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

Filing 134

ORDER granting 113 Aim Development (USA) LLC's Motion to Dismiss for Failure to State a Claim; granting 114 Defendants Verso Paper Corp. and Verso Paper LLC's Motion to Dismiss for Failure to State a Claim. The Court dismisses without prejudice Count Nine in Plaintiffs' First Amended Complaint. By JUDGE JOHN A. WOODCOCK, JR. (MFS)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
INTERNATIONAL ASSOCIATION
OF MACHINISTS AND
AEROSPACE WORKERS, AFL-CIO,
LOCAL LODGE NO. 1821, et al.,
Plaintiffs,
v.
VERSO CORPORATION, et al.,
Defendants.

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1:14-cv-00530-JAW

ORDER ON MOTIONS TO DISMISS
A paper 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 Twombly1
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

1

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).

the Clayton Act covers a sale to a non-competitor as opposed to the acquisition of a
competitor.
I.

BACKGROUND
On 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
Corporation2 (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 FiftyThree Local No. 1821 Members and included additional allegations. First Am. Compl.
for Declaratory and Injunctive Relief (ECF No. 29) (Am. Compl.).
The 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

On April 29, 2015, Verso filed a notice of name change of Verso Paper Corp., substituting the
name Verso Corporation for Verso Paper Corp. Notice of Name Change of Verso Paper Corp. (ECF No.
130). The Court granted the motion on May 1, 2015. Order Granting Mot. to Substitute Party (ECF
No. 131).
2

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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. 133).
Meanwhile, 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).
II.

THE PARTIES’ POSITIONS

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A.

The Defendants’ Motions
1.

Verso’s Motion

In its 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 (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 (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 employees. Id.
2.

AIM’s Motion

In its 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

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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
moot.” Id.
3.

The Plaintiffs’ Response

In 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

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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.
The 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 VersoNewPage merger on divestiture of the Bucksport Mill and sale to a competitor.” Id.
The 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 VersoAIM contract; or (ii) mandate divestiture of the Bucks[]port 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).
The Plaintiffs turn to each of the Counts and maintain that their amended
complaint survives dismissal. Id. at 29-41.
4.

Verso’s Reply

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In its reply, Verso begins by characterizing the Plaintiffs’ contentions:
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 Trinko.
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.
Citing as authority Mad Men,3 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

3

Mad Men: Love Among the Ruins (AMC television broadcast Aug. 23, 2009).

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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.
5.

AIM’s Reply

In its 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.
III.

LEGAL STANDARD
A.

Motion to Dismiss

When 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

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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–Hernández 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 (2009). However, “[n]on-conclusory factual allegations in the
complaint must . . . be treated as true, even if seemingly incredible.”
Hernández, 640 F.3d at 12.

Ocasio–

A court may not “attempt to forecast a plaintiff's

likelihood of success on the merits”. Id. at 13.
In 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.
Two 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.

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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.
In 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 twostep 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)).
B.

The Complaint and Attached Documents

In 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

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plaintiffs.”

Waterson 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 Waterson).
“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.”
Waterson, 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.4
C.

Additional Facts

In its 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

In its opposition, the Plaintiffs intimated that they are “likely to again amend the Complaint
and conform the Complaint to the additional facts that have occurred since December 22 that evidence
a violation of the antitrust laws . . . . However, even as currently [pled], Plaintiffs respectfully maintain
that Plaintiffs’ First Amended Complaint adequately states a cause of action for violation of Section 1
and 2 of the Sherman Act and Section 7 of the Clayton Act against these defendants on which relief
can be granted.” Pls.’ Opp’n at 26 n.36. The Court must rule on the complaint before it, not on one
that might have been filed or might be amended. See Maine Springs, LLC v. Nestlé Waters N. Am.,
Inc., No. 2:14-cv-00321-GZS, 2015 U.S. Dist. LEXIS 33259, at *1 n.1, 2015 WL 1241571, at *1 n.1 (D.
Me. Mar. 18, 2015).
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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).5
Accordingly, as the Plaintiffs and Verso both cite the DOJ’s CIS, the Court has
considered it under the Waterson 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. See Pls.’ 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 No. 133) (“Third, Verso completed its
sale of the Bucksport Mill to AIM on January 29, 2015”). The Court considered these
two additional facts because they are based on documents falling within the Waterson
exceptions for documents the authenticity of which is not disputed by the parties and
for documents central to the Plaintiffs’ claims.
IV.

DISCUSSION
A.

Mootness

In their Amended Complaint, the Plaintiffs seek the following relief:
1) a declaration that the Verso agreement with NewPage to close the
Bucksport mill is an illegal restraint of trade;

The Plaintiffs note that “DOJ published the notice in the Federal Register of the VersoNewPage merger Complaint, divestiture and Consent Decree, as well as the CIS, on January 14, 2015.”
Pls.’ Opp’n at 19.
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2) a declaration that the Verso agreement with AIM to sell the mill is
an illegal conspiracy to monopolize the market;
3) a declaration that Verso’s contemplated actions to destroy the
productive capacity of the Bucksport mill, its refusal to offer the mill
for sale as a going concern, and its agreement to sell the mill to AIM
for salvage amount to an illegal attempted monopolization;
4) an injunction prohibiting Verso from taking steps that would damage
the mill as a going concern or to impede the sale of the mill to a
competitor;
5) an injunction that prohibits Verso’s sale of the mill to AIM, prohibits
Verso and AIM from rejecting reasonable bona fide offers from a
buyer willing to continue operating the mill as a paper mill, requires
Verso to work with the Maine Department of Economic and
Community Development or a neutral to seek prospective buyers;
6) an injunction that prohibits Verso and AIM from taking actions that
would render the Bucksport mill inoperable on a cost basis;
7) an injunction that prohibits Verso from attributing costs from other
Verso facilities, including the Jay mill, to the Bucksport mill;
8) an injunction that prohibits Verso and AIM from selling or trying to
sell the electric power plant except as part of a sale of the whole mill;
and

