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January 23, 1998

In re Citric Acid Litigation; This document relates to all actions

The opinion of the court was delivered by: SMITH


 Defendant Cargill's motion for summary judgment requires the Court to consider whether there is a genuine issue of material fact about whether Cargill participated in a conspiracy to fix the price and allocate market share of citric acid. The Court holds that no reasonable jury could find that Cargill was a participant, and so grants Cargill's motion.


 Citric acid is a corn derivative with a wide variety of uses in the manufacture of food, soft drinks, detergents, and pharmaceuticals. The citric acid market is dominated by a small number of major producers. Between 1991 and 1995, four of those producers--Haarman & Reimer ("H&R"), Hoffman LaRoche ("HLR"), Jungbunzlauer ("JBL"), and Archer Daniels Midland ("ADM")--admittedly conspired to divide the market among them and to raise the price of citric acid by limiting sales. At high-level meetings top executives known as "masters" allocated market shares to within a tenth of a percent. The masters monitored each other by exchanging their monthly sales figures over the telephone. If a conspirator had sold more than its allocation, it was required to purchase the excess from its co-conspirators. The conspiracy was implemented by lower-level corporate officials known as "Sherpas." During the time of the conspiracy, the price of citric acid rose from $ 0.63/lb to $ 0.85/lb.

 After learning of the conspiracy, the Department of Justice began an investigation that culminated in criminal charges to which the four conspirators pled guilty. Several civil cases followed closely on the heels of the criminal proceedings. The four companies that had pled guilty in the criminal prosecution settled. Cargill, Inc., the fifth major producer, however, was not indicted, has not settled and now brings this motion for summary judgment, asserting that it was never a member of the conspiracy.

 In 1993, Cargill joined the European Citric Acid Manufacturers Association ("ECAMA"), which included as members ADM, HLR, H&R, and JBL, as well as several non-conspirator companies. ECAMA is a trade association that collects production and sales data from its members, audits the data through an independent auditor, and then releases to its members aggregate data but not company-specific information. This process is intended to allow its members to learn about the overall state of the world market without divulging secret information to each other.

 In this motion, plaintiffs seek to prove that ECAMA was actually used as a front for the illegal exchange of secrets among the conspirators. They also argue that Cargill's parallel pricing and various meetings with the conspirators provide sufficient circumstantial evidence of participation in the conspiracy to avoid summary judgment. For the reasons set forth in this order, plaintiffs are wrong.


 I. Legal Standard

 A. Summary Judgment

 To withstand a motion for summary judgment, the opposing party must set forth specific facts, admissible in evidence, showing that there is a genuine issue of material fact in dispute. See Fed. R. Civ. P. 56(e). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, "the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 The Court does not make credibility determinations with respect to evidence offered, and is required to draw all inferences in the light most favorable to the non-moving party. See T.W. Elec. Serv., Inc., 809 F.2d 626 at 630-31 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986)). In doing so, however, the Court may only draw inferences "that are reasonable given the substantive law which is the foundation for the claim," Richards v. Neilson Freight Lines, 810 F.2d 898, 902 (9th Cir. 1987), and must not "resort[] to guesswork or conjecture," The Jeanery, Inc. v. James Jeans, Inc., 849 F.2d 1148, 1151 (9th Cir. 1988).

 A special rule applies to the use of circumstantial evidence in antitrust cases. "Where an antitrust plaintiff relies entirely upon circumstantial evidence of conspiracy, a defendant will be entitled to summary judgment if it can be shown that (1) the defendant's conduct is consistent with other plausible explanations, and (2) permitting an inference of conspiracy would pose a significant deterrent to beneficial procompetitive behavior." In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 906 F.2d 432, 440 (9th Cir. 1990) ("Petroleum Products "). If the defendant succeeds in making such a showing, "the plaintiff must come forward with other evidence that is sufficiently unambiguous and tends to exclude the possibility that the defendant acted lawfully." Id.

 Plaintiffs assert that this rule does not apply to conspiracies to raise prices. The Court disagrees. The Petroleum Products rule is based on a reading of the Supreme Court's holding in Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986), in which the Court refused to infer an antitrust violation from evidence of price-cutting, because "cutting prices in order to increase business is often the very essence of competition." Id. at 594. Although one district court from outside the Ninth Circuit has held that the rule of Matsushita is limited to conspiracies to reduce prices, see In re Bulk Popcorn Antitrust Litigation, 783 F. Supp. 1194, 1197-98 (D. Minn. 1991), that is not the rule in the Ninth Circuit, for Petroleum Products applied Matsushita to a conspiracy to raise prices. See Petroleum Products at 436. The Court must therefore apply the Petroleum Products rule to this case.

 B. Sherman Act

 Section 1 of the Sherman act prohibits "conspiracy . . . in restraint of trade or commerce." 15 U.S.C. ยง 1. The requirements for a civil conspiracy are the same as for a criminal conspiracy. See Jones v. City of Chicago, 856 F.2d 985, 992 (7th Cir. 1988). A finding of conspiracy does not require an explicit or formal agreement. See United States v. General Motors Corp., 384 U.S. 127, 142-43, 16 L. Ed. 2d 415, 86 S. Ct. 1321 (1966). "It is enough if you understand the general objectives of the scheme, accept them, and agree, either explicitly or implicitly, to do your part to further them." Jones at 992.

 C. Slight Evidence Rule

 Plaintiffs assert that because the existence of a conspiracy has been proven, they need only provide "slight evidence" that defendant was a member of the conspiracy. The "slight evidence" rule, however, is a rule of criminal appellate procedure not properly applied to a motion for summary judgment. See Zenith Radio Corp. v. Matsushita Elec. Indus. Co., 513 F. Supp. 1100, 1169 (E.D. Pa. 1981), aff'd in part and rev'd in part on other grounds, 723 F.2d 238 (3d Cir. 1983), rev'd, 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986) (rule has "no application to a district court determination of a summary judgment motion"). Plaintiffs have cited one case from this district that did apply the slight evidence rule to a defendant's motion for summary judgment in a civil antitrust case. See U.S. Audio & Copy Corp. v. Philips Bus. Sys., 1983 U.S. Dist. LEXIS 17440, 1983 WL 1818, *2 (N.D. Cal.) (Patel, J.). That case, ...

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