UNION CARBIDE CORPORATION, individually and on behalf of and as the successorin interest of Seadrift Polypropylene Company, Plaintiff,

v.

MONTELL N.V.; Montell Polyolefins; Montell North America Incorporated; Montell USA Incorporated; Technipol S.r.l.; Montedison S.p.A.; Montell Finance USA, Inc.; Royal Dutch Petroleum Company, p.l.c.; The Shell Transport and Trading Company, p.l.c.; Shell Petroleum N.V.; The Shell Petroleum Company Limited; Shell Petroleum Inc.; Shell Oil Company; Shell Polypropylene Company; Shell Canada Limited; Shell International Chemical Company Limited; and Shell Internationale Research Maatschappij B.V., Defendants.

No. 95 Civ. 0134(SAS).

United States District Court,

S.D. New York.

Aug. 4, 1998.

SCHEINDLIN, District Judge.

Plaintiff Union Carbide Corporation ("UCC") filed a Fourth Amended Complaint on September 24, 1996, asserting a variety of tort, contract and antitrust claims arising out of its business dealings with defendant Shell Oil Company ("SOC") in the 1980's and early 1990's. On May 27, 1998, defendants made seven separate motions seeking summary judgment on ten of UCC's claims. Three of these motions were referred to Special Master Bernard S. Black for a report and recommendation ("the Report"). The Report was submitted on June 23, 1998. On August 3, 1998, UCC and the Shell defendants settled their portion of the case, and thus rendered moot the Shell/Montell motion. This Opinion reviews de novo those portions of the Report not rendered moot by the partial settlement.

I.  Factual Summary

The facts of this case were described at some length both by the Court in two of its prior opinions in this case and by the Special Master. See Union Carbide Corp. v. Montell N.V., 95 Civ. 0134, slip op. at 2-5 (S.D.N.Y. July 2, 1998); Union Carbide Corp. v. Montell N.V., 95 Civ. 0134, slip op. at 2-12 (S.D.N.Y. June 3, 1998); Report at 4-15. These facts will therefore not be repeated here, except to the extent necessary to understand my review of the Report.

II.  Summary Judgment Standard

A motion for summary judgment may be granted only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party has the initial burden of identifying evidence that demonstrates the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Capital Imaging Associates, P.C. v. Mohawk Valley Medical Associates, Inc., 996 F.2d 537, 542 (2d Cir.1993). Once this burden is met, the non-movant must produce evidence from which a rational jury could find in its favor. See R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 58 (2d Cir.1997). In determining whether summary judgment should be granted, the court resolves all ambiguities and draws all reasonable inferences against the moving party. See id.

Antitrust claims typically arise out of complex factual situations that support a wide variety of possible inferences; summary judgment on such claims may therefore be difficult to obtain. See Capital Imaging, 996 F.2d at 541. However, because of the potential chilling effect of prolonged antitrust litigation on competition, parties that forward economically implausible antitrust claims "must come forward with more persuasive evidence to support [their] claim[s] than would otherwise be necessary" to survive summary judgment. R.B. Ventures, 112 F.3d at 58 (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)); see also Clorox Co. v. Sterling Winthrop, Inc., 117 F.3d 50, 55 (2d Cir.1997) (" '[I]n the context of antitrust litigation the range of inferences that may be drawn from ambiguous evidence is limited; the nonmoving party must set forth facts that tend to preclude an inference of permissible conduct.' ") (quoting Capital Imaging, 996 F.2d at 542)). Nevertheless, a court considering a motion for summary judgment on an antitrust claim may not weigh the evidence presented as if it were the trier of fact: Even when a plaintiff's claim is implausible, summary judgment may not be granted if "reasonable minds could differ as to the import of the evidence." R.B. Ventures, 112 F.3d at 58-59 (quoting Brady v. Town of Colchester, 863 F.2d 205, 211 (2d Cir.1988)).

III.  Discussion

A.  Montedison's Motion for Summary Judgment on Claim III

Montedison first moves for summary judgment on UCC's third claim for relief, which alleges a violation of Section 1 of the Sherman Act in the polypropylene resin market. This section makes unlawful "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce...." 15 U.S.C. § 1. To prevail on a Section 1 claim, a plaintiff must show "(1) a combination or some form of concerted action between at least two legally distinct economic entities; and (2) [that] such combination constituted an unreasonable restraint of trade either per se or under the rule of reason." Tops Markets, Inc. v. Quality Markets, Inc., 142 F.3d 90, 95-96 (2d Cir.1998).

a.  Proof of Conspiracy

Montedison challenges the sufficiency of UCC's proof on the first prong of this test. I agree with the Special Master that UCC has produced evidence from which a rational juror could find that Shell and Montedison's agreement to pursue the formation of Montell included an agreement to limit output in the polypropylene resin market by ending Nautilus negotiations. For instance, one contemporaneous Montedison memo reports that "[a]s a result [of the Sophia negotiations], Shell blocked all relations with UCC, with whom they were negotiating a JV [i.e. Nautilus] in the US...." Plaintiff Union Carbide Corporation's Response to Defendant's Joint Statement of Material Facts Pursuant to Local Rule 56.1 in Support of Their Motions for Summary Judgment ("Pl's 56.1 Response") at ¶ 144(b). Notes from a Project Sophia meeting further illustrate the causal connection between the Sophia negotiations and the end of Nautilus: "Shell (was) talking to UCC to expand PP in USA....," but "they could stop contacts with [UCC] for (Unipol) expansion of their PP interests in US." Defendants' Joint Statement of Material Facts Pursuant to Local Rule 56.1 In Support of Their Motions for Summary Judgment, Ex. 106. The real question, therefore, is not whether this agreement existed, but whether it amounted to an "unreasonable restraint of trade" within the meaning of the Sherman Act.

b. Was Termination of Nautilus an Ancillary Restraint?

As noted above, a plaintiff can demonstrate the unreasonableness of a restraint on trade under either a "per se" or "rule of reason" theory. Per se analysis, however, is inappropriate in cases where the "challenged conduct is subservient or ancillary to a transaction which is itself legitimate." See United States v. Columbia Pictures Corp., 189 F.Supp. 153, 177 (S.D.N.Y.1960). The Special Master correctly determined that the conduct challenged here--the Shell/Montedison agreement to end the Nautilus negotiations--was ancillary to the formation of Montell. UCC resists this conclusion on two grounds. First, it contends that the decision to terminate Nautilus was not a necessary consequence of the decision to pursue Montell and was therefore not an "ancillary" agreement. UCC has previously stated, however, that "[a]ll the parties were well aware of the fact that for SOC to join [Montell], SOC would have to stop its expansion plans with UCC and terminate its relationship with UCC." UCC's 56.1 Response at ¶ 144(e). In light of this admission, its half-hearted, eleventh-hour change of position is unpersuasive.

Second, UCC argues that the ancillary restraints doctrine does not apply because the formation of Montell was not "lawful." The deal's unlawful nature, it contends, is demonstrated by the fact that it received only conditional approval from antitrust regulators. Suffice it to say that UCC cites no authority that provides an iota of support for this argument. See Blackburn v. Sweeney, 53 F.3d 825, 828 (7th Cir.1995) (ancillary restraint doctrine not applicable to competition-restricting agreement when such agreement was not a necessary component of legitimate partnership dissolution contract); General Leaseways v. National Truck Leasing Ass'n, 744 F.2d 588, 595 (7th Cir.1984) (ancillary restraint doctrine not applicable to competition- restricting agreement when such agreement was not a necessary component of a legitimate reciprocal-service arrangement).

c. Rule of Reason

The fact that an agreement may be considered ancillary to a legitimate one, however, does not end the inquiry. Even an ancillary restraint may violate the Sherman Act if it fails to satisfy the "rule of reason" test. See Brown v. Pro Football, Inc., 50 F.3d 1041, 1056 (D.C.Cir.1995). In the Second Circuit, the first step in a rule of reason analysis is an examination of a defendant's market power, see Capital Imaging, 996 F.2d at 546 ("[M]arket power ... [is] a highly relevant factor in rule of reason analysis."), the presence of which is often, though not always, determined with reference to its market share. See K.M.B. Warehouse Distributors, Inc. v. Walker Mfg. Co., 61 F.3d 123, 129 (2d Cir.1995) ("[M]arket share may be used as a proxy for market power.").

Here, UCC's expert estimated Himont/Montell's share of the North American polypropylene resin market to have been 27.6% in 1990 and 22.9% in 1995. See Expert Report of Dr. Andrew Joskow ("Joskow Rep."), Exhibits Cited in Plaintiff Union Carbide Corporation's Statement of Material Facts as to Which There is a Genuine Dispute Pursuant to Local Rule 56.1 ("UCC's 56.1") at Ex. 6. Courts have consistently held that firms with market shares of less than 30% are presumptively incapable of exercising market power. See Jefferson Parish Hospital Dist. v. Hyde, 466 U.S. 2, 27, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984) (firm with 30% market share lacks "dominant market position"); Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 517 (3rd Cir.1998) ("[S]ince Jefferson Parish, no court has inferred substantial market power from a market share below 30%."); Valley Products v. Landmark, 128 F.3d 398, 402 n. 3 (6th Cir.1997) ("[C]ourts hav[e] repeatedly held that a 30% market share is insufficient to confer ... market power...."). Cf. Yeager's Fuel, Inc. v. Pennsylvania Power & Light Co., 953 F.Supp. 617, 658 (E.D.Pa.1997) (summary judgment denied where defendant had 31% market share and this market share was increasing despite defendant's supracompetitive prices).

