Watson Carpet & Floor Covering, Inc. v. Mohawk Industries, Inc.
2011 U.S. App. LEXIS 12606
| 6th Cir. | 2011Background
- Watson Carpet alleged a 1998 agreement among Mohawk, Carpet Den, and McCormick to run Watson Carpet out of business by refused sales and defamatory conduct.
- Mohawk repeatedly refused to sell to Watson Carpet (1999 portico carpet; 2005, 2006, 2007 refusals) as part of the plan.
- Watson Carpet sued in state court in 1999; the Tennessee jury awarded damages; Mohawk later had a state-court ruling upholding Mohawk's supplier privilege but overturning conspiracy findings.
- Carpet Den and McCormick settled with Watson Carpet in March 2007, releasing claims against them; Mohawk continued to participate in the conspiracy post-settlement.
- During the state litigation, the 2005–2007 refusals to sell formed the basis of the federal Sherman Act claim filed in May 2009 in the Middle District of Tennessee.
- The district court dismissed for Twombly reasons but later held the 2007 claim was outside the release and within four-year limits; Watson Carpet appealed the dismissal, with Carpet Den and McCormick cross-appealing on the release issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint plausibly alleges a §1 conspiracy | Watson Carpet pleads an express agreement and ongoing acts. | Mohawk argues the refusals were unilateral or not connected to the 1998 conspiracy. | Yes; complaint plausibly alleges an ongoing conspiracy and connection to refusals. |
| Whether post-release 2007 claim is barred by the 2007 settlement release | Watson Carpet contends the 2007 claim accrued after the release. | Release bars pre-release claims and withdrawal from conspiracy was not shown. | No; 2007 claim accrual was post-release and release cannot operate prospectively. |
| Whether the settlement constitutes withdrawal terminating liability for coconspirators | Watson Carpet argues defendants withdrew by settling; but lack of explicit withdrawal. | Settlement did not withdraw from conspiracy and did not bar post-release conduct. | Settlement did not effectuate withdrawal; coconspirators remain liable for post-release Mohawk acts. |
Key Cases Cited
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (plausibility standard guiding pleadings; not mere conclusory assertions)
- Twombly, 550 U.S. 544 (U.S. 2007) (requires plausibility of anti-trust agreement beyond mere parallelism)
- In re Travel Agent Antitrust Litig., 583 F.3d 896 (6th Cir. 2009) (lists circumstantial factors for concerted action; plausibility standard)
- United States v. Hayter Oil Co., 51 F.3d 1265 (6th Cir. 1995) (conspiracies presumptively ongoing until objective achieved)
- In re Scrap Metal Antitrust Litig., 527 F.3d 517 (6th Cir. 2008) (ongoing conspiracies and liability considerations over multiple years)
- Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (U.S. 1971) (continuing-conspiracy accrual; continuing impacts of conduct)
- MCM Partners v. Andrews-Bartlett & Assocs., Inc., 161 F.3d 443 (7th Cir. 1998) (release before suit can bar claims based on pre-release conduct; distinguishing post-release conduct)
- Chiropractic Coop. Ass'n of Mich. v. Am. Med. Ass'n, 867 F.2d 270 (6th Cir. 1989) (withdrawal concept in civil conspiracies; affirmative acts indicating withdrawal)