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IN RE LINERBOARD ANTITRUST LITIGATION

April 21, 2004.

IN RE LINERBOARD ANTITRUST LITIGATION; THIS DOCUMENT RELATES TO: All Actions Civil Action Numbers 98-5055 and 99-1341


The opinion of the court was delivered by: JAN DUBOIS, District Judge

MEMORANDUM

I. INTRODUCTION

Presently before the Court is Class Plaintiffs' Motion for Final Approval of the Settlements with Defendants Packaging Corporation of America, Tenneco, Inc., and Tenneco. Packaging, Inc. and with Defendants Stone Container Corporation, Jefferson Smurfit Corporation, and Smurfit Stone Container Corporation (docket no. 328, filed March 22, 2004) ("Motion for Final Approval"). A hearing on the Motion for Final Approval was held on March 26, 2004 ("Fairness Hearing"). For the reasons that follow, the Court grants the Motion and approves the settlement agreements between the classes as certified by the Court and defendants Packaging Corporation of America, Tenneco, Inc., and Tenneco. Packaging, Inc. ("the PCA Settlement") and between the classes as certified by the Court and defendants Stone Container Corporation, Jefferson Smurfit Corporation, and Smurfit Stone Container Corporation ("the Stone Settlement"). II. BACKGROUND

  A. FACTUAL AND PROCEDURAL BACKGROUND

  The Court sets forth only an abbreviated factual and procedural history as pertinent to the Motion for Final Approval. The factual background of the case is described at length in this Court's Memorandum dated October 4, 2000 denying defendants' Motion to Dismiss, its Memorandum dated September 4, 2001 certifying classes of direct purchasers of corrugated boxes and corrugated sheets, and the Opinion of the Court of Appeals for the Third Circuit affirming the September 4, 2001 Memorandum and Order. See In re Linerboard Antitrust Litig., MDL No. 1261, 2000 WL 1475559, at *1-3 (E.D. Pa. Oct. 4, 2000) ("Linerboard I"): In re Linerboard Antitrust Litig., 203 F.R.D. 197, 201-04 (E.D. Pa. 2001) ("Linerboard II"): In re Linerboard Antitrust Litig., 305 F.3d 145, 147-49 (3d Cir. 2002) ("Linerboard III").

  This is an antitrust action involving allegations that a number of U.S. manufacturers of linerboard*fn1 engaged in a continuing combination and conspiracy in unreasonable restraint of trade and commerce in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. The seven lawsuits transferred to this Court for all pretrial proceedings by the Judicial Panel on Multidistrict Litigation on February 12, 1999 were instituted after an administrative complaint filed by the Federal Trade Commission ("FTC") against Stone Container Corporation was resolved by a consent decree. Linerboard I, 2000 WL 1475559, at *1 (setting forth allegations in FTC complaint and details of consent decree). Class Plaintiffs named twelve defendants in their Complaints — Stone Container Corporation, Jefferson Smurfit Corporation, Smurfit-Stone Container Corp., International Paper Company, Georgia-Pacific Corporation, Temple-Inland, Inc., Gaylord Container Corporation, Tenneco, Inc., Tenneco. Packaging, Inc., Union Camp Corporation, Packing Corporation of America and Weyerhaeuser Paper Company — and alleged that they conspired to raise the price of corrugated containers and corrugated sheets throughout the United States by restricting production and/or curtailing inventories in violation of federal antitrust laws.

  By Memorandum and Order dated September 4, 2001, this Court certified the following two plaintiff classes:
Class 1 — Sheet Class
All individuals and entities which purchased corrugated sheets in the United States directly from any of the defendants during the class period from October 1, 1993 through November 30, 1995, excluding the defendants, their co-conspirators, and their respective parents, subsidiaries and affiliates, as well as any government entities, and excluding those individuals and entities which purchased corrugated sheets pursuant to contracts in which the purchase price was not tied to the price of linerboard.
Class 2 — Box Class
 
All individuals and entities which purchased corrugated containers in the United States directly from any of the defendants during the class period from October 1, 1993 through November 30, 1995, excluding the defendants, their co-conspirators, and their respective parents, subsidiaries and affiliates, as well as any government entities, and excluding those individuals and entities which purchased corrugated containers pursuant to contracts in which the purchase price was not tied to the price of linerboard or containerboard.
Linerboard II, 203 F.R.D. at 224. On September 25, 2001, defendants filed a Petition for Leave to Appeal pursuant to Federal Rule of Civil Procedure 23(f)*fn2 in the Court of Appeals. By Order dated December 18, 2001, the Court of Appeals granted that petition. Thereafter, on September 5, 2002, the Court of Appeals affirmed the ruling of this Court. By Order dated October 16, 2002, the Court of Appeals denied defendants' petition for en banc review. On January 14, 2003, defendants filed a Petition for Writ of Certiorari to the United States Supreme Court. The petition was denied on April 21, 2003. See Gaylord Container Corp. v. Garrett Paper, Inc. ___ U.S. ___, 123 S.Ct. 1786 (2003) (No. 02-1070).

