Evergreen Partnering Group, Inc. et al v. Pactiv Corporation et al

Filing 114

Judge Richard G. Stearns: MEMORANDUM AND ORDER entered granting 83 Motion to Dismiss for Failure to State a Claim; granting 85 Motion to Dismiss for Failure to State a Claim; granting 88 Motion to Dismiss for Failure to State a Claim; gr anting 90 Motion to Dismiss for Failure to State a Claim; granting 92 Motion to Dismiss; granting 93 Motion to Dismiss for Failure to State a Claim "For the foregoing reasons, defendants' motions to dismiss are ALLOWED with prejudice. The Clerk will enter judgment for defendants and close the case." (Flaherty, Elaine)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 11-10807-RGS
EVERGREEN PARTNERING GROUP, INC.
v.
PACTIV CORP.; GENPAK, LLC;
DOLCO PACKAGING CORP.; SOLO CUP CO.,
DART CONTAINER CORP.;
and AMERICAN CHEMISTRY COUNCIL
MEMORANDUM AND ORDER ON DEFENDANTS’ MOTIONS
TO DISMISS THE SECOND AMENDED COMPLAINT
June 7, 2012
STEARNS, D.J.
Plaintiff Evergreen Partnering Group (Evergreen) alleges that it was the victim
of a conspiracy by defendants Pactiv Corp., Genpak, LLC, Dolco Packaging Corp.,
Solo Cup Company, Dart Container Corp. (collectively the producer defendants), and
the American Chemistry Council (ACC) to freeze its closed-loop recycling business out
of the polystyrene products market.1 The Second Amended Complaint (SAC) alleges
violations of section 1 of the Sherman Act, 15 U.S.C. § 1, and the Massachusetts Fair

1

Evergreen is domiciled in Massachusetts and filed the case in the District of
Massachusetts, asserting federal question jurisdiction.

Business Practices Act, Mass. Gen. Laws ch. 93A.2 Defendants collectively and
individually3 move to dismiss Evergreen’s SAC for failure to state a viable legal or
equitable claim.
PROCEDURAL BACKGROUND
Evergreen filed its original Complaint on May 9, 2011. After two sets of
attorneys withdrew their appearances, Evergreen’s First Amended Complaint (FAC)
was dismissed because Evergreen failed to comply with the court’s order to obtain
substitute counsel. See Evergreen Partnering Grp., Inc. v. Pactiv Corp., 2011 WL
6012403 (D. Mass. Dec. 1, 2011). After Evergreen belatedly engaged current counsel,
the court removed the default and reinstated the case, leading to the filing (on January
30, 2012) of the SAC. Defendants then renewed their motions to dismiss.
FACTUAL BACKGROUND4

2

Evergreen has withdrawn a third claim of violation of section 43(a) of the
Lanham Act, 15 U.S.C. § 1125(a).
3

Defendants filed a joint memorandum of law (J. Mem., Dkt # 86), as well as
individual memoranda in support of their motions.
4

In the context of a motion to dismiss, plaintiff’s plausible allegations of facts
are assumed to be true. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-556 (2007).
However, “documents the authenticity of which are not disputed by the parties; []
official public records; [] documents central to plaintiffs’ claim; or [] documents
sufficiently referred to in the complaint” may also be considered on a motion to
dismiss. Alt. Energy Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir.
2001) (citation omitted).
2

Polystyrene disposable food service products, which are lightweight and cheap,
are also savaged by environmentalists because they are biodegradation-resistant.5
Evergreen, founded in 2000 by Michael Forrest, developed a “closed-loop” business
model for the recycling of polystyrene products, which involved:
(1) physically collecting certified food-grade polystyrene products from
large school systems; (2) processing these used products into an FDA
approved, food-grade post-consumer polystyrene resin (“PC-PSR”);6 and
(3) using this PC-PSR to manufacture new products for use again in the
same school systems and in other polystyrene products.
SAC ¶ 2. Evergreen’s model offered to save participating school systems up to 35
percent of their waste disposal fees by reducing the cumulative volume of waste, while
also benefitting the environment.
Evergreen’s business model anticipated three sources of revenue:
[f]irst, royalties are paid to Evergreen by producers of the Poly-StyRecycle products based on the total number of these Evergreen foam
products of similar quality sold to consumers each year. . . . Evergreen’s
business model assumed a royalty rate of 4 percent,7 which is standard in
the industry. . . . Second, Evergreen would obtain revenue from selling its
PC-PSR to manufacturers benchmarked at prime pricing of food-grade

