In Re Tableware Antitrust Litigation

484 F. Supp. 2d 1059 (2007)

In re TABLEWARE ANTITRUST LITIGATION
This Document Relates to All Actions.

No. C-04-3514 VRW.

United States District Court, N.D. California.

March 13, 2007.

Alex C. Turan, Henry A. Cirillo, Michael P. Lehmann, Furth Lehmann & Grant LLP, Richard Alexander Saveri, Cadio Zirpoli, Geoffrey C. Rushing, Guido Saveri, Lisa Saveri, Saveri & Saveri Inc., Craig C. Corbitt, Zelle, Hofmann, Voelbel, Mason & Gette LLP, Joseph M. Alioto, Alioto Law Firm, San Francisco, CA, for Plaintiffs.

Jeffrey A. Levee, Jones Day Los Angeles, CA, Phillip Aaron Proger, Toby G. Singer, Jones Day, Washington, DC, Thomas Demitrack, Jones Day, Cleveland, OH, Catherine E. Sison, Ronald J. Dolan, The May Department Stores Company Office of Legal Counsel, St. Louis, MO, David Dong-In Sohn, Skadden, Arps, Slate, Meagher & Flom LLP Tammy Albarran, Terri Garland Morrison & Foerster, Jeffrey C. Hallam, San Francisco, CA, Amy E. Richardson, Patrick Pearse O'Donnell, Joseph Collins Cavender, Justin Emerson Dillon, Harris, Wiltshire, Grannis LLP, Washington, DC, Dawn Michelle Irizarry, Proskauer Rose LLP, LA, CA, for Defendants.

ORDER

WALKER, Chief Judge.

Plaintiffs in these consolidated cases allege that May Department Stores Co ("May") and Federated Department Stores, Inc ("Federated"), which operate department stores across the United States, and Lenox, Inc ("Lenox") and Waterford Wedgwood, USA ("Waterford"), both of which produce fine tableware sold in the United States, conspired with one another to boycott Bed, Bath and Beyond, a competitor of May and Federated. Plaintiffs claim to have purchased fine tableware from May and Federated during the period of the alleged boycott and were thus injured because the boycott impaired competition in that product market. Plaintiffs bring suit under § 1 of the Sherman Act, alleging that defendants' conduct is condemned per se.

On November 17, 2006, Federated (joined by May) and Waterford moved for summary judgment asserting a variety of grounds. Doc # 116; Doc # 128. For reasons discussed below, the court GRANTS Waterford's motion for summary judgment and GRANTS IN PART and DENIES IN PART Federated's and May's motion for summary judgment.

I

In early 2000, both Waterford and Lenox considered expanding the distribution channels for their high-end tableware lines to include Bed, Bath & Beyond and other specialty retailers. Doc # 183 at Ex 67 ("In a perfect world, this [Bed, Bath & Beyond partnership] is the kind of new distribution that we should be exploring; otherwise, we will be forever in the grip of the department stores. However, we will have to assess the amount of angst at Federated compared with the prize before we decide whether or not to be a part of this [Bed, Bath & Beyond] test."). See also Doc # 180, Ex 10 (Mielke depo) at 48:8-51:15.

On March 7, 2001, Bed, Bath & Beyond and Waterford executives met and agreed to proceed with a test project. Doc # 180, Ex 10 (Mielke depo) at 74:12-75:9; Ex 32 ("A * * * meeting in New York when we agreed to proceed with the test * * * "). During subsequent meetings, Bed, Bath & Beyond and Waterford personnel finalized site plans for the opening of a fine china department at Bed, Bath & Beyond. Doc # 180, Ex 10 (Mielke depo) at 82:11-84:8; Doc # 179, Ex 5 (Johnson depo) at 144:1-16; Doc # 183, Ex 72.

Lenox also met with Bed, Bath & Beyond to discuss the prospect of distributing tableware. Doc # 179, Ex 2 (Gavin depo) at 50:19-53:6, 56:18-21, 58:15-24, 59:8-21; Ex 6 (Krangel Depo) at 94:8-98:23, 106:3-19; Doc # 180, Ex 14 (Scala depo) at 68:5-70:11, 71:12-19. Eventually, on March 30, 2001, Lenox agreed to participate in a test rollout with Bed, Bath & Beyond. Doc # 179, Ex 2 at 64:20-65:3; Doc # 183, Ex 59 ("We will be piloting a 7 store test program in Bridal tabletop products"). The parties confirmed specific product assortments at subsequent meetings. Doc # 179, Ex 2 at 139:20-142:2; Doc # 180, Ex 15 (Temares depo) at 59:9-63:22, 160:2-161:3; Doc # 179, Ex 5 (Johnson depo) at 73:20-74:9, 198:18-199:9.

Because Waterford had an interest in knowing the identities of the other manufacturers participating in the Bed, Bath & Beyond rollout, its executives had their "ear to the ground from day one about which manufacturers were going to be participating and who were not going to be participating." Doc # 179, Ex 10 (Mielke depo) at 156:8-14. Indeed, Waterford's Mielke testified that he probably mentioned the Bed, Bath & Beyond rollout during conversations with Lou Scala and Moira Gavin at Lenox. (Doc # 179, Ex 2 (Gavin depo) at 139:20-141:9); Doc # 180, Ex 10 (Mielke depo) at 153:24-157:7; Ex 60 ("Lenox and Waterford are anchoring the department.").

On May 31, 2001, Lenox informed May about its plans to distribute through Bed, Bath and Beyond "as a `6 door test,' starting in 9/01," Doc # 182, Ex 44 at May 65281. Lenox further mentioned that Waterford would also be participating in the Bed, Bath & Beyond rollout. Doc # 179, Ex 7 (Locraft depo) at 179:13-16. The evidence suggests that this news spurred the retailers into action. Gregory Locraft, an executive at May, was "agitated, disappointed, concerned [and] upset" by this news. In a raised voice, Locraft exclaimed "you do what you have to do and we'll do what we have to do." Doc # 179, Ex 7 at 176:14-16. Soon thereafter, May executive Don Engelman called Carl Mielke at Waterford to confirm whether Waterford intended to participate in the Bed, Bath & Beyond rollout. Mielke told Engelman that Waterford was "working on something" with Bed, Bath & Beyond. Doc # 180, Ex 10 at 163:11-12.

The next day, Lenox contacted May executive Judith Hofer "to try to take care of the situation" and "settle things down." Doc # 179, Ex 6 at 206:16-25. Hofer was "very professional" in response, but reiterated Locraft's admonition, "you have to do what you need to do to grow your business and we need to do what we need to do." Id at 209:7-9.

About a week after the May 31 meeting, Federated contacted both Lenox and Waterford to complain about their participation in the rollout. Federated's Salus telephoned Lenox President Krangel and said he was "concerned" about the decision. Doc # 179, Ex 6 (Krangel depo) at 241:9-10. At the end of the conversation, Salus told Krangel: "[y]ou have to do what you have to do to grow your business and we have to do what we need to do with our business." Doc # 170, Ex 6 (Krangel depo) at 239:16-25, 236:19-244:17; Doc # 180, Ex 14 (Scala depo) at 148:5-149:19, 151:3-12.

