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January 13, 2005.


The opinion of the court was delivered by: LORETTA PRESKA, District Judge


RoundUp — "No Root No Weed No Problem" — has been the dominate non-selective herbicide for many years. This action questions the manner in which RoundUp has retained that dominance: have the defendants in this case acted to drive competitors from the market while depriving the plaintiff the benefit of its bargain, or have defendants simply made sound business decisions that are neither illegal nor violate the letter or spirit of the contracts at issue? Though there is insufficient evidence to support some of plaintiff's claims, genuine issues of material fact remain for a jury to decide. Accordingly, the parties' motions for summary judgment are denied in part and granted in part, and the case shall proceed to trial. BACKGROUND

I. The Facts

  A. The Parties

  Plaintiff Aventis Environmental Science USA LP ("Aventis ES") is a Delaware limited partnership and the alleged successor to the assets and liabilities of the original plaintiff to this action, AgrEvo Environmental Health, Inc. ("AgrEvo EH") and its affiliates. (Defendants' Joint Statement Pursuant to Civil Rule 56.1 of Undisputed Facts Material to Plaintiff's Antitrust Claims ("Def's Antitrust 56.1") ¶ 1; Third Am. Compl. ¶ 3, 8-10.) Aventis ES was acquired by Bayer AG in June 2002 and merged Aventis ES and Aventis ES's parent company, Aventis CropScience SA, into Bayer CropScience.*fn1

  Defendants Scotts Company and Scotts' Miracle-Gro Products, Inc. are Ohio corporations with their principal places of business in Marysville, Ohio and Port Washington, New York, respectively. (Def's Antitrust 56.1 ¶¶ 2-3.) Defendant OMS Investments, Inc. is a Delaware corporations (Def's Antitrust 56.1 ¶ 4.) Scotts Company, Scotts' Miracle-Gro Products, Inc. and OMS Investments, Inc. are herein collectively referred to as "Scotts". Defendant Monsanto Company ("Monsanto") is a Delaware corporation with its principal place of business in St. Louis, Missouri.

  B. The Finale Agreement

  In 1994, AgrEvo EH developed a non-selective herbicide ("NSH"), glufosinate ammonium ("GA"), which it marketed and sold to consumers under the trade name "Finale." (Def's Antitrust 56.1 ¶ 4; Plaintiff's Amended Counter Statement of Disputed Material Facts in Opposition to Defendants' Motions for Summary Judgment ("Pl's Antitrust Opp. 56.1") ¶ 10.) On May 15, 1998, AgrEvo EH, entered into an Asset Sales Agreement (the "ASA") with Scotts' Miracle-Gro Inc. and OMS Investments, Inc. that sold to Scotts "certain rights, title and interest" in AgrEvo EH products, including Finale, which were part of AgrEvo EH's Home and Garden Consumer Products Business.*fn2 (ASA p. 1-2.) Enumerated product registrations, title to trademark registrations and applications, customer lists, and other assets were also sold. (ASA p. 1-2.)

  In conjunction with the ASA, AgrEvo EH and Scotts entered into an Exclusive GA Supply Agreement (the "GA Supply Agreement" or "GASA") whereby AgrEvo EH would manufacture and supply Scotts' requirements of GA, the active ingredient in Finale. (GASA p. 1.) The GA Supply Agreement contained a "Take or Pay Obligation" that required Scotts either to purchase $12.6 million of GA during the first three years of the GA Supply Agreement or to pay 50% of the difference between the $12.6 minimum purchase commitment and the amount of actual GA purchased. (GASA § 2.3.) Scotts' maximum obligation to AgrEvo EH pursuant to the this provision (the "take-or-pay provision"), the amount Scotts would owe if Scotts purchased no GA from AgrEvo EH, was thus $6.3 million. (Def's Antitrust 56.1 ¶¶ 41-42.)

  In conjunction with the ASA, Scotts and AgrEvo EH also entered into a Non-Exclusive Insecticide Supply Agreement (the "Insecticide Supply Agreement" or "ISA"). The Insecticide Supply Agreement set forth the terms by which Scotts would become the non-exclusive distributor of AgrEvo EH's insecticide products and AgrEvo EH would supply all of Scotts' requirements for the various insecticides.

