Virginia Vermiculite v. Historic Green Springs

• Decision Date: 04 October 2002
• Docket Number: No. 01-1925.,No. 01-1850.,01-1850.,01-1925.
• Parties: VIRGINIA VERMICULITE, LIMITED, Plaintiff-Appellant, v. The HISTORIC GREEN SPRINGS, INCORPORATED, Defendant-Appellee, and W.R. Grace & Company — Connecticut, Defendant. National Trust For Historic Preservation; The Land Trust Alliance, Amici Curiae. Virginia Vermiculite, Limited, Plaintiff-Appellee, v. The Historic Green Springs, Incorporated, Defendant-Appellant, and W.R. Grace & Company — Connecticut, Defendant. National Trust for Historic Preservation; The Land Trust Alliance, Amici Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 277

307 F.3d 277

VIRGINIA VERMICULITE, LIMITED, Plaintiff-Appellant, v. The HISTORIC GREEN SPRINGS, INCORPORATED, Defendant-Appellee, and W.R. Grace & Company — Connecticut, Defendant.

National Trust For Historic Preservation; The Land Trust Alliance, Amici Curiae.

Virginia Vermiculite, Limited, Plaintiff-Appellee, v. The Historic Green Springs, Incorporated, Defendant-Appellant, and W.R. Grace & Company — Connecticut, Defendant.

National Trust for Historic Preservation; The Land Trust Alliance, Amici Curiae.

No. 01-1850.

No. 01-1925.

United States Court of Appeals, Fourth Circuit.

Argued: May 6, 2002.

Decided: October 4, 2002.

COPYRIGHT MATERIAL OMITTED

ARGUED: Einer Richard Elhauge, Cambridge, Massachusetts, for Appellant. Charles Hubert Montange, Seattle, Washington, for Appellee.

ON BRIEF: Brian A. Glasser, Bailey & Glasser, L.L.P., Charleston, West Virginia, for Appellant. Paul W. Edmondson, Vice President & General, Elizabeth S. Merritt, Deputy General, Anita C. Canovas, Assistant General, National Trust for Historic Preservation, Washington, DC, for Amici Curiae.

Before LUTTIG, WILLIAMS, and MICHAEL, Circuit Judges.

Affirmed by published opinion. Judge LUTTIG wrote the opinion, in which Judge WILLIAMS and Judge MICHAEL joined.

OPINION

LUTTIG, Circuit Judge.

Virginia Vermiculite, Limited (VVL) appeals a district court order granting summary judgment to Historic Green Springs, Incorporated (HGSI) on VVL's claim that HGSI and W.R. Grace & Company (Grace) conspired to restrain trade of Louisa County, Virginia, vermiculite mining rights, in violation of section 1 of the Sherman Act. VVL also appeals the district court's verdict, after a bench trial, that the alleged conspiracy did not constitute a violation of the Virginia Civil Conspiracy Act (VCCA). Although we disagree with the district court's reasoning, we agree with its ultimate conclusions, and therefore affirm.

I.

The relevant facts, which are amply set forth in the prior appeal, see Virginia Vermiculite, Ltd. v. W.R. Grace & Co., 156 F.3d 535 (4th Cir.1998) (VVL I), and the district court's thorough opinions, see Virginia Vermiculite, Ltd. v. W.R. Grace & Co., 108 F.Supp.2d 549 (W.D.Va.2000) (Summary Judgment); Virginia Vermiculite, Ltd. v. W.R. Grace & Co., 144 F.Supp.2d 558 (W.D.Va.2001) (Trial), are as follows.

VVL brought suit against Grace and HGSI, a nonprofit organization dedicated to preserving the Green Springs National Historic Landmark District in Louisa County, Virginia, in a controversy involving the mining and purification of vermiculite, a scarce mineral with many industrial uses. Domestic vermiculite reserves are only known to exist in Montana, South Carolina and Virginia. The Virginia reserves lie almost entirely within Louisa County.

In 1976, VVL began mining vermiculite in Louisa County. At that time, Grace held, unused, an overwhelming percentage of the region's vermiculite-laden lands. Though Grace originally planned to mine its Virginia holdings, by 1991 it decided that the costs required to build a local purification plant were prohibitive. In an attempt to sell its unused holdings, Grace began negotiations with the region's sole vermiculite miner, VVL. The companies failed to reach agreement, however, and Grace instead entered discussions with HGSI about the possibility of donating the land to the nonprofit. Grace ultimately decided to donate its holdings to HGSI, and proceeded to do so through a gift-deed, which, importantly, limited the gift by concurrently attaching restrictive covenants to the land deeds. The covenants, waiveable only by agreement of Grace and the gift-deed holders (i.e., HGSI), prohibited use of the land for vermiculite mining or transport.

