In re Pool Prods. Distribution Mkt. Antitrust Litig., MDL No. 2328

• Decision Date: 27 January 2016
• Docket Number: MDL No. 2328
• Citation: 158 F.Supp.3d 544
• Parties: In re: Pool Products Distribution Market Antitrust Litigation This Document Relates to All Direct-Purchaser Plaintiff Cases
• Court: U.S. District Court — Eastern District of Louisiana

158 F.Supp.3d 544

In re: Pool Products Distribution Market Antitrust Litigation

This Document Relates to All Direct-Purchaser Plaintiff Cases

MDL No. 2328

United States District Court, E.D. Louisiana.

Signed January 27, 2016

ORDER AND REASONS

SARAH S. VANCE

, UNITED STATES DISTRICT JUDGE

Defendants Pool Corporation, SCP Distributors LLC, and Superior Pool Products (collectively, “Pool”) move for summary judgment on direct-purchaser plaintiffs' (DPPs') per se horizontal conspiracy claim.¹ Having considered the record evidence as a whole, the Court finds that DPPs have not presented sufficient evidence to raise an issue of material fact as to the existence of an unlawful horizontal conspiracy. Accordingly, the Court grants the motion for summary judgment.

I. BACKGROUND

DPPs' lone per se claim under Section 1 of the Sherman Act, 15 U.S.C. § 1

, alleges that in the fall of 2007, the Manufacturer Defendants, Pentair Water Pool and Spa, Inc. (Pentair); Hayward Industries, Inc. (Hayward); and Zodiac Pool Systems, Inc. (Zodiac; formerly “Jandy”),² unlawfully conspired with each other and with Pool to increase the minimum purchase amount necessary for customers to qualify for free freight on their Pool Products purchases (“free freight minimums”) from $10,000 to $20,000. Plaintiffs claim that Pool orchestrated the conspiracy to disadvantage buying groups. These buying groups consist of Pool Products “Dealers” who aimed to buy directly from the manufacturers rather than from Pool Products distributors, such as Pool. Plaintiffs contend that Pool, the Manufacturer Defendants' largest customer, demanded that the manufacturers increase their free freight minimums. Plaintiffs also contend that the Manufacturer Defendants acted against their independent business interests by agreeing among themselves and with Pool to the identical price increase.

Defendants deny that any agreement exists among the manufacturers or with Pool. Regarding the Manufacturer Defendants' free freight minimum increases, defendants contend that the manufacturers acted in their independent best interests because their preferred means to market was through distribution and Dealer buying groups, which were a small part of the manufacturers' sales base, grew to include smaller Dealers, which increased the manufacturers' production and distribution expenses during a time of rising fuel costs.

A. Summary Judgment Standard

Summary judgment is warranted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a)

; see also

Celotex Corp. v. Catrett , 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir.1994). When assessing whether a dispute as to any material fact exists, the Court considers “all of the evidence in the record but refrain[s] from making credibility determinations or weighing the evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co. , 530 F.3d 395, 398–99 (5th Cir.2008). All reasonable inferences are drawn in favor of the nonmoving party, but “unsupported allegations or affidavits setting forth ‘ultimate or conclusory facts and conclusions of law’ are insufficient to either support or defeat a motion for summary judgment.” Galindo v. Precision Am. Corp. , 754 F.2d 1212, 1216 (5th Cir.1985) ; see also

Little , 37 F.3d at 1075.

If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party “must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial.” Int'l Shortstop, Inc. v. Rally's, Inc. , 939 F.2d 1257, 1264–65 (5th Cir.1991)

. The nonmoving party can then defeat the motion by either countering with evidence sufficient to demonstrate the existence of a genuine dispute of material fact, or “showing that the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party.” Id. at 1265.

If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party's claim. See Celotex , 477 U.S. at 325, 106 S.Ct. 2548

. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See

id. at 324, 106 S.Ct. 2548. The nonmovant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue for trial. See, e.g., id. ; Little , 37 F.3d at 1075 (“Rule 56

mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” (quoting Celotex , 477 U.S. at 322, 106 S.Ct. 2548 )).

