2010 

provided orders for immediate release have been received prior to July 31, 2010. 

Thank you for your support and we look forward to working with all of you for 

many years to come. 

~YYOurs,
 

~7
 

SIGTP00005144 

CONFIDENTIAL-FTC Docket No. 9351 

FOIA Exempt/Protected by Court Order 

CX 1396-002
From: Craig Schapiro 

Sent: Friday, June 18, 201006:01:56 PM 

To: SIGALL 

Subject: FW: Star - New Fitting Multipliers 

Craig Schapiro 

SIGMA Corporation 

(800) 999-2550 x238 

OEM AWWA Waterworks 

From: Star Pipe Products [mailto:marketing@starpipeproducts.com] 

Sent: Friday, June 18, 2010 5:52 PM 

To: Craig Schapiro 

Subject: Star - New Fitting Multipliers 

June 18,2010 

TO: Star Pipe Customers in the/ollowing trading areas: 

~~~~~~~~~m~~~~n~~~~~~

MO, MS, NC, ND, NE, NH, NJ, NM, NY, OH, OK, PR, RI, SC, SD, TN, TX, VA, VT, WI, 

wv, WY 

RE: New Multipliers for Fittings and Accessories Effective July 1, 2010 

To Our Valued Customers: 

The following multipliers will be effective July 1, 2010 and will apply to our A WWA 

"Utility Fittings & Accessories Price List" (UPL09.02). The Price List is on our 

website at www.starpipeproducts.com. 

IMPORT Multiplier 

SIGTP00006846 

CONFIDENTIAL-FTC Docket No. 9351 

FOIA Exempt/Protected by Court Order 

CX 1406-001
Utility Fittings C11 0 and C153 3" - 48" .29 

Accessories 3" - 48" .29 

Protecto 401 Lined Fittings All Sizes POA 

Please provide your local Territory Manager with documentation regarding any 

existing quotations. Municipal andAnnual Contracts will be honoredper the terms 

ofthe contract, not to exceed one year. 

We remain committed to earning your business. 

Regards, 

Dan McCutcheon 

,,:::...:.:., ~,,::~,~'

-"
 

This message was sent from Star Pipe Products to cs1@sigmaco.com. It was sent from: Star 

Pipe Products, 4018 Westhollow Pkwy, Houston, TX 77082. You can modify/update your 

subscription via the link below. 

.~§

3' ~- ETIManage your subscription ,........._­

SIGTP00006847 

CONFIDENTIAL-FTC Docket No. 9351 

FOIA Exempt/Protected by Court Order 

CX 1406-002
From: From: Victor Victor Pais Pais

Sent: Sent: Tuesday, Tuesday, June June OB, 08, 2010 2010 01:50:32 01:50:32 PM PM

M20 M20

Jim Jim Stohi; Stohi; Joel Joel \NlImsmeYei; \NilmsmeYei; Kane Kane Connoi; Connoi; Mike Mike \Nalsh; \Nalsh; Scott Scott Mailoilv; Mailoilv; Tom Tom

Cc: Cc:

Paquette Paquette

Subject: Subject: VP VP to to LR LR : : Price Price Increase Increase Letter Letter

Attachments: Attachments: MID-YEAR MID-YEAR PRICE PRICE INCREASE INCREASE LETIER-060810.docx LETIER-060Bl0.docx

Importance: Importance: High High

Larry, Larry, 

Since Sincf' 0111' 0111' price price increase increase lelLer lelLf'r aL aL Lhis Lhis poinL poinL is is largely largf'ly a a 'heads 'llf'mls llP' llP' Lo Lo Lhe Lhe CllsLolllf'rS CllsLolllf'rS and <HHi Lhe Lhe

market market about about our our intention intention to to follow follow suit suit when when Star Star or or others others take take a a definitive definitive action action on on price price

in~reases, in~n::'ases, I I thought thought the the atta~hed atta~hed revised revised letter letter would would be be more more effeetive. effeetive. As As you you can can see, see, it it

captures captures the the 2 2 specific specific actions actions signaied signaled byby Star Star whiie while adding adding a a few few "iI,-1.shfui \1\-1.shful thoughts' thoughts' of of our our own own

thrown thrown in, in, hopefully hopefully to to create create some some momentum momentum and and traction... ... 

\Ve \Ve must must note note that that while while increases increases on on P&A P&A and and PRPs PRPs are are our our obv-1.oUS Ob,,-1.011S focus. focus. there there has has been been 

increase increase on on the the costs costs of of MCC MCC as as well, well, which which get get reflected reflected and and enacted enacted thru thru increase increase in in 'floor' 'floor'

prices. prices. Of Of course, course, this this mechanism mechanism has has largely largely frayed frayed as as suppliers suppliers offer offer discounts discounts off off the the PP PP

levels, levels, due due to to the the current current weak weak market market demand. demand. Yet, Yet, the the raw raw material material and and labor labor costs costs for for Mee MCC 

spiked spiked sharply sharply in in Feb Feb - April April period. period. Though Though sorne sorne of of ihese lhese pressures pressures have have abaled abaled a a bil, bil, OUi OUi

snppliers, snppliers, mainly mainly CEC, CEC, had had to to cover cover themselves themselves for for the the raw raw material material to to produce produce OHr our new new orders, orders,

vvhich vvhich took took a a .sptitt .sptiit as as we we were. wt'rt'. adju.sting adju.sting our our lower lower OHI OHI levd.s levd.s and and slightly slightly revived revived ASP.sl ASP.sl 

Fortunately, Fortunately, due due to to SEt's SEt's dogged dogged patient patient negotiation, negotiation, we we have have mitigated mitigated much much of ofthis this increase increase 

and and secured secured a a fairly fairly positive positive pricing pricing package package for for the the recent recent MCC MCC purchases. purchases. (( These These discounts discounts 

will will bebe reflected reflected inin our our AIC Ale over over the the next next few few days <bys and and should should help help the the respective respective peA PCA for for June!) June!)

YN, N, the the import import market market overall overall would would have have experienced experienced a a certain certain increase increase in in .MCC .MCC costs costs and and asas 

such, stich, I I urge urge each each region region to to reflect reflect a a modest modest increase increase of of say say 4%4% onon AA items items and and 6% 6% onon others, others,

from from 6/15/10. 6/15/10. Though Though :~'v':[CC :~'v':[CC market market is is fragmented fragmented and and somcvvhat somcvvhat free-ranging, free-ranging, I I am am eonfident confident 

SIGMA's SIGMA's lead lead thrll thru regional regional general general price price increase increase letters, letters, followed followed byby increased increased price price quotes quotes will will

bebe readily readily followed followed byby the the regional regional MCC MCC suppliers. suppliers. - ­-

So, So, I I suggest suggest LR LR finalizes finalizes the the attached attached letter letter and and all all regions/SST regions/SST circulate circulate itit ASAP. ASAP. 

Regards, Regards,

'V"cior 'V""I.o1' (J)ais

SIGMA SIGMA Corp. Corp. 

609-758-0800 609-758-0800 x x 555 555 (\V) (\V) 

609-529-2020 609-529-2020 (e) (C) 

VrX£I;:slgrn;::lCO.COln 

SIGTP00006788 S!GTP00006788

CONFIDENTIAL-FTC CONFIDENTIAL-FTC Docket Docke! No. No. 9351 9351

FOIA FOIA Exempt/Protected Exempt/Protected by by Court Court Order Order

CX 1413-001
From: From: Jim Jim McGivern McGivern 

Sent: Sent: MondaYI MondaYI June June 07, 07, 2010 2010 9:42 9:42 PM PM

To: To: Victor Vietor Pais; Pais; M20 M20 

Subject: Subject: RE: RE: VP VP to to LR LR :: Price Price Increase Increase Lettei Lettei 

L<:!iry L<:liiY 

! i 8151'1::'1:' 8gn':::e \~t!th \~t!th Victors Victor:; CQmrnei'it':'~ (Qmrnerit':'~ On Un the the f!Wng~ f!Wng~ it it wil! wil! be be intere:;ting intere:;ting to to he,j1' he,]1' the the vie\f~~ vie\f\f~ :)fthe :Jfthe HM:; HM:; and arid 

lom. -10m. II would would 5iJ\l 5u\l Vict'Jf Vict'Jf isis rip,ht rip,ht iJb'Jut iJb'Jut iJ iJ multiplier multiplier increiJse increiJse on on t~e t~e tittings fittings ~ut ~ut :Jtrlers 'Jtrlers miJ¥ miJy have;j have;j

different different perspective. perspective.

Why Why fire. are. we. we. waiting waiting until until mid mid ,Iuly? ,luly? (:an (:an we we not not say say July July 1~,l ~,) Ilo:;k I ~o(;k forward forward toto other other comment:'> corrrnent:-.; iU1d and then then

gNting gelting the the letter letter oul oul torn'J((Ow. torn'J((Ow. 

Regards Regards

Jim Jim

From: From: Victor Victor Pais Pais 

Sent: Sent: Monday, Monday, June June 07, 07, 2010 2010 6:09 6:09 PM PM

To: To: M20 M20 

Subject: Subject: VP VP toto LR LR : : Price Price Increase Increase Letter Letter

Impor+..ance: Impor+..ance: High High

Larry, Larry,

The The plan plan to to increase increase LIST LIST for for PRP PRP isis sound sOLLnd and and we we should should gogo ahead ahead vvith vvith it, it, to to follow follow Star's Star's

published published move. move. 

FuI' FuI' P-401, P-401, I I am am nut nut sure sure v:hu v:hu isis leading leading the. the. pridng? pridng? Is Is itit C&B? C&B? In In any any case, case, all all invulvt',d invulve,d 

including including Star Star will will have have to to follow foUow too... ...

For For any any FrOs, FrGs, it it will will be be a a confusing confusing situation situation if if we we raise raise LISTs. LISTs. Even Even if if Star Star and and other other suppliers suppliers

like like SIP SIP eLc eLc follow follow sLliL, sLliL, whaL whaL happens happens if if McvV MevV doesn'L'? doesn'L'? There There will will be be confusion confusion in in Lhe Lhe markeL. markeL.

Also, Also, at at present, present, FrC FrC List List is is all all inclusive inclusive - S, S, 1\1 1\01 and and L L size size all all in in one. one. Changing Changing some some and and not not

others others wi!! wi!! be be confusing. confusing. SBl SB1 likely likely suggested suggested raising raising the the mu!tipliers mu!tip!iers... ...

This This may may need need additional additional thought thought - but, but, Tapplaud applaud your your efforts efforts to to improve Improve prIclng pricing... ...

Regards, Regards,

'Haul" 'Haul" 'Pais tJ>ais

SIGMA SIGMA Corp. Corp. 

609-758-0800 609-758-0800 x x 555 555 (W) (W)

609-529-2020 609-529-2020 (C) (C)

v IJ(ii:sigrna.co, corn 

From: From: Iryb4461S0@aol.com Iryb4461S0@aol.com [mailto:lryb4461S0@aol.com] [mailto:lryb4461S0@aol.com] 

Sent: Sent: jVionday, jvjonday, June June 07, 07, 2010 2010 4:37 4:37 Pivj Pivj 

To: To: M2Q M20

Subject: Subject: Price Price Increase Increase Letter Letter 

Guys, Guys,

SiGTP00006789 S!GTP00006789

CONFIDENTIAL-FTC CONFIDENTIAL-FTC Docket Docke! No. No. 9351 9351

FOIA FOIA Exempt/Protected Exempt/Protected byby Court Court Order Order 

CX 1413-002
Before! Before! send send this this out! out! want want your your feedback. feedback. 

Larry Larry

SIGTP00006790 S!GTP00006790

CONFIDENTIAL-FTC CONFIDENTIAL-FTC Docket Docke! No. No. 9351 9351

FOIA FOIA Exempt/Protected Exempt/Protected by by Court Court Order Order

CX 1413-003
LL SlGMA SIGMA Your Your Fittin!! Fittin!! Choice... ... 

-'line June 7, 7, 2010 2010

To: To: Sigma Sigma Customers Customers 

Fm: Fm: Larry Larry Rybacki Rybacki

~ub: C"lh· Nev~r i'-.iO"1:" i;C'f- -r\.-r; ...... .oC' ....... fl 1...1 ....... 1-1 Ar.....l i ~..."rl i .-ca,-r...-.o rl;~-n-'"lo.f.o I:';t-t-~nl5-C" UU_lJ. 1 .... '-'v\' list Il~l 1'1 prices .'V...... on VII .L l--'KI--', 1"-1 , 40 """TV i J and C-UIIo..-l- Large LJU-15...... Diameter LJIC-Ullvl .1 Fittings Ill1116~

Dear Dear Valued Valued Customer, Customer,

A ,.1' 1 • £"l. ,1 .1. .. 

-,-A.LS -L.u-LS \Ve \ve enter enI~r {lIe the Illid IlliG year, :year~ \ve \V~ at aT SiglTIa ~lglna CorporatIon Lorporal10n llope hope {lIar that )'011, you, :yOUT your cornpa.11)', compa.1J.Y, all(l a.1J.U

your your farni1ies families are are doing dotng well well as as we we rneander meander through through another another dif[icul1 dirricul1 year. year.

In In order order toto continue continue providing providing you you \"ith \vith the the le"vel level of of service service that that you von'vp,

.J .........-- ~'ve .­ been

accustomed accustolned to, to, we we at at Sig!na Sigma Corporation Corporation plan plan to to Inake make aa few few adj adj ustlnents ustments to to our our pricing pricing of of .L-"~ __ . ~.L"" ~_.~ __ ~~.-1 __ .... .... __ ~.£1~~ .........1_~ __ ~~~ __ L ~~~L ..a....-...~._..J~ :~_ Ll_~ ~~ __ • .... __ ':~1 __ ~_.
 