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9) an injunction that requires Verso to publicize the availability of the
Bucksport mill for sale at a reasonable price to a bona fide buyer.
Am. Compl. at 86-88.
Verso asserts that now that its sale to AIM is complete, the Court is powerless
to grant the Plaintiffs the remedies it is seeking. Verso Mot. at 8-11. The Plaintiffs
respond that:
[e]ven if some of the requested relief delineated in the prayer for relief
in the [First Amended Complaint] has now been rendered ineffective or
unobtainable against Verso[,] as a consequence of the sale of the
Bucksport Mill to AIM, the Court still could 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 papermaker or a North
American producer of other paper products).
Pls.’ Opp’n at 27 (emphasis in original).
The United States Supreme Court observed in 1876 that “[a] court of equity is
always reluctant to rescind, unless the parties can be put back in statu quo. If this
cannot be done, it will give such relief only where the clearest and strongest equity
imperatively demands it.” Grymes v. Sanders, 93 U.S. 55, 62 (1876). Based on the
record before the Court, there is no basis to conclude that an order rescinding the
Verso-AIM contract would place the parties in the position they were in before the
sale. In fact, as the Plaintiffs acknowledged when they filed suit:
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-

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manufacturer has adequate time to make a bona fide offer for the
Bucksport Mill.
Mot. for a TRO and a Prelim. Inj. Pursuant to F.R.C.P. 65 at 4 (ECF No. 4) (Pls.’ TRO
Mot.). In their Amended Complaint and in support of the temporary restraining
order, the Plaintiffs alleged that such actions as wiping the hard drives, failing to
release tension on the belts and felts, failing to maintain heated water in all tanks,
and failing to rotate and lubricate all metal rollers would “permanently destroy the
papermaking capability of the Bucksport Mill, rendering this facility incapable of
being sold to a competitor able to operate as a paper mill . . . .” Am. Compl. ¶¶ 53-54.
Taking these allegations as true, as is required in ruling on a motion to dismiss, the
Plaintiffs have not stated a basis for contract rescission as the sale to AIM has taken
place. There is no basis to conclude that if Verso were to resume ownership of the
Bucksport mill tomorrow, the mill could be used to make paper. In short, the damage
has been done.
As a second potential remedy, the Plaintiffs urge the Court to order AIM to
divest itself of the Bucksport mill property and sell it to a competitor to restore the
mill as “a productive contributor to the North American coated paper market.” Pls.’
Opp’n at 27. As the Plaintiffs correctly point out, courts retain the power to order
divestiture for an antitrust violation. Cia. Petrolera Caribe, Inc. v. Arco Caribbean,
Inc., 754 F.2d 404 (1st Cir. 1985).

However, the divestiture remedy would be

available only against AIM as AIM now owns the Bucksport mill. The Court may not
order Verso to divest itself of something it no longer owns.

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As regards AIM, again the allegations in the Amended Complaint—taken as
true for purposes of the motion to dismiss—establish that now that the sale has taken
place, it is “nearly impossible for Plaintiffs to obtain the relief they seek in their
lawsuit,” Pls.’ TRO Mot. at 4, because the facility has been rendered “incapable of
being sold to a competitor able to operate [it] as a paper mill.” Am. Compl. ¶¶ 53-54.
Even if the Court could theoretically order AIM to sell what remains of the operating
mill to a Verso competitor, the Court would not do so on this record because the Court
is convinced based on the allegations in the Amended Complaint that such an order
would not provide any “effectual relief.” Church of Scientology v. United States, 506
U.S. 9, 12 (1992).
The First Circuit has taught that “[t]he doctrine of mootness enforces the
mandate ‘that an actual controversy must be extant at all stages of the review, not
merely at the time the complaint was filed.’”

ACLU of Mass. v. United States

Conference of Catholic Bishops, 705 F.3d 44, 53 (1st Cir. 2013) (quoting Manqual v.
Rotger-Sabat, 317 F.3d 45, 60 (1st Cir. 2003) (quoting Steffel v. Thompson, 415 U.S.
452, 460 n.10 (1974))). “If events have transpired to render a court opinion merely
advisory, Article III considerations require dismissal of the case.” Manqual, 317 F.3d
at 60. In Gilpin v. American Federation of State, 875 F.2d 1310 (7th Cir. 1989), the
Seventh Circuit wrote that “[e]ven the United States Court of Appeals for the Seventh
Circuit cannot make time run backwards.” Id. at 1313. What is true for the Seventh
Circuit is even more so for the district court in Maine. Here, based on the allegations
in the Amended Complaint, there is nothing to suggest that if this Court were to

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rescind the Verso/AIM contract, place Verso back in ownership of the Bucksport mill,
and order Verso to sell the mill to a competitor, that it could be reasonably sold as an
operable paper mill. “[I]f an event occurs while a case is pending . . . that makes it
impossible for the court to grant ‘any effectual relief whatever’ to a prevailing party,
the appeal must be dismissed.’” Chafin v. Chafin, 133 S. Ct. 1017, 1023 (2013)
(quoting Church of Scientology, 506 U.S. at 12). See also Matt v. HSBC Bank USA,
N.A., 783 F.3d 368, 372 (1st Cir. 2015).
This leaves the Plaintiffs with an abstract right but no realistic remedy. The
remaining request is for a declaration of rights, but Article III of the United States
Constitution limits the federal court to adjudicating “only actual, ongoing cases or
controversies.” Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990). Here, “even if
this court decided the questions” raised by the Plaintiffs, “the pragmatic dispute
between the parties would be unaffected.” United States v. Reid, 369 F.3d 619, 624
(1st Cir. 2004).
The Court concludes that the Plaintiffs’ claims against Verso and AIM are now
moot. However, in excess of caution, the Court addresses the merits of the motions
to dismiss.
B.

Allegations in the Plaintiffs’ Memorandum That Are Not in the
Plaintiffs’ Amended Complaint

In the Plaintiffs’ response, they put forth a series of alleged facts that tracks
the genesis of the Bucksport mill’s sale and demolition to 2010, when, they say, Apollo
Global Management, Verso’s parent, acquired NewPage’s second lien debt.

