Federal Court Rejects Johns Manville’s Summary Judgment Motion on Market Definition Issues Against Bona Law Client, Thermal Pipe Shields
November 12, 2020
On November 12, 2020, a federal court in Colorado denied Johns Manville’s motion for partial summary judgment, confirming that Bona Law’s client Thermal Pipe Shields had proposed a relevant product market for its antitrust claims that was more than sufficient to try to a jury.
You can read the federal court’s decision here, and Bona Law’s opposition brief to summary judgment here.
Factual Background
Bona Law initially filed this lawsuit in March 2019. Specifically, Plaintiff Thermal Pipe Shields accused Defendant Johns Manville Corporation of various unlawful and anticompetitive conduct, including: (i) attempting to destroy competition in that market by exclusionary tactics; (ii) threatening to refuse to sell to any company that buys competing calsil products from Thermal Pipe Shields; (iii) tying sales of insulation products to other Johns Manville industry-standard products that distributors need; and (iv) falsely disparaging the quality of Thermal Pipe Shields’ products, even though Thermal Pipe Shields’ products were of equal or superior quality and produced at the exact same calsil factory that Johns Manville utilized for over a decade.
After an initial round of briefing and hearing with the Court, Thermal Pipe Shields filed an amended complaint on July 24, 2019, alleging two federal antitrust claims for tying and monopolization in violation of the Sherman act and one federal claim of false advertising in violation of the Lanham Act. The Court previously denied Johns Manville’s motion to dismiss on March 23, 2020.
Johns Manville then filed a motion for partial summary judgment, challenging Thermal Pipe Shields’s product market definition, specifically arguing that calsil’s “end-users” should be included in the relevant product market. Thermal Pipe Shields had defined its relevant product market as all sales of calsil by calsil manufacturers (which in North America are only Thermal Pipe Shields and Johns Manville). Thermal Pipe Shields focused its product market at that level of commerce because that is the level Johns Manville is alleged to have monopolized.
The District Court’s Ruling
Following briefing and oral argument, the Court denied Johns Manville’s motion for partial summary judgment, agreeing that Thermal Pipe Shields’s product market was appropriately focused on calsil sales by calsil manufacturers.
In assessing the relevant product market, the Court noted that the “focus of inquiry is on demand and thus the relevant set of customers.” The Court added that the proposed product market must “reflect the real economic market at issue.” The Court elaborated that the relevant product market “is the product market that is relevant to the antitrust claims” and may “focus[] on the level of commerce where the anticompetitive practices allegedly occur.” The Court then turned to the specific arguments raised by Johns Manville.
First, the Court rejected Johns Manville’s primary argument that the product market should have included downstream activity by “end users.” Instead, the Court concluded that Johns Manville had failed to “demonstrate the product market that is relevant to this case must include calsil’s ‘end users.’” According to the Court, these end users, such as the facility owners whose facilities use calsil, were not necessary to consider during this antitrust inquiry. “Instead, the primary direct sources of ‘demand’ for calsil are the project engineers who choose it based on a range of factors including technical ones.” “Once an engineer specifies calsil for a particular project, the contractor is obligated to obtain it absent some later project plan change.” Accordingly, it was appropriate for the product market not to focus on end users of calsil.
Second, and relatedly, the Court rejected Johns Manville’s suggestion that Thermal Pipe Shields’s focus on the distributor link of the supply chain was artificially narrow. Instead, the Court ruled it was “undisputed that distributors play an important role in supplying calsil to projects.” The Court also relied on key cases cited by Thermal Pipe Shields, including McWane, Inc. v. F.T.C., 783 F.3d 814 (11th Cir. 2015), Telecor Commc’ns, Inc. v. Sw. Bell Tel. Co., 305 F.3d 1124 (10th Cir. 2002), and United States v. Dentsply, Int’l, Inc., 399 F.3d 181 (3d Cir. 2005), reasoning that, similar to those cases, here, “[d]istributors in the calsil market likewise have a heightened importance,” because the vast majority of calsil sales are made to distributors. Thus, it made sense to focus on that level of commerce, given that, as alleged, Johns Manville “focused its anticompetitive acts at the distributor level as its means to defend its position as the primary seller of calsil.”
And third, the Court concluded that Johns Manville “fail[ed] to establish as an undisputed fact that calsil is reasonably interchangeable with other insulators.” Specifically, the Court noted that Thermal Pipe Shields “proffer[ed] evidence that calsil is a product with unique technical characteristics,” which justified limiting the product market to calsil and, at the very least, created a question of fact about the degree to which insulation products are interchangeable. Accordingly, Johns Manville’s argument to the contrary was “erroneous as a matter of law.”
Next Steps
Following the denial of Johns Manville’s motion partial summary judgment, the case continues through discovery, with trial tentatively set for late 2021. Ultimately, Thermal Pipe Shields seeks damages exceeding $20 million, those damages trebled, an injunction barring Johns Manville from continuing its anticompetitive and defamatory conduct, and attorneys’ fees and costs.