Antitrust Fall 2008: Comments On Your Projects

ANTITRUST FALL 2008: COMMENTS ON YOUR PROJECTS

A. GENERAL COMMENTS

1. My Handwritten Comments: As you can see, I scribbled extensively on your papers. I regularly used the word “careful” to mean that your statement as written was imprecise or misleading. In addition, I regularly used the following abbreviations: AE = American Electric G’s = Grumble’s McJ = McJennet LE = Loonie Eddie’s FR = Fred Rodgers Info = Information Dox or Docs = documents PB = Phone Booth Matsu = Matsushita If you can’t understand my handwriting, please read through these remarks; many of the comments should become clear. If you still are unsure, feel free to bring or fax me the illegible sections and I will give you translations.

2. Writing and Presentation Issues a. General Points About Writing: Effective writing is clear and accessible. Proofread for clarity. Make sure that your reader has sufficient information to follow your discussions. Use short simple sentences. Use active voice. Take time to edit your work to eliminate unnecessary words. Use past tense to describe decided cases and events in documents. Use spell-check and grammar-check programs. Proofread for typos and missing words. Repeated small errors reduce your credibility. Incorrectly spelling the name of your client (as many plaintiff’s attorneys did) is not a good career move. In legal documents, maintain a professional style. Occasional jokes are fine, but avoid constant use of slang and informality. For example, you should refer to clients and parties by last names in memoranda unless you are discussing a married couple or a family who share surnames. Thus, "Bolger wrote to McJennet several times." as opposed to "Judy wrote to Don several times." Remember that you are doing technical writing and your job is to convey information. Let the information be the star of the show. Resist the instinct to spice up your writing or show off your vocabulary. For example, you need not find interesting alternatives to basic verbs like “said” or “held.” Let your speakers speak for themselves, rather than employing phrases like “McJennet scolded…” or “The court opined…” b. Describe Before You Characterize: When lawyers write to persuade, as in a brief, they commonly provide characterizations of evidence and cases that are helpful to their position and do not describe in detail the underlying materials they cite: During the period LE sold AE products, Grumble’s sales in Indianville declined sharply. [cites to Bolger complaints and sales dox]. When you are writing to inform (rather than to persuade) make sure you describe your subject neutrally in addition to characterizing or explaining its significance. Make very clear which points are the court’s or the document author’s and which are yours. In other

1 words, (to risk a sports metaphor) keep the play-by-play announcing separate from the color commentary. This separation allows the reader to better understand whatever you are describing and to draw her own conclusions to compare with yours: During the period LE sold AE products, Grumble’s sales in Indianville declined sharply. Bolger repeatedly complained about Grumble’s sales in Indianville and attributed the low sales to LE. In November, 1996, she said in a letter to McJennet that ... [quotes from and cites to Bolger letters]. AE monthly sales reports also show that Grumble’s results consistently were worse in the two years LE was in the market than in the same month the year prior to Eddie’s entrance. [Cites to sales dox] For example, Grumble’s sold XX AE telephones in June 1996, but only XX and XX in June 1997 and 1998. [cites]. If I said “describe, don’t characterize,” or if I described a comment as “editorial,” I meant that you were not doing this type of separation clearly enough. An especially serious form of this problem occurs when you deprive the reader of the ability to neutrally assess evidence by using strong adjectives and adverbs to characterize events without providing supporting evidence: Eddie’s had tremendous sales that summer cutting into Grumble’s results catastrophically, resulting in histrionic letters from Bolger complaining bitterly and requesting drastic concerted action. Two related points. First, the most effective way to convey important language is to quote directly from your source. You should quote legal tests in cases and any significant language in documents. Only paraphrase if the original is very long or is unclear. Second, think hard before giving your own opinion of something. You can help the reader by providing ideas as to the significance of the material you are describing. However, if your job is to convey the law in your circuit, nobody cares what you think of it Thus, a useful sentence might read: Together, these cases make it very difficult for a plaintiff to survive summary judgment because defendants can rely on hypothetical reasons for termination with out supporting evidence. An unhelpful version might read: These cases are incredibly stupid because they allow defendants to avoid liability by simply lying. c. Use of Authority: Generally, when doing legal writing you need to provide authority for every factual assertion or proposition of law. Citations for your propositions in internal memos have two important uses. First, they enable the reader to assess the importance and credibility of the assertion. For example, a Supreme Court case is a more authoritative source of legal principle than the Central District of California. Similarly, the Vice-President of Grumble’s is a more authoritative source about company policy that the assistant manager of a local store. Secondly, citations enable a reader to know where to confirm the proposition and to find out about the context in which it was made. In your legal memos, you need to provide accurate citations to each case you use. Although your citations need not be in bluebook form to be useful, you always should include the name of the court and the date to help the reader judge the case’s current significance. You probably should not include in your citations first names of parties,

