Full opinion text
OPINION WALKER, District Judge. INTRODUCTION Apex Oil Company brings this action against numerous defendants alleging antitrust conspiracy, Commodity Exchange Act violations, and fraud. The defendants are a number of companies and individuals, all of whom were participants in February 1982 in the futures market for No. 2 heating oil conducted through the New York Mercantile Exchange (the “Exchange”). Knowledge of the players in this case is critical. Plaintiff Apex Oil Company (“Apex”) is a privately owned trader, refiner, and retailer of oil based in St. Louis. By uneasy convention, the defendants have been divided into two groups: The so-called “long defendants” include companies holding long positions in February 1982 heating oil contracts on the Exchange, their parent corporations, and brokers representing some of the companies. They are: 1. Joseph DiMauro, a broker in both the commodity futures market and the cash, or “wet,” market for heating oil. 2. Triad Petroleum, Inc. {“Triad, ”), Di-Mauro’s brokerage firm for wet market oil transactions. 3. TIC Commodities, Inc. {“TIC”), Di-Mauro’s futures commission merchant firm, or brokerage firm for futures market oil transactions. 4. The Coastal Corporation, Coastal States Marketing, Inc., Belcher Oil Company, The Belcher Company of New York, Inc., Belcher New Jersey, Inc., and Belcher New England, Inc. (collectively “Belcher”). 5. Stinnes Corporation and Stinnes Interoil, Inc. (collectively “Stinnes”). 6. Eastern of New Jersey, Inc. {“Eastern”). 7. Northeast Petroleum Corporation and Northeast Petroleum Industries, Inc. (collectively “Northeast ”). 8. George E. Warren Corporation {“Warren”). 9. Former defendant Global Petroleum Corporation {“Global ”) will be referred to throughout. The so-called “exchange defendants” are the New York Mercantile Exchange itself and Julian Raber, vice chairman of the Exchange. While the facts and allegations require detailed exposition, all arise from the same occurrence. In February, 1982, Apex was a “short” in the futures market for No. 2 heating oil, that is, it had numerous contractual obligations to sell No. 2 oil through the Exchange. On the other side of the contractual equation were the “long” companies, those holding contracts to buy Apex’s No. 2 oil. In the middle were the exchange defendants, through whose offices these obligations were created, regulated, and ultimately resolved. The crux of the matter is that Apex did not have the oil in early February, 1982 when the defendant oil companies wanted it and accordingly claims it was obligated to purchase oil at artificially elevated prices to fulfill the contracts. After its unpleasant experience with this financial bind, Apex commenced this action, seeking damages on eight claims. The defendants have made six separate motions for summary judgment, which collectively address all claims by Apex. THE COMMODITY FUTURES MARKET A basic familiarity with the workings of the commodity futures market is an essential roadmap in this case. An excellent discussion on that score has been provided by the late Judge Friendly in Leist v. Simplot, 638 F.2d 283 (2d Cir.1980), aff'd sub nom. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982), upon which this Court cannot improve. A few highlights drawn from that discussion create a sufficient background here. A commodity futures contract is an executory contract for the purchase and sale of a particular commodity — No. 2 heating oil in this case. Everything about the contract is standardized except the price of the subject commodity, which is fixed by open outcry on the floor of the exchange at the time of contract formation. A single futures contract for No. 2 heating oil constitutes 1,000 barrels of oil at 42 gallons per barrel. The seller of a contract, called a “short,” commits to deliver the commodity at a future date. The buyer, called a “long,” binds himself on that date to accept delivery of the commodity and pay the price agreed upon at formation of the contract. Most contracts, however, do not result in actual delivery by a short to a long. In the common situation, where a short or a long does not wish delivery of the physical item to occur, he will “liquidate” his positions prior to the close of trading in a particular futures contract. In this case, where the subject commodity was heating oil slated for delivery in February 1982, trading in the contract closed on January 29, 1982. The liquidation of a contract before the close of trading lies at the heart of “futures trading.” Money is made or lost by a participant when he liquidates by forming an opposite contract for the same quantity of the commodity so that his obligations to deliver and receive offset each other. That is, a short who does not wish to deliver must enter into an equal number of contracts to buy the commodity, i.e., long contracts. A long who does not wish to accept delivery must buy short positions. Gains or losses are measured by the difference between the prices of the offsetting contracts. If the market price of a future has increased prior to the close of trading, a long will realize a profit upon liquidation, while a short will lose. If the price has declined, the short will profit and the long will lose. It should be remembered that futures trading is a classic zero-sum game. Since every contract must have two sides, a long and a short, each gain by a market participant is accompanied by an equal loss by another participant. In theory, there are two types of commodities customers: hedgers and speculators. The hedger is a trader with a parallel interest in the cash market for a commodity. He uses the futures market as a means of diminishing the risks faced in the cash market. While hedging is a complicated business, it may be generally grasped by imagining that the hedger is betting against his own cash market prospects by using the futures market. If he hopes to buy or sell a quantity of the cash commodity in the future, he will establish a position in the futures market which will be profitable if the price of the commodity moves in direction unfavorable to his cash market position. That way, losses in the cash market will be at least partially offset by gains in the futures market. A speculator, on the other hand, is one who, in theory, has no real stake in the cash market and simply hopes to profit by trading in futures contracts as one might by investing in the stock market. By investing, the speculator assumes and seeks to profit from risks the hedger is specifically seeking to avoid. The operation of a commodity futures market is characterized by several layers of professionals. A futures commission merchant, or broker, deals directly with the commodities customer. The broker communicates the customer’s orders to a clearing member, an organization or individual with membership in the exchange. The broker may also be a clearing member, in which case the intermediate step is absent. As will become evident, the broker also plays an active role should the customer wish to deliver or take delivery of the actual commodity. The clearing member then executes the order to buy or sell by way of a floor broker who stands on the actual floor of the exchange and makes contracts by open outcry and hand signals. An entity called a “clearing house,” of which each clearing