In re Corrugated Container Antitrust Litigation

80 F.R.D. 244, 26 Fed. R. Serv. 2d 955, 1978 U.S. Dist. LEXIS 15705
CourtDistrict Court, S.D. Texas
DecidedSeptember 6, 1978
DocketMDL No. 310
StatusPublished
Cited by46 cases

This text of 80 F.R.D. 244 (In re Corrugated Container Antitrust Litigation) is published on Counsel Stack Legal Research, covering District Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Corrugated Container Antitrust Litigation, 80 F.R.D. 244, 26 Fed. R. Serv. 2d 955, 1978 U.S. Dist. LEXIS 15705 (S.D. Tex. 1978).

Opinion

MEMORANDUM AND ORDER

SINGLETON, District Judge.

This litigation is comprised of fifty-two private treble damage actions consolidated for pretrial purposes by the Judicial Panel for Multidistrict Litigation under 28 U.S.C. § 1407 and transferred to this court November 29, 1977. The complaints allege that the defendants, thirty-seven manufacturers of corrugated sheets and containers and the Fibre Box Association, engaged from at least 1960 until January, 1978, in a conspiracy to fix, raise, maintain and stabilize the prices of corrugated sheets and corrugated containers.

Before the court is the joint motion of most of the plaintiffs in these consolidated cases1 for certification of these actions as a class action. The class which plaintiffs seek to represent is that of all persons in the United States (excluding defendants and all subsidiaries and affiliates of defendants and all independent corrugated box manufacturers) who purchased corrugated containers or corrugated sheets from any defendant, or any subsidiary or affiliate of any defendant, at any time during the period from January 1, 1960 to January 25, 1978. The court has considered the motion, the supporting and opposing briefs, and the numerous affidavits and exhibits submitted by all parties, and is of the opinion that these cases are suitable for class treatment for the reasons discussed herein.

I. NECESSITY FOR CLASS DISCOVERY AND EVIDENTIARY HEARING

Initially, defendants contend that under the case law of the Fifth Circuit the court must await extensive discovery and hold an evidentiary hearing before it can certify a class in these cases. Plaintiffs have had the benefit since mid-May of the documents which each defendant submitted to the Houston grand jury that investigated the corrugated container industry and returned two indictments against certain companies and individuals. They have not sought any further discovery on the class question. Defendants have sought very extensive discovery on the question which would be both expensive and time-consuming and which would not, in this court’s opinion, add to the defendants’ or the court’s information on the crucial points. Instead the court invited the parties, and they agreed, to submit any and all affidavits they desired the court to consider concerning the market structure, pricing process, and other aspects of the corrugated container industry. Defendants’ primary contention is that the corrugated container industry is too diverse in its structure, products, and pricing procedures to be suitable for class treatment. This contention will be discussed at length later in this opinion. It suffices for the moment to say that information on these points is readily available to the defendants without the expensive discovery they sought, and that it can be and has been made available to the court through affidavits without the necessity for in-court testimony. Plaintiffs have also submitted many exhibits and affidavits indicating their proposed methods of proof in these cases. The court finds that further discovery is unnecessary in these cases, as there is ample evidence already in the record as to each of the requirements for class certification under Rule 23, Federal Rules of Civil Procedure.

II. THE CORRUGATED CONTAINER INDUSTRY

A brief sketch of the corrugated container industry will be helpful here. This [246]*246sketch is drawn from the voluminous material submitted by all counsel and from the court’s experience gained in the pretrial procedures in the two cases being brought by the United States against many members of the corrugated container industry, Criminal Nos. H-78-11 and H-78-12. An exhaustive picture of the industry is presented in United States v. Container Corp. of America, 273 F.Supp. 18 (M.D.N.C.1967); much of that information about the industry is apparently still correct today.

Corrugated containerboard is made by gluing a fluted sheet, the corrugating medium, between liners of flat paper facing. Containerboard may be single-wall, with one fluted sheet and two liners (by far the most common type); double-wall, with two fluted sheets between three liners; or triple-wall, with three fluted sheets between four liners. In the manufacture of corrugated containers, containerboard is cut, scored, creased, and printed. Joints are fastened by taping, gluing, or stitching with wire. Generally corrugated containers are manufactured in many sizes and shapes, are frequently printed to the customer’s specifications, and may have any of numerous special features such as waterproofing, ventilating holes, handholes, and so forth. There are some common stock items, but many corrugated containers are specially adapted for the purchaser. In spite of the fact that one purchaser’s cardboard box may not be suitable for another purchaser’s needs, when made to the same specifications the box of one manufacturer is virtually identical to that of another manufacturer. A small percentage of boxes are beyond the manufacturing capacity of most defendants because they require some specialized equipment.

Corrugated containers are made by three types of manufacturers. “Integrated manufacturers” make the liners and the corrugating medium, as well as making containerboard and corrugated containers. Almost all of the defendants are integrated manufacturers. “Independent manufacturers” are those who do not make the liners or corrugating medium but purchase these items from integrated manufacturers and then assemble them into containerboard and containers. At least one defendant, Potlatch Corporation, is an independent manufacturer. Finally there are sheet plants, which purchase containerboard already made by integrated or independent manufacturers and fashion it into corrugated containers. Sheet plants are members of the class plaintiffs seek to represent. .

Corrugated sheets and boxes are relatively bulky and inexpensive to make. Since shipping costs are therefore high in relation to the cost of manufacture, they tend to be made and sold in small geographical areas, the common radius of customers for a manufacturer being under 200 miles. Costs of labor, paper, energy, etc., vary from one area to another, so that the final cost of the same box may vary from one part of the country to another. They are also relatively costly to store and are commonly bought on a short-term basis, a customer often having more than one supplier of the same box.

The corrugated container industry is concentrated. Figures cited to the court for 1975 reveal that although the defendants in these cases constituted less than five per cent of the firms manufacturing corrugated containers, they accounted for seventy-two per cent of the dollar volume of sales. Almost all the defendants maintain more than one corrugated container plant; many of them have plants scattered throughout the country. Pricing is commonly done at the plant level, with apparent supervision at the national level for at least some companies. In spite of this local pricing practice, there have been numerous instances documented in the industry’s trade publications where company-wide price increases of a fixed percentage were announced. At least some of the defendants publish pricing manuals and/or price lists for stock items which are used throughout the country. Many of the defendants handle certain [247]

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Bluebook (online)
80 F.R.D. 244, 26 Fed. R. Serv. 2d 955, 1978 U.S. Dist. LEXIS 15705, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-corrugated-container-antitrust-litigation-txsd-1978.