Erie County v. Morton Salt, Inc.
2012 U.S. App. LEXIS 25741
| 6th Cir. | 2012Background
- Erie County sues Morton Salt and Cargill alleging a market division and price fixing in northern Ohio rock salt under the Valentine Act and Sherman Act.
- The northern Ohio market is a duopoly (Morton and Cargill) with ODOT and Buy Ohio law influencing bids and contract awards.
- ODOT’s pricing spike (2008) prompted an OIG investigation, which identified five indicators of market allocation: stable shares, high incumbency, suspicious bidding, sham bids, and high profits.
- ODOT’s initial interpretation of Buy Ohio allegedly locked out out-of-state bidders, enabling the duopoly; the OIG concluded the lockout stemmed from misapplication of Buy Ohio, not illegal conduct by the defendants.
- Erie County pleaded three claims: deceptive trade practices regarding salt origin, Valentine Act price fixing, and fraud; the district court dismissed the claims as insufficiently pleaded.
- On appeal, Erie County challenges only the Valentine Act claim, arguing the five indicators plausibly show an agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Valentine Act claim is plausibly pleaded. | Erie County argues five indicators show coordination and price fixing. | District court found only parallel conduct; misapplication of Buy Ohio undermines conspiracy. | The claim is dismissed; not plausibly pleaded. |
| Whether parallel conduct can survive Rule 12(b)(6) as plausible conspiracy. | Pleading includes identifiable indicators suggesting agreement. | Parallel conduct with market duopoly can arise from independent behavior; no explicit agreement proven. | Parallelism alone not enough; no plausible unlawful agreement pleaded. |
| Whether Erie County’s lack of Buy Ohio binding defeats the conspiracy claim. | Even without Buy Ohio binding, indirect effects could reflect collusion in county contracts. | Sham bidding relies on Buy Ohio; without it, no plausible conspiracy. | Erie County’s lack of Buy Ohio binding defeats the conspiracy claim. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading standard requires plausible claims, not probable proof)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility required for plausible entitlement to relief)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (context-specific inquiry; conspiracy claims require more than parallelism)
- Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (U.S. 1984) (pre-trial pleading standards; evidence required to exclude independent action)
- Brown v. Pro Football, Inc., 518 U.S. 231 (U.S. 1996) (agreement inference may be drawn from circumstantial evidence)
- Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (U.S. 1962) (parallel conduct evaluated in a combined context with potential agreement)
- Johnson v. Microsoft Corp., 834 N.E.2d 791 (Ohio 2005) (Ohio Supreme Court interpreting Valentine Act precedents)
- Starr v. Sony BMG Music Entm’t, 592 F.3d 314 (2d Cir. 2010) (pleading standards for conspiracy claims; not all parallel conduct proves agreement)