Court Opinion

ID: 3000181
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:02:03.440429+00
Date Added: 2024-06-11T11:45:40.532492
License: Public Domain

In the
    United States Court of Appeals
               For the Seventh Circuit
                        ____________

No. 06-1992
MILES DISTRIBUTORS, INC.,
                                          Plaintiff-Appellant,
                              v.

SPECIALTY CONSTRUCTION BRANDS, INC.,
                                         Defendant-Appellee.
                        ____________
             Appeal from the United States District Court
      for the Northern District of Indiana, South Bend Division.
No. 3:04-CV-561—Christopher A. Nuechterlein, Magistrate Judge.
                        ____________
    ARGUED DECEMBER 8, 2006—DECIDED FEBRUARY 6, 2007
                     ____________

    Before BAUER, FLAUM, and KANNE, Circuit Judges.
  FLAUM, Circuit Judge. After Specialty Construction
Brands, Inc. (hereinafter “TEC”)1, a manufacturer of tile
installation products, stopped supplying wholesale materi-
als to Miles Distributors, Inc. (“Miles”), Miles filed suit
against TEC, alleging restraint of trade in violation of
the Sherman Act, 15 U.S.C. § 1, and a state law claim for
interference with prospective business advantage. On
February 27, 2006, the district court granted summary

1
  Specialty Construction Brands supplies its distributors
with tile installation products bearing the brand name “TEC.”
2                                                    No. 06-1992

judgment in favor of TEC on all claims, and Miles ap-
pealed. For the following reasons, we affirm the district
court’s ruling.

                       I. BACKGROUND
  TEC manufactures industrial and residential building
products, including a line of tile installation products, i.e.,
grout and mortar.2 Miles sells numerous brands of tile and,
until 2004, carried TEC’s tile installation products.
Michael Miles incorporated the company in 1969, and his
son Doug is the company’s current president. Although
Miles was originally centered in northern Indiana, its
business expanded in 2001, putting it in competition with
a number of other TEC distributors, including Virginia
Tile, Louisville Tile, Sobol Sales, Millers Wholesale, and
American Equipment. During the relevant time period,
two of Miles’s competitors expanded their businesses as
well. Both Millers Wholesale and Virginia Tile began
selling TEC products in South Bend, Indiana, where Miles
is headquartered.
  Historically, Miles paid more for TEC products than
some of its competitors, due to a regional pricing system.
In March 2003, however, a significant change occurred
when TEC implemented a new national pricing program
that gave all of its distributors an equal opportunity to
receive lower prices if they purchased TEC product in
bulk. As a result, Miles began paying the same price for
TEC materials as Virginia Tile and Louisville Tile. Al-
though Miles began paying less for TEC materials, it did
not raise its price margins, i.e., its markup for resale,

2
  Mortar is a strong adhesive in which a tile is set; grout is used
to fill in the spaces between tiles.
No. 06-1992                                                 3

which varied based on the volume purchased.3 As a result
of TEC’s new pricing, Miles’s prices decreased and were
lower than those offered by other TEC distributors.
  As TEC distributors expanded and prices changed, TEC
began to receive complaints from other distributors about
Miles’s pricing. As early as April 2002, Louisville Tile’s
President, Randy Parker, complained to TEC that Miles’s
margins were lower than those charged by Louisville Tile.
In September 2002, a Louisville Tile representative
complained to TEC that Miles’s margin on a particular
TEC product was 22% while Louisville’s price margin was
30%. At some point, Parker remarked to Doug Miles, “Hey
Doug, let’s keep our margins up on TEC down here.”
  During a March 2003 trade show, TEC’s Nationwide
Sales Manager, Christopher Bailey, informed Doug Miles
that TEC was dissatisfied with Miles’s pricing. Although
Bailey characterized the discussion as one about market
tactics rather than price, he conceded that “the gist of
[the meeting] was do you have a new price list or what
are you doing out there with our product or you’re caus-
ing me headaches.” According to Miles’s Sales and Mar-
keting Manager, John Zolman, Bailey was more blunt
during the trade show conversation, warning Zolman and
Doug Miles that Miles’s pricing structure would cause
problems in Indianapolis, that Miles’s prices were too low,
and that Louisville Tile was already complaining about
Miles’s pricing. Later, at a September 2003 meeting,
Bailey again expressed concerns about Miles’s pricing
and asked Doug Miles to consider raising prices in the
field. Doug Miles and Zolman said they would look into the

