MR. DEE'S INC.,et al v. INMAR, INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

MR. DEE’S INC., RETAIL )

MARKETING SERVICES, INC., on )

behalf of themselves and all )

others similarly situated, )

and CONNECTICUT FOOD )

ASSOCIATION, )

)

Plaintiffs, )

)

v. ) 1:19CV141

)

INMAR, INC., CAROLINA )

MANUFACTURER’S SERVICES, INC., )

CAROLINA SERVICES, and )

CAROLINA COUPON CLEARING, INC., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., District Judge

Presently before this court is a Motion for Summary

Judgment filed by Defendants Inmar, Inc., Carolina

Manufacturer’s Services, Inc., Carolina Services, and Carolina

Coupon Clearing, Inc. (together, “Defendants”). (Doc. 234.) For

the reasons stated herein, this court finds that the motion

should be denied.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Parties

Plaintiff Mr. Dee’s, Inc. manufactures food products.

(Third Am. Compl. Class Action (“TAC”) (Doc. 145) ¶ 2.)1 Mr.

Dee’s issues coupons to customers and purchases coupon

processing services. (Id.) Plaintiffs Retail Marketing Services,

Inc. and Connecticut Food Association are entities who purchase

coupon processing services for retailers and members. (Id. ¶¶ 3–

4.)

Defendant Inmar, Inc. sells coupon processing services to

manufacturers. (Id. ¶ 7.) Inmar’s subsidiary, Defendant Carolina

Manufacturer’s Services, Inc. (“CMS”), sells coupon processing

services to manufacturers. (Id.) Inmar’s subsidiaries,

Defendants Carolina Coupon Clearing, Inc. (“CCC”) and Carolina

Services (“CS”), sell coupon processing services to retailers.

(Id.)2 Inmar’s president during the relevant time period was

Robert Carter. (See Attach. 1, Decl. of Robert Carter (“Carter

Decl.”) (Doc. 234-1) ¶ 1.)

1 All citations in this Memorandum Opinion and Order to

documents filed with the court refer to the page numbers located

at the bottom right-hand corner of the documents as they appear

on CM/ECF.

2 This court at times uses “Inmar” to refer to either Inmar,

CMS, CCC, and/or CS.

Non-party International Outsourcing Services, LLC (“IOS”),

formerly known as International Data, LLC, acted as a processor

in the coupon redemption process. (Id. ¶ 5.) IOS was initially a

named party. (See Class Action Compl. (“Compl.”) Doc. 1.) In

November 2008, these proceedings were stayed on a motion by IOS

pending resolution of a criminal case against its former

officers and employees. (Doc. 72.) IOS filed a Suggestion of

Bankruptcy in 2009. (Doc. 73.) IOS was later dismissed from

these proceedings. (Doc. 77.)

B. Procedural History

This action was initially brought in the Eastern District

of Wisconsin in 2008. (See Compl. (Doc. 1).) In 2019, the case

was transferred to this district. (See Doc. 112.) Plaintiffs

amended their Complaint three times. (Doc. 33; Doc. 124; TAC

(Doc. 145).) Defendants filed an Answer to the Third Amended

Complaint. (Doc. 148.)

On August 2, 2021, Defendants filed a Motion for Summary

Judgment, (Doc. 234), and accompanying brief, (Defs.’ Mem. in

Supp. of Mot. for Summ. J. (“Defs.’ Br.”) (Doc. 235)).

Plaintiffs responded, (Pls.’ Br. in Opp’n to Defs.’ Mot. for

Summ. J. (“Pls.’ Resp.”) (Doc. 249)), and Defendants replied,

(Defs.’ Reply Mem. in Supp. of Mot. for Summ. J. (“Defs.’

Reply”) (Doc. 258)).

C. Factual Background

A majority of the facts are described here, but additional

relevant facts will be addressed as necessary throughout the

opinion. This court reviews the facts and draws all reasonable

inferences in the light most favorable to Plaintiffs. Scott v.

Harris, 550 U.S. 372, 378 (2007). Antitrust law, however,

“limits the range of permissible inferences from ambiguous

evidence,” such that “conduct at consistent with permissible

competition as with illegal conspiracy does not, standing alone,

support an inference of antitrust conspiracy.” Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986).

The coupon processing industry began declining in the mid-

1990s. (Ex. D, Excerpts of Dep. of Robert Carter (“Pls.’ Carter

Dep. Excerpts”) (Doc. 249-4) at 14.) But despite the decline in

coupon volume, Inmar’s revenue levels remained consistent. (Id.

(“[I]n spite of the value dropping by 200-and-some million

coupons at CCC, we have been able to keep the revenue roughly

flat-ish across that five-year period.”).) Inmar and IOS offered

coupon processing services to manufacturers and retailers. (TAC

(Doc. 145) ¶¶ 5, 7.) In the early 2000’s, there were three main

competitors in the coupon processing market: Inmar, IOS, and NCH

Marketing Services, Inc. (“NCH”). (Ex. A, Excerpts of Dep. of

Jennifer Mauldin (“Pls.’ Mauldin Dep. Excerpts”) (Doc. 249-1) at

3–4.)

Shipping fees are one of the fees assessed during coupon

processing. (Pls.’ Carter Dep. Excerpts (Doc. 249-4) at 7.)

