Pacific Steel Group v. Commercial Metals Company

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PACIFIC STEEL GROUP, Case No. 20-cv-07683-HSG

8 Plaintiff, PUBLIC VERSION OF ORDER FILED ON JUNE 10, 2024 DENYING 9 v. PLAINTIFF’S AND DEFENDANTS’ MOTIONS FOR SUMMARY 10 COMMERCIAL METALS COMPANY, et JUDGMENT1 al., 11 Re: Dkt. Nos. 155, 235 Defendants. 12 13 Before the Court are Plaintiff Pacific Steel Group’s (“Pacific Steel”) and Defendants 14 Commercial Metals Company and its subsidiaries’ (collectively, “CMC”) cross-motions for 15 summary judgment. Dkt. Nos. 155, 235. The Court held a hearing on the cross-motions. Dkt. 16 No. 245. For the reasons below, the Court DENIES the cross-motions for summary judgment. 17 I. BACKGROUND 18 A. The Rebar Industry 19 Steel reinforcing bar or “rebar” is a steel bar used to reinforce concrete in construction 20 projects. Dkt. 155-3, Ex. 3 (“Elhauge Report”) at ¶ 14. Without reinforcement, concrete could not 21 be widely used in construction projects. See id. at ¶ 15. Today, rebar is often produced at a type of 22 steel mill called a “mini mill.” Dkt. 161-3, Ex. 1 (“Lawrence Tr.”) at 53:20-54:5. Mini mills contain 23

24 1 The Court filed an order under seal denying Plaintiff’s and Defendants’ motions for summary judgment on June 10, 2024. In that order, the Court highlighted in yellow any material that might 25 have been subject to the parties’ pending administrative motions to seal. That same day, the Court issued an order directing the parties to file a joint proposed set of redactions as to any information 26 in the summary judgment order they believed to be sealable. See Dkt. No. 319. The parties did not submit any proposed redactions. Instead, the parties submitted a joint statement confirming 27 that neither party believes that the summary judgment order requires any redactions. See Dkt. No. 1 an electric furnace, which melts scrap metal down to molten steel. Id. The molten steel is then cast 2 into billets, and a rolling mill takes the billets and rolls them into final form. Id. The final 3 component is the finishing end, which stacks or bundles the materials. Id. In a traditional mini 4 mill, after billets are heated, they are cut, cooled, stored, and then reheated and rolled into rebar. 5 Dkt. No. 161-5, Ex. 3 (“Cottrell Tr.”) at 125:13-19. 6 A “micro mill” is a specialized type of mini mill. Elhauge Report at ¶ 56. Micro mills use 7 an electric arc furnace, but instead of outputting pure steel billets (which must be stored and later 8 re-heated and rolled into rebar), a micro mill outputs directly into rebar. Cottrell Tr. at 125:13-20. 9 By rolling the billets in real time, continuous-continuous micro mills replace the reheat furnace 10 found in traditional mini mills with a more flexible induction furnace. Id. In Pacific Steel’s view, 11 this advanced technology translates into significant cost advantages for rebar manufacturers: it 12 estimates that each ton of rebar produced by a micro mill costs at least approximately $53 less to 13 manufacture than a ton produced by a mini mill. Elhauge Report at ¶ 182. According to Pacific 14 Steel, the micro mill is not only the most cost-effective and profit-maximizing means of entering a 15 rebar manufacturing market, but also the only means used to build any new rebar manufacturing 16 facility in the United States in the last quarter-century. See Dkt. No. 154-4, Ex. 2 (“Olson Decl.”) 17 at ¶¶ 12–13. 18 B. Alleged Anticompetitive Conduct 19 Defendant Commercial Metals Company manufactures rebar and other steel products at 20 facilities located across the United States and in Poland. Dkt. No.155-3, Ex. 6 (“Leitzinger 21 Report”) at ¶ 6. In 2006, CMC commissioned the Danieli Corporation (“Danieli”) – a leading 22 firm in the production of steel plants – to build the world’s first micro mill in Mesa, Arizona 23 (“AZ1”) using Danieli’s “MiDa” continuous-continuous process. See Dkt. No. 161-13, Ex. 11, 24 (“Smith Tr.”) at 114:22–115:22. Following the agreement and in that same year, CMC and 25 Danieli entered into a territorial exclusivity agreement in which Danieli gave CMC a five-year 26 exclusive right to build a MiDa mill within 350 miles of CMC’s mill site in Mesa, Arizona or 27 within 250 miles of CMC’s other mills. See Dkt. No. 161-17, Ex. 16 at CMC_0000481600. In 1 its potential customers, among other benefits. See id. at 601. AZ1 first opened in 2009. Dkt. 155- 2 3, Ex. 2 at ¶ 35. 3 Plaintiff Pacific Steel Group is a San Diego-based rebar fabrication and installation 4 company founded in 2014. Leitzinger Report at ¶ 6. In 2019, Pacific Steel wanted to build its 5 own micro mill for manufacturing rebar. Dkt. No. 214-1, Ex. 53 at PSG-00043776–7. Pacific 6 Steel believed that such vertical integration would have given it access to increased quantities of 7 rebar at lower prices in a more efficient integrated process. Id. In November 2019, Pacific Steel 8 met with Danieli and began negotiations to build a micro mill in the high desert area near the 9 greater Los Angeles basin. See Dkt. 155-3, Ex. 23. In January 2020, Danieli offered to sell 10 Pacific Steel a micro mill utilizing MiDa technology. See Dkt. No. 161-1, Ex. 30 at 11 Danieli_0021703–04. From November 2019 to August 2020, Pacific Steel attempted to gain 12 regulatory approval and purchase property for its proposed mill. Dkt. No. 187-12, Ex. 10 at 27– 13 28. 14 In August 2020, prior to Pacific Steel and Danieli fully executing an agreement, Danieli 15 informed Pacific Steel it could no longer sell Pacific Steel a MiDa mill because CMC and Danieli 16 had entered into another exclusivity agreement. See Dkt. No. 161-43, Ex. 41, at PSG-00043166. In 17 August 2020, CMC contracted for Danieli to build a micro mill capable of producing both rebar and 18 merchant bar using continuous-continuous technology that Danieli termed “MiDa-S” in Mesa, 19 Arizona (“AZ2”). See Dkt. No. 161-21, Ex. 19, at CMC_0000417063. In connection with this 20 arrangement, CMC and Danieli entered into an exclusivity agreement (“CMC-Danieli Exclusivity 21 Provision”) under which CMC had the exclusive right to build MiDa-S mills within a 500-mile 22 radius of any of its existing United States mills for the next three years. See id. at 63–64. The CMC- 23 Danieli Exclusivity Provision also gave CMC the exclusive right to build a MiDa mill within a 500- 24 mile radius of its traditional mini mill in Rancho Cucamonga, California (the “Rancho mill”), which 25 CMC purchased in 2020. See id. Pacific Steel’s proposed MiDa mill in the greater Los Angeles 26 basin was within the 500-mile radius of the Rancho mill, and accordingly was precluded by the 27 CMC-Danieli Exclusivity Provision. This exclusivity agreement was initially set to last three years, 1 exclusivity provision. See Dkt. Nos. 155-4, Ex. 35 at CMC_0000008798; 161-50, Ex. 48 at 2 Danieli_0017088. Soon after, Danieli notified Pacific Steel that it once again could sell Pacific 3 Steel a MiDa mill in Southern California, and in December 2021, Danieli provided Pacific Steel an 4 updated MiDa mill commercial offer. Dkt. No. 155-6, Ex. 103, at PSG-0024776. 