On the same day, Federated president Terry Lundgren and executive Janet Grove telephoned Waterford CEO Chris McGillivary about the Bed, Bath & Beyond program, warning that it "was not going to help the relationship between the two companies." Doc # 179, Ex 9 (McGillivary depo) at 65:5-66:11. A few days later, James Zimmerman, Federated's CEO, telephoned Anthony O'Reilly, Chairman of Waterford, to discuss Waterford's participation in the Bed, Bath & Beyond rollout. According to Waterford, Zimmerman said he "would advise against it." Doc # 180, Ex 19 at FED 001223; Ex 16 (Zimmerman depo) at 24:4-26:6, 29:4-30:3.

On June 12, 2001, Federated executives held an internal meeting during which the Bed, Bath & Beyond rollout was mentioned. Doc # 179, Ex 3 (Grove depo) at 129:13-130:14. One week later, Helaine Suval, a vice-president at Federated, sent an email summarizing the meeting as relayed to her from Federated's Dawn Robertson (Suval did not attend the meeting). The email states in pertinent part:

Waterford, Lenox and All-Clad have agreed to sell Bed, Bath & Beyond (6 stores). Major point of contention — [Federated's president] Terry Lundgren involved. Federated has threatened to drop them if they go ahead and sell BB & B. No new initiatives with them in stores[.]

Doc # 181, Ex 38. Robertson disputes the accuracy of the Suval email; although unable to recall what was said at the meeting, Robertson firmly relates what was not said. She contends that nobody at the meeting "stated that Lenox or Waterford, or any of their products, would be dropped by Federated or any of its stores, nor did any Federated [employee] at the meeting state that there would be no new initiatives with Lenox." Doc # 131, Ex T, ¶ 4. The point, of course, is that the evidence discloses conflicting versions of events, albeit both from Federated personnel.

Around June 12, 2002, May executive Tom Hayes had a meeting with Scala at Lenox, the substance of which Hayes relayed to Gregory Locraft. Doc # 179, Ex 7 at 215:20-23. According to Locraft's notes, Hayes maintained that he would not distribute several Lenox and Gorham brands if Lenox sold to Bed, Bath & Beyond. Doc # 179, Ex 7 at 218:17-21; Doc # 183, Ex 57.

The concerns of Federated and May appear to have borne fruit. Waterford's McGillivary told his subordinate, Carl Mielke, "[t]his is bad * * *, [w]e need to stop the test." Doc # 180, Ex 10 (Mielke depo) at 113:5-18. McGillivary remarked to Mielke "[w]e needed to find a way to stop this and we need to tell [Bed, Bath & Beyond] we can't do this test, and we can't tell them that it is because of Federated." Doc # 180, Ex 10 (Mielke depo) at 111:21-113:25, 115:22-116:10. Accordingly, Mielke drafted a script of what to tell Bed, Bath & Beyond, which McGillivary approved. Doc # 181, Ex 10 at 119:20-120:5, 130:22-131:7; Doc # 181, Ex 31-33.

On June 12, 2001, Mielke called James Peikon and Todd Johnson at Bed, Bath & Beyond and told them Waterford would not be able to participate in the test program. Doc # 179, Ex 5 (Johnson depo) at 78:3-79:18; Doc # 180, Ex 10 (Mielke depo) at 120:6-15, 130:22-134:21. According to Mielke, Peikon and Johnson told Mielke that his reasons were "bullshit," Doc # 180, Ex 10 at 133:3-25, and that "[t]hese F ___ up department stores will promise you guys anything if you don't sell us but will go right back to F ___ you up the like they always have." Doc # 181, Ex 32.

At McGillivary's instruction, Mielke reported his conversation with Bed, Bath & Beyond to Federated's Janet Grove. Doc # 180, Ex 10 (Mielke depo) at 134:22-136:18; Doc # 181, Ex 31. According to Mielke, Grove said "[t]hat's great[,][y]ou guys do what you have to do and we do what we have to do, but I'm glad you guys made this decision." Doc # 180, Ex 10 (Mielke depo) at 136:19-137:17; Doc # 179, Ex 3 (Grove depo) at 83:7-18.

Next, Lenox called Bed, Bath & Beyond and terminated its participation in the Bed, Bath & Beyond program. Doc # 180, Ex 15 (Temares depo) at 168:5-169:22. Lenox's Krangel called Bed, Bath & Beyond President and CEO Steven Temares and told him that Lenox needed to "pull back." (Doc # 180, Ex 15 (Temares depo) at 95:13-96:4, 99:15-101:14, 103:16-107:22, 109:16-110:15, 168:5-170:16). Temares thought Krangel's purported justification for pulling out of the deal "was a bunch of horse shit," sounded "scripted" and made no sense. Doc # 180, Ex 15 at 111:8-112:16, 170:17-171:7:

It is just inconsistent with common sense since I sat with them at a meeting a month before, that I imagine people told him all along where we were in the process, that we had selected the assortment, that they approved the fixturing, that we had gone through with the selection of stores, that we involved all these people and time and effort and we had numerous meetings at all different levels in the organization, so common sense would indicate that what he said is farfetched.

Id, Ex 15 at 170:17-172:17.

Finally, on June 18, 2001, Federated's Zimmerman wrote to O'Reilly at Waterford, praising him for making the "right decision":

I wanted to write and tell you I think your team made the right decision. You have a great brand and it needs to be protected and enhanced. I assume you played a role and I think you did the right thing for all partners in this game. Thanks for listening to me as I voiced my thoughts.

Doc # 180, Ex 18; Ex 16 (Zimmerman depo) at 26:13-20, 28:1-29:1.

About one year later, Waterford began to sell its Wedgwood tableware products to Bed, Bath & Beyond in August 2002 and its Waterford brand products in November 2004. Lenox followed suit in November 2002. Doc # 179, Ex 2 (Gavin depo) at 221:12-221:21, 231:2-21, 243:21-244:9; Doc # 183, Ex 62; Doc # 183, Ex 67 at 29.

II

In its order denying defendants' motion to dismiss, the court remarked that plaintiffs "appear to state claims (presumably in the alternative) for (1) vertical minimum resale price maintenance, (2) horizontal price fixing and (3) an exclusionary group boycott." Doc # 52 at 5. Since that time, plaintiffs have shed the first two theories of relief, rendering this suit, in plaintiffs' words, "a group boycott case." Doc # 161 at 8.

As a legal matter, however, this case is better characterized as three group boycott cases: in plaintiffs' view, the successful boycott of Bed, Bath & Beyond arose from (1) a horizontal agreement between Federated and May, (2) a horizontal agreement between Waterford and Lenox and (3) vertical agreements among all defendants. Moreover, plaintiffs presumably regard each set of agreements as independently sufficient to effect the boycott of Bed, Bath & Beyond. Although plaintiffs add these alleged agreements together to arrive at one grand (and overdetermined) conspiracy, various antitrust doctrines impel the court to distinguish among these three categories at various points along the court's analysis.

