Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., Inc.

Decision Date13 July 1993
Docket NumberDARLING-DELAWARE,No. 92-7481,92-7481
Citation998 F.2d 1224
Parties1993-1 Trade Cases P 70,293, 39 Fed. R. Evid. Serv. 234 PETRUZZI'S IGA SUPERMARKETS, INC. v.COMPANY, INC.; The Standard Tallow Corp.; Moyer Packing Company; Herman Isacs, Inc., Petruzzi's IGA Supermarkets, Inc. and the class it represents, Appellant.
CourtU.S. Court of Appeals — Third Circuit

Warren Rubin (argued), Law Offices of Bernard M. Gross, P.C., Philadelphia, PA, Larry S. Keiser, Chariton & Keiser, Donald H. Brobst, Rosenn, Jenkins & Greewald, Wilkes-Barre, PA, for appellant.

David S. Acker (argued), Williams Bay, for Darling-Delaware Co., Inc.

Theodore V. Wells, Jr., Terry E. Thornton (argued), Lowenstein, Sandler, Kohl, Fisher & Boylan, Roseland, NJ, Patrick M. Connolly, P.C., Scranton, PA, for Standard Tallow Corp.

David H. Marion (argued), Gilbert F. Casellas, Stephen D. Ellis, Montgomery Before: GREENBERG, NYGAARD, and LEWIS, Circuit Judges.

McCracken, Walker & Rhoads, Philadelphia, PA, Philip Salkin, Pearlstine Salkin & Associates, Lansdale, PA, for Moyer Packing Co.

OPINION OF THE COURT

GREENBERG, Circuit Judge.

Petruzzi's IGA Supermarket, Inc. (Petruzzi's IGA), for itself and on behalf of the class it represents, appeals from the district court's July 31, 1992 order entering summary judgment in favor of defendants Darling-Delaware Company, Inc. (Darling), The Standard Tallow Corp. (Standard), and Moyer Packing Company (Moyer). Petruzzi's IGA does not appeal from an earlier order of the district court dismissing a fourth defendant, Herman Isacs, Inc., pursuant to Fed.R.Civ.P. 12(b)(2) because of a lack of personal jurisdiction. See 677 F.Supp. 289 (M.D.Pa.1987). 1 In its complaint, Petruzzi's IGA alleged that the defendants conspired to allocate customers in the fat and bone rendering industry in violation of section 1 of the Sherman Act, 15 U.S.C. § 1. However, after considering the evidence put forward by Petruzzi's IGA in response to the defendants' motions for summary judgment, the district court concluded that Petruzzi's IGA failed to raise a genuine issue of material fact to controvert the defendants' denial that there was a conspiracy among the remaining defendants. District Court's Opinion (Opin.) at 65. Because we disagree in part with the district court's view of the evidence and in part with its application of the appropriate legal standards, we will reverse its July 31, 1992 order insofar as it granted summary judgment to Darling and Moyer. However, because we agree that the evidence put forward does not tend to exclude the possibility that Standard acted independently, see Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 1471, 79 L.Ed.2d 775 (1984), we will affirm the district court's grant of summary judgment to Standard. 2

I. BACKGROUND

This case involves an allegation of a restraint of trade in the fat and bone rendering industry. In this industry, rendering companies, such as the defendants, purchase inedible fats, bones, suet, and meat trimmings (raw materials) from suppliers, such as butcher shops, supermarkets, restaurants, hotels, and government agencies. These companies then process the raw materials into finished products such as tallow, grease, animal feed, and fertilizer.