5 Accordingly, the claimed violations occurred between August 2020 and December 2021. 6 Pacific Steel’s antitrust claims largely center around CMC’s exclusivity agreement with Danieli. 7 Pacific Steel alleges that CMC’s geographic exclusivity provision with Danieli during the operative 8 time period unlawfully excluded it and all other potential entrants from the relevant geographic 9 market for rebar manufacturing by blocking the uniquely efficient, effective, and profit-maximizing 10 means of entry. See Dkt. No. 76, (“FAC”) ¶ 1. 11 C. Procedural History 12 Pacific Steel filed an eight-count suit in October 2020 alleging claims against CMC and 13 Danieli under Sections 1 and 2 of the Sherman Act, California antitrust law, California unfair 14 competition law, and California common law. See Dkt. No. 1. In May 2021, the Court granted 15 Defendants’ motions to dismiss with leave to amend. Dkt. No. 74 (“Dismissal Order”). Pacific 16 Steel then filed the operative FAC, removing Danieli as a defendant, realleging its original eight 17 causes of action, and addressing some of the deficiencies identified in the Dismissal Order. See 18 Dkt. No. 76. CMC again moved to dismiss. Dkt. No. 79. In April 2022, the Court granted in part 19 and denied in part the second motion to dismiss. Dkt. No. 92. The April 2022 order granted 20 CMC’s motion to dismiss Pacific Steel’s predatory pricing claims with leave to amend, but 21 otherwise denied CMC’s motion. See id. At the motion to dismiss stage, the parties disputed the 22 scope of Pacific Steel’s relevant geographic market. Pacific Steel’s FAC limits the relevant 23 geographic market to “suppliers located within a 500-mile radius from the high desert area near 24 the greater Los Angeles basin, the planned location of the Danieli micro mill that Pacific Steel 25 intended to build before it was blocked from doing so.” FAC ¶ 120. CMC argued that this 26 geographic market was too narrow in that it excluded suppliers to which customers reasonably 27 turn. 1 155 (“PSG Mot.”), 186 (“CMC Opp.”), 202 (“PSG Reply”); 235 (“CMC Mot.”), 187 (“PSG 2 Opp.”), 199 (“CMC Reply”). 3 II. LEGAL STANDARD 4 Summary judgment is proper when a “movant shows that there is no genuine dispute as to 5 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 6 A fact is “material” if it “might affect the outcome of the suit under the governing 7 law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute is “genuine” if 8 there is evidence in the record sufficient for a reasonable trier of fact to decide in favor of the 9 nonmoving party. Id. But in deciding if a dispute is genuine, the court must view the inferences 10 reasonably drawn from the materials in the record in the light most favorable to the nonmoving 11 party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587–88 (1986), and “may 12 not weigh the evidence or make credibility determinations,” Freeman v. Arpaio, 125 F.3d 732, 13 735 (9th Cir. 1997), overruled on other grounds by Shakur v. Schriro, 514 F.3d 878, 884–85 (9th 14 Cir. 2008). If a court finds that there is no genuine dispute of material fact as to only a single 15 claim or defense or as to part of a claim or defense, it may enter partial summary judgment. Fed. 16 R. Civ. P. 56(a). 17 III. SHERMAN ACT LIABILITY 18 Pacific Steel’s Sherman Act claims challenge the CMC-Danieli Exclusivity Provision. That 19 provision prohibited Danieli from selling one of its proprietary micro mills to any company other 20 than CMC within a 500-mile radius of Rancho Cucamonga, California for three years. The 21 Amended Complaint’s first cause of action alleges that the CMC-Danieli Exclusivity Provision 22 violates Section 1 of the Sherman Act (15 U.S.C. § 1), and its second through fourth causes of action 23 allege that CMC violated Section 2 (15 U.S.C. § 2) by using the CMC-Danieli Exclusivity Provision 24 to maintain its monopoly power in the rebar manufacturing market. 25 The Sherman Act contains two principal prohibitions. Section 1 targets concerted action, 26 rendering unlawful “every contract, combination. . . , or conspiracy, in restraint of trade.” 15 27 U.S.C. § 1; Epic Games, Inc. v. Apple Inc., 67 F.4th 946, 973–74 (9th Cir. 2023). To establish 1 that the agreement was an “unreasonable” restraint of trade.2 Aerotec Int’l, Inc. v. Honeywell Int’l, 2 Inc., 836 F.3d 1171, 1178 (9th Cir. 2016). Section 2 targets independent action, making it unlawful 3 to “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, 4 to monopolize any part of the trade or commerce among the several States.” 15 U.S.C. § 1; Epic 5 Games, 67 F.4th at 974. To establish liability under Section 2, a plaintiff must show (1) the 6 possession of monopoly power in the relevant market; (2) the willful acquisition or maintenance of 7 that power; and (3) causal antitrust injury. FTC v. Qualcomm Inc., 969 F.3d 974, 990 (9th Cir. 8 2020). 9 There are two general categories of liability standards for Sherman Act claims. Flaa v. 10 Hollywood Foreign Press Ass’n, 55 F.4th 680, 685 (9th Cir. 2022). A small category of restraints 11 are unreasonable per se because they always or almost always tend to restrict competition and 12 decrease output. Epic Games, 67 F.4th at 974. Most restraints, however, are subject to the Rule of 13 Reason, a three step, burden-shifting framework that “requires courts to conduct a fact-specific 14 assessment” to determine a restraint’s “actual effect” on competition. Id. “The goal is to distinguish 15 between restraints with anticompetitive effect that are harmful to the consumer and restraints 16 stimulating competition that are in the consumer’s best interest.” Ohio v. American Express Co., 17 138 S.Ct. 2274, 2284 (2018) (cleaned up). 18 The parties agree that the Rule of Reason framework applies to this case. At step one, “the 19 plaintiff has the initial burden to prove that the challenged restraint has a substantial 20 anticompetitive effect.” Nat’l. Coll. Athletic Assoc. v. Alston, 141 S. Ct. 2141, 2160 (2021). A 21 plaintiff may meet this initial burden through direct or indirect evidence. Qualcomm Inc., 969 at 22 989. Direct evidence includes “proof of actual detrimental effects on competition,” such as 23 “reduced output, increased prices, or decreased quality in the relevant market.” Id. (cleaned up). 24 The “more common” indirect evidence approach involves “proof of market power plus some 25 evidence that the challenged restraint harms competition.” Rebel Oil Co., Inc. v. Atlantic Richfield 26

