Evergreen Partnering Group, Inc. v. Pactiv Corp.

116 F. Supp. 3d 1, 2015 U.S. Dist. LEXIS 89839, 2015 WL 4205293
CourtDistrict Court, D. Massachusetts
DecidedJuly 10, 2015
DocketCivil Action No. 11-10807-RGS
StatusPublished
Cited by2 cases

This text of 116 F. Supp. 3d 1 (Evergreen Partnering Group, Inc. v. Pactiv Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Evergreen Partnering Group, Inc. v. Pactiv Corp., 116 F. Supp. 3d 1, 2015 U.S. Dist. LEXIS 89839, 2015 WL 4205293 (D. Mass. 2015).

Opinion

MEMORANDUM AND ORDER ON DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT

STEARNS, District Judge.

In this antitrust case, plaintiff Evergreen Partnering Group, Inc., seeks to prove that its business failed because of a conspiracy orchestrated by the defendant polystyrene converters and their trade association, the American Chemistry Council. This court granted a motion to dismiss Evergreen’s Complaint on June 7, 2012. Evergreen Partnering Grp., Inc. v. Pactiv Corp., 865 F.Supp.2d 133 (D.Mass.2012). The First Circuit reversed and remanded the case. Evergreen Partnering Grp., Inc. v. Pactiv Corp., 720 F.3d 33 (1st Cir.2013).1 Discovery now complete, before the court are defendants’ motions for summary judgment.2

BACKGROUND3

Evergreen was the brainchild of Michael Forrest. He envisioned a profitable busi[4]*4ness,model based on the conversion of polystyrene lunch trays into raw, food-grade resin, which could be used in the manufacture of “green” polystyrene products.4 To succeed, the model required a partnership- between Evergreen and at least one established polystyrene converter.

Evergreen’s Founding

In the early 1990s, Nova Chemicals began an experimental program in the Boston Public Schools (BPS), collecting polystyrene waste and converting it into recycled resin. DSOF ¶8; ESOF ¶¶7-8; Defs.’ Ex. 41 at 10779 (TAP in Action article, no date). Nova used the recycled resin itself or sold it to manufacturers of non-food related products. DSOF ,¶ 8. Forrest arranged with Nova to purchase its excess recycled resin. Id. ¶ 9; Defs.’ Ex. A at 48-49 (Forrest Dep.). By 2000, Nova had lost interest in the experiment and made a gift of the recycling equipment to BPS. DSOF ¶ 10. Nova also gave Forrest an exclusive license to purchase the recycled resin produced by BPS with the gifted equipment. Id.; ESOF ¶ 9; Defs.’ Ex. A at 45 (Forrest Dep.).

Evergreen was incorporated by Forrest in 2000. Forrest Aff. ¶ 9.5 Evergreen’s mission was to develop new product lines using the BPS resin, while promoting recycling in other school districts.6 In 2001, Evergreen received a “Non-Objection” letter from the Food and Drug Administration (FDA) sanctioning the use of “food-grade”, recycled resin harvested through “controlled source collection.” Defs.’ Ex, 5 (FDA Non-Objection letter). From 2003 to 2005, Evergreen paid Commodore Plastics to manufacture food trays from the BPS recycled resin, which it then sold [5]*5back to BPS.7 DSOF ¶ 16; ESOF ¶ 10; Defs.’ Ex. A at 77-78 (Forrest Dep.). The recycling program was later expanded to public schools in Providence, Rhode Island. DSOF ¶ 17; Defs.’ Ex. A at 75 (Forrest Dep.).

Evergreen’s Business Model

The experience in Boston and Provi-dente led Forrest to reimagine his business on a national scale. The national business model envisioned three revenue streams for Evergreen. First, the institution contributing polystyrene waste would pay Evergreen an “environmental' fee” for recycling the waste lunch trays.8 Seeond, the polystyrene converter would pay for the recycled resin Evergreen produced. And third, the converter would pay a commission or royalty to Evergreen on every sale of a product containing Evergreen’s resin.9 DSOF ¶ 13; Defs.’ Ex. A at 56 (Forrest Dep.). According to Evergreen’s expert witness,. Francesca. Scarito,- without all three of these revenue streams, “[Evergreen] could not generate sufficient cash to meet ongoing capital requirements or scale the business.” Scarito Rep. (Dkt. #221, Ex. B) at 3.

