The Government of Puerto Rico v. The Carpenter CompanyThe Government of Puerto Rico v. The Carpenter Company
Case Information
1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
THE GOVERNMENT OF PUERTO RICO
Plaintiff,
v.
THE CARPENTER COMPANY, et al.,
Defendants.
OPINION AND ORDER
On December 20, 2018, the Government for the Commonwealth of Puerto Rico (“Government” or “Commonwealth”), in its parens patriae capacity and on behalf of the people of the Puerto Rico, filed suit against several companies and private individuals (“Defendants”) [1] involved in the flexible polyurethane foam’s industry [2] for allegedly conspiring to price-fix products from January 1, 1999 up to the present. (Docket No. 1). Plaintiff seeks injunctive relief, pursuant to the Clayton Act, 15 U.S.C. § 26, requesting this Court to enjoin Defendants from continuing its ongoing price-fixing conspiracy and demands damages in no less than $50,000,000.00, under the unjust enrichment equity doctrine. Id.
Pending before the Court are Defendants’ motions to dismiss for failure to state a claim upon which relief can be granted (Docket No. 34), for lack of standing (Docket No. 39) and for lack of personal jurisdiction (Docket Nos. 35; 37). After reviewing the parties’ submissions, record and applicable law, this Court GRANTS the joint motion to dismiss for failure to state 1 a claim at Docket No. 34 and, consequently, finds that the motions to dismiss at Docket Nos. 35, 37, 39 are MOOT .
I. Relevant Factual and Procedural Background
For purposes of the joint motion to dismiss, the Court accepts as true all the factual
allegations in the Complaint and construes all reasonable inferences in favor of Plaintiff. See
Beddall v. State St. Bank & Trust Co.,
A. Defendants
The companies, and or affiliates, that sold flexible polyurethane foam throughout the United States, including the Commonwealth of Puerto Rico, during the period of the alleged price-fixing conspiracy are: (1) The Carpenter Company (or Carpenter Co.); [3] (2) Flexible Foam Products, Inc. (Flexible Foam Products); [4] (3) FXI Holdings, Inc., Foamex Innovations, Inc., or Foamex International, Inc. (Foamex or FXI); [5] (4) Future Foam, Inc. (Future Foam); [6] (5) Hickory Springs Manufacturing Company (Hickory Springs); [7] (6) Leggett & Platt Inc. 1 (Leggett); [8] (7) Mohawk Industries Inc. (Mohawk); [9] (8) Otto Bock Polyurethane Technologies, Inc. (Otto Bock); [10] (9) Scottdel Inc. (Scottdel); [11] (10) Woodbridge Foam Corporation, Woodbridge Sales & Engineering, Inc., (collectively “Woodbridge”), [12] and (11) Corporation ABC. [13] The claims against Defendants Vitafoam Products Canada Limited (Vitafoam Canada) and Vitafoam Inc. (collectively with Vitafoam Canada, “Vitafoam”) were dismissed with prejudice pursuant to Plaintiff’s notice of voluntary dismissal. (Docket Nos. 58; 59).
Similarly, according to the Complaint, the private individuals responsible for heading the alleged price-fixing conspiracy throughout the United States, including the Commonwealth of Puerto Rico, during the period in question are: (1) Louis Carson, former President of Scottdel; (2) David Carson, former Vice President, Manufacturing of Scottdel, [14] (3) John Doe, (4) Jane Doe, (5) and their conjugal partnership, whose identity is currently unknown yet may be responsible for the allegations set forth in Plaintiff’s complaint. Id. ¶¶ 61-65. Lastly, Plaintiff mentions possible agents and co-conspirators that may have participated as co-conspirators in the violations alleged in the Complaint. (Docket No. 1 ¶¶ 66-69).
