Nexsen Pruet Secures $107 Million Settlement in Textile Price-Fixing Case; Court Rules There was a Cover Up
August 6, 2008
CHARLOTTE, NC – August 4, 2008 – Nexsen Pruet’s Antitrust Practice Group recently settled federal claims against Hoechst Celanese Corporation and its affiliated entities for $107 million in a case involving allegations that the company and other major suppliers of polyester staple fiber had conspired to fix prices and allocate customers.
Nexsen Pruet represented 17 textile and carpet companies in North and South Carolina and Georgia, including Avondale Mills, Burlington Industries, Coats American, Greenwood Mills, Inman Mills, and Mount Vernon Mills. The settlement came shortly before the start of trial on June 2, 2008.
Polyester staple fiber is spun into yarn to make textiles used in a broad range of consumer items, including almost every form of clothing, carpets, curtains, sheets and pillowcases, wall coverings, and upholstery.
As the lead firm in the case, Nexsen Pruet secured $56 million for its clients and another $51 million for clients represented by other firms. Nexsen Pruet had previously settled related lawsuits and claims against four other alleged conspirators — E.I. DuPont de Nemours & Company, Arteva Specialties, Wellman Inc., and Nan Ya Plastics Corporation of America.
Nexsen Pruet filed the lawsuits against Hoechst after a Department of Justice investigation produced a guilty plea against Arteva (also known as KoSa, now INVISTA) in October 2002. That plea came after DuPont and its affiliates — seeking amnesty under the Justice Department’s Leniency Program — had disclosed the price-fixing conspiracy to the department in April 2000.
Arteva pled guilty to fixing prices and allocating customers for the polyester fiber from September 1999 through January 2001. But in a subsequent criminal trial against an ex-employee of Nan Ya, a former Hoechst employee testified that the conspiracy actually began by at least 1995. Nexsen Pruet’s clients filed suit seeking to recover damages dating back to 1995; other firms involved in the case had limited their lawsuits to 1999 and 2000.
“We labored alone on the claims that this conspiracy went back further in time than the Justice Department and other plaintiffs had alleged,” said Nexsen Pruet’s lead lawyer David Eddy. “But the evidence we developed and this settlement confirmed we were right.”
Since 2004 Nexsen Pruet led the case against Hoechst, which by the end of 2005 was the only defendant that had not settled. In addition to establishing evidence of the conspiracy, the Nexsen Pruet’s team of attorneys was able to prove that Hoechst had knowingly sat on hundreds of thousands of pages of relevant documents. Initially, the company had produced only 220 pages of records, claiming all its business documents had been transferred to Arteva/KoSa when its U.S. and Mexican polyester assets were sold to that company.
In June 2006, the court found Hoechst guilty of discovery abuse and allowed Nexsen Pruet to engage in discovery regarding Hoechst’s document production. After Nexsen Pruet deposed six present and former in-house Hoechst lawyers and the lead lawyer at its two outside law firms, Hoechst was forced to admit that it had continually misrepresented the facts about its documents to the court and to plaintiffs since June 2003. On November 16, 2006, U.S. District Judge Richard L. Voorhees found Hoechst guilty of serious discovery abuse and required the company to pay the plaintiffs more than $110,000 for attorneys’ fees and costs incurred on the discovery issue. Hoechst ended up producing more than 750,000 pages of relevant documents that it had claimed for years no longer existed.
The price-fixing case was scheduled for trial before Voorhees on June 2, 2008, but three days before it was to begin, Hoechst settled and agreed to pay $107 million to resolve the claims of the 22 plaintiffs. Nexsen Pruet’s clients obtained approximately $56 million.
“This is the largest settlement in the firm’s history, and an important victory for the companies we represent and the consumers they serve,” said Marguerite Willis, a partner in the firm’s antitrust group.
Leighton Lord, chairman of Nexsen Pruet said, “This victory for our clients is a tribute to our lawyers. Their skill, perseverance, and total commitment were all major factors in the outcome.”
The Nexsen Pruet trial team was led by antitrust attorneys David Eddy and Marguerite Willis and included attorneys: Dennis Lynch, Travis Wheeler and Kristian Cross, and staff members: Marilyn Trevino, Connie Steele, Marie Bowers, and Cindy Hood.
Nexsen Pruet, LLC is one of the largest law firms in the Carolinas, with more than 170 attorneys and offices in Columbia, Charleston, Greenville, Hilton Head, and Myrtle Beach, S.C., and Charlotte and Greensboro, N.C. Founded in 1945, Nexsen Pruet provides a broad range of legal services to the business community and represents companies and other entities in local, state, national, and international venues. For further information, see www.nexsenpruet.com
