Several years ago, a class of titanium dioxide purchasers filed a price-fixing action against suppliers in the Maryland District Court. Valspar a purchaser, opted out of the class, bringing its own suit in the Delaware District Court. While the class case survived summary judgment, when defendant-supplier DuPont filed for summary judgment against Valspar, the Delaware District Court granted DuPont’s motion despite being presented with “substantially the same record . . . as in the Maryland Class Action[.]” Valspar appealed to the Third Circuit.
The Majority Decision
The Third Circuit’s decision continues its recent focus on the value of circumstantial evidence in antitrust cases, particularly in an oligopoly controlled market. “Conscious parallelism”—also referred to as “interdependence”—may occur in oligopolistic markets where a few competitors closely track one another’s activities, seemingly behaving in unison to protect market share and take advantage of elevated pricing. Such parallel behavior is not alone unlawful under the Sherman Act; agreements to coordinate are.
Relying on the Supreme Court decision in Matsushita Electric Industrial Co. v. Zenith Radio Corp., the Valspar majority stressed that “conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy.” Accordingly, courts typically require more than just parallel behavior but also additional “plus” factors, i.e., other evidence that may infer a conspiracy. The Third Circuit went one step further in Valspar, holding that when circumstantial evidence is used to prove an antitrust conspiracy in an oligopolistic market, plaintiffs must provide evidence showing it is “more likely than not” that the defendants entered into a price fixing agreement. It concluded that Valspar failed to meet this requirement.
Specifically, the majority discounted evidence of 31 parallel price increases over a ten-year period as insufficient to infer a conspiracy by rationalizing that such activity just as easily could have been mere interdependent behavior—despite the facts that there had only been three pre-conspiracy increases and virtually all of the 31 price increases were made within 30 days after the competitors met together. The majority then turned to three plus factors: (1) evidence that DuPont had a motive to enter into a price fixing conspiracy; (2) evidence that it acted contrary to its legitimate interests; and (3) “evidence implying a traditional conspiracy”—but the majority quickly discounted the first two factors because “they largely restate the phenomenon of interdependence.” Instead, because the titanium dioxide market was an oligopoly, the majority declared that the “traditional non-economic evidence of a conspiracy as the most important plus factor.” This meant proof of an “explicit” agreement.
Indeed, later in the opinion, the majority explained that to survive summary judgment, the “[c]ircumstantial evidence must be non-economic evidence of an actual agreement between the conspirators[.]”Problematically, the court did not explain how tacit agreements—i.e., non-explicit, but still illegal agreements—can withstand summary judgment motions under this standard. In fact, the majority virtually ignored the possibility of a tacit agreement, instead going piece-by-piece through Valspar’s evidence and in each instance concluding that the conduct could be explained by lawful, oligopolistic behavior rather than a conspiracy. For example, the majority rationalized a DuPont e-mail advocating a price modification only if it was not undercutting a competitor’s price as “essentially . . . show[ing] that the competitors were aware of the phenomenon of conscious parallelism and implemented pricing strategies in response to it.” Thus, while the majority acknowledged that e-mails “raise some suspicion insofar as they indicate that something anticompetitive is afoot[,]” it reiterated that “oligopolistic conscious parallelism is by nature anticompetitive and also legal.”
Similarly, the majority dismissed evidence of information sharing through an industry consultant and a trade association statistics program through which competitors provided production, inventory, and sales-volume data as insufficient to show a conspiratorial agreement, instead accepting “DuPont’s reasonable explanations to the contrary.” In affirming summary judgment, the majority concluded: “[T]he bottom line is that ‘a plaintiff relying on ambiguous evidence alone cannot raise a reasonable inference of a conspiracy sufficient to survive summary judgment[.]’” The majority specifically contrasted this ruling with the Maryland district court’s conclusion that “[w]here ‘a plaintiff relies on ambiguous evidence to prove its claim, the existence of a conspiracy must be a reasonable inference that the jury could draw from that evidence.’”
