Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ohio: $1.8M settlement in industrial scrap metal price fixing suit given final approval, (Aug 9, 2016)

By Linda O’Brien, J.D., LL.M.

The federal district court in Cleveland, Ohio, has granted final approval of a $1.8 million settlement of claims by scrap generating companies that a group of scrap metal dealers conspired to eliminate competition in the purchase of unprocessed industrial scrap metal in Northeastern Ohio (In re Scrap Metal Antitrust Litigation, August 8, 2016, Boyko, C.).

In 2002, industrial scrap generating companies Profile Grinding, Inc. and Lincoln Electric Company filed a putative class action suit against Columbia Iron and Metal Company (CIMCO), CIMCO’s parent company Columbia National Group (CNG), and other scrap metal dealers, alleging violations of Section 1 of the Sherman Act. The plaintiffs alleged that the defendant conspired to eliminate competition in the purchase of unprocessed industrial scrap metal in Northeastern Ohio.

In March 2004, the court certified a class of all generators that sold scrap to the defendants and/or their co-conspirators between December 1992 and March 2000. In February 2006, a jury returned a verdict in favor of the plaintiffs as to CIMCO, but against the plaintiffs as to CNG. The plaintiffs began collection efforts of the $23 million judgment. However, CIMCO ceased operations after the plaintiffs recovered $350,000. In 2010, the plaintiffs filed a separate suit against CNG President David P. Miller and Mercer Co., alleging Sherman Act violations and fraudulent transfers. The antitrust claim was later dismissed. In 2014, the plaintiffs filed suit in state court against Miller and Mercer Co. for successor liability to recover the unsatisfied judgment against CIMCO.

In May 2016, the court in the instant case granted preliminary approval to a settlement agreement between the plaintiffs, CIMCO, CNG, Miller, and Mercer Co. Following a fairness hearing on August 4, the plaintiffs moved for final approval of the proposed settlement.

According to the plaintiffs’ motion, the proposed settlement provides a substantial benefit to the class in absolute terms and in light of the circumstances of the case that CIMCO is insolvent and the judgment is nearly a decade old. The settlement funds are coming from an individual and an entity that are not parties to the case. The settlement agreement was the result of arm’s-length negotiations by experienced counsel after months of investigation and discovery.

Furthermore, the settlement is in the public interest and falls within the range of fair, reasonable, and adequate considering the risks inherent in litigation. The lack of objections is particularly meaningful because the class consists of many large, sophisticated businesses that have substantial claims, the motion states.

In its order, the court found that the proposed settlement was arrived at by arms-length negotiations between experienced counsel, was made in good faith and was non-collusive, no objections or requests for exclusions were filed, and the prerequisites under Federal Rule of Civil Procedure 23 were met.

The court also approved the class counsels’ requested attorney fees award of $600,000, which was one-third of the settlement fund, and litigation expenses of $8,143.

The case is No. 1:02-cv-00844-CAB.

Attorneys: Alfred Philip Levitt (Boies, Schiller & Flexner LLP) and Christopher M. Burke (Varela, Lee, Metz & Guarino, LLP) for Profile Grinding, Inc. Stanley M. Fisher (Stephen M. Fisher & Associates LLP) and Hugh M. Stanley, Jr. (Tucker Ellis LLP) for Harry Rock & Associates, Inc. and M. Weingold & Co., Inc. Charles L. Freed (Thompson Hine & Flory LLP) for Columbia National Group, Inc.

Companies: Profile Grinding, Inc.; Harry Rock & Associates, Inc.; M. Weingold & Co., Inc.; Columbia National Group, Inc.

Cases: Antitrust OhioNews