Market power may also be shown by evidence of "specific conduct indicating the defendant's power to control prices or exclude competition." K.M.B. Warehouse, 61 F.3d at 129 (quoting Broadway Delivery Corp. v. United Parcel Serv., 651 F.2d 122, 126-27 (2d Cir.1981)). As the Report points out, there is evidence in the record suggesting that the termination of Nautilus led to an increase in polypropylene prices in 1994 and 1995. See Expert Report of Benjamin Klein, UCC 56.1 at Ex. 4 ¶ 82. However, UCC cannot show that this increase was the product of "control" exerted by Shell or Montedison: It is undisputed that numerous competitors could have increased production in 1994 and 1995 but chose not to do so. See Joskow Rep. at Ex. 9. While polypropylene prices did increase over those two years, no rational juror could find that this was the result of market power exercised by Shell or Montedison. [FN1]

FN1. UCC also points to an FTC document that describes the polypropylene resin market as one characterized by high barriers to entry. UCC pointedly fails to object, however, to the Report's assertion that there is no evidence to suggest that the firms already participating in the polypropylene market faced any significant barriers to expansion. See Report at 53.

As UCC points out, a showing of market power is not an absolute requirement in a Section 1 case. In some circumstances, at least, other proof of an "actual adverse effect on competition" may suffice. FTC v. Indiana Federation of Dentists, 476 U.S. 447, 461, 106 S.Ct. 2009, 90 L.Ed.2d 445 (1986). This standard is a difficult one for UCC to meet, however: The Court's research has failed to uncover any case in which an actual adverse effect on competition was found in the absence of (1) market power or, at least, high market share and (2) conduct that was either per se illegal or close to it. See id. at 458-61, 106 S.Ct. 2009 (members of defendant organization constituted "heavy majorities" of practicing dentists in the relevant market; members had engaged in a group boycott); National Collegiate Athletic Ass'n v. Board of Regents, 468 U.S. 85, 99, 110, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984) (defendant had market power; members had engaged in a horizontal restriction on price and output, "perhaps the paradigm of an unreasonable restraint on trade"); Wilk v. American Med. Ass'n, 895 F.2d 352, 360, 359-60 (7th Cir.1990) (defendant had market power; members had engaged in a group boycott); Oltz v. St. Peter's Community Hosp., 861 F.2d 1440, 1442, 1446-47 (9th Cir.1988) (defendant had 84% of relevant market share; co-defendants had engaged in a group boycott); see also E.W. French & Sons, Inc. v. General Portland Inc., 885 F.2d 1392, 1403 (9th Cir.1989) (concurring opinion) (evidence suggests defendants had market power and engaged in a price-fixing conspiracy; cases in which a plaintiff can recover solely on price increases or output reduction to establish actual adverse effect on competition "doubtless ... will be rare"). Thus, the "actual adverse effect" test is not intended to radically lower the burden of proof in Section 1 cases, but rather to provide a "safety valve" to cover situations in which a plaintiff fails to meet either the market power or the per se conduct test, but comes close to meeting both.

Clearly, this is not such a situation. UCC can show neither market power, high market share, nor conduct even arguably approaching per se illegality. Moreover, its theory of competitive injury is rather far fetched. [FN2] In these circumstances, an expansive application of the "actual adverse effect" rule is not warranted. I therefore conclude that UCC has failed to proffer evidence that would support a rational jury verdict in its favor on this claim. [FN3]

FN2. UCC argues that [d]efendants, like other industry participants, were well aware that North American [polypropylene] capacity utilization--and [polypropylene] prices and profits--were projected to rise with growing demand in the mid 1990s when the Nautilus capacity was scheduled to come on stream, that significant additional Nautilus capacity would depress industry [polypropylene] prices and profits, and that most [polypropylene] producers would not authorize the construction of new capacity during the bottom of an industry cycle when prices and capacity utilization were low (as they were in the early 1990s).

UCC's Objections to Special Master Black's Report and Recommendation at 5 n. 5. This theory assumes irrational behavior on the part of other market participants: If it was known that polypropylene resin profits were to rise in the mid 1990s, each resin producer--absent an industry-wide conspiracy--would have had a powerful incentive to expand production in order to capture some of those profits. Because UCC's claim of harm to competition depends, at least in part, on this dubious theory, it faces a mildly heightened evidentiary burden at the summary judgment stage. See R .B. Ventures, 112 F.3d at 58; see also Capital Imaging, 996 F.2d at 546 ("[F]irms lacking substantial market power act against their own self-interest when they raise prices, reduce output, or otherwise restrain trade. The marketplace itself will discipline such misguided efforts as buyers switch to substitutes or new sources of supply enter the market.").

FN3. UCC also argues that the damages it seeks on Claim III--damages intended to compensate it for injury to its polypropylene resin business-- may be recoverable under one of its other antitrust claims, given the interrelatedness of the Total Package License and polypropylene resin markets. It would be premature to decide this issue now: The parties did not address it at all in their motion papers and only discussed it briefly in their responses to the Report. UCC may be able to prove that at least some portion of the damage to its polypropylene resin business was caused by Montedison's alleged anticompetitive behavior in the separate, but related, Total Package License market. See Image Technical Servs., Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1222 (9th Cir.1997). If UCC fails to proffer sufficient proof to justify a finding that some of the damages to this business were caused by Montedison's alleged conspiracy to monopolize, attempt to monopolize and/or restraint of trade in the Total Package License market, then Montedison's motion for judgment as a matter of law on this issue at the close of plaintiff's case will be granted.

B.  Interpretation of Claim V

Though Montedison did not move for summary judgment on UCC's Claims IV or V, one issue regarding Claim V must be addressed here. The Special Master recommends that I interpret that claim to allege a unilateral attempt to monopolize by Montedison as well as a conspiracy to monopolize by Montedison and Shell. See Report at 32. As Montedison points out, the claim is phrased generally and, standing alone, makes no specific allegations concerning a unilateral attempt to monopolize by any defendant. See Complaint at ¶¶ 238- 43. However, it does incorporate by reference other parts of the Complaint, some of which make allegations suggesting that Montedison attempted unilaterally to monopolize the Total Package License market. See, e.g., Complaint at ¶ 105 ("Montedison concluded that the UCC/Venture was the only competitor in a position to be a serious threat to its dominance in the licensing of polypropylene technology...."); id. at ¶ 106 ("Montedison sought to break apart the UCC/Shell Venture by inducing UCC to align with Montedison. After UCC rejected Montedison's approach ... Montedison ... contacted RDS and Shell and proposed combining their respective polyolefins businesses into a worldwide venture...."). From these allegations, a party as sophisticated as Montedison could have inferred that it was accused of both joint and unilateral conduct. I am cognizant of the fact that the Complaint's lack of clarity may have affected Montedison's ability to move for summary judgment on this component of UCC's claim. In light of the fact that the evidence supporting it will be largely redundant of the evidence on the conspiracy to monopolize theory, however, Montedison will not be unduly prejudiced if any summary judgment motion it may make is decided concurrently with a motion for a directed verdict at the close of UCC's case. I therefore accept the Special Master's recommendation on this issue

C.  Montedison's Motion for Summary Judgment on Claim VI

Montedison also moves for summary judgment on UCC's Claim VI, which alleges that the RDS Group, Shell Transport, Montedison and Montell N.V. violated Section 7 of the Clayton Act with regard to the Total Package License and Catalyst markets. Having reviewed the record and the parties' briefs, and having received no objections to the Report, I accept the recommendation of the Special Master: Summary judgment is granted for all defendants on Claim VI, but only insofar as it alleges acts prior to the formation of Montell. [FN4]

FN4. Finally, I reject the Special Master's recommendation that the jury be instructed that there is no genuine dispute as to the existence of a conspiracy between Shell and Montedison. See Report at 61. For one thing, UCC has not moved for summary judgment. For another, as Shell points out, the word "conspiracy" generally connotes an illegal agreement. The parties here do not dispute that Shell and Montedison reached an agreement regarding Montell. The legality of that agreement, however, is hotly disputed.

IV.  Conclusion

For the above stated reasons, I hereby accept and adopt the Report insofar as it recommends that: 1) summary judgment be granted for Montedison on Claim III of the Complaint; 2) partial summary judgment be granted on Claim VI; 3) Claim V be interpreted to include both a claim for conspiracy to monopolize by Shell and Montedison and a claim for unilateral attempt to monopolize by Montedison. However, I reject the Report's recommendation that the jury be instructed that, as a matter of law, UCC has demonstrated the existence of a conspiracy between Shell and Montedison.

__________________________________

UNION CARBIDE CORPORATION, individually and on behalf of and as the successor in interest of Seadrift Polypropylene Company, Plaintiff,

v.

MONTELL N.V.; Montell Polyolefins; Montell North America Incorporated; Montell USA Incorporated; Techipol S.r.l.; Montedison S.p.A.; Montell Finance USA, INC.; Royal Dutch Petroleum Company, p.l.c.; The Shell Transport and Trading Company, p.l.c.; Shell Petroleum N.V.; the Shell Petroleum Company Limited; Shell Petroleum Inc.; Shell Oil Company; Shell Polypropylene Company; Shell Canada Limited; Shell International Chemical Company Limited; and Shell Internationale Research Maatschappij B.V., Defendants.