3
  Miles’s markups were as follows: pallet pricing (the largest
volume) was 18.5%, wholesale volume was 27%, and wholesale
was 45%. Miles introduced pallet pricing in 2003.
4                                             No. 06-1992

possibility of changing their prices, but ultimately de-
clined to do so.
  On April 23, 2003, Bailey sent Virginia Tile’s General
Sales Manager, Jack Mulder, an email message in which
he wrote, in part: “it has come to my attention that there
may be some lingering concerns or pricing issues with
TEC,” and that “my ultimate fear is that we are unaware
of these issues and don’t get a chance to address and/or
alleviate them before a radical decision gets made by
Virginia Tile.” Bailey further stated, “We do not want to
see a 2nd line get brought into Virginia Tile[,] and we
will do all in our power to make this unnecessary.” Mulder
responded by email the next day expressing concerns that
Miles’s price list could force Virginia Tile to lower its
prices. Mulder continued, “let’s decide to make a com-
mitted effort to responding by ensuring and protecting
OURS and YOUR market share currently held together.”
  On July 8, 2003, Randy Parker emailed Jack Mulder
writing, “Miles continues to ‘poach’ work from us in area.
It is very important to all that our two companies take the
high road and work together.”
   After receiving more complaints from TEC’s other
distributors, Bailey considered terminating TEC’s relation-
ship with Miles. At a January 2004 trade show, Bailey
approached Parker and said, “Randy, very hypothetically,
if we were to [terminate our relationship with Miles], and
I’m not saying we’re going to, I’m saying if we were to
do, what would you do in order to make up that massive
loss of [sales] volume?” Parker indicated he would think
about it.
  In February 2004, TEC’s management discussed termi-
nating Miles at its quarterly meeting and decided to begin
studying the issue so that TEC could revisit it at the
next quarterly meeting. Bailey instructed two TEC Strate-
gic Area Managers, Marc Mularoni and Charlie Renner, to
No. 06-1992                                               5

research the effects of termination on their respective
territories. Mularoni approached Louisville Tile and
American Equipment to ask whether and how they
would make up the lost sales volume if TEC terminated
Miles. Louisville Tile responded that it would re-empha-
size the TEC product line to compete against other brands,
and it would work with Mularoni to sell to existing TEC
accounts (Miles’s customers), as well as new accounts.
American Equipment also told TEC that it would help
recapture the market.
  Meanwhile, Renner sought similar feedback from TEC
distributors in his territory. By April 13, 2004, Renner had
been in discussions with Virginia Tile and Millers Whole-
sale about the aftermath of terminating Miles. A few days
later, Virginia Tile agreed to aggressively pursue the
South Bend market and to develop a game plan for Fort
Wayne. In an April 19 email exchange, Mularoni told
Renner that “Louisville Indy will be taking TEC to Fort
Wayne . . . [and will] do a blitz with TEC when our deci-
sion is implemented.”
  During the course of its discussions with TEC, Louisville
Tile also agreed that it would begin selling TEC products
in its Chattanooga store, where it had previously sold
only a competing brand.4 Similarly, Virginia Tile agreed
to increase its stock of TEC products in its Cleveland
store. Renner testified that this increase in TEC stock
was “something we hoped to gain from the decision [to
terminate Miles].”
  After consulting with the competing distributors, Renner
and Mularoni decided to terminate Miles. According to
their proposed post-termination plan, key distributors

