Chevron and other oil companies win summary judgment in information-sharing case
Clients Chevron Corporation
On August 20, 2008, the United States District Court for the District of New Jersey granted summary judgment against plaintiffs who claimed that oil industry employers, including Jones Day client Chevron Corporation, had exchanged detailed salary information in an attempt to artificially suppress salaries of managerial, professional, and technical (MPT) employees, in violation of Section 1 of the Sherman Act. The court's decision may end more than 10 years of litigation and reinforces the requirement that antitrust conspiracy plaintiffs must define a relevant market -- at least on "rough" terms.
The litigation originally was filed in 1997 in four separate and later consolidated cases, each on behalf of a class of oil company MPT employees who claimed their employers had exchanged detailed salary and other employment information in an effort to reduce the "premium" between oil industry MPT salaries and MPT salaries outside the industry. One of the cases (Todd v. Exxon) survived a motion to dismiss, and even after the consolidated plaintiffs' classes twice were denied class certification, the ten individual plaintiffs continued to pursue their claims. The defendant oil companies moved for summary judgment on grounds that the individual plaintiffs had not met their burden of proving that the information exchanges had harmed competition in a relevant market. In response, the plaintiffs argued that (1) the oil industry was a relevant market because plaintiffs' industry-specific knowledge made them more valuable to employers in the oil industry than in other industries; (2) in any event, they were not required to affirmatively prove a relevant market because the defendants' market power in the alleged market could be demonstrated through direct evidence that the defendants had been able to suppress growth in industry MPT salaries; and (3) such evidence showed that the defendants' information sharing had an anticompetitive impact on salaries in the oil industry as a whole.
The district court granted summary judgment for the defendants. First, the court ruled that, while plaintiffs may show defendants' market power with "direct evidence" of anticompetitive effects, rather than proof of substantial market shares, even direct evidence must be proven within the "rough parameters" of a relevant market. As this case involved ten individuals, not a class, a relevant market had to be defined for each employee, based on the availability of substitute jobs in other industries. The plaintiffs had only presented evidence on total and average compensation paid to all oil industry MPT employees. This evidence did not show that specific MPT employees -- lawyers, pilots, geologists -- did not have reasonable employment options outside the oil industry. Second, the plaintiffs had not presented evidence that the alleged premium between salaries in the oil industry and other industries actually existed as to any individual plaintiff. Without evidence of a relevant market or evidence of actual competitive harm as to each individual employee, the plaintiffs' case could not survive summary judgment. The court's decision reaffirms the view that plaintiffs may not dispense with identification of a relevant market simply by presenting direct evidence of competitive harm. Moreover, evidence on relevant markets and competitive harm must be particularized to each plaintiff bringing the antitrust claim.
In re Compensation of Managerial, Professional, and Technical Employees Antitrust Litigation, MDL 1471, 2008 U.S. Dist. LEXIS 63633 (D.N.J.)