2 multiple parties, and titles like “M.D.” These do not help the reader locate the case and take up space and time. You do need to provide page numbers for each specific assertion on which you rely, so the reader can look it up herself if she wants to. You can provide a single cite for a set of facts or evidence that you lay out in the a single paragraph rather than repeating id. after each sentence. However, I would separately cite each legal principle. Also, by convention, if you say “the Court” with a capital C, you are referring only to the U.S. Supreme Court. All other courts take a small c. In your document summaries, you need to cite to specific documents for all specific assertions about their contents. Generally speaking, the reader will have trouble using long lists of citations that come at the end of a paragraph making several points. Similarly, the reader is unlikely to find much use for a list of the citations for all 40-odd sales reports. You simply let the partner know that there are a lot of sales reports and what their format is, and let the indexer do the rest. The reader will find it helpful if you consistently provide the dates of documents as well as the names of the author and recipient. Providing dates allows the reader to see connections between events that you may have missed. Do not merely identify the business entity involved (i.e.., describe a letter as “from Bolger,” not “from Grumble’s”). Providing the author/recipient allows the reader to know who to interview or depose for more information on the subject and allows the reader to better assess the importance of the document. For example, when Bolger threatens to stop carrying AE phones (299), it’s helpful to know that this “threat” is by an assistant store manager who probably has little power to alter a national contract, as opposed to the later threat by deHaviland (305), who presumably has much more authority. Describing both letters as “from Grumble’s” will mislead the reader as to their relative significance. d. Formatting: Avoid weird fonts. Use abbreviations for common phrases like the name of your client. You save a lot of paper by saying AE and LE instead of American Electric and Loonie Eddie’s. Unless told otherwise, use justified margins; I was taught that they look more professional. Use relatively short paragraphs; pages with no paragraph breaks are very uninviting. e. Miscellaneous Usage Issues: 1. Assumedly: As far as I can determine, there is no such word. Use “presumably.” 2. Businesses: Refer to business entities as “it” not “they”: “When Grumble’s lost sales to LE, it began to complain to AE.” 3. Concerted Action: This phrase operates as a collective singular noun. Thus, parties can engage in “concerted action” to accomplish several objectives, as opposed to “a concerted action” or “concerted actions.” 4. Correspondence: This is a collective singular noun. More than one letter is “correspondence” not “correspondences.” The correspondence is (not are) located in the file. 5. Infer: This verb means “to draw conclusions (from).” Reasoning beings “infer” conclusions from evidence. The evidence is not a reasoning being, and therefore cannot “infer.” It “implies” or “suggests” the conclusions. Thus: “Lahr’s letter suggests that AE terminated LE to satisfy Grumble’s. From the letter and the subsequent termination, the

3 jury could infer a conspiracy between Grumble’s and AE.” Incidentally, courts do not “infer” when they are reviewing a record for sufficient evidence. Instead, they determine whether a jury could infer concerted action from the evidence presented. 6. Judgment: Dictionaries allow two spellings: “judgment” or “judgement.” Most legal materials, including Rule 56, spell the word without the “e” in the middle, so you will look more knowledgeable if you follow suit. 7. Led & Pled: The past tense of the verbs “to lead” and “to plead” are “led” and “pled,” not “lead” and “plead.” 8. Lose: The opposite of win is "lose" not "loose." 9. Manufacturer: The noun form of this is “manufacturer.” Don’t confuse it with the verb form: “manufacture.” 10. Memoranda: The plural of memorandum is memoranda. 11. Possessives: “It’s” is the contraction of “it is;” the possessive form of it is “its.”: “It’s about to return to its nest where it’s going to feed its children.” Be careful about possessives, plurals and words ending in "s". Only use apostrophes for possessives, not for plurals. Thus, 1 Smith, 2 Smiths; 1 Jones, 2 Joneses (to keep up with). The possessive for Jones can be done either as Jones' or as Jones's; I think the latter is clearer. The possessive plural for the couple only can be Joneses'. The possessive of a possessive looks like “Grumble’s’ prices” or “Loonie Eddie’s’ sales.” 12. Said & Same: Students regularly use “said” as an adjective and “same” as a noun. Said usages are awkward and stilted and you should avoid same. “These” and “them” work just fine. 13. Women: Some creeping sexism caused many of you to turn women into “he”s and “him”s. Ginger, Leslie, and Lesley are usually women's names in the U.S.; Gillian and Judy, to my knowledge, always are. In any event, the text of the documents refers to at least Stehr and deHaviland as women.1 Don’t refer to women as “Mrs.” unless you are specifically invited to or you are otherwise aware of their preference (e.g., McJ sends letters to “Mrs. Stehr”). In a business context in particular, use “Ms.” as your default.

3. Legal Work and Page Length Requirements: A number of your papers provided reasonably thorough analysis for 10-12 pages, then rushed through the remaining discussion. My strong impression was that once you got close to the suggested page limit, you figured you had done enough work. You might try to get used to the idea that your work should generally be as long as it takes to accomplish your goals. The page guidelines I provide are to give you a rough sense of how much you need to do a good job, but certainly are not an indication of either minimum competence or the maximum you could possibly squeeze out. My habit in practice was to write everything I thought I needed to accomplish the requested task, edit carefully to make it as short as possible, then submit it. B. LEGAL MEMO 1 On the other hand, many of you referred to Eugene Keeler, the author of the “typical” customer complaint as “she,” although Eugene is a man’s name.