B. The flexible polyurethane foam market
In 2008, over 590,000 metric tons of slabstock flexible polyurethane foam were produced in the United States. (Docket No. 1 ¶ 74). Flexible polyurethane foam has a wide- range of uses, yet it is most used in bedding and upholstery, while the more rigid variety is used for products, thermal insulation and in automobile dashboards. Id. ¶ 77. The American Chemistry Council estimated that the domestic revenue for polyurethane foam industry for 2015 was $28.2 billion. Id. ¶ 91. The Polyurethane Foam Association, a trade association in which the non-private-individual Defendants are members, advances that, compared to polyurethane foam, other alternative materials in the areas of economics, comfort potential, ease of use, and durability, cannot be deemed as acceptable a substitute. Id. ¶ 98. Finally, according to Plaintiff, there has been a recent trend towards consolidation in this industry where major players within the industry have been active in acquiring smaller companies and other competitors over the course of the last ten years. Id. ¶¶ 99-100.
C. The alleged conspiracy
The unraveling of the alleged conspiracy occurred in February 2010 when Vitafoam voluntarily contacted the U.S. Department of Justice’s (DOJ) Antitrust Division to self-report evidence of misconduct amongst itself, other companies and individuals in the industry. (Docket No. 1 ¶ 105). Vitafoam sought, and eventually received, acceptance into the DOJ’s Corporate Leniency Program. Id. Since that date, Vitafoam and its employees have been cooperating with the DOJ’s criminal investigation into illegal anticompetitive conduct in the flexible polyurethane foam market. (Docket No. 1 ¶ 106). While seeking the corporate leniency letter, and in connection with a Canadian government antitrust investigation, several current and former Vitafoam employees agreed to be interviewed regarding the alleged price-fixing conspiracy. (Docket No. 1 ¶ 108). These interviews revealed the mechanisms, participants, duration, and impact of the conspiracy. Id.
According to these interviews, Defendants established a practice where they would communicate and reach an agreement or understanding as to the percentage amount and timing of price increases and market allocation in the sale and supply of polyurethane foam. Id. at ¶ 109. The price increase discussions occurred approximately two to three times per-year and often coincided with the bi-annual meetings held by the Polyurethane Foam Association (PFA). Id. The general pretext used to explain the price increases was through an increase in raw material costs. Id. at ¶ 110. When Defendants’ raw material suppliers announced price increases for chemical ingredients of foam, they contacted each other to provide an opportunity to raise prices. Id. Defendants viewed price fixing as necessary because if they did not increase their foam prices by the same percentage amount, and at around the same period, then the attempted price increase would fail. Id.
During the period of the alleged conspiracy there has been an understanding among Defendants and their co-conspirators to collectively support supra-competitive prices; specifically, the percentage of price increases, the dates of the increases and how the conspirators would announce the increases with nearly the same effective dates. Id. at ¶ 112. Subsequently, price increase announcement letters were then mailed to customers, reflecting the prices determined. Id. Defendants policed these increases to ensure they were implemented amongst themselves and did not permit price reductions without consent of the overall group. (Docket No. 1 ¶ 112).
In the Complaint, Plaintiff explains in great length how former Vitafoam executives, particularly its former President and Vice President, coordinated and executed this price-fixing conspiracy. (Docket No. 1 ¶¶ 113-153). The allegations described include discussions and transcripts of conversations that occurred by means of telephone, e-mails and in-person meetings. Id. at ¶ 117. These top executives, as detailed in the Complaint, participated in a conspiratorial conduct during this period alongside individuals employed by numerous competitors, including co-Defendants Carpenter, Otto Bock, Woodbridge, Flexible Foam, Hickory Springs, Scottdel, and Foamex. Id. at ¶ 120. Notably, an unnamed witness that participated in an investigation held by Canada’s Commissioner of Competition confirmed the involvements of most Defendants in these price-fixing schemes. Id. at ¶¶ 130-139. It is alleged that Defendants also undertook substantial efforts to police the conspiracy and keep it secret. Id. at ¶¶ 154-207. In this regard, they took advantage of attending trade association meetings along with their competitors and met to discuss coordinating price increases outside of the formal meetings. Id. at ¶ 199. The Complaint also lays out various market factors that made the market for flexible polyurethane foam highly susceptible to anticompetitive practices and unlawful collusion. Id. at ¶ 208. These were: (1) limited competition; (2) inelastic demand due to lack of substitutes; (3) standardized commodity product with high degree of interchangeability; (4) opportunities to conspire. Id. at ¶¶ 209-221.
