In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 17‐2808
KLEEN PRODUCTS LLC, et al.,
Plaintiffs‐Appellants,
v.
GEORGIA‐PACIFIC LLC and WESTROCK CP, LLC,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 10 C 5711 — Harry D. Leinenweber, Judge.
____________________
ARGUED MAY 23, 2018 — DECIDED DECEMBER 7, 2018
____________________
Before WOOD, Chief Judge, and BAUER and ROVNER, Circuit
Judges.
WOOD, Chief Judge. Oligopolies have always posed prob‐
lems for conventional antitrust law: without something that
can be called an agreement, they elude scrutiny under section
1 of the Sherman Act, 15 U.S.C. § 1, and yet no individual firm
has enough market power to be subject to Sherman Act sec‐
tion 2, 15 U.S.C. § 2. Tacit collusion is easy in those markets,
see In re Text Messaging Antitrust Litigation, 782 F.3d 867 (7th
2 No. 17‐2808
Cir. 2015), and firms have little incentive to compete on the
basis of price, “preferring to share the profits [rather] than to
fight with each other.” Joe Sanfelippo Cabs, Inc. v. City of Mil‐
waukee, 839 F.3d 613, 615 (7th Cir. 2016).
This appeal concerns the fine line between agreement and
tacit collusion, or, put another way, conscious parallelism. Di‐
rect purchasers of containerboard (“the Purchasers”) charged
multiple manufacturers with conspiring to increase prices
and reduce output between 2004 and 2010. We affirmed the
district court’s decision to certify a nationwide class of buyers.
Kleen Prods. LLC v. Int’l Paper Co., 831 F.3d 919 (7th Cir. 2016).
Before and after that ruling, most of the defendants settled
with the Purchasers. But two companies—Georgia‐Pacific
LLC and WestRock CP, LLC—decided to fight. They per‐
suaded the district court that there was not enough evidence
of a conspiracy to proceed to trial. We agree with that assess‐
ment and affirm the judgment dismissing the case.
I
A
Containerboard is the name of the material used in
countless boxes: it consists of a corrugated layer of heavy
paper sandwiched between two smooth pieces of linerboard.
Demand is relatively inelastic, meaning that customers will
not defect to other products even if the price goes up, because
the available substitutes are inferior. Containerboard is
manufactured at large, costly mills, which are hard to
duplicate, given both the high cost of construction and the
myriad of environmental laws that must be satisfied. A
handful of major players dominate the industry. Those
players include the original defendants in this suit:
No. 17‐2808 3
International Paper (“IP”), Georgia‐Pacific, Temple‐Inland,
Inc., WestRock,1 Weyerhaeuser Co., Norampac Holdings U.S.
Inc., and Packaging Corporation of America (“PCA”).
During the early 2000s, prices for containerboard were
low. But from February 2004 to November 2010, they rose
dramatically. The original defendants attempted to institute
price increases on 15 different occasions. The pattern was a
common one. After one company announced that it would
raise its prices for containerboard, the rest followed suit with
identical or comparable increases in the ensuing hours, days,
or weeks. (The one exception was a failed attempt in which
there were three hold‐outs.) Such efforts took place from time
to time. For example, in March 2003, the defendants
attempted an ultimately unsuccessful increase. Of the
proposed hikes from 2004 to 2010, Georgia‐Pacific, WestRock,
and a non‐defendant each led the effort twice. The price
increases were sustained nine times, a 60% success rate.
While containerboard prices rose, containerboard produc‐
tion capacity fell in North America (despite the inelasticity of
demand and growth throughout the rest of the globe). The in‐
itial defendants were not immune from this decline. The Pur‐
chasers’ expert concluded that the defendant companies re‐
duced their production capacity by an amount almost double
that of non‐defendants, though they used different strategies
to accomplish this goal. They closed a significant number of
1 Over the lifespan of this case, WestRock has undergone corporate
changes and thus has been known by various names, including RockTenn
CP, LLC and Smurfit‐Stone Container Corporation. We refer to the busi‐
ness by its present name.
4 No. 17‐2808
mills during the class period—WestRock alone was responsi‐
ble for more than a third of those closures. WestRock also took
care, through measures such as buyer selection and machin‐
ery sales, to avoid adding containerboard supply into the
market. Georgia‐Pacific kept all its mills running, but it
slowed the rate of production. It would periodically “slow
back” production by idling or shutting down machines and
taking extra downtime. While these practices diminished sup‐
ply to the point that it sometimes pinched, in the end Georgia‐
Pacific never missed an order. And the company actually in‐
creased its overall capacity by acquiring a new mill in 2007.
