I conclude that plaintiffs' claims under the antitrust laws related to the Funds' documents could inflict no antitrust injury cognizable under the Sherman Act. Associated General, 459 U.S. at 543; Blue Shield, 457 U.S. at 483; Pueblo, 429 U.S. at 487-89.
In sum, the Employer plaintiffs lack standing to pursue their antitrust claims against defendants. The chain of causation is overly attenuated under plaintiffs' theory of the case. There exist direct competitors of the alleged violators who could bring a suit on the same theory. They have not. Plaintiffs' theory that they have sustained damages resulting from improperly inflated fringe benefit costs requires speculation
as to the source of the increases in contribution rates, and would lead to an unduly complex trial on damages. Plaintiffs' claim that the Fund documents they were required to sign is not cognizable under the antitrust laws. Lastly, plaintiffs present, at most, a bare scintilla of admissible evidence that the increase in fringe benefit costs was anything but the product of shrewd negotiation by the IBT and its locals.
C. Antitrust Conspiracy Theory
After a careful review of the submissions of the parties and the oral argument, I also hold, as an independent ground for granting summary judgment in favor of defendants on the section 1 claims, that plaintiffs' section 1 claim must fail under the summary judgment standards set forth in Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986).
In Matsushita, the Supreme Court held that to survive a motion for summary judgment, the party opposing the motion must "establish that there is a genuine issue of material facts as to whether [defendants] entered into an illegal conspiracy that caused [plaintiffs] to suffer a cognizable injury." Id. at 585-86. Proof of the existence of a genuine factual issue has two components. Plaintiffs must show that the alleged conspiracy caused an "antitrust injury" as defined in Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 490, 50 L. Ed. 2d 701, 97 S. Ct. 690 (1977). Matsushita, 475 U.S. at 586. Second, plaintiffs must show that the issue is genuine and material. The proof of the conspiracy must be sufficient to support a verdict by a rational trier of fact in favor of plaintiffs, otherwise there is no genuine issue for trial. Id. at 587.
In some instances, plaintiffs' economic theory of the alleged conspiracy may justify requiring "more persuasive evidence to support their claim than would otherwise be necessary." Id. Plaintiffs are held to the higher standard when their economic theory of the case is "implausible" in the sense that a rationally motivated economic actor would not engage in the conduct with only the hope of economic benefit at some future date. Because the acts which are alleged to be violations of section 1 must be evaluated in the factual context in which they occurred, id., plaintiffs 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 the [plaintiffs]." Id. at 588; see Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764, 79 L. Ed. 2d 775, 104 S. Ct. 1464 (1984); First National Bank of Arizona v. Cities Service, 391 U.S. 253, 280, 20 L. Ed. 2d 569, 88 S. Ct. 1575 (1963); Fragale & Sons Beverage Co. v. Dill, 760 F.2d 469, 473 (3rd Cir. 1985). Finally, "evidence of an opportunity to conspire, although relevant, is not enough to sustain an antitrust plaintiff's burden, and, without more, does not create a jury question on the issue of concerted action." Fragale & Sons, 760 F.2d at 473; Edward J. Sweeney & Sons, Inc. v. Texaco, 637 F.2d 105, 115 (3rd Cir. 1980), cert. denied, 451 U.S. 911, 68 L. Ed. 2d 300, 101 S. Ct. 1981 (1981); see Nanavati v. Burdette Tomlin Memorial Hospital, 857 F.2d 96, 120 (3d Cir. 1988), cert. denied, 489 U.S. 1078, 109 S. Ct. 1528, 103 L. Ed. 2d 834 (1989). I, therefore, turn to the nature of the alleged conspiracy and "the practical obstacles to its implementation." Matsushita, 475 U.S. at 588.
1. The Alleged Conspiracy
As stated previously, plaintiffs' theory of antitrust violations is embodied in three "manifestations" of the conspiracy. The allegations are 1.) TMI negotiated fringe benefit increases in the 1985 NMFA at artificially high levels with the intent of driving up the costs of its competitors; 2.) TMI and the Conference interfered with plaintiffs' independent negotiations with IBT locals by manipulating the locals to demand high rates from plaintiffs; and 3.) TMI and Conference "influenced" the Funds' trustees to implement rules and regulations to increase plaintiffs' fringe benefit costs. Plaintiffs' Consolidated Reply Memo, at 133.