The Commonwealth puts forward that it did not discover nor could have discovered, through the exercise of reasonable diligence, the existence of the conspiracy alleged prior to disclosure in 2010 of federal agencies’ raids of certain Defendants’ facilities. Id. at ¶ 222. Plaintiff stresses that, except for Vitafoam which sought leniency from the DOJ and Scottdel that filed for bankruptcy and went into liquidation, there was no indication that any of the other Defendants has taken affirmative action to leave the conspiracy. (Docket No. 1 ¶ 207). 1 Finally, the Commonwealth pleads that the unlawful conspiracy had the effect of: (1) maintaining prices charged by Defendants at an artificially high and supra-competitive levels; (2) having them pay more for products manufactured with polyurethane foam than they would have paid in a competitive marketplace, and (3) depriving them of the benefits of free, open and unrestricted competition in the market for polyurethane foam. (Docket No. 1 ¶¶ 299-232). All of these occurred, during and throughout the period in question, as the Government indirectly purchased Defendants’ polyurethane foam in Puerto Rico. Id. ¶ 230.
D. Multi-District Antitrust Litigation, Settlements and Fines
The Court takes judicial notice, pursuant to F ED . R. E VID . 201,
[15]
of the following facts:
After Vitafoam voluntarily approached the DOJ’s antitrust division in early 2010, lawsuits were
filed in several district courts seeking class action status and alleging a price-fixing conspiracy
in the foam industry. See Peter Reap, Antitrust News: Companies Which Purchased Flexible
Polyurethane Foam Allege Price Fixing Conspiracy, Wolters Kluwer Antitrust Law Daily, 2013
WL 5861997. Most of these actions were consolidated in the Northern District of Ohio. See In
re: Polyurethane Foam Antitrust Litig.,
E. Defendants’ Motions to Dismiss
Defendants Carpenter, FXI, Future Foam, Hickory Springs, Mohawk, Leggett, and Woodbridge filed a joint motion to dismiss for failure to state a claim, under F ED . R. C IV . P. 12(b)(6), arguing that the allegations contained in the Complaint offer no sufficient legal basis to issue an injunction that would stop the alleged anticompetitive conduct that has not occurred since 2010. (Docket No. 34). Similarly, they posit that the Commonwealth may not sue for unjust enrichment to revive a time-barred antitrust damages claim because the Puerto Rico Antitrust Act (“PRAA”), P.R. L AWS A NN . tit. 10, §§ 257 et seq. , provides an adequate legal remedy to their alleged injuries. Id. Finally, Defendants contend that Plaintiff cannot sue in parens patriae capacity because it lacks statutory standing to litigate the individual claims of Puerto Rico residents. Id.
Defendants Woodbridge, Hickory Springs and FXI filed additional motions to dismiss against Plaintiff on different grounds to those articulated in the joint motion. (Docket Nos. 35, 37, 39). Woodbridge mainly argues that the Government’s conspiracy allegations cannot be related to its business activities in the Commonwealth; thus, under F ED . R. C IV . P. 12(b)(2), the Court lacks personal jurisdiction over the company. (Docket No. 35). Likewise, it also pleads that both federal and Commonwealth antitrust law claims should be dismissed for lack of proper venue, pursuant to F ED . R. C IV . P. 12(b)(3). (Docket No. 35). Similarly, Hickory Springs posits that the Court lacks specific jurisdiction, under F ED . R. C IV . P. 12(b)(2), because Plaintiff’s claims are not related to any activity carried out by Hickory Springs in Puerto Rico. (Docket No. 37). Notably, Hickory Springs puts forward that the polyurethane foam products at issue were sold into the Commonwealth by third parties; hence, there is no nexus between Plaintiff and Hickory Springs. Id. Lastly, FXI argues that Plaintiff cannot identify facts that would establish Article III standing against it given that Plaintiff fails to sue an existing corporate entity, Foamex. (Docket No. 39). Specifically, FXI details Foamex’s bankruptcy procedures that ended up in its dissolution and avers that Plaintiff never mentions FXI in the Complaint neither does it allege a real, immediate, and significant threat of injury. Id.
