Seventh Circuit Affirms Dismissal of Complaint Against Commercial Metals Alleging a Conspiracy to Reduce the Supply of Steel
September 11, 2018
Dechert advised long-time client Commercial Metals Company in the Seventh Circuit Court of Appeals’ affirmance of the dismissal of a complaint alleging a conspiracy amongst steel producers, including Commercial Metals, to reduce the supply of steel. In a suit brought under the antitrust, consumer protection, or unjust enrichment laws of 48 states, the Court held that the complaint was both time-barred and failed to plead that the alleged conspiracy had proximately caused the plaintiffs’ injuries.
Supreme Auto initially alleged that it was an indirect purchaser of steel tubing and brought a suit on behalf of a class of similarly situated indirect purchasers of “steel products.” Originally it defined “steel products” as manufactured items such as steel plate, tubing, sheet and structural beams. In response to an initial motion to dismiss, Supreme Auto amended its complaint to seek recovery on behalf of a class of indirect purchasers of “steel products” which it then defined as a variety of consumer products such as lawn mowers, automobiles, refrigerators, dishwashers and dryers. Then, rather than basing its own claim on its purchase of steel tubing, Supreme Auto alleged that it had purchased two semi-truck trailers.
In March 2017, the district court granted the defendants’ renewed motion to dismiss, finding that the complaint was time-barred. It also rejected Supreme Auto’s claim that the amended complaint related back to the original complaint, finding that the defendants had not been given notice by the original complaint of the vastly more expansive claims made in the amended complaint due to the revised definition of “steel products.” The Court also held that plaintiffs had not--and could not--allege proximate causation. Steel was only one of several components of the products in question and travelled through a sometimes multi-layer distribution system before being incorporated into the products. It would therefore be impossible to determine what, if any, portion of an alleged price increase in a given consumer product was attributable to the alleged conspiracy. On September 6, 2018, the Seventh Circuit agreed with the district court’s reasoning and affirmed the dismissal.
Antitrust partner Christine Levin led the Dechert team advising Commercial Metals.
This successful decision comes amongst a slew of other victories for Dechert’s antitrust team, including achieving a decisive victory for family-owned Pennsylvania egg producer R. W. Sauder, Inc. in a US$1 billion antitrust class action jury trial in Philadelphia Federal Court in June, and obtaining affirmance of a grant of summary judgment in favor of Curtis Circulation Company in a nearly decade-old case alleging an unlawful conspiracy in the magazine industry in August.
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