27 2 The parties do not dispute that a contract exists between CMC and Danieli, and Plaintiff has put 1 Co., 51 F.3d 1421, 1434 (9th Cir. 1995). Should the plaintiff carry this burden, the burden then 2 “shifts to the defendant to show a procompetitive rationale for the restraint.” Alston, 141 S. Ct. at 3 2160. If the defendant can make that showing, “the burden shifts back to the plaintiff to 4 demonstrate that the procompetitive efficiencies could be reasonably achieved through less 5 anticompetitive means. Id. The Rule of Reason applies “essentially the same” whether the 6 alleged antitrust violation involves concerted anticompetitive conduct under Section 1 or 7 independent anticompetitive conduct under Section 2. Epic Games, 67 F.4th at 974; see also Flaa, 8 55 F.4th at 685 (“Because the legal tests for sections 1 and 2 of the Sherman Act similar, we can 9 review claims under each section simultaneously.”). 10 CMC moves for summary judgment on Pacific Steel’s Section 1 and Section 2 claims. CMC 11 contends that Pacific Steel has not adduced sufficient direct or indirect evidence that the challenged 12 restraint had a substantial anticompetitive effect so as to create a genuine issue of fact for trial. CMC 13 argues that (1) Pacific Steel’s proposed geographic market is fatally flawed; (2) Pacific Steel cannot 14 demonstrate that CMC has market or monopoly power; and (3) Pacific Steel cannot prove any harm 15 to competition. CMC Mot. at 12–20. In addition to opposing CMC’s motion, Pacific Steel cross- 16 moves for summary judgment on its Section 1 conspiracy in restraint of trade claim. PSG Mot. at 17 16–25. First, Pacific Steel argues that it is entitled to summary judgment because there is direct 18 evidence of detrimental effects on competition. In the alternative, Pacific Steel contends that 19 indirect evidence of anticompetitive effects (including CMC’s high market share, significant 20 barriers to entry, and supracompetitive prices) shows that it is entitled to summary judgment. 21 On each motion, viewing the factual record in the light most favorable to the nonmoving 22 party, the Court finds at least one genuine dispute of material fact. Accordingly, the Court denies 23 summary judgment to both parties. 24 A. Section 1 Liability 25 i. Direct Evidence 26 Pacific Steel argues that it is entitled to summary judgment on its Section 1 claim because 27 there is direct evidence that CMC’s restraint has had a substantial anticompetitive effect that 1 that CMC intentionally suppressed rebar output by excluding Pacific Steel from the market.” Id. 2 Additionally, Pacific Steel argues that because it has put on sufficient direct evidence of CMC’s 3 injurious exercise of market power, it is entitled to summary judgment without first defining a 4 relevant geographic market. Pacific Steel argues that in Epic Games, the Ninth Circuit made clear 5 that “direct evidence of market power can obviate the need to define the relevant market.” Id. 6 (citing Epic Games, 67 F.4th at 974 & n.6). Relying on this footnote, Pacific Steel contends that 7 the undisputed evidence shows that CMC intentionally suppressed rebar output, and submits that 8 in light of this direct evidence of harm to competition, the Court need not define the relevant 9 geographic market. 10 In response, CMC argues that Pacific Steel’s argument is wrong because (1) even under a 11 direct evidence theory, it must still adequately define a relevant geographic market; and (2) even if 12 it does not need to do so, there has been no showing of harm to competition. On the first point, 13 CMC contends that Pacific Steel’s citation to a footnote in Epic Games is not applicable to this 14 case because that footnote was referencing “quick look” cases, which this case is not. CMC Opp. 15 at 14. On the second point, CMC argues that Pacific Steel speculates that rebar output decreased 16 and prices increased but has no direct proof of this or any other harm to competition beyond its 17 own speculation. See id. 18 The Court agrees that Pacific Steel has not shown that it is entitled to summary judgment 19 based on its direct evidence theory. In most, though not all, antitrust cases, the first step is to 20 accurately define the relevant market in which the defendant competes. Epic Games, 67 F.4th at 21 974; see also American Express, 138 S.Ct. at 2285. (“[C]ourts usually cannot properly apply the 22 rule of reason without an accurate definition of the relevant market.”). As CMC points out, the 23 Epic Games footnote on which Pacific Steel relies clarifies that defining the relevant market is not 24 an absolute requirement, and that the Supreme Court has skipped this threshold step “in its so- 25 called ‘quick look’ cases.” Epic Games, 67 F.4th at 974 & n.6. The “quick look” analysis is 26 appropriate where “an observer with even a rudimentary understanding of economics could 27 conclude that the arrangements in question would have an anticompetitive effect on customers and 1 an arrangement “might plausibly be thought to have a net procompetitive effect, or possibly no 2 effect at all on competition,” then the “quick look” analysis is inappropriate. Id. In this case, the 3 Court cannot say that CMC’s arrangement with Danieli is so obviously anticompetitive that it 4 could not possibly have a “net procompetitive effect,” or have “no effect at all,” on competition. 5 In American Express, the Court considered the argument that there was no need to define the 6 relevant market because plaintiff had offered actual evidence of adverse effects on competition. 7 See 138 S. Ct. at 2286 & n.7. The Court disagreed, noting that while plaintiff cited cases that 8 evaluated whether horizontal restraints had an adverse effect on competition, those cases were 9 different than cases like American Express involving vertical restraints. Id. The Court explained 10 that “[v]ertical restraints often pose no risk to competition unless the entity imposing them has 11 market power, which cannot be evaluated unless the Court first defines the relevant market.” Id. 12 Relevantly, this case involves a vertical agreement between a supplier (Danieli) and a customer 13 (CMC), rather than a horizontal agreement between competitors. Pacific Steel’s citation to a 14 single footnote in Epic Games without further explanation thus does not warrant a deviation from 15 the Supreme Court’s usual approach requiring a threshold definition of the relevant market. 16 And even if Pacific Steel did not need to define the relevant market, its bid for summary 17 judgment on a direct evidence theory nonetheless fails because there is a genuine dispute of 18 material fact as to whether CMC’s territorial exclusion provision had an anticompetitive effect. 19 Pacific Steel’s expert Dr. Leitzinger submits that the Mojave mill would have contributed about 20 173,000 new tons of rebar to the market each year, in addition to the approximately 206,000 tons 21 that the mill would produce for Pacific Steel’s existing furnish-and-install business. Leitzinger 22 Report at ¶¶ 15–22. According to Pacific Steel, this directly demonstrates the actual 23 anticompetitive effects of the territorial exclusion: as a result of Pacific Steel being barred from 24 producing this large amount of rebar, CMC was able to raise prices and keep out competition. See 25 PSG Mot. at 18. But CMC responds with facts suggesting that Pacific Steel’s proposed mill 26 would not meaningfully affect the overall supply of new rebar in the market. According to 27 deposition testimony of Pacific Steel’s founder and CEO, the company’s business plan was to 1 while it would “have the capability of selling excess rebar to independent fabricators,” it “did not 2 anticipate this in the business plan.” See Dkt. No. 186-83, Ex. 81 (“Benson Tr.”) at 291:2-20; 3 293:1-6). CMC also cites Leitzinger’s reply report which represents that “Pacific Steel does not 4 plan to sell the rebar it manufactures.” Dkt. No. 186-87, Ex. 85 (“Leitzinger Reply Report”) at 5 ¶32. CMC thus plausibly suggests that Pacific Steel’s manufacture and internal use of the rebar 6 produced would not have any effect on rebar market prices. The Court finds that there is a dispute 7 of material fact as to whether CMC’s alleged restraint has had actual detrimental effects on 8 competition. Although Pacific Steel has provided some evidence to suggest this may be the case, 9 CMC has proffered enough counterevidence to submit the issue to a jury. The Court finds that 10 Pacific Steel is not entitled to summary judgment on this basis. 