No. 95 Civ. 0134(SAS).

United States District Court, S.D. New York.

June 5, 1998.

OPINION AND ORDER

SCHEINDLIN, J.

Plaintiff Union Carbide Corporation ("UCC") filed a Fourth Amended Complaint on September 24, 1996, asserting a variety of tort, contract and antitrust claims arising out of its business dealings with defendant Shell Oil Company ("SOC") in the 1980's and early 1990's. On May 27, 1998, defendants made seven separate motions seeking summary judgment on eight of UCC's claims. This Opinion resolves SOC's motion for partial summary judgment on UCC's breach of fiduciary duty claim. For the following reasons, this motion is granted in part and denied in part.

I. Factual Summary [FN1]

FN1. For the purposes of this motion, where plaintiff has met its burden of identifying relevant, admissible evidence, its version of the disputed

facts is accepted as true. See Part II, infra.

A.  The Parties

I begin with a sketch of the relevant corporate genealogies. Royal Dutch Petroleum Company ("Royal Dutch") is a corporation organized pursuant to the laws of The Netherlands and has its principal place of business in The Hague, The Netherlands. See Plaintiff Union Carbide Corporation's Response to Defendants' Joint Statement of Material Facts Pursuant to Local Rule 56.1 in Support of Their Motions for Summary Judgment ("Pl's 56.1 Response") at ¶ 1. [FN2] The Shell Transport and Trading Company, p.l.c. ("Shell Transport") is an English corporation with a principal place of business in London, England. Royal Dutch and Shell Transport together own Shell Petroleum N.V. ("SPNV"), The Shell Petroleum Company Ltd. ("SPCo") and Shell Petroleum Inc. ("SPI"). See id. at ¶ 2. As of 1994, SPNV and SPCo together owned Shell International Chemical Company Ltd. ("SICC") and Shell Internationale Research Maatschappij B.V. ("SIRM"). See id. at ¶ 3. SPNV and SPCo currently own a majority of the shares of Shell Canada Ltd. ("SCAN"), a Canadian corporation. See id. at ¶ 4. Plaintiff refers to Royal Dutch, Shell Transport, SPNV, SPCo, SPI, SICC, SIRM, and SCAN collectively as "RDS." See Plaintiff Union Carbide Corporation's Statement of Material Facts as to Which There is a Genuine Dispute Pursuant to Local Rule 56.1 in Opposition to Defendant's Motions for Summary Judgment on the Third, Fourth, Fifth, Sixth, Seventh and Tenth Claims for Relief ("Pl's 56.1") at 12 n. 6. [FN3] The Court will follow this nomenclature.

FN2. This document incorporates Defendants' Joint Statement of Material Facts Pursuant to Local Rule 56.1 in Support of Their Motions for Summary Judgment; the latter document will therefore not be cited separately.

FN3. Defendants refer to the same group of companies as the "Shell defendants." See Pl's 56.1 Response at ¶ 5.

The Shell Oil Company ("SOC"), an SPI subsidiary, is a Delaware corporation with a principal place of business in Houston, Texas. See Pl's 56.1 Response at ¶¶ 3, 12(a). Shell Chemical Company ("SCC") is a subsidiary of SOC. See id. at ¶ 17.

Montedison S.p.A. ("Montedison") is an Italian corporation with a principal place of business in Milan, Italy. See id. at ¶ 6(a). Montedison owns Montecatini, S.p.A. ("Montecatini"), a holding company which controls Montedison's polypropylene ("PP") and polyethylene ("PE") manufacturing and licensing businesses. See id. at ¶¶ 6(c)-(f). Before the creation of Montecatini in 1990, Hammond Incorporated and its subsidiaries (collectively "Hammond") handled Montedison's PP business and Montecatini Technologic its PE business. See id.

Montell N.V. ("Montell") is a Dutch corporation formed pursuant to a 1993 merger agreement between Montedison (Nederland) N.V., a Montedison subsidiary, and SPNV. See id. at ¶ 7(b). Montell N.V. owns Montell Polyolefins B.V. and Montell Finance USA Inc.; the latter owns Montell North America Inc., which, in turn, owns Montell USA Inc. (formerly known as Hammond U.S.A., Inc.). See id. at ¶¶ 8-9. In 1997, Montedison sold its interest in Montell N.V., which is now wholly owned by SPNV and SPCo. See id. at ¶ 11.

Union Carbide is a corporation organized pursuant to the laws of New York. See id. at ¶ 18.

B.  PP Production

PP is a member of a group of plastics known as "polyolefins." See Expert Report of Dr. Andrew Joskow (UCC expert witness) ("Joskow Rep."), Pl's 56.1, Ex. 6 at 3. Polyolefins are created by the process of "polymerization," in which basic petrochemicals such as propylene and ethylene are exposed to certain catalysts. See id. PE is produced when ethylene is polymerized, PP when propylene is polymerized. See Declaration of Stephen Kaufman (UCC Director of Polypropylene) ("Kaufman Dec."), Pl's 56.1, Ex. 1 at 8-9. PP, which is generally sold as a solid resin to end-use manufacturers, is used in a variety of common products, such as appliances, film, bottles, toys, carpeting, rope and auto parts. See id. at 8, 10. PP is cheaper to produce than PE, and has more commercial uses. See id.

For the purposes of the present dispute, there are two basic classes of technology that a manufacturer of PP must possess: (1) "Process" technology, which enables the manufacturer to design, construct and operate equipment in which the polymerization process can take place; and (2) "Catalyst" technology, which involves the development of specific catalysts that can be used to produce specific types of PP. See id. at 9-10. Process and catalyst technologies are closely linked, because catalysts must be designed to work with particular processes. See id. at 15.

Companies that want to produce PP resin must either possess or license process and catalyst technology. In practice, because of the close linkage between these technologies, and because process technology is closely linked to plant design, companies license process and catalyst technology as part of a "total package" including plant design, thus creating a market ("PP license market") for PP total package licenses ("Total Package Licenses"). See id. at 12.

C. UCC's Efforts to Enter the PP License Market

UCC has long possessed state-of-the-art (hereinafter "current generation") PP process technology, originally developed for PE and then modified for use with PP, which it calls "UNIPOL." See id. at 13. Prior to the events giving rise to this lawsuit, however, it did not have the current generation catalyst technology necessary to compete in the PP License Market. See id. at 11, 13.

In the early 1980's, UCC decided to attempt to enter the PP License Market. See id. at 12. It also determined, however, that the cost and risks required were too great to warrant an attempt to develop current generation catalyst technology internally. See id. at 14-15. Instead, it decided to seek a joint venture partner from among the companies that already possessed such technology. See id. Its goal was to create a Total Package License which it and its co-venturer could license to PP manufacturers around the world. See id. at 12.

To this end, UCC initiated discussions with SOC in 1981 regarding the compatibility of UCC's UNIPOL process with SOC's catalyst technology (trademarked under the name "SHAC"). See id. at 23. Shortly thereafter, it entered similar negotiations with Hercules, Inc. ("Hercules") and Stauffer Chemical Company ("Stauffer"). See id. at 19, 21. The talks with Hercules ended when Montedison and Hercules agreed to combine their PP production facilities and technology to form Himont. See id. at 20. The negotiations with Stauffer collapsed in 1984, when Stauffer became a licensee of Himont's current generation catalyst technology. See id. at 21-22.

D. The UCC/SOC Cooperative Undertaking Agreement

UCC's talks with SOC were more fruitful, leading to the execution in 1983 of several related agreements, including a "Cooperative Undertaking Agreement" ("CUA"). See Defendant Shell Oil Company's Exhibits in Support of Motion for Partial Summary Judgment on UCC's Breach of Fiduciary Duty Claims ("Def's Fiduciary Duty Exhibits"), Ex. 2 at 91. This contract envisioned a three-stage effort by the parties jointly to produce PP and to develop a Total Package License business. See id. at Art. 2.01. In phase one, the parties would seek to develop their ability to produce commercially viable PP in "pilot plant operating conditions." Id . at Art. 1.12(a). In phase two, they would build a "demonstration plant" for the production of PP and begin marketing efforts. Id. at Art. 1.12(b). In phase three, they would continue PP production and license their PP technology to third parties. See id. at Art. 1.12(c).

The CUA contains a number of provisions that assume a relationship of cooperation and trust between the parties. For example, Article 2.01 states generally that "[t]he parties ... shall cooperate, one with the other, to carry out the Cooperative Undertaking for the development, use and licensing of the [parties' PP technology.]." Id. More specifically, Article 2.04 provides for the creation of a joint committee (the "CUA Management Team") to oversee the progress of the parties' venture and to take the steps necessary to achieve its goals. See id. Article 2.06 indicates that certain inventions made during the course of the venture will be considered to be jointly owned. See id. Articles 4.02 and 5.02 obligate the parties to share their proprietary PP- related technology. See id. Article 10 prohibits each from disclosing the confidential information of the other. See id. Finally, Article 6.04 provides for the sharing of certain venture-related expenses, and Article 8 for the sharing of profits and losses. See id. The contract, however, also contains the following disclaimer: "It is understood that this Agreement does not create a partnership or joint venture between the parties." See id. Art. 13.01.

Much of the parties, undertaking progressed as planned under the CUA. Pursuant to the agreement, the parties created a partnership known as the Seadrift Polypropylene Company ("Seadrift"). See id. at Art. 4.01; Kaufman Dec. at 25. When the UNIPOL and the SHAC processes had been adequately integrated, Seadrift began operating a PP producing plant using the UNIPOL/SHAC technology. See Kaufman Dec. at 25. The parties also began licensing their combined technology to other PP producers. See id. at 41.