During this period, the defendants were in regular com‐
munication. Company executives and other employees spoke
by phone and at trade association meetings every few days.
The record does not reveal the contents of all these conversa‐
tions, but at least some dealt with the timing and pricing of
interfirm trading of containerboard—a common practice.
Internal and public‐facing statements made by the defend‐
ants’ employees shed light on these economic developments.
Some email exchanges may be read to imply that the defend‐
ants had foreknowledge of other companies’ proposed in‐
creases before they were announced. For example, just before
three price hikes, a PCA employee offered an opinion about
how high prices would need to go over the next year and a
half in order to recover the cost of capital. A Georgia‐Pacific
staffer wrote “the party begins” when discussing an increase
attempt. A WestRock vice president emailed that the com‐
pany “always follow[s] IP,” even though in fact “always” was
an overstatement. And a Weyerhaeuser employee discussed a
specific increase two days before WestRock first made its new
No. 17‐2808 5
price public. Other statements support the inference that a co‐
ordinated plan was in place. For instance, a Weyerhaeuser
employee wrote that he “made up a bunch” of information in
a report about what was learned from customers about com‐
petition, asking others to “be more specific” to stay “out of
anti‐trust legal issues.” A Norampac executive, discussing
problems with the industry, said “you have to be ready to let
go business if you want to keep the price up,” and “everybody
needs to do the same thing.”
Georgia‐Pacific and WestRock made their own incriminat‐
ing remarks. Because some details remain under seal in this
court, some of our examples are a bit vague, but we have re‐
viewed the sealed materials and they are consistent with the
remainder of the evidence. A WestRock vice‐president made
remarks in an email that could easily be construed as an un‐
dertaking to follow‐the‐leader. A different vice‐president
complained that the company “ha[d] no choice but to support
[a price increase] initiative” and that WestRock “ha[d] done
[its] part.” At one point, a company employee wrote that the
“only way to get paid is to have a 1994‐95 situation where the
tide rises for all boats,” perhaps referring to the container‐
board industry’s earlier run‐ins with antitrust law. See, e.g., In
re Linerboard Antitrust Litig., 305 F.3d 145 (3d Cir. 2002). Pub‐
licly, WestRock’s CEO was reported to have said that the com‐
pany had a restructuring plan to “cut supply enough at
[WestRock] to force price increases throughout the industry.”
Georgia‐Pacific’s president gave a speech during the period
in question urging the industry to resist customer requests for
price breaks.
6 No. 17‐2808
B
In September 2010, the Purchasers filed a putative class ac‐
tion alleging violations of section 1 of the Sherman Act. 15
U.S.C. § 1. The district court consolidated the suit with similar
actions and denied several motions to dismiss. Discovery fol‐
lowed. Then in March 2015, the district court granted the Pur‐
chasers’ motion for class certification under Federal Rule of
Civil Procedure 23. It defined the class as follows:
All persons that purchased Containerboard Prod‐
ucts directly from any of the Defendants or their sub‐
sidiaries or affiliates for use or delivery in the United
States from at least as early as February 15, 2004
through November 8, 2010.
Kleen Prods., 831 F.3d at 922. We affirmed the certification de‐
cision while making clear that we were not addressing the
merits. E.g., id. at 928.
Back in the district court, the litigation rolled onward. The
court largely denied the parties’ cross‐motions to exclude
each other’s experts. Both sides moved for summary judg‐
ment. Before the court acted on those motions, some of the
defendants settled with the Purchasers. The district court
granted the remaining defendants, Georgia‐Pacific and
WestRock, summary judgment. In a lengthy opinion that
delved deeply into the Purchasers’ evidence, the court con‐
cluded that the record, viewed holistically in the light most
favorable to the Purchasers, did not tend to rule out that the
defendants had acted independently. With only the final ap‐
proval of settlement agreements pending, the district court
entered partial final judgment for the remaining defendants
under Rule 54(b). The Purchasers ask us to revisit that ruling.
No. 17‐2808 7
II
Section 1 of the Sherman Act prohibits every “contract,
combination, … or conspiracy in restraint of trade … .” Courts
have understood for more than a century that this language
does not ban all contracts, but instead reaches only agree‐
ments that restrict competition. Copperweld Corp. v. Indep. Tube
Corp., 467 U.S. 752, 768 (1984); see also Broadcast Music, Inc. v.
Columbia Broadcasting Sys., Inc., 441 U.S. 1 (1979); United States
v. Socony‐Vacuum Oil Co. (1940). In the absence of an agree‐
ment, the antitrust laws forbid only monopolization or at‐
tempts to monopolize, see 15 U.S.C. § 2, as well as a few other
arrangements including anticompetitive mergers and acqui‐
sitions, see 15 U.S.C. § 18. But this case concerns only sec‐
tion 1; the plaintiffs make no claim that any of the defendants
has even attempted to monopolize, much less succeeded in
such an effort. See Spectrum Sports, Inc. v. McQuillan, 506 U.S.