The Government filed responses in opposition to all motions to dismiss (Docket Nos.
60, 61) and Defendants replied thereafter. (Docket Nos. 68, 69, 70, 71).
II. Standard of Review
When considering a motion to dismiss for failure to state a claim upon which relief can
be granted, F ED . R. C IV . P. 12(b)(6), the Court analyzes the complaint in a two-step process
under the context-based “plausibility” standard established by the Supreme Court. See Schatz
v. Republican State Leadership Comm.,
III. Discussion
Defendants primarily argue that Plaintiff cannot show imminent harm and rely on the
analysis set forth in different complex litigation antitrust cases. (Docket No. 34 at 5-6). See In
re New Motor Vehicles Canadian Exp. Antitrust Litig.,
Plaintiff holds, in opposition, that in the context of antitrust litigation the requirements for standing to pursue an injunctive relief are “less stringent” than those for standing to claim damages. (Docket No. 61 at 4). At this early litigation stage, the Government avers that it describes a plausible set of facts about the conspiracy: how it worked and the active policing that each Defendant engaged in to ensure everybody involved complied with the agreement. Id. Plaintiff also puts forward that not issuing an injunction may result in a recurring incident that could evade judicial review. Id. at 5. Lastly, the Government holds that it plausibly suffers an imminent threat of injury. Id.
In their reply, Defendants posit that the Government offers a legal conclusion about a continuing conspiracy without supporting factual allegations from the past nine years. (Docket No. 69). They insist that the Court should not enjoin all potential and future antitrust law violations. Id. As to the evading judicial review argument, Defendants assert that the mootness doctrine exception explained in the opposition is irrelevant to the case at hand. Id. Finally, Defendants aver that Plaintiff failed to oppose their laches argument, and have thus, waived its right to contest it. Id.
Given the early stage of the proceedings, the plausibility standard requires the Court to
consider if the allegations set forth in the Complaint are “more than merely possible.” Schatz,
A. Injunctive Relief
Plaintiff invokes Section 16 of the Clayton Act which provides that “[a]ny person, firm,
corporation, or association shall be entitled to sue for and have injunctive relief . . . against
threatened loss or damage by a violation of the antitrust laws.” 15 U.S.C. § 26. To meet this
burden Plaintiff must “demonstrate a significant threat of injury from an impending violation
of the antitrust laws or from a contemporary violation likely to continue or recur.” Zenith Radio
Corp. v. Hazeltine Research, Inc.,
Section 16’s requirement of “threatened injury” dovetails with Article III’s requirement that in order to obtain forward-looking relief, a plaintiff must face a threat of injury that is both real and immediate, not conjectural or hypothetical. Past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief . . . if unaccompanied by any continuing, present adverse effects.