“It’s a fee intended to be a reimbursement for the [] cost of

moving the coupons around.” (Id.) Shipping fees are not tied to

the physical movement of coupons. (Id.) Rather, they are a

“market level fee” where “manufacturers [are] effectively

covering part of the cost of the retailer’s processing.” (Id. at

7–8.) Manufacturers were not contractually bound to pay these

fees. (Id. at 8.) If manufacturers paid less than the full

amount of the shipping fee, they would “chargeback” the unpaid

fee amounts to retail processors, who would in turn deduct the

unpaid shipping fee amounts from their retail clients or write

off the shipping fee chargebacks. (Ex. I, Excerpts of Dep. of

Thomas Chris Balsiger, (“Pls.’ Balsiger Dep. Excerpts”)

(Doc. 249-9) at 12–13; Carter Decl. (Doc. 234-1) ¶¶ 16–18.)

IOS, as a retail coupon processor, charged shipping fees to

manufacturers. (Pls.’ Carter Dep. Excerpts (Doc. 249-4) at 16.)

Inmar, in response to IOS’s increased shipping fees, increased

its chargebacks to IOS’s retail clients. (Ex. N (“July 17, 2000

Letter”) (Doc. 249-14).) IOS responded to Inmar’s chargebacks by

threatening a “price war” against Inmar. (Id.; Pls.’ Balsiger

Dep. Excerpts (Doc. 249-9) at 31.) On October 10, 2000, IOS CEO

Chris Balsiger spoke with CMS President Robert Carter. (Ex. P

(“Oct. 10, 2000 Email”) (Doc. 249-16) at 2.) Balsiger “made a

number of references to ‘our need for control.’ He said ‘you

guys at Inmar are going to have to figure out that strategic

alliances and mergers will make you rich.’” (Id.)

On April 11, 2001, Inmar and IOS entered into a series of

related agreements: (1) an Asset Purchase Agreement; (2) a

Proprietary Data Transfer Agreement; (3) a Coupon Sub-Processing

Agreement; and (4) a Joint Marketing Agreement. (See Attach. 14,

Asset Purchase Agreement (“APA”) (Doc. 234-14); Attach. 16,

Proprietary Data Transfer Agreement (“PDTA”) (Doc. 234-16);

Attach. 15, Coupon Sub-Processing Agreement (“CSPA”) (Doc. 234-

15); Attach. 17, Joint Marketing Agreement (“JMA”) (Doc. 234-

17).) The Asset Purchase Agreement allowed CMS to purchase all

contracts for coupon processing between IOS subsidiary Consumer

Response Company and its manufacturer customers. (See APA

(Doc. 234-14).) The Joint Marketing Agreement combined IOS and

Inmar’s marketing efforts to solicit contracts with large mass

merchandisers. (See JMA (Doc. 234-17).) The Proprietary Data

Transfer Agreement established a “One-Count” program between IOS

and CMS. (See PDTA (Doc. 234-16); Carter Decl. (Doc. 234-1)

¶ 19.) Finally, the Coupon Sub-Processing Agreement allowed CCC

to “obtain[] an additional flexible means of subprocessing

coupons received by CCC from certain of its Retail Stores in

order to satisfy the Retail Stores’ needs and expectations

during peak periods of usage of coupon promotion.” (See CSPA

(Doc. 234-15) at 1, § C.) Under the Coupon Sub-Processing

Agreement, IOS would conduct the retail coupon processing

services for CCC. (Id. at 1, § B.)

After these agreements, Inmar and IOS’s fees increased.

(Pls.’ Carter Dep. Excerpts (Doc. 249-4) at 6–7.) IOS’s CEO

Balsiger maintained that IOS’s fees were increasing prior to the

execution of these agreements. (See Pls.’ Balsiger Dep. Excerpts

(Doc. 249-9) at 17–18.) Inmar’s president denies that there were

ever any discussions between IOS and Inmar about fixing shipping

fees. (Carter Decl. (Doc. 234-1) ¶ 32.) During IOS CEO Chris

Balsiger’s criminal trial, he testified that he entered into a

joint venture with Inmar “to head off a price war on coupons”

which “allow[ed] [them] to escalate [their] freight revenue.”

(Ex. E, Tr. Excerpt of Bench Trial (“Balsiger Trial Tr.”)

(Doc. 249-5) at 9–10.) However, when deposed for this case,

Balsiger denied discussions about fixing shipping fees. (Attach.

4, Excerpts of Dep. of Thomas Chris Balsiger (Doc. 234-4) at

18.)

II. STANDARD OF REVIEW

Summary judgment is appropriate when “there is no genuine

dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Celotex

Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). This court’s

summary judgment inquiry is whether the evidence “is so one-

sided that one party must prevail as a matter of law.” Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). The moving

party bears the initial burden of demonstrating “that there is

an absence of evidence to support the nonmoving party’s case.”

Celotex, 477 U.S. at 325. If the “moving party discharges its

burden . . ., the nonmoving party must come forward with

specific facts showing that there is a genuine issue for trial.”

McLean v. Patten Cmtys., Inc., 332 F.3d 714, 718–19 (4th Cir.

2003) (citing Matsushita, 475 U.S. at 586–87). Summary judgment

should “be granted unless a reasonable jury could return a

verdict in favor of the nonmovant on the evidence presented.”

Id. at 719 (citing Liberty Lobby, 477 U.S. at 247–48).

III. ANALYSIS

Defendants move for summary judgment, contending that there

is no basis in the record on which a jury could infer that Inmar

and IOS conspired to fix shipping fees. (See Defs.’ Br.

