IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT IN RE ETHYLENE PROPYLENE DIENE MONOMER (EPDM) LITIGATION

---------------------------------------------------THIS DOCUMENT RELATES TO ALL ACTIONS IN RE: POLYCHLOROPRENE RUBBER (CR) ANTITRUST LITIGATION ---------------------------------------------------THIS DOCUMENT RELATES TO: ALL ACTIONS ) ) ) ) ) ) ) ) ) ) ) ) )

No. 3:03 MD 1542 (SRU) FILED UNDER SEAL CONTAINS HIGHLY CONFIDENTIAL INFORMATION PROTECTED FROM DISCLOSURE BY PROTECTIVE ORDER No. 3:05 MD 1642 (SRU) June 20, 2008

CLASS PLAINTIFFS MEMORANDUM OF LAW IN OPPOSITION TO MOTIONS FOR SUMMARY JUDGMENT FILED BY DEFENDANTS DSM COPOLYMER, INC., DSM ELASTOMERS EUROPE B.V., AND EXXON MOBIL CORPORATION
David R. Schaefer (Bar No. 04334) BRENNER, SALTZMAN & WALLMAN, LLP 271 Whitney Avenue New Haven, CT 06507-1746 Tel: (203) 772-2600/ Fax: (203) 562-2098 PLAINTIFFS' LIAISON COUNSEL BOLOGNESE & ASSOCIATES, LLC Anthony J. Bolognese Joshua H. Grabar John G. Narkin 1500 JFK Blvd., Suite 320 Philadelphia, PA 19102 Tel: (215) 814-6750/Fax: (215) 814-6764 GOLD BENNETT CERA & SIDENER, LLP Steven O. Sidener Joseph M. Barton C. Andrew Dirksen 595 Market St., Suite 2300 San Francisco, CA 94105 Tel: (415) 777-2230/Fax: (415) 777-5189 LEVIN FISHBEIN SEDRAN & BERMAN Howard J. Sedran Charles Sweedler 510 Walnut St., Suite 500 Philadelphia, PA 19106 Tel: (215) 592-1500/Fax: (215) 592-4663 COHEN MILSTEIN HAUSFELD & TOLL, PLLC Michael D. Hausfeld Kathleen M. Konopka 1100 New York Ave., N.W. West Tower, Suite 500 Washington, DC 20005 Tel: (202) 408-4600/Fax: (202) 408-4699

PLAINTIFFS' CO-LEAD COUNSEL

TABLE OF CONTENTS I. II. INTRODUCTION .........................................................................................................1 EVIDENCE PRECLUDING SUMMARY JUDGMENT .............................................3 A. Overview of Conspiracy ....................................................................................3 B. The EPDM Price-Fixing Conspiracy In Operation............................................4 1. Formation of the Conspiracy ........................................................................4 2. DDE and Union Carbide Cause Turmoil in the EPDM Market ...............6 3. Defendants Work Collegially to Rectify EPDM Market Turmoil ............7 4. Defendants Collusion Leads to Additional Price Increases ......................10 5. DSM Shares Supply With Exxon While EPDM Prices Continue to Rise..13 6. Conspirators Struggle To Avert The Return of EPDM Market Turmoil....18 III. ARGUMENT...............................................................................................................21 A. B. Summary Judgment Standards .......................................................................21 There are Genuine Issues of Material Fact Concerning the Non-Settling Defendants Participation in the EPDM Price-Fixing Conspiracy ..................25 a. b. c. d. e. C. Parallel Conduct.............................................................................27 Market Structure and Motive .........................................................27 Anti-Competitive Behavior and Action Against Self-Interest .......28 High Level of Interfirm Communications......................................34 Customary Indications of Traditional Conspiracy .........................34

Defendants Summary Judgment Arguments are Unpersuasive and Unavailing........................................................................................................39 1. 2. The Non-Settling Defendants Mischaracterize the Evidence ...........40 The Non-Settling Defendants Misapply the Law .............................46

D.

The Court Should Reject DSMs Evidentiary Challenges..................................48 1. Legal Standards Governing Admissibility At Summary Judgment....48

2. Gattos Incriminating Writings Are Admissible ................................49 a. Present Sense Impression................................................................49 b. Statements Against Interest.............................................................51 c. Statements of Co-Conspirator Made in the Course of and in Furtherance of the EPDM Price-Fixing Conspiracy ............51 3. Evidence Derived From the EC Statement of Objections Is Highly Relevant, Probative and Admissible ....................................52 4. 5. 6. IV. Other Evidence of Conspiratorial Conduct in Europe Is Admissible .........................................................................................55 The Court May Consider Assertions Of Fifth Amendment Privilege Against Self-Incrimination By Crompton Executives.......59 The Court Should Consider the Crompton Interrogatory Answers ..............................................................................................63

CONCLUSION............................................................................................................65

ii

TABLE OF AUTHORITIES Cases Ad/Sat v. Associated Press 181, F.3d 216, (2d Cir. 1999).......................................................................................... 47 Adler, Coleman Clearing Corp. v. Ensminger, 1998 WL 182808 (Bankr. S.D.N.Y. Apr. 17, 1998)..................................................... 62 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed2d 202 (1986)............................................ 21, 39 Apex Oil Co. v. DiMauro, 822 F.2d 246 (2d Cir. 1987)................................................................................... passim Beech Aircraft Corp. v. Rainey, 488 U.S. 153 (1988)...................................................................................................... 53 Bell Atlantic v. Twombly, 127 S.Ct. 1955 (2007)................................................................................................... 21 Big Apple BMW v. BMW of N. Am., 974 F.2d 1358 (3d Cir. 1992)........................................................................................ 23 Blomkest Fertilizer, Inc. v. Potash Corp. of Saskatchewan, 203 F.3d 1023 (8th Cir. 2000) ....................................................................................... 47 Bourjaily v. United States, 483 U.S. 171 (1987)...................................................................................................... 52 Brenner v. World Boxing Council, 675 F.2d 445 (2d Cir. 1985)............................................................................................ 47 Brinks Inc. v. City of New York, 717 F.2d 700 (2d Cir. 1983).......................................................................................... 59 Burlington Coat Factory Warehouse Corp. v. Esprit Corp., 769 F.3d 919 (2d Cir. 1995)............................................................................................ 47 Consolidated Edison Co. of New York, Inc. v. DiNapoli, 1971 WL 528 (S.D.N.Y. 1971)..................................................................................... 65 Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (1962)...................................................................................................... 25

iii

Creative Copier Service v. Xerox Corp., 2005 WL 2175138 (D.Conn. Sept. 2, 2005) ................................................................. 21 Czekalski v. Peters, 475 F.3d 360 (D.C. Cir. 2007) ...................................................................................... 39 Davis v. Team Elec. Co., 520 F.3d 1080 (9th Cir. 2008) ...................................................................................... 39 Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992)...................................................................................................... 21 Ezzos Invs., Inc. v. Royal Beauty Supply, Inc., 94 F.3d 1032 (6th Cir. 1996) ........................................................................................... 24 F. Hoffman-Laroche v. Empagran S.A., 542 U.S. 155 (2004)...................................................................................................... 55 FIGA v. R.V.M.P. Corp., 874 F.2d 1528 (11th Cir. 1989) ..................................................................................... 43 Fournier v. Erickson, 242 F. Supp. 2d 318 (S.D.N.Y. 2003)........................................................................... 50 Geneva Pharmaceuticals Technology Corp. v. Barr Laboratories, 386 F.3d 485 (2d. Cir. 2004)........................................................................................... 47 Gentile v. County of Suffolk, 129 F.R.D. 435 (E.D.N.Y. 1990), affd, 926 F.2d 142 (2d Cir. 1991) ............. 53, 54, 55 Goffstein v. State Farm Fire & Cas. Co., 764 F.2d 522 (8th Cir. 1985) ......................................................................................... 43 In re Automotive Refinishing Paint Antitrust Litig., 2004 U.S.Dist. LEXIS 29160 (E.D. Pa. Oct. 29, 2004)................................................ 56 In re Baby Food Antritrust Litig., 166 F.3d 112 (3d. Cir 1999).......................................................................................... 46 In re Brand Name Prescription Drug Antitrust Litig., 186 F.3d 781 (7th Cir. 1999) ......................................................................................... 22 In re Citric Acid Antitrust Litig., 191 F.3d 1090 (9th Cir. 1999) ....................................................................................... 46

iv

In re Flat Glass Antitrust Litig., 385 F.3d 350 (3d.Cir. 2004), cert denied, 544 U.S. 948 (2005)............................ passim In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651 (7th Cir. 2002) .................................................................................. passim In re High Pressure Laminates Antitrust Litig., 2006 WL 1317023 (S.D.N.Y. May 15, 2006) ....................................................... passim In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238 (3d Cir. 1983).......................................................................................... 53 In re Korean Air Lines Disaster of September 1, 1983, 932 F.2d 1475 (D.C. Cir. 1991) .................................................................................... 53 In re Linerboard Antitrust Litig., 203 F.R.D. 197 (E.D. Pa. 2001).............................................................................. 19, 24 In re Medical X-Ray Film Antitrust Litig., 946 F.Supp. 209 (E.D.N.Y. 1996) .................................................................... 23, 24, 28 In re Plastic Additives Antitrust Litig., 2004 WL 2743591 (E.D. Pa. Nov. 29, 2004) .............................................................. 56 In re Uranium Antitrust Litig., 480 F. Supp. 1138 (N.D. Ill. 1979) ............................................................................... 56 In re Vitamins Antitrust Litig., No. 99-197, 2001 WL 1049433 (D.D.C. June 20, 2001)............................ 43, 56, 58, 60 In re Worldcom, Inc. Securities Litigation, 2005 WL 375315 (S.D.N.Y. Feb. 17, 2005)................................................................. 59 Information Resources, Inc. v. The Dun & Bradstreet Corp., 1998 WL 851607 (S.D.N.Y. Dec. 8, 1998) .................................................................. 53 JTC Petroleum Co. v. Piasa Motor Fuels Inc., 190 F.3d 775 (7th Cir. 1999) ......................................................................................... 22 Kellys Auto Parts No. 1, Inc. v. Boughton, 809 F.2d 1247 (6th Cir. 1987) ....................................................................................... 43 LaSalle Bank Nat. Assn v. v. Normura Asset Capital Corp., 424 F.3d 195 (2d Cir. 2005).......................................................................................... 48

Lendino v. Trans Union Credit Information Co., 970 F.2d 1110 (2d Cir. 1992)........................................................................................ 39 Libutti v. United States, 107 F.3d 110 (2d Cir. 1997).................................................................................... 59, 62 Lorusso v. Borer, 2006 WL 473729 (D. Conn. Feb. 28, 2006) ................................................................ 63 Marshall v. El Paso Natural Gas Co., 874 F.2d 1373 (10th Cir. 1989) ..................................................................................... 43 Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed 538 (1986)................................................ 21, 22 McFeeley v. United States, 700 F.Supp. 414 (S.D.Ind. 1988) .................................................................................. 48 Metropolitan Life Ins. Co. v. Bancorp Services, L.L.C., 2008 WL 2229785 (Fed. Cir. June 2, 2008) ................................................................. 39 Minpeco, S.A. v. Conticommodity Serv., Inc., 673 F.Supp. 684 (S.D.N.Y. 1987)............................................................................ 23 Molex Inc. v. Wyler, No. 04 C 1715, 2005 WL 497812 (N.D. Ill. Feb. 17, 2005)......................................... 50 Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984)................................................................................................... 23 Moyer Packing Co. v. Petruzzis IGA Supermarkets, Inc., 510 U.S. 994 (1993)...................................................................................................... 22 Phoenix Mut. Life Ins. Co. v. Adams, 828 F. Supp. 379 (D.S.C. 1993), affd 30 F.3d 554 (4th Cir. 1994) ............................. 50 Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946)..................................................... 45 Reed v. Ford Motor Co., 679 F.Supp. 873 (S.D.Ind. 1988) .................................................................................. 48 Rosario v. United States, 164 F.3d 729 (2d Cir. 1998).......................................................................................... 45

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Rossi v. Standard Roofing Co., 156 F.3d 452 (3d Cir. 1998.)......................................................................................... 22 Silverstein v. Chase, 260 F.3d. 142 (2d Cir.2001).......................................................................................... 64 Silverstein v. Smith Barney, Inc., 2002 WL 1343748 (S.D.N.Y. June 18, 2002) .............................................................. 64 State Farm Mut. Auto. Ins. Co. v. Abrams, 2000 WL 574466 (N.D. Ill. May 11, 2000) .................................................................. 61 Todd v. Exxon Corp., 275 F.3d 191 (2d Cir. 2001).......................................................................................... 26 Toys R Us, Inc. v. FTC, 221 F2d. 928 (7th Cir. 2000) ......................................................................................... 22 Tracinda Corp. v. DaimlerChrysler AG, 362 F. Supp. 2d 487 (D. Del. 2005)........................................................................ 49, 50 Trammel v. United States, 445 U.S. 40 (1980)........................................................................................................ 59 U.S. v. 42 Jars, More or Less, Bee Royal Capsules, 264 F.2d 666 (3rd Cir. 1959) ........................................................................................ 65 Union Carbide Corp. v. Montell N.V., 28 F. Supp. 2d 833 (S.D.N.Y. 1998)............................................................................. 53 United Air Lines, Inc. v. Austin Travel Corp., 867 F.2d 737 (2d Cir. 1989).......................................................................................... 54 United States v. 4003-05 5th Ave., 55 F.3d 78 (2d Cir.1995)............................................................................................... 62 United States v. Andreas, 216 F.3d 645 (7th Cir. 2000) ......................................................................................... 57 United States v. Brand, 467 F.3d 179 (2d Cir. 2006).......................................................................................... 58 United States v. District Council of New York City, 832 F. Supp. 644 (S.D.N.Y. 1993)................................................................................ 60

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United States v. Dolah, 245 F.3d 98 (2d Cir, 2001)............................................................................................ 63 United States v. Dubogryzov, 2007 WL 2746752 (D. Conn. Sep. 18, 2007) .............................................................. 58 United States v. Ferber, 966 F. Supp. 90 (D. Mass. 1997) .................................................................................. 49 United States v. Garcia, 291 F.3d 127 (2d Cir. 2002).......................................................................................... 58 United States v. Ginsberg, 758 F.2d 823 (2d Cir. 1985).......................................................................................... 52 United States v. Lang, 589 F.2d 92 (2d Cir. 1978)............................................................................................ 51 United States v. Lieberman, 637 F.2d 95 (2d Cir. 1980)...................................................................................... 49, 51 United States v. Livoti, 196 F.3d 322 (2d Cir. 1999).......................................................................................... 59 United States v. Microsoft Corp., 1995 WL 505998 (D.D.C. Aug. 21, 1995) ................................................................... 56 United States v. Pimentel, 83 F.3d 55 (2d Cir. 1996) ............................................................................................. 45 United States v. Pitre, 960 F.2d 1112 (2d Cir. 1992).................................................................................. 57, 58 United States v. Provenzano, 615 F.2d 37 (2d Cir. 1980)............................................................................................ 52 United States v. Ragland, 375 F.2d 471 (2d Cir. 1967).......................................................................................... 52 United States v. Rigas, 490 F.3d 208 (2d Cir. 2007).......................................................................................... 57 United States v. Roldan-Zapata, 916 F.2d 795 (2d. Cir. 1990)......................................................................................... 58

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United States v. Ruiz, 249 F.3d 643 (7th Cir. 2001) ........................................................................................ 49 United States v. Van Putten, 2005 WL 612723 (S.D.N.Y. March 15, 2005) ............................................................. 57 United States v. Williams, 205 F.2d 23 (2d Cir. 2000)............................................................................................ 59 United States v. Zackson, 12 F.3d 1178 (2d Cir. 1993).......................................................................................... 58 Vasquez v. Claires Accessories, Inc., 392 F. Supp. 2d 342 (D. Conn. 2005)........................................................................... 39 Venture Tech., Inc. v. Natl Fuel Gas Co., 685 F.2d 41 (2d Cir. 1982)............................................................................................ 23 Virgin Atl. Airways Ltd. v. British Airways PLC, 257 F.3d 256 (2d Cir. 2001).......................................................................................... 22 Williamson v. United States, 512 U.S. 594 (1994)...................................................................................................... 64 Willingham v. County of Albany, 2006 WL 1979048 (N.D.N.Y. 2006) ........................................................................... 62 OtherAuthorities Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law 1434b (2d ed. 2000)..................................................................................................... 26 Principles of Federal Prosecution, United States Department of Justice, 9-27.400..... 43 Rules Fed. R. Evid. 403 .............................................................................................................. 58 Fed. R. Evid. 801(d)(E)..................................................................................................... 51 Fed. R. Evid. 804(b)(3) ..................................................................................................... 63 Fed.R.Civ.P. 56 (c) ........................................................................................................... 21

ix

Class Plaintiffs (Plaintiffs) respectfully submit this memorandum of law in opposition to motions for summary judgment filed by DSM Copolymer Inc., DSM Elastomers Europe B.V., and ExxonMobil Corporation (collectively, the Non-Settling Defendants).1 I. INTRODUCTION Plaintiffs allege a conspiracy among defendants to stabilize and increase the prices of synthetic rubber ethylene propylene diene monomer ("EPDM") during at least the period from January 1, 1997 until December 2001 ("Class Period"). The record before the Court refers to hundreds of meetings and communications among defendants concerning EPDM.2 This record includes evidence of discussions about EPDM prices, price increases, customers, capacity and market conditions by defendants at bi-lateral and multi-lateral meetings worldwide. ( 11-12). For example, there are handwritten notes describing discussions by defendants about specific price increases, customers, volumes, and other cartel issues. ( 86; see also 55, 69, 93, 110, 119, 129, 179, 260). There is also evidence of the destruction and concealment of evidence of anti-competitive conduct ( 11, 54, 60, 119, 228, 251); maintaining and enforcing market and pricing discipline (see, e.g., 67, 169, 189, 212, 229, 267, 277, 323); strategies of not buying business, following price increases by the book, and offering merely competitive prices to customers ( 223; Pl. St. at 172); and across-the-board, lockstep price increases that

1 2

DSM U.S. and DEE are referred to collectively as DSM.

