Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ohio: “Sensible or not,” court compels arbitration in polyurethane foam litigation, (Aug 13, 2014)

By Greg Hammond, J.D.

Mohawk Industries, Inc. successfully moved to compel arbitration and stay price fixing conspiracy claims involving the company’s polyurethane foam. In granting Mohawk’s motion to compel arbitration and stay claims, the federal district court in Toledo determined that the legal standards of waiver and scope weighed in favor of preserving the arbitration agreements, despite the court’s belief that arbitration would be “inefficient and wasteful” in this context (In re Polyurethane Foam Antitrust Litigation, August 12, 2014, Zouhary, J.).

According to the court, direct purchaser plaintiffs chiefly argued that they would be prejudiced by Mohawk’s delay in bringing its motion to compel arbitration. Specifically, direct purchasers argued that Mohawk: (1) was attempting to relitigate already-resolved issues in arbitration, such as revoking class certification for a majority of its customers; (2) already gained access to discovery not likely available in arbitration; (3) already caused direct purchasers to expend substantial time and expenses for a number of Mohawk-specific issues; and (4) should have brought its motion to compel arbitration “years ago.”

However, the court determined, even if Mohawk brought a more timely motion to compel arbitration, it still would have had access to the same amount of discovery, and the direct purchasers’ only avoidable expenses related to expert analysis examining specific transactions of arbitration customers. Despite the court’s belief that arbitration in this context would be “inefficient and wasteful,” it found that “the law is what it is, sensible or not.” Specifically, the court found that its “review of Supreme Court and Sixth Circuit waiver doctrine shows the applicable legal standard is a demanding one, requiring resolution of doubt as to waiver in favor of preserving the arbitration agreements.” Consequently, Mohawk’s motion to compel arbitration and stay claims was granted.

The case number is 1:10 MD 2196.

Attorneys: Stephen R. Neuwirth (Quinn, Emanuel, Urquhart, Oliver & Hedges) and William A. Isaacson (Boies, Schiller & Flexner) for Direct Purchaser Class. James H. Walsh (McGuire Woods) and Kendall Millard (Barnes & Thornburg) for Defendants.

Companies: Mohawk Industries, Inc.

Cases: Antitrust OhioNews