4
 Louisville Tile agreed to replace 50% of its volume at the
Chattanooga store with TEC products within nine months.
6                                              No. 06-1992

would get a “heads up” so they could “be up and rolling”
before Miles learned of its termination. TEC would notify
Miles on a Friday at 10:00 A.M., and, while Miles was
being notified, Miles’s competitors would send emails and
faxes to Miles’s customers. TEC also used a promotional
giveaway to provide Miles’s customers with an addi-
tional incentive to continue buying TEC products.
  Mularoni communicated the final decision to Louisville
Tile and American Equipment, and Renner informed
Virginia Tile. Just before TEC informed Miles of its
decision, Virginia Tile sent the following memorandum to
its sales team:
    This morning (Friday June 11) TEC is notifying
    MILES DISTRIBUTING of South Bend they will no
    longer be a TEC Distributor. This is a culmination of
    two things: 1) many discussions that VIRGINIA TILE
    COMPANY and Miller Wholesale has had with TEC
    Mgmt and 2) TEC’s consideration for the manner of
    marketing that MILES Distributing uses and the
    compatibility to their long range goals. . . .
    We need to relate our knowledge of this event in a
    very CONSISTENT manner. If a Customer inquires
    to the reasoning behind this, our response is to be:
    THIS IS A RESULT OF A TEC DECISION! Whether
    on the record OR OFF THE RECORD, do NOT imply
    that it was a result of any discussions we have had or
    any dissatisfaction we expressed over the manner
    in which they marketed the line.
    TEC is counting on VIRGINIA TILE COMPANY to
    pick up this additional business as it goes “back on the
    street” with some extra effort. We are counting on
    you to find this business and bring it to VIRGINIA
    TILE COMPANY. If you have any questions please
    call me immediately.
No. 06-1992                                             7

  On June 18, 2004, TEC terminated Miles. A letter, dated
June 17, 2004 and addressed to Doug Miles, stated in
pertinent part:
   We have decided to consolidate our distribution
   channels in the Midwest, and have made the difficult
   decision to cease our direct sales to your company.
   After August 18, 2004[,] we can no longer accept
   purchase orders for shipment to your facilities. This
   notice allows for a two month transition period.
Shortly before the letter arrived, Bailey called Michael
Miles to inform him of the termination, telling him that
TEC was consolidating its distribution in the Midwest
and that TEC had to end its relationship with Miles.
Michael Miles was shocked by the news. Despite Bailey’s
proffered reason for terminating Miles, TEC closed no
other distributors in the Midwest in 2004. In fact,
Mularoni’s March 2004 quarterly report suggested that
TEC “look to expand distribution in markets where there
are multiple existing TEC customers.”
  In a May 26, 2004 document entitled “Miles Termination
Plan,” TEC laid out “talking points” concerning reasons
for the termination under a heading that said, “Miles not
on premium strategy.” The talking points included: (1)
currently stocking three competing manufacturers in
all markets; and (2) weak promotional strategy. The
document did not mention pricing or consolidation of
distribution channels.
  Until TEC terminated Miles, it did not complain about
the manner in which Miles supported the product or
express concerns that Miles was “free-riding” the brand
recognition and good-will generated by other TEC distribu-
8                                                    No. 06-1992

tors.5 Further, Miles emphasizes that it was not the
only TEC distributor that stocked competing brands;
Louisville Tile, American Equipment, and Virginia Tile
all stocked competing brands at some of their stores. Miles
also notes that its TEC product sales vastly exceeded
sales of its other two tile installation brands.
  Suspicious of the circumstances surrounding its ter-
mination, Miles filed suit against TEC on August 27, 2004,
alleging antitrust violations. On May 19, 2005 Miles
amended its complaint, adding a state law claim. On
October 3, 2005, TEC moved for summary judgment, which
the district court granted on February 27, 2006. This
appeal followed.

                       II. DISCUSSION
  Section one of the Sherman Act forbids contracts,
combinations, and conspiracies that unreasonably restrain
trade. See 15 U.S.C. § 1; In re High Fructose Corn Syrup
Antitrust Litig., 295 F.3d 651, 654 (7th Cir. 2002). Al-
though courts generally analyze claims alleging restraint
of trade under a rule of reason, certain kinds of agree-
ments will so often prove harmful to competition and so
rarely prove justified that plaintiffs need not prove that
the agreements are, in fact, anticompetitive. See State
Oil Co. v. Khan, 522 U.S. 3, 10 (1997); Nw. Wholesale
Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S.
284, 289-290 (1985). Such agreements are unlawful per se.