The parties' cooperative relationship developed more or less according to plan as well. The parties shared profits and losses as well as confidential technological information. See, e.g., Testimony of William W. Chalmers, SOC Manager, Before the Federal Trade Commission ("Chalmers Testimony"), Plaintiff Union Carbide Corporation's Exhibits in Opposition to Defendant Shell Oil Company's Motion for Partial Summary Judgment on Breach of Fiduciary Duty Claims ("Pl's Fiduciary Duty Exhibits"), Ex. 17 at 84, 86. The undertaking was jointly managed, first under the CUA Management Team and later under a similarly staffed "Venture Management Team." See Deposition of John W. Goodenbour, SOC/UCC Venture Manager ("Goodenbour Dep."), at 36; Plaintiff Union Carbide Corporation's Statement of Material Facts in Dispute and Response to Defendant Shell Oil Company's Statement of Material Facts Not at Issue In Support for [sic] Partial Summary Judgment on Breach of Fiduciary Duty Claims ("Pl's Fiduciary Duty 56.1") at ¶ 10 [FN4]; Def's Fiduciary Duty Exhibits, Ex. 10. The parties thought of their relationship as one predicated on trust and a sense of mutual obligation. See, e.g., Deposition of Michael H. Grasley, SOC President ("Grasley Dep."), Pl's Fiduciary Duty Exhibits, Ex. 9 at 206.

FN4. As above, UCC's statement incorporates SOC's corresponding statement completely; thus, only UCC's will be cited.

E. The Nautilus Negotiations

Despite some initial success, the parties became concerned in the late 1980's that their efforts were not generating sufficient revenue to finance the investment in research and development necessary to remain competitive in the PP License Market in the long run. See Pl's 56.1 Response at ¶ 30(b). Both felt that the best solution to the problem was an expansion of their current enterprise and/or the creation of a new joint venture that would further exploit the UNIPOL/SHAC technology. See id. at ¶ 31(c). Discussions between the parties along these lines began in 1989. See id. at ¶ 34(a).

On February 26, 1990, UCC and SOC executed a "Disclosure and Secrecy Agreement" to facilitate negotiations. See id. at ¶ 35(a). This agreement provided that:

Unless the parties subsequently agree otherwise in a writing executed by duly authorized officers of the parties, at any time prior to the execution of a definitive joint venture or other business arrangement agreement, either party, in its sole discretion, may pursue alternative business opportunities, regardless of the fact that such pursuit may preclude consummation of any transactions which are being evaluated and discussed by the parties as contemplated by this agreement.

Id. at 35(c). Negotiations toward an expanded joint undertaking-- referred to as "Project Nautilus"--continued until August, 1991, when they terminated without success. See id. at ¶¶ 36-39, 104. The immediate reason for the termination was the fact that in the summer of 1991, RDS and SOC became interested in an alternative venture involving a combination of the PP assets of Himont and various Shell companies. See Pl's 56.1 Response at ¶¶ 108-110. At that time, Himont was the UCC/SOC venture's leading competitor in the PP License Market. See Joskow Rep., Pl's 56.1 Response at Ex. 314. Perhaps for this reason, SOC knew that it could not undertake both Nautilus and the Himont transaction. See Deposition of Italo Trapasso, Montecatini Chairman and C.E.O. ("Trapasso Dep."), Pl's 56.1 Response, Ex. 303 at 129-30. The Shell/Himont talks ultimately led to the formation of Montell in 1993. See supra Part I.A.

F. Research and Development Expenditures

Anticipating a successful completion of the Nautilus negotiations, UCC and SOC increased PP research and development spending beginning in 1990. See Deposition of Kenneth Spall, UCC Financial Analyst ("Spall Dep."), Pl's Fiduciary Duty 56.1, Ex. 75 at 59. This spending was cut, however, when the negotiations were terminated. See id.

II. Summary Judgment Standard

A motion for summary judgment may be granted only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party has the initial burden of identifying evidence that demonstrates the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Capital Imaging Associates, P.C. v. Mohawk Valley Medical Associates, Inc., 996 F.2d 537, 542 (2d Cir.1993). Once this burden is met, the non-movant must produce evidence from which a rational jury could find in its favor. See, R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 58 (2d Cir.1997). In determining whether summary judgment should be granted, the court resolves all ambiguities and draws all reasonable inferences against the moving party. See id.

III. Discussion

A. Fiduciary Duties Arising From the CUA

SOC first seeks summary judgment on the issue of whether the CUA, or actions taken pursuant to it, gave rise to a fiduciary relationship between the parties. Under New York law, a contract does not create a fiduciary relationship unless it places one or both parties in a "position of trust or special confidence" with regard to the other. Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13, 20 (2d Cir.1996); see also GLM Corp. v. Klein, 665 F.Supp. 283, 286 (S.D.N.Y.1987) ("If a contract establishes a relationship of trust and confidence between the parties ... then a fiduciary duty arises from the contract which is independent of the contractual obligation."); Furniture Consultants. Inc. v. Acme Steel Door Corp., 240 A.D.2d 180, 658 N.Y.S.2d 284, 284 (1st Dept.1997) ("arms-length" contractual obligation did not give rise to fiduciary duties). Contracts that create joint ventures necessarily establish relationships of "special confidence," and therefore give rise to fiduciary duties. See, e.g., Herrick Co. v. Vetta Sports, Inc., No. 94 Civ. 0905, 1996 WL 691993, at *11 (S.D.N.Y. Dec.3, 1996).

The question of whether a relationship rises to the level of a joint venture is one that can only be decided with reference to the particular contractual terms at issue. See United States v. Standard Oil Co., 155 F.Supp. 121, 148 (S.D.N.Y.1957), aff'd, 270 F.2d 50 (2d Cir.1959) (existence of a joint venture requires a fact-intensive inquiry). A joint venture "has been variously described as an association to carry out a single business enterprise for profit; a common enterprise for mutual benefit; and a combination of property, efforts, skill and judgment in a common undertaking." Sound Video Unlimited, Inc. v. Video Shack Inc., 700 F.Supp. 127, 138 (S.D.N.Y.1988) (quoting Standard Oil Co., 155 F.Supp. at 148). In order to form a joint venture under New York law,

(1) two or more persons must enter into a specific agreement to carry on an enterprise for profit; (2) their agreement must evidence their intent to be joint venturers; (3) each must make a contribution of property, financing, skill, knowledge, or effort; (4) each must have some degree of joint control over the venture; and (5) there must be a provision for the sharing of both profits and losses.

Itel Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd., 909 F.2d 698, 701 (2d Cir.1990).

As the facts described above reveal, a rational juror could find that elements (1), (3), (4), and (5) of this test are met here: The CUA envisioned a for-profit, jointly-managed enterprise to which both parties contributed property, skill and effort, and from which both took profits and bore losses. SOC does not contest that these elements are satisfied.

Instead, SOC asserts that the disclaimer contained in Article 13.01 of the CUA demonstrates that the parties did not intend to create a joint venture, and thus that the second requirement of the Itel test has not been satisfied. SOC's reliance on this disclaimer, however, is misplaced: While such clauses may be relevant to the question of whether the parties intended to create a joint venture, they are not dispositive. As I indicated in my previous opinion in this case, the substance--not the form--of a contract determines its legal consequences. See Union Carbide Corp. v. Montell N.V., 944 F.Supp. 1119, 1131 (S.D.N.Y.1995) (" 'statements that no partnership is intended are not conclusive. If as a whole a contract contemplates an association of two or more persons to carry on as co-owners a business for profit, a partnership there is.' ") (quoting Martin v. Peyton, 246 N.Y. 213, 217, 158 N.E. 77 (1927)). As SOC correctly points out, the issue must ultimately be resolved with reference to the parties' intent. See Bailey v. Broder, No. 94 Civ. 2394, 1998 WL 13827, at *1 (S.D.N.Y. Jan.15, 1998). However, the relevant inquiry is whether the parties intended to do the acts necessary to create the legal relationship, not whether they desired to be governed by the law applicable to that relationship. See id. (substance of parties' agreement determined their legal relationship, not the terminology used in the agreement); Rubenstein v. Small, 273 A.D. 102, 103-04, 75 N.Y.S.2d 483 (1st Dept.1947) (joint venture arises out of contract that "imports a relationship of trust and confidence between the parties" despite explicit provision stating that no joint venture was intended).

Application of the second element of the Itel test therefore requires analysis not of the label the parties chose to attach to their relationship, but of whether their contract envisions a joint undertaking that includes the other four elements. Because, as SOC concedes, the CUA provides for just such an undertaking, a rational juror could find that this element is satisfied as well. SOC is therefore not entitled to summary judgment on the issue of whether the CUA gave rise to a fiduciary relationship between it and UCC. [FN5]

FN5. Because there is a genuine issue of fact precluding summary judgment on the issue of whether the CUA created a fiduciary relationship between UCC and SOC, I need not address SOC's argument that the actions taken by these parties pursuant to the CUA did not create such duties: This argument is entirely dependent on the erroneous proposition that the Article 13.01 disclaimer is effective as a matter of law. See Defendant Shell Oil Company's Memorandum in Support of Motion for Partial Summary Judgment on Breach of Fiduciary Duty Claims ("Def's Fiduciary Duty Mem.") at 6-9.