(Doc. 235) at 1.) Defendants emphasize that this case rests

entirely on circumstantial evidence, and that “[a]ntitrust law

. . . ‘limits the range of permissible inferences from ambiguous

evidence in a § 1 case.’” (Id. at 23, 26 (quoting Matsushita,

475 U.S. at 588).)

A. Market and Customer Allocation

This court first addresses Plaintiffs’ argument that

Defendants have failed to move for summary judgment on market

and customer allocation. Plaintiffs argue that Defendants “do[]

not seek summary judgment on, and fail[] to carry [their]

initial burden on, market and customer allocation, and other

anticompetitive restraints.” (Pls.’ Resp. (Doc. 249) at 20.) In

reply, Defendants assert that the Third Amended Complaint “is

rife with allegations that the Defendants conspired to fix

prices” and “[h]aving continually ‘narrowed’ their claims over

the 14-year pendency, it is disingenuous for Plaintiffs to seek

to benefit from a contention that Defendants did not address the

remnant of their ever-shrinking case.” (Defs.’ Reply (Doc. 258)

at 4, 5 n.3.)

Section 1 of the Sherman Act prohibits “[e]very contract,

combination . . . or conspiracy, in restraint of trade or

commerce among the several States, or with foreign nations.” 15

U.S.C. § 1. The Supreme Court has interpreted this potentially

expansive language “to outlaw only unreasonable restraints.”

State Oil Co. v. Khan, 522 U.S. 3, 10 (1997). One category of

restraints that can trigger liability under § 1 is horizontal

agreements—agreements between competitors in a relevant market.

See United States v. Topco Assocs., Inc., 405 U.S. 596, 608

(1972) (explaining that horizontal arrangements are between

“competitors at the same level of the market structure”). Price-

fixing agreements and market or customer allocation agreements

are two types of horizontal agreements. See Texaco Inc. v.

Dagher, 547 U.S. 1, 5 (2006) (“Price-fixing agreements between

two or more competitors, otherwise known as horizontal price-

fixing agreements, . . . are per se unlawful); Palmer v. BRG of

Ga., Inc., 498 U.S. 46, 49–50 (1990) (holding horizontal

agreements among competitors to divide markets are per se

illegal).

“[A] party seeking summary judgment always bears the

initial responsibility of informing the district court of the

basis for its motion, and identifying those portions of” the

record “which it believes demonstrate the absence of a genuine

issue of material fact.” Celotex, 477 U.S. at 323; see also LR

56.1(e) (“A party moving for summary judgment upon an opposing

party’s claim shall set out a statement of the nature of the

matter before the Court, a statement of facts, and a statement

of the questions presented as provided in LR 7.2(a)(1)–(3). The

party shall also set out the elements that the claimant must

prove (with citations to supporting authority) and explain why

the evidence is insufficient to support a jury verdict on an

element or elements, or why some other rule of law would defeat

the claim.”). This burden “may be discharged by ‘showing’—that

is, pointing out to the district court—that there is an absence

of evidence to support the nonmoving party’s case.” Celotex, 477

U.S. at 325.

When a defendant fails to provide argument on why the court

should rule in its favor, the court should deny any requested

relief. Champion Pro Consulting Grp., Inc. v. Impact Sports

Football, LLC, No. 1:12CV27, 2014 WL 2559285, at *2 n.4

(M.D.N.C. June 6, 2014) (denying the movants relief where the

movants “fail[ed] to develop any argument or cite any authority

in support of [their] request” in accordance with LR 7.2(a));

Myers v. Saluda Cnty. Sch. Dist., Civil Action No. 8:08-cv-

02976-RBH, 2010 WL 1664891, at *2 (D.S.C. Apr. 23, 2010)

(denying summary judgment where the defendant “completely failed

to address whether a genuine issue of material fact exist[ed] as

to the Plaintiff’s First Amendment claim”); The Carrolton of

Fayetteville, Inc. v. Pine Manor Rest Home, Inc., 215 B.R. 341,

344 (E.D.N.C. 1997) (affirming the bankruptcy court’s denial of

summary judgment where the moving party’s brief “fail[ed] to

specifically address the merits of its own motion for summary

judgment” on four issues).

In this case, Plaintiffs’ Sherman Act § 1 claim is based on

two types of horizontal agreements between Inmar and IOS: (1)

Defendants’ alleged conspiracy “to allocate markets and

customers”; and (2) Defendants’ alleged conspiracy to

“unreasonably fix, raise, maintain, or stabilize prices, in the

United States market for” manufacturer and retail coupon

processing services. (TAC (Doc. 145) ¶ 108.) Defendants’

argument in their summary judgment brief focuses solely on

shipping fees. (See Defs.’ Br. (Doc. 235) at 19.) Although

Defendants make passing references to Plaintiffs’ allegation

regarding market and customer allocation, (id. at 2, 5),

Defendants “fail to develop any argument or cite any authority

in support of [their] request,” Champion Pro Consulting Grp.,

2014 WL 2559285, at *2 n.4.

A horizontal price fixing agreement is distinct from an

agreement to allocate markets or customers. Compare Catalano,

Inc. v. Target Sales, Inc., 446 U.S. 643, 647 (1980) (price

fixing), with Palmer, 498 U.S. at 49 (market allocation). Here,

while Plaintiffs bring only one Sherman Act claim, (TAC

(Doc. 145) ¶¶ 106–15), they allege two theories for that

violation: (1) allocating markets and customers, and (2) fixing

prices for retail and manufacturer coupon processing services,

(id. ¶ 108). Because a price fixing agreement and a market

allocation agreement are distinct types of unlawful restraints

on trade, compare Catalano, 446 U.S. at 647, with Palmer, 498

U.S. at 49, Defendants may be liable for violating Section 1 of

the Sherman Act because of a price fixing agreement, a market or

customer allocation agreement, or both, (see TAC (Doc. 145)

¶ 108).