11 ii. Indirect Evidence 12 Both parties contend that they are entitled to summary judgment as to Plaintiff’s Section 1 13 claim based on indirect evidence. In order for a plaintiff to meet its burden with indirect evidence, 14 it must (1) define the relevant market;3 (2) show that the defendant has market power; and (3) 15 present some evidence that the defendant uses that market power to “harm competition.” See Epic 16 Games, 67 F.4th at 983. CMC argues that (1) Pacific Steel improperly defines the relevant 17 geographic market; (2) CMC does not have market power; and (3) Pacific Steel fails to 18 demonstrate harm to competition. For its part, Pacific Steel argues that (1) it has properly defined 19 the relevant market; (2) CMC does have market power; and (3) CMC has harmed competition. 20 a. Relevant Geographic Market 21 The relevant market for antitrust purposes is “the area of effective competition,” which 22 means “the arena within which significant substitution in consumption or production occurs.” 23 Epic Games, 67 F.4th at 975. A relevant market includes both a geographic market and a 24 product market. Id. Generally, “[t]he process of defining the relevant [geographic] market is a 25

26 3 Though the relevant market includes both geographic and product dimensions, see Qualcomm, 969 F.3d at 992, CMC only challenges the propriety of Pacific Steel’s proposed geographic 27 market, see CMC Mot. at 13. Accordingly, this order only addresses that aspect of the market 1 factual inquiry for the jury.” High Tech. Careers v. San Jose Mercury News, 996 F.2d 987, 990 2 (9th Cir. 1993). But summary judgment is appropriate on this basis if the “moving party shows 3 that there is an absence of evidence to support the plaintiff’s case,” and the non-moving party’s 4 “evidence cannot sustain a jury verdict on the issue of market definition.” Rebel Oil, 51 F.3d a 5 1435. 6 The 2010 Department of Justice and Federal Trade Commission Horizontal Merger 7 Guidelines (“2010 Merger Guidelines”) explain the two ways that agencies and courts define a 8 geographic market.4 One is based on the location of the relevant suppliers and the other is based 9 on the location of the relevant customers. See 2010 Merger Guidelines §§ 4.2.1, 4.2.2. A 10 geographic market based on the location of the suppliers must include all the firms with relevant 11 production, sales, or service facilities in the specified region. Id. § 4.2.1. A supplier-based 12 market accordingly must be broad enough to “encompass the region from which sales are made.” 13 Id. On the other hand, when the market is based on the location of the relevant customers, some 14 suppliers that sell into the relevant geographic market may be located outside the boundaries of 15 that market. Id. § 4.2.2. The Guidelines account for this on the back end, however, by including 16 in the market share calculation all the firms that sell to customers in the geographic region, 17 regardless of the location of the supplier making those sales. Id. Under either approach the 18 geographic market and market share, when taken together, must account for the relevant firms 19 who supply the market. A common method of confirming the proper scope of the relevant 20 geographic market is to determine whether a hypothetical monopolist could impose a “small but 21 significant non-transitory increase in price” (SSNIP) in the proposed market. Id. § 4. If enough 22 consumers would respond to a SSNIP by purchasing the product from outside the proposed 23 geographic market, making the SSNIP unprofitable, the proposed market definition is too narrow. 24 See Saint Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys., 778 F.3d 775, 784 (9th Cir. 25

26 4 In December 2023, the Federal Trade Commission and Department of Justice issued revised Merger Guidelines. The 2023 Merger Guidelines do not appear to differ from the 2010 Merger 27 Guidelines in any way relevant to this case. The parties cite the 2010 Merger Guidelines, and 1 2015); see also Teradata Corp. v. SAP SE, 570 F.Supp. 3d 810, 838 (N.D. Cal. 2021) (“This test 2 asks whether a hypothetical monopolist over a group of products could profitably impose a . . . 3 ‘SSNIP’ of 5%.”). 4 Pacific Steel proposes that the relevant geographic market for rebar manufacturing in this 5 case “consists of suppliers located within a 500-mile radius from the high desert area near the greater 6 Los Angeles basin, the planned location of the Danieli micro mill that Pacific Steel intended to build 7 before it was blocked from doing so.” FAC ¶ 120. This is consistent with the relevant geographic 8 market that Pacific Steel’s expert Professor Elhauge defines: “suppliers located within 500 miles of 9 Southern California.” Elhauge Report at ¶ 122–24. Elhauge proposes that the market should be 10 “centered around Rancho Cucamonga, CA (because the challenged restraint foreclosed rival steel 11 rebar mills within 500 miles of Rancho Cucamonga, CA) or should be centered around Mojave, 12 (because that is the location from which Pacific Steel was foreclosed from building its planned steel 13 rebar mill).” Id. Elhauge claims that qualitative and quantitative evidence supports the 14 appropriateness of this geographic market. Qualitatively, Elhauge argues that (1) CMC’s internal 15 documents indicate that rebar mills “serve a small market” and “are located . . . close to customers”; 16 (2) CMC’s own CEO stated that “a 500-mile shipping range” for steel rebar is “the most efficient, 17 cost-effective way to serve the market”; (3) Bank of America’s Global Investment Banking division 18 observed that rebar mills are “designed to service an area of 400-500 miles”; (4) Danieli concluded 19 that the feasibility of a rebar mill depends on having an identified market for rebar with a radius of 20 350 to 500 miles; and (5) CMC’s own contracts set “exclusivity zones of no more than a 500 mile 21 radius.” Id. at ¶¶ 126–31. Quantitatively, Elhauge asserts that the hypothetical monopolist test is 22 met because CMC raised its prices (relative to its costs) well beyond the 5% threshold typically used 23 define a SSNIP. See id. at ¶ 199. 