5
   According to Miles, its promotional strategies included training
its sales people and its customers on the use of TEC product,
promoting TEC through advertisements and brochures, and
supporting TEC products in all of its locations. Miles representa-
tives also accompanied TEC representatives on visits to cus-
tomers and introduced customers to new TEC products.
No. 06-1992                                                 9

NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 133 (1998).
Relying on the Sherman Act as well as a derivative state
law claim, Miles argues that its termination as a TEC
distributor was anticompetitive per se and that genuine
issues of fact precluded the entry of summary judgment.

  A. Summary Judgment Standard
  We review the district court’s grant of summary judg-
ment in favor of TEC de novo. Gordon v. United Airlines,
246 F.3d 878, 885 (7th Cir. 2001). In considering Miles’s
appeal, we draw our own conclusions of law and fact from
the record, making all reasonable inferences in favor of
Miles, and will uphold summary judgment in TEC’s favor
only if there is no genuine issue of material fact and TEC
is entitled to judgment as a matter of law. Id. See also
Fed. R. Civ. P. 56(c).

  B. Classification of Alleged Conspiracy
  When an agreement between competitors at the same
level of distribution restrains trade, it has traditionally
been denominated horizontal. See Bus. Elecs. Corp. v.
Sharp Elecs. Corp., 485 U.S. 717, 730 (1988). Trade
restraining agreements between firms at different levels
of distribution, e.g., a wholesale supplier and a retail
distributor, are deemed vertical restraints. Id. In this case,
the district court did not classify the alleged conspiracy
as either horizontal or vertical, reasoning that such a
classification was immaterial to the outcome. Specifically,
the court stated:
    A review of the cases suggests that whether one
    classifies the agreement as horizontal or vertical is not
    of consequence in this case because plaintiff must
    still prove an agreement to fix the price or price levels
10                                                     No. 06-1992

     after termination. Therefore, the appropriate analysis
     is not whether this agreement is vertical or horizontal,
     but rather whether the plaintiff has provided suf-
     ficient evidence of an agreement to fix price or price
     levels to withstand a motion for summary judgment.
Miles Distribs., Inc. v. Specialty Constr. Brands, Inc., 417
F. Supp. 2d 1030, 1036 (N.D. Ind. 2006). In fact, the
classification of the alleged conspiracy is of consequence,
because it determines what evidence Miles must produce
in order to survive summary judgment. To prove a vertical
conspiracy that is per se illegal, Miles must show an
agreement to fix prices. See Bus. Elecs., 485 U.S. at 735-
36. However, certain horizontal conspiracies, like horizon-
tal group boycotts,6 are illegal regardless of price fixing.
See NYNEX Corp., 525 U.S. at 134. If, as Miles has
suggested, its competitor tile stores conspired together to
force TEC to terminate Miles, then the conspiracy consti-
tutes an antitrust violation.7 See, e.g., Klor’s, Inc. v.

6
  Horizontal restraints that are per se illegal usually involve
boycotts by a group of competitors against a joint supplier in
order to disadvantage another competitor.
7
    The characterization of the offense as a horizontal conspiracy,
given that it is a lawsuit between a supplier and a distributor,
might strike some as odd. Although the sole defendant in this
case is a supplier, the alleged boycott also includes retailers, i.e.,
conspirators at different levels of distribution. Miles notes that
a facially vertical restraint imposed by a manufacturer can be
horizontal if caused by a “horizontal cartel” among distributors,
citing Business Electronics, 485 U.S. at 730, n. 4 (“A restraint
is horizontal not because it has horizontal effects, but because
it is a product of a horizontal agreement.”). Though the idea that
an apparent vertical restraint may in fact be horizontal comes
from dicta that the Supreme Court relegated to a footnote, at
least one circuit has followed that dicta. See Rossi v. Standard
                                                      (continued...)
No. 06-1992                                                   11

Broadway-Hale Stores, Inc., 359 U.S. 207, 212 (1959)
(noting that horizontal group boycotts have long been
forbidden). We therefore consider whether Miles has
shown that a genuine issue of material fact remains
under either a horizontal or vertical conspiracy analysis.