Defendants attempt in their reply brief to bootstrap an

argument about market and customer allocation agreements to

their price-fixing argument. (See Defs.’ Reply (Doc. 258) at 4–

6.) Defendants contend that the Third Amended Complaint “is rife

with allegations that Defendants conspired to fix prices.” (Id.

at 4.) Defendants then try to paint Plaintiffs’ allegations

about market and customer allocation agreements as a new

argument. (Id. at 5–6 (“Plaintiffs now argue that their case is

still viable even if there was not direct evidence on the actual

prices to be maintained, and that allocation of markets and

customers itself reduces competition and causes price increases,

without the need for further agreement on prices.” (internal

citation and quotation marks omitted) (quoting Pls.’ Resp.

(Doc. 249) at 23)).) Plaintiffs allege an agreement to allocate

markets and customers in their Third Amended Complaint, (TAC

(Doc. 145) ¶ 108), and contrary to Defendants’ argument that

Plaintiffs “hav[e] continually ‘narrowed’ their claims over the

14-year pendency” of this case, (Defs.’ Reply (Doc. 258) at 5

n.3), Plaintiff’s original Complaint is rife (to use Defendants’

words) with allegations of an agreement to allocate customers

and markets, (see, e.g., Compl. (Doc. 1) ¶¶ 1, 40, 57, 94, 101).

Defendants attempt to cast blame on Plaintiffs for Defendants’

failure to move for summary judgment as to a Sherman Act

violation based on market and customer allocation agreements.

Given that Defendants provided no argument to support this court

granting summary judgment for Defendants on the market and

customer allocation agreement allegations, it would be

inappropriate for this court to find that issue no longer

remains. Therefore, this court finds Plaintiffs’ allegation of a

§ 1 violation because of customer and market allocation

agreements remains, and that issue must be resolved at trial.

B. Price Fixing

Because Defendants failed to properly move for summary

judgment on the issue of an anticompetitive agreement to

allocate customers and markets, see discussion supra Section

III.A, this court focuses the remainder of its analysis on

Defendants’ argument for summary judgment on allegations of

price fixing.

“To establish a § 1 antitrust violation, a plaintiff must

prove (1) a contract, combination, or conspiracy; (2) that

imposed an unreasonable restraint of trade.” SD3, LLC v. Black &

Decker (U.S.) Inc., 801 F.3d 412, 423–24 (4th Cir. 2015)

(internal quotation marks omitted) (quoting N.C. State Bd. of

Dental Exam’rs v. FTC, 717 F.3d 359, 371 (4th Cir. 2013)). “The

essence of a § 1 claim is concerted action.” Cooper v. Forsyth

Cnty. Hosp. Auth., Inc., 789 F.2d 278, 280 (4th Cir. 1986).

Before analyzing whether there is direct or circumstantial

evidence of an agreement to fix prices, this court will

determine the legal effect of Balsiger’s criminal trial

testimony, (Balsiger Trial Tr. (Doc. 249-5)), as this court

finds that testimony relevant to its analysis. Defendants

contend Balsiger’s criminal trial testimony is “hearsay,”

(Defs.’ Br. (Doc. 235) at 19, 25), and is not direct evidence of

antitrust activity because “when the time came for [Balsiger] to

testify in this case, he denied all Plaintiffs’ contentions

concerning anticompetitive concerted action with Inmar,” (id. at

25). Plaintiffs rely on Balsiger’s trial testimony throughout

their response brief, (see Pls.’ Resp. (Doc. 249) at 8–10, 16–

17, 26, 28–29, 35), and although they do not explicitly cite

Balsiger’s trial testimony as direct evidence of an agreement to

fix prices between Inmar and IOS, at summary judgment “[t]he

court need consider only the cited materials, but it may

consider other materials in the record,” Fed. R. Civ. P.

56(c)(3).

In determining whether a genuine dispute of material fact

exists, a court considers facts that could “be presented in a

form that would be admissible in evidence” at trial. See Fed. R.

Civ. P. 56(c)(2). It is true that Balsiger’s criminal trial

transcripts would be inadmissible hearsay at a trial in this

case because Plaintiffs likely could not show that Balsiger is

unavailable to testify, and even if he were unavailable,

Defendants did not have “an opportunity and similar motive to

develop” Balsiger’s testimony at his criminal trial. See Fed. R.

Evid. 804(b)(1)(B). However, this court sees no reason why the

contents of Balsiger’s criminal trial testimony could not “be

presented in a form that would be admissible in evidence” at

trial in this case. Fed. R. Civ. P. 56(c)(2). Plaintiffs

presumably could subpoena Balsiger for live testimony or take a

trial deposition and introduce that testimony. For that reason,

this court finds it may properly consider Balsiger’s criminal

trial testimony in a manner similar to any other sworn affidavit

or declaration in analyzing whether to grant summary judgment on

a Sherman Act § 1 claim based on price fixing.3

1. Direct Evidence of an Antitrust Conspiracy

To survive summary judgment, an antitrust plaintiff must

present “direct or circumstantial evidence that reasonably tends

to prove that the [alleged conspirators] had a conscious

commitment to a common scheme designed to achieve an unlawful

objective.” Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S.

