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International Association of Machinists and Aerospace Workers, AFL-CIO, Local Lodge No. 1821 v. Verso Paper Corp.

United States District Court, D. Maine

January 20, 2015

INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO, LOCAL LODGE NO. 1821, et al., Plaintiffs,
v.
VERSO PAPER CORP., et al., Defendants

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For INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS AFL-CIO LOCAL LODGE NO 1821, RICHARD GILLEY, Individually and as IAMAW District 4 Business Representative for Local Lodge 1821, COREY DARVEAU, Individually and as President of Local Lodge 1821, BRIAN SIMPSON, Individually and as Vice President of Local Lodge 1821, BRIAN ABBOTT, Individually and as Recording Secretary of Local Lodge 1821, HAROLD PORTER, Individually and as Financial Secretary for Local Lodge 1821, FIFTY-THREE LOCAL NO 1821 MEMBERS, Individually and for all other similary situated salaried and hourly wage employees, Plaintiffs: ISHAI MOOREVILLE, LEAD ATTORNEY, DONALD I. BAKER, PRO HAC VICE, BAKER & MILLER PLLC, WASHINGTON, DC; JESSE MARKHAM, LEAD ATTORNEY, PRO HAC VICE, BAKER & MILLER LLP, SAN FRANCISCO, CA; KIMBERLY J. ERVIN TUCKER, LEAD ATTORNEY, LAW OFFICE OF KIMBERLY J. ERVIN TUCKER, LINCOLNVILLE, ME; DANA F. STROUT, LAW OFFICE OF DANA STROUT, ROCKPORT, ME.

For VERSO PAPER CORP, VERSO PAPER LLC, Defendants: GRETA LOUISE BURKHOLDER, SCOTT ALAN STEMPEL, LEAD ATTORNEYS, PRO HAC VICE, MORGAN, LEWIS & BOCKIUS LLP, WASHINGTON, DC; DAVID E. BARRY, NOLAN LADISLAV REICHL, PIERCE ATWOOD LLP, PORTLAND, ME; DAVID A. STROCK, FISHER & PHILLIPS, LLP, PORTLAND, ME.

For AIM DEVELOPMENT USA LLC, Defendant: CLIFFORD RUPRECHT, LEAD ATTORNEY, ROACH HEWITT RUPRECHT SANCHEZ & BISCHOFF, P.C., PORTLAND, ME.

For UNITED STEELWORKERS OF AMERICA AND ITS LOCALS 1188 AND 261, Interested Party: JONATHAN S. R. BEAL, LEAD ATTORNEY, LAW OFFICE OF JONATHAN S.R. BEAL, BELFAST, ME.

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ORDER DENYING PLAINTIFFS' MOTION FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION AND ADDENDUM

JOHN A. WOODCOCK, JR., UNITED STATES DISTRICT JUDGE.

As early as January 19, 2015, Verso Paper Corp. and Verso Paper LLC (Verso) anticipated selling the Bucksport, Maine Paper Mill to AIM Development (USA), LLC (AIM) and in anticipation of the sale, Verso ceased paper mill operations in Bucksport. In this lawsuit, former Verso employees of the Bucksport Paper Mill, their union, and former Verso employees in their capacity as consumers of coated paper goods allege various federal and state antitrust law violations, and seek an order enjoining and restraining Verso and AIM from closing on the sale. The Court denies Plaintiffs' motion.

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I. BACKGROUND

A. Procedural Background

On December 15, 2014, the International Association of Machinists and Aerospace Workers, AFL-CIO, Local Lodge No. 1821 (IAM or IAMAW), Richard Gilley, Corey Darveau, Brian Simpson, Brian Abbott, and Harold Porter (Plaintiffs) filed a complaint against Verso Paper Corp. and Verso Paper LLC (Verso) and against AIM Development (USA) LLC (AIM).[1] Compl. for Declaratory and Injunctive Relief (ECF No. 1) ( Compl.). Also on December 15, 2014, Plaintiffs filed a motion for a temporary restraining order and preliminary injunction. Mot. for a TRO and a Prelim. Inj. Pursuant to F.R.C.P. 65 (ECF No. 4) ( Pls.' Mot.). On December 22, 2014, Plaintiffs filed an amended complaint, which added 53 Local No. 1821 Members as plaintiffs and included additional allegations. First Am. Compl. for Declaratory and Injunctive Relief (ECF No. 29) ( Am. Compl.). In the Amended Complaint,[2] Plaintiffs allege that: (1) Verso publicly refuses " to consider any offers to purchase [the] Bucksport [Mill] from other" competitors, and deliberately selected AIM as the buyer, which has " a prior history of scrapping paper making mills" and plans on doing the same in Bucksport, all in violation of the Sherman Antitrust Act, 15 U.S.C. § § 1-2; and (2) AIM's acquisition of a Verso subsidiary " will substantially lessen competition, and tend to create a monopoly, in the relevant national market for coated printing paper," in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18, and Maine antitrust law, 10 M.R.S. § § 1101-1102-A. Id. ¶ ¶ 2, 4.

