IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-20267

MM STEEL, L.P., 

 Plaintiff - Appellee

v.

JSW STEEL (USA) INCORPORATED; NUCOR CORPORATION, 

 Defendants - Appellants

Appeals from the United States District Court 

for the Southern District of Texas

Before BENAVIDES, CLEMENT, and HIGGINSON, Circuit Judges.

STEPHEN A. HIGGINSON, Circuit Judge:

This case concerns the Gulf Coast domestic steel industry. In 2011, two 

longtime steel industry salesmen opened a new steel distributor, MM Steel, 

L.P. (“MM”). MM quickly found it difficult to survive because certain steel

manufacturers, including Nucor Corporation (“Nucor”) and JSW Steel (USA), 

Inc. (“JSW”), refused to sell them steel. Shortly before MM closed, MM sued 

the manufacturers and MM’s competing distributors, claiming that the 

distributors formed an illegal conspiracy to deprive MM of steel and that the 

manufacturers knowingly joined the conspiracy. After a six-week trial, a jury 

found the defendants per se liable under Section 1 of the Sherman Act, 15 

U.S.C. § 1. The district court trebled the damages to more than $150 million. 

United States Court of Appeals

Fifth Circuit

FILED

November 25, 2015

Lyle W. Cayce

Clerk

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The defendants timely appealed, but the distributors and one manufacturer

settled and dismissed their appeals, leaving JSW and Nucor as the only 

appellants. Finding, inter alia, insubstantial evidence that Nucor joined this 

conspiracy, we REVERSE the judgment as to Nucor, but we AFFIRM the 

judgment as to JSW. 

BACKGROUND

I.

In the Gulf Coast domestic steel industry, steel manufacturers sell 

approximately half of their steel plate to end users, including companies such 

as Wal-Mart, Exxon, and General Motors, and sell the other half to distributors

who then sell the plate to end users. To be profitable, the distributors rely on 

their supply agreements with the manufacturers. Plaintiff MM is a 

distribution company that was founded by two steel distributor salesmen—

Matt Schultz and Mike Hume. Defendants Nucor and JSW are two major steel 

manufacturers in the Gulf Coast region. 

The record supports the following facts. Schultz and Hume worked 

together as salesmen at American Alloy (“AmAlloy”), a steel distributor, until 

they left in 1999 to open an office in Houston for another distributor, Chapel.

In spring 2011, Schultz and Hume began planning to leave Chapel to open 

their own distribution company, MM. As part of their preparation, they met 

with JSW, from whom they had purchased steel at Chapel. On August 2, 2011, 

MM and JSW signed a one-year supply agreement for MM to purchase a 

certain amount of steel plate per month from JSW. MM received a $750,000 

line of credit from Wells Fargo, and JSW agreed to extend an additional line of 

credit for double that amount. On September 1, without providing notice, 

Schultz, Hume, and two other top Chapel salesmen resigned from Chapel, and 

officially opened MM.

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Chapel and AmAlloy were not pleased that Schultz and Hume had left 

to open MM. On September 3, AmAlloy executives discussed “do[ing] all we 

can to help [Chapel] in going after [MM].” Chapel’s president, Stan Altman,

was overheard telling a Chapel salesman “[i]f you don’t have any steel, you 

can’t sell any steel.” On September 8, Altman met with Arthur Moore, 

AmAlloy’s president, and upon leaving the meeting, Moore said “[d]on’t worry, 

we’re going to get them.” Chapel informed Moore that Chapel “plan[s] on 

taking all available courses of actions, legally and otherwise, including 

notifying any mill that is selling [to MM], that they can no longer expect any 

future business from Chapel.” As described in more detail below, Chapel and 

AmAlloy went forward with plans to threaten manufacturers to not sell steel 

to MM.

II.

On September 15, 2011, Chapel filed a lawsuit against MM and its 

founders alleging that MM had violated a non-compete agreement. The next 

day, MM told JSW to hold off on shipments until further notice. On September 

20, MM met with JSW. MM informed JSW that the lawsuit prompted their 

request to stop shipments and raised the possibility of having to return some 

steel that JSW had manufactured for MM. The day before the meeting 

between MM and JSW, JSW executives met with AmAlloy’s Moore, at Moore’s 

invitation. Moore told JSW’s representatives that JSW had a choice to make:

“The choice was to do business with American Alloy or to do business with MM 

Steel.” Later, on September 29, Moore emailed Chapel’s Altman about JSW’s 

“ridiculously low” sales prices to MM and said he hoped Chapel would be

successful in shutting MM down. On October 4, Chapel and JSW met, and 

Chapel gave JSW a choice to do business with Chapel or with MM. 

Around October 14, Chapel and MM settled the lawsuit over the noncompete agreement. The settlement prohibited MM from contacting and 

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selling to certain customers for six months. MM then told JSW the lawsuit 

had been resolved and asked for a quote. On October 20, JSW’s president, 

Mike Fitch, told MM that it would not be doing business with MM going 

forward and that it “understood the gravity of the situation.” The day before 

JSW told MM it was ending their relationship, JSW emailed Chapel wanting 

to see “if JSW and Chapel Steel could step up business for [Chapel’s] Houston

[office] and other locations.” Chapel then internally commented on the 

“[i]nteresting timing” of JSW’s approach to “step up business.” 

III.

Nucor and Chapel’s relationship dates back to 2000. Nucor supplies 

seventy-five percent of Chapel’s steel, and Chapel is Nucor’s largest external 

customer. On September 1, 2011, Hume left Nucor’s Jeff Whiteman a 

voicemail saying that Hume had left Chapel to start MM and that MM hoped 

to sell Nucor steel to a longtime Chapel customer. In response, Whiteman 

immediately emailed Chapel’s president to pledge his “fulles support.” 