In reviewing a summary judgment motion, the court must determine whether genuine issues of material fact exist, resolving any doubt in favor of the party opposing the motion. "[S]ummary judgment will not lie if the dispute about a material fact is `genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L.Ed.2d 202 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. And the burden of establishing the absence of a genuine issue of material fact lies with the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). When the moving party has the burden of proof on an issue, the party's showing must be sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party. Calderone v. United States, 799 F.2d 254, 258-59 (6th Cir.1986). Summary judgment is granted only if the moving party is entitled to judgment as a matter of law. FRCP 56(c).

The nonmoving party may not simply rely on the pleadings, however, but must produce significant probative evidence supporting its claim that a genuine issue of material fact exists. TW Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987). The evidence presented by the nonmoving party "is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255, 106 S. Ct. 2505. "[T]he judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id at 249, 106 S. Ct. 2505.

III

A

Section 4 of the Clayton Act provides that "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue * * *." 15 USC § 15(a). Although this language could be read to afford relief to all persons whose injuries are causally related to an antitrust violation, Lucas v. Bechtel Corp., 800 F.2d 839, 843 (9th Cir. 1986), the doctrine of "antitrust standing" precludes such an interpretation. Los Angeles Memorial Coliseum Comm'n v. NFL, 791 F.2d 1356, 1363 (9th Cir.1986). "Only those who meet the requirements for `antitrust standing' may pursue a claim * * *; and to acquire `antitrust standing,' a plaintiff must adequately allege and eventually prove `antitrust injury.'" Glen Holly Entertainment, Inc. v. Tektronix Inc., 352 F.3d 367 (9th Cir.2003) (citing Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 530-35, 103 S. Ct. 897, 74 L. Ed. 2d 723 (1983)).

To determine whether plaintiffs have standing to pursue their antitrust claim, the court considers five factors:

(1) the nature of plaintiffs' alleged injury-whether it was the type the antitrust laws were intended to forestall;

(2) the directness of the injury;

(3) the speculative measure of the harm;

(4) the risk of duplicative recovery; and

(5) the complexity in apportioning damages.

Associated General Contractors, 459 U.S. at 538-45, 103 S. Ct. 897;

To conclude that there is antitrust standing, the court need not find in favor of plaintiffs on each factor, see Amarel v. Connell, 102 F.3d 1494, 1507 (9th Cir. 1996); generally, "no single factor is decisive." R C Dick Geothermal Corp. v. Thermogenics, Inc., 890 F.2d 139, 146 (9th Cir.1989) (en banc). Yet courts give great weight to the nature of plaintiffs' alleged injury. See Amarel, 102 F.3d at 1507. Indeed, the Supreme Court has noted that "[a] showing of antitrust injury is necessary, but not always sufficient, to establish standing." Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 110, n. 5, 107 S. Ct. 484, 93 L. Ed. 2d 427 (1986). To demonstrate an antitrust injury, it is not enough that the plaintiffs' claimed injury flows from the unlawful conduct; an antitrust injury must "flow [] from that which makes defendants' acts unlawful." Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334, 110 S. Ct. 1884, 109 L. Ed. 2d 333 (1990) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S. Ct. 690, 50 L. Ed. 2d 701 (1977)).

Plaintiffs principally rely on Blue Shield v. McCready, 457 U.S. 465, 102 S. Ct. 2540, 73 L. Ed. 2d 149 (1982), in asserting their injury was the type the antitrust laws were intended to forestall. In McCready, the Supreme Court held that an individual had standing to sue her health insurer for reimbursement of payments to a clinical psychologist for allegedly conspiring with physicians to bar clinical psychologists from the market by excluding their services from coverage under the insurance policy. In doing so, the Court rejected the argument that the plaintiff lacked standing because she was not an actor in the relevant market and because the more appropriate plaintiffs were the psychologists. Id. The Court reasoned that antitrust remedies "cannot be restricted to those competitors whom the conspirators hope to eliminate from the market. * * * As a consumer of psychotherapy services * * * [the plaintiff] was within that area of the economy * * * endangered by [the] breakdown of competitive conditions." Id at 479-80, 102 S. Ct. 2540. Even though the plaintiff "was not a competitor of the conspirators, the injury she suffered was inextricably intertwined with the injury the conspirator sought to inflict on psychologists and the psychotherapy market." Id at 483, 102 S. Ct. 2540.

Like the plaintiff in McCready, plaintiffs here are consumers in the restrained market — the tableware market. And by purchasing tableware directly from the alleged co-conspirators, plaintiffs participated in the area of the economy endangered by anticompetitive conditions. See id. at 480, 102 S. Ct. 2540. See also Glen Holly Entertainment, 352 F.3d at 372 (noting that "the party alleging the injury must be either a consumer of the alleged violator's goods or services or a competitor of the alleged violator in the restrained market") (citing Eagle v. Star-Kist Foods, Inc., 812 F.2d 538 (9th Cir.1987)). Accordingly, under McCready, although plaintiffs were not the direct target of defendants' boycott, their injuries were "inextricably intertwined with the injury the conspirators sought to inflict" on Bed, Bath & Beyond. See McCready, 457 U.S. at 483, 102 S. Ct. 2540.

The second factor assesses whether plaintiffs' asserted injuries were the direct result of defendants' allegedly anticompetitive conduct. Plaintiffs contend that defendants increased the price of its tableware by boycotting expansion to Bed, Bath & Beyond. To assess the directness of this injury, courts look to the chain of causation linking plaintiffs' injury to the alleged restraint in the market. See Associated General, 459 U.S. at 540, 103 S. Ct. 897; Yellow Pages Cost Consultants, Inc. v. GTE Directories Corp., 951 F.2d 1158, 1162 (9th Cir.1991) ("Directness in the antitrust context means close in the chain of causation."). The chain of causation vis-a-vis Federated and May is direct because the boycott of Bed, Bath & Beyond allegedly affected the price plaintiffs paid Federated and May for Lenox and Waterford tableware. See Glen Holly, 352 F.3d at 374 (antitrust injury flowed from discontinuation of a competing product). The chain of causation with respect to Waterford and Lenox, however, is more attenuated and, for reasons discussed below, implicates the so-called "direct purchaser" requirement.

Under the third factor, courts consider whether plaintiffs' damages are speculative. See Associated General 459 U.S. at 542, 103 S. Ct. 897. In Associated General, the Supreme Court found the damages claim in question to be speculative because (1) the alleged injury was indirect; and (2) "the alleged effects * * * may have been produced by independent factors." Id; see also Eagle v. Star-Kist Foods, Inc., 812 F.2d 538, 542 (9th Cir.1987).

