Judge Milton Shadur of the U.S. District Court for the Northern District of Illinois denied seven motions to dismiss by the defendants, including Packaging Corp. of America, Norampac Industries Inc., Cascades Canada Inc., Weyerhaeuser Co., Georgia Pacific LLC, Smurfit-Stone Container Corp. and Temple-Inland Inc.

The judge said that plaintiffs, including floor care products company Kleen Products LLC, Ferraro Food Inc. and others, sufficiently alleged violations of the Sherman Act by the defendants.

Judge Shadur said the plaintiffs’ most persuasive evidence was the coincidental timing of the defendants’ price increases and capacity reductions. In the suit, the plaintiffs accuse the containerboard companies of using trade association meetings to organize the scheme.

“It is striking that all defendants repeatedly — twice in each of 2005 and 2006 and once in each of 2007 and 2008 — raised their prices soon after an industry event,” Judge Shadur said.

While the defendants correctly pointed out differences in the amount and timing of capacity reductions within the companies, Judge Shadur found that the variations were not substantial enough to overcome suspicion.

The plaintiffs had also accused the defendants of cutting capacity despite favorable economic conditions, showing the alleged conspiracy was plausible.

Facing declining profit margins, rising demand and a promising economic environment in 2005, many of the defendants reduced their production capacity, according to the suit. They closed plants, idled capacity and scheduled production downtime despite high demand for containerboard, the plaintiffs alleged.

According to the suit, the consolidated nature of the containerboard industry, barriers to entry as well as inelasticity of demand makes collusion more likely. Extensive antitrust litigation and other charges of unfair competition have plagued the industry since the 1930s.

Many of the named defendants, including International Paper and Smurfit-Stone, were part of a price-fixing cartel in the mid-1990s that resulted in numerous class actions and the eventual payout of over $200 million to their customers, according to the suit.

Attorneys for the plaintiffs and the defendants did not immediately respond to requests for comment Monday.

Kleen is represented by Freed Kanner London & Millen LLC, the Mogin Law Firm PC, Lockridge Grindal Nauen PLLP and Gustafson Gluek PLLC, among others.

Packaging Corp. of America is represented by Kirkland & Ellis LLP. International Paper is represented by Gibson Dunn & Crutcher LLP and Eimer Stahl Klevorn & Solberg LLP. Cascades and Noramnpac Holdings U.S. Inc. are represented by K&L Gates LLP. Weyerhaeuser is represented by McDermott Will & Emery LLP. Georgia Pacific is represented by Quinn Emanuel Urquhart & Sullivan LLP and Figliulo & Silverman PC. Temple-Inland is represented by Mayer Brown LLP. Smurfit-Stone Container Corp. is represented by Winston & Strawn LLP.

The case is Kleen Products LLC et al. v. Packaging Corp. of America et al., case number 1:10-cv-05711, in the U.S. District Court for the Northern District of Illinois.

–Additional reporting by Lance Duroni. Editing by Jonathan Jacobson.

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Several attorneys general and attorneys for the private plaintiffs issued statements Thursday announcing the deal, which settles not only eight-year-long multidistrict litigation pending in the U.S. District Court for the Northern District of California, but also numerous state court actions around the country.

The defendants involved in the settlement are U.S.-based Micron and NEC, Germany’s Infineon Technologies AG, South Korea’s Hynix Semiconductor Inc., Japan’s Elpida Memory Inc. and Taiwan’s Mosel Vitelic Inc.

The indirect purchaser plaintiffs had previously reached settlements totaling $90 million with memory chip makers Samsung and Winbond Electronics Corp.

Taiwan’s Nanya Technology Corp. is the only remaining defendant in the case.

NEC, now known as Renesas Electronics America after a merger in April, said in a statement that it “continues to dispute any liability or responsibility for the alleged antitrust acts,” and decided to settle the case to end the lengthy and costly litigation and focus on future business.

A representative of Micron said the company had no comment on the settlement. Representatives for the other defendants could not be reached for comment.

The settlement is to be paid over two years plus interest and the amount each state will receive is still being determined, the attorneys general said.

Of the total, $115 million will go to consumers and businesses, $14 million to state and local governments and the rest will cover litigation costs, according to the attorneys general. No settlement documents have yet been filed with the Northern District of California.

“The settlement money is welcome, but the illegal overcharging never should have happened in the first place,” California Attorney General Jerry Brown said in a statement. “Especially when times are tight, schools and government agencies can’t afford to be ripped off by companies that violate our antitrust laws to keep profits high.”

