Opinion ID: 3062248
Heading Depth: 1
Heading Rank: 6

Heading: sufficiency of the evidence

Text: Dow also challenges the sufficiency of the evidence regarding liability, arguing that the district court erred in denying the motion for judgment as a matter of law. We reject this challenge.
32 We engage in de novo review of the district court’s denial of judgment as a matter of law, applying the same standard as the district court. Myklatun v. Flotek Indus., Inc., 734 F.3d 1230, 1233-34 (10th Cir. 2013). This standard requires us to determine whether the evidence allowed a verdict for the plaintiffs. See Wolfgang v. Mid-Am. Motorsports, Inc., 111 F.3d 1515, 1522 (10th Cir. 1997). In applying this standard, we view the evidence and related inferences in the light most favorable to the plaintiffs. See Myklatun, 734 F.3d at 1234. Judgment as a matter of law should not be granted “[u]nless the proof is all one way or so overwhelmingly preponderant in favor of the movant as to permit no other rational conclusion.” Greene v. Safeway Stores, Inc., 98 F.3d 554, 557 (10th Cir. 1996). This evidence, viewed in the light most favorable to the plaintiffs, was sufficient for a finding of liability.
Dow argues that: (1) there was insufficient evidence that the alleged price-fixing agreement was effectively implemented, (2) there was insufficient evidence of a conspiracy involving Lyondell, and (3) the jury necessarily rejected Dr. McClave’s models, leaving insufficient evidence of impact and damages. We reject each argument.
Dow does not dispute: ● the existence of an agreement to coordinate price-increase announcements and try to make them stick, or 33 ● the existence of evidence involving coordination in announcing price increases. Rather, Dow questions the existence of evidence that the conspirators followed through with the agreement by requiring suppliers to make the price increases stick. Without evidence of follow-through, Dow argues, the price-fixing claim fails as a matter of law. We reject Dow’s argument.
The argument rests on a purported distinction between two categories of pricefixing conspiracies: (1) those involving an agreement to set prices directly, and (2) those involving an agreement to announce price increases and try to make them stick. Conspiracies falling into the second category, Dow submits, require an evidentiary link between the price-increase announcements and subsequent prices. According to Dow, this evidentiary link is necessary because parallel price-increase announcements do not prove a conspiracy. For the sake of argument, we can assume that evidence of parallel price-increase announcements would not establish a price-fixing conspiracy. But the plaintiffs did more than show parallel announcements. The evidence included admissions by industry insiders, collusive behavior, susceptibility of the industry to collusion, and setting of prices at a supra-competitive level. For example, the plaintiffs presented testimony by Ms. Stephanie Barbour (Dow), who admitted that Dow had participated in a price-fixing conspiracy. Ms. Barbour 34 directly implicated at least three Dow executives in the conspiracy: Mr. Marco Levi, Mr. David Fischer, and Mr. Peter Davies. Another key witness for the plaintiffs was Mr. Lawrence Stern (Bayer), who recounted numerous conversations he had had with his counterparts at Dow, BASF, and Huntsman. Mr. Stern described these conversations as “inappropriate,” for they pertained to future pricing and “the possibility of raising prices.” SA 912-14. Mr. Stern added that he had: ● discussed prices with David Fisher (Dow) on eight to fifteen occasions, and ● exchanged confidential pricing information with competitors to spur industry-wide price increases. Id. at 896-97, 905. Mr. Stern also testified that he had taken “unusual steps” to conceal his conversations with Bayer’s competitors. Id. at 881. For instance, he would use pay telephones instead of calling from his office and would use a prepaid phone card. Id. Other times, Mr. Stern met with competitors at off-site locations, such as coffee shops or hotels. Commenting on these secretive communications, the plaintiffs’ expert econometrician told the jury that “economists associate secrecy with collusion.” Id. at 2688. Testimony about a conspiracy also came from others, such as: ● Mr. Edward Dineen (Lyondell), who implicated Mr. Jean Pierre Dhanis (BASF) and Mr. Robert Wood (Dow) in the conspiracy, 35 ● Mr. Robert Kirk (Bayer), who confirmed Mr. David Fischer’s (Dow) involvement, and ● two Bayer executives (Ms. Michelle Blumberg and Mr. Gerald Phelan) who had grounds to suspect their colleague, Mr. Wolfgang Friedrich, of pricefixing. The jury also heard from the plaintiffs’ expert, Dr. John Solow, who testified about: (1) collusive conduct he had observed in the polyurethane industry, and (2) the industry’s