The court finds that plaintiffs' alleged damages are not speculative enough to eviscerate plaintiffs' standing. First, as discussed above, plaintiffs' asserted injury flows directly from defendants' alleged decision to boycott Bed, Bath & Beyond. Second, defendants do not suggest that plaintiffs' asserted injury may have stemmed from other exogenous market factors. Third, although the extent of plaintiffs' damages hinges on a complex counterfactual (the price of tableware if Bed, Bath & Beyond had participated in the market), "this complexity is not so unusual as to distinguish this case from other complex business disputes * * *." American Ad Management, Inc. v. GTE Corp., 190 F.3d 1051, 1059 (9th Cir.1999). See also Forsyth v. Humana, Inc., 114 F.3d 1467, 1478 (9th Cir.1997) ("Complex antitrust cases * * * invariably involve complicated questions of causation and damages.").

The fourth factor — the risk of duplicative recovery — also weighs in favor of plaintiffs' standing. The purpose undergirding this factor is to avoid the risk "that potential plaintiffs may be in a `position to assert conflicting claims to a common fund * * * thereby creating the danger of multiple liability for the fund.'" Eagle, 812 F.2d at 542 (quoting Associated General, 459 U.S. at 544, 103 S. Ct. 897). Even if Bed, Bath & Beyond could bring suit against defendants (it appears the statute of limitations has run, see 15 USC § 15(b)), duplicative recovery is unlikely because plaintiffs' damages are distinct from Bed, Bath & Beyond's. To the extent defendants' alleged tactics raised artificially the price for tableware, plaintiffs' damages exceed — and thus diverge from — Bed, Bath & Beyond's lost profits. See American Ad, 190 F.3d at 1059-60 (damages related to lost profits are distinct from those related to increased costs).

As discussed above with respect to the speculative measure of harm factor, the court does not find the apportionment of damages in this case to be exceedingly complicated. Furthermore, unlike Associated General, in which damages needed to be apportioned among "directly victimized contractors and subcontractors and indirectly affected employees and union entities," 459 U.S. at 545, 103 S. Ct. 897, apportioning damages in this case would require only a determination of the damages suffered by direct customers.

In sum, because all five of the Associated General factors weigh in plaintiffs' favor, the court finds that plaintiffs have antitrust standing in this litigation, at least with respect to Federated and May.

One issue involving standing remains: inasmuch as plaintiffs' suit targets an alleged horizontal agreement between Waterford and Lennox, plaintiffs run afoul of the so-called "direct purchaser" requirement from Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977). The Court in Illinois Brick ruled that a plaintiff does not state a claim for relief for an illegal overcharge due to an anticompetitive agreement if the plaintiff did not purchase directly from a member of the conspiracy. In doing so, the Court precluded antitrust claims based on overcharges that were "passed-on" through the distribution chain to the ultimate consumer. Id.

Illinois Brick does not preclude this suit entirely because plaintiffs purchased the relevant goods directly from Federated and May. Yet the allegations concerning a horizontal agreement between Waterford and Lennox implicate Illinois Brick, as plaintiffs stand as indirect purchasers visa-vis this alleged agreement. Putting aside, for a moment, the alleged vertical agreements, the allegations concerning an agreement between Waterford and Lennox are probative only to the extent they substantiate horizontal agreements between Federated and May or vertical agreements among defendants. See Arizona v. Shamrock Foods, 729 F.2d 1208 (9th Cir.1984) (concluding that Illinois Brick is inapplicable to claims against remote sellers when the plaintiffs allege that the sellers conspired with intermediates in the distribution chain to fix the price at which the plaintiffs purchased). Moreover, if Federated and May succeed in obtaining summary judgment, leaving only an alleged horizontal agreement between Waterford and Lennox, then plaintiffs become indirect purchasers with respect to the alleged conspiracy and thereby cease to have standing to sue.

B

The next issue posed by defendants' motions is whether the alleged agreements among defendants to prevent the sale of Waterford and Lenox tableware to Bed, Bath and Beyond is properly viewed as a group boycott deserving of per se scrutiny. Although the Supreme Court lists "group boycotts" among the classes of economic activity that warrant per se invalidation under § 1, the Court acknowledges that "exactly what types of activity fall within the forbidden category is * * * far from certain." Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 294-95, 105 S. Ct. 2613, 86 L. Ed. 2d 202 (1985). See also id at 295, 105 S. Ct. 2613 ("There exists more confusion about the scope and operation of the per se rule against group boycotts than in reference to any other aspect of the per se doctrine."). Or as one court quipped, using the term "boycott" is "the equivalent of yelling `fire' in the halls of traditional antitrust jurisprudence." Universal Amusements Co. v. General Cinema Corp., 635 F. Supp. 1505, 1523 (S.D.Tex.1985).

The application of the per se rule to group boycotts developed from a series of cases in which the Supreme Court invalidated such boycotts as § 1 violations. In Eastern, States Retail Lumber Dealers' Association v. United States, 234 U.S. 600, 611-14, 34 S. Ct. 951, 58 L. Ed. 1490 (1914), for example, the Court held unlawful concerted refusals to deal with wholesalers who sold directly to customers. Similarly, in Fashion Originators' Guild of America v. FTC, 312 U.S. 457, 61 S. Ct. 703, 85 L. Ed. 949 (1941), the Court deemed unlawful a joint "program" of textile and garment manufacturers that prohibited the sale of garments to stores that sold "style pirated" garments and the sale of fabrics to manufacturers who sold to stores selling pirated goods.

The Court's predilection for designating group boycotts per se unlawful law reached its highwater mark in Klor's Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S. Ct. 705, 3 L. Ed. 2d 741 (1959). A retailer, Broadway, entered into an agreement with suppliers of appliances "either not to sell to Klor's or to sell to it only at discriminatory and highly unfavorable prices." Id at 209, 79 S. Ct. 705. Broadway argued that because consumers and other competitors had access to supply, the public was not injured. The Court disagreed with Broadway, declaring that

[g]roup boycotts, or concerted refusals by traders to deal with other traders, have long been held to be in the forbidden category. They have not been saved by allegations that they were reasonable in the specific circumstances, nor by a failure to show that they "fixed or regulated prices, parcelled out or limited production, or brought about a deterioration in quality."

Id. at 212, 79 S. Ct. 705 (citing Fashion Originators' Guild v. Federal Trade Commission, 312 U.S. 457, 466, 61 S. Ct. 703, 85 L. Ed. 949 (1941)).

The Supreme Court has since retreated from its stance in Klor's and has cautioned against blindly fixing the per se label on all concerted refusals to deal. See Richard A Posner, Antitrust Law (2d ed 2001) ("A boycott * * used to be deemed a per se violation * * *; [t]he Supreme Court has wisely abandoned that position, which anyway was never taken seriously"). Indeed, in Northwest Wholesale Stationers, Inc. v. Pacific Stationery Printing Co., 472 U.S. 284, 105 S. Ct. 2613, 86 L. Ed. 2d 202 (1985), the Court rejected, except for a narrow category of cases, the per se characterization for concerted refusals to deal. Under this new standard, the Court declined to apply the per se approach to the expulsion of a member from a cooperative purchasing agency because the agency achieved "economies of scale in both the purchase and warehousing of wholesale supplies." Northwest Wholesale, 472 U.S. at 295, 105 S. Ct. 2613.

