Opinion
CIVIL ACTION NO. 3:21-CV-309-KHJ-LGI
2022-05-13
DAVID B. TURNER BUILDERS LLC, et al., Plaintiffs v. WEYERHAEUSER COMPANY, et al., Defendants
Abby Gale Robinson, Abby Robinson Law Firm, PLLC, Jackson, MS, for Plaintiffs David B. Turner Builders LLC, New England Construction LLC. Christopher Emrich Ondeck, Pro Hac Vice, Stephen R. Chuk, Pro Hac Vice, Proskauer Rose, LLP, Washington, DC, Joshua J. Metcalf, Chelsea C. Lewis, Forman Watkins & Krutz, LLP, Jackson, MS, for Defendant Weyerhaeuser Company. Deena B. Klaber, Pro Hac Vice, Joseph R. Rose, Pro Hac Vice, Rachel Susan Brass, Pro Hac Vice, Gibson, Dunn & Crutcher, LLP, San Francisco, CA, Adam Stone, Jones Walker, LLP, Jackson, MS, Corey D. Hinshaw, Watkins & Eager, PLLC, Jackson, MS, for Defendant West Fraser, Inc. Craig A. Stanfield, Pro Hac Vice, King & Spalding, LLP, Houston, TX, Erik T. Koons, Pro Hac Vice, Jana I. Seidl, Pro Hac Vice, Baker Botts, LLP, Washington, DC, La'Toyia J. Slay, P. Ryan Beckett, Butler Snow LLP, Ridgeland, MS, for Defendant GP Wood Products LLC. Jack Robinson Dodson, III, K&L Gates, LLP, Nashville, TN, for Defendant Sierra Pacific Industries. Evan R. Kreiner, Pro Hac Vice, Karen Hoffman Lent, Pro Hac Vice, Matthew M. Martino, Pro Hac Vice, Skadden, Arps, Slate, Meagher & Flom, LLC, New York, NY, Adam Stone, Kaytie M. Pickett, Jones Walker, LLP, Jackson, MS, for Defendant Interfor Company. David A. Maas, Pro Hac Vice, Davis Wright Tremaine, LLP, Seattle, WA, R. David Kaufman, Martin Patrick McDowell, Brunini, Grantham, Grower & Hewes, PLLC, Jackson, MS, for Defendant Idaho Forest Group. Adam V. Griffin, Maynard Cooper & Gale, PC, Birmingham, AL, Adam Stone, Jones Walker, LLP, Jackson, MS, William C. Brabec, Adams and Reese, LLP, Ridgeland, MS, for Defendant PotlatchDeltic Land & Lumber, LLC. Chadwick M. Welch, Heidelberg Patterson Welch Wright, PLLC, Ridgeland, MS, for Defendant RSG Forest Products. Charles Howard Samel, PHV, Stoel Rives, LLP, San Francisco, CA, Emily C. Atmore, Pro Hac Vice, Stoel Rives, LLP, Minneapolis, MN, Simon T. Bailey, John Alexander Purvis, Bradley Arant Boult Cummings, LLP, Jackson, MS, for Defendant Hampton Tree Farms, LLC. Carl Stanley Burkhalter, Pro Hac Vice, Harold William Bloom, III, Pro Hac Vice, Maynard, Cooper & Gale, PC, Birmingham, AL, Adam Stone, Jones Walker, LLP, Jackson, MS, Evan N. Parrott, Maynard, Cooper & Gale, PC, Mobile, AL, for Defendant Canfor Corporation.
Abby Gale Robinson, Abby Robinson Law Firm, PLLC, Jackson, MS, for Plaintiffs David B. Turner Builders LLC, New England Construction LLC.
Christopher Emrich Ondeck, Pro Hac Vice, Stephen R. Chuk, Pro Hac Vice, Proskauer Rose, LLP, Washington, DC, Joshua J. Metcalf, Chelsea C. Lewis, Forman Watkins & Krutz, LLP, Jackson, MS, for Defendant Weyerhaeuser Company.