5

Polystyrene products, being mostly air, create high volumes of nonbiodegradable landfill waste.
6

Evergreen marketed recycled food-grade food service products under the
trademark Poly-Sty-Recycle.
7

Evergreen applied for a patent on its business method in 2004, but has since
abandoned the application.
3

resin. Again, because polystyrene product producers must buy resin
anyway, and because PC-PSR is priced no differently than the offset
prime resin, this poses no additional cost to the producers. Finally, the
schools or other institutions implementing a closed-loop program would
pay an “environmental fee” to Evergreen, which was specifically
structured to be merely a percentage of the cost-savings each school
achieved by virtue of its participation in the closed-loop program.
Id. ¶ 24. As explained in its business model, Evergreen collected and recycled used
polystyrene products into PC-PSR, but did not manufacture polystyrene products. As
Evergreen expanded and planned a nine-facility expansion,8 it sought to partner with
a company with a large enough production capacity to convert its PC-PSR into PolySty-Recycle products.
Only the producer defendants had the ability to meet Evergreen’s production
needs. Each of the producer defendants controls a distinct segment of the polystyrene
products market.9 As summarized in the SAC,
8

In 2002-2003, Evergreen partnered with the Boston and Providence Public
School Systems and Sodexo, Inc. (Sodexo is a large food service management
company.) Evergreen then expanded to the Gwinnett and DeKalb County Public
School Systems in Georgia. In 2008, Evergreen secured contracts with the Newton
County School System in Georgia, the Pasco County School System in Florida, a 25school pilot program in Miami-Dade County in Florida, and obtained commitments
from the Atlanta Public School h System, Georgia Tech University, and IRS and
Centers for Disease Control government cafeterias in Atlanta.
9

Pactiv is incorporated in Delaware with a principal place of business in Illinois.
Genpak is incorporated in New York with a principal place of business in New York.
Dart is incorporated in Michigan with a principal place of business in Michigan. Dolco
is incorporated in Delaware with a principal place of business is New Jersey. Solo is
4

Pactiv controls over 70 percent of the foam lunch tray market for large
school systems and food management companies; Genpak controls over
70 percent of the foam lunch tray market for small to medium schools;
Dart controls over 70 percent of the market for injected foam hot and cold
cups; Dolco controls over 70 percent of the market for egg foam cartons;
and finally, Solo controls over 70 percent of the market for thermoformed
foam cups. Together, these five Defendants possess or control an
estimated 90 percent of the market for single service polystyrene food
service packaging and tableware.
Id. ¶ 17. The producer defendants are also members of the Plastics Food Service
Packaging Group (PFPG), an affinity group within the ACC.10
In 2002, as Evergreen launched its business, Eastern Bag & Paper Group, a
Northeastern U.S. distributor of food service products, requested that Pactiv and
Genpak work with Evergreen and the Boston Public Schools in establishing a recycling
program, but both companies declined. In 2004, Sodexo contracted with Evergreen to
test the market for Evergreen’s model in the Providence, Rhode Island school system.11
Pactiv caused Sodexo to cancel its contract with Evergreen by

incorporated in Delaware with a principal place of business in Illinois.
10

ACC is an association organized under the laws of New York with a principal
place of business in Washington, D.C. The PFPG was formerly known as the
Polystyrene Food Service Packaging Group. From 2005 through 2008, the PFPG was
tasked with finding solutions to counter the environmental criticism of polystyrene
products.
11

