### In the



# United States Court of Appeals

For the Seventh Circuit

____________________

No. 17

‐ 2808

K LEEN P RODUCTS LLC, et al.

, Plaintiffs

‐ Appellants

,

v.

G EORGIA

‐ P ACIFIC LLC and W EST R OCK CP, LLC,

Defendants

‐ Appellees

.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 10 C 5711

— Harry D. Leinenweber

, Judge

.

____________________

A RGUED M AY 23, 2018

— D ECIDED D ECEMBER 7, 2018

____________________

Before W OOD

, Chief Judge

, and B AUER and R OVNER

, Circuit

Judges

.

W OOD

, Chief Judge

. Oligopolies have always posed prob

‐

lems for conventional antitrust law: without something that

can be called an agreement, they elude scrutiny under section

1 of the Sherman Act, 15 U.S.C. § 1, and yet no individual fi rm

has enough market power to be subject to Sherman Act sec

‐

tion 2, 15 U.S.C. § 2. Tacit collusion is easy in those markets,

see In re Text Messaging Antitrust Litigation

, 782 F.3d 867 (7th2 No. 17

‐ 2808

Cir. 2015), and fi rms have li tt le incentive to compete on the

basis of price, “preferring to share the pro fi ts [rather] than to

fi ght with each other.” Joe Sanfelippo Cabs, Inc. v. City of Mil

‐

waukee

, 839 F.3d 613, 615 (7th Cir. 2016).

This appeal concerns the fi ne line between agreement and

tacit collusion, or, put another way, conscious parallelism. Di

‐

rect purchasers of containerboard (“the Purchasers”) charged

multiple manufacturers with conspiring to increase prices

and reduce output between 2004 and 2010. We a ffi rmed the

district court’s decision to certify a nationwide class of buyers.

Kleen Prods. LLC v. Int’l Paper Co.

, 831 F.3d 919 (7th Cir. 2016).

Before and after that ruling, most of the defendants se tt led

with the Purchasers. But two companies—Georgia

‐ Paci fi c

LLC and WestRock CP, LLC—decided to fi ght. They per

‐

suaded the district court that there was not enough evidence

of a conspiracy to proceed to trial. We agree with that assess

‐

ment and a ffi rm the judgment dismissing the case.

I

A

Containerboard is the name of the material used in

countless boxes: it consists of a corrugated layer of heavy

paper sandwiched between two smooth pieces of linerboard.

Demand is relatively inelastic, meaning that customers will

not defect to other products even if the price goes up, because

the available substitutes are inferior. Containerboard is

manufactured at large, costly mills, which are hard to

duplicate, given both the high cost of construction and the

myriad of environmental laws that must be satis fi ed. A

handful of major players dominate the industry. Those

players include the original defendants in this suit:No. 17

‐ 2808 3

International Paper (“IP”), Georgia

‐ Paci fi c, Temple

‐ Inland,

Inc., WestRock, 1 Weyerhaeuser Co., Norampac Holdings U.S.

Inc., and Packaging Corporation of America (“PCA”).

During the early 2000s, prices for containerboard were

low. But from February 2004 to November 2010, they rose

dramatically. The original defendants a tt empted to institute

price increases on 15 di ff erent occasions. The pa tt ern was a

common one. After one company announced that it would

raise its prices for containerboard, the rest followed suit with

identical or comparable increases in the ensuing hours, days,

or weeks. (The one exception was a failed a tt empt in which

there were three hold

‐ outs.) Such e ff orts took place from time

to time. For example, in March 2003, the defendants

a tt empted an ultimately unsuccessful increase. Of the

proposed hikes from 2004 to 2010, Georgia

‐ Paci fi c, WestRock,

and a non

‐ defendant each led the e ff ort twice. The price

increases were sustained nine times, a 60% success rate.

While containerboard prices rose, containerboard produc

‐

tion capacity fell in North America (despite the inelasticity of

demand and growth throughout the rest of the globe). The in

‐

itial defendants were not immune from this decline. The Pur

‐

chasers’ expert concluded that the defendant companies re

‐

duced their production capacity by an amount almost double

that of non

‐ defendants, though they used di ff erent strategies

to accomplish this goal. They closed a signi fi cant number of

1 Over the lifespan of this case, WestRock has undergone corporate

changes and thus has been known by various names, including RockTenn

CP, LLC and Smurfit

‐ Stone Container Corporation. We refer to the busi

‐

ness by its present name.4 No. 17

‐ 2808

mills during the class period—WestRock alone was responsi

‐

ble for more than a third of those closures. WestRock also took

care, through measures such as buyer selection and machin

‐

ery sales, to avoid adding containerboard supply into the

market. Georgia

‐ Paci fi c kept all its mills running, but it

slowed the rate of production. It would periodically “slow

back” production by idling or shu tt ing down machines and

taking extra downtime. While these practices diminished sup

‐ ply to the point that it sometimes pinched, in the end Georgia

‐

Paci fi c never missed an order. And the company actually in

‐

creased its overall capacity by acquiring a new mill in 2007.