Deena B. Klaber, Pro Hac Vice, Joseph R. Rose, Pro Hac Vice, Rachel Susan Brass, Pro Hac Vice, Gibson, Dunn & Crutcher, LLP, San Francisco, CA, Adam Stone, Jones Walker, LLP, Jackson, MS, Corey D. Hinshaw, Watkins & Eager, PLLC, Jackson, MS, for Defendant West Fraser, Inc.
Craig A. Stanfield, Pro Hac Vice, King & Spalding, LLP, Houston, TX, Erik T. Koons, Pro Hac Vice, Jana I. Seidl, Pro Hac Vice, Baker Botts, LLP, Washington, DC, La'Toyia J. Slay, P. Ryan Beckett, Butler Snow LLP, Ridgeland, MS, for Defendant GP Wood Products LLC.
Jack Robinson Dodson, III, K&L Gates, LLP, Nashville, TN, for Defendant Sierra Pacific Industries.
Evan R. Kreiner, Pro Hac Vice, Karen Hoffman Lent, Pro Hac Vice, Matthew M. Martino, Pro Hac Vice, Skadden, Arps, Slate, Meagher & Flom, LLC, New York, NY, Adam Stone, Kaytie M. Pickett, Jones Walker, LLP, Jackson, MS, for Defendant Interfor Company.
David A. Maas, Pro Hac Vice, Davis Wright Tremaine, LLP, Seattle, WA, R. David Kaufman, Martin Patrick McDowell, Brunini, Grantham, Grower & Hewes, PLLC, Jackson, MS, for Defendant Idaho Forest Group.
Adam V. Griffin, Maynard Cooper & Gale, PC, Birmingham, AL, Adam Stone, Jones Walker, LLP, Jackson, MS, William C. Brabec, Adams and Reese, LLP, Ridgeland, MS, for Defendant PotlatchDeltic Land & Lumber, LLC.
Chadwick M. Welch, Heidelberg Patterson Welch Wright, PLLC, Ridgeland, MS, for Defendant RSG Forest Products.
Charles Howard Samel, PHV, Stoel Rives, LLP, San Francisco, CA, Emily C. Atmore, Pro Hac Vice, Stoel Rives, LLP, Minneapolis, MN, Simon T. Bailey, John Alexander Purvis, Bradley Arant Boult Cummings, LLP, Jackson, MS, for Defendant Hampton Tree Farms, LLC.
Carl Stanley Burkhalter, Pro Hac Vice, Harold William Bloom, III, Pro Hac Vice, Maynard, Cooper & Gale, PC, Birmingham, AL, Adam Stone, Jones Walker, LLP, Jackson, MS, Evan N. Parrott, Maynard, Cooper & Gale, PC, Mobile, AL, for Defendant Canfor Corporation.
ORDER
Kristi H. Johnson, UNITED STATES DISTRICT JUDGE
This matter is before the Court on Defendants GP Wood Products LLC ("Georgia Pacific"), Canfor Corporation ("Canfor"), Hampton Tree Farms, LLC ("Hampton"), Idaho Forest Group ("Idaho Forest"), Interfor Corporation ("Interfor"), PotlatchDeltic Land & Lumber, LLC ("PotlatchDeltic"), RSG Forest Products, Inc. ("RSG Forest"), Sierra Pacific Industries ("Sierra Pacific"), West Fraser, Inc. ("West Fraser"), and Weyerhaeuser Company's ("Weyerhaeuser") (collectively "Defendants") Joint Motion to Dismiss the Second Amended Complaint [96]. For the following reasons, the Court grants the motion with prejudice.
I. Facts and Procedural History
Plaintiffs David B. Turner Builders LLC and New England Construction LLC (collectively "Plaintiffs") operate construction companies that buy and use lumber to construct homes and buildings. Pl.’s Second Amend. Compl. [92] ¶ 13. Defendants are ten lumber manufacturers. Def.’s Mem. in Supp. of Mot. to Dismiss [97] at 3. Plaintiffs sued Defendants, alleging violation of several federal and state laws. [92] at 1–2. Plaintiffs assert "the price of lumber had more than tripled the usual market price" in November 2020. Id. ¶ 13. Plaintiffs also claim "the top 10 manufacturers of lumber ... conspired to increase lumber prices over 100 percent during the COVID-19 pandemic." Id. ¶ 15. According to Plaintiffs, Defendants suddenly increased their price of lumber by 400 percent within the same period. Id. ¶ 24.
