Opinion ID: 3009393
Heading Depth: 3
Heading Rank: 1

Heading: Parallel pricing and pricing patterns

Text: When UPI raised its prices, U.S. Steel also raised its prices to some customers. Stanislaus asserts that this allowed UPI to maintain artificially high prices in an agreed-upon absence of competition. Of course, “[p]arallel pricing is a relevant factor to be considered along with the evidence as a whole; if there are sufficient other ‘plus’ factors, an inference of conspiracy can be reasonable.” Id. at 1102 (citation omitted). Key to Stanislaus’s theory is that this pricing behavior was contrary to U.S. Steel’s self-interest. Specifically, Stanislaus argues that U.S. Steel’s decision to raise its price to one of Silgan’s competitors despite having lower hot band steel costs than in the previous year was not in U.S. Steel’s economic self-interest. See In re Text Messaging Antitrust Litig., 630 F.3d 622, 628 (7th Cir. 2010) (noting that falling costs increase a seller’s profit margin and motivate the seller to reduce its price). This argument, which pinpoints a single year, fails to account for pricing patterns over multiple years. STANISLAUS FOOD PRODS. V. USS-POSCO INDUS. 15 To get the full picture, we must juxtapose the price of tin against the cost involved in making that tin. In particular, the cost of hot band steel—a significant factor in tin manufacturing—only dropped in 2009 after having jumped, sharply, in 2008. The cost of making tin was therefore in flux, creating uncertainty for manufacturers. U.S. Steel may have raised tin prices in 2009 to make up for losses caused by skyrocketing material costs a year earlier—or as a hedge against future price increases in the market for component parts. Of course, Stanislaus’s critique of U.S. Steel’s pricing behavior is also undercut by the fact that its prices were still lower than those of UPI. This “price point” had potential, even if unrealized, to attract customers away from UPI. This behavior is not credibly viewed as against U.S. Steel’s self-interest or as tending to exclude independent behavior.5 B. Information exchanges and other communications To support an inference of conspiracy, Stanislaus offers evidence of information exchanges between U.S. Steel and UPI. Interfirm communications, particularly among highlevel executives, are a “plus factor” that can bolster the inference of conspiracy. See In re Publ’n Paper Antitrust 5 Stanislaus also complains that these pricing patterns do not reflect the historical spread between the cost of hot band steel and the price of tin mill products, and argues that the patterns are inconsistent with declining demand and excess manufacturing capacity. Market conditions during a period of alleged collusion can be a plus factor that support an inference of agreement. See, e.g., In re Publ’n Paper Antitrust Litig., 690 F.3d 51, 65 (2d Cir. 2012) (excess capacity). But Stanislaus’s arguments on this point are spare and devoid of citations to the record. 16 STANISLAUS FOOD PRODS. V. USS-POSCO INDUS. Litig., 690 F.3d 51, 62 (2d Cir. 2012); In re Flat Glass Antitrust Litig., 385 F.3d 350, 368–69 (3d Cir. 2004). Executives at U.S. Steel were aware of the contract between UPI and Silgan. In 2008, the president of UPI emailed U.S. Steel executives an overview of the price and other terms associated with the new contract. The alleged conspirators argue that these communications are irrelevant without evidence that they affected U.S. Steel’s price to Silgan in 2009. See In re Flat Glass Antitrust Litig., 385 F.3d at 369; In re Baby Food Antitrust Litig., 166 F.3d 112, 125 (3d Cir. 1999) (requiring “evidence that the exchanges of information had an impact on pricing decisions”). To show the lack of such an impact, the alleged conspirators point to a provision in the 2005 agreement between U.S. Steel and Silgan that limits subsequent price increases for tin mill products to 2% in any given year. Exchanges of information like this call to mind the requirement that Stanislaus “must show more than a conspiracy in violation of the antitrust laws; [it] must show an injury to [it] resulting from the illegal conduct.” Matsushita, 475 U.S. at 586. Absent deviation from the contracted price between U.S. Steel and Silgan, we agree that any negative inference is more difficult for Stanislaus to show and that the interfirm communications are of limited use. U.S. Steel’s knowledge of the new contract between its joint venture and Silgan has little legal significance if it did not prompt action on U.S. Steel’s part. Even if the U.S. Steel–Silgan contract was not affected, Stanislaus argues that this information prompted U.S. Steel to change the pricing for Silgan’s competitors. Despite this STANISLAUS FOOD PRODS. V. USS-POSCO INDUS. 17 relatively attenuated chain of cause-and-effect, we nonetheless take a deeper look at this allegation. In particular, Stanislaus asks that we take note of internal communications that prove that UPI “made pricing decisions based on its understanding of [U.S. Steel’s] agreement not to compete on price” in the region. In August 2008, the president of UPI wrote, “There is a lot going on regarding 2009 industry pricing for tin . . . . Right now our position on 2009 West Coast pricing for everyone other than Silgan is major increases consistent with Arcelor Mittal’s announcement and our understanding of what U.S. Steel is doing, plus a major additive for freight to the West Coast.” UPI internally predicted that “[h]igh [p]rices and [t]ransportation [c]osts [w]ill [k]eep [e]astern [s]teel in the [e]ast.” These communications arose in the context of observations about the difficult state of the tin market in the previous year due to skyrocketing hot band steel prices, increased fuel and freight costs, inexpensive imports, and fluctuations in demand. None of this evidence bolsters the inference that Stanislaus would have us draw from these communications. Considered against the backdrop of market conditions in the industry, it is ambiguous what the president of UPI meant when he wrote of “our understanding of what U.S. Steel is doing.” Stanislaus would have a jury infer that “what U.S. Steel [was] doing” was deliberately failing to price competitively, as agreed. It is just as plausible, if not more so, that the phrase referred to what U.S. Steel was doing in the face of the same challenging conditions in the tin market at the time. Although we do not totally discount the evidence as irrelevant, the evidence is insufficient to support the existence of a market allocation conspiracy. 