During this period, the defendants were in regular com

‐

munication. Company executives and other employees spoke

by phone and at trade association meetings every few days.

The record does not reveal the contents of all these conversa

‐

tions, but at least some dealt with the timing and pricing of

inter fi rm trading of containerboard—a common practice.

Internal and public

‐ facing statements made by the defend

‐

ants’ employees shed light on these economic developments.

Some email exchanges may be read to imply that the defend

‐

ants had foreknowledge of other companies’ proposed in

‐

creases before they were announced. For example, just before

three price hikes, a PCA employee o ff ered an opinion about

how high prices would need to go over the next year and a

half in order to recover the cost of capital. A Georgia

‐ Paci fi c

sta ff er wrote “the party begins” when discussing an increase

a tt empt. A WestRock vice president emailed that the com

‐

pany “always follow[s] IP,” even though in fact “always” was

an overstatement. And a Weyerhaeuser employee discussed a

speci fi c increase two days before WestRock fi rst made its newNo. 17

‐ 2808 5

price public. Other statements support the inference that a co

‐

ordinated plan was in place. For instance, a Weyerhaeuser

employee wrote that he “made up a bunch” of information in

a report about what was learned from customers about com

‐ petition, asking others to “be more speci fi c” to stay “out of

anti

‐ trust legal issues.” A Norampac executive, discussing

problems with the industry, said “you have to be ready to let

go business if you want to keep the price up,” and “everybody

needs to do the same thing.”

Georgia

‐ Paci fi c and WestRock made their own incriminat

‐ ing remarks. Because some details remain under seal in this

court, some of our examples are a bit vague, but we have re

‐

viewed the sealed materials and they are consistent with the

remainder of the evidence. A WestRock vice

‐ president made

remarks in an email that could easily be construed as an un

‐ dertaking to follow

‐ the

‐ leader. A di ff erent vice

‐ president

complained that the company “ha[d] no choice but to support

[a price increase] initiative” and that WestRock “ha[d] done

[its] part.” At one point, a company employee wrote that the

“only way to get paid is to have a 1994

‐ 95 situation where the

tide rises for all boats,” perhaps referring to the container

‐

board industry’s earlier run

‐ ins with antitrust law. See, e.g.

, In

re Linerboard Antitrust Litig.

, 305 F.3d 145 (3d Cir. 2002). Pub

‐ licly, WestRock’s CEO was reported to have said that the com

‐

pany had a restructuring plan to “cut supply enough at

[WestRock] to force price increases throughout the industry.”

Georgia

‐ Paci fi c’s president gave a speech during the period

in question urging the industry to resist customer requests for

price breaks.6 No. 17

‐ 2808

B

In September 2010, the Purchasers fi led a putative class ac

‐

tion alleging violations of section 1 of the Sherman Act. 15

U.S.C. § 1. The district court consolidated the suit with similar

actions and denied several motions to dismiss. Discovery fol

‐

lowed. Then in March 2015, the district court granted the Pur

‐

chasers’ motion for class certi fi cation under Federal Rule of

Civil Procedure 23. It de fi ned the class as follows:

All persons that purchased Containerboard Prod

‐

ucts directly from any of the Defendants or their sub

‐

sidiaries or a ffi liates for use or delivery in the United

States from at least as early as February 15, 2004

through November 8, 2010.

Kleen Prods.

, 831 F.3d at 922. We a ffi rmed the certi fi cation de

‐

cision while making clear that we were not addressing the

merits. E.g.

, id. at 928.

Back in the district court, the litigation rolled onward. The

court largely denied the parties’ cross

‐ motions to exclude

each other’s experts. Both sides moved for summary judg

‐

ment. Before the court acted on those motions, some of the

defendants se tt led with the Purchasers. The district court

granted the remaining defendants, Georgia

‐ Paci fi c and

WestRock, summary judgment. In a lengthy opinion that

delved deeply into the Purchasers’ evidence, the court con

‐

cluded that the record, viewed holistically in the light most

favorable to the Purchasers, did not tend to rule out that the

defendants had acted independently. With only the fi nal ap

‐ proval of se tt lement agreements pending, the district court

entered partial fi nal judgment for the remaining defendants

under Rule 54(b). The Purchasers ask us to revisit that ruling.No. 17

‐ 2808 7

II

Section 1 of the Sherman Act prohibits every “contract,

combination,

... or conspiracy in restraint of trade

... .” Courts

have understood for more than a century that this language

does not ban all contracts, but instead reaches only agree

‐

ments that restrict competition. Copperweld Corp. v. Indep. Tube

Corp.

, 467 U.S. 752, 768 (1984); see also Broadcast Music, Inc. v.

Columbia Broadcasting Sys., Inc.

