DOJ Set to Drop in on Jeld-Wen’s Hearing

May 26th, 2020 by Drew Vass

The Department of Justice (DOJ) plans to drop in at the U.S. Court of Appeals for the Fourth Circuit in Richmond, Va., this Friday, taking the mic for a brief five-minute advisement period amid a remote hearing. After the court set two tentative dates for oral arguments in an appeals case filed by Jeld-Wen Inc., officials for DOJ suggested their input might help to shed light on certain factors germane to the proceedings—including information regarding how enforcements for private and public antitrust laws intermingle.

The appeal follows a 2018 ruling against Jeld-Wen awarding $100 million in damages to rival door maker Steves and Sons Inc. (Steves), and an order that Jeld-Wen divest of is plant in Towanda, Pa. The antitrust ruling was brought on by actions linked to the acquisition of Craft Master International (CMI) by Jeld-Wen in October 2012—a move that was later found to unfairly impact competitions within the door skins market. Jeld-Wen filed an appeal for the ruling in April 2019.

The move by DOJ to provide input follows a brief that was filed positioning the department as an impartial adviser, urging the court to affirm two aspects of the case—including that the doctrine of laches fails to categorically bar private plaintiffs from challenging a merger once consummated, and that no relevant inference can be drawn from evidence that the U.S. investigated but failed to produce antitrust claims prior to the merger. The doctrine of laches is a type of legal defense asserting there were unreasonable delays leading up to a lawsuit, prejudicing or precluding defendants from proper defense. Prior to Steves’ case against Jeld-Wen, resulting in an antitrust ruling, DOJ’s Antitrust Division investigated Jeld-Wen’s proposed acquisition of CMI in 2012, closing the investigation in September 2012 with no further action. Following the successful acquisition of CMI in October 2012, a string of sparring followed between the two companies, brought on by price increases and a terminated supply agreement. According to court documents, Steves then raised concerns with DOJ’s Antitrust Division starting in December 2015. On June 29, 2016, Steves filed a complaint.

The case was tried before a jury, which found Jeld-Wen’s acquisition of CMI to be in violation of Section 7 of the Clayton Act, which prohibits mergers and acquisitions that may substantially lessen competition, or that tend to create monopolies. In support of its appeal, Jeld-Wen argues that by barring a jury from knowing about DOJ’s choice to stay out of the merger, a trial court wrongly impacted the outcome if its case.

A brief filed by DOJ August 23, 2019, states, “The United States urges this Court to recognize that laches does not bar all private-party antitrust suits seeking divestiture filed after the consummation of a merger, particularly those suits in which the private-party plaintiff cooperated with the Antitrust Division’s review instead of immediately bringing its own suit to block the merger. The United States also urges that no inference should be drawn from the Division’s decision to close an investigation into a merger without taking further action.”

After suggesting that its weigh-in would aid the Fourth Circuit Court in Richmond, both parties to the case agreed to DOJs brief involvement. A court order has since allowed DOJ’s request for a five-minute session, also extending the amount of time that Jeld-Wen will have to argue its case. The hearing is set to take place via videoconferencing this Friday, May 29.

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