18 STANISLAUS FOOD PRODS. V. USS-POSCO INDUS. C. Spot market sale Stanislaus also points to evidence about a spot market sale, a circumstance in which buyers individually negotiate one-time sales. But the evidence offered here of a single spot market sale from U.S. Steel to one of Silgan’s competitors—thus not involving Stanislaus’s supplier at all—adds too little to qualify as “specific” evidence in support of a conspiracy. In 2008, U.S. Steel sold 1,000 tons of tin mill products to one of Silgan’s competitors on the spot market. The customer directed the tin mill products to be shipped to the western United States. The sale price was higher than the national contract price between U.S. Steel and that same customer; U.S. Steel would not negotiate despite the customer’s complaints about the high price. Although U.S. Steel’s one-time price does not appear to have been as competitive as its prices set by long-term contract, what is missing is a link to competitive pricing vis-a-vis UPI. The record does nothing to place the sale in context—for example, it does not reflect how frequently these types of sales occurred or whether high spot market prices somehow displaced its other sales. We thus treat the spot sale as somewhat of an outlier. Several U.S. Steel executives communicated internally about this sale. Upon learning of the high price, U.S. Steel’s CEO inquired, “Is this because UPI is full?” Another U.S. Steel executive answered, “I am told this is NOT a supply issue—but a price issue.” In another exchange, one U.S. Steel executive commented, “not sure this is high enough but OK now,” to which another wrote, “Greed is a deadly sin.” STANISLAUS FOOD PRODS. V. USS-POSCO INDUS. 19 The meaning of these emails is ambiguous at best, but it does not bear on the key question of whether U.S. Steel agreed to or did stop competing with UPI. Perhaps anticipating that nothing concrete can be inferred from the emails, Stanislaus characterizes the exchanges as exhibiting an “incongruous[ly] high level of senior management attention” to what it calls a “de minimis order” when compared to U.S. Steel’s total annual production of 1.2 million tons. This subjective gloss on a single aspect of the evidence does not implicate the claimed conspiracy or its impact on pricing to Stanislaus. D. Expert report Finally, Stanislaus argues that the district court improperly ignored its expert report. The district court reviewed “the two-page portion of Dr. Rausser’s report that Plaintiff direct[ed] the Court’s attention to,” but went on to note that it “is nothing more than a broad overview of Plaintiff’s argument.” The district court declined to mine the 82-page report for “substantive opinions that are not cited in its briefing,” citing Carmen v. San Francisco Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001), for the proposition that courts “need not examine the entire file for evidence establishing a genuine issue of fact, where the evidence is not set forth . . . with adequate references so that it could conveniently be found.” The explanation that Stanislaus now offers linking the summary conclusions to various components of the expert report is too little, too late. Summary judgment proceedings focus on whether there are genuine issues of fact. Specific citations, not bulk references, are essential to pinpoint key 20 STANISLAUS FOOD PRODS. V. USS-POSCO INDUS. facts and factual disputes. The district court was not required to put the puzzle together from a boxful of facts, and, in line with Carmen, may permissibly decide the motion without mining the entire document for more substantiation. Nonetheless, on de novo review, and despite the breezy reference, we give Stanislaus the benefit of a full review. In doing so, we are sympathetic to the district court’s predicament. Not only is the report 82 pages, but the evidentiary references are found, without much detail, in 285 footnotes, a listing of more than 180 sets of documents, multiple websites, and an array of other evidence. Although the expert report is well crafted and provides useful background on the optics of the industry, it also contains extensive discussion related to price-fixing claims that are not at issue in the appeal. Even Stanislaus’s belated explanation that the expert summary relates to two broad sections of the report does little to identify factual issues or cite to specific evidence supporting Stanislaus’s argument. This circumstance highlights why the appellate rules require specific citations to the record. Fed. R. App. P. 28(a)(8)(A), 28(e); 9th Cir. R. 28-2.8. However, consideration of the evidence (which we dug out ourselves) dealing with market allocation does not change our analysis. The broad conclusions and cited evidence essentially mirror Stanislaus’s arguments elsewhere and nothing in the market analysis rescues Stanislaus’s case.6 6 For example, the expert report does not contain any analysis of profit margins showing that USS would actually be better off with 50% of UPI’s profits in the western U.S. than it would be competing for its own business in the western U.S. During oral argument, when asked whether there was any “mathematical analysis of the profit margins” in the record “that STANISLAUS FOOD PRODS. V. USS-POSCO INDUS. 21