Antitrust Law Daily Wrap Up, TOP STORY—E.D. Pa.: $55M settlement in drywall price fixing suit gets final approval, (Aug 25, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in Philadelphia has given final approval to a $55 million settlement between drywall manufacturers TIN Inc., USG Corp., United States Gypsum Co., and L&W Supply Corp. and direct and indirect drywall purchasers. The settlement resolves claims that the domestic drywall manufacturers conspired to fix, raise, maintain, and/or stabilize the prices of drywall products sold in the United States (In re Domestic Drywall Antitrust Litigation, August 20, 2015, Baylson, M.).

Background. Direct and indirect purchasers of domestic drywall products that were used in commercial and residential construction projects filed a series of class action suits against drywall manufacturers, alleging that the manufacturers engaged in a conspiracy to fix prices and eliminate job quotes in the sale of domestic drywall. The plaintiffs alleged that several manufacturers colluded to increase prices for drywall in 2011 and 2012.

In March 2015, the court granted preliminary approval of proposed settlements between the direct and indirect purchasers and TIN Inc., USG Corp., United States Gypsum Co., and L&W Supply Corp. The plaintiffs then moved for final approval of the settlements.

For purposes of the settlement, the court certified a class of direct purchasers defined as all individuals or entities that purchased wallboard in the United States directly from the defendants from January 1, 2012 through November 30, 2014. The indirect purchasers were similarly defined on behalf of individuals or entities that purchased wallboard in the United States on an indirect basis, such as from contractors or retailers.

Settlement. Under the terms of the settlement, TIN, Inc. paid $5.25 million, while USG Corp., United States Gypsum Co., and L&W Supply Corp paid $39.25 million for a total of $44.5 million for the direct purchasers. For the indirect purchasers, TIN, Inc. paid $1.75 million and USG Corp., United States Gypsum Co., and L&W Supply Corp paid $8.75 million for a total of $10.5 million. The overall settlement amount for all plaintiffs from the settling defendants was $55 million.

The court found that the proposed settlement was reached after extensive arm’s-length negotiation between very experienced counsel for the parties. The settlement amount reflects a fair award for the plaintiff, less than what might be gained after a lengthy trial but still a significant sum relative to the actual sales of drywall products by the defendants.

Additionally, the range of reasonableness of the settlement fund was the best possible recovery in view of (1) the complexity, expense, and likely duration of the litigation; (2) the overall positive reaction of the class; (3) the amount of discovery that was completed which allowed the parties to evaluate the merits of their claims; (4) the risks of establishing liability and damages; (5) the risks of maintaining the class action through trial, and (6) the ability of the defendants to withstand a greater judgment.

Past and future litigation expenses. The plaintiffs’ counsel also requested permission to use a significant portion of the settlement proceeds for payment of already incurred expenses and future litigation expenses in continuing the litigation against the nonsettling defendants. The court granted the request for the direct and indirect purchasers to be reimbursed for common litigation expenses that had been already incurred in the case. However, a decision regarding future litigation expenses was deferred pending a decision of the remaining defendants’ motions for summary judgment.

The case is MDL No. 2437.

Attorneys: Garrett Dennis Blanchfield, Jr. (Reinhardt Wendorf & Blanchfield), Anthony J. Bolognese (Bolognese & Associates, LLC), and Michael J. Boni (Boni & Zack LLC) for the plaintiffs. Philip S. Beck (Bartlit Beck Herman Palenchar & Scott LLP) for USG Corp. Edward G. Biester, III (Duane Morris LLP), and Elizabeth A.N. Haas (Foley & Lardner) for TIN, Inc.

Companies: USG Corp.; TIN, Inc.

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