Plaintiffs assert three counts: Count I alleges violations of Section 1 and 2 of the Sherman Act, the Robinson-Patman Act, Section 7 of the Clayton Act, Section 1983 conspiracy to monopolize in the lumber market, and the Hart-Scott-Rodino Antitrust Improvements Act; Count II alleges various state law claims, including predatory pricing, price fixing, conspiracy in price gouging, negligence in business fair trading, misrepresentation, business interference, breach of contract, intentional infliction of emotional distress, and negligent infliction of emotional distress; and Count III alleges intentional infliction of emotional distress. Id. at 29–30.
In ruling on Defendants’ first Motion to Dismiss Plaintiffs’ First Amended Complaint pursuant to FRCP 12(b)(6), this Court concluded that Plaintiffs inadequately pleaded each of their claims and allowed Plaintiffs to amend their complaint to cure the defects. See Order [91]. Defendants now move to dismiss the Second Amended Complaint pursuant to FRCP 12(b)(6). [56].
II. Standard
In reviewing a motion under FRCP 12(b)(6), "the central issue is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief." Doe v. MySpace, Inc. , 528 F.3d 413, 418 (5th Cir. 2008) (quoting Hughes v. The Tobacco Inst., Inc. , 278 F.3d 417, 420 (5th Cir. 2001) (alteration omitted)). A valid claim for relief contains "sufficient factual matter, accepted as true," giving the claim "facial plausibility" and allowing "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). The plausibility standard does not ask for a probability of unlawful conduct but does require more than a "sheer possibility." Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements" do not satisfy a plaintiff's pleading burden. Id. (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).
III. Analysis
a. Federal Law Claims
Plaintiffs allege unfair monopolization, joint monopolization, and conspiracy to monopolize in violation of Section 1 and 2 of the Sherman Act, the Robinson-Patman Act, Section 7 of the Clayton Act, the Hart-Scott-Rodino Antitrust Improvements Act, and Section 1983 conspiracy to monopolize in the lumber market. See [92] at 29. For the reasons stated below, the Court dismisses each of these claims.
First, Defendants move to dismiss Plaintiffs’ federal antitrust claims because Plaintiffs are barred from recovering under such claims as indirect purchasers. [97] at 13. Plaintiffs counter that they are not barred as indirect purchasers because they "were directly affected" by higher prices resulting from the alleged antitrust violations. Pl.’s Mem. in Opp. to Mot. to Dismiss [99] at 31. The Court disagrees.
Indirect purchasers cannot recover federal antitrust damages. Illinois Brick Co. v. Illinois , 431 U.S. 720, 746, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977) ; see also Summit Off. Park, Inc. v. U.S. Steel Corp. , 639 F.2d 1278, 1282–93 (5th Cir. 1981) (affirming dismissal because Illinois Brick barred plaintiff—an indirect purchaser of materials—from asserting federal antitrust claims against defendants). As Defendants correctly assert, the Second Amended Complaint shows that Plaintiffs have not made any direct purchases from any Defendant, meaning they are at most indirect purchasers. See [97] at 13–14. Consequently, Plaintiffs’ antitrust claims are dismissed.
Second, even if Plaintiffs had a right to recover antitrust damages, each of Plaintiffs’ federal claims is still dismissed for the reasons below.
i. Section 1 of the Sherman Act
Section 1 of the Sherman Act prohibits contracts, combinations, and conspiracies which unreasonably restrain trade. 15 U.S.C. § 1. To establish a violation of Section 1, a " ‘plaintiff must prove (1) the existence of an agreement (2) which unreasonably restrains trade (3) to the damage of the plaintiff.’ " J.T. Gibbons, Inc. v. Crawford Fitting Co. , 704 F.2d 787, 791 (5th Cir. 1983) (quoting Abadir & Co. v. First Miss. Corp. , 651 F.2d 422, 424 (5th Cir. 1981) ).