B. Breach of Fiduciary Duties

SOC next argues that even if it owed fiduciary duties to UCC by virtue of the WA, these duties did not require it to form Nautilus. If such a requirement ever existed, SOC contends, UCC waived it by agreeing that either party could unilaterally terminate the Nautilus negotiations in favor of an alternative transaction. See supra Part I.E.

UCC does not dispute this: SOC's breach, it claims, flows not from its decision to abandon Nautilus, but from its participation in the Shell/Himont "conspiracy" to create Montell. Plaintiff Union Carbide Corporation's Memorandum in Opposition to Motion for Partial Summary Judgment on Breach of Fiduciary Duty Claims ("Pl's Fiduciary Duty Mem.") at 20. According to UCC, SOC agreed with Montedison (Himont's parent corporation) to "defer[ ], terminat[e] and never restart[ ] Project Nautilus negotiations" in order to facilitate the Shell/Himont deal. Id. at 20. As a result, it claims, SOC injured the UCC/SOC venture by reducing its research and development budget, which had been increased in anticipation of Nautilus. See id. at 20-21.

This argument, while a fine specimen of creative lawyering, is unsound. Despite UCC's rhetorical legerdemain, it is clearly attempting to hold SOC liable for not forming Nautilus. If SOC could neither "defer" nor "terminate" Nautilus negotiations, then if would be required to pursue those negotiations to a successful conclusion, and to do so promptly. It is equally clear that SOC was not required to participate in Nautilus. As UCC implicitly admits, any such requirement would fly in the face of the parties' Disclosure and Secrecy Agreement, which explicitly allowed unilateral termination in favor of other transactions. [FN6] While parties cannot effectively disclaim their status as joint venturers when their contract creates a relationship that is, in law, a joint venture, see supra Part III.A., they can agree to waive legal claims based on the fiduciary duties that arise from their relationships. See Cooper v. Parsky, No. 97-7525, 1998 WL 151731, at *8 (2d Cir. April 2, 1998) (contractual waiver of fiduciary duty claim effective); Asian Vegetable Research and Development Center v. Institute of Int'l Educ., 944 F.Supp. 1169, 1178 (S.D.N.Y.1996) (summary judgment granted for defendant on breach of fiduciary duty claim where contract disclaimed the existence of fiduciary duties between the parties). Because UCC waived any right it may have had to compel SOC to form Nautilus, it similarly waived any right it had to prevent SOC from "deferring, terminating, and never restarting" Nautilus negotiations. SOC is therefore entitled to summary judgment on this issue. [FN7]

FN6. I note that UCC took advantage of this clause by exploring its own transaction involving Himont's PP assets while the Nautilus negotiations were ongoing. See Pl's 56.1 Response at ¶¶ 40-72.

FN7. UCC also appears to suggest that SOC breached its fiduciary duties in that its motivation for ending the Nautilus negotiations was a desire to participate in the Shell/Himont transaction. See Pl's Fiduciary Duty Mem. at 21. UCC's reluctance to make this argument explicitly may stem from a realization that it is without merit: As noted above, the parties expressly agreed that either one could end the negotiations for precisely this reason. It is true that the formation of Montell may have injured the UCC/SOC venture by creating additional competition in the PP industry. However, given the limited number of companies who participate in the industry, see Joskow Rep. at 1-4, the pursuit of alternative deals incompatible with Nautilus--which the parties agreed to allow--necessarily includes deals involving other PP producers.

C. Evidence of Damages

Finally, SOC argues that UCC's damage calculations are incorrect as a matter of law in that they include a share of the profits the Nautilus joint venture would have earned had it gone forward. As the Second Circuit has recently noted, lost profits damages are available under New York law on breach of fiduciary duty claims. See American Federal Group. Ltd. v. Rothenberg, 136 F.3d 897, 907 (2d Cir.1998). However, the causal relationship between the lost profits and the breach must be demonstrated "with certainty" before a plaintiff may recover under this theory. Id. (citing Stoeckel v. Block, 170 A.D.2d 417, 417, 566 N.Y.S.2d 625 (1st Dept.1991)). Here, as I have discussed, UCC cannot show that SOC breached its fiduciary duties by failing to form Nautilus, nor has UCC identified any other breach of fiduciary duty by SOC at all related to Nautilus. In the absence of proof of a breach, there can be no assessment of damage flowing from that breach. Thus, UCC has failed to demonstrate any causal connection between SOC's alleged breach of fiduciary duty and the lost profits damages it seeks.

IV. Conclusion

A rational juror could conclude that the CUA created a joint venture involving SOC and UCC, and thus gave rise to fiduciary duties between them. SOC's motion for partial summary judgement on this issue is therefore denied. However, a rational juror could not find that SOC's termination of the Nautilus negotiations breached its fiduciary duties, nor that the profits Nautilus would have earned were lost as a result of any other breach on the part of SOC. Therefore, SOC's motion for partial summary judgment is granted as to these issues.

SO ORDERED:

S.D.N.Y.,1998.

Union Carbide Corp. v. Montell N.V.

__________________________________

UNION CARBIDE CORPORATION, individually and on behalf of and as the successor in interest of Seadrift Polypropylene Company, Plaintiff,

v.

MONTELL N.V.; Montell Polyolefins; Montell North America Incorporated; Montell USA Incorporated; Technipol S.r.l.; Montedison S.p.A.; Montell Finance USA, Inc.; Royal Dutch Petroleum Company, p.l.c.; The Shell Transport and Trading Company, p.l.c.; Shell Petroleum N.V.; The Shell Petroleum Company Limited; Shell Petroleum Inc.; Shell Oil Company; Shell Polypropylene Company; Shell Canada Limited; Shell International Chemical Company Limited; and Shell Internationale Research Maatschappij B.V., Defendants.

No. 95 CIV. 0134(SAS).

United States District Court, S.D. New York.

Aug. 12, 1998.

AMENDED OPINION AND ORDER

SCHEINDLIN, D.J.

Plaintiff Union Carbide Corporation ("UCC") filed a Fourth Amended Complaint on September 24, 1996, asserting a variety of tort, contract and antitrust claims arising out of its business dealings with defendant Shell Oil Company ("SOC") in the 1980's and early 1990's. On May 27, 1998, defendants made seven separate motions seeking summary judgment on ten of UCC's claims. Two of these motions were referred to Special Master Marvin E. Frankel for a report and recommendation ("the Report"). The thorough and thoughtful Report, submitted on June 29, 1998, recommended denial of both. On August 3, 1998, UCC and the Shell defendants settled their portion of the case. Although Montedison moved for summary judgment with regard to both claims seven and eight, it only objects to the recommendation regarding the eighth claim for relief. Accordingly, the recommendation regarding the disposition of the seventh claim for relief is hereby accepted and Montedison's motion for summary judgment on that claim is denied. This Opinion reviews de novo the Report's recommendation on the remaining motion, i.e. Montedison's motion for summary judgment on UCC's eighth claim for relief.

I. Factual Summary

The facts of this case were described at some length by the Court in two of its prior opinions in this case. See Union Carbide Corp. v. Montell N.V., 95 Civ. 0134, slip op. at 2-5 (S.D.N.Y. July 2, 1998); Union Carbide Corp. v. Montell N.V., 95 Civ. 0134, slip op. at 2-12 (S.D.N.Y. June 3, 1998). Therefore, only a brief elaboration of the facts relevant to the claim at issue is necessary.

In the late 1980's, Royal Dutch Shell ("RDS") agreed to acquire licenses from the UCC/SOC venture pursuant to which RDS could use the venture's polypropylene technology at a number of its polypropylene plants. See UCC's Statute of Limitations Exhibits, Exs. 3-4. As of October 1990, RDS planned to obtain further licenses from the venture. See id. at Ex. 5. Sometime in the summer of 1991, UCC learned that RDS and SOC were engaged in serious joint venture negotiations with Montedison, a company that possessed competing technology. See UCC's 56.1 Response at ¶ 100(c). UCC knew that these negotiations jeopardized its plans for an expanded polypropylene venture with SOC. See id. (SOC expressed a desire to put off further Nautilus negotiations for several months shortly after talks with Montedison began).

On December 2, 1991, SOC, SICC and Montecatini, a Montedison subsidiary, signed a "Letter of Intent" indicating their intention to proceed with the negotiations that ultimately led to the formation of Montell. See id. at ¶ 146(a). The Letter of Intent forbade negotiations with non-signatories on any subject matter presenting a potential conflict with the proposed venture, but made an exception permitting SOC to continue its discussions with UCC. See id. at ¶ 54(e), (f). The purpose of this exception was to allow SOC to terminate the UCC/SOC venture. See id. at ¶ 54(g). After this agreement was signed, RDS took no additional technology licenses from the UCC/SOC venture. UCC was not informed of the existence of either the letter of Intent or the secrecy agreement until after January 9, 1992. See, e.g., UCC Statute of Limitations Exhibits, Ex. 23 at 268-70.

II. Summary Judgment Standard

A motion for summary judgment may be granted only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party has the initial burden of identifying evidence that demonstrates the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Capital Imaging Associates, P.C. v. Mohawk Valley Medical Associates, Inc., 996 F.2d 537, 542 (2d Cir.1993). Once this burden is met, the non-movant must produce evidence from which a rational jury could find in its favor. See R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 58 (2d Cir.1997). In determining whether summary judgment should be granted, the court resolves all ambiguities and draws all reasonable inferences against the moving party. See id.

