published Friday, August 2nd, 2013

Cleveland's Jackson Furniture joins antitrust suit against 16 foam makers, two in Chattanooga

DEFENDANTS

• Hickory Springs Manufacturing Company

• The Carpenter Company

• Flexible Foam Products

• Scottdel

• FXI-Foamex Innovations

• Future Foam

• Vitafoam Products Canada Limited

• Vitafoam

• British Vita Unlimited

• Mohawk Industries

• Leggett & Platt

• E.R. Carpenter

• Carpenter Holdings

• Woodbridge Sales & Engineering

• Woodbridge Foam Fabricating

• Woodbridge Foam Corporation

Source: Case No. 1:13-cv-00198

A local furniture company has filed suit against 16 manufacturers of polyurethane foam, alleging that the foam manufacturers fixed and inflated prices for flexible polyurethane foam for more than 10 years.

Jackson Furniture, based in Cleveland, Tenn., joins almost 90 other companies nationwide that have sued some of the major players in the polyurethane foam industry after the Department of Justice launched an investigation into the price-fixing allegations in 2010.

The lawsuit, filed by Jackson Furniture in June, alleges that the foam manufacturers kept prices for polyurethane foam — which is often used in vehicle seats or furniture — about 15.2 percent higher than what customers would have paid without the distortion.

Mohawk Industries, based in Calhoun, Ga., and Woodbridge Foam Fabricating, which operates two factories in Chattanooga, were named as defendants in the case.

“The company denies all allegations and will vigorously defend itself,” stated Mohawk’s annual report, filed with the SEC. Neither Woodbridge nor Mohawk returned requests for comment.

Jackson Furniture’s attorney, Greg Revera with Leo Law in Huntsville, Ala., said he’s confident about the case.

“We feel very strong about our claims and that we will ultimately prevail in this litigation,” he said.

The lawsuit alleges that one foam manufacturer, Vitafoam, voluntarily approached the Department of Justice in February 2010 to self-report illegal antitrust activities in order to enter the department’s corporate leniency program.

The Department of Justice’s leniency program allows businesses who report cartel activity to avoid criminal convictions, fines and prison sentences, according to the Department’s website. A Department of Justice spokesperson declined to comment on the investigation.

The foam manufacturers compared prices and determined price increases through phone calls, faxes and emails, the complaint alleges. If one company failed to share its expected price increase, the other companies would threaten and pressure that company, according to the complaint.

“Defendants’ employees also would avoid detection by communicating through fax machines at a local Staples or other store, so that the identification of the sender would be hidden on the fax transmittal,” alleges the complaint.

The numerous plaintiffs include Sealy Corporation and General Motors. Plaintiffs in the case are seeking treble damages.

The entire polyurethane industry generated $19.7 billion in revenues in 2010 and directly employed over 37,000 workers, according to a 2012 report by the American Chemistry Council.

Bob Luedeka, with the Polyurethane Foam Association, said the trade organization has no official comment on the case. But he added that he personally knows some of the business people involved and doesn’t believe the allegations.

“I’ve known them for 30 years,” he said. “And I’d be amazed if anything like this has taken place. Nothing like this has happened before and I don’t see the members of our association doing something like that.”

The cases have been consolidated in the Northern District of Ohio under the name “In Re Polyurethane Foam Antitrust Litigation.”

Contact staff writer Shelly Bradbury at sbradbury@timesfreepress.com or 423-757-6525.

about Shelly Bradbury...

Shelly Bradbury covers police and crime in Chattanooga and Hamilton County for the Times Free Press. She's been with the paper since 2012, working first as an intern and then as a business reporter. She is from Houghton, New York, and graduated from Huntington University in Huntington, Indiana, with a bachelor’s degree in journalism and minor in management. Before moving to Tennessee, Shelly previously interned with The Goshen News, The Sandusky Register and The Mint ...

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