Defendants move to dismiss Plaintiffs’ claim under Section 1 of the Sherman Act because the Second Amended Complaint fails to allege sufficient facts to establish the existence of an agreement or conspiracy between Defendants. See [97] at 6–10. Plaintiffs contend they show an agreement or "concerted action" through both direct and circumstantial evidence and that Defendants’ motion should thus be denied. [99] ¶ 11–12.
Plaintiffs’ Second Amended Complaint alleges that Defendants must have engaged in a price fixing conspiracy because they raised prices on general lumber products at the same time. See [92] at ¶ 15 ("upon information and belief Plaintiffs discovered that the top 10 manufacturers of lumber just one day conspired with each other to increase lumber prices over 100 percent during the COVID-19 pandemic."). Plaintiffs, however, do not provide any facts about the alleged price-fixing conspiracy, nor do they allege that an agreement or conspiracy was formed to unreasonably restrain trade in the lumber market. See Marucci Sports, L.L.C. v. Nat'l Collegiate Athletic Ass'n , 751 F.3d 368, 375 (5th Cir. 2014) ("The pivotal question [of a Section 1 claim] is whether the concerted action was a result of an agreement between [Defendants] to unreasonably restrain trade."); see also Larry R. George Sales Co. v. Cool Attic Corp. , 587 F.2d 266, 273 (5th Cir. 1979) ("A general allegation of conspiracy, ... without a statement of the facts constituting the conspiracy, is a mere allegation of a legal conclusion and is inadequate of itself to state a cause of action.").
Plaintiffs merely point to Defendants’ parallel conduct of raising lumber prices at the same time to show the existence of an agreement or conspiracy; such a general allegation is insufficient to plead a Section 1 claim. See United States v. Simmons , 374 F.3d 313, 320 (5th Cir. 2004) ("parallel prices and practices alone do not establish a Sherman Act violation") (emphasis removed); Abraham & Veneklasen Joint Venture v. Am. Quarter Horse Ass'n , 776 F.3d 321, 327 (5th Cir. 2015) (" Section 1 is only concerned with concerted conduct among separate economic actors rather than their independent or merely parallel action."); Futurevision Cable Sys. Of Wiggins, Inc. v. Multivision Cable TV Corp. , 789 F. Supp. 760, 772 (S.D. Miss. 1992) (dismissing Section 1 claims, concluding that the complaint's conspiracy allegations were "not grounded in well-pleaded facts," as they "merely allege[d] parallel conduct").
Because Plaintiffs specify no details of the Defendants’ alleged agreement or conspiracy to restrict trade in the lumber market, Plaintiffs do not state a plausible claim under Section 1 of the Sherman Act. Accordingly, this claim is dismissed.
ii. Section 2 of the Sherman Act
Section 2 of the Sherman Act prohibits monopolization, attempts to monopolize, and conspiracies to monopolize. 15 U.S.C. § 2. The elements of a monopolization claim are "(1) possession of monopoly power in the relevant market; (2) willful acquisition or maintenance of that power; and (3) causal ‘antitrust’ injury." Multivision Cable TV Corp. , 789 F. Supp. at 776 (citations omitted). Further, to establish a conspiracy to monopolize claim, a plaintiff must prove "(1) the existence of a combination or conspiracy; (2) an overt act in furtherance of a conspiracy; (3) a substantial amount of commerce affected; and (4) specific intent to monopolize." Id. at 777.
As stated above, Plaintiffs’ Second Amended Complaint fails to adequately plead a conspiracy or agreement between Defendants. See Corr Wireless Comms., L.L.C. v. AT&T, Inc. , 893 F. Supp. 2d 789, 810 (N.D. Miss. 2012) (dismissing Section 2 conspiracy to monopolize claim "[b]ecause a conspiracy to monopolize claim requires joint action"). As a result, Plaintiffs do not adequately plead a claim for conspiracy to monopolize under Section 2 of the Sherman Act.
