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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
SPRING AIR INTERNATIONAL LLC, )
SPRING AIR OHIO LLC, SPRING AIR )
LLC, E&E BEDDING CO. INC., AND )
ALFRED T. GIULIANO, CHAPTER )
7 TRUSTEE OF THE )
SUBSTANTIVELY CONSOLIDATED )
ESTATES OF CONSOLIDATED )
BEDDING INC. AND RELATED )
HICKORY SPRINGS ) COMPLAINT
MANUFACTURING COMPANY, ) JURY TRIAL DEMANDED
VALLE FOAM INDUSTRIES, INC., )
DOMFOAM INTERNATIONAL, INC., )
CARPENTER COMPANY, )
WOODBRIDGE FOAM CORPORATION, ) Case No.
FLEXIBLE FOAM PRODUCTS, INC., )
SCOTTDEL, INC., FOAMEX )
INNOVATIONS, INC., FUTURE FOAM, )
INC., VITAFOAM PRODUCTS CANADA )
LIMITED, VITAFOAM, INC., BRITISH )
VITA UNLIMITED, MOHAWK )
INDUSTRIES INC., LEGGETT & )
PLATT INC., ADVANCED URETHANE )
TECHNOLOGIES, INC. )
Charles E. Tompkins Eric Watt Wiechmann
Thomas G. Shapiro Vanessa Roberts Avery
Rachel M. Brown Richard Hernandez
SHAPIRO HABER & URMY LLP MCCARTER & ENGLISH, LLP
53 State Street 185 Asylum St., 36th Floor
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Boston, MA 02109 Hartford, Connecticut 06103
Tel.: (617) 439-3939 Tel: (860) 275-6700
Fax: (617) 439-0134 Fax: (860) 724-3397
Email: firstname.lastname@example.org Email: email@example.com
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Plaintiffs Spring Air International LLC (“Spring Air International”), Spring Air Ohio
LLC (“Spring Air Ohio”), Spring Air LLC (“Spring Air Utah”), E&E Bedding Company, Inc.
(“E&E Bedding”), and Alfred T. Giuliano, the Chapter 7 Trustee (“Trustee”) of the
Substantively Consolidated Estates of Consolidated Bedding, Inc. and related entities 1 (“CBI,”
and collectively with Spring Air International, Spring Air Ohio, Spring Air Utah and E&E
Bedding, “Plaintiffs”) for themselves and through their predecessors, successors and assigns,
bring this Complaint for damages and injunctive relief against Hickory Springs Manufacturing
Company, The Carpenter Company, The Woodbridge Group, Flexible Foam Products, Inc.,
Scottdel Inc., Foamex Innovations, Inc., Future Foam, Inc., Vitafoam Products Canada Limited,
Vitafoam Inc., Mohawk Industries, Inc., Leggett & Platt Inc., and Advanced Urethane
Technologies, Inc. (collectively “Defendants”), in violation of Section 1 of the Sherman
Antitrust Act of 1890, 15 U.S.C. § 1 (“Section 1”). Based on the evidence set forth below,
Plaintiffs allege that Defendants, since at least 1999, have been engaged in an ongoing
conspiracy to fix the price of flexible polyurethane foam and flexible polyurethane foam
products (collectively, “flexible polyurethane foam”). As used herein, flexible polyurethane
foam refers to both slabstock and molded polyurethane foam, both of which were the focus of
the conspiracy alleged herein. Flexible polyurethane foam is a commodity widely utilized for
The full list of substantively consolidated estates represented by the CBI Trustee is as follows: Consolidated
Bedding, Inc.; Ackerman Manufacturing Company; Alabama Bedding Manufacturing Company, Inc.; American
Bedding Industries, Inc.; Associated Trucking Company, Inc.; Atlas Bedding Manufacturing Corporation; Chatham
& Wells, Inc.; Nature’s Rest, Inc.; Nature's Rest Marketing, LLC; Spring Air Bedding Company; Spring Air
California - Deluxe Bedding Company, Inc.; Spring Air Mattress Company; Spring Air Mattress Company of
Colorado; Spring Air - Mountain West, Inc.; Spring Air Partners - California, Inc.; Spring Air Partners - New Jersey,
Inc.; Spring Air Partners - North America, Inc.; Spring Air Partners - Texas, Inc.; Spring Air West, LLC; and The
Spring Air Company.
