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In re Titanium Dioxide Antitrust Litigation

United States District Court, D. Maryland

August 26, 2013

IN RE: TITANIUM DIOXIDE ANTITRUST LITIGATION. THIS DOCUMENT RELATES TO: ALL ACTIONS

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For Haley Paint Company, Plaintiff: Michael C Dell Angelo, LEAD ATTORNEY, PRO HAC VICE, Eric L Cramer, PRO HAC VICE, Matthew P McCahill, PRO HAC VICE, Berger and Montague PC, Philadelphia, PA; Charles Andrew Dirksen, PRO HAC VICE, Solomon B Cera, PRO HAC VICE, Gold Bennett Cera and Sidener LLP, San Francisco, CA; Daniel M Hutchinson, PRO HAC VICE, Eduardo E Santacana, PRO HAC VICE, Eric B Fastiff, PRO HAC VICE, Lieff Cabraser Heimann and Bernstein LLP, San Francisco, CA; Daniel E Seltz, PRO HAC VICE, Steven E Fineman, PRO HAC VICE, Lieff Cabraser Heimann and Bernstein LLP, New York, NY; Joseph Richard Saveri, PRO HAC VICE, Saveri Law Firm, San Francisco, CA; Kendall S Zylstra, PRO HAC VICE, Stephen E Connolly, PRO HAC VICE, Faruqi and Faruqi LLP, Jenkintown, PA; Kevin Bruce Love, PRO HAC VICE, Criden and Love PA, South Miami, FL; Paul Mark Sandler, Robert B Levin, Shapiro Sher Guinot and Sandler, Baltimore, MD.

For Isaac Industries, Inc., on behalf of themselves and all others similarly situated, Plaintiff: Michael C Dell Angelo, LEAD ATTORNEY, PRO HAC VICE, Eric L Cramer, PRO HAC VICE, Matthew P McCahill, PRO HAC VICE, Berger and Montague PC, Philadelphia, PA; Charles Andrew Dirksen, PRO HAC VICE, Solomon B Cera, PRO HAC VICE, Gold Bennett Cera and Sidener LLP, San Francisco, CA; Daniel M Hutchinson, PRO HAC VICE, Eduardo E Santacana, PRO HAC VICE, Eric B Fastiff, PRO HAC VICE, Lieff Cabraser Heimann and Bernstein LLP, San Francisco, CA; Daniel E Seltz, PRO HAC VICE, Steven E Fineman, PRO HAC VICE, Lieff Cabraser Heimann and Bernstein LLP, New York, NY; Paul Mark Sandler, Robert B Levin, Shapiro Sher Guinot and Sandler, Baltimore, MD; John D Radice, PRO HAC VICE, Linda P Nussbaum, PRO HAC VICE, Shelly L Friedland, PRO HAC VICE, Grant and Eisenhofer PA, New York, NY; Joseph Richard Saveri, PRO HAC VICE, Saveri Law Firm, San Francisco, CA; Kendall S Zylstra, PRO HAC VICE, Stephen E Connolly, PRO HAC VICE, Faruqi and Faruqi LLP, Jenkintown, PA; Kevin Bruce Love, PRO HAC VICE, Criden and Love PA, South Miami, FL.

For East Coast Colorants LLC, doing business as Breen Color Concentrates, Intervenor Plaintiff: Renae D Steiner, Vincent J Esades, LEAD ATTORNEYS, PRO HAC VICE, Scott W Carlson, PRO HAC VICE, Heins Mills and Olson PLC, Minneapolis, MN; Kendall S Zylstra, PRO HAC VICE, Stephen E Connolly, PRO HAC VICE, Faruqi and Faruqi LLP, Jenkintown, PA; Michael C Dell Angelo, Berger and Montague PC, Philadelphia, PA; Paul Mark Sandler, Robert B Levin, Shapiro Sher Guinot and Sandler, Baltimore, MD.

For E.I. Dupont De Nemours and Company, Defendant: Jeffrey Blumenfeld, PRO HAC VICE, John Luke Cuddihy, Kent A Gardiner, PRO HAC VICE, Ryan C Tisch, PRO HAC VICE, Shari Ross Lahlou, Crowell and Moring LLP, Washington, DC.