Accompanying this memorandum is the Consolidated Local Rule 56(a)(2) Statement of Class Plaintiffs and Plaintiffs Parker Hannifin and PolyOne in Opposition to the Local Rule 56(a)(1) Statements of Defendants DSM Copolymer Inc., DSM Elastomers Europe B.V., and ExxonMobil Corporation (Plaintiffs Statement or Pl. St.) and documentary and testimonial exhibits supporting same. Unless otherwise stated, citations herein to _____ are to Section II of Plaintiffs Statement, which comprehensively discusses some of the evidence in this matter. To ensure uniformity of citations to the record, plaintiffs incorporate all other references set forth in Plaintiffs Statement. Additional meetings and contacts among defendants are described within discovery responses submitted by DSM or produced in the litigation. See, e.g., Jt. Exs. 94, 108, 161, and exhibits 45 and 49 within the Appendix of Documentary Exhibits in Support of Plaintiffs Consolidated Local Rule 56(a)(2) Statement. Exhibits to this Appendix are cited PX_____.

were successfully implemented throughout the Class Period, helping to make EPDM a money machine for defendants. ( 158; see also Appendix A attached hereto and 74-80, 103-108, 149-50, 156, 193-94, 221, 257). The story of the EPDM conspiracy is a compelling one. Facing competition from new entrants Dupont Dow Elastomers (DDE) and Union Carbide (UCC) in 1995-1996, the EPDM suppliers -- including Non-Settling Defendants DSM and Exxon -- increased the frequency of their contacts with one another in a cooperative and collegial effort to stabilize and increase prices, while managing industry capacity expansion. See, e.g., 11-13, 27-30, 35, 132, 158-59, 170. As documented below, even after economic conditions changed, these unlawful efforts continued throughout the Class Period. Based on the evidence before the Court, a reasonable jury could conclude that defendants violated Section 1 of the Sherman Act by conspiring unlawfully to overcharge plaintiffs and other customers for EPDM. See In re Flat Glass Antitrust Litig., 385 F.3d 350, 364 (3d.Cir. 2004), cert denied, 544 U.S. 948 (2005); In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 661-62 (7th Cir. 2002); In re High Pressure Laminates Antitrust Litig., 2006 WL 1317023, at *4 (S.D.N.Y. May 15, 2006) (quoting Apex Oil Co. v. DiMauro, 822 F.2d 246, 25455 (2d Cir. 1987). Notwithstanding the fulsome record of defendants improper conduct, plaintiffs do not have to prove the conspiracy at this stage of the litigation. As the Second Circuit cautioned in Apex Oil, at 252-53, summary judgment is not a substitute for trial, and the question of what weight should be assigned to competing permissible inferences remains within the province of the factfinder at trial. Under this controlling legal standard, the Non-Settling Defendants motions for summary judgment should be denied.

III.

EVIDENCE PRECLUDING SUMMARY JUDGMENT A. Overview of Conspiracy

The incriminating words and phrases used by defendants themselves throughout their hundreds of meetings and conversations with one another to discuss EPDM market conditions and price increases ( 11-324) describe the illegality of defendants conduct in stunningly candid terms: The constant objective of EPDM producers was to raise prices as an industry again through frequent communications with key competitors. ( 157). EPDM producers were made to understand that competitors acted in a uniform way. ( 18). The many meetings and conversations between and among EPDM producers were intended to lay all of the necessary ground work for a general price increase ( 14). EPDM producers reassured one another that they did not want to spoil the market by undercutting competitors and would avoid such action by committing to stick to the set prices and refrain from any aggressive marketing in the U.S. ( 45, 49) See also 58 (assurance between conspirators that capacity and production strategies were not intended to destroy the EPDM market); 169 (Tell them that we are trying to avoid any conflict with them); 67, 169, 189, 212, 229, 267, 277, 323 (repeated emphasis on a state of discipline in the market place). Promises by EPDM producers to vigorously support or follow industry price initiatives, to be very firm on prices, to refrain from buying the business of

other producers and to offer merely competitive prices so as not to upset other producers ( 61, 93-94, 110). Comments like one from DSMs President, Paul Hamm, who reminded a coconspirator that Weve worked hard and long to get prices back to where they should be. ( 124). Threats to make a target out of an EDPM producer that failed to watch its pricing behavior in North America. ( 169). See also 212 (intra-competitor cooperation to discipline the market and avoid a price war). The frequent communications between and among EPDM executives concerning EPDM prices often took place immediately before and after public announcement of industry-wide lockstep price increases (see below at 4-20). EPDM executives also went to extraordinary lengths to maintain the secrecy of these meetings and conversations (see below at 36-38). Moreover, collusion among EPDM producers was facilitated, not only by the structural characteristics of their industry (see below at 27-28), but through close personal relationships demonstrating that their executives were -- in both the commercial and social senses colleagues rather than genuine competitors (see below at 34-35). B. The EPDM Price-Fixing Conspiracy In Operation 1. Formation of the Conspiracy Even before capacity expansion plans announced by Dupont Dow Elastomers (DDE) and Union Carbide (UCC) in late 1994 inspired EPDM producers to increase the frequency of their contacts to stabilize and increase EPDM prices worldwide (see below 6-8), EPDM producers routinely conducted their business in an anti-competitive fashion. --

For example, in May or June 1994, DSMs Glen Steady telephoned Cromptons Daniel Shantz (both of whom were responsible for EPDM) and discussed their common view that the market for EPDM in North America could sustain a price increase. 14, citing Cromptons Second Supplemental Objections and Responses to Plaintiffs Interrogatories (Crompton Interrogatory Answers; DSM Jt. Ex. 94) at 9. Steady subsequently wrote an internal DSM email asserting that all of the necessary ground work has been laid for a general [EPDM price] increase. 14. Weeks later, Crompton announced a price increase. Id. On November 29, 1994, in a hotel lobby in Dusseldorf, Germany, Dietmar Forster of Bayer met with Cromptons Dan Shantz and Joe Gatto (responsible at this time for Cromptons European EPDM business), Forster made clear to Crompton that competitors acted in a uniform way. 18. Duly admonished, Crompton agreed to align its prices. Id. Along with Cromptons James Conway, former Crompton CEO, and Gerald Fickenscher, former Crompton Vice President, Europe, both Gatto and Schantz refused to testify substantively at their depositions on the basis of their Fifth Amendment privilege against self-incrimination. However, contemporaneously written notes of some of Gattos conversations with competitors were produced to Plaintiffs in discovery, and these conversations were confirmed by, among other evidence, the Crompton Interrogatory Answers at DSM Jt. Ex. 94.3 As demonstrated by regular conversations between Steady of DSM and Shantz of Crompton (who were personal friends for 20 years), DSM participated in the EPDM price-fixing conspiracy since its inception (see, e.g., 14, 15, 38, 44, 47). The same is true of Exxon. Along with executives of Bayer (Forster) and Enichem (Cantoni), DSMs DeRoo and Exxons Kuhne

Aware of the highly incriminating nature of this evidence, DSM has questioned the admissibility of the Crompton executives Fifth Amendment invocations, the Crompton Interrogatory Answers and Gattos notes. DSM Mem. at 31, 60-61, 64. These evidentiary challenges are addressed below in Section II.D.

attended a hotel meeting held among EPDM producers during the last weeks of 1994. 19, citing PX 19 at 64). DSMs DeRoo also admitted having met with Exxons Kuhne four or five times. 19, citing DeRoo Dep. at 45. 2. DDE and Union Carbide Cause Turmoil in the EPDM Market Beginning in October 1994, EPDM industry members learned that DDE planned to construct a new EPDM plant in Seadrift, Texas and that UCC planned to expand its existing EPDM manufacturing facilities, including one in Plaquemine, Louisiana. 24. As DSM later recounted: The EP(D)M market used to be very balanced. . . . Capacity expansions used to be incremental and did not impact the demand/supply-balance in a dramatic way. This [had] resulted in a relatively stable market where prices used to follow [raw material] prices. Margins in the U.S. used to be relatively flat around U$1000. Europe [had been] more vulnerable to imports and this [had] resulted in more fluctuating prices. On average margins in Europe were comparable to the US but more fluctuating around this level based on global capacity utilization rates. This rather peaceful world ended in 1995 with the announcement of DDE and UCC of their new capacities and the rise of the Lopez-effect [customer consolidation]. The market [had] perceived the announcements as an upcoming huge overcapacity in the market. 29, citing PX 23) (emphasis supplied). In 1995, one Exxon employee circulated a trade publication article entitled Turmoil in the EPDM business to other interested Exxon representatives, characterizing the article as a fairly honest assessment of the EPDM industry. 28, quoting PX 27. One such assessment was that the additional EPDM plant expansions by DDE and UCC were making the established [EPDM] players nervous. Id. Both Non-Settling Defendants, no less than their industry colleagues, understood that actions of DDE and UCC portended an upcoming huge overcapacity in the market, which had

the potential to lower EPDM prices worldwide.4 27 (DSM recognized that capacity expansion could disturb the market significantly). For its part, Exxon expressed concern about the globalisation trend of the industry and the impact that the prospective new capacity could have on its worldwide business. 30. Exxon fretted about whether the new global capacity could prevent existing players from retaliating against one another for disobeying the rules of what EPDM industry members regarded as a [g]entlemens game. Id. (emphasis supplied). DSM concurred with Exxon that the globalisation trend needed to be addressed by established members of the EPDM industry. In September 1995, DSM articulated why EPDM producers believed with increasing urgency that it was necessary for them to do business worldwide in a concerted fashion: Due to the globalization of customers, especially the multiregional suppliers cannot afford anymore to behave differently in different regions. Most of all, this will be the case in terms of pricing. In order to protect themselves, the global suppliers will try to force harmonic behavior upon their regional competitors. Furthermore, the globally acting suppliers will be vulnerable to actions by each other on a global scale, which will lead to some kind of understanding and mutual dependency to get policies implemented. 13 (quotations in original, emphasis supplied). 3. Defendants Work Collegially to Rectify EPDM Market Turmoil Despite harmonic behavior, multiregional understandings and mutual dependency, members of the EPDM industry could not initially prevent the threat of DDE and UCCs projected capacity expansion from reducing their profit margins significantly. 29. However, as reflected by their lockstep industry-wide price increase announcements in Fall 1997, the traditional conspiratorial modus operandi of the global EPDM producers began to yield its intended dividends when industry profit margins stabilized and approached earlier non-

See, e.g, High Fructose, 295 F. 3d at 657.

depressed levels. Id. (See also Appendix A, attached hereto, describing defendants general, across-the-board price increases; 316, describing the successful impact of defendants price increases). Along with other evidence, Gattos handwritten notes and the Crompton Interrogatory Answers establish that the EPDM industry (in which the Non-Settling Defendants exercised global leadership positions)5 was rife with collusion in 1997 and 1998, and at other times before and during the Class Period. For example, in an e-mail dated December 20, 1998, Gatto advised a Crompton executive in Europe that (a) We are trying to raise prices as an industry again; (b) it is a good idea to meet key competitors and (c) there is always an upside to listening to competitors. You never fail to hear something interesting. 157 (emphasis supplied). In fact, raising prices as an industry and high-level communications among key competitors were conventional practices in the EPDM industry. While discussions among DSM, Exxon and the other EPDM producers about possible joint ventures and collaborations intensified because of the looming prospect of global overcapacity created by the entry of UCC and DDE (see, e.g., 24-27, 35-36, 43, 54, 58), industry pricing was invariably their paramount consideration. Even DDE and UCC, whose capacity expansion plans unsettled their industry colleagues, understood that price was everyones overriding concern. Aware of how its plans were perceived, UCC in April 1995 assured DSM that it intended to enter the market with lower capacity to keep prices high. 40. Similarly, at a dinner meeting in Geneva, Switzerland, DDE sought to comfort Crompton that DDEs product additions and introductory pricing strategies were not intended to destroy the EPDM market.

27, citing DEE-EPDM 037530. See also 32, 33, 34.

 58. Notwithstanding such assurances, the fears of nervous EPDM producers were not allayed, and they increased their collusive contacts to try to stabilize and increase EPDM prices and keep further industry expansion in check. Between Fall 1995 and their eventual lockstep industry-wide price increase in Fall 1997, defendants routinely communicated, primarily to keep abreast of how the expansion plans of DDE and UCC were developing, and to discuss how they could work together to manage global EPDM supply and to raise EPDM prices. 37-72. In addition to the specific communications identified above, further evidence of conspiracy during this period includes: A meeting in the Netherlands on August 14, 1996 at which Cromptons Schmitt and DSMs DeRoo discussed EPDM prices, worldwide capacity for EPDM (including U.S. capacity), U.S. EPDM personnel and a probable EPDM price increase, all of which led Schmitt to understand that DSM also intended to increase prices. 55. A trilateral meeting on January 21-22, 1997 at the Sheraton Brussels Airport Hotel attended by DSM, Enichem and Bayer (including Bayers Stephen Pask, whose expense report reflected that a conference room was booked under the fictitious name Weitzman), during which the participants agreed to a 10% EPDM price increase in Europe. 60. Gattos handwritten notes reflecting the aforementioned 10% European price increase and Cromptons decision to vigorously support the increase and be very firm in not lowering price. 61. An April 8, 1997 e-mail exchange among Exxon executives noting that, after the industrys price increase in Europe, it was considering whether to lead a price increase in North America to stabilize pricing in the market and demonstrate to competitors Exxons willingness to increase prices. 64. Gattos handwritten notes reflecting his July 17, 1997 conversation with Bayers Pask, who expressed (a) Bayers desire for an EPDM price increase in the United States in October 1997; (b) DSMs reluctance to lead such price increase; (c) the desirability of Cromptons Dan Schantz taking the lead on such price increase; and (d) the expectation that Exxon would follow the price increase. 69).