U a few' ll;;W of Vl our vw 1J1VUU\.>l:S, products, to LV 11;;1.11;;\.>l reflect the Ull;; 11;;\.>I;;Ul recent cost ~V:>l trends IlI;;UU:S in Ul the lUI;; lUW Ta\V l11aterial, U1Ull;;llUl, CluTency \:Ulll;;lU:y

exchange, exchange, tran.sportation, tran.sportation, health health care care an.d fuld other other operational operational expenses. expenses. The The following following ISIS a a

summary summary of ofthese these changes changes:: 

1. 1. The TIle List List Prices Prices of of all all of of Ollf 01][ Rcstraillcd Restrained Joint JOillt Products Prodllcts v\rill v\I'ill bebe increased illcrcascd byby abol1t about 

1'10/_ 121 -.1.."'::"- Yo. /u. 

2. 2. The The List List Prices Prices of of our our Protecto Protecto 401 401 Lined Lined products products will will be be increased increased byby about about 12%. 12%.

3. 3. The TIle }Jet }Jet Prices Prices of of our Ollr 1'-1I1ullicipal i'-~1unicipal Castings Castillgs includillg including Valve Val'le Boxes Boxes and and 1\1eter i'-~1eter Boxes Boxes 'l.1~11 h,:...J. ~n{·r,:...J.·--lio.:',:....a;fl ·..Jt"--1 r~fJ"~nn·..Jl h·..J ..... ~"-"' \vill T' ...... .1. be IL.)'_ ......... increased, __... _Ll.-U_'-I-, ....... L L-I. .I. _0... '-1".1..1.........1. lL.)' ....... oJ.Lu.


A '1"'1_ _ __ _ 1 __ 1 __ _ f" __ "- ..I _ _ _ 1 1r. T _ __ _1 __ .--... __ --' _ ~11 1_ __ _ _ 1 4. 'to The lIle IIlUlllpIleIS tnultipliers [or lUI DOlneshc LJUIIleSlll: and elIlU 1:..Jon-doInesl1c l'lUIl-UUlIleSlll: RestranllS KeSUalIllS will WIll be ue revIsed. n:VISeU. 

5. 5. The The lTIu1tip1iers multipliers for for Non-DolTIestic Non-Domestic Fittings Fittings ':\lil1 \vill bebe revised. revised. 

The The List List Price Price increases increases \vill will bebe published published in in our our website w"ebsite byby the the stall st311: of of Avv"J.l A\\n.NA - June JLUle 

20,2010. 20,2010. 1he Ihc new new prices prices will will bebe in in effect effect Monday Monday July July 1,2010 1,2010 with with nono exceptions. exceptions. 

Th8nk Th(mk you you for for your your support support 8nd and friendship friendship 8nd and with 8a little little luck luck we'll we'll find find the the next next 0 () ~~~~1~~ l..~++~_ ~t.~~ ~1~~ 1~~4­ months 1I1\.)IILlJ~ bcttcr LlL.LLL-1 than LIlall the LIlLo last. Id~L.

Sincerely Sincerely yours, yours, 

SIGTP00006791 SIGTP00006791 

CO!'JF!DE!'JT!AL~FTC COr-JF!DEr-JT!AL~FTC Docket Dcc!{et No. !"Jo. 9351 9351 

FOL6. !=lIlLl. ExemptfProtected !=v..rnntfPrnt.....toti h" by Court ("nllrt Order lIrtior . - .• - _.,_....... - .. ----~-- -7 --_.- _._-­

CX 1413-004
From: From: Rick Rick Tatman Tatman

Sent: Sent: Thursday, Thursday, June June 17, 17, 2010 2010 8:40 8:40 PMPM 

To: To: Bulcl-I Sulcll Doane Doane (bulch.doane@ferguson.com) (bulcluloane@ferguson.com) 

Subject: Subject: Tyler Tyler Union Union Price Price Announcement Announcement

NON 1\.1(11\.1 DOMEST!C nnl\n~~TI(" FTG I::T~ 7-1-10.pdf; 7_1_1n "",rtf, MC II.Ar- _ 1\1 n"'rY'I.c,e-ti,..,. ~_17_1" rI" v· r _ 1\1\/1\1 ..... Attachments: Attachments: ''''''''''''" ............ 'VIL-....... " ...... ' ._ I I , ..... 1'-'..... " IVI ...... - Non , " Domestic ........... II ............ L1 ......... 6-17-10.docx; II .U , MC .v - NV ,... Non , " 

Domestic Domestic 6-17-1 6-17-1 O.docx; NMC NMC - WA WA OROR ID ID MT MT AK AK Non Non Domestic Domestic 6-17-1 6-17-1 O.docx; O.docx; NON NON 

DOMESTIC DOMESTIC ACCESS ACCESS 7-1-10.pdf 7-1-10.pdf 

O.docx: 

Butch, Butch, 

The The attached attached ietters letters will will gogo out out this this afternoon. afternoon. 

Basically Basically we: we:

•• Moved Moved the the prior prior 0.27 0.27 areas areas to to 0.29 0.29

•• Moved Moved CA, CA, AZAl and and Hi HI from from 0.28 0.28 to to 0.29 11.11 -1 P.llJ -1_... _ J:~ __ ............. _ n,n __ .a.L.._ n ........... .. __ ... '--_~ __1 .1-_ ....1- .1.: ..:. __ 1_•• _1


• Moved IVIUVl::U NV 1'\1 V do"vvn UUVlfl1 from flUll1 U . 0.32 .:JL to lV U.Lj 0.29 as d:::J the lilt:' 0.32 U.JL Wd:::J was no flU even t::VCII Wllt:lt:: where L1U:::Jt:' dose to lU the Lilt:: LUllltJt:lIl1V'l:: competitive level It:Vt:1 

•• Maintained Maintained WA, WA, OR, OR, ID, ID , MT MT and and AK AK @@ 0.32 0.32 

There There '.vi!! vvi!! not not be be <.1ny t.1ny chJnge ch<.1nge inin Domestic Domestic pricing pricing <.1t ZIt this this point

ir Ir you you need need rne rne Lo to cdil cdli and dnd discuss discu~~ rUlthel further please please iet lei rne rne know. know. 

Not Not sure sure ifif you you are are going going toto AWWA, AWWA, but but if if soso II hope hope toto see see you you in in Chicago

Givi Givi && VP VP Tyier Tyier Union Union

r.t~.tr:n_~n.@JyJ.€L~n.i.QD.:_~Q.rn r.!.i'!_tlJ')_'!n.@J'i!.~.r.~D.i.Q!).:_9?rn.

f"- __f'i""_t""II+i.-1 Confidential \.JUI IIIUoc;l lual Mc\lJane-O18585

CX 2440-001
CX 2440-002

Non-DcUTIE!s1tic ... Utility IJtility IFiittings IFiittings

IVh:sp IVhiP LP-S091 l...P ...S091

Eff,&cHve Eff'8clive 7<-10 7<-10

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TYLER UNION') 


Quamy 1I1I3i&fW0<1I<$ Prudllcis 

June June 17, 17, 2010 2010 

To: To: Tyler Tyler Union Union Customers Customers inin the the following following market market areas. areas. 

I\"C ~nc: \fT\fT "ILJ .... ILJ AnA I\J1A DI DI f"", r'<-T "IV'" II..IV .... 1 II nc rH::: r.nr. .. nr\ \//\ \/1\ \1\1\/ \.1\/\1 "If"" .... Ir" Cor- C"',-... r"A r'&1t. [:"1 CI nD no. "I 1\ I r.nC' .. .lie' ,,,. ."'1 IVIC, IVIC, VV I,I, I'll I'll I,I, IVI IV 1"-", ..... , 1'1.1, ~I, VV I,I, 1'\1 1"1 r, r l l'Iv, ."'....,1, LlC, LJl::::, IVILI, IVIU V/",\, vvv, vv, \,;1'-', rL, I"'\L, I I'll, l v,-., VVV l I'lv. I'lv. VV, \,,;IJ"'\, IL, rr\., rr\., /""\L, IVlv, IVlv, 11'1, 

KY, KY, OH, OH, IN, IN, IL, IL, MI, MI, WI, WI, MN, MN, lA, lA, MO, MO, AR, AR, LA, LA, TX, TX, OK, OK, KS, KS, NE, NE, SO, SO, NO, NO, WY, WY, CO, CO, NM, NM,

CA, CA, AZ, AZ, HI, HI, Puerto Puerto Rico Rico 

Re: Re: New New Multipliers Multipliers Effective Effective July July 1, 1, 2010 2010 

Dear Dear Valued Valued Customer, Customer, 

Due Due to to rising rising global global costs costs associated associated with with both both the the manufacturing manufacturing and and importing importing of of non non 

Domestic Domestic iron iron products, products, effective effective July July 1,2010 1,2010 Tyler Tyler Union Union will will be be implementing implementing aa price price increase increase

onon aii aii non non Domestic Domestic audiie ductiie iron iron waterworks waterworks fittings, fittings, giands giands and and accessory accessory products. products. This

in,...rg~~Q \l\Iill hg, ~,..,.."mnli~hQn h\/ ("'h~nng inin nllr nllhlic:hg..... militinli,gr~ fnr th",c:,g nr,,{"I1I,...t~ increase II ._ __ V'/!!! ~~ be accomplished , I '1""""-' - .., by J a change _. ''WI' '-=:1- .. I our _, published 1""" _- multipliers I I '-'''''r-'' 11_' for _ , those ._-- products 1""" --_ ...

against against our our current current List List Price, Price, LPLP 5091, 5091, asas follows: follows: 

Non Non Domestic Domestic - Import Import Product Product Group Group 

.29 .29 Utility Utility Fittings Fittings C11 C11 00 and and C153 C153 (3"- 48") 48") 

.29 .29 Glands Glands and and Accessories Accessories (3"- 48") 48") 

Non Non Domestic Domestic 'Jalve Valve and and Ser.Jice Sen/ice Boxes Boxes -- Call Call for for Pricing Pricing 

We We will will not not bebe implementing implementing any any price price action, action, at at this this time, time, for for our our Domestic Domestic products products 

All All annual annual municipal municipal bid bid contracts contracts will will be be honored honored per per the the terms terms of of the the contract. contract. Jobs Jobs quoted quoted 

prior prior to to today's today's announcement announcement will will bebe honored honored through through July July 31,2010 31, 2010 provided provided orders orders for for

immediate immediate release release have have been been received received onon or or prior prior toto July July 31, 31, 2010. 2010. 

IfIf you you have have any any questions questions regarding regarding this this announcement, announcement, please please contact contact your your local local Tyler Tyler Union Union 

territory territory manager. manager. We We look look forward forward toto continuing continuing toto work work together together to to provide provide you you and and the the 

waterworks waterworks industry industry quality quality products products and and service. service. 

We We thank thank you you for for your your business business and and support. support. 

Jerry Jerry 

ni~ nl~ Jansen Jansen 

j\jationai j\iaiionai Saies Saies ivianager ivianager 

f"- __f'i""_t""II+i.-1 I\JI_\Al n.., Ol:O"7 Confidential \.JUI IIIUoc;l lual Mc\lJans-018587 IVI\,;V v CIIIlOJ-U I UVU I 

CX 2440-003
TYLER UNION') 


Quamy 1I1I3i&fW0<1I<$ Prudllcis 

June June 17, 17, 2010 2010 

To: To: Tyler Tyler Union Union Customers Customers inin Nevada Nevada 

Re: Re: New New Multipliers Multipliers Effective Effective July July 1, 1, 2010 2010 

Dear Dear Valued Valued Customer, Customer, 

Due Due to to rising rising global global costs costs associated associated with with both both the the manufacturing manufacturing and and importing importing of of non non 

Domestic Domestic iron iron products, products, we we announced announced aa price price increase increase for for many many of of our our market market areas. areas. 

Aithough Although we we are are seeing seeing increased increased costs, costs, we we are are aiso also committed committed toto keeping keeping our our customers customers 

competitive competitive within within their their market market areas. areas. AsAs such, such, effective effective July July 1, 1, 2010 2010 Tyler Tyler Union Union will will bebe 

implementing impiementing aa price price decrease decrease onon aii aii non non Domestic Domestic duciiie ductiie iron iron waterworks waterworks fittings, fittings, giands glands and

accessory ~,..,...,g~~nn.1 products. nr",rill,..t~ This Thi~ decrease ng,...rg~C:Q wi!! \Alill be hg, accomplished ~,...("'nmnli~hQn h\J by a change ("'h~nng inin our nllr published nllhlic:hQrI --------• .J -- 11,.- __ _- ". -- ., _ -J"'" _,I '='_ III __ , _ .... 

multipliers multipliers for for those those products products against against our our current current List List Price, Price, LP LP 5091, 5091, as as follows: follows:

Non Non Domestic Domestic - Import Import Product Product Group Group 

.29 .29 Utility Utility Fittings Fittings C11 C11 00 and and C153 C153 (3"- 48") 48") 

.29 .29 Glands Glands and and Accessories Accessories (3"- 48") 48") 

Non Non Domestic Domestic 'Jalve Valve and and Ser.Jice Sen/ice Boxes Boxes -- Call Call for for Pricing Pricing 

We We will will not not bebe implementing implementing any any price price action, action, at at this this time, time, for for our our Domestic Domestic products products 

All All annual annual municipal municipal bid bid contracts contracts will will be be honored honored per per the the terms terms of of the the contract. contract. IfIf required, required, jobs jobs 

quoted quoted prior prior toto today's today's announcement announcement will will be be honored honored through through July July 31,,2010 31,2010 provided provided orders orders for for

immediate immediate release release have have been been received received onon or or prior prior toto July July 31" 31, 2010. 2010. 

IfIf you you have have any any questions questions regarding regarding this this announcement, announcement, please please contact contact your your local local Tyler Tyler Union Union 

territory territory manager. manager. We We look look forward forward toto continuing continuing toto work work together together to to provide provide you you and and the the 

