Citations
- 355 F. Supp. 2d 1214
Full opinion text
MEMORANDUM AND ORDER
MARTEN, District Judge.
This matter is before the court on ten motions submitted by the parties: three motions for partial summary judgment, five motions in limine, and two miscellaneous motions seeking to expand (a motion for leave to file a surreply) or contract (a motion to strike) the pleadings or evidence otherwise before the court. For the reasons stated herein, the court will partially grant and partially deny the relief sought by both parties.
Because much of the material supporting the various motions, as well as the motion for surreply itself, has been filed under seal, the court has previously directed the Clerk of the Court to file a copy of the present order under seal as well. However, the court noted that the protective orders currently in place in the present action were largely the result of agreement of the parties, (Dkt. No. 136), or based upon a generic assertion of confidentiality and expediency and convenience (Dkt. No. 360, granting Dkt. No. 359, which noted a blanket seal of briefs was the “most efficient, least time-consuming, and less confusing” means for briefing as opposed to “sort[ing] through the documents to determine which ones should be filed electronically and which should be filed manually, under seal”). Accordingly, the court directed the parties to specify which portions, if any, of the present order they contend should remain under seal, along with the specific justification which the party or parties contends overrides the general public interest, on or before January 6, 2005. See Ratts v. Board of County Com’rs of Harvey County, 141 F.Supp.2d 1289 (D.Kan.2001) (giving parties two weeks to show cause why summary judgment memorandum and order should not be unsealed).
As the court noted, there is a fundamental distinction between the broad latitude the court has to accord confidentiality to the parties’ discovery and other preliminary proceedings, and the narrower discretion the court has in issuing orders resolving litigation. Disclosure of the basis for a court’s orders is the rule, not the exception. See Nixon v. Warner Communications, Inc., 435 U.S. 589, 597, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978). See also Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 252 (4th Cir.1988) (noting that “if the case had gone to trial and the documents were thereby submitted to the court as evidence, such documents would have been revealed to the public” and not subject to protective order). The court must bear in mind the strong public policies supporting open access to the decisions of the courts, and that “documents used by parties moving for, or opposing, summary judgment should not remain under seal absent the most compelling reasons.” Joy v. North, 692 F.2d 880, 893 (2d Cir.1982). Indeed, as a general rule, documents submitted as a part of motions for summary judgment are subject to public right of access. Anderson v. Cryovac, Inc., 805 F.2d 1, 13 (1st Cir.1986).
The parties have responded to the court’s directive. Vulcan has stated that it has no objection to unsealing the order in its entirety. The Atofina defendants have submitted a pleading designating portions of the proposed order for redaction, emphasizing in particular Atofina’s replacement supply contracts with third parties. Atofina’s pleading in support of redaction states that the alternative supply contracts are confidential, and that “public disclosure of these arrangements and their terms would harm defendants in their current and prospective negotiations concerning business transactions with thrid parties involving cholorform and R-22.” (Def. Resp. at 1-2).
The court' will not grant the proposed redactions, and shall direct the Clerk of the Court to file as unsealed the present order, which incorporates in full the earlier sealed order. The burden is on the parties to show why the order of the court should be sealed in any particular respect. However, no evidence of actual or likely harm has been presented by defendants; their assertion of potential future harm is simply the uncorroborated argument of counsel. This is insufficient to counterbalance the strong interest in open public access to rulings of the court. Were the matter to have proceeded to trial without summary judgment, evidence of the alternative supply contracts would have been submitted in open court. The court has also examined the individual redactions proposed by defendants, and finds that they seek to exclude virtually any detail as to the alternative supply contracts, including the dates they were entered into. The court finds no basis, on the record before it, for concluding that the important public interest in open rulings by the court has been overridden, and that justice requires sealing any element of this order.
I. Summary Judgment.
Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, the court must examine all evidence in a light most favorable to the opposing party. McKenzie v. Mercy Hospital, 854 F.2d 365, 367 (10th Cir.1988).