447 (1993). We can therefore disregard all other antitrust the‐
ories and focus on the question whether the district court cor‐
rectly decided that the Purchasers did not present enough ev‐
idence to permit a trier of fact to find the agreement necessary
for section 1 liability. As the Supreme Court put it in Bell At‐
lantic Corp. v. Twombly, 550 U.S. 544 (2007), “at the summary
judgment stage a § 1 plaintiff’s offer of conspiracy evidence
must tend to rule out the possibility that the defendants were
acting independently.” Id. at 554, citing Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).
It is worth recalling that an antitrust plaintiff, like all oth‐
ers, is entitled to try to meet that burden with either direct or
circumstantial evidence. Miles Distribs., Inc. v. Specialty Constr.
Brands, Inc., 476 F.3d 442, 449 (7th Cir. 2007). Antitrust plain‐
8 No. 17‐2808
tiffs do not face a heightened burden to defeat summary judg‐
ment. See Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d
697, 707 (7th Cir. 2011). As Rule 56 generally commands, we
draw all reasonable inferences in favor of the non‐moving
party, here the Purchasers. It is the substantive law, however,
that establishes what the plaintiff must address. The Purchas‐
ers needed evidence that would allow a trier of fact to nudge
the ball over the 50‐yard line and rationally to say that the ex‐
istence of an agreement is more likely than not. Put more di‐
rectly, they must put on the table “some evidence which, if be‐
lieved, would support a finding of concerted behavior.” Toys
“R” Us Inc. v. FTC, 221 F.3d 928, 935 (7th Cir. 2000); accord
Blomkest Fertilizer, Inc. v. Potash Corp. of Saskatchewan, 203 F.3d
1028, 1032 (8th Cir. 2000) (en banc) (reading Matsushita to re‐
quire that it be more reasonable to infer a price‐fixing conspir‐
acy than permissible activity).
Armed with bountiful circumstantial evidence, the Pur‐
chasers accuse the defendant manufacturers of agreeing to re‐
strict the supply of containerboard and thereby to create mar‐
ket conditions that would support significantly higher prices.
The district court properly considered “economic evidence
suggesting that the defendants were not in fact competing,
and noneconomic evidence suggesting that they were not
competing because they had agreed not to compete.” In re
High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 655 (7th
Cir. 2002). It then drew and compared the corresponding in‐
ferences from each data point. See, e.g., Omnicare, 629 F.3d at
707–20. After determining that each piece of evidence individ‐
ually did not rule out the possibility of independent action, it
reviewed the evidence in the aggregate, as required. See id. at
720. The court concluded that because no individual piece of
evidence tended to show collusion, the combined probative
No. 17‐2808 9
value was zero. We are not so sure of that. While no single
piece of information may win the day, the whole may be
greater than the sum of its parts in tending to exclude the pos‐
sibility of conscious parallelism. See High Fructose Corn Syrup,
295 F.3d at 655 (“[E]vidence can be susceptible of different in‐
terpretations … without being wholly devoid of probative
value … .”).
Nonetheless, our assessment of the district court’s deci‐
sion is de novo, and so we need only satisfy ourselves that we
have the proper standard in mind. In re Dairy Farmers of Am.,
Inc., Cheese Antitrust Litig., 801 F.3d 758, 762 (7th Cir. 2015).
Viewing the evidence and reasonable inferences in the Pur‐
chasers’ favor, we ask whether they have produced any evi‐
dence that would rule out the hypothesis that the defendants
were engaged in self‐interested but lawful oligopolistic be‐
havior during the relevant period. Despite the volume of evi‐
dence the Purchasers submitted in opposition to summary
judgment, we find ourselves in agreement with the district
court’s ultimate conclusion. We discuss below only the most
significant evidence against Georgia‐Pacific and WestRock;
those interested in a more comprehensive account should re‐
fer to the district court’s opinion, Kleen Prods. LLC v. Int’l Pa‐
per, 276 F. Supp. 3d 811 (N.D. Ill. 2017). We conclude that noth‐
ing in this record would permit a trier of fact to conclude that
the defendants were colluding, rather than behaving in their
independent self‐interest.
