Failure To Adequately Allege Lack Of Supply Cross-Elasticity Dooms Attempted Monopolization Action To 'Quick Look' Dismissal

GULF STATES REORGANIZATION GROUP, INC. V. NUCOR CORP. (11th Cir. July 15, 2013) No. 11-14983.

In 1999, Gulf States Steel, Inc., a participant in a market described as "black hot rolled coil steel" filed a petition for bankruptcy. When reorganization efforts failed, and it filed a Chapter 7 petition, a group called Gulf States Reorganization Group ("GSRG") negotiated with the Bankruptcy court to purchase and operate the "black hot rolled coil steel" assets. The Bankruptcy court issued an order requiring the sale of the assets to GSRG, unless another entity made a higher bid. In that eventuality, an auction would be held.

Nucor, a participant in the black hot rolled coil steel market, joined with Casey Equipment Corp. to form a shell entity to bid for the assets. Although GSRG submitted the highest bid, it was rejected as being non-conforming. Accordingly, the Nucor group purchased the assets, and later sold the steel producing assets to an Asian buyer. Nucor and Casey made a substantial profit on the transaction.

When GSRG learned that Nucor and Casey had been successful in obtaining the steel producing assets, it filed a complaint alleging that they had contracted and combined in violation of Section 1 of the Sherman Act to keep the steel producing assets from recompeting in the market. It alleged further that Nucor's purchase and sale of the assets created a dangerous probability that it would obtain monopoly power in a relevant market described as "black hot rolled coil steel in the Southwest United States". The District Court dismissed the complaint for failure to state a cognizable antitrust injury, and that plaintiff accordingly, lacked antitrust standing. The Court of Appeals reversed, and remanded. See Gulf States Reorganization Group, Inc. v. Nucor Corp., 466 F.3d 961 (11th Cir. (2006)).

On remand, to the District Court, James F. Rill, a former Assistant Attorney General in charge of the Antitrust Division, was appointed as a Special Master. Special Master Rill issued four reports. In the third and fourth reports, he recommended that Nucor be granted summary judgment as to all claims. The District Court adopted the reports and recommendations, and granted summary judgment. GSRG again appealed.

GSRG argued on appeal, inter alia, that the District Court improperly rejected its market definition of "black hot rolled coil steel". The District Court had reasoned that steel producers currently making "pickled and oiled steel" could forgo...