Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ohio: $145K bond required in polyurethane foam settlement appeal, (Apr 14, 2016)

By Greg Hammond, J.D.

Five individuals have been ordered to post an appeal bond of $145,463 in an action in which firms in the flexible polyurethane foam market settled claims that they engaged in a decade-long conspiracy to fix, raise, and maintain the price of foam products. The federal district court in Toledo, Ohio, determined that an appeal bond was appropriate given the individuals’ history of acting as professional, or serial objectors, the objectors’ unlikely chance of success on appeal, the risk of nonpayment of appeal costs if the appeal is unsuccessful, and the objectors’ ability to post a bond (In re Polyurethane Foam Antitrust Litigation, April 13, 2016, Zouhary, J.).

The court previously granted approval to nine separate settlement agreements between purchasers of foam products and various manufacturers. Five objectors to the settlements have appealed the approval and counsel for the indirect purchaser plaintiffs moved for an order requiring the objectors to file an appeal bond.

The court determined that an appeal bond was warranted, finding first that each objector has acted “vexatiously,” pursued his or her objections in bad faith, or both. “Their conduct here resembles scavenger ants on a jelly roll, scrambling to extort money from the approved settlements,” the court noted. Second, success on the merits was unlikely, according to the court, because nearly all of the arguments on appeal merely rehash how the court exercised its discretion and none of the opposition briefs cite controlling authority that would reverse any of the court’s conclusions.

In addition, the court found that at least three objectors reside outside of the court’s jurisdiction and two objectors have a history of showing disrespect for legal ethics and the rules of the court, supporting a conclusion that an appellant may not pay the appeal costs if the appeal is unsuccessful. Lastly, the court found that the objectors failed to demonstrate that they lack the financial ability to post a bond. Nevertheless, the court reduced the amount of the requested bond from $305,463 to $145,463.

Cy pres recipient. In a separate order, the court rejected the plaintiffs’ proposal to name the American Antitrust Institute or the Institute for Law and Economic Policy as the recipient of any residual cy pres distribution once the net settlement fund is depleted to such a level that additional distributions to class members would not be economically feasible. The proposal “missed the target” of naming charities or other beneficiaries that have objectives related as closely as possible to the purposes and remedies sought by the class action, according to the court. Instead, the court was looking for an organization that offers carpets, beds and chairs—“prime vehicles for the foam at the heart of this litigation”—to those in need. Consequently, the court designated Family House Toledo as the cy pres recipient, a charitable organization that offers emergency family housing.

The case is No. 1:10 MD 2196.

Attorneys: Stephen R. Neuwirth (Quinn Emanuel Urquhart & Sullivan, LLP) for Direct Purchaser Class. Kimberly A. Conklin (Kerger & Hartman LLC) for Indirect Purchaser Class. James H. Walsh (McGuireWoods LLP) for Defendants.

Companies: DomFoam International, Inc.; Valle Foam Industries Inc.; A-Z Sponge & Foam Products Ltd.; Carpenter Co.; Leggett & Platt, Inc.; Hickory Springs Manufacturing Company; Mohawk, Inc.; Vitafoam, Inc.; Woodbridge Foam Fabricating, Inc.

Cases: Antitrust OhioNews