, 441 U.S. 1 (1979); United States

v. Socony

‐ Vacuum Oil Co. (1940). In the absence of an agree

‐

ment, the antitrust laws forbid only monopolization or at

‐

tempts to monopolize, see 15 U.S.C. § 2, as well as a few other

arrangements including anticompetitive mergers and acqui

‐

sitions, see 15 U.S.C. § 18. But this case concerns only sec

‐

tion 1; the plainti ff s make no claim that any of the defendants

has even a tt empted to monopolize, much less succeeded in

such an e ff ort. See Spectrum Sports, Inc. v. McQuillan

, 506 U.S.

447 (1993). We can therefore disregard all other antitrust the

‐

ories and focus on the question whether the district court cor

‐ rectly decided that the Purchasers did not present enough ev

‐

idence to permit a trier of fact to fi nd the agreement necessary

for section 1 liability. As the Supreme Court put it in Bell At

‐

lantic Corp. v. Twombly

, 550 U.S. 544 (2007), “at the summary

judgment stage a § 1 plainti ff ’s o ff er of conspiracy evidence

must tend to rule out the possibility that the defendants were

acting independently.” Id. at 554, citing Matsushita Elec. Indus.

Co. v. Zenith Radio Corp.

, 475 U.S. 574 (1986).

It is worth recalling that an antitrust plainti ff

, like all oth

‐

ers, is entitled to try to meet that burden with either direct or

circumstantial evidence. Miles Distribs., Inc. v. Specialty Constr.

Brands, Inc.

, 476 F.3d 442, 449 (7th Cir. 2007). Antitrust plain

‐8 No. 17

‐ 2808

ti ff s do not face a heightened burden to defeat summary judg

‐

ment. See Omnicare, Inc. v. UnitedHealth Grp., Inc.

, 629 F.3d

697, 707 (7th Cir. 2011). As Rule 56 generally commands, we

draw all reasonable inferences in favor of the non

‐ moving

party, here the Purchasers. It is the substantive law, however,

that establishes what the plainti ff must address. The Purchas

‐

ers needed evidence that would allow a trier of fact to nudge

the ball over the 50

‐ yard line and rationally to say that the ex

‐

istence of an agreement is more likely than not. Put more di

‐ rectly, they must put on the table “ some evidence which, if be

‐

lieved, would support a fi nding of concerted behavior.” Toys

“R” Us Inc. v. FTC

, 221 F.3d 928, 935 (7th Cir. 2000); accord

Blomkest Fertilizer, Inc. v. Potash Corp. of Saskatchewan

, 203 F.3d

1028, 1032 (8th Cir. 2000) ( en banc ) (reading Matsushita to re

‐ quire that it be more reasonable to infer a price

‐ fi xing conspir

‐

acy than permissible activity).

Armed with bountiful circumstantial evidence, the Pur

‐

chasers accuse the defendant manufacturers of agreeing to re

‐

strict the supply of containerboard and thereby to create mar

‐

ket conditions that would support signi fi cantly higher prices.

The district court properly considered “economic evidence

suggesting that the defendants were not in fact competing,

and noneconomic evidence suggesting that they were not

competing because they had agreed not to compete.” In re

High Fructose Corn Syrup Antitrust Litig.

, 295 F.3d 651, 655 (7th

Cir. 2002). It then drew and compared the corresponding in

‐

ferences from each data point. See, e.g.

, Omnicare

, 629 F.3d at

707–20. After determining that each piece of evidence individ

‐ ually did not rule out the possibility of independent action, it

reviewed the evidence in the aggregate, as required. See id. at

720. The court concluded that because no individual piece of

evidence tended to show collusion, the combined probativeNo. 17

‐ 2808 9

value was zero. We are not so sure of that. While no single

piece of information may win the day, the whole may be

greater than the sum of its parts in tending to exclude the pos

‐ sibility of conscious parallelism. See High Fructose Corn Syrup

,

295 F.3d at 655 (“[E]vidence can be susceptible of di ff erent in

‐ terpretations

... without being wholly devoid of probative

value

... .”).

Nonetheless, our assessment of the district court’s deci

‐

sion is de novo

, and so we need only satisfy ourselves that we

have the proper standard in mind. In re Dairy Farmers of Am.,

Inc., Cheese Antitrust Litig.

, 801 F.3d 758, 762 (7th Cir. 2015).

Viewing the evidence and reasonable inferences in the Pur

‐

chasers’ favor, we ask whether they have produced any evi

‐

dence that would rule out the hypothesis that the defendants

were engaged in self

‐ interested but lawful oligopolistic be

‐

havior during the relevant period. Despite the volume of evi

‐

dence the Purchasers submi tt ed in opposition to summary

judgment, we fi nd ourselves in agreement with the district

court’s ultimate conclusion. We discuss below only the most

signi fi cant evidence against Georgia

‐ Paci fi c and WestRock;

those interested in a more comprehensive account should re

‐

fer to the district court’s opinion, Kleen Prods. LLC v. Int’l Pa

‐

per

, 276 F. Supp. 3d 811 (N.D. Ill. 2017). We conclude that noth

‐ ing in this record would permit a trier of fact to conclude that

the defendants were colluding, rather than behaving in their

independent self

‐ interest.