A small producer – Commodore Manufacturing – was able to meet the
production needs of the Providence pilot program. However, Commodore did not have
the capacity to meet the needs of Sodexo’s other clients.
5

(1) [] refus[ing] to provide Poly-Sty-Recycle products to Sysco
Corporation (an extremely large distributor that Sodexo employs) and
Eastern Bag & Paper; (2) threatening to revoke Sodexo’s Vendor
Distribution Allowances (“VDAs”), which constitute a significant portion
of Sodexo’s revenues; and (3) misrepresenting that polystyrene recycling
was not economically feasible.
Id. ¶ 35.
In 2005, after reviewing a proposal, Dolco expressed strong interest in
Evergreen’s model, but backed away after representatives from Pactiv and Dart opined
at a 2005 or 2006 PFPG meeting that recycling polystyrene was not economically
viable.

While Dolco continued to purchase PC-PSR as scrap resin for use in

fabricating its egg cartons, it refused to promote Evergreen’s close-loop system or to
pay Evergreen royalties. Sometime thereafter, Solo expressed an initial interest in
Evergreen’s model and tested 15,000 pounds of PC-PSR. However, Solo broke off
dealings with Evergreen after Solo’s president was “told by his people not to work with
Evergreen or Michael Forrest.” Id. ¶ 47.
Between 2007 and 2008, Pactiv refused to provide the distributors of Compass (a
Sodexo competitor) with Poly-Sty-Recycle products. At some point Pactiv also tested
Evergreen’s PC-PSR, but told a representative of the Gwinnett County Schools that PCPSR was more expensive than virgin resin and created problems during the
manufacturing process. Pactiv and Genpak also refused to work with Southeastern

6

Paper Group, which had expressed interest in implementing the Evergreen closed-loop
system. Despite the opportunity to do so, Dolco, Dart, and Solo would not compete with
Pactiv and Genpak for a share of the polystyrene tray market. Genpak’s president stated
that “Genpak had no interest in competing against Pactiv” and would only support
Evergreen’s closed-loop program if it was endorsed by another PFPG member. Id. ¶ 44.
In May of 2007, Evergreen made overtures to the ACC and the PFPG. Evergreen
sought funding from the PFPG to institute a polystyrene recycling program in California,
where sentiment for a complete ban on polystyrene products was gathering momentum.
The director of the PFPG informed Forrest that its members would collectively decide
whether to approve Evergreen’s proposal. By letter of June 20, 2007, the PFPG turned
down Evergreen’s funding request.12
Despite the PFPG’s decision, in August of 2007, Genpak and Dolco agreed to
provide Evergreen with $150,000 to fund its recycling plant in Norcross, Georgia, and
to purchase PC-PSR from Evergreen.13 However, in late 2007, Genpak switched the
Pasco County, Florida school system from white trays to black trays, making Evergreen’s
recycled resin unsalable.

12

Genpak nonetheless agreed to purchase a quantity of

The letter is attached as Exhibit 2 to the SAC.

13

This agreement is attached to Evergreen’s FAC as a part of Exhibit M, as well
as to Genpak’s Memorandum (where it appears as Exhibit B).
7

Evergreen’s unsalable black resin and to provide an additional $21,000 in funding for the
Norcross facility. In return, Evergreen agreed “to release Genpak of any future liability.”
Id. ¶ 46.14
Because of defendants’ refusal to subscribe to its business model, Evergreen
claims to have lost out on a $10 million investment from Perot Investment. In October
of 2008, ACC provided a letter15 to Evergreen lauding its recycling program, and
“encourag[ing] [profit organizations] to contact [Evergreen] as potential investors.”16