Pls.’

Opp’n at 29. As NewPage was a major competitor of Verso in 2010, the Plaintiffs say
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that Apollo’s acquisition of NewPage’s debt was anticompetitive. Id. at 30. In fact,
the Plaintiffs observe that Apollo’s acquisition of a competitor’s debt was challenged
in the United States District Court for the Southern District of New York in 2003.
Id. (citing Vantico Holdings S.A. v. Apollo Mgmt., 247 F. Supp. 2d 437 (S.D.N.Y.
2003)). The Plaintiffs maintain that the district court in Vantico recognized “the
established precedents that hold that acquisition of a competitor’s debt can violate
antitrust laws.” Id. The Plaintiffs then assert that beginning in 2011, Apollo used
its influence as the holder of NewPage’s debt to “compel a Verso-NewPage merger.”
Id. In four detailed paragraphs, the Plaintiffs set forth these factual assertions,
concluding that these “facts meet the parallel plus probability standard in Twombly”
and therefore “dismissal of Plaintiff[]s’ Section 1 claims is not appropriate.” Id. at 3032. The Plaintiffs repeat these allegations in their discussion of their theory of
liability under § 2 of the Sherman Act. Id. at 38.
In its reply, Verso complains that these factual allegations about Apollo and
its ownership of NewPage debt are nowhere in the Plaintiffs’ Amended Complaint
and should not be considered by the Court. Verso says that the Plaintiffs’ new
allegations in their opposition brief are “a thinly disguised attempt by Plaintiffs to
amend the [First Amended Complaint] through their brief.” Verso Reply at 2. Verso
maintains that in ruling on the motions to dismiss, the Court may consider only the
“well-pleaded facts as they appear in the complaint.” Id. at 3-4 (quoting Coyne v. City
of Somerville, 972 F.2d 440, 442-43 (1st Cir. 1992)).

18

Verso is correct. In ruling on a motion to dismiss, a court is restricted to the
allegations in the plaintiffs’ complaint, and the Court construes “the well-pleaded
facts in the light most favorable to the plaintiffs, . . . accepting their truth and drawing
all reasonable inferences in plaintiffs’ favor.” Foley v. Wells Fargo Bank, N.A., 772
F.3d 63, 67-68 (1st Cir. 2014) (quoting Medina-Velázquez v. Hernández-Gregorat, 767
F.3d 103, 108 (1st Cir. 2014)). At the same time, the plaintiffs may argue what
“reasonable inferences” should be drawn from those “well-pleaded facts” to provide
greater context. The Court has considered the facts in the Plaintiffs’ response but
not alleged in the Amended Complaint only to the extent they shed light on the facts
and theories actually alleged in the Amended Complaint. A Rule 12(b)(6) motion
tests the sufficiency of the facts and inferences in a complaint, not the sufficiency of
the facts and inferences in a lawyer’s memorandum.
C.

Count One—The Sherman Act Section One
1.

The Section 1 Allegations in the First Amended Complaint

In their amended complaint, the Plaintiffs allege that Verso “entered into an
unlawful agreement to restrain trade with NewPage under Section 1 of the Sherman
Act.” Am. Compl. ¶ 5. The Plaintiffs spell out the charge in Count One of the
Amended Complaint. Id. ¶¶ 168-74. First, they say that Verso and NewPage “are
the leading competitors in the market for coated printing papers in North America”
and that they “have cooperated extensively in implementing the terms of their merger
agreement and seeking to obtain approval of the NewPage Acquisition by the DOJ
and other relevant authorities.” Id. ¶ 169. The Plaintiffs point out provisions in the

19

January 3, 2014 merger agreement between Verso and NewPage that conditioned the
merger on “certain debt-restructuring transactions” and the NewPage’s sale of two
paper mills, one in Biron, Wisconsin and the other in Rumford, Maine, “in order to
address antitrust considerations related to the NewPage acquisition.” Id. (quoting
Verso’s Form 8-K filing of October 30, 2014). The Plaintiffs also say that the merger
agreement provided that “NewPage and Verso would use their reasonable best efforts
to obtain regulatory approval, and would not sell, dispose or divest any assets without
the written consent of the other.” Id.
The heart of the Plaintiffs’ § 1 allegation is that:
Verso’s decision to shut down the Bucksport Mill, announced on October
1, 2014, was part of a cooperation agreement between Verso and
NewPage designed (i) to assure that Verso’s financial condition
remained satisfactory until closing of the NewPage Acquisition (as
apparently required by the Verso-NewPage merger agreement) and (ii)
to increase future coated printing paper prices and thereby make the
NewPage Acquisition more attractive to Verso economically than it
otherwise would have been.
Id. ¶ 170. To this end, the Plaintiffs claim, Verso entered into an agreement with
AIM to sell the Bucksport mill, knowing that AIM intended to demolish it and sell it
as scrap, which the Plaintiffs maintain will reduce competition for coated printing
paper in North America and will eliminate demand for skilled papermaking workers.
Id. ¶ 172. The Plaintiffs allege that the closure of the Bucksport mill would reduce
Verso’s own coated printing paper production capacity in 2014 by about 26% “as a
way of implementing its merger-related understandings with NewPage.” Id. ¶ 173.
The closure was, in the Plaintiffs’ view, an “unreasonable contract, combination or

20

conspiracy in restraint of trade that is per se illegal under Section 1 of the Sherman
Act . . . .” Id.
They go on to claim that “[e]ven if Verso’s decision to shut down the Bucksport
Mill pursuant to its broader cooperation agreement with NewPage were found to be
subject only to the Rule of Reason, the facts surrounding the decision clearly establish
that it is an unreasonable restraint of trade.” Id. ¶ 174. This is so, they say, because
shutting down the Bucksport mill and selling it to a company that intends to demolish
it, will “reduc[e] productive capacity thereby generating higher prices in the market
where [Verso] will be the clearly leading supplier.” Id.
2.