III
A
We start with some structural evidence about the contain‐
erboard industry. As we noted in our earlier encounter with
10 No. 17‐2808
this litigation, the market has certain structural features that
make it “conducive to successful collusion,” such as a small
number of manufacturers, vertical integration, inelastic de‐
mand, a standardized commodity product, and high barriers
to entry. Kleen Prods., 831 F.3d at 927–28. These characteristics
make it easier for companies either to form a cartel or to follow
the leader independently. Text Messaging, 782 F.3d at 871–72;
In re Chocolate Confectionary Antitrust Litig., 801 F.3d 383, 397
(3d Cir. 2015). We explained why this is so in our 2015 Text
Messaging opinion:
[I]f a small number of competitors dominates a market,
they will find it safer and easier to fix prices than if
there are many competitors of more or less equal size.
For the fewer the conspirators, the lower the cost of ne‐
gotiation and the likelihood of defection … . But the
other side of this coin is that the fewer the firms, the
easier it is for them to engage in “follow the leader”
pricing (“conscious parallelism,” as lawyers call it,
“tacit collusion” as economists prefer to call it)—which
means coordinating their pricing without an actual
agreement to do so. As for the apparent anomaly of
competitors’ raising prices in the face of falling costs,
… this may be not because they’ve agreed not to com‐
pete but because all of them have determined inde‐
pendently that they may be better off with a higher
price. That higher price, moreover—the consequence
of parallel but independent decisions to raise prices—
may generate even greater profits (compared to com‐
petitive pricing) if costs are falling, provided that con‐
sumers do not have attractive alternatives.
No. 17‐2808 11
Text Messaging, 782 F.3d at 871–72. Because of the competing
inferences that can be drawn from this market structure, the
district court properly found that the economic evidence did
not tend to exclude the possibility of independent action.
B
Next, we turn to more specific evidence that the Purchas‐
ers offered. In establishing both defendants’ failure to com‐
pete, the Purchasers rely heavily on the 15 price hikes that oc‐
curred over the class period. But one must take care with the
inferences that can be drawn from such evidence. Following
a competitor’s price increases can be consistent with rational
self‐interest in oligopolies. See Text Messaging, 782 F.3d at 874–
75. Each firm in a tight oligopoly might think that it will reap
greater profits if it imitates, rather than undermines, its peers’
price hikes. Brooke Grp. Ltd. v. Brown & Williamson Tobacco
Corp., 509 U.S. 209, 227 (1993); Valspar Corp. v. E.I. Du Pont de
Nemours & Co., 873 F.3d 185, 191 (3d Cir. 2017). And it might
reach that conclusion without any conscious coordination
with its competitors. For that reason, “it is not a violation of
antitrust law for a firm to raise its price, counting on its com‐
petitors to do likewise (but without any communication with
them on the subject) … .” Text Messaging, 782 F.3d at 876.
1
The task before any plaintiff is thus to find and produce
evidence that reveals coordination or agreement (even a wink
and a nod—formal agreements have never been required for
purposes of Sherman Act section 1). See id.; Blomkest Fertilizer,
203 F.3d at 1033. For instance, foreknowledge of price
increases may be persuasive evidence that an agreement was
afoot. See Chocolate Confectionary, 801 F.3d at 408; In re
12 No. 17‐2808
Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust
Litig., 906 F.2d 432, 455 (9th Cir. 1990). The Purchasers here
attempt to carry their burden by emphasizing the timing of
the price increase attempts, which they describe as “lockstep.”
They urge us to draw the inference that such tight congruence
of price movements could not have occurred unless the
competitors had an inside scoop. But a close look at the record
reveals that the Purchasers overstate how coordinated these
hikes actually were. Different manufacturers, including non‐
defendants, led the attempts. See Reserve Supply Corp. v.
Owens‐Corning Fiberglas Corp., 971 F.2d 37, 54 (7th Cir. 1992)
(finding that a change in who is the price leader suggests that
manufacturers could independently decide whether to
participate in price increases). Sometimes companies
followed suit over a month later. Even the attempts that saw
quick turnaround times do little to raise suspicions. If it is in
a company’s self‐interest to imitate a price leader’s increase,
why wait to enjoy the benefit? The Purchasers accuse the
defendants of lying when they claim to have explored
independently a possible increase. But there is no evidence
supporting this allegation.
The Purchasers’ “proof” of prior knowledge amounts to
nothing more than speculation. They emphasize a March 2004
PCA memorandum that said “at least three $40–50 increases
over the next 18 months” were needed to recoup the cost of
capital. By September 2005, three attempts to raise prices had
indeed occurred. But this supposed smoking gun could be
nothing more than a somewhat accurate industry prediction.
That two of the increases were for $50 is unsurprising, given
that most of the 15 attempts were for $40 or $50. More tell‐
No. 17‐2808 13
ingly, the PCA employee did not accurately predict three suc‐
cessful increases, since the second one failed and the third was
only for $30.