Following that email, Chapel executives informed Nucor that MM had 

partnered with JSW, and Nucor reiterated its support of Chapel by instructing 

its employees that Nucor would not be quoting MM but “will continue to 

support our existing customers.” Around September 2, MM’s Hume reached 

out to three separate Nucor employees, including Nucor’s President Whiteman, 

and each employee declined to quote or discuss a potential sale with Hume.

The jury received evidence, which Nucor contests as inadmissible, 

alluding to a threat allegedly made by Chapel to Nucor before September 5. 

On September 5, John Sergovic, the president of ArcelorMittal USA, another 

steel manufacturer not included in this lawsuit, sent an internal email stating 

that he had been threatened by Chapel’s Altman to not sell to MM and that 

“Stan [Altman] said he made the same comment to Jeff Whiteman at Nucor.”

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In early October, Nucor employees dined with Chapel employees in 

connection with a retirement party. Nucor denies that MM was discussed at 

this dinner. On October 26, MM asked Nucor for a quote, and Nucor did not 

respond. Later, on January 5, 2012, after Nucor got a quote request from a 

similarly named “M and M Steel,” Nucor emailed Chapel asking, “Are these 

our boys?” Chapel responded, “No our boys are MM Steel but I appreciate you 

keeping an eye out for them.”

After JSW decided to stop supplying MM, MM began buying steel from 

North Shore, another distributor and customer of Nucor. North Shore began 

placing orders on MM’s behalf from Nucor. Nucor was not happy to learn about 

this arrangement because it allowed MM to circumvent Nucor’s “practice” of 

not accepting business that conflicts with the business of a current client in 

order to “stick with [the original] supply chain”—what Nucor referred to as its 

incumbency practice. Nucor told North Shore it would be a problem to ship 

steel to MM, and North Shore stopped ordering steel for delivery to MM. On 

March 19, 2012, Hume and Schultz secretly taped North Shore’s Byron Cooper 

telling them that Nucor’s Whiteman told Cooper that “there’s a lot of pressure 

on the mills to not support [MM] from their biggest customers” and also that 

Whiteman stated “[t]here’s a mandate at Nucor that’s against supporting [] 

MM Steel.”

MM closed and officially stopped doing business in August 2013.

IV.

On April 29, 2012, MM sued Nucor, JSW, Chapel, Reliance, AmAlloy,

AmAlloy’s Moore, and SSAB (an additional manufacturer) in federal court 

alleging, inter alia, an illegal group boycott in violation of § 1 of the Sherman 

Act, 15 U.S.C. § 1. MM also brought a claim against JSW for breach of contract. 

The district court denied defendants’ motions to dismiss and motions for 

summary judgment. SSAB settled before trial for $2.5 million. The remaining 

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defendants proceeded to trial. MM’s sole theory of liability was that 

defendants were per se liable for joining a horizontal group boycott. As 

illustrated in the jury’s answer to Interrogatory Number 1, the jury found that 

the distributors “conspire[d] to persuade, induce, or coerce any steel mill not to 

sell steel plate to MM.” Under Interrogatory Number 3, the jury found that 

Nucor and JSW both “knowingly join[ed] the conspiracy” (emphasis added). 

This finding resulted in a per se violation of § 1 of the Sherman Act and an 

award of $52 million.1 The jury also found JSW liable for breaching its 

agreement to supply MM and awarded damages of $2 million for this breach. 

The district court denied various motions for judgment as a matter of law and 

for new trials. MM elected to recover on its antitrust claims, foreclosing 

recovery on its contract claim, and the district court trebled the damages, 

entering a final judgment holding all defendants jointly and severally liable. 

Defendants timely appealed, but the distributor defendants (Reliance, 

Chapel, AmAlloy, and Moore) settled for undisclosed terms and dismissed their 

appeals. Nucor and JSW are the remaining defendants on appeal. Nucor and 

JSW appeal the antitrust liability finding and award of damages. In the 

alternative, JSW also appeals the breach of contract award. Nucor also 

appeals the district court’s denial of its motions for a new trial due to the court’s

exclusion of expert testimony, flawed jury instructions, the admittance of 

inadmissible hearsay, and MM’s improper closing arguments. JSW appeals 

the district court’s denial of its motion for a new trial due to the admission of 

MM’s “patently unreliable” damages expert. Because we affirm the antitrust 

judgment as to JSW and reverse the judgment as to Nucor, we will not address 

 

1 Interrogatory Number 4 asked, “Did one or more steel mills refuse to sell steel plate 

to MM Steel as a result of the conspiracy thereby denying it access to a supply of steel plate 

necessary for it to compete effectively?” Although the jury answered in the affirmative, 

because this question did not specifically ask the jury to consider each manufacturer 

separately (as Interrogatory Number 3 did), clarity is lacking.

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Nucor’s evidentiary claims, nor will we address JSW’s appeal of the breach of 

contract award. 

DISCUSSION

I. 

We first consider whether there was substantial evidence to conclude 

that Nucor and JSW entered into a horizontal conspiracy with the distributors 

to refuse to deal with MM. We review jury verdicts deferentially. EEOC v. 