    C. Horizontal Conspiracy
  A plaintiff may prove a horizontal conspiracy by either
direct or circumstantial evidence. Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574 (1986); Toys “R”
Us, Inc. v. FTC, 221 F.3d 928, 934 (7th Cir. 2000). When
a plaintiff attempts to defeat summary judgment by
highlighting circumstantial evidence of a conspiracy,
some of the evidence must tend to exclude the possibil-
ity that the alleged conspirators acted independently
rather than in concert. Monsanto Co. v. Spray-Rite Serv.
Corp., 465 U.S. 752, 764 (1984); Toys “R” Us, 221 F.3d
at 934 . Miles argues that it submitted sufficient evi-
dence of concerted action among competing TEC distribu-
tors so that a reasonable jury could find a horizontal
conspiracy. First, it notes that all of the competing TEC
distributors complained to TEC about Miles’s prices. This
evidence, however, is insufficient to create a genuine
issue of material fact. The Supreme Court has noted
that such complaints are natural and unavoidable reac-

7
  (...continued)
Roofing, Inc., 156 F.3d 452, 462 (3d Cir. 1998) (classifying a
restraint as horizontal where a number of competitor firms
agreed with each other and at least one of their common suppli-
ers to eliminate their price-cutting competition by cutting its
access to supplies). We therefore assume, without deciding the
issue, that Miles may classify the alleged conspiracy as horizon-
tal. Oddly, though, Miles does not name its competitors as
defendants.
12                                             No. 06-1992

tions by distributors to the activities of their rivals. See
Monsanto, 465 U.S. at 763. Miles must therefore point to
evidence other than the complaints that reasonably
suggests TEC and the other distributors “had a conscious
commitment to a common scheme designed to achieve an
unlawful objective.” Id. at 764 (internal quotation and
citations omitted).
  Miles next identifies threats made by various TEC
distributors, noting that Virginia Tile threatened to carry
a competing brand of installation products and that
Louisville Tile threatened, among other things, to stop
promoting the TEC brand. Miller Wholesale also threat-
ened to bring in another line of installation products. As
the Supreme Court noted in Matsushita, although all
reasonable inferences must be drawn in favor of the non-
movant on motions for summary judgment, antitrust law
limits the range of inferences that can be drawn from
ambiguous evidence in a § 1 case. 475 U.S. at 587-88.
Thus, conduct that is as consistent with permissible
competition as with illegal conspiracy does not, standing
alone, support an inference of antitrust conspiracy. Id.
at 588. In this case, the distributors’ threats are as
consistent with permissible competition as with a con-
spiracy. Indeed, distributors can legitimately decide to
carry or promote other brands if they are dissatisfied
with reduced profits caused by price-cutters. Therefore,
the fact that several of Miles’s competitors told TEC that
they were considering carrying or promoting other tile
installation brands does not support the inference that
Miles’s competitors conspired together to boycott TEC.
  Naturally, Miles attempts to identify additional evidence
of concerted action among TEC distributors. He relies
heavily on the email message between Mulder and Parker
in which Parker refers to Miles’s “poaching” and empha-
sizes that “our two companies take the high road and
work together.” He also refers to Virginia Tile’s memo
No. 06-1992                                              13

stating that Miles’s termination resulted from many
discussions Virginia Tile and Miller Wholesale had with
TEC management. Finally, Miles points to the post-
termination sales blitz by competing distributors to
capture business in Miles’s territory. None of this evidence
is sufficient to create a genuine issue of fact about the
existence of a horizontal conspiracy. The statements from
the email and memo are ambiguous at best. See Bus.
Elecs., 485 U.S. at 726 (expressing concern that if courts
permit the inference of illegal concerted activity from
highly ambiguous evidence it would unduly burden the
marketplace). Furthermore, all other evidence about
the sales blitz suggests that it resulted from distinct
conversations between TEC and its distributors rather
than concerted action among the distributors.
  In short, the evidence, viewed in the light most favorable
to Miles, does not suggest that the competing tile stores
conspired to boycott TEC unless it terminated Miles. As a
result, Miles cannot proceed under a horizontal group
boycott analysis.