The party moving for summary judgment must demonstrate its entitlement to summary judgment beyond a reasonable doubt. Ellis v. El Paso Natural Gas Co., 754 F.2d 884, 885 (10th Cir.1985). The moving party need not disprove plaintiffs claim; it need only establish that the factual allegations have no legal significance. Dayton Hudson Corp. v. Macerich Real Estate Co., 812 F.2d 1319, 1323 (10th Cir.1987).
In resisting a motion for summary judgment, the opposing party may not rely upon mere allegations or denials contained in its pleadings or briefs. Rather, the nonmoving party must come forward with specific facts showing the presence of a genuine issue of material fact for trial and significant probative evidence supporting the allegation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Once the moving party has carried its burden under Rule 56(c), the party opposing summary judgment must do more than simply show there is some metaphysical doubt as to the material facts. “In the language of the Rule, the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.’ ” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed. R.Civ.P. 56(e)) (emphasis in Matsushita). One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and the rule should be interpreted in a way that allows it to accomplish this purpose. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Given the extensive, indeed frequently repetitive, nature of the evidence and argument submitted to the court with respect to the summary judgment and other motions, motions for reconsideration of the present memorandum and order are discouraged. Such motions under Fed.R.Civ. Pr. 59(e) may be granted only to correct manifest errors or present newly discovered (but previously undiscoverable) evidence. Anderson v. United Auto Workers, 738 F.Supp. 441, 442 (D.Kan.1990). Any such request or motion shall not exceed five, double-spaced pages, shall not reiterate evidence or repeat arguments previously made to the court in the pleadings already on file, and shall be filed on or before December 30, 2004. Any response to such a motion is subject to the same limitations, and shall not be filed on or after January 14, 2005. No reply is permitted.
The court finds that the following facts are established as uncontroverted. To the extent that the requested findings of fact are not included herein, it is because the requested findings are irrelevant, not supported in the evidence, or are not presented in the manner set forth under D.Kan.R. 56.1.
A. Findings of Fact
Plaintiff Vulcan Materials Company is based in Birmingham, Alabama. It operates chemical plants in Wichita, Kansas and Geismar, Louisiana. Vulcan produces chlorine, caustic soda, hydrochloric acid, chloroform, and other chemicals at its Wichita plant.
Defendant ATOFINA Chemicals (“Ato-fina”), formerly known as Elf Atoehem North America, Inc., is based in Philadelphia, Pennsylvania. Until June 2002, Ato-fina operated a chemical plant in Wichita, Kansas. Defendant ATOFINA S.A. (“Ato-fina France”) is a French corporation based in Paris, France.
The evidence is unclear as to the precise relationship between Atofina and Atofina France.
Defendants contend that the two corporations are merely affiliates, both owned by Total S.A. Atofina and Atofina France are both parts of Total’s Chemical Branch. However, cited authority (Atofina branch manager Bruno Estagnasie), asked if the defendant corporations, along with a third Elf Aquitaine, are “separate and distinct corporate entities,” responded, “I don’t know.” He testified that Atofina and Ato-fina France are “sister companies,” but also testified that “It’s complicated. I don’t feel at ease to answer this question.” There is evidence in the form of an affidavit from Héléne Moneeaux that the defendants are in fact sister companies under the general ownership of Total.
Atofina’s Wichita plant was the only place Atofina made R22. Atofina France owns an R-22 plant in France, and, through other affiliates, R-22 plants in Spain and China. Atofina France manufactures chloroform in France.
Before June of 2002, Atofina bought from Vulcan the chloroform it needed to make R-22. Atofina’s Wichita plant was physically adjacent to Vulcan’s Wichita plant, and was connected to Vulcan’s plant by a system of pipelines.
R-22 is a chemical generally used in North America as a refrigerant. It is also known as HCFC-22, F-22, Forane 22, and ehlorodifluoromethane. One component of R-22 is chloroform (also known as CFM and CHC13). R-22 is produced by chemically reacting chloroform and hydrofluroic acid.
