Haley Paint Company v. E.I. Dupont De Nemours and Company et al
Filing
366
MEMORANDUM OPINION. Signed by Judge Richard D Bennett on 11/27/2012. (aos, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
IN RE: TITANIUM DIOXIDE ANTITRUST
LITIGATION
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THIS DOCUMENT RELATES TO:
ALL ACTIONS
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CIVIL ACTION NO.: RDB-10-0318
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MEMORANDUM OPINION
This case concerns an alleged price-fixing conspiracy in the market for titanium
dioxide. Plaintiffs Haley Paint Company and Isaac Industries, Inc., and Intervening Plaintiff
East Coast Colorants, LLC d/b/a Breen Color Concentrates (collectively, “Plaintiffs”) claim
that Defendants E.I. du Pont de Nemours & Co., Huntsman International LLC, Kronos
Worldwide Inc., and Millennium Inorganic Chemicals, Inc. (collectively, “Defendants”)
engaged in an unlawful conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C. §
1, to fix, raise, or maintain the price of titanium dioxide in the United States. Plaintiffs allege
that as a consequence of the unlawful conspiracy, Defendants were successful in charging
artificially inflated prices for titanium dioxide products—thereby injuring all Plaintiffs.
On August 28, 2012, this Court issued a Memorandum Opinion (ECF No. 337)
certifying a class of customers who purchased titanium dioxide from the Defendants during
a period from February 1, 2003 until the present. The class is currently defined as follows:
All persons and entities who purchased titanium dioxide in the United States
directly from one or more Defendants or Tronox, or from any predecessors,
parents, subsidiaries, or affiliates thereof, between February 1, 2003, and the
present. Excluded from the Class are Defendants, their coconspirators, parent
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companies, predecessors, subsidiaries and affiliates, and all governmental
entities.
Presently pending before this Court is the Defendants’ Motion to Amend Class Definition
(ECF No. 351). The parties’ submissions have been reviewed and no hearing is necessary.
See Local Rule 105.6 (D. Md. 2011). For the reasons articulated below, Defendants’ Motion
to Amend Class Definition will be DENIED as not ripe for review.
BACKGROUND
The facts of this case are fully set forth in the Memorandum Opinion issued on
August 28, 2012 (ECF No. 337). An abbreviated factual summary is repeated here so as to
introduce the pending motion.
Plaintiffs Haley Paint Company and Isaac Industries, Inc., and Intervening Plaintiff
East Coast Colorants, LLC d/b/a Breen Color Concentrates (collectively, “Plaintiffs”) claim
that Defendants E.I. du Pont de Nemours & Co., Huntsman International LLC, Kronos
Worldwide Inc., and Millennium Inorganic Chemicals, Inc. (collectively, “Defendants”), who
are the market leaders in the production of titanium dioxide, conspired to fix, raise, maintain,
and stabilize the price of titanium dioxide when demand for the product declined. The
conspiracy is alleged to have occurred from February 1, 2003, through the present. On
February 9, 2010, the Plaintiffs filed suit, and they submitted an Amended Complaint (ECF
No. 51) on April 12, 2010, initiating this class action lawsuit. The Plaintiffs’ Amended
Complaint alleges a price-fixing conspiracy in violation of the Sherman Act, 15 U.S.C. § 1.
On August 28, 2012, this Court issued a Memorandum Opinion (ECF No. 337)
certifying a class of titanium dioxide purchasers who are alleged to have sustained injury
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when they paid artificially inflated prices for the product.1 In their opposition to class
certification, the Defendants had argued that many members of the putative class had
entered into contracts with the Defendants that contained mandatory arbitration clauses,
forum selections clauses, or jury waiver provisions. Mem. Op. 40. Though these contractual
provisions did not defeat class certification, this Court left open the possibility of a later
amendment to the class certification Order if certain members’ contracts rendered them
atypical of the class. Id.
Defendants now argue, based on sixty-three contracts provided as examples in their
Motion to Amend Class Definition, that the class should be defined to exclude any putative
members who are contractually barred from participation in this class action litigation.
