DuPont Still on the Hook in Antitrust Case

     SAN JOSE (CN) – A federal judge dismissed claims that a Saudi company helped corner the market on titanium dioxide, the primary coloring agent in white paint, but upheld most claims against DuPont and other U.S. companies.
     Hardware and home improvement stores, including two Ace Hardware branded stores, filed a class action again E.I. DuPont De Nemours and Co., Huntsman International, Kronos Worldwide, and Millennium Inorganic Chemical, in March 2103.
     The indirect purchasers added Cristal Arabia in an October 2014 second amended complaint.
     There is an enormous worldwide market for titanium dioxide, 80 percent of which is used in paints and varnishes. China controls about half the worldwide market, according to industry reports. At September 2014 prices of 14,350 renminbi per ton, when the renminbi was trading at 6 to the dollar, China’s share came to about $7.5 billion a year.
     “Titanium dioxide traps and reflects light better than almost any known substance,” the retailers say in their complaint. “(T)here are no viable white pigment competitive substitutes.”
     The defendants sought dismissal in November 2014.
     Cristal Arabia claimed lack of jurisdiction and insufficient service of process. The U.S. defendants made a joint motion to dismiss for lack of Article III standing and failure to state a claim, and also filed a motion to strike the class allegations.
     U.S. District Judge Beth Labson Freeman on Tuesday granted Cristal’s motion based on lack of personal jurisdiction and terminated at moot its motion based on insufficient service.
     The purchaser/retailers claimed that Cristal’s contacts with its U.S. subsidiary, Millennium, and its own contacts with the United States are enough to assert jurisdiction, but Freeman disagreed.
     She said the plaintiffs did not help themselves in their burden to establish a prima facie case showing Millennium as Cristal’s alter ego by “blurring” the lines between the two companies.
     “With respect to control of pricing, contracts and expenditures, the court notes that much of the evidence proffered by plaintiffs refers to pricing controls and other actions by ‘Cristal Global’ rather than Cristal Arabia,” the judge wrote in a 57-page order.
     “However, even if the court were to accept the proffered documents as evidence that Cristal Arabia set the titanium dioxide price increases for all Cristal entities, and required approval for certain contracts and business expenses, that evidence does not suggest that Millennium ‘functions as merely the incorporated department of its parent.’
     “This court … concludes that, even viewing the record as a whole and giving plaintiffs the benefit of the doubt as to conflicting evidence and inferences, plaintiffs have not made out a prima facie case of alter ego or agency.”
     Freeman also rejected the claim of jurisdiction based on Cristal’s direct contacts in the United States. But she granted the U.S. defendants’ motion to dismiss based on lack of Article III standing.
     “Plaintiffs alleged facts sufficient to make out a claim that defendants conspired to and did artificially inflate the price of titanium dioxide, but plaintiffs have not alleged facts showing that the resulting overcharges to manufacturers of architectural coatings were passed down the thousands of distribution chains at issue to plaintiffs,” Freeman wrote.
     She granted the plaintiffs leave to amend, finding they may be able to uncover a trail of overcharges.
     “The court notes that based upon the allegations in the SAC, it is likely that plaintiffs could successfully allege Article III standing with respect to the market for architectural paint,” she said.
     Freeman partially granted the defendants’ motion to dismiss for failure to state a claim. Specifically, she granted the motion in relation to state antitrust claims with leave to amend the claims brought under Iowa, Nebraska, New Mexico and New York law for lack of antitrust standing.
     She also granted the motion in relations to state consumer protection law and the Sherman Act, with leave to amend, and granted the motion relating to state unjust enrichment laws, without leave to amend, for the claims under Florida, Kansas and Kentucky law.
     Freeman denied the motion to dismiss in all other regards, and denied the defendants’ motion to strike the class allegations.
     She set a Sept. 15 deadline for any amended pleading.

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