Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ohio.: Settlements totaling $151M in polyurethane foam price fixing suit get final approval, (Jan 28, 2016)

By Greg Hammond, J.D.

The federal district court in Toledo, Ohio, has granted final approval of nine class action settlement agreements—amounting to $151.25 million—in an action in which indirect purchasers of polyurethane foam products alleged that various companies engaged in a price fixing conspiracy. Attorneys’ fees, however, were reduced from the requested $45.375 million to $21.24 million (In re Polyurethane Foam Antitrust Litigation, January 27, 2016, Zouhary, J.).

The indirect purchaser class claimed that a number of dominant firms in the flexible polyurethane foam market engaged in a ten-year long conspiracy to fix, raise, and maintain the price of foam products.

Fair, reasonable, adequate settlement. In granting final approval of the nine settlements, the court concluded that: (1) there was no basis to suspect any of the settlements reached were the result of fraud or collusion; (2) the complexity, expense, and likely additional duration of the litigation clearly favored voluntary settlement; (3) lengthy discovery and testing of the strength of the facts discovered, supplied the plaintiffs with a clear picture of what their claims were worth; (4) both the plaintiffs and defendants faced substantial risk if the case proceeded to trial; (5) while a handful of class members objected, more than 27,000 claims have already been filed, supporting final approval; and (6) settlement would conserve scarce judicial resources, which was in the public interest.

Objections, attorney fees. Although there were various objectors—which the indirect purchasers claimed were serial objectors, had improper motives, plainly misstated facts, suffered serious disciplinary proceedings, made scurrilous, unfounded accusations, and made extortionist threats—the court focused on the merits of the objections and determined that only a couple objections, concerning attorneys’ fees, were valid.

In particular, the court determined that it would be fair to decrease the number of hours used by counsel, which would reduce the lodestar calculation by a few percentage points. In addition, the court noted that its “greatest concern” was that counsel paid contract attorneys low rates, but billed the indirect purchasers high rates. In particular, contract attorneys in this case were billed out at $250-$525 per hour, according to the court, but the rates passed through by law firms to paying contract attorneys rarely exceeded $150 per hour. The court therefore reduced the requested attorney fees from 30 percent to 24 percent.

As the defendants will have deposited a total of $88.5 million in settlement funds within 15 days of the final approval order, the court concluded that class counsel for the indirect purchasers are entitled to $21.24 million, as well as 24 percent of any additional amounts that are deposited.

The case is No. 1:10 MD 2196.

Attorneys: Kimberly A. Conklin (Kerger & Hartman LLC) and Adam B. Wolfson (Quinn, Emanuel, Urquhart, Oliver & Hedges) for Indirect Purchaser Class. James H. Walsh (McGuire Woods LLP) for Defendants Liaison Counsel.

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