Opinion ID: 392844
Heading Depth: 3
Heading Rank: 1

Heading: The Statutory Violation

Text: 9 Section 1 of the Sherman Act, 15 U.S.C. § 1 (1976), provides that every contract, combination ... or conspiracy in restraint of trade or commerce ... is ... illegal. The term every is not to be taken literally; instead the standard of reasonableness has been adopted to judge the lawfulness of the restraint. Standard Oil Co. v. United States, 221 U.S. 1, 66, 31 S.Ct. 502, 518, 55 L.Ed. 619 (1911). Certain practices, however, have such a pernicious effect on competition, Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958), that they are considered to be per se violations of section 1 of the Sherman Act. Among these practices is price fixing, United States v. Trenton Potteries, 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700 (1927), and the machinery employed to achieve that end is immaterial, United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 210, 60 S.Ct. 811, 838, 84 L.Ed. 1129 (1940). These long-standing principles enjoy full vitality today. See Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643, 100 S.Ct. 1925, 64 L.Ed.2d 580 (1980). 10 In response to special interrogatories, the jury returned a verdict that defendants were engaged, along with other softwood plywood manufacturers, in a conspiracy to fix prices. Defendants attack the viability of this verdict, asserting that plaintiffs produced no evidence, either direct or circumstantial, of any such conspiracy. Accordingly, they contend that it was error for the district court to deny their motion for judgment notwithstanding the verdict. Our standard for review of that denial by the district court is well known. Considering all of the evidence in the light most favorable to the nonmoving party, 11 If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motions is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury.... (I)t is the function of the jury as the traditional finder of the facts, and not the Court, to weigh conflicting evidence and inferences, and determine the credibility of witnesses. 12 Boeing Co. v. Shipman, 411 F.2d 365, 374-75 (5th Cir. 1969) (en banc). 13 We find that there is substantial evidence, as defined in the quotation above, from which a reasonable jury, both directly and circumstantially, could find the existence of a conspiracy to fix prices. It does not strain credulity that solemnized covenants to conspire are difficult to come by in any price fixing case. Plaintiffs have, nevertheless, unearthed damaging evidence from the mouths, or typewriters, of defendants' own employees. 14 In 1971, James Tweedie, Softwood Plywood Product Manager for Weyerhaeuser, received an internal memorandum from Wayne Marcella, which begins as follows: 15 Jim, my apologies for the delayed response on our various conversations regarding Georgia-Pacific. As you know, at the American Plywood Association meeting in Biloxi, Mississippi I made it a point to spend considerable time with (Georgia-Pacific plywood sales managers) Tom Nash and Bill Fuller. The following outlines the highlights of our conversations which ranged from customer commitments to plywood marketing practices. 16 The memo concludes with the following assurance: The communication channels developed through Tom Nash and Bill Fuller offers (sic ) an opportunity to secure specific competitive information. Therefore, it is my intention to keep this direct contact open through weekly phone conversations. 17 A 1969 memorandum sent to James Tweedie informs him that Georgia-Pacific personnel have adopted the following price basis. Low Crow's less 5% less 3% plus West Coast freight. This applys (sic ) in truck lots (Mill) &/or pick up at the local Columbia warehouse. A 1971 internal memorandum from F. V. Langfitt, Jr., Vice President of Sales, Georgia-Pacific, to Tom Nash reveals the following: Jimmy Schmidt, Sales Manager for Boise (Cascade)'s Southern Pine Mill in North Carolina, was in the office last week and indicated that they are making all of their 1/2 in 3-Ply construction and are selling it all at not to exceed $1.00 under 4-Ply/5-Ply.A 1970 memorandum from K. C. Sisson to R. W. Stewart, both of Weyerhaeuser, contains the following language: 18 We have been attempting to secure information regarding Georgia-Pacific's Intermediate Glue Line and pricing for this product. 19 .... 20 Today I contacted an old acquaintance at Georgia-Pacific's Portland office, Don Martin. Don offered the following information: 21 They are currently manufacturing the Intermediate Glue Line, on their sheathing production at their Corvallis, Oregon mill.... They price the IMG $2.00 to $3.00 under their exterior level. 22 A copy of the memorandum was sent to James Tweedie and Wayne Marcella. 23 In response to a rumor that some manufacturer was deviating from the industry's practice of west-coast-freight pricing, a 1972 Georgia-Pacific memorandum from Mr. Trammel, a Regional Sales Manager, to Winston Purifoy, asks the latter the following question: Tom Mateo advises he has heard of some Arkansas plywood mills shifting to an FOB mill pricing policy. Do you know anything about this? Mr. Purifoy responded as follows: 24 Negative. I had not heard this and called all plants. Big W(eyerhaeuser) is now encouraging their more distant truck customers to make mill pick-ups in return for an allowance. They thus are dropping their truck customers in poor freight gain areas. 25 A 1972 memorandum authored by James Tweedie and directed to L. V. Imhoff begins as follows: 26 As a segment of our southern mill intelligence trip, a visit was scheduled with Winston Purifoy, Vice President-Sales, Southern Plywood-Particleboard, and Bill Fuller, Plywood Sales Manager (both of Georgia-Pacific). It was a very cordial visit and one which was very informative to us. Listed below are some of the subjects discussed and their input. 27 Mr. Tweedie then reports the substance of his communications with the Georgia-Pacific officials regarding pricing, sales practices, and numerous other aspects of Weyerhaeuser's chief competitor's operations. The memorandum concludes with the following appraisal: 28 It was a good exchange and the connection has been made to keep in touch without exposing our individual companies to any risks. Wayne Marcella (Weyerhaeuser) will stay close to Bill Fuller (Georgia-Pacific) and monitor what is happening in the south. With this connection, we should be able to round out our information on this company as it relates to plywood and more especially the south. 29 Without belaboring the point by citation of further examples, the record contains documents from which a reasonable jury could find that defendants and other softwood plywood manufacturers were engaged in a conspiracy to fix prices in violation of section 1 of the Sherman Act. Moreover, we have held previously that proof of a conspiracy under § 1 of the Sherman Act does not require the existence of an express agreement.... It is 'enough that, knowing that concerted action was contemplated and invited, the (defendants) gave their adherence to the scheme and participated in it.'  Gainesville Utilities Dept. v. Florida Power & Light Co., 573 F.2d 292, 300 (5th Cir.), cert. denied, 439 U.S. 966, 99 S.Ct. 454, 58 L.Ed.2d 424 (1978) (citations omitted). The parallel pricing conduct clearly demonstrated in the record plus the numerous items of direct evidence of communication between high-level personnel on pricing policy adequately support the jury's verdict. Cf. id., 575 F.2d at 301 and n.13 (evidence points so strongly to the existence of a conspiracy that reasonable men could not arrive at a contrary verdict).