After many conversations between and among EPDM producers, in an announcement dated August 28, 1997, Exxon did lead an agreed-upon North American price increase ( 74). Deceptively, at least two EPDM producers, including DCI, told its customers that the price increase was attributable to its rising manufacturing costs, even though Exxon understood that the price of ethylene (a key raw material in the production of EPDM) was and would remain flat. 81-82.Given the eager anticipation among EPDM producers of this Fall 1997 North American price increase (which had ensued after a European price increase earlier in the year), it was followed swiftly in lockstep fashion by defendants. 76-81. The increase was important because as Cromptons Schmitt explained to one of his European customers, the EPDM industry needed to start to address [the price] differential between Europe and USA. 77. 4. Defendants Collusion Leads to Additional Price Increases Almost immediately after the ink dried on their Fall 1997 industry-wide price-increase announcements, the EPDM conspirators proceeded to lay all of the necessary ground work for another one in Winter 1998. As before, improper discussions among defendants occurred and, as before, Cromptons Gatto was a key architect of the increase, chronicling its anti-competitive construction in incriminating detail. Evidence of conspiracy during this period includes, among other things: A meeting on October 9, 1997 at London's Heathrow International Airport, during which Gatto and Shantz of Crompton and Bayer's Pask discussed Pasks proposal to attempt a worldwide price increase if UCCs plant was still non-operational in six months, in addition to cartel issues and customer issues. 86. In early 1998, Cromptons Gatto made a series of telephone calls to Bayers Pask, DSMs DeRoo and Enichems Protopappa to discuss EPDM prices in North America and Europe. 92-94. A conversation in early January 1998 between Cromptons Gatto and DeRoo of DSM, who discussed support among DSM, Bayer, Exxon and Enichem for

10

EPDM price increases in North America and Europe. 93).6 A conversation between January 5-7, 1998 among Gatto and representatives of Enichem and DSM in which (a) Enichem expressed support for an EPDM price increase, apparently in the United States, in March or April 1998, with maybe one month delay and (b) DSM wants another 5% in Europe for April 1. ( 94). An undated document produced by DSM entitled Analysis of DSM Led Industry Price Increases on EPDM, with the initials of Roger Lacallade (as of January 1998, recently in charge of DSMs U.S. EPDM business).7 The document addresses whether DSM should lead an EPDM price increase. 101. Under a section entitled Risks, the document states that customers could regard an EPDM price increase as gouging by customers because no remote justification exists for the increase (id.) a vivid echo of Exxons observation that the price of EPDM cost-driver ethylene would remain flat ( 82). On January 28, 1998, Exxon announced an increase of the price of EPDM to customers in North America. 104. Other members of the EPDM price-fixing conspiracy followed

Exxons price increase announcement soon thereafter. ( 105-107). Having accomplished their mission in the United States, the EPDM price-fixers redirected their attention to an industry-wide price increase in Europe. On February 23, 1998, Crompton's Gatto and Bayer's Pask had yet another conversation about EPDM prices. ( 110). Pask informed Gatto, among other things, that DSM's already high prices precluded it from another increase, but that DSM would support an increase verbally and that Exxon was notified about the increase. Id. Gatto himself planned to notify DDE. Id. To DSMs Lacallade, the European EPDM price increase enabled his sales force in March 1998 to help North American customers to better understand, and appreciate the situation the 'world' is in on EPDM right now. 114 (emphasis supplied).
6

Gatto's handwritten notes of his call with DSMs DeRoo refer to various customers (BTR, Gates, Detwyler, Draftex, Sangummi) and also state Europe -- implement -- 4-5% -- DSM, Bayer, Exxon, Enichem. There is also a line drawn from Exxon to the phrase oil types 5%. The notes refer to support for a price increase from Bayers Pask and Enichems Cantoni, and also refer to the U.S.: April/May for 4-5% again for Europe -- Support Pask, Cantoni and Worried about U.S. > Jack will check with Roger [apparently Lacallade of DSM]. ( 93).
7

94.

11

Shortly thereafter, in Dusseldorf, Germany, defendants DSM, Bayer and Enichem conducted a trilateral meeting on April 17, 1998, in a hotel room booked under the assumed name of Weissmann, which was used to conceal the meeting ( 119). Handwritten notes about this meeting that were authored by the DSM attendee, Nicholas Viets, refer to EPDM customers, prices and price increase, as well as prices of other synthetic rubbers. Id. On June 3, 1998, DSM's Paul Hamm had a telephone conference with DDE's Duncan, in which the latter remarked, We've worked, particularly in Europe, we've worked hard and long to get prices back to where they should be 124 (emphasis supplied). Another example of defendants hard work in raising EPDM prices took place at a dinner meeting on June 24, 1998 in Milan, Italy, which was attended by Crompton and Enichem representatives, including Gatto ( 130). The three competitors discussed EPDM prices, price increases and capacity, with a specific reference to pricing in the USA. Id. Only a few weeks later, Crompton participated in a meeting with DSM in Holland during which the impact of possible capacity expansion announcements on EPDM prices was a topic of conversation ( 132). Cromptons Gatto and Fickenscher and DSMs William Donners and Paul Hamm attended the meeting. In addition to discussing industry market shares, Donners indicated [that] DSM will be looking to raise Europe prices in Q4. Id. Hamm also expressed concer[n] about major expansion announcements by anyone in the industry, fearing a price downslide like the one experienced 2-3 years ago in the aftermath of planned capacity expansion announcements by DDE and UCC. Id. Eager to increase prices again, in November 1998, before the issuance of general price increase announcement letters, DSMs Lacallade told Cromptons Shantz in a telephone

12

conversation that DSM was going to increase [its EPDM] prices.

146.

During this

conversation, Shantz commented that a price increase would be good for the industry. Id. On November 25, 1998, DSM announced an EPDM price increase in North America with an effective date of January 1, 1999. 149. As in the past, all EPDM producers followed the EPDM leader. 156. As Cromptons Shantz explained, this price increase was difficult to justify: [T]his one will be harder than most. Since raw material costs are still low and there have been two EPDM price increases during the last 15 months. 150. Crompton was pleased to cash in on its EPDM business, which it regarded as a money machine, because it benefited from significant price increases for [EPDM] products while raw material costs ha[d] been at historical lows. 158. 5. DSM Shares Supply With Exxon While EPDM Prices Continue to Rise

In 1999, defendants continued to drive their money machine to obtain their customers dollars and euros by sustaining their campaign to stabilize and increase EPDM prices (again) while simultaneously trying to reign in capacity expansion during a time of perceived tightness in EPDM supply. For example, in preparation for the annual meeting of the International Institute of Synthetic Rubber Producers (IISRP) held in Taipei, Taiwan on May 9-13, 1999, DSM Vice President Steve Nathanson wrote a memorandum to his superior, President Paul Hamm, entitled IISRP Contact Notes. 169. This memorandum provided Hamm with a list of subjects to be raised with other EPDM producers who he referred to as our colleagues. Id. (See also 166.) Nathanson advised Hamm to: Warn Bayer to watch its pricing behavior in North America or it would become a target of DSM. ( 169).

13

Congratulate UCC for being professional and disciplined (We have not seen them in many places). (Id.) Thank Crompton for their support of us on the January 1, 1999 price increase led by DSM and Tell them we are trying to avoid any conflict with them. (Id.) Criticize DDE for giving large discounts to large volume customers. (Id.). Criticize Enichem/Kumho for importing product into North America with aggressive prices. (Id.) Ask Exxon about its capacity plans (noting pointedly that Exxon was the last group to support 1/1/99 increase with lots of discounts). (Id.) A more brazen illustration of a price fixing cartel in operation is difficult to imagine. At minimum, this evidence, along with the substantial evidence identified elsewhere in this memorandum, is sufficient for this Court to permit a jury to determine whether the Non-Settling Defendants participated in a conspiracy to maintain and raise the price of EPDM. Meanwhile, defendants continued -- yet again -- to lay the ground work for still more industry-wide price increases in both the United States and Europe. Evidence of unlawful collusion among industry leaders Exxon and DSM and the other defendants during Fall 1999 includes: On or about October 7, 1999, Crompton's Schmitt spoke with Guy De Lestours of Exxon, during which De Lestours informed Schmitt that Exxon planned a European price increase and Schmitt shared Cromptons internal pricing information with Exxon. 179. MARY: PLEASE FIX THE YELLOW BULLET MARK. On October 20, 1999, Crompton's Shantz met with DSM's Lacallade at a coffee shop in Baton Rouge, Louisiana. 181. They discussed North American pricing, but Lacallade told Shantz that DSM would not lead a price increase, purportedly because it had suffered in leading the last one. Id. (But see an email from DSMs Director of Marketing, Lincoln Widmer, dated September 25, 2002 (PX 305), stating that During the last four or five consecutive price increases led by DSM, I did no

14

observe any significant losses in volume. . . . Id. at DEE-EPDM 140295 (emphasis supplied)). On October 25, 1999, DSM's Nathanson met in Baton Rouge, Louisiana, with representatives of Exxon. 183. On October 28, 1999, Exxon's McKinley and Moore called DSM's Nathanson to inquire about setting up a 3 year contract with DSM to purchase EP(D)M rubber. 184, citing Exxon Ex. 135, EM0000000241.8 On November 4, 1999, Exxon and DSM met concerning a potential long term EPDM supply agreement, whereby Exxon would purchase a widely sold commodity grade of EPDM from DSM. 187. Exxon told DSM that great strain was being placed on Exxon's ability to supply EPDM to meet its customers needs. Id. DSM agreed to submit a proposal to Exxon on November 9, 1999. Id. Four days later, on November 9, 1999, DSM's Lacallade e-mailed DSMs sales personnel (with a copy to Widmer and Nathanson) telling them that because market conditions in both Europe (where a price increase was already underway) and the United States were the exact same (in light of the fact that there would be an announcement soon about UCCs EPDM plant shutting down), they should therefore 'talk up' this same possible price increase in the USA, as a likely occurrence [sic] in early 2000. 188. On November 11, 1999 (a mere week after his meeting with Exxons McKinley), DSM's Widmer e-mailed Viets, Hamm and others within DSM concerning EPDM pricing in North America. Widmer explained that the market was likely to support a price increase in 2000, even though DDE had become highly aggressive and [u]nlike Exxon, Uniroyal and DSM, Bayer had been highly undisciplined in implementing pricing policy in the Americas. 189. Widmer opined that, unless UCC exited the EPDM business, DSM should not lead a price increase, but said that DSM should nevertheless (1) [c]ontinue developing [the] climate for a general price increase, (2) lead an increase in the second quarter of 2000 under certain circumstances,9 and (3) [i]mmediately support Exxon if they lead. Id. Indeed, Widmer already understood from Lacallades e-mail of November 9, 1999 that DSM sales personnel were preparing the North American EPDM market for an increase in early 2000. Widmers comment about DSM [i]mmediately support[ing] Exxon if they lead a price increase took place within a few days of DSMs top level contacts with Exxon about an EPDM
8 9

The anti-competitive nature of DSM/Exxon supply contract is discussed further below at 29-32. DSM did lead an industry-wide EPDM price increase effective July 1, 2000. 221.

15

supply agreement ( 183-185, 187). Widmers memorandum about his meeting with Exxon on November 4, 1999 -- unlike Exxons memorandum of the same meeting ( 187) -- states that DSM and Exxon had [g]eneral discussions on the EPDM business (i.e., market drivers, customer behavior, relative profitability of various segments and applications). 190. At the time of this meeting, Exxon was already preparing to lead a Winter 2000 EPDM industry-wide price increase. An internal Exxon memorandum dated October 21, 1999 reveals that Exxon intended to announce an EPDM price increase on December 1, 1999, effective January 1, 2000, even though Exxon was aware that industry capacity utilization might not support [its] recommended price increase. 182. This same memorandum also reported that Exxon's Elissa Sterry plan[ned] to ask DSM what volume they can offer to support [Exxons] sales targets, a reference to the proposed EPDM/Exxon supply contract. Id. As discussed below, DSM agreed to supply a widely sold, commodity grade of EPDM to Exxon, which helped Exxon support its sales targets (id.) during a time of shortage in the industry. (PD 1, Widmer Dep. At 154-55; see also PX 336 at DC1077919, and 196, 203). On November 30, 1999, Exxon announced an EPDM price increase that was followed by all defendants. 193-194. Before DDE announced its own increase, DDEs President, Theo Krapels, told Cromptons President Jim Conway at the Russian Tea Room in New York City that DDE would support the price increase. 195. From the timing and substance of the discussions between Exxon and DSM in November 1999, a strong inference can be drawn that Exxon and DSM reached a common understanding during their November 4th meeting that Exxon would lead an industry-wide price increase to be followed by DSM and other EPDM producers. This is a classic issue of material fact that should be decided by a jury.

16

In addition to orchestrating industry-wide price increases, defendants also discussed pricing and volume at individual customer accounts. See, e.g., 197 (Gatto of Crompton and Lacallade of DSM exchanged information about how much they could both raise prices to common customer GDX); 180 (DSMs Viets informed Cromptons Schmitt about DSMs aggressive negotiations with common global customer Trelleborg); 179 (Exxons Guy De Lestours informed Cromptons Schmitt about prices charged by Exxon to the European operations of global customers Trelleborg and BTR); 164 (Cromptons Shantz and DSMs Lacallade discussed pricing at a specific account). Given such dishonest treatment from their suppliers, it is little wonder that defendants feared that customers would believe themselves to be victims of price gouging. See 101; see also 205, quoting from PX 185 (Companies like Trelleborg and Hutchinson are not prepared to accept massive pricing disparities in different markets, and are determined to break what they see as the 'artificial' price level in North America). Shortly after their industry-wide EPDM price increase announcements were issued in late 1999, defendants once again proceeded to coordinate yet another across-the-board price increase. Illustrative evidence of conspiracy during 2000 includes: Crompton admitted that in or about February or March 2000, Crompton's Gatto spoke with DSM's Widmer about EPDM pricing and whether a price increase would be appropriate for the market. 207. In or about the second quarter of 2000, Crompton's Gatto spoke with DSM's Lacallade, during which Lacallade suggested that DSM would lead a price increase and stated that DSM would be the first supplier to increase prices at GenCorp, a customer. 211. On April 13, 2000, DSM's Widmer sent an internal e-mail to Nathanson and Lacallade recommending an EPDM price increase. 213. Widmer stated that [t]here are strong indications that the EPDM industry will quickly support the increase. Id.

17

During the week of May 11, 2000, at the time of an IISRP/European Rubber Journal industry convention in Brussels that was attended by defendants, DSMs Hamm openly discussed the need to increase EPDM prices. 216. Consistent with -- and presaged by -- the price increase discussion between Cromptons Gatto and DSMs Nathanson described above ( 211), DSM announced an EPDM price increase to North American customers, effective July 1, 2000. 221. As in the past, the other defendants promptly followed, converting DSMs initiative into yet another industry-wide price increase driven by anti-competitive communications and understandings. The Summer 2000 increase was one more demonstration of the same EDPM industry philosophy that Bayers Forster made clear to Cromptons Gatto and Shantz many years earlier in the lobby of the Arabella Hotel in Dusseldorf: [c]ompetitors ac[t] in a uniform way. 18. 6. Conspirators Struggle To Avert The Return of EPDM Market Turmoil Like many other criminal enterprises, the EPDM price-fixing conspiracy could not sustain itself indefinitely. In or about 2000, DDE continued to follow price increases and to meet collegially with the other defendants (even complaining at one time to DSM that it was not sticking to a price increase announcement globally 246), but DDE nevertheless began implementing a strategy of aggressively growing market share. 284. As DDEs EPDM products became increasingly accepted by customers, DDE increased sales, it expanded utilized capacity, and it even decided to try to activate its newly acquired Seadrift EPDM plant. 28889.10 DDEs co-conspirators believed that DDE had started to flood the market with low

10

After Dow and UCC merged, DDE acquired ownership of UCCs EPDM business and also inherited UCCs Seadrift, Texas plant 288-290. For awhile, DDE led Crompton to believe that it would shut down Seadrift (see, e.g., 178, 195, 200) and EPDM co-producers urged DDE to shut it down. 288-290. While this may not have led to an actual agreement to restrict output (which is tantamount to price fixing and per se illegal under Section 1 of the Sherman Act, In re Linerboard Antitrust Litig., 203 F.R.D. 197, 215-16 (E.D. Pa. 2001)), the fact that such discussions took place at all among supposed industry rivals is another demonstration of the anticompetitive nature of the EPDM industry. Likewise, there is evidence that defendants (like true cartelists) also agreed during joint venture discussions not to make capacity expansion announcements and to refrain from selling to certain market segments pending the results of their collaborative efforts. See, e.g., 128, 170, 276, 283-84, 288.

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prices, which was creating disdain among suppliers. 251. See also 259, quoting DSM Jt. Ex. 94 at 37 (Cromptons complaint that DDE was stealing [market] share from Crompton in the weather seal market via extremely low prices). The other EPDM producers responded to DDEs aggression in the market by discussing among themselves whether to retaliate (see, e.g., 279, 295, 303-306) and by speaking directly with DDEs President, Theo Krapels, about their displeasure (see, e.g., 284, 288-290, 303-304). They also decided to increase -- or at least rationalize -- production capacity. For example, during a July 20, 2001 meeting in Germany, executives from Crompton and Bayer discussed EPDM capacity issues, DDE's actions in the market and Bayers intention to retaliate against DDE. 279. In an e-mail dated that same day, Cromptons Gatto reported that he was informed by a Bayer executive that Bayer was proceeding with a new line at its plant in Marl, Germany, and would also debottleneck another EPDM production facility. Id. Gatto also reported that he learned from Bayer and another source close to DSM that DSM was building a new EPDM plant in Geleen, Netherlands. Id. During the course of DDEs aggression and numerous discussions among defendants seeking to thwart it, Crompton nevertheless still held out hope that the EPDM money machine would keep generating cash and that the industry would return to stability. On January 9, 2001, Crompton announced an EPDM price increase, effective February 10, 2001. 257. Then, in their characteristic, lockstep fashion, and after substantial inter-firm communications about EPDM pricing plans,11 DSM, Exxon and the other defendants followed Cromptons price increase. Id.