According to the Northwest Wholesale Court, a per se standard generally applies to cases involving "joint efforts by a firm or firms to disadvantage competitors by `either directly denying or persuading or coercing suppliers or customers to deny relationships the competitors need in the competitive struggle.'" Northwest Wholesale, 472 U.S. at 294, 105 S. Ct. 2613 (quoting L Sullivan, Law of Antitrust 261-62 (1977)). See also P Areeda & L Kaplow, Antitrust Analysis: Problems, Text, and Cases 333 (5th ed 1997) (defining paradigmatic boycott as "collective action among a group of competitors that may inhibit the competitive vitality of rivals"). In these cases, "the boycott often cut off access to a supply, facility or market necessary to enable the boycotted firm to compete, and frequently the boycotting firm possessed a dominant position to the relevant market. In addition, the practices were generally not justified by plausible arguments that they were intended to enhance overall efficiency and make markets more competitive." Northwest Wholesale, 472 U.S. at 294, 105 S. Ct. 2613.

Guided by Northwest Wholesale, the Court in FTC v. Indiana Federation of Dentists, 476 U.S. 447, 106 S. Ct. 2009, 90 L. Ed. 2d 445 (1986), refused to apply the per se designation to an agreement by competitors, dentists, to deny patient Xrays to insurance companies. These Xrays posed a problem for Indiana's dentists because they enabled insurance companies to review the appropriateness of the dentists' charges. The Court declined to invoke the per se rule and "forc[e] the [dentists'] policy into the `boycott' pigeonhole," reasoning that

the category of restraints classed as group boycotts is not to be expanded indiscriminately, and the per se approach has generally been limited to cases in which firms with market power boycott suppliers or customers in order to discourage them from doing business with a competitor.

Id. at 458, 106 S. Ct. 2009.

A number of courts have construed Northwest Wholesale and Indiana Federation of Dentists as holding that per se analysis is inappropriate unless the boycotting party possesses market power or exclusive access to an element in effective competition. See, e g, Hahn v. Oregon Physicians' Service, 868 F.2d 1022, 1030 (9th Cir.1989). But in FTC v. Superior Court Trial Lawyers Association, 493 U.S. 411, 110 S. Ct. 768, 107 L. Ed. 2d 851 (1990), the Supreme Court concluded that at least some group boycotts among horizontal competitors are per se unlawful without regard to the market power of the participants. This case involved an agreement by members of a bar association not to represent indigent criminal defendants unless the District of Columbia increased their compensation. The Court held that this agreement "was unquestionably a `naked restraint' on price and output" and, as such, was per se unlawful. Id. at 423, 110 S. Ct. 768. See also NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 119 S. Ct. 493, 142 L. Ed. 2d 510 (1998) (limiting per se scrutiny to cases "involving horizontal agreements among direct competitors").

The Ninth Circuit reads Northwest Wholesale and its progeny as establishing three criteria for determining whether the per se standard applies to a group boycott:

(1) the boycott cuts off access to a supply, facility, or market necessary to enable the victim firm to compete;

(2) the boycotting firm possesses a dominant market position; and

(3) the practices are not justified by plausible arguments that they enhanced overall efficiency or competition.

Adaptive Power Solutions, LLC v. Hughes Missile Systems Co., 141 F.3d 947, 950 (9th Cir.1998) (quoting Hahn v. Oregon Physicians' Serv., 868 F.2d 1022, 1030 (9th Cir.1988)). In the Ninth Circuit, these three criteria "are indicative of per se illegal conduct." Adaptive Power Solutions, 141 F.3d at 950.

Notwithstanding the importance of this court's determination whether to apply per se scrutiny, neither party deals with this issue adequately. Defendants misstate the Ninth Circuit's test and portray these factors as prerequisites for adopting the per se approach. See Doc # 184 at 2 ("horizontal agreements are eligible for per se condemnation only if * * * "). Plaintiffs relegate their analysis to a footnote, asserting that (1) the boycott cut off Bed, Bath and Beyond's access to two of the principal suppliers of high-end tableware (Lenox and Waterford); (2) the firms instigating the boycott (Federated and May) held dominant positions in the retail tableware market; and (3) there are no plausible justifications for the boycott. Doc # 161 at n4.

With respect to the first factor, the court notes that Waterford and Lennox were suppliers of tableware products necessary to enable Bed, Bath & Beyond to compete in the high-end tableware market. Further, defendants allegedly cut off this essential supply in order to obstruct Bed, Bath & Beyond's access to this market. The second factor (whether the boycotting firm possesses a "dominant" position in the market) is difficult to assess on the present record. In 2001, Federated and May were the third and fourth largest department store chains in the United States, respectively. Doc # 181, Ex 35 at 26-27. Although this ranking among department stores does not imply market power, it may suggest that defendants held a "dominant" position. As the Seventh Circuit observed in Toys "R" Us, Inc. v. FTC, 221 F.3d 928 (7th Cir.2000), the term "dominant" was "plainly chosen to stand for something different from antitrust's term of art `monopoly.'" Id at 936. In view of this uncertainty, the court finds that this second factor weighs in neither party's favor.

Most damaging to Federated's argument in favor of rule of reason review is the third factor — whether the boycott arguably enhances efficiency or competition. In accordance with this consideration, courts have noted that in the following factual settings, the effect of a refusal to deal is "more complex" than in the "classic boycott" scenario: industry self-regulation, sports leagues, health care, noneconomic boycotts and access to joint venture facilities. ABA Section of Anti trust Law, Antitrust Law Developments, 114 (5th ed 2002). The conduct alleged by plaintiffs falls within none of these exceptions. Nor does Federated proffer an independent pro-competitive justification for the alleged horizontal agreements to boycott Bed, Bath and Beyond. This silence is unsurprising, as the alleged horizontal agreement falls squarely within the ambit of per se treatment as dictated by Northwest Wholesale: "joint efforts by a firm or firms to disadvantage competitors by either directly denying or persuading or coercing suppliers or customers to deny relationships the competitors need in the competitive struggle." Northwest Wholesale, 472 U.S. at 294, 105 S. Ct. 2613. Accordingly, the court concludes that the alleged horizontal agreement between Federated and May constitutes a classic boycott and thus warrants per se treatment.

The court hastens to add that its conclusion does not extend to the alleged vertical agreements to boycott Bed, Bath & Beyond. The Supreme Court has expressly "limit[ed] the per se rule in the boycott context to cases involving horizontal agreements among direct competitors." NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 136, 119 S. Ct. 493, 142 L. Ed. 2d 510 (1998). The vertical agreements therefore warrant per se treatment only to the extent they implemented the alleged horizontal agreements — a distinction plaintiffs appear to acknowledge. See Doc # 161 at 9 ("Since, as explained above, the boycott of [Bed, Bath & Beyond] at issue here includes horizontal, as well as vertical, agreements, the per se rule applies.").