Atofina had historically lost money producing R-22. It lost approximately two million dollars each year between 1990 and 1997. It gained a profit in 1998 and 1999, but lost money again in 2000, and forecast additional losses in 2001. Atofina’s total income from the Wichita plant in 1999 was approximately $4.7 million. Vulcan knew Atofina had accepted the risk of plant closure because it knew if Atofina decided to close its plant, Vulcan would have 12-months’ notice. Atofina wanted a twelvemonth notice provision in the 1999 Agreement to, if necessary, allow it to find an alternate source of chloroform supply. Atofina understood that if R-22 production stopped in Wichita, Vulcan would have to find new customers for the chemical products it manufactured in Wichita.
Occasionally, prior to the 1999 agreement which is at the heart of the present case, Atofina raised the possibility of closing its plant. Vulcan was told in 1998 that Atofina will “probably need to rationalize R-22 production somewhere in 3-5 years.” One employee of Vulcan testified that the company “had heard [from Atofina] the possibility of we’re going to shut it down if you don’t lower your price many, many, many times.” Notwithstanding these statements of potential closure, Vulcan and Atofina entered into a series of contracts for the sale of chloroform from Vulcan to Atofina. Prior to June 1, 1999, Atofina bought the chloroform needed for its R-22 manufacturing from Vulcan, pursuant to a June 1,1994 Chloroform and Muriatic Acid Sales Agreement. The 1994 Agreement had an initial five-year term, from June 1, 1994 to May 31,1999.
On September 1, 1999, the parties entered into a new Sales Agreement. Atofi-na’s negotiators for the 1999 Sales Agreement included Dave Thomas (Atofina’s Manager of Chemical Purchases) and Thomas Parrillo (Vice-President of Supply Chain). The initial term of the 1999 Agreement was for three years: from September 1, 1999 through August 31, 2002.
Section 2.2 of the 1999 Agreement provides:
The initial term of this Agreement shall extend for three (3) years after it becomes effective (“InitialTerm”). Thereafter, this Agreement shall renew automatically for successive twelve (12) calendar month periods (“Additional Term(s)”) unless the Agreement is terminated pursuant to the provisions of this Agreement. In . addition to the specific rights of termination provided herein, either party may terminate this Agreement after the Initial Term effective upon the expiration of twelve (12) months prior written notice mailed to the other party. The Initial Term and any Additional Terms shall sometimes be collectively referred to herein as the “Term.”
(1999 Agreement at 4).
Under Section 3.1 of the 1999 Agreement, Atofina was obligated to purchase its “entire requirements of chloroform” for the Wichita plant from Vulcan. (Id.) The same section provided that Vulcan was not required to deliver more than 5,000 tons of chloroform to Atofina “in any calendar month during the Term.” The 1999 Agreement required Atofina to provide Vulcan with estimates of its chloroform needs. It required Atofina to give an estimate of its monthly chloroform requirements for the next calendar year on or before November 1 of each year, and to provide updated forecasts by the eighth working day of the month preceding each upcoming month and quarter.
The 1999 Agreement set a base price of $480 per ton ($0.24 per pound) for chloroform. Vulcan could change the price for its chloroform, upon 30-days written notice, subject to certain limitations. After notification of a chloroform price change by Vulcan, Atofina was to calculate its average bulk equivalent R-22 price for the three-month period preceding Vulcan’s notice. (§ 4.1.1). If the price was less than $0.95/lb, Vulcan’s chloroform price could not exceed the lowest price Vulcan charged to any other domestic chloroform customer, excluding those customers who purchased chloroform solely for polymer production, on a net of freight and price rebate basis at Vulcan’s producing plant. (§ 4.1.2). The Agreement suspended the price limitations if Atofina’s imports of R-22 in any three month period exceeded its three-month average of imports in 1998 and if Atofina’s pipeline chloroform purchases from Vulcan were less than 8,500 tons for the same period. (§ 4.1.4).
The Agreement provided that it would be “enforced and otherwise governed in all respects by the laws of the State of Kansas” (1999 Agreement at 13, § 15.)
The 1999 Sales Agreement did not specify any minimum quantity of chloroform that Atofina was obligated to buy in any one year. It also did not limit Atofina to selling R-22 made only in Wichita; it could sell R-22 made at other plants.
