Antitrust Law Daily Wrap Up, ANTITRUST—D. Kan.: Dow can relitigate conspiracy issue in opt-out actions in urethane price fixing case, (Dec 18, 2013)

By Linda O’Brien, J.D., LL.M.

Following a class action trial against Dow Chemical Company for its participation in a conspiracy to fix prices for chemicals used in the manufacture of polyurethane products, the federal district court in Kansas City, Kansas, has denied a summary judgment motion brought by plaintiffs who opted out of the class action seeking to preclude Dow from relitigating the issue of the existence of a conspiracy (In re Urethane Antitrust Litigation, December 16, 2013, Lungstrum, J.).

A series of class actions were filed against Dow and other producers of certain chemicals used in the manufacture of polyurethane products. Three direct-action plaintiffs, Carpenter Co., Woodbridge Form Corp., and Dash Multi-Corp., opted out of the class action to pursue separate claims. In the class action, a jury found that Dow participated in a conspiracy in violation of federal antitrust law. The plaintiffs moved for summary judgment seeking to preclude Dow from relitigating the issue of the existence of a conspiracy involving Dow and other chemical producers to fix prices for certain polyurethane products.

The plaintiffs argued that the doctrine of collateral estoppel applies: the issue of the existence of a conspiracy involving Dow was decided by a jury in the class action, the class action was fully adjudicated on the merits, and Dow had a full and fair opportunity to litigate the issue in the class action.

In declining to apply the collateral estoppel doctrine, the court found that to allow preclusion would not result in judicial economy. The number of lawsuits could actually increase as class members would have an incentive to opt out of a class action, wait for a favorable result in the class action, but not be bound by an unfavorable result. Additionally, preclusion would not allow for equality or consistency among class members because the opt-out plaintiffs specifically chose to be treated differently from other class members.

The plaintiffs were members of the class and chose not to remain in class action. The court suggested that it would be unfair to Dow to allow the opt-out plaintiffs to benefit from a finding in the class action. The imprecise nature of the jury finding, which did not identify the duration of the conspiracy, its members, or products to which it related, would still require the plaintiffs to prove the scope of the conspiracy. Finally, collateral estoppel should not be available to the plaintiffs who could have joined in the class action but chose not to do so, the court concluded.

The case is No. 04-1616-JWL, MDL No. 1616.

Attorneys: Gloria B. Solomon (Trout Cacheris, PLLC) for Carpenter Co. Mauro M. Wolfe (Dickstein Shapiro Morin & Oshinsky LLP) for Woodbridge Foam Corp., Foam Supplies, Inc., Leggett & Platt, Inc., Sherwin-Williams Company, Dash Multi-Corp, Inc., Marchem Corp. and Burkart Foam, Inc. Steven P. Benenson (Porzio, Bromberg & Newman) for Lyondell Chemical Co.

Companies: Dow Chemical Company; Carpenter Co.; Woodbridge Foam Corp.; Foam Supplies, Inc.; Leggett & Platt, Inc.; Sherwin-Williams Co.; Dash Multi-Corp, Inc.; Marchem Corp.; Burkart Foam, Inc.; Lyondell Chemical Co.

Cases: Antitrust KansasNews