Steves & Sons, Inc. v. Jeld-Wen, Inc.

Citation345 F.Supp.3d 614
Decision Date05 October 2018
Docket NumberCivil Action No. 3:16cv545
Parties STEVES AND SONS, INC., Plaintiff, v. JELD-WEN, INC., Defendants.
CourtU.S. District Court — Eastern District of Virginia

345 F.Supp.3d 614

STEVES AND SONS, INC., Plaintiff,
v.
JELD-WEN, INC., Defendants.

Civil Action No. 3:16cv545

United States District Court, E.D. Virginia.

Signed October 5, 2018


345 F.Supp.3d 623

Marvin Grady Pipkin, Pro Hac Vice, Kortney Kloppe-Orton, Pro Hac Vice, Pipkin & Kloppe-Orton LLP, San Antonio, TX, Ashley Cummings, Pro Hac Vice, Hunton & Williams LLP, Atlanta, GA, Emily Claire Curran-Huberty, Pro Hac Vice, Kyle Mach, Pro Hac Vice, Munger Tolles & Olson LLP, San Francisco, CA, Glenn Pomerantz, Pro Hac Vice, Gregory Michael Sergi, Pro Hac Vice, Kuruvilla J. Olasa, Pro Hac Vice, Ted Dane, Munger Tolles & Olson LLP, Los Angeles, CA, Lewis Franklin Powell, III, Alexandra Leigh Klein, Douglas McCarley Garrou, John Samuel Martin, Maya Miriam Eckstein, William Howell Wright, Jr., Hunton Andrews Kurth LLP, Robert Dennis Fairbanks, Jr., Hunton & Williams LLP, Richmond, VA, for Plaintiff.

Craig Thomas Merritt, Michael W. Smith, Harrison Mann Gates, James Edward Moore, Rowland Braxton Hill, IV, Christian & Barton LLP, Richmond, VA, Elif Kimyacioglu, Pro Hac Vice, Robin L. Kuntz, Pro Hac Vice, Alfred Carroll Pfeiffer, Jr., Pro Hac Vice, Sarah Meyers Ray, Pro Hac Vice, Latham & Watkins LLP, San Francisco, CA, Allyson McKenzie Maltas, Pro Hac Vice, Anna Moschet Rathbun, Pro Hac Vice, David Lee Johnson, James Scott Ballenger, Pro Hac Vice, Margaret M. Zwisler, Pro Hac Vice, Maximilian Antony Grant, Pro Hac Vice, Latham & Watkins LLP, Washington, DC, Lawrence Edward Buterman, Pro Hac Vice, Latham & Watkins LLP, New York, NY, for Defendants.

PUBLIC SEAL

MEMORANDUM OPINION

Robert E. Payne, Senior United States District Judge

345 F.Supp.3d 624

This matter is before the Court on PLAINTIFF STEVES AND SONS, INC.'S MOTION FOR EQUITABLE RELIEF (ECF No. 1191), which the parties addressed through briefs before and after the evidentiary hearing on equitable remedies ("the Remedies Hearing"). For the reasons set forth below, PLAINTIFF STEVES AND SONS, INC.'S MOTION FOR EQUITABLE RELIEF (ECF No. 1191) will be granted in part and denied in part.

GENERAL BACKGROUND

On June 29, 2016, Steves and Sons, Inc. ("Steves") filed this action against JELD-WEN, Inc. ("JELD-WEN") by filing a COMPLAINT FOR INJUNCTIVE AND DELCARATORY RELIEF, DAMAGES AND SPECIFIC PERFORMANCE (ECF No. 1). The Complaint contained six counts, including COUNT ONE which alleged a violation of Section 7 of the Clayton Act, § 15 U.S.C. § 18, and sought damages under Section 4 of the Clayton Act, and injunctive relief under Section 16 of the Clayton Act, all by virtue by an allegedly illegal merger that occurred in 2012 but that subsequently substantially lessened competition in the so-called molded interior doorskin market. COUNT TWO alleged various breaches of contract. Steves voluntarily dismissed COUNT THREE (Breach of Warranty), COUNT FIVE (Specific Performance), and COUNT SIX (Trespass to Chatels). In COUNT FOUR, Steves sought declaratory relief and that claim remains for decision by the Court.