Atofina President Mickey Lauchert knew when he signed the 1994 Agreement that it would run for an initial term of five years, and would renew automatically for another year until June 1, 2000, unless notice was given to Vulcan before June 1, 1998. The 1994 Agreement contained a provision identical to Section 2.2 of the 1999 Agreement, except that it contained a five-year Initial Term. Vulcan moved to terminate the 1994 Agreement at the end of its initial five-year term, by letter dated May 29, 1998. Vulcan’s letter noted that because of the May 29, 1998 notice, “under the provisions of this agreement it will expire on May 31, 1999.” (Pl.Ex. 6 at AT005836.)
Atofina’s Dave Thomas stated that the notice provision of the 1999 Agreement constitutes an “evergreen provision” by which the contract automatically renews for 12-month periods, unless terminated with twelve months advance notice. Thomas understood that, if a notice of termination under the 1999 Agreement was provided too late to prevent automatic renewal, the notice would effectively provide more than 12-months notice of termination.
In August 1999, Thomas told Vulcan, “I’m sure we will have to continue to keep each other advised of events in our respective markets that can have major impacts on our R-22 volumes and pricing.” An Atofina document indicates that that company understood that the price change mechanism (Section 4) of the 1999 Agreement would apply during any notice period following a decision by Atofina to shut down the Wichita plant.
The CDC, or Comité Direction Chimie, is the board of managers for the chemicals branch of the defendants’ business. In May 2001, the defendants produced a summary of the 1999 Agreement, in anticipation of the meeting between the CDC and Atofina’s General Manager of Fluorinated Products, Bruno. The summary stated that the 1999 Agreement had a contract term of “3 yrs Sep ’99 to Aug ’02, then Evergreen 12 month intervals.” (Pl.Ex. 11, Wichita Project at AT004574.) The summary also states: “Termination: 12 months notice, (Aug ’01 notice to terminate as of Aug ’02).” (Pl.Ex. 11, Wichita Project at AT004574.)
Defendants’ expert witness, Michael J. Clarke, understood that “because the Agreement between Atofina and Vulcan has a contractual 12-month notice of termination provision...,” any alleged damages should be addressed “through February 11, 2003, at the latest.” (Pl.Ex. 12, Clarke 11/10/03 Report at 12.) Clarke testified in his signed report that “the agreement also retained an automatic renewal of 12-month periods.... ” (Pl.Ex. 12, Clarke 11/10/03 Report at 5.)
On March 2, 2000, John Kevgas, Atofi-na’s Vice-President and General Manager of Fluorochemicals, distributed summaries of several Atofina contracts attached to a notice of an upcoming meeting. One of the summaries related to the Vulcan contract, and said that Atofina signed a chloroform agreement in September 1999 that contained a “12 month evergreen provision with 12 months cancellation notice.” (PI. Ex. 6 at AT023157.)
Atofina believes the 1999 Agreement was in existence and enforceable after closure of the plant in June 2002 until February 11, 2003.
On February 22, 2002, Vulcan’s in-house counsel offered Atofina an interpretation of the 1999 Agreement suggesting it terminated on February 11, 2003.
Internal Atofina documents show that an essential element of its policy regarding the Wichita plant was the price of chloroform. In August 1999, an Atofina memorandum emphasizes the importance it has on chloroform price:
I think we all recognize that the chloroform pricing has a significant impact on the cost structure for our R-22 refrigerant. We also acknowledge and thank Vulcan for the past support for chloroform pricing that allows us to sell R22 into a very competitive market.
(Pl.Ex. 6 at AT009494-9495.)
Thomas, one of Atofina’s executives negotiating the 1999 Agreement, testified:
As I think back to the events that led to [the 1999 Agreement], I believe it was centered around the pricing element, ... but there were discussions in 1998 and in ’99 about a new price mechanism for Chloroform. And I believe those were the primary drivers that led to the creation of this document.