Boh Bros. Constr. Co., 731 F.3d 444, 451 (5th Cir. 2013). We review the denial 

of a judgment as a matter of law de novo, but we apply the district court’s 

standard: granting judgment as a matter of law only if the “facts and inferences 

point ‘so strongly and overwhelmingly in the movant’s favor that reasonable 

jurors could not reach a contrary conclusion.’ ” Id. (citation omitted). We can 

reverse a denial of a motion for judgment as a matter of law only if “the jury’s 

factual findings are not supported by substantial evidence or if the legal 

conclusions implied from the jury’s verdict cannot in law be supported by those 

findings.” Am. Home Assurance Co. v. United Space Alliance, LLC, 378 F.3d 

482, 486–87 (5th Cir. 2004). Substantial evidence is something more than “a 

scintilla of evidence.” Hunnicutt v. Wright, 986 F.2d 119, 122 (5th Cir. 1993).

To establish liability under § 1 of the Sherman Act, 15 U.S.C. § 1, a 

plaintiff must show that the defendants “(1) engaged in a conspiracy (2) that 

restrained trade (3) in a particular market.” Spectators’ Commc’n Network Inc. 

v. Colonial Country Club, 253 F.3d 215, 220 (5th Cir. 2001). MM’s sole theory 

of liability for the manufacturers is that Nucor and JSW joined a horizontal 

(i.e., between competitors) conspiracy between AmAlloy and Chapel, as 

explicitly found by the jury in Interrogatories Numbers 1 and 3. Nucor and 

JSW do not challenge the jury’s finding that a horizontal conspiracy existed 

between the distributors, but rather, they argue that there was not substantial 

evidence for the jury to conclude that they joined the conspiracy. After a 

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searching review of the record that exceeds 30,000 pages, we hold that there 

was not substantial evidence to conclude that Nucor joined the alleged 

conspiracy, but we affirm the finding as to JSW.

Only a concerted refusal to deal is illegal; a manufacturer “generally has 

a right to deal, or refuse to deal, with whomever it likes, as long as it does so 

independently.” Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761 

(1984). So that liability is not levied for independent refusals to deal, a plaintiff 

seeking to prove that a defendant joined an antitrust conspiracy without direct 

evidence of the conspiracy must present evidence “that tends to exclude the 

possibility” of independent conduct. Id. at 764; see Insulate SB, Inc. v. 

Advanced Finishing Sys., Inc., 797 F.3d 538, 545 (8th Cir. 2015) (“Under the 

‘Colgate doctrine,’ ‘[a] manufacturer . . . generally has a right to deal, or refuse 

to deal, with whomever it likes, as long as it does so independently.’ ” (citing 

United States v. Colgate & Co., 250 U.S. 300, 307 (1919)); see also Multiflex, 

Inc. v. Samuel Moore & Co., 709 F.2d 980, 988 (5th Cir. 1983) (“An antitrust 

conspiracy is rarely shown by direct evidence, and usually is proved by 

inference and suspicion.” (citing United States v. Paramount Pictures, Inc., 334 

U.S. 131 (1948))). Circumstantial evidence of a refusal to deal will not tend to 

exclude independent conduct unless refusing to deal is “inconsistent with [the 

manufacturer’s] independent self-interest.” Viazis v. Am. Ass’n of 

Orthodontists, 314 F.3d 758, 763 (5th Cir. 2002). The jury was properly 

instructed that a single firm’s refusal to deal does not entail a conspiracy if it 

makes that decision independently. 

A plaintiff seeking to prove that a defendant joined a conspiracy must 

also provide evidence that the conspiring parties “had a conscious commitment 

to a common scheme designed to achieve an unlawful objective.” Monsanto, 

465 U.S. at 764 (citation omitted). MM must have provided evidence showing

Nucor and JSW knew “the essential nature and general scope” of the joint plan. 

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H & B Equip. Co. v. Int’l Harvester Co., 577 F.2d 239, 245 (5th Cir. 1978)

(citation omitted). However, MM did not need to prove that Nucor and JSW 

orchestrated the plan. Rather, parties who knowingly join an antitrust 

conspiracy, like any conspiracy, are liable to the same extent as other 

conspirators. See United States v. All Star Indus., 962 F.2d 465, 478 (5th Cir. 

1992) (“It is well-established that, as a participant in [a bid-rigging] conspiracy, 

MIA is legally liable for all the acts of its co-conspirators in furtherance of this 

crime.”); Spectators’ Commc’n Network, 253 F.3d at 220-21. The jury was also 

properly instructed that “[w]hat the evidence must show is that . . . each 

defendant knowingly became a member of the conspiracy.” 

The type of conspiracy that MM alleged and that the jury found Nucor 

and JSW to have joined is a group boycott—here, and often, a concerted

agreement among competitors to refuse to deal with a manufacturer unless the

manufacturer refuses to deal with an additional (typically new) competitor. 

See Spectators’ Commc’n Network, 253 F.3d at 221. MM’s sole theory of 

antitrust liability was that Nucor and JSW joined the group boycott by joining 

the horizontal conspiracy among the competitors, the distributors. For us to 

affirm liability, a reasonable jury must have been able to conclude that Nucor 

and JSW knowingly joined the conspiracy between the distributors to refuse to 

deal with MM. Specifically, MM must have presented substantial evidence 

tending to exclude the possibility that JSW and Nucor each acted independent 

of the distributors’ horizontal conspiracy. See Viazis, 314 F.3d at 762.

A. 

JSW contends that there was not substantial evidence to conclude that 

JSW knowingly joined the horizontal conspiracy between the distributors. We 

disagree. We first summarize the evidence presented to the jury. JSW 

originally agreed in writing to do substantial business with MM. JSW even 

extended a line of credit to the newly formed company. However, after meeting 

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with executives from both AmAlloy and Chapel, and receiving independent

threats from two distributors, JSW decided to no longer do business with MM. 