14

This agreement is referenced in paragraph 46 of the SAC, and is attached to
Genpak’s Memorandum as Exhibit A. Part 1 of the agreement stated that Genpak had
previously experienced a major production problem as a result of the quality of
Evergreen’s black resin, and would not accept any additional black resin from
Evergreen until the problem had been resolved. Part 5 of the agreement stated that
“Forrest greatly appreciates the support and help that Genpak has provided over the
past year but realizes that Forrest needs to achieve the goals/objectives detailed in Parts
2 and 3 [whereby Forrest agreed to do his best to obtain contracts from schools] to
have Genpak consider any additional support to Forrest and/or [Evergreen].”
15

This letter is attached as Exhibit C to Evergreen’s FAC and as Exhibit B to
Dart’s Memorandum.
16

Previously, in late 2007 or early 2008, the ACC had posted on its website an
article by Dart’s Ray Ehrlich describing polystyrene recycling as an economically failed
strategy. Dart, Pactiv, and PFPG are also alleged to have held out Packaging
Development Resource (PDR) as a competitor of Evergreen able to supply closed-loop
recycled polystyrene trays. As a result, Evergreen was required to participate in
various school systems’ competitive bidding processes rather than be exempted as a
single-source supplier. Dart points out that, like Evergreen, PDR had received a letter
of non-objection from the FDA for its recycled resin. A portion of this letter is included
as part of Exhibit P to Evergreen’s FAC, and is attached as Exhibit D to Dart’s
Memorandum. The letter was still available on the FDA’s website as of May 9, 2012.
8

However, with its capital and investor pool exhausted, Evergreen shut down its
operations in December of 2008. In early 2009, Pactiv and Genpak expressed an
interest in resuming work with Evergreen.

But Evergreen was no longer able to

perform.
DISCUSSION
To survive a motion to dismiss pursuant to Rule 12(b)(6), the factual allegations
of the complaint must “possess enough heft” to set forth “a plausible entitlement to
relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 559 (2007); Thomas v. Rhode
Island, 542 F.3d 944, 948 (1st Cir. 2008). As the Supreme Court has emphasized, this
standard “demands more than an unadorned, the-defendant-unlawfully-harmed-me
accusation. A pleading that offers labels and conclusions or a formulaic recitation of
the elements of a cause of action will not do. Nor does a complaint suffice if it tenders
naked assertion[s] devoid of further factual enhancement.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (internal citations and quotation marks omitted). The determination
of the plausibility of a claim is “context specific,” and requires the court “to draw on
its judicial experience and common sense.” Id. at 679.

http://www.fda.gov/Food/FoodIngredientsPackaging/FoodContactSubstancesFCS/u
cm155214. These facts, however, relate only to Evergreen’s now-withdrawn Lanham
Act claim, see Pl. Dart Opp’n at 12 & n.4, and thus have no present bearing.
9

Liability under section 1 of the Sherman Act requires a “contract, combination
. . . , or conspiracy, in restraint of trade or commerce.” 15 U.S.C. § 1. As the Supreme
Court has explained, section 1
“does not prohibit [all] unreasonable restraints of trade . . . but only
restraints effected by a contract, combination, or conspiracy,”
Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 775
(1984), “[t]he crucial question” is whether the challenged anticompetitive
conduct “stem[s] from independent decision or from an agreement, tacit
or express,” Theatre Enterprises [Inc. v. Paramount Film Distributing
Corp.], 346 U.S. [537], [] 540 [(1954)]. While a showing of parallel
“business behavior is admissible circumstantial evidence from which the
fact finder may infer agreement,” it falls short of “conclusively
establish[ing] agreement or . . . itself constitut[ing] a Sherman Act
offense.” Id., at 540-41. Even “conscious parallelism,” a common
reaction of “firms in a concentrated market [that] recogniz[e] their shared
economic interests and their interdependence with respect to price and
output decisions” is “not in itself unlawful.” Brooke Grp. Ltd. v. Brown
& Williamson Tobacco Corp., 509 U.S. 209, 227 (1993).

