In re Sulfuric Acid Antitrust Litig..This Document Relates To: All Related Actions.

743 F.Supp.2d 827

In re SULFURIC ACID ANTITRUST LITIGATION.This Document Relates to: All Related Actions.

MDL Docket No. 1536.Case No. 03 C 4576.

United States District Court, N.D. Illinois, Eastern Division.

Sept. 24, 2010.

Mary Jane Fait, Adam J. Levitt, John E. Tangren, Theodore Beloyeannis Bell, John E. Tangren, Wolf, Haldenstein, Adler, Freeman & Herz LLC, Chicago, IL, Steven A. Asher, Mindee J. Reuben, Weinstein Kitchenoff & Asher LLC, Robert Joseph Larocca, Kohn, Swift & Graf, P.C., Philadelphia, PA, Charles Andrew Dirksen, Solomon B. Cera, Gold Bennett Cera & Sidener LLP, San Francisco, CA, Jason Hartley, Stueve Siegel Hanson LLP, San Diego, CA, for Plaintiffs.Edward M. Ordonez, Cozen O'Connor, Hugo Chaviano, Sanchez & Daniels, Andrew C. Nordahl, David C. Gustman, Jill Christine Anderson, Jeffery Moore Cross, Freeborn & Peters, LLP, Michael H. Cramer, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Adam R. Chiss, Michael David Richman, Reed Smith LLP, Matthew Patrick Connelly, Cory D. Anderson, Jeffrey James Scolaro, Connelly, Roberts & McGivney, Joel Gerald Chefitz, McDermott Will & Emery LLP, Todd Lawrence McLawhorn, McLawhorn Law Offices, P.C., John Reid Malkinson, Malkinson & Halpern, P.C., Mary Jane Fait, Wolf, Haldenstein, Adler, Freeman & Herz LLC, Chicago, IL, K. Scott Hamilton, Dickinson Wright PLLC, Detroit, MI, Susan G. Kupfer, Glancy & Binkow LLP, San Francisco, CA, for Defendants.

MEMORANDUM OPINION AND ORDER

DAVID H. COAR, District Judge.

Plaintiffs have filed suit on behalf of a class of sulfuric acid consumers against several producers of the commodity (collectively “Defendants”) for violations of § 1 of the Sherman Act, 15 U.S.C. § 1. Plaintiffs allege that Defendants engaged in anticompetitive behavior by conspiring to reduce the output and fix the price of sulfuric acid in Canada and the United States. In furtherance of the conspiracy, American Defendants GAC Chemical Corporation (“GAC”),¹ Boliden Intertrade Holdings, Inc. (“Boliden”), Pressure Vessel Services, Inc. (“PVS”),² Koch Industries Inc. (“Koch”), E.I. du Pont de Nemours and Company (“DuPont”), Marsulex, Inc., (“Marsulex”), and Chemtrade Logistics, Inc. (“Chemtrade”) allegedly shut down or curtailed production in their respective facilities in favor of purchasing acid from Canadian Defendants Noranda, Inc. (“Noranda”) or Falconbridge Ltd. (“Falconbridge”). Plaintiffs also allege that Defendants Noranda, Falconbridge, and DuPont operated an illegal price fixing and output restriction agreement under the label of Noranda DuPont, LLC (now “Norfalco”), a joint venture. Plaintiffs' cases were consolidated and transferred to this Court by the Multidistrict Litigation Panel on July 1, 2003. The Court certified Plaintiffs' class on March 21, 2007, 2007 WL 898600.

Before this Court are motions for summary judgment brought by Defendants GAC [413], Noranda [418], Boliden [422], Falconbridge [426], PVS [430], Norfalco [433], and Koch [439]. All Defendants join in each other's motions. For the reasons stated below, the motions of Defendants Noranda, Boliden, PVS, Norfalco, and Koch are DENIED. Defendant Falconbridge's motion is DENIED in part and GRANTED in part. The Court GRANTS Defendant GAC's motion for summary judgment.

FACTS ³

The instant action centers on allegedly anticompetitive behavior that took place in the sulfuric acid market in Canada and the United States from 1988 through 2001.

A. Parties

1. The named Plaintiffs are Ohio Chemical Services, inc., Independent Chemical Corporation, National Alum Corporation, Producers Chemical Company, Old Bridge Chemicals, Inc., and AG RX. Each claims to have purchased sulfuric acid directly from one or more of the Defendants or their alleged co-conspirators.

2. The Defendants are Norfalco, Noranda, Falconbridge, PVS, GAC, and Koch. Defendants Noranda and Falconbridge, both located in Canada, were at all relevant times in the mining business, and were involuntary producers of sulfuric acid as a consequence of their metal smelting activities. The other Defendants were at various times in the business of manufacturing, marketing, selling, or distributing sulfuric acid in the United States.

3. Defendants who have already reached settlement with Plaintiffs include DuPont, Marsulex, and Chemtrade.

B. Jurisdiction

4. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1337 and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26.

