The Dow Chemical Co. on Friday urged a Kansas federal court to overturn a $400 million jury verdict that urethane foam buyers won at trial in multidistrict antitrust litigation and decertify the class action based on the U.S. Supreme Court's recent ruling for Comcast Corp., arguing that the plaintiffs' damages model couldn't support classwide damages.
Dow had already begun pressing to overturn the Feb. 20 verdict before the Supreme Court handed down its decision overturning class certification in a monopolization suit against Comcast, which reasoned that the plaintiffs' expert testimony couldn't directly link price increases to the company's alleged anti-competitive conduct.
In a pair of filings on Friday, Dow warned that the same flaws applied to the urethane plaintiffs' claims, meaning that judgment should be entered in the company's favor or that the class should at least be decertified.
"Comcast offers powerful confirmation that the class in this case should be decertified," Dow's brief said. "And like Wal-Mart Stores Inc. v. Dukes — another significant class certification decision issued since this court granted class certification in 2008 — Comcast will provide much needed guidance to lower courts, to ensure that certification is granted only when consistent with Rule 23, the Rules Enabling Act, and the guarantees of the Due Process Clause and Seventh Amendment."
Among other issues, Dow said that the jury had clearly rejected a damages model from the same expert involved in the Comcast case — statistician James McClave — because the model estimated damages from 1999 to 2003, but the jury's verdict found no injury for the time before November 2000.
"The issue addressed by the Supreme Court was whether Dr. McClave's multiple regression model was able to 'establish that damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3),'" Dow said. "While noting as a preliminary matter that such calculations need not be exact, the court stated that 'any model supporting a "plaintiffs' damages case must be consistent with its liability case, particularly with respect to the alleged anti-competitive conduct"' ... and reiterated its instruction in Dukes that the analysis of whether this was so must be 'rigorous.'"
In the Comcast decision, the justices cautioned that damages calculations should stem from the "translation of the legal theory of the harmful event into an analysis of the economic impact of that event," the brief said. The problem was that McClave's model was based on multiple theories of anti-competitive impact, even though only one theory was at issue in the case, according to Dow.
"The same essential defect lies at the core of the model advanced by plaintiffs here," Dow said. "Two theories of collusion were reported in Dr. McClave's own report, one on prices and the other to allocate customers and markets [and] it was not until more than a year after Dr. McClave finished his work that plaintiffs decided not to pursue the second theory."
The plaintiffs responded to Dow's original efforts to overturn the verdict by accusing Dow of framing the lawsuit as an "all-or-nothing" claim when in fact it was within the jury's purview to decide "the scope and duration" of the conspiracy and jurors could accept their entire conspiracy theory or just parts of it, and for any part of the class period.
In a brief filed just days before Comcast came down, the plaintiffs noted that Dow hadn't cited any cases in which a verdict had been overturned because it did not uphold every allegation made in a lawsuit.
The litigation, which was consolidated in 2008, originally accused chemical companies Dow, Bayer AG, BASF SE, Huntsman International LLC and Lyondell Chemical Co. of orchestrating a scheme to fix prices of polyether polyol products that are used to manufacture urethane foam. But only Dow refused to settle, taking the case to trial earlier in the year.
A spokeswoman for Dow declined to comment on the matter. An attorney for the plaintiffs was not immediately available for comment Monday.