United States District Court, D. Maine
INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO, LOCAL LODGE NO. 1821, et al., Plaintiffs,
VERSO CORPORATION, et al., Defendants
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, 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; DONALD I. BAKER, PRO
HAC VICE, BAKER & MILLER PLLC, WASHINGTON, DC.
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.
DEVELOPMENT USA LLC, Defendant: CLIFFORD RUPRECHT, LEAD
ATTORNEY, ROACH HEWITT RUPRECHT SANCHEZ & BISCHOFF, P.C.,
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.
ON MOTIONS TO DISMISS
WOODCOCK, JR., UNITED STATES DISTRICT JUDGE.
company and scrap metal operator move to dismiss claims that
the purchase and sale of a paper mill violates § 1 and
§ 2 of the Sherman Act and § 7 of the Clayton Act.
The Court first concludes that the pending lawsuit is now
moot because the sale has been fully consummated and even if
the Plaintiffs have an abstract right, they have no realistic
remedy. Next, if their claims are not moot, their Sherman Act
claims must still fail because the Plaintiffs' critical
allegations are conclusions of law, not statements of fact,
and are not sufficient under Twombly  standards.
Furthermore, despite their protests to the contrary, the
Plaintiffs' Sherman Act claims are premised on the
erroneous notion that the paper company had the legal
obligation to sell the mill to a competitor. Finally, the
Court rejects the Plaintiffs' Clayton Act claim because
it is grounded in the incorrect contention that the Clayton
Act covers a sale to a non-competitor as opposed to the
acquisition of a competitor.
December 15, 2014, the International Association of
Machinists and Aerospace Workers AFL-CIO Local Lodge No. 1821
(IAMAW) and other individual Plaintiffs (collectively
Plaintiffs) filed suit against Verso Paper LLC, now Verso
Paper Corporation (Verso), and AIM Development USA, LLC
(AIM) claiming that an agreement entered into between Verso
and AIM in which Verso agreed to sell its Bucksport, Maine
mill to AIM violated federal antitrust law (Counts One, Two,
and Three), the Clayton Act (Count Four), violated state of
Maine antitrust law (Counts Five, Six, Seven, and Eight), and
violated state of Maine severance and vacation pay law (Count
Nine). Compl. for Declaratory and Injunctive Relief
(ECF No. 1). On December 22, 2014, the Plaintiffs filed an
amended complaint, which added Fifty-Three Local No. 1821
Members and included additional allegations. First Am.
Compl. for Declaratory and Injunctive Relief
(ECF No. 29) ( Am. Compl. ).
parties' initial focus was the Plaintiffs' claims for
severance and vacation pay under Maine law. On January 6,
2015, the Court concluded that the state law claims belonged
in state court and dismissed the portion of the
Plaintiffs' amended complaint insofar as it sought relief
under Maine law. Order Dismissing Pls.' Mot. for
Declaratory and Injunctive Relief; and Dismissing Pls.'
Mot. for Attach. And Trustee Process (ECF No. 73). The
Court's decision did not sit well with the Plaintiffs. On
January 20, 2015, the Plaintiffs filed a motion for
reconsideration. Pls.' Mot. for Recons.,
Certification to the Maine Supreme Judicial Ct., or
Certification of Appeal for Interlocutory Review of the
Severance Pay Claims In Count 9 (ECF No. 97). On August
3, 2015, the Court denied the Plaintiffs' motion for
reconsideration. Order Denying Pls.' Mot. for
Recons. and Req. for Certification (ECF No.
after the Plaintiffs filed a stipulation, dismissing the
state antitrust counts, leaving only the federal antitrust
claims along with the severance and vacation pay count,
Stipulation of Voluntary Dismissal of Counts 5
Through 8 (State Antitrust Claims) of Pls.' First Am.
Compl. (ECF No. 106), on March 2, 2015, the Defendants
filed motions to dismiss the federal antitrust claims.
Mot. of AIM Development (USA) LLC to Dismiss Pls.'
First Am. Compl. (ECF No. 113) ( AIM Mot. );
Defs. Verso Paper Corp. and Verso Paper LLC's Mot. to
Dismiss Pls.' First Am. Compl. for Declaratory and
Injunctive Relief (ECF No. 114) ( Verso Mot. ).
On March 23, 2015, the Plaintiffs filed their response.
Pls.' Consolidated Resp. in Opp'n to Defs.'
Separate Mots. to Dismiss Pls.' First Am. Compl. Pursuant
to Rule 12(b)(6) (ECF No. 123) ( Pls.'
Opp'n ). The Defendants responded on April 6, 2015.