(Pl.Ex. 8, Thomas 30(b)(6) Dep. at 27, 30.) Bruno Estagnasie testified:
We saw from the beginning that all of our problems in [R-]22 in North America were stemming from the high price of chloroform that Vulcan had us pay without any possibility of finding another supplier. The more we conducted the study, the more we progressed in the thinking, the more we analysed everything, the remediation costs and the logistical alternative and the possibility of having product at Honeywell, and the high fixed costs that we incurred at Wichita that couldn’t be decreased and so on, the more obvious it came to us to say that there was absolutely no solution with Vulcan.
(Pl.Ex. 5, Estagnasie dep. at 129.)
In his deposition, Estagnasie identified several problems with the profitability of the Wichita plant, including the nature of the American market, the relative small size of the Wichita plant, and as “[t]he main disadvantage,” chloroform and its “high cost.” (Id. at 44).
Estagnasie stated that Atofina had been trying to get a better chloroform price from Vulcan for “years,” and that Atofina had only two options to ensure greater profitability: either get Vulcan to lower its prices or shut down the plant and seek an alternative supply of chloroform (Id. at 79-81, 112-13.) He testified: “One scenario was to try to get very quickly a big improvement in the price of chloroform and lower fixed costs because the fixed costs are charged to us by Vulcan in Wichita ... if that was impossible, then we would have to find an alternative.” (Id. at 81).
The evidence shows that the price of chloroform was the single most significant fact driving the defendant’s actions. Other considerations were present. For example, the Wichita facility was a smaller, single-product facility, thereby resulting in higher fixed costs per unit than Atofina’s competitors. Estagnasie testified that he believed the Wichita plant was a problem because of the price of chloroform, the small size of the plant, and transportation costs from Wichita. Richard Kanter also noted the small size of the Wichita plant as one factor, in addition to the chloroform cost, in the plant’s lack of profitability. However, a uniform theme throughout the defendants’ decisions regarding the Wichita plant was the cost of chloroform associated with the Vulcan contract. Further, there is no evidence that would support a conclusion that the alternative factors identified by Atofinia were in any way discoveries of facts unknown at the time of the 1999 Sales Agreement.
Atofina’s attempts to negotiate price changes were noted by George Bittling-mayer in his report, which noted that (in addition to other proposals such as converting the Wichita plant to another product) “Atofina sought repeatedly to negotiate more favorable terms with Vulcan.” (Pl.Ex. 14, Bittlingmayer Report at 3.) According to Bittlingmayer, “[t]he resulting squeeze between the cost of the major input [chloroform] and the price of the output [R-22] was a leading cause of low profits and strained the relationship between Atofina and Vulcan.” (Id. at 19.) Bittlingmayer wrote: “Each cent paid per pound of chloroform resulted in extra annual plant costs of $800,000 dollars [sic]. Hence savings of a few cents could spell the difference between million dollar annual profits and million dollar annual losses.” (Id. at 18.) And Bittlingmayer stated that “savings that came from shifting production on purchases of R-22 to sites with lower chloroform costs” contributed to the savings Atofina associated with the Wichita shutdown. (Id. at 22.)
According to Atofina’s Mickey Lauchert, Atofina had told Vulcan many times “that if we can’t find a reasonable solution to our economics, the costs of raw materials, our fixed costs inevitably, we will have to take that plant down.” (Pl.Ex. 4, Lauchert Dep. at 300.) He testified that meetings with Vulcan regarding how Atofina could improve its profitability at Wichita “had been going on for a long, long time” and that “[w]e were always unhappy about the price of chloroform.” (Id. at 20, 246.) According to Lauchert, Atofina shut down the Wichita plant because it was losing money. (Id. at 409.)
Officials from Vulcan, Atofina, and Atofi-na France met in Paris in October 1999. Atofina identified chloroform pricing problems with Vulcan and stated “we either survive together or we die together!” (PI. Ex. 6 at AT023156.) Atofina France’s Es-tagnasie asked Vulcan “for a better chloroform price in Wichita,” and he noted that Wichita was Atofina’s most expensive plant, making it “a logical choice should we have to rationalize our production.” (PI. Ex. 6 at AT008602-8604.) Atofina attempted to get chloroform price concessions from Vulcan in 2000 to improve the economics of the Wichita operation, saying if it could not improve Wichita economics it would cease production at Wichita.