B. Proving a Horizontal Conspiracy Under Section 1 of the Sherman Act

Section 1 of the Sherman Act forbids every contract, combination, or conspiracy that unreasonably restrains trade. See 15 U.S.C. § 1

; Nat'l Collegiate Athletic Ass'n v. Bd. of Regents of the Univ. of Okla. , 468 U.S. 85, 98, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984)

. To prevail on their horizontal conspiracy claim, DPPs must prove the existence of an anticompetitive agreement or conspiracy among actual competitors. See

Texaco Inc. v. Dagher , 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006) ; United States v. Socony–Vacuum Oil Co. , 310 U.S. 150, 223–24, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). A showing of concerted action is vital to any Section 1 conspiracy claim. Tunica Web Adver. v. Tunica Casino Operators Ass'n , 496 F.3d 403, 409 (5th Cir.2007) (citing Monsanto Co. v. Spray–Rite Serv. Corp. , 465 U.S. 752, 761, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984) ). DPPs must also prove that they suffered an “antitrust injury” from Pool's alleged violation. Id. ; see also

Alabama v. Blue Bird Body Co. , 573 F.2d 309, 317 (5th Cir.1978). “Antitrust injury” is an “injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful.” Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc. , 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977).

1. Horizontal Price-Fixing Agreements Are Per Se Illegal

Courts consider certain agreements to be “inherently anticompetitive.” See Tunica Web , 496 F.3d at 412

. When the defendants' agreement “facially appears to be one that would always or almost always tend to restrict competition and decrease output,” or constitutes a “naked restrain[t] of trade with no purpose except stifling [ ] competition,” it is deemed per se unreasonable—and thus per se illegal—under Section 1, and condemned without further analysis. Broad.

Music, Inc. v. Columbia Broad. Sys., Inc. , 441 U.S. 1, 19–20, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979) ; see also

Leegin Creative Leather Prods. v. PSKS, Inc. , 551 U.S. 877, 886, 127 S.Ct. 2705, 168 L.Ed.2d 623 (2007).

Horizontal price-fixing agreements among competitors are traditionally per se illegal, while vertical price-fixing agreements among firms at different levels in the distribution chain are not. See, e.g. , Leegin , 551 U.S. at 886, 127 S.Ct. 2705

; Hyland v. HomeServices of Am., Inc. , 771 F.3d 310, 318 (6th Cir.2014). Agreements affecting components of a product's purchase price, such as agreements to terminate discounts or the practice of extending credit to purchasers, are equivalent to price fixing because they distort the ultimate price a consumer pays for a good or service. See

Catalano, Inc. v. Target Sales, Inc. , 446 U.S. 643, 648, 100 S.Ct. 1925, 64 L.Ed.2d 580 (1980).

Here, the Manufacturer Defendants' freight charges are a component of the purchase price for Pool Product purchases. See id. at 648–49, 100 S.Ct. 1925

. DPPs allege that the Manufacturer Defendants, who are horizontal competitors, conspired among themselves and with Pool, to raise the free freight minimums for Pool Products purchases. To prevail on their claim of per se liability, plaintiffs must show that the Manufacturer Defendants conspired with each other, and that Pool knowingly joined their horizontal conspiracy. If plaintiffs cannot show the existence of the horizontal element, i.e. , collusion among the Manufacturer Defendants, their per se claim must fail.

2. Proving an Unlawful Agreement with Direct Evidence or with Circumstantial Evidence and “Plus” Factors

To prove a Section 1

conspiracy, an antitrust plaintiff may present direct or circumstantial evidence of an unlawful agreement. Golden Bridge Tech., Inc. v. Motorola Inc. , 547 F.3d 266, 271 (5th Cir.2008). “Direct evidence explicitly refers to an understanding between the alleged conspirators, while circumstantial evidence requires additional inferences ... to support a conspiracy claim.” Id.

(citing Tunica Web , 496 F.3d at 409 ). In other words, direct evidence cannot be ambiguous; rather, “[d]irect evidence is tantamount to an acknowledgment of guilt ....” Hyland v. HomeServices of Am., Inc. , 771 F.3d 310, 318 (6th Cir.2014). With direct evidence, “the fact finder is not required to make inferences to establish facts.” In re Baby Food Antitrust Litig. , 166 F.3d 112, 118 (3d Cir.1999) (quoting Rossi v. Standard Roofing , 156 F.3d 452, 466 (3d Cir.1998) ). Evidence of a conspiracy that depends on additional inferences is “at most, circumstantial[.]” Viazis v. Am. Ass'n of Orthodontists , 314 F.3d 758, 762 (5th Cir.2002) ; see also

Burtch v. Milberg Factors, Inc. , 662 F.3d 212, 225 (3d Cir.2011) (Direct evidence “is explicit and requires no inferences to establish the proposition or conclusion being asserted.”)

An antitrust plaintiff who is unable to present direct evidence may nonetheless rely on...