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Ashley Furniture Industries, Inc. v. Packaging Corporation of America

United States District Court, W.D. Wisconsin

September 26, 2017



          WILLIAM M. CONLEY, District Judge

         Plaintiff Ashley Furniture Industries, Inc. (“Ashley”) is a purchaser of containerboard products who alleges that between 2004 and 2013, defendants, containerboard manufacturers, conspired to restrict output and raise prices in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Before the court are defendants' partial motions to dismiss plaintiff's claims of a conspiracy lasting beyond 2010 and plaintiff's state law claims under Wis.Stat. § 133.14. As explained in more detail below, because plaintiff has plausibly alleged a conspiracy extending into 2013, and because its claims as to § 133.14 are adequately pled, defendants' motions to dismiss will be denied. Nevertheless, the court will grant in part the parties' recent, joint motion to stay further proceedings for the reasons set forth at the end of this opinion.


         In its second amended complaint, which is the operative pleading, Ashley alleges an ongoing conspiracy among defendants to restrict output and raise prices of containerboard products between 2004 and 2013. As explained in more detail in this court's opinion and order on defendants' motion to transfer this case to the Northern District of Illinois, Ashley Furniture Industries, Inc. v. Packaging Corp. of America, No. 16-cv-469-wmc, 2017 WL 3207061 (W.D. Wis. July 28, 2017), plaintiff opted out of Kleen Products LLC, et al. v. International Paper, et al., Case No. 1:10-cv-05711, a class action involving substantially similar claims and defendants, but which was limited to a conspiracy period between 2004 and 2010.

         Generally speaking, the second amended complaint includes allegations that beginning in or around 2004, the containerboard industry was experiencing decreasing profit margins and increased demand. (2d Am. Compl. (dkt. #95) ¶ 6.) In response to those market conditions, plaintiff alleges that defendants agreed to a scheme to restrain capacity artificially, and thus charge supra-competitive prices. (Id.) The second amended complaint further alleges that in their effort to collude, defendants were aided by common membership in industry and trade organizations, as well as consolidation and other market characteristics in the containerboard industry that are conducive to price-fixing. (Id. at ¶¶ 37-46.)

         Although, as already mentioned, Kleen Products is limited to an alleged conspiracy period ending in 2010, Ashley alleges that similar market dynamics and behaviors characteristic of price-fixing collusion continued through 2013. Among these were additional acquisitions, adjustments of capacity and coordinated price increases. (Id. at ¶¶ 185-90.) WestRock RKT Company, formerly Rock-Tenn Company, was responsible for one of these acquisitions.[1] In 2011, WestRock RKT acquired Smurfit-Stone Container Corporation, which had emerged from bankruptcy a year earlier, and merged it into a subsidiary, creating RockTenn CP, LLC, which itself later became defendant WestRock CP, LLC. (Id. at ¶ 20.)

         In addition to Sherman Act Section 1 claims, plaintiff's second amended complaint also includes claims that defendants' conspiracy gives rise to additional remedies under Wisconsin state law. Specifically, plaintiff alleges that all of its contracts or agreements for purchases of containerboard products from defendants arise out of an illegal antitrust conspiracy in violation of Wis.Stat. § 133.03. Accordingly, plaintiff seeks to recover “all payments made under the void contracts or agreements” under § 133.14. (Id. at ¶ 215.)


         I. Conspiracy Period

         All defendants move to dismiss plaintiff's claims that an illegal agreement extended beyond 2010 through 2013.[2] Opting not to challenge plaintiff's allegations of a conspiracy between 2004 and 2010, the same conspiracy period litigated in Kleen Products, defendants argue primarily that plaintiff has failed to plead allegations of a conspiracy between 2011 and 2013 with sufficient factual specificity to pass muster under the plausibility pleading standard described in the Supreme Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 556 (2007).[3]

         More specifically, defendants argue that it is not enough for plaintiff to maintain a § 1 claim for the three-year period beyond that claimed in Kleen Products by simply alleging: (1) Smurfit's 2011 acquisition by WestRock RKT after bankruptcy; (2) International Paper's 2012 acquisition of Temple-Inland; and (3) two parallel price increases in 2012 and 2013. (See Defs.' Opening Br. (dkt. #115) at 12 (citing 2d Am. Compl. (dkt. #95) ¶¶ 185-86, 189-90).) Moreover, with regard to the mergers, defendants point out that both were cleared by the United States Department of Justice. (Id.) With respect to another allegation in the second amended complaint, defendants also assert that plaintiff misleadingly quoted an article analyzing stocks, which was published on the Internet, to infer that containerboard capacity -- as opposed to other paper products -- decreased during this three-year period, an assertion that plaintiff conspicuously fails to address. (Def.'s Opening Br. (dkt. #110) at 5-7; Defs.' Opening Br. (dkt. #115) at 13.)