11

See, e.g., 231, 234, 244-47, 251-52, 255, 258.

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The Winter 2001 industry-wide price increase led by Crompton did not help Crompton avoid what Cromptons Conway described as Cromptons worst month on record in June 2001. 281. During a trade association function in Baltimore on the evening of July 25, 2001, Conway informed DSMs Nathanson that (1) Crompton was [o]n board that prices need to go up, (2) Crompton [a]gree[d] that grabing [sic] more share from each other is not the way, (3) Crompton believed that, for price increase purposes, the key is DDE, to which Crompton had recently lost market share and seemed not to be stopping on lowering price; (4) Crompton was disinclined to initiate an industry-wide price increase because of low sales and negative customer reaction from its Winter 2001 price increase; and (5) Crompton would watch [DSM] and Exxon and follow price as has been [Cromptons] history. 280-281. Believing that DDE was attempting to preempt the industry [by] dissuad[ing] others from expanding, on August 7, 2001, Cromptons Conway warned DDEs Krapels over another lunch at New York Citys Russian Tea Room to be prepared for a blood bath, because Crompton would not give up [its] market share. 284. By the end of the Class Period in December 2001, DSMs Nathanson and Cromptons Conway commiserated over the telephone with each other, bemoaning the EPDM market and the turmoil that had returned to it in full force. Even at that late moment, DSMs Nathanson reassured Cromptons Conway that it was not [DSMs] intent to take share from them. 295. A price war ensued and would continue into 2003. 318. In January 2003, DSMs Lacallade presented his sales force with a powerpoint presentation slide lamenting that The EPDM business is in a Price War and that This may be the industrys darkest, most challenging time. 324.

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III.

ARGUMENT A. Summary Judgment Standards In Creative Copier Service v. Xerox Corp., 2005 WL 2175138, at *1 (D.Conn. Sept. 2,

2005) (Underhill, J.), an action involving claims of attempted monopolization in violation of 15 U.S.C. 2, this Court denied the parties cross-motions for summary judgment. The Court held: Summary judgment is appropriate when the evidence demonstrates that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56 (c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255-56, 106 S.Ct. 2505, 91 L.Ed2d 202 (1986). When ruling on a summary judgment motion, the court must construe the facts in the light most favorable to the non-moving party and must resolve all reasonable inferences against the moving party. Anderson, 477 U.S. at 255. If a reasonable inference can be drawn in the non-movants favor, summary judgment is not authorized even if other inferences can also be discerned from the evidence. Creative Copier, 2005 WL 2175138, at *3 n.2. The issue is whether jurors could reasonably conclude that there is a factual basis supporting the non-movants claim. See id. at * 3, 4, 5. Plaintiffs alleging a claim under Section 1 of the Sherman Act must introduce evidence of conspiracy that is (1) something more than parallel conduct; (2) economically plausible; and (3) tend[s] to rule out the possibility that defendants were acting independently. Bell Atlantic v. Twombly, 127 S.Ct. 1955, 1964-66 (2007), citing, inter alia, Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed 538 (1986). As the Supreme Court made clear in Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992): The Courts requirement in Matsushita that the plaintiffs claims make economic sense did not introduce a special burden on plaintiffs facing summary judgment in antitrust cases. The Court did not hold that if the moving party enunciates any economic theory supporting its behavior, regardless of its accuracy in reflecting the actual market, it is entitled to summary judgment. Matsushita demands only that the nonmoving partys

21

inferences be reasonable in order to reach the jury, a requirement that was not invented, but merely articulated, in that decision. (emphasis in original). See also Virgin Atl. Airways Ltd. v. British Airways PLC, 257 F.3d 256, 262 (2d Cir. 2001); Flat Glass, 385 F.3d at 357 ("a court must generally apply the same summary judgment standards that apply in other contexts"). Evidence that "tends to exclude" the possibility of independent action means simply that antitrust plaintiffs "must show that the inference of conspiracy is reasonable in light of the competing inferences." Matsushita, 475 U.S. at 588 (emphasis supplied).12 It does not require Plaintiffs to present conclusive evidence that would establish their own entitlement to judgment on the merits. See High Fructose, 295 F.3d at 663 (reversing summary judgment although [t]he evidence is not conclusive by any means -- there are alternative interpretations of every bit of it. ); JTC Petroleum Co. v. Piasa Motor Fuels Inc., 190 F.3d 775, 779 (7th Cir. 1999) (Posner, J.) (There may be an innocent explanation [for defendants conduct]. But the only issue for us is whether a rational jury could conclude that defendants conspired); Toys R Us, Inc. v. FTC, 221 F2d. 928, 934-35 (7th Cir. 2000) (plaintiffs are not required to exclude all possibility that the manufacturers acted independently, which would impose an absurd and legally unfounded burden; plaintiffs need only present some evidence, which believed, would support a finding of concerted behavior); Big Apple BMW v. BMW of N. Am., 974 F.2d 1358, 1365 (3d Cir. 1992) (plaintiffs are not required to eliminate all possible independent justifications by the [defendant] [so that] only evidence of concerted action would be left in the record).

When there is direct evidence of a conspiracy, the strictures of Matsushita do not apply. Rossi v. Standard Roofing Co., 156 F.3d 452, 466 (3d Cir. 1998.); Petruzzis IGA Supermarkets, Inc., v. Derling-Delaware Co., Inc., 998 F.2d 1224, 1233 (3d. Cir.), cert. denied sub. nom., Moyer Packing Co. v. Petruzzis IGA Supermarkets, Inc., 510 U.S. 994 (1993). See also High Fructose, 295 F.3d at 654; Flat Glass, 385 F.3d at 357 n.7. Although the distinction between direct and circumstantial evidence can be confusing, direct evidence is tantamount to an acknowledgement of guilt. High Fructose, 295 F.3d at 661-62. See also In re Brand Name Prescription Drug Antitrust Litig., 186 F.3d 781, 785 (7th Cir. 1999) (eyewitness accounts are paradigm evidence of collusion). The facts identified above in Section II arguably constitute direct evidence of a conspiracy.

12

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To establish a conspiracy, the evidence must show a conscious commitment to a common scheme designed to achieve an unlawful objective. In re Medical X-Ray Film

Antitrust Litig., 946 F.Supp. 209, 216 (E.D.N.Y. 1996) (citing Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984) and Minpeco, S.A. v. Conticommodity Serv., Inc., 673 F.Supp. 684, 688 (S.D.N.Y. 1987)). As the Court observed in Medical X-Ray, a conspiracy or agreement to restrain trade in violation of the Sherman Act need not be express but can be inferred from the circumstances. It is not necessary that such a combination be established by direct proof of oral or written agreements; it may be proven by inferences drawn from circumstantial evidence, including the acts and conduct of the alleged conspirators. 946 F.Supp. at 216 (citations omitted). As the Seventh Circuit explained in High Fructose, 295 F.3d at 661-62: The question is simply whether th[e] evidence [of conspiracy], considered as a whole and in combination with the economic evidence, is sufficient to defeat summary judgment. [Relevant circumstantial evidence] include[es] ambiguous statements. These are not to be disregarded because of their ambiguity; most cases are constructed out of a tissue of such statements and other circumstantial evidence, since an outright confession will ordinarily obviate the need for a trial. See also Fears v. Wilhelmina Model Agency, Inc., 2004 WL 594396, at *3 (quoting Venture Tech., Inc. v. Natl Fuel Gas Co., 685 F.2d 41, 45 (2d Cir. 1982)). In High Fructose, 295 F.3d at 661, the Seventh Circuit held that the amount of evidence sufficient to defeat summary judgment in conventional horizontal price-fixing cases like this one is less substantial than in atypical antitrust actions like Matsushita, which involved highly speculative allegations of predatory pricing:13

13

In Matsushita, plaintiffs claimed that over twenty Japanese electronics manufacturers conspired to cut prices in the United States below cost and thereby deliberately incurred losses for two decades. The Court found this contention speculative and not reasonable. 475 U.S. at 588, 590, 595, 597. Given these unusual allegations, the Court stated: [I]f the factual context renders respondents claim implausible if the claim is one that simply makes no

23

More evidence is required the less plausible the charge of collusive conduct. In Matsushita, for example, the [conspiracy] charge ... was implausible for a variety of reasons ... But the charge in this case involves no implausibility. The charge is of a garden-variety price-fixing conspiracy. . . . See also Flat Glass, 385 F.3d at 357 (and cases cited therein). Here, Plaintiffs allege garden-variety collusion in a market whose structural characteristics were suited perfectly to conspiratorial behavior. Compare High Fructose, 295 F.3d at 656-61 with 1-10. The misconduct alleged by Plaintiffs was both economically feasible and per se unlawful.14 Courts must review the evidence presented, not just in the light most favorable to plaintiffs,15 but in its undivided whole. As the Second Circuit held in Apex Oil, 822 F.2d at 254-55: A court deciding whether to grant summary judgment should not view each piece of evidence in a vacuum. Seemingly innocent or ambiguous behavior can give rise to a reasonable inference of conspiracy in light of the background against which the behavior takes place. Evidence can take on added meaning when viewed in context with all the circumstances surrounding a dispute. Thus, while we must carefully determine what inferences reasonably may be drawn from each piece of evidence, we must make this determination in light of all of the evidence proffered by [plaintiff]. (emphasis supplied). Accord: Fears v. Wilhelmina Model Agency, Inc., 2004 WL 594396, at *4 (S.D.N.Y. 2004) and Medical X-Ray, 946 F. Supp. at 219 (each citing Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962)) ([t]he character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by

economic sense respondents must come forward with more persuasive evidence to support their claim than would otherwise be necessary. Id. at 587. (citation omitted). On the economic plausibility of collusion in markets like EPDM, see, e.g., In re Linerboard Antitrust Litig., 504 F. Supp.2d 38, 54 (E.D. Pa. 2007); Flat Glass, 385 F.3d at 361-62; High Fructose, 295 F.3d at 656-58; Ezzos Invs., Inc. v. Royal Beauty Supply, Inc., 94 F.3d 1032, 1036 (6th Cir. 1996) (This case involves the classic anti-trust situation: an attempt to avoid a competitive marketplace by setting prices at an artificially high level. There is nothing implausible or unlikely about the conduct alleged.
15 14

See In re High Pressure Laminates Antitrust Litig., 2006 WL 1317023, at *1 (and cases cited therein).

24

looking at it as a whole); In re High Pressure Laminates Antitrust Litig., 2006 WL 1317023, at *4 (quoting Apex Oil, 822 F.2d at 254-55)); In re Flat Glass Antitrust Litig., 385 F.3d at 368 (evidentiary record must be considered "collectively and holistically," and the Court should not disregard evidence suggesting a conspiracy merely because it "does not in isolation lead inexorably to the conclusion that [defendants] entered into an agreement). This Courts inquiry is much the same as in any other case challenged under Rule 56 of the Federal Rules of Civil Procedure -- whether the evidence, viewed as a whole and with all reasonable inferences drawn in favor of the non-moving party, raises a genuine dispute of material fact. Plaintiffs have presented sufficient evidence to meet that standard. C. There are Genuine Issues of Material Fact Concerning the Non-Settling Defendants Participation in the EPDM Price-Fixing Conspiracy The Second Circuit and other courts have identified the type of evidence required to defeat summary judgment in a price-fixing action under Section 1 of the Sherman Act. Relevant evidence includes: (1) (2) Parallel conduct. (Apex Oil, 822 F.2d at 253). Evidence that the structure of the market was such as to make secret price fixing feasible, which is sometimes characterized as motive to engage in a price-fixing conspiracy (Flat Glass, 385 F.3d at 360, quoting High Fructose, 295 F.3d at 655; Apex Oil, 822 F.2d at 254). (3) Evidence that the market behaved in a noncompetitive manner, which is sometimes characterized as action against self-interest. (Flat Glass, 385 F.3d. at 360, quoting High Fructose, 295 F.3d 655). (4) A high level of interfirm communications. (Apex Oil, 822 F.2d at 254; Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir. 2001).

25

(5)

[C]ustomary indications of traditional conspiracy. (Flat Glass, 385 F.3d at 361, quoting Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law 1434b, at 243 (2d ed. 2000)).

These plus factors provide the established analytical framework for distinguishing legal independent oligopolistic behavior from unlawful collusion. Flat Glass, 385 F.3d at 355, 359. In combination with parallel conduct, they allow a fact-finder to infer a conspiracy. Apex Oil, 822 F.2d at 253; High Pressure Laminates, 2006 WL 1317023, at *2. In Flat Glass, the Third Circuit held that plaintiffs may avoid summary judgment by presenting proof that the defendants got together and exchanged assurances of common action or otherwise adopted a common plan even though no meetings, conversations, or exchanged documents are shown. 385 F.3d at 361. Here, as shown above in Section II and throughout Plaintiffs Statement, the NonSettling Defendants and their co-conspirators adopted and implemented an unmistakable common plan to stabilize and raise the price of EPDM, both in the United States and in Europe. The pretrial record is replete with evidence of anticompetitive meetings and conversations that took place in advance of the EPDM conspirators lockstep price-increase announcements. As demonstrated below, the evidence identified by Plaintiffs is more than sufficient to enable a reasonable jury to draw a plausible inference of a direct participation of DSM and Exxon in the EPDM price-fixing conspiracy. f. Parallel Conduct Parallel conduct can be probative evidence bearing on the issue of whether there is an antitrust conspiracy, even if it does not by itself suffice as evidence of the conspiracy. Apex Oil at 253.

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There are six lockstep, industry-wide price increase announcements that DSM concedes are not in dispute in this motion: (1) Fall 1997; (2) Winter 1998; (3) Winter 1999; (4) Winter 2000; (5) Summer 2000 and (6) Winter 2001. DSM Mem. at 23-24 and DSM Jt. Ex. 44-49. See also Table of EPDM Price Increases, attached to this memorandum as Appendix A. This parallel conduct is probative evidence supporting Plaintiffs claim of a price-fixing conspiracy among EPDM manufacturers. b. Market Structure and Motive The Non-Settling Defendants and their co-conspirators had a powerful economic motive to engage in collusion because the structure of the market for EPDM made their cartel feasible. Flat Glass, 385 F.3d at 360. Among the structural characteristics relevant to this determination are: (1) a limited number of sellers (High Fructose, 295 F.3d at 656); (2) a high degree of standardization of the product and a lack of close substitutes (id. at 657); and (3) an undifferentiated commodity product (id. at 658). As discussed in Section II above and in Plaintiffs Statement, the peaceful EPDM market was thrown into turmoil as result of announced plans by DDE and UCC to increase production capacity, which resulted in dramatically lower profit margins throughout the industry that, in turn, inspired the conspirators to take concerted action to improve their distressed economic circumstances. The conspirators were able to conduct themselves in this unlawful fashion for several years, even after profit margins recovered, because the market for EPDM, like the industry in High Fructose, was highly concentrated among a few dominant manufacturers that produced a standardized, commodity-like product. Id. Given the unassailable economic facts, there is no doubt that the EPDM market was extremely well-suited to the conspirators price-fixing cartel.

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c. Anti-Competitive Behavior and Action Against Self-Interest In Medical X-Ray, 946 F. Supp. at 222, the Southern District of New York, after analyzing the evidence in relation to the plus factors cited by plaintiffs, concluded that there was a reasonable basis from which to infer an agreement or conspiracy sufficient to preclude summary judgment. These plus factors included: (1) advance communications regarding competitors price increase announcements; (2) dissemination of current price and marketing information; and (3) direct contacts and communications between and among competitors, and multiple opportunities to conspire. 946 F. Supp. at 218-19. The evidentiary record before the Court paints a compelling portrait illustrating that defendants engaged in a plethora of communications concerning future price increase announcements, habitually exchanging confidential and secret information about EPDM pricing, customers, market conditions, and production capacity. See, e.g., 11 and Section II above. Despite the Non-Settling Defendants protestations to the contrary, the evidence in its totality is not consistent with legitimate independent market conduct.16 Rather, it is indicative of anti-competitive behavior supporting a plausible inference of conspiracy that can and should be drawn by a reasonable jury at trial. There is compelling evidence that DSM acted in a manner contrary to its economic selfinterest to promote the EPDM producers conspiratorial objective of announcing and implementing an industry-wide price increase. Beginning in October 1999, as the EPDM conspirators plotted yet again among themselves for an economically unjustified price increase, Exxon and DSM commenced negotiations aimed toward a three-year contract under which DSM would sell Exxon its Keltan 5508 EPDM product (a commodity grade, which was
16

The factual and legal arguments relied upon by the Non-Settling Defendants in support of their motions for summary judgment are addressed below in Section III.C.