III

A

We start with some structural evidence about the contain

‐

erboard industry. As we noted in our earlier encounter with10 No. 17

‐ 2808

this litigation, the market has certain structural features that

make it “conducive to successful collusion,” such as a small

number of manufacturers, vertical integration, inelastic de

‐

mand, a standardized commodity product, and high barriers

to entry. Kleen Prods.

, 831 F.3d at 927–28. These characteristics

make it easier for companies either to form a cartel or to follow

the leader independently. Text Messaging

, 782 F.3d at 871–72;

In re Chocolate Confectionary Antitrust Litig.

, 801 F.3d 383, 397

(3d Cir. 2015). We explained why this is so in our 2015 Text

Messaging opinion:

[I]f a small number of competitors dominates a market,

they will fi nd it safer and easier to fi x prices than if

there are many competitors of more or less equal size.

For the fewer the conspirators, the lower the cost of ne

‐ gotiation and the likelihood of defection

... . But the

other side of this coin is that the fewer the fi rms, the

easier it is for them to engage in “follow the leader”

pricing (“conscious parallelism,” as lawyers call it,

“tacit collusion” as economists prefer to call it)—which

means coordinating their pricing without an actual

agreement to do so. As for the apparent anomaly of

competitors’ raising prices in the face of falling costs,

... this may be not because they’ve agreed not to com

‐

pete but because all of them have determined inde

‐ pendently that they may be be tt er o ff with a higher

price. That higher price, moreover—the consequence

of parallel but independent decisions to raise prices—

may generate even greater pro fi ts (compared to com

‐ petitive pricing) if costs are falling, provided that con

‐

sumers do not have a tt ractive alternatives.No. 17

‐ 2808 11

Text Messaging

, 782 F.3d at 871–72. Because of the competing

inferences that can be drawn from this market structure, the

district court properly found that the economic evidence did

not tend to exclude the possibility of independent action.

B

Next, we turn to more speci fi c evidence that the Purchas

‐

ers o ff ered. In establishing both defendants’ failure to com

‐

pete, the Purchasers rely heavily on the 15 price hikes that oc

‐

curred over the class period. But one must take care with the

inferences that can be drawn from such evidence. Following

a competitor’s price increases can be consistent with rational

self

‐ interest in oligopolies. See Text Messaging

, 782 F.3d at 874–

75. Each fi rm in a tight oligopoly might think that it will reap

greater pro fi ts if it imitates, rather than undermines, its peers’

price hikes. Brooke Grp. Ltd. v. Brown & Williamson Tobacco

Corp.

, 509 U.S. 209, 227 (1993); Valspar Corp. v. E.I. Du Pont de

Nemours & Co.

, 873 F.3d 185, 191 (3d Cir. 2017). And it might

reach that conclusion without any conscious coordination

with its competitors. For that reason, “it is not a violation of

antitrust law for a fi rm to raise its price, counting on its com

‐ petitors to do likewise (but without any communication with

them on the subject)

... .” Text Messaging

, 782 F.3d at 876.

1

The task before any plainti ff is thus to fi nd and produce

evidence that reveals coordination or agreement (even a wink

and a nod—formal agreements have never been required for

purposes of Sherman Act section 1). See id. ; Blomkest Fertilizer

,

203 F.3d at 1033. For instance, foreknowledge of price

increases may be persuasive evidence that an agreement was

afoot. See Chocolate Confectionary

, 801 F.3d at 408; In re12 No. 17

‐ 2808

Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust

Litig.

, 906 F.2d 432, 455 (9th Cir. 1990). The Purchasers here

a tt empt to carry their burden by emphasizing the timing of

the price increase a tt empts, which they describe as “lockstep.”

They urge us to draw the inference that such tight congruence

of price movements could not have occurred unless the

competitors had an inside scoop. But a close look at the record

reveals that the Purchasers overstate how coordinated these

hikes actually were. Di ff erent manufacturers, including non

‐

defendants, led the a tt empts. See Reserve Supply Corp. v.

Owens

‐ Corning Fiberglas Corp.

, 971 F.2d 37, 54 (7th Cir. 1992)

( fi nding that a change in who is the price leader suggests that

manufacturers could independently decide whether to

participate in price increases). Sometimes companies

followed suit over a month later. Even the a tt empts that saw

quick turnaround times do li tt le to raise suspicions. If it is in

a company’s self

‐ interest to imitate a price leader’s increase,

why wait to enjoy the bene fi t? The Purchasers accuse the

defendants of lying when they claim to have explored

independently a possible increase. But there is no evidence

supporting this allegation.

The Purchasers’ “proof” of prior knowledge amounts to

nothing more than speculation. They emphasize a March 2004

PCA memorandum that said “at least three $40–50 increases

over the next 18 months” were needed to recoup the cost of

capital. By September 2005, three a tt empts to raise prices had

indeed occurred. But this supposed smoking gun could be

nothing more than a somewhat accurate industry prediction.