Defs.’ Mot. to Amend 3. They request that the class definition be amended as follows:
All persons and entities who purchased titanium dioxide in the United States
directly from one or more Defendants or Tronox, or from any predecessors,
parents, subsidiaries, or affiliates thereof, between February 1, 2003, and the
present, except those persons and entities who purchased titanium dioxide in the United
States directly from one or more Defendants or Tronox, or from any predecessors, parents,
subsidiaries, or affiliates thereof, during the Class Period pursuant to a written contract
containing (i) an arbitration clause, (ii) a clause restricting the litigation of disputes to courts
other than the U.S. District Court for the Northern District of Maryland, and/or (iii) a
provision waiving the right to a jury trial. Also excluded from the Class are
Defendants, their coconspirators, parent companies, predecessors, subsidiaries
and affiliates, and all governmental entities.
Id. at 3-4 (emphasis added to illustrate proposed amendment). The Defendants seek this
amendment before notice is issued to the class and the opt-out period expires. They argue
that this amendment is required to honor the putative members’ contractual agreements with
The Defendants petitioned to appeal this Court’s decision certifying the class, and that petition was
denied on November 14, 2012. See Order, In re Titanium Dioxide Antitrust Litig., No. 12-320 (1:10CV-00318-RDB) (4th Cir. Nov. 14, 2012).
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the Defendants as well as to ensure that the class certified by this Court is not overly broad.
Id. at 4.
The Plaintiffs argue, on the other hand, that the Defendants’ Motion to Amend is
procedurally improper because the Defendants have not moved to compel arbitration or to
enforce other contractual rights that would preclude a member’s participation in this class
action. See Pls.’ Opp’n 5-9. They also argue that a member’s contractual agreement with one
Defendant should not preclude that member from participating in the class action as against
all other Defendants with whom the member has no contractual obligations. Id. at 10-16.
Finally, they claim that the Defendants have waived their right to enforce these contractual
provisions.
Within their waiver argument they advance two separate points: (1) The
Plaintiffs argue as to the arbitration clauses that the Defendants’ actions throughout the
pendency of this case have been inconsistent with an intent to arbitrate. (2) As to the forum
selection and jury waiver clauses, the Plaintiffs contend that in order to enforce them the
Defendants were required to file a motion challenging venue before filing any responsive
pleading. See id. at 17-23. If this Court is willing to consider the Defendants’ Motion to
Amend, however, the Plaintiffs suggest that consideration of this issue be deferred until
notice has been issued to the class and the opt-out period has expired. See id. at 9, 25.
STANDARD OF REVIEW
Rule 23(c)(1)(C) of the Federal Rules of Civil Procedure provides simply that “[a]n
order that grants or denies class certification may be altered or amended before final
judgment.” Fed. R. Civ. P. 23(c)(1)(C). This Court has previously stated that “[a] district
court has ‘broad discretion in determining whether the action may be maintained as a class
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action,’ . . . and so long as the court considers the proper criteria, it is permitted to exercise
such discretion.” Doe v. Lally, 467 F. Supp. 1339, 1345 (D. Md. 1979) (citations omitted). As
this court previously held, “[a] federal district court possesses the same broad discretion in
determining whether to modify or even decertify a class.” Wu v. MAMSI Life & Health Ins.
Co., 256 F.R.D. 158, 162 (D. Md. 2008) (citing Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147,
160 (1982)). In fact, a federal district court judge has an affirmative obligation to ensure that
the class membership remains at all times consistent with the underlying facts and
procedural posture of the case. See Richardson v. Byrd, 709 F.2d 1016, 1019 (5th Cir. 1983)
(“Under Rule 23 . . . the district judge must define, redefine, subclass, and decertify as
appropriate in response to the progression of the case from assertion to facts.”); Chisolm v.
TranSouth Fin. Corp. 194 F.R.D. 538, 544 (E.D. Va. 2000) (“[T]he Court is duty bound to
monitor its class decision and, where certification proves improvident, to decertify,
subclassify, alter, or otherwise amend its class certification.”).
