Antitrust Law Daily Wrap Up, ANTITRUST—D. Conn.: Former parent of bankrupt defendant not joined in commercial paper price fixing case, (Jun 27, 2013)

By Jeffrey May, J.D.

In a class action alleging a conspiracy to fix prices for commercial grade paper used for printing catalogues and magazines, the federal district court in Bridgeport, Connecticut, has denied a request from complaining purchasers to substitute or join Stora Enso Oyj (SEO), the former parent of Stora Enso North America Corporation (SENA), as a defendant in the case. The plaintiffs sought to join SEO as a defendant under Federal Rule of Civil Procedure 25(c) after SENA filed for bankruptcy (In Re: Publication Paper Antitrust Litigation, June 20, 2013, Underhill, S.).

The plaintiffs brought the action in 2005, alleging that SENA and SEO conspired with UPM-Kymmene Corp. (UPM), a non-party, to fix the price of certain grades of commercial paper. Although the district court granted summary judgment in favor of both SEO and SENA in 2010 (2010-2 Trade Cases ¶77,293), the Second Circuit reversed with respect to SENA and upheld dismissal of SEO (690 F.3d 51, 2012-2 Trade Cases ¶78,000). The record was “devoid of evidence that SEO had any direct involvement in decisions regarding the marketing, sale, or pricing of publication paper in the United States,” according to the appellate court.

Rule 25(c) allows substitution of a successor in interest or its joinder as an additional party when an interest in a lawsuit changes hands. The court rejected the plaintiffs' theory that SENA’s alleged antitrust liability was “transferred” to or “assumed” by SEO—or any other party—under the terms of a stock purchase agreement (SPA), pursuant to which NewPage Corporation acquired all of the outstanding stock—along with the assets and liabilities—of SENA in 2007. Since the acquisition, NewPage and SENA have filed for Chapter 11 bankruptcy.

The court rejected the plaintiffs' argument that SEO intended to assume SENA’s antitrust liability despite NewPage’s acquisition of SENA’s stock under the SPA. The SPA merely provided that SEO would indemnify NewPage for losses associated with SENA’s pending lawsuits. It did not establish that SEO would take on SENA’s liabilities as its own. Because the contract's language was clear and unambiguous, the court refused to consider any of the extrinsic evidence submitted by the plaintiffs to support a contrary interpretation of the SPA.

The case is No. 3:04-md-01631-SRU.

Attorneys: Alex C. Turan (The Furth Firm) for plaintiff Charles J. Gardella, Jr.

Companies: NewPage Corp.; Stora Enso Oyj; Stora Enso North America Corp.; UPM-Kymmene Corp.

Cases: Antitrust ConnecticutNews