Evergreen Partnering Grp., Inc. v. Pactiv Corp.

• Decision Date: 02 August 2016
• Docket Number: No. 15-1839,15-1839
• Citation: 832 F.3d 1
• Parties: Evergreen Partnering Group, Inc., Plaintiff, Appellant, Michael Forrest, Plaintiff, v. Pactiv Corporation; Solo Cup Company, a corporation; Dolco Packaging, a Tekni-Plex Company, a corporation; Dart Container Corporation; American Chemistry Council, Inc., an association, Defendants, Appellees, Genpak, LLC., a/k/a Genpack, LLC, Defendant.
• Court: U.S. Court of Appeals — First Circuit

832 F.3d 1

Evergreen Partnering Group, Inc., Plaintiff, Appellant,

Michael Forrest, Plaintiff,

v.Pactiv Corporation; Solo Cup Company, a corporation; Dolco Packaging, a Tekni-Plex Company, a corporation; Dart Container Corporation; American Chemistry Council, Inc., an association, Defendants, Appellees,Genpak, LLC., a/k/a Genpack, LLC, Defendant.

No. 15-1839

United States Court of Appeals, First Circuit.

August 2, 2016

Richard Wolfram , with whom Jan R. Schlichtmann , Orestes G. Brown and Metaxas Brown Pidgeon LLP , Beverly, MA, were on brief, for appellant.

John M. Faust , with whom Law Office of John M. Faust, PLLC , William E. Lawler, III , Ralph C. Mayrell and Vinson & Elkins LLP , Washington, DC, were on brief, for appellees Dart Container Corporation and Solo Cup Company.

Steven M. Cowley , with whom Duane Morris, LLP , Boston, MA, was on brief, for appellee Dolco Packaging.

Richard A. Sawin, Jr. , Richard E. Bennett and Michienzie & Sawin LLC , Boston, MA, on brief for appellee Pactiv Corporation.

Ralph T. Lepore, III , Michael T. Maroney , Benjamin M. McGovern , Scott A. Moore and Holland & Knight LLP , Boston, MA, on brief for appellee American Chemistry Council.

Before Howard, Chief Judge, Torruella and Barron, Circuit Judges.

TORRUELLA

, Circuit Judge.

Plaintiff-Appellant Evergreen Partnering Group, Inc. (“Evergreen”) appeals a summary judgment from the United States District Court for the District of Massachusetts against its Sherman Act section 1, 15 U.S.C. § 1

, claim. Under its business model, Evergreen collected used polystyrene products, processed them into a recycled polystyrene resin (“recycled resin”), and sold its resin to converters to use in a “green foam” line of products. According to Evergreen, the five largest converters of polystyrene products—Dart Container Corporation (“Dart”), Dolco Packaging (“Dolco”), Genpak, LLC (“Genpak”), Pactiv Corporation (“Pactiv”), and Solo Cup Company (“Solo”)—through the trade association American Chemistry Council (“ACC”) (hereinafter referred to collectively as “the defendants”) refused in concert to deal with Evergreen in order to prevent polystyrene recycling from becoming viable and maintain their respective market positions.¹ On summary judgment, the district court concluded that Evergreen failed to present evidence that tended to exclude the possibility that each polystyrene manufacturer independently chose not to partner with Evergreen as required by Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)

. We agree with the district court's reasoning and affirm.

I.²

A. Industry Overview

Michael Forrest founded Evergreen in 2000. Prior to the advent of Evergreen, other companies tried to recycle polystyrene products but had difficulty turning a profit. Evergreen envisioned that it could succeed where others had failed by obtaining revenue from three different sources.

First, Evergreen would charge an “environmental fee” to large end users (such as school districts that used polystyrene food trays in their cafeterias) for collecting their used polystyrene products. Because these institutions often paid waste disposal fees to transport their used polystyrene products to landfills, Evergreen believed they would be willing to pay the environmental fee. After collecting the used polystyrene products, Evergreen would transport them to its recycling plants to process into a recycled resin. Selling this recycled resin to polystyrene converters would form the basis of Evergreen's second revenue stream. These converters would use Evergreen's resin to create new polystyrene products and sell them to customers. As its third revenue stream (and of particular relevance to its lawsuit), Evergreen sought to charge converters a commission on the products sold containing its resin. Evergreen hoped the commission would keep the price of its resin competitive with virgin resin and believed the commission reflected the market's willingness to pay a premium for “green” products. Evergreen also believed its green foam products would bring the converters new customers because many of the suppliers of the used polystyrene products would also be interested in purchasing recycled products.

