Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation

Justice White,

with whom Justice Brennan, Justice Blackmun, and Justice Stevens join, dissenting.

It is indeed remarkable that the Court, in the face of the long and careful opinion of the Court of Appeals, reaches the result it does. The Court of Appeals faithfully followed the relevant precedents, including First National Bank of Arizona v. Cities Service Co., 391 U. S. 253 (1968), and Monsanto Co. v. Spray-Rite Service Corp., 465 U. S. 752 (1984), and it kept firmly in mind the principle that proof of a conspiracy should not be fragmented, see Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U. S. 690, 699 (1962). After surveying the massive record, including very *599significant evidence that the District Court erroneously had excluded, the Court of Appeals concluded that the evidence taken as a whole creates a genuine issue of fact whether petitioners engaged in a conspiracy in violation of §§ 1 and 2 of the Sherman Act and § 2(a) of the Robinson-Patman Act. In my view, the Court of Appeals’ opinion more than adequately supports this judgment.

The Court’s opinion today, far from identifying reversible error, only muddies the waters. In the first place, the Court makes confusing and inconsistent statements about the appropriate standard for granting summary judgment. Second, the Court makes a number of assumptions that invade the factfinder’s province. Third, the Court faults the Third Circuit for nonexistent errors and remands the case although it is plain that respondents’ evidence raises genuine issues of material fact.

I

The Court’s initial discussion of summary judgment standards appears consistent with settled doctrine. I agree that “[wjhere the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Ante, at 587 (quoting Cities Service, supra, at 289). I also agree that “ ‘[o]n summary judgment the inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion.’” Ante, at 587 (quoting United States v. Diebold, Inc., 369 U. S. 654, 655 (1962)). But other language in the Court’s opinion suggests a departure from traditional summary judgment doctrine. Thus, the Court gives the following critique of the Third Circuit’s opinion:

“[T]he Court of Appeals concluded that a reasonable factfinder could find a conspiracy to depress prices in the American market in order to drive out American competitors, which conspiracy was funded by excess profits obtained in the Japanese market. The court apparently did not consider whether it was as plausible to conclude *600that petitioners’ price-cutting behavior was independent and not conspiratorial.” Ante, at 581.

In a similar vein, the Court summarizes Monsanto Co. v. Spray-Rite Service Corp., supra, as holding that “courts should not permit factfinders to infer conspiracies when such inferences are implausible . . . .” Ante, at 593. Such language suggests that a judge hearing a defendant’s motion for summary judgment in an antitrust case should go beyond the traditional summary judgment inquiry and decide for himself whether the weight of the evidence favors the plaintiff. Cities Service and Monsanto do not stand for any such proposition. Each of those cases simply held that a particular piece of evidence standing alone was insufficiently probative to justify sending a case to the jury.1 These holdings in no way under*601mine the doctrine that all evidence must be construed in the light most favorable to the party opposing summary judgment.

If the Court intends to give every judge hearing a motion for summary judgment in an antitrust case the job of determining if the evidence makes the inference of conspiracy more probable than not, it is overturning settled law. If the Court does not intend such a pronouncement, it should refrain from using unnecessarily broad and confusing language.

I — I hH

In denning what respondents must show in order to recover, the Court makes assumptions that invade the fact-finder’s province. The Court states with very little discussion that respondents can recover under § 1 of the Sherman Act only if they prove that “petitioners conspired to drive respondents out of the relevant markets by (i) pricing below the level necessary to sell their products, or (ii) pricing below some appropriate measure of cost.” Ante, at 585, n. 8. This statement is premised on the assumption that “[a]n agreement without these features would either leave respondents in the same position as would market forces or would actually benefit respondents by raising market prices.” Ibid. In making this assumption, the Court ignores the contrary conclusions of respondents’ expert DePodwin, whose report in very relevant part was erroneously excluded by the District Court.

The DePodwin Report, on which the Court of Appeals relied along with other material, indicates that réspondents were harmed in two ways that are independent of whether petitioners priced their products below “the level necessary to sell their products or . . . some appropriate measure of cost.” Ibid. First, the Report explains that the price-raising scheme in Japan resulted in lower consumption of petitioners’ goods in that country and the exporting of more of petitioners’ goods to this country than would have occurred had prices in Japan been at the competitive level. Increas*602ing exports to this country resulted in depressed prices here, which harmed respondents.2 Second, the DePodwin Report indicates that petitioners exchanged confidential proprietary information and entered into agreements such as the five company rule with the goal of avoiding intragroup competition in the United States market. The Report explains that petitioners’ restrictions on intragroup competition caused respondents to lose business that they would not have lost had petitioners competed with one another.3

*603The DePodwin Report alone creates a genuine factual issue regarding the harm to respondents caused by Japanese car-telization and by agreements restricting competition among petitioners in this country. No doubt the Court prefers its own economic theorizing to Dr. DePodwin’s, but that is not a reason to deny the factfinder an opportunity to consider Dr. DePodwin’s views on how petitioners’ alleged collusion harmed respondents.4

*604The Court, in discussing the unlikelihood of a predatory conspiracy, also consistently assumes that petitioners valued profit-maximization over growth. See, e. g., ante, at 595. In light of the evidence that petitioners sold their goods in this country at substantial losses over a long period of time, see Part III-B, infra, I believe that this is an assumption that should be argued to the factfinder, not decided by the Court.