In Fall 2000, Atofina and Atofina France asked Vulcan to lower its chloroform price or enter into a product swapping arrangement. In September 2000, Atofina offered to discuss a new chloroform contract, asking, “Is Vulcan interested in selling chloroform to ATOFINA Chemicals at Wichita?,” and suggesting a global chloroform swap with Atofina France. (PLEx. 6 at AT008545.)
Atofina France’s Estagnasie prepared and presented a document titled “RMT Fluorochemicals” at the November 2000 RMT meeting. “RMT” is a French term that stands for “rendezvous midterm,” and is a business review. The November 2000 RMT presentation noted the impending rapid decrease in U.S. market after 2005. Estagnasie also wrote that a “return to profitability only depends on obtaining a big decrease of the chloroform price from VULCAN. The alternative is to shut down and to supply the U.S. packaged market from Europe and China, without any increased cost (extra logistics being compensated by cheaper chloroform cost).” (PLEx. 37 at AT004060.) The RMT proposed “initiate a ‘hard-ball’ negotiation with VULCAN at the soonest,” recommending generally negotiating “a loseAose situation is not a fair win/win deal.” (Pl. Ex. 37 at AT004064.) The RMT concluded: “Our preferred choice is to negotiate a deal with VULCAN which would grant ATOFINA a competitive chloroform price at Wichita (less than 21 ct/lb).... If this is not possible, then we would have to close Wichita.” (PLEx. 37 at AT004064.)
On December 11, 2000, Thomas told Vulcan that Atofina was “making strategic decisions with respect to its sourcing for the North American market,” and that Atofina’s objective was chloroform at $0.20/lb. beginning January 2001. (PLEx. 6 at AT009487-88.) Vulcan responded by giving Atofina a chloroform price of $0.23/ lb. Previously, Vulcan’s chloroform price to Atofina had been $0.26/lb.
An Atofina document from early 2001 recognized that Vulcan was “standing firm at $.23/pound of chloroform.” (Pi’s Ex. 6 at AT005244-45.) Another document from the same general time recognizes that ‘Vulcan has initiated a review to determine potential manufacturing savings (30 days).” (PLEx. 6 at AT005244.) A third reflects Lauchert’s handwritten notes that Vulcan’s review of manufacturing savings would conclude at the “End Feb 2001.” (PLEx. 6 at AT005244.) A fourth identifies issues having to do with Vulcan: “Accept or continue to pressure Vulcan: Indirect Pressures [or] Tell Vulcan we are shutting down.” (PLEx. 6 at AT005245.) And a fifth asks, “Are we willing to play poker with Vulcan?” (PLEx. 6 at AT005245.)
In early 2001, the management of Atofi-na France changed its R-22 business to a global approach. Estagnasie was appointed global General Manager for the refrigerants business beginning January 2001. His new responsibilities as global General Manager included management of the North American R-22 business. After this appointment, Estagnasie saw himself as responsible for improving the results in the company’s R-22 business in North America. As a part of his new responsibilities, Estagnasie undertook a new study of the competitive position of the Wichita plant in 2001.
Until January 1, 2001, Atofina had profit and loss responsibility for North American R-22 production. Atofina’s change in management shifted responsibility for the company’s business to the Division of Fluorochemicals and Oxygenated Products (“DFO”) in France. Atofina France’s Daniel Laure was the head of the DFO in 2001.
Atofina’s criticism of Vulcan’s chloroform pricing had been going on since 1994, but became more focused after the management change in 2001. According to Lauchert, this focus increased because Laure and Estagnasie, the “most vocal critics” of the Wichita production, were now directly responsible for the business. According to Kanter, “there was pressure within the company to improve the profitability of R-22 at the earliest possible time.” Dave Thomas understood that Es-tagnasie’s personal opinion on the Wichita plant was that it “was the highest cost operation and that it was one that would be shut down.”
Atofina’s United States employees were not enthusiastic about closing the Wichita plant, and some rigorously opposed it.