4 1. Remember the Purpose of the Memo: Remember that the litigation is in a very early stage. The purpose of the memo is to convey to the partner in charge of the case, briefly and clearly, the legal standards that will govern the case and the types of evidence she needs to look for. If you think the answer is ambiguous, you want to lay out the boundaries of the ambiguity. Try to look for language that is both helpful and harmful. The partner needs as clear a sense as possible of what the cases say. It is too early in the case for any but the most tentative conclusions about the validity of your conspiracy claim. The strongest assertions you can make are things like, "Thus, LE would need to find some specific evidence of conspiracy to support its assertion that the other distributor's discussed the issue between themselves." You don't want to be too positive or negative about a case before discovery reveals what evidence will be available to prove the other side's claims. Instead, your memo should focus on stating the applicable legal standards and on describing the type of evidence that has been held sufficient or insufficient to meet them. 2. Using Cases on Your List: Although some of the cases on your lists were less important than others, I thought all of them had something relevant to say about your issue. A few of you completely ignored one or more of the cases provided. I think, as a matter of strategy, I might have at least noted the case briefly in a footnote and explained why it seemed outside the scope of the memo. However, the better move was probably rereading the case a couple of times to figure out why I thought it might help. 3. Choosing What to Discuss: Stick to the Question Presented: Despite quite specific directions, many of you discussed issues that were outside the scope of what you were asked to do. You need to get used to following narrowing directions. If they come from your boss, you may waste your time and the client’s money discussing issues about which your boss already has good information. If they come from a court, you risk losing your case by not addressing the issues the court thinks are important and by irritating judges whose requests you have ignored. Here, I placed several limitations on your work. You got no credit for discussions clearly outside the scope of the assignment. a. Sherman Act Section One: The instructions make clear that you are to be discussing Sherman Act §1. Discussions of portions of the cases addressing the Clayton Act, Sherman Act §2, state antitrust laws, federal criminal conspiracy law and the admissibility of evidence were off-point. Discussions of general summary judgment standards applicable in all federal civil cases were beyond the scope of the memo. If the partner wanted a memo on burdens of production in summary judgment motions, she’d have asked for it. She asked you about evidence in Monsanto cases. b. Concerted Action: Section One claims have two elements, (1) concerted action and (2) unreasonable restraint of trade. Your memo should have focused on the first. Some of the cases you cited involved the second element: either the question of whether a particular restraint was to be judged under the per se rule or the rule of reason or the application of the rule of reason. While these issues may be relevant to your case eventually, you were not asked to research them and they should not have appeared in the memo except:

5  You should have noted that after Sylvania and Sharp, vertical non-price restraints are judged under the rule of reason and that a vertical restraint is only classified as price-fixing if it includes agreement on a specific price or price level.  A few listed cases discussed whether a plaintiff had produced sufficient evidence that a conspiracy included the price element required by Sharp. The directions indicate that these discussions were within the scope of the memo. c. Between a Supplier and Non-Terminated Distributors: You obviously needed to discuss any analysis of vertical concerted action in supplier-distributor cases. However, some cases on your list did not involve this fact pattern and so you needed to decide how much of the case was relevant. Keep in mind that the central issue in the paradigm cases like Monsanto is determining whether the supplier acted for independent reasons in a context in which some interaction between the supplier and the other alleged conspirators is normal and desirable. Thus, you are primarily looking instance where the court is sorting through good or benign communications to find bad ones. There often are helpful passage in hospital cases involving alleged vertical agreements (doctors conspire with hospital to eliminate competitors) and cases involving standard-setting bodies accused of conspiring with one group of competitors to exclude one or more rivals. Even some horizontal concerted action cases have helpful discussions regarding situations where the competitors have legitimate reasons to communicate (as with doctors working on peer review committees). d. Procedural Posture: When describing cases, keep in mind that different courts do different tasks depending on the procedural posture in which they encounter the case. For the purposes of this memo, the legal standards are identical at the district court and court of appeals levels for each of the following situations: (1) Reviewing defendant’s motion for summary judgment (2) Reviewing defendant’s motion for directed verdict (3) Reviewing a jury verdict in favor of the plaintiff for sufficiency of evidence In each case, the court is to determine whether the plaintiff has put sufficient evidence into the record for a jury to decide in its favor. Thus, cases in all three postures are essentially interchangeable and relevant to your memo. By contrast, cases in some other postures may be less relevant. When discussing these cases you need to make the different posture clear to the reader and think carefully about its effect on the court’s analysis. For example, where there has been a jury verdict for the defendant, the appellate court will review for the sufficiency of the defendant’s evidence, a slightly different question. If a court is reviewing jury instructions, like the Supreme Court in Sharp, its statements as to the law may well be relevant to your issue, but you need to be clear that it is not reviewing the evidence. If the case is before the court on a motion for a preliminary injunction, the standard is “substantial likelihood of success on the merits” which really is focused on ultimate victory and not simply surviving summary judgment. 4. Presenting Cases: Focus on the Excluded Party’s Evidence: As the instructions tried to make clear, because the legal standards have not changed significantly since