The evidence that Georgia‐Pacific provided or received
advance notice is even weaker. The best that the Purchasers
offer is a comment made by a Georgia‐Pacific employee that
“the party begins,” following a discussion that a few manu‐
facturers had announced an increase. This remark could
merely express enthusiasm about the upward trend in pric‐
ing.
Another aspect of the Purchasers’ argument is that the ris‐
ing prices throughout the class period reflect an abrupt
change in business practices. If that is an accurate description
of what happened, it might support an inference of conspir‐
acy. But before the inference can be drawn, we have looked
for a shift in firm behavior, as opposed to external market con‐
ditions. See Toys “R” Us, 221 F.3d at 935; Chocolate Confection‐
ary, 801 F.3d at 410. In the present case, the Purchasers’ evi‐
dence reveals only changed market conditions. For instance,
they point to complaints that manufacturers made about ag‐
gressively competitive pricing that took place before, but not
during, the class period. Yet the shift may be explained by ex‐
ternal factors, such as the emergence from the economic
downturn of 2008, which occurred in the middle of the class
period. And in terms of the companies’ behavior—the rele‐
vant inquiry—the manufacturers had attempted to raise
prices before the class period as well. A continuation of a his‐
toric pattern—including of parallel price increase announce‐
ments—does not plausibly allow one to infer the existence of
14 No. 17‐2808
a cartel. Valspar, 873 F.3d at 196; Chocolate Confectionary, 801
F.3d at 410.
A further strike against the Purchasers’ case is the failure
rate of the manufacturers’ efforts: 40% of the attempted
increases did not hold. The district court pondered why a
company would risk treble damages by colluding on an often‐
ineffective plan when tacitly following price hikes had no
downside risk. Cf. Text Messaging, 782 F.3d at 878. Perhaps the
Purchasers have a good answer to that question: when
potential profits are in the billions, even 60% odds provide a
substantial incentive. But that at best leaves matters in
equipoise.
If this was a cartel, it would have tried to impose discipli‐
nary measures on the “cheaters” who did not go along with
the price increases. But that type of evidence is conspicuously
absent, even though nearly half the price hikes failed. See
Petruzzi’s IGA Supermarkets, Inc. v. Darling‐Del. Co., Inc., 998
F.2d 1224, 1233 (3d Cir. 1993) (noting that “a cartel cannot sur‐
vive absent some enforcement mechanism”). The Purchasers
propose two possible mechanisms for enforcement, but they
have not pointed to any evidence indicating that either one
was used. It is true that a cartel may exist with only soft
measures of control or ineffective enforcement. See In re
Broiler Chicken Antitrust Litig., 290 F. Supp. 3d 772, 796–97
(N.D. Ill. 2017) (evidence of an enforcement mechanism is not
always required). Even if that is so, however, the absence of
evidence about enforcement does nothing to dissipate the in‐
ference of independent behavior. We are still left with price
increases that appear to be just as consistent with independ‐
ent action as with collusion.
No. 17‐2808 15
2
The second half of the Purchasers’ theory focuses on sup‐
posedly coordinated reductions of output through mill clo‐
sures and machine slowdowns. Supply behavior is highly rel‐
evant because price‐fixing arrangements often function
through restrictions of output. See Westinghouse Elec. Corp. v.
Gulf Oil Corp., 588 F.2d 221, 226 (7th Cir. 1978). But not every
supply‐side change is equally suggestive of a conspiracy.
Conduct that is easily reversed may be consistent with self‐
interested decision‐making.
An example illustrates the point. Suppose Company X
takes its machines offline more frequently in order to reduce
its supply. If competitors follow suit, and industry‐wide pro‐
duction falls, all companies can charge more for the commod‐
ity and potentially reap greater profits. See Text Messaging, 782
F.3d at 877. But what if instead the competitors maintain their
supply and woo Company X’s customers. Because Company
X’s reduction strategy was flexible, it can quickly get its ma‐
chines running and filling orders again, minimizing any
losses. In contrast, if Company X had lowered its production
by selling its mills or equipment, it could not rapidly undo its
efforts while competitors came knocking on customers’ doors.
This inability to stave off potential losses has earned the name
“perilous leading.” PHILLIP E. AREEDA & HERBERT
HOVENKAMP, ANTITRUST LAW ¶ 1425d (4th ed. 2018). Firms
take significant risks by reducing their output in an inflexible
manner, unless there is an enforceable agreement in place to
ensure that competitors will follow suit. Petroleum Prods., 906
F.2d at 463; In re Plasma‐Derivative Protein Therapies Antitrust
Litig., 764 F. Supp. 2d 991, 1002 (N.D. Ill. 2011). Because peri‐
16 No. 17‐2808
lous leading makes “little economic sense” absent coordina‐
tion, evidence of less‐reversible supply restrictions supports
an inference of conspiracy. Broiler Chicken, 290 F. Supp. 3d at
798.