On January 5, 2001, Estagnasie told Atofina’s Business Manager, Richard Kan-ter, that despite a recent decrease in Vulcan’s chloroform price, Atofina was still far from the additional $0.03/lb. price reduction it wanted to achieve.
Atofina’s Tom Parrillo, Mickey Lauc-hert, and Marshall Turner, and Atofina France’s Daniel Laure met in Philadelphia on January 23, 2001. In minutes of the meeting, it was reported that the “action plan” included a plan to “study the economics of Wichita shutdown” and “in the decision we have to make, we will be driven by the economics, and chloroform price is a key factor.” (PLEx. 19 at AF000227.) The minutes state that defendants had “accepted and we use the 23 cts/lb price until mid-2001,” and that ‘Vulcan will be back to us end of February with a review of potential manufacturing savings in case they would operate our plant.” (PLEx. 19 at AF000226.)
At some point in late 2000 or early 2001, Atofina began monthly imports of R-22 from Atofina France.
During early 2001, Atofina conducted a study of the worldwide logistical optimization of R-22 supply, including the role of the Wichita plant. Persons both in France and North America contributed to the study.
In March 2001, Estagnasie began negotiating with Honeywell. In April, he indicated to Lee Diestelow, Atofina’s Demand Manager, that “[w]e should understand the breakeven point relative to the chloroform price at Wichita.” (Pl.Ex. 6 at AT007651; Pl.Ex. 2.)
Diestelow understood that if the Wichita plant could be returned to profitability, it would continue operating. (Pl.Ex. 23, Diestelow dep. at 55-56.) He also knew Estagnasie was engaged in hardball chloroform price negotiations with Vulcan. He understood that Vulcan had not made price concessions significant enough to prevent the Wichita shutdown.
On April 12, 2001, Scott Schwartzat Ato-fina asked Atofina France to examine the “Current Case” to determine whether Wichita’s operating costs could be reduced before considering the “Shutdown Case,” but Atofina France officials were less interested in maintaining the Wichita plant than Atofina officials. (Pl.Ex. 6 at AT004151.) Estagnasie testified that by May 2001, he was “working on an alternative” to continuing price negotiations with Vulcan. He testified that part of his June 19, 2001 presentation to the CDC was a recommended chloroform “swap” with Dow: “It’s a swap. Dow was shipping chloroform to Europe. Atofina [France] would have shipped chloroform to the United States. Both companies were paying a lot of money in shipping costs. The swap is just the saving of costs for both companies.”
In May 2001, Rick Kanter, Atofina’s Business Manager for Refrigerants, responded to an e-mail from Atofina’s Mickey Lauchert, a regional group President. Kanter set forth an alternative case in the event that negotiations with Vulcan are unsuccessful and therefore we must close the plant. In order to have a productive negotiation with Vulcan, we need to know what kind of a result we could accept from Vulcan. Is it 18 cents? 20 cents? No one knows. That is the purpose of this analysis, to determine what chloroform price (and other terms) we can accept, and where we should walk away and proceed with the shutdown. (Pl.Ex. 6 at AT007671.)
On May 22, 2001, a letter was drafted to terminate the 1999 Agreement. The draft termination letter is substantially similar to the letter sent to Vulcan in February 2002. The letter was prepared before the June 19 CDC meeting, in case the decision to shut down was made and the letter needed to be sent.
As early as May 2001, Atofina was discussing whether or not to notify Vulcan of its intentions.
On June 19, 2001, Atofina France officials made a presentation prepared by Es-tagnasie, “Timing for Wichita Shutdown,” to the CDC. Jean-Pierre Seewus, President and CEO of Atofina also attended the meeting. The presentation noted there was excess capacity in R-22 production, arising from ozone legislation which was phasing out emissive demand in the developed countries, along with mandated energy efficiencies in North America. The report noted that “[d]emand for R22 is expected to decrease in 2008 and progressively switch to HFC 410A,” another refrigerant. The report also noted that the growth in polymer use of R-22 — R-22 is a feedstock for polymer production, a non-emissive use — will “hardly compensate the decline of the demand for emis-sive uses.” It predicted generally that demand would grow by about 1% per year from 2000 to 2010.
