Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Class certification granted in steel price fixing class action, (Sep 10, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in Chicago has granted class certification on the issue of conspiracy to a group of direct purchasers of steel products in their suit against several domestic steel producers for allegedly engaging in a conspiracy to fix steel prices. However, the court declined to certify a class on the issues of impact and damages (In re Steel Antitrust Litigation, September 9, 2015, Zagel, J.).

In 2008, Standard Iron Works, Wilmington Steel Processing Co., Inc., Capow, Inc., Alco Industries, Inc., and Gulf Stream Builders Supply, Inc. filed a class action on behalf of themselves and others who purchased steel products directly against domestic steel producers, United States Steel Corporation, Arcelormittal S.A., Nucor Corporation, Steel Dynamics, Inc., and SSAB Swedish Steel Corporation, alleging the companies engaged in a conspiracy to fix steel prices. Before the court was a motion to certify a class who purchased steel products directly from the defendants between April 1, 2005 and December 31, 2007.

Rule 23(a). The court first determined that the plaintiffs satisfied the requirements of Federal Rule of Civil Procedure 23(a). The members of the class were so numerous that joinder would be impracticable, there were questions of law or fact common to the class, the claims and defenses of the named representatives were typical of the claims and defenses of the class, and the named representatives would fairly and adequately protect the interests of the class.

Predominance. According to the court, the plaintiffs must show how common evidence and a single, reliable methodology will prove each of the elements of their claims. In this case, it was undisputed that whether the defendants engaged in a conspiracy in violation of antitrust law was a question common to the entire class’s claims. As common proof of a conspiracy, the plaintiffs intended to introduce statements by defendants’ senior executives at trade association meetings regarding a plan to reduce supply over the relevant period, which caused higher prices and profits for the industry as a whole. The plaintiffs also intended to offer expert testimony that, although not all finished steel is the same, the defendants principally compete on the basis of price which is an economic factor that motivates and facilitates collusion. Since whether the defendants engaged in a conspiracy was central to the case, the question of whether the defendants’ conduct constituted a conspiracy was appropriate for resolution on a class wide basis, in the court’s view.

Impact and damages. However, the court determined that the plaintiffs’ experts’ methodology could not be used on a common basis to accurately measure what impact, if any, each class member experienced as a result of the conspiracy. To prove antitrust impact and damages, the plaintiffs intended to offer expert testimony to show that the structure of the steel industry was ripe for a successful supply cartel, raw steel production cuts caused increased prices, and prices of all major categories of steel products followed similar trends. In the court’s view, although the plaintiffs’ expert’s model offered to measure the impact of the conspiracy, it did not identify and isolate damages that there the certain result of the defendants’ conduct and therefore could not be used to establish damages susceptible to measurement across the entire class. Even if the plaintiffs determined that the overall price of steel had increased, individual inquiries into damages each class member incurred would be required and predominate over issues common to the class, the court concluded.

The case is No. 08-cv-5214.

Attorneys: Allen D. Black (Fine, Kaplan & Black), Mark C. Hansen (Kellogg, Huber, Hansen, Todd & Evans, PLLC) and Steven A. Kanner (Freed Kanner London & Millen, LLC) for Standard Iron Works. Eric B. Fastiff (Lieff Cabraser Heimann & Bernstein) for Wilmington Steel Processing Co, Inc. Dianne M. Nast (NastLaw LLC) for Rem Systems, Inc. Anthony J. Bolognese (Bolognese & Associates) for Alco Industries, Inc. Joseph Goldberg (Freedman Boyd Hollander) for Gulf Stream Builders Supply, Inc. Andrew Stanley Marovitz (Mayer Brown LLP) for Arcelormittal USA, Inc. Jonathan Stuart Quinn (Neal, Gerber & Eisenberg) for United States Steel Corp. David Gersch (Arnold & Porter LLP) for Nucor Corp. Joel Gerald Chefitz (McDermott Will & Emery LLP) for Steel Dynamics, Inc. John W. Treece (Sidley Austin LLP) for SSAB Swedish Steel Corp.

Companies: Standard Iron Works; Wilmington Steel Processing Co, Inc.; Rem Systems, Inc.; Alco Industries, Inc.; Gulf Stream Builders Supply, Inc.; Arcelormittal USA, Inc.; United States Steel Corp.; Nucor Corp.; Steel Dynamics, Inc.; SSAB Swedish Steel Corp.

Cases: Antitrust IllinoisNews