752, 768 (1984). Conduct that is “as consistent with permissible

competition as with [an] illegal conspiracy does not, standing

alone, support an inference of [an] antitrust conspiracy.”

Matsushita, 475 U.S. at 588 (citing Monsanto, 465 U.S. at 764).

Thus, “antitrust law limits the range of permissible inferences

from ambiguous evidence in a § 1 case.” Id. In other words, the

plaintiff “must show that the inference of conspiracy is

3 The parties’ arguments focused on the admissibility of the

transcripts of Balsiger’s criminal trial testimony, which is

addressed in this opinion. The parties did not specifically

address at summary judgment the effect of conflicting

statements, if any, between Balsiger’s trial testimony and his

deposition testimony. After review of the portions of the

transcripts presented, this court is not able to weigh that

testimony to make any finding as to whether any conflicts in

testimony should affect this analysis. To the contrary, drawing

all reasonable inferences in favor of the non-moving party, this

court is compelled to consider Balsiger’s testimony in the light

most favorable to Plaintiffs.

reasonable in light of the competing inferences of independent

action.” Id.

“Direct evidence is extremely rare in antitrust cases and

is usually referred to as the ‘smoking gun.’” Am. Chiropractic

Ass’n v. Trigon Healthcare, Inc., 367 F.3d 212, 226 (4th Cir.

2004) (quoting InterVest, Inc. v. Bloomberg, L.P., 340 F.3d 144,

159 (3d Cir. 2003)). Direct evidence must be “explicit and

requires no inferences to establish the proposition or

conclusion being asserted.” Id. (internal quotation marks

omitted) (quoting InterVest, 340 F.3d at 159); see also United

Mine Workers of Am. v. Pennington, 381 U.S. 676, 720 (1965)

(Goldberg, J., dissenting) (“Only rarely will there be direct

evidence of an express agreement” in conspiracy cases.).

Plaintiffs assert there is direct evidence of written

agreements regarding “allocation of customers and markets,” but

do not argue that there is also direct evidence of agreements to

fix prices. (See Pls.’ Resp. (Doc. 249) at 23.) The four written

agreements between IOS and Inmar, which Plaintiffs point to as

direct evidence of a conspiracy to allocate customers and

markets, (id.), do not concern shipping fees, see discussion

supra Section I.C. Although not explicitly raised by Plaintiffs,

Balsiger’s criminal trial testimony references an agreement

between Inmar and IOS to fix prices. Balsiger testified that he

“proposed a joint venture to [Inmar]” which “consummate[d]

around April of 2001.” (Balsiger Trial Tr. (Doc. 249-5) at 9–

10.) Balsiger further testified that the joint venture “was to

head off a price war on coupons and . . . allow[ed] us to

escalate our freight revenue.” (Id. at 10.) The joint venture

“created noncompetes by doing deals back and forth on

subprocessing and the retail.” (Id.) Balsiger admitted that he

used that joint venture to “raise [IOS’s] rates tremendously.”

(Id. at 12; see also id. at 14 (“I know as a fact that I

increased my fees once we had that control, and I had a

noncompete, I increased my fees dramatically.”).)

This court finds Balsiger’s testimony reflects a clear

intent on the part of IOS to fix prices but does not reflect

such intent on the part of Inmar. Although Balsiger’s testimony

could be interpreted as evidence Inmar entered the agreement

with the intent to raise shipping fees, (see Balsiger Trial Tr.

(Doc. 249-5) at 10 (stating that the purpose of the joint

venture “was to head off a price war on coupons and . . .

allow[ed] us to escalate our freight revenue” (emphasis

added))), this court declines at this juncture to make such a

finding; however, because this court will find that Plaintiffs

have established a genuine dispute of material fact as to

whether there is circumstantial evidence of a conspiracy to fix

prices, this court need not determine whether there is direct

evidence of a price-fixing conspiracy.

2. Circumstantial Evidence of an Antitrust

Conspiracy

If there is no direct evidence of an antitrust conspiracy,

circumstantial evidence is sufficient to establish an antitrust

conspiracy. Monsanto, 465 U.S. at 764. However, even where the

alleged conspiracy is a plausible one, courts “have been

cautious in accepting inferences from circumstantial evidence”

if the alleged anticompetitive conduct can plausibly be

explained by the rational, procompetitive conduct of businesses

in an oligopoly. See In re Flat Glass Antitrust Litig., 385 F.3d

350, 358–59 (3d Cir. 2004). Moreover, there are limitations on

the inferences that can be drawn from circumstantial evidence:

ambiguous evidence that could be as consistent with lawful

behavior as unlawful competitive conduct cannot, standing alone,

establish liability under § 1 of the Sherman Act. Matsushita,

475 U.S. at 588.

In a market dominated by a few entities, making it highly

concentrated, “any single firm’s ‘price and output decisions

will have a noticeable impact on the market and on its rivals.’”