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cushioning and insulation in a variety of goods, including but not limited to furniture, bedding,
packaging, flooring, and motor vehicles.
In addition, Plaintiffs allege that Vitafoam Inc. agreed with co-conspirators Valle Foam
Industries, Inc. and Domfoam International, Inc. not to solicit each other’s customers for flexible
polyurethane foam. Upon information and belief, the other Defendants also participated in this
conspiracy. Like the price-fixing alleged herein, this alleged conduct is a per se violation of
Section 1. See U.S. v. Cooperative Theaters of Ohio, Inc., 845 F.2d 1367 (6th Cir. 1988).
The allegations herein are based on the investigation of counsel, detailed economic
analysis undertaken at counsel’s request, records of government investigation into the flexible
polyurethane foam industry, the amnesty proffers, ongoing discovery and, where indicated,
information and belief. The allegations related to the Plaintiffs and those related to the
Defendants’ stated reasons for their price increase are based on personal knowledge.
II. SUMMARY OF THE ALLEGATIONS
1. This case arises out of a conspiracy among Defendants and their co-conspirators
to fix the price of flexible polyurethane foam. Analysis of information relating to flexible
polyurethane foam pricing indicates that this conspiracy began no later than 1999. Plaintiffs
further performed a particular economic analysis, based on publicly available market
information, of slabstock foam prices in the United States. 2 That analysis indicates that prices
Plaintiffs’ economic analysis focused particularly on the slabstock foam market from 2001 because when it was
performed Plaintiffs believed that Defendants’ conspiracy involved that particular type of foam and time frame.
Since this economic analysis was performed, however, Plaintiffs’ investigation, including proffers by the amnesty
applicant in this matter and other discovery, has indicated that Defendants’ conspiracy in flexible polyurethane foam
was not limited to slabstock foam and has also shown that it went back in time at least to 1999. Plaintiffs
nonetheless include their original economic analysis in this Second Amended Complaint because slabstock foam
comprises the majority of flexible polyurethane foam produced and is representative of the pricing in the flexible
polyurethane foam market more generally.
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for slabstock foam over at least the last decade have been higher by at least approximately 3.5%
than they would have been absent a conspiracy.
2. Economic analysis also indicates that damages inflicted by the conspiracy
increased substantially in the aftermath of Hurricane Katrina in September of 2005.
3. In 2005, however, damage caused by Hurricane Katrina significantly curtailed,
for a limited period of time, United States production of Toluene Diisocyanate (“TDI”), a
primary input material for flexible polyurethane foam. Defendants saw this natural disaster as an
opportunity. They capitalized upon the well-publicized shortages of raw materials created by
Hurricane Katrina, and agreed among themselves to use the price increases that naturally would
have occurred as a result of shortages in TDI as a pretext to implement and sustain additional
price increases not justified by naturally created shortages.
4. In addition, even after TDI production and Polyether Polyol production returned
somewhat closer to pre-Katrina levels, around the middle of 2006, Defendants’ conspiracy
prevented flexible polyurethane foam prices from returning to their pre-Katrina levels, even in
the face of a global economic recession that substantially decreased demand for foam. In the
absence of a conspiracy, this decrease in demand would have been expected to drive down
flexible polyurethane foam pricing.
5. Indeed, as the following chart, Figure 1, comparing slabstock foam pricing in the
post-Katrina years to slabstock foam demand, demonstrates, Defendants’ conspiratorial conduct
enabled them to increase prices in the face of decreasing demand during those years:
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6. As the chart above suggests, Defendants’ conspiracy was remarkably effective,
especially during the post-Katrina years. During the four-year period prior to the FBI raids on
July 27, 2010 that first alerted Plaintiffs to the alleged conspiracy, a regression analysis of
publicly available information relating to pricing in the slabstock foam industry indicates that
slabstock foam prices were at least 15.2% higher than they would have been in the absence of a
7. Evidence of the conspiracy uncovered by Plaintiffs’ counsel during the course of
their investigation includes:
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a. Substantial economic evidence indicating that, given historical supply and
demand indicators in the flexible polyurethane foam industry, prices for flexible
polyurethane foam have, since at least 1999, been inexplicably higher than they
would have been absent a conspiracy;
b. Economic evidence demonstrating that, on many occasions, prices for flexible
polyurethane foam rose by substantial amounts (not explained by market forces)
immediately following industry association meetings attended by representatives
of the Defendants. This strongly suggests that pricing agreements were reached at
these industry meetings. See Standard Iron Works v. ArcelorMittal, 639
F.Supp.2d 877, 896-897 (N.D. Ill. 2009).
