Federal antitrust class action filed over allegations of gypsum board price fixing

A Florida man and a New York resident have joined forces in bringing a class action

antitrust suit against U.S. Gypsum Company, CertainTeed Corp. and others over allegations that the defendants have, dating back to at least September 2011, conspired to fix, raise, maintain and stabilize the price of gypsum board, more commonly known as drywall.

Attorneys for Robert Pitter, who hails from Southwest Ranches, Fla., and Nicholas L. DeMarco, a resident of Albany, N.Y., filed a federal antitrust action at the U.S. District Court in Philadelphia Jan. 23 against eight defendants who engage in the manufacture and sale of gypsum board, which is alternatively known as drywall, wallboard, sheetrock and plasterboard.

The lawsuit, filed on behalf of the two plaintiffs and others similarly situated, claims that from at least the fall of 2011 through the present, the defendants combined and conspired to fix and raise the prices at which they sold the commodity across the United States, beginning with large and coordinated price increases that became effective on or about Jan. 1 or 2 of last year.

“In advance of these coordinated increases, during late September through mid-October 2011, five of the eight defendant manufacturers announced to their customers that they were raising gypsum board prices in January 2012, each by an unprecedented 35% and indicated those price increases would remain in place throughout 2012,” the lawsuit reads.

Because gypsum board is a commodity product, the complaint states, in the absence of collusion, the defendants’ price increases would have contravened each defendant’s independent self-interest, “as anyone could have profited and gained market share by undercutting the others during a period where the defendants had substantial unused capacity.”

The suit further states that contrary to prior history in the industry, the defendants not only announced these coordinated price increases, they also successfully maintained much higher prices throughout 2012, despite the fact that the increases were imposed during a soft construction market.

“Defendants also maintained substantially higher prices in the face of significant industry overcapacity that would have made it virtually impossible for any Defendant independently to impose and maintain a substantial price increase on its customers in the absence of collusion,” the lawsuit says.

The defendants also simultaneously abolished their use of a decades-old competitive pricing practice known as “job quotes,” the suit states, a practice that allowed customers to lock in the price of gypsum board for the entire course of a construction project.

Each defendant “abruptly” eliminated this practice in late 2011, according to the complaint, which was around the same time they put into place the industry-wide price increases that are subject of the litigation.

The suit states that plaintiff Pitter indirectly purchased gypsum board manufactured by defendant USG Corporation in Davie, Fla., and as a result, has suffered injury in that he paid more for that product than he would have paid in the absence of the defendants’ misconduct.

Similarly, plaintiff DeMarco indirectly bought gypsum board made by that same defendant and suffered the same injuries as his co-plaintiff.

The lawsuit, which says that the manufacturers of gypsum board see annual sales of more than $5 billion, accuses the defendants of violating the Sherman Act.

The class of plaintiffs outlined in the lawsuit would be those who indirectly purchased gypsum board in the United States from Jan. 1, 2012 through the present.

The complaint alleges violations of federal and state antitrust laws, state consumer protection and unfair competition laws, and unjust enrichment laws.

The plaintiffs seek judicial class action certification as well as attorney’s fees, interest and other damages.

The complaint was jointly filed by Kenneth I. Trujillo and Ira Neil Richards, attorneys with Philadelphia-based Trujillo Rodriguez & Richards, and Jeffrey C. Block, Whitney E. Street and Mark A. Delaney, lawyers with the Boston firm of Block & Leviton.

 

The federal case number is 2:13-cv-00384-MMB.