susceptibility to collusion. Dr. Solow had observed four types of collusive conduct. First, the defendant companies had issued “a series of . . . lockstep price increase announcements,” which came within weeks of each other, communicated the same or similar price increases, and were to take effect at about the same time. Id. at 2678-79, 2682. Second, Dr. Solow noticed “a widespread pattern of communication” among the top executives of the defendant companies. Id. at 2679. Dr. Solow was struck not only by the frequency and secrecy of these communications but also by their timing, for the contacts frequently occurred within days of a lockstep price-increase announcement. Id. at 2706-09. This proximity suggested that the price-increase announcements had been coordinated. Id. Third, Dr. Solow detected a “price over volume strategy,” where the companies would stick to their list prices even if it meant walking away from opportunities to earn business or make sales at lower, but still profitable, prices. Id. at 2679. In Dr. Solow’s 36 view, these actions would not take place in a competitive market and the companies were acting contrary to their interests. Id. at 2711-12. Fourth, the defendant companies monitored one another to prevent cheating and to discipline any supplier that was found cheating. Id. at 2723. Dr. Solow also testified that the polyurethane industry was “ripe for collusion” based on six features:14 1. Sales of polyurethane products were “concentrated in the hands of only a handful of firms” during the conspiracy period;15

4. there were no close product substitutes available to customers;18 5. there was excess capacity for MDI, TDI, and polyether polyols during the conspiracy period, meaning that the companies could “produce more output than the customers actually want[ed] to buy,” putting a “strong downward pressure on prices;”19 and 14 SA 2675. 15 Id. at 2644. 16 Id. at 2645. 17 Id. at 2646. 18 Id. at 2649. 19 Id. at 2651-52. 37 6. the industry has several trade associations, which provided “an opportunity to engage in price fixing behavior.”20 The evidence also included testimony by Dr. McClave. He testified that class members had been overcharged for polyurethane products because of “something other than competition.” AA 1072-73, 1119; SA 6297. The evidence, viewed favorably to the plaintiffs, goes beyond parallel announcements of price increases. b. Announcements of Price Increases v. Actual Price Increases Dow argues that even if a conspiracy existed, it did not work because the plaintiffs could not tie the announcements to actual price hikes. But the plaintiffs had no reason to connect the two, for they were not trying to prove that the price-increase announcements caused supra-competitive prices. Instead, the plaintiffs were trying to prove that the supra-competitive prices were caused by the conspiratorial agreement; the price-increase announcements were merely an instrument used to effectuate that agreement. The jury could have inferred that the announcements proved successful, for the trial included testimony that: (1) manufacturers sometimes used the announcements to avoid price decreases,21 and (2) some of the announcements were partially or fully 20 Id. at 2660-61. 21 SA 1964 (testimony of Mr. Jean-Pierre Dhanis). 38 accepted.22 From this testimony, the jury could have inferred that a conspiracy existed and that it caused prices to be higher than they would have been in a marketplace free of collusion. 2. Involvement of Lyondell Dow argues the evidence was insufficient regarding Lyondell’s involvement in the conspiracy. This argument fails legally and factually. The argument fails legally because even if the evidence had not shown Lyondell’s involvement, Dow would not have been exonerated. A defendant can incur liability for a conspiracy under § 1 of the Sherman Act so long as the defendant did not act unilaterally. See Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 768 (1984). And, for the reasons discussed above, there is sufficient evidence of a conspiracy between Dow and the other defendant companies, regardless of Lyondell’s involvement. Dow’s argument also fails factually because the evidence allowed a reasonable fact-finder to infer Lyondell’s participation in the conspiracy. The inference was possible based on evidence that: (1) Lyondell and Dow communicated before three price hikes, 22 SA 892-93 (testimony of Mr. Larry Stern); id. at 4156 (testimony of Mr. Richard Beitel that price increases were fully paid for 40-50% of the announcements); id. at 299300 (Bayer memorandum stating that “the price increases [are] becoming effective and being paid”); id. at 304 (Bayer memorandum stating that announcements of price increases allowed Bayer to benefit from the full impact); id. at 341-42 (Dow e-mails acknowledging that Dow had obtained “the full increases”); id. at 482 (Dow announcement in connection with pricing, stating “Its [sic] Working!!!!!!!”); id. at 3438, 3502-03 (testimony of Dr. McClave that prices exceeded competitive levels from 1999 to 2003); id. at 2732 (testimony of Dr. Solow that the alleged conspiracy succeeded because nearly all class members had to pay the higher prices). 