Opinion ID: 775962
Heading Depth: 4
Heading Rank: 2

Heading: Whether Plaintiff's Alleged Market is Under-Inclusive

Text: 27 The issues discussed above overlap with the district court's under- inclusiveness argument. The district court found that plaintiff fails to adequately explain why an antitrust lawyer employed by an oil company does not compete in the same market as an antitrust lawyer at a commercial bank or in a private law firm. Todd, 126 F. Supp. 2d at 325. Defendants make the same argument on appeal. By underinclusive, the district court appears to mean that the market should not be limited to employers in the oil and petrochemical industry. There may be merit to the district court's argument as it relates to less specialized job categories, but this fact-specific question cannot be resolved on the pleadings. At this stage, it is sufficient that plaintiff has alleged specific facts that support a narrow product market in a way that is plausible and bears a rational relation to the methodology courts prescribe to define a market for antitrust purposes. 28 Plaintiff claims that MPT employees accumulate industry-specific knowledge that renders them more valuable to employers in the oil and petrochemical industry than to employers in other industries. Plaintiff supports this contention by arguing that [w]orkers receive compensation for skills that are specific to a set of firms that produce similar products, and thus MPT employees would suffer large wage losses if they switch industries. According to the complaint, [a]s the employees gain experience, the only practical outlets to sell their services at an amount reflecting the value of their experience are the integrated oil and petrochemical companies, i.e., Defendants. Compl. ¶ 115. While the complaint could perhaps be more specific about the experience that renders these employees more valuable within the oil industry, plaintiff's point is hardly counter-intuitive. It is consistent with common sense and empirical research that employees' industry-specific experience may cause them to suffer a pay cut if forced to switch industries. See Elisabetta Magnani, Risk of Labor Displacement and Cross-Industry Labor Mobility, 54 Indus. & Lab. Rel. Rev. 593, 593-94 (2001) (referring to the empirical research indicating that wage losses generally accompany industry mobility). To be sure, the district court and defendants may be correct to assume that industry specificity affects certain MPT employees less than others. Todd, 126 F. Supp. 2d at 325. Less technical jobs tend to involve skills that are not as industry-specific, creating greater cross-elasticity for these employees. See Bruce C. Fallick, A Review of the Recent Empirical Literature on Displaced Workers, 50 Indus. & Lab. Rel. Rev. 5, 12 (1996) (noting that executives, administrators, and managers, as well as more highly educated workers tend to have greater industry mobility than sales and production employees). 29 This is not to say, however, that less technical jobs require no industry-specific experience, and the extent to which they do involves a question of fact not resolvable on a Rule 12(b)(6) motion. It is not implausible that less technical MPT employees develop industry-specific expertise that affects their value in the labor market. A lawyer, for example, who works for an oil company may gain expertise on regulatory issues regarding the environment and natural resources, while a lawyer for a pharmaceutical company becomes proficient in such matters as FDA approval and warning labels. 6 While plaintiff's contention that it is virtually self-evident that employers will pay more for employees with relevant experience may oversimplify the issues of market definition in this case, it cannot be said that plaintiff's alleged market is implausible. 30 It may well be that the availability of employment in alternative industries places some constraints on the ability of the alleged conspirators to limit salary increases. Market definition is generally a matter of degree. Even a monopolist is subject to limitations on how far it can increase price. See Donald F. Turner, Antitrust Policy and the Cellophane Case, 70 Harv. L. Rev. 281, 308-10 (1956). In accordance with this Court's formulation in AD/SAT, 181 F.3d at 227-28, plaintiff is simply alleging that a slight decrease in salary by a hypothetical oligopsonist cartel in the oil/petrochemical industry would not cause MPT employees to leave the industry because they would have difficulty finding compensation fully reflecting the value of their experience elsewhere. At trial, plaintiff would have to prove this theory with economic evidence regarding the cross-industrial elasticity of MPT employees. Evidence could include information regarding, for example, the extent to which decreases in oil/petrochemical industry salaries, or increases that do not keep pace with increases in other industries, cause MPT employees to leave the industry; whether MPT employees who leave or are displaced from the oil/petrochemical industry suffer pay cuts upon switching industries; 7 and whether it takes longer for MPT employees who leave or are displaced from oil/petrochemical industry jobs to find employment in other industries than within the same industry. The outcome of fact-intensive inquiries such as these would help the court determine whether plaintiff's proposed market can be sustained. 31 Defendants attempt to invoke our statement in AD/SAT that [i]f the sales of other producers substantially constrain the price-increasing ability of the hypothetical cartel, these others are part of the market. AD/SAT, 181 F.3d at 228 (citation omitted). Defendants' reference to AD/SAT merely restates the test; it does not predict its outcome in this case. The fact that electronic transmission of newspaper advertisements does not constitute its own product market - the finding in AD/SAT - sheds little light on the fact-specific question of whether MPT employment opportunities in the oil and petrochemical industry constitute the relevant market in the instant case. It is also significant that AD/SAT was decided on summary judgment, not a Rule 12(b)(6) motion to dismiss, and thus the Court considered evidence such as the newspapers' use of the different transmission services and research by consultants regarding market conditions. Id. at 228-29; cf. Virgin Atl. Airways Ltd. v. British Airways PCL, 257 F.3d 256, 259 (2d Cir. 2001) (affirming grant of defendant's motion for summary judgment in predatory pricing case but only [a]fter reviewing the voluminous exhibits filed under seal in this case). 32 In finding that plaintiff's allegation about the industry-specific expertise of MPT employees supports a plausible product market, we do not indicate whether plaintiff will succeed in proving the alleged market. It remains to be seen whether every category of MPT employee in the plaintiff class can demonstrate the requisite degree of inelasticity. 8 We find only that the allegation of a market limited to employers in the oil and petrochemical industry is plausible on its face.