When ending their relationship, JSW told MM that it understood the “gravity 

of the circumstance.” The day before JSW ended its relationship with MM, 

JSW contacted Chapel to expand their business with Chapel, including its 

Houston office. 

Although evidence of mere complaints from a distributor to a 

manufacturer would not be sufficient evidence to establish a conspiracy or that 

a manufacturer joined a conspiracy, see Viazis, 314 F.3d at 763, evidence that 

a manufacturer responded to a distributors’ actual threat can show concerted 

action that is not independent conduct. Id. at 763–64; see Monsanto, 465 U.S. 

at 767–68 (holding that evidence of specific threats to refuse to deal was

probative of concerted action). JSW received actual threats in the form of 

ultimatums to refuse to deal with MM from AmAlloy and Chapel, both of whom

had already formed a horizontal conspiracy.2 The fact that both companies 

made these threats within several weeks of each other was sufficient evidence 

for a reasonable juror to conclude that JSW was aware of the horizontal 

conspiracy to exclude MM from the market. A reasonable juror also could have 

concluded that JSW’s abrupt decision to no longer deal with MM following 

these threats and JSW’s statements regarding that decision tended to exclude 

the possibility of conduct that was independent of the distributors’ conspiracy. 

JSW contends that it made an independent decision to no longer deal 

with MM after learning of Chapel’s lawsuit against MM and after MM asked 

JSW to postpone shipments. A reasonable juror could have concluded that 

 

2 AmAlloy threatened JSW on September 19, 2011, and Chapel threatened JSW on 

October 4. The horizontal conspiracy and group boycott between these distributors was 

confected at the meeting between AmAlloy and JSW on September 8, 2011; as described in 

MM’s brief to this court, “the first business between the companies since Matt and Mike left 

AmAlloy in 1999, [signaling] a wholesale change in their relationship.” 

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these reasons were pretextual and that instead, JSW’s refusal to deal was a 

response to the two threats from the distributors. See Rossi v. Standard 

Roofing, Inc., 156 F.3d 452, 478 (3d Cir. 1998) (holding that pretextual excuses 

to explain a refusal to deal can be circumstantial evidence of a conspiracy); 

DeLong Equip. Co. v. Washington Mills Electro Minerals Corp., 990 F.2d 1186, 

1195–96 (11th Cir. 1993) (same). At the time JSW ended its relationship with 

MM, Chapel and AmAlloy had already threatened JSW, and MM had already 

settled the lawsuit with Chapel. In addition, JSW risked a breach of contract 

claim by ending this relationship. A reasonable juror could have concluded

that JSW’s explanation for its supposedly independent refusal to deal was 

pretextual. Because there was substantial evidence that tended to exclude the 

possibility that JSW acted independent of the horizontal conspiracy between 

the distributors when it refused to deal with JSW, we affirm the jury’s finding 

that JSW joined the horizontal conspiracy between the distributors. See 

Monsanto Co., 465 U.S. at 761. 

B.

Nucor also argues that there was not substantial evidence to conclude 

that it joined the horizontal conspiracy between the distributors. We agree.

For us to affirm the finding that Nucor joined the horizontal conspiracy, a 

reasonable juror must have been able to conclude from the evidence that Nucor 

knew “the essential nature and general scope” of the joint plan and joined it. 

See H & B Equip. Co., 577 F.2d at 245. MM needed to provide substantial 

evidence that tended to exclude the possibility that Nucor’s three refusals to 

deal (September 2, 2011, October 26, 2011, and March 2012) with MM were 

made independent of the existing horizontal conspiracy between the 

distributors. See Viazis, 314 F.3d at 762. After our searching review of the 

record, we conclude that MM did not provide such evidence. 

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On September 1, 2011, Nucor was first approached by MM’s Hume, who 

let Nucor know that he had left Chapel and started MM. Nucor’s President 

Whiteman immediately emailed Chapel’s Altman to let him know that they 

were aware of this development and would continue supporting Chapel.3

Nucor then first refused to quote MM on September 2, 2011. On September 5, 

2011, John Sergovic, the president of ArcelorMittal, sent an internal email, 

which Nucor contests on appeal, stating that Nucor was threatened by Chapel 

to not deal with MM before that date. Although Nucor’s initial email of support 

to Chapel does not reference this threat or suggest knowledge of this threat, a 

reasonable juror could have credited Sergovic’s email as evidence that Nucor 

received a threat from Chapel to not deal with MM before committing to its 

own decision to refuse to deal with MM.4

Nucor asserts that each time it refused to deal with MM, it was acting in 

accordance with its “incumbency practice,” where Nucor remains loyal to 

established customers, such as Chapel, in order to maintain its original supply 

chain. Even if the jury did not credit this practice, MM did not provide evidence 

showing that when Nucor first refused to quote MM, Nucor was aware of an 

agreement between the distributors to foreclose MM from the market. MM 

failed to provide evidence that tended to exclude the possibility that Nucor 

acted independent of such a conspiracy. In fact, at the time Nucor first refused 

to quote MM, Nucor believed that JSW, its competitor, was supplying MM. 

Hence Nucor would not have perceived that its refusal to deal (a decision either 

 

3 Earlier that day, a Chapel representative visited Nucor with another customer, and 

according to Nucor’s Whiteman, the representative was busy with phone calls due to a 

development at Chapel’s Houston office. That interaction led Whiteman to refer to MM’s 

formation as “the crisis” in his email to Altman. MM did not present any evidence showing

that the Chapel representative discussed MM during the visit on September 1. 