  D. Vertical Conspiracy
   Miles also argues that it offered evidence from which
a jury could find an illegal vertical conspiracy. The Su-
preme Court has held that a vertical restraint is not
illegal per se unless it includes some agreement on price
or price levels. Bus. Elecs., 485 U.S. at 735-36. Although
the post-termination sales blitz shows concerted activity
between TEC and its distributors, Miles must still demon-
strate that the concerted activity involved an agreement
on price. Id.; see also Monsanto, 465 U.S. at 762 (recog-
nizing that constant communication between a manu-
facturer and its distributors about prices and market
strategy does not show that the distributors are not
making pricing decisions independently).
14                                              No. 06-1992

  Monsanto stands for the proposition that a jury cannot
reasonably infer an agreement to fix prices from the fact
that a termination came about in response to com-
plaints about price. See 465 U.S. at 763. Evidence of price
complaints or action in response to such complaints
cannot support a conspiracy to fix prices in and of itself
because suppliers may legitimately decide to retain their
larger customers by terminating a price-cutting competi-
tor. See id. That does not mean, however, that evidence
of price complaints has no probative value at all. Id. at
764 n.8.
  In this case, it is undisputed that the competing distribu-
tors, Virginia Tile, Louisville Tile, Sobol Sales, Miller’s
Wholesale and American Equipment complained about
the prices Miles charged for TEC products. It is also
clear that TEC covertly worked hand-in-hand with those
distributors to formulate a plan to blitz the market as
soon as it terminated Miles. Notably, TEC did not circu-
late a price list or suggest price margins to its distribu-
tors. Nonetheless, Miles asserts that TEC conspired with
its other distributors to terminate Miles knowing that
doing so would stabilize prices. Miles also emphasizes that
TEC asked Miles to raise its prices.
  Moreover, Miles highlights its competitors’ actions after
its termination as evidence that TEC and its distributors
made quid pro quo arrangements in exchange for the
termination. In contemplating its options, TEC sought
assurances from its other distributors that they would
work to recover sales lost in the event that Miles ceased
distributing TEC products. During this time, Louisville
Tile agreed to begin selling TEC product in its Chatta-
nooga store where it had previously sold only a competing
brand. Similarly, Virginia Tile agreed to increase the
presence of TEC product in Cleveland and, in fact, did so
after Miles was terminated.
No. 06-1992                                               15

  Furthermore, once Miles was terminated, Virginia Tile
represented in an internal memo that the termination
resulted from discussions between Virginia Tile and
Millers Wholesale and TEC management. The memo
further emphasized that the termination was a result of
a TEC decision. According to Miles, the memo shows that
the termination was not solely a TEC decision, and that
Virginia Tile was concerned enough to cover up its role
in the decision.
  As with the horizontal conspiracy, we must ask whether
this evidence sufficiently excludes the possibility that
TEC and its non-terminated distributors were acting
independently. Monsanto, 465 U.S. at 764. There is no
question that TEC and its other distributors acted in
concert regarding non-price issues like retaining customer
accounts and promoting the TEC product, even going so
far as to blitz the market upon Miles’s termination.
Nonetheless, a reasonable jury could not infer concerted
action to fix prices from the fact that TEC and its other
distributors acted in concert in other respects. See
Monsanto, 465 U.S. at 763 (“[I]t is of considerable im-
portance that . . . concerted action on nonprice re-
strictions[ ] be distinguished from price-fixing agree-
ments . . . .”). Nor could a jury infer a price fixing agree-
ment from the fact that Miles’s termination pleased its
competitors. Clearly, the termination eliminated the
downward pressure Miles put on TEC products in the
market, but no reasonable jury could infer a price-fixing
agreement from the fact that the prices stayed the same
before and after Miles was terminated. See Bi-Rite Oil Co.
v. Ind. Farm Bureau Coop. Ass’n, 900 F.2d 200, 203
(recognizing that many legitimate factors may lead to a
decision to terminate a price-cutter).
  Despite the paucity of its evidence, Miles argues that
its evidentiary burden is lessened by the Supreme Court’s
decision in Matsushita. Miles argues that Matsushita
16                                                No. 06-1992