For Huntsman International LLC, Defendant: David B Hamilton, LEAD ATTORNEY, Womble Carlyle Sandridge and Rice PLLC, Baltimore, MD; David T Harvin, PRO HAC VICE, Erica T Krennerich, PRO HAC VICE, James Arthur Reeder, Jr, PRO HAC VICE, Stacey Neumann Vu, PRO HAC VICE, Vinson and Elkins LLP, Houston, TX; Justin T Toth, PRO HAC VICE, Ray Quinney and Nebeker PC, Salt Lake City, UT; Shari Ross Lahlou, Crowell and Moring LLP, Washington, DC.

For Kronos Worldwide Inc., Defendant: Paul Edward Coggins, LEAD ATTORNEY, Kelly Rothermel Vickers, Kiprian Edward Mendrygal, Locke Lord Bissell and Liddell LLP, Dallas, TX; Shari Ross Lahlou, Crowell and Moring LLP, Washington, DC.

For Millennium Inorganic Chemicals, Inc., a Delaware corporation with its principal place of business in Hunt Valley, Baltimore County, Maryland, Defendant: Richard Arthur Ripley, LEAD ATTORNEY, Lauren Ann Perotti, PRO HAC VICE, Nora Lorraine Whitehead, PRO HAC VICE, Haynes and Boone LLP, Washington, DC; Andrew Mercer Treaster, PRO HAC VICE, James L Cooper, PRO HAC VICE, Justin P Hedge, PRO HAC VICE, Robert A Stolworthy, Jr, Ryan Watts, PRO HAC VICE, Arnold and Porter LLP, Washington, DC; Christopher A Rogers, PRO HAC VICE, Haynes and Boone LLP, Dallas, TX; Dimitri J Nionakis, PRO HAC VICE, Susanne M Calabrese, PRO HAC VICE, Howrey LLP, Washington, DC; Shari Ross Lahlou, Crowell and Moring LLP, Washington, DC.

OPINION

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Richard D. Bennett, United States District Judge.

MEMORANDUM OPINION

This class action concerns an alleged price-fixing conspiracy in the market for titanium dioxide. [1] The Plaintiff class representatives Haley Paint Company, Isaac Industries, Inc., and East Coast Colorants, LLC, doing business as Breen Color Concentrates, and the class of titanium dioxide purchasers whom they represent (together, " Plaintiffs" ) claim that Defendants Kronos Worldwide Inc. (" Kronos" ), and Cristal USA Inc., formerly known as Millennium Inorganic Chemicals, Inc. (" Millennium" ), together with E.I. du Pont de Nemours &

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Co. (" DuPont" ), Huntsman International LLC (" Huntsman" ), and Tronox Inc. (" Tronox" ), engaged in an unlawful conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, to fix, raise, or maintain the price of titanium dioxide in the United States. The Plaintiffs allege that as a consequence of the unlawful conspiracy, the Defendants were successful in charging artificially inflated prices for titanium dioxide.

On August 6, 2013, this Court ordered a stay of all proceedings between the Plaintiffs, DuPont, and Huntsman, as those parties have reached agreements in principle to settle and release the class claims against DuPont and Huntsman. See Stay Order, ECF No. 484. In a Memorandum Opinion and Order issued on August 14, 2013 (ECF Nos. 498 & 499), this Court denied the Motions for Summary Judgment filed by Defendants Millennium and Kronos. Presently pending before this Court is the Defendants' Motion to Compel Arbitration and Stay Proceedings, Motion to Dismiss for Improper Venue, Motion to Strike, and Renewed Motion to Amend the Class Definition (ECF No. 423). Defendants Millennium and Kronos argue that approximately 320 members of the class are contractually precluded from participating in this class action. They seek to enforce arbitration clauses, class action and jury trial waivers, and forum selection clauses against the relevant class members. They also ask this Court to amend its definition of the class to exclude any titanium dioxide purchasers whose contracts contain these clauses.

The parties' submissions have been reviewed, and a hearing was held on June 25, 2013. In addition, the Court has reviewed the supplemental memoranda regarding the impact of the DuPont and Huntsman settlements. For the reasons that follow, the Defendants' Motion to Compel Arbitration and Stay Proceedings, Motion to Dismiss for Improper Venue, Motion to Strike, and Renewed Motion to Amend the Class Definition (ECF No. 423) is GRANTED.

BACKGROUND

The facts of this case are fully set forth in the Memorandum Opinion on the Defendants' Motions for Summary Judgment, issued on August 14, 2013 (ECF No. 498). For purposes of this Motion, the Court recites facts pertinent to the issue at hand: whether arbitration clauses, forum selection clauses, and class action and jury waivers entered into by some of the class members may be enforced against them, to the extent that they are precluded from pursuing their claims as part of this class action litigation.