6 Monsanto in any jurisdiction, the focus of the question presented was on evidence. What kinds of evidence meet the test; what kinds don't? Clear answers to these questions will enable the partner to make intelligent decisions about what type of discovery to conduct. Thus, the center of your analysis of each major case should have looked something like: (1) Plaintiff alleged a conspiracy between X & Y to do Z (2) Plaintiff offered the following evidence of concerted action ... (3) The court found this evidence (in)sufficient because ... Note that the best information you have about what evidence meets the Monsanto test is the evidence in Monsanto itself. Many of you did not lay out the Monsanto evidence or neglected to discuss it when identifying patterns even though Monsanto’s analysis is binding on all circuits. In reviewing a court’s discussion of the evidence, look for comments about what is missing. Suppose a case says, “The plaintiff presented no evidence that the competing dealers participated in the termination decision or threatened the manufacturer in any way.” This is terrific information. It tells you that the court would find that missing evidence helpful to the plaintiff’s case. Remember that any time a court comments on something that isn’t there, it is providing instructions to lawyers in later cases. Because of the focus on evidence, lots of other information about the cases was only marginally relevant to your memo. To present the significant points most efficiently, you should try to trim the less relevant information to the minimum necessary to understand the case. Thus, although you need to be aware of the procedural history of the case, you need not recite it in detail unless you are dealing with a case that is not directly addressing the sufficiency of plaintiff’s evidence. Similarly, you need not tell the reader that the case involves a Sherman Act §1 claim. Your boss should be able to assume you wouldn’t write about it if it didn’t. Don’t repeat general information already known to the partner. For example, you should not include boilerplate language about the plaintiff’s burden in summary judgment cases generally, or the elements of a §1 offense. Many of you kept repeating that the plaintiff needs to present evidence of concerted action to survive summary judgment in a §1 case. The partner obviously knows that; she’s asked you to find out what that evidence needs to be. You need not repeat the language of the tests from Monsanto and Matsushita unless the court refashions them in some way. If I wrote “This is not news,” I meant that you were providing information that the partner must already know. Try to limit your memo to information that has “news value,” that is, will add to the reader’s understanding of the problem you’ve been given. Distinguish between the background “facts” of a case and the evidence of concerted action that the court is reviewing. Cases often include long fact summaries that incorporate lots of detail you don’t need. Present the minimum amount of background that you can to make sense of the plaintiff’s claim, then discuss the evidence. You always should make clear the roles of the parties (supplier, competing dealer, hospital, terminated doctor, etc.), but generally speaking, the names of the parties, the dates of transactions, and the product or service at issue will not be relevant. The partner does not want to spend more time than necessary reading your work, so trim it.

7 Finally, many of you spent a long time detailing the rationales of the Supreme Court cases. Unless your circuit focuses on the rationales in devising its own standards, this information is at best marginally important to your task. Thus, trim discussions of rationales to a sentence or two. At this stage of the case, the partner cares much less about why the rule developed than about what evidence she has to look out for. Similarly, my criticisms of cases in my article is not particularly relevant to the question of what evidence the cases require you to present. 5. Analysis of the Cases: Identify Patterns: Although clearly describing all the relevant cases satisfied the assignment, the partner would also like to see you analyze the information by examining relationships between the cases and identifying patterns. The relationship between cases is very important. Often two cases will, between them, create a fairly clear rule because of the distinctions between them. Merely listing them without discussing the interaction will not give the partner a full picture of the law. This is particularly true if one of your cases includes a discussion comparing itself to another relevant case. Because cases tend to build on one another, keeping a sense of the chronology helps the partner understand how the caselaw has developed. When in doubt, you are safe putting the cases in chronological order either completely, or within some form of subject matter grouping. A few of you presented the cases in reverse chronological order. I think this makes it difficult to understand what is going on. There are at least a couple of effective ways to organize your material to include both the case descriptions and your analysis. Often, the clearest and most efficient method of explaining legal research that involves cases (as opposed to statutes or regulations) is to try to list general principles or statements of law and the trends you see in applying these standards, with a list of relevant citations. Then follow up with discussions of the facts of the relevant cases to elaborate the general standard or trend. Thus, rather than listing each case and noting under each that they recite formulas from Monsanto, you could say something like: The Supreme Court has indicated that to survive summary judgment on a conspiracy claim, a plaintiff must show evidence that “tends to exclude the possibility that” the manufacturer acted independently of its complaining distributors. In other words, it must have a “conscious commitment to a common scheme” of illegal activity. Monsanto. The Xth Circuit has repeated this test in a number of cases. (cites). These cases apply the test in the following way: (specific facts and decisions). You also can choose a format where you run through cases one at a time, and then include a concluding section that identifies patterns in the cases: Thus, it appears that in the Xth Circuit, whenever there is evidence that the termination was initiated by the manufacturer, courts will grant summary judgment, [cites] but where there is evidence the conspiracy was initiated by the other distributors, plaintiffs have gotten to take their case to the jury. [cites] A few of you divided the cases into “plaintiff wins” and “plaintiff loses” sections and did patterns at the end of each. This is fine, so long as you compare the winners and losers with each other. The lines between them define the law.