member is a part, plays a crucial role in the entire process. The clearing house is the heart of the exchange and operates as a seller to all buyers and a buyer to all sellers, thus facilitating the interchangibility of contracts and the liquidation of positions. The presence of this entity means an investor who wishes to liquidate or take delivery can always find a willing partner through the clearing house. As discussed earlier, the most common outcome in the futures market is a liquidation of positions before the close of trading in a contract. Actual delivery of the commodity, however, does occur and that delivery process is critical to this case. In general, delivery is arranged when a short and a long each notify the exchange that they stand to give or take the possession of the subject commodity and not liquidate. When this occurs, the clearing house matches delivering shorts with accepting longs. As will be shown below, however, the matching details of place, method, and timing of delivery and any default or delinquency penalties are entirely the creature of the exchange’s rules. If the holder of a contract fails to liquidate by the close of trading, delivery under the exchange rules may yet be avoided by agreement between the parties to “exchange futures for product” or an EFP. In such a transaction, the delivery obligation under the exchange contract is superseded by a new contract providing for the short to deliver product on the wet market. FACTUAL BACKGROUND A detailed discussion of the facts will be included in the analysis of evidence at issue on each motion for summary judgment. A basic outline of the undisputed facts, however, will serve as a useful background for the evidentiary maze that follows. The last day of trading on the Exchange for the February 1982 contract in No. 2 heating oil was Friday, January 29. Under the Exchange rules, all contracts not intended for delivery or EFP resolution had to be liquidated by the close of trading on that day. By the end of January 29, Apex held a short — i.e., a seller’s — unliquidated position on 4,378 contracts. Since each contract represents 1,000 barrels at 42 gallons per barrel, Apex was obligated on its contracts to deliver 183,876,000 gallons of heating oil in February 1982. By the close of trading that day, the other side of the contract picture had also crystallized. While there were 4,906 total contracts open and designated for delivery, 1,945 of those were held on the long side by six oil companies alleged by Apex to be wrongdoers. On January 29, 1982, the six held the following number of long contracts: Northeast 748 Warren 170 Belcher 315 Stinnes 300 Eastern 50 Global 362 On Monday, February 1, 1982, Goldman Sachs & Co. (“Goldman”), Apex’s clearing member, submitted to the Exchange a “Delivery Notice for Petroleum Products Futures” for its short contracts. Under the rules of the Exchange, the short was obligated to select a delivery site in New York Harbor for its contracts upon submission of the Delivery Notice. Apex chose the GATX terminal in Carteret, New Jersey as the delivery site for 4,281 of its 4,378 contracts. The remaining 97 contracts were designated for delivery at the B.P. terminal at Tremley Point, New Jersey. Also on Monday, February 1, pursuant to the rules, the clearing members for the longs submitted the required “Notice of Intention to Accept Petroleum Products Futures.” As usual, the clearing house operated to match receiving longs with delivering shorts and, on February 2, the Exchange issued Allocation Notices matching up longs and shorts for delivery. Apex was assigned to deliver the full amount due to each of the six longs, except for fifteen of Warren’s contracts. Under the Exchange rules, which were incorporated into each contract, a long was obligated between the second and fifth business day of the delivery month to designate the date and method of delivery. Delivery was permitted by barge, tanker, truck, pipeline, intra-facility transfer, inter-facility transfer, or book transfer. Intra- and inter-facility transfers are oil pump-overs between tanks at one facility and more than one facility, respectively. Book transfer under the rules, commonly referred to as inventory transfer, is accomplished “by transfer of title to the buyer without physical movement of product.” The parties also employ the term “book transfer” to mean an accounting method by which companies holding mutual delivery obligations extinguish those obligations on their books without any actual transfer of title or oil. The Court will adopt the parties’ practice and use “book transfer” to mean the accounting mechanism for extinguishing obligations; “inventory transfer” will connote transfer of title without movement of oil. The nomination for each contract had to be delivered to the clearing house by no later than 4:30 p.m. on the fifth business day of the delivery month. In this case, the deadline was Friday, February 5, 1982. Under the rules of the Exchange, a long could designate for delivery any day between the beginning of the first calendar day after the fifth business day of the month and the calendar day before the last business day of the month. In this case, that meant the earliest day on which delivery could be demanded was Saturday, February 6. A short was obligated to deliver on the designated delivery day and as soon as the designated barge or tanker reported readiness to load or as soon as the buyer reported the transfer facility or truck ready to accept the product. Apex contends the long defendants, with the aid of broker DiMauro, agreed unlawfully during the first days of February to nominate their contracts for delivery in the first three delivery days of February, that is, February 6, 7, and 8. While there is a sharp dispute as to whether the defendant longs agreed to do so, there is no dispute that they in fact did nominate a large number of their contracts for delivery on the first few days. A chronology of those nominations is as follows: February 2 — Global nominated to take 51 of its contracts by barge on the morning of February 6 and 23 by barge on February 7. —Belcher nominated to take all 315 of its contracts by barge at 12:01 a.m. on February 6. —Northeast nominated to take 200 contracts by tanker at 8:00 a.m. on February 8, 1986. —Warren nominated all 155 of its Apex-matched contracts for February 6. February 3 — Northeast nominated 75 contracts for barge receipt at 6:00 p.m. on February 6. —Northeast nominated three separate barge loadings of 70 contracts each for 2:00 p.m. on February 6, noon on February 8, and noon on February 10. —Northeast nominated 75 contracts for barge receipt at 6:00 p.m. on February 9. —Northeast nominated to take 75 contracts by barge on February 10. —Northeast nominated to take 75 contracts by barge at 6:00 p.m. on February 12. —Global nominated to take 25 contracts by barge at 6:00 a.m. on February 6. February 4 — Stinnes nominated to take its 300 contracts by inventory transfer on February 6. February 5 — Eastern nominated to take all 50 of its contracts by inventory transfer on February 6. —Global, altering nominations previously made but not listed above, nominated to take 111 contracts by book transfer on February 6. —Global nominated an additional 25 contracts for inventory transfer on February 6. —Northeast nominated to