On March 14, 1986, Petruzzi's IGA filed a class action in the United States District Court for the Middle District of Pennsylvania against Darling, Standard, Moyer, and Herman Isacs, Inc., alleging that from as early as January 1, 1977, to at least December 31, 1985, the defendants conspired to allocate existing raw material accounts in the fat and bone rendering industry in parts of Pennsylvania, New Jersey, and Connecticut. According to the complaint, the defendants violated section 1 of the Sherman Act by: (1) agreeing to refrain from soliciting accounts serviced by the other defendants; (2) submitting collusive and rigged bids to certain accounts; (3) settling "allocation disputes," where one competitor acquired an account owned by a competitor, by requiring the former to return the account or transfer an account of equal tonnage to the wronged renderer; and (4) urging other renderers to join the conspiracy. Complaint pp 15-17, App. at 141-42. Petruzzi's IGA contends that those competitors of the defendants who refused to abide by these "rules" were targeted by other renderers in an effort to keep them in line. For example, if Rendering Company A offered a higher price for the raw materials from an account which was On April 1, 1991, the three defendants remaining after the dismissal of Herman Isacs, Inc., moved for summary judgment, citing an absence of evidence of concerted action. In response to these motions, Petruzzi's IGA submitted a large amount of evidence which it contended demonstrated the existence of an agreement among the remaining defendants. Of significance, Petruzzi's IGA submitted: (1) testimony from Howard Salisbury and Ralph Ebersole, two former employees of Moyer; (2) secretly taped recordings of conversations between principals of Ryder Rendering Company, a former competitor of the defendants, and principals of Moyer (the Ryder tapes); (3) testimony of two economists who concluded that the defendants conspired not to compete for existing raw material accounts; (4) deposition testimony of representatives of the defendants; (5) a memorandum prepared by Michele Ellerin, the former wife of Lee Ryder, a co-owner of Ryder Rendering (the Ellerin memorandum); (6) records of five past civil and criminal antitrust actions involving the defendants and/or their employees; (7) phone records of the defendants and their principals indicating numerous phone calls to each other over the years; and (8) evidence of socializing by principals of the defendants. Petruzzi's IGA's evidence describes the limited nature of competition for existing accounts and several instances of retaliation against noncomplying rendering companies.

                being serviced by one of the defendants, then that defendant or perhaps another participant in the conspiracy would respond by offering higher, above-market prices on Company A's other accounts.   According to Petruzzi's IGA, because of the defendants' superior financial resources, such predatory tactics ensured that competitors either complied with the rules, sold out to the defendants, or entered bankruptcy.   Brief at 5.   Petruzzi's IGA does not contend the defendants conspired with respect to new accounts, but only that once the account was won or "loaded," others stayed away or at most put forward sham bids
                

Despite this evidence, the district court granted the defendants summary judgment because it determined that Petruzzi's IGA had not put forward evidence which tended to exclude the possibility that the defendants acted independently. Opin. at 65. In addition, the court stated that summary judgment was appropriate because the defendants "have met plaintiff's evidence with plausible business reasons justifying the conduct called into question." Opin. at 66. Petruzzi's IGA then appealed.

II.

DISCUSSION

In this appeal, we once again consider what evidence an antitrust plaintiff alleging a violation of section 1 of the Sherman Act 3 must put forward to defeat a motion for summary judgment. To establish a section 1 violation, a plaintiff must prove: (1) concerted action by the defendants; (2) that produced anticompetitive effects within the relevant product and geographic markets; (3) that the objects of the conduct pursuant to the concerted action were illegal; and (4) that it was injured as a proximate result of the concerted action. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1541 (3d Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1313, 113 L.Ed.2d 246 (1991); Tunis Bros. Co. v. Ford Motor Co., 763 F.2d 1482, 1489 (3d Cir.1985), vacated for further reconsideration, 475 U.S. 1105, 106 S.Ct. 1509, 89 L.Ed.2d 909 (1986). Without proof of all of these elements, a plaintiff cannot maintain a section 1 claim.

As was the case here, at the summary judgment stage antitrust defendants often maintain that the plaintiff has not offered sufficient proof that they acted in concert and accordingly did not satisfy the first element of a section 1 claim. See, e.g., Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1364 (3d Cir.1992),

                cert. denied, --- U.S. ----, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993).   And, as noted above, the district court agreed with the defendants.   Petruzzi's IGA argues that the district court erred in this determination because it proffered evidence sufficient to allow a reasonable jury to conclude that the defendants acted in concert.   Petruzzi's IGA asserts that the district court not only improperly discounted evidence that supported an inference of collusion, but also improperly compartmentalized the evidence Petruzzi's IGA put forth
                
A. The Summary Judgment Standard

We review the district court's summary judgment determination de novo, applying the same standard as the district court. 4 As this court recently reiterated, "A non-movant's burden in defending against summary judgment in an antitrust case is no different than in any other case." Big Apple BMW, 974 F.2d at 1363. Rather, in all cases summary judgment should be granted if, after drawing all reasonable inferences from the underlying facts in the light most favorable to the nonmoving party, the court concludes that there is no genuine issue of material fact to be resolved at trial and the moving party is entitled to judgment as a matter of law. Where the movant has produced evidence in support of its motion for summary judgment, the nonmovant cannot rest on the allegations of pleadings and must do more than create some metaphysical doubt.

However, at the summary judgment stage, a court is not to weigh the evidence or make credibility determinations. Id. at 1363. Instead, these tasks are left for the...

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