As such, plaintiffs need not define and support a relevant market (as they would need to do for a § 2 claim), nor do they need to demonstrate harm to competition, something which is presumed in a per se case, see Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 498, 89 S. Ct. 1252, 22 L. Ed. 2d 495 (1969) (" T)here are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.'" (quoting Northern Pacific R Co v. United States, 356 U.S. 1, 5, 78 S. Ct. 514, 2 L. Ed. 2d 545 (1958))). But plaintiffs' decision to rely on per se scrutiny comes at a cost: it renders the existence of a horizontal agreement essential to their suit.

To sum up the court's analysis heretofore, plaintiffs lack standing to rest their case on an agreement between Waterford and Lennox and lack the evidentiary wherewithal to rely alone on the alleged vertical agreements and proceed under the rule of reason. The upshot is that the alleged agreement between Federated and May is the cornerstone of plaintiffs' legal theory; without it, the case collapses. With these insights in mind, the court turns to the substance of plaintiffs' suit.

C

The essential issue propounded by defendants' summary judgment motions is whether plaintiffs adduced enough evidence of concerted action to survive summary judgment. In Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S. Ct. 1464, 79 L. Ed. 2d 775 (1984), the Supreme Court announced the modern formula by which courts determine the existence of concerted action:

The correct standard is that there must be evidence that tends to exclude the possibility of independent action by the [parties]. That is, there must be direct or circumstantial evidence that reasonably tends to prove that [the parties] had a conspicuous commitment to a common scheme designed to achieve an unlawful objective.

465 U.S. at 738, 104 S. Ct. 1464.

Conspiracies may be shown either by direct or circumstantial evidence. The Court recognizes, however, that "[o]nly rarely will there be direct evidence of an express agreement" in conspiracy cases; hence, circumstantial evidence plays a pivotal role in antitrust litigation. Although interpreting such evidence and drawing inferences from it ordinarily are responsibilities of the factfinder, the Supreme Court mandates a threshold judicial assessment of such evidence as set forth in Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986):

[A]ntitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case. Thus, * * * conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. * * * To survive a motion for summary judgment or for a directed verdict, a plaintiff seeking damages for a violation of § 1 must present evidence "that tends to exclude the possibility" that the alleged conspirators acted independently. * * * [Plaintiffs], in other words, must show that the inference of conspiracy is reasonable in light of the competing inferences of independent action or collusive action that could not have harmed [them].

Id. at 588, 106 S. Ct. 1348 (citations omitted).

Citing its earlier decision in First National Bank v. Cities Service Co., 391 U.S. 253, 288-289, 88 S. Ct. 1575, 20 L. Ed. 2d 569 (1968), the Court in Matsushita identified two separate inquiries that are relevant to this issue: (1) whether the defendant had "any rational motive" to join the allege conspiracy, and (2) whether the defendant's conduct "was consistent with the defendant's independent interest." Matsushita, 475 U.S. at 596-97, 106 S. Ct. 1348.

Animating the Matsushita standard is the Court's concern that "permitting the inference of conspiratorial behavior from circumstantial evidence consistent with both lawful and unlawful conduct would deter pro-competitive conduct — an especially pernicious danger in light of the fact that the very purpose of the antitrust laws is to promote competition." In re Citric Acid Litigation, 191 F.3d 1090, 1094 (9th Cir.1999). See also Matsushita, 475 U.S. at 593, 106 S. Ct. 1348 ("Courts should not permit factfinders to infer conspiracies when such inferences are implausible, because the effect of such practices is often to deter pro-competitive conduct.").

Relying in part on Matsushita, the Ninth Circuit has crafted a two-part test to be applied whenever plaintiffs rest their case entirely on circumstantial evidence. First, defendants may "rebut an allegation of conspiracy by showing a plausible and justifiable reason for its conduct that is consistent with proper business practice." In re Citric Acid Litigation, 191 F.3d at 1094 (citing Richards v. Neilsen Freight Lines, 810 F.2d 898, 902 (9th Cir.1987)). The burden then shifts back to plaintiffs to provide specific evidence tending to show that defendants were not engaging in permissible competitive behavior. See City of Long Beach v. Standard Oil Co. of California, 872 F.2d 1401, 1406 (9th Cir.1989).

The present action implicates this two-part test because plaintiffs have not produced direct evidence in support of their group boycott theory. As noted by the Ninth Circuit, "[d]irect evidence in a [§] 1 conspiracy must be evidence that is explicit and requires to inferences to establish the proposition or conclusion being asserted." In re Citric Acid Litigation, 191 F.3d at 1093-94. As plaintiffs appear to concede, none of plaintiffs' evidence satisfies this test, at least with respect to an alleged agreement between Federated and May.

Turning to the Ninth Circuit's twopart test, the court first finds that defendants proffer a "plausible and justifiable reason" for acting as they did. In re Citric Acid Litigation, 191 F.3d at 1094. City of Long Beach v. Standard Oil Co., 872 F.2d 1401, 1406 (9th Cir.1989) (defendant is entitled to summary judgment when it "provides a plausible and justifiable alternative interpretation of its conduct that rebuts the alleged conspiracy"). Defendants assert that Federated and May were concerned that the sale of its tableware products by Bed, Bath & Beyond would broaden the distribution into a lower prestige channel, a valid and lawful concern. See Winn v. Edna Hibel Corp., 858 F.2d 1517, 1520 (11th Cir.1988) (recognizing a company's interest in avoiding the "cheapening" of the image of its products); Richards v. Neilsen Freight Lines, 810 F.2d 898, 902 (9th Cir.1987) (finding independent self-interest an adequate explanation).

Prior to 2001, Bed, Bath & Beyond, a national "big-box" retailer of kitchen, bath and other items, was selling various standard tableware products, including, for example, lower-end dinner plates manufactured by Lenox. Doc # 131, Ex B, (Johnson depo) at 30:10-12, 37:24-40:2; Doc # 141, Ex C (Lundgren depo) at 38:14-21. Bed, Bath & Beyond became interested in expanding its offerings to include more expensive china and crystal manufactured by Lenox, Waterford and others. Doc # 131, Ex E (Temares depo) at 35:11-16. Federated and May opposed the broad distribution its manufacturers sought because Federated and May had made significant investments in the sale of Lenox and Waterford products. Doc # 141, Ex C at 39:4-40:2, 44:12-45:9. See also Monsanto, 465 U.S. at 763, 104 S. Ct. 1464 (complaints by retailers regarding other retailers are "natural — and from the manufacturer's perspective, unavoidable — reactions by distributors to the activities of their rivals").

Consequently, the burden shifts back to plaintiffs to provide specific evidence tending to show that the defendants were not engaging in permissible competitive behavior. See City of Long Beach v. Standard Oil Co. of California, 872 F.2d 1401, 1406 (9th Cir.1989). Such evidence must "tend [] to exclude the possibility that the alleged conspirators acted independently." Matsushita, 475 U.S. at 588, 106 S. Ct. 1348. In assessing this evidence, the court also considers (1) whether the defendants had "any rational motive" to join the alleged conspiracy, and (2) whether the defendants' conduct "was consistent with the defendant's independent interest." Id. at at 596-97, 106 S. Ct. 1348.