  C. The Roundup Agreement

  Monsanto developed a proprietary NSH, glyphosate, in 1984, and Monsanto began manufacturing and marketing glyphosate to consumers under the name RoundUp. (Def's Antitrust 56.1 ¶ 9; Pl's Antitrust Opp. 56.1 ¶ 9.) Since Monsanto's introduction of the product, RoundUp has been very successful, indeed the best-selling residential NSH in the United States. Though much of this case depends on the characterization of Monsanto's actions and motivations in deciding to sell some or all of its interest in RoundUp, Monsanto contends that in late 1997 it decided to concentrate on the "life sciences" business and began looking to sell its consumer lawn and garden division, called Solaris, which included RoundUp. (Def's Antitrust 56.1 ¶ 12.) Scotts initially indicated to Monsanto that it was interested in the RoundUp business, but in early 1998 Monsanto entered into exclusive negotiations with another company for the sale of Solaris. (Def's Antitrust 56.1 ¶ 19.)

  Monsanto's exclusive negotiations, however, collapsed, and in April 1998, potential purchasers of the Solaris division, including Scotts, were again contacted. (Def's Antitrust 56.1 ¶¶ 30-34.) On June 15, 1998, Scotts submitted a bid to purchase the non-RoundUp assets of the Solaris division and to become Monsanto's exclusive agent and marketer of RoundUp in the United States. (Def's Antitrust 56.1 ¶ 52.) Monsanto evaluated the bids it had received, and on June 24, 1998, Monsanto and Scotts signed a letter of intent to enter into an exclusive agency and marketing agreement for the sale of consumer RoundUp, which was then executed on September 30, 1998 (the "RoundUp Agreement"). (Def's Antitrust 56.1 ¶¶ 61-62.)

  D. Scotts Divests the Finale Assets to Farnam

  In 1993, Monsanto had entered into a consent decree with the Federal Trade Commission (the "FTC") upon acquiring the Ortho product line from the Chevron Corporation. Under the terms of the consent decree Monsanto agreed not to acquire any direct or indirect interest in any competing NSH until 2003. (Def's Antitrust 56.1 ¶¶ 44-46.) Monsanto asserts that it informed Scotts that under the terms of the consent decree with the FTC, Monsanto believed that it would not be able to enter into the RoundUp Agreement with Scotts until Scotts divested its interest in the Finale assets recently acquired from AgrEvo EH. (Def's Antitrust 56.1 ¶ 47.) Scotts asserts that based on what it was told about the consent decree by Monsanto, Scotts began looking to divest the Finale assets. (Def's Antitrust 56.1 ¶ 47.)

  Regardless of Scotts' stated reasons for divesting the Finale assets, which AgrEvo EH contends do not reflect Scotts' true motivations (Pl's Antitrust Opp. 56.1 ¶¶ 44-51), Scotts did in fact divest some of its interest in Finale.*fn3 The parties dispute Scotts' characterization of its offer of the Finale business back to AgrEvo EH and Scotts' efforts to try to find prospective buyers for the Finale assets, but the parties do agree that Scotts did eventually divest at least some of the Finale assets to Farnam Companies, Inc. ("Farnam") on February 15, 1999. (Def's Antitrust 56.1 ¶¶ 66-79; Pl's Antitrust Opp. 56.1 ¶¶ 66-79.) As a result of this divestiture, Farnam became the seller and marketer of Finale (Def's Antitrust 56.1 ¶¶ 83-86), though Scotts retained the take-or-pay obligation and paid almost $6 million in May 2002 pursuant to that provision of the GA Supply Agreement (Def's Antitrust 56.1 ¶¶ 99-102).

  II. Procedural History

  AgrEvo EH filed the original complaint in this action on June 3, 1999, which was then amended on August 16, 1999. A second amended complaint was filed by AgrEvo EH on May 17, 2000. Following oral argument, on June 19, 2000, I denied Scotts' and Monsanto's motions to dismiss the second amended complaint, with the exception of my dismissal of AgrEvo EH's claim for tortious interference with contract, which I held did not sufficiently plead an intentional procurement of breach. AgrEvo EH was granted permission by the Honorable Theodore Katz, United States Magistrate Judge, to file the Third Amended Complaint, which was filed on September 7, 2001. On March 31, 2003, I upheld Judge Katz's decision to permit the filing of the Third Amended Complaint. On October 26, 2001, Monsanto filed a motion to dismiss the claims of AgrEvo EH's affiliates for lack of standing, which is converted into a motion for summary judgment and addressed herein.