In re New Motor Vehicles Canadian Exp. Antitrust Litig., 522 F.3d 6, 14 (1st Cir. 2008)
(citations and internal quotation marks omitted); see also In re Nexium (Esomeprazole)
1
Antitrust Litig.,
When entertaining a suit under the Clayton Act’s Section 4 (damages), a Court shall
determine if it was filed within the four-year statute of limitations. 15 U.S.C. § 15b. These
claims accrue “when a defendant commits an act that injures a plaintiff’s business.” Zenith
Radio Corp.,
Where the claim is a continuing conspiracy violation, “each time a plaintiff is injured
by an act of the defendants [,] a cause of action accrues to him to recover the damages caused
by that act and that, as to those damages, the statute of limitations runs from the commission of
the act.” Id. In the context of price-fixing allegations, this implies that each time a defendant
sells its price-fixed product, the sale constitutes a new overt act causing injury to the purchaser
and the statute of limitations runs from the date of the act. However, “the commission of a
separate new overt act generally does not permit the plaintiff to recover for the injury caused
by old overt acts outside the limitations period.” See Klehr v. A.O. Smith Corp.,
Notwithstanding this analysis, several District and other Circuit courts have held that
there is no statute of limitations for injunctive relief claims under Section 16 of the Clayton Act
and that rather, the equitable defense of laches applies. See e.g. Midwestern Machinery Co.,
Inc. v. Northwest Airlines, Inc.,
The doctrine of laches, “which penalizes a litigant for negligent or wilful failure to assert
his rights,” Valmor Prods. Co. v. Standard Prods. Corp.,
In light of the above, the Court agrees with Defendants’ position that Plaintiff has failed to present a cogent argument for establishing an impeding, contemporary and threatened harm. Although an alleged price-fixing conspiracy could have possibly occurred throughout the Nation, as the multi-district antitrust lawsuits, settlement agreements and monetary fines reveal, it is apparent from the face of the Complaint that the last injurious act in this entire scheme befell almost ten years ago; specifically, in the Summer of 2010 (Docket No. 1 at 136-188). Not a single pleading references a recent act (from 2011 to 2018), nor does it relate to the Defendants’ businesses in the Commonwealth of Puerto Rico. Simply adding the phrase, “including Puerto Rico” at the end of every other allegation in the Complaint is not specific enough to survive the burden at this stage. (Docket No. 1). As the First Circuit has held, in similar antitrust cases, “[p]ast exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief . . . if unaccompanied by any continuing, present adverse effects.” In re New Motor Vehicles Canadian Exp. Antitrust Litig., 522 F.3d at 14.
Consequently, Plaintiff has failed to plausibly establish that injunctive relief should be granted. The Court will not proceed with almost decade-old allegations, as Defendants correctly point out. (Docket No. 34 at 5-8).
Plaintiff’s request for injunctive relief is time-barred and the laches doctrines applies.
There is
no doubt
that more than four years have elapsed since the factual allegations detailed
in the Complaint. Under the conspiracy exception, there has not been an overt act since the
Summer of 2010 that would have tolled this cause of action. When considering theses defenses,
the Ninth Circuit has held that to re-start a statute of limitations, there must be a new overt act
which: (1) is “new and independent . . . [and] not merely a reaffirmation of a previous act and
(2) inflict[s] new and accumulating injury on the plaintiff.” Oliver,
Additionally, under the First Circuit’s laches analysis, the Commonwealth must or should have known of the infringing conduct, given the allegations in the Complaint date back to at least four years prior to its filling. In the Complaint, Plaintiff contradicts itself when it alleges that: “Plaintiff did not discover and could not have discovered through the exercise of reasonable diligence the existence of the conspiracy alleged herein prior to disclosure in 2010 of the raids by government agencies of certain Defendants’ facilities .” (Docket No. 1 ¶ 222) (emphasis added). It admits that it learned about the alleged conspiracy in 2010 yet did not file suit until December 20, 2018. Once again, an injunctive relief claim that relies on general and vague descriptions of an “ongoing conspiracy” without a new and independent act, fails to overcome the Rule 12(b)(6) standard.
Although district courts are reluctant to dismiss antitrust injunction claims based on
ongoing conspiracies, this Court is mindful “that proceeding to antitrust discovery can be
expensive” and thus “retain[s] the power to insist upon some specificity in pleading before
allowing a potentially massive factual controversy to proceed.” Twombly, 550 U.S. at 558
(citations and internal quotations marks omitted); see also Associated Gen. Contractors of Cal.,
Inc. v. Carpenters,
Finally, the Court is concerned that the present case could be a needless fishing
expedition. See In re Carbon Black Antitrust Litig., Case No. 03-10191 (DPW), 2005 WL
102966 at *5 (D. Mass. 2005); see also Eastern Food Services, Inc. v. Pontifical Catholic Univ.