Twombly, 550 U.S. at 553-554. To survive a motion to dismiss, Evergreen must plead
“enough factual matter (taken as true) to suggest that an agreement was made.” Id. at
556. “[A]n allegation of parallel conduct and a bare assertion of conspiracy will not
suffice.” Id. More is required – allegations of parallel conduct “must be placed in a
context that raises a suggestion of a preceding agreement, not merely parallel conduct
that could just as well be independent action.” Id. at 557 (emphasis added).
Defendants contend that Evergreen’s SAC suffers from the same defects as the

10

complaint in Twombly. In Twombly, consumers brought a section 1 class action lawsuit
against incumbent local exchange carriers (ILECs) for allegedly conspiring to keep
competitive local exchange carriers (CLECs) from entering the divested local telephone
business. Twombly alleged that the ILECs conspired to restrain trade in two ways.
First, the ILECs engaged in “parallel conduct” in their respective geographic service
areas to choke off the growth of startup CLECs by restricting the CLECs’ access to the
ILEC networks, providing inferior connections, and overcharging and billing in ways
intended to sabotage the CLECs’ relationships with their customers. Id. at 550-551.
Second, the ILECS refrained from competing with one another despite attractive
opportunities to do so. Id. at 551.
The Supreme Court found that Twombly’s allegations lacked persuasive heft.
Other than conclusory labels, Twombly made no plausible factual allegations that the
ILECs had entered into an actual agreement to stifle competition. Id. at 564-566.
Their parallel conduct “could equally have been prompted by lawful independent goals
which do not constitute a conspiracy.” Id. at 567.
The 1996 [Telecommunications] Act did more than just subject the ILECs
to competition; it obliged them to subsidize their competitors with their
own equipment at wholesale rates. The economic incentive to resist was
powerful, but resisting competition is routine market conduct, and even
if the ILECs flouted the 1996 Act in all the ways the plaintiffs allege, . .
. there is no reason to infer that the companies had agreed among
themselves to do what was only natural anyway; so natural, in fact, that
11

if alleging parallel decisions to resist competition were enough to imply
an antitrust conspiracy, pleading a § 1 violation against almost any group
of competing businesses would be a sure thing.
Id. at 566. The Court also found that the ILECs’ reluctance to compete with one
another did not amount to a convincing claim of a conspiracy.
The ILECs were born in that world [where monopolies in
telecommunications was the norm], doubtless liked the world the way it
was, and surely knew the adage about him who lives by the sword.
Hence, a natural explanation for the noncompetition alleged is that the
former Government-sanctioned monopolists were sitting tight, expecting
their neighbors to do the same thing.
Id. at 568.
Defendants argue that Evergreen has alleged nothing more substantial than the
unsuccessful plaintiffs in Twombly. They note that the thrust of Evergreen’s SAC
involves instances in which various producer defendants unilaterally refused to deal
with Evergreen, or evinced disinterest in competing with one another in each other’s
respective niche markets. Defendants contend that like the ILECs, they had rational
business reasons for ultimately deciding to reject Evergreen’s partnering overtures. See
J. Mem. at 7-9. Several of the producer defendants independently tested and/or
purchased Evergreen’s recycled resin, but found the results disappointing for various
and often different reasons. See SAC ¶¶ 28, 46, 47, 53, and 55. Of concern to all
defendants was the fact that Evergreen’s business model would have significantly