That two of the increases were for $50 is unsurprising, given

that most of the 15 a tt empts were for $40 or $50. More tell

‐No. 17

‐ 2808 13

ingly, the PCA employee did not accurately predict three suc

‐

cessful increases, since the second one failed and the third was

only for $30.

The evidence that Georgia

‐ Paci fi c provided or received

advance notice is even weaker. The best that the Purchasers

o ff er is a comment made by a Georgia

‐ Paci fi c employee that

“the party begins,” following a discussion that a few manu

‐

facturers had announced an increase. This remark could

merely express enthusiasm about the upward trend in pric

‐ ing.

Another aspect of the Purchasers’ argument is that the ris

‐ ing prices throughout the class period re fl ect an abrupt

change in business practices. If that is an accurate description

of what happened, it might support an inference of conspir

‐

acy. But before the inference can be drawn, we have looked

for a shift in fi rm behavior, as opposed to external market con

‐

ditions. See Toys “R” Us

, 221 F.3d at 935; Chocolate Confection

‐

ary

, 801 F.3d at 410. In the present case, the Purchasers’ evi

‐

dence reveals only changed market conditions. For instance,

they point to complaints that manufacturers made about ag

‐ gressively competitive pricing that took place before, but not

during, the class period. Yet the shift may be explained by ex

‐

ternal factors, such as the emergence from the economic

downturn of 2008, which occurred in the middle of the class

period. And in terms of the companies’ behavior—the rele

‐

vant inquiry—the manufacturers had a tt empted to raise

prices before the class period as well. A continuation of a his

‐

toric pa tt ern—including of parallel price increase announce

‐

ments—does not plausibly allow one to infer the existence of14 No. 17

‐ 2808

a cartel. Valspar

, 873 F.3d at 196; Chocolate Confectionary

, 801

F.3d at 410.

A further strike against the Purchasers’ case is the failure

rate of the manufacturers’ e ff orts: 40% of the a tt empted

increases did not hold. The district court pondered why a

company would risk treble damages by colluding on an often

‐

ine ff ective plan when tacitly following price hikes had no

downside risk. Cf. Text Messaging

, 782 F.3d at 878. Perhaps the

Purchasers have a good answer to that question: when

potential pro fi ts are in the billions, even 60% odds provide a

substantial incentive. But that at best leaves ma tt ers in

equipoise.

If this was a cartel, it would have tried to impose discipli

‐

nary measures on the “cheaters” who did not go along with

the price increases. But that type of evidence is conspicuously

absent, even though nearly half the price hikes failed. See

Petruzzi’s IGA Supermarkets, Inc. v. Darling

‐ Del. Co., Inc.

, 998

F.2d 1224, 1233 (3d Cir. 1993) (noting that “a cartel cannot sur

‐

vive absent some enforcement mechanism”). The Purchasers

propose two possible mechanisms for enforcement, but they

have not pointed to any evidence indicating that either one

was used. It is true that a cartel may exist with only soft

measures of control or ine ff ective enforcement. See In re

Broiler Chicken Antitrust Litig.

, 290 F. Supp. 3d 772, 796–97

(N.D. Ill. 2017) (evidence of an enforcement mechanism is not

always required). Even if that is so, however, the absence of

evidence about enforcement does nothing to dissipate the in

‐

ference of independent behavior. We are still left with price

increases that appear to be just as consistent with independ

‐

ent action as with collusion.No. 17

‐ 2808 15

2

The second half of the Purchasers’ theory focuses on sup

‐ posedly coordinated reductions of output through mill clo

‐

sures and machine slowdowns. Supply behavior is highly rel

‐

evant because price

‐ fi xing arrangements often function

through restrictions of output. See Westinghouse Elec. Corp. v.

Gulf Oil Corp.

, 588 F.2d 221, 226 (7th Cir. 1978). But not every

supply

‐ side change is equally suggestive of a conspiracy.

Conduct that is easily reversed may be consistent with self

‐

interested decision

‐ making.

An example illustrates the point. Suppose Company X

takes its machines o ffl ine more frequently in order to reduce

its supply. If competitors follow suit, and industry

‐ wide pro

‐

duction falls, all companies can charge more for the commod

‐ ity and potentially reap greater pro fi ts. See Text Messaging

, 782

F.3d at 877. But what if instead the competitors maintain their

supply and woo Company X’s customers. Because Company

X’s reduction strategy was fl exible, it can quickly get its ma

‐

chines running and fi lling orders again, minimizing any

losses. In contrast, if Company X had lowered its production

by selling its mills or equipment, it could not rapidly undo its

e ff orts while competitors came knocking on customers’ doors.

This inability to stave o ff potential losses has earned the name

“perilous leading.” P HILLIP E. A REEDA & H ERBERT

H OVENKAMP

, A NTITRUST L AW ¶ 1425d (4th ed. 2018). Firms

take signi fi cant risks by reducing their output in an in fl exible

manner, unless there is an enforceable agreement in place to

ensure that competitors will follow suit. Petroleum Prods.

, 906

F.2d at 463; In re Plasma

‐ Derivative Protein Therapies Antitrust

Litig.