“Obviously we’re all pleased that this occurred and that we can move on with the disposition of the case,” said Josef Cooper of Cooper & Kirkham PC, lead counsel for the indirect purchaser plaintiffs. The attorneys generals alleged that consumers in their states, along with state agencies, universities and local governments, were forced to pay inflated prices for products containing DRAM chips.

The attorneys general said in their statements that funds will be set up so that consumers and state entities could received settlement funds in amounts to be determined by a special master.

Suspicion about a price-fixing conspiracy among DRAM manufacturers arose in June 2002, when the U.S. Department of Justice launched a criminal investigation into what officials have called “one of the largest cartels ever discovered.”

A flood of antitrust lawsuits against the manufacturers were consolidated in the Northern District of California that year. Direct purchaser plaintiffs have settled with the various DRAM manufacturers for more than $300 million.

In May, the European Commission fined nine DRAM makers, including several of the parties to the settlement, a total of $408 million for the price-fixing scheme.

The indirect purchaser plaintiffs are represented in the case by Zelle Hofmann Voelbel Mason & Gette LLP, Gustafson Gluek PLLC, Straus & Boies LLP, Cooper & Kirkham PC, The Mogin Law Firm PC and Gross Belsky Alonso LLP.

Micron is represented by Gibson Dunn & Crutcher LLP, among others.NEC is represented by Winston & Strawn LLP, among others.

Infineon is represented by Kaye Scholer LLP, among others.

Hynix is represented by O’Melveny & Myers LLP, among others.

Elpida is represented by Simpson Thacher & Bartlett LLP, among others.

Mosel Vitelic is represented by Orrick Herrington & Sutcliffe LLP, among others.

Nanya is represented by Orrick Herrington & Sutcliffe LLP, among others.

The multidistrict litigation is In re: Dynamic Random Access Memory Antitrust Litigation, case number 02-cv-01486, in the U.S. District Court for the Northern District of California. There are also numerous related cases filed in state courts around the country.

– Additional reporting by Abigail Rubenstein

Download the PDF of the article as it originally appeared at http://competition.law360.com/print_article/177238

Who knew that a friendship between Bob Weinberg and an up-and-coming, young lawyer that began 25 years ago would help spearhead the largest donation the CHP 11-99 Foundation has ever been graced with?!

On February 26, 2010 The Mogin Law Firm, P.C. held a ceremony in their San Diego office to award $500,000 to the 11-99 Foundation. This donation was part of $40 million in Cy Pres Awards from the settlement fund in the Smokeless Tobacco Case I-IV*.

This blessed February day began wayback when Bob Weinberg was the owner of Coast Grain, the most successful grain company in California at the time. Bob had heard of the winning talents of one, Daniel J. Mogin who was practicing law in Tustin. Dan had a stellar reputation for successfully handling difficult cases that had previously failed.

In 1985, when Dan first met up to interview Bob, an immediate bond was formed! A year later, with Mr. Mogin’s name prominently in the news, Bob sought out his counsel for a private securities litigation. At that time, Dan had the pleasure of getting to know Bob and his outstanding secretary, Becky Centner.

Dan considered Bob to be a most unforgettable character who had such love for life, family, friends and driving his huge white Cadillac along the California highways!

Dan shares that, “It’s no wonder that Bob’s huge heart and passion for the CHP empassioned him to envision the CHP 11-99 Foundation. With the talents of his dedicated secretary, Becky Centner, the Foundation has thrived to this day.”

Even though Bob’s case was Dan Mogin’s very first attempt at Securities litigation, Dan won the suit leading him to specialize in this field of law. Bob Weinberg was at the hub of many significant events that wound up shaping Dan’s legal career.

In 2002, The Mogin Law Firm, P.C. was selected as co-liaison counsel in the class action antitrust lawsuit against U. S. Smokeless Tobacco. During a meeting to decide the list of Cy Pres Awardees, the CHP 11-99 Foundation was mentioned. In remembering Bob’s philanthropy and the Foundation’s first event long ago at the Saddleback Inn in Norwalk, Dan Mogin enthusiastically endorsed this choice and asked his co-counsel if his firm, could have the honor of making the presentation.

What a nostalgic surprise when Dan Mogin saw John Schroeder at that presentation… for they had been buddies in law school and had not seen each other since their graduation 30 years ago!

‘This $500,000 gift will help the CHP 11-99 Foundation continue its mission to support California Highway Patrol personnel in their times of greatest need,” said John Schroeder, CHP 11-99 Chairman. “In addition, the Smokeless Tobacco team of plaintiffs’ lawyers should feel proud that this contribution will directly assist a number of students in starting, continuing or completing their higher education. Many of these students would not be able to continue their education without the assistance of such gifts. The Smokeless Tobacco team of lawyers will forever be remembered by the CHP 11-99 Foundation Board of Directors for the direct benefits conferred on the families of California Highway Patrol employees.”

