Antitrust Law Daily Wrap Up, TOP STORY—N.D. Ohio: Settlement of indirect purchasers’ polyurethane foam price fixing claims approved, (Apr 7, 2015)

By John W. Arden, J.D., LL.M.

The settlement of indirect purchasers’ polyurethane form price fixing claims against DomFoam International, Inc., Valle Foam Industries Inc., and A-Z Sponge & Foam Products Ltd. received final approval from the federal district court in Toledo, Ohio. There was no monetary component to this settlement due to substantial fines imposed by the Canada Competition Bureau on the defendants and the defendants’ precarious financial position. However, the defendants agreed to provide substantial assistance to the class in the prosecution of their claims against other defendants (In re Polyurethane Foam Antitrust Litigation, April 3, 2015, Zouhary, J.).

According to a non-document order, the district court held a record fairness hearing on April 2 and granted the indirect purchasers’ motion for final approval of the settlement. Class counsel was directed to submit proposed judgment entries pursuant to the settlement agreement.

The multidistrict litigation arose from an alleged conspiracy to fix the prices of polyurethane foam products. The first indirect purchaser class action claim was filed in the federal district court on January 21, 2011. Subsequently filed direct and indirect purchaser class action and direct action cases were consolidated in the district court by order of the Judical Panel on Multidistrict Litigation.

In a memorandum of law in support of the final approval of the settlement, the indirect purchasers stated that they had reason to believe that Domfoam possessed relevant information regarding their claims. In fact, on January 5, 2015, Domfoam and Valle Foam pleaded guilty before the Ontario Superior Court in Ottawa that they had agreed with competitors Carpenter, Vitafoam, and Foamex to fix the prices of polyurethane foam products manufactured in their Canadian plants over a period of 11 years. Subsequently, Domfoam filed for bankruptcy and restructuring proceedings in both Canada and the United States.

Under the settlement agreement, Domfoam’s current and former officers and directors are required to cooperate with the plaintiffs. According to the memorandum, the indirect purchasers believe that the cooperation pledged by the defendants would not have been available to them but for the agreement.

This development follows a February 26 final approval of a settlement between a class of direct purchasers and polyurethane foam manufacturers Leggett & Platt and Carpenter Co. Under that settlement, the direct purchasers will receive $39.8 million.

The case is MDL Docket No. 2196, Index No. 10-MD-2196 (JZ).

Attorneys: Marvin A. Miller (Miller Law LLC), Richard M. Kerger (Kerger & Hartman, LLC), Shpetim Ademi (Ademi & O’Rielly, LLP), Jay B. Shapiro (Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.), Martin D. Holmes (Dickinson Wright PLLC), Daniel Lynch (Lynch & Stern LLP), Eric D. Barton (Wagstaff Cartmell), and David Schiller (Schiller & Schiller, PLLC), and Susan Bernstein for the Indirect Purchaser Plaintiffs.

Companies: DomFoam International, Inc.; Valle Foam Industries Inc.; A-Z Sponge & Foam Products Ltd.

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