, 764 F. Supp. 2d 991, 1002 (N.D. Ill. 2011). Because peri

‐16 No. 17

‐ 2808

lous leading makes “li tt le economic sense” absent coordina

‐

tion, evidence of less

‐ reversible supply restrictions supports

an inference of conspiracy. Broiler Chicken

, 290 F. Supp. 3d at

798.

During the class period, the North American market saw

a drop in overall capacity for containerboard. The original

defendants collectively were responsible for 19 mill closures.

Yet Georgia

‐ Paci fi c not only kept its mills open; it also

purchased a new mill. The Purchasers respond that Georgia

‐

Paci fi c underutilized its machines, but Georgia

‐ Paci fi c has an

answer for that: its run

‐ to

‐ demand strategy. Under this

strategy, which dated back to 1999, Georgia

‐ Paci fi c aimed to

produce just enough containerboard to fi ll orders without

creating excess inventory. Internal communications suggest

that this strategy led to some close calls when fi lling orders,

but Georgia

‐ Paci fi c always found a way to meet its customer

demand. Moreover, its acquisition of a mill allowed it to

increase its production capacity over the class period.

The Purchasers’ strongest evidence undercu tt ing Georgia

‐

Paci fi c’s account are comments in performance reviews that

credit employees for ge tt ing price increases by keeping

inventory low. Because Georgia

‐ Paci fi c did not have su ffi cient

market power to alter containerboard pricing on its own, the

Purchasers insist that these statements can be understood

only as proof of an anticompetitive agreement. But

underusing machinery is the kind of fl exible behavior that is

consistent with rational a tt empts to raise prices through

watchful a tt ention to one’s competitors’ actions. Far from

perilous, had Georgia

‐ Paci fi c’s e ff orts not paid o ff

, it could

have increased its output quickly. Georgia

‐ Paci fi c’s supplyNo. 17

‐ 2808 17

behavior does not point towards its having a role in any

conspiracy.

3

As ammunition against both defendants, the Purchasers

cite the frequent contacts that company executives had by

phone and at trade association meetings. They allege that the

defendants’ regular communications and trades served as

opportunities for collusion. Some courts have held that this

type of information fl ow, especially between executives, may

be probative of conspiracy. E.g.

, Stanislaus Food Prods. Co. v.

USS

‐ POSCO Indus.

, 803 F.3d 1084, 1093 (9th Cir. 2015). But

having the opportunity to conspire does not necessarily imply

that wrongdoing occurred

. Monsanto Co. v. Spray

‐ Rite Serv.

Corp.

, 465 U.S. 752, 762 (1984); Weit v. Cont’l Ill. Nat’l Bank &

Trust Co. of Chi.

, 641 F.2d 457, 462 (7th Cir. 1981). Especially

when companies have legitimate business reasons for their

contacts, plainti ff s must o ff er some evidence that moves

beyond speculation about the content of what was conveyed.

See Text Messaging

, 782 F.3d at 878 (“And as there is no

evidence of what information was exchanged at these [trade

association] meetings, there is no basis for an inference that

they were using the meetings to plot prices [ sic ] increases.”);

accord Chocolate Confectionary

, 801 F.3d at 409; In re Musical

Instruments & Equip. Antitrust Litig.

, 798 F.3d 1186, 1196 (9th

Cir. 2015).

The Purchasers have no evidence indicating that the exec

‐

utives discussed illicit price

‐ fi xing or output restriction deals

during their calls or meetings. They rely instead on the fre

‐

quency and timing of the contacts. For example, 20 calls were

made in the days around a Georgia

‐ Paci fi c

‐ led price increase,

despite the fact that the company had predicted fl at pricing18 No. 17

‐ 2808

just two weeks earlier. That is not enough. We cannot put

much stock in the frequency of contacts, given the amount of

trading that was taking place among the fi rms. See Dairy

Farmers of Am.

, 801 F.3d at 763 (where companies were not

only competitors but also among each other’s largest suppli

‐

ers and largest customers, plainti ff s needed to point to a com

‐

munication that “suggest[ed] a meeting of the minds to fi x

prices”); High Fructose Corn Syrup

, 295 F.3d at 659 ( fi nding

nothing suspicious about occasional inter fi rm trades unless

fi rms could supply their customers at a lower cost).

Furthermore, we hesitate to impugn the companies’ inten

‐

tions solely from the timing of the contacts. To be clear, we do

not see the frequency of the calls and meetings as evidence

tending to exclude collusion. Such a rule would create an in

‐

centive for businesses to make constant phone calls in order

to immunize themselves from antitrust liability. Here, how

‐

ever, though some trade association meetings occurred before

price

‐ increase proposals, most of Georgia

‐ Paci fi c’s announce

‐

ments were not preceded by meetings. The Purchasers’ spec

‐

ulation about the content of the frequent inter fi rm contacts is

not enough to create a jury issue.

4

Incriminating remarks by defendants’ employees can sup

‐

port the inference that a conspiracy existed. See, e.g.

