Gypsum Board antitrust class action transferred to Eastern District of Pa.

Another drywall price-fixing antitrust complaint has surfaced at the Eastern District of

Pennsylvania, this one transferred from the federal court in western North Carolina.

The United States Judicial Panel on Multidistrict Litigation on April 29 transferred a case initiated by New York-based Ashford Gypsum Services Inc., which is suing on behalf of itself and others similarly situated, to the federal courthouse in Philadelphia, where U.S. District Judge Michael M. Baylson is overseeing pretrial proceedings in an MDL docket containing consolidated cases that allege gypsum board manufacturers conspired, from at least 2008 to the present, to fix, raise, maintain and stabilize the price of drywall sold in the country.

There are a number of defendants listed in the lawsuit, which include, but aren’t limited to, National Gypsum Co., LaFarge North America Inc., American Gypsum Co., Georgia-Pacific LLC, USG Corp. and Certainteed Corp.

The latest lawsuit, which contains near identical claims to those complaints that have come before it, alleges that the drywall price-fixing conspiracy is an outgrowth of what it calls the largest housing crash in U.S. history back in late 2007.

“The decline in demand for housing during real estate downturn produced a corresponding decline in demand for drywall, resulting in tremendous overcapacity,” the suit reads. “The decline in demand translated to lost profits and the threat of further lost profits to Defendants. In the face of this decreased demand, Defendants attempted to, and actually did, increase prices – something that they would not, nor could not, have done in a competitive market.”

The lawsuit accuses the defendant companies of defying the “laws of economics, by increasing prices and threatening to continue to increase prices.

“Absent the alleged conspiracy, this could not, and would not, have happened,” the complaint reads. “Drywall prices would have languished with housing prices.”

The lawsuit says that the defendants reached what it terms illegal agreements to increase prices and restrain trade during trade association meetings and other industry functions.

Because the plaintiffs had no alternatives available to them, the suit claims, the direct purchaser plaintiff class paid, and continues to pay, the “supra-competitive high prices to Defendants, who reaped, and continue to reap, artificially high profits.”

The suit says that drywall, also known as gypsum board and sheetrock, possesses many of the characteristics of a commodity product, and that drywall produced by one defendant doesn’t differ significantly in quality, appearance or use from that produced by another defendant.

Coinciding with the alleged conspiracy, the complaint states, the defendants also engaged in a “drastic departure” from prior industry practice in which customers were able to lock in drywall prices for the duration of a construction project, a process referred to as “job quotes.”

“The primary effect of Defendants’ agreement to eliminate job quotes was to increase the price of drywall,” the suit states.

The complaint accuses the defendants of engaging in fraudulent concealment, and it also alleges that the drywall manufacturers violated the Sherman and Clayton Antitrust Acts.

The plaintiffs seek monetary damages as well as injunctive relief against each of the defendants.

The latest lawsuit was filed by North Carolina attorneys Larry S. McDevitt and David M. Wilkerson, of The Van Winkle Law Firm, and Minnesota lawyers David M. Cialkowski, Anne T. Regan and Brian C. Gudmundson, of Zimmerman Reed LLP.

 

The federal case number is 2:13-cv-02295-MMB.