At the request of Plaintiffs, the Court held a telephone conference on December 19, 2014 and set initial scheduling deadlines. Minute Entry (ECF No. 26). On December 27, 2014, Plaintiffs filed a request for judicial notice, and a sworn attorney declaration relating to the accuracy of the documents attached to the First Amended Complaint. Pls.' Req. for Judicial Notice (ECF No. 45) ( Req. for Judicial Notice ); Decl. of Kimberly J. Ervin Tucker (ECF No. 46) ( First Tucker Decl.).[3]

On January 2, 2015, AIM filed its response in opposition to Plaintiffs' motion. Mem. of AIM Dev. (USA) LLC in Opp'n to Pls.' Mot. for TRO and Prelim. Inj. (ECF No. 64) ( AIM's Opp'n ). Also on January 2, 2015, Verso filed its response in opposition to Plaintiffs' motion. Defs. Verso

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Paper Corp. and Verso Paper LLC's Opp'n to Pls.' Mot. for a TRO and a Prelim. Inj. (ECF No. 67) ( Verso's Opp'n ). On January 5, 2015, Magistrate Judge John C. Nivison held a telephone conference regarding discovery. Minute Entry (ECF No. 71). On January 6, 2015, the Magistrate Judge issued an order on discovery. Order on Disc. (ECF No. 74). On January 8, 2015, Plaintiffs filed their reply to AIM and Verso's oppositions, and on January 12, 2015, they filed a corrected reply. Pls.' Reply Mem. in Support of Mot. for TRO and Prelim. Inj. Under the Antitrust Laws (ECF No. 79) ( Pls.' Reply ); Pls.' Corrected Reply Mem. in Support of Mot. for TRO and Prelim. Inj. Under the Antitrust Laws (ECF No. 82) ( Pls.' Corrected Reply ). Also on January 12, 2015, Verso filed a surreply. Defs. Verso Paper Corp. and Verso Paper LLC's Surreply in Further Opp'n to Pls.' Mot. for a TRO and a Prelim. Inj. (ECF No. 84) ( Verso's Surreply ). On January 13, 2015, the Court heard oral argument. Minute Entry (ECF No. 86).

B. Factual Background [4]

1. The Parties

AIM is an affiliate of American Iron & Metal Company, Inc. AIM'S Opp'n Attach. 1 Membership Interest Purchase Agreement among AIM and Verso § 1.01 ( MIPA ). It is " one of the leading firms in the world in the metal recovery and recycling industry." Decl. of Jeff McGlin in Support of AIM Dev. (USA) LLC's Opp'n to Mot. for TRO and Prelim. Inj. ¶ 4 (ECF No. 65) ( McGlin Decl.). In addition, much of its business " involves sourcing scrap metal through the purchase of discontinued manufacturing facilities, salvage of the recoverable metal, and preparation of the site for further disposition." Id. ¶ 5.

Verso Paper Corporation is a Delaware corporation and indirect parent of the sellers of the Bucksport Mill, Verso Paper LLC, a Delaware limited liability company, and Verso Maine Power Holdings LLC, also a Delaware limited liability company. MIPA at 2, § 1.01.

