Domestic Drywall Antitrust Litig. v. USG Corp.

• Decision Date: 08 July 2019
• Docket Number: CIVIL ACTION 15-cv-1712,MDL No. 13-2437
• Citation: 399 F.Supp.3d 280
• Parties: IN RE: DOMESTIC DRYWALL ANTITRUST LITIGATION This Document Relates to: Ashton Woods Holdings LLC, et al., Plaintiffs, v. USG Corp., et al., Defendants
• Court: U.S. District Court — Eastern District of Pennsylvania

399 F.Supp.3d 280

IN RE: DOMESTIC DRYWALL ANTITRUST LITIGATIONThis Document Relates to:Ashton Woods Holdings LLC, et al., Plaintiffs,

v.USG Corp., et al., Defendants

CIVIL ACTION 15-cv-1712

MDL No. 13-2437

United States District Court, E.D. Pennsylvania.

Filed July 8, 2019

MEMORANDUM RE: MOTION FOR SUMMARY JUDGMENT (CHOICE-OF-LAW)

Baylson, District Judge

I. Introduction

In this multidistrict litigation, Plaintiffs, twelve large homebuilders who purchased gypsum wallboard (drywall) (collectively, "Plaintiffs"),¹ allege that Defendants, drywall manufacturers, conspired to eliminate job quotes and fix prices for the calendar years 2012 and 2013. Only three Defendants remain in this case: PABCO Building Products, LLC ("PABCO"); the United States Gypsum Company ("USG") and the United States Gypsum Corporation ("USG Corp.") (together, "USG"); and USG Corp.'s wholly-owned subsidiary, L & W Supply Corporation ("L & W"). The Third Amended Complaint (ECF 110, "TAC")–the operative Complaint in this action–alleges four Counts:

1. Count I : Violation of the Sherman Act, 15 U.S.C. § 1, by all Plaintiffs against all Defendants, seeking declaratory and injunctive relief, pre- and post-judgment interest, and costs, including attorneys' and expert fees;

2. Count II : Violation of the Sherman Act, 15 U.S.C. § 1 by Plaintiffs Ashton Woods and D.R. Horton against all Defendants, seeking declaratory and injunctive relief, pre- and post-judgment interest, and costs, including attorneys' and expert fees;

3. Count III : Violations of the California Business & Professions Code §§ 16750(a), et seq. ("Cartwright Act") and, in the alternative, state antitrust and restraint of trade laws in Illinois, North Carolina, Arizona, District of Columbia, Michigan, Minnesota, Mississippi, Nevada, New Mexico, New York, Oregon, Tennessee, West Virginia, and Wisconsin by all Plaintiffs against all Defendants, seeking damages, pre- and post-judgment interest, and costs, including attorneys' and expert fees;

4. Count IV : Violations of state consumer protection and unfair competition laws of California, Colorado, Florida, Nevada, New Mexico, North Carolina, South Carolina, and Virginia by all Plaintiffs against all Defendants, seeking damages and/or restitution, pre- and post-judgment interest, and costs, including attorneys' and expert fees.

Currently before this Court is Defendants' Motion for Summary Judgment on Choice-of-Law (ECF 316, "MSJ"). At issue is Plaintiffs' allegation that they may pursue all of their state antitrust claims in Count III under California's Cartwright Act. (TAC ¶ 273.) Defendants seek dismissal of state antitrust claims made by Plaintiffs' purchasing entities that are headquartered in states that have not repealed Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977) ("non-repealer states"). Non-repealer states do not allow indirect purchasers to seek recovery from antitrust violators, unlike California, a "repealer state."² The parties agree that Alabama, Delaware, Georgia, Indiana, Kentucky, Louisiana, Maryland, New Jersey, Ohio, Pennsylvania, Texas, and Washington are non-repealer states. (See MSJ at 23.)³

For the reasons discussed below, Defendants' Motion is DENIED IN PART.

II. Background

A. Procedural History

As the Court has provided a thorough summary of the procedural history in this multidistrict litigation in several prior opinions, the Court includes only the procedural history relevant to the instant Motion. (See, e.g., ECF 351 ("February 2016 MSJ Opinion") (granting in part and denying in part manufacturers' motions for summary judgment in the direct and indirect purchaser actions)⁴ ; ECF 101 ("Homebuilder MTD Opinion") (granting in part and denying in part Defendants' motion to dismiss Plaintiffs' state law and Sherman Act § 1 claims in the Second Amended Complaint)⁵ .)

Plaintiffs filed the TAC on August 12, 2016 against Defendants USG; L & W; New NGC, Inc.; Continental Building Products, Inc. ("Continental")⁶ ; CertainTeed Gypsum, Inc. ("CertainTeed"); American Gypsum Company LLC ("American Gypsum"); and PABCO. (ECF 110.) Defendants New NGC, Inc., USG, L & W, and CertainTeed filed Answers to the TAC on August 26, 2016. (ECF 121 (Answer by New NGC, Inc.); ECF 123 (Answer by PABCO); ECF 124 (Answer by USG Entities: L & W and USG); ECF 125 (Answer by CertainTeed).) On the same date, all Defendants filed a Partial Motion to Dismiss the state consumer protection and unfair competition law claims–Count IV of the TAC–which the Court denied (ECF 122, 163).