The Court next turns to Plaintiffs’ Section 2 monopolization claim. Defendants contend the claim fails because "Plaintiffs do not allege Defendants’ market share or any facts to plausibly suggest they have monopoly power." Reply Mem. in Support of Def.’s Joint Mot. to Dismiss [101] at 7. Plaintiffs proffer they have established that "Defendant[s] are the movers, shakers, developers, creators and controllers of the Lumber Commodity [in Jackson and Madison, Mississippi,] according to the Dow Jones Market Report." [99] at 29.
Assuming Plaintiffs identified the relevant market as the lumber market in "the geographical area of the State of Mississippi towns of Jackson and Madison," id. , Plaintiffs have failed to plausibly allege that Defendants have monopoly power in that market. Plaintiffs broadly allege that Defendants possess "direct control to decide[,] make, and create the price of ... lumber," [92] ¶ 19, and that Defendants "accounted for just over half of all U.S. production capacity in 2020." Id. ¶ 33. Yet Plaintiffs produce no authority to establish that United States production capacity is an accurate measure of Defendants’ market share in the relevant market, Jackson and Madison, Mississippi.
These conclusory statements are not enough to state a claim of monopolization in violation of the federal antitrust laws. Accordingly, Plaintiffs’ claim under Section 2 of the Sherman Act is dismissed. iii. Section 7 of the Clayton Act
Section 7 of the Clayton Act prohibits any merger or acquisition where the effect of the transaction "may be substantially to lessen competition, or to tend to create a monopoly." 15 U.S.C. § 18. To state a claim under Section 7, a complaint must define the relevant market and demonstrate the probability of anticompetitive results flowing from the challenged merger or acquisition. See Domed Stadium Hotel, Inc. v. Holiday Inns, Inc. , 732 F.2d 480, 491–92 (5th Cir. 1984) (citing United States v. General Dynamics Corp. , 415 U.S. 486, 505, 94 S.Ct. 1186, 39 L.Ed.2d 530 (1974) ). A Section 7 plaintiff can make a prima facie showing of probable anticompetitive impact in one of two ways: (1) by showing that the size of the entities involved "makes them inherently suspect in light of Congress’ design to prevent undue [economic] concentration," thereby resulting in a "significant" increase in market share and an "undue" market concentration; or (2) by showing that other characteristics of the market make the merger or acquisition more economically harmful than the bare market share and market concentration statistics otherwise indicate. Domed Stadium Hotel, Inc. , 732 F.2d at 492 (quoting United States v. Philadelphia Nat. Bank , 374 U.S. 321, 363, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963) ).
Defendants assert that Plaintiffs failed to adequately plead facts in the Second Amended Complaint showing Defendants engaged in a transaction that substantially lessened competition or tended to create a monopoly. [97] at 11. The Court agrees.
As stated above, Plaintiffs appear to identify the relevant market as the lumber market in "the geographical area of the State of Mississippi towns of Jackson and Madison." [99] ¶ 41. And Plaintiffs allege Defendants violated Section 7 of the Clayton Act when "Defendant Interfor Acquired [4] SawMills from Georgia Pacific." [92] ¶ 46. Plaintiffs broadly insist this demonstrates that "the same actors, the top 10 lumber producers, [are] merely swapping saw mills in an effort to perpetrate their scheme of controlling and directing the prices of lumber." Id. The Second Amended Complaint, however, does not provide any facts to plausibly suggest the probability of anticompetitive results flowing from this acquisition of four sawmills between two defendants. Because Plaintiffs fail to plead an adequate showing of probable anticompetitive impact in one of the two ways listed above, their claim under Section 7 of the Clayton Act is dismissed.
iv. Robinson-Patman Act
The Robinson-Patman Act, also known as the Price Discrimination Act, prohibits entities from discriminating in pricing. 15 U.S.C. § 13. To succeed on a price discrimination claim under the Act, a plaintiff must show "discrimination between purchasers," in which "there must be actual sales at two different prices to two different actual buyers." Jones v. Metzger Dairies, Inc. , 334 F.2d 919, 924 (5th Cir. 1964) (collecting cases).
