By Jeffrey May, J.D.
A proposed class of approximately 14,000 drywall distributors, buying cooperatives, contractors, and other persons and entities that purchased directly from defending drywall manufacturers or their wholly-owned subsidiaries was certified by the federal district court in Philadelphia, permitting the plaintiffs to proceed with price fixing claims against the firms. The class was defined as persons and entities that purchased paper-backed Gypsum Wallboard in the United States from January 1, 2012, through January 31, 2013. The plaintiffs met their burden as to the numerosity, commonality, typicality, and adequacy requirements of Federal Rule of Civil Procedure 23(a), as well as the predominance, superiority, and ascertainability requirements of Rule 23(b)(3) (In re Domestic Drywall Antitrust Litigation, August 23, 2017, Baylson, M.).
Standing. At the outset, the court disposed of the defendants’ challenges to the four named plaintiffs on standing grounds. With respect to three of the plaintiffs, the defendants argued that these drywall purchasers did not have antitrust standing to bring their claims because they did not qualify as direct purchasers. Although these plaintiffs purchased from a non-defendant, the non-defendant was a wholly-owned subsidiary of defendant USG Corp. Therefore, they had standing under the "control exception" to the Illinois Brick rule that indirect purchasers generally lack antitrust standing under federal antitrust law.
A fourth plaintiff—a company that bought drywall through a purchasing co-operative for building materials dealers—also had standing. The court rejected the defendants’ assertions that the assignment of the antitrust claim from the cooperative to this plaintiff was invalid.
Summary judgment. The court in 2016 had denied summary judgment as to all but one defendant. In considering the motion for class certification, the court explained that the "review of the evidence at the summary judgment phase deserves an important role in the ‘rigorous’ examination required on the class action question, particularly as to whether common questions predominate, and more specifically, whether plaintiffs can prove antitrust impact and measurable damages on a classwide basis."
Rule 23. The plaintiffs satisfied the requirements of Rule 23(a) and Rule 23(b)(3). The defendants did not challenge the plaintiffs’ ability to meet the numerosity requirement or commonality requirement of Rule 23(a). They did, however, argue that the plaintiffs could not meet the typicality and adequacy prerequisites. The court disagreed. The defendants failed to convince the court that the class representatives were (1) subject to unique defenses, and (2) in different factual circumstances than the defendants’ customers. "Though they may have suffered different damages, the overall alleged scheme is the same, and the Plaintiffs’ claims are the same," the court concluded.
In its predominance analysis under Rule 23(b)(3), the court spent a significant amount of time explaining how the plaintiffs had shown, by a preponderance of the evidence, that antitrust impact could be proven on a classwide basis. It noted that this was the "most difficult and complex of the class certification requirements."
The court’s determination that the class satisfied Rule 23 did not mean that a jury would accept the plaintiffs’ theory, it was noted. The substantive issues of liability remained for the jury to decide.
The court also concluded that the plaintiffs demonstrated that common issues predominate as to the element of "measurable damages." The court noted that it could potentially create sub-classes for purposes of damages determinations.
The court issued an order certifying the class, and the parties were directed to prepare a notice for class members.
This case is No. 2:13-md-02437-MMB.
Attorneys: Jeffrey J. Corrigan (Spector Roseman Kodroff & Willis, PC), Michael C. Dell'Angelo (Berger & Montague, PC), and Brent W. Johnson (Cohen Milstein Seller & Toll PLLC) for Sierra Drywall Systems Inc., Janicki Drywall Inc. and New Deal Lumber & Millwork Co. Edward G. Biester, III (Duane Morris LLP) for Tin Inc. Sundeep K. Addy (Bartlit Beck Herman Palenchar & Scott LLP) for USG Corp. and United States Gypsum Co.
Companies: Sierra Drywall Systems Inc.; Janicki Drywall Inc.; New Deal Lumber & Millwork Co.; Tin Inc.; USG Corp.; United States Gypsum Co.
MainStory: TopStory Antitrust PennsylvaniaNews
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