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Judge denies Dow's motion in urethane chemical price-fixing case

By: Miles Moore
RUBBER & PLASTICS NEWS

May 17, 2013

KANSAS CITY, KAN. — Dow Chemical Co. said it will appeal the ruling by a Kansas City federal judge denying Dow's motion to decertify a price-fixing class action and ordering the company to pay $1.2 billion in damages to the plaintiffs.

A jury before the Kansas court found last Feb. 20 that Dow had participated in a long-term conspiracy to fix prices for urethane chemicals between Nov. 24, 2000, and sometime in 2003. At that time, Judge John W. Lungstrum ordered Dow to pay the plaintiffs $400 million. The plaintiffs had originally sought $1.13 billion, Dow said at the time.

Dow was the only defendant not to reach a settlement in the multidistrict litigation, which was consolidated in the Kansas court in 2004 and certified as a class action in 2008. Under federal antitrust law, Lungstrum has the authority to triple the damages.

In denying Dow's motion for decertification, Lungstrum said Dow filed the motion on Jan. 22, the day before the price-fixing trial began. "Dow has not offered any reason why it could not have filed its motion much earlier, and why it instead field its motion literally on the eve of trial," Lungstrum wrote.

"Reconsideration of the court's certification order at that time or even post-trial would cause severe prejudice to plaintiffs, who prepared for a long and complex trial at great expense," he said.

Even if Dow had filed its motion in a timely fashion, the motion would have failed on its merits, according to Lungstrum. Dow argued that because a few of the plaintiffs had suffered no damage from the price fixing, the class action as a whole was invalid. But case law is to the contrary, Lungstrum ruled.

Lungstrum also denied Dow's motion for a new trial. According to him, Dow did not prove that plaintiffs' evidence of classwide impact and damages was insufficient; that the evidence that Dow participated in the conspiracy was insufficient; or that the imposition of joint and several liability violated the Due Process Clause of the Constitution.

"As plaintiffs note and as the jury was instructed, one member of a conspiracy is responsible for the acts of its co-conspirators in furtherance of the conspiracy," Lungstrum wrote.

In its statement, Dow said it believes Lungstrum should have decertified the class action based on a recent U.S. Supreme Court decision involving Comcast Corp. "Dow looks forward to pursuing these and other grounds for reversal," it said.

Because the circumstances in the urethane price-fixing case were different from those of the Comcast case, the Comcast decision was not applicable, Lungstrum ruled.

Dow also said it fully cooperated with the U.S. Department of Justice from 2005 to 2007 in an investigation of the same price-fixing allegations, and that the agency closed the investigations without indicting any person or company.

"Consistent with the outcome in the earlier DOJ investigation, Dow should not be held liable in the civil case," Dow said.