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Class action in flat glass antitrust MDL can proceed

Post Time:Feb 12,2009Classify:Industry NewsView:108

A federal court has refused to dismiss from multidistrict litigation a class action accusing the six largest U.S. flat glass manufacturers of price-fixing through a combination of energy surcharges and price increases, according to a Feb. 11 Law360 article.

In an order signed Wednesday in the U.S. District Court for the Western District of Pennsylvania, Judge Donetta W. Ambrose denied the six defendants' motion to dismiss, ruling that the allegations of antitrust conspiracy in the plaintiffs' consolidated amended complaint “nudge over the line of sufficiency.”

The six plaintiffs are direct purchasers of glass products and bring the action on behalf of themselves and all entities that purchased construction flat glass in the U.S. directly from AGC America Inc., AGC Flat Glass North America Inc., Guardian Industries Corp., Pilkington North America Inc., Pilkington Holding Inc. and PPG Industries between July 1, 2002, and Dec. 31, 2006.

The defendants controlled approximately 75 percent of the U.S. market for construction flat glass during the class period by agreeing to fix prices through a combination of collusive energy surcharges and price increases, according to the consolidated class action complaint filed in September.

Flat glass refers to all glass products used for cutting into windowpanes, and glass formed flat and subsequently bent or curved for use in automobile windshields.

The complaint was lodged after the U.S. Judicial Panel on Multidistrict Litigation consolidated 20 cases into the MDL for coordinated pretrial proceedings in June.

The claims of the putative class echo similar allegations of illegal market sharing made by the European Commission against four of the world’s largest glassmakers, including Pilkington, last year.

In November, the EC levied record fines totaling more than €1.3 billion ($1.6 billion) against the companies, which allegedly created a market-sharing cartel that exchanged commercially sensitive information on car-glass deliveries in EU member states in violation of the EC Treaty’s ban on restrictive business practices.

The commission’s action came after it hit another group, including some of the same glassmakers, with a total fine of €487 million ($609 million) for alleged price-fixing in November 2007.

The plaintiffs in the U.S. class action contend that because the U.S. and European construction glass markets are so similar, the recognition by the dominant players in the European market that collusion was necessary to impose energy surcharges and prices increases in Europe is “itself evidence that similar measures to impose surcharges and increase prices were achieved in the U.S. through collusion,” according to the complaint.

The putative action seeks compensatory and treble damages, as well as attorneys' fees and costs.

In a motion to dismiss filed in October, the defendants argued that the amended complaint contains allegations that are insufficient under the pleading standard that is required to infer the existence of an agreement or conspiracy to restrain trade.

But Judge Ambrose ruled that the plaintiffs' allegations were sufficient, pointing out that the complaint claims there was a history of inability to raise and maintain prices prior to the conspiracy, as well as a history of varying surcharges by region of the country.

The complaint states that starting in June 2002, the defendants stopped varying their surcharges by region as they agreed to raise prices by identical percentages and charge energy surcharges in “virtual lockstep," the court's order said.

That price-fixing pattern lasted until February 2005, when the EC launched raids against the European construction flat glass market, the complaint said.

The complaint also lists meeting dates that provide defendants with notice of specific time frames and manner of the alleged agreement, the court said.

Based on the facts detailed in the complaint, the plaintiffs do not rely solely on the decision of the EC to assert a domestic conspiracy or a solely parallel conduct case, the court added.

The facts of the European conspiracy are relevant solely in terms of the timing of the defendants' alleged conspiracy, and the complaint goes beyond simply asserting a theory of “since it happened there, it happened there,” Judge Ambrose said.

The plaintiffs' co-lead counsel said they believed the opinion correctly applied the prevailing standard for resolving motions to dismiss, and represented one of a number of recent decisions in which the courts have been unwilling to extend the application of the U.S. Supreme Court's May 2007 decision in Twombly.

In that case, the high court ruled that a plaintiff claiming an antitrust violation under Section 1 of the Sherman Act, which prohibits conspiracies to restrain trade, must allege more than just evidence that companies engaged in similar behaviors. Plaintiffs, the court said, must allege facts that, if true, would indicate a plot was afoot.

“The court correctly recognized that the detailed fact presentation in our complaint made out a price-fixing case,” said Jay L. Himes, an attorney at Labaton Sucharow LLP, one of the co-lead counsel firms in the case. “We will be proceeding to develop all of the evidence needed to try the case.”

Counsel for the defendants could not immediately be reached for comment Wednesday.

A status conference is scheduled for March 9.

The class action is not the first time that some of the defendants have faced charges of price-fixing in the U.S.

AGC, Guardian, Pilkington and PPG were previously sued for fixing prices of flat glass products between Aug. 1, 1991, and Dec. 31, 1995, the complaint said. To settle that action, PPG paid $60 million, AGC paid $19.8 million, Pilkington paid $17 million and Guardian paid $16.9 million, according to the article.

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