39 (2) other conspirators discussed collusion in front of Lyondell’s representative, and (3) other manufacturers colluded. First, the plaintiffs presented evidence that Mr. Mario Portela (Lyondell) had communicated with Mr. Marco Levi (Dow) immediately before at least three lockstep price-increase announcements. See SA 3147-51, 3224-30; AA 1772-92. Second, the evidence included testimony by Mr. Edward Dineen (Lyondell), who told the jury that: (1) he had attended a dinner with Mr. Jean-Pierre Dhanis (BASF) and Mr. Robert Wood (Dow), and (2) during the dinner, Mr. Dhanis made “comments regarding pricing and market conditions for urethanes” that made Mr. Dineen feel “uncomfortable from an antitrust perspective.” SA 1984-85. The fact that Mr. Dhanis felt comfortable discussing prices in front of Mr. Dineen suggests the involvement of one or more Lyondell executives. Finally, the evidence suggested participation by virtually every large manufacturer. This evidence could have led the jury to infer participation by Lyondell. See In re Flat Glass Antitrust Litig., 385 F.3d 350, 363 (3d Cir. 2004) (“If six firms act in parallel fashion and there is evidence that five of the firms entered into an agreement, . . . it is reasonable to infer that the sixth firm acted consistent with the other five firms’ actions because it was also a party to the agreement.”). 3. Effect of the Jury Verdict on Dr. McClave’s Models The jury found no injury for the 23-month period preceding November 24, 2000. AA 513-14. From this finding, Dow infers that the jury partially rejected Dr. McClave’s 40 models. With this inference, Dow argues that Dr. McClave’s models are invalid; and without valid models, Dow continues, the plaintiffs lack sufficient evidence of impact and damages. This series of inferences does not allow us to disturb the jury’s unequivocal findings on impact and damages. We conclude that: ● the plaintiffs’ failure to prove a conspiracy for part of the alleged conspiracy period does not invalidate the finding of liability for part of this period, and ● we have no reason to believe that the jury rejected Dr. McClave’s models in their entirety. As the district court recognized, the jury may have fully credited Dr. McClave’s models, but found the evidence insufficient to find an injury before November 24, 2000. Citing In re Rail Freight Fuel Surcharge Antitrust Litigation, Dow contends that the models are invalid because they “detect[] injury where none could exist.” Appellant’s Opening Br. at 51 (quoting In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d 244, 252 (D.C. Cir. 2013)). This case does not apply. In In re Rail Freight, an expert witness found damages for plaintiffs who were bound by rates agreed to before the alleged conspiracy. 725 F.3d at 252. Thus, the plaintiffs could not have been harmed by the conspiracy. Id. And, under Comcast, the D.C. Circuit Court of Appeals regarded certification as questionable because damages might not be provable through class-wide evidence. Id. at 252-53. This analysis does not apply here for two reasons. 41 First, In re Rail Freight involved a certification challenge decided on interlocutory review; at that stage, the Court of Appeals could only predict whether common issues would predominate for purposes of class certification. Here, we have the benefit of knowing what happened at the trial: Common issues predominated over individualized issues. Thus, the D.C. Circuit’s concern lacks any bearing on whether common issues predominated here. Second, Dr. McClave’s model does not suffer from the same flaw identified in In re Rail Freight. There, the appeals court could not credit the expert’s opinion because his methodology yielded damages for a time period in which prices had been freely set. Thus, the expert found damages for plaintiffs who could not possibly have suffered injury. Here, by contrast, Dow has not identified a single class member for whom injury was impossible. Rather, Dow asks us to infer a flaw based on the jury’s finding of no damages for a specific time period. We cannot draw that inference, for the jury could have limited the time period for the conspiracy based on Dow’s explanation for prices before November 24, 2000. Thus, the jury might have limited the conspiracy period while agreeing with Dr. McClave’s analysis of pricing after November 24, 2000. For both reasons, the flaw in In re Rail Freight does not exist here, and the jury’s finding does not imply a failure to prove impact or damages after November 24, 2000.