Plaintiffs are a labor union and its 59 hourly-wage members employed as mechanics at the Bucksport Mill, as well as " purchasers of magazines and other products that contain coated paper." Pls.' Mot. at 1.[5]

2. The Merger Between Verso and NewPage; The DOJ's Approval of the Merger

On January 3, 2014, Verso agreed to acquire NewPage Holdings, Inc. (NewPage) for approximately $1.4 billion. United States v. Verso Paper Corp., Case No. 1:14-cv-2216 at 2 (D.D.C. Dec. 31,

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2014), http://www.justice.gov/atr/cases/f310800/310833.pdf ( Competitive Impact Statement ). The NewPage Acquisition was submitted to the United States Department of Justice (DOJ) for antitrust review and clearance, which remained pending at the time of Plaintiffs' lawsuit on December 15, 2014. Pls.' Mot. at 5. In a letter to Verso employees dated October 30, 2014, Verso President and CEO David Paterson provided an update to employees:

Today, in order to address potential antitrust considerations related to the acquisition, NewPage Corporation and two of its subsidiaries signed an agreement to sell NewPage's paper mills in Biron, Wisconsin, and Rumford, Maine, to a subsidiary of Catalyst Paper Corporation.

Compl. Attach. 28 Statement of Pl. Harold Porter at 3 ( Porter Decl.).

On December 31, 2014, as part of the settlement process with Verso, the DOJ filed a civil antitrust action in the United States District Court for the District of Columbia alleging that the pending merger would violate antitrust laws. Competitive Impact Statement at 1. However, the DOJ also submitted a " Hold Separate Stipulation and Order" and proposed Final Judgment, " which are designed to eliminate the anticompetitive effects of the acquisition," and thus, allow the merger to proceed. Id. at 2, 9-12. Under the terms of the proposed Final Judgment, the NewPage paper mills in Biron, Wisconsin and Rumford, Maine must be sold to Catalyst Paper Corporation, or an alternate buyer approved by the DOJ. Id. at 2, 9-10. The purpose of the divestiture is to " provide the purchaser of the divested assets with a market presence comparable to Verso's current market presence in the relevant markets." Id. at 11. With this caveat, the DOJ states that it " is satisfied . . . that the divestiture of assets described in the proposed Final Judgment will preserve competition for the provision of coated freesheet web paper, coated groundwood paper, and label paper in the relevant market identified by the [DOJ]." Id. at 14. Furthermore, " [t]he [DOJ] does not allege that the closing of the Bucksport Mill is a result of the merger." Id. at 3 n.1.

The district court will rule on whether the proposed Final Judgment " is in the public interest" after the 60-day comment period passes, as required by 15 U.S.C. § 16(e)(1). Id. at 15. However, Verso's counsel indicated to the Court during oral argument on January 13, 2015 that the Verso-NewPage merger is complete. Tr. of Proceedings 31:12-14 (ECF No. 90).

3. The Bucksport Mill and Its Closure

The Bucksport Mill employed over 500 people (including Plaintiffs). Pls.' Mot. at 2; Verso's Opp'n at 2. It was capable of producing " approximately 350,000 tons of coated groundwood paper and 55,000 tons of specialty paper per year." Verso's Opp'n Attach. 2 Decl. of George A. Hay in Support of the Verso Defs.' Opp'n to Pls.' Mot. for Entry of a TRO and a Prelim. Inj. ¶ 6 ( Hay Decl.). On October 1, 2014, Verso announced its plans to shut down the Bucksport Mill. Compl. Attach. 31 Statement of Pl. Brian Simpson at 2 ( Simpson Decl.); id. Attach. 30 Statement of IAMAW 1821 Member Alfred George at 2 ( George Decl.). The following day, Verso Vice President Dennis Castonguay told employees that the Mill " may be offered on the market, but not to a competitor." George Decl. at 2; Porter Decl. at 2. On December 4, 2014, the Bucksport Mill's printing facilities shut down. Pls.' Mot. at 6.

4. Verso's Reasons for Shutting Down the Bucksport Mill

Mr. Paterson stated that " Verso had unilateral, legitimate business reasons for closing the Bucksport Mill." Verso's Opp'n Attach. 1 Decl. of David J. Paterson in Support of the Verso Defs.' Opp'n to Pls.' Mot. for Entry of a TRO and a Prelim.