c. Economic evidence demonstrating that the reasons Defendants provided to
Plaintiffs as justification for their price increases – generally increases in fuel or
other input costs – were in fact false and did not justify price increases of the
8. In addition, substantial evidence of the conspiracy has been gathered by the
United States Department of Justice (the “DOJ”) during its investigation of the conspiracy
alleged herein. This evidence, much of which was contained in an affidavit filed by United
States government authorities that was, for a brief time, unsealed, includes direct evidence of
specific and detailed communications by executives and employees of Defendants regarding
their agreement to fix prices. It also includes direct evidence of an agreement among some
Defendants not to solicit each other’s customers in violation of Section 1. Further, information
sworn under oath on July 21, 2010 by Pierre-Yves Guay of the Commissioner of Competition in
Canada strongly supports Plaintiffs’ allegations.
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9. In addition, in February 2010, Defendant Vitafoam Inc. voluntarily approached
the DOJ, Antitrust Division, to self-report evidence of illegal antitrust activities amongst itself
and other companies and individuals in the industry (“competitors”) and to seek acceptance into
the Antitrust Division’s Corporate Leniency Program. Since that time, Vitafoam and its
employees have been cooperating with a criminal investigation into illegal anticompetitive
conduct in the flexible polyurethane foam market.
10. Evidence of the conspiracy herein has also come to light through the prosecution
of a substantially related polyether polyols conspiracy, discussed below, in which a number of
the Defendants in the instant action are Plaintiffs. Numerous documents produced in that action
demonstrate generally that Defendants communicated with each other to coordinate the amounts
and timing of price increases for polyurethane foam products, prior to disclosing such increases
to their customers and the public.
1. Plaintiff CBI is a consolidated estate of entities (see supra n. 1) represented by a
duly appointed, qualified and acting Chapter 7 Trustee who was appointed by the United States
Bankruptcy Court for the District of Delaware (“Bankruptcy Court”) pursuant to 11 U.S.C.
§ 701. Each of the CBI entities within the estate, or any one or more of them, directly purchased
flexible polyurethane foam from one or more of the Defendants during the Relevant Period.
2. Plaintiff Spring Air International LLC is a Delaware limited liability company
with its principal place of business located at 70 Everett Avenue, Suite 507, Chelsea, MA 02150.
Spring Air International directly purchased flexible polyurethane foam from one or more of the
Defendants during the Relevant Period. Prior to 2009, the Plaintiff manufactured and sold
mattresses in the United States and Canada and licensed other manufacturers to sell mattresses
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under its brand name worldwide. In or around May 2009, most of the assets and businesses of
CBI were rolled up and purchased by Spring Air International. Since 2009, the Plaintiff no
longer manufactures mattresses but continues to license the right to manufacture bedding
products to its licensees worldwide. The mattress lines include Back Supporter, Four Seasons,
Sleep Sense, and Chatham and Wells.
3. Spring Air International owns the global Spring Air brand, which was established
in 1926. The Spring Air brand is prominent in the mattress industry and the Spring Air brand is
among the largest mattress manufacturers in the United States. 3
4. The Spring Air brand is also a household name that has sold thousands of
mattresses across the world. Shipments in 2006 were estimated at $329 million; shipments in
2007 were estimated at $272 million. In the past decade, $4 billion worth of Spring Air sleep
sets have been sold. 4
5. Plaintiff Spring Air Ohio LLC was an Ohio limited liability company with its
headquarters located at 2221 John Glenn Avenue, Columbus, OH 43217. Spring Air Ohio
directly purchased flexible polyurethane foam from one or more of the Defendants during the
6. Plaintiff Spring Air LLC is a Utah limited liability company with its headquarters
located at 402 West 300 North, Salt Lake City, UT, 84103. Spring Air Utah directly purchased
flexible polyurethane foam from one or more of the Defendants during the Relevant Period.