During the class period, the North American market saw
a drop in overall capacity for containerboard. The original
defendants collectively were responsible for 19 mill closures.
Yet Georgia‐Pacific not only kept its mills open; it also
purchased a new mill. The Purchasers respond that Georgia‐
Pacific underutilized its machines, but Georgia‐Pacific has an
answer for that: its run‐to‐demand strategy. Under this
strategy, which dated back to 1999, Georgia‐Pacific aimed to
produce just enough containerboard to fill orders without
creating excess inventory. Internal communications suggest
that this strategy led to some close calls when filling orders,
but Georgia‐Pacific always found a way to meet its customer
demand. Moreover, its acquisition of a mill allowed it to
increase its production capacity over the class period.
The Purchasers’ strongest evidence undercutting Georgia‐
Pacific’s account are comments in performance reviews that
credit employees for getting price increases by keeping
inventory low. Because Georgia‐Pacific did not have sufficient
market power to alter containerboard pricing on its own, the
Purchasers insist that these statements can be understood
only as proof of an anticompetitive agreement. But
underusing machinery is the kind of flexible behavior that is
consistent with rational attempts to raise prices through
watchful attention to one’s competitors’ actions. Far from
perilous, had Georgia‐Pacific’s efforts not paid off, it could
have increased its output quickly. Georgia‐Pacific’s supply
No. 17‐2808 17
behavior does not point towards its having a role in any
conspiracy.
3
As ammunition against both defendants, the Purchasers
cite the frequent contacts that company executives had by
phone and at trade association meetings. They allege that the
defendants’ regular communications and trades served as
opportunities for collusion. Some courts have held that this
type of information flow, especially between executives, may
be probative of conspiracy. E.g., Stanislaus Food Prods. Co. v.
USS‐POSCO Indus., 803 F.3d 1084, 1093 (9th Cir. 2015). But
having the opportunity to conspire does not necessarily imply
that wrongdoing occurred. Monsanto Co. v. Spray‐Rite Serv.
Corp., 465 U.S. 752, 762 (1984); Weit v. Cont’l Ill. Nat’l Bank &
Trust Co. of Chi., 641 F.2d 457, 462 (7th Cir. 1981). Especially
when companies have legitimate business reasons for their
contacts, plaintiffs must offer some evidence that moves
beyond speculation about the content of what was conveyed.
See Text Messaging, 782 F.3d at 878 (“And as there is no
evidence of what information was exchanged at these [trade
association] meetings, there is no basis for an inference that
they were using the meetings to plot prices [sic] increases.”);
accord Chocolate Confectionary, 801 F.3d at 409; In re Musical
Instruments & Equip. Antitrust Litig., 798 F.3d 1186, 1196 (9th
Cir. 2015).
The Purchasers have no evidence indicating that the exec‐
utives discussed illicit price‐fixing or output restriction deals
during their calls or meetings. They rely instead on the fre‐
quency and timing of the contacts. For example, 20 calls were
made in the days around a Georgia‐Pacific‐led price increase,
despite the fact that the company had predicted flat pricing
18 No. 17‐2808
just two weeks earlier. That is not enough. We cannot put
much stock in the frequency of contacts, given the amount of
trading that was taking place among the firms. See Dairy
Farmers of Am., 801 F.3d at 763 (where companies were not
only competitors but also among each other’s largest suppli‐
ers and largest customers, plaintiffs needed to point to a com‐
munication that “suggest[ed] a meeting of the minds to fix
prices”); High Fructose Corn Syrup, 295 F.3d at 659 (finding
nothing suspicious about occasional interfirm trades unless
firms could supply their customers at a lower cost).
Furthermore, we hesitate to impugn the companies’ inten‐
tions solely from the timing of the contacts. To be clear, we do
not see the frequency of the calls and meetings as evidence
tending to exclude collusion. Such a rule would create an in‐
centive for businesses to make constant phone calls in order
to immunize themselves from antitrust liability. Here, how‐
ever, though some trade association meetings occurred before
price‐increase proposals, most of Georgia‐Pacific’s announce‐
ments were not preceded by meetings. The Purchasers’ spec‐
ulation about the content of the frequent interfirm contacts is
not enough to create a jury issue.
