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In re Domestic Drywall Antitrust Litigation

United States District Court, E.D. Pennsylvania

May 10, 2018

USG Corp., et al., Defendants. THIS DOCUMENT RELATES TO: Ashton Woods Holdings LLC, et al., Plaintiffs,


          Baylson, J.

         Competing motions filed by Plaintiffs (large Homebuilders) and Defendants (drywall manufacturers) concerning discovery over injury and damages have been filed (Civil Action 15-1712 - ECF 287 and ECF 290). The Court has read the briefs submitted by the parties. The attachments stretch almost 12 inches in height and have been reviewed selectively.

         As a background for these motions, the Court held a hearing on October 19, 2017 for the purpose of adjudicating a number of discovery disputes in this case, principally over the fact of injury and damages. Extensive discovery had already taken place concerning general background and liability, but did not preclude discovery of evidence relevant on injury and/or damages. Because of the disputed discovery about injury and damages, the Court determined to require contention statements to be filed by Plaintiffs, followed by at least one, and up to three, depositions of “representatives” of each plaintiff, and then followed by Defendants' contention statements. See detailed Corrected and Amended Pretrial Order (ECF264) dated November 13, 2017.

         As paragraph 11 of the Order stated, the Court realized there were “lingering disputes about production of documents and the Court will require that these issues be resolved promptly.” The Court set a specific schedule and then in the last sentence stated: “In other words, the Court will not consider any future complaints about document discovery or ESI, unless presented for decision as required.”[1]

         The Court intends to follow this deadline. A number of the depositions attached as exhibits to the motion to compel were taken during calendar year 2017. Any disputes arising out of 2017 correspondence or deposition testimony, necessarily reflect document requests made prior to the November 13, 2017 Order, but no motion to compel was filed until April 5, 2018.

         It is possible that some disputes arose as a result of depositions of Plaintiffs' representatives were taken within 14 days of April 5, 2018, on which date Plaintiffs filed their motion to compel. These may be renewed. Otherwise, the motion is not timely.


         An important backdrop to this dispute is that discovery on liability has long ago been completed in this case. An important part of an antitrust case is the Plaintiffs' burden of proving the “fact of injury” - that the illegal conduct resulted in damages, and providing discovery relevant on the amount of damages claimed.

         The Court's decisions on the Direct Purchaser class action will help put this discovery dispute in context of the overall case. There is no dispute that the selling price of drywall increased in the damages period. In the proceedings leading up to this Court's decision to certify a Direct Purchaser class action, there were substantial disputes between the parties over whether the fact of injury could be proven on a class wide basis. Defendants had put forward substantial facts, supported by expert testimony, that other factors in the drywall business had caused the price increases, principally an increase in demand, such that injury could not be proven on a class wide basis. The Court had extensive hearings, including the testimony of the competing experts, and a so-called “hot tub” where both experts sat in the jury box and were examined by counsel and the Court. The Court appointed an independent “economic consultant” who reviewed the various expert reports and wrote his own opinion on the issue. Eventually, the Court determined that there was substantial evidence that the price increases may have been caused by an increase in demand as well as an agreement to fix prices, but that this would not bar the ability of a class to prove the fact of injury on class wide basis.

         Plaintiff does not have the burden of proving that an agreement to fix prices is the sole cause of a price increase. Under settled law, Plaintiffs only need to prove that the illegal agreement is a “substantial” or a “material” cause of a price increase, even though a jury could conclude that there may be other reasons for the increase. Thus, when the case reaches the trial stage, the parties will undoubtedly put on competing evidence as to what caused price increases to the Homebuilder Plaintiffs. The Plaintiffs will have evidence, from the liability phase of this case, from which a jury may conclude there was an agreement. Defendants assert there is other evidence as well, including facts that may show that the Homebuilders “passed on” the price of drywall to their home buying customers, that demand increased, and possibly that their own costs increased. There may be other economic factors present in the Homebuilder cases that were not present in the Direct Purchaser class action case.

         There may still be some fact issues as to whether the Homebuilders were Direct Purchasers or Indirect Purchasers, or a combination of both, depending from whom they purchased drywall.


         This discovery dispute must be put in the context of the overall case, that there is a great deal of data already produced by both parties, about the economics, distribution factors, costs, transportation, etc. that go into the final price of a home to a customer. What is the overall normal or range of percentage of the cost of drywall to the total cost of building a home, or the overall retail price of the home? This may be relevant and is surely a legitimate issue in these Homebuilder cases.

         Among the attachments to the various motions are detailed expert reports on these topics. Upcoming expert depositions may ...

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