Tuesday, November 28, 2006

Weyerhaeuser Oral Arguments

Find attached the transcript of the oral argument in the Weyerhaeuser case: Download Weyerhaeuser.pdf

As with Twombly, the argument was lively.  However, the discussion did become a bit more esoteric as it explored the economics of the pricing scheme.  There is a good chance that Justice Breyer will write the opinion, and the following exchange from Transcript at pages 31-33, with Mr. Haglund, arguing for the respondent Ross-Simmons, is revealing:

"Justice Breyer:  So where we are is at the problem.  The problem is the same as at the buying side.  What we have is possibly a very bad motive and very bad effects.  On the other hand, low prices are good for the consumer.

"Mr. Haglund: But you're not--

"Justice Breyer:  Here we have bad effects, bad possibilitied. On the other hand, higher prices are good for the woodsmen.  So we need rules to separate the shep from the goats.  And the other side is proposing a rule, and the rule simply is don't count this as bad conduct, unless the person who pays the money for the goods is in fact buying so many goods that later on when he tries to sell them he will incur a loss.

"Now I would have thought for 40 years that was a traditional idea.  If you're trying to decide whether people are hogging goods unnecessarily for bad purposes, or rather storing up nuts for winter for good purposes, then a very good key to that is to do these people expect in the long run to make money out of this without driving those victims out?   If the answer is yes; they can make money on the market, they are storing up nuts for the winter.  It's good.  And if the answer is no it's bad.  That's called the recoupment test. I don't think that's new.  I think it's old." 

It will be interesting to see if the Court devices a one part test to assess both predatory bidding and predatory selling based on recoupment.   I feel confident in predicting that the Court will not simply affirm the Ninth Circuit and a remand with jury instructions reflecting the new standard articulated by the Court will be the final result.


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