COUNTS ONE and TWO were tried to a jury and the jury returned a verdict in favor of Steves on both the antitrust claim and the breach of contract claims. Steves' claim for equitable relief is based on the jury's finding of liability on the antitrust violations in COUNT ONE and arises by virtue of Section 16 of the Clayton Act.

By agreement of the parties, the record in the antitrust and breach of contract trial is part of the record upon which the decision respecting Steves' motion for equitable remedies will be decided. In addition, the Court conducted a three day evidentiary hearing during which the parties presented additional evidence on the issues of equitable relief.

Equitable relief under Section 16 of the Clayton Act must be tethered to the alleged violation of Section 7 of the Clayton Act found by the jury. It is therefore appropriate briefly to summarize the evidence upon which the jury found that JELD-WEN had violated Section 7 of the Clayton Act.

The product at issue in this litigation is called an interior molded doorskin. It is created by pouring a moist, softened fibrous material (treated with resin and wax) into a mold and then subjecting it to heat and pressure. The doorskin is a component part of an interior molded door which is made with a four-sided wooden frame and certain filling material to which the molded doorskin is glued. The doorskin provides the decorative covering for the front and the back of the door. The end product resembles a solid wood door but is much lighter and can be made and shipped at a considerably lower cost than a solid wooden door.

Steves and JELD-WEN both sell interior molded doors. JELD-WEN also makes

345 F.Supp.3d 625

doorskins, some of which it uses to make its own doors, and some of which it sells to independent door manufacturers (the "Independents") of which Steves is one. Steves has never made its own doorskins and has to purchase doorskins from doorskins manufacturers.

From 2001 to 2012, there were three manufacturers from which the Independents, including Steves, could purchase doorskins: Masonite Corporation, JELD-WEN, and Craftmaster International ("CMI"). All three were vertically integrated manufacturers of doorskins and interior molded doors. In 2011, Steves was negotiating for possible long-term supply contracts with all three manufacturers. In May 2012, JELD-WEN and Steves entered into a long-term supply agreement (the "Supply Agreement") that was to last for seven years and that contained an evergreen provision by which the contract was automatically renewed annually if notice of termination was not given in accord with the provisions of the Supply Agreement. In June 2012, JELD-WEN announced that it intended to acquire CMI and the acquisition was completed in October 2012.

The jury found that, as a consequence of the merger and JELD-WEN's conduct in 2014 and thereafter, competition was substantially lessened in the doorskin market and that, as a result, Steves sustained injuries of the type that the antitrust laws were designed to prevent. Thereupon, the jury awarded Steves $58,632,454.00 in antitrust damages which, when trebled as required by statute, amounts to antitrust damages in the amount of $175,897,362.00. The jury also found that JELD-WEN had breached Sections 1, 6, and 8 of the Long Term Supply agreement and awarded damages in the amount of $12,151,873.00 on account of those breaches. That award will be reduced by $2,188,271.00 because the Court granted JELD-WEN, INC'S MOTION FOR JUDGMENT AS A MATTER OF LAW AGAINST STEVES & SONS, INC. (ECF No. 1773).

As a primary equitable remedy, Steves asks the Court to order JELD-WEN to divest Towanda (formerly part of CMI) to restore competition in the doorskin market. Steves also asks the Court to impose certain so-called "behavioral" or "conduct" remedies, including restrictions and obligations on JELD-WEN, to the end that the divested entity will be able to successfully operate as a stand-alone independent business or to be successfully combined with the assets of the acquiring party so as to become an effective competitor. To those ends, Steves contends that the equitable remedy of divestiture must be accompanied by the following conduct remedies:

(1) transfer of all tangible assets and likes necessary to develop, manufacture, and sell doorskins at Towanda;

(2) a transfer of licensing of all intangible assets used in the development, manufacturing, and sale of molded doorskins at the Towanda facility to include:

• Transfers or licenses to the purchasing entity of patents used to make doorskins, schematics or designs used to manufacture doorksins, customer lists, vendor lists, and know-how in trade secrets to operate the facility

(3) an Order assuring that the acquiring entity can retain the services of the employees currently operating the Towanda facility;

(4) an Order prohibiting JELD-WEN from hiring their employees for at least two-year transitional period;
345 F.Supp.3d 626
(5) a provision requiring the divested entity to offer an eight-year long-term supply agreement to Steves at reasonable prices and terms (based on the LTSA);

(6) a provision allowing independent door manufacturers like Lynden, Haley, and Excel to terminate their supply agreements with JELD-WEN without penalty; and

(7) a provision allowing JELD-WEN to be allowed to buy doorskins from the divested entity for a period of two years, the so-called transition period.