take 13 contracts by book transfer and 25 contracts by inventory transfer on February 10. On Wednesday, February 3, Jeffrey At-kin, a member of the Exchange and a floor broker representing long interests, stated on the floor of the Exchange that Apex would be unable to make delivery. The Control Committee of the Exchange was convened that same day to hear Atkin’s statements. The Control Committee is a body charged by the exchange by-laws with the “endeavor to correct any circumstances which interfere with or might interfere with the normal functioning of the market.” It investigates market problems and attempts to resolve them by informal discussions, or “jawboning,” with members of the Exchange. The minutes of the February 3 committee meeting reflect that Atkin said “he had learned from industry sources that Apex did not have oil to deliver to his customers.” That same day, the Control Committee contacted Apex’s clearing member, Goldman, and requested and received assurances that Apex had oil to deliver at GATX at the times requested by the longs. On February 4, Goldman told the committee that Apex would make timely delivery using 750 contracts coming from Amoco and another 400 owned by or owed to Apex presently at GATX. On February 5, however, Goldman informed the Control Committee that Apex’s situation was different than previously represented. Apex did not have the necessary oil available at GATX. The 750 Amoco contracts would not be available for delivery to GATX on February 6, 7, or 8. In fact, there was a negligible amount of oil available for delivery at GATX on February 6. During February 4 and 5, the Control Committee, under the leadership of acting committee chairman and defendant Julian Raber, spoke to the clearing members representing holders of long positions in February. The clearing members were asked to urge their customers to agree to change delivery dates and sites. By the end of the day on February 5, all contracts slated for delivery on February 6 had been resolved with the exception of Stinnes’ 300 contract nomination. In the late evening on February 5, in an effort to resolve the remaining contracts under this nomination, Raber met privately with DiMauro of TIC in the “Market Bar” restaurant at the World Trade Center. Both men testified that Raber urged DiMauro to negotiate with Apex to resolve the contracts and avert a crisis. Eventually, all the delivery obligations were satisfied by EFP or delivery and Apex did not default. The resolution of this difficult situation, however, is the basis for Apex’s claims. Apex claims that the long defendants conspired, (with the conspiratorial acquiescence of the Exchange and Raber), manipulated, and fraudulently insisted on delivery in the first few delivery days of February. In addition, it claims that Raber and the Exchange violated their statutory duties by failing to remedy the unlawful position in which Apex was placed. As a result, Apex alleges that it was forced to meet its delivery obligations by purchasing artificially high-priced oil on the cash market and from the longs themselves. For example, while the February contract for No. 2 oil closed at a price of 89.7 cents per gallon, Apex alleges that it had to purchase 500,000 barrels of oil from Northeast at 96.25 cents per gallon and then transfer the product back to that company in satisfaction of its futures contracts with Northeast. Also on February 5, Apex claims it purchased 362,000 barrels from Global at 95 cents per gallon and transferred the oil back to Global to resolve its February contracts with that company. Additionally, Apex alleges it paid 97.5 cents per gallon for oil from Stinnes and Eastern which was then delivered back to those companies in resolution of the February contracts. In short, Apex believes that it was forced to buy into the “wet market” at artificially high prices as a result of the fraud, conspiracy, and manipulation by the various defendants and that the exchange defendants failed to remedy the unlawful situation by permitting deferred delivery. It is this unhappy series of events which gives rise to the eight claims asserted in the amended complaint to which we now turn. THE ALLEGATIONS (1) Antitrust The first four claims for relief allege violations of the Sherman Act, 15 U.S.C. § 1 et seq. (“the Act”). The first three allege violations of Section 1 of the Act; the last involves Section 2. All four seek treble damages under the Act. (a) Claim I alleges that the long defendants and the exchange defendants conspired to nominate for early delivery of the oil due the longs on their futures contracts. (b) Claim II alleges that the long defendants conspired not to deal with Apex and refused to sell or make available No. 2 oil and as a result created an artificially high price for the oil in February 1982. (c) Claim III alleges that the long defendants conspired to limit Apex’s access to sources of No. 2 oil in February 1982 and as a result created an artificially high price for the oil. (d) Claim IV alleges that the long defendants conspired to monopolize the market for deliverable No. 2 heating oil in early February 1982. (2) Commodities Manipulation Claim V alleges all defendants violated Sections 9(b) and 13(a) of the Commodity Exchange Act, 7 U.S.C. §§ 13(b), 13e(a), both by manipulating the price for No. 2 oil on the Exchange in February 1982 and by participating in the spreading of false reports about Apex. (These claims have been abandoned as to the exchange defendants. See discussion, infra). (3) Fraud (a) Claim VI alleges fraud by the long defendants under Section 4b of the Commodity Exchange Act. (b) Claim VIII alleges common law fraud by the long defendants. (4) Regulatory Failures Claim VII alleges the exchange defendants violated the Commodity Exchange Act and rules promulgated by the Commodity Futures Trading Commission by failing to properly regulate the trading and delivery of No. 2 heating oil under exchange contracts in February 1982. After over three years of discovery in this fact-intensive case, including more than 120 depositions and the production of mountains of documents, the defendants have made summary judgment motions which collectively address all claims. The motions have been extensively briefed in support and opposition and argued orally at great length. ANTITRUST AND THE LONG DEFENDANTS: CLAIMS I-IV (1) Introduction Section 1 of the Sherman Act provides: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal ... 26 Stat. 209, as amended, 15 U.S.C. § 1. Section 2 of the Act provides: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor ... 26 Stat. 209, as amended, 15 U.S.C. § 2. The defendants have narrowly addressed their summary judgment motion on the four antitrust claims to the question of conspiracy. Without conceding that a conspiracy would be per se unlawful in the context of this case, the defendants contend there is no material issue of fact concerning the allegations that: —all defendants conspired to demand delivery of the No. 2 oil in early February 1982; —the long defendants conspired to limit Apex’s access to No. 2 oil; —the long defendants conspired to fix the price of No. 2 oil; and —the long defendants conspired to monopolize the market for No. 2 oil in early February 1982. In short, the defendants argue there is no triable issue of fact as to whether any conspiracy existed with respect to the February 1982 heating oil futures contracts. (2) Summary Judgment Standard Under Fed.R.Civ.P. 56(c) the movant on a summary judgment motion bears the burden of demonstrating the absence of a genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). Once the movant has carried this burden, the non-moving party must come forward with “specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). The non-movant must “do more than simply show that there is a metaphysical doubt as to the material facts.” Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation, — U.S. -, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Where the record could not lead a rational trier of fact to find for the non-movant, “no genuine issue for trial” exists. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 1592, 20 L.Ed.2d 569 (1968). The Supreme Court’s recent decision in Matsushita explains the standard for summary judgment in the context of an antitrust conspiracy and details the method by which a district court should examine the voluminous record in search of a “genuine issue for trial.” While some controversy may have existed prior to Matsushita concerning the proper standard for horizontal conspiracy cases such as this one, the first sentence of Justice Powell’s opinion leaves no doubt as to that case’s broad application: “This case requires that we again consider the standard district courts must apply when deciding whether to grant summary judgment in an antitrust conspiracy case.” Id. 106 S.Ct. at 1351. The teaching of Matsushita and the Court’s earlier decisions in Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984) and Cities Service is that summary judgment is available in the context of a large antitrust conspiracy case. In fact, the authorities indicate that the nature of such a case demands that the district court, in considering summary judgment, give searching scrutiny to the inferences available from the typically ambiguous mass of evidence. In Matsushita, the district court had been faced with a summary judgment motion in an action that had been through years of discovery and involved twenty-one co-defendant corporations from the Japanese electronics industry. The trial court found that the admissible evidence did not raise a genuine issue of material fact as to the existence of the alleged conspiracy. 106 S.Ct. at 1352. The Third Circuit reversed the grant of summary judgment, holding that, based on inferences from the admissible evidence, “a reasonable factfinder could find a conspiracy ...” Id. at 1353. In reaching that conclusion, however, the Third Circuit “apparently did not consider whether it was as plausible to conclude that petitioners’ ... behavior was independent and not conspiratorial.” Id. The Supreme Court held that the Third Circuit had applied the wrong standard. It concluded that the appeals court should have been more skeptical in its treatment of inferences drawn from the evidence of conspiracy in an antitrust case because “antitrust law limits the range of permissible inferences from ambiguous evidence ...” The Court reiterated its earlier holding in Monsanto that “conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy.” Id. at 1357 (citing Monsanto, 465 U.S. at 764, 104 S.Ct. at 1471). Building upon Monsanto, a case which involved an alleged vertical price-fixing conspiracy, the Court promulgated a general rule for all antitrust conspiracy cases: To survive a motion for summary judgment or for a directed verdict, a plaintiff seeking damages for a violation of § 1 must present evidence “that tends to exclude the possibility” that the alleged conspirators acted independently [citing Monsanto ]. Respondents in this case, in other words, must show that the inference of conspiracy is reasonable in light of the competing inferences of independent action ... 106 S.Ct. at 1357. Matsushita involved allegations that the defendant Japanese electronics manufacturers and distributors had violated Section 1 of the Sherman Act by “dumping” products in the United States market and engaging in concerted “predatory pricing” in an effort to dominate the American market for electronics products with a view to subsequently raising prices. The petitioners in Matsushita argued that in light of the evidence’s ambiguity, the absence of any rational motive to engage in predatory pricing, and the fact that the subsequently higher prices necessary to offset the predatory pricing losses had not occurred after twenty years, no trier of fact could reasonably conclude that the conspiracy existed. The Supreme Court agreed that since predatory pricing was economically nonsensical, the admissible evidence did not tend to exclude the competing inference of independent pro-competitive conduct. The Court reemphasized “that courts should not permit factfinders to infer conspiracies when such inferences are implausible, because the effect of such practices is often to deter pro-competitive conduct ... [Mistaken inferences in cases such as this one are especially costly, because they chill the very conduct the antitrust laws are designed to protect.” Id. at 1360 (citations omitted). In this case, Apex has argued, in effect, that Matsushita cannot mean what it seems to say because the Court failed to overrule its earlier decision in Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). In Poller, the Court considered the propriety of summary judgment in the context of an antitrust conspiracy case involving an alleged attempt by CBS and an affiliate to dominate the UHF television market in Milwaukee, Wisconsin. In a fact-specific decision, the Court concluded that summary judgment was inappropriate: “We look at the record on summary judgment in the light most favorable to Poller, the party opposing the motion, and conclude that it should not have been granted.” Id. at 473, 82 S.Ct. at 491. In reversing the grant of summary judgment, the Court in Poller did employ language that appears contrary to the spirit of Matsushita: We believe that summary procedures should be used sparingly in complex antitrust litigation where motive and intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot. It is only when the witnesses are present and subject to cross-examination that their credibility and the weight to be given their testimony can be appraised. Trial by affidavit is no substitute for trial by jury which so long has been the hallmark of “even handed justice.” 