The Plaintiff class representatives, Haley Paint Company, Isaac Industries, and East Coast Colorants, LLC, doing business as Breen Color Concentrates, are small purchasers of titanium dioxide. They bring this case under Section 1 of the Sherman Act, alleging that the Defendants Millennium and Kronos, as well as DuPont, Huntsman, and Tronox, which are the market leaders in the production of titanium dioxide, conspired to fix prices during a period from February 1, 2003 to the present (the " Class Period" ). On February 9, 2010, the Plaintiffs filed suit, and they submitted an Amended Consolidated Complaint (ECF No. 51) on April 12, 2010, initiating this class action lawsuit.

On August 28, 2012, this Court issued a Memorandum Opinion (ECF No. 337) certifying a class of titanium dioxide purchasers who are alleged to have sustained injury when they paid artificially inflated prices for the product. [2] The class is currently defined as follows:

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All persons and entities who purchased titanium dioxide in the United States directly from one or more Defendants or Tronox, or from any predecessors, parents, subsidiaries, or affiliates thereof, between February 1, 2003, and the present (" Class Period" ). Excluded from the Class are Defendants, their coconspirators, parent companies, predecessors, subsidiaries and affiliates, and all governmental entities.

In their opposition to class certification, the four original Defendants argued that some putative class members purchased titanium dioxide pursuant to contracts containing mandatory arbitration clauses, forum selection clauses, and class action and jury trial waivers, all of which would contractually bar them from participating in this class action. See Class Cert. Mem. Op. 40. Though these contractual provisions did not defeat class certification, this Court left open the possibility of a later amendment to the class certification Order if certain members' contracts rendered them atypical of the class. Id.

On November 2, 2012, the four original Defendants moved to amend the class definition (ECF No. 351). They asserted that the class should be defined to exclude any putative class members who would be contractually precluded from participation in this class action litigation. In a Memorandum Opinion and Order of November 27, 2012 (ECF Nos. 366 & 367), this Court denied the motion as not yet ripe for review. Specifically, this Court found that a determination regarding whether mandatory contractual provisions would be enforceable against putative class members should await the expiration of the class opt-out period, when the parties to this action would be known. See Nov. Mot. Amend Class Def. Mem. Op. 6-7.

On March 18, 2013, the Court-appointed Notice Administrator reported that after eleven persons properly opted out of the class, the final class was composed of 537 unique entities. See Sherwood Decl., ECF No. 403. With that information, the remaining Defendants Millennium and Kronos have moved this Court to enforce the contractual provisions that they argue bar some 320 class members from participating in this class action. They specifically request that this Court (1) order the class members with claims subject to an arbitration clause to proceed, if at all, in arbitration; (2) dismiss the claims of class members whose purchases were subject to mandatory forum selection provisions that render this Court an improper forum; and (3) strike the jury trial demands of class members that have contractually waived their rights to a jury trial. The clauses asserted by the Defendants are described herein.

DuPont: Approximately 215 titanium dioxide purchasers of DuPont signed contracts with mandatory arbitration clauses, class action waiver clauses, or forum selection clauses. See Defs.' Ex. 3, ECF No. 460-2; Daney Decl. & DuPont Exs. 1-58, ECF No. 426 & 426-1 through 426-58. Some of these contractual clauses were individually negotiated. See Daney Decl. ¶ 4 (listing thirty-one DuPont customers who agreed to formal written contracts containing an arbitration clause); id. ¶ 17 (naming twenty-nine DuPont customers who signed class action waivers as part of formal written agreements); id. ¶ 19 (identifying twelve DuPont customers with forum selection clauses in their contracts). The majority of the clauses, however, are

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part of DuPont's Standard Conditions of Sale, which as of March 2007 include a mandatory arbitration clause and class action waiver. [3] See id. ¶ ¶ 15, 17 (identifying 180 DuPont customers who agreed to the arbitration provision and class action waiver in DuPont's revised Standard Conditions of Sale).