Section 1 of the Sherman Act

Section 1 of the Sherman Act prohibits “[e]very contract, combination in the
form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the
several States . . . .”6 15 U.S.C. § 1. Section 1 of the Sherman Act “does not prohibit
all unreasonable restraints of trade, but ‘only restraints effected by a contract,
combination or conspiracy.’” Evergreen Partnering Group, Inc. v. Pactiv Corp., 720
F.3d 33, 43 (1st Cir. 2013) (quoting Twombly, 550 U.S. at 553) (quoting Copperweld
Corp. v. Ind. Tube Corp., 467 U.S. 752, 775 (1984)).
To prove that Verso’s acquisition of NewPage constituted an unreasonable
restraint of trade, the Plaintiffs allege that Verso’s decision to close the Bucksport
mill and sell it to a business that would in turn sell it for scrap implemented an
understanding with NewPage to reduce competition for coated paper in North

The principal author of the Sherman Act was Ohio Senator John Sherman, whose brother was
the legendary Civil War general, William Tecumseh Sherman.
6

21

America and to eliminate the demand for skilled labor. Am. Compl. ¶ 172. This
critical allegation, however, is not anchored by fact.

The Plaintiffs point to no

provision in the Verso/NewPage acquisition documents and no assertion by
Verso/NewPage executives that proves such an agreement ever existed. As the Court
observed earlier, “there is no evidence that Verso needed the written consent of
NewPage to close the Mill; in fact, the evidence suggests the contrary.” TRO Order
at 69.
Instead, the Plaintiffs speculate that “discovery of internal communications
between Verso and NewPage, and depositions of executives for both parties which
were engaged in discussions between the parties, is likely to provide evidentiary
support to show that Verso and NewPage unlawfully agreed to shut down and sell
the Bucksport Mill to a non-paper manufacturer in order to make the pending
NewPage acquisition more attractive economically to Verso.” Id. ¶ 171. But the
Twombly Court warned against reliance on discovery in an antitrust case to cross the
critical line from possible to plausible. Instead, the Twombly Court ruled that an
antitrust complaint must contain “enough factual matter (taken as true) to suggest
that an agreement was made.” Twombly, 550 U.S. at 556 (emphasis supplied). Here,
the Plaintiffs have hypothesized about what agreements could have been made and
what discovery could reveal about these supposed agreements. To survive dismissal
under Twombly, the allegations must “raise a reasonable expectation that discovery
will reveal evidence of illegal agreement.” Id. (footnote omitted). Here, the Court

22

concludes that the allegations in the Amended Complaint fall short and do not raise
such a reasonable expectation.
In their memorandum, the Plaintiffs also claim that their allegations “meet
the parallel plus probability standard in Twombly.” Pls.’ Opp’n at 32. The Plaintiffs
state that the “[First Amended Complaint] and Chronology summarize the parallel
actions.” Id. at 30. The Plaintiffs then argue that Apollo used its acquisition of
NewPage’s debt to “compel a Verso-NewPage merger” and then set about engaging in
“anticompetitive and coordinated actions to reduce capacity in various North
American coated paper markets.” Id. at 30-31. They say that Verso and NewPage
acted in furtherance of “the Apollo-Verso-NewPage-AIM scheme to reduce capacity in
advance of the desired and anticipated Verso-NewPage merger.” Id. at 31. They
conclude that the “only reason that Verso decided to close Bucksport and Sartell Mills
(Verso’s only unionized facilities), was because of its planned merger with NewPage—
because, but/for that merger . . . closing neither the Bucksport nor Sartell Mill—i.e.
representing at least 50% of Verso’s business assets in 2012—would have made no
economic sense.” Id.
The first problem with the Plaintiffs’ parallel plus argument is that it relies on
some facts not alleged in the First Amended Complaint.

The First Amended

Complaint makes passing reference to Apollo as Verso’s parent, but it does not set
out the chronology that is attached to their memorandum. There is, for example, no
allegation in the First Amended Complaint about Apollo purchasing NewPage’s debt
to force a merger with Verso. Furthermore, the Plaintiffs elected not to name Apollo

23

or NewPage as party defendants in this case. Pls.’ Opp’n at 6 (“Plaintiffs did not
name Apollo or NewPage as defendants in this action, nor did Plaintiffs challenge the
merger of Verso and NewPage”).
But the major problem is that the Plaintiffs’ parallel plus argument, especially
when the focus is on the allegations and inferences in the First Amended Complaint,
is that it is replete with accusation but scarce on facts. In Twombly, the Supreme
Court cautioned:
[L]awful parallel conduct fails to bespeak unlawful agreement. It makes
sense to say, therefore, that an allegation of parallel conduct and a bare
assertion of conspiracy will not suffice. Without more, parallel conduct
does not suggest conspiracy, and a conclusory allegation of agreement
at some unidentified point does not supply facts adequate to show
illegality. Hence, when allegations of parallel conduct are set out in
order to make a § 1 claim, they must be placed in a context that raises a
suggestion of preceding agreement, not merely parallel conduct that
could just as well be independent action.
550 U.S. at 556-57. Without some more concrete allegation, the mere fact that both
Verso and NewPage closed paper mills is not enough under Trombly to withstand
dismissal.
D.

Counts Two and Three—The Sherman Act Section 2
1.

The Section 2 Allegations in the Amended Complaint
a.