Services Assoc., Inc.,
For the all foregoing reasons, this Court GRANTS Defendants joint motion to dismiss at Docket No. 34 as to Plaintiff’s request for injunctive relief.
B. Unjust or Undue Enrichment Doctrine and Indirect Purchaser Claims
Given the subsidiary nature of the unjust enrichment doctrine, Defendants aver that the
Government may not pursue this claim because the Puerto Rico Antitrust Act (“PRAA”), P.R. L AWS A NN . tit. 10, § 268, provides a legal remedy. It further puts forward that the Court has
previously dismissed an antitrust claim “cloaked as unjust enrichment” in Rivera-Muñiz v.
Horizon Lines Inc.,
Plaintiff opposed this argument asserting that an indirect purchaser antitrust claim is not
available under Puerto Rico law and hence it can only sue pursuant to the unjust enrichment
doctrine. (Docket No. 61 at 6-7). The Government posits that Defendants rely on Rivera-
Muñiz’s analysis on this issue, while other federal courts have held that Puerto Rico has not
1
rejected Illinois Brick Co. v. Illinois,
The Puerto Rico Supreme Court recognized a cause of action under the unjust or undue
enrichment doctrine in Ortiz-Andújar v. Commonwealth of Puerto Rico, 22 P.R. Offic. Trans.
774,
Defendants focus primarily on the doctrine’s fifth element, or the absence of thereof, arguing that the Government had a legal remedy under PRAA’s Section 268. Specifically, this 1 section provides that “[a]ny person who shall be injured in his business or property by any other 2 person, by reason of acts or intended acts, forbidden or declared to be unlawful by the provisions 3 of this chapter . . . may sue therefor . . . and shall recover threefold the damages by him 4 sustained.” P.R. L AWS A NN . tit. 10, § 268(a). [19] Furthermore, it provides that “[t]he judicial 5 action to recover damages . . . [the action] shall be commenced within four (4) years after the 6 cause of action accrued.” Id. Under Defendants’ theory, Plaintiff had a remedy under PRAA 7 yet failed to file suit within the four-year statute of limitations and cannot now disguise its time- 8 barred action using the unjust enrichment doctrine. (Docket No. 34-1 at 9-10). The Government 9 opposes this argument and posits that an indirect purchaser antitrust claim is not available under 10 Puerto Rico law and thus the only remedy available is unjust enrichment. (Docket No. 61 at 6- 11 9).
The Court disagrees with Plaintiff’s arguments on indirect purchaser standing. As a
threshold matter, in Rivera-Muñiz the undersigned explicitly addressed the issue of direct and
indirect purchaser antitrust standing under Commonwealth law and held that “although federal
jurisprudence has implied special standing requirements into private antitrust actions, Puerto
Rico explicitly rejects any such limitations.” Rivera-Muñiz,
The Puerto Rico legislature enacted PRAA in 1964. Pressure Vessels of P.R., Inc. v. Empire Gas de P.R.,137 P.R. Dec. 497 , 519 (1994). Since then, federal precedents have limited standing in private antitrust actions under federal law to direct purchasers. See Ill. Brick Co. v. Illinois, 431 U.S. 720, 746 (1977). Without citing Illinois Brick explicitly, the Puerto Rico Supreme Court rejected such limitations on standing for the purpose of private antitrust actions under PRAA. See Pressure Vessels,137 P.R. Dec. at 519 (citing federal precedents limiting antitrust standing that postdate enactment of PRAA in 1964). According to the Commonwealth court, the legislative intent under PRAA must be inferred from the state of federal case law in 1964 -when federal precedents tended to favor liberal standing requirements in private antitrust actions. Id. Because the Puerto Rico Supreme Court has unequivocally rejected limitations to private antitrust standing under PRAA, this court must deny Defendants’ motion for certification. See Romero,204 F.3d at 305-06 .
