Antitrust Law Daily Wrap Up, TOP STORY: Drywall manufacturers seek dismissal in price fixing conspiracy suit, (Apr 26, 2016)

By Greg Hammond, J.D.

Six drywall manufacturers are seeking dismissal of claims the manufacturers reached an agreement to raise prices and eliminate job quotes, in violation of the antitrust laws (In re Domestic Drywall Antitrust Litigation, Dkt. 13-MD-2437).

Twelve homebuilding firms individually claim that the manufacturers—including American Gypsum Company LLC, CertainTeed Gypsum, Inc., Continental Building Products, Inc., Lafarge North America Inc., New NGC, Inc., and PABCO Building Products—conspired to raise prices, restrict supply, and eliminate the long-standing price practice of providing job quotes. The federal district court in Philadelphia previously dismissed the homebuilders’ complaint.

In support of their joint motion to dismiss, the manufacturers claim that the homebuilders’ individual claims are based on the same alleged conspiracy in the class actions that are also before the court. Allegations that the manufacturers continued to conspire to the present—more than three years after the litigation began—are deficient, the manufacturers claim, because they are conclusory assertions with no factual basis. Further, the allegations of conspiracy through the present also are deficient, the manufacturers claim, because—even assuming a conspiracy existed—it is not plausible that any defendant manufacturer would be “so foolish as to continue conspiring while under the scrutiny of this Court, the Class Action plaintiffs, the U.S. Department of Justice, and the customers who are the alleged victims.”

Continental filed an individual motion to dismiss, arguing that the homebuilder’s second amended complaint sets forth no factual allegations plausibly connecting Continental to the alleged conspiracy to fix the price of gypsum wallboard in the United States. Rather, the complaint merely alleges that Continental “affirmatively” joined an alleged conspiracy when Continental was created at the end of August 2013—eight months after the first complaints in the multidistrict litigation were filed and the conspiracy allegations became a matter of public knowledge. The complaint also fails to allege how Continental supposedly joined the alleged conspiracy, Continental claims.

CertainTeed also filed its own motion to dismiss, asserting that the amended complaint alleges nothing new or different with regard to CertainTeed. Rather, the homebuilders merely recycled the same allegations that the court already found to be insufficient, according to CertainTeed, such as generalized contentions that: the manufacturers conspired; CertainTeed employees attended trade shows and other industry events; CertainTeed occasionally received widely published analyst reports; and CertainTeed made price announcements consistent with commonplace follow-the-leader pricing.

Attorneys: H. Laddie Montague, Jr. (Berger & Montague PC) for the plaintiffs. Jeffrey A. Jaeckel (Morrison & Foerster LLP) for Continental Building Products, Inc. Thomas S. Brown (Butler Pappas Weihmuller Katz Craig LLP) for American Gypsum Co. LLC. J. Mark Gidley (White & Case LLP) for CertainTeed Gypsum, Inc.

Companies: American Gypsum Company LLC; CertainTeed Gypsum, Inc.; Continental Building Products, Inc.; Lafarge North America Inc.; New NGC, Inc.; PABCO Building Products

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