On September 8, 2016, the Court approved the parties' Joint Stipulation dismissing all claims in the TAC against Defendant Continental with prejudice (ECF 129). The following year, on February 6, 2017, the Court granted Plaintiffs' unopposed Motion for Dismissal of CertainTeed, dismissing all claims against CertainTeed with prejudice (ECF 178). On May 21, 2018, the Court approved the parties' Joint Stipulation voluntarily dismissing all claims against American Gypsum (ECF 300).

On July 2, 2018, Defendants USG, L & W, New NGC, Inc., and PABCO moved for summary judgment with respect to claims arising from purchases made by Plaintiffs in non-repealer states, which do not allow indirect purchasers to recover damages for antitrust violations (ECF 316). On July 31, 2018, the parties filed a Joint Stipulation, which the Court approved, voluntarily dismissing all claims against Defendant New NGC, Inc. with prejudice, leaving Defendants USG, L & W, and PABCO in the action (ECF 331).

The following month, on August 27, 2018, Plaintiffs filed a Response in opposition to the Motion for Summary Judgment, arguing that summary judgment should be denied because Defendants failed to rebut the presumption that California law applies to all of Plaintiffs' claims, including those claims arising from purchases in non-repealer states that do not allow indirect purchaser claims (ECF 340, "Resp."). Plaintiffs attached to the Response a Separate Statement of Material Facts (ECF 781, "Pls. Supp. SOF").⁷

Defendants filed a Reply on September 17, 2018, reiterating that California law should not apply to all of Plaintiffs' claims, but rather, that the law of the states where purchases occurred should govern (ECF 350, "Rep."). Defendants also filed a Response to the Separate Statement of Material Facts (ECF 351, "Defs. Resp. SOF").

On February 19, 2019, Plaintiffs filed a Request for Judicial Notice of the then-pending Apple, Inc. v. Pepper case before the Supreme Court (ECF 375). According to Plaintiffs, an amicus brief filed by non-repealer states in that case, attached as Exhibit A to the Request for Judicial Notice, confirmed that there was no "true conflict" between the interests of California and non-repealer states and, therefore, California law should be applied to all of Plaintiffs' state antitrust claims (ECF 375 at 3; id. Ex. A). Defendants filed a Response on March 5, 2019, arguing that the amicus brief was irrelevant to the choice-of-law issue and seeking to refute Plaintiffs' contention that the amicus brief revealed that non-repealer states have no interest in preventing indirect purchaser recoveries under their states' laws (ECF 377 at 2–3).

On March 12, 2019, the Court held oral argument on the Motion for Summary Judgment (ECF 378–81). Following oral argument, on June 3, 2019, both parties filed Notices regarding the Supreme Court's decision in Apple, Inc. v. Pepper, ––– U.S. ––––, 139 S.Ct. 1514, 203 L.Ed.2d 802 (2019) (ECF 385, 386). On June 21, 2019, Defendants filed a Request for Judicial Notice of an amicus brief filed by the states of Louisiana, Ohio, Texas, and the Department of Justice in the pending Ninth Circuit case of Stromberg v. Qualcomm Inc., No. 19-15159 (9th Cir. 2019) (ECF 387). Plaintiffs filed a Response on June 28, 2019 (ECF 389).

B. UNDISPUTED FACTS

The following is a fair account of the factual assertions relevant to the instant Motion, as taken from both parties' Statements of Facts, and are not genuinely disputed.

i. Parties

1. Plaintiffs

Plaintiffs allege that during the relevant time period–January 1, 2012 through December 31, 2015–they purchased drywall in Alabama, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin that was manufactured by Defendants. (TAC ¶ 4.) During the relevant period, three Plaintiffs were headquartered or had their principal places of business in California: CalAtlantic, KB Home, and TRI Pointe. (Pls. Supp. SOF ¶¶ 45–47). The states where Plaintiffs have their headquarters and/or principal places of business are as follows:⁸

1. Ashton Woods , the named Plaintiff in this action, is a Georgia limited liability company with its principal place of business in Georgia. (MSJ Ex. 2, "DSOF" ¶ 1; ECF 781, "PSOF" ¶ 1.) None of the eight Ashton Woods entities that purchased drywall were incorporated in or have their principal places of business in California. (DSOF ¶ 2.)

2. Beazer Homes was incorporated in Delaware and has its principal place of business in Georgia. (Id. ¶ 3.) None of its three entities⁹ that purchased drywall were incorporated or have their principal places of business in California. (Id. ¶ 4.)¹⁰

3. CalAtlantic was incorporated in Delaware and has its principal place of business in California. (Id. ¶ 5.) Two of its purchasing entities, Standard Pacific Corp. and Ryland Group, Inc., both have their principal places of business in California and purchased drywall during the relevant time period. (Id. ¶ 6.)¹¹ In total, CalAtlantic Group, Inc.'s purchasing entities purchased 103,725 millions of square feet ("msf") of drywall in California during

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