From the humble beginnings of the CHP 11-99 to now, through the generosity of its donors, like YOU, the11-99 Foundation has provided $18 million to assist CHP families over the last 28 years.

Download the PDF of CHP 11-99 Star Newsletter here

SAN DIEGO- (BUSINESS WIRE) -The Mogin Law Firm has distributed $3.45 million to 10 San Diego legal societies, organizations and charities as part of $40 million in cy pres awards from settlement funds in the Smokeless Tobacco Case I-IV, according to Daniel J. Mogin of The Mogin Law Firm, PC.

 The organizations receiving cy pres awards include the Legal Aid Society of San Diego, the California Highway Patrol 11-99 Foundation, California Indian Legal Services, University of San Diego Legal Clinics, Feeding America San Diego, San Diego Volunteer Lawyer Program, United Way of San Diego, San Diego Audubon Society, California Western School of Law and Thomas Jefferson School of Law. Total distributions were made to 45 California legal societies, organizations and charities, such as the Injured Marine Semper Fi Fund, Food Banks throughout California, Surfrider Foundation, California Ducks Unlimited, Sierra Club, Keep America Beautiful and the National Wildlife Federation.

“This is an unprecedented and truly astounding financial development for the San Diego Volunteer Lawyer Program,” said Amy J. Fitzpatrick, Esq., Executive Director of the San Diego Volunteer Lawyer Program, Inc. “We are carefully considering a number of options, but, are certain to use the award to strengthen our financial base and to enhance our service delivery to those most in need in San Diego County. We are extremely grateful to Dan Mogin and other counsel involved with this litigation for including SDVLP in this tremendous award.”

“The $400,000 gift we received from The Mogin Law Firm comes at a time when we need it most. The number of people living in poverty in San Diego County last year increased by a whopping 46,000 people to 367,000 people with approximately one-third of them being children,” said Gary McDonald, president and CEO of Feeding America San Diego. “According to the 2000 US Census, 367,000 people living in poverty would place them as the 47th largest city in the United States! This is a critical time in which we need to help our neighbors in need and The Mogin Law Firm has responded in a very significant way.”

In the Smokeless Tobacco Cases I-IV, a certified class of California smokeless tobacco purchasers alleged that U.S. Smokeless Tobacco and related entities (“U.S. Smokeless Tobacco”) engaged in sales practices that made it possible for U.S. Smokeless Tobacco to monopolize the market for moist smokeless tobacco products in violation of the antitrust and consumer protection laws of the State of California. The plaintiffs alleged that, as a result, they paid more for U.S. Smokeless Tobacco moist snuff tobacco products than they would have absent the alleged conduct. U.S. Smokeless Tobacco’s moist smokeless tobacco products include Copenhagen®, Skoal®, Rooster®, Red Seal®, Bandits®, Pouches® and Husky® (and including the different cuts and/or flavors thereof).

At the conclusion of class action cases, it is common to have funds that for a number of reasons cannot be distributed directly to the class members technically entitled to the funds. The doctrine of “cy pres” literally allows the court to do the “next best thing” and distribute the remaining funds to one or more charitable organizations. For more information on the Smokeless Tobacco Cases visit www.californiasmokelesstobaccosettlement.com.

Other San Diego County charities and organizations that have received past cy pres awards through the efforts of The Mogin Law Firm include the Vista Community Clinic, Rady Children’s Hospital, Mothers Against Drunk Driving, License to Freedom, Mama’s Kitchen, Meals on Wheels, UCSD Medical School, St Jude Children’s Research Hospital, Center for Employment Training, International Rescue Committee, The Council of Community Clinics, Women’s Resource Center and Legal Aid Society of San Diego.

Based in San Diego, The Mogin Law Firm, P.C. specializes in plaintiffs’ antitrust, consumer protection, investment and complex business and class action litigation. Dan Mogin has handled numerous savings and loan crisis cases and was part of a core group of “pooled claims counsel” for investor cases pooled with the FDIC and the Resolution Trust Corporation cases that resulted in settlements valued at over $2.5 billion from Drexel, Milken, auditors, directors, officers and other professionals. For more information, call 619-687-6611 or visit www.moginlaw.com.

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By DAN MOGIN

Tuesday, September 15, 2009

Editor’s note: This is the second of a two-part series.