Ill

In reversing the Third Circuit’s judgment, the Court identifies two alleged errors: “(i) [T]he ‘direct evidence’ on which the [Court of Appeals] relied had little, if any, relevance to the alleged predatory pricing conspiracy; and (ii) the court failed to consider the absence of a plausible motive to engage in predatory pricing.” Ante, at 595. The Court’s position is without substance.

A

The first claim of error is that the Third Circuit treated evidence regarding price fixing in Japan and the so-called five company rule and check prices as “ ‘direct evidence’ of a conspiracy that injured respondents.” Ante, at 583 (citing In re Japanese Electronics Products Antitrust Litigation, 723 F. 2d 238, 304-305 (1983)). The passage from the Third *605Circuit’s opinion in which the Court locates this alleged error makes what I consider to be a quite simple and correct observation, namely, that this case is distinguishable from traditional “conscious parallelism” cases, in that there is direct evidence of concert of action among petitioners. Ibid. The Third Circuit did not, as the Court implies, jump unthinkingly from this observation to the conclusion that evidence regarding the five company rule could support a finding of antitrust injury to respondents.5 The Third Circuit twice specifically noted that horizontal agreements allocating customers, though illegal, do not ordinarily injure competitors of the agreeing parties. Id., at 306, 310-311. However, after reviewing evidence of cartel activity in Japan, collusive establishment of dumping prices in this country, and long-term, below-cost sales, the Third Circuit held that a fact-finder could reasonably conclude that the five company rule was not a simple price-raising device:

“[A] factfinder might reasonably infer that the allocation of customers in the United States, combined with price-fixing in Japan, was intended to permit concentration of the effects of dumping upon American competitors while eliminating competition among the Japanese manufacturers in either market.” Id., at 311.

I see nothing erroneous in this reasoning.

B

The Court’s second charge of error is that the Third Circuit was not sufficiently skeptical of respondents’ allegation that petitioners engaged in predatory pricing conspiracy. But *606the Third Circuit is not required to engage in academic discussions about predation; it is required to decide whether respondents’ evidence creates a genuine issue of material fact. The Third Circuit did its job, and remanding the case so that it can do the same job again is simply pointless.

The Third Circuit indicated that it considers respondents’ evidence sufficient to create a genuine factual issue regarding long-term, below-cost sales by petitioners. Ibid. The Court tries to whittle away at this conclusion by suggesting that the “expert opinion evidence of below-cost pricing has little probative value in comparison with the economic factors . . . that suggest that such conduct is irrational.” Ante, at 594, n. 19. But the question is not whether the Court finds respondents’ experts persuasive, or prefers the District Court’s analysis; it is whether, viewing the evidence in the light most favorable to respondents, a jury or other fact-finder could reasonably conclude that petitioners engaged in long-term, below-cost sales. I agree with the Third Circuit that the answer to this question is “yes.”

It is misleading for the Court to state that the Court of Appeals “did not disturb the District Court’s analysis of the factors that substantially undermine the probative value of [evidence in the DePodwin Report respecting below-cost sales].” Ibid. The Third Circuit held that the exclusion of the portion of the DePodwin Report regarding below-cost pricing was erroneous because “the trial court ignored DePodwin’s uncontradicted affidavit that all data relied on in his report were of the type on which experts in his field would reasonably rely.” 723 F. 2d, at 282. In short, the Third Circuit found DePodwin’s affidavit sufficient to create a genuine factual issue regarding the correctness of his conclusion that petitioners sold below cost over a long period of time. Having made this determination, the court saw no need — nor do I — to address the District Court’s analysis point by point. The District Court’s criticisms of De-*607Podwin’s methods are arguments that a factfinder should consider.

IV

Because I believe that the Third Circuit was correct in holding that respondents have demonstrated the existence of genuine issues of material fact, I would affirm the judgment below and remand this case for trial.

The Court adequately summarizes the quite fact-speciñc holding in Cities Service. Ante, at 587.