waterworks waterworks industry industry quality quality products products and and service. service. 

We We thank thank you you for for your your business business and and support. support. 

hf~ hl~
 Jerry Jerry Jansen Jansen 

j'-iationai j'-Jationai Saies Saies ivianager ivianager 

f"- __f'i""_t""II+i.-1 I\JI_\Al n.., Ol:OO Confidential \.JUI IIIUoc;l lual Mc\lJane-O IVI\,;V v CIIIlOJ-U 18588 I UVUU 

CX 2440-004
TYLER UNION') 


Quamy 1I1I3i&fW0<1I<$ Prudllcis 

June June 17, 17, 2010 2010 

To: To: Tyler Tyler Union Union Customers Customers inin WA, WA, OR, OR, ID, ID, MT, MT, AKAK 

Re: Re: Non Non Domestic Domestic product product multipliers multipliers 

Dear Dear Valued Valued Customer, Customer, 

Due Due to to rising rising global global costs costs associated associated with with both both the the manufacturing manufacturing and and importing importing of of non non 

Domestic Domestic iron iron products, products, we we announced announced aa price price increase increase for for many many of of our our market market areas. areas.

Aithough Although we we are are seeing seeing increased increased costs, costs, we we are are aiso also committed committed toto keeping keeping our our customers customers 

competitive competitive within within their their market market areas. areas. AsAs such, such, wewe will will not not be be adjusting adjusting our our published published multipliers multipliers

for for your your market market areas. areas. Our Our published multipliers will remain remain as as per per below against against our our current current

List List Price, Price, LPLP 5091. 5091. 

pubiished muiiipiiers wiii beiow 

Non Non Domestic Domestic - Import Import Product Product Group Group 

.32 .32 Utility Utility Fittings Fittings C11 a and and C153 C153 (3"- 48") 48")

.32 .32 Glands Glands and and Accessories Accessories (3"- 48") 48")

Non Non Domestic Domestic Valve Valve and and Service Service Boxes Boxes - Call Call for for PriCing PriCing 

VVa "-iVa lvvill vy'ili also also not not be be implementing implementing any any price price action, action, at at this this time, time, for for our our Domestic Domestic products products 

IfIf you you have have any any questions questions regarding regarding this this announcement, announcement, please please contact contact your your local local Tyler Tyler Union Union 

territory territory manager. manager. We We look look forward forward toto continuing continuing toto work work together together to to provide provide you you and and the the 

waterworks waterworks industry industry quality quality products products and and service. service. 

We We thank thank you you for for your your business business and and support. support.

/ jj 

~\1'~ ~Y"'~

// / / /

Jerry Jerry Jansen Jansen 

National National Sales Sales Manager Manager 

f"- __f'i""_t""II+i.-1 Confidential \.JUI IIIUoc;l lual Mc\lJane-O 18589

CX 2440-005
CX 2440-006

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Non lDornestic )l,cclessories 

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Eff'ecHve 7<-10 
From: From: Rick Rick Tatman Tatman 

Sent: Sent: Saturday, Saturday, June June 19, 19, 20106:43 20106:43 PM PM

To: To: Jeffy Jeffy Jansen Jansen

Subject: Subject: Re: Re: Star Star - New New Fitting Fitting Multipliers Multipliers

Send Send NW NW and and NY NY when when available available 

Sent Sent via via i iPhone Phone

On On Jun Jun 19. 19. 2010. 2010. at at 11 11 :34 :34 AM, AM, "Jerry IIJerry Jansen" Jansen" <JerrvJansen@tvierunion.com>"\Vfote: <JerrvJansen@tvlerunion.com>"\Vfote: 

Fyi Fyi

From: From: Curry, Curry, Rusty Rusty [HDS] [HDS] <Rustv.Curry@hdsuDply.com> <Rusty,Currv@hdsuDply,com>

To: To: Jerry Jerry Jansen Jansen

Seiit: Sent: SatJun SatJun 1908:08:002010 1908:08:002010 

Subject: Subject: FW: FW: Star Star - New New Fitting Fitting Multipliers Multipliers

From: From: Star Star Pipe Pipe Products Products LmojJ.tg.:m.orke.\j.og@.s!oIPiP.eJl[Qd.\!.c1;>,wm]
 LmoiJ.to.:morte,\j.og@.s\oIRiR.eJl[Qd1!.C!;>,wml

Sent: Sent: Friday, Friday, june june 18, 18, 2010 2010 5:53 5:53 Pivj
 Pivj

To: To: Curry, Curry, Rusty Rusty [HDS]
 [HDS]

Subject; Subject; Slar Slar - New New Filling Filling j

vluilipiiers luilipiierS

I[xl [xl ':C-:~i:%;:1 ':C;:~i:%;:1

I II
 

June June /8, IR, 20/0 2010

TO: TO: S'tar S'tar Pipe Pipe Customers Customers in in thefollorJ-'ing thefol/orJ-'inK trading fradinK areas:

AT., AL, AR, AR, AZ, AZ, CA, CA, CO, CO, CT, CT, DE, DE, FT., FL, GA, GA, HI, HI, lA, lA, IT., IL, IN, IN, KS, KS, KY, KY, lA, lA, MA, MA, MD, MD,

~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~

SD, SD, Tlv~ Tlv~ TX, TX, T~4, VT, VT, TfIJ, HI[, rvv; rvv; 1fT 1fT

RE: RE: New New Multipliersjor Multipliersjor FittinKs Fittings and andAccessories Accessories Effective Efli!ctive July July 1,2010

To Tf..) Our Our Valued Valued ('ustomers: ('ustOlners: 

Thefoiiowing Thefollowing lI1uilipiiers multipliers wili wiii bebe effeclive effeclive Juiy July 1,2010 1,2010 and and will wiii apply appiy 1010 our our

Ai:Vi:VA Ai:Vi:VA "Utility "Utility Fillings Fillings && Accessories Accessories Frice Frice I)st" /)st" (UFlfi9.02).The (UFlfi9.02). The Frice Frice I)st /)st

Confidential Confidential Mc\lJane-O18617 18617 

CX 2441-001
_' _ _ _ _ _ _ _ __ .. _ , ' _ _. j .. __ . __ ! . _ _1_ _ _. __ is IS on un uur our weusile web5;ile of Ul Www vvww.:'llarpipeproduc(s.com. ..Hurpl{JepruuuC/S.CUffl. 

iMPORT iMPORT Size Size Muitipiier Muitipiier

Utiiity Uiiiity Fittings Fittings C"j Cii -j 0 0 and and C'i C"j 53 53 3" 3" -- 48" 48" .29 ..29

Accessories Accessories 3" 3" -- 48" 48" .29 .29

Protecto Protecto 401 401 Lined Lined Fittings Fittings All All Sizes Sizes POA POA 

Please Please provide provide your your local local Territory Territory lvfanager lv/Gnager wilh with documentation documentation regarding regarding

any existing quotati()ns. quotations. Municipal Municipal and Annual Contracts C()ntracts will behe h()n()red honoredper per 

the the terms ferms qf L?f the the confract, contract, not no! to to exceed exceed one one year. year.

We -r:Ve remam remain commlffed committed to fo earmng earning your your busmess. business. 

Regards, 13 1 "l :::':;':~::.~~"~'~ """,.co'··- ,"',., .~ ..,.... -_ ..,.. ···"""...... ···,,·"." .. ,·_··~,···I ..""1 

I1 I
 1

Dan Dan1vfcCutcheon lvlcC_:utcheon

'::;1' f -5 ;~<~, I"l"f 

1 

1-- 1--·.-..-....------- -------....------ ------.·----·.- ..----..-....-------.------.------..... .....--....---- ----....------.-------... ...--....---- ----....------ ------....---------

---------··----··-··----··-·-··-I:-.:.~~;_:·~::~..:.·i·:··:~----· ..----..-..----..-.-..-"-.:..~~,-;~::~:..;..:-:.:~----.

This This message message was was sent sent from from Star Star Pipe Pipe Products Products toto .c!:l_?Jy_~~LLy.@_h_g_?~pJ.!ly..:.~gnJ.. _C!,l_?_ty_~~J:f.i"@.h_g_?l,!pJl.!y--'-~gm. ItIt was was sent sent from: fr~m: Star Star Pipe Pipe I:' _._11 ~"'~" ...... ,',~~,"'"~"'~III~ '·'~"'~·"'tI ~, ~' I

I Products. 4018 Westhollow Pkwy. I

1

:~~~~c',. 4018 W",hollow Pkwy. Hoc,'". Houston. TX TX 77082. 77082. Yeo You coo can modifvluodate moMy/c,d", your yO"' ,",,,,;,,;,, subscriotlon I;' via 'h' the link I;ok I1 ,;'1 :",''';.~·oc'',,;·,;··,,:;,·~,~,/:,'',~ 21 ' ....... ''-'·''''''''''1 
 I below. . .." ...., IC-J....... I
 

f"- __f'i""_t""II+i.-1 I\JI_\Al n.., oc.., 0

Confidential \.JUI IIIUoc;l lual Mc\lJane-O IVI\,;VVCIIIlOJ-U 18618 IUV IU 

CX 2441-002
From: From: Rick Rick Tatman Tatman

Sent: Sent: Wednesday, Wednesday, June June 16, 16, 2010 2010 5:18 5:18 AM AM

To: To: Leon Leon G. G. ivicCuiiough; ivicCuliougi-l; JeJeny ....y Jansen Jansen 

Subject: Subject: Price Price Announcement Announcement

Attachments: Attachments: Non Domestic Draft B.docx; Non Domestic Draft i.... doc I\I n nt"\t'Y'ln~+i ..... nr-:lf+ Q rI v· 1\1 n rY\n"ti,..,. nr":'lft 8 nn..... I , I , I ' '-"L I'V "-'. L , I , I , I IOU L' LlI L L ...... 

Tracking: Tracking: Recipient Recipient Read Read 

Leon Leon GG McCullough McCulioug h 

Jerry Jerry Jansen Jansen Read: Read: 611612010 6/16/2010 106 1·06 PMPM 

Leon Leon && Jerry, Jerry,

InIn regards regards toto recent recent communication communication from from Star Star and and Sigma, Sigma, II believe believe our our response response will will be be toto support support aa price price increase increase on on

non non domestic domestic fittings, fittings, glands glands and and accessories, accessories, but but not not toto provide provide any any supporting supporting communication communication onon restraints restraints of of other other 

products. products. 

II believe believe Sigma Sigma is is waiting waiting for for either either aa supporting supporting communication communication from from usus or or anan announcement announcement onon specific specific price price actions. actions. 

At At this this stage stage we we really really have have two two approach approach options: options: 

1. 1. Send Send out out anan "it's "it's coming" coming" communication communication prior prior to to any any further further announcements announcements from from either either Sigma Sigma or or Star Star and and 

then then quickly quickly decide decide onon what what multipliers multipliers we we want want to to publish publish and and send send out out that that announcement announcement by by week's week's end end toto 

which which most most iikeiy likely the the others others will wiii foliow. foiiow. 

2. 2. Send Send out out communication communication supporting supporting the the need need for for aa price price increase, increase, wait wait for for Sigma Sigma or or Star Star to to publish publish new new 

multipliers multipliers and and then then tallow tollow 

The The attached attached Draft Draft A A supports supports options options #1 #1 and and Draft Draft BB support support option option #2. #2. 

! ~m open Jerry's input ~nd Leon's judgment, but! prefer something ~!ong the lines of Dr~ft A. 

11 L _-,-- I _L -,-- L_II :, ...... ! L _-,--L 1 __ -,- 1 I L! .L~ I.LL _! __ ! 1 -'- L_-,-­ i'rn I fli sornewhat ~UITleWlldLCUllcer concerned lieu about dUUUL following I UII UWII II'; Sigrna :)II';ITld UULll both frorn HUHI a d ITldlr<.eL rnarket leadership leduel ~fllfJ fJel perception cefJlIUfI and dflU their Hlell JUUI';HlefiL judgrnent on Ull what Wfld L 

the the proper proper multiplier multiplier structure structure should should be. be. 

Too Too large large of of aa published published increased increased \lv'ould v\I'ould be be difficult difficult for for both both our our customers customers and and other other import import competitors competitors to to take take 

seriously seriously which which might might make make any any degree degree of of traction traction difficult. difficult.

!f If \AJ'O' \-A/e're ...'O going O'nino to tn publish, nllhlieh I'!! I'll need ng.on Thursday Thllr'er'l:::'\1 morning rYInr'nino tn to analyze ~n~I\l7.o data, I'bt~ but hilt my rY!\J gut Ollt sense <::oneo \Alnllirl would be h.o tn to increase in ,.o:::.(:~ the tho n 0.270 /7n " ""', "'" 0 "'0 r"" , ,,' ,. " ', J ·" '··"'0 " 'r J ..., "J c " ..., ", , ,,"'" ..... 

region region and and potentially potentially not not adjust adjust the the 0.32 0.32 markets markets in in the the Northwest Northwest asas even even stock stock orders orders are are selling selling @@ 0.27 0.27 inin that that 

market. market. NV NV is is published published @ @ 0.32. 0.32. and and selling selling @@ 0.23 0.23 soso II might might even even align align NV NV with with CA. CA. 

I'll I'll bebe driving driving toto D<lllas O<lllas in in the the morning morning but but can can be be reached reached via via cell cell or or e-mail e-mail on on my my i-phone. i-phone. 

Once Once we we have have a a general general document, document, Laura Laura can can clean-up clean-up my my grammar grammar and and publish publish under under Jerry's Jerry's signature. signature.