4 Notably, the cross-examination of JSW’s President Fitch elicited knowledge of raw 

threats from both Chapel and AmAlloy. The cross-examination of Nucor’s President 

Whiteman did not reveal any knowledge of the alleged threat from Chapel.

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made independently or even with Chapel) would help foreclose MM from the 

market. In addition, as MM contends, the horizontal agreement between the 

two distributors was not confected until September 8, 2012, the first date that 

AmAlloy and Chapel met following the establishment of MM.5 Nucor’s decision 

not to deal with MM took place on September 2, 2012, without knowledge of a 

horizontal conspiracy between Chapel and AmAlloy, and without knowledge of 

a concerted purpose to rid MM from the market. 

Although Nucor’s decision to not deal with MM was consistent with the 

purpose of the group boycott, Nucor’s decision does not tend to exclude the 

possibility that it was made independent of the group boycott. The Supreme 

Court has held that “conduct as consistent with permissible competition as 

with illegal conspiracy does not, standing alone, support an inference of 

antitrust conspiracy.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 588 (1986). The evidence establishes only that Nucor’s decision to 

support Chapel and not deal with MM was either consistent with its 

incumbency practice, or at most, consistent with a vertical agreement with 

Chapel, its longstanding customer. Without knowing that another distributor 

was threatening manufacturers, or that other manufacturers were refusing to 

deal with MM, Nucor could not consciously commit to a common scheme to 

foreclose MM from the market. See Monsanto, 465 U.S. at 764. A reasonable 

juror could not have found that Nucor’s original September 2 decision to not

deal with MM, made in favor of a longstanding customer, tended to exclude 

conduct independent of the horizontal conspiracy between the distributors.6

 

5 MM did not present any evidence showing that Chapel and AmAlloy communicated

regarding MM before this meeting.

6 Again, MM’s sole theory of liability was that Nucor joined the horizontal conspiracy 

and was thus per se liable for antitrust violations. We do not address whether this evidence 

would be sufficient to establish that Nucor and Chapel entered into a vertical refusal to deal 

agreement that could be held unlawful under the rule of reason. See NYNEX Corp. v. Discon, 

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MM has not identified any record evidence showing that Nucor was

approached by any distributor other than Chapel seeking concerted action 

against MM. In fact, the only evidence that could lead a reasonable juror to 

conclude that Nucor became aware of an agreement between the distributors 

was the statement made by North Shore’s Cooper to Hume and Schultz that 

MM recorded on March 19, 2012. Cooper stated that Nucor’s President 

Whiteman told Cooper, “So there’s a lot of pressure on the mills to not support 

you from their biggest customers.” Before Cooper made this statement, Nucor 

had refused to do business with North Shore when North Shore sold its steel 

to MM. Even if a reasonable juror could infer that when Nucor refused to deal 

with North Shore when selling to MM, Nucor was aware of the agreement 

between the distributors, Whiteman’s statement does not tend to exclude the 

possibility that Nucor acted independent of the horizontal conspiracy between 

the distributors. Nucor’s decision to not do business with North Shore when 

North Shore was selling to MM was consistent with its original decision not to 

deal with MM, which was made on September 2, 2011, without knowledge of 

the conspiracy between the distributors. See also Southway Theatres, Inc. v. 

Georgia Theatre Co., 672 F.2d 485, 494 (5th Cir. 1982) (recognizing this court’s 

consistent enforcement of the rule that “inference of a conspiracy is always 

unreasonable when it is based solely on parallel behavior that can be explained 

as the result of the independent business judgment of the defendants”). We 

hold that MM did not present substantial evidence from which a reasonable 

juror could conclude that Nucor’s unwavering refusal to deal with MM in favor 

of its longstanding relationship with Chapel tended to exclude the possibility 

 

Inc., 525 U.S. 128, 136 (1998); see also In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 317 

(3d Cir. 2010) (“While pleading exclusively per se violations can lighten a plaintiff’s litigation 

burdens, it is not a riskless strategy. If the court determines that the restraint at issue is 

sufficiently different from the per se archetypes to require application of the rule of reason, 

the plaintiff’s claims will be dismissed.”).

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that Nucor’s actions were made independent of the horizontal conspiracy

between AmAlloy and Chapel and joined by JSW. For that reason, we reverse

the judgment as to Nucor.

II.

We next consider whether the district court erred in instructing the jury 

that if it found that Nucor and JSW joined the conspiracy between the 

distributors, Nucor and JSW would be per se liable under § 1 of the Sherman 

Act. The decision to analyze the conspiracy under a per se theory of liability is 

a question of law that we review de novo. See Craftsmen Limousine, Inc. v. 

Ford Motor Co., 363 F.3d 761, 772 (8th Cir. 2004). Having reversed the verdict 

as to Nucor, we address only JSW’s arguments. JSW argues (1) that the per 

se rule does not apply and (2) in the alternative, “the case should be remanded 

for a new trial because the district court failed to properly submit the Tunica

factors to the jury.”

A.