The day after the Supreme Court denied review of the Cipro decision, Jon Leibowitz, chair of the FTC, said that stopping collusive “pay-for-delay” settlements would save consumers $3.5 billion a year and also reap significant savings for the federal government, which pays approximately one-third of all prescription drug costs.

Leibowitz urged Congress to pass legislation to ban or restrict such settlements. “From my perspective … the decision about whether to restrict pay-for-delay settlements should be simple,” Leibowitz said. “On the one hand, you have savings to American consumers of $35 billion or more over 10 years – about $12 billion of which would be savings to the federal government – and the prospect of helping to pay for health care reform as well as the ability to set a clear national standard to stop anticompetitive conduct. On the other hand, you have a permissive legal regime that allows competitors to make collusive deals on the backs of consumers.”

A few days later in another part of the Cipro litigation, the DOJ’s Antitrust Division filed an amicus brief in the Second Circuit, asserting that reverse payment settlements presumptively violate the antitrust laws. (Notably, the San Diego Superior Court recently issued a ruling that echoes the district court’s findings at issue in the Second Circuit appeal). The very next day, it was reported that the European Union Competition Commission was investigating pay-for-delay deals believed to have cost EU healthcare providers 3 billion euros ($4.2 billion), between 2000 and 2007.

Thus, the competition agencies appear unanimous in the view that pay-for-delay settlements are unlawful and antithetical to healthcare consumer welfare. Congress too has joined in with the Protecting Consumer Access to Generic Drugs Act presently under consideration. But, the courts continue as the FTC chair says, to “allow competitors to make collusive deals on the backs of consumers.” And other parts of the Administration appear willing to let the art of the health care deal trump the welfare of drug consumers. In fact, turning away from competition is consistent with economic history and was anticipated by the new head of the Antitrust Division, Assistant Attorney General Christine Varney, who reminded us in her maiden speech that the Great Depression led to passage of the National Industrial Recovery Act “that effectively foreclosed competition” and allowed industries to create “codes of fair competition” that set “prices and wages, established production quotas, and imposed restrictions on entry.”

As a result “competition was relegated to the sidelines, as the welfare of firms took priority over the welfare of consumers. It is not surprising that the industrial codes resulted in restricted output, higher prices, and reduced consumer purchasing power.” But during the second Roosevelt Administration, the country saw a revival of antitrust enforcement that became “a cornerstone of the New Deal’s economic agenda and a part of that era’s legacy for modern economic policy.”

Thus, the antitrust chief concluded that economic history teaches, “First, there is no adequate substitute for a competitive market, particularly during times of economic distress.

Second, vigorous antitrust enforcement must play a significant role in the Government’s response to economic crises to ensure that markets remain competitive.”

It was the Supreme Court’s decision in the Schechter Poultry case that struck down the industrial codes which led to FDR’s ill-fated court expansion scheme and the “switch in time that saved nine” decision in West Coast Hotels. There, an earlier Justice Roberts switched his vote to uncharacteristically uphold legislatively enacted economic regulation.

In terms of antitrust, the contemporary Roberts’ Court has imposed stringent threshold pleading requirements (upsetting over 50 years of Supreme Court precedents), restricted circumstantial evidence, made vertical price-fixing or resale price maintenance more difficult to prove and immunized securities and telecomm markets from antitrust liability, contrary to at least 55 years of the court’s jurisprudence that disfavored implied immunities.

Based on the record so far, it could be argued the Supreme Court prefers government regulation to antitrust’s competition mandate and that subsequent healthcare and other economic initiatives of the Obama Administration, including the promise to re-invigorate antitrust may meet a similar fate in the Supreme Court as FDR’s New Deal legislation.

And, just as FDR’s New Dealers vacillated between cooperation and competition, the same debate appears to continue to be waged within the current administration. The Antitrust Division recently lost out to “assisting corporate America in a time of recession and helping larger companies form industry alliances to provide consumer benefits by making their businesses more efficient” and in the financial sector the White House is reported to have “rejected a significant antitrust role as a way to reduce the size of large companies considered too big to be allowed to fail,” prompting the New York Times’ headline, “Antitrust Chief Hits Resistance in Crackdown.”

Given judicial and political resistance and preference for the deal (cooperation), what are the prospects that competition and antitrust will play a significant role in healthcare reform? Like FDR’s New Dealers, we may face a Supreme Court “switch in time” and a competition epiphany before that the rhetoric of free markets becomes a legal reality.
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Mogin is the managing attorney of The Mogin Law Firm in San Diego; teaches antitrust at University of San Diego School of Law; chaired the Antitrust and Unfair Competition Law Section of the State Bar; and co-authored “California Antitrust and Unfair Competition Law.”

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