Int'l Ass'n of Machinists & Aerospace Workers v. Verso Paper Corp.

• Decision Date: 20 January 2015
• Docket Number: No. 1:14–cv–00530–JAW.,1:14–cv–00530–JAW.
• Citation: 80 F.Supp.3d 247
• Parties: INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL–CIO, LOCAL LODGE NO. 1821, et al., Plaintiffs, v. VERSO PAPER CORP., et al., Defendants.
• Court: U.S. District Court — District of Maine

80 F.Supp.3d 247

INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL–CIO, LOCAL LODGE NO. 1821, et al., Plaintiffs

v.VERSO PAPER CORP., et al., Defendants.

No. 1:14–cv–00530–JAW.

United States District Court, D. Maine.

Signed Jan. 20, 2015.

Ishai Mooreville, Jesse Markham, Donald I. Baker, Baker & Miller PLLC, Washington, DC, Kimberly J. Ervin Tucker, Law Office of Kimberly J. Ervin Tucker, Lincolnville, ME, Dana F. Strout, Law Office of Dana Strout, Rockport, ME, for Plaintiff.

Greta Louise Burkholder, Scott Alan Stempel, Morgan, Lewis & Bockius LLP, Washington, DC, David E. Barry, Nolan Ladislav Reichl, Pierce Atwood LLP, David A. Strock, Fisher & Phillips, LLP, Clifford Ruprecht, Roach Hewitt Ruprecht Sanchez & Bischoff, P.C., Portland, ME, for Defendant.

ORDER DENYING PLAINTIFFS' MOTION FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION AND ADDENDUM

JOHN A. WOODCOCK, JR., District Judge.

As early as January 19, 2015, Verso Paper Corp. and Verso Paper LLC (Verso) anticipated selling the Bucksport, Maine Paper Mill to AIM Development (USA), LLC (AIM) and in anticipation of the sale, Verso ceased paper mill operations in Bucksport. In this lawsuit, former Verso employees of the Bucksport Paper Mill, their union, and former Verso employees in their capacity as consumers of coated paper goods allege various federal and state antitrust law violations, and seek an order enjoining and restraining Verso and AIM from closing on the sale. The Court denies Plaintiffs' motion.

I. BACKGROUND

A. Procedural Background

On December 15, 2014, the International Association of Machinists and Aerospace Workers, AFL–CIO, Local Lodge No. 1821 (IAM or IAMAW), Richard Gilley, Corey Darveau, Brian Simpson, Brian Abbott, and Harold Porter (Plaintiffs) filed a complaint against Verso Paper Corp. and Verso Paper LLC (Verso) and against AIM Development (USA) LLC (AIM).¹ Compl. for Declaratory and Injunctive Relief (ECF No. 1) (Compl. ). Also on December 15, 2014, Plaintiffs filed a motion for a temporary restraining order and preliminary injunction. Mot. for a TRO and a Prelim. Inj. Pursuant to F.R.C.P. 65 (ECF No. 4) (Pls.' Mot. ). On December 22, 2014, Plaintiffs filed an amended complaint, which added 53 Local No. 1821 Members as plaintiffs and included additional allegations. First Am. Compl. for Declaratory and Injunctive Relief (ECF No. 29) (Am. Compl. ). In the Amended Complaint,² Plaintiffs allege that: (1) Verso publicly refuses “to consider any offers to purchase [the] Bucksport [Mill] from other” competitors, and deliberately selected AIM as the buyer, which has “a prior history of scrapping paper making mills” and plans on doing the same in Bucksport, all in violation of the Sherman Antitrust Act, 15 U.S.C. §§ 1 –2 ; and (2) AIM's acquisition of a Verso subsidiary “will substantially lessen competition, and tend to create a monopoly, in the relevant national market for coated printing paper,” in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18, and Maine antitrust law, 10 M.R.S. §§ 1101 –1102–A. Id. ¶¶ 2, 4.

At the request of Plaintiffs, the Court held a telephone conference on December 19, 2014 and set initial scheduling deadlines. Minute Entry (ECF No. 26). On December 27, 2014, Plaintiffs filed a request for judicial notice, and a sworn attorney declaration relating to the accuracy of the documents attached to the First Amended Complaint. Pls.' Req. for Judicial Notice (ECF No. 45) (Req. for Judicial Notice ); Decl. of Kimberly J. Ervin Tucker (ECF No. 46) (First Tucker Decl. ).³

On January 2, 2015, AIM filed its response in opposition to Plaintiffs' motion. Mem. of AIM Dev. (USA) LLC in Opp'n to Pls.' Mot. for TRO and Prelim. Inj. (ECF No. 64) (AIM's Opp'n ). Also on January 2, 2015, Verso filed its response in opposition to Plaintiffs' motion. Defs. Verso

Paper Corp. and Verso Paper LLC's Opp'n to Pls.' Mot. for a TRO and a Prelim. Inj.

(ECF No. 67) (Verso's Opp'n ). On January 5, 2015, Magistrate Judge John C. Nivison held a telephone conference regarding discovery. Minute Entry (ECF No. 71). On January 6, 2015, the Magistrate Judge issued an order on discovery.Order on Disc. (ECF No. 74). On January 8, 2015, Plaintiffs filed their reply to AIM and Verso's oppositions, and on January 12, 2015, they filed a corrected reply. Pls.' Reply Mem. in Support of Mot. for TRO and Prelim. Inj. Under the Antitrust Laws (ECF No. 79) (Pls.' Reply ); Pls.' Corrected Reply Mem. in Support of Mot. for TRO and Prelim. Inj. Under the Antitrust Laws (ECF No. 82) (Pls.' Corrected Reply ). Also on January 12, 2015, Verso filed a surreply. Defs. Verso Paper Corp. and Verso Paper LLC's Surreply in Further Opp'n to Pls.' Mot. for a TRO and a Prelim. Inj. (ECF No. 84) (Verso's Surreply ). On January 13, 2015, the Court heard oral argument. Minute Entry (ECF No. 86).