  On May 3, 2004, Scotts and Monsanto filed various motions for summary judgment to dismiss AgrEvo EH's claims in the Third Amended Complaint. Scotts and Monsanto filed joint motions for summary judgment to dismiss AgrEvo EH's antitrust claims for lack of standing and antitrust claims on the merits. Scotts filed a motion for summary judgment to dismiss AgrEvo EH's contract claims, and Monsanto filed a motion for summary judgment to dismiss AgrEvo EH's claim for tortious interference with business relations. Also on May 3, 2004, Monsanto and Scotts filed a joint motion to preclude the expert testimony of AgrEvo EH's damage expert.

  On May 3, 2004, AgrEvo EH filed a motion for partial summary judgment on its antitrust claim for liability pursuant to Section 1 of the Sherman Antitrust Act. AgrEvo EH also filed a motion to preclude the expert testimony of four of defendants' experts on various grounds.

  Oral argument on the motions was held in the morning and afternoon of September 21, 2004, and on October 25, 2004, I issued a Memorandum and Order granting in part and denying in part Scotts' and Monsanto's motions for summary judgment; denying AgrEvo EH's motion for partial summary judgment; and denying the motions by both sides to preclude expert testimony. This Opinion and Order comports with the holdings in my October 25, 2004 Memorandum and Order and further explains those holdings.


  Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment shall be rendered forthwith if the pleadings, depositions, answers, interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); see Anderson v. Liberty Lobby, 477 U.S. 242, 250 (1986).

  The moving party has the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The substantive law determines the facts that are material to the outcome of a particular litigation. See Anderson, 477 U.S. at 250; Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir. 1975). In determining whether summary judgment is appropriate, a court must resolve all ambiguities, and draw all reasonable inferences against the moving party. See Matsushita Elec. Industr. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).

  If the moving party meets its burden, the burden then shifts to the non-moving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The non-moving party must "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. However, only when it is apparent that no rational finder of fact "could find in favor of the non-moving party because the evidence to support its case is so slight" should summary judgment be granted. Gallo v. Prudential Residential Servs., Ltd., 22 F.3d 1219, 1223 (2d Cir. 1994).


  The undisputed relevant product market is the residential NSH market, which consists of NSH products for use by consumers for the general control of brush, weeds, and grasses in their homes and gardens, and the relevant geographic market is the United States. (Def's Antitrust 56.1 ¶¶ 6-7.) With respect to the antitrust allegations contained in the Third Amended Complaint, Defendants have moved for summary judgment on the basis that AgrEvo EH lacks standing to assert antitrust claims, on behalf of itself and its related entities, Hoechst Schering AgrEvo GmbH ("AgrEvo GmbH"), AgrEvo EH's parent company, and AgrEvo USA. Defendants have also moved for summary judgment on the basis that AgrEvo EH has failed to submit facts upon which a reasonable jury could find that Scotts and Monsanto acted anticompetitively in order to harm competition, in violation of Sections 1 and 2 of the Sherman Act.

  A. Antitrust Standing

  1. Appropriateness of AgrEvo EH as Plaintiff

  Defendants argue that by consummating the transaction with Scotts for Finale, AgrEvo EH exited the residential NSH market, became a mere supplier of an ingredient for use in Finale and, therefore, lacks standing to assert antitrust claims.*fn4 As Defendants point out, it is well-settled that a plaintiff who exits the market does not retain standing to assert antitrust claims for anticompetitive behavior occurring within the market. See, e.g., McDonald v. Johnson & Johnson, 722 F.2d 1370, 1373-79 (8th Cir. 1983); Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1235 (6th Cir. 1981); A.D.M. Corp. v. Sigma Instruments, Inc., 628 F.2d 753, 754 (1st Cir. 1980); Argus Inc. v. Eastman Kodak Co., 612 F. Supp. 904, 908-14, 916 (S.D.N.Y. 1985), aff'd, 801 F.2d 38 (2d Cir. 1986). It is equally well-established that mere suppliers of products to the targets of antitrust violators do not have standing to assert antitrust claims. See, e.g., Billy Baxter, Inc. v. The Coca-Cola Co., 431 F.2d 183, 189 (2d Cir. 1970); Midwest Gas Serv., Inc. v. Indiana Gas Co., 317 F.3d 703, 710-11 (7th Cir.), cert. den'd, 124 S. Ct. 82 (2003); Asahi Glass, Ltd. v. Pentech Pharm., Inc., 289 F. Supp. 2d 986 (N.D. Ill. 2003).