Rivera-Muñiz v. Horizon Lines Inc., Civil No. Case 09-2081 (GAG),
Following this decision, as Plaintiff points out, several district courts have rejected the
Court’s Pressure Vessels of P.R., Inc. reading. See e.g. In re Opana Er Antritrust Litig., 162 F.
Supp. 704 (N.D. Ill. 2016); United Food & Commercial Workers Local 1776 & Participating
Employers Health & Welfare Fund v. Teikoku Pharma USA, Inc.,
Accordingly, under the current state of Commonwealth law, there exists a liberal
construction of who and whom possess standing to bring to court an antitrust case. If there is
no distinction between direct or indirect purchaser, then the Government should have sought
damages pursuant to PRAA for the alleged price-fixing conspiracy and not under the unjust
enrichment doctrine. In Rivera-Muñiz, the Court also decided that the unjust enrichment
doctrine is “subsidiary to other remedies provided by law and is unavailable if the plaintiff may
seek other forms of relief. Because PRAA affords a remedy to private litigants who are injured
by antitrust violations, Plaintiff[] may not simultaneously seek relief under the theory of unjust
enrichment.” Rivera-Muñiz,
C. Parens patriae standing
Finally, Defendants argue that the Government lacks
parens patriae
standing to sue
because there is no express statute granting it and neither can it satisfy the Supreme Court’s test
set forth in Alfred L. Snapp & Son, Inc. v. P.R., ex rel., Barez,
3 Federal antitrust law, specifically Section 16 of the Clayton Act, provides statutory authorization for claims brought by a state or territory in its capacity as parens patriae . 15
U.S.C. §§ 15g-15h; Georgia v. Pennsylvania R.R.,
D. Motions to Dismiss for Lack of Personal Jurisdiction and Proper Venue (Docket Nos. 35 and 37) and Motion to Dismiss for Lack of Standing (Docket No. 39) The Court need not address these motions as Plaintiff’s claims have been dismissed on other grounds. For the foregoing reasons, the Court finds the motions to dismiss at Docket Nos. 35, 37, 39 are MOOT .
IV. Conclusion
As explained above, the costs of complex antitrust lawsuits require diligence and timeliness. Plaintiff lacked both and, thus, failed to plausibly state a claim upon which relief may be granted. Consequently, the Court GRANTS the joint motion to dismiss for failure to state a claim at Docket No. 34.
According to the case’ record, remaining Defendants Flexible Foam Products, Otto Bock, Scottdel, Louis Carson and David Carson have not been served with process. Plaintiff shall inform the Court, on or before March 5, 2020 , any action it has taken to pursue its claims against them. Otherwise, the Court will proceed to enter judgment accordingly.
SO ORDERED.
In San Juan, Puerto Rico this 27th of February, 2020.
s/ Gustavo A. Gelpí GUSTAVO A. GELPI United States District Judge
Notes
[1] Not all Defendants named in the Complaint have appeared before this Court. Each defendant is specifically named in section I.A.
[2] Flexible polyurethane foam is defined in the Complaint as “a commodity widely used for cushioning and 23 insulation in a variety of goods, including but not limited to furniture, bedding, packaging, and flooring.” (Docket No. 1 ¶ 3).
[3] Carpenter Co. is a company that manufacture and distribute flexible polyurethane foam for bedding, 17 including cushioning, foam mattresses, and fibers, carpet cushion products, and flexible foam packaging. (Docket No. 1 ¶¶ 13-16). Defendant Carpenter Co. clarifies in its joint motion to dismiss that Plaintiff 18 incorrectly identified it as “The Carpenter Company,” when the corporation’s name is Carpenter Co. Id. at 1.
[4] Flexible Foam Products is a company that manufactures flexible polyurethane foam and re-bond products serving customers in the bedding, flooring, furniture, packaging, and transportation industries. Id. ¶¶ 17-20. 19 Defendant Flexible Foam Products has yet to appear in this case.
