Antitrust Law Daily Wrap Up, ANTITRUST—E.D. La.: Pool products maker’s $600K settlement of conspiracy claims given preliminary approval, (Sep 1, 2015)

By Greg Hammond, J.D.

A $600,000 settlement between pool product maker Pentair Water Pool & Spa, Inc. and indirect purchasers has been preliminarily approved by the federal district court in New Orleans. If the settlement receives final approval, it would resolve claims against Pentair over its alleged role in a conspiracy involving Pool Corp.—the country’s largest distributor of pool products—and other pool products manufacturers (In re Pool Products Distribution Market Antitrust Litigation, August 31, 2015, Vance, S.).

Pool products are the equipment, products, parts or materials, and chemicals used for the construction, renovation, maintenance, repair, and service of residential and commercial swimming pools. Pool owners who indirectly purchased pool products claim that Pentair, Hayward Industries, Inc., and Zodiac Pool Systems, Inc.—the three largest manufacturers of pool products in the United States—and Pool Corp. conspired to restrain trade and monopolize the pool product distribution market by eliminating existing distribution competitors and preventing new entrants from obtaining the products necessary to compete.

The indirect purchasers obtained final approval of a settlement with Hayward and Zodiac in July, and have subsequently reached a proposed $600,000 settlement with Pentair. The proposed settlement class includes all individuals residing or entities operating in Arizona, California, Florida, or Missouri who or which, between January 1, 2008, and July 16, 2013, purchased indirectly from Pool Corp. (and not for resale) pool products in Arizona, California, Florida, or Missouri manufactured by Hayward, Pentair, or Zodiac. The “all-in” $600,000 settlement amount, if approved, will be used to pay notice and administration costs; attorney fees and legal expenses; incentive awards; class member benefits; and any remaining administration expenses and costs. The indirect purchasers moved for preliminary approval.

Class certification. The court first determined that the proposed settlement met the numerosity, typicality, commonality, and adequacy requirements of Federal Rule of Civil Procedure 23(a). The predominance and superiority requirements of Rule 23(b) were also met. Specifically, the court noted that the indirect purchasers in all four states alleged the same conduct and advanced the same theory as to why that conduct violated the state antitrust or consumer protection laws. In addition, the indirect purchasers set forth a plausible method for proving injury using classwide proof and methodology, because: (1) the direct purchasers’ expert testified that a uniform overcharge could be demonstrated for a nationwide class of direct purchasers using common evidence and regression analysis; and (2) the indirect purchasers’ economic expert asserted that economic theory predicted that the pool product overcharge would be fully passed on to the indirect purchasers over the long run. Further, the court found that where the amount at stake for any individual plaintiff would not make litigating a complex antitrust dispute worth the time, money, or effort, as in this case, a class action was superior to other methods of adjudicating the case. The court consequently certified the proposed settlement class.

Fairness. The court also determined that the proposed settlement provided no reason to doubt its fairness, had no obvious deficiencies, did not improperly grant preferential treatment to class representatives or segments of the class, and appeared to fall within the range of possible approval. In particular, the court noted that the settlement agreement was the product of four formal sessions of arm’s length mediation, two years of negotiations, and three years of litigation and extensive fact discovery, demonstrating that counsel was experienced and familiar with the factual and legal issues in this case. The modest incentive award of $500 for each of the class representatives did not reflect preferential treatment. Lastly, the settlement amount was within the range of approval and was economically fair due to the significant risks of non-recovery in this case.

The case is MDL No. 2328.

Attorneys: Russ M. Herman (Herman, Herman, Katz & Cotlar, LLP) for Direct Purchaser Plaintiffs’ Liaison Counsel. Thomas J. H. Brill for Indirect Purchaser Plaintiffs’ Liaison Counsel. William Bernard Gaudet (Adams & Reese, LLP) for Defendants’ Liaison Counsel. David H. Bamberger (DLA Piper, LLP) for Defendants’ Lead Counsel. Wayne J. Lee (Stone, Pigman, Walther, Wittmann, LLC) for Manufacturer Defendants’ Liaison Counsel.

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

Cases: Antitrust LouisianaNews