Dow Chemical Denied Summary Judgment on Urethane Price Fixing Conspiracy Claims

This posting was written by E. Darius Sturmer, Editor of CCH Trade Regulation Reporter. 

Dow Chemical Company could have violated federal antitrust law through its alleged participation in a conspiracy with other manufacturers to fix prices of certain urethane products from 1999 to 2003, the federal district court in Kansas City, Kansas, has ruled. A motion by Dow for summary judgment in its favor on class claims related to purchases of polyether polyol-based products was, therefore, denied (In re: Urethane Antitrust Litigation, December 18, 2012, Lungstrum, J.).

Dow is the last remaining defendant in the case, as the class and opt-out plaintiffs have settled their claims against competing manufacturers Bayer, BASF, Huntsman, and Lyondell.

The plaintiffs in the case provided sufficient direct and indirect evidence of a price fixing conspiracy involving Dow to allow a reasonable jury to find that such a conspiracy existed, the court held. Direct evidence included testimony by Dow employees about meetings between the company and its competitors at which agreements were reached to set prices and to make price increases stick, as well as testimony by employees of competing manufacturers confirming those agreements.

The direct evidence was also supported by circumstantial evidence of conspiracy, the court added. This evidence consisted of: (1) testimony by additional witnesses that at least supported the inference of a price fixing agreement; (2) simultaneous or near-simultaneous identical price increase announcements; (3) communications, meetings, and joint vacations among executives of the competing manufacturers that involved pricing; and (4) apparent efforts undertaken by the alleged conspirators to maintain the secrecy of their communications, particularly those involving pricing. Further factors suggesting a conspiracy were evidence that: the executives allegedly in communication with each other were high-ranking officers of the company with the authority to set pricing, the structure of the market was conducive to price fixing and provided a motive to enter into an illegal agreement, various actions by the conspirators that were contrary to their own interests absent a conspiracy, and expert opinion evidence suggested that prices were supracompetitive during the conspiracy period.

The court rejected an argument by Dow that the alleged meetings and communications were justified by legitimate business reasons. Dow’s contention that the class failed to exclude the possibility that the conspirators acted competitively instead of collusively in communicating with each other did not merit serious consideration because the plaintiffs’ evidence was not limited to circumstantial evidence of parallel conduct coupled with mere communications between competitors, the court said. The plaintiffs’ evidence included direct evidence of conspiracy and was not ambiguous.

Additionally rejected was a narrower argument by Dow that it was entitled to summary judgment for claims arising from the period of the alleged conspiracy prior to the dates in 2000 on which several key witnesses began their employment for allegedly conspiring manufacturers. The plaintiffs’ evidence of conspiracy went beyond these witnesses’ testimony, the court explained. The class pointed to two specific series of evidence in 1999 to support a conspiracy period extending back to that year. Further, the evidence of a conspiracy existing in 2000 at least allowed for the reasonable inference that the conspiracy was ongoing at that point. “Assuming the existence of a conspiracy,” the court remarked, “its duration is a question of fact for the jury.”

Claims for the period within the alleged conspiracy prior to November 24, 2000, were not time-barred because the class introduced sufficient evidence of fraudulent concealment to toll the limitations period, the court also decided.

The case is MDL No. 1616, No. 04-1616-JWL.

George A. Hanson (Stueve Siegel Hanson LLP - KC) for plaintiffs. Brian R. Markley (Stinson Morrison Hecker LLP) for The Dow Chemical Company.