- Third Circuit Ruling Eases Standard For Summary Judgment in Price-Fixing Cases
- December 31, 2004 | Author: Barak A. Bassman
- Law Firm: Pepper Hamilton LLP - Philadelphia Office
The U.S. Court of Appeals for the Third Circuit recently issued a major new opinion on the standard for summary judgment in cases brought under Section 1 of the Sherman Act.
In In re Flat Glass Antitrust Litigation, 385 F.3d 350 (3d Cir. 2004), the court reversed the opinion of the lower court granting summary judgment to a defendant in an antitrust class action. In the Flat Glass case, plaintiffs alleged that the five primary manufacturers of glass in the United States conspired to fix prices from 1991 through 1995 in the market for architectural glass used in commercial and residential construction and the market for replacement glass products for automobiles. Four of the five defendants settled. The one non-settling defendant, PPG Industries, Inc., moved for summary judgment. The district court granted the motion, reasoning that there was no data showing that the actual transactional prices paid by glass purchasers rose during the alleged conspiracy period, and noting that simply because the manufacturers' pricing was interdependent did not mean that there was a conspiracy.
The Court of Appeals affirmed the lower court regarding the automotive glass business. The court reversed, however, the grant of summary judgment with respect to the architectural glass business. The court rejected the argument that transactional prices must rise to show a price-fixing conspiracy. The court noted that the alleged conspirators repeatedly raised list prices and found it implausible that list price increase announcements were not intended to affect actual transaction prices. The court reasoned that the fact that prices may not have risen simply goes to how effective the alleged conspiracy was, not whether it existed.
The appellate court also criticized the lower court for excessively compartmentalizing the evidence in the record in its opinion. The court held that because the "plaintiffs' theory of a conspiracy . . . makes perfect economic sense," "more liberal inferences from the evidence should be permitted." The court engaged in a detailed analysis of the fact record, finding that the evidence, in the aggregate, was sufficient for a reasonably jury to infer the existence of a price-fixing conspiracy.
Specifically, the court noted that on multiple occasions, the alleged co-conspirators issued price increase announcements at roughly the same time and for approximately the same amounts. These price announcements were often preceded by meetings among high-level executives of the alleged conspirators, the court found. Despite a lack of direct evidence regarding the content of meetings or communications among the alleged conspirators and involving the single defendant remaining in the case, the court allowed the fact that meetings occurred to serve as the basis for an adverse inference. The court noted that the alleged conspirators issued price announcements when demand was falling, and that some alleged competitors' internal documents appeared to predict accurately the success of certain price increase announcements.
Plaintiffs in future price-fixing cases, particularly in the Third Circuit, will likely try to "fit" their facts into the frame of the Flat Glass decision. For defendants, this decision may make summary judgment a higher hurdle and highlights the risks to each defendant of the evidence against its alleged co-conspirators in cases involving parallel pricing.