28

interchangeable with Exxons Vistalon 7000 grade). 184, 187, 190. During these negotiations, Exxon informed DSM that a great strain was being placed on Exxon's ability to supply EPDM to meet its customers requirements. 187. This was because Exxon wanted to free-up capacity it had been using to make Vistalon 7000 to make an electrical grade of EPDM, the demand for which increased due to the shut-down of DDEs Beaumont plant and DDEs withdrawal from the electrical segment of the EPDM market. Id. Exxon told DSM that it insisted that the Keltan 5508 had to be made at DSM's Addis facility in the United States. With respect to pricing, Exxon told DSM that it wanted a price that would permit it to be somewhat competitive in the market, recognizing that DSM needed to be pleased with the price versus their next best alternative to selling the product to other customers. Id. (emphasis supplied). Stated another way, DSM was being asked by Exxon to help a competitor both free-up capacity to make another (presumably more profitable) grade of EPDM, while also maintaining its Vistalon 7000 customer base; in return, DSM was expected to sell Keltan 5508 EPDM to Exxon at a lower price than that charged by DSM to its own customers. On its face, the proposed contract was of enormous benefit to Exxon, while even DSMs finance department recognized that it appeared in many respects against DSMs economic self-interest. See Pl. St. at 175-77; 196. DSM acknowledged that it's contribution margin from the deal was certainly below the average charged to its regular customers for Keltan 5508). 196. In the thick of these negotiations, in November 1999, top executives of Exxon and DSM met to discuss their mutual needs, which, aside from the terms of the supply contract, logically included an explicit or implied reference to the decision that Exxon had already made to lead an industry-wide price increase (announced by Exxon on November 30, 1999) to become effective

29

in January 2000. 193-194. They discussed the price at which DSM would sell the Keltan 5508 to Exxon and, indeed, DSMs first proposed price offer sent to Exxon in a letter dated a few weeks before Exxon announced the Winter 2000 price increase included the statement that the base price of Keltan 5508 in the offer was subject to 50% of announced and accepted industrywide general price increase in North America. 190. Shortly after the remaining EPDM producers followed and supported Exxons lead action on the Winter 2000 price increase, DSM and Exxon executed the Keltan 5508 supply contract on January 26, 2000 in Baton Rouge, Louisiana. 203. About eight months into the supply agreement, in August 2000, DSM received information that the Keltan 5508 EPDM that DSM was selling to Exxon was apparently being resold by Exxon to a common customer, MA Hanna, that was purchasing less volume from DSM than in previous months. 235. DSM sales manager Jim Otis sent an e-mail on August 29, 2000 to DSMs Widmer expressing concern about the deal because Exxon was selling our product to a customer at a lower price than what we were selling that customer, and it did not make sense that Exxon would sell DSM-supplied product to DSM customers. A meeting among DSM and Exxon executives subsequently took place on August 31, 2000 ( 236, 238), for which DSM prepared both official and unofficial minutes. The official version omitted a key statement attributed in the unofficial version to Exxons Jim McKinley: McKinley had promised to remedy the fact that DSM was running into its own product being resold by Exxon in the market because such customer encroachment was not the original intent of the supply contract and not a win/win situation. 238. Despite the contention of Non-Settling Defendants that Plaintiffs are second guessing the economic justification for their supply contract, Plaintiffs do not doubt that many factors

30

were considered by them in undertaking this arrangement. However, effectively allocating customers of Keltan 5508 and Vistalon 7000 -- two of the most widely sold commodity grades of EPDM -- was anti-competitive and an important reason why both DSM and Exxon entered into this agreement. Exxon was able to maintain its Vistalon 7000 customer base without having to be concerned about competition from DSM, while also freeing up capacity to make a grade for the electrical segment, and DSM was able to maintain its Keltan 5508 customer base free from the risk that Exxon would compete for its customers. The evidence demonstrates plainly that (1) DSMs own finance department expressed a concern that the supply contract appeared to be against DSMs self-interest; (2) the timing of meetings and discussions among top Exxon and DSM executives with pricing authority for EPDM coincided directly with a time when the need for another industry-wide price increase was under active consideration among all EPDM suppliers; (3) within a few weeks of the DSM and Exxon meetings in November 1999, Exxon was the first to issue an announcement for the industry-wide Winter 2000 increase; (4) the original intent of the Keltan 5508 supply contract was to create a win/win situation in which both Exxon and DSM could avoid competing with each other over customers and price; and (5) in the midst of the market stability fostered by this supply agreement for one of the most popular and widely sold EPDM products in the market, DSM led a price increase in the Summer 2000 that was also, like every other increase, supported and followed by all defendants, including Exxon. At trial, the jury should be given an opportunity to decide the significance of the relationship between the Exxon/DSM supply contract and the EPDM price-fixing conspiracy alleged by Plaintiffs.

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Other evidence of anti-competitive behavior in the EPDM industry also lends itself to plausible inferences of conspiracy that the jury should be allowed to consider. For example, frequent use of the term discipline in relation to markets and market participants is a trademark indication of a price-fixing conspiracy. See, e.g., Flat Glass, 385 F.3d at 365; High Fructose, 295 F.3d at 662. The EPDM co-conspirators used this term repeatedly in the evidence detailed in Plaintiffs Statement. See e.g., 67, 169, 189, 212, 229, 267, 277, 323. One DSM executive went so far as to assert that the exercise of market discipline was needed to avoid a price war in the Brazilian EPDM market. 212. Likewise, evidence that industry members cheated or failed to hold the line on prices is another traditional indication of a price-fixing conspiracy. See Flat Glass, 385 F.3d at 365. Here, as shown above at Section II and in Plaintiffs Statement, the Non-Settling Defendants and their coconspirators closely monitored one anothers compliance with price-fixing agreements. For example, after Bayers Pask complained to Gatto about Cromptons aggressive price strategy, Gatto assured Bayer that Crompton would stick to the set prices. In return, Pask assured Gatto that Bayer would not conduct any aggressive marketing in the US. 49. Bayers Georg Bach also disclosed to Cromption Bayers intention to retaliate against DDE by, among other things, proceeding with a new line at its plant in Marl, Germany and debottleneck[ing] another EPDM production facility. 279. Similarly, DDE President Theo Krapels telephoned a DSM executive and [c]omplained about price in market and DSM [was] not sticking to announcement globally. 246. DSM understood that DDEs complaint was a good lesson of how we are watched, an unmistakable threat of price competition from a co-producer like DEE that was beginning to show signs of

32

aggressively growing its market share.17 Id. (Any sign of weakness i.e., not sticking to [an] announcement globally -- could become an excuse for competitor field sales to recommend a price change action to their respective management). The threat of market discipline was also understood by DSMs Nathanson, who suggested that co-producer Bayer be told to watch their pricing behavior in North America or they would become a target of DSMs. 169. A similar threat was made by an executive named Mr. Reeb in High Pressure Laminates, 2006 WL 1317023, at * 4, who warned a co-conspirator causing trouble in the business that he would be squash[ed] like a bug. As the Laminates court observed: It is also more likely than not that Mr. Reeb's threat to "squash" interfering "bugs," if it were really made, leads to an inference of collusion. The Court has no opinion as to whether Reeb actually said this, and/or whether he actually had the power to crush "bugs." The Court cannot ignore these realities at this stage and conclude that it is as equally plausible that all intercorporation communications were benign, although a jury may so find. Id. Price-fixers own description of their direct, deliberate inter-corporate communications as inappropriate or otherwise improper is another indication of an unlawful conspiracy. Id. The record here contains many instances where EPDM executives admitted that either their own conduct was improper or the conduct of their fellow executives (even at their own company) was improper. See, e.g., 144, 179, 251, 267, 277, 292. Indeed, DSMs antitrust policy states that employees meeting with competitors should not engage in discussions related to markets, pricing, customers or other issues of a competitive nature. 301. As detailed in Section II above and the record evidence cited therein, the words and expressions used repeatedly by the Non-Settling Defendants and their fellow EPDM producers
17

See Section II above and 284.

33

suggest strongly that these parties did not operate lawfully in a parallel but independent fashion. On the contrary, the established lexicon and cartel practices of the EPDM industry demonstrate that its members worked together constantly to pursue their common objectives of maintaining and increasing EPDM prices. This is concerted action that is the very essence of an illegal pricefixing conspiracy. To paraphrase a DSM strategy memo written before the Class Period,

defendants reached an understanding and mutual dependency to get [their common] policies implemented. 13 (quotations in original). d. High Level of Interfirm Communications The evidence in this case chronicles more than 100 meetings and conversations between and among EPDM manufacturers regarding EPDM, EPDM capacity and EPDM prices during the alleged conspiracy period in this case. See 11-324 and Section II above. Undoubtedly, many more such meetings and conversations have not been memorialized or discovered, in some instances because the conspirators intentionally destroyed incriminating business records. See Section III d. below. Not only did high-level executives for EPDM producers have an extraordinary number of meetings and conversations with their competitors, many of these executives had longstanding personal friendships that made it convenient and easy for the EPDM industry to engage in its unlawful collusion. For example, Cromptons Joe Gatto was the best man at DSMs Roger Lacallades wedding, with both men having enjoyed a close friendship since college and both mens wives maintaining a social relationship. 197, 271. citing Lacallade Dep. at 74-49. See also 293294.

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Similarly, Lacallade and Steady of DSM were well acquainted with Cromptons Dan Shantz for over 20 years. 14, citing Steady Dep. at 41; 197, citing Lacallade Dep. at 247. On at least one occasion, a marvelous gift was sent by one competitor to another. 265, citing DCI153438. Moreover, DSMs Nathanson boasted to his bosses that he had developed a very good relationship with Cromptons Conway, with whom he reportedly spoke every week. 226, citing DEE-EPDM 192350-51. Conway, who was described by Nathanson as always very open, also gave Nathanson confidential information about Cromptons EPDM business, including its discussions with Exxon, Bayer, DDE and all industry players. Id. Key executives like DSMs Nathanson even referred to his ostensible competitors as business colleague[s]. 295; see also PD 10, Lacallade Dep. at 210-211, quoting an exhibit at Lacallades deposition of an email from Lacallade about meeting DDEs Krapels and his wife at an IISRP meeting in Naples (Joyce and I enjoyed ourselves in Naples but, I think we also connected very well with many colleagues. We felt particularly good about the start of a relationship with Theo (President of DDE) and Janet Krapels.) (emphasis supplied). DSMs Paul Hamm gave an illuminating interview in 1999 that provided insights about the purportedly competitive nature of his business, unabashedly describing the culture of collusion pervading the EPDM industry. 166. Hamm admitted that DSM was in contact with our colleagues18 (i.e., DSMs competitors or co-producers) and stated I feel this is the way it ought to be. (Id., emphasis supplied). Hamm remarked that if DSM make[s] it clear what we are doing, then I expect my

18

Hamm and Nathanson were not alone in characterizing ostensible competitors as colleagues. DSMs Widmer also described Exxon as our colleagues in the supply side in a memorandum he authored concerning DSMs EPDM supply agreement with Exxon. 166, citing PX 148.

35

colleagues to tell me some of the things they are doing, and also that if his colleagues want to have an influence on what DSM is doing, They should come and talk to us. (Id). Here, as in High Fructose, the conspiring executives did not treat each other as competitors in a competitive industry. This is a factor that should be considered in assessing the plausibility of an alleged conspiracy. 295 F.3d at 662 (citing statement by a corporate president who declared that our competitors are our friends, a sentiment that Judge Poser found was hardly consistent with the goal of winning friends for capitalism). As demonstrated by the extremely high level of interfirm communications in the record before the Court, there is more than sufficient evidence from which a reasonable jury could the draw the plausible inference that EPDM colleagues unlawfully orchestrated six parallel industry-wide price increases during the Class Period. e. Customary Indications of Traditional Conspiracy Much of the evidence described above also falls into the category of customary indications of traditional conspiracy. There is an abundance of additional evidence that falls into this category. The nature of the meetings and communications among EPDM co-conspirators illustrates their blatant illegality. 11. The conspirators seldom met in their regular places of business. See 45, citing Schmitt Dep. at 128-29 (meeting in DSMs offices would have been seen as potential collusion). To hide or disguise their unlawful discussions, the conspirators met furtively in locations like the Arabella Hotel in Dsseldorf ( 18, 46, 49, 84, 119, 145); the Russian Tea Room in New York City ( 195, 284); the LaMadeline coffee shop in Baton Rouge, Louisiana ( 181, 186, 231, 247); the bar of the Sheraton Airport Hotel in Brussels ( 134); an IISRP conference in Rio

36

DeJaniero, Brazil ( 122); the Grand Ole Opry in Nashville, Tennessee ( 138); and a restaurant by the Rhine River ( 175). At least one hotel meeting room was reserved under a false identity. 119. Further evidencing their efforts to conceal their unlawful conduct (which also accentuates their acute consciousness of guilt), the EPDM conspirators written reports of their meetings contained such dire warnings as (1) Please copy DAS [Daniel Shantz] and eliminate from email ( 54); (2) Pls destroy e-mail after reading ( 251); and (3) SECRET ( 51, capitalization in original). Without any evident legitimate purpose, they prepared both official and unofficial versions of meetings with competitors. 238. They used telephones and scrupulously avoided incriminating e-mail communications with competitors because they understood that there could be negative implications if such e-mails were to be found by law enforcement officials. 251. The foregoing efforts by EPDM executives to conceal the fact and nature of their frequent communications are highly suggestive of unlawful conspiratorial conduct. See Flat Glass 385 F.3d at 368-69 (upper level executives secret conversations about price have probative weight in assessing plausibility of conspiracy); High Fructose, 295 F.3d at 656 (price fixing has to be kept secret in order to avoid immediate detection followed promptly by punishment). Given the extraordinary lengths to which they traveled to cover up the tracks of their conspiracy, it is not surprising that only a limited documentary trail exist for many meetings between and among competitors known to have occurred. Given the EPDM executives

obsession with secrecy and the evidence of intentional document destruction, it is surprising that so much evidence of the EPDM price-fixing conspiracy survives.

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Moreover, there is evidence that the EPDM conspirators used false pretextual justifications for their price increases. For example, Exxon told DSM in August 1997 that the price of ethylene (a key raw material component of EPDM) would remain stable, yet the NonSettling Defendants and their co-conspirators increased EPDM prices anyway -- falsely attributing their action to increasing costs. 82, 150, 158. Raising prices at a time of stable costs is not competitive behavior. High Fructose, 295 F.3d. at 659. The Non-Settling Defendants and other EPDM producers increased prices in every year of the class period -- even when raw material costs decreased -- based on the false claim that price increases were necessary to create profits for reinvestment purposes. Compare 318 with 109, 152. DSM undertook this action even though one of its own executives recognized that customers could view a price increase as gouging because "no remote justification exist[ed] for an increase. 102. Even after their price-fixing conspiracy imploded and their EPDM employers faced the legal consequences of their action, several executives continued their efforts to hide the truth. Cromptons Gatto, Shantz, Conway and Fickenscher each invoked the Fifth Amendment privilege against self-incrimination rather than provide truthful testimony that corroborated by other evidence in the record -- would further incriminate them in (and potentially expose them to criminal penalties for) the illegal conduct that made the EPDM price-fixing conspiracy possible. Witnesses who did testify used their depositions as vehicles to deny, or offer improbable explanations for, facts that are established in documents that they authored or received in the ordinary course of their business. See, e.g., 246, 250, 267, 281, 286, 292, 295. Although the credibility of the testimony of alleged co-conspirators is a matter properly reserved for the jury at trial,19 manifestly incredible deposition testimony can be considered by the Court in assessing

19

Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) ([t]he

38

motions for summary judgment. High Fructose, 295 F.3d. at 655 (evaluating similar selfserving, uncorroborated, implausible testimony of a defense witness). The plus factor of customary indications of traditional conspiracy is established by substantial evidence here. C. Defendants Summary Judgment Arguments are Unpersuasive and Unavailing The foregoing evidence in its totality establishes that a reasonable jury could draw a plausible inference of a price-fixing conspiracy among the Non-Settling Defendants and their coEPDM producers. A multitude of genuine issues of material fact exist, and the jury -- the ultimate finder of fact -- should not be displaced from its designated province of deciding the question of what weight should be assigned to competing permissible inferences. Apex Oil, at 252-53. In the sections that follow, Plaintiffs address directly the factual and legal arguments advanced by the Non-Settling Defendants in their motions for summary judgment. As shall be seen, DSM and Exxon take the liberty of reinterpreting the evidence in a way that fails to reflect the evidentiary record as a whole and merely puts their own self-serving spin on isolated facts -- a judicially discredited strategy that in no way comports with the cardinal tenant of Rule 56 that all evidence must be viewed in a light most favorable to the non-moving party. Indeed, these defendants essentially ask this Court to intrude upon the province of the jury and accept their distorted and selective interpretations of the evidence. They also rely on unanalogous and irrelevant case law that has no application to the pertinent facts and issues involved in this litigation.
evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor) See also Metropolitan Life Ins. Co. v. Bancorp Services, L.L.C., 2008 WL 2229785, at *7 (Fed. Cir. June 2, 2008); Davis v. Team Elec. Co., 520 F.3d 1080, 1096 n.11 (9th Cir. 2008); Czekalski v. Peters, 475 F.3d 360, 368 (D.C. Cir. 2007); Lendino v. Trans Union Credit Information Co., 970 F.2d 1110, 1113 (2d Cir. 1992); Vasquez v. Claires Accessories, Inc., 392 F. Supp. 2d 342, 349 (D. Conn. 2005).