         Defendants bolster their arguments by citing cases standing for the proposition that the filing of the 2010 lawsuit in Kleen Products neutralizes any plausible inference that an illegal agreement continued after its commencement. See In re Domestic Drywall Antitrust Litig., Civil Action 15-cv-1712, MDL No. 13-2437, 2016 WL 3453147, at *3 (E.D. Pa. June 22, 2016) (describing claims based on price increases in last two years of alleged conspiracy period to be implausible as pled, “[e]specially in light of the intervening [class actions filed against the defendants]”); In re Folding Carton Antitrust Litig., 465 F.Supp. 618, 622 n.3 (N.D. Ill. 1979) (noting that “it is highly improbable that the price fixing conspiracy was continued in 1975 while the government's criminal investigation was progressing”), vacated on other grounds, 699 F.2d 867 (7th Cir. 1979).

         In response, plaintiff essentially argues that truncating the end date of the alleged conspiracy at the pleadings stage makes little sense given that no defendant moves to dismiss the allegations of a conspiracy between 2004 and 2010. In doing so, plaintiff cites a handful of cases for the notion that parties should not “dismember” conspiracy allegations and evaluate their sufficiency separately, as well as the notion that a conspiracy is presumed to continue until an affirmative showing of abandonment. (Pl.'s Opp'n Br. (dkt. #128) at 2-3.) Plaintiff also attempts to draw a contrast between allegations of the conspiracy's start date and its end date for purposes of deciding a motion to dismiss, suggesting that courts have more closely scrutinized the former.

         Bolstering its argument, plaintiff points to In re Lithium Ion Batteries Antitrust Litigation, No. 13-MD-2420, 2014 WL 309192 (N.D. Cal. Jan. 21, 2014), in which the district court found that although the plaintiffs did not adequately plead the beginning of a conspiracy period, the end of the alleged period should not be similarly trimmed, particularly in light of the plausible inference that the defendants did better to conceal their illegal agreement over time. Id. at *12 (“[I]n this later period, unlike in the years 2000 and 2001, the relative paucity of allegations is plausibly explained by increased care and efficiency in the operation of the conspiracy.”).

         While the case that plaintiff cites in support of its argument that the adequacy of allegations as to the end of a conspiracy should be viewed more leniently than those as to its beginning is largely inapposite as applied here, the court agrees with plaintiff that the conspiracy allegations here between 2011 and 2013 have been adequately pled, albeit just barely. Defendants contend that the allegations as to that period are inadequate in part because plaintiff does not allege any “specific meetings or communications” during that time. See In re Urethane Antitrust Litig., 663 F.Supp.2d 1067, 1076 (D. Kan. 2009) (truncating the start of the alleged conspiracy in large part because there were “no allegations of specific meetings or communications occurring during that period, ” as opposed to the allegations with respect to a later period); see also In re Foreign Exch. Benchmark Rates Antitrust Litig., 13 Civ. 7789 (LGS), 2016 WL 5108131, at *16-17 (dismissing claims that a conspiracy existed before 2007, since they were based only on communications dating back to 2004 that the plaintiffs did not even suggest “reflected unlawful conduct”); In re Lithium Ion Batteries, 2014 WL 309192, at *12 (dismissing as implausible claims that a conspiracy began in 2000, which was “reflected in the dearth of meetings alleged in the complaint in the years 2000 and 2001”).

         But taking as true plaintiff's allegations regarding the two acquisitions in 2011 and 2012 that further consolidated the containerboard industry, as well as two, lockstep price increases in 2012 and 2013, it is at least plausible that an illegal conspiracy continued into 2013, particularly given plaintiff's allegations with respect to the nature of the containerboard industry and its susceptibility to price-fixing agreements, which plaintiff asserts only intensified between 2011 and 2013. See In re Lithium Ion Batteries, 2014 WL 309192, at *12 (refusing to limit conspiracy period of 2009-2011 supported by only “sparse” allegations, namely “a single bid-rigging incident involving two defendants in 2009, and another in 2010”); cf. In re Refrigerant Compressors Antitrust Litig., 795 F.Supp.2d 647, 660-61 (E.D. Mich. 2011) (rejecting the defendants' argument, “rely[ing] heavily” on In re Urethane, that the alleged conspiracy period should be trimmed at the pleadings stage).

         Further tipping the scale of plausibility is the inference that despite the filing of Kleen Products in 2010, defendants maintained their illegal agreement through arguably more covert means than trade association meetings, which the court cannot rule out as unreasonable at this stage of the litigation, even though the ultimate proof of that fact appears improbable. See Twombly, 550 U.S. at 556 (“[O]f course, a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.”) (internal quotation marks omitted). Indeed, the court maintains a healthy skepticism about the continuation of a conspiracy post-2010 for reasons already ...

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