Flat Glass, 385 F.3d at 359 (quoting Phillip E. Areeda & Herbert

Hovenkamp, Antitrust Law ¶ 1429, at 206 (2d ed. 2000)). For this

reason, “when a firm in a concentrated market (i.e., an

‘oligopolist’) is deciding on a course of action, ‘any rational

decision must take into account the anticipated reaction of the

other [] firms.’” Id. (alteration in original) (quoting Areeda,

supra, ¶ 1429, at 207). This concept, known as “conscious

parallelism,” is not on its own sufficient to support a finding

of concerted action. See In re Titanium Dioxide Antitrust

Litig., 959 F. Supp. 2d 799, 821–22 (D. Md. 2013); see also SD3,

801 F.3d at 424 (noting that “[n]ot even ‘conscious parallelism’

is enough” to state a violation of § 1 of the Sherman Act

(quoting Brooke Grp., Ltd. v. Brown & Williamson Tobacco Corp.,

509 U.S. 209, 227 (1993))).

Put another way, “[e]vidence of parallel conduct in an

oligopoly, without more, is insufficient to withstand a motion

for summary judgment.” Titanium Dioxide, 959 F. Supp. 2d at 822;

see also Matsushita, 475 U.S. at 588 (“[C]onduct as consistent

with permissible competition as with illegal conspiracy does

not, standing alone, support an inference of antitrust

conspiracy.”). Rather, “[P]laintiffs must demonstrate, in

addition to merely parallel conduct, the exist of certain ‘plus

factors’ that are indicative of a conspiracy. Id. (quoting Flat

Glass, 385 F.3d at 360.)

Courts have identified at least three types of plus factors

indicative of a conspiracy: (1) “evidence that the defendant had

a motive to enter into a price fixing conspiracy”; (2) “evidence

that the defendant acted contrary to its interests”; and

(3) “evidence implying a traditional conspiracy,” such as “non-

economic evidence that there was an actual, manifest agreement

not to compete.” Flat Glass, 385 F.3d at 360–61 (internal

quotation marks omitted) (quoting Petruzzi’s IGA Supermarkets,

Inc. v. Darling-Del. Co., 948 F.2d 1224, 1244 (3d Cir. 1993); In

re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 661

(7th Cir. 2002)); see also Albert v. Global Tel*Link Corp.,

Civil Action No. 20-cv-01936-LKG, 2021 WL 4478696, at *7–9 (D.

Md. Sept. 30, 2021) (denying motion to dismiss where “th[e]

plaintiffs sufficiently allege[d] facts to demonstrate the

existence of plus factors that would suggest that defendants’

parallel conduct resulted from concerted action”).

a. Evidence of Increase in Prices

Defendants assert that years before there was any agreement

between Inmar and IOS to fix prices, shipping fees were rising.

(Attach. 5, Excerpts of Dep. of Robert Carter (Doc. 234-5) at 8–

9.) On the other hand, Plaintiffs’ expert contends that

“[s]hipping rates increased substantially during the class

period as a result of the conspiracy.” (Pls.’ Resp. (Doc. 249)

at 15–16 (citing Ex. 32, Suppl. Expert Report of Kathleen Grace

(Doc. 193-2) ¶¶ 11, 13).) She opines that shipping fees rose

because of the reduced competition, “put[ting] upward pressure

on pricing.” (Ex. FF, Merits Rebuttal Expert Report of Kathleen

Grace (“Grace Rebuttal Report”) (Doc. 249-32) ¶ 11.)

Additionally, Plaintiffs offer evidence that after the

agreements, both Inmar and IOS’s price strategy was to increase

fees billed to manufacturers. (Ex. KK (Doc. 249-37); Ex. LL

(Doc. 249-38) at 3 (“Strategy: Industry volume declines have

been countered with higher fees billed to manufacturers with

increases in S&H per 1000 . . . .”).) Plaintiffs’ expert opines

that absent a conspiracy to fix prices, shipping fees would have

declined because of reduced demand. (Grace Rebuttal Report

(Doc. 249-32) ¶¶ 11–15.)

This court finds Plaintiffs have offered evidence of

parallel increases in shipping fees after the alleged agreement

between IOS and Inmar. This court makes no determination on

whether Defendants’ or Plaintiffs’ interpretation of the

evidence is more persuasive. But viewing the evidence in the

light most favorable to Plaintiffs, as the non-moving party,

this court finds Plaintiffs have offered evidence that shows

parallel increases in shipping fees from Inmar and IOS. Whether

those price increases are the result of independent or collusive

behavior is a factual dispute inappropriate to resolve at

summary judgment.

b. Motive

This court finds the first plus factor, “motive to enter

into a price fixing conspiracy,” Flat Glass, 385 F.3d at 360, is

satisfied. “[E]vidence that the industry is conducive to

oligopolistic price fixing, either interdependently or through a

more express form of collusion,” is indicative of a motive to

enter a price fixing conspiracy. Id. This court finds that the

coupon processing industry, as relevant here, is fairly

described as an oligopoly.4 There are three main competitors:

IOS, NCH, and CCC. (Defs.’ Br. (Doc. 235) at 24; Pls.’ Mauldin

Dep. Excerpts (Doc. 249-1) at 4, 7.)

At this stage, Defendants do not appear to genuinely

dispute Plaintiffs’ evidence of reduced demand in the market.

4 The Third Circuit in Flat Glass defined an “oligopolist”

as “a firm in a concentrated market.” 385 F.3d at 359.

For example, in a market of one hundred sellers of

equal size, an expansion in output of 20 percent by

one of them will result in an average fall in output

of only about .2 percent for each of the others, so a

seller need not worry in making his pricing decisions

about the reactions of his rivals. But if there are

three sellers of equal size, a 20 percent expansion in

the sales of one will cause the sales of each of the

others to fall by an average of 10 percent—a sales

loss the victims can hardly overlook.

Id. at 359 n.10 (internal citation and quotation marks omitted)

(quoting Richard A. Posner, Antitrust Law 56 (2d ed. 2001)).