12

increased their costs – Evergreen charged prime resin prices while demanding an
additional four percent royalty on all sales, making its PC-PSR more expensive than
virgin resin. See id. ¶ 24. Moreover, because under the proposed business model,
Evergreen would serve as the “sole source” of resin for the “closed loop” products,
defendants would forfeit the opportunity to sell competing wares to closed-loop
customers, see id. ¶ 31, including more environmentally friendly and profitable trays
made from paper and/or bamboo. Id. ¶ 32. Finally, as in Twombly, defendants may
have unilaterally chosen to refuse to deal with Evergreen because they were each
comfortable with the status quo, which Evergreen’s entry into the market threatened
to disrupt. See id. ¶ 30. Because, as in Twombly, there are legitimate business reasons
that can as easily explain defendants’ refusal to deal with Evergreen or to compete with
one another for market share as can any insinuation of a conspiratorial agreement,
Evergreen has failed to plead a viable claim under section 1.
As its final line of defense, Evergreen points to the additional allegation that
defendants’ membership in the ACC enabled them to covertly deploy the PFPG as the
coordinating vehicle of the conspiracy. See In re Test Messaging Antitrust Litig., 630
F.3d 622, 628 (7th Cir. 2010) (noting that membership in a trade association could
facilitate alleged price fixing by companies with a dominant share of a contested
market). Specifically, Evergreen points to the previously cited meeting of the PFPG
13

in 2005 or 2006 at which recycled resin was discussed in negative terms. Shortly after
that meeting, Dolco rescinded its agreement with Evergreen to implement the closedloop program, while the following year, Evergreen’s California recycling proposal was
scuttled by a collective decision of the PFPG membership.
Evergreen contends that these allegations are consistent with those found
plausible in Watson Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d
452 (6th Cir. 2011). Watson, a carpet vendor, accused two other vendors and a carpet
supplier of an express agreement to concertedly destroy Watson’s business. Id. at
454-455. As alleged, the supplier would refuse to sell to Watson, while the vendors
would disparage Watson among potential customers. Id. The Sixth Circuit found that,
unlike in Twombly, Watson had alleged not only an express conspiratorial agreement,
but also a plausible “connection between the original agreement and the later refusal
to sell.” Id. at 457.
Evergreen further relies on Standard Iron Works v. ArcelorMittal, 639 F. Supp.
2d 877 (N.D. Ill. 2009), In re Delta/AirTran Baggage Fee Antitrust Litig., 733 F.
Supp. 2d 1348 (N.D. Ga. 2010), and In re Flash Memory Antitrust Litig., 643 F. Supp.
2d 1133 (N.D. Cal. 2009).17 In Standard Iron, the district court held that a steel

17

Evergreen additionally argues that at the pleading stage, it is premature for the
court to evaluate defendants’ proffered business judgement reasons for boycotting
Evergreen. See Watson, 648 F.3d at 458 (“Often, defendants’ conduct has several
14

purchaser had sufficiently alleged a section 1 claim against steel producers for
conspiring to suppress production of raw steel where, immediately after the
steelmakers’ trade association endorsed an industry-wide strategy of cutting back
production, the producers fell in line contrary to their competitive interest. Standard
Iron, 639 F. Supp. 2d at 893-901. In Delta/AirTran, the court found that plaintiffs
plausibly alleged that defendants
(1) engaged in collusive communications through earnings calls and
industry conferences; (2) aligned their business practices following the
collusive communications; (3) implemented business practices contrary
to their self-interest following the communications; (4) offered a
pretextual explanation for the implementation of the first-bag fee; and (5)
undertook this concerted action to achieve higher revenues at the expense
of higher prices for consumers.
Delta/AirTran, 733 F. Supp. 2d at 1361. Finally, in Flash Memory, the court found
that plaintiffs plausibly alleged that defendants routinely exchanged highly sensitive
pricing and production data to curtail the production of flash memory devices in order
to drive up consumer prices. Flash Memory, 643 F. Supp. 2d at 1142.
Evergreen’s SAC, however, is distinguishable from the complaints in each of the

plausible explanations. Ferreting out the most likely reason for the defendants’ actions
is not appropriate at the pleadings stage.”). The Supreme Court’s decision in Twombly
holds the opposite. Moreover, defendants do not independently assert reasons for their
business decisions, but assert that the various reasons disclosed in the SAC for resisting
Evergreen’s closed-loop system render the conspiracy claim implausible.
15