  In an Order dated August 26, 2003, this Court approved a partial settlement in the amount of $8 million between Plaintiff Classes and Temple-Inland, Inc. and Gaylord Container Corp. The $8 million settlement was reduced to $7.2 million in accordance with the terms of the settlement agreement based on the number of parties that subsequently opted-out of the classes. This first partial settlement was described by Plaintiff Classes as an "ice-breaker" settlement — a settlement that would lead to further settlements. Within a month of Court approval of the ice-breaker settlement, on September 22, 2003, the Plaintiff Classes and defendants International Paper Company and Union Camp Corporation, Georgia Pacific Corporation, and Weyerhauser Company announced they had reached a settlement agreement in the amount of $68 million. The Court granted final approval of that settlement on December 8, 2003. Prior to that date, in October and November 2003, the parties announced the two additional partial settlements that are the subject of the pending motion — the PCA Settlement in the amount of $43 million and the Stone Settlement in the amount of $92.5 million. As a result of a "most favored nation's clause" in the PCA Settlement Agreement, the terms of the Stone Settlement triggered a reduction in the amount owed by PCA from $43 million to $34 million.*fn3 With the Court's approval of these last two partial settlements, all claims in the class action will be resolved for a total of $202.5 million. In absolute terms, according to a recent survey of all class actions between 1972 and 2003, the total settlements in the Linerboard litigation make it the sixth largest reported antitrust settlement. 24 Class Action Rep. 157, 169-170(2003).

  B. THE SETTLEMENT AGREEMENTS BETWEEN CLASS PLAINTIFFS AND DEFENDANTS PACKAGING CORPORATION OF AMERICA, INC., TENNECO, INC., AND TENNECO PACKAGING, INC. AND WITH DEFENDANTS STONE CONTAINER CORPORATION, JEFFERSON SMURFIT CORPORATION AND SMURFIT STONE CONTAINER CORPORATION.

  Settlement negotiations between the Plaintiff Classes and Defendants Packaging Corporation of America, Tenneco, Inc., and Tenneco. Packaging, Inc. ("PCA Defendants") and settlement negotiations between the Plaintiff Classes and Defendants Stone Container Corporation, Jefferson Smurfit Corporation and Smurfit Stone Container Corporation ("the Stone Defendants") (collectively "Settling Defendants") began shortly after the settlements with Weyerhauser, International Paper, Union Camp and Georgia Pacific were announced. While the negotiations were conducted separately, Class Counsel "adopted a strategy directed towards settling the entire case and viewed both negotiations as part of a single route to a common goal." Declarations in Support of Class Settlements with the Stone and PCA Defendants and in Support of Class Counsels' Petition for Attorneys' Fees and Costs, Declaration of Howard Langer at 58 (docket no. 302, filed February 2, 2004). On October 28, 2003 an agreement was reached between the Plaintiff Classes and the PCA Defendants. On October 29, 2003 an agreement was reached between the Plaintiff Classes and the Stone Defendants.

  Reflecting the fact that both settlements were pursued with the common goal of settling the entire case, Class Counsel and the Settling Defendants submitted both settlements for preliminary and final approval in a single motion. Further, the Court considered both settlements at the Fairness Hearing held on March 26, 2004. Accordingly, this Memorandum will address both settlements.

  The terms of the PCA and Stone Settlements are substantially similar but not identical.*fn4 The principal terms of both settlement agreements are as follows.

  1. Approval of the Agreement and Dismissal of Claims

  The settlement agreements commit the parties to seek Court approval of their respective agreements. PCA Settlement Agreement ¶ 14; Stone Settlement Agreement ¶ 14. The settlement agreements also provide that the parties shall jointly seek entry of a Final Order and Judgment approving the settlement agreements and that the form of order shall include a provision dismissing the action as to the Settling Defendants with prejudice. PCA Settlement Agreement ¶ 16; Stone Settlement Agreement ¶ 15. 2. Releases and Discharge

  Upon final approval of the settlements by the Court, both agreements provide for a release of all claims against Settling Defendants arising out of the causes of action asserted in the case. PCA Settlement Agreement ¶ 18; Stone Settlement Agreement ¶ 17. The claims of the Plaintiff Classes against all of the remaining defendants are specifically excluded from the release. PCA Settlement Agreement ¶ 19; Stone Settlement Agreement ¶ 18.

  3. Settlement Payment

  The PCA Defendants agreed to pay the Plaintiff Classes $43 million, which was deposited into an escrow account. PCA Settlement Agreement ¶ 20. That amount was subsequently reduced to $34 million due to the triggering of "most ...


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