  In this case, there are certainly facts that suggest AgrEvo EH did exit the relevant market. Most significantly, the fact that AgrEvo EH and Scotts entered into a sales agreement for the Finale business, the Asset Sales Agreement, certainly implies an exit from the market. Additionally, the Asset Sales Agreement contains a covenant not to compete for a period of ten years, which further suggests AgrEvo EH was no longer competing in the market. (ASA § 2(i).) Similarly, none of the parties disputes that following the Finale transaction in May 1998, AgrEvo EH became the supplier of GA to Scotts. Therefore, it is certainly not incorrect to characterize AgrEvo EH as a "supplier" within the ordinary meaning of the word. Yet, simply to categorize AgrEvo EH as a former competitor that exited the market and became a mere supplier would ignore the substance and effects of the transaction with Scotts and the intent of the antitrust laws.

  The Court of Appeals has provided a two-part test for determining whether a plaintiff has antitrust standing. See Balaklaw v. Lovell, 14 F.3d 793, 797 n. 9 (2d Cir. 1994). First, a court must determine whether the plaintiff has suffered an antitrust injury. Second, if that prong is satisfied, the court must next "determine whether any of the other factors, largely relating to the directness and identifiability of the plaintiff's injury, prevent the plaintiff from being an efficient enforcer of the antitrust laws." Id. Under this test, therefore, not all plaintiffs who suffer an injury causally linked to an antitrust violation have standing. See Associated Gen. Contractors of California, Inc. v. California State Council, 459 U.S. 519, 540-41 (1983); Volvo North America Corp v. Men's Intern. Professional Tennis Council, 857 F.2d 55, 66 (2d Cir. 1998).

  In order to determine whether a plaintiff has suffered an "antitrust injury" a court must determine whether the injury alleged has had an adverse effect on competition, not just on the competitor asserting the claim. Balakaw, 14 F.3d at 797. As discussed in the subsequent section addressing the merits of AgrEvo EH's antitrust claims, I find that AgrEvo EH has proffered facts sufficient to raise a material question of fact as to the adverse effect Defendants' conduct had on competition, not just on AgrEvo EH, and I address here the question of the appropriateness of AgrEvo EH as a plaintiff in this action.

  Courts evaluate the suitability of a plaintiff as an enforcer of the antitrust laws by looking to the following nonexhaustive list of factors adapted from the Supreme Court's holding in Associated General: (1) the directness or indirectness of the asserted injury; (2) the existence of an identifiable class of persons whose self-interest would normally motivate them to vindicate the public interest in antitrust enforcement; (3) the speculativeness of the alleged injury; and (4) the difficulty of identifying damages and apportioning them amongst direct and indirect victims so as to avoid duplicative recoveries. Volvo North America Corp., 857 F.2d at 66; see also Associated Gen., 459 U.S. at 540-45 (1983); Crimpers Promotions, Inc. v. Home Box Office, Inc., 724 F.2d 290 (2d Cir. 1983) (adopting the Associated General test). Most relevant to the issues in this case is the first factor, which inquires whether a plaintiff has been directly injured by anticompetitive behavior. Those cases precluding recovery for those who have exited the market and are no more than suppliers are consistent with the desire to limit antitrust injury to those not merely tangentially affected by an antitrust violation. Yet, while those cases may establish a general rule regarding the directness of a plaintiff's injury, not every plaintiff who has sold some assets or could reasonably be characterized as a "supplier" lacks standing.

