Zodiac Pool Systems is settling in an anti-trust lawsuit.
The Vista, Calif., manufacturer proposed an almost $4 million settlement with pool companies and consumers in the anti-trust litigation.
“We quite simply wanted to avoid expensive and protracted litigation,” said Zodiac Managing Director Troy Franzen. “We deny allegations of any wrongdoing. We just felt that it was in the best interest of our company to settle so we can get back to the business at hand, on a day-to-day basis, of servicing our customers.”
Zodiac was named in the case along with mega-distributor PoolCorp of Covington, La., and the other “Big Three” manufacturers — Hayward Industries of Elizabeth, N.J.; and Pentair Aquatic Systems of Sanford, N.C.
Vista, Calif.-based Zodiac is the second to settle. Hayward is awaiting court approval of the $8 million settlement agreement it proposed in June.
The firms were accused of violating the Sherman Antitrust Act, which prohibits activities that restrain trade or commerce. Plaintiffs also claimed PoolCorp violated the section of the law prohibiting monopolies.
The suit originally was filed in 2011, shortly after the conclusion of a 1½-year investigation of PoolCorp by the Federal Trade Commission. At first, the distributor was the sole defendant. It was accused of using its Preferred Vendor program to motivate, or even intimidate, manufacturers to withhold business from other distributors, along with other anti-competitive behavior.
The following year, the Big Three manufacturers were added to the lawsuit. Plaintiffs said the companies conspired with PoolCorp by agreeing to its terms.
Two sets of plaintiffs are involved — one including pool and spa firms; the other consisting of consumers. If approved, Zodiac’s settlement will mean a $3.45 million payout to affected industry entities that purchased from the company between Nov. 22, 2007 and Nov. 21, 2011. Of that amount, up to $1.15 million may be used to cover attorneys’ fees and other court-related costs.
The consumers are set to receive $500,000, Franzen said. That group is still finalizing settlement paperwork for the court.
The settlement cannot be used in court to imply guilt by Zodiac or the other parties. Zodiac continues to maintain its innocence. “PoolCorp resolved the FTC’s investigation without admitting any wrongdoing, and neither Zodiac nor any other pool product manufacturer was accused of any wrongdoing by the FTC,” the company stated in a press release.
The company went on further to describe as predictable the filing of the class action lawsuits following the FTC investigation.
Court documents stated that Zodiac had negotiated more than a year to reach the settlement. The decision to settle was a pragmatic one, Franzen said. “This will remove distractions from our business,” he said. “We want to get back to doing what we do best, and that’s servicing our customers and providing good-quality pool products, and we want to move forward.”
In the meantime, other important filings have taken place in the litigation:
- The consumer group of plaintiffs has embarked on an important part of class-action litigation. They have officially filed for class certification. If granted, this would allow the named plaintiffs to serve as representatives for an entire class of consumers, rather than just themselves. For the group to qualify, the plaintiffs must prove that there are enough people in the group to justify this kind of litigation; they have enough in common to proceed as one party; they have all been affected by the defendants’ alleged behavior in the same way; and they can all be identified and notified through some mechanism. For this case, only consumers from California, Arizona, Florida and Missouri are included because they have consumer-protection laws in place that cover the behavior of which the defendants are accused.
- PoolCorp has filed for summary judgment on the accusations of attempted monopolization. The distributor said the plaintiffs had not adequately made a case that there was a dangerous probability that it would monopolize the relevant markets, that the alleged behavior had an impact on competition and that there was a causal link between the alleged activities and the damages sought by both sets of plaintiffs.
- PoolCorp and Pentair also jointly filed for summary judgment on claims of a conspiracy between the two companies. In this filing, the defendants said the plaintiffs did not provide evidence of an agreement between the two, that Pentair’s Preferred Vendor Agreement with PoolCorp did not prevent competition from other distributors, and that the plaintiffs did not provide evidence that certain events they claim occurred affected competition. PoolCorp filed individual summary judgments on similar conspiracy claims against it and the two settling manufacturers.