, High

Fructose Corn Syrup

, 295 F.3d at 662. The Purchasers fl ag a few

comments that they see as particularly inculpatory. For start

‐

ers, a Weyerhaeuser employee wrote that he “made up a

bunch” of information in a report and instructed others to “be

more speci fi c” to keep the company “out of anti

‐ trust legal

issues.” In addition, while discussing problems with the in

‐ dustry, a Norampac executive said “you have to be ready toNo. 17

‐ 2808 19

let go business if you want to keep the price up,” and “every

‐ body needs to do the same thing.”

Yet even if these statements are enough to create a triable

question about the presence of an agreement generally, they

are not enough to show that Georgia

‐ Paci fi c was a part of that

cartel. On this front, the Purchasers present li tt le proof. They

point to a speech in which Georgia

‐ Paci fi c’s CEO supposedly

suggested that the industry should “say ‘no’ on deals” that,

though competitive, are not pro fi table. But that is hardly an

earthsha tt ering insight, even if proof of the statement were

possible without the use of hearsay contained in newspaper

articles reporting on the speech. See Eisenstadt v. Centel Corp.

,

113 F.3d 738, 742 (7th Cir. 1997). And the account of an

a tt endee rejects the rumors, stating that this message “was not

said nor implied.” And the CEO claimed in his deposition that

he was speaking only about Georgia

‐ Paci fi c

, not the industry,

needing to decline deals. Like their economic proof, the

Purchasers’ noneconomic evidence—even when viewed with

the parallel conduct—does not exclude the possibility that

Georgia

‐ Paci fi c acted in a self

‐ interested but permissible way.

C

Some of the Purchasers’ evidence was particular to

WestRock, to which we now turn. There is a wrinkle in its po

‐

tential liability: in June 2010, just shy of the close of the class

period, WestRock received a discharge in bankruptcy, for

which it had fi led in 2009. At that moment, it was free of any

antitrust liability incurred up to the date of discharge. See In

re Travel Agent Comm’n Antitrust Litig.

, 583 F.3d 896, 902 (6th

Cir. 2009). Nonetheless, WestRock is potentially liable for the

alleged conspiracy if there is evidence it rejoined the cartel

post

‐ discharge. Kleen Prods.

, 831 F.3d at 930; see also O’Loghlin20 No. 17

‐ 2808

v. Cnty. of Orange

, 229 F.3d 871, 875 (9th Cir. 2000) (“A ‘fresh

start’ means only that; it does not mean a continuing licence

[ sic ] to violate the law.”). We must therefore look to see if there

is evidence that would permit a trier of fact both to fi nd the

initial agreement, and to fi nd that WestRock rejoined that

agreement after its discharge.

1

As we have explained, the parallel price hikes alone do not

su ffi ce to permit a jury to fi nd a cartel. But the Purchasers cite

evidence hinting at WestRock’s conspiratorial involvement.

For example, they point to an email from Weyerhaeuser that

discussed a $50 increase just days before WestRock an

‐

nounced it. Though a publication’s email blast had made pub

‐

lic the existence of a future a tt empt, it had go tt en the amount

wrong. Weyerhaeuser had the right number.

Yet even if this is enough to create a fact question about

WestRock’s original participation in the alleged agreement, it

does nothing to establish that it rejoined the agreement post

‐ discharge. During the relevant period, in July 2010, WestRock

did participate in an unsuccessful a tt empt to hike prices. The

Purchasers insist that this reveals more than parallel conduct,

given an email between WestRock sta ff that the company “al

‐

ways follow[s] IP [International Paper].” But, as we have

noted several times, merely following a leader is not the same

as agreeing to do something. Also of li tt le probative value is

the fact that a WestRock vice president met with other manu

‐

facturers on the day between the fi rst defendant’s joining the

increase and WestRock’s decision to follow suit. Before this

meeting, the increase had been fl oated by a non

‐ defendant.

See Valspar Corp. v. E.I. Du Pont de Nemours

, 152 F. Supp. 3d

234, 247 (D. Del. 2016), a ff

’d 873 F.3d 185 (declining to inferNo. 17

‐ 2808 21

that a meeting provided an opportunity to conspire when

price increase announcements occurred before and after the

meeting). And WestRock o ff ered evidence that since April it

had been contemplating that prices would go up. Purchasers’

parallel pricing evidence does not provide a hook for

WestRock’s liability.

2

Perhaps the most compelling evidence of collusion is

WestRock’s supply restrictions. During the class period,

WestRock closed seven of its mills and took other steps to re

‐

duce capacity. WestRock a tt empts to rationalize this behavior

in various ways. It claims that the closures were part of a 2003

restructuring plan to get rid of ine ffi cient plants in light of its

purchase of a highly e ffi cient mill. It also asserts that it made

certain sales decisions in light of a green marketing plan

where buyers would assume a mill’s associated environmen

‐

tal liabilities. And WestRock reminds us that it sold the mills

while it was under the oversight of the bankruptcy court, a

commi tt ee of creditors, and fi nancial advisors.