B. Factual Background ⁴

1. The Parties

AIM is an affiliate of American Iron & Metal Company, Inc. AIM'S Opp'n Attach. 1 Membership Interest Purchase Agreement among AIM and Verso § 1.01 (MIPA ). It is “one of the leading firms in the world in the metal recovery and recycling industry.” Decl. of Jeff McGlin in Support of AIM Dev. (USA) LLC's Opp'n to Mot. for TRO and Prelim. Inj. ¶ 4 (ECF No. 65) (McGlin Decl. ). In addition, much of its business “involves sourcing scrap metal through the purchase of discontinued manufacturing facilities, salvage of the recoverable metal, and preparation of the site for further disposition.” Id. ¶ 5.

Verso Paper Corporation is a Delaware corporation and indirect parent of the sellers of the Bucksport Mill, Verso Paper LLC, a Delaware limited liability company, and Verso Maine Power Holdings LLC, also a Delaware limited liability company. MIPA at 2, § 1.01.

Plaintiffs are a labor union and its 59 hourly-wage members employed as mechanics at the Bucksport Mill, as well as “purchasers of magazines and other products that contain coated paper.” Pls.' Mot. at 1.⁵

2. The Merger Between Verso and NewPage; The DOJ's Approval of the Merger

On January 3, 2014, Verso agreed to acquire NewPage Holdings, Inc. (NewPage) for approximately $1.4 billion. United States v. Verso Paper Corp., Case No. 1:14–cv–2216 at 2 (D.D.C. Dec. 31, 2014), http://www.justice.gov/atr/cases/f310800/310833.pdf (Competitive Impact Statement ). The NewPage Acquisition was submitted to the United States Department of Justice (DOJ) for antitrust review and clearance, which remained pending at the time of Plaintiffs' lawsuit on December 15, 2014. Pls.' Mot. at 5. In a letter to Verso employees dated October 30, 2014, Verso President and CEO David Paterson provided an update to employees:

Today, in order to address potential antitrust considerations related to the acquisition, NewPage Corporation and two of its subsidiaries signed an agreement to sell NewPage's paper mills in Biron, Wisconsin, and Rumford, Maine, to a subsidiary of Catalyst Paper Corporation.

Compl. Attach. 28 Statement of Pl. Harold Porter at 3 (Porter Decl. ).

On December 31, 2014, as part of the settlement process with Verso, the DOJ filed a civil antitrust action in the United States District Court for the District of Columbia alleging that the pending merger would violate antitrust laws. Competitive Impact Statement at 1. However, the DOJ also submitted a “Hold Separate Stipulation and Order” and proposed Final Judgment, “which are designed to eliminate the anticompetitive effects of the acquisition,” and thus, allow the merger to proceed. Id. at 2, 9–12. Under the terms of the proposed Final Judgment, the NewPage paper mills in Biron, Wisconsin and Rumford, Maine must be sold to Catalyst Paper Corporation, or an alternate buyer approved by the DOJ. Id. at 2, 910. The purpose of the divestiture is to “provide the purchaser of the divested assets with a market presence comparable to Verso's current market presence in the relevant markets.” Id. at 11. With this caveat, the DOJ states that it “is satisfied ... that the divestiture of assets described in the proposed Final Judgment will preserve competition for the provision of coated freesheet web paper, coated groundwood paper, and label paper in the relevant market identified by the [DOJ].” Id. at 14. Furthermore, “[t]he [DOJ] does not allege that the closing of the Bucksport Mill is a result of the merger.” Id. at 3 n. 1.

The district court will rule on whether the proposed Final Judgment “is in the public interest” after the 60–day comment period passes, as required by 15 U.S.C. § 16(e)(1). Id. at 15. However, Verso's counsel indicated to the Court during oral argument on January 13, 2015 that the Verso–NewPage merger is complete. Tr. of Proceedings 31:12–14 (ECF No. 90).

3. The Bucksport Mill and Its Closure

The Bucksport Mill employed over 500 people (including Plaintiffs). Pls.' Mot. at 2; Verso's Opp'n at 2. It was capable of producing “approximately 350,000 tons of coated groundwood paper and 55,000 tons of specialty paper per year.” Verso's Opp'n Attach. 2 Decl. of George A. Hay in Support of the Verso Defs.' Opp'n to Pls.' Mot. for Entry of a TRO and a Prelim. Inj. ¶ 6 (Hay Decl. ). On October 1, 2014, Verso announced its plans to shut down the Bucksport Mill. Compl. Attach. 31 Statement of Pl. Brian Simpson at 2 (Simpson Decl. ); id. Attach. 30 Statement of IAMAW 1821 Member Alfred George at 2 (George Decl. ). The following day, Verso Vice President Dennis Castonguay told employees that the Mill “may be offered on the market, but not to a competitor.” George Decl. at 2; Porter Decl. at 2. On December 4, 2014, the Bucksport Mill's printing facilities shut down. Pls.' Mot. at 6.

4. Verso's Reasons for Shutting Down the Bucksport Mill

Mr. Paterson stated that “Verso had unilateral, legitimate business reasons for closing the Bucksport Mill.” Verso's Opp'n Attach. 1 Decl. of David J. Paterson in Support of the Verso Defs.' Opp'n to Pls.' Mot. for Entry of a TRO and a Prelim.

Inj.

¶ 5 (Paterson Decl. ). He asserted that the Mill was “unprofitable for...