At the trial on the merits, Steves proved, by a preponderance of the evidence that, before JELD-WEN acquired CMI in 2012, there was a competitive doorskin market with three vertically integrated suppliers. Indeed, the evidence showed, and the Court finds, that the competition among those three suppliers was vigorous and quite effective. The merger reduced the number of suppliers to two. Steves also proved that the merger substantially lessened competition in the doorskin market. The issue now to be decided is how competition can be restored, and whether divestiture of Towanda (without or along with the requested conduct remedies) is the correct, and, as Steves urges, indeed the only way to do that.

...

To continue reading

Request your trial
3 cases
  • Steves & Sons, Inc. v. Jeld-Wen, Inc.
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • 18 Febrero 2021
    ...brought about by the merger at issue and where its collateral consequences can be mitigated." Steves & Sons, Inc. v. JELD-WEN, Inc. , 345 F. Supp. 3d 614, 650 (E.D. Va. 2018). With those principles in mind, the court proceeded to apply the four-factor test set forth in eBay .In the district......
  • Plumbers & Steamfitters Union Local No. 10 v. Waters
    • United States
    • U.S. District Court — Eastern District of Virginia
    • 2 Abril 2020
    ...to apply [laches] to his case." King v. Richardson , 136 F.2d 849, 862 (4th Cir. 1943) ; see also Steves & Sons, Inc. v. JELD-WEN, Inc. , 345 F. Supp. 3d 614, 673 (E.D. Va. 2018) (quoting King , 136 F.2d at 862 ). Other circuits have similarly found that the burden rests on Plaintiff to dem......
  • Plumbers & Steamfitters Union Local No. 10 v. Waters
    • United States
    • U.S. District Court — Eastern District of Virginia
    • 2 Abril 2020
    ...to apply [laches] to his case." King v. Richardson, 136 F.2d 849, 862 (4th Cir. 1943); see also Steves & Sons, Inc. v. Jeld-Wen, Inc., 345 F. Supp. 3d 614, 673 (E.D. Va. 2018) (quoting King, 136 F.2d at 862). Other circuits have similarly found that the burden rests on Plaintiff to demonstr......
2 firm's commentaries
  • Developments In US Antitrust Litigation'2021 Year In Review
    • United States
    • Mondaq United States
    • 31 Enero 2022
    ...6. 43. Steves and Sons v. Jeld-Win, Inc., No. 19-1397 (4th Cir. Feb, 18, 2021), ECF. 92. 44. Steves & Sons, Inc.,. v. JELD-WEN, Inc., 345 F. Supp. 3d 614 (E.D. Va. 45. Id. at 54. 46. Id. at 46-47. 47. Order, Steves and Sons v. JELD-WEN, Inc., No. 19-1397 (4th Cir. Mar. 22, 2021). 48. 2021 W......
  • Developments In US Antitrust Litigation'2021 Year In Review
    • United States
    • Mondaq United States
    • 31 Enero 2022
    ...6. 43. Steves and Sons v. Jeld-Win, Inc., No. 19-1397 (4th Cir. Feb, 18, 2021), ECF. 92. 44. Steves & Sons, Inc.,. v. JELD-WEN, Inc., 345 F. Supp. 3d 614 (E.D. Va. 45. Id. at 54. 46. Id. at 46-47. 47. Order, Steves and Sons v. JELD-WEN, Inc., No. 19-1397 (4th Cir. Mar. 22, 2021). 48. 2021 W......
1 books & journal articles
  • Private Antitrust Suits
    • United States
    • ABA Antitrust Premium Library Antitrust Law Developments (Ninth) - Volume I
    • 2 Febrero 2022
    ...Section 7.”), aff’d , 40 F.3d 1238 (2d Cir. 1994). 384. 988 F.3d 690 (4th Cir. 2021); see also Steves and Sons v. Jeld-Wen, Inc., 345 F. Supp. 3d 614 (E.D. Va. 2018). PRIVATE ANTITRUST SUITS 855 actual harm suffered by the plaintiff during the ensuing period, which plaintiff showed would co......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT