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From Antitrust Law Daily, July 13, 2015

Resin recycling business failed to show boycott conspiracy by packaging manufacturers

By Linda O’Brien, J.D., LL.M.

In an action against polystyrene packaging producers and a trade association for conspiring to boycott a resin recycling business’ method for polystyrene food service products, the recycler failed to set forth facts that there was a conspiracy involving the defendant polystyrene producers, the federal district court in Boston has ruled. Thus, the producers’ motions for summary judgment were granted (Evergreen Partnering Group, Inc. v. Pactiv Corporation, July 10, 2015, Stearns, R.).

Evergreen Partnering Group, Inc., through its founder Michael Forrest, developed a business method for recycling polystyrene food service products. The success of the company’s business model depended on its ability to partner with one of the five largest polystyrene packaging producers in the United States—Pactiv Corporation, Dolco Packing, Solo Cup Company, Dart Container Corporation, and Genpak, LLC . The manufacturers were never able to agree upon terms with Evergreen to pay royalties for its recycled resin, and Evergreen was ultimately forced out of business.

Evergreen filed suit against the manufacturers in 2011, alleging that they engaged in a conspiracy with their trade associations, the American Chemistry Council and Plastics Food Packaging Group, to boycott Evergreen’s recycling technology, in violation of antitrust laws. Evergreen asserted that the goal of the boycott was to maintain the defendants’ existing market shares in the polystyrene food packaging industry by stifling any competition. In June 2012, the court granted the defendants’ motion to dismiss.

However, in June 2013, the U.S. Court of Appeals in Boston vacated the dismissal, finding that Evergreen adequately alleged that the producers and trade groups conspired to boycott Evergreen’s recycling business method. The case was remanded for completion of discovery. Before the court were the defendants’ motions for summary judgment.

Conspiracy claims. In granting summary judgment, the court determined that Evergreen failed to demonstrate a factual basis that there was a “combination . . . or a conspiracy, in restraint of trade or commerce” that involved the producer defendants. Evergreen’s contention that the failed business negotiations with three of the defendants to form a joint venture demonstrated a unity of opposition to recycling among trade association members was rejected. Evergreen’s evidence of unauthenticated notes of claimed meetings and conference calls was insufficient to show that two of the major polystyrene producers—Pactiv and Dart—pressured other producers to refuse to deal with Evergreen.

Evergreen’s argument that the defendants attempted to organize opposition to Evergreen’s recycling efforts at a 2007 Plastics Group trade association meeting was also rejected. According to the court, Evergreen did not offer any plausible evidence (1) that the defendants, through the Plastics Group, were attempting to suppress Evergreen or (2) that the meeting was a “launching pad” for a conspiracy.

There also was no evidence to support Evergreen’s allegations that the defendants participated in a campaign to actively promote a “sham” competitor at Evergreen’s expense. Evergreen did not identify the defendants who participated in the alleged campaign and did not deny that two of the defendant producers had no involvement with the competitor. Instead, evidence indicated that both Evergreen and the competitor were invited to make presentations to the Plastics Group and were identified by the Group as recyclers that “members should seek out to explore possible business opportunities.”

Furthermore, there was considerable evidence that the defendants’ responses to Evergreen were illustrative of lawful independent parallel conduct. Evergreen’s recycled resin was more expensive than virgin resin and became more expensive as the price of oil dropped in 2008. Evergreen’s own expert opined that Evergreen could not survive on the proceeds of recycled resin sales alone and its business model required the market’s willingness to pay royalties on the sales of a producer’s products containing Evergreen’s recycled resin in order to succeed. The defendants were unwilling to enter into deals structured with unprofitable components that Evergreen insisted upon. Ultimately, discovery demonstrated that Evergreen’s business model could not survive in a competitive capitalist economy, the court concluded.

The case is No. 11-10807-RGS.

Attorneys: Donald R. Pepperman (Blecher & Collins, PC) and Orestes G. Brown (Metaxas Brown Pidgeon LLP) for Evergreen Partnering Group, Inc. Richard E. Bennett (Michienzie & Sawin LLC) for Pactiv Corp. Ralph C. Mayrell (Vinson & Elkins LLP) for Solo Cup Co., and Dart Container Corp. Jennifer Mikels (Duane Morris LLP) for Dolco Packaging. Benjamin M. McGovern (Holland & Knight, LLP) for American Chemistry Council Inc.

Companies: Evergreen Partnering Group, Inc.; Pactiv Corporation; Dolco Packing; Solo Cup Company; Dart Container Corporation; American Chemistry Council, Inc.

MainStory: TopStory Antitrust MassachusettsNews

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