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Inj. ¶ 5 ( Paterson Decl.). He asserted that the Mill was " unprofitable for the past several years, despite Verso's attempts to increase its profitability," and its " cash flow and EBITDA (earnings before interest, taxes, depreciation and amortization), both of which are common measures of profitability, were significantly negative for the past several years." Id. ¶ 6. Mr. Paterson also explained that the Mill was " highly dependent on natural gas as an energy source," but because the cost of natural gas is so high, especially during the winter season, it " played a significant role in Verso's decision to close the Bucksport mill before the winter of 2014-2015." Id. ¶ 17. Furthermore, according to Dr. George A. Hay, a Verso-hired economist, " North American demand for publication papers is declining rapidly primarily due to the proliferation of tablet computers, e-readers, internet-based publications and advertising, and electronic mail," and there is and will continue to be a trend of paper mill closures across North America. Hay Decl. ¶ ¶ 7, 9-10.

In addition, Mr. Paterson stated that " Verso has considered closing the mill for several years," even before the NewPage merger was negotiated. Paterson Decl. ¶ 9. According to him, it did not close before now because it had insufficient " cash on hand to pay the costs associated with closing," approximately $35-40 million. Paterson Decl. ¶ 18; Hay Decl . ¶ 17. Dr. Hay noted that Verso has overall debt of approximately $1.3 billion, and in his opinion, it could eventually file for bankruptcy as a stand-alone company. Hay Decl. ¶ 12. Mr. Paterson affirmed that the proceeds of the pending sale with AIM will be used to pay closing costs, " including the payment of severance and other benefits to the former employees of the mill." Paterson Decl. ¶ 20. According to Dr. Hay, the sale will also put Verso " in a position to be a more vigorous competitor in the publication papers market." Hay Decl. ¶ 18.

Despite Mr. Paterson's explanations for why the Mill is closing now, Frederick R. Warren-Boulton, an economist hired by Plaintiffs, opined that the timing of the merger and sale may not be coincidental because " the acquisition will increase the profitability to Verso of closing Bucksport, and can make the closure of Bucksport profitable even though it would not be profitable to close the mill, at least at this time, absent the merger." Pls.' Reply Attach. 7 Decl. of Frederick R. Warren-Boulton at 3 ( Warren-Boulton Decl.).

5. Verso Agrees to Sell the Bucksport Mill to AIM

According to AIM Vice President Jeff McGlin, AIM first became aware that the Bucksport Mill was for sale " on or about November 30, 2014," by which time Verso had announced its plans to shut down the Mill. McGlin Decl. ¶ ¶ 10-11. He stated that the Mill " was being actively marketed by a broker, Concentric Energy Advisors." Id. ¶ 10. Mr. McGlin confirmed that before the transaction at issue in this case, AIM had bought a Verso paper mill in Minnesota in 2013, " which had been destroyed by an explosion, to salvage the mill for scrap." Id.

On December 2, 2014, AIM submitted its initial bid. Paterson Decl. ¶ 11. On December 8, 2014, Verso announced an agreement to sell the Bucksport Mill to AIM for $58 million. Pls.' Mot. at 1, 6; MIPA § 2.03(a)(i); see also Paterson Decl. ¶ 19 (" Verso sold the Bucksport mill to AIM for approximately $60 million" ). AIM paid a $10 million deposit as part of the transaction. McGlin Decl. ¶ 14. The closing is scheduled to occur at a date in the near future, as soon as January 19, 2015.[6] Tr. of Proceedings 3:1-22.

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Mr. Paterson maintained that " Verso neither sought nor received the written consent of NewPage for the sale of the Bucksport mill. NewPage's consent was not necessary . . . because the sale of the Bucksport mill was not undertaken at the request of the [DOJ] in order to obtain regulatory clearance" of the merger. Paterson Decl. ¶ 22.

6. Alternate Potential Purchasers of the Bucksport Mill

According to Mr. Paterson, " [a]ny purchaser of the Bucksport mill would not purchase an ongoing business, but instead a non-functioning mill without orders, inventory, raw materials or a sales force to generate those orders." Id. ¶ 13. To his knowledge, no coated groundwood paper manufacturer " expressed an interest in buying the Bucksport mill and operating its papermaking facilities." Id. ¶ 14. In addition, even if such a purchaser existed, Mr. Paterson " would not expect" it to buy the Mill " at any price above $60 million." Id. ¶ 15.