8 Be as specific as possible in identifying patterns. The partner wants to know as precisely as possible what kinds of evidence to look out for in the case. A number of you had what I think of as the Napoleon problem: your patterns were a little general. When searching for patterns and relationships, keep in mind that the court usually believes that it is acting consistently. Thus, even if you think two cases are hard to reconcile, you must try to explain why they are consistent. The district court must try to work with all of the court of appeals cases; it will be your job to explain how that is possible. It is easy to say things are inconsistent. You get paid to find ways to make things fit. DOCUMENT SUMMARY 1. Introduce the Reader to the Documents: The purpose of a document summary is to provide the reader with a good sense of what types of evidence are contained in the documents and to give the reader a familiarity with the case without having to examine the documents. Although your boss has some familiarity with the events of the case, until she sees your summary, she is relying on the client’s imperfect memory. For example, everybody in the case seems to believe that the other retailers sales suffered after LE entered the market. Many of you took this “fact” as a given in your summaries. However, the sales documents show that FR sales were up slightly and Phone Booth sales up considerably compared to the year before LE’s entry. Moreover, the partner may wish to use your memo to bring other lawyers up to speed on the facts of the case. Thus, you should assume very little knowledge when you write, making “introductions” as you go. First, introduce the reader to the file. Early in the memo, you briefly should provide a general sense of the types of documents that are in the file: "The file contains monthly sales figures for Eddie's and the other Indianville distributors, correspondence between Eddie's and AE, correspondence between AE and its other distributors referring to Eddie's..." etc. It also is helpful to describe the format of recurring documents like the sales reports: "There are two types of sales reports. The first consists of monthly units sold of four different categories of AE phones for the four Indianville distributors. Each month’s report included the figures for that month, the previous month, and the same month a year earlier. The second is a monthly report sent by June Tyrone to McJennet giving the number of each type of phone sold by LE. These reports contain no price, cost, or sales dollar information." In addition, introduce people, terms, and incidents to the reader the first time you refer to them so the reader doesn't have to go thumbing through piles of stuff to figure out what you're talking about. When you refer to someone new, provide their job title: “June Tyrone, LE’s Assistant Manager.” Introduce terms special to the business or industry. For example, some of you referred without explanation to “Boutique phones” or “Consumer Affairs reports.” Did you know what these terms meant before you started the project? If not, briefly explain them to the reader. When you refer to an event, do not assume the reader knows the facts. You need to describe important events like the July 4 sale and the Al Grace spying caper carefully so the reader understands what happened. 2. Organize Your Summary to Convey Information Efficiently: The documents can be organized usefully in a number of different ways. There are three important and somewhat conflicting goals when choosing a format: First, you need to provide a sense

9 of the sequence of events. Second, you need to help the reader see connections between the documents. Third, you want to present information as briefly as possible. Whatever format you use, you want to briefly explain it to the reader at the beginning of the memo. Unlike a legal memo, the reader won’t know what to expect in terms of structure, so tell her. In addition, whatever format you employ, my sense is that most readers will prefer reading a narrative account to trying to interpret a list of documents with brief explanations. However, this may be particular to the reader so check with your boss. Arranging documents chronologically obviously provides a clear sense of the sequence of events. It has two possible drawbacks. First, the reader may have trouble seeing connections between related parts of the story. For example, it is hard to convey a sense of the meaning of the sales reports if you discuss them one at a time. Second, if you choose to put a little bit of commentary after each document, unless your summary is very long, you won’t have enough time to provide enough detail on the most important documents, to summarize their significance as a group, or to make suggestions for future discovery. In addition, students who put commentary after each document tended to repeat themselves a lot. Remember that the documents will be indexed by someone else at some point. You are trying to provide an overview, not an index. Arranging documents by the type of document (letters from AE to LE; letters from G’s to AE, etc.) can show the development of particular arrangements clearly. For example, a section consisting of G’s complaints and AE responses may effectively convey both the sequence of events and the relationship between these documents. The problem with this system is that some key sequences of events are referenced in several kinds of documents. For example, issues about LE training and misinformation show up in letters from AE to LE, internal AE documents, and complaint letters from dealers. The sequence of events leading from the discovery of the Superman ad to termination also is presented in several different places. Thus, you need to do careful cross-referencing if you employ this system or the sense of story will get lost. Perhaps the least successful organization divides the documents into “helpful” and “harmful” categories. This usually results in your presenting two overstated versions of the story and makes getting a sense of the whole very difficult. Historically, the papers that have discussed groups of documents together by topic (sales reports, tests of Eddie's service, Grumble's complaints, etc.) have been the most successful in conveying the necessary information. However, this too can risk losing a sense of the sequence of events if the student is not careful to indicate dates and to cross- reference among the sections. 3. Describing Documents: Be Accurate and Precise: In practice, you may find (as I did my first week on the job) that you are going to be the only person who ever looks at a particular set of files. Your bosses will only look at documents you say are significant, unless the other side brings them up. Thus, you must be accurate and precise is your recounting. By accuracy, I mean that what you say must be true. Read carefully. Present quotes exactly as they appear. Don’t make statements that cannot be supported by the record. For example, many of you stated that AE General Counsel Gillian Licht put a circle around the word “antitrust” on the letter from LE’s attorney that first raised the

