Settlement Reached With Two Companies Involved In Drywall MDL
TIN Inc. and USG Corp. have both agreed to the first settlements approved in multidistrict litigation connected to allegations of price-fixing in the drywall industry.
Monday, March 23, 2015 - The first two settlements in multidistrict litigation against a number of drywall companies accused of price-fixing have been approved by a U.S. district judge. TIN Inc. and USG Corp. will combine to pay $55 million to direct and indirect buyers of their gypsum drywall, commonly referred to as sheetrock or plasterboard. Eligible members include purchasers that bought the materials from the companies while the alleged price-fixing took place in 2012. The indirect and direct buyers will each receive their own settlements from the two companies, with a total of four class-action deals garnering approval.
USG Corp. will pay $39.25 million to direct buyers and $8.75 million to indirect buyers of the wallboards. TIN Inc. will pay $5.25 million to direct and $1.75 million to indirect. USG commands over a quarter of the drywall market and will likely lead the way for other large market drywall companies to settle in the near future. TIN Inc. is expected to do the same for small market drywall companies. American Gypsum Co. LLC, CertainTeed Gypsum Inc., Georgia-Pacific LLC, PABCO Building Products LLC and Spangler Cos. Inc. account for the other companies involved in the MDL.
These companies combined with TIN and USG make up 99 percent of the drywall sold in the U.S., a $5 billion industry. The companies involved are based in Illinois, North Carolina and Pennsylvania. The drywall at the heart of the price-fixing allegations was sold to both homes and businesses, which will likely draw from the separate settlement pools awarded in the agreement.
The case, which was consolidated two years ago, delves into allegations that seven drywall companies conspired to artificially raise the price of gypsum wallboards. In addition to artificially raising prices, plaintiffs allege that the drywall companies did away with an industry tactic of giving buyers what are known as job quotes. These quotes would provide an all-inclusive price for a consumer‘s project, and plaintiffs claim the abandonment of this method allowed for their understanding of pricing to improve and eventually allowed them to catch the nefarious price hikes. The practice of price-fixing in the drywall industry has a history as well. Antitrust penalties have been sought against companies in Europe and the U.S. dating back decades.
Plaintiffs claim that the surge in pricing for gypsum wallboards, which they said constituted the biggest jump in price in over ten years at the time, prompted the first lawsuits to be filed in December of 2012. Their arguments assert that there were no market pressures or price hikes in the production chain that would have accounted for the severe inflation in cost for products sold by the drywall companies. A number of the companies even raised the prices on their drywall concurrently on January 1, 2012.
The multidistrict litigation progressed quickly for the case, as negotiations for the settlement began in April of 2014 only one year after the lawsuits were transferred to Pennsylvania. The settlement does not work as a guilty plea for the companies involved, which will agree to the deal while denying any wrongdoing connected to the incident. A fairness hearing with TIN and USG will take place on July 15.