III. Discussion

The parties agree, and the Special Master held, that the statute of limitations applicable to a tortious interference with prospective contractual relations claim under New York law is three years, see Union Carbide Corp. v. Montell N.V., 944 F.Supp. 1119, 1138 (S.D.N.Y.1996) (citing N.Y. C.P.L.R. § 214(4) (McKinney 1990), and that UCC's original complaint was filed on January 9, 1995. See id. at 1140. They disagree as to when the statute of limitations accrued on UCC's claim.

As UCC points out, a tort claim does not accrue until each element of the tort "can be truthfully alleged in a complaint." Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 94, 595 N.Y.S.2d 931, 612 N.E.2d 289 (1993). To prevail on its claim, UCC must show "(1) business relations with a third party; (2) defendant's interference with those business relations; (3) [that] defendant [ ] acted with the sole purpose of harming the plaintiff or used dishonest, unfair or improper means; and (4) injury to the relationship." Purgess v. Sharrock, 33 F.3d 134, 141 (2d Cir.1994). This Court has previously held that a plaintiff must have been "reasonably certain" that it would have benefited from the prospective relationship absent the defendant's interference. Union Carbide Corp., 944 F.Supp. at 1142. Thus, a plaintiff suffers injury to its prospective contractual relationships when its "reasonable certainty" regarding the relationship in question disappears. [FN1]

FN1. Kronos is not to the contrary. The court there held that a claim for tortious interference with an existing contract does not accrue until the plaintiff suffers actual, pecuniary injury. See 81 N.Y.2d at 97, 595 N.Y.S.2d 931, 612 N.E.2d 289. When a prospective contract is tortiously interfered with, on the other hand, the injury is to the plaintiff's relationship with its prospective business partner. See Purgess, 33 F.3d at 141.

Here, no rational juror could find it to have been reasonably certain that UCC would continue to sell polypropylene manufacturing licenses to RDS or its affiliates after the Letter of Intent was signed. By signing the Letter, SOC and SICC manifested their intention to establish a business entity that would compete directly with UCC in the polypropylene technology licensing business. Given this intention, there was at least a substantial likelihood that other Shell companies would forgo further UCC licenses in favor of those provided by their affiliate. UCC implicitly concedes this point when it asserts that Grasely's (SOC) letter to Joyce (UCC) informing him of the RDS/Montedison talks caused its claim to accrue in August, 1992. See Plaintiff Union Carbide Corporation's Memorandum in Opposition to the Shell/Montell and Montedison Defendants' Motions for Summary Judgment on Statute of Limitations Grounds ("UCC's Mem.") at 9. If those talks injured UCC's prospective contractual relationships with the Shell companies, surely the execution of two binding agreements--the Letter of Intent and the secrecy agreement--injured that relationship.

UCC makes one implicit and one explicit objection to this conclusion. It implicitly contends that its injury could not have accrued before it was informed of the damage to its relationship with RDS. It has some justification for doing so, as this Court's Opinion resolving defendants' motion to dismiss contains language suggesting that notice to UCC was required before the statute would begin to run. See Union Carbide Corp., 944 F.Supp. at 1141 ("UCC's claim accrued in August 1992, when UCC learned through SOC that RDS and Montedison were discussing a possible joint venture. That appears to be the earliest that UCC was put on notice that RDS and Montedison were discussing a possible joint venture."). Insofar as that Opinion so held, however, I now believe it to have been in error. [FN2]

FN2. While this issue was not explicitly addressed in the motion to dismiss Opinion, I am cognizant of the fact that some of the concerns underlying the law of the case doctrine are applicable here. That doctrine, however, "is, at best, a discretionary [one], which does not constitute a limitation on the court's power." Tischmann v. ITT/Sheraton Corp., --- F.3d ----, 97 Civ. 7624, 145 F.3d 561, 1998 WL 300121 (2d Cir. June 10, 1998) (quoting Doctor's Assocs., Inc. v. Distajo, 107 F.3d 126, 131 (2d Cir.1997)).

The general rule in New York is that, absent fraud, a tort action "accrues when an injury occurs, even if the aggrieved party is then ignorant of the wrong or injury." Ackerman v. Price Waterhouse, 84 N.Y.2d 535, 541, 620 N.Y.S.2d 318, 644 N.E.2d 1009 (1994); see also Joseph M. McLaughlin, Practice Commentaries, McKinney's Cons.Laws of N.Y., CPLR C203:1, at 140 (1990) ("[T]he statute of limitations starts to run when the cause of action accrues ... knowledge of the cause of action is not required."; Jack B. Weinstein et al., New York Civil Practice: CPLR ¶ 203.01 (1998) ("[B]ecause knowledge of the cause of action is not required ... accrual may occur before the plaintiff is aware he has a cause of action.").

The application of this rule has led, at times, to arguably inequitable results, particularly in the toxic tort area. See, e.g ., Thornton v. Roosevelt Hosp., 47 N.Y.2d 780, 781, 417 N.Y.S.2d 920, 391 N.E.2d 1002 (1979) (products liability action time barred--action accrued when the defective drug was introduced into plaintiff's body, not twenty years later when its effects were discovered). In 1986, the Legislature responded to this problem by amending Article 2 of the CPLR to provide for an accrual date that runs from discovery of injury in certain actions. [FN3] See Rothstein v. Tennessee Gas Pipeline Co., 204 A.D.2d 39, 616 N.Y.S.2d 902, 903 (2d Dept.1994) (describing amendment of Article 2). Thus, in actions by the state for spoliation or misappropriation of public property, see N.Y. C.P.L.R. § 213(5) (McKinney 1990), actions for fraud, see N.Y. C.P.L.R. § 213(8) (McKinney 1990), actions to annual a marriage on grounds of fraud, see N.Y. C.P.L.R. § 214(7) (McKinney 1990), certain malpractice actions, see N.Y. C.P.L.R. § 214-a (McKinney 1990), personal injury actions based on exposure to Agent Orange, see N.Y. C.P.L .R. § 214-b (McKinney 1990), and certain other toxic tort actions, see N.Y. C.P.L.R. § 214-c (McKinney 1990), the accrual date is calculated with reference to the plaintiff's actual or constructive knowledge of the injury at issue. As Ackerman makes clear, however, these additions are merely exceptions to the traditional rule, not an outright rejection of it. See Ackerman, 84 N.Y.2d at 541, 620 N.Y.S.2d 318, 644 N.E.2d 1009.

FN3. N.Y. C.P.L.R. § 203(g) provides a two year post-discovery statute of limitations for such actions, except as to those for which a different limitations period is expressly provided.

Nowhere is it suggested that a claim for tortious interference with prospective contractual relations could fall within any of these categories. Therefore, the general rule applies, and renders irrelevant UCC's assertion that it was ignorant of the Letter of Intent and secrecy agreement until after January 9, 1992. See D'Andrea v. Rafla-Demetrious, --- F.Supp. ----, 92 Civ. 2783, 1996 WL 940209, at *14 n. 8 (E.D.N.Y. March 25, 1996) (tortious interference with prospective contractual relations injury occurred when defendant wrote letter critical of plaintiff to third party; date of notice to plaintiff not considered relevant).

The issue of notice aside, UCC also argues that a rational juror could find that it was reasonably certain to win licensing business from RDS even after December, 1991. [FN4] The only evidence it proffers supporting this assertion is a proposal for a "Process Design Package"--a package that would include UCC's "Unipol" technology--submitted by UCC to SIRM in April, 1992. See UCC's Statute of Limitation Exhibits, Ex. 34. This document shows that UCC continued to solicit business from RDS companies even after the Letter of Intent was signed. It cannot, however, support the conclusion that UCC was reasonably certain to win that business.

FN4. UCC also relies, as did the Special Master, on a September 1991 RDS

"Strategy Assessment" that envisioned the future use by RDS of UCC licenses. This document was written, however, before the Letter of Intent and secrecy agreements were signed.

IV. Conclusion

Because the undisputed facts show that UCC's Claim VIII accrued before January 9, 1992, summary judgment must be entered in favor of Montedison, and the Report's recommendation on this issue is rejected. However, as noted at the outset, the recommendation with regard to the seventh claim for relief is accepted and the motion for summary judgment on that claim is denied.

SO ORDERED:

S.D.N.Y.,1998.

_______________________________

UNION CARBIDE CORPORATION, Plaintiff,

v.

MONTELL N.V.; Montell Polyolefins; Montell North America Incorporated; Montell USA Incorporated; Technipol S.r.1.; Montedison S.p.A.; Montedison U.S.A., Inc., Defendants.

No. 95 Civ. 0134(SAS).

United States District Court,

S.D. New York.

OPINION AND ORDER

SCHEINDLIN, District Judge.