10 antitrust issues. You don’t know that. What you know is that, someone put a circle around the word, and the circle appears on McJennet’s copy of the document. For all you know, McJennet circled it on the photocopy he received. Similarly, if you are relying on your boss’s memo to make a point, say so. Don’t let her think the documents support a point they do not. Some of you drew conclusions from the absence of any reference to an event in the documents: “Eddie never replied to this letter.” However, documents can only provide direct evidence of what did happen. The gaps you found are important, but as areas that should be explored with further discovery. For all you know, Eddie got on the phone to reply as soon as he received the letter. The most you can say accurately is “The documents contain no evidence that Eddie replied to this letter.” These may sound like lawyer’s quibbles, but you must get used to thinking about exactly what documents do and do not show. By precision, I mean using specific rather than general terms to describe the documents. Try to avoid use of words like some, many, a few, and a lot. Statements like “Some of AE’s dealers complained about LE’s prices,” are true but not helpful. G’s and FR complained about prices. PB did not. The partner needs to know this precisely to think about how to proceed with the case. Similarly, in describing the sales reports, many of you said, “Grumble’s sales fell in June.” You need to give more information. Did they fall as compared with May? Did they fall as compared with June of the prior year? Did they fall over the course of the month? Incidentally, in retail, sales are very seasonal.2 Thus, success is usually measured by comparing sales in a period to the same period in the prior year. Measured this way, Grumble’s sales fell after LE entered the market, FR sales were up slightly, and Phone Booth’s rose by more than 50%. Your biggest problems with accuracy and precision combined to create overstatements: “AE’s dealers constantly complained about LE’s low prices.” Actually, G’s complained about prices five or six times (depending on how you view deHaviland’s letter), FR complained about prices once, and PB never did. Overstatement makes it difficult for the partner to assess the value of the case. I deducted points freely for overstatement; it is a bad and dangerous habit. You could mislead your boss, cause a witness to be surprised in depositions, or get sanctioned by a court. 4. Describing Documents: Provide Helpful and Harmful Stories and Language: a. Telling Stories: You will best help your assigning partner if you attempt to begin telling the stories that are suggested by the documents. For example, These complaints, read together, might suggest that there was an understanding between AE and its distributors that they had to follow suggested retail prices. On the other hand, there is no language at all that actually states that such an understanding existed. Be careful to spin out both the best and worst stories for your client, as well as versions of events that are in between. Don’t take your client’s own words at face value. Many of

2 In some industries, more than 60% of sales occur between November 1 and Christmas. When I drafted the documents, I assumed that Indianville was a college town and that phone sales would be relatively high in June and September (when college students typically move into new residences).

11 the AE lawyers assumed that there could be no price-fixing because McJ kept saying there wasn’t. A well-advised defendant will do any resale price maintenance under just such a veil of official denial. Similarly, many of the LE lawyers took Nelson’s statements that he was working on training issues as proof that he was doing so. He could easily have been lying to AE about doing training and assuming that his high sales would allow him to get away with it. Don’t worry at this stage of the case about whether some of the statements made in the documents might constitute hearsay or otherwise be inadmissible at trial. They still can be the basis for further investigation, especially questions in interviews and depositions. Moreover, you may well be able to get the document admitted anyway under one of the many exceptions to the hearsay rule. A few of you made quick decisions about the validity of your client's case and spent the entire summary amassing evidence that proved conclusively that you would win (or, in some papers, lose). Your job is to make sure that the litigation team considers all the stories that can be read out of the documents at this early stage so you are not surprised by the opposing lawyers. The extent to which your client biases your reading of the documents was made very apparent to me, reading first defendant's, then plaintiff's memos. I strongly suggest that you take the time to look at a memo prepared by someone on the other side to see the arguments that were available. b. Identifying Key Language: Lawyers use language in documents as the basis for questions of witnesses at depositions. They will ask the author what he meant and often grill him to try to obtain an admission of improper activity. Language that is far too ambiguous to survive the Matsushita test by itself still can be the basis for embarrassing moments in deposition. With this in mind, you need to try to identify for your boss any language that can be used this way by you or by the opposition. One of the worst mistakes you can make as an associate is to underestimate the value of a document to the opposition. If a document you failed to identify becomes a major focus at deposition, your boss will be quite displeased. However, it also is bad to underestimate your own case and prevent your client from getting a deserved remedy. c. Using Common Sense: When spinning stories and identifying important language, please use some common sense. You are allowed inferences from the documents, but only reasonable ones. For example, you must allow for reasonable passage of time. To my knowledge, letters do not arrive the day they are mailed anywhere in the U.S. People do not always read their mail the day it arrives. Reports do not get written immediately upon getting the relevant information. Dealer-supplier relationships (like those between lovers) are complex. Many of you apparently are single because you seem convinced that the appropriate response to the first sign of trouble would be to end the relationship. In fact, as with any relationship, dealers and suppliers regularly put up with less than perfection. Just as a person might say to their lover, “I love your cooking, but I wish you did a better job cleaning up afterward,” AE can rationally say to LE, “We love your sales but please don’t lie to the customers.” Many of you bought into Eddie’s claim of “mixed signals.” Your apparent assumption that it could not possibly sell so much if it trained its workers seems no more