Notwithstanding Mr. Paterson's statements, an expert for Plaintiffs, Whitfield Russell, a public utility consultant and principal of Whitfield Russell Associates, stated that he emailed the person he thought was the assistant to the Verso CEO on November 18, 2014 to inform Verso that he had two clients that sought anonymity but also had " [c]onsiderable interest" in making a potential bid on the electricity generation plant at the Bucksport Mill and requested review of company documents as part of a due diligence analysis. Pls.' Reply Attach. 1 Aff. of Whitfield A. Russell ¶ ¶ 1, 9(a) ( Russell Decl.). However, Mr. Russell represented that he never received a response from Verso regarding his email. Id. ¶ 9(b). In addition, regarding the $58 million sale price, Mr. Russell believed it " is a relatively low price typical of older, condensing power plants divested by electric utilities." Id. In his view, had one of his anonymous clients been permitted " to bid on the Bucksport co-generation facility, it would have necessarily undertaken to explore carefully whether there was any paper making company willing to continue operation of the paper making capacity at Bucksport," and had such a company emerged, would have potentially led to a higher bid for the Mill. Id. ¶ 9(c).

Mr. Warren-Boulton stated that " it may well be profitable for a buyer other than AIM to continue operating Bucksport even if it is not profitable for Verso to operate Bucksport after the merger. Specifically a new [owner] could find it profitable to operate Bucksport and would be willing to pay more for Bucksport than AIM is willing to pay." Warren-Boulton Decl. at 4. However, he did not provide insight on whether there were or are any specific buyers to buy the Bucksport Mill, or to

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buy it for more than $58 million. See id. at 2-5.

Upon information from officials with the state of Maine, Plaintiffs' counsel attempted to learn the identity of an alleged potential buyer willing to pay more than $58 million for the Mill, one who had emerged before Verso accepted the AIM contract. Pls.' Reply Attach. 6 Decl. of Kim Ervin Tucker at 2 ( Second Tucker Decl.). However, Attorney Tucker explained " it is impossible for the State or Plaintiffs to confirm this since Verso had required the buyer to sign a confidentiality agreement regarding any offers made to Verso." Id. On January 8, 2015, Maine Governor Paul LePage's office issued a public statement regarding closure of the Bucksport Mill, noting that " Administration officials are aware [a] firm was able to communicate with Verso and express its interest in pursuing due diligence to continue papermaking activities. Before that due diligence could even take place, Verso chose to sell the asset to AIM." Id. at 5. According to the Governor's Office, " more than one firm had expressed genuine interest in acquiring the asset in Bucksport to continue papermaking activities." Id. at 4. In addition, the public statement claimed that another potential firm " made several attempts to contact Verso" before the sale to AIM, but Verso never responded. Id. at 5. Finally, the Governor's Office stated that " there are still interested parties out there." Id.

7. AIM's Intended Use of the Bucksport Mill

On its face, the MIPA entered into between AIM and Verso suggests that AIM intends to use the Bucksport Mill for its power-generating facility, its scrap value, and for use as a landfill, but does not mention paper production. MIPA § 1.01 (" Buyer's Intended Use" ). In addition, AIM does not sell or produce coated paper. McGlin Decl. ¶ 7. Since 2011, AIM has acquired three paper mills in total (not including the Bucksport Mill) from NewPage and Verso. Id. ¶ 8; Supplemental Decl. of Jeff McGlin ¶ 4 (ECF No. 88) ( McGlin Supplemental Decl.).

Despite section 1.01 of the MIPA, Mr. McGlin explained that AIM will not necessarily scrap the Bucksport Mill, at least not right away:

AIM has not agreed with Verso that it will dismantle the mill. AIM is at liberty to resell the mill at any time after closing, and would sell to a buyer intending to operate the mill to make paper, if the offer represented a better economic opportunity than salvage of the mill. Since it will take some time to commence and complete salvage operations, there will be a period of opportunity after closing for a buyer to purchase the mill from AIM before the mill is dismantled.

McGlin Decl. ¶ 13. Furthermore, during oral argument, AIM's counsel indicated that the definition from section 1.01 is

used in all of the seller's representations and warranties and covenants, and the reason is quite simple. Verso is promising AIM that in the interim period between the [MIPA] and the closing of the transaction, Verso's not going to do anything with that facility that's going to impair what AIM is planning to do with that -- with that property.