368 U.S. at 473, 82 S.Ct. at 491 (footnote omitted). Plaintiff naturally relies heavily on this language to urge that summary judgment must be used sparingly in complex antitrust cases. However true that sentiment may have been in 1962, it is not true today. The Supreme Court’s recent opinions, particularly those in Monsanto and Matsushita, signal a marked change from the reticence to grant summary judgment of Poller, a change spurred, perhaps, by the onslaught of massive antitrust litigation over the last twenty years and the attendant stress on the administration of justice. It is also significant that Matsushita, in elucidating a standard which requires the district judge to carefully parse inferences before sending an antitrust case to a jury, does not mention Poller, a silence which speaks volumes about the Court’s intentions. The Supreme Court’s recent decisions in Anderson v. Liberty Lobby, Inc., — U.S. —, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) and Celotex Corporation v. Catrett, — U.S. —, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) offer further encouragement to a district court to utilize the summary judgment procedure. In Anderson, the Court decided that a district court, after assessing the proofs submitted by the non-movant plaintiff, should grant summary judgment in a libel case unless they met the “clear and convincing” standard required to prove malice. Citing Cities Service and Adickes, the Court made clear that a summary judgment motion is to be treated in the same manner as one for a directed verdict: The question is not whether there is any evidence supporting the non-movant but whether “there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party.” Id. — U.S. at —, 106 S.Ct. at 2511 (citation omitted). Thus, the Court reasoned, analysis in light of the appropriate evidentiary standard was required. In Celotex, the Court held that even where the movant’s proofs were meager and failed to negate the opponent’s claims, summary judgment should still be granted where the evidence of the non-movant was deficient as to a necessary element of the claim as to which the non-movant bore the burden of proof. In that situation, summary judgment should be granted “since a complete failure of proof concerning an essential element of the non-moving party’s case necessarily renders all other facts immaterial.” Id. — U.S. at —, 106 S.Ct. at 2553. The “showing” required for the summary judgment movant to meet its initial burden did not require actual evidence but merely a “pointing out to the district court that there is an absence of evidence to support the non-moving party’s case.” Id. — U.S. at —, 106 S.Ct. at 2554. Both Anderson and Celotex reaffirm the principle that the summary judgment procedure should be used to dispose of cases that should not be tried. As the Court stated in Celotex, Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed “to secure the just speedy and inexpensive determination of every action.” Id. — U.S. at —, 106 S.Ct. at 2555 (citations omitted). In Modem Home Institute, Inc. v. Hartford Accident and Indemnity Company, 513 F.2d 102, 110 (2d Cir.1975), Judge Mansfield wrote that summary judgment is particularly appropriate where an antitrust plaintiff has had ample opportunity “to obtain whatever proof of a conspiracy there may be in the hands of defendants.” In that situation, “[i]f the most that can be hoped for is the discrediting of defendants’ denials at trial, no question of material fact is presented.” Id. (citations omitted). More recently, the Seventh Circuit stressed the potentially important role of summary judgment in large antitrust cases: When a District Court has afforded the parties eight years of unlimited discovery, the parties have designated the evidence on which they will rely at trial, and the Court has had an opportunity to review the evidence and concludes that no reasonable jury could return a verdict for plaintiffs, judicial economy mandates that summary judgment be entered. A trial on such claims would serve only as a forum for impeachment and argument by counsel; not for the presentation of evidence. Weit v. Continental Illinois National Bank & Trust Co., 641 F.2d 457, 464 (7th Cir.1981) (citations omitted), cert. denied, 455 U.S. 988,102 S.Ct. 1610, 71 L.Ed.2d 847 (1982). In Matsushita, the Supreme Court made it clear that in an antitrust conspiracy case ambiguous evidence is to be treated skeptically on a motion for summary judgment, since an inference of unlawful conduct which arises only from ambiguous evidence will be of no use to the plaintiff at trial. In Monsanto, the Court warned that a standard which permitted trial on the basis of such inferences presented “a considerable danger” that pro-competitive conduct would be discouraged. 465 U.S. at 763,104 S.Ct. at 1470. The test enunciated in Matsushita also dictates that ambiguous evidence, because it is by definition incapable of a dominant inference, will not alone defeat a motion for summary judgment. In this case, defendants’ sworn denials are more than sufficient to shift the burden to plaintiff under Fed.R.Civ.P. 56(e). Weit, 641 F.2d at 461; see Celotex, — U.S. at —, 106 S.Ct. at 2553. Thus, to survive defendants’ motion for summary judgment, Apex must establish that there is a genuine issue of material fact as to whether defendants entered into a conspiracy. To make such a showing, Apex must offer significant probative evidence which tends to exclude the possibility that the alleged conspirators acted independently. Matsushita, 106 S.Ct. at 1357; Cities Service, 391 U.S. at 285, 88 S.Ct. at 1590-91; Weit, 641 F.2d at 462. (3) Parallel Conduct It is a “familiar doctrine that the existence of a conspiracy rarely can be established by direct proof but usually is inferred from acts, declarations and conduct of the alleged members of the unlawful combination.” Hunt v. Mobil Oil Corp., 465 F.Supp. 195, 223 (S.D.N.Y.1978) (citations omitted), aff'd mem. 610 F.2d 806 (2d Cir.1979). And, as discussed, Matsushita makes it the duty of the court on summary judgment to carefully examine circumstantial evidence and its concomitant ambiguities. Circumstantial evidence alone, however, can be sufficient to support a finding of an antitrust conspiracy. Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610 (1939). In fact, as in this case, parallel business behavior— “conscious parallelism” — is the type of circumstantial evidence often relied upon to support an allegation of conspiracy. As will be seen, Apex devotes substantial effort to the construction of an inference of conspiracy from proof of parallel conduct plus a wide range of alleged circumstantial evidence. While the parties have disputed the extent to which Apex relies on parallelism to infer conspiracy, it is obvious that that method of proof is at the heart of Apex’s attempt to survive this summary judgment motion. In Interstate Circuit, plaintiff alleged that a group of motion picture distributors had conspired to restrict later showings of newly distributed films in certain Texas cities, thus benefiting first-run theatres. There was no direct evidence in the case showing that the distributors had agreed with one another to impose the restrictions, but each distributor knew the others had considered the same proposal and knew the restrictions would work only if adhered to by all distributors. In addition, concerted action would create a likelihood of increased profits for each individual distributor which did not exist if less than all distributors imposed restrictions. On those facts, the Supreme Court held that an inference of agreement to restrain competition could reasonably be drawn. In Cities Service, the Court explained that the inference was possible in a case like Interstate Circuit because the parallel behavior there was accompanied by an identical motive: each conspirator stood to gain greatly from a cartel. On the other hand, independent action would rationally lead to economic losses since others could not be counted on to act in the same manner. The facts in Cities Service were markedly different and permitted no inference of conspiracy from circumstantial evidence of parallel action. In that case, plaintiff claimed that Cities Service Oil Co. (“Cities Service”) was part of a conspiracy among oil companies to refuse to buy plaintiff’s Iranian oil. The Court held that although Cities Service, like the other oil companies, had refused to deal, an inference of conspiracy did “not logically follow” because Cities Service could not possibly have benefited from a refusal to deal with the plaintiff; it made no economic sense for Cities Service to join the boycott. 