r'1\i1 " \ In T •. I ........ II __ ...... __
 GM 'UIVI & Ol; VP v r I Tyler yl';:;l Union VIIIVII 

rtatman@tylerunion.com rtatman@tylerunion.com 

f"- __f'i""_t""II+i.-1 Confidential \.JUI IIIUoc;l lual Mc\lJane-021685

CX 2442-001
From: MW (Mike Walsh - CRM) 

Sent: Wednesday, March OS, 2008 10:50:17 AM 

To: 'AR1 (AI Richardson-HTN)' 

Subject: FW: VP to AR : RE: SIP & TYLER 

yea....it's about time you started monitoring the mkt pricing! 

From: VP (Vietor Pais - CRM) [mallto:vp@sigmaco.com] 

Sent: Wednesday, March OS, 2008 9:25 AM 

To: Larry Rybacki; RM6 

CC: SBI (Siddharth Bhattacharji-eRM); TB2 (Tom Brakefield - ALX) 

Subject: VP to AR : RE: SIP & TYLER 

Al, 

It's good that we are starting to monitor the mkt pricing -- and equally, sharing 

the info! 

While Tyler and SIP could certainly be lower than the 'MAP' multiplier, we also 

need to keep an eye on the back-end. SIP may not be having much of a traction 

withy the VRs, so they may offer it upfront. The same may be true with Tyler who 

has known to be less aggressive at the VR than Star who in tum has forced us go 

deep... 

Let's keep watching. 

'fIidor(pais 

SIGMA Corp 

609-758-0800 x 555 

609-529-2020 (cell) 

vp@sigmaco.com 

From: AR1 (AI Richardson-HTN) [mailto:ar1@sigmaco.com] 

Sent: Wednesday, March OS, 2008 8:59 AM 

To: Larry Rybacki 

Cc: VP (Victor Pais - CRM); SB1 (Siddharth Bhattacharji-CRM); RM6 

Subject: FW: SIP & TYLER 

Al Richardson 

SW Regional Manager 

Houston, TX 

281-987-1200 EXHIBIT •I :(YO:, s -3 i S ·3 \ .\ 2. .f.\-(V)(],.. 

SIGTP00021606 

CONFIDENTIAL-FTC Docket No. 9351 

FOIA Exempt/Protected by Court Order 

RX-037
 
800-999-0109 

281-987-0200 Fax 

-----Original Message---­

From: GCl (Glen Chaissan-HTN) 

Sent: Wednesday, March OS, 2008 7:57 AM 

To: ARl (AI Richardson-HTN) 

Subject: SIP & TYLER 

For what it is worth, I was told by HDSWW on Thomas Rd. that Tyler and SIP were at a .26 and 

only us and STAR are holding the .28. 

This is only a verbal acknowledgement and no proof in the form of letters from either mfg'r. I'm 

not sure how much we could believe them, but 

they called me back about an hour later after I had inquired about who's doing what in the market. 

Let's see if anyone else comes up with 

similar information but again, without written proof, it's hard to accept at this point. Could just be a 

plot to try and get us to react.... 

As usual, they wanted anonymity on the info. 

Glenn 

SIGTP00021607 

CONFIDENTIAL-FTC Docket No. 9351 

FOIA Exempt/Protected by Court Order 

RX-037.0002 
, EXHIBIT 

SRHW-00419 

RX-053 
From: Long, Thad G. 

sent: Friday, Apri/25, 2008 4:<16 PM 

To: 'Tom Brakefield'; 'TB2@sigmaco.com'; 'VP (Vidor Pais - CRM)'; 'Dan McCutcheon'; rtatman@tylerunion.com; 'Gary 

Crawford' 

ce: Herren, K. Wood; McKIbben, Michael D. 

SUbject: 

Gentlemen: 

This morning there was a conference telephone can to discuss certain issues relating to DIFRA member reporting of data. 

in which the participants were Tom Brakefield and VlCI:or Pais (Sigma), TIck Talman (Tyier-McWane) and Dan' 

McCutcheon (Star). Gary Crawford of U.S. Pipe was out of the country but had previously said he would accept whatever 

decision was made concerning these reporting issues. The subjects of the telephone call were: (1) the format of the 

reporting fonns and reporting standards for assuring that data were being reported in a consistent manner across the 

various reporting companies; and (2) the geographic area of sales to be included in the reporting data. A consensus was 

reached on all these outstanding issues, and I am undertaking in this email to summarize the conclusions reached and to 

integrate them with previous decisions and reiterate them in a single comprehensive summarizing email herein. 

1. Reporting Area Geographically, and Reporting SUbject (Shipments, not sales). The geographic extent covered by 

the reporting would include shipments in tons (short tons - 2.000#) of the entirety oUlle United Slates and Puerto 

Rico, but excluding all of the restat the world. For example. neither Canada nor Mexico, nor Central America, nor South 

America nor the Caribbean would be included. but Alaska, Hawaii and Puerto Rico would be included. Please note that 

SHIPM.ENT figures should be used. rather than sales figures. since sales can be canceled and never shipped, and sales 

could reflect items whose shipping date is so far in the future as not to reflect reliably current economic activity in the 

products. Reporting forms have been attached. 

2. Elimination of Duplications in Reporting. Reporting companies would exclude. from reported shipments, all 

shipments to other DIFRA members who also report. Thus if member A ships to member B, member A would subtract out 

of its report whatever the shipments were to member B; but when member 8 ships the items it has purchased from 

member A, member B would report those shipments. In that manner, there will be no duplication of shipments of the same 

items from two companies which each make shipments at the same physical items. To elaborate further. if a DIFRA 

member ships to another ductile iron fittings supplier which is NOT a DIFRA member (such as a smaller importer of 

ductile iron fittings), the shipping member WOULD report that shipment, because there would be no duplication in any of 

the reported sales data. since the purchaser in this example in not a DIFRA member and would not be participating in 

supplying data. 

3. Definition. "Non-Flange fittings· mean mean all types of fittings, specialty or otherwise, which are not flanged fittings. 

such as MJ, restrain. grooved and flanged conf'9urations (such as MJ & flange, TJ & flange. etc.) 

4. Commencement ot Reporting, TImeframes, and Rep<>mng Deadlines. It was determined in the conference call that 

reports would be submitted by al/ DIFRA members no later than May 15. 2008 (which would reflect data for April 2008 and 

2 

SRHW·00420 

RX-053.0002 
•
 

for prior time periods as will be indicated below), and that monthly reports would thereafter be made by the 15th calendar 

date of each month for data referable to the immediately preceding calendar month. The initial reports which would be 

filed by May 15, 2008 would also reflect some "catch-up" data for the years 2006 and 2007. For the year 2006, it is 

necessary only to report annual aggregate data for that entire year. For the year 2007, monthly data should be reported to 

that year-te-year variations can be ascertained relative to 2008. At this time, DIFRA has elected to utilize the accounting 

firm of Sellers Richardson Watson Haley & Logan LLP CPA, 2100 Southbridge Parkway, Birmingham, AL 35209, to 

compile the data and to report back to each member, monthly, aggregate data only with no information provided as to 

sales by any single company. The data should normally be sent to the attention of Rick Haney at Sellers Richardson, 

unless otherwise advised. 

I would appreciate your comments on the reporting forms and the criteria which govem the filling out of the forms, as set 

forth above. I look forward to hearing from you when you have had an opportunity to review this email and its attachments 

to be sure I am accurately reflecting the decisions you have made. Thanks. My best. Thad Long 

Thad G. Long 

For Attorney Profile click below. 

Thad G. Long 

Confidentiality Notice: This e-mail is from a law fnm and may be protected by the anomey-client or work product privileges. !fyou have received this message in error, please 

nmify the sender by replying 10 this e-mail and !hen delete it from yoor computer. 

3 

SRHW·00421 

RX-053.0003 
Ductile Iron FItting Research Association 

Schedule of Ductile Iron Waterworks FIttings (Trade Tons Shipped) 

For the Year Ended December 31, 2006 

total 

bQ!!.§ 

Member Name 

2",12" 

Flanged a 

All Other 

14"·24" 

a 

Flanged o 

All Other 

> 24" 

Flanged 

All Other 

Total Trade Tons ShIpped o

a 

a

a 

en 


 


 N 


 o
 

U'I 

Colo)

.
 

o

o

o
 

I 3/1/2012 
Member Name 

2"-12" 

Flanged 

All Other 

14"-24" 

Flanged 

All Olher 

> 24" 

Flanged 

All Other 

Total Trade Tons Shipped 

en 

;:0
 

:I:
 

I 

o 

o 

(11 

. 

w

o 

o 

o 

(11 

Ductile Iron Fitting Research Association 

Schedule of Ductile Iron Waterworks Fittings (Trade Tons Shipped) 

For the Year Ended December 31,2007 

ll!ll. E!!t. Mar ARL Mav Jun Jul Ayg §.w. Q.£l !i!ri Dec YTD 

0 0 0 0 0 0 0 0 0 0 0 0 0 

0 0 0 0 0 0 0 0 0 0 0 0 0 

0 0 0 0 0 0 0 0 0 0 0 0 0 

0 0 0 0 0 0 0 0 0 0 0 0 0 

0 0 0 0 0 0 0 0 0 0 0 0 0 

0 0 0 0 0 0 0 0 0 0 0 0 0 

0 0 0 0 0 .0 0 0 0 0 0 0 0 

I 

3/1/2012 
en 

;:.u

::x: 

:E.
 

o 

N 

I 

o
 

(11 

.
woo

o 

en
 

3/1/2012 
.
 -<­

Ductile Iron FittIng Research Association 

Schedule of DucUle Iron Waterworks Fittings (Trade Tons Shipped) - 2008 

mn Em. MiL Am.. Mu. .lYn Jul AYg §.1m Oct M2.x Q!.!< IQtal Year 

Total DIFRA - 2007 

2"-12" 

Flanged 0 0 0 0 0 0 0 0 0 0 0 0 0 

All Other 0 0 0 0 0 0 0 0 0 0 0 0 0 

14"·24" 

Flanged 0 0 0 0 0 0 0 0 0 0 0 0 0 

All Other 0 0 0 0 0 0 0 0 0 0 0 0 0 

> 24" 

Flanged 0 0 0 0 0 0 0 0 0 0 0 0 0 

All Other 0 0 0 0 0 0 0 0 0 0 0 0 0 

Total Trade Ton. Shipped 0 0 0 0 0 0 0 0 0 0 0 0 0 

4i!L. Feb Mar ARL !'!'!n. 4.!m 4Y! A!!.9 Nov Dec YTD 

(f) 

:::I: 

<J1 

I 3/112012

o 

(11 

. 

w

o 

o 

o 

.......
 
4.
 

RX-144
 
actually are the ones from USP who coordinated USP outsourcing with them. They are 

very qualified and did a great job for USP. USP had work at Glidewell that we moved to 

Eureka, as we found Glidewell difficult to work with. McWane has quite a bit of stoke 

with Glidewell as a result of their V&H volume booked there. It is my opinion that 

fittings do not fit well at Glidewell and business would need to be very bad for them to 

actively seek fittings work. Compared to what they currently make, fittings are a poor 

mold yield. If I remember correctly, Glidewell sells off of "mold revenue" and this would 

cause the fittings price per pound to be quite high. 

2.	 Southern Ductile is a very capable facility for what they do. Unfortunately, their 

molding equipment does not lend itself to a wide size range of fittings. I think they have 

(3) Hunter 20 molding lines that can only make some 4 and 6 inch fittings. These are 

f1askless molds. They also have a BMM cope and drag line that might be able to make 

12 inch fittings, but I do not know the flask depth. If it is less than 12 over 12 then it 

would be limited to 12 inch flange and maybe 16 inch MJ. Obviously, this is just my 

opinion based on past fitting manufacturing experience. 

3.	 The 4-12 inch fittings should be made on a Disa if we want the best possible cost per 

pound. Unfortunately, we do not have access to any Disa fittings tooling that I am 

aware of. A set of tools, patterns core box and changeable ends, for MJ and Flange 

tooling would cost about 30-40 k each. We would need to conduct an analysis to see if 

this option would be a sound business decision. 

4.	 Lost foam fittings might be a good solution to the machining Issues below. Mueller In 

Albertville probably needs the volume. A set of tooling for foam is not much different 

than what is required for a DISA and the cost per pound is about the same. I think MA 

could make up to 16 inch with their existing equipment. MA also has equipment for 

machining flange fittings. 

MACHINING: 

1.	 We currently do not have the equipment at any of our facilities to machine flange 

fittings. The simple way to handle this is with HMC's (horizontal machining centers). 

They offer the most flexibility, but could be a thru put issue if the volumes are large. 

2.	 We do not have the equipment, and we will also find that most of the casting producers 