Hoovers Company In-Depth Records, Spring Air International LLC, (Aug. 11, 2010); Best Mattress Buying Guide,
The Spring Air Mattress Company. Available at http://www.best-mattress-buying-guide.net/spring-air-
Spring Air, About Us. Available at http://www.springair.com/index.php/about-us.
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7. Plaintiff E&E Bedding Company, Inc. is a Massachusetts corporation with its
headquarters located at 124 Second Street, Chelsea, MA 02150. E&E Bedding directly
purchased flexible polyurethane foam from one or more of the Defendants during the Relevant
8. Plaintiffs have been directly injured by the conduct alleged herein. Based on their
initial internal analysis, Plaintiffs estimate that they are entitled to recover the damages
associated with hundreds of millions of dollars of purchases of flexible polyurethane foam made
by themselves, their predecessors, successors and assigns directly from Defendants during the
Relevant Period. 5
9. The prices Plaintiffs paid to Defendants for flexible polyurethane foam were
greater than the prices they would have paid absent the conspiracy alleged herein. Plaintiffs have
therefore been injured in their business and property by reason of Defendants’ antitrust
10. Plaintiffs thus bring this action pursuant to Sections 4 and 16 of the Clayton Act,
15 U.S.C. §§ 15 and 26, to recover treble damages, the costs of suit, including reasonable
attorneys’ fees, to enjoin the continuation of the conspiracy, and for such other relief as is
afforded under the antitrust laws of the United States.
11. Defendant Hickory Springs Manufacturing Company (“Hickory Springs”) is a
North Carolina corporation with its headquarters located at 235 2nd Avenue, NW, Hickory, NC,
28601. During the Relevant Period, Hickory Springs directly sold flexible polyurethane foam
throughout the United States.
The Relevant Period is defined as January 1, 1999 through December 31, 2010.
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12. Hickory Springs is one of the nation’s largest integrated components
manufacturers and suppliers for the furniture and bedding industries with more than 60 operating
facilities in the United States and throughout the world. The furniture industry is the largest
segment of Hickory Springs’ customer base. With more than 160 flexible polyurethane foam
formulations, Hickory Springs is one of the United States’ largest producers of foam.
13. Defendant The Carpenter Company (“Carpenter”) is a privately owned and
operated company with its headquarters located at 5016 Monument Avenue, Richmond, VA,
23230. Carpenter operates from around 30 locations in the United States, 5 locations in Canada
and around 20 locations in Europe. During the Relevant Period, Carpenter directly sold flexible
polyurethane foam throughout the United States.
14. Carpenter is the largest manufacturer of polyurethane foam cushioning in the
world. It has divisions on the following areas: air filter media, bedding, carpet cushion,
chemicals, chemical systems, consumer products, expanded polystyrene systems, flexible foam
packaging furniture, molded manufacturing, polyester fiber, and tire products.
15. Defendant Woodbridge Foam Corporation (“Woodbridge”) is a Canadian
corporation with its headquarters located at 4240 Sherwoodtowne Blvd., Mississauga, ON, L4Z
2G6, Canada. During the Relevant Period, Woodbridge directly sold flexible polyurethane foam
throughout the United States.
16. Woodbridge’s primary focus is supplying foam for automotive components, but
also supplies other sectors including: commercial and recreational transportation, building
products, construction, packaging and several consumer and industrial markets.
17. Defendant Flexible Foam Products, Inc. (“Flexible Foam”) is a privately owned
and operated Ohio company with its headquarters located at 12575 Bailey Road, Spencerville,
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OH 45887 and operations in Texas, Indiana, Florida and Wisconsin. It is a subsidiary of Ohio
Decorative Products, Inc., also of Spencerville, Ohio. During the Relevant Period, Flexible Foam
directly sold flexible polyurethane foam throughout the United States.
18. Flexible Foam manufactures polyurethane foam and rebond products for
customers in the bedding, flooring, furniture, packaging, and automotive industries.
19. Defendant Scottdel Inc. (“Scottdel”) is a privately held corporation with its
headquarters located at 400 Church Street, Swanton, OH 43558. During the Relevant Period,
Scottdel directly sold flexible polyurethane foam throughout the United States.
20. Scottdel began manufacturing bonded urethane carpet cushion in 1961 and
manufactures a complete line of commercial and residential bonded urethane cushions ranging in
density from 3.5 pounds to 10 pounds per cubic foot.