Reply Mem. of AIM Development (USA) LLC in Support of its
Mot. to Dismiss Pls.' First Am. Compl. (ECF No. 128)
( AIM Reply ); Defs. Verso Paper Corp. and Verso
Paper LLC's Reply in Support of Defs.' Mot. to
Dismiss Pls.' First Am. Compl. for Declaratory and
Injunctive Relief (ECF No. 129) ( Verso Reply
THE PARTIES' POSITIONS
The Defendants' Motions
motion, Verso observes that it sold the Bucksport mill to AIM
on January 29, 2015 and claims that because it no longer owns
the Bucksport mill, it " no longer has the legal right
to possess or manipulate any of the mill's physical
assets." Verso Mot. at 1-2. The effect of the
sale, in Verso's view, is to erase the premise of the
lawsuit because the Court is unable to " preserve a mill
that Verso no longer owns and to prevent the sale of a mill
that Verso already has sold." Id. at 2. Next,
Verso argues that Count One, based on Section 1 of the
Sherman Act, fails because Plaintiffs have not alleged the
existence of a contract, combination, or conspiracy to
restrain trade under Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2006).
Id. Verso also argues that Counts Two and Three,
based on Section 2 of the Sherman Act, are not actionable
under Verizon Communications Inc. v. Law Office of Curtis
V. Trinko, LLP, 540 U.S. 398, 124 S.Ct. 872, 157 L.Ed.2d
823 (2004). Id. Verso says the same is true of the
Plaintiffs' claims in Count Four based on Section 7 of
the Clayton Act because the Plaintiffs failed to allege
" either that the sale of the Bucksport mill to AIM
would lessen competition in the market where AIM competes or
that the acquisition will harm competition."
Id. Finally, Verso contends that if any of the
federal antitrust claims are allowed to proceed, the
Plaintiffs must be limited to claims as consumers, not
companion motion, AIM first observes that, because Counts One
and Two are directed only against Verso, the only counts now
pending against AIM are Counts Three and Four of the Amended
Complaint. AIM Mot. at 1-2. AIM contends that the
Plaintiffs' antitrust lawsuit is founded upon a faulty
premise: " namely, that any reduction of capacity by a
manufacturer or discontinuance of a manufacturing facility
threatens competition because it reduces manufacturing supply
and therefore might lead to higher prices." Id.
at 3. AIM asserts that this theory " is incorrect as a
matter of law." Id. Finally, AIM argues that
the Plaintiffs' antitrust claims " are now largely
The Plaintiffs' Response
their response, the Plaintiffs contend that four
groups--Verso's parent, Apollo Global Management
(Apollo); Verso and its entities; NewPage Holdings, Inc.
(NewPage); and AIM--have all engaged in " known
anticompetitive acts" demonstrating a " pattern of
conduct" in violation of " Sections 1 and 2 of
Sherman and Section 7 of Clayton." Pls.'
Opp'n at 2. The Plaintiffs allege that Apollo
acquired NewPage's debt and that it " used its
acquisition of NewPage's second lien debt to exert
improper influence over NewPage, to force a merger with Verso
and to reduce capacity in the highly concentrated coated
paper markets in North America in anticipation and
preparation for that merger." Id. The
Plaintiffs say that " [t]his acquisition and exertion of
influence reduced competition and had the intent to further
Verso's monopoly power over the North American coated
paper markets, in violation of Sections 1 and 2 of the
Sherman Act and Section 7 of the [C]layton Act."
Id. Turning to AIM's role, the Plaintiffs
maintain that AIM " was the instrument Verso and NewPage
used to ensure that any reductions in capacity in these
markets was permanent, by selling these mills to a scrapper
rather than competitors willing to pay a higher price to
continue to operate the mills in the production of coated
paper products." Id.
Plaintiffs concede that they " did not name Apollo or
NewPage as defendants in this action, nor did [they]
challenge the merger of Verso and NewPage." Id.
at 6. They explain that the " legality of the
Verso-NewPage merger was the subject of a long-running, and
on-going investigation by the Antitrust Division of the U.S.
Department of Justice (DOJ)" and " [r]ather than
attempt to undertake a challenge to the Verso-NewPage merger,
Plaintiffs' antitrust counsel communicated
Plaintiffs' concerns regarding the closure and scrapping
of the Bucksport Mill to DOJ in early November, 2014"
and " requested that DOJ condition the approval of the
Verso-NewPage merger on divestiture of the Bucksport Mill and
sale to a competitor." Id.