Count Two: Attempted Monopolization

In Count Two, the Plaintiffs allege that Verso “entered into a corporate
acquisition agreement with its largest competitor in the industry, NewPage, in order
to become the dominant supplier in the declining market for coated printing papers
in North America.” Am. Compl. ¶ 176 (footnote omitted). They say that “[i]f the

24

NewPage Acquisition is permitted by DOJ to go forward, even subject to the
announced divestitures of two NewPage mills, Verso would have more than doubled
in size and become the clear market leader with about a 50% share of the relevant
market for coated paper in North America.” Id. The Plaintiffs assert that:
Verso’s actions and statements . . . demonstrate that Verso has the
specific intent to monopolize the North American market for ‘coated
printing paper’ by intentionally closing the Bucksport Mill, refusing to
discuss potential offers for the Bucksport Mill from any entities wishing
to continue using Bucksport to produce paper, and finally selling the
Bucksport Mill to an entity that specializes in scrap metal and has no
experience or intention of continuing to operate the Bucksport Mill as a
paper-manufacturing facility.
Id. ¶ 177. The Plaintiffs claim that “Verso’s purpose in deliberately destroying the
Bucksport Mill’s productive capacity is to prevent continued operation of Bucksport
by a smaller competitor in the coated printing paper market or a qualified potential
competitor into that market, and thereby generate higher prices made possible by
reduced industry capacity in the North American market for coated printing paper.”
Id.
They assert that “Verso’s ‘decommissioning’ plans to disable the Bucksport Mill
from continued capability to produce coated printing paper, coupled with its
deliberate efforts to prevent its sale as a going concern and its intentional sale of the
Bucksport Mill to a scrap metal company, constitute an illegal attempt to monopolize
the North American market for coated printing paper in violation of Section 2 of the
Sherman Act.” Id. ¶ 178. The Plaintiffs go on to maintain that “Verso’s acts and
statements . . . show that Verso has engaged in predatory and/or anticompetitive
conduct, and that it has the specific intent to monopolize the North American coated
25

printing paper market.” Id. ¶ 179. Verso’s “specific purpose,” the Plaintiffs say, in
refusing to sell the Bucksport mill to any competitor and its decision to sell the mill
to AIM is “anticompetitive.” Id. They allege that Verso’s “clear purpose” is “to profit
by reducing productive capacity and thus generating higher prices in the market for
North American coated printing paper where Verso will be the leading supplier,
especially if the Verso-NewPage merger is allowed to proceed.” Id.
Finally, the Plaintiffs refer to Verso’s “prior destruction of printing paper
capability in Sartell, Minnesota, and its acquisition of its largest competitor
(NewPage—who has also used AIM to perpetrate a similar scheme to reduce supply
in Kimberly, WI).” Id. ¶ 180. They claim that Verso’s “additional destruction of the
Bucksport Mill’s productive capability creates a dangerous probability that an
already dominant Verso will be able to become a monopoly, and/or achieve monopoly
power, in the North American market for coated printing paper in the future after
any merger with NewPage.” Id.
b.

Count Three: Conspiracy to Monopolize

In Count Three, the Plaintiffs allege that “Verso and AIM are participants in
an ongoing undertaking to help Verso monopolize the North American coated
printing paper market by destroying paper mills historically committed to producing
coated printing papers.” Id. ¶ 182. They allege that this “is not the first time that
Verso has contracted with AIM to reduce coated printing paper making capacity.” Id.
¶ 183. They say that in 2012, “Verso contracted with AIM to take over Verso’s closed
printing paper making plant in Sartell, Minnesota,” which had been closed due to a

26

fire, but then “unexpectedly—Verso announced it would sell the Sartell Mill to AIM.”
Id. The Plaintiffs allege that AIM then “proceeded to scrap and demolish the Sartell
mill’s papermaking capacity.” Id.
Paragraph 184 sets out AIM’s “extensive experience in buying up closed
printing paper mills and making sure they are never committed again to the market,”
including the purchase and demolition of the NewPage printing paper mill in
Kimberly, Wisconsin. Id. ¶ 184. On information and belief, the Plaintiffs say that
AIM never attempted to sell the Kimberly or Sartell mills as operational paper mills.
Id. ¶ 185. The Plaintiffs allege that “NewPage’s President and CEO reportedly told
federal and state legislators that it would only lease to a ‘non-competing firm.’” Id.
(footnote omitted).
The Plaintiffs assert that the December 5, 2014 contract between Verso and
AIM makes it “very clear that Verso expects AIM to destroy the Bucksport Mill as a
potential producer of coated printing paper going forward and AIM promises to do it,
while retaining only Bucksport’s power plant as an operational facility.” Id. ¶ 186.
Finally, the Plaintiffs maintain that Verso’s “steadfast refusal to sell the Bucksport
Mill as a going concern, and instead to contract with AIM to have it destroyed is
plainly exclusionary because it prevents (i) potential new entry into the North
American market for coated paper or (ii) expansion of capacity by one of the small
competitors already in the market.” Id. ¶ 187. The Plaintiffs conclude that “the
collective acts and statements of Verso and AIM . . . show that each party has the

27

specific intent that Verso should monopolize the North American coated printing
paper market and has agreed to take actions to achieve that end.” Id. ¶ 188.
2.

Section 2 of the Sherman Act

Section 2 of the Sherman Act provides that “[e]very person who shall
monopolize, or attempt to monopolize, or combine or conspire with any other person
or persons, to monopolize any part of the trade or commerce among the several States,
or with foreign nations, shall be deemed guilty of a felony . . . .” 15 U.S.C. § 2.
As the Court understands the allegations in Counts Two and Three of the
Amended Complaint, the Plaintiffs make two overriding points in their § 2 claims.
First, they assert that Verso was determined to reduce coated printing paper capacity
in North America to make the product scarcer and thus more expensive, and to carry
out its plan, Verso resolved to shut down and demolish the Bucksport mill.

It

thereafter refused to consider selling the mill to any of its competitors, large or small,
and instead sold the mill to a company in the business of demolishing mills. Second,
the Plaintiffs allege that Verso and NewPage engaged in illegal parallel conduct
before they merged, since each of them destroyed a paper mill, Verso in Sartell,
Minnesota, and NewPage in Kimberly, Wisconsin.
Despite the Plaintiffs’ disavowal, the Court still views the Plaintiffs’ first
theory as premised on the unsupported notion that Verso had a legal duty to sell the
Bucksport mill to one of its competitors. This is simply not the law. In Pacific Bell
Telephone Company v. linkLine Communications, Inc., 555 U.S. 438 (2009), the
United States Supreme Court reiterated the general principle that “[s]imply

28

possessing monopoly power and charging monopoly prices does not violate § 2; rather,
the statute targets ‘the willful acquisition or maintenance of that power as
distinguished from growth or development as a consequence of a superior product,
business acumen, or historic accident.”

