The second part of a class action lawsuit naming PoolCorp and the “Big 3” manufacturers will move forward partially intact.
“Now it’s a matter of going through the process of them proving their allegations are true and our demonstrating that they’re not,” said PoolCorp CEO Manuel Perez de la Mesa. “We’re very confident ... because we know their allegations are not true.”
In 2011, a group of distributors, dealers and consumers filed a class-action suit against PoolCorp, claiming the Covington, La.-based megadistributor engaged in anticompetitive behavior.
PoolCorp was accused of using its influence to convince manufacturers not to do business with other distributors, especially new firms, and for purchasing competitors only to shut them down. Consumers said the alleged behavior resulted in artificially high prices.
Last year, the plaintiffs added manufacturers Hayward Pool Products of Elizabeth, N.J., Pentair Aquatic Systems of Sanford, N.C., and Zodiac Pool Systems of Vista, Calif. to the case, alleging that they cooperated with PoolCorp.
The plaintiffs were separated into two groups: industry companies, called direct purchasers; and consumers, called indirect purchasers. Each group has its own suit. The defendants filed motions to dismiss both cases, but in April, a judge in the U.S. District Court in eastern Louisiana allowed certain parts of the industry lawsuit to proceed while denying others.
Last month, Judge Sarah S. Vance made a similar decision regarding a motion to dismiss the consumer lawsuit.
The consumer plaintiffs come from four states — Arizona, California, Florida and Missouri. PoolCorp and the Big 3 argued that the claims from all four states should be dismissed, saying the plaintiffs didn’t meet qualifications to seek awards under the anti-trust and consumer-protection laws in the four states. After examining the laws in question, the judge determined that the four parties were, in fact, entitled to seek compensation.
Yet just as in the direct purchaser case, the judge dismissed claims of monopolization, while allowing allegations of attempted monopolization by the Arizona and California plaintiffs. She also halted fraud allegations in the Florida and Missouri suits, in which the consumers said that PoolCorp acted to conceal its alleged behavior. “The complaint lacks any factual allegations which allow the reasonable inference that [PoolCorp] or the manufacturer defendants took affirmative acts to keep their agreements secret or even intended their agreements to be secret,” Judge Vance said.
If she had allowed the fraud claims to move forward, the lawsuits would have been able to go beyond the statute of limitations and cover activity from 2003 to the present. Instead, the case can only apply to the years 2008 to 2012.
All other claims were allowed to move forward.
With the motions to dismiss addressed, the consumer plaintiffs now have the option of asking to submit a revised complaint, which could possibly improve on arguments that the judge found lacking. The industry plaintiffs already filed such a request and are awaiting a decision.
It is generally more difficult for consumer plaintiffs to successfully make their cases than it is for industry plaintiffs. While the dealers only need to prove that the defendants performed the alleged violations, consumers must prove that the resulting price increases were paid by them. Plaintiffs sometimes try to do this by showing that despite artificially high prices from the defendants, dealers managed to maintain their profits perhaps by passing the increases down to the end user.
Discovery on these cases is expected to run through the end of the year, and oral arguments are scheduled for October 2014.