do not have the equipment, to drill bolt holes in MJ fittings. All of the USP tooling is set 

up so that this drilling is required. None of the bolt holes are cored. 

3.	 Specialty equipment for these machining functions might be available on the used 

market, but it would be hit and miss. 

LINING and PAINTING: 

1.	 You should be aware that neither Glidewell or Eureka were interested in cement lining 

or painting USP material. I think that Eureka would be more receptive to the idea 

especially if we could book enough business with them. However, machining is required 

prior to lining and most commercial foundries do not have this capability. 

2.	 We could ship castings to AU< and gear up m26 for the lining and coating. By gear up, I 

mean that we would have to invest in the plant and equipment to minimize our labor 

cost. Depending on the volume of fittings to be processed, there could be some 

environmental concerns. However, any environmental issues will be much easier to 

handle in Coosa County AL than any of our other locations. 

3.	 I have been asking Mike Hayes when ACIPCO is going to give us the opportunity to move 

into step two of our ASD plan, which includes the opportunity to process fittings on the 

CONFIDENTIAL-FTC Docket No. 9351	 SIG -0006164 

RX-144.0002
 
ACIPCO property. He is receptive to the idea, but has not helped move this process 

along. Environmentally, this will be a much longer lead time than ALX. 

Please do not think I am being pessimistic about the possibility of domestic fittings 

manufactured by or for Sigma. I just thought I should give you a quick overview of what my 

experience tells me we should all be aware of. 

Thanks, 

Stuart 

From: VP (Victor Pais-CRM) 

sent: Friday, April 24,2009 8:10 AM 

To: OEMS 

Cc: SB2 (Stuart Box - CRM); Ron J. Douglas (ron@drmetals.com) 

Subject: VP to OEM team : BA Options 

Attn :OEMS cc: SB2 + RJD 

As we are winding down our campaign to extract a waiver for the BA eligibility with the 

EPA, I don't see much hope for any general waiver nor for even the Large size range. EPA 

just doesn't seem amenable to issue it as such based on whatever presentations we make 

-- relying on the market place + their readiness to issue the waivers on a case by case 

basis on merits... 

Our only 2 credible choices for a BA alternative source: 

1. Korea -- as Korea is one ofthe 38 countries who qualifythru the GPA (Govt Purch 

Agrmt) route as they have signed reciprocal buying agreements with USA, but perhaps 

the ONLY one among the 38 who has a competitive foundry footprint. Of course, we 

were active in Korea with a full range of CllO AWWA Ftgs between 97 - 03, when they 

became expensive and we moved it all to China. (Unfortunately, Mexico does NOT 

qualify, even thru NAFTA, as the latter had language to bar NAFTA useforfunding 

thru US grants and loans. It qualifiesfor US Govt's direct buying, which is minimal!) 

2. USA: Use the patterns we have from ACIPCO and USP and produce domestically. 

We now need to get into a full action phase as we have just about sufficient time as the 

ARRA is just heating up, but may not have much time! 

Yesterday, Mitch and I had a long talk with RJD who had called to mention a real 

possibility with the Southern Ductile Foundry unit of Citation, who is nearing 

bankruptcy. SDF is said to be very profitable and has a good order book -- but, may be 

getting throttled under Citation's debt burden... 

During this chat, he also mentioned that McWane has approached Glidewell, a reliable, 

steady and independent No Bake foundry in AL -- to explore the feasibility for LIS 

fittings. 

CONFIDENTIAL-FTC Docket No. 9351 SIG ·0006165 

RX-144.0003
 
.. ' 

I SUGGEST WE EXPLORE AVIABLE OPTION TO PRODUCE FroS FOR SIGMA IN A 

DOMESTIC FOUNDRY USING THE PTNS FROM USP/ACIPCO AND EVEN 

METALFIT (AS THEY WON'T BE ABLE TO USE THEM AT HOMEI) SO WE CAN 

OFFER A BA BRAND! 

We should also explore producing a DOM-Restraint range, for which we may have to 

produce glands in US, with inserts and bolts from China. This combination is definitely 

admissible under the BA guidelines. We may have to also explore the legality of 

importing all the 3 parts here and assembling -- with the logic that individually these 

parts are not functional or sol 

I suggest we have a conf call to brainstorm these options and I suggest Monday 4/21 as I 

will be away 4/22 - 4/23. 

SB2 + RJD--> Please advise any likelyfoundry who can produce FTGs using the 

existing patterns. In this climate, we should be able tofind suitablejacilities. We may 

also be able to offer Tyler the LIS thru our production! 

Any and all views are welcome. We need to have a suitable sourcing response/plan for 

ACIPCO and USP -- beyond the individual waivers and the 5% deminimus option which 

may be used on some jobsl 

Regards, 

1'ictora'aU 

SIGMA Corp
 

609-758-0800 x 555
 

609-529-2020 (cell)
 

yp@sigmaco.oom 

CONFIDENTIAL-FTC Docket No. 9351 SIG ·0006166 

RX-144.0004 
DECLARATION OF LARRY RYBACKI
 

I, Larry Rybacki, declare as follows: 

1.	 I am currently Vice President ofSales and Marketing for Sigma Corporation ("SIGMA''). 

I have held this position since 1990. As Vice President of Sales and Marketing, I was 

intimately involved in SIGMA's analysis of the possibility of entry into the domestic 

ductile iron pipe fittings market and in the decision to enter a Master Distribution 

Agreement ("MDA'') with McWane Inc. I make this declaration based upon my personal 

knowledge. . 

2.	 SIGMA is an importer of waterworks products including ductile iron pipe fittings. 

SIGMAis not a manufacturer. Rather, SIGMA relies on foreign third-party foundries to 

produce fittings. SIGMA then distributes these foreign made fittings to its customers. 

Experience at NAPPCO 

3.	 Prior to working at SIGMA, I worked for the North American Pipe Prod~ts Company 

("NAPPCO") from 1977 until 1990. I worked my way up through NAPPCO to become 

Vice President of Sales and Marketing. While I was employed there, I was aware of the 

company's efforts to build a domestic foundry to manufacture fittings. The foundry 

project proved to be exorbitantly expensive and time consuming and. led ultimately to 

NAPPCO's bankruptcy. In the final year of NAPPCO's existence, I was promoted to 

President, and helped to liquidate the company. 

An.lUis orEmry into Domestic Ductile Iron Pipe fitti.- Showed that SIGMA's Enta 

was Unrealistic 

4.	 In 2008, SIGMA's core ductile iron pipe 1;ittings ("DIPF') business was substantially 

weakened by the economic crisis. SIGMA's business model relies heavily on the subdivision housing market. In the ten years prior to 2008, approximately 60% of SIGMA's 

business was tied to housing work. Beginning in 2008, the economic crisis devastated 

the hOlJSing market, and as a result SIGMA's core business. 

S.	 In early 2009, I learned of the "Buy American" clause in the American Recovery and 

Reinvestment Act ("AR.RA"). SIGMA believed the ARRA would lead to a short-term 

spike in demand for domestic fittings for a limited period of time. Because of SIGMA's 

loss of core business and the promise of new business in the domestic market, SIGMA 

researched the possibility ofselling its own domestic fittings to its customers. 

6.	 Two hurdles that SIGMA identified early on were the overwhelming cost of production 

and the long time line that would be necessary to bring a full product line to its 

customers. 

1.	 I estimate that STOMA would have needed to invest ten to twelve million dollars to 

produce a fun line of fittings. See, e.g., Exhibit [I] (SI0-0002150; SIG-0004703). In 

fact, producing the "A" items alone would have required an investment ofapproximately 

five to eight million dollars.. 

EXHIBIT 

Bjb(J..~ )3
 S-I'i-I~

RX-284
 
8.	 The high prohibitive cost of domestic production was discussed at a SIGMA board 

meeting in BQston. SIGMA was h~vily burdened with debt, and could not borrow the 

necessary capital expenditure to produce a full line of domestic fittings without violating 

its debt covenants. See Exhibit [2] (September 9, 2010 letter to FTC regarding debt 

covenants). And producing only a partial line was not a viable option because itwould 

have prevented SIGMA from bidding on many of the domestic projects that were funded 

by the ARRA. Our customers almost always look to a single source to fulfill an order 

and are reluctant to split a job into piecemeal orders, even if the customer has to place the 

order with a supplier that is not its first choice. 

9.	 Because SIGMA was an importer and distributor of fittings, SIGMA had no 

manufacturing experience. Manufacturing a full line of ductile iron pipe fittings is a 

specialized process that requires a number ofdistinct steps. For example, designing and 

fabricating the tooling that a foundly will need in order to make castings is necessary for 

each individual fitting and often individual to each specific foundry. The tooling for one 

foundry is not interchangeable with the tooling for another foundry. 

10. SIGMA could not produce a full line of fittings in time to meaningfully participate in the 

spike in domestic demand from the ARRA. Producing a full line of fittings would have 

required several years. Throughout 2009, I believed the spike in deIDand for domestic 

fittings created by the ARRA would last for only about twelve to eighteen months. I 

currently expect the uptick in domestic demand for fittings to fade by the end of2010. 

By the time SIGMA brought a credible line ofdomestic fittings to market, the ARRA and 

the increased demand for domestic fittings would likely have passed. SIGMA decided 

that, among other things, the overwhelming cost of production and the risk that SIGMA 

would entirely miss the spike in demand made entry unrealistic. 

11 ..	 My concerns regarding the time line for domestic production for fittings have been born 

out in part by SIGMA'8 experiences in trying to pursue domestic production of pipe 

restraints ("PRP"). Initially, SIGMA believed a full range of domestic PRP would be 

ready for sale in April 2010. 

12. SIGMA identified two domestic foundries to manufacture different ranges·ofPRP, but 

because of extensive issues regarding machining, tooling, and quality control tests. 

SIGMA was only able to release its first production purchase orders in June 20IO-Over 

a year after SIGMA decided to manufacture domestic PRP. SIGMA's chosen domestic 

foundries have continued to face more production delays due to problems with capacity 

and tooling. SIGMA eventually was forced to pull all domestic PRP production from one 

of the domestic foundries. and currently must rely on only one domestic foundry to 

produce domestic PRP. 

13. Nearly two years after SIGMA decided to manufacture domestic PRP, SIGMA.can only 

manufacture restraints in the 20" to 48" range. Even though a full range ofPRP requires 

fewer items than domestic ductile iron pipe fittings, SIGMA vastly underestimated the 

capital expenditure and the time required to produce domestic PRP. In the end, SIGMA 

still cannot produce a full range ofdomestic PRP. 

RX-284.0002
 
14. SIGMA's recent struggles with domestic PRP production, as well as my earlier 

experiences with NAPPCO's attempts at building a domestic foundry provide me with a 

unique insight into the high cost and time consuming nature of manufacturing domestic 

castings. I was particularly wary of,SIGMA's research into the feasibility of selling its 

own domestic ductile iron pipe fittings. The necessary and substantial financial 

investment, coupled with the short lead time to get a fuJI-line of fittings to meet the 

ARRA demand were hurdles that SIGMA correctly identified as too high to overcome. 