Although not explicitly stated by Evergreen, there were'other contingencies that also had to be met for the business model to succeed. First, school districts had to agree to the model, which required a pairing of waste haulage costs with supply contracts. Second, because Evergreen did not have the capacity or ability to manufacture and distribute a final polystyrene product, it would have to successfully partner with one or more of the established polystyrene converters. That in turn depended on the ability of Evergreen to produce recycled resin at a price competitive with that of virgin resin.10 DSOF ¶ 15. Finally, the converter would have to agree to pay a commission or royalty to Evergreen on the sale of “green” polystyrene products containing Evergreen’s resin.

Early attempts to put together deals

Between 2002 and 2005, Evergreen attempted to partner with several established converters in order to fund the expansion of its business. In particular, Forrest solicited the aluminum giants, Alcoa and Reynolds, both of which had a small presence in the polystyrene foodser-vice products market. DSOF ¶¶ 21-22. Neither company expressed an interest in Evergreen’s business model. In 2005, Forrest approached two small polystyrene converters, Fabri-Kal and Placon. They [6]*6too declined to partner with Evergreen. DSOF ¶¶ 24-25.

In 2005, there were five polystyrene converters with a national market presence: Pactiv Corporation, Dolco Packing, Solo Cup Company, and Dart Container Corporation (collectively the producer defendants), and Genpak, LLC (which settled with Evergreen after the Court of Appeals issued its decision, Dkt. #207). Forrest Aff. ¶ 15. Insofar as Forrest was concerned, Evergreen’s ultimate success depended on its ability to partner with one of these “big five” polystyrene producers'. Id. ¶ 14. However, Forrest came to believe by early 2005 that the big five were implacably opposed to recycling. He reports being told by Sodexo, “a food service facility management and procurement group,” that Dart and Pactiv in particular had zero interest in producing a “green” polystyrene line using Evergreen’s recycled resin. Id. ¶ 17.

In 2005, Evergreen came up with sufficient financing to open a facility in Nor-cross, Georgia, to recycle food trays collected from the Gwinnett. County- School System (Gwinnett Schools). , Id. ¶ 20; ESOF ¶ 20.11 Simultaneous with the opening of the Norcross facility, Evergreen agreed with Sysco, a distributor of food service polystyrene, to jointly produce “green” polystyrene food ' containers (among other items) to be marketed as part of Sysco’s projected “Earth Plus” product line. Forrest Aff. ¶ 21; Pl.’s Ex. 1034 (Aug. 23, 2005 letter from Maurice Malone of Sysco to Forrest). ■

In July of 2005, Forrest pitched the Sysco venture to Norm Patterson, the General Manager of the Midwest Division of Dolco.12 Forrest Aff. ¶ 22; DSOF ¶ 185. Forrest, Patterson, and a Sysco representative met in November of 2005 and made .progress towards. reaching an agreement. Forrest Aff. ¶ 23. According to Forrest, Sysco believed that a deal might result in sales. of upwards of $50 million in “green” polystyrene products. Id. Despite the promising start, Forrest says , that he was later told by Patterson that the heads, of Dolco and Dart had opposed the recycling effort at a meeting of the Plastics Food Packaging Group (Plastics Group). Id. ¶ 24. Patterson also allegedly said that Dolco was unwilling to compete with Pactiv. Id.

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116 F. Supp. 3d 1, 2015 U.S. Dist. LEXIS 89839, 2015 WL 4205293, Counsel Stack Legal Research, https://law.counselstack.com/opinion/evergreen-partnering-group-inc-v-pactiv-corp-mad-2015.