The dissent, authored by Lawrence F. Stengel, the Chief Judge of the Eastern District of Pennsylvania, contended that the majority had affirmed a decision that “usurp[ed] the jury’s role in deciding cases loaded with circumstantial evidence of an actual agreement to fix prices.” According to the dissent, the District Court Judge had improperly “weighed and compartmentalized evidence, a task better suited for juries—not judges,” and had failed to draw all reasonable inferences in favor of the non-moving party.
Perhaps most importantly, the dissent casts doubt on the majority’s central theory that fewer inferences should be drawn in oligopoly cases. As Judge Stengel pointed out, this means that “in situations ‘in which the danger of [parallel pricing] is most serious,’” liability would actually be “less likely.” In doing so, the dissent stressed that the majority “wrongly applied” Matsushita, a case which had found that the plaintiffs’ economic theory was “implausible” and made “no practical sense” because among other things, there was no plausible motive to engage in the conduct charged. Indeed, even in Matsushita, however, the Supreme Court had remanded the case to the District Court to consider whether there was “evidence  ‘tend[ing] to exclude the possibility’ that the defendants had underpriced respondents to compete for business rather than to implement an economically senseless conspiracy[,]” noting that “[w]e do not imply that, if petitioners had had a plausible reason to conspire, ambiguous conduct could suffice to create a triable issue of conspiracy.” Judge Stengel further highlighted a more recent Supreme Court precedent, Eastman Kodak Co. v. Image Technical Services, Inc., which specifically addressed the application of Matsushita, declaring that it demands only that “the nonmoving party’s inferences be reasonable in order to reach the jury[.]”
The dissent ultimately concluded that up until the majority decision “the general theory of interdependence never supplanted a court’s consideration of the plaintiff’s economic theory” and reflected that because Valspar had a perfectly plausible economic theory, its circumstantial evidence, when “[v]iewed together, and not compartmentalized, . . . was more than sufficient to preclude summary judgment.”
Valspar has filed a petition for rehearing en banc, arguing that the majority “incorrectly created a new ‘more likely than not’ standard to evaluate circumstantial evidence at summary judgment”—“the same standard used by juries at trial when deciding cases based on a ‘preponderance of the evidence’”—and a test that is “irreconcilable with the summary judgment standard[.]” If the Third Circuit refuses to grant en banc review, Valspar’s only option is to appeal to the Supreme Court.
There arguably is a Circuit split on this issue. For instance, the Second Circuit deviates from the analysis in Valspar, declaring that “[r]equiring a plaintiff to ‘exclude’ or ‘dispel’ the possibility of independent action places too heavy a burden on the plaintiff.” Instead, it has noted that “f the scheme alleged is implausible, a conspiracy must be proved by strong direct or strong circumstantial evidence, and the implausibility of a scheme will reduce the range of inferences that may permissibly be drawn from ambiguous evidence.” Meanwhile, the Ninth Circuit has most recently applied a burden shifting analysis, under which: “[f]irst, the defendant can rebut an allegation of conspiracy by showing a plausible and justifiable reason for its conduct that is consistent with proper business practice[,]” and, second, “[t]he burden then shifts back to the plaintiff to provide specific evidence tending to show that the defendant was not engaging in permissible competitive behavior.” However, the Ninth Circuit applied that analysis in a case in which the alleged conspiracy was “economically implausible.” The Seventh Circuit also has envisioned a sliding scale, noting “[m]ore evidence is required the less plausible the charge of collusive conduct.”
Unlike the other three circuits, the majority opinion in Valspar did not explicitly consider the plausibility of Valspar’s economic theory. Rather, it declared that if antitrust defendants have any reasonable counter-theory, antitrust plaintiffs have a burden to show at summary judgment that “it is more likely than not” that the conspiracy occurred. That heightened standard may be just far enough beyond the holdings in the other circuits to obtain en banc rehearing or a Supreme Court grant of certiorari.
 Valspar Corp. v. E.I. DuPont de Nemours & Co. (Valspar), 873 F.3d 185 (3d Cir. 2017) (issued Sept. 14, 2017). Valspar is seeking en banc review, arguing the decision creates “an unprecedented summary judgment standard for plaintiffs trying to prove a price-fixing conspiracy by circumstantial evidence” by “incorrectly creat[ing] a new ‘more likely than not’ standard to evaluate circumstantial evidence at summary judgment.” Appellants’ Petition for Panel Rehearing and Rehearing En Banc (Pet.), Valspar Corp. v. E.I. DuPont de Nemours & Co., Case No. 16-1345, Doc. No. 003112752745 (3d Cir., filed Oct. 13, 2017).
