Settlement Reached In Foam Antitrust MDL

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Three foam manufacturers reached settlement with plaintiffs who accused them of antitrust activities concerning their foam products.

Monday, August 3, 2015 - A $22 million settlement has been reached in multidistrict litigation regarding antitrust allegations levied against manufacturers of foam who plaintiffs claim artificially increased the price of their products. The litigation, which is based in the Northern District of Ohio, received preliminary approval last week for the settlement which was first consolidated nearly five years ago.

There were lawsuits filed against a series of defendants in the MDL that were consolidated in December of 2010. FFP Holdings LLC, Future Foam Inc. and FXI Holding Inc. were among those accused of conspiring to raise the price on their polyurethane foam products to increase revenues in violation of the Sherman Act. Plaintiffs claimed that the companies agreed to fix the price of their foam products unilaterally, illegally limiting competition.The $22 million settlement between plaintiffs and these three companies will be split between the defendants, with Future Foam taking the largest hit at $10.5 million, FXI Holding next with a settlement of $9 million and FFP Holdings paying out $2.27 million to plaintiffs.

The alleged antitrust behavior by the defendants began in 1999 when plaintiffs claim that companies began to raise prices in tandem on their foam products, which are used in a variety of products including car padding and bedding materials. Top bed manufacturers Sealy and Tempur-Pedic were among the companies involved in the multidistrict litigation. The plaintiffs claim that not only did this result in higher prices for consumers purchasing foam products, but it also increased the prices for direct buyers that worked to distribute the foam products to the consumers. Both the direct and indirect buyers filed lawsuits pursuant to their respective groups in the MDL

FFP Holdings had been in hot water lately, as it was called out by co-defendants for the late filing of a report by an expert that was to present testimony for the company. The judge determined that the late filing of the report did not give the plaintiffs ample time to familiarize themselves with the documents and imposed a financial sanction on the company. Just three months later, FFP Holdings has decided to settle the lawsuits.

Previous settlements in the foam MDL had been reached prior to the latest agreement. Indirect purchasers of the foam materials had exceeded $125 million in combined settlements at the time of the most recent settlement, while Direct purchasers brought in over $400 million in settlements as a result of the MDL proceedings. The latest settlement for the direct purchases took place in April just before their lawsuits were set to stand trial, and by itself netter $275 million for the plaintiffs.

Settlements have been coming more steadily lately for the MDL as a whole as plaintiffs are beginning to cite previous deals agreed upon in their arguments to the court. Many of the defendants decided to settle almost immediately after they were brought into the class. FFP, FXI and Future Foam were among the last 10 manufacturers to continue to battle the MDL as of December 2014. They have all denied any wrongdoing in accepting into the settlement agreement.