391 U.S. at 287, 88 S.Ct. at 1591-92. Modem Home sheds further light on the use of parallel behavior in the antitrust context. There, the Second Circuit noted that “parallel behavior alone is not sufficient evidence of conspiracy” and the mere fact that all defendants acted in the same manner, even if each “knew the other defendant companies were doing like-wise, is not enough to defeat the motion for summary judgment.” 513 F.2d at 110 (citations omitted). The court explained that where the parallel conduct demonstrated by plaintiff was “consistent with independent competitive decisions ...[,] [additional facts or circumstances are needed to show that the decisions were interdependent and thus raise the inference of a tacit agreement ...” Id. On the other hand, “[ajctions against the apparent individual economic self-interest of the alleged conspirators may raise an inference of interdependent action,” as may actions which would make economic sense only if done in concert. Id. at 111. (4) The Evidence We now turn to the evidence offered by Apex to determine if it has met its burden of producing significant probative evidence of concerted behavior which tends to exclude any competing inference of independent action. In its opposition papers, Apex has attempted to divide its ease for conspiracy into direct and circumstantial evidence. In this regard, Apex contends it has offered sufficient direct evidence of a conspiracy among the defendants to defeat a motion for summary judgment without recourse to inferences from circumstantial or ambiguous proof. As will be seen below, however, the distinction between direct and circumstantial evidence is a murky one, particularly in the context of an alleged antitrust conspiracy where confessions and smoking guns are few and far between. As one court has noted: “It does not strain credulity that solemnized covenants to conspire are difficult to come by in any price fixing case.” In re Plywood Antitrust Litigation, 655 F.2d 627, 633 (5th Cir.1981), cert. dismissed sub nom. Weyerhaeuser v. Lyman Lamb, 462 U.S. 1125, 103 S.Ct. 3100, 77 L.Ed.2d 1358 (1983). It is also apparent from the organization of Apex’s memorandum in opposition that it intends to present an imposing overall picture of a conspiracy constructed from a myriad of evidentiary inferences. While any one piece might not reasonably infer conspiracy, Apex attempts to present a completed puzzle which will. The sheer volume and desultory organization of the facts presented makes dissection of Apex’s evidence an unenviable task, but it is an effort mandated by Matsushita. It must be remembered throughout this exercise that an assumption of conspiracy is not the starting point after which each event must be explained away by the defendants. Rather, it is Apex, now faced with unequivocal sworn denials, that must demonstrate that the evidence, construed in its favor, supplies an inference of conspiracy that is reasonable in light of any competing inference of independent conduct proffered by the defendants. In this regard, it is critical that Apex’s often bewildering effort to treat the “longs” as a monolith be resisted. Evidence must be presented which tends to establish that each defendant made a conscious commitment to concerted action. Moreover, inadmissible hearsay may not be considered and the co-conspirator exception to the hearsay rule may only be employed after Apex has offered evidence which independently tends to establish that the declarant under consideration is a member of the conspiracy. (a) “Direct” Evidence 1. Schultz Testimony. Apex offers the testimony of Jerry Schultz, a commodities trader in 1982 with Tipco Products, Inc., as direct evidence of conspiracy. Tipco held a long position in February contracts and had been matched for delivery with Apex. Schultz testified at his deposition that on the morning of Tuesday, February 2, he received a phone call from Joe DiMauro’s brother Sal, of defendant Triad. Triad was a broker who represented parties to wet market contracts. Apex characterizes Schultz’s testimony as stating that Sal Di-Mauro invited him to participate in a “short squeeze” of Apex. Apex contends Schultz was asked by Sal DiMauro to nominate Tipco’s contracts for early delivery and “came to understand the conspiring longs included Belcher, Northeast, Stinnes and Global.” Schultz testified that he was concerned about nominating early in the delivery month because he had no storage. In response, Sal DiMauro stated that storage arrangements could be worked out. When Schultz expressed uncertainty over the proper steps for nomination, Sal DiMauro had a representative of TIC, the commodities broker, call and explain the nomination process. When Schultz continued to have questions, he asked for a telex explaining the necessary steps. Instead, he received a copy of a telex addressed to Conticommodity Inc. (“Conti”), Tipco’s clearing member at the exchange, stating that Tipco wished to take delivery of all its February contracts on February 6, the first possible delivery date. Schultz testified that he never authorized the sending of the telex to Conti. Apex argues that this testimony is direct evidence that Sal DiMauro, brother of defendant Joe DiMauro, and an employee of defendant Triad, was recruiting co-conspirators to nominate early and demand delivery from Apex. Despite Apex’s effort, however, this testimony produces no direct evidence and, in fact, only serves to create extremely ambiguous circumstantial evidence of conspiracy. Apex has mischaracterized Schultz’s testimony. The full text of the Schultz deposition reveals that he was never asked to participate in a “short squeeze” and Di-Mauro never used those words in their conversation of February 2. Schultz said he did not think DiMauro was asking Tipco to nominate on the first delivery day and no one tried to pressure him to nominate on a particular day. Contrary to Apex’s phraseology, Schultz never “came to understand the conspiring longs included Belcher, Northeast, Stinnes and Global.” He merely testified that “at some point” he “came to realize” that those companies were among those holding long positions matched with Apex. All this, of course, was market information. Even if it may be concluded from Schultz’s testimony that he knew a “short squeeze” was taking place, it is entirely unclear what he intended that term to mean. Schultz’s use of the phrase is susceptible to two radically different meanings. It could import a conspiratorial effort to apply pressure on a short or it could mean a circumstance brought about by market forces upon a short’s failure to secure adequate supply. Thus, even if Schultz’s testimony is construed as Apex wishes, it does not support an inference of conspiracy which tends to exclude the inference of independent action; at best for Apex, it is ambiguous. The remainder of the circumstantial evidence gleaned from Schultz’s testimony by Apex is of little use. The offer of storage by DiMauro is probative of nothing; Di-Mauro was a broker for Tipco who attempted to facilitate transactions for his customers and stood to receive a fee for arranging storage. The telex sent to Conti on behalf of Tipco is ambiguous. It was a preliminary indication of a desire to nominate and expressly provided that “further delivery instructions” were intended. In light of the fact that Schultz had inquired as to the procedure for nomination, the telex at best presents competing inferences. Any inference of conspiracy drawn from it simply does not “tend to exclude” the competing inference that it was the work-product of an aggressive brokerage firm soliciting its client’s business. 