Antitrust Law Daily Wrap Up, TOP STORY—E.D. La.: Antitrust settlement between pool products purchasers, Zodiac gets preliminary nod, (Dec 23, 2014)

By Jeffrey May, J.D.

The federal district court in New Orleans has given preliminary approval to a $3.45 million settlement between pool product maker Zodiac Pool Systems, Inc. and pool product purchasers, including pool builders, pool retail stores and pool service and repair companies. The settlement would resolve claims against Zodiac over its alleged role in a conspiracy involving Pool Corporation (PoolCorp)—the country’s largest distributor of pool products—and pool products manufacturers Hayward Industries, Inc., Pentair Water Pool and Spa, Inc., and Zodiac. The settlement only applies to the claims of direct purchaser plaintiffs (DPPS), which are defined as entities that purchased their pool products directly from PoolCorp (In Re: Pool Products Distribution Market Antitrust Litigation, December 22, 2014, Vance, S.).

Settlement class. For purposes of granting preliminary approval of the settlement, the court certified a settlement class under Rule 23 of the Federal Rules of Civil Procedure. The class consisted of all persons and entities that purchased pool products in the United States directly from PoolCorp from November 22, 2007 to November 21, 2011. The class reportedly includes “tens of thousands” of purchasers. The class moved for preliminary approval of the settlement on November 24.

The court identified the claims remaining in the case as (1) a Section 2 attempted monopolization claim against PoolCorp; (2) Section 1 claims under the rule of reason involving three separate vertical conspiracies (one between PoolCorp and each defending manufacturer); and (3) a Section 1 claim under the per se rule involving a horizontal agreement between the defending manufacturers and PoolCorp to fix prices regarding freight minimums. For purposes of meeting the predominance requirement of Rule 23, the DPPs put forward a plausible method for proving impact using class-wide proof and methodology and a plausible method for proving individual damages using class-wide methodology, in the court’s view.

Reasonableness of settlement figure. The settlement figure was found to be within the range of reasonableness. The DPPs' expert estimated damages for class members during the class period at $266,846,301. That figure was reached by multiplying PoolCorp's sales figures during the class period by a purported overcharge of 4.97 percent. The court noted that the settlement figure appeared at first glance to be small in comparison to the universe of potential damages. However, the settlement was adequate in light of the risks of non-recovery that the DPPs faced and the benefit to the class provided by Zodiac's continuing cooperation in the case.

Earlier settlement. In September, the court preliminarily approved a $6.5 million settlement between the DPPs and Hayward. The proposed settlement class for the settlement between the DPPs and Zodiac was identical to that in the proposed settlement between DPPs and Hayward. The terms of the two settlements were also similar, the court noted.

Attorney fees, expenses. Attorney fees and expenses not to exceed $1,150,000 will be paid from the Zodiac settlement fund. That amount is equal to one-third of the settlement fund. The remaining fund balance is to be distributed on a pro rata basis to class members who make claims according to the claimant’s calculated loss under the allocation plan. There would be no incentive payments for the settlement class representatives.

This is Case No. 2:12-md-02328-SSV-JCW (MDL No. 2328).

Companies: Pool Corp.; Hayward Industries, Inc.; Pentair Water Pool and Spa, Inc.; Zodiac Pool Systems, Inc.

Attorneys: Russ M. Herman (Herman, Herman, Katz & Cotlar, LLP) for Direct Purchaser Plaintiffs' Liaison Counsel. Arnold Levin (Levin, Fishbein, Sedran & Berman), Daniel W. Krasner (Wolf, Haldenstein, Adler, Freeman & Herz, LLP), and Douglas G. Thompson (Finkelstein Thompson LLP) for Plaintiffs' Steering Committee. Jay L. Himes (Labaton Sucharow, LLP), Robert N. Kaplan (Kaplan Fox & Kilsheimer LLP), and Ronald J. Aranoff (Bernstein Liebhard LLP) for Plaintiffs' Executive Committee. William Bernard Gaudet (Adams & Reese, LLP) for Defendants' Liaison Counsel. David H. Bamberger (DLA Piper, LLP) for Defendants' Lead Counsel. Wayne J. Lee (Stone, Pigman, Walther, Wittmann, LLC) for Manufacturer Defendants' Liaison Counsel.

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