24 The Court begins with CMC’s motion. CMC argues that it is entitled to summary judgment 25 because Pacific Steel’s proposed supplier-based geographic market is “legally defective” given that 26 it “seeks to exclude the rebar sales of all manufactures – regardless of how much rebar those 27 manufacturers ship into the market.” CMC Mot. at 13. According to CMC, buyers within Pacific 1 to source rebar. Id. at 14. CMC argues that Elhauge’s report “ignores the basic commercial realities 2 of the market.” Id. at 15. CMC contends that after its 2018 Rancho acquisition, rebar prices and 3 margins increased throughout the entire country, not just in Pacific Steel’s proposed geographic 4 market. It contends that prices in this market moved in lockstep with prices throughout the country, 5 which undermines Elhauge’s conclusion and makes Pacific Steel’s proposed market deficient. Id. 6 at 16. CMC’s rebuttal expert, Dr. Ramsey Shehadeh, provides a report in support of this position. 7 He claims that customers in Elhauge’s proposed geographic market “have historically turned to 8 mills outside the [proposed market] for an economically significant portion of their rebar 9 purchases.” Dkt. No. 161-10, Ex. 8 (“Shehadeh Report”) at ¶ 79. According to Shehadeh, this means 10 Pacific Steel’s proposed geographic market is defective. See id. Shehadeh contends that distant 11 mills in Washington, Texas, Utah, and Colorado effectively constrain prices at mills within Pacific 12 Steel’s proposed market. Shehadeh Report at Exs. 23–30. CMC also argues that though Elhauge’s 13 SSNIP analysis concludes that CMC increased its prices beyond the 5% threshold, that analysis does 14 not show that this price increase outpaced the market. See CMC Mot. at 16. According to CMC, 15 since Pacific Steel argues that prices increased beyond 5% at AZ1, it would also need to demonstrate 16 that the price of rebar in the overall market did not rise at the same level between 2017 and 2019. 17 According to Shehadeh, rebar prices steadily rose during this time period, and national prices did 18 not far outpace prices in Pacific Steel’s proposed geographic market. See Shehadeh Report at Exs. 19 13–15. 20 Pacific Steel claims that CMC’s methodology broadly includes relatively distant geographic 21 substitutes whose competitive significance is unlikely to be commensurate with their share in a 22 properly-defined market. PSG Opp. at 14 (citing 2010 Merger Guidelines § 4). Pacific Steel argues 23 the that the 500-mile radius from the high desert area near the greater Los Angeles basin defines an 24 appropriate market because it is corroborated by CMC’s own contemporaneous documents and 25 executives’ admissions, as well as by its sales and profit margin data. PSG Mot. at 20. Pacific Steel 26 cites a statement by CMC’s then-CEO that the “most efficient, cost-effective way to serve the 27 market” is to “limit your shipping radius to . . . a 500-mile shipping range” because “steel is very 1 at 6. Further, Pacific Steel argues that Elhauge’s SSNIP analysis demonstrates that from 2017 to 2 2019, CMC increased AZ1’s rebar prices relative to its costs by 13%, well in excess of the 5% that 3 is considered sufficient for the SSNIP test. Id. at 20–21; Elhauge Report Ex. 11 ¶¶ 21, 104. 4 CMC is not entitled to summary judgment regarding the viability of Pacific Steel’s proposed 5 geographic market. CMC’s principal arguments are that (1) distant suppliers effectively compete 6 in the proposed geographic market and (2) Elhauge’s SSNIP analysis is unreliable because it does 7 not account for general price increase trends outside the proposed geographic market. Pacific Steel 8 has raised a genuine dispute of fact as to both arguments. Pacific Steel has identified internal 9 documents that indicate CMC’s own understanding that placing mill sites within 500 miles of 10 intended customers is optimal. Dkt. No. 155-6, Ex. 106 at 6. Plaintiff also points out that CMC’s 11 own expert has confirmed that he does not know of any CMC documents reflecting a radius greater 12 than 500 miles around a proposed rebar mill site. Dkt. No. 155-4, Ex. 22 (“Shehadeh Tr.”) at 265:3– 13 6 (“I have not seen a document from CMC that has an anticipated mill site and draws a radius greater 14 than 500 miles for rebar.”). While this evidence does not conclusively establish the validity of 15 Pacific Steel’s proposed market, it does tend to support it. And Pacific Steel also has proffered 16 evidence suggesting that distant mills may not be an effective check on CMC’s pricing because of 17 its freight cost advantages. See Dkt. No. 155-3, Ex. 11 (“Elhauge Reply Report”) at ¶¶ 129 18 (“Because a competitive market prices at the efficient competitive level, a supplier located at a 19 distance where it incurs inefficient costs cannot price at the competitive level. Further, because a 20 supplier located more than 500 miles from the relevant customers incurs such inefficient costs, it 21 cannot constrain a rival from charging an above-competitive price to those customers. Accordingly, 22 the evidence that it would be inefficient to supply customers located more than 500-miles away 23 means that a hypothetical monopolist in that area could raise prices over the competitive level, thus 24 satisfying the hypothetical monopolist test.”); 137 (positing that after CMC shuttered the Rancho 25 mill, it was able to raise prices over 5%, even with distant suppliers attempting to serve as a 26 competitive check). Viewing these facts in the light most favorable to Pacific Steel, a reasonable 27 jury could find its geographic market to be appropriately defined. 1 Pacific Steel raises a genuine dispute of fact as to this issue as well. CMC argues that prices in 2 Pacific Steel’s proposed market increased, but did so in “lockstep” with prices charged by mills 3 throughout the country. But as Elhauge’s reply report points out, “correlated price movements 4 might reflect the similar responses of different markets to similar changes.” Elhauge Reply Report 5 ¶ 72. This correlation could be attributed to similar responses to similar market dynamics or any of 6 a number of other factors. See id. at ¶¶ 72–73. Stated differently, proof that prices outside the 7 relevant geographic market also increased does not necessarily foreclose the possibility that a 8 hypothetical monopolist would be able to impose a SSNIP. Moreover, Pacific Steel has proffered 9 evidence supporting Elhauge’s SSNIP analysis. Elhauge analyzed how CMC’s 2018 acquisition of 10 four Gerdau mills impacted CMC’s pricing power at its other mills. In that analysis, he found 11 (contrary to CMC’s assertion that rebar prices outside the proposed market increased in “lockstep” 12 with prices for AZ1 rebar) that CMC mills with different market dynamics experienced much less 13 significant price increases. See PSG Opp. at 10; Dkt. 155-3, Ex. 6. This tends to undermine CMC’s 14 position that Elhauge’s SSNIP analysis was deficient for not taking outside price trends into account. 