Price-Fixing Claims Against Door Skins Manufacturers Carry Weight but Lack Timing Judge SaysSeptember 25th, 2019 by Kyra Thompson
A Virginia federal judge granted in part and denied in part a motion to dismiss a lawsuit against two prominent interior molded door companies for allegations that they conspired to hike product prices.
Masonite Corp. and Jeld-Wen Inc. failed in their attempt to fully convince the court that arguments posted by two groups of plaintiffs’ should be dismissed on the basis of failure to state a claim, after the court found that the accusation by the two groups, including direct and indirect purchasers, “sufficiently alleged” the charges.
However, U.S. District Judge John A. Gibney Jr. did grant the defendants a partial dismissal on the basis that the indirect purchaser claims arising under antitrust state law “fall short in various respects.”
The group of dealers and buyers filed the case in October 2018 following the success of a similar claim filed against Jeld-Wen by Steves and Sons Inc.
In order to successfully plead a conspiracy to fix prices, there must be facts showing that the defendants increased prices in a parallel fashion and entered into an illegal agreement to fix prices, according to the court issued memorandum of opinion.
The plaintiffs outlined in their argument how, after Jeld-Wen acquired CraftMaster International Inc. (CMI), Masonite and Jeld-Wen controlled 85% of the door skins manufacturing market. In the years that followed, from 2012 until 2018, the two companies increased prices in similar percentage increments, the plaintiffs allege, with the last alleged price increase announced by both companies within two days of one another.
Among the allegations set forth by the plaintiffs suggesting collusion between the two companies were:
- Executive officials for both companies attend the same trade group meetings, investor conventions and are often swapped back and forth between companies;
- The market is highly concentrated, contains high barriers to entry and deals with an inelastic, interchangeable good;
- Companies in the industry have a history of violating antitrust laws;
- Masonite and Jeld-Wen increased prices despite falling input costs;
- Masonite engaged in irrational pricing activity and;
- Masonite then stopped selling door skins in order to yield the market to Jeld-Wen.
[Please note this paragraph updates and corrects an earlier version of the article.] The judge’s decisions, as published in the opinion, were split between the plaintiffs and the defendants, though the Court made clear that the “plaintiffs have not proven that the defendants made any agreements to fix prices in the IMD market.” The Court said only that the allegations of parallel conduct plus factors are sufficient to survive a motion to dismiss.
The judge then sided with the defendants that the plaintiffs failed to satisfy due diligence requirements by seeking damages for violations within four years of the cause. “The plaintiffs also failed to allege any direct evidence of a conspiracy or agreement,” the memorandum read. In addition to this, Judge Gibney agreed with the defendants’ refute of several state law claims. The defendants argued that the plaintiffs lack standing to invoke laws of states where none of the plaintiffs live—a point to which the judge agreed in his opinion, dismissing those claims, also agreeing to address remaining arguments in states in which plaintiffs did have a presence.
Neither side has responded yet to the order which was filed September 18, 2019.