Whether a restraint on trade is per se illegal or is analyzed under the 

rule of reason is a key distinction in antitrust law. Although § 1 proscribes 

“[e]very contract, combination . . . , or conspiracy . . . in restraint of trade or 

commerce,” 15 U.S.C. § 1, it is well-established that only unreasonable 

restraints on trade actually violate the Sherman Act. NYNEX Corp. v. Discon, 

Inc., 525 U.S. 128, 133 (1998). To determine whether a restraint is 

unreasonable, courts use one of two methods of analysis. Most agreements are 

analyzed under the rule of reason, whereby a court “must decide whether the 

questioned practice imposes an unreasonable restraint on competition, taking 

into account a variety of factors, including specific information about the 

relevant business, its condition before and after the restraint was imposed, and 

the restraint’s history, nature, and effect.” State Oil Co. v. Khan, 522 U.S. 3, 

10 (1997). But, certain agreements “because of their pernicious effect on 

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competition and lack of any redeeming virtue are conclusively presumed to be 

unreasonable and therefore illegal without elaborate inquiry as to the precise 

harm they have caused or the business excuse for their use.” United States v. 

Gen. Motors Corp., 384 U.S. 127, 146 (1966) (citation omitted). Group boycotts 

to foreclose an entrant from the market are of this latter character. Id.

The Supreme Court has consistently held that the per se rule is 

applicable to group boycotts identical to the boycott alleged in this case. See 

NYNEX, 525 U.S. at 135. The Supreme Court has regularly applied per se 

liability to agreements described as “either directly denying or persuading or 

coercing suppliers or customers to deny relationships the competitors need in 

the competitive struggle.” Nw. Wholesale Stationers, Inc. v. Pac. Stationery & 

Printing Co., 472 U.S. 284, 294 (1985) (citation omitted).7 The Court enforces

the per se rule to these group boycotts because “the likelihood of 

anticompetitive effects is clear and the possibility of countervailing 

procompetitive effects is remote.” Id. In Klor’s, Inc. v. Broadway-Hale Stores, 

Inc., the Court found it per se unlawful for manufacturers, distributors, and a 

retailer to agree to refuse to deal with another competing retailer. 359 U.S. 

207, 209–10 (1959). In United States v. General Motors Corp., the Court held 

it per se unlawful for an automobile manufacturer to agree with automobile 

dealers to boycott other dealers that were discounting cars. 384 U.S. at 145. 

These cases, and many more, illustrate that group boycotts involving a

horizontal conspiracy to foreclose a market participant are considered per se 

violations of § 1. See Gen. Motors Corp., 384 U.S. at 146. 

 

7 That a group boycott organized by a cooperative or professional organization is 

analyzed under the rule of reason unless the plaintiff can show that the cooperative or 

professional organization possessed “market power or exclusive access to an element 

essential to effective competition” has no bearing on this case as it does not involve a 

cooperative or a professional organization. See Nw. Wholesale, 472 U.S. at 296; see also F.T.C. 

v. Indiana Fed’n of Dentists, 476 U.S. 447, 458–59 (1986).

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JSW contends that the Supreme Court limited the application of per se 

liability to group boycotts in Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 

551 U.S. 877, 893 (2007). In antitrust law, a distinction exists between 

agreements that are made between competitors (horizontal agreements) and 

agreements between manufacturers and customers (vertical agreements). In 

Leegin, the Supreme Court held that the per se rule is inapplicable to 

price-setting vertical agreements, adding in dicta that this holding would 

extend to vertical agreements that facilitate horizontal conspiracies to increase 

prices. Id. (“To the extent a vertical agreement setting minimum resale prices

is entered upon to facilitate [horizontal cartels that decrease output or reduce 

competition to increase prices], it, too, would need to be held unlawful under 

the rule of reason.” (emphasis added)). 

Long before Leegin, settled Supreme Court case law held that purely 

vertical agreements to refuse to deal are not per se unlawful. NYNEX, 525 

U.S. at 135. Purely vertical refusals to deal, often referred to as exclusive 

dealing agreements, frequently have procompetitive justifications, such as 

limiting free riding and increasing specialization. See Richard Posner, 

Antitrust Law 253 (2d ed. 2001). However, the crux of the group boycotts at 

issue in the cases in which per se liability has always applied is that members 

of a horizontal conspiracy use vertical agreements anticompetitively to 

foreclose a competitor from the market. See NYNEX, 525 U.S. at 135 (“The 

agreement in Fashion Originators’ Guild involved what may be called a group 

boycott in the strongest sense: A group of competitors threatened to withhold 

business from third parties unless those third parties would help them injure 

their directly competing rivals.” (describing Fashion Originators’ Guild of Am. 

v. Fed. Trade Comm’n, 312 U.S. 457, 461–63 (1941)); Klor’s, Inc., 359 U.S. at 

208–09. In these cases, the vertical participants, the manufacturers, actually 

join the horizontal conspiracy. See United States v. MMR Corp. (LA), 907 F.2d 

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489, 498 (5th Cir. 1990) (holding that a non-competitor participant in a 

horizontal conspiracy was per se liable because “[i]f there is a horizontal 

agreement between A and B, there is no reason why others joining that 

conspiracy must be competitors”); Spectators’ Commc’n Network, 253 F.3d at 

223; see also Klor’s, Inc., 359 U.S. at 212–13; Nw. Wholesale Stationers, Inc., 

472 U.S. at 294. Each court that has addressed the anticompetitive nature of 

these group boycotts was aware of the vertical components of the conspiracy 

and still applied per se liability to each member of the conspiracy. See, e.g., 

Klor’s, Inc., 359 U.S. at 208–09. For example, in Klor’s, which remains 

controlling precedent, the Supreme Court applied per se liability to all of the 

participants in a group boycott that was arranged by only one competitor 

because there was a horizontal agreement among those that carried out the 

boycott. Klor’s, 359 U.S. at 212–13. 