Reduced demand is a market condition “that favor[s] price cuts,

rather than market increases,” Flat Glass, 385 F.3d at 361, and

thus when there is evidence of price increases in a market of

reduced demand, that is evidence of a motive to conspire to fix

prices. Because the coupon processing market is highly

concentrated with only three main competitors, (Pls.’ Mauldin

Dep. Excerpts (Doc. 249-1) at 4, 7), meaning “the market is

controlled by a limited number of sellers,” In re Publ’n Paper

Antitrust Litig., 690 F.3d 51, 65 (2d Cir. 2012), this court

finds that Plaintiffs have sufficiently shown that the market

for coupon processing made it such that Defendants had a motive

to enter a price fixing conspiracy.

c. Actions Against Self-Interest

This court further finds that Plaintiffs have shown there

is evidence that Defendants may have acted contrary to their

economic self-interest. “[P]rice increases that are not

correlated with principles of supply and demand may be

especially probative of behavior contrary to self-interest.”

Titanium Dioxide, 959 F. Supp. 2d at 827 (citing Flat Glass, 385

F.3d at 362). Plaintiffs have offered evidence that Defendants’

prices increased despite a drop in demand. (Pls.’ Carter Dep.

Excerpts (Doc. 249-4) at 7, 14.) That is because “absent

increases in marginal cost or demand, raising prices generally

does not approximate—and cannot be mistaken as—competitive

conduct.” Flat Glass, 385 F.3d at 358. In response, Defendants

have put forth evidence presenting possible pro-competitive

business reasons for Defendants’ actions. (See Attach. 2, Defs.’

Resps. to Pls.’ Second Set of Interrogs. (Doc. 234-2) at 4-6.)

Thus, this court is faced with competing explanations for

Defendants’ behavior: Plaintiffs argue the evidence shows

collusion, while Defendants argue there were procompetitive

benefits to their actions. It is for a jury to decide which

party’s interpretation of the evidence carries the day. See,

e.g., Publ’n Paper, 690 F.3d at 55, 65 (denying summary judgment

despite the fact that the plaintiffs’ “evidence admits of

alternative interpretations,” because “it is the province of the

jury to determine how much weight to accord” that evidence).

d. Evidence Implying a Traditional Conspiracy

Because the first two plus factors may “largely restate the

phenomenon” of conscious parallelism, the third plus factor

carries greater weight. See, e.g., Flat Glass, 385 F.3d at 360–

61. The third factor is “non-economic evidence ‘that there was

an actual, manifest agreement not to compete.’” Id. at 361

(quoting High Fructose Corn Syrup, 295 F.3d at 661). An example

of such evidence includes “proof that the defendants got

together and exchanged assurances of common action or otherwise

adopted a common plan even though no meetings, conversations, or

exchanged documents are shown.” Id. (quoting Areeda, supra,

¶ 1434b, at 243). Upon analyzing the third plus factor, this

court finds there is evidence Defendants “adopted a common plan”

to fix prices.

“Ambiguous statements by competitors, taken as a whole, may

support the inference of a price-fixing conspiracy.” Titanium

Dioxide, 959 F. Supp. 2d at 829. But “mere contacts and

communications, or the mere opportunity to conspire, among

antitrust defendants is insufficient evidence [of] . . . an

antitrust conspiracy.” Cooper, 789 F.2d at 281. In High Fructose

Corn Syrup, the Seventh Circuit cited the following as evidence

implying a traditional conspiracy: the defendants’ statements

regarding “an understanding within the industry not to undercut

each other’s prices” and “support” for their efforts to limit

pricing, references to competitors as friends and customers as

enemies, a defendant’s statement that there was an

“understanding between the companies . . . that makes us not

. . . make irrational decisions,” and a statement that “entry of

new entrants (barriers) and will they play by the rules

(discipline).” 295 F.3d at 662 (alteration in original)

(internal quotation marks omitted).

Like the defendants in High Fructose Corn Syrup, Plaintiffs

have put forth evidence supporting Plaintiffs’ allegations of a

price-fixing conspiracy between Inmar and IOS. First, in October

2000, IOS CEO Balsiger and CMS’s President Carter had a phone

meeting. (Ex. P, Oct. 10, 2000 Email (Doc. 249-16).) Carter

wrote in an internal email that he “spoke with Chris Balsiger

today. The call was a result of the letter I sent [IOS] for

their comment on the NCH S&H letter.” (Id. at 2.) In detailing

his conversation with Balsiger, Carter noted Balsiger “made a

number of references to ‘our need for control.’ . . . He made a

comment that the market was a three player market but it could

be a two player market.” (Id. at 2–3.) When Carter relayed his

conversation to others at Inmar, his suggestion was to “use this

as a way to move the one count process along.” (Id. at 3.) The

Proprietary Data Transfer Agreement, executed between Inmar and

IOS six months later, served to formalize the one count program

between Inmar and IOS. (PDTA (Doc. 234-16); Carter Decl.

(Doc. 234-1) ¶ 19.)

