Kleen Products filed a lawsuit against International Paper in 2010 claiming “the existence of anti-competitive behavior beginning in August 2005.”
US Supreme Court
The firm alleges certain containerboard firms used a pricing increase strategy within months after jointly attending an industry conference in June 2005, and again after another industry conference that took place in November 2005.
The containerboard producers named in the lawsuit include International Paper, Packaging Corp. of America and Georgia-Pacific.
International Paper makes paper bags, cups and food containers for the food and beverage industry, among others.
Among the containerboard or cardboard buyers that have filed suit is Minnetonka and Minnesota-based concrete cleaning products maker Kleen Products.
According to Reuters, the US Supreme Court class-action lawsuit contends the firms engaged in price fixing activities and the plaintiffs are seeking ‘nearly $12bn in potential damages’.
In its defense, the containerboard producers said “terms of sale are negotiated between buyers and sellers, resulting in widely varying prices and contracts.”
The defendants claim judges have held this is contrary to the notion that collusion can be part of the pricing process.
"We continue to maintain that the allegations are baseless and without merit," said Mark Sutton, chairman/CEO, International Paper.
"However, we have agreed to settle this lawsuit to avoid substantial on-going legal expenses and the inherent risks of a multi-billion-dollar class-action lawsuit."
Dismissal of all claims
If approved by the court, the agreement would resolve disputed claims involving the price of containerboard products purchased directly from International Paper, Temple-Inland and Weyerhaeuser Company by the class members at any time prior to the date of court approval.
Under the terms of the agreement, International Paper will pay $354m into a settlement fund in return for dismissal and release of all claims.
It will record a reserve for the expected settlement, which will result in a pre-tax charge of $354m ($219m, net of tax) in the second quarter of 2017.
"In this complex class-action case, where any award would be tripled and potentially paid by International Paper alone, this settlement avoids the substantial uncertainty of continued involvement with this litigation and a possible adverse jury verdict," the company said in a statement.