  In this case, rather than having exited the market and become a mere supplier, AgrEvo EH remained a competitor "in every relevant economic sense." See Information Resources, Inc. v. The Dun and Bradstreet Corp., 294 F.3d 447, 450 (2d Cir. 2002) (quoting 2 Phillip E. Areeda et al., Antitrust Law: An Analysis of Antitrust Principles and Their Application, ¶ 348f1, at 404 (2d ed. 2000)). AgrEvo EH was not supplying a minor ingredient for the use in Finale but was supplying the only active ingredient, GA, and it was supplying it to Scotts in fully formulated ready-to-use ("RTU") form. This RTU formula was then packaged and sold to retailers by Scotts without any further alteration. Later, AgrEvo EH began supplying Manufacturing Use Product ("MUP"), which was easily converted — by adding water and a few inert ingredients — into an RTU formula, a concentrate formula, or super-concentrate formula. It is undisputed that whether AgrEvo EH was supplying RTU or MUP, the GA it supplied did not change in form as it descended the manufacturing chain. See Areeda, supra, ¶ 348f3, at 405.

  Similar cases have held that antitrust standing is proper for the supplier of the product when the supplied product is passed along relatively unchanged. In Sanitary Milk Producers v. Bergjans Farm Dairy, Inc., 368 F.2d 679, 688-89 (8th Cir. 1966), the Eighth Circuit held that raw milk producers, who did not sell directly to retailers or consumers, had standing to press antitrust claims against milk processors who were alleged to have sold milk to retailers at predatory prices. The court held that because the raw milk supplied by plaintiffs was virtually the same product ultimately sold to retailers through a sales company, the raw milk producers were not "mere suppliers" and were properly characterized as actual competitors of the defendants. See also South Carolina Council of Milk Producers v. Newton, 360 F.2d 414, 418 (4th Cir. 1966) (holding plaintiff properly had antitrust standing because "the item sold by by plaintiffs is not simply an ingredient of the corresponding commodity sold by defendants but . . . is essentially the equivalent commodity."). Similarly, in Karseal Corp v. Richfield Oil Corp., 221 F.2d 358, 362-65 (9th Cir. 1955), the court held that the supplier, Karseal, that furnished car wax to wholesalers in the same condition the wax would be sold to the retail consumer had antitrust standing. See also Sulmeyer v. Seven-Up Co., 411 F. Supp. 635, 638-39 (S.D.N.Y. 1976) (holding that the producer of soft drink concentrate had standing in a suit alleging anticompetitive activity in the marketing and distribution of soft drinks).

  Though the cases cited in the previous paragraph predate the factors set forth in Associated General and Volvo North American Corp., their logic comports with the logic and purpose of the more modern test seeking to limit antitrust recovery to those directly injured. See IRI, 294 F.3d at 450 (citing the above cases). Moreover, in Crimpers Promotions, Inc. v. Home Box Office, Inc., 724 F.2d 290, 294 (2d Cir. 1983), the Court of Appeals applied the Associated General test and held that antitrust standing was proper since plaintiff was "not just a `supplier' of a competitor, to whom standing is generally denied," and additional cases have also held that suppliers are not necessarily precluded from standing. See Amarel v. Connell, 102 F.3d 1494, 1509-10 (9th Cir. 1997); Morris Elec. of Syracuse v. Mattel, Inc., 595 F. Supp. 56, 61 (N.D.N.Y. 1984). Though he denied standing to the plaintiff in Asahi Glass Co., Ltd. v. Pentech Pharm., Inc., 289 F. Supp. 2d 986, 991 (N.D. Ill. 2003), holding that the plaintiff was a mere supplier whose antitrust injury was too remote, Judge Posner also stated that the result might have been different had plaintiff been the "target" of the antitrust violation. Had the plaintiff been the target the plaintiff would have been more directly injured and might have had standing. Id. Here, AgrEvo EH has proffered evidence, which, if believed would demonstrate that it was the target of the alleged antitrust violations by Scotts and Monsanto.

  Because AgrEvo EH was not a mere supplier of one unimportant component of Finale, but instead supplied a product that was nearly complete and identical to the product ultimately delivered to consumers by Scotts, it cannot be said that AgrEvo EH simply exited the market and, therefore, lacks standing. The cases relied upon by Defendants such as McDonald v. Johnson & Johnson, 722 F.2d 1370, 1378 (8th Cir. 1983), in which plaintiffs sold their stock and accepted an earnout under the contract, for the proposition that plaintiffs who exit the market lack antitrust standing are inapposite. In cases like McDonald, the plaintiffs did not continue to participate in the market in any meaningful ...

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