21. Defendant FXI – Foamex Innovations, Inc. f/k/a Foamex International Inc.
(“Foamex”), is a privately owned and operated company with its headquarters located at Rose
Tree Corporate Center II, 1400 N. Providence Road, Suite 2000, Media, PA 19063-2076. During
the Relevant Period, Foamex directly sold flexible polyurethane foam throughout the United
22. Foamex provides foam for the home, healthcare, electronics, industrial, personal
care and transportation markets. Its foam is used in automotive cushioning, shipping packages,
beds and furniture, as well as personal electronics. Foamex also provides components for filters,
dispensers, gaskets and seals in everything from blood oxygenators to computer disk drives.
23. Defendant Future Foam, Inc. (“Future Foam”) is a privately owned and operated
company with its headquarters located in 1610 Avenue N, Council Bluffs, IA 51501. During the
Relevant Period, Foamex directly sold flexible polyurethane foam throughout the United States.
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24. Future Foam produces foam products for bedding, foam blocks, carpet cushion,
furniture, and packaging.
25. Defendant Vitafoam Products Canada Limited (“Vitafoam Canada”) is a privately
owned and operated company with its headquarters located at 150 Toro Road, North York, ON
M3J 2A9, Canada. During the Relevant Period, Vitafoam directly sold flexible polyurethane
foam, either directly or through its affiliates, in the United States.
26. Vitafoam Canada manufactures all types of flexible polyurethane foam for use in
furniture, bedding and automotive applications, including packaging, medical, industrial and a
full range of memory foams. It also produces latex mattresses and toppers.
27. Vitafoam, Inc. (“Vitafoam, Inc.”) is a privately owned and operated company
with its headquarters located a 2215 Shore Drive, High Point, NC 27263. During the Relevant
Period, Vitafoam Inc. directly sold flexible polyurethane foam, either directly or through its
affiliates, throughout the United States. Collectively, Vitafoam Canada and Vitafoam Inc. are
referred to as “Vitafoam.”
28. Vitafoam, Inc. manufactured plastic netting, automotive products, general trade,
and nonwoven products. It produced mattresses and pads, convoluted pads, wheelchair
components, and protective packaging for medical supplies, as well as positioning and support
wedges, and immobilizing devices, such as neck bracing pillows for the home and commercial
healthcare industries. The company offered polyurethane foam products for packaging,
furniture, and upholstery industries; marine industry products, such as fenders, drainable boat
seats, waterproof cushions, air circulation pads, and filtration devices; and foam for fabric
producers, laminators, trim companies, and original equipment manufacturers in the automotive
industry. It also provided laminating materials, such as fabrics, flexible polyurethane foam,
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nonwoven webs, films, and other substrates, as well as carpet underlay for residential and
commercial sectors. Vitafoam, Inc. also served medical, marine, technical, bedding, lamination,
and carpet underlay industries.
29. Defendant Mohawk Industries, Inc. (“Mohawk”) is a Delaware corporation with
its headquarters located at 160 S. Industrial Boulevard, Calhoun, GA, 30701. During the
Relevant Period, Mohawk, directly or through its subsidiaries, affiliates, predecessors-in-interest
and assigns, directly sold flexible polyurethane foam throughout the United States.
30. Defendant Leggett & Platt Inc. (“Leggett”) is a Missouri corporation with its
principal place of business at 1 Leggett Road, Carthage, MO 64836. Leggett manufactures,
among other things, foam and other components for the bedding and furniture industry. During
the Relevant Period, Leggett manufactured and directly sold flexible polyurethane foam
throughout the United States.
31. Defendant Advanced Urethane Technologies, Inc. (“AUT”) is a private domestic
corporation incorporated in Delaware (with incorporation date 3/9/2007). The headquarters of
AUT is 187 Rte 36 Ste 101, West Long Branch, NJ. AUT is a subsidiary of Sleep Innovations,
Inc., also headquartered in West Long Branch, NJ. L&P sold the assets comprising its foam
business to AUT on March 30, 2007. During the Relevant Period, AUT manufactured and
directly sold flexible polyurethane foam throughout the United States.