Id. at 447-48 (quoting United States v.

Grinnell Corp., 384 U.S. 563, 570-71 (1966)). In Trinko, the United States Supreme
Court flatly reiterated that “there is no duty to aid competitors.” 540 U.S. at 411.
The Trinko Court explained:
[C]ompelling negotiation between competitors may facilitate the
supreme evil of antitrust: collusion. Thus, as a general matter, the
Sherman Act “does not restrict the long recognized right of [a] trader or
manufacturer engaged in an entirely private business, freely to exercise
his own independent discretion as to parties with whom he will deal.”
Id. at 408 (quoting United States v. Colgate & Co., 250 U.S. 300, 307 (1919)). As the
Pacific Bell Court phrased it: “As a general rule, businesses are free to choose the
parties with whom they will deal, as well as the prices, terms and conditions of that
dealing.”7 Pac. Bell, 555 U.S. at 448 (citing Colgate & Co., 250 U.S. at 307).
The Plaintiffs are at pains to claim that they are not contesting Tinko, Pacific
Bell, or Aspen Skiing. Pls.’ Opp’n at 34-39. Instead, they cite United States v.
American Tobacco Company, 221 U.S. 106 (1911) for the proposition that it is illegal
for a business to acquire production capacity for the purpose of destroying it. Pls.’
Opp’n at 34 (citing Am. Tobacco, 221 U.S. at 183).

There is a limited exception to this general rule, which is set forth in Aspen Skiing Co. v. Aspen
Highlands Skiing Corp., 472 U.S. 585, 608-11 (1985). In its Order denying the Plaintiffs’ motion for
TRO and for preliminary injunction, the Court discussed the Aspen Skiing exception and determined
it did not apply. TRO at 64-65. In their response, the Plaintiffs concede that Aspen Skiing does not
apply. Pls.’ Opp’n at 34.
7

29

In the Court’s view, the Plaintiffs’ overstate this single factor in the American
Tobacco analysis and its applicability to this case. In 1911, the Supreme Court listed
six factors that led to the conclusion that the American Tobacco Company had
violated the Sherman Act, Am. Tobacco, 221 U.S. at 182-83, and among those factors
was the “persistent expenditure of millions upon millions of dollars in buying out
plants, not for the purpose of utilizing them, but in order to close them up and render
them useless for the purposes of trade.” Id. at 183. It is one thing for a business to
purchase a manufacturing plant, to operate that plant for years, and to conclude that
it is necessary to close the plant; it is another for a business to purchase a
manufacturing plant in order to shut it down. Here, there is no evidence that Verso
acquired the Bucksport mill in order to shut it down. Furthermore, even though AIM
may have bought the Bucksport mill to scrap and demolish it, AIM is not a
papermaker and whatever motivated AIM’s decision making, there is no suggestion
that it is related to the price or supply of coated paper.
Nor is American Tobacco’s control over tobacco in the early Twentieth Century
analogous to Verso’s control over coated paper production. The American Tobacco
Court recites a litany of monopolistic actions, including the use of corporate forms to
obscure American Tobacco’s control; the placement of aspects of the tobacco industry
into seemingly independent contractors, which in fact were controlled by American
Tobacco; the creation of perpetual barriers to the entry of others into the tobacco
trade; and the entering into of numerous lengthy, non-compete agreements with
manufacturers, employees and stockholders. Id. at 182-83. In fact, the Supreme

30

Court later cited American Tobacco as addressing a plan in which “American tobacco
corporations agreed in England with a British company to divide world markets.” F.
Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 170 (2004). The Supreme
Court and the First Circuit have emphasized that the rule of reason must be read
into the antitrust statutes. Standard Oil Co. v. United States, 221 U.S. 1, 62 (1911);
Fraser v. Major League Soccer, 284 F.3d 47, 70-71 (1st Cir. 2002). Here, even as
alleged in Plaintiffs’ Amended Complaint, Verso’s alleged monopolistic conduct is a
pale shadow of American Tobacco’s attempt to divide the world tobacco market with
a competitor.
Turning to parallel conduct, the Court arrives at the same conclusion for the
same reasons concerning § 2 that it reached concerning § 1.

The bulk of the

allegations run afoul of Trinko’s ruling that “there is no duty to aid competitors.” 540
U.S. at 411. Once the allegations that assert Verso, NewPage, and AIM had a duty
to seek out and sell the Bucksport mill to a competitor are winnowed, there is little
left, and the claim, which is full of adjectives but short on facts, runs against the
Twombly Court’s admonition that a mere allegation of conspiratorial parallel conduct
is insufficient to state an antitrust claim absent “facts adequate to show illegality.”
550 U.S. at 557. Here, the Court concludes that the allegations are too conclusory to
survive dismissal.
E.

Count Four: Violation of The Clayton Act
1.

The Clayton Act Allegations in the First Amended
Complaint

31

In Count Four, the Plaintiffs alleged that AIM is a salvage company that has
never operated a paper mill and, pursuant to its agreement with Verso, agreed to
scrap the papermaking equipment at the Bucksport mill and demolish the buildings
dedicated to papermaking.

Am. Compl. ¶ 190.

The Plaintiffs say that the

“competitive effect of the AIM Acquisition is to permanently remove 350,000 metric
tons of printing paper capacity from the North American coated printing paper
market.” Id. ¶ 191. They allege that the “likely (and intended) competitive effect of
this significant reduction in capacity caused by the AIM Acquisition is that future
consumers of coated printing paper will pay higher prices than they would if the
Bucksport Mill remained operational in Verso’s hands or those of a competitor.” Id.
¶ 192.
Quoting § 7 of the Clayton Act, the Plaintiffs assert that because the AIM
Acquisition permanently eliminates the possibility that the Bucksport mill will be
used to produce printing paper, it violates the Clayton Act. Id. ¶ 193. The Plaintiffs
claim that Verso and AIM are both engaged in interstate commerce and that the
“relevant product market in which the AIM Acquisition ‘may. . . substantially lessen
competition’ is the market for ‘coated printing papers’ and the relevant geographic
market is ‘North America’ or the ‘United States.’” Id. ¶ 194. They say that neither
Verso nor AIM can “claim that the AIM Acquisition, by eliminating competitive
facilities from the market, somehow generates efficiencies that would benefit
consumers of coated printing paper.” Id. ¶ 195.
2.