cited cases. Of greatest significance, defendants did not act consistently with any
alleged agreement to boycott Evergreen. After the conspiracy was supposedly hatched
at the 2005 or 2006 PFPG meeting, Dolco – whatever it thought of Evergreen’s closedloop system – continued to purchase Evergreen’s resin. Dolco later entered into
another agreement, along with Genpak, not only to purchase recycled resin from
Evergreen, but also to provide funding for Evergreen’s Norcross, Georgia facility.18
This pattern of conduct not only belies the existence of a boycotting conspiracy, but
also describes behavior at cross-purposes with the supposed conspiratorial goal. Other
defendants also, in varying degrees, continued to deal with Evergreen – Pactiv and Solo
separately tested Evergreen’s resin, while the ACC issued a laudatory letter in October
of 2008 encouraging venture capital to invest in Evergreen.19 Unlike the plaintiffs in
Watson and the other cases, Evergreen has not alleged any express agreement that

18

Evergreen discounts the significance of defendants’ purchase of its resin and
insists that the defendants’ target was the closed-loop system because of the royalties
and environmental fees that Evergreen would have reaped. The short answer is that the
Sherman Act did not obligate defendants to guarantee Evergreen’s profits by paying
a royalty over and above the market price for otherwise suitable prime resin.
19

The only defendant not alleged to have dealt with Evergreen during the
relevant time frame is Dart. But there is no allegation that Evergreen ever approached
Dart with an offer to do business. That said, a company’s unilateral refusal to deal is
not actionable under the Sherman Act, see Nynex Corp. v. Discon, Inc., 525 U.S. 128,
136-137 (1998) (buyer’s unilateral decision to switch suppliers does not harm the
competitive process), for the common-sense reason that a company cannot conspire
with itself.
16

plausibly shaped the defendants’ subsequent conduct.
When shorn of its conclusory labels, Evergreen’s SAC fails to limn even the
essentials of a conspiratorial agreement among the defendants. The complaints in
Delta/AirTran and Flash Memory included highly specific details as to how the alleged
conspirators communicated with each other, the individuals who were involved, when
the communications took place, the substance of their contents, and the dramatic switch
in business practices that followed.20 See Delta/AirTran, 733 F. Supp. 2d at 1362;
Flash Memory, 643 F. Supp. 2d at 1143-1144. In contrast, Evergreen’s SAC alleges
only (1) the attendance by unidentified persons at a PFPG meeting at which Pactiv and
Dart are said to have disparaged polystyrene recycling, and (2) a rejection by the PFPG
of Evergreen’s request that the trade group fund Evergreen’s California proposal.21

20

Flash Memory and Delta/AirTran both dealt with “per se” price-fixing
antitrust violations, which are not at issue here. See Augusta News Co. v. Hudson
News Co., 269 F.3d 41, 47 (1st Cir. 2001). The complaints in Watson and Flash
Memory were also supported by extrinsic corroboration. In Watson, a Tennessee state
court jury had found the defendants liable for tortious interference with Watson’s
contractual relations with one of its customer (although the verdict as to the supplier
was later reversed because of the supplier’s privilege not to deal under Tennessee state
law.) Watson, 648 F.3d at 455. In Flash Memory, the U.S. Department of Justice had
initiated an active investigation of the flash memory market and had issued grand jury
subpoenas to several of the named defendants. Flash Memory, 643 F. Supp. 2d at
1140.
21

As defendants note, mere membership in a trade association does not trigger
antitrust liability. See Twombly, 550 U.S. at 567 n.12 (rejecting the argument that a
conspiracy could be inferred from defendants’ membership in various trade
17