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Because their motions lack merit, the Non-Settling Defendants requests for summary judgment should themselves be summarily denied. 1. The Non-Settling Defendants Mischaracterize the Evidence DSM and Exxon contend that Plaintiffs claims are implausible based on mischaracterizations of the evidence before the Court, such as: (1) (2) (3) There are only isolated communications involving DSM representatives in which EPDM prices were occasionally referenced (DSM Mem. at 2); There are only a smattering of ambiguous communications, for which Plaintiffs offer merely speculative interpretations (DSM Mem. at 4); There are only occasional bilateral communications between DSM and Crompton touching upon some aspect of EPDM market processes (DSM Mem. at 5); The evidence consist only of a hodgepodge of documents and testimony involving isolated references to communications between some defendants on the subject of market conditions, none of which is tied to the actual price increase announcements challenged by plaintiffs allegations (DSM Mem. at 52); Plaintiffs have never identified when the purported conspiracy supposedly began, when each of the various participants joined, who purportedly participated, nor how the conspiracy supposedly operated (Exxon Mem. at 10, emphasis supplied); The purported evidence is so thin as to be virtually nonexistent amounting to, at most, a few instances of parallel pricing behavior and a handful of opportunities to conspire (Exxon Mem. at 30).

(4)

(5)

(6)

Try as the Non-Settling Defendants might to minimize, disparage and distort the evidence that establishes their liability for violations of Section 1 of the Sherman Act, the record presents a compelling composite account of (a) an industry that was highly susceptible to price-fixing; (b) executives who, faced with the prospect of overcapacity and other difficult market conditions, were eager to stabilize and raise industry-wide prices, even when such increases lacked justification; and (c) high-level corporate colleagues who knew one another well, and who

40

communicated constantly about their need for uniform industry pricing and discipline, all the while using terminology indicative of a conspiracy -- including explicit threats of reprisal against companies that acted out of step with the agreed-upon objectives of the cartel. In moving for summary judgment in the face of such strong evidence of liability in this case, the Non-Settling Defendants have exhibited gamesmanship of the sort articulated by Judge Posner in High Fructose, 295 F.2d at 255-56: In deciding whether there is enough evidence of price fixing to create a jury issue, a court asked to dismiss a price-fixing suit on summary judgment must be careful to avoid traps that the defendants in this case have cleverly laid in their brief. The first is to weigh conflicting evidence (the job of the jury). The second trap to be avoided in evaluating evidence of an antitrust conspiracy for purposes of ruling on the defendants' motion for summary judgment is to suppose that if no single item of evidence presented by the plaintiff points unequivocally to conspiracy, the evidence as a whole cannot defeat summary judgment. The question for the jury in a case such as this would simply be whether, when the evidence was considered as a whole, it was more likely that the defendants had conspired to fix prices than that they had not conspired to fix prices. The Non-Settling Defendants misleading description of the evidence in this case is intended to convince this Court that they and their co-conspirators acted independently and in their individual economic self-interest. Although overcharging customers is always in the individual economic interest of price-fixers, it is nevertheless unlawful, and Non-Settling Defendants willfully ignore the compelling evidence that defendants worked together to solve common industry problems and to promote common industry objectives, including the implementation of industry-wide price increases. Their obfuscation of the evidence notwithstanding, Non-Settling Defendants real agenda is to show that if some -- or any -- legitimate business justification for their actions exists, then summary judgment must be granted in their favor. Time and again, however, courts have

41

rejected this argument. See Flat Glass, 385 F.3d at 368 (citations omitted) (arguments combining recital of facts favorable to defendants with an interpretation favorable to them of the remaining evidence are irrelevant to courts consideration of a summary judgment motion); High Fructose, 295 F.3d at 663 (summary judgment denied although plaintiffs evidence was [i]nconclusive, and defendants had alternative explanations for every bit of it); High Pressure Laminates, 2006 WL 1317023, at *2 (rejecting motion for directed verdict despite considerable doubt ... as to whether Defendants interpretation of the plus factors evidence presented is equally as plausible as Plaintiffs). Despite the Non-Settling Defendants arguments to the contrary, it is the function of the jury to evaluate and compare their proffered business justifications against the strong evidence of conspiracy that exists in the record.20 The Non-Settling Defendants have not sustained the burden they have assumed in requesting the Court to take this question out of the hands of the jury. The Non-Settling Defendants also advance the fundamentally flawed argument that their ability to avoid prosecution by the United States Department of Justice (DOJ) and the European Commission (EC) somehow demonstrates that Plaintiffs claim of a price-fixing industry is without merit or implausible. DSM Mem. at 2-4, 26 n. 16, 63-64; Exxon Mem. at 23, 9-10.

20

This will be a challenge for the Non-Settling Defendants. In their summary judgment motions, for example, the Non-Settling Defendants refer extensively to various proposed joint ventures, which they describe as a form of permitted collaboration. DSM Mem. at 40-43, 56-58 (quotation at 40, emphasis in original); Exxon Mem. at 13, 47. What they neglect to mention to the Court is that none of these proposed joint ventures were ever consummated and that many of the inter-firm communications surrounding these aborted joint ventures also included discussions about EDPM pricing and price increases. Likewise, while Exxon and DSM devote page-after-page of their briefs attempting to offer a legitimate business justification for their Keltam 5508 supply agreement (see, e.g., Exxon Mem. at 42-48; DSM Mem. 6, 45-50), they do not even attempt to address the inference of conspiracy that flows from virtually simultaneous inter-firm communications concerning an imminent industry-wide EDPM price increase led by Exxon, nor do they acknowledge disturbing questions raised by DSM executives about whether the Exxon supply arrangement was in DSMs economic self-interest. .

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As a general rule, evidence that criminal charges were not brought is inadmissible in a civil case arising out of the same events as the criminal charges. See Goffstein v. State Farm Fire & Cas. Co., 764 F.2d 522, 524 (8th Cir. 1985); Kellys Auto Parts No. 1, Inc. v. Boughton, 809 F.2d 1247, 1251-53 (6th Cir. 1987); FIGA v. R.V.M.P. Corp., 874 F.2d 1528, 1531-32 (11th Cir. 1989); Marshall v. El Paso Natural Gas Co., 874 F.2d 1373, 1380 (10th Cir. 1989). Moreover, there are many sound reasons why the DOJ and EC could have decided to devote their resources elsewhere. See In re Vitamins Antitrust Litig., 2000 WL 1475705 at *11 (D.D.C 2000) (quoting Principles of Federal Prosecution, United States Department of Justice, 9-27.400) (readily provable charges may be dropped or bargained away because the United States Attorneys Office is particularly overburdened, the case would be time-consuming to try, and proceeding to trial would significantly reduce the number of cases disposed of by the office). Judge Posner addressed this issue squarely in High Fructose, 295 F.3d at 664, where he held that a decision of the DOJ not to move against an alleged price-fixing conspiracy does not support the conclusion that there must not have been one. As the Court noted, the DOJ has limited resources, and it may have felt that there was little to be gained, so far as securing greater compliance with the Sherman Act was concerned, by suing these defendants for fixing the price of HFCS. It may also have felt that the antitrust class action bar had both the desire and the resources to prosecute such a suit vigorously, as indeed it has done.21 Id. at 664-65. DSMs counsel in this action, Mayer Brown LLP, makes the same argument here that it did on behalf of defendant Cargill in High Fructose (295 F.3d at 664) (because the Justice Department has not moved against the alleged . . . price-fixing conspiracy, there must not have
21

At the time it concluded its investigation in or about July 2006, the DOJ was likely aware of the multi-million dollar settlements that had been reached with many defendants in this class action litigation.

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been one). However, after the Seventh Circuit affirmed the district courts order denying summary judgment, the High Fructose defendants paid $431 million to settle claims against them rather than present their arguments to the jury22 In Flat Glass, as well, the DOJ elected not to seek an indictment against defendants, who nonetheless paid $121.7 million to settle plaintiffs claims.23 When, as here, law enforcement agencies exercise their prosecutorial discretion in a conservative fashion, there is no rational conclusion to be drawn about the merits of a civil antitrust lawsuit. By suggesting that the conclusion of further proceedings against EPDM pricefixers by government authorities is evidence that Plaintiffs claims lack merit or are implausible, the Non-Settling Defendants (as DSM wrongfully accused Plaintiffs of doing in another context) engage in speculation of the wildest sort. DSM Mem. at 32. Two other related arguments offered by DSM are equally devoid of merit. DSM argues that the conspiracy alleged by Plaintiffs is implausible as a matter of law because: (1) liability to Plaintiffs requires an agreement by all defendants concerning all of the price increases at issue in this litigation (DSM Mem. at 25-28), and (2) Exxon led certain industry-wide price increases during the Class Period, and there is insufficient evidence of Exxons active participation in the conspiracy (DSM Mem. at 6, 28, 31-32, 36-37). The first argument ignores fundamental conspiracy law: Under the test for coconspirator liability announced in Pinkerton v. United States, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489 (1946), a coconspirator who does not directly commit a substantive offense may be liable for that offense if it was committed by another coconspirator in furtherance of the

22

See High Fructose Corn Syrup Settlement Notice (C.D. Ill. July 7, 2004), a copy of which is attached here at Appendix B. See Flat Glass Settlement Notice (E.D. Pa. Nov. 23, 2005), a copy of which is attached here at Appendix C.

23

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conspiracy and was a reasonably foreseeable consequence of the conspiratorial agreement. United States v. Pimentel, 83 F.3d 55, 58 (2d Cir. 1996) (citations omitted). See also Rosario v. United States, 164 F.3d 729, 734 (2d Cir. 1998). Conspiracy law does not preclude a diversity of co-conspirators action. The second argument not only ignores the facts, but is also a classic non-sequitur. As demonstrated in this memorandum and by the evidence recited in Plaintiffs Statement, there is sufficient evidence from which a reasonable jury could conclude that Exxon was an active participant in the conspiracy, although one that was more adept than its co-conspirators in concealing the illegal nature of its activities. Moreover, even if liability could not be established against Exxon, the evidence of price-fixing against all other conspirators, including DSM, speaks eloquently for itself, and Exxon certainly benefitted from the cartel practices and price increase support offered by its co-conspirators. See, e.g., 316 (describing some of the evidence of the successful impact of defendants price increases). The evidentiary arguments put forth by the Non-Settling Defendants fail to withstand even the most rudimentary scrutiny. As applied to the governing legal standards under Rule 56 and Section 1 of the Sherman Act, they fall far short of what is necessary to sustain motions for summary judgment. 2. The Non-Settling Defendants Misapply the Law

As Plaintiffs demonstrated above in Section III.A, Matsushita does not elevate or materially change the standards for summary judgment in a traditional horizontal price-fixing case like this one. Virtually all of the cases cited by the Non-Settling Defendants appear to be offered as support for that untenable proposition. Because these cases have only the most superficial thing in common with this litigation (they are antitrust actions of one variety or

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another), Plaintiffs give them no more weight than they deserve, discussing them only briefly to demonstrate their inapplicability to this action. For example, the Non-Settling Defendants rely inappropriately on In re Baby Food Antritrust Litig., 166 F.3d 112 (3d. Cir 1999). DSM Mem at 21, 17; Exxon Mem. at 23, 31, 33, 39, 48, 52 and 55. In sharp contrast to the evidence presented by Plaintiffs here, the evidence in Baby Food involved action by low-level employees without pricing authority who engaged in competitor communications unconnected to parallel conduct. See Flat Glass, 385 F.3d at 368-69 (explaining and distinguishing Baby Food). In further contrast to Baby Food, Plaintiffs here provided much more than mere scraps of evidence that did not correlate information exchanges with specific collusive behavior. Flat Glass, 385 F.3d at 368-69. The Non-Settling Defendants also prominently cite In re Citric Acid Antitrust Litig., 191 F.3d 1090 (9th Cir. 1999),24 whose only relevance here is its affirmation of the established principle that courts considering summary judgment motions must consider the evidence as a whole in determining whether a reasonable jury could draw a plausible inference of conspiracy. Otherwise, Citric Acid involved improbable charges of misconduct following trade association meetings that were not even attended by a principal defendant. Such circumstances bear no similarity to the evidence in this case. In Blomkest Fertilizer, Inc. v. Potash Corp. of Saskatchewan, 203 F.3d 1023 (8th Cir. 2000), another case of no significance to this action relied upon by the Non-Settling Defendants,25 plaintiffs had no evidence of communications among defendants in advance of a future price increase; the only evidence presented related to verifications about completed sales. 203 F.3d at 1034. The record before the Court here could not be more different.
24 25

DSM Mem. at 27; Exxon Mem. at 20, 23-24, 33, 38, 39, 47, 50, 52, 54. DSM Mem. at 18, 20, 23, 27, 48; Exxon Mem. at 52.

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Other cases relied upon the Non-Settling Defendants are even more tangential to this case, involving as they do causes of action completely unrelated to the traditional horizontal price-fixing claims at issue in this litigation. See Geneva Pharmaceuticals Technology Corp. v. Barr Laboratories, 386 F.3d 485 (2d. Cir. 2004); Ad/Sat v. Associated Press 181, F.3d 216, (2d Cir. 1999); Burlington Coat Factory Warehouse Corp. v. Esprit Corp., 769 F.3d 919 (2d Cir. 1995) and Brenner v. World Boxing Council, 675 F.2d 445 (2d Cir. 1985). The distinction -- blurred indiscriminately by the NonSettling Defendants -- is of critical importance. As the Seventh Circuit held in High Fructose, 295 F.3d at 661, the amount of evidence sufficient to defeat summary judgment in garden-variety price-fixing cases like this one is less than in more atypical and (and often implausible) antitrust actions involving other kinds of claims and other types of proof. The fact that the Non-Settling Defendants have found it necessary to invoke such inapposite case law is yet another telling demonstration of the lack of merit underlying their motions for summary judgment. D. The Court Should Reject DSMs Evidentiary Challenges 1. Legal Standards Governing Admissibility At Summary Judgment According to DSM, it is black letter law that if evidence cannot be offered at trial in admissible form, it is also inadmissible on summary judgment. DSM Mem. at 22, citing LaSalle Bank Nat. Assn v. v. Normura Asset Capital Corp., 424 F.3d 195, 205 (2d Cir. 2005). The black letter law is qualified. As the Second Circuit held in LaSalle, 424 F.3d at 205, [t]he evidence considered on a summary judgment motion must generally be admissible evidence, and the district court has wide discretion in determining which evidence is admissible. (Emphasis supplied; citation omitted).

