A federal judge has ordered that all the remaining drywall
manufacturers in the price-fixing antitrust litigation but one will
have to remain in the case.
U.S. District Senior Judge Michael M. Baylson of the Eastern
District of Pennsylvania, who has handled the case since it was
consolidated nearly three years ago, denied summary judgment to the
majority of the remaining defendants in the litigation.
The drywall manufacturers requesting summary judgment were
National Gypsum, CertainTeed, American Gypsum, Lafarge and PABCO.
CertainTeed's summary judgment motion was the only one granted by
Baylson. In March, two former defendants, USG Corp. and TIN Inc.,
settled with the direct and indirect purchaser plaintiffs for a
total of $55 million. Altogether, the defendants represent just
over 89 percent of all U.S. drywall sales.
TIN agreed to pay $5.25 million to settle claims from direct
purchasers of drywall and $1.75 million to settle with indirect
USG agreed to pay $39.25 million to settle with the direct
purchasers and $8.75 million to settle with indirect
According to Baylson's 161-page opinion, both putative classes
of plaintiffs alleged that, beginning in 2011, the defendants
violated the antitrust laws by conspiring to hike prices, restrict
supply, and eliminate the traditional pricing practice of providing
customers with job quotes.
The remaining defendants claimed they "were merely 'following
the leader,' which they argue is an expected and legal business
practice in an oligopoly," Baylson wrote, noting that American was
the first company to send a letter in 2011 notifying customers of a
35 percent price increase.
The defendants claimed that American's position took the
industry by surprise, Baylson said, but ultimately, they saw it as
an opportunity to improve their bottom line and mimicked American's
strategy based on their independent conclusions that the changes
American implemented were in their best interests, individually,
and not part of a conspiracy.
Officers for American said in declarations that the price
increase was a way to deal with the hit the company took during the
Great Recession. Part of that plan to cope with American's
financial troubles included eliminating price quotes. The officers
claimed they did not communicate with other manufacturers about the
Declarations and depositions from the officers and employees of
National, Lafarge, PABCO and CertainTeed denied knowledge of any
agreement between other drywall manufacturers to set prices.
The difference in CertainTeed's case, Baylson said, was "the
relative lack of evidence that CertainTeed communicated with other
manufacturers or analysts coupled with the evidence that
CertainTeed did take steps indicative of independent
decision-making, result[ing] in the court's conclusion that a jury
could not reasonably make the inference that CertainTeed
participated in an agreement in restraint of trade."
The same could not be said for the other defendants, according
"When plaintiffs' evidence is considered as a whole, it tends to
exclude the possibility that National, American, PABCO and Lafarge
acted independently, or even interdependently," the judge
Thomas Brown of Butler Weihmuller Katz Craig represented
American, Leslie John of Ballard Spahr represented Lafarge, Gregory
Casamento of Locke Lord represented PABCO, and Robert Milne of
White & Case represented CertainTeed; none returned calls
Steven Bizar of Dechert represented National and said the
litigation still has a long way to go. "It's not a ruling on the
merits of the case," he said.
The classes still face the hurdle of certification, and they
have to go to trial, he said, adding, "At the end of the day, on
behalf of National Gypsum, we believe that our prices are fair,
competitive and were set by National Gypsum alone."
In his opinion, Baylson also expressed that the litigation was
only in its beginning stages and summary judgment was not the
"The judge's function in ruling on summary judgment is as a
'gatekeeper' through which the parties must pass. Denial of a
summary judgment motion bestows a legal 'rite of passage'-like the
trials and tribulations facing the Prince and Papageno in Mozart's
'The Magic Flute,' or the adventures of Ulysses in ancient Greece,"