The opinion of the court was delivered by: SIFTON
In these consolidated antitrust actions, plaintiffs allege that defendants Eastman Kodak Co., E.I. DuPont de Nemours & Co., Miles, Inc., and Fuji Medical Systems, U.S.A., Inc. have fixed the prices of medical x-ray and imaging films since 1988, in violation of the Sherman Antitrust Act ("the Sherman Act"), 15 U.S.C. § 1. Defendants have filed a renewed motion to dismiss the amended complaint, pursuant to Rules 8, 9, and 12
of the Federal Rules of Civil Procedure. For the reasons set forth below, the motion is converted into one for summary judgment and, as such, is denied.
The instant motion involves five cases filed as separate but related actions, which have been consolidated for pretrial purposes.
All five cases seek damages on behalf of a class of purchasers of medical x-ray film.
The original complaints allege that defendants, along with other unnamed co-conspirators, conspired to fix, raise, maintain, and stabilize the prices of medical x-ray and imaging films, including general radiography films, mammography films, radiation therapy films, CRT and video imaging films, laser imaging films, duplicating films, and spot films sold in the United States to plaintiffs and other class members at supra-competitive levels from 1988 to the present, in violation of Section 1 of the Sherman Antitrust Act. In furtherance of the conspiracy, defendants allegedly agreed to and did exchange current and future price information; agreed to and did coordinate pricing levels and movements; agreed upon prices and price levels; agreed to and did fix, stabilize, inflate and increase prices and price levels in relation to each other; and agreed to and did refrain from competing among themselves on the basis of price. Each complaint seeks declaratory, injunctive, and compensatory relief on behalf of the named plaintiffs and the class for injuries sustained as a result of the foregoing activities.
On February 23, 1994, defendants moved to dismiss the complaints under Fed. R. Civ. P. 8, 9(b), and 12(b)(6). At oral argument on April 6, 1994, the Court proposed that plaintiffs file an amended complaint with more particularized allegations that would not unduly bind plaintiffs, that defendants then file their answers within thirty days, and that automatic disclosure under the Civil Justice Expense and Delay Reduction Plan be expedited in order for the parties to depose four witnesses whose testimony plaintiffs claimed supports the allegations in the complaint. The parties consented to the Court's proposal, thereby disposing of the motion to dismiss.
Plaintiffs filed an amended complaint on April 14, 1994, alleging additionally that, in furtherance of the claimed conspiracy, defendants exchanged price increase announcements and other competitive information in advance of their release to the public; discussed future and prospective price increases during the course of trade association meetings; increased prices by approximately the same percentage amounts within a brief period of time of one another; and engaged in non-public meetings, telephone conversations, and facsimile message exchanges in which future and prospective price increases were disclosed or discussed. The parties thereafter deposed four witnesses, all of whom are former employees of defendants: Joel Popham of Kodak, Gregory Gessert of Fuji, and Ronald Bloomquist and John Farrell of Agfa Corporation ("Agfa"), which merged with Miles, leaving Agfa a division of Miles effective December 31, 1991. The deposition testimony is summarized below.
Defendants subsequently renewed their motion to dismiss under Fed. R. Civ. P. 8, 9, and 12, contending that the deposition testimony provides an insufficient factual basis upon which to state a claim under the antitrust laws. At oral argument on July 27, 1994, the Court attempted to clarify the procedural posture of the motion presented. While defendants considered the motion one for dismissal with the deposition testimony serving simply as an amplification and thus part of the pleadings, plaintiffs considered discussion of the deposition testimony as requiring that the motion be converted to one for summary judgment. After listening to argument from both sides, the Court granted a continuance of the motion in order to permit limited discovery and depositions of the supervisors identified by the four witnesses previously deposed, as well as circumscribed discovery of individuals mentioned in the subsequent depositions, by agreement of the parties. The parties were instructed to supplement their papers with any other materials obtained through discovery that would bear on a motion for summary judgment, and oral argument was set for October 6, 1994.
By order dated October 5, 1994, the Court adjourned the motion to any date to be set by the magistrate. At a conference on October 24, 1994, to resolve discovery disputes, Magistrate Judge Caden outlined the limited discovery to be pursued in conformity with the Court's direction of July 27, 1994.
On November 16, 1994, all five cases were randomly reassigned to Judge Block, during which time discovery continued, but the instant motion was never decided.
In February 1996, the case was reassigned from Judge Block to the undersigned, and a status conference was held on February 8, 1996. The parties were directed to brief the outstanding motion, which is currently before the Court.
The following is a summary of the deposition testimony of the four employees originally deposed, upon which the complaint's allegations are based.