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Moreover, Rule 56 of the Federal Rules of Civil Procedure does not require an unequivocal conclusion that the evidence will be admissible at trial as a condition precedent to its consideration on a summary judgment motion, nor need the evidence be judged on the same basis as evidence at trial. Reed v. Ford Motor Co., 679 F.Supp. 873, 874 (S.D.Ind. 1988) (citations omitted).26 Courts recognize that some leeway should be provided in assessing the admissibility of evidence under Rule 56. McFeeley v. United States, 700 F.Supp. 414, 418 (S.D.Ind. 1988). A motion to strike is the proper means of test[ing] the admissibility of documents on a summary judgment motion. Glynn v. Bankers Life & Casualty Co., 2005 WL 2028698, at *1 (D. Conn. Aug. 23, 2005), (citations omitted). There is no basis for motions to strike the evidence here. All of the evidence challenged by DSM is admissible. Independently and together with other facts, this evidence raises issues of material fact that preclude summary judgment. 2. Gattos Incriminating Writings Are Admissible Cromptons Joe Gatto documented some of the unlawful communications identified above in Section II and Plaintiffs Statement through contemporaneous handwritten notes and other writings. Despite DSMs suggestion to the contrary (DSM Mem. at 31), this evidence is admissible on multiple grounds. Crompton personnel familiar with Gattos handwriting independent of this litigation confirmed Gattos authorship of the documents. (PX 70, 71). Although Gatto asserted his Fifth Amendment privilege, the documents are properly authenticated under Fed.R.Evid. 901(b)(2). (Id.). The authenticity of the Gatto documents is further reinforced by the fact that they documents were produced from Cromptons own files.
26

In motions in limine, a party seeking to exclude evidence must show that the evidence is clearly inadmissible on all potential grounds. United States v. Van Putten, 2005 WL 612723, at *3 (S.D.N.Y. March 15, 2005). Courts may reserve judgment until trial so that the motion is placed in the appropriate factual context. Id.

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a. Present Sense Impression Statements that describe[e] or explain[] an event or condition while the declarant was perceiving the event or condition, or immediately thereafter are admissible as exceptions to the hearsay rule. Fed. R. Evid. 803(1). The statement must describe an event or condition without calculated narration; the speaker must have personally perceived the event or condition described; and the statement must have been made while the speaker was perceiving the event or immediately thereafter. United States v. Ruiz, 249 F.3d 643, 646 (7th Cir. 2001). Numerous courts have admitted contemporaneous notes of conversations under this rule. See, e.g., United States v. Ferber, 966 F. Supp. 90, 97 (D. Mass. 1997); United States v. Lieberman, 637 F.2d 95, 103 n.10 (2d Cir. 1980); Tracinda Corp. v. DaimlerChrysler AG, 362 F. Supp. 2d 487, 501-02 (D. Del. 2005). As the Court observed in Ferber: [The authors] handwritten notes were nothing more than a recital of those things [the intermediate declarant] said to him. The level of detail in the [notes] supported the inference that [the intermediate declarant] made the report to [the author] with virtual immediacy and that [the intermediate declarant] had no conceivable reason to falsify at that time. After all, at the time of this report, Merril Lynch and [defendant] were as thick as thieves. Furthermore, . . . the notes themselves demonstrated that they were made either as [the intermediate declarant] was telling [the author] what transpired in her conversation with [defendant] or immediately thereafter. 966 F. Supp. at 97-98.27 Here, Gattos handwritten documents bear indicia on their face that show they were written contemporaneously with the events they recount. The notes consist primarily of short statements, usually in the form of bulletpoints. They are free of narration. They have arrows,
By contrast, where documents show on their face that they were written many days after the communications they memorialize, or the context in which the document was created shows a motive to fabricate, Rule 803(1) does not apply. See, e.g., State of N.Y. v. Microsoft Corp., No. Civ. A 98-1233, 2002 WL 649951, at *2 (D.D.C. Apr. 12, 2002); United States Football League v. National Football League, No. 84 Civ. 7484, 1986 WL 8066, at *2 (S.D.N.Y. July 17, 1986).
27

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circles, abbreviations, and other shorthand devices rather than exposition. A sophisticated business executive making an after-the-fact memorandum, with time to reflect, reconsider or refine his words, would not create handwritten documents of this sort. It is also probable that these documents, with their shorthand notations and difficult-to-read scrawl, were intended primarily, if not exclusively, for Gattos own reference. This forecloses any likelihood that the contents of the notes are a fabrication. Given their inherently reliable nature, Gattos notes should be admitted under the presentsense impression exception to the hearsay rule. See, e.g., Tracinda Corp., 362 F. Supp. 2d at 501-02; Molex Inc. v. Wyler, No. 04 C 1715, 2005 WL 497812, at * 5 (N.D. Ill. Feb. 17, 2005); Fournier v. Erickson, 242 F. Supp. 2d 318, 323-24 (S.D.N.Y. 2003); Phoenix Mut. Life Ins. Co. v. Adams, 828 F. Supp. 379, 389 (D.S.C. 1993), affd 30 F.3d 554, 567 (4th Cir. 1994). b. Statements Against Interest

A hearsay statement is admissible as a statement against interest when the declarant is unavailable and the statement was at the time of its making so far contrary to the declarants pecuniary or proprietary interest, or so far tended to subject the declarant to civil or criminal liability . . . that a reasonable person in the declarants position would not have made the statement unless it were true. Fed. R. Evid. 804(b)(3). As the Second Circuit held: The Rule does not require that the declarant be aware that the incriminating statement subjects him to immediate criminal prosecution. Rather, it simply requires that the incriminating statement sufficiently tended to subject the declarant to criminal [or civil] liability so that a reasonable man in his position would not have made the statement unless he believed it to be true. United States v. Lieberman, 637 F.2d 95, 104 (2d Cir. 1980) (quoting United States v. Lang, 589 F.2d 92, 97 (2d Cir. 1978)).

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There is no question here that Gattos notes, which are corroborated fully by the totality of their circumstances and by other evidence in the record, are admissible because they subjected him and his employer to civil or criminal liability. See Flat Glass, 385 F.3d at 374; Lieberman, 637 F.2d at 103. c. Statements of Co-Conspirator Made in the Course of and in Furtherance of the EPDM Price-Fixing Conspiracy Statements otherwise barred as hearsay are admissible if they were made by a coconspirator of a party during the course of and in furtherance of the conspiracy. Fed. R. Evid. 801(d)(E). Plaintiffs must show by a preponderance of the evidence that the statements memorialized in the notes were made in the course of and in furtherance of a conspiracy of which the declarant and the party against whom the evidence is offered were members. Flat Glass, 385 F.3d at 375. In making this factual determination, a district court is not bound by the rules of evidence. Thus, a district court can consider hearsay and other inadmissible evidence. And it must consider the content of the alleged coconspirator statement as well, although the statements require independent corroboration. Id. (emphasis supplied). See also Bourjaily v. United States, 483 U.S. 171, 179-80 (1987). To find that a conspiracy existed, the evidence need only show a likelihood of an illicit association between the declarant and the defendant, and the proof may be totally circumstantial. United States v. Lombardozzi, No. S1 02 CR 273, 2003 WL 1956290, at *1 (S.D.N.Y. Apr. 24, 2003) (quoting United States v. Ragland, 375 F.2d 471, 477 (2d Cir. 1967). Once it is shown that there was a conspiracy, the evidence needed to link another defendant with it need not be overwhelming. United States v. Ginsberg, 758 F.2d 823, 829 (2d Cir. 1985) (quoting United States v. Provenzano, 615 F.2d 37, 45 (2d Cir. 1980)).

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Here, as demonstrated throughout this memorandum, there is strong evidence of a conspiracy and of Gattos direct and acknowledged participation therein. Because the statements memorialized in Gattos notes and other writings were made in furtherance of this conspiracy, they are admissible. 3. Evidence Derived From the EC Statement of Objections Is Highly Relevant, Probative and Admissible DSM contends that the EC Statement of Objections has no evidentiary value at all because (1) it is a report setting forth a preliminary complaint of anticompetitive activity, before a full investigation and (2) the E.C. ultimately decided not to pursue the charges.28 DSM Mem. at 63-64 (emphasis in original). In Information Resources, Inc. v. The Dun & Bradstreet Corp., 1998 WL 851607, at *1 (S.D.N.Y. Dec. 8, 1998), the Southern District of New York rejected an objection to admission of the same form of evidence: The European Commission's Statement of Objections (SOO) sets forth factual findings resulting from an investigation made pursuant to authority granted by law,see Fed. R. Evid. 803(8)(C), although it is not a final Decision by the Commission. There is no requirement that a hearing was held on the findings for them to be admissible. See In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238, 268, 273 (3d Cir. 1983) (requiring crossexamination would rob the rule of practical utility; it plainly includes findings in investigatory proceedings, accusatory or otherwise); In re Korean Air Lines Disaster of September 1, 1983, 932 F.2d 1475, 1481-82 (D.C. Cir. 1991) (findings admissible although report was ultimately rejected). The circumstances do not indicate any lack of trustworthiness, and to the extent that the SOO represents conclusions, it is subject to the ultimate safeguard the opponent's right to present evidence tending to contradict or diminish the weight of those conclusions. Beech Aircraft Corp. v. Rainey, 488 U.S. 153, 168 (1988). See also Union Carbide Corp. v. Montell N.V., 28 F. Supp. 2d 833, 842 (S.D.N.Y. 1998) (admitting evidence of EC investigation predating conspiracy by 8 to 10 years).
28

As shown above, there is no legal significance to the ECs decision to devote its limited resources to other important pursuits.

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The EC Statement of Objections is admissible under Fed. R. Evid. 803(8)(C), which establishes a hearsay exception for: Records, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth factual findings resulting from an investigation made pursuant to authority granted by law, unless the sources of information or other circumstances indicate lack of trustworthiness. Under this rule, trial courts have broad discretion to use common sense in determining whether the hearsay document offered in evidence has sufficient independent indicia of reliability to justify its admission. Gentile v. County of Suffolk, 129 F.R.D. 435, 448 (E.D.N.Y. 1990), affd, 926 F.2d 142 (2d Cir. 1991). Because an authorized report of a government agency is assumed to be trustworthy, the burden is on the party opposing admissibility to make an affirmative showing of untrustworthiness, beyond the obvious fact that the declarant is not in court to testify. Gentile, 129 F.R.D. at 449 (citation omitted). See also Gentile, 926 F.2d at 148 (describing admissibility opponents burden of specifying negative factors that would outweigh the presumption favoring admissibility, which extends not merely to factual determinations in the narrow sense, but also to conclusions or opinions that are based upon a factual investigation). DSM has not made an affirmative showing of untrustworthiness, particularly as to the fact of the meetings and conversations identified by the EC. DSM cited only one off-point case in which no abuse of discretion was found in a trial courts exclusion of a report deemed to be interim or inconclusive in nature. DSM Mem. at 64, citing United Air Lines, Inc. v. Austin Travel Corp., 867 F.2d 737, 743 (2d Cir. 1989). Although the EC for whatever reason chose not to pursue further action against the EPDM price-fixers, there is no basis to suspect that the facts documented in the EC Statement of Objections (which were ascertained from face-to-face witness interviews and examination of internal business records by investigators experienced in

53

antitrust law enforcement) are an unreliable account of the meetings and other anticompetitive communications set forth in the ECs official public record. Indeed, the opposite presumption obtains under Fed. R. Evid. 803(8)(C). Furthermore, the facts in the EC Statement of Objections are often corroborated by other evidence in the case, including witness testimony and the expense reports and calendars of meeting participants. See, e.g., 159-60, 162, 175. Courts analyze trustworthiness applying four nonexclusive criteria: (1) timeliness of the investigation; (2) special skill or experience of the officials conducting the investigation; (3) procedures governing hearings, if any; and (4) existence of motivation problems on the part of either the investigators or other sources of information. Gentile, 129 F.R.D. at 450, citing 1972 Advisory Committee note to Fed. R. Evid. 803(8). The court in Gentile also endorsed an additional trustworthiness factor -- finality -- which is not a sine qua non (or indispensable condition) because [i]n many instances non-final reports may be extremely useful and reliable. Gentile, 129 F.R.D. at 450, 458. [A]dmissibility of evidence of this sort is generally favored. Gentile, 926 F.2d at 148. In the absence of a significant showing of unfair prejudice, evidence with substantial probative value should not be excluded. Gentile, 926 F.2d at 151 (citation omitted). The finality factor is all that DSM mentions in support of its request for exclusion of the EC Statement of Objections. This is not nearly enough to discharge its burden of specifying negative factors that outweigh the presumption favoring admissibility. The designated meetings and conversations identified in the EC Statement of Objections should be admitted into evidence because the circumstances do not indicate any lack of trustworthiness as to those facts. To the extent that the Statement represents conclusions, it is subject to the ultimate safeguard -- the opponent's right to present evidence tending to

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contradict or diminish the weight of those conclusions. Dun & Bradstreet Corp., 1998 WL 851607, at *1 (citation omitted). 2. Other Evidence of Conspiratorial Conduct in Europe Is Admissible

DSM asserts that [e]vidence of discussion about European pricing cannot help plaintiffs on their allegations of a U.S. pricing conspiracy. DSM Mem. at 33. DSM cites F. Hoffman-Laroche v. Empagran S.A., 542 U.S. 155, 164, 169 (2004) (DSM Mem. at 33, 58), in which the Supreme Court held only that federal courts in the United States have no jurisdiction to decide actions involving purely foreign transactions that have no direct or indirect impact on domestic commerce. DSM does not dispute the jurisdiction of this Court. What it does dispute is the relevance and admissibility of evidence pertaining to misconduct in Europe that had a clear impact on United States commerce, including a direct impact on prices charged to customers with U.S. and European operations. Empagram has nothing to do with the evidentiary issues raised in DSMs motion for summary judgment. Chief Judge Thomas Hogan, whose dismissal of the foreign claims in Empagran was upheld by the Supreme Court, recognized the relevance of foreign evidence to claims of an international price-fixing conspiracy having an impact on the American market. In In re

Vitamins Antitrust Litig., No. 99-197, 2001 WL 1049433 (D.D.C. June 20, 2001), Judge Hogan held that: [T]he information would be relevant to show the breadth of the conspiracy, the role that each defendants executives played in implementing, expanding, enforcing and concealing the conspiracy, and how the conspiracy was maintained for the length of time alleged. Furthermore, this information could be extremely relevant for purposes of impeaching defendants trial witnesses. Id. at *11 and n.24 (citations omitted). Other courts agree that evidence of foreign conspiratorial conduct is relevant proof of

55

defendants price-fixing activities in the United States. See, e.g., In re Automotive Refinishing Paint Antitrust Litig., 2004 U.S.Dist. LEXIS 29160 at *14-17 (E.D. Pa. Oct. 29, 2004); In re Plastic Additives Antitrust Litig., 2004 WL 2743591 at *14 (E.D. Pa. Nov. 29, 2004); In re Uranium Antitrust Litig., 480 F. Supp. 1138, 1154-56 (N.D. Ill. 1979); Cf. United States v. Microsoft Corp., 1995 WL 505998, at *6 (D.D.C. Aug. 21, 1995). See also Fears v. Wilhelmina Model Agency, Inc., 2004 WL 594396, at *13 (S.D.N.Y. Mar. 23, 2004). The action taken by EPDM producers in the European component of their global pricefixing conspiracy is relevant and admissible. As shown in 11-12 and in Section II above, this conspiracy entailed communications among EPDM executives about prices on a worldwide scale, prices in the United States and prices in Europe. EPDM producers set prices in the United States in consideration of European prices to avoid arbitrage. 12. Defendants employees with responsibility for North America met with EPDM personnel with responsibility for Europe and other regions. Id. This was a global industry and a global conspiracy in its truest sense. Because evidence of conspiracy in Europe is inextricably intertwined with the American component of the conspiracy, it is admissible, independent of the proscription in Fed. R. Evid. 404(b) against admission of evidence of other crimes, wrongs, or acts to prove the character of a person in order to show action in conformity therewith. As the court held in United States v. Andreas, 216 F.3d 645, 665 (7th Cir. 2000) (citations omitted), evidence of conduct is admissible if the: acts are so intricately interwoven with the facts of the charged crime that to omit the evidence relating to it would lead to confusion or leave an unexplainable gap in the narrative of the crime. This type of evidence is permitted by virtue of not being included within the province of the rule. Other crimes or acts does not include those acts that are part and parcel of the charged crime itself; they simply are not other. To omit the evidence would leave unanswered some questions regarding the charged offense. Such evidence includes acts that although not charged as crimes, are directly

