On July 16, 2018, U.S. District Judge Michael M. Baylson of U.S. District Court, District of Pennsylvania, Eastern District granted final approval of a $125 million settlement between direct purchasers and three of the nation’s largest drywall manufacturers: National Gypsum, Eagle Materials Inc. and PABCO Building Products, settling claims that they conspired to raise prices on drywall and ending a six year long antitrust litigation. Previous settlements with three other companies—Lafarge North America Inc., TIN Inc. (or Temple-Inland) and USG Corp. (and its subsidiaries)—bringing the total amount of settlements for direct purchasers in the case to nearly $191 million.
In his order, Judge Baylson noted that plaintiffs’ counsel, specifically naming Cohen Milstein, had been “imaginative” in their successful bid for class certification, and said they’d done “outstanding work” in the case overall, including surviving a summary judgment motion in February 2016. Judge Baylson stated that he was “personally knowledgeable of the high degree of their competence.” He also stated: “There was no government case or investigation, on which Plaintiffs could build their own case. Few cases with no government action, or investigation, result in class settlements as large as this one.”
Cohen Milstein filed the first complaint against the drywall manufacturers in December 2012. The case was consolidated in the U.S. District Court for the Eastern District of Pennsylvania with other similar cases, and Cohen Milstein was appointed co-lead counsel with Berger & Montague, P.C. and Spector Roseman & Kodroff, P.C.
Drywall, also known as wallboard, sheetrock or plasterboard, is a building material used in over 90% of all new residential and commercial construction projects in the U.S. Plaintiffs allege that the major drywall manufacturers – American Gypsum, CertainTeed, Lafarge, National Gypsum, PABCO, Temple-Inland, and USG – conspired to manipulate drywall prices. In the fall of 2011, after the manufacturers failed to implement a series of announced price increases, American Gypsum announced a 35% price increase, effective for all of 2012, and the elimination of a long-standing industry pricing practice called job quotes. Every other Defendant then made substantially similar announcements, and despite a history of failed price increases and a drab economic outlook of flat demand and excess capacity, they were successful in getting this increase to stick. Defendants subsequently announced substantial price increases effective for all of 2013, which they also successfully implemented. As a result of this conspiracy, purchasers of drywall paid significantly more than they would have in a competitive market, free from Defendants’ collusion.
Defendants USG and TIN, Inc. settled with direct purchasers in February 2015 – USG for $39.25 million and TIN for $5.25 million. Plaintiffs then defeated motions for summary judgement from four of the five remaining defendants. Defendant Lafarge subsequently settled with direct purchasers in June 2016 for $23 million.
In February 2016, the Court denied the motions for summary judgment of all but one defendant, finding plaintiffs had sufficient evidence to proceed with respect to the remaining defendants. In August 2017, the Court granted direct purchaser plaintiffs’ motion for class certification.