The Clayton Act

32

The critical language of the Clayton Act provides:
No person engaged in commerce or in any activity affecting commerce
shall acquire, directly or indirectly, the whole or any part of the stock or
other share capital and no person subject to the jurisdiction of the
Federal Trade Commission shall acquire the whole or any part of the
assets of another person engaged also in commerce or in any activity
affecting commerce, where in any line of commerce or in any activity
affecting commerce in any section of the country, the effect of such
acquisition may be substantially to lessen competition, or to tend to
create a monopoly.
15 U.S.C. § 18. The parties’ positions view the Verso to AIM transaction in mirror
images: Verso and AIM focus on the impact from the sale on the buyer’s market, while
the Plaintiffs focus on the impact from the sale on the seller’s market. In Verso and
AIM’s view, AIM’s acquisition of the Bucksport mill could not lessen competition
because AIM does not compete in the coated printing paper business.

In the

Plaintiffs’ view, Verso’s sale of the Bucksport mill lessens competition because the
sale effected the scrapping of the Bucksport mill and its papermaking capacity,
thereby reducing the overall supply of coated printed paper and escalating the price
of paper.
The parties have engaged in vigorous adjectival advocacy in their memoranda,
but they have cited very little illuminating law on the critical point: whether the
Clayton Act contemplates a determination of the impact of the acquisition of the
property on the market of the selling party’s business. See AIM Reply at 4-7 (“This
recasting of their Clayton Act claim is in vain and inappropriate”; “Plaintiffs dislike
AIM’s purchase of the Mill, because it lays bare the fact that their jobs—lost before
AIM ever got involved—are not coming back”; “Plaintiffs’ ginned-up claims of

33

lessened competition”; “Plaintiffs’ claim of standing is nothing but a trick”); Verso
Reply at 8-9 (“And in one of the few accurate statements in their opposition brief,
Plaintiffs acknowledge that the [First Amended Complaint] does not challenge
Verso’s acquisition of NewPage”; “Plaintiffs have all but conceded that they otherwise
cannot state a claim for relief under Section 7 of the Clayton Act”); Pls.’ Opp’n at 3941 (“Defendants misstate the applicable standard”).
The language of the Clayton Act supports Verso and AIM’s argument because
it uses the terms “acquire” or “acquisition,” which place the statutory focus on the
impact of the transaction on the buyer, not the seller:
No person engaged in commerce or in any activity affecting commerce
shall acquire, directly or indirectly, the whole or any part of the stock or
other share capital and no person subject to the jurisdiction of the
Federal Trade Commission shall acquire the whole or any part of the
assets of another person engaged also in commerce or in any activity
affecting commerce, where in any line of commerce or in any activity
affecting commerce in any section of the country, the effect of such
acquisition may be substantially to lessen competition, or to tend to
create a monopoly.
15 U.S.C. § 18 (emphasis supplied).

If Congress had intended to capture the

monopolizing effect of the divestiture of property, it could easily have done so. 8 But
it did not. See Goss Int’l Americas, Inc. v. MAN Roland Inc., No. Civ. 03-CV-513-SM,
2005 WL 2998531, at *3-4 (D.N.H. Nov. 8, 2005) (“Section 7 focuses on unlawful
acquisition, holding entities acquiring assets, but not those relinquishing assets, in

The Court acknowledges that divestiture may be a remedy to an antitrust violation, see, e.g.,
United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 330 (1961) (describing divestiture as
“the most important of antitrust remedies”). At the same time, divestiture is considered a “farreaching and drastic remedy.” United States v. Coca-Cola Bottling Co., 575 F.2d 222, 229 (9th Cir.
1978). In this case, where Verso has divested itself of an asset by selling it to a non-competitor, the
Plaintiffs have presented the Court with no authority that it should order the non-competitor to divest
its newly acquired asset.
8

34

violation”) (citing United States v. Coca-Cola Bottling Co., 575 F.2d 222, 227 (9th Cir.
1978); Dailey v. Quality Sch. Plan, Inc., 380 F.2d 484 (5th Cir. 1967));9 Addamax
Corp. v. Open Software Found., Inc., 888 F. Supp. 274, 285 (D. Mass. 1995) (“It is true
that the Clayton Act, by its own terms, applies only where there has been an
acquisition of assets, stock, or other share capital”) (citing 15 U.S.C. § 18).
Judge Newman’s seminal opinion in SCM Corporation v. Xerox Corporation
contains language that supports the Defendants’ view: “Section 7 is concerned with
undue concentrations of power and the anti-competitive effects of permitting one
entity with market power to strengthen its position by acquisition.” 463 F. Supp. 983,
1001-02 (D. Conn. 1978) (citing Brown Shoe Co. v. United States, 370 U.S. 294 (1962)),
aff’d on other grounds 645 F.2d 1195 (2d Cir. 1981). More precisely, Judge Newman
wrote: “But simply transferring the exclusionary power of valid patents from an
inventor to a research institute to a company with manufacturing and marketing

