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Ashley Furniture Industries, Inc. v. Packaging Corp.

United States District Court, W.D. Wisconsin

July 27, 2017



          WILLIAM M. CONLEY, District Judge

         Plaintiff Ashley Furniture Industries, Inc. alleges that defendants, vertically-integrated manufacturers of containerboard products, conspired to restrict output and raise prices in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. All but a single defendant move to transfer this case to the District Court for the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a), asserting that this lawsuit is substantially related to a class action pending in that forum, from which the plaintiff here opted-out. (Dkt. #78.) The other defendant, Georgia-Pacific LLC (“Georgia-Pacific”), moves to sever and then transfer plaintiff's claims against it to the District of Delaware, pointing to a forum selection clause contained in its terms and conditions for sale. (Dkt. #63.) In response, plaintiff Ashley Furniture emphasizes its right to file and have the case decided in its home forum, along with its addition of specific claims under Wisconsin law and expansion of the alleged conspiracy period, arguing that each compel the denial of both motions. For other reasons explained below, the court will deny defendants' motions.


         Plaintiff Ashley Furniture Industries, Inc. (“Ashley”) is a Wisconsin corporation with its principal place of business in Arcadia, Wisconsin. During the period relevant to this lawsuit, plaintiff purchased containerboard and products made out of containerboard[2] directly from defendants, all of which manufacture and sell containerboard and containerboard products.[3] Plaintiff asserts that venue is proper in this district because a substantial part of the events giving rise to its antitrust claims occurred in this district by virtue of defendants' sales of containerboard to plaintiff.

         More generally, plaintiff claims that defendants began conspiring in or around 2004 to restrict production of and to raise prices for containerboard products. Plaintiff alleges that defendants were able to carry out this conspiracy and charge supra-competitive prices through coordination facilitated by frequent gatherings sponsored by industry trade organizations. Plaintiff further asserts that the containerboard industry is vulnerable to collusive behavior, due to factors including the commoditized nature of containerboard, inelastic demand for containerboard and the small number of containerboard manufacturers.

         Defendants identify significant similarities between plaintiff's allegations in this case and the § 1 class action that is being actively litigated before Judge Leinenweber in the Northern District of Illinois, Kleen Products LLC, v. International Paper, , Case No. 1:10-cv-05711.[4] Kleen Products began as five putative class actions that were filed in 2010, and then consolidated upon the plaintiffs' motions into a single case originally assigned to Judge Shadur and then reassigned to Judge Leinenweber in 2012. (Defs.' Opening Br. (dkt. #79) at 3.)

         Defendants represent that there have been more than 60 status hearings in Kleen Products and that discovery has been “extensive, ” including “dozens of written discovery requests, millions of pages of produced documents (or their electronic equivalents), and more than one hundred depositions, including at least ten third-party depositions.” (Id. at 3-4.) Defendants also indicate that the parties' discovery disputes in Kleen Products generated seventeen motions to compel, requiring the Magistrate Judge to “overs[ee] two days of evidentiary hearings, ” as well as “conduct[] eleven status hearings and Rule 16 conferences with all parties, and facilitate[] three additional Rule 16 conferences between the plaintiffs and specific defendants.” (Id. at 4.) In addition, defendants point out that Judge Leinenweber granted the Kleen Products plaintiffs' motion for class certification, which “spawned seven separate briefs that total more than 300 pages, ” in a 66-page opinion on March 26, 2015.[5] Kleen Prods. LLC v. Int'l Paper, 306 F.R.D. 585, 588 (N.D. Ill. 2015). The Seventh Circuit affirmed Judge Leinenweber's decision on August 4, 2016. Kleen Prods. LLC v. Int'l Paper Co., 831 F.3d 919 (7th Cir. 2016).

         With respect to the similarities between this case and Kleen Products, defendants emphasize in their opening brief that: (1) much of plaintiff's complaint is identical to the Kleen Products pleadings, including excerpted examples of matching language; (2) plaintiff essentially alleges the same conspiracy period, 2004 to 2010; and (3) both cases name the same defendants, with the exception of changes reflecting “certain Defendants' corporate organization that post-date the class action complaint.” (Defs.' Opening Br. (dkt. #79) 4-8.) Defendants acknowledge in their opening brief that plaintiff Ashley Furniture also asserts claims under Wis.Stat. § 133.14, but argue that the state law claims are largely immaterial to the transfer analysis, because “the legal standard is the same under either statute, ” while acknowledging that “the Wisconsin statute may in some circumstances permit certain forms of relief not available under the Sherman Act.” (Id. at 8.)

         Plaintiff filed a second amended complaint before the deadline established in the court's pretrial conference order to file amended pleadings without leave, and then filed a brief in opposition to defendants' transfer motion. The second amended complaint added several paragraphs of “post-2010” allegations suggesting that defendants' conspiracy lasted into 2013. While Ashley Furniture concedes in its opposition brief that “the plaintiffs in Kleen Products . . . assert a substantially similar federal antitrust claim against essentially the same defendants, ” plaintiff argues this case is different from Kleen Products “in two significant ways.” (Pl.'s Opp'n Br. (dkt. #96) at 3.) First, plaintiff alleges claims under Wisconsin law, and second, plaintiff alleges a longer conspiracy period.

