U.S.Supreme Court Won’t Halt Class Action Suit against Containerboard Producers

The U.S. Supreme Court has declined to halt a class action lawsuit against several containerboard manufacturers, which could now face trial on claims of price fixing by tens of thousands of buyers and nearly $12 billion in potential damages, according to a recent Reuters news report.

The justices left in place a federal judge's certification of the antitrust class action against containerboard producers including International Paper Co., Weyerhaeuser Co., and Georgia-Pacific LLC. The companies argued that individually negotiated pricing regimes with the buyers should preclude class action certification.

Reuters reported that several containerboard or "cardboard" product buyers, including Minnesota-based floor care product maker Kleen Products LLC, filed suit in Chicago federal court in 2010 alleging the manufacturers violated U.S. antitrust law. The buyers said that between 2004 and 2010, the manufacturers conspired to manipulate prices by closing or idling mills to restrict production of the material, attempting 15 coordinated price increases during that time. They sought class certification, and the trial court allowed it, a decision upheld by the Chicago-based 7th U.S. Circuit Court of Appeals last August. That court said the buyers had shown there was proof common to the class members showing they were injured by the anti-competitive behavior.

"Purchasers tendered extensive evidence that, if believed, would be enough to prove the existence of the alleged conspiracy," the appeals court said, adding that the evidence is largely circumstantial.

The containerboard producers appealed to the Supreme Court, saying the lower courts should not have allowed a class action when the trial would be loaded with questions about whether each buyer paid artificially high prices and by how much. The producers said in court papers that in their industry, terms of sale are negotiated between buyers and sellers, resulting in widely varying prices and contracts, which other courts have held undercuts the presumption of class-wide harm.

"The presence of this individualized pricing should have precluded class certification of the sprawling and disparate class certified here," the producers said.

Weyerhaeuser sold its containerboard business to International Paper for $6 billion in 2008.