Antitrust Law Daily Wrap Up, ANTITRUST—D. Mass.: Recycling business did not release boycott claims against packaging manufacturer, (Jan 21, 2014)

By Jeffrey May, J.D.

A company that developed a business method for recycling polystyrene food service products did not release its claims against a polystyrene packaging producer for allegedly conspiring to boycott the complaining company’s technology, the federal district court in Boston has ruled (Evergreen Partnering Group, Inc. v. Pactiv Corp., January 17, 2014, Stearns, R.).

The dispute is on remand from the U.S. Court of Appeals in Boston. In June 2013, the appellate court vacated a judgment dismissing the complaint on the ground that the plaintiff, Evergreen Partnering Group, Inc., failed to plead sufficient plausible facts to support a prima facie antitrust claim.

Evergreen contends that five polystyrene producer defendants that purportedly control about 90 percent of the market for single-service polystyrene food service packaging and tableware, along with the American Chemistry Council, boycotted its efforts to establish a “closed-loop” recycling method that would support “food-grade” recycled polystyrene products. The alleged goal of the boycott was to maintain the “defendants’ existing market shares” in the polystyrene food packaging industry by stifling any competition from Evergreen.

Following remand, one of the polystyrene producer defendants—Genpak, LLC—filed a renewed motion to dismiss on a new ground of a claimed contractual release. Genpak contended that Genpak and Evergreen entered into two contracts that granted a general release from liability to Genpak.

The court rejected Genpak’s argument that a non-disparagement clause in a 2008 agreement it had entered into with the founder of Evergreen amounted to a release of the antitrust claims. Nowhere in the provision at issue were the words or phrases that were typically used in a contract to signify an exoneration of liability: “release,” “remise,” “discharge,” or “hold harmless,” the court noted. Nor were the words “liability” or “claim” used in describing the founder’s promise to do nothing to disparage Genpak’s reputation. There was no plausible construction of the promise not to say or do anything that might have a future “negative effect” on Genpak’s reputation that would amount to a “covenant not to sue,” the court ruled.

An indemnity clause in an earlier contract also did not release Genpak from the claims asserted in the case. Rather, under the 2007 contract put forward by Genpak, Evergreen and its founder agreed to indemnify Genpak and hold it harmless for all claims resulting from their actions and Genpak agreed to a parallel term for the benefit of Evergreen. “These clauses neither individually nor collectively suggest that the parties agreed to indemnify each other (or hold each other harmless) for claims they may have had against each other,” the court explained.

This is Case 1:11-cv-10807-RGS.

Attorneys: Thomas V. Urmy, Jr. (Shapiro Haber & Urmy LLP) for Evergreen Partnering Group, Inc. Richard A. Sawin, Jr. (Michienzie & Sawin, LLC) for Pactiv Corp.

Companies: Evergreen Partnering Group, Inc.; Pactiv Corp.; Genpak, LLC.

Cases: Antitrust MassachusettsNews