Antitrust Law Daily Wrap Up, ANTITRUST—E.D. La.: $2M settlement of indirect purchasers’ claims against pool product makers gets final approval, (Jul 28, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in New Orleans has given final approval to a $2 million settlement between pool product makers Hayward Industries and Zodiac Pool Systems, Inc. and indirect pool product purchasers. The settlement resolves claims against Hayward and Zodiac over their alleged roles in a conspiracy involving Pool Corporation—the country’s largest distributor of pool products—and other pool products manufacturers (In re Pool Products Distribution Market Antitrust Litigation, July 27, 2015, Vance, S.).

Background. Pool products are the equipment, parts, and chemicals used for the construction, maintenance, and service of residential and commercial swimming pools. After an FTC investigation into Pool Corporation’s alleged unfair methods of competition resulted in a consent decree, a group of pool owners (indirect purchaser plaintiffs or IPPs) filed suit against Pool and the three largest manufacturers of pool products in the United States — Hayward Industries, Zodiac Pool Systems, and Pentair Water Pool and Spa. The IPPs alleged that Pool conspired with the manufacturer defendants to restrict the supply of pool products to rival distributors, which resulted in higher prices, reduced output, and reduced consumer choice.

In May 2013, the court denied the defendants’ motion to dismiss and allowed the IPP’s Arizona, California, Florida, and Missouri antitrust claims to proceed. In December 2014, the court granted preliminary approval of a proposed settlement between the IPPs and Hayward and Zodiac. The IPPs then moved for final approval of the settlement.

For purposes of the settlement, the court certified a class of indirect purchasers defined as all individuals or entities that purchased pool products indirectly from the defendants between January 1, 2008 and July 16, 2013.

Settlement. Under the terms of the settlement, Hayward paid $1.5 million, and Zodiac paid $500,000 into the settlement fund. The fund will be used to pay the notice and administration expenses, incentive awards, attorneys’ fees and litigation expenses, and class member benefits. The parties also proposed a cy pres distribution of any unclaimed settlements funds. The court determined that the proposed award was appropriate, since there would likely be unclaimed funds remaining at the end of the class filing deadline of December 2015. The proposed award recipients — American Antitrust Institute, Consumers Union, and Loyola University Institute for Consumer Antitrust Studies — are organizations with a consumer protection purpose that serves the objectives underlying the lawsuit.

The court found that the proposed settlement was fair, reasonable, and adequate under Federal Rule of Civil Procedure 23(e). There was no evidence that the settlement was obtained by fraud or collusion, since the parties reached agreement only after multiple formal sessions of arm’s-length mediation. The settlement avoids the risks and burdens of potentially protracted litigation and the parties have completed sufficient discovery to evaluate the merits of their competing positions.

Additionally, the settlement was in the range of possible damages that could be recovered at trial, no objections to the settlement were filed, and no class members asked to opt out the settlement.

Attorneys’ fees and costs. Utilizing the percentage method to assess the attorneys’ fees request, the court approved class counsel’s request for $347,000 in fees. The requested award was 17 percent of the total settlement fund. The court concluded that the award was reasonable in light of the time and labor required for the case, the complexity of the litigation, the results obtained for the class, and the experience and ability of the attorneys involved in the case.

The case is No. 2:12-md-02328-SSV.

Attorneys: Thomas J.H. Brill (Law Office of Thomas H. Brill) for Indirect Purchaser Plaintiffs. David H. Bamberger (DLA Piper, LLP) for Pool Corporation, Hayward Industries, Inc., and Zodiac Pool Systems, Inc.

Companies: Pool Corporation; Hayward Industries, Inc.; Zodiac Pool Systems, Inc.

Cases: Antitrust LouisianaNews