The MDA Was Good For Customers 

15. In early 2009, after hearing about the ARRA, SIGMA first tried to engage McWllIle in a 

Buy-Sell Agreement for McWane's domestic fittings. McWane offered to sell SIGMA 

domestic fittings at a discount of 5% less than distributor costs. SIGMA declined the 

offer as a S% discount would be unprofitable and likely cause SIGMA to sell fittings at a 

loss. SIGMA also approached McWane about the production of private-l~I,SIGMAbranded domestic fittings on a cost-plus basis. McWane did not accept SIGMA's offer. 

16. Eventually, after months of hard negotiations, SIGMA entered into a distribution 

agreement with McWane that would allow Sigma to sell domestic ductile iron pipe 

fittings to its customers. Without the MDA, SIGMA most likely would have remained on 

the sidelines and would have been.W1able to supply its customers with domestic ductile 

iron pipe fittings. 

17. The MDA was good for customers because SIGMA's extensive distribution network 

increased the size and scope of the domestic market by enabling domestic iron pipe 

fittings to reach more distributors and expanded the purchasing options available to end 

users. Distributors now had competing suppliers ofdomestic fittings, and two inventories 

from which to order. In addition. because SIGMA has superior distributiop capabilities, 

SIGMA can reach distributors that McWane traditionalIy has not supplied. The MDA 

also increased competition between distributors for sales to their customers by enabling 

more distributors to bid against each other for domestic requirement projects. 

18. It is likely that the MDA also enabled McWane to more efficiently meet the spike in 

domestic demand created by the ARRA. Without SIGMA's superior distribution abilities 

and agreement to carry domestic fittings in its inventory, McWane most likely would 

have suffered a oottleneck in production and. delayed delivery of domestic iron pipe 

fittings that were needed for "shovel-ready" ARRAprojeets. The MDA ensured that 

domestic fittings reached more customers faster, andmoreefliciently. 

19. In my capacity as Vice President of Sales and Marketing, I was responsible for 

explaining to SIGMA's customers the MONs rationale. I explained that the MDA was a 

win-win arm's length agreement that would benefit customers through greater 

distribution services and increased access to. domestic fittings from more than one 

supplier. SIGMA's customers responded that the MDA made it easier for them to supply 

jobs that required domestic ductile iron pipe fittings and welcomed the opportunity to buy 

domestic fittings from SIGMA. 

RX-284.0003
 
I declare under penalty ofpeIjury tbatthe foregoing is true and correct 

Executed this 24th day ofSeptember 2010
 

~orthborough. Massachusetts
 

RX-284.0004
 
,

.
 

I, SIDDHARTH B 

1.	 I ani Sigma Corporation's ("SIGMA'') Executive Vice President. I am a member of 

SIGMA's board ofdirectors as well as a shareholder. I make this declaration based upon my 

personal knowledge. 

2. I have worked for SIGMA since 1985 and have held my current position sin that time. 

3. 

\ 4.	 

importing them into the United States, an 

In 2009, in response to the American 

analyzed the feasibility of construe . 

that it sells to its customers.

g items from foreign foundries,

selling them to customers through its regional 

pOSSI . 'ty ofboth strategies.

SIGMA has never manufactured Prior to 

2010, SIGMA's busines 

network ofdistribution hubs. 

5.	 ct ("ARRA''), SIGMA 

DIWF as well as PRP. I 

was part ofthe group ofSI 

6.	 I estimated that it would pendi of between $5 million and $10 million to 

construct a domestic DIWF suppl and that it would take between $0.5 million and 

$1 million to construct a domestic PRP supply chain. 

7.	 SIGMA was unable to pursue both strategies. SlOMA's loan agreements precluded it from 

borrowing the neces investment without breaching its debt covenants. See, e.g., 

8. 

September 9, 201 C regarding debt	 

nstruct a 

elected to 

9.	 encounter fewer productions problems with PRP compared to 

DIWF. as fewer items 0 unique items) are needed for a PRP range to be considered 

complete for sale to U.S. customers. The steps needed to build a domestic PRP supply chain, 

although simpler, are similar to the steps needed to build a domestic DIWF supply chain. 

10. The SIGMA Domestic PRP Foundry Team was formed in January 2009 to survey foundries 

and indentify facilities that could manufacturer do stic PRP. 

11. The teami ed approximately I oun es ose ilities JD1 t be suitable for 

domestic PRP production. The SlOMA Domestic PRP Foundry Team identified 10 of those 

facilities as potentially capable and cost effective manufacturers. 

RX-286
 
12. In the fall of 2009, the SIGMA Domestic PRP Foundry Team. carried out a detailed audit of 

each of the 10 foundry candidates, and selected Akron Foundry ("AFj in Indiana and 

Talladega Foundry ("TF') in Alabama to be SIGMA's PRP contract manufacturers. 

13. SlOMA's audit revealed that AF was able to cast the 3" to 18" PRP and TF was able to cast 

20" to 48". After casting the 3" to 18" PRP at AF, SIGMA would need to transfer the 3" to 

18" PRP to a nearby facility for machining and assembly. SIGMA was unable to locate a 

facility near TF capable of both machining and assembling of the 20" to 48" PRP. SIGMA 

determined that it would need to machine the 20" to 48" PRP near TF and then transfer the 

unassembled restraints to SIGMA's Birmi warehouse for assembly. The machining of 

the castings produced in AF and TF to be t Castings Specialties in Rochester, 

IN and Industrial Machine and I In I pectively. 

15. AF's production line required a different of tooling than that ofTF. AF agreed to have 

the tooling e for 3", 4", 6" restraints, and SIGMA would acquire tooling for 8" to 18" 

from a too er in India and ship it to AF. TF agreed to manufacture the 20" to 36" 

tooling in-house SIGMA agreed to purchase the tooling for 42" and 48" PRP from its 

Chinese supplier. TF also agreed to manufacture any other tooling they required. 

16. Before tooling was p , SIGMA and the foundries wor to . e the shrinkage 

allowance tha: needed. There are industry norms to adjust for ct that the molten 

metal hardens into final shape, but both TF and AF had differing estimates for 

the shrinkag . resolve this issue, SIGMA had to send its existing tooling for 8" and 20" 

from the Chinese PRP manufacturer by airfreight (at an additional cost of $10,000) and 

samples of castings to AF and TF respectively. They used the tooling to make samples and 

confirm our estimate of the shrinkage was correct. It took approximately two months to 

manufacture sample castings and to determine the shrinkage allowance at each foundry. 

sessment was resolved, purchase orders were issued to the 

ers began producing the neces tooling for PRP with the 

oling in Fe 

at minor modifica 

could be produce . agreed to make 

took longer for AF to check out the tooli the 

the tooling. While 1F worked closely together WI Sigma's engineering team on the 

development of samples, AF was less open in having Sigma involved in the sample 

development process. As a result both AF and Sigma did not anticipate c issues which 

were to come up during development process. 

19. SIGMA's development plan required each foundry to send sample 

certain quality control tests to ensure the quality of the domestic PRP. 

2
 

RX-286.0002
 
necessary for the products to meet AWWA specifications, as well as industry accepted 

approvals from Underwriters Laboratories (''ULj and Factory Mutual (''PM'). 

20. TF complied with SIGMA's quality testin rogram and provided the material samples and 

requested reports. 

21. AF agreed to acquire'a spectrometer and a tensile testing machine, relatively common pieces 

ofequipment used to test the chemical and mechanical. composition ofthe ductile iron metal. 

Unknown to SIGMA, AF bad only leased the spectrometer for three months and quietly 

returned the equipment wi ing SIGMA. They were unable to provide verification of 

their metal uality as requi e ASTMA A536 standard 

22.AF 19ma found that the samples 

to ec .cal) followin .ch we had UL 

and Sigma engineers. cleared the 

faciliti 

23. In June of 2010 SIGMA moved out of the development stage and released production 

purchase orders to AF and TF. TF began production immediately, but AF ran into additional 

problems that significantly delayed their production. 

24. AF delayed ordering cores and informed SIGMA that the tooling would need to be repaired 

again. AF requested that SIGMA pay for some ofthe costs ofthese repairs. SIGMA agreed 

to do so in order to ke duction deadlines from slipping again. 

25. AF then informed SIGMA that i 

postpone the production of 

26. Shortly thereafter, AF r I ofthe orders for PRP outside ofthe 

3" to 12" range. This n IOMA to again look for suitable foundries. SIGMA 

complied and released orders m to 12" range for AF GMA also supplied AF with a 

list ofmgent orders in this range to fill immediately. 

27. AF infonned SlOMA that it would notp 

ramp up production gradually, starting s 

". AF also infonnedSIOMA that it could n 

urchase orders due to production limitatio 

reView the production problems with the straints. 

28. Aro .s tim F encoun ems with electrici . bilitY that slowed 

production capacity. They had to limit their melting to night times to take advantage of the 

off.peak load electricity rates and hence limiting the number ofmolds they could roduce. 

29. Once AF's production problems were resolved, AF· ran a produ . n b 3" and 6" 

restraints. Neither batch met SIGMA's minimum requiremen f the material grade. In 

addition, AF was unwilling to pure necessary test equipment it had previously agreed to 

purchase. AF thereafter asked SI for additional financial support to purchase the 

neces equipme 

3
 

RX-286.0003
 
30. In early July, AF abruptly stopped all PRP production and told SIGMA that it was not 

interested in producing domestic PRP in any size or configuration. At first the owner of AF 

would not give any reason for his abrupt decision and SIGMA bad to approach AF's partner 

in Massachusetts to intervene and he said that AF would produce PRP only ifSIGMA agreed 

to a price increase and provided additional financial support with lwnp smn payments. 

SIGMA agreed to provide additional support if to resolve its production quality 

issues. After a few weeks of trials, AF again halted production and decided to abandon the 

PRP project altogether. 

31. SIGMA was forced to quickly determine whether other foundries could be brought in to 

replace Akron. Ultimately, SIGMA determined that AF's range was b ferred to TF so 

that we did not have to monitor too many suppliers. This decisio e with severe 

reservation SI the production line to be used in TF had been mo 

estimate that GMA lost approximately $25,000 through the· atio 

or a . e. I 

This does not include lost business, the need for new tooling as . g tooling was made 

exclusively for AF or the cost increase due to transportation of castings from Alabama to 

Indiana for machining. 

32. SIGMA is transferring the tooling from AF to TF. TF has begun making samples of 4" to 

12" PRP for quality approval. The 14" to 18" tooling is currently being reworked to suit the 

TF machines at least on a temporary basis till such time new tooling is made. SIGMA 

expects that sampling and testing for the 4" to 12" restraints to be completed by the end of 

September 2010. In addition to this since the machine and assembly shop approved for sizes 

4-18 is in Rochester, IN Sigma is shipping the castings all the way from Talladega, AL to 

Rochester IN incurring additional cost 