56

related to the charged offense. See also United States v. Rigas, 490 F.3d 208, 238 (2d Cir. 2007) (citations omitted); United States v. Van Putten, 205 WL 612723, at * 3 (S.D.N.Y. May 15, 2005) Even if evidence of the EPDM price-fixers European misconduct were not admissible under this rationale, it is admissible under the exception to Rule 404(b) permitting evidence of related conduct for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident. See United States v. Pitre, 960 F.2d 1112, 1119 (2d Cir. 1992) (If the evidence is offered for a proper purpose, the district court must next determine if the evidence is relevant to an issue in the case, and, if relevant, whether its probative value is substantially outweighed by the danger of unfair prejudice. Finally, upon request, the district court must give an appropriate limiting instruction to the jury). The Second Circuit evaluates Rule 404(b) evidence under an inclusionary approach and allows evidence for any purpose other than to show a defendants criminal propensity. United States v. Lombardozzi, 491 F.3d 61, 78 (2d Cir. 2007) (quoting United States v. Garcia, 291 F.3d 127, 136 (2d Cir. 2002) and Pitre, 960 F.2d at 1118)). Here, as in Pitre at 1119, evidence of defendants other behavior is relevant to inform the jury of the background of the conspiracy charged, to complete the story of the crimes charged, and to help explain to the jury how the illegal relationship between participants in the crime developed. See also United States v. Dubogryzov, 2007 WL 2746752, at * 1 (D. Conn. Sep. 18, 2007). To establish their case, Plaintiffs must prove that the Non-Settling Defendants had knowledge of the conspiracy and that they intended to advance the unlawful purpose of the conspiracy. In re Vitamins Antitrust Litig., 320 F. Supp. 2d 1, 15-16 (D.D.C. 2004). Because

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the Non-Settling Defendants contend that there was no conspiracy at all and that their acts advanced only legitimate business interests, the abundant evidence of anti-competitive activity in Europe (and Brazil) is obviously relevant to show knowledge, motive, opportunity, intent and state of mind. See United States v. Brand, 467 F.3d 179, 197 (2d Cir. 2006) (citing United States v. Zackson, 12 F.3d 1178, 1182 (2d Cir. 1993) (prior act evidence is generally admissible to prove that the defendant acted with the state of mind necessary to commit the offense charged). The probative value of this evidence is not so substantially outweighed by the risk of unfair prejudice as to render it inadmissible under Fed. R. Evid. 403, and the evidence does not involve conduct more serious than the charged crime. United States v. Roldan-Zapata, 916 F.2d 795, 804 (2d. Cir. 1990). If this case should proceed to trial, the jury may receive a proper limiting instruction. United States v. Williams, 205 F.2d 23, 34 (2d Cir. 2000) (citing United States v. Livoti, 196 F.3d 322, 326 (2d Cir. 1999)). 3. The Court May Consider Assertions Of Fifth Amendment Privilege Against Self-Incrimination By Crompton Executives

Although DSM contends that Crompton witnesses Fifth Amendment invocations are inadmissible against the DSM Defendants (DSM Mem. at 65), it has not addressed the ultimate test for evaluating the admissibility in a civil action of a non-partys invocation of the Fifth Amendment and the drawing of an adverse inference -- whether the adverse inference is trustworthy under all of the circumstances and will advance the search for the truth. In re Worldcom, Inc. Securities Litigation, 2005 WL 375315, at *5 (S.D.N.Y. Feb. 17, 2005) (quoting Libutti v. United States, 107 F.3d 110, 124 (2d Cir. 1997)). In Brinks Inc. v. City of New York, 717 F.2d 700 (2d Cir. 1983), the Second Circuit affirmed a district courts admission of testimony of non-party ex-employees who invoked their privilege against self-incrimination. The Court of Appeals recognized the difficulty, and

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perhaps the undesirability, of a bright line rule against drawing inferences from a failure to testify in the context of civil proceedings, and it held that Fed.R.Evid. 501 affords district court judges the flexibility to develop rules of privilege on a case-by-case basis. Id. at 707 (quoting Trammel v. United States, 445 U.S. 40, 47 (1980)). The Second Circuit in Libutti, 107 F.3d at 121, likewise observed that the circumstances of a given case, rather than the status of a particular non-party witness, is the admissibility determinant. The Court held that the following non-exclusive factors should be considered in deciding whether an adverse inference is warranted: (1) (2) (3) The nature of the relationship between the party and the non-party; The degree to which the party controls the non-party; The compatibility of interests of the party and non-party in the outcome of the litigation (i.e, whether the non-party witness is pragmatically a noncaptioned party in interest and whether the assertion of the privilege advances the interests of both the non-party witness and the affected party in the outcome of the litigation); and (4) The role of the non-party witness in the litigation (i.e., [w]hether the non- party witness was a key player in the litigation and played a controlling role in any of its underlying aspects. 107 F.3d at 123-24. The adverse inferences that arise from the Fifth Amendment privilege invocation by the Crompton executives satisfy the fundamental and overarching concern that the inferences must be trustworthy and advance the Courts search for the truth. Id. at 124. As the record shows, the EPDM executives who invoked the Fifth Amendment privilege engaged personally in countless communications with representatives of DSM, Exxon and all defendants that go to the

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very heart of the EPDM price-fixing conspiracy. They are in every sense noncaptioned parties in interest. The business relationship of the Crompton executives with DSM, Exxon and other colleagues was intimate and far-reaching, a significant indication of the trustworthiness of the adverse inferences to be drawn from their Fifth Amendment assertions.29 In United States v. District Council of New York City, 832 F. Supp. 644, 652 (S.D.N.Y. 1993), the court held that the refusal to testify by a proven co-conspirator may justify an adverse inference against other conspirators because co-conspirators are generally regarded as agents for each other. The court in State Farm Mut. Auto. Ins. Co. v. Abrams, 2000 WL 574466, at *7 (N.D. Ill. May 11, 2000), also remarked that: [U]nder appropriate circumstances, an adverse inference could be drawn against a party from an alleged co-conspirator's invocation of the Fifth Amendment privilege against self-incrimination. As alleged coconspirators, some degree of loyalty and/or control may prevent one party from rendering damaging testimony against another. The appropriate circumstances are present here. Crompton was a defendant in this case before it settled Plaintiffs claims. As a litigant, Cromptons financial and legal interests were aligned closely with those of the Non-Settling Defendants. Like the other defendants, Crompton denied Plaintiffs allegations. Pl. St. at 187. By asserting the Fifth Amendment privilege, Cromptons executives not only advanced their personal interest in avoiding criminal prosecution, they advanced the interests of Crompton, DSM, Exxon and other co-conspirators in

Other courts have drawn the same conclusion in the context of civil price-fixing actions under Section 1 of the Sherman Act. See In re Scrap Metal Antitrust Litig., Case No. 1:02cv0844 (Order dated January 20, 2006) at 4-6, attached to this memorandum at Appendix D (a trial verdict in favor of plaintiffs was recently affirmed by the Sixth Circuit in In re Scrap Metal Antitrust Litig., 2008 WL 2050820 (6th Cir., May 15, 2008)). See also In re Vitamins Antitrust Litig., MDL Docket No. 1285, Misc. No. 99-197 (TFH) (Jury Instruction No. 47), attached here at Appendix E (An adverse inference from the invocation of the Fifth Amendment by a witness who you find was a conspirator also may be drawn against all others who you find to be his or her co-conspirators, provided you find that there is independent evidence of the existence of the alleged conspiracy and their participation therein).

29

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limiting or avoiding civil liability by frustrating Plaintiffs ability to obtain critical evidence that would even more conclusively establish Plaintiffs claims.30 DSM also attempts to use the Fifth Amendment invocations of Crompton witnesses as a justification for its related argument (discussed below) that Cromptons incriminating interrogatory answers are inadmissible. DSM Mem. at 63 (The interrogatory answers are replete with assertions that could only be based upon the personal knowledge of persons other than the affiant, and frequently upon the knowledge of Crompton individuals (Gatto and Shantz) who exercised their Fifth Amendment right not to testify). Failure to draw the adverse inferences that flow from these Fifth Amendment invocations would not only thwart the Courts search for the truth (Libutti, 107 F.3d at 124), but also undermine the rationale for allowing introduction of adverse inferences in the first place. See Willingham v. County of Albany, 2006 WL 1979048, at *4 (N.D.N.Y. 2006) (citing United States v. 4003-05 5th Ave., 55 F.3d 78, 82-83 (2d Cir.1995) (The purpose underlying the allowance of an adverse inference in civil cases is equitable, not punitive, and serves to vitiate the prejudice to the party denied discovery by invocation of the privilege) (emphasis supplied).31

30

Although DSM cites High Fructose for the proposition that invocation of the Fifth Amendment privilege of one party is inadmissible against other parties to prove they were members of the conspiracy (DSM Mem. at 65), Judge Posner did not address that argument, nor did he so hold. 295 F.3d at 664 (Fifth Amendment privilege invocation does not trigger co-conspirator exception to hearsay rule, a contention that Plaintiffs have have not made in this case).
31

DSM complains that the timing of the Crompton interrogatory answers vis--vis the Cromption executives assertions of their Fifth Amendment privilege compromised its own ability to cross-examine these witnesses. DSM Mem. at 63. However, DSM misperceives the equitable interests served by introduction of adverse inferences, which are intended only to vitiate the prejudice to the party denied discovery by invocation of the privilege. Here, it is Plaintiffs that were denied the opportunity to obtain critically important deposition testimony that would corroborate other facts in the record. Moreover, there is no requirement that, when the invocation of the Fifth Amendment is admissible, an adverse inference must be drawn. Fact-finders are free to draw whatever inferences they choose to draw from such invocations. DSM also complains that the assertion of the privilege against self-incrimination by the Crompton executives denied them the right to cross-examine these witnesses because they were deposed after the Crompton Interrogatory Answers were served. DSM Mem. at 63. The absence of cross-examination is a relevant factor only in criminal

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The Crompton executives who invoked the Fifth Amendment privilege are key players in this litigation who performed important and/or central roles in the price-fixing conspiracy alleged by Plaintiffs. This factor strongly favors admission of this evidence. See Willingham, 2006 WL 1979048, at * 5 (imputing adverse inferences from invocation of privilege by nonparty who played a critical role in the events giving rise to th[e] action, even though there was no evidence that party exercised any control over non-partys conduct); Adler, Coleman Clearing Corp. v. Ensminger, 1998 WL 182808, at *9 (Bankr. S.D.N.Y. Apr. 17, 1998) (role of key figure in proceeding weighs in favor of admitting their assertions of the Fifth Amendment privilege). 3. The Court Should Consider the Crompton Interrogatory Answers The [interrogatory] answers of one defendant are not admissible as against another defendant, unless they should fall under some exception to the hearsay rule. 8A Charles A. Wright, et al., FEDERAL PRACTICE AND PROCEDURE 2180, at 341-42 (2d ed. 1994). Two exceptions to the hearsay rule authorize admission of the Crompton Interrogatory Answers into evidence. Fed. R. Evid. 804(b)(3), which governs statements against interest made by unavailable witnesses, provides: A statement which was at the time of its making so far contrary to the declarant's pecuniary or proprietary interest, or so far tended to subject the declarant to civil or criminal liability, or to render invalid a claim by the declarant against another, that a reasonable person in the declarant's position would not have made the statement unless believing it to be true. A statement tending to expose the declarant to criminal liability and offered to exculpate the accused is not admissible unless corroborating circumstances clearly indicate the trustworthiness of the statement.
cases implicating the Sixth Amendment right of an accused to confront witnesses. See Crawford v. Washington, 541 U.S. 36 (2004); United States v. Casiano, 133 Fed. Appx. 791, 794 (2d Cir. 2005).

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As DSM acknowledged (DSM Mem. at 63), the Crompton executives who invoked their Fifth Amendment privilege provided important facts that were incorporated in the Crompton Interrogatory Answers, which incriminate the Non-Settling Defendants as co-conspirators. DSM admits that these executives will not testify about their personal knowledge of the facts at trial. Id. Under governing Second Circuit law, these executives will therefore be unavailable as witnesses under Rule 804(b). See Lorusso v. Borer, 2006 WL 473729, at * 8 (D. Conn. Feb. 28, 2006) (quoting United States v. Dolah, 245 F.3d 98, 102 (2d Cir, 2001)) (It is settled in this Circuit that a witness who invokes the privilege against self-incrimination is unavailable within the meaning of Rule 804(b)). Crompton had not yet settled Plaintiffs claims when its interrogatory answers were served. At that time, Crompton vigorously contested Plaintiffs case on the merits. The admissions in the Cromptons Interrogatory Answers were contrary to Crompton's pecuniary or proprietary interest and they tended to subject [Crompton] to civil or criminal liability. This satisfies the requirement for admissibility of the Crompton Interrogatory Answers under Rule 804(b)(3). The Crompton Interrogatory Answers may also be admitted into evidence under Fed. R. Evid. 807, which establishes a hearsay exception for statements not specifically covered by Rule 803 or 804 but having equivalent circumstantial guarantees of trustworthiness. To be admissible under Rule 807, evidence must be (1) trustworthy; (2) material; (3) more probative than other available evidence; and must fulfill (4) the interests of justice and (5) notice. Silverstein v. Chase, 260 F.3d. 142, 149 (2d Cir.2001). Each of these requirements is satisfied here. The anti-competitive communications identified in the Crompton Interrogatory Answers

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are material proof of Plaintiffs conspiracy claims. The answers are also trustworthy because Lynn A. Schefsky (Cromptons Senior Vice President and General Counsel) verified them under oath, fully aware that the facts confirmed in them exposed his employer/client to treble damages under the Sherman Act -- something he would not have done unless the facts were true.32 DSM admits that it has notice of Plaintiffs intention to use these answers as substantive evidence at trial. DSMs contention that exclusion of the Crompton Interrogatory Answers would render Plaintiffs unable to present evidence to oppose DSMs summary judgment motion, although incorrect, demonstrates DSMs belief that this evidence is more probative than other available evidence to establish the truth of Plaintiffs allegations. Here, as in Silverstein v. Smith Barney, Inc., 2002 WL 1343748, at *3 (S.D.N.Y. June 18, 2002), the interests of justice support admission of written hearsay statements under Rule 807 because critical witnesses with personal knowledge of relevant facts are unavailable and this unavailability should not obstruct the search for the truth that is the very hallmark of our system of justice.33 IV. CONCLUSION For all of the reasons expressed above, Plaintiffs respectfully request this Court to deny the Non-Settling Defendants motions for summary judgment.
32

As the Supreme Court said in Williamson v. United States, 512 U.S. 594, 599 (1994), Rule 804(b) is founded on the commonsense notion that reasonable people, even people that are not especially honest, tend not to make selfinculpatory statements unless they believe them to be true.

33

DSM also objects to the admissibility of the Crompton Interrogatory Answers because Crompton General Counsel Schefsky, who conducted an internal investigation of Plaintiffs claims, lacked direct personal knowledge of the facts recounted in the interrogatory answers. DSM Mem. at 61-63. Where officers and other employees of a corporation invoke their Fifth Amendment privilege, the corporation must appoint an agent, often a corporate attorney, regardless of whether or not the agent had personal knowledge to respond to interrogatories on behalf of the corporation. U.S. v. 42 Jars, More or Less, Bee Royal Capsules, 264 F.2d 666, 670 (3rd Cir. 1959). See also Consolidated Edison Co. of New York, Inc. v. DiNapoli, 1971 WL 528 (S.D.N.Y. 1971) (corporation should appoint an agent for purposes of answering interrogatories when officers and others would be unable to do so without incriminating themselves). This requirement would not exist if interrogatory answers verified by an agent were inadmissible.

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Respectfully submitted, Dated: June 20, 2008 Plaintiffs Liaison Counsel s/David R. Schaefer David R. Schaefer (Bar No. 04334) BRENNER, SALTZMAN & WALLMAN, LLP 271 Whitney Avenue New Haven, CT 06507-1746 Telephone: (203) 772-2600 Facsimile: (203) 562-2098 Email: dschaefer@bswlaw.com

Plaintiffs Co-Lead Counsel BOLOGNESE & ASSOCIATES, LLC Anthony J. Bolognese Joshua H. Grabar John G. Narkin 1500 JFK Blvd., Suite 320 Philadelphia, PA 19102 Tel: (215) 814-6750/Fax: (215) 814-6764 GOLD BENNETT CERA & SIDENER, LLP Steven O. Sidener C. Andrew Dirksen 595 Market St., Suite 2300 San Francisco, CA 94105 Tel: (415) 777-2230/Fax: (415) 777-5189

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COHEN, MILSTEIN, HAUSFELD & TOLL, P.L.L.C. Michael D. Hausfeld Kathleen Konopka 1100 New York Ave., N.W., West Tower, Suite 500 Washington, DC 20005 Tel: (202) 408-4600/Fax: (202) 408-4699

LEVIN FISHBEIN SEDRAN & BERMAN Howard J. Sedran Charles C. Sweedler 510 Walnut St., Suite 500 Philadelphia, PA 19106 Tel: (215) 592-1500/Fax: (215) 592-4663

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