This is not the stuff of a plausible conspiracy.
Furthermore, the parties’ differing roles in the polystyrene business weigh
against the plausibility of any antitrust claim. Evergreen, as a putative supplier of
recycled resin, did not compete against the producer defendants, but instead sought to
partner with them in establishing a business model highly beneficial to Evergreen as the
designated exclusive supplier. The ACC and the PFPG, as industry groups, did not
engage in competitive market activities at all. Thus, it is unclear how defendants’
sometime refusal to deal with Evergreen could have had an anti-competitive effect on
the market.21 Cf. Eastern Food Serv., Inc. v. Pontifical Catholic Univ. Serv. Ass’n,
Inc., 357 F.3d 1, 5 (1st Cir. 2004) (only horizontal refusal-to-deal agreements between
competitors amount to per se violations). See also Mendez Internet Mgmt. Servs. Inc.
v. Banco Santander de Puerto Rico, 2009 WL 1392189, at *5 (D.P.R. 2009) (an

associations); Maple Flooring Mfrs. Ass’n v. United States, 268 U.S. 563, 584 (1925)
(“We do not conceive the members of trade associations become conspirators merely
because they gather and disseminate information.”).
Moreover, where Evergreen
invited the action of the PFPG as a group, it is hard pressed to claim that the group
action was illegal simply because its decision was not the one that Evergreen requested.
See Tunica Web Advertising v. Tunica Casino Operators Ass’n, 496 F.3d 403, 410
(5th Cir. 2007) (“Given the joint nature of [plaintiff’s] initial proposal, which invited
the [defendants] to respond together as a single entity, the [defendants’] decision to
reject that proposal is not concerted action subject to section 1 [of the Sherman Act].”)
21

At oral argument, Evergreen’s counsel was unable to articulate how Evergreen
competed with any of the named defendants.
18

alleged concerted refusal to deal was inherently implausible where defendants did not
compete with plaintiff); Consol. Metal Prods., Inc. v. Am. Petroleum Inst., 846 F.2d
284, 295 (5th Cir. 1988) (buyers have no conceivable motive to drive a potential
supplier from the market).22
Finally, Evergreen’s boycott conspiracy allegations under Mass. Gen. Laws ch.
93A, § 11, fail for the same reasons that the Sherman Act claim fails. Massachusetts
courts have long held that refusal to deal, without more, is insufficient to state a claim
under Chapter 93A.23 See PMP Assocs., Inc. v. Globe Newspaper Co., 366 Mass. 593,
595-96 (1975) (upholding dismissal of complaint, stating that refusing to do business

22

In their separate memoranda of law, defendants make numerous arguments as
to why the SAC is insufficient as to each of them. Because I find that the SAC does
not plausibly allege a conspiracy of the whole, it is not necessary to address each of its
constituent parts.
23

Evergreen’s Chapter 93A claims also suffer from statute of limitations defects.
Evergreen’s only alleged harm falling within the applicable four-year limitations period,
see M.G.L.A. 260 § 5A, was Genpak’s decision to switch from white to black trays in
servicing the Pasco County School System in late 2007. However, Evergreen has not
alleged that Genpak was under any duty to it to continue selling white trays in Pasco
County. Without identifying any such duty “within at least the penumbra of some
common-law, statutory or other established concept of unfairness” as required to allege
a Chapter 93A claim, this allegation is not actionable. See Lambert v. Fleet Nat. Bank,
449 Mass. 119, 126-27 (2007) (citation omitted). It is also seems unlikely that the
decision, which involved a Florida school system, would meet section 11’s
jurisdictional requirement that any alleged unfair competition “occur primarily and
substantially within the commonwealth.” In any case, the subsequent agreement
between Genpak and Evergreen released Genpak from any liability.
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“is not within any recognized conception of unfairness, is neither immoral, unethical,
oppressive nor unscrupulous, and would not cause substantial injury to consumers,
competitors or other businessmen.”); Chiodini v. Target Marketing Grp., Inc., 58
Mass. App. Ct. 376, 379 (2003) (affirming summary judgment on a claim that refusal
by newspaper to do business with competitor did not constitute unfair trade practices
under Chapter 93A).
ORDER
For the foregoing reasons, defendants’ motions to dismiss are ALLOWED with
prejudice. The Clerk will enter judgment for defendants and close the case.
SO ORDERED.
/s/ Richard G. Stearns
_______________________________
UNITED STATES DISTRICT JUDGE

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