Settlement Reached in Class Action Against Packaging Companies

Settlement Reached in Class Action Against Packaging Companies Photo: Grant Blakeman/iStockphoto.com.

Packaging Corporation of America (PCA) has agreed to pay $17.6 million to settle an antitrust class action lawsuit filed against it and eight other North American manufacturers of containerboard that accused them of a conspiracy to fix and raise prices of their U.S. products.

In a motion filed April 16, lead plaintiff Kleen Products asked the U.S. District Court for the Northern District of Illinois to grant preliminary approval of the settlement.

Under terms of the settlement, PCA will pay $17.6 million into a settlement fund in exchange for dismissal and release of all claims of the purported class. The company, based in Lake Forest, Illinois, will also pay up to $100,000 in costs of notice and administration. Read the plaintiff’s motion in Kleen Products LLC et al. v. Packaging Corporation of America, et al. here.

In a statement released by PCA, the company said it will record a reserve for the expected settlement of the agreement in first quarter 2014 results, which will result in an after-tax charge of $11.3 million, or 11 cents per share.

Kleen Products filed the suit in 2010 against PCA and eight other defendants, including International Paper, Georgia Pacific, Temple-Inland Inc. and Weyerhaeuser Co., on behalf of all direct purchasers of containerboard products in the United States. The products, including linerboard and corrugated sheets and boxes, were purchased between Feb. 15, 2004, and Nov. 8, 2010.

Plaintiffs alleged that “defendants engaged in an agreement, combination, or conspiracy to fix, raise, elevate, maintain, or stabilize prices of Containerboard Products sold in the United States.” Plaint’s amended complaint also alleged that the U.S. containerboard industry was susceptible to price fixing and has a history of anticompetitive conduct and acts of concealment.

The defendants have denied these allegations, according to the motion seeking the court’s approval for the settlement.

In a company statement, the PCA continued to deny any wrongdoing, but the company said its board of directors had determined it was in their shareholders’ best interest to settle the lawsuit to avoid substantial legal costs and the uncertainty of the litigation.

In its motion, Kleen Products states that at the time the settlement was reached there had been extensive discovery conducted between the parties including approximately 1.8 million documents produced by defendants and various third parties and reviewed by plaintiffs.

Laura Castro contributes to law.com.

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