5. Plaintiffs also allege that personal jurisdiction over the defendants comports with the United States Constitution. Plaintiffs allege that venue is proper in this District pursuant to Sections 4 and 12 of the Clayton Act, 15 U.S.C. § 15(a) and 22, and 28 U.S.C. § 1391(b), (c) and (d) based upon their allegations that Defendants resided, transacted business, were found or had agents in this District and because of their allegations that a substantial part of the events giving rise to their claims occurred, and a substantial portion of the allegedly affected interstate trade and commerce was carried out, in this District.

C. Procedural History

6. Sulfuric acid consumers filed a variety of suits in United States federal courts, many of which were consolidated and transferred to this court by the Multidistrict Litigation Panel on July 1, 2003. On motion of the Plaintiffs, this Court certified a class on March 21, 2007, made up of:

All persons (excluding federal, state, and local governmental entities and political subdivisions, the Defendants, and their respective parents, subsidiaries and affiliates) who purchased sulfuric acid in the United States directly from one or more of the Defendants or their parents, subsidiaries, affiliates, or joint ventures during the period January 1, 1988 through January 16, 2003.

7. Plaintiffs allege they purchased sulfuric acid directly from one or more of the defendants in this case.

D. Sulfuric Acid Industry Generally

8. Sulfuric acid is an extremely corrosive chemical used in many industrial processes. The largest use of sulfuric acid in North America is to manufacture fertilizer, which is made by combining acid with phosphates. Sulfuric acid is also an input in numerous industrial products and manufacturing processes. For example, it is used in kraft pulp bleaching to make chlorine dioxide, a bleaching agent, and to make titanium dioxide. (Falconbridge Rule 56.1 Statement of Facts (“SOF”) ¶¶ 4, 13, 14)

9. Sulfuric acid is generally produced in one of two ways: voluntarily, in a process of burning elemental sulfur, or involuntarily, as a by-product from the smelting of ores into metals such as copper and zinc. (Noranda SOF ¶ 4.)

10. The marginal cost to a voluntary producer of sulfuric acid is generally the cost of the sulfur and the cost of operating the plant, net of a credit for any by-product energy generated during the manufacturing process. (Noranda SOF ¶ 7.)

11. The process of smelting ores into metals generates sulfur-containing gases, which environmental laws require to be recaptured, resulting in the “involuntary” production of sulfuric acid. There is a dispute as to how to characterize the marginal cost to smelters of producing involuntary sulfuric acid. (Pl. Response, Noranda SOF ¶ 8.)

12. Because there are no commercially viable methods for disposing of or storing sulfuric acid, smelting operations producing acid have no reasonable alternative to selling it. A smelter runs the risk of a forced shut down of its smelting operations if it is unable to sell enough sulfuric acid to avoid exceeding its storage capacity. (Falconbridge SOF ¶¶ 7, 8, 10.)

13. The costs of shutting down a smelter are quite high. (Falconbridge SOF ¶ 11.)

14. The cost of transporting sulfuric acid is large compared to its value. (Falconbridge SOF ¶ 12.)

15. The demand for sulfuric acid is driven for the most part by the demand for the products in which it is used as an input. There are frequently no close substitutes for acid in these products. (Falconbridge SOF ¶¶ 15, 16.)

16. However, the demand for acid is not always responsive to the price of acid. Also, the value of sulfuric acid in relation to the value of the product in which it serves as an input is small. (Falconbridge SOF ¶¶ 16, 17.)

17. In the 1980s, environmental legislation designed to prevent acid rain forced smelting companies to capture an increased amount of sulfuric acid as a result of their smelting processes. (GAC SOF ¶ 21.)

18. Acid pricing eroded in the early 1990s due to the abundance of smelter acid in the market. (GAC SOF ¶ 46.)

E. Noranda's Sulfuric Acid

19. Noranda's core smelting operations produce base metals, such as nickel, copper, or zinc. Sulfuric acid is not part of Noranda's core business. (Noranda SOF ¶ 9, 18, 20.)

20. During the 1980s, Noranda had to deal with an increased amount of sulfuric acid from its smelting processes, due in part to stricter environmental regulations for the prevention of acid rain. Regulations required the recapture of sulfur containing gases from the smelting process, which were converted to sulfuric acid. (Falconbridge SOF ¶ 18.)

21. In the mid–1980s, Noranda made plans for a new sulfuric acid plant at its Horne smelter, designed to produce hundreds of thousands of additional tons of sulfuric acid per year. (Noranda SOF ¶ 16.)

22. The supply of acid in Eastern Canada, where Noranda's smelters were located, was greater than the local demand. (Falconbridge SOF ¶ 19.)

23. Noranda retained an outside consultant to investigate the market opportunities for the new sulfuric acid recovery system to be built at its Horne smelter. The result was a June 1985 report by Manderson Associates, Inc., entitled Sulphur & Sulphuric Acid: Long Range Outlook for World and Regional Supply, Demand, Costs, and Prices with Emphasis on the Market Opportunities for By–Product Sulphuric Acid that May be Produced at Noranda's Smelter at Noranda, Quebec. (Noranda Ex. 6 (“Manderson Report”).)

24. The Manderson Report...