Tr. of Proceedings 59:16-22. The Court later inquired: " But you're saying that that [provision] doesn't apply to postsale activities on the part of AIM?" Id. 60:8-9. AIM's counsel replied: " Correct. There's not a single promise by AIM in that agreement anywhere regarding how AIM is going to use that facility. That's just not a covenant or a representation that AIM makes to Verso." Id. 60:10-13.

In addition, Mr. McGlin stated that while " AIM has not finalized its strategy

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for the use of the site . . . the site represents a potentially very good strategic fit with a number of recycling facilities AIM has developed throughout Maine, and AIM intends to explore the beneficial use it might develop for the deep water port associated with the Mill site." McGlin Decl. ¶ 17.

II. POSITION OF THE PARTIES

A. Plaintiffs' Motion

Plaintiffs assert that, through this lawsuit, they hope " to protect and preserve the capacity of the Bucksport Mill to operate as a paper mill," and continue their employment at the Mill " under the employ of a successor employer." Pls.' Mot. at 1 & n.1. In addition, they contend that Verso plans on " violating its prior commitment to Plaintiffs" regarding when it will remove hard drives and data on the hard drives from the Bucksport Mill computers; Plaintiffs claim that Verso promised not to remove hard drives and data until after the sale, but now plan on doing so " a few days before the transaction is completed." Id. at 1-2. They further argue that an injunction is necessary under the circumstances of this case:

Once AIM takes control of the Bucksport Mill, it will be nearly impossible for Plaintiffs to obtain the relief they seek in their lawsuit, which is a limited injunction against the destruction or sale of the Bucksport Mill to any entity which does not intend to continue to use it for the production of paper until at least June 1, 2015, so that a paper-manufacturer has adequate time to make a bona fide offer for the Bucksport Mill.

Id. at 3. In summary, Plaintiffs contend that closure of the Bucksport Mill and its pending sale to AIM " is anticompetitive and violates federal [and state] antitrust laws," specifically, 15 U.S.C. § § 1-2, 18, and 10 M.R.S. § § 1101-1102-A. Id. at 2.

Quoting Cia. Petrolera Caribe, Inc. v. Arco Caribbean, Inc., 754 F.2d 404, 430 (1st Cir. 1985) for the proposition that '" the key to the whole question of an antitrust remedy is of course the discovery of measures effective to restore competition,'" Plaintiffs seek a temporary restraining order (TRO) and preliminary injunction: (1) blocking the sale between Verso and AIM or any other entity that does not intend to continue operating the Bucksport Mill as a paper mill; (2) prohibiting " Verso and AIM from taking any actions that would render the Bucksport Mill inoperable on a cost basis, or otherwise financially impair the Bucksport Mill" ; (3) forcing Verso to coordinate with the Maine Department of Economic and Community Development or another neutral party appointed by the Court " to seek, solicit, evaluate and respond to offers from prospective buyers willing to continue to operate the Bucksport Mill as a printing paper mill" ; (4) ensuring that Verso and AIM not damage " the Bucksport Mill as a going concern for the production of coated paper" ; (5) forbidding Verso from selling or attempting to sell the " electric power plant associated with the Bucksport Mill" unless sold to a buyer that agrees to continue running the Mill as a paper mill; and (6) preventing Verso " from rejecting any offer to purchase the Bucksport Mill at a reasonable price from any bona fide buyer [including any competitor] willing to continue operating it" as a paper mill. Id. at 3-5.

In Plaintiffs' view, " Verso's sole purpose in shutting down the Bucksport Mill and selling it for scrap is to reduce competition in the North American market for coated paper, and increase its chances for obtaining monopoly power." Id. at 7. Furthermore, referencing prior deals between AIM and Verso, which Plaintiffs characterize as " scrapping endeavors," they argue that those deals and the pending Bucksport

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Mill sale " are all part of a Verso-NewPage-AIM scheme to reduce capacity and supply in the coated paper market . . . [t]he antitrust laws do not permit a dominant firm to conspire to reduce output, as Verso plainly is poised to do." Id. Thus, according to Plaintiffs, if this deal goes through, the following laws will be violated:

1. 15 U.S.C. § 18 and 10 M.R.S. § 1102-A: By Verso's attempt to shut down the Bucksport Mill and pending deal with AIM, it " tend[s] to create a monopoly, in both the market for coated paper in North America, and the labor market for specialized Mill workers in the state of Maine" ;
2. 15 U.S.C. § 2 and 10 M.R.S. § 1102: By Verso's attempt to shut down the Bucksport Mill and pending deal with AIM, it " creates a dangerous probability that Verso will achieve monopoly power and raise market prices," and constitutes conspiracy to monopolize; and
3. 15 U.S.C. § 1 and 10 M.R.S. § 1101: " Verso's agreement with NewPage to shut down the Bucksport Mill and reduce output constitutes concerted action in restraint of trade."

Id. at 7-8.

Addressing the suitability of a preliminary injunction, Plaintiffs recite the four required elements:

(i) [T]he movant's likelihood of success on the merits of its claims;
(ii) whether and to what extent the movant will suffer irreparable harm if the injunction is withheld;
(iii) the balance of hardships as between the parties; and
(iv) the effect, if any, that an injunction (or the withholding of one) may have on the public interest.

Id. at 9 (quoting Corporate Techs., Inc. v. Harnett, 731 F.3d 6, 9 (1st Cir. 2013)). In Plaintiffs' view, " all four factors favor granting a TRO and preliminary injunction." Id. at 10.

1. Likelihood of Success on the Merits

Plaintiffs contend that they have shown a likelihood of success on the merits based on their claims that Verso has violated federal and state antitrust laws. Id. First, quoting Section 7 of the Clayton Act, 15 U.S.C. § 18,[7] they assert that the MIPA between Verso and AIM and prior dealings demonstrate an intent to '" substantially . . . lessen competition, or to tend to create a monopoly." ' Id. Specifically, the deal

will lead to the immediate removal of 350,000 tons of production capacity from the market for coated paper and will " substantially lessen competition" in the same market. Additionally, it will also lessen competition in the market for the specialized labor provided by plaintiffs that have been trained to work in paper production.

Id. at 11. According to Plaintiffs, if the acquisition were completed, Verso-NewPage will control " more than fifty percent (50%) of the North American coated paper market." Id. at 11-12.

Second, Plaintiffs argue that they " have established that Verso has attempted to monopolize the market for North American coated paper," in violation of 15 U.S.C. § 2.[8] Id. at 12. To prove an " attempt to

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monopolize," Plaintiffs say they must show '" (1) the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power.'" Id. (quoting Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 448, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993)). They assert that (1) the first Spectrum Sports element has been met because they " have demonstrated that Verso has engaged in anticompetitive conduct by intentionally shutting down and selling the Bucksport Mill at below market value for salvage, as well as stating publically that it would not sell the Bucksport Mill to any competitor," id.; (2) the second Spectrum Sports element has been met based on " Verso's statements that it will not sell the Mill to any competitor, and the suspicious timing of its actions to shut down the Bucksport Mill while a DOJ investigation [was] pending," id. at 13; and (3) the third Spectrum Sports element has been met because " Verso will have greater tha[n] 50% of the market for coated paper in . . . North America" if the NewPage Acquisition is approved. Id. at 13-14 (citing Hayden Pub. Co. v. Cox Broad. Corp., 730 F.2d 64, 69 n.7 (2d Cir. 1984); Valley Liquors, Inc. v. Renfield Importers, Ltd., 822 F.2d 656, 667 (7th Cir. 1987)).

Third, Plaintiffs assert that " an agreement to shut down the Bucksport Mill constitutes a restraint of trade," in violation of 15 U.S.C. § 1.[9] Id. at 14. This is so, according to Plaintiffs, because (1) Verso and NewPage are competitors that reached an agreement " to reduce output," (2) Verso could not shut down the Bucksport Mill without the written approval of NewPage (i.e., to gain DOJ approval and indicates that Verso and NewPage communicated about the Bucksport Mill sale), and (3) " both parties understand that reducing their market share in the market for North American coated paper would improve the chances for the acquisition gaining approval," as demonstrated by Verso and NewPage agreeing that upon DOJ approval, NewPage " should sell two of its paper mills to a third party if the acquisition is approved." Id. at 14-15.