 Titanium dioxide is a dry chemical powder often used as a pigment in paint and other products.
 In re Titanium Dioxide Antitrust Litig., 959 F. Supp. 2d 799, 832 (D. Md. 2013).
 Valspar Corp. v. E.I. Du Pont De Nemours, 152 F. Supp. 3d 234, 252 (D. Del. 2016).
 See, e.g., In re Chocolate Confectionary Antitrust Litig. (Chocolate), 801 F.3d 383, 397 (3d Cir. 2015) (explaining that “despite the facial plausibility of the Plaintiff’s theory and the circumstantial evidence supporting it, we must be cautious. . . [because] the U.S. chocolate market is a textbook example of an oligopoly and we cannot infer too much from mere evidence of parallel pricing among oligopolists.” (citation omitted)).
 Valspar, 873 F.3d at 189-93.
 Id. at 189-92.
 Id. at 192 (quoting Matsushita, 475 U.S. 574, 588 (1986)).
 Id. at 193.
 Id. at 192 n.1. The Third Circuit explains that Matsushita’s dictates do not apply where there is “direct” evidence of a conspiracy but, in the same pen-stroke, recognizes that direct evidence is “rare” and “difficult to come by in any pricing fixing case.” Id. at 192 n.2.
 Id. at 194-96.
 Id. at 214 (dissenting op.).
 Id. at 196.
 Id. at 193 n.3.
 Id. at 203 n.15.
 The majority addressed tacit agreements in a footnote, noting that while they are unlawful, the only way to prove them is through the use of “explicit” evidence of agreement—economic evidence will not suffice. Id. at 193 n.3. The majority’s example of the type of evidence that could be used to show a tacit agreement is “when Company A proposes a parallel price increase to Company B, and Company B does not explicitly agree but then follows suit when Company A raises its prices[.]” Id. (citation omitted).
 Id. at 200.
 Id. at 197-201.
 Id. at 201.
 Id. at 194 (quoting Chocolate, 801 F.3d at 396).
 Id. at 203 (citing Titanium Dioxide, 959 F. Supp. 2d at 824).
 Id. at 217 (dissenting op.).
 Id. at 203 (dissenting op.).
 Id. at 203-06 (dissenting op.).
 Id. at 206 n.3 (dissenting op.) (citing Br. for the Am. Antitrust Instit. As Amicus Curiae in Support of the Pls.-Appellants (AAI Br.), Valspar Corp. v. E.I. DuPont de Nemours & Co., Case No. 16-1345, 2016 WL 3996824, at *15 (3d Cir., filed July 22, 2016) (quoting Louis Kaplow, Competition Policy & Price Fixing 126 (2015)).
 Id. at 216 (dissenting op.) and Matsushita, 475 U.S. at 597. Matsushita held that: “Lack of motive bears on the range of permissible conclusions that might be drawn from ambiguous evidence: if petitioners had no rational economic motive to conspire, and if their conduct is consistent with other, equally plausible explanations, the conduct does not give rise to an inference of conspiracy.” 475 U.S. at 596-97. Specifically, the plaintiffs there alleged an agreement among 21 companies to price below market levels for two decades—behavior that rational businesses had “every incentive not to engage in[.]” Id.
 Id. at 597-98.
 Id. at 597 n.21.
 Valspar, 873 F.3d at 206 (dissenting op.) (quoting Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 468-69 (1992)).
 Id. at 217-18 (dissenting op.).
 Pet. at 1.
 In re Publ’n Paper Antitrust Litig., 690 F.3d 51, 63 (2d Cir. 2012).
 Apex Oil Co. v. DiMauro, 822 F.2d 246, 253 (2d Cir. 1987)
 Stanislaus Food Prods. Co. v. USS-POSCO Indust., 803 F.3d 1084, 1089 (9th Cir. 2015).
 In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 661 (7th Cir. 2002).
*Christopher Lebsock is a partner and Samantha Stein is an associate in the San Francisco office.