As a general proposition, § 7 of the Clayton Act focuses on buyers, not sellers. However, relying
on Ninth Circuit authority, the United States District Court of New Hampshire observed that “[i]n
certain instances, courts may maintain jurisdiction over entities relinquishing assets to allow for the
equitable remedy of rescission.” Goss Int’l, 2005 WL 2998531, at *4 (citing Coca-Cola, 575 F.2d at
229). The Coca-Cola Court conducted an interlocutory review to decide whether rescission is available
as a remedy in § 7 cases. Coca-Cola, 575 F.2d at 227. The Ninth Circuit perceived a congressional
intent to bind “third parties” whose conduct was “so related to the anti-competitive effects at which
the act was directed . . . .” Id. at 228. Thus, it ruled that “rescission is not without the pale of equitable
discretion in appropriate circumstances,” though “[t]he fact that sellers in [§] 7 cases are not technical
violators of the law is itself a strong equity consideration against rescission.” Id. at 230. Shortly after
the Ninth Circuit decided Coca-Cola, another court interpreted that decision as “merely stand[ing] for
the proposition that a court can maintain as a Clayton [§] 7 defendant any party whose presence is
necessary to effectuate relief.” Palmer News, Inc. v. ARA Servs., Inc., 476 F. Supp. 1176, 1193 (D. Kan.
1979). The general proposition holds on these facts.
The Court assumes that it would have the power to rescind the Verso-AIM contract if necessary
to do so to “eliminate the effects of an acquisition offensive to the statute.” Coca-Cola, 575 F.2d at 229
(citations omitted). In the unusual case in which a court decides to exercise jurisdiction over a seller,
it must first find an anticompetitive conduct to remedy. Here, however, the Court can discern no
recognized theory of such conduct on the facts before it. Thus, it is without a basis on which to conclude
that the transaction at issue—i.e., the sale of the mill to a noncompetitor—is the sort of anticompetitive
conduct calling for a remedy under § 7 of the Clayton Act.
9

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potential does not create damage liability under § 7 when the acquiring company has
no market power in the relevant product market.”

Id. at 1002.

“It is highly

questionable,” Judge Newman continued, “whether a § 7 violation occurs at all when
a company acquires patents prior to the existence of a relevant product market or
acquires patents at a time when it has no market power in a relevant product
market.” Id. The SCM case presented a closer question than the issue in this case
because the plaintiff SCM was a direct potential competitor with Xerox. Here, AIM,
the buyer, is not in the business of producing coated printing paper. Thus, in Judge
Newman’s words, AIM has “no market power in the relevant product market,” nor is
it ever likely to have any market power in that market.
It may be that the notable absence of caselaw in the parties’ submissions
reflects the novelty of the Plaintiffs’ theory of Clayton Act liability: that Verso is
cornering the coated printing paper market, not by expanding, but by contracting.
Verso’s memorandum describes three traditional types of Clayton Act violations: (1)
a horizontal merger, Verso Mot. at 20 (citing United States v. Phila. Nat’l Bank, 374
U.S. 321 (1963)); (2) a vertical merger, id. at 20-21 (citing Brown Shoe Co., 370 U.S.
294); and (3) a conglomerate or harm to potential competition merger. Id. at 21 (citing
Richard A. Posner, Antitrust Policy and the Supreme Court: An Analysis of the
Restricted Distribution, Horizontal Merger and Potential Competition Decisions, 75
COLUM. L. REV. 282, 319 (1975)).

See also WILLIAM C. HOLMES & MELISSA H.

MANGIARACINA, ANTITRUST LAW HANDBOOK § 6:2 (2015) (identifying three varieties of
Clayton Act claims: horizontal mergers, vertical mergers, and conglomerate mergers).

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Without a sale to a potential competitor, none of these recognized forms of Clayton
Act liability applies.
It appears that the Plaintiffs are seeking to create a new class of Clayton Act
violation, whereby the monopoly is created not by controlling a greater percentage of
the overall market by expanding production, but by curtailing it. The notion that a
business could increase its market power by downsizing is at least counterintuitive.
However academically valid, this theory of monopoly power has not found its way into
federal statute or caselaw. In Brown Shoe Co., the Supreme Court undertook a
detailed review of the legislative history behind the Clayton Act and observed that
Congress passed the Act due to “evidence of the danger to the American economy in
unchecked corporate expansions through mergers.”

370 U.S. at 315 (footnote

omitted). See Philadelphia National Bank, 374 U.S. at 363 (addressing a potential
merger between two Philadelphia area banks where the result would have been “a
single bank controlling at least 30% of the commercial banking business in the fourcounty Philadelphia metropolitan area”). The Court is unable to fit the Plaintiffs’
theory of Clayton Act liability into the language of the statute or the caselaw that has
interpreted it.
Accordingly, the Court concludes that the Plaintiffs have not stated a potential
Clayton Act violation by alleging that Verso, a papermaking corporation, sold a
papermaking mill, to AIM, a scrap metal operation, because AIM’s purchase of the
Bucksport mill is not an “acquisition” the effect of which is “substantially to lessen
competition, or to tend to create a monopoly.” 15 U.S.C. § 18.

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F.

Vacation Pay and Severance Pay Claims

As a final housekeeping matter, Verso points out that in its January 6, 2015
Order, the Court dismissed only the Plaintiffs’ motion for expedited declaratory
judgment and their requests for preliminary and permanent injunction and did not
formally dismiss Count Nine, the Maine severance pay and vacation pay counts.
Verso Mot. at 23-24 (citing Order Dismissing Pls.’ Mot. for Declaratory and Injunctive
Relief; and Dismissing Pls.’ Mot. for Attach. and Trustee Process at 85 (ECF No. 73)).
The Plaintiffs did not respond to this portion of Verso’s motion. To the extent Count
Nine remains viable, the Court agrees it should be dismissed without prejudice for
the reasons set forth in its January 6, 2015 and August 3, 2015 orders.
V.

CONCLUSION
The Court GRANTS Motion of AIM Development (USA) LLC to Dismiss

Plaintiffs’ First Amended Complaint (ECF No. 113) and Defendants Verso Paper
Corp. and Verso Paper LLC’s Motion to Dismiss Plaintiffs’ First Amended Complaint
for Declaratory and Injunctive Relief (ECF No. 114). The Court DISMISSES without
prejudice Count Nine in Plaintiffs’ First Amended Complaint.
The Clerk shall enter Judgment in favor of Defendants Verso Paper Corp.,
Verso Paper LLC, and AIM Development (USA) LLC and against Plaintiffs.
SO ORDERED.
/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR
UNITED STATES DISTRICT JUDGE
Dated this 14th day of December, 2015
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