Antitrust Law Daily Wrap Up, ANTITRUST—D. Md.: Class of titanium dioxide purchasers scaled back due to arbitration, forum-selection agreements, (Aug 27, 2013)

By Jeffrey May, J.D.

In a price fixing class action against producers of titanium dioxide, the federal district court in Baltimore has amended the class definition to exclude purchasers whose titanium dioxide contracts contained: (i) an arbitration clause, (ii) a clause restricting the litigation of disputes to courts other than the forum, (iii) a class action waiver clause, or (iv) a provision waiving the right to a jury trial. The court granted the defending producers' motions to enforce arbitration clauses, class action and jury trial waivers, and forum selection clauses against the relevant class members (In Re: Titanium Dioxide Antitrust Litigation, August 26, 2013, Bennett, R.).

The suit was brought against market leaders in the production of titanium dioxide—E.I. du Pont de Nemours & Co., Huntsman International LLC, Kronos Worldwide Inc., and Millennium Inorganic Chemicals, Inc.—by purchasers of the product, including Haley Paint Company and Isaac Industries, Inc. Titanium dioxide is a chemical powder used as a pigment in paints and other coatings. The plaintiffs and DuPont and Huntsman had reached agreements in principle to settle the litigation. Earlier this month, the court denied motions for summary judgment filed by Millennium and Kronos (2013-2 Trade Cases ¶78,488).

Millennium and Kronos argued that approximately 320 members of the certified class were contractually precluded from participating in the class action. When the court certified the class back in 2012 (2012-2 Trade Cases ¶78,044), it noted that there were at least 700, and as many as several thousand purchasers, affected by the alleged conspiracy.

According to Millennium and Kronos, some class members purchased titanium dioxide pursuant to contracts containing mandatory arbitration clauses, forum selection clauses, and class action and jury trial waivers, all of which would contractually bar them from participating in this class action. The vast majority of contracts containing these restrictions were between the titanium dioxide purchasers and DuPont or Huntsman.

Millennium and Kronos were entitled to enforce not only the arbitration clauses, forum selection clauses, and class action and jury waiver provisions to which their approximately 16 customers agreed, but also the restrictive clauses contained in the contracts of DuPont and Huntsman, the court ruled. Although Millennium and Kronos were nonsignatories to the DuPont and Huntsman agreements, they could “enforce the lion’s share of these contractual clauses only by relying on equitable estoppel to bar the signatory class members from pursuing this litigation.”

The court rejected the plaintiffs' arguments that the defendants had waived their rights to enforce the arbitration and class action waiver clauses, because they had known about these clauses since the early stages of the litigation, but they did not seek to enforce them until class certification. Also rejected were the plaintiffs' assertions that the arbitration provisions were not broad enough to encompass the antitrust claims or that the agreements were not enforceable under the Federal Arbitration Act. The arbitration clauses even applied retroactively to cover antitrust claims that arose prior to the execution of the relevant contracts, the court noted. Thus, the actions of class members whose arbitration clauses were deemed to be enforceable were dismissed.

Forum selection clauses. The court also dismissed the claims of customers with forum selection clauses for improper venue under Rule 12(b)(3) of the Federal Rules of Civil Procedure. Millennium and Kronos successfully argued that the forum selection clauses, which provided that disputes had to be litigated in forums other than the U.S. District Court for the District of Maryland, were enforceable.

Jury trial waivers. 43 titanium dioxide customers participating in the class signed contracts including enforceable jury trial waivers and knowingly and voluntarily waived their jury trial rights, the court also ruled. The plaintiffs' arguments challenging the jury trial waivers, which were similar to the arguments raised against the arbitration and forum selection clauses, were rejected.

Amended Class Definition. The class definition was amended because the class as originally defined did not meet the commonality, typicality, and predominance requirements of Rule 23, the court ruled. There were individual questions of law and fact as to the enforcement of provisions of class members’ contracts that were not common to the class.

The case is RDB-10-0318.

Attorneys: Michael C. Dell Angelo (Berger and Montague PC) for Haley Paint Co. James P. Ulwick (Kramon and Graham PA) for Kronos Worldwide Inc. Richard Arthur Ripley (Haynes and Boone LLP) for Millennium Inorganic Chemicals, Inc.

Companies: Haley Paint Co.; Kronos Worldwide Inc.; Millennium Inorganic Chemicals, Inc.

Cases: Antitrust MarylandNews