We decline to hold that the Supreme Court silently overruled this line of 

cases by stating that vertical agreements to regulate prices that facilitate 

horizontal agreements to regulate prices “too, would need to be held unlawful 

under the rule of reason.” Leegin, 551 U.S. at 893; see also Anderson News, LLC 

v. Am. Media, Inc., 680 F.3d 162, 183 (2d Cir. 2012) (recognizing, post-Leegin, 

that, under Klor’s, per se liability applies to group boycotts with horizontal and 

vertical components). But cf. Toledo Mack Sales & Serv., Inc. v. Mack Trucks, 

Inc., 530 F.3d 204, 225 (3d Cir. 2008) (holding that under Leegin per se liability 

did not apply to vertical agreements between manufacturers and distributors 

to refuse to deal with distributors that were not part of a horizontal price-fixing 

conspiracy, but not finding that the manufacturers joined a horizontal group 

boycott). The district court did not err when it instructed the jury that if they 

found that the manufacturers joined the conspiracy between the distributors, 

the manufacturers were per se liable for a § 1 violation.

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B.

JSW also argues that in the alternative scenario where this court does 

not outright apply the rule of reason to determine the legality of the alleged 

conspiracy, we should order a new trial because the jury was not instructed to 

consider the factors discussed in Tunica Web Advertising v. Tunica Casino 

Operators Ass’n, Inc., 496 F.3d 403, 414–15 (5th Cir. 2007). The Tunica

decision does not affect our above holding that the per se rule applies to the 

group boycott alleged in this case. Instead, Tunica potentially expanded per 

se liability. In Tunica, this court reversed summary judgment where the 

district court concluded that the per se rule applies only to group boycott cases 

“where one of the conspirators is a direct competitor of the victim.” Id. at 414. 

This court recognized (post-Leegin) that per se liability applies to group 

boycotts where there is a horizontal agreement to foreclose a competitor from 

the market, but we also held that the per se rule is not limited to group boycotts 

where the horizontal agreement is among competitors. Id. at 413–14. The

Tunica court then instructed the district court to consider three factors on 

remand to determine whether per se liability applies.8 Id. at 414. Even if the 

Tunica court did not intend to expand per se liability, the application of the 

three factors was limited to the specific facts of that case. See id. at 414. The 

district court did not err by not applying these factors or instructing the jury 

to consider them before applying per se liability. 

III. 

Finally, we address JSW’s argument that the jury’s damages findings 

were fatally defective because MM’s damages expert, Stephen P. Magee,

 

8 These factors were: “(1) whether the casinos hold a dominant position in the relevant 

market; (2) whether the casinos control access to an element necessary to enable TWA to 

compete; and (3) whether there exist plausible arguments concerning pro-competitive 

effects.” Id. at 414–15. In light of our description of the alleged conspiracy, each of these 

factors would likely be met in this case.

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should have been excluded. Before trial, JSW filed a Daubert motion to exclude 

Magee’s testimony as unreliable. The district court denied the motion. JSW 

renewed the same objections at trial, in motions for judgment as a matter of 

law post-trial, and in a motion for a new trial, all of which the district court 

denied. JSW raises the same arguments on appeal.

We review “the district court’s determination of admissibility of expert 

evidence under Daubert for abuse of discretion.” Knight v. Kirby Inland 

Marine Inc., 482 F.3d 347, 351 (5th Cir. 2007) (referencing Daubert v. Merrell 

Dow Pharms., Inc., 509 U.S. 579 (1993)). Under Daubert, “[t]he proponent 

need not prove to the judge that the expert’s testimony is correct, but she must 

prove by a preponderance of the evidence that the testimony is reliable.” Moore 

v. Ashland Chem. Inc., 151 F.3d 269, 276 (5th Cir. 1998). The Daubert inquiry 

is flexible, but the proponent must establish reliability by showing that the 

testimony is based on reasoning or methodology that is “scientifically valid.” 

Id. 

JSW contends that there are four problems with Magee’s testimony and 

with the jury’s damages award. In so arguing, JSW asserts that the existence 

of any of these problems individually, or all cumulatively, requires a new trial 

or remittitur. JSW contends that when using the yardstick model of damages, 

Magee (1) relied on an invalid comparator, (2) used the wrong time period for 

comparison, (3) “assumed a gross-profit margin that, indisputably, no company 

achieved during the alleged damage period,” and (4) failed to take into account

MM’s settlement with Chapel that reduced its customer pool for the first six 

months of operation. We find no abuse of discretion in the district court’s

admission of Magee’s testimony. 

JSW’s asserted fatal flaws all relate to the expert’s use of the yardstick 

model. We have described this model as follows:

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There are two generally recognized methods of proving lost profits: 

(1) the before and after theory; and (2) the yardstick test. The 

before and after theory compares the plaintiff’s profit record prior 

to the violation with that subsequent to it. The before and after 

theory is not easily adaptable to a plaintiff who is driven out of 

business before he is able to compile an earnings record sufficient 

to allow estimation of lost profits. Therefore, the yardstick test is 

sometimes employed. It consists of a study of the profits of 

business operations that are closely comparable to the plaintiff’s. 

Although allowances can be made for differences between the 

firms, the business used as a standard must be as nearly identical 

to the plaintiff’s as possible.

Lehrman v. Gulf Oil Corp., 500 F.2d 659, 667 (5th Cir. 1974). Because MM 

was newly formed at the time the alleged conspiracy began, it had no financial 

performance to use as the “before” in the before and after test. Thus, Magee 

used the yardstick approach. As a comparator, Magee chose the first twelve 

years of operation at Chapel’s Houston office, which Schultz and Hume had 

opened and ran until they left to start MM. He excluded an outlier year in 

which Chapel’s performance was extraordinary. Magee imported the average 

gross-profit margin from this comparator and projected profits, assuming that 

MM would have kept operating for ten years. We find no abuse of discretion 

in allowing Magee to testify according to this approach.

