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A class action antitrust suit against the leading manufacturers of corrugated paper products has resulted in more than $202 million in settlements — the largest ever in a price-fixing case in the Eastern District of Pennsylvania — now that a federal judge has granted final approval of the final two settlements. In his 27-page opinion in In re: Linerboard Antitrust Litigation, Senior U.S. District Judge Jan E. DuBois concluded that the final two settlements — $92.5 million paid by Smurfit-Stone Container Corp. and $34 million paid by Packaging Corporation of America and Tenneco Inc. — were “fair, adequate and reasonable.” DuBois had previously approved a $68 million settlement by three defendants — Weyerhaeuser Co., International Paper Co. and Georgia-Pacific Corp. — and an “icebreaker” settlement of $8 million by defendants Temple-Inland Inc. and Gaylord Container Corp. Although the two final settlements effectively end the class action, a significant portion of the litigation will continue because some of the biggest purchasers “opted out” of the class action to pursue their own lawsuits. Among the companies that opted out of the class action are Proctor & Gamble Co., Kellogg Co., Sara Lee Corp., Coca-Cola Co., Colgate-Palmolive Co., General Mills Inc. and Hallmark Cards Inc. Still sitting on DuBois’ desk is a petition from the team of plaintiffs’ lawyers led by attorney Howard I. Langer of Langer & Grogan asking for attorney fees equal to 30 percent of the fund, or more than $60.7 million, for the 51,910 hours they logged on the case.And those fees could swell significantly because DuBois has also ruled that the opt-out plaintiffs must set aside a portion of any settlement or judgment they win to compensate the class action team for the work they did during the first four years of the litigation. Langer led a team that included attorneys from four Philadelphia firms — Robert LaRocca of Kohn Swift & Graf, Eugene A. Spector of Spector Roseman & Kodroff, Roberta D. Liebenberg and Donald L. Perelman of Fine Kaplan & Black, and Martin I. Twersky of Berger & Montague, along with Michael Freed of Much Shelist Freed Denenberg Ament & Rubenstein in Chicago; Joseph Goldberg of Freedman Boyd Daniels Hollander Goldberg & Cline in Albuquerque, N.M.; and W. Joseph Bruckner of Lockridge Grindal Nauen in Minneapolis. In an affidavit supporting the fee petition, Langer said the case “was prosecuted by a relatively small group of attorneys who assumed an unusual proportion of risk.” None of the defendants proposed early settlement, Langer said, and the case “proceeded through four years of litigation without serious settlement discussions.” Urging DuBois to approve a 30 percent fee, Langer wrote: “No attorney analyzing this case at the outset would have anticipated that it would have resulted in the largest antitrust class action settlement ever to have been achieved in the [3rd] Circuit.” The settlements, worth more than $202 million, were “achieved in a case in which only 60 percent of the market participants were parties defendant, where there was no prior government proceeding against the defendants establishing liability or even charging the conspiracy alleged in this case, and for classes covering a relatively short conspiracy period of just 26 months,” Langer said. The settlements will also be “paid entirely in cash,” Langer said, and the sum “represents close to 50 percent of the overcharge alleged and in excess of 50 percent of the overcharge for the period of the alleged conspiracy falling within the statute of limitations.” The plaintiffs in the class action consisted of two classes of purchasers — those who purchased corrugated containers directly from the defendants and those who purchased corrugated sheets. The defendants are manufacturers of “linerboard,” a term that refers to any grade of paperboard suitable for use in the production of corrugated sheets, which are in turn used in the manufacture of corrugated boxes and for a variety of industrial and commercial applications. Corrugated sheets are made by gluing a fluted sheet, known as the corrugating medium, between facing sheets of linerboard. In the suit, the plaintiffs allege that even though demand for linerboard was strong and rising from 1989 to 1992, the manufacturers’ prices for linerboard had fallen. The suit alleged that the linerboard manufacturers attempted to increase prices during 1991, 1992 and the first half of 1993 but that the price increase announcement did not “stick,” and, therefore, the manufacturers had to rescind the increases. At that point, the suit alleged, Roger Stone, the president of Stone Container Corp., the largest of the manufacturers, masterminded a twofold plan among his competitors to lower the industry inventory to a five-week supply. In the first step of Stone’s alleged plan, the manufacturers would close their mills for “market downtime,” thereby reducing industry inventory at mills and box plants. Stone then planned to purchase inventory from other manufacturers while idling his own mills, the suit said. The suit alleged that Stone conducted a telephone survey of his competitors and coordinated the industrywide downtime, agreeing to have his company purchase a significant volume of linerboard from its competitors rather than meet the requirements from its own production. Stone shut down six of its mills during the following months, the suit said. The plan allegedly worked for a time. By October 1993, the linerboard manufacturers had concerted their actions and had lowered total inventories to the desired level of less than a five-week supply. The suit said that inventory reached “a 20-year low” and that the manufacturers successfully increased their prices for containerboard and boxes for the first time in more than two years. Each manufacturer allegedly raised its container prices by an identical amount, the suit said, and linerboard prices in the Eastern United States rose in six consecutive escalations from a low of about $270 to $290 per ton in the third quarter of 1993 to $530 per ton by April 1995. In Wednesday’s ruling, DuBois applied the so-called “ Girsh factors” — named after the 3rd Circuit’s 1975 decision in Girsh v. Jepson — to decide whether the final two settlements were “fair, adequate and reasonable.” On the first factor — the complexity and duration of the litigation — DuBois found that the case “is now in its sixth year and were it to go to trial could go on for any number of years.” None of the class members objected to either settlement, DuBois noted, a fact that “strongly militates a finding that the settlement is fair and reasonable.” The settlements were reached after “extensive informal discovery and discovery on class issues, and near completion of formal discovery,” DuBois noted, and the negotiations involved face-to-face meetings and telephone conferences. “The court concludes that the parties conducted adequate investigation and discovery to gain an appreciation and understanding of the relative strengths and weaknesses of the claims and defenses asserted,” DuBois wrote. But DuBois also found that the plaintiffs faced significant risks if they had proceeded to trial since the defense would have argued that economic forces — and not illegal collusion — had prevented them from meeting the increased demand. As a result, DuBois found that the Girsh factor that looks to risk also weighed in favor of approving the settlements.

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