15 At this stage, Pacific Steel does not need to definitively prove its proposed geographic 16 market. Instead, it only needs to present enough evidence to reasonably raise a dispute of material 17 fact regarding the viability of that market. See Lucas Auto. Eng’g, Inc. v. Bridgestone/Firestone, 18 Inc., 275 F.3d 762 (9th Cir. 2001) (reversing order granting summary judgment because there was 19 a genuine issue of material fact regarding market definition); Hynix Semiconductor Inc. v. Rambus 20 Inc., No. CV-00-20905-RMW, 2008 WL 73689 at *10 (N.D. Cal. January 5, 2008) (“However, 21 questions of fact exist, and, accordingly, the court cannot enter summary judgment on the 22 geographic scope of the relevant technology markets.”). Though Pacific Steel bears the burden of 23 proving the relevant geographic market at trial, at the summary judgment stage CMC must show the 24 absence of any genuine issue of material fact. Id. at 8. Pacific Steel has presented sufficient 25 evidence to raise at least one such issue as to the viability of its proposed geographic market. 26 Accordingly, CMC is not entitled to summary judgment on this basis. 27 The Court’s explanation as to why CMC is not entitled to summary judgment also establishes 1 validity of its proposed geographic market. While Pacific Steel has presented enough evidence to 2 defeat CMC’s motion for summary judgment, it has not definitively established that its own 3 proposed geographic market is appropriately defined. CMC has raised issues of fact that preclude 4 summary judgment in Pacific Steel’s favor. As discussed above, CMC presents evidence supporting 5 the position that customers in Pacific Steel’s proposed geographic market have historically turned 6 to mills outside that market, in places such as Texas, Washington, Utah, and beyond. See Shehadeh 7 Report at ¶ 79, Exs. 23–30. CMC has also proffered evidence that though prices at AZ1 increased, 8 prices increased at a similar rate throughout the entire country. See id. at Exs. 8–16. Viewed in the 9 light most favorable to CMC, these facts provide a basis on which a reasonable jury could reject 10 Pacific Steel’s position, so the Court denies its motion for summary judgment as well. 11 b. Market Power 12 Next, the Court addresses the second factor in the anticompetitive conduct analysis: market 13 power. To prevail on its unreasonable restraint of trade claim based on indirect evidence of 14 substantial anticompetitive effects, Pacific Steel must show that CMC has market power. See Epic 15 Games, 67 F.4th at 982–83. Market power is the ability for a defendant to profitably raise prices by 16 restricting output. Id. at 983. “In other words, a firm with market power is a price-maker, not the 17 price-takers that economic theory expects in a competitive market. Pursuant to this indirect- 18 evidence route, the existence of market power is a significant finding that casts an anticompetitive 19 shadow over a party’s practices in a rule-of-reason case.” Id. Market power is generally inferred 20 from the defendant’s possession of a high market share and the existence of “significant barriers to 21 entry.” Rebel Oil, 51 F.3d at 1434. Courts generally require a 65% market share to establish a 22 prima facie case of market power. Image Tech. Servs., Inc. v. Eastman Kodak Co., 125 F.3d 1195, 23 1206 (9th Cir. 1997). Whether a defendant possesses market power is a factual question. Epic 24 Games, 67 F.4th at 983. 25 CMC argues that Pacific Steel’s 32.9% market share is presumptively insufficient to 26 establish market power. CMC Mot. at 18. CMC also argues that Pacific Steel has no other direct 27 evidence of market power. See id. at 19. In opposition to CMC’s motion and in support of its own 1 sufficient to establish market power. PSG Opp. at 17; PSG Mot. at 22. 2 The Court finds that there are genuine disputes of material fact as to whether CMC has 3 market power, precluding the entry of summary judgment for either party. CMC argues that 4 Shehadeh’s report confirms its presumptively low market share. In that report, Shehadeh claims 5 that 1,670,827 tons of rebar were sold to customers in Elhauge’s alleged relevant geographic market. 6 Shehadeh Report, Ex. 29. According to Shehadeh, CMC sold 549,545 tons, accounting for 32.9% 7 of the market. Id. Shehadeh’s analysis includes suppliers from beyond Southern California, 8 including Utah, Washington, Texas, Arizona, Oklahoma, Tennessee, and Oregon. Id. Pacific Steel 9 argues that CMC’s market share challenge (based on Shehadeh’s analysis) relies on its geographic 10 market arguments, which should fail because they include distant suppliers who do not constrain 11 CMC’s ability to increase prices. PSG Reply at 9–10. Pacific Steel submits analysis by Elhauge 12 showing that CMC accounts for at least 86% of overall rebar sales when the geographic market is 13 properly defined. Elhauge Report at ¶ 151; Elhauge Reply Report at ¶¶ 138, 142.5 Given the Court’s 14 earlier conclusion that there are disputes of fact regarding the proper scope of the geographic market, 15 there are also related disputes of fact on this issue. The Court cannot resolve the parties’ market 16 share arguments at this stage because unresolved issues of fact based on the expert analyses directly 17 bear on the appropriate scope of the geographic market. “This is a classic example of dueling expert 18 testimony that precludes summary judgment.” Tevra Brands LLC v. Bayer HealthCare LLC, NO. 19 19-cv-04312-BLF, 2024 WL 1909156, at *10 (N.D. Cal. May 1, 2024). Triable issues of fact thus 20 preclude summary judgment for either party on Pacific Steel’s Section 1 claim. 21 c. Harm to Competition 22 Where the defendant’s conduct harms the plaintiff without adversely affecting competition 23 generally, there is no antitrust injury. Pool Water Prods. v. Olin Corp., 258 F.3d 1024, 1034–36 24 (9th Cir.2001). Accordingly, to succeed on a Section 1 or 2 claim under an indirect evidence theory, 25 a plaintiff must also present “‘some evidence’ that the defendant uses [its] market power to harm 26

27 5 Elhauge concludes that CMC’s market share is between 91 and 95%, but submits that even 1 competition.” Epic Games, 67 F.4th at 983. This inquiry need not always be extensive or highly 2 technical. “It is sufficient that the plaintiff prove the defendant’s conduct, as matter of economic 3 theory, harms competition—for example that it increases barriers to entry or reduces 4 consumer choice by excluding would-be competitors that would offer differentiated products.” Id. 5 at 983–84. 6 In the Court’s order granting CMC’s initial motion to dismiss, the Court found exclusive 7 dealing precedent to be the closest analogue to Pacific Steel’s claims. Dismissal Order at 14. The 8 Court recognized that technically the CMC-Danieli Exclusivity Provision is not “an agreement 9 between a vendor and a buyer that prevents the buyer from purchasing a given good from any other 10 vendor.” See Allied Orthopedic Appliances Inc. v. Tyco Health Care Group LP, 592 F.3d 991, 996 11 (9th Cir. 2010). But as in exclusive dealing cases, the fundamental harm alleged here is market 12 foreclosure due to an exclusive relationship between a supplier (Danieli) and its customer (CMC). 13 The Court found this contractual relationship similar enough to a traditional exclusive-dealing 14 relationship to make that precedent helpful, and accordingly asked whether the CMC-Danieli 15 Exclusivity Provision “forecloses competition” in a “substantial share” of the rebar manufacturing 16 market. See Dismissal Order at 14–15 (citing Allied Orthopedic, 592 F.3d at 996 (“Under the 17 antitrust rule of reason, an exclusive dealing arrangement violates Section 1 only if its effect is to 18 ‘foreclose competition in a substantial share of the line of commerce affected.’”)). 