U.S. District Court For The Southern District Of Texas Dismisses Claims Against Three Largest U.S. Producers Of Steel
03/01/2022On February 17, 2022, the United States District Court for the Southern District of Texas dismissed an antitrust suit against the country’s largest steel manufacturers. JSW Steel (USA) Inc. v. Nucor Corp. et al., 4:21-cv-01842 (S.D. Tex. 2022). Plaintiff, JSW Steel (a finished-steel producer), alleged that Cleveland Cliffs Inc., Nucor Corp., and U.S. Steel Corp. violated Section 1 of the Sherman Act and various Texas state competition and contracts laws. Specifically, Plaintiff alleged that Defendants colluded to increase the price of certain steel imports by lobbying for tariffs, while not being able to provide Plaintiff with equivalent steel products. Plaintiff argued that its thriving business was crippled and eventually failed due to the collusive behavior of Defendants.
Plaintiff argued that Defendants violated Section 1 of the Sherman Act by acting in parallel to secure tariffs on steel imports, while not selling an equivalent product to Plaintiff. As a preliminary matter, since Plaintiff’s Section 1 claim was based on Defendants’ allegedly parallel conduct, the Court noted that Plaintiff was required to plead additional “plus factors,” beyond the usual requirements, to plead conspiracy. First, Plaintiff alleged that Defendants shared confidential information with each other when lobbying for steel tariffs and when objecting to Plaintiff’s requests for tariff exemptions from the U.S. Department of Commerce. The Court rejected these contentions and held that the information relied upon by Defendants was publicly available. Plaintiff then argued Defendants’ nearly simultaneous submissions of objections to Plaintiff’s exemption requests was evidence of collusion. The Court again sided with Defendants, noting that “it is unremarkable that all objectors filed on or around the deadline.” Lastly, Plaintiff pointed to trade association meetings and Defendants’ meetings with the Trump Administration as another plus factor since Defendants “may have conversed with other defendants” at these meetings. The Court held that Plaintiff’s allegations did not support “an inference of conspiracy.”
The Court also held, to the extent Plaintiff’s Section 1 claim relied upon Defendants’ parallel conduct while petitioning the government, that conduct was protected by the Noerr-Pennington doctrine. The Court held that the only conduct alleged against Nucor involved Nucor’s public advocacy relating to the steel tariffs. The Court noted that “joint efforts by competitors to influence government decision-makers are protected by the Noerr-Pennington doctrine and cannot be a basis for antitrust liability.
The Court also rejected Plaintiff’s contention that it had suffered antitrust injury as a result of Defendants’ alleged collusion. The Court held that Plaintiff’s injuries stemmed from the “U.S. Government’s national security tariffs and its (initial) refusal to exempt JSW from those tariffs—not from any antitrust violation.” According to the Court, “the government’s decision to act reflects an independent governmental choice, constituting a supervening cause that breaks the link between a private party’s request and the plaintiff’s injury.”
Lastly, the Court dismissed Plaintiff’s state law claims, again by reference to the Noerr-Pennington doctrine. The Court also went further, noting that to the extent Plaintiffs’ state law claims were tied directly to Defendants alleged anticompetitive conduct, the “claims rise and fall together as the antitrust claims are unsubstantiated so must be the tortious interference.”
The JSW Steel decision underscores the importance of the Noerr-Pennington defense to both Sherman Act claims as well as state competition claims.