12 logical to me than someone claiming they cannot cook properly if they have to clean up the kitchen afterward. Similarly, the fact that AE does not terminate LE immediately upon the showing of the first or second questionable ad seems consistent with normal human behavior. People take time to decide to act and may try to negotiate before doing something permanent like terminating a dealer. If your partner comes home unpleasantly drunk one night some time into the relationship, you are unlikely to walk out immediately. Instead you will try to find out what is going on and are likely to respond favorably to assurances (like those LE gave) that the conduct was inadvertent and will not recur. If after several months, the conduct does recur, you may well spend some time trying to “save” the relationship before giving up on it. That seems to be what happened here. Moreover, AE did punish LE for its misbehavior; it withheld the other AE products LE wanted to sell. Finally, be careful about spinning conspiracy theories that are a little too spy novelish. Why would AE even bring LE on board if it were engaging in price-fixing from the beginning? Why would AE fabricate the first Consumer Affairs Report three months after LE started as a dealer on the basis of one complaint from Judy Bolger? Do you really think it was trying to create a record so that it could terminate LE if Grumble’s desired it? If so, why did it wait 19 months to complete the termination? You also should employ common sense in looking at the file as a whole. For example, several students expended a great deal of energy worrying about the meaning of “mo’ly” in document 200, some even suggesting that it might mean monopoly. The upsetting abbreviation is in a sentence that says “please start a file ‘Loonie Eddie’s’ – put copies of Indianville mo’ly phone results + correspondence.” And what do you find in the file? Correspondence and monthly phone sales reports. Mystery solved. Similarly, many of you were convinced that the first half of document 237 (8/2/97 letter from Bolger) was not in the file. Some of you suggested that this was part of a plot to hide evidence of concerted action. First of all, businesses do not run perfect filing systems and so lost pages are likely to be unintentional. Second, the document labeled 235 is from Grumble’s Indianville and is also dated 8/2/97 and the signature page was missing. The logical conclusion, particularly since it is the same typeface as 237, is that it is the first half of the letter. The fact that the two halves are separated by one other page should not have stymied so many of you.

5. Include Suggestions For Future Discovery: Remember that these documents are not the whole universe of evidence. Further discovery will reveal other documents; interviews, interrogatories, and depositions will yield other information. Part of your job in a summary is to make suggestions for areas that need further exploration. Do other letters exist? Did the parties communicate in person or by phone in a way that was not recorded on paper? Inquiring minds want to know. Moreover, the instructions asked you to do so.

13 6. Legal Analysis: Briefly Assess the Significance of the File to the Case: You need to include some quick discussion (maybe 1 1/2-2 pages) of how the documents fit into the legal structure. Although your legal memos only addressed one issue, the instructions state that the summary should consider the significance of the documents under all the causes of action. a. My Take on the Legal Significance 1. Vertical Price-Fixing Conspiracy: There is no direct evidence in the file that AE and its dealers agreed to prices. The statements by dealers requesting AE to set LE prices and suggesting that they believed they had to follow MSRP are the kind of ambiguous dealer statements that are insufficient without some evidence that AE sought this acquiescence. See Monsanto note 9. The one really questionable statement by McJ: “there was no requirement that you there was no requirement that you institute the new suggested prices immediately at the beginning of July” (238) is probably too ambiguous in context to go to the jury. Moreover, Grumble’s’ threats during the summer of 1998 are pretty clearly aimed (at least on their face) at TV ads, not prices. However, these statements will be used by LE at deposition to press witnesses about the existence of a price agreement. 2. Vertical Conspiracy: TV ads: There seems little question here that there is concerted action on this issue, even in the Sixth Circuit which has almost completely done away with vertical non-price restraints. The TV ad provision is in all the contracts, AE was using its dealers to monitor compliance, and Grumble’s threats and Lahr’s responses to them involved this issue. Thus, the question is likely to be whether this is an unreasonable conspiracy. LE will argue that that a contract to advertise only at a particular price is per se under Sharp since it requires a particular price level. AE will argue that absent an agreement to set the price, the advertising limit is a non-price restraint. This is an unresolved legal question in all circuits except the 5th and 7th, which have applied the Rule of Reason. If you end up in Rule of Reason, AE is probably OK because it probably does not have market power. 3. Horizontal Boycott: After Sharp, this requires evidence of agreement between two horizontal players. In this case, that would have to be FR and Grumble’s. The caselaw makes clear that merely because AE operates on two levels does not make its relationship with FR and G’s horizontal. There is little evidence to support an agreement between FR and G’s, although LE will explore the occasional evidence of discussions among the retailers. Also, although the instructions suggest that this claim arose from the same facts as the vertical-price fixing cause of action, LE did not allege horizontal price-fixing, so you should confine your horizontal to boycotts. b. Common Errors in Legal Analysis 1. Concerted Action is not Illegal: §1 only prohibits concerted action that unreasonably restrains trade. Concerted action by itself is not illegal. Indeed, the thrust of Sylvania, Monsanto, and Sharp is that most concerted action between dealers and suppliers is pro-competitive. Thus, when you say that a document provides evidence of “concerted action,” you need to tell the reader what the players are conspiring to do.