19 The parties’ summary judgment briefing has not undermined these premises, so the Court 20 will continue to apply them. The Ninth Circuit has indicated that when analyzing whether an 21 agreement forecloses competition, courts should consider the “the full range” of opportunities that 22 the agreement leaves open to the defendant’s competitors. See id. at 15 (citing Omega Env’t., Inc. 23 v. Gilbarco, Inc., 127 F.3d 1157, 1162–63 (9th Cir. 1997) (citations omitted)). 24 CMC argues that is entitled to summary judgment because Pacific Steel has not made a 25 sufficient showing to create a genuine issue of fact as to whether its conduct harmed competition. 26 CMC Mot. at 20. CMC argues that there is no evidence that the CMC-Danieli Exclusivity Provision 27 foreclosed Pacific Steel from manufacturing rebar. According to CMC, the evidence shows that 1 contends that Pacific Steel could have contracted with Danieli to build another kind of mini mill 2 that did not use MiDa technology. It asserts that this alternative mill could have been more profitable 3 than Pacific Steel’s existing business and enjoyed margins comparable to a MiDa mill. Id. Further, 4 CMC claims that Pacific Steel’s “entire theory impermissibly conflates harm to PSG with harm to 5 competition.” CMC Reply at 12. 6 The Court finds that there is at least one genuine dispute of material fact bearing on whether 7 CMC’s conduct substantially foreclosed competition. Viewing the evidence in the light most 8 favorable to Pacific Steel, a reasonable jury could find that CMC’s conduct substantially foreclosed 9 the range of opportunities available to its competitors. Pacific Steel argues that because of the 10 territorial exclusivity provision, there were no alternative mills that competitors (including itself) 11 could have built in the proposed geographic market that “could have constrained CMC’s pricing of 12 rebar.” PSG Opp. at 23. Pacific Steel cites at least three types of evidence to support this position. 13 First, Pacific Steel cites an email exchange between various Danieli executives, in which 14 one executive relayed a statement by CMC’s then-COO contending that Pacific Steel moving to a 15 MiDa mill in California would “crush the dynamics of the market” and that MiDa is the “winning 16 technology.” Dkt. No. 187-32, Ex. 30 at 11–12. In Pacific Steel’s view, this document confirms 17 that CMC believed that the MiDa technology was not only superior to any alternatives, but that 18 competitors having access to this technology would disrupt CMC’s current advantages in the 19 market. Viewed in this light, the evidence supports a reasonable inference that CMC was interested 20 in foreclosing others’ access to MiDa technology to perpetuate its own advantage. 21 Second, Pacific Steel submits a declaration from its Vice President of Mill Operations Mark 22 Olson. Discussing the unviability of alternative mills, Olson avers that “SMS could not offer Pacific 23 Steel a technologically advanced finishing end comparable to Danieli’s DRB system,” and says this 24 alternative “would have been less efficient and precise” making it “unsuitable for Pacific Steel’s 25 business needs.” Olson Decl. at ¶ 25. In discussing another alternative mill from Primetals, Olson 26 points out that that proposed mill would not have included continuous casting and rolling process 27 comparable to MiDa mill, and notes that “the last rebar min mill constructed in the United States 1 Arizona, which came online in 1996.” Id. at ¶ 28. Olson also contends that Danieli’s proposed 2 workaround mill design was “materially inferior to the MiDa mill” because it “would have used a 3 traditional finishing end, used in conventional mini mills,” which is far less efficient than the MiDa 4 micro mill’s direct rolling and bundling system. Id. at ¶¶ 32, 35. 5 And third, Pacific Steel points to Elhauge’s report, which provides a complementary 6 analysis. According to Elhauge, “Pacific Steel and other rivals were 100% foreclosed from access 7 to micro-mills in the relevant geographic market.” Elhauge Report at ¶ 173. Elhauge concludes 8 that the Danieli MiDa mill was the only feasible means for competitors to compete economically in 9 the proposed geographic market. See id. at ¶¶ 173, 180. He opines that the total operational cost 10 savings for using a Danieli micro mill rather than a mini mill were estimated to be $53 per ton. See 11 id. at ¶ 182. He also explains that a non-MiDa Danieli mill was not economically viable because it 12 would have increased operating costs by at least $9.50 per ton. Id. at ¶ 210 & n. 495; Elhauge Reply 13 Report at ¶ 168. Finally, Elhauge opines that no other company could offer a “reasonable economic 14 substitute” because those companies had less experience than Danieli, and Danieli offered the 15 “lowest capital and operational costs.” Elhauge Reply Report at ¶¶ 170–77. Elhauge’s report 16 accordingly concludes that neither Pacific Steel nor “rivals” more broadly could effectively compete 17 in the proposed geographic market while the exclusivity provision was in place. According to him, 18 whether for Pacific Steel or other competitors, alternative mills could not offer the environmental- 19 permitting prospects, financing possibilities, or efficiencies needed to justify the risk of investing 20 hundreds of millions of dollars. See Elhauge Report at ¶ 170–78. 21 Together, this evidence suffices to create a genuine issue of fact as to whether CMC’s 22 territorial exclusion might have had the effect of substantially foreclosing competition in the rebar 23 market in Southern California. Whether Pacific Steel ultimately will be able to prove its case is not 24 the issue at this stage. Instead, the Court decides only whether there is a genuine dispute of material 25 fact as to whether CMC’s actions have “foreclosed existing competitors or new entrants from 26 competition in the . . . relevant market.” Gilbarco, 127 F.3d at 1162. Pacific Steel has proffered 27 facts supporting an inference that CMC substantially foreclosed competition by leaving rivals no 1 geographic market. So the Court cannot grant summary judgment. See Complete Entertainment 2 Resources LLC v. Live Nation Entertainment, No. CV 15-9814 DSF, 2017 WL 6512223 at *3 (C.D. 3 Cal. Oct. 16, 2017) (“Despite Defendants’ adamant statements to the contrary, [Plaintiff’s] argument 4 is not absurd on its face. The Court is unaware of any legal rule that says that an antitrust defendant 5 prevails in a rule-of-reason case if a plaintiff’s legal theory of anticompetitive harm cannot neatly 6 fit in a preexisting legal ‘box.’ Defendants are free to attack Plaintiff’s expert, put on their own 7 expert, and let the finder of fact decide who is right and who is wrong.”); Id & n. 8 (“This is not a 8 case where there is, for example, no restraint as a matter of law or the restraint has no plausible 9 effect on competition. There is clearly a restraint of trade and it is admittedly exclusionary to rivals. 