Matsushita Elec. Indus. Co. v. Zenith Radio Corp.

Brief Fact Summary.

Two companies sued over 20 other companies alleging conspiracy in violation of the Sherman Act. Defendant’s motion for summary judgement is granted and the plaintiff appeals.

Synopsis of Rule of Law.

To survive a motion for summary judgement a plaintiff seeking damages for a violation of § 1 of the Sherman Act must present evidence that tends to exclude the possibility that the alleged conspirators acted independently.

Facts.

Plaintiffs represented by Zenith are suing over 20 Japanese-owned companies represented by Defendant Matsushita for allegedly engaging in predatory pricing in violation of the Sherman Antitrust Act. Plaintiff Zenith claims that Defendants conspired to sell their products at extremely low prices, at a loss to Defendants, in order to run American manufacturers of the same goods out of business and thereafter gain a monopoly over the American market. The district court granted Defendant’s motion for summary judgement and Plaintiff Zenith appealed. The court of appeals reversed, finding that a factfinder could have inferred that the Defendants were part of a conspiracy to lower prices in the American market to drive American companies out. The Defendants appealed to the United States Supreme Court which granted certiorari.

Issue.

In order to survive a motion for summary judgement must a plaintiff seeking damages for a violation of § 1 of the Sherman Act present evidence that tends to exclude the possibility that the alleged conspirators acted independently?

Held.

Yes, to survive a motion for summary judgement a plaintiff seeking damages for a violation of § 1 of the Sherman Act must present evidence that tends to exclude the possibility that the alleged conspirators acted independently. The decision of the court of appeals is reversed and the case is remanded for further proceedings.

Dissent.

Justice Justice White joined by Justices Brennan, Blackmun, and Stevens dissenting

The majority ignores the conclusion in Plaintiff Zenith’s expert DePodwin’s report. The report suggests that the Defendants entered into an agreement to prevent competition in the American market. The report also suggests that because of the inflated prices in Japan, Defendants exported more products to America than normal, consequently decreasing Plaintiffs’ sales. This report creates a genuine issue for trial.

Discussion.

1. Antitrust cases on summary judgement require special analysis.
2. Under FRCP 56 a court will grant summary judgement if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgement as a matter of law.
3. While the court is to view the evidence in the light most favorable to the plaintiff, the potential inferences that can be drawn from obscure evidence in a § 1 action is limited.
4. Therefore a plaintiff seeking damages for a violation of § 1 of the Sherman Act must present evidence that tends to exclude the possibility that the alleged conspirators acted independently.
5. A court should not permit an inference of conspiracy if the inference is implausible.
6. Here, in order to survive Defendant’s motion for summary judgement Plaintiff Zenith must show a genuine issue of material fact as to whether Defendants entered into a conspiracy that caused Plaintiffs’ injuries.
7. Plaintiff Zenith’s contention that over 20 companies engaged in predatory pricing for over two decades is implausible for multiple reasons.
8. First, that the companies have not even come close to achieving their alleged goal of putting American companies that manufacture the same products out of business makes it very unlikely that a conspiracy exists.
9. Second, the high number of companies and the strong incentive to not adhere to the conspiracy makes it unlikely that all of the companies were willing to suffer losses for such an extended period of time.
10. Third, Plaintiff Zenith and another American company have held the largest two shares in the relevant product market and their shares have not considerably decreased.
11. There is no reasonable motive for Defendants to engage in predatory pricing and thus there is no reason to infer conspiracy.
12. The decision of the court of appeals is reversed and the case is remanded for further proceedings.