recognized the existence of a plausible motive to engage
in an antitrust violation as a significant factor in deter-
mining whether a material issue of fact precludes sum-
mary judgment. 475 U.S. at 597. Therefore, Miles con-
tends, because TEC had a plausible motive to conspire
with its other distributors to terminate Miles, less evi-
dence is necessary to raise an inference of an illegal
agreement than would be necessary if no plausible
motive existed. Miles misstates Matsushita, which actu-
ally says that:
     the absence of any plausible motive to engage in the
     conduct charged is highly relevant to whether a ‘genu-
     ine issue for trial’ exists . . . . Lack of motive bears on
     the range of permissible inferences that might be
     drawn from ambiguous evidence: if petitioners had
     no rational economic motive to conspire, and if their
     conduct is consistent with other, equally plausible
     explanations, the conduct does not give rise to an
     inference of conspiracy.
Id. (emphasis supplied). The Court added in a footnote
that it did not mean to imply that “if petitioners had had
a plausible reason to conspire, ambiguous conduct could
suffice to create a triable issue of conspiracy,” and noted
that Monsanto still controlled the interpretation of am-
biguous evidence. Id. at 597 n.21. In other words, a
plausible motive for TEC to engage in anticompetitive
behavior does not lessen Miles’s evidentiary burden.
   Finally, Miles cites cases from other circuits to argue
that the allegedly pretextual justifications for its termina-
tion raise genuine issues of material fact as to whether
TEC’s actions were legal. See Alvord-Polk, Inc. v.
F. Schumacher & Co., 37 F.3d 996, 1012 (3d Cir. 1994)
(recognizing that where facts show that a defendant’s
proffered explanation for its actions is, in fact, pretextual,
it tends to support an inference of concerted action); Ezzo’s
No. 06-1992                                                17

Invs., Inc. v. Royal Beauty Supply, Inc., 94 F.3d 1032,
1034-35 (6th Cir. 1996) (holding that a reasonable jury
could infer a price-fixing conspiracy from a supplier’s
pretextual reason for cutting off a beauty product dis-
tributor).
  Even assuming that TEC’s initial reasons were
pretextual, all of Miles’s evidence suggests that it was
terminated based on price complaints from other TEC
distributors rather than an illegal price-fixing agreement.
Because the Supreme Court has already said that manu-
facturers can legitimately terminate distributors based on
price complaints, the fact that TEC offered different
reasons initially does not change the analysis. Although
pretextual reasons have some probative value, we hold
that they are insufficient to create a genuine issue of fact
without other evidence pointing to a price-fixing agree-
ment. See, e.g., H.L. Hayden Co. of N.Y., Inc. v. Siemens
Med. Sys., Inc., 879 F.2d 1005, 1014 (2d Cir. 1989) (stating
that mere fact that defendant’s purported reason is
undermined does not, by itself, justify the inference that
the conduct was the result of a conspiracy). Taking the
evidence as a whole, Miles has not shown that a genu-
ine issue of fact exists regarding a price-fixing agreement.

  C. Interference with Prospective Business Advan-
     tage
  Under Indiana state law, in order to prevail on a tortious
interference with prospective business relations claim, a
plaintiff must prove: 1) the existence of a business rela-
tionship; 2) the defendant’s knowledge of the existence of
that relationship; 3) the defendant’s intentional inter-
ference with that relationship; 4) the absence of any
justification; and 5) damages. Levee v. Beeching, 729
N.E.2d 215, 222 (Ind. Ct. App. 2000). Where there is no
contract, “illegal conduct is an essential element of tortious
18                                            No. 06-1992

interference with a business relationship.” Id. Therefore,
Miles’s state tort claim rises or falls with its antitrust
claim, which would supply the illegal conduct. Because
Miles cannot succeed on its antitrust claims, we affirm the
district court’s grant of summary judgment on the state
law claim as well.

                    III. CONCLUSION
  For the foregoing reasons, we AFFIRM the district court’s
entry of summary judgment in favor of the defendant.

A true Copy:
      Teste:

                       ________________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit

                   USCA-02-C-0072—2-6-07