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Paint-pigment makers agree to pay $164M

Four companies accused of conspiring to inflate and fix the price of a paint additive have settled the class-action lawsuit against them for $164 million.

About a third of the settlement, or $54.5 million, will go to attorneys’ fees, according to documents that were approved in December in U.S. District Court by Judge Richard D. Bennett.

The defendant companies include Millennium Inorganic Chemicals Inc., a Hunt Valley-based company purchased in 2007 by Cristal Global and now operating as Cristal USA Inc.

Class members have until the end of January to submit a claim, according to Solomon B. Cera, a San Francisco-based lawyer whose firm filed the class action almost four years ago. Cera estimated there are as many as 600 class members, most of which are paint companies. They include all purchasers of titanium dioxide from the four defendant companies since Feb. 1, 2003.

A weeks-long trial in the case was scheduled to begin in Baltimore last September, before Texas-based Kronos Worldwide Inc. became the final defendant to agree to settle, Cera said. E.I. du Pont De Nemours & Co., of Wilmington, Del., and Salt Lake City-based Huntsman International LLC were the other two defendant companies.

Paul Mark Sandler of Shapiro Sher Guinot & Sandler in Baltimore was set to lead the plaintiffs’ litigation team in Baltimore’s federal court.

“I would have rather tried the case, but it was not in the best interests of the clients,” said Sandler.

Under the settlement, DuPont will pay $72 million, Cristal will pay $50 million, Kronos will pay $35 million and Huntsman will pay $6.5 million.

The lawsuit, filed in February 2010, alleges the defendants violated the federal Sherman Act by conspiring to fix the price of titanium dioxide, a white pigment that affects paint’s brightness and opaqueness. The four defendants controlled approximately 70 percent of the world’s titanium dioxide and “formed a cartel” to control its price, according to the lawsuit.

Cera said his firm researched the case for 18 months before filing suit.

“It was a very risky case, although we always felt we were on to something and had evidence to support our claim,” he said.

The plaintiffs alleged in court filings the titanium dioxide market was plunging in the 1990s, with the per-ton price dropping from $3,200 to $1,900 during the course of the decade. Those economic woes forced Millennium to close its plant in Baltimore in 2001.

Concerned about the sharp drop in price, the Titanium Dioxide Manufacturers Association — a European group that already included Millennium, Huntsman and Kronos — changed its rules to permit non-European manufacturers to join. That opened the door to DuPont, a leading seller.

TDMA also formed a Global Statistics Program for the sharing of sales data that — in a non-collusive marketplace — would be deemed proprietary, the plaintiffs claimed.

After a Jan. 24, 2002, TDMA meeting, the four companies announced increases of 5 cents per pound in the price of titanium dioxide within days of each other. These parallel price increases continued multiple times in each succeeding year through September 2008, the plaintiffs allege.

The defendants argued they were competitors, not conspirers. Millennium and Kronos, in court filings, cited many instances during the 2000s when the companies tried to undercut one another’s prices. They cited summer 2005 as an example, when DuPont had to close a Mississippi plant due to damage from Hurricane Katrina and the other three companies moved in to supply DuPont’s clients.

Bennett, the judge overseeing the case, granted class certification to the plaintiffs in August 2012 and denied Millennium and Kronos’ motions for summary judgment last August.

James L. Cooper and Charles A. Malloy, lawyers for Millennium, did not return calls seeking comment. Cooper and Malloy are partners at Arnold & Porter LLP in Washington.

HALEY PAINT COMPANY, ET AL V. KRONOS WORLDWIDE, INC.

Court:

U.S. District Court, Baltimore

Case No.:

1:10-cv-00318-RDB

Judge:

Richard D. Bennett

Outcome:

$163.5 million from defendants ($72M from DuPont, $50M from Cristal, $35M from Kronos, $6.5M from Huntsman)

Dates:

Event: March 2002 to September 2008

Suit filed: Feb. 9, 2010

Settlement order: Dec. 13, 2013

Plaintiffs’ Attorneys:

Solomon B. Cera of Gold Bennett Cera & Sidener LLP in San Francisco, Paul Mark Sandler of Shapiro Sher Guinot & Sandler in Baltimore

Defendants’ Attorneys:

James L. Cooper and Charles A. Malloy of Arnold & Porter LLP in Washington, D.C. for Millennium Inorganic Chemicals Inc.

Count:

Price-fixing in violation of the Sherman Act