10 Plaintiff has presented evidence that the restraint is anticompetitive; Defendants have presented 11 evidence of procompetitive justifications. So, under the rule-of-reason, the finder of fact evaluates 12 the arguments and weighs the effects.”). 13 B. Section 2 Liability 14 CMC also moves for summary judgment on Plaintiff’s Section 2 claim. CMC largely 15 repeats its Section 1 arguments in its motion for summary judgment as to the Section 2 claims. 16 See CMC Mot. at 12-24. Accordingly, its geographic market6 and harm to competition arguments 17 fail as to Section 2 for the reasons explained above. CMC’s only Section 2 specific argument is 18 that it is entitled to summary judgment on Pacific Steel’s attempted monopolization claim. 19 CMC moves for summary judgment on the attempted monopolization claim on the basis that 20 Pacific Steel cannot establish that CMC “had a dangerous probability of achieving monopoly 21 power.” Mot. at 20. To establish a Sherman Act Section 2 violation for attempted monopolization, 22 a plaintiff must demonstrate four elements: (1) specific intent to control prices or destroy 23 competition; (2) predatory or anticompetitive conduct directed at accomplishing that purpose; (3) a 24 dangerous probability of achieving “monopoly power”; and (4) causal antitrust injury. Rebel Oil, 25

26 6 Monopoly power under Section 2 requires “something greater than market power” under Section 1, meaning that the Section 2 standard is more “stringent.” Eastman Kodak Co. v. Image Tech. 27 Servs., Inc., 112 S. Ct. 2072, 2090 (1992). As explained above, there is a genuine issue of fact as 1 51 F.3d at 1432–33. Elhauge reports that CMC’s market share increased to nearly 100% when it 2 acquired the Rancho mill in 2018. Elhauge Reply Report ¶ 136. Elhauge’s data spans 2017 to 2021, 3 and shows that after CMC acquired then shut down the Rancho mill, it was able to significantly 4 reduce steel output in the market (worsening a steel rebar shortage) and charge higher profits. See 5 id. at ¶ 164. Together, these facts raise a question appropriately decided by a jury as to whether 6 CMC possesses a dangerous probability of achieving monopoly power. Accordingly, CMC’s 7 motion on this basis fails. 8 IV. STATE CLAIMS 9 Finally, CMC moves for summary judgment on Pacific Steel’s Cartwright Act, UCL, and 10 interference with prospective economic advantage claims, all of which sound in California law. 11 Pacific Steel cross-moves for summary judgment on its interference with prospective economic 12 advantage claims. The Court denies the parties’ motions. 13 A. Cartwright Act and UCL 14 Like Section 1 of the Sherman Act, California’s Cartwright Act bans agreements that 15 “prevent competition in . . . [the] sale or purchase of . . . any commodity.” Cal. Bus. & Prof. Code 16 § 16720(c). Because it was modeled after the Sherman Act, “[t]he analysis under California’s 17 antitrust law mirrors the analysis under federal law.” Cnty. of Tuolumne v. Sonora Cmty. Hosp., 18 236 F.3d 1148, 1160 (9th Cir. 2001). California’s Unfair Competition Law (UCL) prohibits “any 19 unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. “[C]laims 20 raised under the UCL’s unlawful prong rise or fall with the Court’s determination of liability with 21 respect to the underlying violation.” GreenCycle Paint, Inc. v. PaintCare, Inc., 250 F. Supp. 3d 22 438, 451 (N.D. Cal. 2017). CMC argues that these claims rise and fall with the Sherman Act claims. 23 See CMC Mot. at 24 (“PSG has staked those claims on the same conduct as its antitrust claims, so 24 summary judgment is proper for the same reasons detailed above.”). Since the Court found that 25 Pacific Steel’s Sherman Act claims survive summary judgment, it reaches the same conclusion as 26 to the Cartwright Act and UCL claims. 27 B. Interference with Prospective Economic Advantage 1 elements: (1) an economic relationship between the plaintiff and some third party, with the 2 probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the 3 relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) 4 actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by 5 the acts of the defendant. Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1153 6 (2003). To succeed on this claim, Pacific Steel must ultimately prove that CMC’s conduct was 7 “wrongful by some legal measure other than the fact of interference itself.” Della Penna v. Toyota 8 Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 393 (1995). An act is independently “wrongful” if it is 9 unlawful, i.e., “if it is proscribed by some constitutional, statutory, regulatory, common law, or other 10 determinable legal standard.” Korea Supply, 29 Cal. 4th at 1159. 11 CMC argues that (1) Pacific Steel’s economic relationship with Danieli was too speculative 12 to be actionable; and (2) CMC’s actions were not independently wrongful because it did not violate 13 any laws. CMC Mot. at 25. In its opposition, Pacific Steel argues that it “was engaged in a real and 14 ongoing relationship with Danieli to build a rebar mill before CMC intentionally blocked that 15 effort.” PSG Opp. at 25. 16 CMC is not entitled to summary judgment on this claim because Pacific Steel has put 17 forward sufficient evidence to reasonably support the conclusion that Pacific Steel had more than a 18 prospective relationship with Danieli. Pacific Steel proffers documents exchanged between its 19 senior officers and Danieli’s discussing terms for a MiDa mill. Dkt. No. 187-51, Ex. 49. Top 20 executives at Danieli eventually shared multiple rounds of proposals with Pacific Steel discussing 21 what the “investment level would be,” and after considering possible “new opportunities and new 22 projects and new customers,” were “prepared to sell Pacific Steel a MiDa mill in Southern 23 California.” Dkt. No. 155-4, Ex. 23 (“Losso Tr.”) at 48:20-49:21. Moreover, Pacific Steel has 24 submitted agreements between it and other companies regarding the inspection of the proposed mill 25 site. Exs. 49–53. Viewing this evidence in the light most favorable to the non-moving party, a 26 reasonable jury could find that Pacific Steel had a relationship with Danieli, with the probability of 27 future economic benefit. Accordingly, the Court denies CMC’s motion for summary judgment. 1 same undisputed facts that establish [its] restraint of trade claim also prove all six elements of its 2 intentional interference . . . claim. PSG Mot. at 25. But since the Court denied Pacific Steel 3 summary judgment on its restraint of trade claim, it does so again on this basis.

4 // 5 // 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 V. CONCLUSION The Court DENIES both parties’ motions for summary judgment. See Dkt. Nos. 155, 235. 2 The clerk is directed to serve via email Christopher Wheeler (cwheeler@fbm.com), 3 Benjamin Brown (bbrown @cohenmilstein.com), Steven Bizar (steven.bizar@dechert.com), and 4 Bonnie Lau (blau@mofo.com). 5 IT IS SO ORDERED. 6 Dated: 6/28/2024 7 8 iaywos S. GILLIAM, JR. i 9 United States District Judge 10 11 12

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