A superior court judge has ruled that California residents may now join shop owners as plaintiffs in a class action suit accusing paint manufacturers of conspiring to “fix, maintain or stabilize” the resale price of paint.
On June 17, Judge Ronald M. Sabraw of the Alameda County Superior Court certified Bessen Auto Body et al. vs. PPG, DuPont, Sherwin-Williams, BASF, Akzo Nobel, originally filed on Aug. 15, 2002, as a class action suit (see “Paint companies, distributors subject of California lawsuit,” ABRN, Nov. 2002). Sabraw also declared that both refinishers and their customers were entitled to seek damages from horizontal price fixing allegedly committed by the five paint manufacturers along with seven paint distributors/retailers. California shops and collision-repair customers who purchased paint or received paint services from Jan. 1, 1993 through Dec. 31, 2002 may now sign on as plaintiffs in the case. Plaintiffs are asking the court to issue an injunction against the alleged price fixing and are seeking restitution for any lost monies.
In his decision, Sabraw defined two separate plaintiff classes, a Refinishing class and an End User class. The Refinishing class includes “All persons or entities located in California that purchased liquid automotive refinishing products manufactured by defendants from persons other than defendants…” End Users are comprised of “All persons or entities located in California that purchased applied automotive refinishing products manufactured by defendants from persons other than defendants…” Government entities, along with the defendants, their parents, subsidiaries and affiliates, are excluded from both classes.
This case grew out of a 2001 investigation by the U.S. Department of Justice (DOJ) into alleged price fixing by the paint manufacturers. That investigation closed in 2003 without bringing any charges. However, during its lifespan, a number of price-fixing suits were filed by paint jobbers in state courts across the United States. In 2002, those cases were consolidated in the U.S. District Court for the Eastern District of Pennsylvania. DuPont, BASF and Akzo Nobel eventually agreed to pay a total of $96 million in settlements while denying the allegations in the suits. Sherwin Williams and PPG have yet to settle. In a statement, DuPont declared that it chose to settle as a business decision to avoid paying even more in litigation costs. In press releases, BASF and DuPont both pointed to the results of the DOJ investigation as proof they could have won in trial.
Herman Franck, an operator of a discount paint business who also works as a liaison between shops and one of the legal firms (Blecher and Collins) handling the suit, expects manufacturers to similarly settle this case. He also expects plaintiffs to see little of any settlement money. Refinishing customers, says Franck, will see precious few funds. “Since 1993 there have probably been over one million cars that have been painted in California If you look at what kind of settlement we can expect, that will probably work out to just a couple of dollars per car,” he says.
Franck explains that shops trying to collect on any settlement ironically could end up losing money. He explains, “Shops buy paint every day, so they end up with a huge number of paint invoices. If they start going back through invoices dated back to 1993, they’ll invest about $1,000 in bookkeeping time. Then, they’ll probably end up collecting just $400 or $600. It’s a sad situation.”
Franck adds that, most likely, it will be the lawyers who will see the better part of any money.
The Bessen case is unique because it was filed by indirect purchasers of paint products. Most states do not allow indirect purchasers to sue for damages, owing to the Supreme Court’s 1977 decision in Illinois Brick Co. v. Illinois, which limits the ability of indirect purchasers to recover damages under the Sherman and Clayton Antitrust Acts. A 1978 law added to California’s Business and Professions Code allows the practice.
Franck estimates that nearly 8,000 shops are represented in the class action suit.
