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In a huge victory for the plaintiffs in a class action antitrust suit against office supply giant 3M, a federal judge has ruled that several key issues have already been decided by the jury in a prior antitrust trial. In his 18-page opinion in Bradburn Parent/Teacher Store Inc. v. 3M, U.S. District Judge John R. Padova of the Eastern District of Pennsylvania found that the doctrine of collateral estoppel applies to the October 1999 verdict in LePage’s Inc. v. 3M. LePage’s, a competing supplier of tape, won a $68 million judgment in an antitrust suit that accused 3M — the maker of Scotch brand tape — of using illegal tactics to drive it out of business. Now Padova has ruled that the plaintiffs in a class action suit on behalf of direct purchasers of 3M transparent tape need not relitigate issues that were decided by the jury in the LePage’s case. Padova ruled that collateral estoppel applies to establish several key facts — that 3M “possessed monopoly power” in the transparent tape market, including “the power to control prices and exclude competition;” that 3M “willfully maintained such monopoly power by predatory or exclusionary conduct;” and that 3M’s “predatory or exclusionary conduct harmed competition.” Although those facts, standing alone, establish an antitrust violation, Padova found that the jury in the Bradburn case will still need to decide several additional issues, including the time frame in which the violation took place and whether the plaintiffs can show any “antitrust injury.” As a doctrine of issue preclusion, Padova found that collateral estoppel “has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation.” Although the plaintiffs in the Bradburn case were not parties to the LePage’s case, Padova found that they had the right to use collateral estoppel “offensively” against 3M. “It is well-settled that a litigant who was not a party to a prior judgment may nevertheless use that judgment ‘offensively’ to prevent a defendant from relitigating issues resolved in the earlier proceeding,” Padova wrote. Padova first announced his collateral estoppel rulings in a March opinion. Now, in a second opinion, Padova has rejected most of 3M’s arguments in its motion for reconsideration. But in a significant victory for 3M, Padova concluded that no temporal parameters can be gleaned from the LePage’s verdict and that the plaintiffs must therefore prove when the antitrust violation began and ended. In its motion for reconsideration, 3M’s lawyers argued that Padova erred when he held that the LePage’s verdict established as a fact that 3M possessed “the power to control prices and exclude competition in the relevant market.” It was improper, they argued, to infer from the jury’s verdict that 3M had the power to control prices because 3M presented evidence at trial that the market was dominated by customers much larger than 3M who were in a position to retaliate on a broad range of product purchases if 3M were to charge supra-competitive prices for transparent tape. The LePage’s jury, they argued, could have found that although 3M had the ability to exclude competition, it did not have the power to control prices. Padova disagreed, saying “3M’s power to control prices was essential to the jury’s verdict in LePage’s because the jury had determined that 3M had the power to exclude competition, and the ability to exclude competition necessarily results in the ability to control prices.” Once a monopolist achieves its goal by excluding potential competitors, Padova said, “it can then increase the price of its product to the point at which it will maximize its profit.” As a result, Padova said, “the mere fact that 3M’s larger customers could have retaliated had 3M raised prices beyond their existing levels did not permit the jury in LePage’s to find that 3M did not have the power to control prices.” Although 3M’s “point of profit maximization” for transparent tape may have been lower than usual due to the potential retaliation by its larger customers across 3M’s product line, Padova found that “the potential for decreases in demand for 3M’s products as a result of an increase in tape prices does not establish that 3M might not have had the power to control prices.” Lawyers for 3M also argued that Padova’s ruling created an unfair risk that the jury in the Bradburn case will either consider itself constrained to find that 3M did, in fact, control prices, or speculate that the LePage’s jury might have made such a finding. Padova disagreed, saying, “a finding that 3M had the power to control prices does not establish that 3M in fact exercised that power to the detriment of Bradburn, and Bradburn retains the burden of proving this allegation at trial.” As for 3M’s “fears of juror confusion,” Padova assured that they “can and will be fully addressed through appropriate jury instructions.” Defense lawyers also argued that Padova erred in holding that it was an established fact that 3M “willfully maintained … monopoly power by predatory or exclusionary conduct.” Such a finding, they said, improperly suggests that 3M had unlawfully acquired a monopoly or would have lost its monopoly position absent the conduct challenged in LePage’s as predatory or exclusionary. Again, Padova disagreed, saying 3M “remains free to argue that it would have acquired and continued to possess its monopoly position even if 3M had not engaged in predatory or exclusionary conduct.” Likewise, 3M argued that Padova erred in holding that “harm to competition” was an established fact because the LePage’s jury was never instructed that it was required to find harm to competition. Although the jury found that LePage’s had been harmed, defense lawyers argued that there was also evidence presented at trial that competition in general was beneficial. And a finding of harm to competition was not essential to the jury’s verdict, they said. But Padova found that harm to competition was “necessarily implied by the jury’s determination that 3M had unlawfully maintained monopoly power in violation of Section 2 [of the Sherman Act].” In the final section of the opinion, Padova said he agreed with 3M’s argument that he had erred by applying collateral estoppel to the LePage’s jury’s findings for “the time period from June 11, 1993, to Oct. 13, 1999.” Defense lawyers argued that, due to the general nature of the verdict rendered in LePage’s, it was impossible to discern the exact time period for which the jury in LePage’s found that 3M possessed monopoly power, willfully maintained such power, and harmed competition. Padova agreed, saying, “it is not possible to infer from the jury’s verdict that 3M had engaged in unlawful conduct throughout the entire … period of time. Collateral estoppel, therefore, can only be applied to establish that 3M engaged in unlawful behavior for some period of time between June 11, 1993, and Oct. 13, 1999.” Modifying his March ruling, Padova found that “collateral estoppel is properly applied to establish only that, for some period of time between June 11, 1993, and Oct. 13, 1999, 3M possessed monopoly power, willfully maintained such power and harmed competition.” The plaintiffs in the Bradburn case are represented by attorneys Robert S. Berry, J. Daniel Leftwich and Gregory Baruch of Berry & Leftwich in Washington, D.C., along with Charles M. Jones of Jones Osteen Jones & Arnold in Huntsville, Ga. The 3M defense team consists of attorneys John G. Harkins Jr., Eleanor Illoway and David Engstrom of Harkins Cunningham in Philadelphia, along with Brent N. Rushforth, Kit A. Pierson, Martina M. Stewart and Paul Alexander of Heller Ehrman White & McAuliffe in Washington.

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