Plaintiffs argue that the sale of the Bucksport mill to AIM
does not render their Amended Complaint moot because they
contend that the Court retains the authority to " find
the sale to AIM to be illegal and (i) order rescission of the
Verso-AIM contract; or (ii) mandate divestiture of the
Bucksport Mill as a going concern by AIM, so that
the Mill could be sold to a Verso competitor or any new
entrant into the coated printed paper market (e.g., a foreign
paper maker or a North American producer of other paper
products)." Id. at 27 (emphasis in original).
Plaintiffs turn to each of the Counts and maintain that their
amended complaint survives dismissal. Id. at 29-41.
reply, Verso begins by characterizing the Plaintiffs'
The First Amended Complaint contains essentially three
antitrust claims: (1) Verso and NewPage conspired to close
the Bucksport mill in violation of Section 1 of the Sherman
Act; (2) Verso attempted to monopolize the North American
coated paper market (and conspired with AIM to do so) by
selling the Bucksport mill to AIM in violation of Section 2
of the Sherman Act; and (3) Verso sold the Bucksport mill to
AIM--a noncompetitor in the North American coated paper
market--in violation of Section 7 of the Clayton Act.
Id. at 1. Verso then summarizes its response:
Verso moved to dismiss the [First Amended Complaint] because
(1) all of Plaintiffs' claims against Verso are now moot;
(2) the Section 1 claim fails because Plaintiffs do not
satisfy the pleading standard set forth in Twombly ;
(3) the Section 2 claims fail because Plaintiffs allege no
conduct besides a purported refusal to deal with competitors,
which is not a violation of the antitrust laws under
Trinko ; and (4) the Section 7 claim fails because
it is nothing more than an effort to make an end-run around
Id. at 1-2. Contending that the Plaintiffs have
sought to defend the Verso motion to dismiss by adding new
allegations in their opposition brief, Verso asserts that the
Plaintiffs have engaged in a " wholesale attempt"
to " fundamentally change the nature of their case by
and through their opposition to the pending motion to
dismiss," which Verso says is " improper under
Twombly." Id. at 3.
as authority Mad Men, Verso accuses the
Plaintiffs of attempting to " change the
conversation" by making a series of allegations in their
opposition that is not contained in their First Amended
Complaint. Id. at 2 n.1, 4-9. First, Verso insists
that the allegations about Apollo are " not properly
before the Court because they are not in the [First Amended
Complaint], nor are they relevant to the question of whether
Verso, one of many portfolio companies that Apollo owns,
conspired with NewPage to close the Bucksport mill."
Id. at 5-6. Next, Verso expresses skepticism that
the Plaintiffs have not claimed that Verso has refused to
deal with a competitor as the refusal to do so is not a
Section 2 violation under Trinko. Id. at 6-8. Third,
Verso objects to the Plaintiffs' reference to Verso's
acquisition of NewPage, rather than Verso's sale of the
Bucksport mill to AIM. Id. at 8-9.
reply, AIM focuses on the Plaintiffs' asserted failure to
respond to AIM's analysis of the Membership Interests
Purchase Agreement (MIPA), where AIM contended that "
AIM did not make the 'promise' to Verso that
Plaintiffs allege AIM made, and on which their entire claim
of conspiracy hangs--a promise that AIM would salvage the
Mill." AIM Reply at 2. AIM points out that
" it requires no conspiracy for AIM to agree to purchase
a mill and then to salvage it; that is AIM's
business." Id. at 2-3. AIM rejects the
Plaintiffs' attempts to distinguish the Verso sale to AIM
from Trinko. Id. at 3. Regarding the Clayton Act,
AIM writes that the Plaintiffs " point to no case that
says an asset owner violates the Clayton Act by selling its
own asset to a non-competitor (or refusing to sell its own
asset to a competitor)." Id. at 4.
Motion to Dismiss
evaluating a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim upon which
relief can be granted, a court must determine " whether,
construing the well-pleaded facts of the complaint in the
light most favorable to the plaintiffs, the complaint states
a claim for which relief can be granted."
Ocasio--Herná ndez v. Fortuño--
Burset, 640 F.3d 1, 7 (1st Cir. 2011) (citing
Fed.R.Civ.P. 12(b)(6)). A court need not assume the truth of
conclusory allegations, and the complaint must state at least
a " plausible claim for relief." Ashcroft v.
Iqbal, 556 U.S. 662, 678-79, 129 S.Ct. 1937, 173 L.Ed.2d
868 (2009). However, " [n]on-conclusory factual
allegations in the complaint must . . . be treated as true,
even if seemingly incredible." Ocasio--Herná
ndez, 640 F.3d at 12. A court may not " attempt to
forecast a plaintiff's likelihood of success on the
merits" . Id. at 13.
2007, the United States Supreme Court issued
Twombly, which emphasized the need for a
plaintiff's complaint to marshal sufficient facts to
demonstrate a " plausible entitlement to relief."