These explanations are all plausible. Yet they do not over

‐

come the inference of conspiracy given that, unlike Georgia

‐

Paci fi c’s reversible cuts, WestRock’s supply behavior could

not be undone easily. Such perilous leading risked signi fi cant

losses. Furthermore, a vice president wrote that WestRock

“ha[d] done [its] part,” implying it played a role in a larger

agreement. And other company emails state that restricting

supply would help raise prices, something no manufacturer

could do alone.

While this discussion may suggest that the Purchasers win

the day, the insurmountable problem is one of timing: these22 No. 17

‐ 2808

events occurred pre

‐ discharge. Even assuming (favorably to

the Purchasers) that WestRock was part of a cartel, they fall

short on presenting evidence that WestRock was involved

post

‐ discharge. In those months, WestRock did some machine

maintenance, but it did not close any mills and generally op

‐

erated at a high level of production and capacity.

3

Last, we consider the other evidence that the Purchasers

lodged against WestRock. This includes incriminating state

‐

ments made by WestRock employees and an article discuss

‐ ing the CEO’s statements that the company needed a restruc

‐ turing plan to “cut supply enough at [WestRock] to force price

increases throughout the industry.” The la tt er is inadmissible

hearsay. Eisenstadt

, 113 F.3d at 742. The Purchasers maintain

nonetheless that the CEO’s deposition testimony con fi rms

that he was signaling indirectly the company’s commitment

to a price

‐ fi xing plan. It does not.

Worse for WestRock are two vice

‐ presidents’ remarks that

the company had “li tt le choice” or “no choice” but to join the

price increases, even though one was not supported by sup

‐ ply and demand. The most plausible explanation for its deci

‐

sion to go along with a price hike out of obligation, when that

hike is not economically justi fi ed, is that WestRock had com

‐

mi tt ed to an agreement. See In re Flat Glass Antitrust Litig.

, 385

F.3d 350, 369 (3d Cir. 2004) ( fi nding probative documents em

‐ phasizing that competitors had to hold the line on price in

‐

creases that were not economically supported). Also inculpa

‐

tory was a sta ff member’s email to a vice

‐ president, among

others, that “the only way to get paid is to have a 1994

‐ 95 sit

‐

uation where the tide rises for all boats.” The Purchasers en

‐No. 17

‐ 2808 23

courage us to read this statement as a reference to the contain

‐

erboard industry’s earlier antitrust violations. See Linerboard

,

305 F.3d 145. These statements are some of the Purchasers’

strongest evidence that WestRock’s price hikes and mill clo

‐

sures were more than just conscious parallelism. But again,

they all occurred pre

‐ discharge, and so they say nothing

about WestRock’s post

‐ discharge conduct.

The Purchasers fi nally o ff er some economic and noneco

‐

nomic evidence that could suggest suspicious activity. But

even if it is credited, it is not enough to permit a trier of fact

to fi nd impermissible coordination. Statements by Georgia

‐

Paci fi c sta ff are not enough to cast a cloud over its follow

‐ the

‐

leader price increases and fl exible production adjustments.

And while some of WestRock’s behavior, particularly its mill

closures, gives us pause, the Purchasers fail to establish that

anything the company did post

‐ discharge amounts to rejoin

‐ ing any existing conspiracy. This case shares many similari

‐

ties with our decision in Text Messaging

. In both situations, the

plainti ff s did not discover a “smoking gun or

... additional

circumstantial evidence that further tilts the balance in favor

of liability.” Id. at 871 (citation omi tt ed). The Purchasers may

be right that the containerboard industry got savvier at hiding

its antitrust violations. But unfortunately for them, they

“failed to carry the burden” of “establishing a prima facie case

of explicit collusion,” o ff ering “no more than a plausible in

‐ terpretation” of the defendants’ anticompetitive conduct. Id.

at 876.

IV

The outcome of this case fl ows directly from both the lim

‐

itation in section 1 of the Sherman Act to anticompetitive24 No. 17

‐ 2808

agreements and the Supreme Court’s cautions against inter

‐ fering with individual fi rm behavior in ways that could inad

‐ vertently distort incentives to compete. In Matsushita, the

Court warned against “mistaken inferences

... [that] chill the

very conduct the antitrust laws are designed to protect.’”

Matsushita

, 475 U.S. at 594; see also Text Messaging

, 782 F.3d at

874 (expressing pragmatic concerns about prohibiting con

‐

scious parallelism).

Scholars, lawmakers, and courts have yet to agree on a reg

‐ ulatory regime that can address oligopolistic behavior that

leads to higher prices and reduced consumer choice, without

sti fl ing normal business activity. For now, we follow estab

‐

lished law to the e ff ect that “‘conscious parallelism’ has not

yet read conspiracy out of the Sherman Act entirely.”

Twombly

, 550 U.S. at 552 (citation omi tt ed).

Because the evidence pro ff ered by the Purchasers does not

tend to exclude the possibility that Georgia

‐ Paci fi c and

WestRock engaged only in tacit collusion, we A FFIRM the

judgment of the district court.