2. Densieski Statements. Apex offers as direct evidence the statements of Tony Densieski, an employee of Texas Energy, another long matched with Apex in February 1982. Densieski’s statements are reported first by John Treat, Senior Vice-President of the Exchange, who described a telephone conversation with Densieski in February, during which Densieski allegedly reported that he had been recruited by unspecified “longs” to take advantage of Apex’s “difficult position.” Neither Densieski nor Texas Energy are alleged to be co-conspirators, so Densieski’s statements, as reported by Treat, are inadmissible hearsay. And even if this testimony were admissible, it is of minimal probative value. Considering the size of the open position on the Exchange in February contracts, the vague reference to “longs” is non-probative against the defendants. Other statements by Densieski are reported through the testimony of Paul Been-en, an employee of the Exchange, who testified that he too spoke to Densieski in February 1982. Not only is this testimony also inadmissible hearsay, but it does no more than state that “people” were taking “advantage” of Apex because it was “subject to market pressures and did have to go to the cash market to get oil that they eventually didn’t have in place____” This is merely evidence that Apex had difficulty meeting its obligations and that unspecified parties were doing unspecified things to take “advantage” of the situation. It should be noted here, and remembered throughout the discussion of Apex’s evidence, that there is nothing unlawful about “taking advantage” of Apex. The fact that a long, aware of Apex’s shortage of deliverable oil, chose to stand by its nomination and extract concessions from Apex at most shows the long and Apex are players in an aggressive market. Such conduct may not be nice, but it does not tend to establish an actionable antitrust violation. The issue at the heart of this discussion is whether two or more defendants together decided to exercise their rights and by so doing take advantage of Apex. Without proof of concerted action, the parallel assertion of legal rights provides no reasonable inference of conspiracy. Hunt v. Mobil Oil Corp., 465 F.Supp. 195, 229 (S.D.N.Y.1978), aff'd mem. 610 F.2d 806 (2d Cir.1979). 3. Bernstein Statements. Apex claims Jay Bernstein, an employee of Northville Caribbean, another long matched with Apex, presents direct evidence of the conspiracy. It says Bernstein knew “other longs were forcing Apex to deliver early and were offering Apex a buy out at very high prices____ Northville Caribbean, however, elected not to participate in the conspiracy.” This characterization of Bernstein’s testimony is absurd. He never spoke of a “conspiracy.” And even his actual testimony, while nonhearsay, is of dubious probative value because he referred only to “other longs” and said he had no personal knowledge of the longs’ actions. 4. Raber Statements. The fourth piece of so-called direct evidence presented by Apex is provided by the reported statements of defendant Julian Raber, vice chairman of the Exchange, and an alleged co-conspirator. Patricia Lyons, an employee of Apex, recorded that Raber told her on February 11, 1982 that he was aware there had been “a conspiracy to ‘squeeze the shorts.’ ” Paul Novelly, President of Apex, also testified that Raber later referred to the events of the first week of February as a “sting.” These statements are inadmissible hearsay. Fed.R.Evid. 801(d) provides: A statement is not hearsay if— (2) The statement is offered against a party and is ... (E) a statement by a coconspirator of a party during the course and in furtherance of the conspiracy. At oral argument, Apex’s counsel stated that it is Apex’s contention that the conspiracy began on February 1, 1982 and ended no later than February 8, 1982. Thus, these statements, even if construed in the manner urged by Apex, were made after the completion of any conspiracy and not “during the course of” a concerted effort. The statements also cannot be characterized as ones made “in furtherance” of the conspiratorial enterprise. It hardly furthers a conspiracy’s purposes for a co-conspirator to implicate his fellows. Lyons also never said Raber used the word “conspiracy”; that was a helpful gloss added by her. Moreover, the use of the term “sting” by Raber is as consistent with independent action as with a conspiracy. Finally, as discussed below, there is no independent evidence to establish that Raber was a member of the conspiracy and was therefore ever capable of making a “co-conspirator” statement. 5. Karam Statements. Apex’s fifth piece of “direct” evidence consists of the statements of Fred Karam, president of Karam Petroleum Company. Edwin Wahl, an Apex employee, testified that he spoke to Karam on the third or fourth day of February and Karam told him that defendant George E. Warren Corporation was “trying to blank you,” that is, trying to get Apex. First, this testimony is nonprobative. Karam actually told Wahl that “he had heard some rumors” that Warren was out to get Apex; he never said someone from Warren declared that company’s malicious intention. Even a direct statement of Warren’s animus towards Apex, however, would not be probative of a conspiracy to get Apex. As noted earlier, there is nothing illegal about aggressive, even nasty, competitive behavior standing alone. Second, even if Karam was reporting statements by Warren employees, the testimony of Wahl about Karam statements about Warren statements is double hearsay and inadmissible. 