The parties have moved in limine pursuant to Rule 16(c)(3) and (4) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P.") to preclude the admission of certain evidence. Thirty separate motions were fully submitted on October 26, 1998. Eight of those motions were referred to Magistrate Judge Michael Dolinger for a report and recommendation. The parties also addressed the question of whether the liability and damages issues should be tried separately. Oral argument was held on November 2 through 5, 1998. The following constitutes the Court's rulings on the bifurcation question and on sixteen of the motions in limine (fourteen are decided and two have been deferred). The remainder of the motions will be addressed in separate orders. The facts of this case have been described in some detail in previous opinions and will not be repeated here. [FN1]

FN1. See Union Carbide v. Montell N.V., 95 Civ. 0134, 1998 WL 474207, * 1-2 (S.D.N.Y. Aug.12, 1998); Union Carbide Corp. v. Montell N.V., 9 F.Supp.2d 405, 407-408 (S.D.N.Y. July 2, 1998); Union Carbide Corp. v. Montell N.V., 95 Civ. 0134, 1998 WL 293991, *1-5 (S.D.N.Y. June 5, 1998); Union Carbide Corp. v. Montell N.V., 944 F.Supp. 1119, 1125-1131 (S.D.N.Y.1996). See also Report and Recommendation of Special Master Bernard S. Black, on Defendants' Motions for Summary Judgment, submitted June 23, 1998.

I.  Bifurcation of Liability and Damages

Prior to argument on the motions, the parties discussed the possibility of bifurcating the trial by trying the liability issues before reaching the issue of damages. See Transcript of Oral Argument, November 3, 1998 ("Nov. 3, 1998 Tr."), at 3-15. A court may order a separate trial of any issue to avoid prejudice and promote judicial efficiency. See Fed.R.Civ.P. 42(b); see also Vichare v. AMBAC Inc., 106 F.3d 457, 466 (2d Cir.1996). Bifurcation may be appropriate where the evidence offered on two different issues will be wholly distinct, see, e.g., Katsaros v. Cody, 744 F.2d 270, 278 (2d Cir.1984) (affirming bifurcation "because the two phases involved different types of evidence"), or where litigation of one issue may obviate the need to try another issue, Morse/Diesel, Inc. v. Fidelity and Deposit Co., 763 F.Supp. 28, 35 (S.D.N.Y.), modified in part on other grounds, 768 F.Supp. 115 (S.D.N.Y.1991), aff'd by summary order, 1996 WL 481813 (2d Cir. Aug.22, 1996).

The question of whether to bifurcate a trial into liability and damages phases is committed to the sound discretion of the trial court. See Getty Petroleum Corp. v. Island Transportation Corp., 862 F.2d 10, 15 (2d Cir.1988); see also 3 Moore's Federal Practice, § 16.77[4][a][iv] (Matthew Bender 3d ed.). When determining bifurcation issues, judges consider the following factors:

[1] The likelihood that bifurcation, or the failure to bifurcate, would result in risk of substantive prejudice, such as the jury not deciding any aspect of the case strictly on the merits of the evidence.

[2] The likelihood that bifurcation would enhance juror comprehension of the issues presented in the case.

[3] The likelihood that significant resources would be saved by bifurcation.

[4] The likelihood that significant resources would be wasted by bifurcation, as a result of having to repeat presentation in two proceedings of the same evidence.

[5] The potential that, after bifurcation and trial, the remaining issues might be resolved by motion or settlement.

[6] The fact that the case involves a class action or mass tort case involving many plaintiffs.

Id. at 184-85. Several of these considerations favor the bifurcation of liability and damages in this case.

First, bifurcation would enhance the jury's understanding of the issues in this complex case. The Court's Order Regarding Pre-Trial Schedules and Conduct of the Trial of September 11, 1998, directs that the trial is to last no more than eight weeks. Not only does the trial promise to be lengthy, but also complex. The case involves the obscure and highly technical field of technology licensing, as well as concepts of market share, competition and attempted monopolization. Jurors will be asked to evaluate the facts with regard to three antitrust claims and one state law claim of tortious interference with an existing contractual relationship. Both the liability and the damages issues presented by such claims involve voluminous evidence and difficult concepts lying at the crossroads of law and economics. The jury will be required to learn entirely new vocabularies in areas in which they are likely to be totally inexperienced. Segmenting difficult issues of liability and damages might enhance juror comprehension. Confronting one complex set of issues at a time is likely to reduce the possibility of jury frustration and confusion.

There is little likelihood of repetition or waste of resources because the damages issues do not appear to be inextricably interwoven with the liability issues or to require repetition of the evidence presented during the liability phase. The parties intend to call only a few witness in the damages phase. Plaintiff intends to rely primarily on its damages expert, Dr. Jeffrey J. Leitzinger; Defendants, in turn, will rely on their expert, Professor Sharon M. Oster. Both sides agreed that there may be a few additional brief witnesses during the damages phase. See Nov. 3, 1998 Tr. at 8-9. The parties agreed that the liability phase would last approximately seven weeks, and could be followed immediately, before the same jury, by a one-week trial on damages. See id. at 11-12.

Of course, if the jury concludes that Defendants have no liability, there would be no need to try damages. Finally, those motions in limine directed solely toward damages (Plaintiff's Motions 15 and 17) need not be decided prior to the damage phase, thereby decreasing the Court's burden. [FN2] As a result, any measure that reduces the Court's burden is viewed favorably.

FN2. This case has been very burdensome to the judicial system. In the close to four years that the case has been pending, the parties filed nine (9) motions, apart from the thirty (30) motions now pending. Two magistrate judges have handled innumerable discovery and trial disputes, including 2,300 objections to proposed trial evidence. The parties have also retained four (4) special masters to assist in resolving complex motions and supervising settlement talks. In addition, the Court has already issued five (5) significant opinions in this matter.

The arguments against bifurcation are less compelling. In candor, I do not believe that a plaintiff's liability verdict will result in settlement, given the significant legal issues that exist in connection with the calculation of damages. Plaintiff also fears that jurors will be influenced in their liability deliberations by their desire not to spend any further time on the case. While Plaintiff is right on the first argument, that does not weigh against bifurcation--it only confirms that no trial time will be saved. As to the second argument, I believe that a proper jury instruction can dispel Plaintiff's worry that it will be prejudiced.

On balance, I conclude that the jury will benefit by focusing on fewer issues and less evidence when it deliberates. The damages issues will be tried directly after the jury has reached a verdict on liability. The damages trial is not to exceed one week, exclusive of charge and deliberations.

II.  Rulings on Motions in Limine

1. Plaintiff Union Carbide Corporation's ("UCC") motion in limine to preclude Defendant Montedison S.p.A. ("ME") from offering any evidence relating to Bhopal (Plaintiff's Motion Number One)

Pursuant to Rules 402 and 403 of the Federal Rules of Evidence ("FRE"), UCC's motion to preclude evidence or argument relating to the disaster at Bhopal, India is granted. The prejudice and confusion that would result from the admission of this evidence, which is only of the slightest relevance, outweighs its probative value.

2. UCC's motion in limine to preclude ME from offering evidence of or referring to other litigations previously filed by UCC (Plaintiff's Motion Number Two)

Plaintiff's motion to preclude Defendant from offering evidence of or referring to other litigation previously filed by UCC, particularly Union Carbide Corp. v. Exxon Corp., 94 Civ. 8866(LAP) (S.D.N.Y. filed Dec. 8, 1994), is granted pursuant to FRE 401, 403, and 404(b).

Both parties cite to McCormick on Evidence § 196 (Other Claims, Suits, or Defenses of a Party) to support their arguments for inclusion or exclusion of this evidence. Section 196 states that judges, balancing probative value against prejudice, should admit evidence of prior litigation "only if the probability of coincidence seems negligible or if the proponent has distinct evidence of fraud." 1 McCormick on Evidence at § 196 (4th ed.1992). ME has conceded that it has no specific evidence of fraud on UCC's part. McCormick offers guidance as to what evidence courts typically consider in determining whether to admit evidence of prior litigation when fraud is not alleged and the "probability of coincidence" is at issue:

The likelihood of repeated, substantially identical claims depends on the number of claims and the probability of each accident. The degree of similarity among the claims is also important, inasmuch as a series of disparate but bona fide claims seems more likely than a string of very similar ones.

Id. at § 196 n. 10.

In neither its response to Plaintiff's motion, nor at oral argument, did ME identify any prior litigation it wishes to introduce at trial, except for UCC v. Exxon. See Nov. 4, 1998 Tr. at 263-267. Because ME only seeks to introduce evidence of a single prior claim, the motion is granted. The prejudice created by this evidence outweighs its probative value, if indeed it has any probative value. The real purpose of offering this evidence, it appears, is to accuse UCC of shady business practices and bad motives--in short "unclean hands." As discussed at page 11 below such proof is not permissible in this type of case.

3. UCC's motion in limine to preclude ME from offering evidence of or referring to certain conduct by UCC for the purpose of showing purported similarity to Defendant's alleged unlawful conduct (Plaintiff's Motion Number Three) Plaintiff's motion pursuant to FRE 403 to preclude evidence of or reference to certain conduct it undertook for the purpose of showing that such conduct was similar to Defendant's alleged unlawful conduct is denied in part and granted in part. In this motion, UCC seeks to preclude certain evidence related to Project Global, [FN3] including the following:

FN3. "Project Global" refers to UCC's negotiations with ENI, a company owned by the Government of Italy, to acquire Himont, ME's polypropylene subsidiary, in order to create a global polyolefins company combining their polyethylene and polypropylene assets ("polyolefins" are a group of compounds which include polyethylene, polypropylene, and polybutylene). ME contends that UCC's simultaneous pursuit of Project Global and Project Nautilus (the UCC/SOC venture) caused UCC to delay the Nautilus discussions. ME further argues that UCC's inattention to Nautilus proximately caused Shell Oil Company ("SOC") to exercise its right to accept Royal Dutch Shell's ("RDS") invitation to participate in Project Sophia talks. Project Sophia was the ME/RDS joint venture later to become Montell. Therefore, according to ME's theory, any injury to UCC resulted not from ME's alleged conspiracy with SOC to interfere with Project Nautilus, but from UCC's own conduct. Defendant also seeks to show that UCC's pursuit of Project Global establishes that the Cooperative Undertaking Agreement ("CUA") allowed SOC and UCC to pursue alternative business opportunities. Finally, Defendant seeks the admission of evidence relating to Project Global in order to prove that this lawsuit is really about UCC's competition with RDS to obtain Himont, and that UCC's loss in that competition is not an antitrust injury. See Defendant's Response to Plaintiff's Motion in Limine to Exclude Evidence of or Reference to Alleged Conduct of Plaintiff for the Purpose of Showing Purported Similarity to Defendant's Unlawful Conduct at 1-2.