In addition, Plaintiffs have offered Balsiger’s criminal

trial testimony in support of their allegations of a price-

fixing conspiracy. (See Pls.’ Resp. (Doc. 249) at 26, 28–29,

35.) Balsiger’s criminal trial testimony suggests that Inmar

and IOS agreed to coordinate to increase shipping fees. Balsiger

testified during his criminal trial that he “proposed a joint

venture to Carolina [(Inmar)] . . . . That deal [] consummate[d]

around April of 2001.” (Balsiger Trial Tr. (Doc. 249-5) at 9–

10.) Balsiger testified that the deal “was to head off a price

war on coupons” and “allow[ed] [them] to escalate [their]

freight revenue.” (Id. at 10.) He further testified that the

deal “created noncompetes by doing deals back and forth on

subprocessing and the retail.” (Id.) After the deal was

consummated, Balsiger “raise[d] rates tremendously . . . on

processing . . . [and] on chargeback fees because [he] had the

market.” (Id. at 12.) Balsiger acknowledged that his “number one

competitor . . . on a fair-playing-field basis was

Carolina. . . . Once [they] did the joint venture the combined

market share . . . gave [them] 87 percent control of the

market.” (Id. at 13–14.) After the deal, Balsiger “increased

[his] fees . . . had a noncompete, [and] [he] increased [his]

fees dramatically.” (Id. at 14.)

Defendants argue that that no such conversations or

communications to fix prices occurred. (See Defs.’ Br.

(Doc. 235) at 25.) In Carter’s declaration, he stated that “[a]s

President of CMS (and Carolina Promotion Services, a company

that managed functions within CMS and CCC), I would have been

aware of any such communications had they taken place. None

did.” (Carter Decl. (Doc. 234-1) ¶ 32.) Carter further stated,

“[g]iven the fact that payment of shipping fees was not a

contractual obligation . . . it is not even clear to me how IOS

and Inmar could have engaged in some joint activity that

resulted in the fixing of fees assessed to manufacturers.” (Id.

¶ 3.)

In sum, there is some evidence before this court of

evidence “that the defendants got together and exchanged

assurances of common action or otherwise adopted a common plan.”

Flat Glass, 385 F.3d at 361 (quoting Areeda, supra ¶ 14346, at

243). Although Balsiger’s criminal trial testimony can fairly be

labeled “[a]mbiguous,” Titanium Dioxide, 959 F. Supp. 2d at 829,

that testimony, in combination with evidence of the other two

plus factors, leads this court to find that Plaintiffs have met

their burden of establishing that a genuine dispute of material

fact exists, cf. Am. Chiropractic Ass’n, 367 F.3d at 227

(affirming the district court’s grant of summary judgment where

the plaintiff failed to show evidence of concerted action

between the defendant and a third party, and the plaintiff

failed to explain the defendant’s economic motive to enter the

alleged antitrust conspiracy).

At summary judgment, this court does not weigh the evidence

or make credibility determinations. Liberty Lobby, 477 U.S. at

255. Because there is evidence before this court of a rise in

IOS’s and Inmar’s prices, combined with the structure of the

coupon-processing industry and other evidence implying a price-

fixing conspiracy, this court finds that Plaintiffs have offered

sufficient evidence tending to exclude the possibility of

independent action.

3. Unreasonable Restraint on Trade

Only unreasonable restraints on trade violate § 1 of the

Sherman Act. State Oil, 522 U.S. at 10. Some practices are

considered to, in and of themselves, unreasonably restrain trade

and “are deemed unlawful per se” under § 1. Leegin Creative

Leather Prod., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007)

(internal quotation marks omitted) (quoting State Oil, 522 U.S.

at 10). This “small group of restraints are unreasonable per se

because they ‘always or almost always tend to restrict

competition and decrease output.’” Ohio v. Am. Express Co., 138

S. Ct. 2274, 2283 (2018) (quoting Bus. Elecs. Corp. v. Sharp

Elecs. Corp., 485 U.S. 717, 723 (1988)).

“Typically only ‘horizontal’ restraints—restraints ‘imposed

by agreement between competitors’—qualify as unreasonable per

se.” Id. at 2283–84 (quoting Bus. Elecs., 485 U.S. at 730); see

also Topco Assocs., 405 U.S. at 608 (explaining that horizontal

arrangements are between “competitors at the same level of the

market structure”). The Supreme Court has recognized that

horizontal agreements among competitors to fix prices are per se

illegal. See Texaco, 547 U.S. at 5; Catalano, 446 U.S. at 647.

In this case, Plaintiffs have supplied sufficient evidence

to create a genuine dispute of material fact as to whether there

is evidence of an antitrust conspiracy. See discussion supra

Section III.B.2. The alleged conspiracy is a horizontal

conspiracy between competitors IOS and Inmar to fix prices.

Supra Section III.B.2. Because horizontal price-fixing

conspiracies are per se unreasonable restraints on trade,

Texaco, 547 U.S. at 5, no further inquiry is required, see

Catalano, 446 U.S. at 647 (reasoning that because “price-fixing

agreements have been adjudged to lack any ‘redeeming virtue,’ it

is conclusively presumed illegal without further examination

under the rule of reason”). Plaintiffs have created a genuine

dispute of material fact as to whether Defendants violated § 1

of the Sherman Act.

In conclusion, this court finds Plaintiffs have offered

sufficient evidence to establish that genuine issues of material

fact exist as to whether Defendants violated § 1 of the Sherman

Act. See Liberty Lobby, 477 U.S. at 247. Plaintiffs have come

forward with specific facts showing that there was an agreement

between Inmar and IOS to fix prices, which created an

unreasonable restraint on trade. See Matsushita, 475 U.S. at

587-88. Therefore, this court will deny Defendants’ motion for

summary Judgment.

IV. CONCLUSION

For the foregoing reasons, this court finds that

Defendants’ Motion for Summary Judgment, (Doc. 234), should be

denied.

IT IS THEREFORE ORDERED that Defendants’ Motion for Summary

Judgment, (Doc. 234), is DENIED.

This the 18th day of March, 2022.

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Lo Miran Gohan Me

United States District Judge

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