Fourth, Plaintiffs claim they have " demonstrated a conspiracy to monopolize between Verso and AIM," in violation of 15 U.S.C. § 2.[10] Id. at 15. To prove a " conspiracy to monopolize," Plaintiffs say their burden of proof must only reasonably tend to show " '(1) concerted action; (2) overt acts in furtherance of the conspiracy; and (3) specific intent to monopolize.'" Id. (quoting Boston Scientific Corp. v. Schneider (Eur.) AG, 983 F.Supp. 245, 268 (D. Mass. 1997); citing Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984)). They argue that (1) the first Boston Scientific Corp. element has been met because the sale agreement between AIM and Verso states that " AIM will only use the Mill as a power plant, as a landfill, and for salvage," id.; (2) the second Boston Scientific Corp. element has been met based on AIM and Verso's prior dealings and the sale at hand, id. at 15-16; and (3) the third Boston Scientific Corp. element has been met based on Verso's public statement that it will not sell the Mill to one of its competitors, and the sale of the Mill " at far below market value." Id. at 16.

2. Irreparable Harm Caused to Plaintiffs if the Preliminary Injunction was Denied

Plaintiffs argue they will suffer irreparable harm if the preliminary injunction and

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TRO were denied because they " have demonstrated that they will lose their ability to work for the Bucksport Mill if the Mill is sold to AIM and it is destroyed. Once the key facilities and machines of the Bucksport Mill are gone, it would require enormously large investments of money and capital to reopen the Bucksport Mill and restart paper production." Id.

3. The Balance of Hardships

In Plaintiffs' view, there would be " no great hardship imposed on Verso" if it was prevented from selling the Bucksport Mill to AIM temporarily and required to keep the Mill in reasonable working condition " until a new buyer can be found." Id. In contrast, according to them, Plaintiffs will suffer " great and irreparable hardship" if the Mill is sold and destroyed because a new buyer could no longer acquire and continue operating it as a paper mill, leaving Plaintiffs unemployed. Id. at 16-17.

4. The Effect on Public Interest

Plaintiffs also assert that the effect on public interest is great, as the " Bucksport Mill is vital not only to those it employs, but also the entire community of Bucksport and the surrounding area. The Mill employs more than 500 persons and provides about 44% of the town's tax revenue." Id. at 17.

5. Standing

Finally, Plaintiffs argue they have standing under the Clayton Act, 15 U.S.C. § 26, to pursue their claims, and because they are seeking injunctive relief, " they need only show 'significant threat of injury from an impending violation of the antitrust laws.'" Id. (quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 130, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969)). Plaintiffs also argue they have standing not only as terminated employees of the Bucksport Mill, but also as " purchasers of magazines containing coated paper, [as] both interests coincide." Id. at 17-18 (citing an array of caselaw). They explain:

The consumers' interest is obvious: incrementally more capacity supplying the market is likely to lead to somewhat lower prices. The employees' complementary interest in maintaining the Bucksport Mill as a viable long term producer of coated paper is equally obvious: they are suppliers of specialized, skilled paper mill labor in an isolated geographic market, and thus are dependent on the Mill being productively operated to create the demand for their skilled services.

Id. at 18.

Furthermore, Plaintiffs assert that standing in antitrust cases is evaluated on a case-by-case basis, based on the following factors:

(1) [T]he causal connection between the alleged antitrust violation and harm to the plaintiff;
(2) an improper motive [by Defendant];
(3) the nature of the plaintiff's alleged injury and whether the injury was of a type that Congress sought to redress with the antitrust laws ('antitrust injury');
(4) the directness with which the alleged market restraint caused the asserted injury;
(5) the speculative nature of the damages; and
(6) the risk of duplicative recovery or complex apportionment of damages.

Id. (quoting Sullivan v. Tagliabue, 25 F.3d 43, 46 (1st Cir. 1994)). Here, Plaintiffs argue that all relevant Sullivan factors have been met, based in large part on arguments previously discussed (including that " 'loss of employment' may constitute an antitrust injury" and " consumers of magazines and other products containing coated paper" have standing " because they will

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likely pay higher prices as a result of the destruction of the Bucksport Mill" ). Id. at 19-20 (citing Tugboat, Inc. v. Mobile Towing Co., 534 F.2d 1172, 1176 (5th Cir. 1976); Eichorn v. AT& ...


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