4
Incriminating remarks by defendants’ employees can sup‐
port the inference that a conspiracy existed. See, e.g., High
Fructose Corn Syrup, 295 F.3d at 662. The Purchasers flag a few
comments that they see as particularly inculpatory. For start‐
ers, a Weyerhaeuser employee wrote that he “made up a
bunch” of information in a report and instructed others to “be
more specific” to keep the company “out of anti‐trust legal
issues.” In addition, while discussing problems with the in‐
dustry, a Norampac executive said “you have to be ready to
No. 17‐2808 19
let go business if you want to keep the price up,” and “every‐
body needs to do the same thing.”
Yet even if these statements are enough to create a triable
question about the presence of an agreement generally, they
are not enough to show that Georgia‐Pacific was a part of that
cartel. On this front, the Purchasers present little proof. They
point to a speech in which Georgia‐Pacific’s CEO supposedly
suggested that the industry should “say ‘no’ on deals” that,
though competitive, are not profitable. But that is hardly an
earthshattering insight, even if proof of the statement were
possible without the use of hearsay contained in newspaper
articles reporting on the speech. See Eisenstadt v. Centel Corp.,
113 F.3d 738, 742 (7th Cir. 1997). And the account of an
attendee rejects the rumors, stating that this message “was not
said nor implied.” And the CEO claimed in his deposition that
he was speaking only about Georgia‐Pacific, not the industry,
needing to decline deals. Like their economic proof, the
Purchasers’ noneconomic evidence—even when viewed with
the parallel conduct—does not exclude the possibility that
Georgia‐Pacific acted in a self‐interested but permissible way.
C
Some of the Purchasers’ evidence was particular to
WestRock, to which we now turn. There is a wrinkle in its po‐
tential liability: in June 2010, just shy of the close of the class
period, WestRock received a discharge in bankruptcy, for
which it had filed in 2009. At that moment, it was free of any
antitrust liability incurred up to the date of discharge. See In
re Travel Agent Comm’n Antitrust Litig., 583 F.3d 896, 902 (6th
Cir. 2009). Nonetheless, WestRock is potentially liable for the
alleged conspiracy if there is evidence it rejoined the cartel
post‐discharge. Kleen Prods., 831 F.3d at 930; see also O’Loghlin
20 No. 17‐2808
v. Cnty. of Orange, 229 F.3d 871, 875 (9th Cir. 2000) (“A ‘fresh
start’ means only that; it does not mean a continuing licence
[sic] to violate the law.”). We must therefore look to see if there
is evidence that would permit a trier of fact both to find the
initial agreement, and to find that WestRock rejoined that
agreement after its discharge.
1
As we have explained, the parallel price hikes alone do not
suffice to permit a jury to find a cartel. But the Purchasers cite
evidence hinting at WestRock’s conspiratorial involvement.
For example, they point to an email from Weyerhaeuser that
discussed a $50 increase just days before WestRock an‐
nounced it. Though a publication’s email blast had made pub‐
lic the existence of a future attempt, it had gotten the amount
wrong. Weyerhaeuser had the right number.
Yet even if this is enough to create a fact question about
WestRock’s original participation in the alleged agreement, it
does nothing to establish that it rejoined the agreement post‐
discharge. During the relevant period, in July 2010, WestRock
did participate in an unsuccessful attempt to hike prices. The
Purchasers insist that this reveals more than parallel conduct,
given an email between WestRock staff that the company “al‐
ways follow[s] IP [International Paper].” But, as we have
noted several times, merely following a leader is not the same
as agreeing to do something. Also of little probative value is
the fact that a WestRock vice president met with other manu‐
facturers on the day between the first defendant’s joining the
increase and WestRock’s decision to follow suit. Before this
meeting, the increase had been floated by a non‐defendant.
See Valspar Corp. v. E.I. Du Pont de Nemours, 152 F. Supp. 3d
234, 247 (D. Del. 2016), aff’d 873 F.3d 185 (declining to infer
No. 17‐2808 21
that a meeting provided an opportunity to conspire when
price increase announcements occurred before and after the
meeting). And WestRock offered evidence that since April it
had been contemplating that prices would go up. Purchasers’
parallel pricing evidence does not provide a hook for
WestRock’s liability.
2
Perhaps the most compelling evidence of collusion is
WestRock’s supply restrictions. During the class period,
WestRock closed seven of its mills and took other steps to re‐
duce capacity. WestRock attempts to rationalize this behavior
in various ways. It claims that the closures were part of a 2003
restructuring plan to get rid of inefficient plants in light of its
purchase of a highly efficient mill. It also asserts that it made
certain sales decisions in light of a green marketing plan
where buyers would assume a mill’s associated environmen‐
tal liabilities. And WestRock reminds us that it sold the mills
while it was under the oversight of the bankruptcy court, a
committee of creditors, and financial advisors.