Joel Popham testified that he had been a sales representative for Kodak from October 1988 to May 1992. He stated that he had no personal knowledge of any employee of Kodak exchanging future price information prior to the public announcement of that information, no personal knowledge of any communication between an employee of Kodak and an employee of any other x-ray film manufacturer regarding pricing, and no personal knowledge of any agreement between or among any x-ray film manufacturers regarding pricing.
Popham did, however, testify that during a sales training meeting in November 1988 a group of Kodak employees began to whisper among themselves and then left the room. At the conclusion of the meeting, the instructor told the trainees that the other employees had left the room because they had been made aware that DuPont intended to announce a price increase and they needed to decide what kind of a response Kodak would make to that price increase. According to Popham, the price increase would have taken effect early in 1989. Popham further testified that he did not himself hear what the employees were whispering about, and he did not know how these employees were made aware that DuPont was going to increase its prices. In April 1989, he learned that DuPont had increased its 1989 list prices for medical x-ray film.
Popham also explained that Kodak had sales contracts with various hospitals but that the hospitals did not deal with Kodak directly. Rather, Kodak sold the medical x-ray film to its authorized dealers throughout the United States who, in turn, functioned as distributors selling the film to the hospitals. He said that Kodak's principal competitors were DuPont, Fuji, Agfa, 3M and Konica, and they all, as well as Kodak, issued price lists for medical x-ray film they sold. The prices increased annually during Popham's employment with Kodak. They generally were announced late in the year and were put in effect shortly after January 1 of the following year. Popham was unable to recall whether DuPont's price increases in 1990 were the same as Kodak's price increases for that year.
Popham also testified that in the fall of 1989, 1990 and 1991, his Kodak sales district supervisor, Don Waddelow, telephoned the sales representatives in his district, including Popham, and informed them each year that DuPont would be announcing a price increase. He instructed the sales representatives to talk to Kodak's customers and dealers to ascertain whether they had any information regarding this price increase. Popham testified that he was not instructed to communicate directly with a competitor, that he never did communicate with any competitors about price increases, and that his supervisor's requests did not lead him to believe that his supervisor had direct information from DuPont about a price increase.
Popham thereafter contacted those customers and dealers who bought film from both Kodak and DuPont in an effort to obtain the requested information. In 1990 and 1991, his customer inquiries were fruitless, and he did not obtain any information regarding potential price increases. In 1989, however, a Kodak authorized dealer who was also a DuPont authorized dealer told Popham that he had been apprised of a pending DuPont price increase of between five and seven percent for 1990. Popham testified that this information was not already available in the field, but he did not know how the customer had learned the information.
Popham testified that in 1989, DuPont announced its price increase before Kodak did, but in 1990 and 1991, Kodak announced its price increase before Dupont. He also explained that Kodak film dealers usually were informed of Kodak's price increases approximately thirty days before the price increase would become effective so that the dealers could buy an extra month's-worth of film at the old prices prior to the price increase. Although Popham and other sales representatives would have been made aware of the impending price increases before the dealers were, he testified that he did not disclose those increases to anyone, nor was he aware that any other sales representative had.
John Farrell testified that he was employed by Agfa from March 15, 1989, until he was fired in July 1992, as a territory manager for the western half of Missouri, Kansas, Nebraska, and a portion of Iowa. He was responsible for promoting sales of Agfa products, including medical x-ray film, through a dealer network as well as through direct sales to hospitals. Farrell identified Kodak, DuPont, and Fuji as Agfa's major competitors in the sale of medical x-ray film at that time.
Farrell testified that there was a general industry-wide price increase in medical x-ray film in January and February of 1990, 1991, and 1992 in which DuPont, Kodak, Fuji, and Agfa participated. According to Farrell, the price increases between the companies were very close in time and amount. He stated that he obtained advance notice in late October or early November prior to the increase of each of the three years that there would be general price increases in medical x-ray film by Kodak, DuPont, Fuji, and Agfa. He received the information through either telephone calls or by letter from Bob Eisen, his regional manager, who instructed Farrell to find out from his dealers or hospital contacts the details of the industry-wide price increase. Farrell then spoke with several dealers and hospitals who told him they had not been notified by any of the other companies concerning any type of price increase.
Farrell also testified that Mr. Eisen mailed to him written competitor information, including internal memoranda authored by Agfa's competitors and information on terms and conditions of sale offered by Agfa's competitors, such as DuPont, Fuji, and 3M, on more than one occasion during his employment with Agfa. Farrell was unaware of how Elsen obtained these documents. Farrell testified further that Eisen mentioned to him on several different occasions that he had contact with Agfa's competitors, such as Kodak, but Farrell could provide no details concerning these contacts or the specific subjects discussed.
Farrell testified that he had no knowledge of any meetings among competitors regarding prices, that he had never attended any such meetings with competitors nor did he have any knowledge of others having done so, and that he ...