Huntsman: Approximately 109 Huntsman customers signed contracts containing forum selection clauses, jury waivers, or arbitration clauses. See Defs. Ex. 3; Quinn Decl. & Huntsman Exs., ECF No. 427 & 427-1 through 427-40. Many of Huntsman's supply agreements contain a set of " General Terms and Conditions," including a jury waiver for " any action, suit or proceeding arising out of or relating to" the agreement. See Quinn Decl. ¶ 5; Huntsman Exs. 1-5. Some supply agreements also provide that the parties " irrevocably submit to the exclusive jurisdiction" of courts other than this Court--to wit, the United States District Court for the Southern District of Texas; the Texas State District Courts of Harris County, Texas; the United States District Court for the District of Delaware; or the state Chancery Court in Wilmington, Delaware. See id. All in all, twenty-five supply agreements contain these clauses. Id. Moreover, nine of Huntsman's distributors agreed to waive their right to trial by jury and submit to the exclusive jurisdiction of the District Court for the Southern District of Texas or State District Courts in Harris County, Texas. See Quinn Decl. ¶ 6; Huntsman Exs. 26-34.

Huntsman also sold titanium dioxide to the Guild CPO, Inc. (" the Guild CPO" ), an organization made up of paint and coatings manufacturers and providing cooperative purchasing services for its members. See Quinn Decl. ¶ 7. A total of eighty-three Guild CPO members agreed to waive " any right it may have to a trial by jury" and " irrevocably submit to the exclusive jurisdiction" of the Southern District of Texas and the Texas state courts of Harris County. See id. ¶ 8.

Finally, Huntsman and titanium dioxide customer GAF agreed pursuant to their contract that " [a]ny controversy or claim arising from or relating to this Agreement shall be settled by final and binding arbitration by a single arbitrator." See id. ¶ 9; Huntsman Ex. 38.

Kronos: Approximately nine Kronos customers entered into contracts for the purchase of titanium dioxide that included jury waivers, mandatory arbitration clauses, or forum selection provisions. See Defs.' Ex. 3; Sanzalone Decl. & Kronos Exs. 1-21, ECF No. 428 & 428-1 through 428-21. Though Kronos's standard supply agreements do not contain these clauses, customers sometimes request that they be included. See Sanzalone Decl. ¶ 5 (identifying seven Kronos customers with arbitration clauses in their contracts); id. ¶ 7 (listing two Kronos customers who agreed

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to jury waiver provisions); id. ¶ 9 (identifying three Kronos customers whose contracts contain forum selection clauses).

Millennium: Finally, an estimated seven entities who purchased titanium dioxide from Millennium agreed to mandatory arbitration provisions or forum selection clauses. See Defs.' Ex. 3; Clover Decl., ECF No. 425 & Millennium Exs., ECF No. 425 & 425-1 through 425-7. For example, some Millennium contracts provide that all disputes between the parties should be arbitrated at The Hague, Netherlands, see Millennium Exs. 1-2, or in Baltimore, Maryland, see Millennium Ex. 7. Millennium's contract with customer Weyerhauser Company includes a forum selection clause requiring claims to be litigated in the State of Washington. See Millennium Ex. 6.

In addition to asserting the subject contractual clauses against the 320 identified current class members, [4] the Defendants have renewed their Motion to Amend Class Definition. They argue that the class is overly broad and improperly certified under Rule 23 of the Federal Rules of Civil Procedure for two reasons. First, they assert that the claims of class members that cannot proceed in this class action litigation are atypical, and the class representatives cannot adequately represent these members. See Fed.R.Civ.P. 23(a)(3)-(4). Moreover, the Defendants contend that questions affecting individual class members now predominate over the common questions, such that Rule 23(b) is no longer satisfied. See Fed.R.Civ.P. 23(b)(3). To cure these Rule 23 deficiencies, the Defendants propose that the current class definition be amended as follows:

All persons and entities who purchased titanium dioxide in the United States directly from one or more Defendants or Tronox, or from any predecessors, parents, subsidiaries, or affiliates thereof, between February 1, 2003, and the present (" Class Period" ), except those persons and entities who purchased titanium dioxide in the United States directly from one or more Defendants or Tronox, or from any predecessors, parents, subsidiaries, or affiliates thereof, during the Class Period pursuant to a contract containing one or more of the following: (i) an arbitration clause, (ii) a clause restricting the litigation of disputes to courts other than the U.S. District Court for the District of Maryland, (iii) a class action waiver clause, or (iv) a provision waiving the right to a jury trial. Also excluded from the Class are Defendants, their coconspirators, parent companies, predecessors, subsidiaries and affiliates, and all governmental entities.

Defs.' Renewed Mot. to Amend Class Def. Mem. 4, ECF No. 424-2 (emphasis on proposed amendment added).

For the reasons stated below, the Defendants' Motion to Compel Arbitration and Stay Proceedings, Motion to Dismiss for Improper Venue, Motion to Strike Jury Trial Demand, and Renewed Motion to ...


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