In Monsanto, the Court held that a manufacturer’s termination of a price-cutting distributor after receiving a complaint from another distributor is not, standing alone, sufficient to create a jury question. 465 U. S., at 763-764. To understand this holding, it is important to realize that under United States v. Colgate & Co., 250 U. S. 300 (1919), it is permissible for a manufacturer to announce retail prices in advance and terminate those who fail to comply, but that under Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 (1911), it is impermissible for the manufacturer and its distributors to agree on the price at which the distributors will sell the goods. Thus, a manufacturer’s termination of a price-cutting distributor after receiving a complaint from another distributor is lawful under Colgate, unless the termination is pursuant to a shared understanding between the manufacturer and its distributors respecting enforcement of a resale price maintenance scheme. Monsanto holds that to establish liability under Dr. Miles, more is needed than evidence of behavior that is consistent with a distributor’s exercise of its prerogatives under Colgate. Thus, “[tjhere must be evidence that tends to exclude the possibility that the manufacturer and nonterminated distributors were acting independently.” 465 U. S., at 764. Monsanto does not hold that if a terminated dealer produces some further evidence of conspiracy beyond the bare fact of postcomplaint termination, the judge hearing a motion for summary judgment should balance all the evidence pointing toward conspiracy against all the evidence pointing toward independent action.

Dr. DePodwin summarizes his view of the harm caused by Japanese cartelization as follows:

“When we consider the injuries inflicted on United States producers, we must again look at the Japanese television manufacturers’ export agreement as part of a generally collusive scheme embracing the Japanese domestic market as well. This scheme increased the supply of television receivers to the United States market while restricting supply in the Japanese market. If Japanese manufacturers had competed in both domestic and export markets, they would have sold more in the domestic market and less in the United States. A greater proportion of Japanese production capacity would have been devoted to domestic sales. Domestic prices would have been lower and export prices would have been higher. The size of the price differential between domestic and export markets would have diminished practically to the vanishing point. Consequently, competition among Japanese producers in both markets would have resulted in reducing exports to the United States and United States prices would have risen. In addition, investment by the United States industry would have increased. As it was, however, the influx of sets at depressed prices cut the rates of return on television receiver production facilities in the United States to so low a level as to make such investment uneconomic.
‘We can therefore conclude that the American manufacturers of television receivers would have made larger sales at higher prices in the absence of the Japanese cartel agreements. Thus, the collusive behavior of Japanese television manufacturers resulted in a very severe injury to those American television manufacturers, particularly to National Union Electric Corporation, which produced a preponderance of television sets with screen sizes of nineteen inches and lower, especially those in the lower range of prices.” 5 App. to Brief for Appellants in No. 81-2331 (CA3), pp. 1629a-1630a.

The DePodwin Report has this, among other things, to say in summarizing the harm to respondents caused by the five company rule, ex*603change of production data, price coordination, and other allegedly anti-competitive practices of petitioners:

“The impact of Japanese anti-competitive practices on United States manufacturers is evident when one considers the nature of competition. When a market is fully competitive, firms pit their resources against one another in an attempt to secure the business of individual customers. However, when firms collude, they violate a basic tenet of competitive behavior, i. e., that they act independently. United States firms were confronted with Japanese competitors who collusively were seeking to destroy their established customer relationships. Each Japanese company had targeted customers which it could service with reasonable assurance that its fellow Japanese cartel members would not become involved. But just as importantly, each Japanese firm would be assured that what was already a low price level for Japanese television receivers in the United States market would not be further depressed by the actions of its Japanese associates.
“The result was a phenomenal growth in exports, particularly to the United States. Concurrently, Japanese manufacturers, and the defendants in particular, made large investments in new plant and equipment and expanded production capacity. It is obvious, therefore, that the effect of the Japanese cartel’s concerted actions was to generate a larger volume of investment in the Japanese television industry than would otherwise have been the case. This added capacity both enabled and encouraged the Japanese to penetrate the United States market more deeply than they would have had they competed lawfully.” Id., at 1628a-1629a.

For a more complete statement of DePodwin’s explanation of how the alleged cartel operated, and the harms it caused respondents, see id., at 1609a-1642a. This material is summarized in a chart found id., at 1633a.

In holding that Parts IV and V of the Report had been improperly excluded, the Court of Appeals said:

“The trial court found that DePodwin did not use economic expertise in reaching the opinion that the defendants participated in a Japanese televi*604sion cartel. 505 F. Supp. at 1342-46. We have examined the excluded portions of Parts IV and V in light of the admitted portions, and we conclude that this finding is clearly erroneous. As a result, the court also held the opinions to be unhelpful to the factfinder. What the court in effect did was to eliminate all parts of the report in which the expert economist, after describing the conditions in the respective markets, the opportunities for collusion, the evidence pointing to collusion, the terms of certain undisputed agreements, and the market behavior, expressed the opinion that there was concert of action consistent with plaintiffs’ conspiracy theory. Considering the complexity of the economic issues involved, it simply cannot be said that such an opinion would not help the trier of fact to understand the evidence or determine that fact in issue.” In re Japanese Electronics Products Antitrust Litigation, 723 F. 2d 238, 280 (1983).

The Court of Appeals had similar views about Parts VI and VII.

I use the Third Circuit’s analysis of the five company rule by way of example; the court did an equally careful analysis of the parts the cartel activity in Japan and the cheek prices could have played in an actionable conspiracy. See generally id,., at 303-311.

In discussing the five-company rule, I do not mean to imply any conclusion on the validity of petitioners’ sovereign compulsion defense. Since the Court does not reach this issue, I see no need of my addressing it.