Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Foam manufacturers denied High Court review in price fixing class action, (Mar 2, 2015)

By Jeffrey May, J.D.

The U.S. Supreme Court will not consider class certification in a “gargantuan” class action against manufacturers of flexible polyurethane foam for conspiring to fix prices. Today, the Court denied the manufacturers’ November 18, 2014, petition for certiorari (Carpenter, Co. v. Ace Foam, Inc., Dkt. 14-577).

In April 2014, the federal district court in Toledo, Ohio, granted certification of two classes in the suit: a direct purchaser class and an indirect purchaser class. The class members, ranging from furniture manufacturers purchasing seat padding to individuals buying pillows, seek more than $9 billion in treble damages, according to the petitioners. It was suggested that the two classes could collectively include hundreds of millions of American consumers and businesses.

In September 2014, the U.S. Court of Appeals in Cincinnati denied the manufacturers’ petition for permission to appeal a district court’s grant of class certification. The appellate court also rejected motions to reopen the appeal in order to file an emergency motion to stay issuance of class notice. Settlement proceedings are moving forward.

In their petition, the manufacturers contended that the Court should correct the “fundamentally flawed standards used to justify the certification” in this case “at this juncture because the extraordinary amount of damages sought by Plaintiffs virtually ensures that the mere fact of class certification will end this litigation, regardless of the underlying merits of Plaintiffs’ claims.” They contended that the class action included uninjured class members and that the appellate court's sanctioning of the certification order exacerbated the conflict in the circuits over whether absent class members must have Article III standing. The petitioners also suggested that the decision deepens a split among the circuits regarding the impact of individualized damages issues on the predominance requirement of Federal Rule of Civil Procedure 23(b)(3).

Specifically, the petitioners asked: (1) whether the standing requirements under Article III apply to all members of a class certified under Rule 23; and (2) whether certifying a class under Rule 23(b)(3) is proper where individualized damages issues predominate, and where plaintiffs rely exclusively on aggregate damages models that calculate damages purportedly incurred by the class as a whole, rather than by individual class members.

Attorneys: Theodore J. Boutrous Jr. (Gibson, Dunn & Crutcher, LLP) for Carpenter Co. Sanford I. Weisburst (Quinn Emanuel Urquhart & Sullivan, LLP) for Direct Purchaser Class. Marvin Miller (Miller Law LLC) for Indirect Purchaser Class.

Companies: Ace Foam, Inc.; Carpenter Co.

News: Antitrust