The U.S. Court of Appeals for the Third Circuit on Wednesday denied Valspar Corp.’s request for an en banc rehearing of a decision to toss a $176 million antitrust lawsuit accusing DuPont of conspiring to fix the price of a paint ingredient.
Judge Thomas Hardiman said in a one-page order that the court declined to revisit a split decision from October affirming a lower court’s ruling that Valspar failed to prove the Wilmington-based chemical giant engaged in a scheme with competitors to fix the price of titanium dioxide.
Attorneys for Valspar had petitioned for a rehearing before the whole court, saying the opinion ”eviscerates” antitrust protections by establishing an “unprecedented summary judgment standard for plaintiffs trying to prove a price-fixing conspiracy” in the appeals court.
In its filing, Valspar keyed into the Oct. 2 dissent of Judge Lawrence F. Stengel, who criticized the majority’s ruling that plaintiffs in oligopoly cases must show the alleged conspiracy is “more likely than not” to have occurred. Stengel, the chief judge for the Eastern District of Pennsylvania, was sitting by designation on the three-member panel.
Valspar, a Minnesota-based paint manufacturer, filed suit in Delaware federal court in 2013.
In its complaint, Valspar said DuPont used secret communications with three rivals to control the price of titanium dioxide, causing Valspar to overpay for the chemical by $176 million. The company pointed to 31 parallel price-increase announcements between 2002 and 2013, claiming the defendants used the public statements to quietly gauge each other’s willingness to raise prices.
But the highly concentrated nature of the U.S. titanium dioxide market figured prominently in Judge Richard G. Andrews’ February 2016 decision to grant summary judgment to DuPont. In that type of market, known as an oligopoly, legal and illegal behavior can be hard to distinguish, and Valspar could not show the alleged conspirators were not operating independently, Andrews said.
Andrews noted that Valspar had to show the existence of “plus factors,” particularly evidence implying an “actual, manifest agreement” to defeat DuPont’s motion.
“These parallel price increases, or ‘signals,’ would perhaps describe how a conspiracy practically functioned, but only if there were some indication of an agreement to begin with, rather than conduct that could just as well be explained by independent action. In short, nothing about these announcements tends to exclude the possibility of independent action.”
Hardiman and fellow Third Circuit Judge Cheryl Ann Krause affirmed Andrews’ ruling on the same basis, sparking a petition by Valspar and amicus the American Antitrust Institute that the entire court reconsider the “virtually impossible” summary judgment standard it set.
But Hardiman said Wednesday there was no majority consensus that the case should be reheard.
Attorneys for both sides were not available to comment Thursday.
Valspar was represented by James M. Lockhart, James P. McCarthy and Kathryn E. Wendt of Lindquist & Vennum and Frederick L. Cottrell III, Jason J. Rawnsley and Chad M. Shandler of Richards, Layton & Finger.
DuPont was represented by Shari R. Lahlou, Randa Adra, Clifton S. Elgarten and Benjamin C. Wastler of Crowell & Moring and Kathleen F. McDonough and John A. Sensing of Potter Anderson & Corroon.
The case is captioned Valspar v. DuPont.