ANALYSIS
The Defendants request that this Court amend the class definition before putative
class members receive class notice and the attendant opt-out period expires. They argue that
an amendment at this stage is appropriate because certain putative class members are
contractually barred from involvement in this class action. Amending the class definition
pursuant to Rule 23 of the Federal Rules of Civil Procedure, the Defendants claim, offers a
simple, timely resolution to the issue. The Plaintiffs suggest that if this Court is inclined to
consider the Defendants’ Motion to Amend, then it should follow the District Court for the
Northern District of California, which in a quite similar case addressed such contractual
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provisions only after the opt-out period expired. See In re TFT-LCD (Flat Panel) Antitrust
Litig., 07-1827, 2011 WL 1753784 (N.D. Cal. May 9, 2011).
This Court is persuaded that consideration of the Defendants’ Motion to Amend
should be deferred until after class notice has issued and the opt-out period has expired. At
that time, the parties will be aware of the composition of the class, and in particular whether
the class contains members who agreed to a contractual provision barring them from class
action litigation yet did not exclude themselves during the opt-out period. See In re TFTLCD Antitrust Litig., 2011 WL 1753784, at *2. A resolution of this issue requires that the
class composition be known, since the problem that the Defendants perceive only arises if
there are class members who agreed to mandatory and enforceable arbitration, forum
selection, or jury waiver clauses in their contracts with the Defendants. See, e.g., id. at *3
(“[P]utative class members are not parties to an action prior to class certification.” (quoting
Saleh v. Titan Corp., 353 F. Supp. 2d 1087, 1091 (S.D. Cal. 2004)).
Moreover, this Court must determine whether these mandatory contractual
provisions are enforceable, a task that cannot be completed until the parties to this class
action litigation are known and the record presented by the parties is fully developed. See id.
at *4 (reasoning that a determination regarding mandatory arbitration clauses in putative
members’ contracts could not be rendered until the defendants moved to compel arbitration
and provided the court with all contracts they intended to assert).
As it stands, the
Defendants have provided examples of the types of contracts that they argue should
preclude putative class members from this class action. See Defs.’ Mot. to Amend 3; Defs.’
Exs. 1-67. After the opt-out period, the Defendants will be in a position to supply this
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Court with the actual contracts on which to base a motion to amend class definition or a
motion to compel arbitration. For these reasons, this Court finds the Defendants’ Motion to
Amend Class Definition is not yet ripe for review.
CONCLUSION
For the reasons stated above, the Defendants’ Motion to Amend Class Definition
(ECF No. 351) is DENIED as not ripe for review. The Defendants may resubmit a motion
challenging the class definition after class notice has issued and the opt-out period has
expired.2 At that time, this Court will address the arguments advanced by both parties
regarding whether mandatory arbitration, forum selection, and jury waiver clauses should
preclude a member from participating in this class action litigation.3
A separate Order follows.
Dated:
November 27, 2012
/s/_________________________________
Richard D. Bennett
United States District Judge
Although this Court defers addressing this Motion to Amend at this time, it acknowledges that the
District Court in In re TFT-LCD (Flat Panel) Antitrust Litig., 07-1827, 2011 WL 1753784 (N.D. Cal.
May 9, 2011), presents an efficient procedure for dealing with contractual provisions that may
preclude a member from participating in class action litigation.
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This Court notes that it is inclined to rule that the Defendants have not waived at least their right
to enforce any mandatory arbitration clauses against putative members of the class. As in In re TFTLCD Antitrust Litigation, the Defendants in this case could not have moved to compel arbitration
anytime before class certification, since putative class members are not parties to the litigation until
after the class has been certified. See In re TFT-LCD Antitrust Litig., 2011 WL 1753784, at *3
(quoting Saleh v. Titan Corp., 353 F. Supp. 2d at 1091). To move to compel arbitration or dismiss
absent class members at any stage earlier than class certification likely would have been futile. See,
e.g., Shelton v. Pargo, Inc., 582 F.2d 1298, 1314-15 (4th Cir. 1978) (acknowledging that “precertification dismissal does not legally bind absent class members” (internal citation omitted)).
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