Richard's Lumber & Supply Co. v. U.S. Gypsum Co., 76-1245
| Decision Date | 14 October 1976 |
| Docket Number | No. 76-1245,76-1245 |
| Citation | 545 F.2d 18 |
| Parties | 1976-2 Trade Cases 61,135 RICHARD'S LUMBER AND SUPPLY COMPANY, Individually, and Richard's Lumber and Supply Company, as representatives of a class, Plaintiffs-Appellants, v. UNITED STATES GYPSUM COMPANY et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
John Bernard Cashion, Chicago, Ill., for plaintiffs-appellants.
James G. Hiering, Frederic J. Artwick, Chicago, Ill., for defendants-appellees.
Before PELL, TONE and BAUER, Circuit Judges.
The gist of the antitrust violation charged in this private treble-damage action is that a gypsum wallboard manufacturer induced the specification of its wallboard in residential construction projects by granting rebates to the developers of the projects. Plaintiff is a retail building materials dealer which sold wallboard to drywall contractors, who installed it in construction projects. The defendants, in addition to the wallboard manufacturer, are developers of construction projects who received rebates. We affirm the District Court's judgment in favor of the defendants.
Plaintiff is Richard's Lumber and Supply Company, an Illinois retail dealer in building supplies. It brings this action against United States Gypsum Company (USG), which manufactures gypsum wallboard used in home construction, Kaufman and Broad, Inc. (K & B), which engages in the construction and sale of residential housing, and two K & B subsidiaries which carry on construction activities in Illinois. Plaintiff's allegations are in substance as follows: Gypsum wallboard is a homogeneous product which does not vary from manufacturer to manufacturer. From 1968 through 1972 there existed an arrangement between USG and K & B whereby K & B received a rebate, or "corporate discount" (calculated on a sliding scale, as a percentage of the price paid for USG board), on USG gypsum wallboard purchased for use in its developments. 2 The purchasers of the board were drywall contractors engaged by the K & B subsidiaries. The contractors purchased the board from plaintiff and other building materials dealers. To ensure the maximum possible usage of USG board in their projects, K & B subsidiaries were told by the parent to specify USG board to their drywall contractors, and USG sales representatives reported monthly to each subsidiary (which cross-checked their figures) and to K & B on the amount of USG wallboard that had been purchased for use in K & B developments. Each month USG paid the rebate to the parent. It is alleged that this arrangement between what plaintiff describes as the country's largest manufacturer of gypsum wallboard and the country's largest home-builder constituted illegal price-fixing. 3 Richard's adds in its second amended complaint that the existence of this rebate plan "compelled" it to sell only USG wallboard to contractors working for K & B subsidiaries (except when USG supplies became scarce) and thus forced it to buy the more expensive USG products. Richard's also alleges that the agreement produced artificially high prices for USG board. All this, it is alleged, damaged Richard's in the sum of $20,000.
The District Court granted USG's motion for summary judgment, holding that plaintiff's action against USG was barred by a covenant not to sue executed on behalf of a class of which plaintiff was a member in consideration of the settlement of a prior antitrust class action against USG and other gypsum manufacturers.
In In re Gypsum Cases, 386 F.Supp. 959 (N.D.Cal.1974), USG was a defendant in a complex class antitrust action, in which it and several other manufacturers of gypsum wallboard were charged with a conspiracy to fix prices. In 1973, under the supervision of the district court, a settlement agreement was reached in which the defendants paid $67,640,000 (with USG paying the major portion of it) in return for the following agreement not to sue, executed on behalf of the various plaintiff classes:
"each plaintiff and intervenor, and each class member which does not elect to be excluded as herein provided, shall be deemed to have covenanted to refrain from proceeding against the settling defendants, or any of them, on any present or prospective claim pertaining to any building and construction products manufactured from gypsum, including any...
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