Masonite, Jeld-Wen Hit with Class Action Over Alleged Interior Molded Doors Price Fixing [UPDATE]
Last Updated on March 3, 2021
Grubb Lumber Company, Inc. v. Masonite Corporation et al
Filed: October 19, 2018 ◆§ 3:18cv718
A lawsuit claims Masonite and Jeld-Wen have colluded to fix prices and suppress competition in the market for interior molded doors and doorskins.
Virginia
Case Updates
March 3, 2021 – Direct, Indirect Interior Molded Door Buyers Net $81 Million Price-Fixing Settlement
Direct and indirect purchasers of interior doors made by Jeld-Wen and Masonite have secured preliminary approval for separate settlements totaling $81 million after a federal judge urged the parties to rehash negotiations last year.
The revised deal, split among direct and indirect interior molded door buyers, was approved by United States District Judge John A. Gibney Jr. on February 5, 2021. Direct buyers, such as lumberyards, are slated to receive $61.6 million, while indirect buyers, such as consumers who bought an interior molded door from a retailer, are set to receive $19.5 million.
Separate settlement proposals were filed last September yet by the fall the defendants became concerned about how much pricing information they would be required to disclose in order to be released from the litigation, according to Law360. In December 2020, Judge Gibney ordered the plaintiffs to draft new preliminary approval documents that make experts’ pricing reports publicly available as part of settlement notices to be sent to class members. On January 25, 2021, Judge Gibney denied the indirect buyer plaintiffs’ motion to withdraw from the settlement agreement reached last September.
The group of direct buyers covered by the settlement includes all persons or entities who bought interior molded doors in the U.S. between October 19, 2014 and December 31, 2018 directly from either Jeld-Wen or Masonite. The group of indirect buyers includes all persons and entities that indirectly bought one or more Jeld-Wen- or Masonite-made standalone interior molded doors between March 1, 2014 and September 4, 2020 in Arizona, Arkansas, California, Florida, Hawaii, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, New Hampshire, New York, North Carolina, North Dakota, Oregon, South Carolina, Tennessee, Utah, West Virginia and Wisconsin.
Official settlement websites with more information for the respective direct and indirect purchaser groups can be found at www.directpurchaserimdlitigation.com and www.interiormoldeddoorsettlement.com.
Those with questions can contact the settlement administrator here or here.
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Masonite Corporation and Jeld-Wen, Inc. are the defendants in a proposed antitrust class action lawsuit that centers on an allegedly collusive pricing scheme for interior molded doors. Filed in Virginia by a lumber supply company, the 42-page suit, citing potential violations of the Sherman Act and Clayton Act, alleges Masonite and Jeld-Wen fixed prices for interior molded doors while ensuring market competition was all but eliminated.
Interior molded doors “attempt to simulate the aesthetics of solid wood doors at lower prices,” according to the lawsuit. The case explains the doors are created through a process by which a wood frame and a hollow or solid core are sandwiched together between two doorskins made of high-density fiber. Such doors are popular in North America, the case adds, noting that the vertically-integrated defendants—who produce both molded doorskins and interior molded doors—account for roughly 85 percent of the market for interior molded doors.
“Being the only two vertically-integrated interior molded door manufacturers in the U.S., Jeld-Wen and Masonite have significant power in both product markets,” the complaint reads.
A molded doorskin can account for up to 70 percent of the total cost of an interior molded door, the suit continues.
Providing more background, the lawsuit says that the Department of Justice in 2001 allowed non-party Premdor, Inc. to acquire Masonite, thereby forming a newly integrated doorskin/interior molded door maker in the process, under the condition that Premdor/Masonite divest its doorskin manufacturing plant into a new entity. That entity, CraftMaster, Inc. (CMI), was acquired by defendant Jeld-Wen in 2012, according to the complaint, “thereby eliminating the check on competition established by the DOJ’s required divestiture.” Further, the suit notes that the defendants, between 2001 and 2012, acquired a number of smaller interior door manufacturers.
From here, the lawsuit charges the defendants have outright and jointly sought to wipe out competition by eliminating their practice of supplying doorskins to smaller interior door manufacturers. This move looks dually collusive, the case goes on, in light of Masonite's 2014 announcement that it would also no longer sell doorskins to other companies.
“This unprecedented shift in business practice was plainly against Masonite’s own economic interests, as it handed over that entire market to Jeld-Wen,” according to the lawsuit. “Worse, it did so at a time when Jeld-Wen’s doorskins were of poor quality.”
It was after the defendants began collaborating that Jeld-Wen began to take adverse actions against third-party door makers with which it had long-term supply agreements for doorskins, the lawsuit alleges. This, coupled with Jeld-Wen informing at least one third-party manufacturer that it would altogether terminate its supply agreement, the suit adds, further harmed competition within the market for interior molded doors.
The lawsuit rounds out by shifting its focus to the interior molded door market itself, a market whose structure has allegedly allowed Masonite and Jeld-Wen to repeatedly raise prices across the board with little restraint. More from the complaint:
“Defendants’ price increases cannot rationally be explained by normal market forces, such as key input costs, and supply and demand factors. Key input costs for raw materials, such as wood, resin, wax, oil, sealer, paint, and packaging, and for energy, such as electric power prices, natural gas prices, and boiler fuel decreased while Defendants increased their prices. Masonite employees analyzed data and ran pricing scenarios based on market factors, such as the price of raw materials, transportation costs, and expected demand, and were often surprised to learn that the Board and the company’s top executives intended to impose price increases that were substantially in excess of what they believed the market would accept.”
The full lawsuit can be read below.
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