[5] FXI is a company with its principal place of business in Pennsylvania that provides flexible polyurethane 20 foam for the home, healthcare, electronics, industrial, personal care and transportation markets. (Docket No. 1 ¶¶ 21-25). Defendant FXI clarifies that “Foamex Innovations, Inc.” or “Foamex International, Inc.” no 21 longer exist and that FXI Holdings, Inc. is the entity appearing to move to dismiss the present case. (Docket No. 34 at 1).
[6] Future Foam is a company with its principal place of business in Iowa that produces flexible polyurethane 22 foam products for the bedding, flooring, furniture, and packaging industries. (Docket No. 1 ¶¶ 26-28).
[7] Hickory Springs is one of the nation’s largest integrated components manufacturers and suppliers for the 23 furniture and bedding industries, with more than sixty operating facilities in the United States and throughout the world. Id. ¶¶ 29-33.
[8] Leggett is a company that manufactures flexible polyurethane foam and other components for the bedding and furniture industries. Id. ¶¶ 34-36.
[9] Mohawk is a company that manufactures flexible polyurethane foam and other components for the flooring industry. (Docket No. 1 ¶ 37).
[10] Otto Bock is a subsidiary of Otto Bock Holding GmbH & Co. KG, a German company. Id. ¶¶ 38-40. Defendant Otto Bock has yet to appear in this case.
[11] Scottdel is a company that manufactures bonded urethane carpet cushions since 1961 and now operates 20 complete line of commercial and residential cushions ranging in density from 3.5 pounds to 10 pounds per cubic foot. Id. ¶¶ 41-44. Defendant Scottdel has yet to appear in this case. 21
[12] Woodbridge are companies whose primary focus involves supplying flexible polyurethane foam for automotive components, but it also supplies flexible polyurethane foam for commercial and recreational transportation, building products, construction, packaging, and several consumer and industrial products. Id. 22 ¶¶ 53-59.
[13] Corporation ABC is a corporate entity and who’s the identity is currently unknown that may be responsible 23 for the allegations set forth in Plaintiff’s complaint. Id. ¶ 60.
[14] These individual defendants have yet to appear in this case.
[15] At the motion to dismiss stage, a Court may take judicial notice of the fact that press coverage, prior
lawsuits or regulatory filings contained certain information, without regard to the truth of the contents. See
20
Rodi v. S. New England Sch. Of Law,
[16] See Polyurethane foam makers in $128.5 mln US price-fixing accords, Reuters (June 22, 2015),
https://www.reuters.com/article/polyurethane-settlement/polyurethane-foam-makers-in-128-5-mln-us-price
-fixing-accords-idUKL1N0Z829 M20150622; Jonathan Stempel, Polyurethane foam makers pay $275.5
22
million to end price-fixing cases, Reuters (May 19 2015), https://www.reuters.com/article/us-polyurethane-
settlement/polyurethane-foam-makers-pay-275-5-million-to-end-price-fixing-cases-idUSKBN0O42K8201
23
50519. See also In re Polyurethane Foam Antitrust Litig., 135 F. Supp. 3d 679 (N.D. Ohio 2015); In re
Polyurethane Foam Antitrust Litig., Civil Case No. 10-MD-2196,
[17] See Three Foam Manufacturers Plead Guilty in Price Fixing Scheme, Department of Justice (June 27, 2014), https://www.justice.gov/opa/pr/three-foam-manufacturers-plead-guilty-price-fixing-scheme; 22 European Commission, Antitrust: Commission fines producers of foam for mattresses, sofas and car seats € 114 million in cartel settlement (Jan. 29, 2014), 23 https://ec.europa.eu/commission/presscorner/detail/en/IP_14_88; Polyurethane foam, Government of Canada (Jan. 6, 2012), https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02585.html.
[18] In Illinois Brick, several brick companies allegedly conspired to raise prices to masons who in turn passed
20
the inflated prices along to the subcontractors on public works projects; ultimately harming the indirect
purchasers: the state and its taxpayers. Illinois Brick Co.,
[19] It is worth noting that this statutes language is practically identical to the Clayton Act’s Section 4 (damages), 15 U.S.C. § 15.