33. Approximately twenty one months after deciding to supply domestic PRP, SIGMA is only 

able to fill orders for restraints in the 20" to 48" range, approximately 10 unique items. The 

process has required significantly more management oversight and financial commi1ment 

from SIGMA than initially anticipated. 

34. SIGMA's experience with building a domestic supply chain for PRP is typical for any new 

casting production involving foundries. Based on my 25 years of ex .ence in managing 

. not 

estic 

•gn supply c . for D , SIGMA would have undoubtedly ex 

de ays blems with U.S. foundries ifSIGMA 

DIWF. 

I declare under penalty ofperjury that the foregOing is 1rue 

Executed this 11 day of September 2010 

Cream Ridge,W 

RX-286.0004
 
EXHIBIT
 

DECLARATION OF TOMBIlAKEFIELD 

1, TOMBRAKEFffiLD, declare as follows: 

1.	 Since November 2003, I have been employed 'at Sigma Coxporation ("SIGMA") as a 

National Sales Manager. Prior to joining SlOMA, I wolked at U.S. Pipe for over 34 years. 

During my tenure at U.S. Pi~ I started as a mail clerk and rose through the sales force in the 

soil pipe and pressure pipe divisions, and was eventually promoted to Sales Manager - Pipe 

in 1998, and Vice President of Marketing and Sales in 1999. In my over 40 years in the 

industry, I have been involved in many industry organizations serving in many different 

capacities from president to committee member. I make this declamtion based upon my 

personal knowledge. 

2.	 As a National Sales Manager for SIGMA, I utilize my extensive experience in the water and 

sewer industry to assist SIGMA managers and sales personnel with planning and strategy. I 

assist SIGMA sales management on key sales relationships with OEM and large distribution 

customers like lID Supply (fonnally Hughes Supply). I also assist in developing 

international sales of SlOMA's products, including ductile iron pipe fittings ("DIPF''}, 

pipeline restrains and special coatings and linings. 

3.	 I was involved in SIGMA's response to the challenges posed by "Buy American" provisions 

ofthe American Recovery and Reinvestment Act ('"ARM''} that was enacted in February 

2009. Specifically, I was involved in helping to orgaDize the Water and Sewer 

Manufacturers Association (WASMA), and engaging with lobbyists to advance SIGMA's 

position. 

4.	 I was also involved in SIGMA's efforts to evaluate options regarding the production of 

SIGMA-branded domestic ductile iron pipe fittings. To this end I evaluated the market 

effects of the ARRA, including effects on the distribution segment ofthe market, as well as 

on the public works segment. Additionally, I assisted evaluating the results of 1he work 

perfonned by Stuart Box and Mitchell Rona in identifying potential options for sourcing 

domestic DIPF from U.S folllldries. 

uation ofthe steps necessary to have do estic DIPF produced on its behalfin 

eet the "Buy America" provisi the ARRA revealed that there 

were several signifi ehall and barriers to overcome. Producing just a' DIPF 

configuration for sale to 0 distribution customers involves a nwn .stinct 

processes. These processes include designing and fabrica~the tooling that a oondry will 

need in order to make castings. Tooling includes patterns, molds and sand core molds for 

each individual fitting configuration. 

6.	 SlOMA bad no captive foundry capabilities in the United States. SIGMA.had to SlD'Vey 

foundries in the U.S. for suitability to pour castings for each individual DIPF configuration. 

SIGMA also needed to find foundries or finishing facilities to machine the castings (i.e. 

5. 

R-SIG-000001 

i!1.60-l.£t>o-SOi!	 dtt:i!O at l.i! d-s 

RX-287 
drilling holes. sanding), cleaning, painting and lining the fittings, and plan for delivery and 

logistiCs for the various processes. 

7.	 Througbit.s slU'VeyofU.S. foundry capabilities,. SlOMA discovered .that 110.·singlefound1'y 

could produCe all. of SIGMA's proj~uniquedomestic DIPFcoofiguratioos,.8nd that 

many foundries were limited in the size and number ofDIPF itemsthat they could produce. 

8.	 To produce a full line of domestic DIPF that SIGMA would bave needed to meet ARRA 

demand, SIGMAestimated.thafit'-VOuldneecftofabrieate approxiJDatcly600. to. 800. unique 

pattemsandtooling.corifigurations.Inthelongerterm,forSIGMAtobave 8 complete linc 

ofDIPF itwouldhave tOaddlldditiona1l200 tc>1400 more pa~andconfigurations. The 

patternsandtoC,)lingareneces.sary to east DIPF. SIGMAoWJlCd ll0pattemsatthe time the 

AlUlA came into being,andluld little experience in design and fabrication ofpatterns. 

9.	 SIGMA.·also lacked experience in cOordinating the ·maDY .• processes needed to manufacture 

DIPF.. Coordination of these processes by several··third-partyvendorlJ·· would·have been 

imperative for SIGMA to have DIPF Irianllfactured in tbeUDited States. 

lO.In.order to. use more than one foundry, SIGMAwould have needed.to have someone else, 

foreign. or domestic, design and fabrieatetooHngforcompatibility with thc produdion 

process ineacbdomestic foundry. .SomefOUlldries.could. notpr()duce •larger size DIPF 

configumtiODS, while other foundries did not· have the facilities for high volwne. production 

ofsmaller size DIPF·configurations. 

11. Many. of the foU1ldriestbatSIGMAevaluated·. for dOJnestic prod.J.lction did not· have the 

macbioin8odinishing cap8bilitiesto complete the: castedDIPF.~I()MAwouldbave needed 

t0t.raIlSpQrtuni"mishedpIPFarouIJ.<ltheC<>\JDUy, or even. across intemati0nalborders,to have 

the DIPFmachined aDd finisbedbefore the DIPFcouldbe sold as dom.estic DlPF in the 

UDitedStates. 

12. A	 picceIJleal approach to Producing domestic DIPF WOuld have required a significant 

manageIDeDt and operationaFeffort in terms ofcoordinatingJogisticstiothfor prodUCtion and 

delivery·.to buyers' •••• Managingthcse logistics would •have imposed ..sigIlificanttangibleand 

non-tangible COstsOD SIGMA., and would have taxed SIGMA's lIl8Ila&~distribUtion

and othernon-financialfesourCes. 

13. It must be understood that SlOMA's historical business model bas been to source DIPF fiom 

fOlDldries in China, India, and Mexico. SIGMA bas neVer been involved in foundry 

operations to produce DIPF. Rather, SIGMA's business model has relied on third-party 

manufacturers and service providers to perform the numerous steps needed to produce DIPF 

for sale in the U.S. water and sewer market. 

14. SIGMA bad DO prior experience in the actual manufilcture of DIPF. and did not have 

substantial engineering or design resources to commit to the domestic production ofDIPF. 

The result was that any domestic production for SIGMA would have required a piecemeal 

approach. 

R-SIG-000002 ~LBO-LE"-SO~	 dtt:~O at L~ dotS 

RX-287.0002 
ARRt\.Pemapd for Domestic DuetiIe Irap Pi"fitth!1jcIwM specific aDd Immediate . 15. In addition to the challenges posed in creating such a segmented supply chain in the United 

States, SIGMA faced a significant timing problem to meet the specific ARM demand The 

ARRA was enacted in February 2009, and SIGMA realized that it would take a few months 

for the ARRA fimds to be awarded. During this tim~ SlOMA made efforts to secure waivers 

from the Enviromnental Protection Agency to allow the use of non-domestic fittings on 

ARRA-funded projects. SlOMA also began its research into finding a domestic 

manufacturing option. 

16. SlOMA would have faced a significant coordination problem if SIGMA bad tried to have 

domestic DIPF manufactured in the United States. Connecting the dots to build a steady 

domestic supply chain for D d have proven extremely difficult for SIO~

particularly in light ofthe specific and immediate demand for domestic DIPF because ofthe 

ARRA "shovel ready" projects. 

17. ARRA funds were targeted at projects that were "shovel ready," and would be awarded in a 

short amount oftime, about one year from the date the ARRA went into effect. To meet the 

accelerated time table, SIGMA would have needed to have domestic DlPF manufactured in 

the United States on a highly compressed timeline. 

18. Meeting	 an accelerated timelinc for entry posed a number of major difficulties. First, 

obtaining the tooling necessary to produce the range ofDIPF configurations that would be 

needed to credibly meet ARRA demand could not be achieved quickly. SIGMA would have 

needed at least four to six months to fabricate the first dozen or so patterns and toolings for 

domestic DIPF. Second, any foundries located in the United States would have needed to 

shift production very quickly to be able to employ the tooling, including testing and other 

preparatory steps, so that SIGMA could meet the ARRA demand for domestic DIPF. There 

was no guarantee that SIOMA and any single foundry, let alone multiple fOW1dries, could 

accomplish these production requirements in the timeftame forced on SIGMA by the ARRA. 

19. There were no options for SlOMA to expedite this entry process. despite SIGMA's efforts to 

locate alternative production capacity. For example, in January and February 2009, Vietor 

Pais and I had discussions with Mike O'Brien. V.P. Sales & Marketin& Jerry Bwns, Sales 

Manager - Ductile Iron Pipe; Skip Benton, Assistant Sales Manager - Ductile Iron Pipe, and 

Mike Hays, Director of Purchasing at ACIPCO about ACIPCO's foundry capacity. Within 

the last several years, ACIPCO had shut down two of three f01mdries that could handle 

production ofa full range ofdomestic DIPF. However, even in the face of potential demand 

arising from the ARRA,. ACIPCO indicated that it was dismantling its idled foUlldries and 

had no interest in putting them back into operation and help· WASMA or SIGMA in 

meeting the new demand ftom the ARRA. ACIPCO indi if SIGMA could find 

other foundries to make larger diameter DIPF, ACIPCO would ve considered sharing its 

patterns for larger fittings in order to increase their capacity for the large diameter fittings 

market. SIGMA, however, found that it was nearly impossible to find- u.s. foundries that 

bad the technical ability to handle larger sized DIPF configurations. Thus, ACIPCO would 

not support WASMA or SIGMA strategy to meet the ARRA demand. Their onl~

consideration was the large diameter segment ofthe market 

tt'f fA.~ ~Il( R-SIG-000003 iU.SO-loE"-SO~	 d~l:~O Ot loa d~s

RX-287.0003
 
,
 

20. During my previous employment at U.S. Pipe, I experienced the difficulties of investing in 

the production of domestic DIPF. In the late 199080 U.S. Pipe examined its Chattanooga 

fitting plant to upgrade the processes used to produ= DIPF, particularly for large size 

fittings. One ofthe reasons for the upgrades was to improve the efficiency of the foundry, 

which was a '100 year old plant with buildings set-up such that the manufacturing line was 

not efficient The upgrades, which took approximately 2 years to complete, included 

upgraded tooling, patterns, robotic grinding, new processes for fusion bonded coatings and 

new conveyor belts for the movement ofDIPF throughout the foundry. Before the upgrades, 

U.S. Pipe had to handle and re-bandled the fitting with front-end loaders that bad very large 

buckets in order to get the fitting from one process in one building to another process in 

another building. The improvements allowed U.S. Pipe to eliminate the loaders and connect 

the upgn1ded processes together. The cost to upgrade the DIPF production processes .at 

Chattanooga alone was approximately $15 to 20 million. 

21. In analyzing its options for domestic manufacturing of DIPF, SIGMA confronted. a highly 

compressed time schedule for domestic fittings demand. The lifespan of the increased 

demand seemed short, and coupled with the need to engage in the management of a 

segmented production process, SIGMA was facing some very high hurdles. Not only would 

