Cross-Market Claims Flunk Twombly

In two companion opinions, Magistrate Judge Louis Guirola, Jr. of the Southern District of Mississippi granted motions to dismiss and greatly limited the scope of the claims asserted against several defendants in “opt out” actions following from the In re OSB Antitrust Litigation in the Eastern District of Pennsylvania. Bailey Lumber & Supply Co. v. Georgia-Pacific Corp. Cause No. 1:08CV1394 LG-JMR (S.D. Miss, Feb. 25, 2010 and March 19, 2010).
 
In the order entered on February 25, 2010, the court dismissed claims against BlueLinx Corporation on the ground that the plaintiffs had not sufficiently stated a plausible cause of action for violation of Section 1 of the Sherman Act. The plaintiffs are purchasers of plywood and “oriented strand board” (“OSB”). The complaint lumps plywood and OSB together into a single “structural panel” market. Plaintiffs allege that the defendant manufacturers, and BlueLinx, a distributor, violated Section 1 by engaging in coordinated reduction of output, and facilitating anticompetitive effects in the “structural panel” market by coordinated exchanges of pricing information. In ruling on plaintiffs’ second amended complaint against BlueLinx, the court again dismissed the action, holding that it would be implausible that BlueLinx, a distributor, and not a manufacturer of either plywood or OSB, would conspire with manufacturers to reduce the output of the products that BlueLinx purchased, and resold, hopefully at a profit, to its customers. The allegations relating to BlueLinx and the manufacturing defendants were held to be conclusory only, and did not plausibly or factually explain how BlueLinx could have contributed to either supply reduction coordination, or price information sharing coordination activities. The complaint does not allege that BlueLinx was a “mule”, or a facilitating inter-mediator between the manufacturing defendants. The court held that Twombly, and its later companion case, Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), does not permit the maintenance of a complaint that does not permit the court to infer more than the “mere possibility of misconduct”.

But the “main course” was the court’s decision of March 19, 2010. The plaintiffs were purchasers of plywood and OSB who had opted-out of an OSB price-fixing class action; in the opt-out suit the plaintiffs asserted price-fixing claims for both plywood and OSB. The defendants moved to dismiss and strike the plywood claims as barred by the four year statute of limitations under Section 4b of the Clayton Act, 15 U.S.C. § 15b. The court began by agreeing with the defendants that plywood and OSB occupied different markets, and therefore that the defendants’ motion to dismiss could properly target just the plywood claims. The court then found that the limitations period on plaintiffs’ plywood claims had not been tolled by the pendency of the OSB price-fixing class action because a plywood conspiracy was not “embraced” within that action. Accordingly, the court held that plaintiffs’ allegations of anticompetitive conduct in the plywood industry prior to November 12, 2004 (i.e., four years prior to the filing of plaintiffs’ initial complaint) were barred by the statute of limitations.