14 For example, conspiracy to insure that dealers provide good information about AE phones is certainly legal. It is a non-price restraint, judged under the Rule of Reason. LE is going to have a hard time convincing a court that it harms competition to force a dealer to tell the truth about AE’s products. Many of you were sloppy about the difference between conspiracy to fix prices and conspiracy to enforce the TV ad provision. You need to keep these conspiracies separate. It probably will be easy to show concerted action on the latter, but it seems likely that it would be a rule of reason issue. 2. AE Probably Can’t Conspire With Phone Booth: Many of you engaged in long discussions of the concerted action between AE and Phone Booth. Your materials make clear that Phone Booth is owned by, and it might not even be a separate corporate entity. Thus, Al Grace is an AE employee and cannot conspire with AE. There is some caselaw that agents and employees can conspire if they have an independent economic interest in the matter. However, you have no evidence at all that Grace has any interest other than AE’s. He wants to sell a lot of phones, he wants to help enforce the contracts, and he wants to make sure AE customers get accurate information. At most, you might have briefly suggested that the lawyers explore the relationship to make sure Grace is no more than what he seems. 3. The Relevant Market: A number of you referred to the “Indianville telephone market” and to LE’s increasing “market share.” You have very little information about the relevant market. You don’t know how many other manufacturers sell telephones in Indianville nor how many they sell. You don’t know whether Indianville is part of a larger retail market or itself is divided into separate geographic markets. Retailers do not tend to measure success by market share because it is so hard to get good information about which competitors are selling what. Retailers generally judge success by sales. Grumble’s wouldn’t care very much if LE was selling 60% of the telephones in Indianville if Grumble’s’ own sales were rising steadily. Those of you who discussed LE’s “market share” might have recognized that none of the documents refer to market share or suggest that any of the players was using it as a measure of success. 4. Breaches of the Contract: Remember that nobody has brought a breach of contract action. AE raised LE breaches as a defense to the suit, not as a counterclaim. Thus, the precise question of whether either the training or the commercials violated the contract is not at issue in the case. There is lots of evidence that AE believed that the contract was breached and that is probably sufficient in an antitrust suit to provide the legitimate basis for termination if the underlying contract provisions were legal. In fact, you had too little evidence to say definitively whether the contract was breached. The contract might have contained definitions that clarified the key provisions. The parties might have reached some understanding about the meaning during negotiations. In any event, you should not state a legal conclusion (like “the contract obviously was not breached”) as though it were a fact supported by the documents. Some of you seemed to assume that LE could not violate the training provision because AE knew he was a warehouse-style operation when it entered the contract. This is an odd view of contract law. Nelson signed an agreement that required that his salespeople be aware of the features of the phones. He also repeatedly stated that he would try to conform. Perhaps the meaning of the provision might change some in light

15 of AE’s knowledge, particularly if the parties had reached some understanding as to how it would apply to LE. However, I know of no rule of contract law that says that a business can be excused from its promises if the other party knows that the business may have some trouble fulfilling them. 5. Free-Riding: Many of you referred to LE as a free-rider. Technically, free-riding means benefiting from services like good information provided by competing entities. The evidence does not suggest that consumers (i) got information from Grumble’s then (ii) bought at LE. Instead, it suggests that the problem is that consumers got their information from LE. This is not free-riding, although it certainly creates legitimate concerns for LE. Moreover, part of the importance of the July 4 sale is that Eddie’s outsells the competition in part because it seems to have more storage space to stock up on the lower priced phones before the AE price increase. Thus, it arguably is pricing lower because of economies of scale, not free-riding. 6. MSRP: Many of you argued that the existence of suggested retail prices was somehow sinister. Manufacturer’s suggest retail prices all the time. They do so, at least in part, because they may have better data about how the market operates than a local dealer. In effect, the manufacturer says, “We have found that the product sells to our satisfaction at this price.” But absent some evidence that AE tried to enforce it, the existence of MSRP by itself is not even probative evidence of a price-fixing conspiracy. Similarly, that department stores follow the MSRP is not much help to the plaintiff. Department stores generally charge MSRP in an unthinking way most of the time. Monsanto footnote 9 says you need more than evidence that the dealers followed the supplier’s pricing suggestions, you need evidence that the dealers communicated their acquiescence and evidence that this acquiescence was sought by the supplier. The latter is not present in this file. 7. Rule of Reason Analysis: Some of you attempted independent analysis of whether the various restraints would hurt or harm the local telephone market. Although some of your work was quite thoughtful, remember that lower courts doing rule of reason analysis begin by requiring the plaintiff to show that the defendant has market power. If it doesn’t, the analysis stops there. In addition, the documents contain very little information that would help you do a full-blown rule of reason analysis, so trying to do so is not an effective use of time in the summary.