International Paper Co. has agreed to pay $354 million to settle a class action lawsuit accusing it and other containerboard manufacturers of colluding to suppress supply and increase prices. A proposed settlement agreement was filed in an Illinois federal court last month. The settlement came after “extensive” motions to dismiss, a discovery process that included 1.8 million documents and 85 depositions, a Seventh Circuit appeal, and a failed bid by International Paper to have the U.S. Supreme Court overturn the class certification.
Filed in 2010 by floor care products company Kleen Products LLC, Ferraro Foods Inc. and others, the lawsuit alleged that, beginning in 2004, the containerboard manufacturers colluded to suppress supply and increase prices. In its complaint, Kleen alleged that as demand for containerboard rose, the small number of manufacturers in the industry all began suppressing supply at the same time, leading to skyrocketing prices.
In 2014, Packaging Corp. of America agreed to pay $17.6 million to settle and get out of the suit. It also agreed to provide evidence against other containerboard manufacturers.
U.S. District Judge Harry Leinenweber granted class certification in March 2015, ruling that any difference among class members was overcome by the fact that they would likely rely on the same evidence in an attempt to prove they paid more than they would have absent a conspiracy.
In April, the U.S. Supreme Court denied a December 2016 petition by International Paper Co., Weyerhaeuser Co. and Temple-Inland Inc. — later joined by briefs from co-respondents RockTenn CP LLC and Georgia-Pacific LLC — in which the three said the Seventh Circuit wronged them by granting class certification. International Paper’s actual payout under the settlement could still change, according to the proposal, depending on what Georgia-Pacific ends up paying. International Paper’s class share is three times the size of Georgia-Pacific’s, the proposal says. International Paper will only pay three times the amount Georgia-Pacific pays out. So if Georgia-Pacific settles for anything less than $118 million, International Paper’s payout will go down.
On August 1, International Paper will put $165 million into escrow for the class under the settlement proposal. “In addition to a monetary payment, the settlement will provide additional benefits to the members of the class, including cooperation from the settling defendants as provided in the settlement agreement. The class is represented by Michael Freed and Robert J. Wozniak of Freed Kanner London & Millen LLC, and Daniel Mogin and Jodie Williams of MoginRubin LLP. The case is Kleen Products LLC et al. v. International Paper Co. et al., (case number 1:10-cv-05711) in the U.S. District Court for the Northern District of Illinois.