Plaintiffs generally agree that their economic theory is analogous to a predatory pricing theory of fringe benefit costs, but argue that defendants exerted "conspiratorial pressure" in two ways. Plaintiffs argue that the competitive presence of the Nationwide Network Carriers forced trucking rates down. Concurrently, plaintiffs allege defendants combined to push fringe benefit costs upward. The result, according to plaintiffs, is a conspiracy to force plaintiffs' prices lower, while plaintiffs' costs were increased. Plaintiffs' Consolidated Reply Memo, at 137.
Obviously, this theory suffers from insurmountable obstacles relative to plaintiffs and defendants participation in two entirely separate markets: the nationwide "LTL" market or dry freight market for defendants and the regional tank or cement haul markets for plaintiffs. Ignoring these problems, plaintiffs must show that the actions of the defendants is linked to the harm plaintiffs allegedly suffered. Plaintiffs claim that the expert report of Dr. James A. Clifton, Exhibit 94 to Plaintiffs' Consolidated Reply, shows "that the TMI has raised fringe benefit costs in the Central Pennsylvania region, as it has throughout the country increasing the costs of doing business, especially for the smaller regional carriers." Plaintiffs Consolidated Reply Memo, at 135.
First, I note that the report is not in admissible form. Rule 56(e) requires in part that "supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e). "The substance of the report was not sworn to by the alleged expert. Therefore, the purported expert's report is not competent to be considered on a motion for summary judgment." Fowle v. C&C Cola, 868 F.2d 59, 67 (3rd Cir.1989).
Setting aside this fatal defect in the sole piece of evidence on the issue, the report of Dr. Clifton primarily
discusses actions of the Nationwide Network Carriers who are not defendants to this case. Further, the report discusses evidence of "supercompetitive [sic] profits" earned by the Nationwide Network Carriers in certain regions of the country. The conclusion most relevant to this case is that the patterns of profitability in the Eastern Central Region
show "a sustained and widespread pattern of predatory pricing by the [Nationwide Network Carriers]." This evidence, even if found sufficiently relevant to the actions within the Central Pennsylvania region to be admissible, is precisely the type of evidence the Supreme Court was skeptical of in Matsushita. Id. at 593. The Court found that such evidence is insufficient to survive a summary judgment motion "absent some strong likelihood that the alleged conspiracy . . . will eventually pay off" in the defendants' market. Id.
Plaintiff argues that, based on the projections of Dr. Clifton, the Nationwide Network Carriers will control 96 per cent of the Eastern central market in 1997. This projection does not discuss the competitive environment of the trucking industry since deregulation in 1980. See Second Amended Complaint at para. 133. Dr. Clifton's report ignores the economic reality that additional competitors are attracted to markets with supracompetitive profits.
His conclusion is a "metaphysical hope" of payoff for the Nationwide Network Carriers.
Plaintiffs also argue that the establishment of so-called non-union, double-breasted companies is additional evidence of a conspiracy by the Nationwide Network Carriers to drive up the costs of unionized firms. Apart from the inferences plaintiffs contend should be drawn from the entire "mosaic" of evidence, there is no evidence in the record to conclude that the establishment of non-unionized affiliates is anything but "conduct as consistent with permissible competition as with illegal conspiracy." Matsushita, 475 U.S. at 558.
Plaintiffs also set forth a lengthy theory of the origins of the TMI and Conference conspiracy. Plaintiffs Consolidated Reply Memo, at 142-50. This theory centers on the restructuring of TMI that occurred during the early 1980's. Plaintiffs claim that the process used and reforms enacted are "highly interesting and relevant" proof of the alleged conspiracy. This evidence is either legal action not remediable under the antitrust laws, action consistent with permissible competition and insufficient to support the inference of conspiracy urged by plaintiffs, or not in admissible form.
The heart of the allegations is that TMI was able to manipulate the IBT into forcing the higher fringe benefit costs onto non-TMI or Conference carriers. The evidence of antitrust conspiracy here is in plaintiffs' own terms, the "smoking gun" reference to the minutes of a TMI negotiating committee meeting held on January 27, 1985 in which the phrase "antitrust implications" was used. The portion referred to states:
P.S. Do we expect MCLAC [to attend a negotiation session]?