The court focuses on the alleged agreement between Federated and May because, as established above, this suit turns on the existence of such an agreement. Plaintiffs assert that a horizontal agreement may be inferred from the following pieces of information:

(1) one week after May was advised by Lennox in May 2001 of Lenox's and Waterford's intent to participate in the Bed, Bath & Beyond rollout, Federated contacted both Lenox and Waterford to complain about the rollout;

(2) both Federated and May used similar language when they separately pressured Lenox and Waterford to break their deal with Bed, Bath & Beyond ("you do what you have to do, and we will do what we have to do") (Doc # 180, Ex 10 (Mielke depo) at 136:19-137:17);

(3) in a letter from Federated's Zimmerman to a Waterford executive, written after Waterford terminated its participation in the rollout, Zimmerman thanked Waterford for doing "the right thing for all partners in the game" (Doc # 180, Ex 18); and

(4) Federated's Zimmerman "took the Fifth" when asked at deposition whether Federated and May entered into any agreements concerning their approach to the Bed, Bath & Beyond rollout (Doc # 180, Ex 16 at 48:6-13).

With respect to the first point, defendants note that that plaintiffs offer no evidence that Federated learned of the manufacturers' plans from May. Federated asserts that it probably learned about the rollout from the manufacturers themselves, as employees from Federated met with the employees of Lenox and Waterford regularly. Doc # 186, Ex HH, (Gavin depo) at 44:21-45:11, 48:21-49:2, 129:4-8; Ex LL, (McGillivary depo) at 153:9-21.

Defendants also dispute plaintiffs' reasoning concerning the second piece of evidence — the allegation that employees of Federated and May, in separate conversations, used similar language in speaking to the manufacturers about the rollout ("you do what you have to do, and we will do what we have to do"). Doc # 161 at 19, 31. According to defendants, the similarity is unsurprising because the phrase is precisely what retailers should say in order to avoid implicating the antitrust laws.

Third, defendants argue that Federated's letter to Waterford did not refer to May when it thanked Waterford for doing "the right thing for all partners in the game." In support, defendants claim that Federated and Waterford frequently referred to each other as "partners." Doc # 141, Ex F, ("Grove depo") at 67:14-24, 69:9-13, 84:7. Federated's expert also used the term "partner" to describe the nature of the relationships between vendors and retailers. Doc # 131, Ex DD at ¶¶ 48, 64, 79.

Regarding plaintiffs' fourth point, defendants cite Curtis v. M & S Petroleum, Inc., 174 F.3d 661, 675 (5th Cir.1999), for the proposition that the invocation of the Fifth Amendment by Federated's CEO is not sufficient to create a genuine issue of material fact. Defendants also urge the court to interpret Zimmerman's conduct in light of prior events: When the New York attorney general's office deposed Zimmerman in 2004, he testified that he could not recall a conversation he had with an executive at Waterford. In response, the attorney general's office indicted him for perjury. A New York trial court dismissed the indictment, but the attorney general's office had appealed the dismissal. As a result, when he was deposed in this action, Zimmerman invoked his Fifth Amendment rights. Doc # 131, Ex X (Zimmerman depo) at 20:20-22:25.

Finally, defendants aver that all witnesses pertinent to this case have denied the existence of any communications between Federated and May regarding Bed, Bath & Beyond. See Doc # 141, Ex C (Lundgren depo) at 75:25-76:7; Ex F (Grove depo) at 88:15-19, 91:10-17; Ex G, (Engelman depo) at 99:19-25; 192:24-193:4; Ex H (Locraft depo) at 181:11-24, 273:20-274:6, 275:1-10; Doc # 131, Ex D (Hofer depo) at 158:24-159:2, 214:15-24. Nor were employees of Bed, Bath & Beyond, Lenox or Waterford aware of any communications between Federated and May. Doc # 131, Ex B (Johnson depo) at 239:12-14; Ex I (Mielke depo) at 158:18-159:6; Ex J (Krangel depo) at 300:14-18; Ex K (Gavin depo) at 255:12-16.

Defendants' methodical critique of plaintiffs' evidence implies that Matsushita demands a certain quantum of evidence of verbal agreement to avoid summary judgment. Yet the Matsushita court never insisted that any particular kind of evidence of collusion was required. Instead, the Court demanded that the evidence be of such quality that makes collusion a likely explanation of the activity before the court. Matsushita's analysis, moreover, arose from the context of a highly improbable twenty-year-long predatory pricing conspiracy; as such, the Court required high-quality evidence to permit such a conspiracy to be presented to a jury. Matsushita, 475 U.S. at 587-88, 106 S. Ct. 1348 ("If the factual context renders respondents' claim implausible — if the claim is one that simply makes no economic sense — respondents must come forward with more persuasive evidence to support their claim than would otherwise be necessary."). Hence, plaintiffs need not demonstrate the existence of an explicit conspiracy, only that "the inference of conspiracy is reasonable in light of the competing inferences of independent action." Id. at 588, 106 S. Ct. 1348.

The court therefore assesses whether defendants had "any rational motive" to conspire and whether defendants' conduct was consistent with their independent interest. Matsushita, 475 U.S. at 596-97, 106 S. Ct. 1348. Plaintiffs correctly note that Federated and May had a "rational motive" to conspire against Bed, Bath & Beyond. The gravamen of plaintiffs' theory is that Federated and May acted together in an effort to block a new entrant's access to the market. The reasons why such behavior would be economically rational are straightforward. During the alleged conspiracy, consumers were steadily migrating from department stores to home specialty chain stores, such as Bed, Bath & Beyond, and bridal registries (which made up a significant portion of the tableware business) were following suit. Doc # 180, Ex 10 (Mielke depo) at 43:25-44:25. Federated and May, as established market participants, could reasonably fear that Bed, Bath & Beyond would erode their profit and market share. As one commentator remarked, "[w]here the `victim' [of an exclusionary group boycott] is a competitor of the alleged conspirators, there is no mystery as to why the defendants would want to injure the rival. It is axiomatic that firms prefer to have fewer rather than more rivals." Kenneth L Glazer, Concerted Refusals to Deal Under Section 1 of the Sherman Act, 70 Antitrust L J 1, 17 (2002)

But the motive to conspire articulated by plaintiffs works both ways: insofar as Bed, Bath & Beyond's competitive threat encouraged conspiracy, it also bolsters defendants' version of the events — that Federated and May pressured the manufacturers unilaterally. Accordingly, each party's account of the events make "economic sense," see Adaptive Power Solutions, LLC v. Hughes Missile Systems Co., 141 F.3d 947, 953 (9th Cir.1998), and the emergence of Bed, Bath & Beyond as a competitor does not weigh in either party's favor.

