Antitrust Law Daily Wrap Up, ANTITRUST—Miss. Sup. Ct.: Rejection of jury verdict against Georgia Pacific undisturbed, (Jul 1, 2016)

By Jeffrey May, J.D.

The Mississippi Supreme Court has denied petitions for rehearing in an antitrust action brought by logging company Cook Timber Co., Inc. against national wood-processing company Georgia Pacific Corporation. The divided court did not disturb its holding that there was insufficient evidence to support a jury’s finding of monopolization by Georgia Pacific. Also left standing was the affirmance of a directed verdict in favor of Georgia Pacific on an antitrust conspiracy claim. However, the court’s March 3 decision was withdrawn, and a new opinion was issued (Georgia Pacific Corp. v. Cook Timber Co., Inc., June 30, 2016, Dickinson, J.).

The underlying dispute arose after Georgia Pacific notified Cook, an exclusive timber supplier, that it would no longer receive any pine pulpwood deliveries from the company at one of its mills. Cook filed suit, alleging violations of Mississippi Code Section 75-21-3 (prohibiting unilateral conduct by a market participant to engage in certain prohibited practices) and Section 75-21-1 (prohibiting agreements to commit the prohibited practices).

Unilateral conduct. Section 75-21-3 specifies five types of conduct that violate the law. The court noted that two methods were inapplicable because they addressed differential pricing between localities in the state, which was not alleged. No evidence supported a conclusion that Georgia Pacific monopolized or attempted to monopolize its industry to support a finding under a third provision, the court ruled. Georgia Pacific did not violate the prohibition on "[r]estrain[ing] or attempt[ing] to restrain the freedom of trade or production" by seeking to purchase material for the lowest possible cost. Lastly, the court decided that the prohibition on "engross[ing], forestall[ing] or attempt[ing] to engross or forestall any commodity" was inapplicable to Georgia Pacific’s conduct because the case involved Georgia Pacific’s actions as a consumer, not a seller. Georgia Pacific’s conduct—purchasing timber at the lowest possible price from suppliers who deliver at a consistent price and stockpiling timber in anticipation of higher future timber prices—was not illegal, the court held.

Conspiracy. Georgia Pacific was properly granted a directed verdict on the Section 75-21-1 claim because Cook put forth insufficient evidence to establish the necessary agreement between market participants, the court decided. The only evidence of conduct involving other market participants was an email between Georgia Pacific executives. The email stated: "I am getting reports that some of the competition is pulling their price down about as fast as we are. I am of the opinion that we are the ones making the difference and everyone else is following." According to the court, the email merely reflected an observation and fell far short of establishing either an express or implied agreement between the parties.

Dissent. According to the dissent, the evidence in this case supported the conclusion that Georgia Pacific was not simply taking advantage of a naturally low market, but was attempting to manipulate and control what would have otherwise been natural market prices for the commodity it needed. The dissent also supported the jury’s damages award, including $2.5 million in punitive damages, against Georgia Pacific. Because the majority reversed the jury’s verdict, it did not consider the damages challenge.

Contract claim. The state supreme court reversed a directed verdict on Cook’s breach-of-contract claim and remanded for a new trial on that issue. "[A] reasonable juror could conclude that Georgia Pacific culled wood for other reasons—mainly to lower prices—and that this breached its contract with Cook Timber," the court concluded.

The case is No. 2013-CA-01869-SCT.

Attorneys: Stephen Walker Burrow (Heidelberg, Steinberger, Colmer, & Burrow, P.A.) for Georgia Pacific Corp. Joseph E. Roberts, Jr. (Pittman, Germany, Roberts & Welsh, L.L.P.) for Cook Timber Co., Inc.

Companies: Georgia Pacific Corp.; Cook Timber Co., Inc.

Cases: Antitrust MississippiNews