With respect to Atofina’s R-22 production, the presentation stated that “Wichita is our less competitive plant (high chloroform price and high fixed costs).” The most competitive plant was the Pierre-Benite plant in France. The presentation noted the production costs per kilogram for R-22 at these plants, as well as two competitors:
Dupont (Louisville) $1.19
Atofina Pierre-Benite 1.29
Allied-Honeywell 1.33
Atofina Wichita 1.51
And the presentation stated that the costs of transporting R-22 to North American customers would be cheaper from Pierre-Benite ($1.93 per kilogram) than from Wichita ($2.28 per kilogram). The presentation stated that shutting down the Wichita plant could generate net savings of $3.4 million.
The presentation also noted that Atofina had not placed itself to enter the non-emissive, polymer market, and that the company “does not have polymer downstream and because most polymer producers are also producing [R-]22, it has to sell its volumes on the declining emissive market.” The presentation stated that Atofina “has a case to rationalize its production worldwide,” and stated:
We recommend the shutdown of Wichita under the following scenario:
! Give simultaneous notice of both service and chloroform contracts immediately
! Negotiate a price of chloroform valid until the end of 2002 of 19ct/lb (- 88$/T). This will break even with a shutdown of the plant end of 2001.
! Shutdown the plant at the latest on December 31st 2002
! This contractual date enables to minimize the penaltyes [sic] to be paid to Vulcan[.] It gives us 18 months to prepare for the shutdown to fully optimize the alternatives, and to locally produce [R-]22 during the 2002 season.
! If Vulcan refuse to reduce its chloroform price, give the 150 days notice after having finalized the Honeywell contract.
(Pl.Ex. 20, at AT004023.)
Estagnasie testified that the conclusions in the presentation arose from a combination of factors, including the price of chloroform, but also “the possibility of purchasing 22 at a relatively cheaper price in North America, the logistical savings of shipping disposable [containers of R-22] from Europe, [and] the overall logistical optimization.” He also testified that the reason for the recommendation for 150 days’ notice “was to try, if possible, to match the economics that [defendants] would get in closing Wichita earlier by closing later on by getting a relief in chloroform that could match the economics of closing earlier.” (Pl.Ex. 5, Estagnasie dep. at 153-54.) The Action Plan associated with the presentation recommended giving notice to Vulcan terminating the 1999 Agreement by June 30, 2001, and “Evaluate the interest of VULCAN ultimate proposal (if any) on the shutdown date [by July 31, 2001].” (Pl.Ex. 20, at AT004024.)
Laure had to secure approval from the CDC before closing the plant. The CDC did not approve the recommended shutdown of the Wichita facility at the June meeting. Atofina negotiated with Dow and Honeywell the terms under which Ato-fina might obtain R-22 from those companies.
The negotiations continued through the summer and fall of 2001. On October 19, 2001, Atofina gave Vulcan its forecast of its chloroform requirements for 2002 pursuant to the 1999 Sales Agreement. John Warren, the operations manager at the Wichita plant, prepared the forecast. Warren testified that he did not know what Vulcan may have used the forecasts for, if anything.
The CDC decided in December, 2001 not to give Vulcan notice terminating the 1999 Agreement, until replacement supply contracts with Honeywell and DuPont were signed. The CDC withheld final approval of Estagnasie’s shutdown plan, because it wanted to see if Estagnasie could get a better deal with Honeywell. It also directed Estagnasie to continue his study of the economics of the Wichita plant.
The CDC’s December 18, 2001 meeting took place at 2:45 p.m. in Paris, France. The presentation on the Wichita closure to the CDC took about 15 minutes. The presentation at the meeting outlined the highlights of the negotiation results: the tolling arrangement with Honeywell had been finalized and a draft contract was virtually ready for signature; the purchase agreement with DuPont had been concluded and a draft contract had been sent to DuPont.
The presentation compared the costs of chloroform produced at Wichita (23