(1) UCC's consideration of antitrust issues presented by Project Global;

(2) The projected competitive strength or position of Global Plastics, [FN4] including whether it would be the largest polyolefins company in the world;

FN4. Global Plastics refers to a 1990 business proposal by ENI to UCC for the purpose of purchasing Himont.

(3) Communications and/or agreements within UCC or between UCC and ENI, EniChem, or any other person or entity regarding acquiring or venturing with ME or Himont that do not directly reference the CUA or Nautilus, including the vast majority of evidence before October 1990 and after August 1991; and

(4) Plans, actions, opinions, or communications by or with UCC with respect to ME's or Himont's polyethylene business, including the Spherilene technology.

With regard to these four categories, ME may offer evidence to prove that UCC's pursuit of Project Global caused delays in the Project Nautilus [FN5] discussions which, in turn, may have led to the termination of Project Nautilus. This evidence may include events occurring prior to October 1990. This evidence is admissible on the issue of causation.

FN5. Between 1989 and 1991, Project Nautilus negotiations involved a proposed expanded joint venture between SOC and UCC which contemplated the building of two new polypropylene resin plants.

With regard to the first category, ME may elicit, during the cross- examination of UCC witnesses, that UCC employed tax consultants and lawyers to consider issues raised by Project Global. However, ME may not elicit the fact that UCC analyzed the "antitrust liability" of Project Global. See Nov. 3, 1998 Tr. at 121.

With regard to the second and third categories, ME may not argue that UCC's participation in the Project Global negotiations was analogous to ME's alleged misconduct, although ME is not precluded from arguing that UCC's involvement in Project Global suggested that the CUA allowed the parties to terminate the CUA to pursue other business opportunities. Nor may ME use evidence of Global Plastics or Project Global to argue that UCC violated the antitrust laws and therefore comes to court with "unclean hands." See Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 140, 88 S.Ct. 1981, 20 L.Ed.2d 982 (1968); Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U.S. 211, 214, 71 S.Ct. 259, 95 L.Ed. 219 (1951).

As discussed below, UCC has moved separately to preclude the fourth category and other evidence concerning UCC's polyethylene business in Plaintiff's Motion Number 12. See below Part II.8.

4. UCC's motion in limine to preclude testimony by Professor Sharon Oster, Defendant's damages expert, regarding opinions not properly disclosed to Plaintiff (Plaintiff's Motion Number 4) UCC withdrew this motion during a conference held on October 30, 1998.

5. UCC's motion in limine to preclude Dr. Carl Shapiro, Defendant's expert, from referring to the opinions or conclusions of Defendant's former expert Dr. Jamil Wakim (Plaintiff's Motion Number 5)

Pursuant to an agreement between the parties reached during oral argument on November 4, 1998, UCC's motion to preclude Dr. Shapiro from referring to the opinions or conclusions of Jamil Wakim is withdrawn. See Nov. 4, 1998 Tr., at 270-272. Specifically, the parties agreed that during UCC's cross-examination, Professor Shapiro may disclose the bases for his opinions, including his reliance on the work of Dr. Wakim. See id. Dr. Shapiro may not testify, however, as to what various individuals allegedly told Dr. Wakim. Plaintiff may offer portions of Dr. Wakim's deposition testimony in rebuttal.

6. C's motion in limine to preclude evidence of or reference to an alleged relevant product market other than the worldwide market for Total Package Licenses (Plaintiff's Motion Number 10)

Plaintiff's motion to preclude evidence of or reference to an alleged relevant product market other than the worldwide market for Total Package Licenses ("TPL") is denied. Defense expert Carl Shapiro's opinion that the "polypropylene technology market" is the relevant product market for the purposes of this case is admissible.

Contrary to UCC's argument, Special Master Bernard Black assumed, solely for the purpose of summary judgment, that UCC's alleged TPL market was the relevant market. This assumption was not a finding, as a court does not resolve disputed issues of fact on a summary judgment motion. The burden of establishing the contours of the relevant market in a federal antitrust action rests with the private plaintiff. See ABA Antitrust Section, Antitrust Law Developments 544 n. 237 (4th ed.1997). Determining the relevant product market is a fact issue to be determined by the jury. See e.g., Eastman Kodak Co. v. Image Tech. Servs., 504 U.S. 451, 482, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) (proper market could only be found after "factual inquiry"); Hayden Publishing Co. v. Cox Broadcasting Corp., 730 F.2d 64, 70 (2d Cir.1984) (genuine issues of fact concerning relevant market precluded summary judgment).

7. UCC's motion in limine to preclude evidence of or reference to Plaintiff's profits and financial condition (Plaintiff's Motion Number 11)

Plaintiff's motion to preclude evidence of or reference to UCC's profits and financial condition is granted in part and denied in part. During oral argument on this motion, the Court learned that ME seeks to offer only two items of evidence. The first item is two redacted letters from UCC executives published in UCC's Annual Report of 1992. ME argues that these letters are relevant to establish that the reduction in research and development spending by the CUA was caused by UCC's decision to cut costs. This evidence, as redacted in Exhibit A annexed hereto, is admissible to prove causation and to mitigate damages. See Nov. 5, 1998 Tr., at 304-311.

Defendant also seeks to elicit testimony from UCC executives as to UCC's financial situation subsequent to UCC's purchase of Shell Polypropylene Company's ("SPC") assets in 1995. ME argues that because UCC was financially able to build new resin plants, it cannot claim that it was damaged by Shell Oil Company's ("SOC") withdrawal from Project Nautilus, which contemplated the joint construction of the new resin plants. As this proof is relevant to UCC's damages claim, Defendant may elicit a general admission of UCC's 1995 financial condition. See id. at 301-302.

ME has agreed not to offer any evidence of or make reference to UCC's gross financial data or UCC's Annual Reports from any year except 1992, unless necessary to impeach the credibility of a UCC witness. Should such a need arise, Defendant must seek the Court's permission before offering such evidence. See id. at 311.

8. UCC's motion in limine to preclude evidence of or reference to its polyethylene business (Plaintiff's Motion Number 12)

Plaintiff's motion to preclude evidence of or reference to its polyethylene business is granted in part and denied in part. [FN6] UCC's motion is denied insofar as ME may offer evidence of UCC's business policies relating to its polyethylene business to establish UCC's alleged neglect of or delay in pursuing the Project Nautilus discussions. Plaintiff's motion is granted in part, such that evidence of UCC's "dominant" market share in the polyethylene industry is inadmissible.

FN6. The Court notes that this motion is strikingly similar to UCC Motion # 3 in which UCC moved to preclude this and other evidence of UCC's polyethylene business, discussed above at Part II.3. In that motion, UCC moved to preclude evidence of "[p]lans, actions, opinions, or communications by or with UCC with respect to Montedison's and/or Himont's polyethylene business, including Spherilene technology." See Plaintiff's Memorandum in Support of UCC's Motion in Limine to Exclude Evidence of or Reference to Alleged Conduct of UCC for the Purpose of Showing Purported Similarity to Defendant's Unlawful Conduct at 9.

9. UCC's motion in limine to preclude evidence of or reference to compromise, offers of compromise, and conduct and statements made in relation to compromise negotiations (Plaintiff's Motion Number 13)

Plaintiff's motion to preclude evidence of compromise under FRE 408 is granted in part and denied in part. At oral argument, ME agreed that it would not seek to offer such evidence, except as to four specific areas: (1) a counterproposal that UCC made to SOC in December 1992, which followed SOC's proposal to UCC in August 1992, regarding the termination of the CUA; (2) a presentation by UCC in September 1993 on Project Romeo, which concerned UCC's proposal to purchase Himont's North American resin plants; (3) evidence of discussions that occurred in the interim periods not covered by the secrecy agreements executed by the parties; and (4) evidence regarding UCC's purchase of SPC's polypropylene-related assets in February 1995 at a 15% "discount" and evidence regarding Morgan Stanley's appraisal of such assets. See Nov. 4, 1998 Tr., at 211-234.

As to categories (1) and (2) above, UCC's motion to preclude the evidence is denied. Such discussions and documents comprised business communications rather than settlement negotiations. Moreover, such evidence is not being introduced for the purpose of proving the invalidity of Plaintiff's claims or the amount of damages it suffered, but rather to provide the jury with the context and information necessary to understand the case and because it is relevant to the issue of causation. See MCI Communications Corp. v. American Tel. & Tel. Co., 708 F.2d 1081, 1152 (7th Cir.1983).

With regard to the third category, the parties have not yet provided the Court with specific dates during which the secrecy agreements were ineffective or any specific evidence relating to those time periods. If and when such details are provided to the Court, a further ruling regarding the admissibility of such evidence will be made.