JSW asserts that Chapel’s Houston office was too different from MM to 

be a reliable comparator in the yardstick model. An antitrust plaintiff must 

“demonstrate the reasonable similarity of the business whose earning 

experience he would borrow.” Eleven Line, Inc. v. N. Tex. State Soccer Ass’n, 

Inc., 213 F.3d 198, 208 (5th Cir. 2000). MM has adequately done so here. 

Chapel’s Houston office is not nearly as dissimilar as other comparators this 

court has found to be improper yardsticks. See El Aguila Food Prods., Inc. v. 

Gruma Corp., 131 F. App’x 450, 453 (5th Cir. 2005) (where an expert “made no 

effort to demonstrate the reasonable similarity of the plaintiffs’ firms and the 

businesses whose earnings data he relied on as a benchmark”); Eleven Line, 

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Inc., 213 F.3d at 208 (where the expert’s yardstick was not nearly identical and

he offered no evidence of the comparators’ geographic location, size, market 

served, or costs of operation). Magee’s yardstick was “as nearly identical to 

[MM] as possible.” Lehrman, 500 F.2d at 667; cf. J. Truett Payne Co. v. 

Chrysler Motors Corp., 451 U.S. 557, 566 (1981) (noting that courts are willing 

to accept some uncertainty in antitrust damages estimates because the 

“vagaries of the marketplace usually deny us sure knowledge of what plaintiff’s 

situation would have been in the absence of the defendant’s antitrust 

violation”). Therefore, the district court did not abuse its discretion by 

concluding that Magee’s comparator was reliable. 

Similarly, JSW contends that Magee should have used the years 2011–

2013 as his benchmark period instead of 2001–2011. JSW contends that 2001–

2011 were “some of the best years for the steel industry” and are not 

representative of the industry’s future performance. As support, JSW cites 

weaknesses in the steel market in 2011–2013. JSW has not shown that 

Magee’s use of 2001–2011 data was unreasonable or unsupported. Magee 

excluded one extraordinary year (2004), and his benchmark period included six 

years of recession. The defendants had the opportunity to show whether the 

benchmark period was correct on cross examination. See Daubert, 509 U.S. at 

596 (“Vigorous cross-examination, presentation of contrary evidence, and 

careful instruction on the burden of proof are the traditional and appropriate 

means of attacking shaky but admissible evidence.”). We find no abuse of 

discretion as to this point.

JSW also asserts that Magee’s model is unreliable because no actual 

competitor achieved the gross-profit margin that his model projected for MM. 

This criticism is related to the previous two criticisms; Magee used the grossprofit margin achieved by Chapel’s Houston office between 2001 and 2011 

(excluding 2004). JSW contends that Chapel’s Houston office from 2012–2013, 

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or MM acting as a broker in 2011, is the proper comparator for gross-profit 

margin. Magee’s assumption that MM would achieve better margins than its 

competitors was reasonable based on evidence that MM’s leadership was 

simply better than that of its competitors. While at Chapel, MM’s founders 

had achieved a twenty percent profit margin in a year so bad for the steel 

industry that another distributor had its first negative year in forty years. 

Magee’s projections were perhaps rosy, but they were not unreliable. In 

addition, JSW’s competing expert adequately aired his disagreement. It was 

not an abuse of discretion to allow MM’s expert to provide his own model 

reaching a different projected gross-profit margin. See Pipitone v. Biomatrix, 

Inc., 288 F.3d 239, 250 (5th Cir. 2002) (“The fact-finder is entitled to hear [the 

expert’s] testimony and decide whether it should accept or reject that 

testimony after considering all factors that weigh on credibility, including 

whether the predicate facts on which [the expert] relied are accurate.”).

Lastly, JSW argues that Magee failed to consider the fact that for the 

first six months of operation, MM was prohibited from doing business with 

approximately 190 of Chapel’s former customers. Magee’s testimony shows 

that he considered this limitation but ultimately decided the limitation was 

temporary and would not affect MM’s sales potential. This decision did not 

make Magee’s testimony unreliable.

Because the district court did not abuse its discretion by admitting the 

testimony of MM’s damages expert, Magee, the district court correctly denied 

JSW’s motion for a new trial. See Munn v. Algee, 924 F.2d 568, 575 (5th Cir. 

1991) (“When reviewing the disposition of a new trial motion, we normally 

reverse the judgment only for an abuse of discretion.”).

CONCLUSION

Following a six-week jury trial, the district court entered judgment for 

MM on its claim under § 1 of the Sherman Act alleging an illegal conspiracy 

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between the distributors and manufacturers of the Gulf Coast domestic steel 

industry. MM alleged that Nucor and JSW, steel manufacturers, joined the 

horizontal conspiracy between MM’s competing distributors to refuse to deal 

with MM. The jury was correctly instructed to apply per se liability if they 

found that the manufacturers joined the conspiracy. The jury, finding that the 

manufacturers joined the conspiracy, awarded MM damages of $52 million, 

which the court trebled. We hold, among other things, that there was 

substantial evidence for the jury to conclude that JSW joined the conspiracy 

between the distributors. However, there was not substantial evidence, direct 

or circumstantial, to conclude that Nucor joined the horizontal conspiracy

between the distributors—MM’s only theory of § 1 liability. 

We REVERSE the judgment as to Nucor and AFFIRM the judgment as 

to JSW. 

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