Foam manufacturers settle antitrust class action for $128 million

Posted on: September 3rd, 2015 by Steve Larson

Consumer ProtectionSix foam manufacturers, including market leaders, Carpenter Co. and Leggett & Platt Inc.,have agreed to pay a combined $128.5 million to settle with indirect purchasers and exit multidistrict litigation accusing the companies of plotting to fix prices.  The indirect purchasers filed a motion for preliminary approval of the settlement asking the Ohio federal court overseeing the dispute to preliminarily approve each of six settlement agreements. The motion described the settlement as a “substantial” recovery for the class.

The indirect purchasers told the court the settlement would strengthen their bargaining position with respect to the remaining defendants and streamline an upcoming trial, which has been scheduled for October.  The motion noted that the settlement doesn’t change the remaining defendants’ liability for damages caused by the alleged conspiracy, including all sales made by the settling defendants.

The plaintiffs have accused the foam makers of conspiring since at least 1999 to fix the price of the polyurethane foam, which is widely used as cushioning and insulation in products such as bedding, packaging, flooring and cars.

The foam maker defendants had tried to convince the U.S. Supreme Court to review the class certification of the claims of the direct and indirect purchasers in the case after the Sixth Circuit refused to take up the issue on an immediate appeal. In March, the U.S. Supreme Court chose not to grant certiorari.

The direct purchasers — which include a variety of foam, packaging and carpet companies — were set to go to trial against the six foam companies that remained in the case in April, but on the eve of trial, the defendants agreed to pay $275 million to put the dispute to bed.  That deal brought the direct purchasers’ settlement total to $433.1 million.

Nearly half of the settlement amount comes from Carpenter, which agreed to pay $63.5 million to resolve the suit. Leggett & Platt will pay $26.5 million, while Mohawk will pay $16 million, according to their individual agreements.

Hickory Springs, Woodbridge and Vitafoam will pay $10.25 million, $9.5 million and $2.75 million, respectively.

The case is In re: Polyurethane Foam Antitrust Litigation, case number 1:10-md-02196, in the U.S. District Court for the Northern District of Ohio.