These explanations are all plausible. Yet they do not over‐
come the inference of conspiracy given that, unlike Georgia‐
Pacific’s reversible cuts, WestRock’s supply behavior could
not be undone easily. Such perilous leading risked significant
losses. Furthermore, a vice president wrote that WestRock
“ha[d] done [its] part,” implying it played a role in a larger
agreement. And other company emails state that restricting
supply would help raise prices, something no manufacturer
could do alone.
While this discussion may suggest that the Purchasers win
the day, the insurmountable problem is one of timing: these
22 No. 17‐2808
events occurred pre‐discharge. Even assuming (favorably to
the Purchasers) that WestRock was part of a cartel, they fall
short on presenting evidence that WestRock was involved
post‐discharge. In those months, WestRock did some machine
maintenance, but it did not close any mills and generally op‐
erated at a high level of production and capacity.
3
Last, we consider the other evidence that the Purchasers
lodged against WestRock. This includes incriminating state‐
ments made by WestRock employees and an article discuss‐
ing the CEO’s statements that the company needed a restruc‐
turing plan to “cut supply enough at [WestRock] to force price
increases throughout the industry.” The latter is inadmissible
hearsay. Eisenstadt, 113 F.3d at 742. The Purchasers maintain
nonetheless that the CEO’s deposition testimony confirms
that he was signaling indirectly the company’s commitment
to a price‐fixing plan. It does not.
Worse for WestRock are two vice‐presidents’ remarks that
the company had “little choice” or “no choice” but to join the
price increases, even though one was not supported by sup‐
ply and demand. The most plausible explanation for its deci‐
sion to go along with a price hike out of obligation, when that
hike is not economically justified, is that WestRock had com‐
mitted to an agreement. See In re Flat Glass Antitrust Litig., 385
F.3d 350, 369 (3d Cir. 2004) (finding probative documents em‐
phasizing that competitors had to hold the line on price in‐
creases that were not economically supported). Also inculpa‐
tory was a staff member’s email to a vice‐president, among
others, that “the only way to get paid is to have a 1994‐95 sit‐
uation where the tide rises for all boats.” The Purchasers en‐
No. 17‐2808 23
courage us to read this statement as a reference to the contain‐
erboard industry’s earlier antitrust violations. See Linerboard,
305 F.3d 145. These statements are some of the Purchasers’
strongest evidence that WestRock’s price hikes and mill clo‐
sures were more than just conscious parallelism. But again,
they all occurred pre‐discharge, and so they say nothing
about WestRock’s post‐discharge conduct.
The Purchasers finally offer some economic and noneco‐
nomic evidence that could suggest suspicious activity. But
even if it is credited, it is not enough to permit a trier of fact
to find impermissible coordination. Statements by Georgia‐
Pacific staff are not enough to cast a cloud over its follow‐the‐
leader price increases and flexible production adjustments.
And while some of WestRock’s behavior, particularly its mill
closures, gives us pause, the Purchasers fail to establish that
anything the company did post‐discharge amounts to rejoin‐
ing any existing conspiracy. This case shares many similari‐
ties with our decision in Text Messaging. In both situations, the
plaintiffs did not discover a “smoking gun or … additional
circumstantial evidence that further tilts the balance in favor
of liability.” Id. at 871 (citation omitted). The Purchasers may
be right that the containerboard industry got savvier at hiding
its antitrust violations. But unfortunately for them, they
“failed to carry the burden” of “establishing a prima facie case
of explicit collusion,” offering “no more than a plausible in‐
terpretation” of the defendants’ anticompetitive conduct. Id.
at 876.
IV
The outcome of this case flows directly from both the lim‐
itation in section 1 of the Sherman Act to anticompetitive
24 No. 17‐2808
agreements and the Supreme Court’s cautions against inter‐
fering with individual firm behavior in ways that could inad‐
vertently distort incentives to compete. In Matsushita, the
Court warned against “mistaken inferences … [that] chill the
very conduct the antitrust laws are designed to protect.’”
Matsushita, 475 U.S. at 594; see also Text Messaging, 782 F.3d at
874 (expressing pragmatic concerns about prohibiting con‐
scious parallelism).
Scholars, lawmakers, and courts have yet to agree on a reg‐
ulatory regime that can address oligopolistic behavior that
leads to higher prices and reduced consumer choice, without
stifling normal business activity. For now, we follow estab‐
lished law to the effect that “‘conscious parallelism’ has not
yet read conspiracy out of the Sherman Act entirely.”
Twombly, 550 U.S. at 552 (citation omitted).
Because the evidence proffered by the Purchasers does not
tend to exclude the possibility that Georgia‐Pacific and
WestRock engaged only in tacit collusion, we AFFIRM the
judgment of the district court.