Cook County Record

Friday, January 17, 2020

Judge OKs $354M settlement of cardboard price-fixing class action; lawyers get 30 percent

By Jonathan Bilyk | Oct 18, 2017

Law money 09

A federal judge has signed off on a $354 million settlement deal to box up a years-long class action against some of the country’s largest makers of cardboard, accusing the companies of violating federal antitrust law by conspiring to fix prices for their product.

And the attorneys who represented the plaintiffs in the action are set to take in nearly $100 million under the deal, or roughly 30 percent of the settlement fund.

On Oct. 17, U.S. District Judge Harry D. Leinenweber granted final approval to the deal between the cardboard makers and a group of plaintiff companies who purchased and used the cardboard products, for which they said they were overcharged.

Companies serving as lead plaintiffs in the action included Kleen Products LLC; R.P.R. Enterprises Inc.; Mighty Pac Inc.; Ferraro Foods Inc.; Ferraro Foods of North Carolina LLC; MTM Packaging Solutions of Texas LLC; RHE Hatco Inc; and Chandler Packaging Inc.

The plaintiffs were represented in the action by lead counsel Michael J. Freed and Robert J. Wozniak, of the firm of Freed Kanner London & Millen LLC, of suburban Bannockburn, and Daniel J. Mogin and Jodie Williams, of the firm of MoginRubin LLP, of San Diego.

Defendants in the action included Packaging Corporation of America; International Paper; Norampac Industries; Cascades Inc.; Weyerhauser Company; Temple-Inland; Georgia Pacific; and WestRock.

The legal action, first filed in federal court in 2010, centered accusations the defendant companies conspired to fix prices for containerboard from February 2004 to November 2010, by allegedly raising prices in “lockstep” and cutting back production.

Containerboard is the industry term for the product used to make corrugated cardboard boxes, which are used to package and ship a huge range of consumer and business goods.

In their court filings, plaintiffs accused the defendant companies of collectively announcing 15 price hikes and scaling back production over that six year period. The lawsuit accused the plaintiffs of roughly mirroring each others’ price hikes and production cuts, and said the increases all came around the time of trade association meetings, telephone calls and other communications among the defendants.

The plaintiffs asserted the defendants’ actions violated federal antitrust law.

Rather than take the lawsuits to trial, most of the defendants opted to settle.

Early in 2017, plaintiffs settled with defendant companies Norampac and PCA for $22.4 million.

But in July, plaintiffs’ lawyers asked the judge to approve the big prize, a settlement to end the action against three of the defendants – International Paper, Temple-Inland and Weyerhauser.

Under the terms of that deal, the three companies agreed to collectively pay $354 million into a settlement fund. The plaintiffs’ lawyers then separately asked the judge to grant them 30 percent of the total payout as fees.

The remainder of the settlement funds, minus $200,000 for administration, would be paid to the lead plaintiff companies and more than 158,000 class members.

A month later in August, Judge Leinenweber granted summary judgment on Georgia Pacific and WestRock, saying he did not believe their conduct or the evidence could “support an inference of antitrust conspiracy.”

In that ruling, Leinenweber said he believed a company could raise prices and count on its rivals to follow suit, but without communicating about it.

“The law thus only requires Defendants to gamble on the consequences of trusting their competitors. The gamble paid off in this case,” the judge wrote

Nonetheless, the judge granted final approval to the settlement deal with the other three defendants, saying he believed the $354 million payment represented a fair deal for the plaintiffs and class members.

“The $354 million Settlement represents a substantial recovery for the Class,” the judge said.

And he said the amount of the settlement, coupled with the amount of effort the attorneys put into the case – including what the attorneys, in a motion for approval of their fee request, said were “tens of millions of dollars in time and expenses litigating the case purely on a contingent basis” – justified the sizable fee request.

“The Court finds that the request for an interim award of attorneys’ fees is fair, adequate and reasonable,” Leinenweber wrote. “The relevant factors used to determine the reasonableness of the requested fee award in common fund cases such as this are the market rate, fee awards in similar matters, the nature of this case – including the risk of non-recovery, and amount and quality of Class Counsel’s work.

“The Court finds that all of these factors support awarding the interim fee request of 30 percent of the Settlement Funds.”

Class members would have until Feb. 6, 2018, to submit a claim, the judge ruled.

International Paper was represented in the action by attorneys with the firms of Foley & Lardner LLP, of Milwaukee and Chicago; McDonnell, Boyd, Smith and Solmson, of Memphis, Tenn.; Eimer Stahl LLP, of Chicago; and Wyatt, Tarrant & Combs LLP, of Memphis, Tenn.

Weyerhauser was represented by the firm of McDermott Will & Emery, of Chicago.

Temple-Inland was represented by the firm of Mayer Brown LLP, of Chicago.


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Organizations in this Story

Foley & Lardner LLPEimer Stahl LLPFreed Kanner London & Millen LLCMcDermott, Will & Emery LLPU.S. District Court for the Northern District of IllinoisMayer Brown