domestic manufilcturing ofDIPF have strained SIGMA's:financial resources, but SIGMA's 

human capital would have been. asked to undertake a process with which it had no experience 

in managing. SIGMA has never been involved in the actual manufacture of DIPF, 

domestically or elsewhere. 

22. SIGMA has been importing DIPF for sale in the U.S. for over 20 years. SIGMA's successful 

efforts at selling low-cost jmported DIPF in the U.S. are one ofthe main reasons that the 

domestic supply of DIPF has significantly declined over the last 20 years. Prior to the 

enactment ofthe ARRA in February 2009, SIGMA never attempted to have its own domestic 

DIPF manufactured in the United States, although there were some states and local 

governments that enforced a "Buy American" provision for DIPF. That part of the market 

was and remains so small that it does not merit the capital investment required to produce 

domestic DIPF. 

I declare under penalty ofperjury tbattheforegoing is true aodcorrect 

~~()/J Tom Blaketie .•..• . 

Executed this?:l day ofSeptember, 2010 

In: Birmingham, Alaball1a 

R-SIG-000004 al.BO ... l.£tr- soa dat :ao Ot l.a des 

RX-287.0004
 
From: 

Sent: 

To: 

Subject: 

Attach: 

Rick Tatman <rtatman@tylerunion.com>
 

Friday, April 25, 2008 3:05 PM
 

McCullough, Leon (McWane Executive Vice President)
 

<lmccullough@c1owvalve.com>; Walton,Thomas (McWane Sf. Vice President)
 

<twalton@MH-Valve.com>
 

Sigma Price Increase Letter 5-19-08
 

Sigma Price Inc 5-19-08.pdf
 

Thought you might find this interesting reading. 

• Multipliers vs List Price 

• Increase of Up to 10 multiplier points. 

• The % increase for this region is between 18% and 40% ( Prior multipliers penciled in as a reference) 

• Move to transition to broader regional multipliers 

• Note the comment to eventually get to a national multiplier. 

I believe this is great for helping us achieve our business objective of regaining share while netting price. We can 

talk more next week about strategy. We'll try to gather the other Sigma regional letters and multiplier maps. 

I don't think any of us truly believe that degree of net price will stick. Just this week we had a pretty solid input 

from a Mainline regional manager stating that when Sigma came in pitching the need for this increase they then 

offered to increase the cash discount from 2% to 5% if Mainline would sign up for some incremental volume. We 

already have a hard copy of a Mainline invoice showing 90 day terms. 

Richard (Rick) Tatman 

VP&GM Tyler/Union 

McWane Waterworks Fittings Division 

(903) 882-240 

rtatman@tylerunion.com 

Confidential TU-FTC-0255105 

RX-417 
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Confidential TU-FTC-0255106 

RX-417.0002 
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Confidential TU-FTC-0255107 

RX-417.0003 
Jennifer McDaniel 

From: Rick Tatman [rtatman@tylerunion.com]
 

Sent: Monday, May 05, 2008 3:04 PM
 

To: McCullough, Leon (McWane Executive Vice President)
 

Cc: Walton,Thomas (McWane Sr. Vice President)
 

Subject: Draft Announcement letter
 

Attachments: May Price Increase Draft C.doc; sigma increase.pdf; Current Map 414 08.ppt; Map #4
 

Conservative.ppt; Map #5 Aggressive.ppt 

Leon, 

Per your request, attached is the draft letter I was working on when you called. Also, as a reference I have attached the
 

Sigma letter as well as several multiplier maps.
 

This draft would align with the approach of waiting until the DIFRA data is available before announcing any price actions.
 

I have other draft letters developed in the event we'd elect to announce something sooner.
 

Although the Sigma announcement represented an increase range of 20% to 40%, I don't believe we would follow that
 

lead regardless of the DIFRA data as it would lead to instability.
 

The attached Map #4 is probably the most conservative approach we'd take which represents an overall increase of 8%
 

on Blended products While Map #5 probably is the most aggressive recommendation for this next step with an overall
 

increase of -12%.
 

The current pricing is reflected in the map dated 4/14/08.
 

Thomas and I were scheduled to review this subject today @ 4pm
 

VP&GM Tyler/Union 

McWane Waterworks Fittings Division 

(903) 882·240 

rtatman @tylerunion.com 

1 

Confidential TU·FTC·0266212

RX-419 
® 

May 6,2008 

To: All Tyler Union Utility Customers 

RE: Pricing for Utility Fittings and Accessories 

Dear Valued Customer, 

You have likely heard or read about continued increases in factors of production 

irnpactinq both domestic and global operations. The foundry industry has been hit 

particularly hard with sharp increases in scrap iron, alloys and transportation costs. 

While the financial impact to our business is real, we also recognize there are 

restrictions as to the level and timing at wtlich pricing can be accommodated in the 

market. 

Since several rnisperceptions are starting to circulate, we wanted to send out this 

general communication to clearly define our intention in regards to any future pricing 

actions. 

Before announcing any price actions we can:lfully analyze all factors including; Domestic 

and Clobal inflation, market & competitive conditions within eaell region as well as 

performance against our own internal metrics. We are currently waiting on updates for 

several factors but anticipate being able to complete our analysis towards the middle of 

the month. At that point we will be sendlnq out speclfic letters to each region detailing 

changes; if any, to our current pricing policy. 

For plannin~J purposes only, we expect for regions that do have a change that multipliers 

will increase in the range of 6% upto 16%, effective about 3 weeks after the 

announcement date. As always, annual municipal bid contracts will be honored pet the 

terms of the contract and jobs quoted prior to the announcement date will be honored 

through a specified period provided in the announcement 

Sincerely, 

Jerry 

h1~ ,Jansen
 

National Sales Manager
 

Confidential TU-FTC-0266213 

RX-419.0002 
To FERGUSON Walerworks·Henderson Page 1 of 2 8:33:20 PM 4/2712008 6097581163 Sigma Corp 

i ®SIGMA

! 

J CORPORATION 

I 

! 

Date: April 24, 2008 

To: SIGMA Corporation's Valued Customers 

From.: Larry Rybacki 

SI.lb: Multiplier Increase May 19> 2008 

Dear Fliends, 

To say this year has been a challenge is a gross understatement. With rising 

costs in transportation, labor, medical benefits, raw materials. etc., 2008 will 

certainly be a difficult year for all ofns. Hopefully we wiIlleam something from it 

and be better businesses in the future for having endured this very tough downntrn. 

SIGMA Corporation., like all manufactlirers in the Waterworks lJ.1dustry, has 

been hit with unpxecedented increases in scrap iron prices which have increased 7 

fold in just a few shOlt years. As a result we will be ;rnj~ multipliers up to 10 

multil1lier points depending on your regioll. The increase will take place 011 May 

19, 2008 and your SIGMA Regional Manager will infonn you by letter before the 

end ofApril ofyollt new multiplier. 

We've cut the number of different multipliers across the country down to four 

or five with the ultimate goal ofone multiplier for Fittings (MJ & Push-on. C-153, 

Flanged C-IIO) nationwide in the not too distant future. We can't promise that this 

will be the last increase in 2008, but we can promise we will give you ample 

warning ofany future changes. 

Only orders that are plaoed before May 19,2008 with It specific shipping date 

will be honored and any jobs that are held for release will be subieQt to the 

muitiplie.:.§" 

In conc1usio~ we at SlOMA 1hmlk mY for your loyalty and friendship and we 

wish you all the best during 'these 'trying times in our marketplace. 

Confidential TU-FTC-0266214 

RX-419.0003 
To. FERGUSON Waterworks·Hcnderson Page 2 of 2 8:33:20 PM, 4127/2008 6097581163 Sigma Corp 

:J16So13on VlewAvtl (ElOO!6aaJIl230 

Onttlrlo, CA 91761 1909) 9B3.'1944 ®SIGMA
 FAX: (909) 391-2033

CORPORATION 

April 241 2008 

Utility Fitting & Ac~e5sory Multiplier Adjustment effective May 19, 2008 

Dear Valued NEVADA Customer: 

The multiplier referenced below is to be used against the SIGMA price 

book dated Julyl, 2007. 

Utility Fittings .3 8
 

Accessories ..38
 

Please contact your .regional sales office with any questions.
 

Sincerely,
 

Larry Rybacki
 

2
 

Confidential TU-FTC-0266215 

RX-419.0004 
Confidential TU-FTC-0266216 

RX-419.0005 
ilj (<: 

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Confidential TU-FTC-0266217 

RX-419.0006 
Confidential TU-FTC-0266218 

RX-419.0007 
January 11, 2008 

RE: Pending Price Change for Utility Fittings and Accessories 

Dear Valued Customer, 

Due to continued rising costs, especially within our off-shore operations, we find 

it necessary to increase pricing on Utility Fittings and Accessories. 

As per our prior letter of October 5, 2007, we will adjust pricing by increasing 

multipliers while retaining our current List Price, LP-5072. Letters stating the new 

region specific multipliers will be mailed January 18, 2008. The increase will be 

10% to 12% above the current prevailing multiplier levels on Blended Fittings and 

Accessories and 3% to 5% on Domestic Fittings effective February 18, 2008. 

To help our distribution customers better manage their inventory valuations and 

compete on a more level playing field, it is our intention going forward to sell all 

products only off the newly published multipliers. We will continue to monitor the 

competitive environment and adjust regional multipliers as required to provide 

you with competitive pricing. 

All annual municipal bid contracts will be honored per the terms of the contract. 

Jobs quoted prior to this announcement will be honored through March 1, 2008, 

with acceptable documentation provided to your local Tyler/Union sales 

representative. 

If the current inflationary trends continue as forecasted, we anticipate the need to 

announce another multiplier increase within the next six months. However, we 

will only do so as conditions require. 

We thank you for your business and as always we remain committed to providing 

you with quality products and service at competitive prices. 

Sincerely, 

Jerry 

hf~ Jansen 

National Sales Manager 

Confidential TU-FTC-0010307 

RX-591 
May 7,2008 

To: All Tyler Union Distribution Customers 

RE: Pricing for Utility Fittings and Accessories 

Dear Valued Customer, 

You have likely heard or read about continued increases in factors of production 

impacting both domestic and global operations. The foundry industry has been hit 

particularly hard with sharp increases in scrap iron, alloys and transportation costs. 

While the financial impact to our business is real, we also recognize there are 

restrictions as to the level and timing at which pricing can be accommodated in the 

market. 

We are sending this general communication to our waterworks distribution customers to 

more clearly define our intention in regards to future pricing actions. 

Before announcing any price actions, we carefully analyze all factors including: domestic 

and global inflation, market and competitive conditions within each region, as well as 

performance against our own internal metrics. We anticipate being able to complete our 

analysis by the end of May. At that point, we will send out letters to each specific region 

detailing changes, if any, to our current pricing policy. 

For planning purposes only, we expect for regions with a change that multipliers will 

increase in the range of 6% up to 16% effective June 16th . 

Sincerely, 

Jerry 

hf~ Jansen 

National Sales Manager 

Confidential TU-FTC-0010321 

RX-592