Yet this same economic intuition fails to account for the alleged conspiracy between Lenox and Waterford. Nothing in the present record establishes an economic motive for a conspiracy between Waterford and Lenox to back out of the Bed, Bath & Beyond rollout. Nor do plaintiffs articulate why Waterford and Lenox would have harbored animosity toward Bed, Bath & Beyond. Manufacturers generally lack incentives to conspire to undercut an upstart retailer like Bed, Bath & Beyond; to the contrary, such manufacturers have every reason to establish ties with these newcomers. This intuition appears to have played out here: Lennox and Waterford commenced dealings with Bed, Bath & Beyond that were ruptured at the bidding of Federated and May.

In light of plaintiffs' evidence and defendants' market conditions, the issue for the court is to determine whether plaintiffs satisfy their burden and "tend [] to exclude the possibility that the alleged conspirators acted independently." Monsanto, 465 U.S. at 768, 104 S. Ct. 1464. That determination is clear-cut with respect to the alleged horizontal conspiracy between Lennox and Waterford. As discussed above, the theory that Lennox and Waterford conspired to boycott Bed, Bath & Beyond neither makes economic sense nor finds support in the record. See Mitchael v. Intracorp, Inc., 179 F.3d 847 (10th Cir. 1999) (granting summary judgment in circumstantial evidence case because plaintiffs failed to demonstrate any motive to conspire); Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1370 (3d Cir.1996) (affirming summary judgment for defendant in part because of lack of motive to conspire). Accordingly, the court concludes that plaintiffs' circumstantial evidence of an agreement between Lennox and Waterford falls short of the standard under Matsushita.

Turning to the alleged agreement between Federated and May, the court finds that plaintiffs satisfy their burden, albeit with little evidence to spare. First, the court agrees with plaintiffs that Federated's and May's simultaneous behavior within a two-week period constitutes a pattern of uniform business conduct that bespeaks a tacit agreement or even so-called "conscious parallelism." See Petruzzi's IGA Supermarkets v. Darling-Delaware Co., 998 F.2d 1224, 1242-43 (3d Cir.1993). To be sure, that Federated learned about the rollout one week after Lenox informed May about the program hardly establishes that Federated communicated with May, as Federated met with its manufacturers on a regular basis. But defendants fail to explain precisely when or how Federated learned of the rollout from its manufacturers, leaving open the inference of horizontal communications. See generally Interstate Circuit v. United States, 306 U.S. 208, 225-26, 59 S. Ct. 467, 83 L. Ed. 610 (1939) ("When the proof supported, as we think it did, the inference of such concert, the burden rested on appellants of going forward with the evidence to explain away or contradict it.").

The parallel language ("you do what you have to do, and we will do what we have to do") used by Federated and May also carries some weight. Granted, in both situations, business executives plausibly repeated this boilerplate to clarify that each company had to act independently, not collusively. And it would be anomalous for antitrust law to regard efforts against collusion as evidence of collusion. But antitrust law does not direct executives to invoke the particular phrase at issue; as such, the striking similarity permits an inference of concerted action. See e g, De Jong Packing Co. v. USDA, 618 F.2d 1329 (9th Cir.1980) (continuance of conspiracy inferred from identical letters sent separately at the same time); Apex Oil v. Di Mauro, 822 F.2d 246, 255-57 (2d Cir.1987) ("striking" similarity of defendants' separate notebook entries of conversations among them gives rise to reasonable inference of conspiracy).

Federated's phrase ("partners in the game") in its letter to Waterford may also suggest a collusive agreement between Federated and May. That said, if the phrase is construed to encompass May, then Federated's assertion simply offers an opinion that Waterford's exclusive relationship with the various department stores is symbiotic; it does not necessarily imply an agreement between the department stores. Nevertheless, Federated's alleged acknowledgment of May's interests tends to undercut defendants' contention that they acted independently. See Petruzzi's IGA Supermarkets, 998 F.2d at 1242-43.

Finally, Zimmerman's "pleading the Fifth" may be relevant to the present dispute. In Baxter v. Palmigiano, 425 U.S. 308, 96 S. Ct. 1551, 47 L. Ed. 2d 810 (1976), the Supreme Court held that the drawing of the adverse inference from the invocation the Fifth Amendment in civil suit is proper when incriminating evidence is also presented. See id. at 317-18, 96 S. Ct. 1551. The Ninth Circuit interprets Baxter as licensing the drawing of an adverse inference in the civil context only if "independent evidence exists of the fact to which the party refuses to answer." Doe by & through Rudy-Glanzer v. Glanzer, 232 F.3d 1258, 1264 (9th Cir.2000). This proviso is said to broker the competing interests of the party asserting the privilege and those of the adverse party, "who is deprived of a source of information that might conceivably be determinative in a search for the truth." SEC v. Graystone Nash, Inc., 25 F.3d 187, 190 (3d Cir.1994). Here, defendants neither contend that corroborating evidence is lacking nor counsel against drawing an adverse inference based on Zimmerman's invocation of the privilege. This omission impels the court to conclude that Zimmerman's invocation of the Fifth Amendment may have deprived plaintiffs of probative testimony.

In view of plaintiffs' evidence and the market conditions defendants' faced, the court finds that plaintiffs satisfy their burden and tend to exclude the possibility that the Federated and May acted independently. Accordingly, the court finds that plaintiffs raise an inference of unlawful conspiracy between Federated and May sufficient to overcome defendants' summary judgment motion.

The court stresses that plaintiffs only survive summary judgment on the basis of the alleged horizontal agreement Federated and May: the vertical communications remain relevant to the extent they abetted the alleged horizontal agreement, but such communications cannot serve as an independent ground for antitrust liability under the rule of reason. Even if plaintiffs provided evidence under the rule of reason, which they have not, Monsanto and its progeny would require the dismissal of any vertical claims because plaintiffs' evidence suggests, at most, that Lenox and Waterford caved to complaints from Federated and May. See Monsanto, 465 U.S. at 763, 104 S. Ct. 1464, (explaining that distributor complaints "arise in the normal course of business and do not indicate illegal concerted action"); OSC Corp. v. Apple Computer, Inc., 792 F.2d 1464, 1468 (9th Cir.1986) (holding that "[dealer] complaints followed by termination are not enough to provide sufficient proof of an antitrust conspiracy"); The Jeanery, Inc. v. James Jeans, Inc., 849 F.2d 1148 (9th Cir.1988), 849 F.2d at 1157 ("Complaints by competitors, standing alone, are not sufficient to show a conspiracy."); Isaksen v. Vermont Castings, Inc., 825 F.2d 1158, 1162 (7th Cir.1987) (Posner, J) ("Complaints to a supplier, made by competitors of a dealer who is cutting prices below suggested levels are not, standing alone, evidence of agreement"). Hence, even if plaintiffs pursued a claim under the rule of reason, their evidence is insufficient to raise an inference of unlawful conspiracy or combination.

IV

In sum, the court GRANTS Waterford's motion for summary judgment and GRANTS IN PART and DENIES IN PART Federated's and May's motion for summary judgment. The matter is set down for trial on June 11, 2007.

IT IS SO ORDERED.