Plaintiffs do not allege facts sufficient to support a claim under the Act. Plaintiffs’ sole attempt to articulate a violation of the Act falls well short of the pleading requirements. See [92] ¶ 46 ("Here, Plaintiffs have demonstrated that the dealing between the Defendants is a showing of their controlling the market and that such control and dominance is prohibited under the Robinson-Patman Act."). The Second Amended Complaint does not demonstrate that Defendants ever discriminated between buyers by selling supplies at different prices. Accordingly, Plaintiffs’ claim under the Robinson-Patman Act is dismissed. v. Hart-Scott-Rodino Antitrust Improvement Act
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSRA"), requires entities to file premerger notifications with the federal government when certain mergers or acquisitions exceed jurisdictional thresholds. 15 U.S.C. § 18a. The HSRA does not provide a private right of action. See id. § 18a(g)(1) ("Such penalty may be recovered in a civil action brought by the United States."); see also Koppers Co. v. Am. Exp. Co. , 689 F. Supp. 1371, 1405 (W.D. Pa. 1988) ("there is no private right of action under the [HSRA]"). Thus, Plaintiffs’ claim under the HSRA is dismissed.
vi. Section 1983 Conspiracy
To state a claim under 42 U.S.C. § 1983, a plaintiff must allege that (1) he or she has "been deprived of a right ‘secured by the Constitution and the laws’ of the United States" and (2) the deprivation was caused by a defendant "acting under color of" state law. Flagg Bros. v. Brooks , 436 U.S. 149, 155-56, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978) ; 42 U.S.C. § 1983. The Second Amended Complaint contains no allegation that Plaintiffs were deprived of any right as a result of state action or that Defendants acted under the color of state law. See [97] at 17. Therefore, Plaintiffs’ 1983 conspiracy to monopolize claim is dismissed. See Priester v. Lowndes Cty. , 354 F.3d 414, 420 (5th Cir. 2004) (dismissing Section 1983 claim for lack of state action; there were no allegations that a private "citizen conspired with or acted in concert with state actors").
b. State Law Claims
Defendants also move to dismiss Plaintiffs’ state antitrust claims and their remaining state law claims. Plaintiffs have failed to meet the necessary requirements to state a claim for relief. Once again, the Second Amended Complaint merely lists the state law claims without the elements or factual allegations to support each element. See Jones v. United States Postal Serv. , 690 F. Appx 147, 149 (5th Cir. 2017) (affirming dismissal where the plaintiff failed to "explicitly provide[ ] the legal theory" to underpin his claim). The Second Amended Complaint does not provide Defendants with adequate notice of the "grounds upon which [the claims] rest." See Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Accordingly, Plaintiffs’ state law claims lack facial plausibility because the Court cannot draw any "reasonable inferences" that Defendants are liable for the misconduct alleged.
This is especially the case for Plaintiffs’ misrepresentation and conspiracy state law claims, which require Plaintiffs to plead with particularity under FRCP 9. See, e.g., Poppelreiter v. GMAC Mortg., LLC , No. 1:11CV008-A-S, 2011 WL 2690165, at *5 (N.D. Miss. July 11, 2011) (an intentional misrepresentation claim must satisfy the "particularity requirements of Rule 9(b), which include the "who, what, when, and where" of any alleged misrepresentation); see also Williams v. WMX Techs., Inc. , 112 F.3d 175, 177–78 (5th Cir. 1997) (noting requirement to show who made the statement, where and when it was made, and why it was fraudulent). Therefore, Plaintiffs’ state law claims against Defendants also do not satisfy the pleading requirements and are dismissed.
IV. Conclusion
The Court has considered all arguments. Those not addressed would not have changed the outcome. For these reasons, Defendants’ Joint Motion to Dismiss [96] is GRANTED. Plaintiffs’ claims are DISMISSED WITH PREJUDICE. SO ORDERED AND ADJUDGED this the 13th day of May, 2022.