550 U.S. at 559. It is noteworthy that Twombly is an
antitrust case in which the plaintiff claimed a violation of
§ 1 of the Sherman Act. Id. at 548. In
stressing the need for plausibility, the Twombly
Court observed that an antitrust action " can be
expensive," id. at 558, and the Supreme Court
worried that " the threat of discovery expense will push
cost-conscious defendants to settle even anemic cases before
reaching" the summary judgment or trial stages.
Id. at 559.
years later, in Iqbal, the United States Supreme
Court refined the dismissal standard:
To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face. A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.
556 U.S. at 678 (internal quotation marks and citations
omitted). The Iqbal Court suggested that courts when
considering motions to dismiss could " chose to begin by
identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of
truth." Id. at 679. Having isolated " the
well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise
to an entitlement to relief." Id.
2013, the First Circuit described the Twombly and
Iqbal decisions as " watershed cases."
García-Catalán v. United States, 734
F.3d 100, 101 (1st Cir. 2013). The " plausibility
standard," the First Circuit wrote, has become "
the 'new normal' in federal civil practice."
Id. (quoting A.G. v. Elsevier, Inc., 732
F.3d 77, 78-79 (1st Cir. 2013)). The First Circuit explained
that " the plausibility inquiry necessitates a two-step
pavane." Id. at 103 (citing
Rodríguez-Reyes v. Molina-Rodríguez,
711 F.3d 49, 53 (1st Cir. 2013)). " First, the court
must distinguish 'the complaint's factual allegations
(which must be accepted as true) from its conclusory legal
allegations (which need not be credited).'"
Id. (quoting Morales-Cruz v. Univ. of P.R.,
676 F.3d 220, 224 (1st Cir. 2012)). " Second, the court
must determine whether the factual allegations are sufficient
to support 'the reasonable inference that the defendant
is liable for the misconduct alleged.'" Id.
(quoting Haley v. City of Boston, 657 F.3d 39, 46
(1st Cir. 2011) (quoting Iqbal, 556 U.S. at 678)).
The Complaint and Attached Documents
evaluating the sufficiency of a complaint, a court "
must take the allegations in the complaint as true and must
make all reasonable inferences in favor of the
plaintiffs." Watterson v. Page, 987 F.2d 1, 3
(1st Cir. 1993). See also Town of Barnstable v.
O'Connor, 786 F.3d 130, 141 n.12 (1st Cir. 2015)
(discussing Watterson ). " Ordinarily, of
course, any consideration of documents not attached to the
complaint, or not expressly incorporated therein, is
forbidden, unless the proceeding is properly converted into
one for summary judgment under Federal Rule of Civil
Procedure 56." Watterson, 987 F.2d at 3 (citing
Fed.R.Civ.P. 12(b)(6)). At the same time, there are "
narrow exceptions" for " documents the authenticity
of which are not disputed by the parties; for official
records; for documents central to plaintiffs' claim; or
for documents sufficiently referred to in the
complaint." Id. at 3 (citations omitted). The
Court has applied these restrictions in its review of the
allegations and documents in this case.
motion, Verso contends that even though certain additional
facts are not alleged in the Amended Complaint, the Court may
and should consider them for purposes of ruling on the motion
to dismiss. Verso Mot. at 5-6. These facts include:
(1) that " the DOJ approved the Verso/NewPage
transaction and, in doing so, concluded that Verso's
decision to sell the Bucksport mill to AIM was unrelated to
Verso's acquisition of NewPage" ; (2) that "
Verso's acquisition of NewPage closed on January 7,
2015" ; and (3) that " Verso's sale of the
Bucksport mill to AIM closed on January 29, 2015."
Id. The Plaintiffs do not directly respond to
Verso's assertion that the Court should consider these
facts. However, regarding DOJ's approval of the
Verso/NewPage transaction, the Plaintiffs attached to their
response to the motion to dismiss a copy of DOJ's
December 31, 2014 Competitive Impact Statement (CIS).
Pls.' Opp'n Attach. 9 DOJ Competitive
Impact Statement (ECF No. 123). Accordingly, as the
Plaintiffs and Verso both cite the DOJ's CIS, the Court
has considered it under the Watterson exception for
public documents. Similarly, the Plaintiffs and Verso agree
that the Verso/NewPage merger took place on January 7, 2015
and that the Verso/AIM sale was completed on January 29,
2015. SeePls.' Opp'n Attach. 1
Factual Chronology, at 7 (ECF No. 123); Order
Denying Pls.' Mot. for Recons. and Req. for
Certification at 5-6 (ECF ...