Antitrust Law Daily Wrap Up, ANTITRUST—D. Minn.: Valspar’s price fixing suit against titanium dioxide suppliers split, headed to different courts, (Apr 22, 2014)

By Jeffrey May, J.D.

Paint and coatings maker Valspar Corporation will need to pursue price fixing claims against titanium dioxide suppliers E.I. DuPont de Nemours and Company and Huntsman International, LLC in two different federal courts. The federal district court in St. Paul, Minnesota, has granted the motions of DuPont and Hunstman to transfer Valspar’s claims to the District of Delaware and the Southern District of Texas, respectively, based on forum-selection clauses contained in supply agreements between the parties (Valspar Corp. v. E.I. DuPont de Nemours and Co., April 21, 2014, Kyle, R.).

In its complaint filed in November 2013, Valspar alleged that DuPont and Huntsman—as well as Kronos Worldwide, Inc., and Millennium Inorganic Chemicals, Inc.—colluded to raise the price of titanium dioxide, a chemical primarily used as a white pigment in paints and coatings. The conspiracy allegedly harmed Valspar by causing it to pay higher prices for titanium dioxide it used to produce its coatings. Valspar is seeking to recover for the “supra-competitive, artificially inflated prices.”

Title 28 U.S.C. § 1404(a) provides “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” Because the statute plainly authorized only the transfer of an entire lawsuit, the court concluded that it would have to sever the claims against the moving defendants under Federal Rule of Civil Procedure 21, creating entirely new civil actions against them. Then it could transfer the severed civil actions pursuant to § 1404(a).

The court was not persuaded by Valspar’s arguments against transfer. Valspar argued that (1) its claims fell outside the reach of the forum-selection clauses and (2) even if the clauses applied, the court should exercise its discretion not to transfer the claims to avoid “claim splitting.”

The forum-selection clauses were broad enough to reach the antitrust claims, the court ruled. The “transactions contemplated” by the agreement were Valspar’s purchases of titanium dioxide from Huntsman and DuPont, allegedly at artificially inflated prices. These very purchases formed the basis of Valspar’s claims against the suppliers. The court pointed to another court’s decision to enforce identical forum-selection clauses in a now-settled titanium-dioxide purchaser class action in which Valspar opted-out.

“With the applicability of the forum-selection clauses established, the outcome of the instant Motions essentially becomes a foregone conclusion,” the court noted. There were no “extraordinary circumstances” that “clearly disfavor transfer.”

While it would be more expeditious to try related claims in one forum rather than several, the efficiency and economy would largely inure to Valspar’s benefit. This was not a relevant consideration, in the court’s view. The court also rejected Valspar’s contention that some of the claims against Hunstman should remain in the federal district court in Minnesota because its certain Hunstman purchases occurred while agreements containing forum-selection clauses were not in place. With some of the claims against Huntsman subject to forum-selection clauses and thus transferable, it made eminent sense to transfer all of the claims against it - even those arguably not subject to such clauses - in order to promote the very efficiency Valspar espouses, the court noted. Splitting the claims against Huntsman between two courts would run the risk of inconsistent verdicts and wasted resources.

Therefore, Valspar’s claims against DuPont were severed and the newly created case was transferred to District Court for the District of Delaware. Valspar’s claims against Huntsman were severed and the newly created case was transferred to the Southern District of Texas.

The case is Civ. No. 13-3214 (RHK/LIB).

Attorneys: Richard Ihrig (Lindquist & Vennum LLP) for Valspar Corp. Shari Ross Lahlou (Crowell & Moring LLP) and C. Todd Koebele (Murnane Brandt, PA) for E.I. DuPont de Nemours and Co. James Arthur Reeder, Jr. (Vinson & Elkins LLP) and Lawrence Zelle (Zelle Hofmann Voelbel & Mason LLP) for Defendant Huntsman International LLC.

Companies: Valspar Corp.; E.I. DuPont de Nemours and Co.; Huntsman International LLC; Kronos Worldwide, Inc.; Millennium Inorganic Chemicals, Inc.

Cases: Antitrust MinnesotaNews