VVL brought suit against Grace and HGSI alleging violations of sections 1 and 2 of the Sherman Act and related state law provisions. Specifically, VVL claimed that the donation constituted an unreasonable restraint of trade of Louisa County vermiculite mining rights and a violation of the VCCA. The district court dismissed VVL's section 1 claim against Grace, and all claims against HGSI, for failure to state a claim, but on appeal we reversed. See VVL I, 156 F.3d 535. On remand, the district court granted summary judgment to Grace and HGSI on all antitrust claims except for conspiracy to monopolize. See Summary Judgment, 108 F.Supp.2d at 554. Grace subsequently settled all claims with VVL, removing itself from this action. The district court, after a bench trial, found in favor of HGSI on all remaining counts. See Trial, 144 F.Supp.2d at 610. VVL only appeals the district court's grant of summary judgment to HGSI on the section 1 claim, and the court's judgment for HGSI on the VCCA claim.

II.

VVL contends that the district court erred by granting summary judgment on the section 1 claim to HGSI under the rule of reason. We agree with the district court's disposition of VVL's claims, though we do not reach the detailed rule of reason analysis the district court undertook. We instead affirm the grant of summary judgment on the basis of the reasoning below.

A.

We review de novo a grant of summary judgment under section 1 of the Sherman Act, see Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 466, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992), to determine if the plaintiff "establish[ed] the existence of [all] element[s] essential to [its] case, and on which [it] would bear the burden of proof at trial." Celotex Corporation v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Because VVL claims that Grace and HGSI conspired in violation of section 1 of the Sherman Act, it must establish, as a genuine issue of fact, that Grace and HGSI entered into an illegal, conspiratorial agreement. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

B.

It is incontestable that "concerted action" in restraint of trade lies at the heart of a Sherman Act section 1 violation. The language of the Act expressly requires such a concert. See 15 U.S.C. § 1 ("Every contract, combination ... or conspiracy, in restraint of trade ... is declared to be illegal."). The Supreme Court has gone so far as to say that the "distinction between unilateral and concerted action is critical," Fisher v. Berkeley, 475 U.S. 260, 266, 106 S.Ct. 1045, 89 L.Ed.2d 206 (1986) (emphasis added), and is "necessary for a proper understanding of the [act]," Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 769, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984) (emphasis added).

Because "[i]ndependent action is not proscribed [by § 1]," Monsanto Co. v Spray-Rite Service Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984), courts may impose antitrust liability on the basis of unilateral conduct only under section 2 of the Sherman Act, which prohibits monopolization and attempts to monopolize. See, e.g., Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 105 S.Ct. 2847, 86 L.Ed.2d 467 (1985).

Under this well-established framework, it is incumbent on VVL, if it is to survive summary judgment, to proffer evidence that can establish the existence of illegal, concerted activity by the defendants in restraint of trade.

The district court recognized the imperative that evidence of concerted action be proffered on the section 1 claim. See Summary Judgment, 108 F.Supp.2d at 563. It also understood that the analysis is governed by the Supreme Court's statements that the plaintiff must prove the defendants "had a conscious commitment to a common scheme designed to achieve an unlawful objective," Monsanto, 465 U.S. at 764, 104 S.Ct. 1464, and that the plaintiffs evidence must "tend[] to exclude the possibility that the alleged conspirators acted independently," Matsushita, 475 U.S. at 588, 106 S.Ct. 1348. Having stated these principles as its authority, the court held that "evidence of the donations containing restrictive covenants alone satisfies the plaintiff's burden of producing sufficient evidence to establish concerted action under § 1," Summary Judgment, 108 F.Supp.2d at 563, and in so doing, rejected HGSI's contrary argument that "engaging in these transactions [i.e., taking receipt of the gift-deed and its attached covenants] is not evidence of concerted action." Id. The district court erred in this conclusion.

The term "concerted action" must be construed in a more refined manner, for "concerted activity subject to § 1 is judged more sternly than unilateral activity under § 2," Fisher, 475 U.S. at 266, 106 S.Ct. 1045. Thus, it is of "`considerable importance' that independent activity by a single entity be distinguished from a concerted effort by more than one entity to fix prices or otherwise restrain trade," id. (citation omitted) (emphasis added).

The Supreme Court, in further describing the conduct that constitutes concerted activity for section 1 purposes (i.e., susceptible to section 1 condemnation as being unlawful for fixing prices or restraining trade), has said that it:

deprives the marketplace of the independent centers of decision making that competition assumes and demands.... [It] reduces the diverse directions in which economic power is aimed but suddenly increases the economic power moving in one particular direction. [It involves a] merging of resources.

Copperweld, 467 U.S. at 769, 104 S.Ct. 2731 (Burger, C.J.).

In Copperweld, the Court, citing to Monsanto, which was decided just three months earlier, rejected the contention that a parent corporation and an individually incorporated, but wholly-owned subsidiary of that parent, could engage in concerted activity that was unlawful under section 1. Notwithstanding the everyday sense in which their joint efforts were concerted action, their conduct was held not to be concerted action for purposes of section 1, because "agreements among them do not suddenly bring together economic power that was previously pursuing...