Antitrust Law Daily Wrap Up, ANTITRUST—E.D. La.: Pool product manufacturer, purchasers settle price fixing claims for $6M, (Aug 17, 2015)

By Greg Hammond, J.D.

A proposed $6 million settlement between direct purchasers and one of the largest pool product manufacturers in the United States, over claims that the manufacturer engaged in a price fixing conspiracy, has been preliminarily approved by the federal district court in New Orleans, Louisiana. The court found the proposed settlement to be fair and reasonable (In re Pool Products Distribution Market Antitrust Litigation, August 13, 2015, Vance, S.).

Pentair Water Pool and Spa, Inc., Hayward Industries, Inc., and Zodiac Pool Systems, Inc. are the three largest manufacturers of pool products in the United States. Pool product purchasers filed suit against the three manufacturers and Pool Corp.—the largest pool products distributor in the United States—claiming that the defendants engaged in a price fixing conspiracy. A nearly $10 million settlement between the purchasers, Hayward, and Zodiac received final approval in June 2015. Since then, a $6 million settlement has been reached between Pentair and the purchasers, from which notice and administration costs, attorney fees and expenses of up to $2 million, incentive awards, class member benefits, and any remaining administration expenses and costs would be paid. The purchasers sought preliminary approval of the proposed settlement.

The court first determined that the numerosity, commonality, typicality, and adequacy requirements of Federal Rule of Civil Procedure 23(a) and the predominance and superiority requirements of Rule 23(b) were satisfied. It therefore certified for settlement purposes a class consisting of all persons and entities located in the United States that purchased pool products in the United States directly from Pool Corp., during the class period from November 22, 2007, to November 21, 2011.

Second, the court found no reason to doubt the fairness of the process by which the parties reached their settlement, as the agreement was the product of four formal sessions of arm’s length mediation; the settlement occurred after three years of litigation and extensive fact discovery; the parties were experienced and familiar with the factual and legal issues in the case; and the settlement did not appear to give preferential treatment to the named plaintiffs or any segment of the class.

The amount of the settlement was within the range of possible approval, the court concluded. Although the plaintiffs’ expert estimated the purchasers’ damages as nearly $267 million, this was a best case scenario that did not reflect the substantial risks of nonrecovery or diminished recovery due to the challenges and problems of proof concerning their theory of per se illegality and the existence of a conspiracy; the complex market analysis and consideration of potential justifications concerning the attempted monopolization and conspiracy rule of reason claims; the disputed market definition; and challenges to the testimony of the purchasers’ expert concerning liability, the relevant market, overcharge, and impact.

The $6 million did not reflect the full value of the settlement to the class, which includes Pentair’s cooperation to answer questions about its transactional data and to assist with authenticating records as the purchasers proceed with litigation against Pool Corp. Given the risk of non-recovery and the benefits generated by Pentair’s continuing cooperation, the court found the settlement to be within the range of reasonableness.

The case is MDL No. 2328.

Attorneys: Russ M. Herman (Herman, Herman, Katz & Cotlar, LLP) for Direct Purchaser Plaintiffs. David H. Bamberger (DLA Piper, LLP) and William Bernard Gaudet (Adams & Reese, LLP) for Pentair Water Pool and Spa, Inc..

Companies: Pool Corp.; Pentair Water Pool and Spa, Inc.; Hayward Industries, Inc.; Zodiac Pool Systems, Inc.

Cases: Antitrust LouisianaNews