6. Atkin Statement. The final piece of evidence claimed to be direct by Apex is the statement of Jeffrey Atkin, the floor broker for several of the long defendants. Daniel Mancusi, head of the Exchange clearing house, testified that Atkin told the February 3 meeting of the Exchange’s Control Committee that “one or two of his customers were out to get Apex.” This statement, too, is inadmissible hearsay. Atkin is not an alleged co-conspirator. Even if the statement were admissible, it is of little probative value concerning the conduct of particular defendants. Mancusi’s report of Atkin’s statement does not specify what “customers” Atkin meant or what being “out to get” Apex entailed. Finally, the fact that “one or two” customers sought to “get” Apex is neither probative nor surprising. There is no serious dispute in this case that Apex was not well-liked. The market had moved sharply against the longs since the purchase of their contracts. They had purchased the February contracts at prices ranging from $1.0375 to $.9020 per gallon and the closing price for February oil was $.897 per gallon. During the market’s fall in late January they had been forced to expend substantial sums on margin payments. The longs believed that it was Apex’s massive expansion of its short position during January which depressed the futures price for No. 2 oil, forcing them to incur margin costs and allowing Apex to reap large liquidated and unliquidated (i.e., paper) profits. In fact, it is the defendants’ contention — and the subject of counterclaims — that Apex played a high-stakes game of expansion in short positions right up until the close of trading on January 29 in the hope that it could defer delivery over the month of February while the market price continued to drop, resulting in additional profits. There is little doubt that a long might have harbored ill will toward Apex resulting in a desire to “get Apex.” Nonetheless, such a desire, even if properly evidenced, would not necessitate an inference of conspiracy; it is as consistent with independent action. (b) Circumstantial Evidence 1. Late January Purchases. Apex claims that purchases of long positions by the defendants in late January without economic justification are evidence of a conspiracy. Apex does not contend the conspiracy existed at that point, but merely that the unsound purchases are evidence of the later formed conspiracy. On January 27, Belcher purchased 80 contracts and Warren purchased 158. On January 28, Northeast bought 331 contracts. Northeast: Apex asserts that the late January purchases support an inference of unlawful behavior by Northeast because prior to the establishment of these long positions, Northeast had severely cut back its scheduled receipt of oil in January and February from wet market suppliers. Belcher: Apex also claims that Belcher bought these late January contracts at a time when it was declining to accept deliveries from its oil suppliers. Warren: Apex argues that Warren’s late purchases are suspicious because none of the Warren witnesses could remember why they increased their February long position at the end of January. Without explicitly saying so, Apex apparently believes these are “parallel acts against interest” in January that support an inference of a conspiracy in early February. Putting aside the difficult question of how purchases made before the conspiracy are evidence of a common scheme, Apex’s presentation of the evidence omits one critical fact that makes an inference of independent action from the late January purchases overwhelming: The oil could be purchased at a lower price through a futures contract on the Exchange than it could under existing wet market supply contracts. The witnesses and documents of both Northeast and Belcher establish that they could get cheaper No. 2 heating oil through a February long contract than from their wet market suppliers. The witnesses from Warren simply could not recall what their rationale was at the time of purchase. This omission is probative of nothing, particularly in light of the reasons given by Northeast and Belcher for their late purchases. 2. Prior Practice. In support of a conspiratorial inference, Apex contends that the actions of the six longs in nominating for delivery in the first three delivery days of February and sticking to those nominations was contrary to prior practice in the industry. This deviation from normal practice, Apex implies, when combined with parallel conduct, supports a conspiratorial inference sufficient to survive this summary judgment motion. Apex argues that while the Exchange rules permitted a nomination for delivery on the first day after the fifth business day of the month, “it was the custom in the industry for the long and short to mutually work out the time, method and place of delivery.” Customarily, it contends, the parties would agree to resolve their contracts by EFP or book transfer, a solution which required no immediate physical product. Apex claims that despite being short on 2,048 contracts for December 1981 and 4,612 contracts for January 1982, it had no problem making delivery by mutual agreement. In fact, an Apex witness estimated that one-half to two-thirds of the deliveries made by Apex in prior months had been resolved by book transfer. Apex further argues that in contracts for delivery in December 1981 and January 1982 none of the long defendants concentrated their nominations early in the month and, in fact, spread them “reasonably throughout the month.” The long defendants do not dispute Apex’s characterization of their behavior as to December 1981 and January 1982 contracts. Instead they contend that Apex has inaccurately stated the custom of the industry and ignored basic economic incentives that distinguished their behavior in other months from that in February. The price at which a long purchased February heating oil in 1982 was fixed at the time of contract formation. Thus, by the time the delivery phase was reached at the close of trading on January 29, the longs had locked in a price for their oil. This situation is critical in light of two undisputed facts: the wet market price for No. 2 heating oil was falling in February 1982 and this was a predictable market response as the heating season drew to a close. The price of March futures, known in January and February, clearly signalled the resulting natural price drop. To a long holding a right to receive oil at a fixed price, the falling market created a powerful incentive to receive the oil and resell it before the market price fell too far. Apex’s own expert has testified that in a falling market oil is most valuable to a trader at the beginning of the month, before its price slides further. Common sense dictates that if one must take the oil at some point in a month, it is most desirable when it is most valuable. Thus, in a rising market month, a long would naturally seek to defer receipt and avoid storage costs while watching the value of his oil rise. In a falling market, however, a long would take the oil and incur storage costs in the hope that these costs would be more than offset by the early sale of the oil before its price fell too far below the price paid for it through the futures contract. For example, Warren estimates that every day that receipt of its 155,000 barrels from Apex was deferred represented a decline in resale value of over $10,000, or $300,000 per month. In contrast, storage of the oil would only cost between $31,000 and $46,-500 per month. The incentives speak for themselves. This analysis highlights the fallacy of Apex’s argument from prior behavior. It is undisputed that in the months of December 1981 and January 1982 — peak heating months — the price of heating oil was not falling, but rising. Thus, the economic forces at work in February differed from those in prior months and make comparison inappropriate. On the other hand, although the March 1982 contracts were subject to slightly different delivery rules, the pattern of nominations there is instructive. In that month, 41% of the long contracts were nominated for the first two delivery days, compared with 29% for February. Even if one controls for the fact that the March rules provided for a five day delivery “window” and the ultimate resolution of the 41% nominated is unknown, March 1982 contract delive