Last week, the Sixth Circuit issued an opinion in a lengthy and complex antitrust case about the prices of replacement truck hoods in the American auto parts industry. In Superior Production Partnership v. Gordon Auto Body Parts (“PBSI v. Gordon”), the court affirmed summary judgment in favor of the defendant Gordon based largely on several discovery disputes resolved favorably for Gordon and, in the process, clarified the minimum standard a plaintiff must meet for a claim of below-cost pricing under either the “concerted” or “independent” antitrust provisions of the Sherman Act.
As the court explained, Gordon was one of several Taiwanese manufacturers that dominated the replacement truck hood market for certain models of American trucks prior to the mid-2000s. Gordon and a couple of these other manufacturers engaged in joint ventures in plants and equipment. PBSI, also an auto parts manufacturer, decided to enter the replacement truck hood market in 2006. PBSI then sued Gordon shortly after Gordon and the other manufacturers lowered their prices on hoods about the time PBSI entered the market, claiming that Gordon violated the Sherman Act in attempting to force PBSI out of the market.
In affirming summary judgment in favor of Gordon, the Sixth Circuit first turned to the district court’s resolution of several discovery disputes in the case. PBSI had filed an initial motion to compel discovery in 2008, upon which the district court set up a document sampling procedure for PBSI to obtain discovery from Gordon. In this case, PBSI appealed the court’s denial of its second motion to compel, which, the Sixth Circuit held, was no more than a motion for reconsideration of the first sampling order, and so PBSI’s had waived its right to appeal this denial and had suffered no injustice sufficient to excuse this default. PBSI also sought to overturn the district court’s order denying it price data about other parts (not truck hoods) from Gordon, but the Sixth Circuit found these irrelevant to the disposition of the case and so not warranting remand. Finally, the Sixth Circuit affirmed the district court’s admission of Gordon’s expert report and the denial of PBSI’s expert’s report on the grounds that PBSI’s expert report: (1) would not assist a factfinder in diving Gordon’s intent under the Sherman Act, and (2) relied on a test for predation—the “no economic sense” test—that was “flatly contrary to law.”
In the final pages of the opinion, the court turned to the issue of whether summary judgment for Gordon was proper. The court reasoned that, without its expert’s report, PBSI had “little to support an essential part of its case,” i.e., Gordon’s alleged predatory pricing below average variable cost. Because it was “not helpful to [PBSI] that Gordon’s prices” merely may have had a “‘close proximity’ to average variable cost,” or that Gordon’s price cuts “coincided with competitive entry,” PBSI had failed to meet its burden of production, and so summary judgment for Gordon was proper.