In furtherance of its goal to produce recycled resin, Evergreen began setting up its first independent recycling plant in Norcross, Georgia, in February 2005.³

Starting in 2006, Gwinnett County Public Schools (“Gwinnett Schools”), also in Georgia, began paying Evergreen to collect its used polystyrene lunch trays.⁴

At the same time, Evergreen sought out partnerships with polystyrene converters. Between 2002 and 2005, Evergreen reached out to several small polystyrene converters but had little success. Evergreen then began targeting what it believed to be the five main national polystyrene converters—Dart, Dolco, Genpak, Pactiv, and Solo—the defendants in this case.

Early on, Dolco and Genpak showed interest in working with Evergreen. In July 2005, Forrest approached Dolco's General Manager for the Midwest Division, Norman Patterson, about the distribution company Sysco's interest in an “Earth Plus” product line containing Evergreen's resin. Initially, Patterson appeared receptive and representatives from Sysco, Dolco, and Evergreen met about a possible deal in November 2005. Dolco made a formal proposal to Sysco in December and told Evergreen it would be willing to pay a royalty to use its recycled resin as long as the relationship could be profitable. Sysco, however, eventually backed out and the deal fell through.

Additionally, towards the end of 2006, Evergreen met with Genpak. Genpak began making lunch trays with Evergreen's resin and submitted a bid to Gwinnett Schools (who was already paying Evergreen to remove their trays) to supply it with trays for the 2007-2008 academic year. Gwinnett Schools subsequently selected Genpak's $16.97 per case bid over Pactiv's $18.97 per case bid.⁵

B. The Alleged Conspiracy⁶

In 2007, Forrest approached Genpak's president, Jim Reilly, about financing a new Evergreen recycling plant in California as well as upgrades to Evergreen's Norcross facility. Reilly told Forrest he should submit his funding proposal to the Plastics Foodservice Packaging Group (“Plastics Group”).

The Plastics Group is a subgroup of the ACC that focused on promoting plastic foodservice packaging. All five of the converter defendants were members of the Plastics Group at one time or another. By 2007, the Plastics Group was particularly concerned with local and state initiatives to ban polystyrene products due to the perception that polystyrene was not recyclable.

On May 14, 2007, the Plastics Group held a conference call with Forrest to discuss Evergreen's intention to expand to California. About a week later, Forrest submitted two proposals to the Plastics Group's Senior Director, Michael Levy, requesting that the Plastics Group help Evergreen expand its operations to California.⁷

The Plastics Group held a conference call between its members on May 31, 2007, to discuss Forrest's proposals. Evergreen alleges that during this conference call, the defendants not only rejected funding Evergreen's proposals, but also agreed that no individual converter would enter any deal with Evergreen that involved the payment of commissions. In addition, Evergreen alleges that at this meeting the defendants agreed to promote a sham competitor called Packaging Development Resources of California, LLC (“PDR”)—a California-based polystyrene recycler whose business model relied entirely on selling its recycled resin and had no commission component—to block Evergreen's access to polystyrene end users.

C. Events After the Alleged Conspiracy Began

Following the May 31, 2007, conference call, Levy notified Forrest that the Plastics Group had rejected all of his proposals. Forrest submitted two additional proposals to the Plastics Group, which were also rejected. Without funding, Evergreen did not build a California recycling plant.

In the intervening months, Evergreen continued to negotiate with the defendants to try to obtain an agreement that included both the purchase of resin and the payment of commissions. Genpak and Dolco entered a joint funding agreement with Evergreen in July 2007, each agreeing to provide Evergreen with $75,000 and to purchase any “acceptable quality” resin that Evergreen produced for $0.85 per pound but rejecting any commission requirement. Evergreen also began negotiations with Solo. Solo purchased resin to test in May 2008 but stated it would not accept any deal that included a commission payment. In addition, Pactiv and Dart tested samples of Evergreen's resin throughout 2008 and 2009 without reaching an agreement.

Evergreen also found itself largely unable to attract customers who would pay Evergreen to remove their waste products or pay a premium for polystyrene products containing recycled resin. Although Genpak bid to supply Gwinnett Schools with trays containing Evergreen's resin for the 2008-2009 school year, it raised its price. Pactiv, in contrast, lowered its bid and won. No further purchase agreements between Evergreen, Genpak, or Dolco were executed.

In May 2008, Evergreen shut down its Norcross facility and opened a smaller recycling plant in Lawrenceville, Georgia. Evergreen subsequently shut down the smaller plant in October 2008 and ceased operations.

II.

In May 2011, Evergreen and Forrest filed a complaint in district court alleging that the defendants agreed to boycott Evergreen in violation of section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1

. The district court granted the defendants' motion to dismiss, which Evergreen (but not Forrest) appealed to this court.

We reversed in Evergreen Partnering Group v. Pactiv Corp.(“Evergreen I”), 720 F.3d 33 (1st Cir.2013)

. Our opinion highlighted several facts that we viewed, if proven, as sufficient “to establish a context for plausible agreement in the form of industry...