         For its part, defendant Georgia-Pacific moves to sever plaintiff's claims against it under Federal Rule of Procedure 21, and then moves to transfer the severed action to the District Court for the District of Delaware to vindicate the forum selection clause included in its terms and conditions attached to the sale of its containerboard products. Specifically, that clause states that “the courts of Delaware shall have exclusive jurisdiction.” (Decl. of Mary K. McLemore Ex. C (dkt. #75-3).) Plaintiff does not contest the validity of the forum selection clause, but rather argues that Georgia-Pacific's insistence that the forum selection provision significantly outweighs other factors typically considered regarding transfer is overblown, especially considering that plaintiff alleges a conspiracy involving Georgia-Pacific and the other defendants. The other defendants oppose Georgia-Pacific's motion on grounds similar to those raised in support of their transfer motion, namely that transfer of the entire action to the Northern District of Illinois would best serve judicial economy.


         I. Georgia-Pacific's Motion

         Because the parties agree that § 1404(a) requires transfer of an action as a whole, see Paduano v. Express Scripts, Inc., 55 F.Supp.3d 400, 431 (E.D.N.Y. 2014), the court will first decide whether severance and transfer of plaintiff's claims against defendant Georgia-Pacific is warranted before addressing the remaining defendants' motion. Federal Rule of Civil Procedure 21 extends broad discretion to district courts to “sever any claim against a party.” See Rice v. Sunrise Exp., Inc., 209 F.3d 1008, 1016 (7th Cir. 2000). When a party's motion to sever and transfer is principally based on a forum selection clause, as is Georgia Pacific's, courts have merged the relevant analyses under Rule 21 and 28 U.S.C. § 1404(a). See Paduano, 55 F.Supp.3d at 431-32 (“In exercising that discretion [whether to grant a Rule 21 severance motion], courts typically consider the same general factors elucidating the § 1404(a) analysis. In other words, if the Court were to conclude that the pertinent factors render transfer appropriate under § 1404(a), then severance, too, would be proper.”) (brackets omitted) (internal quotation marks and citations omitted) (quoting Valspar Corp. v. E.I. DuPont de Nemours & Co., 15 F.Supp.3d 928 (D. Minn. 2014)); see also Monje v. Spin Master Inc., No. CV-09-1713-PHX-GMS, 2013 WL 6498073, at *4 (D. Ariz. Dec. 11, 2013) (“Severance is a necessary precursor to . . . transfer, and it is justified by the same reasoning[.]”); Atlantic Marine Contsr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex., 571 U.S. ___, 134 S.Ct. 568, 579 (2013) (holding that motions to transfer to another federal court pursuant to a forum selection provision are governed by § 1404(a)).

         “For the convenience of the parties and witnesses [and] in the interest of justice, ” § 1404(a) provides that “a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.” Courts deciding a § 1404(a) transfer motion, therefore, typically “must evaluate both the convenience of the parties and various public-interest considerations, ” ultimately deciding “whether, on balance, a transfer would serve the convenience of the parties and witnesses and otherwise promote the interest of justice.” Atlantic Marine, 134 S.Ct. at 581 (internal quotation marks and citation omitted). When the transfer motion is based on a valid forum selection clause between the parties, this traditional § 1404(a) analysis is altered in three ways: (1) the plaintiff's choice of forum deserves no weight; (2) the parties' private interests are immaterial; and (3) the court should not weigh the transferee court's familiarity with the law dictated by the transferor court's choice of law rules, since those rules would not follow along with a transfer. Id. at 581-82. Consequently, the Supreme Court explained in Atlantic Marine that “[w]hen the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause. Only under extraordinary circumstances unrelated to the convenience of the parties should a § 1404(a) motion be denied.” Id. at 581.

         The forum selection provision in the terms and conditions attached to sales of Georgia-Pacific's corrugated products states as follows:

These Terms and Conditions of Sale shall be governed by the laws of the State of Delaware, USA, and the courts of Delaware shall have exclusive jurisdiction without reference to the choice of law, conflicts of law, or principles of any other state or county which might otherwise be applied.

(Def.'s Opening Br. (dkt. #73) at 3 (quoting Decl. of Mary K. McLemore Ex. C (dkt. #75-3).) Plaintiff does not contest the validity of this forum selection provision, but rather argues that the force of the Supreme Court's “extraordinary circumstances” requirement is satisfied here, because unlike Atlantic Marine, this case involves allegations of a multi-defendant conspiracy. In support, plaintiff cites several other cases in which district courts denied a single defendant's motion to sever and transfer where multiple other defendants were facing the same claims.

         Raising the same concerns, the other defendants filed their own brief in opposition to Georgia-Pacific's motion, [6] echoing plaintiff's argument that “Atlantic Marine says nothing about forum-selection clauses in a case like this one, where multiple defendants who did not ‘agree' to the clause oppose transfer to the specified forum.” (Defs.' Opp'n Br. (dkt. #89) at 2 (emphasis in original).) Instead, defendants argue this court should apply the same factors that other courts have found important in deciding Rule 21 motions: “(1) whether the claims arise out of the same transaction or occurrence; (2) whether the claims present some common questions of law or fact; (3) whether settlement of the claims or judicial economy would be facilitated; (4) whether prejudice would be avoided if severance were granted; and (5) whether different witnesses and documentary proof are required for the separate claims.” In re High Fructose Corn Syrup Antitrust Litig., 293 F.Supp.2d 854, 862 (C.D. Ill. 2003). This court agrees, finding that all of these factors militate against severance, most of them strongly so.

         Georgia-Pacific's reply underscores that the parties' central dispute centers around whether the Supreme Court's decision in Atlantic Marine dictates transfer. While Atlantic Marine “did a lot to clear up the law of forum selection, ” commenters have noted that the Supreme Court left important questions unanswered, including “[i]f the [forum selection] clause applies to only some parties or claims but not others, how should the court review a transfer motion?” Linda S. Mullenix, Gaming the System: ProtectingConsumers from Unconscionable Contractual Forum-Selection and Arbitration Clauses, 66 Hastings ...

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