V. CO-CONSPIRATORS AND AGENTS
32. Upon information and belief, certain other corporations engaged in the business of
manufacturing flexible polyurethane foam have participated in the unlawful conspiratorial
activities alleged herein. These entities include: Otto Block Polyurethane Technologies, Inc., a
German corporation; Inouac Corporation, a Japanese corporation; Inouac USA Inc., a Kentucky
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corporation; Crest Foam Industries, Inc., a Delaware corporation; Plastomer Corporation
(“Plastomer”), a Missouri corporation; Valle Foam Industries (1995), Inc., a privately owned and
operated corporation headquartered in Ontario, Canada (“Valle”), and Domfoam International,
Inc. (“Domfoam”), a subsidiary of Valle Foam Industries, headquartered in Quebec, Canada.
33. In addition, other natural persons, corporations, and entities not named as
Defendants herein, including but not limited to executive employees of Defendants and the
named co-conspirators, have participated in the unlawful conspiratorial activity alleged herein in
violation of the antitrust laws of the United States.
34. Whenever in this Complaint reference is made to a statement, or transaction of
any corporation or entity, the allegation means that the corporation or entity acted, stated, or
transacted by or through its directors, members, partners, officers, employees, or agents, while
they were engaged in the management, direction, control, or conduct of the corporation’s or
entity’s business and were acting within the scope of their authority.
VI. JURISDICTION AND VENUE
35. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337
and 15 U.S.C. §§ 15, 26.
11. Venue is proper in this district pursuant to 28 U.S.C. §§ 15, 22 and 26 and
pursuant to 28 U.S.C. § 1391(b), (c) and (d), because at all times relevant to the Complaint:
(a) Defendants transacted business, were found, or acted through subsidiaries or agents present in
this district; (b) a substantial part of Plaintiffs’ claims occurred in this district; and (c) a
substantial portion of the affected interstate trade and commerce described below has been
carried out in this district. The acts complained of have had substantial anticompetitive effects
within this district.
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36. This Court has in personam jurisdiction over each of the Defendants because,
inter alia, each of the Defendants: (a) committed acts in furtherance of the conspiracy alleged
herein in this district and directed the unlawful conspiracy through persons and entities located in
this district, including fixing the prices of flexible polyurethane foam sold to purchasers in this
district; (b) transacted business in flexible polyurethane foam and other products in this district;
(c) maintain and have maintained continuous and systemic contacts with this district over a
period of years; and (d) purposefully availed itself of the benefits of doing business in this
district. Accordingly, each of the Defendants maintains minimum contacts with this district
more than sufficient to subject it to service of process and sufficient to comply with due process
VII. FACTUAL ALLEGATIONS
A. Overview of The Polyurethane Foam Market
37. Polyurethane foams are used to insulate objects or reduce shock. Specifically,
polyurethane foams are used in appliances, bedding, flooring underlay, construction, furniture
packaging, textiles, transportation and a variety of other applications.
38. Polyurethane foam is a chemical compound made up of polyols, diisocyanates,
and water joined together by carbamate (also known as urethane) links. These inputs are
“typically metered and mixed together continuously and discharged while the mixture
polymerizes and concurrently expands to a cellular mass.” 6 The proportion of the inputs varies
depending on the end-use requirement of the foam. As set forth in greater detail below, the
polyurethane foam market is substantially related to the polyether polyol market, because
polyether polyol is the primary component of flexible polyurethane foam.
Chinn, Henry, et al., “Polyurethane Foam,” CEH Marketing Research Report, p. 8 (Oct. 2009).
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39. There are two distinct types of polyurethane foam that comprise the majority of
the polyurethane foam market. The first is flexible foam, which is cushion-like and is used in
automotive interiors, bedding, furniture, flooring underlay, and packaging. Flexible
polyurethane foam is known for its “light weight, resilient, quiet, [and] low odor” qualities. 7 The
second is rigid foam, which is typically a board, laminate, or spray and is used in building
construction and refrigeration insulation. Other types of polyurethane foam also exist, but have
significantly less market share. These include “microcellular foam, which may be used to make
car steering wheels or line the insides of athletic helmets, and elastomeric foam, which is
typically used to make the outer sole of many types of footwear, including athletic shoes.” 8
40. Flexible and rigid polyurethane foam have different chemical properties. Flexible
foam is comprised of TDI and has mainly open cells, formed by gas bubbles that have popped.
Air can pass through the cells easily, resulting in a soft, resilient, flexible material. Rigid foam is
comprised of polyphenylene polymethylene diisocyanate (MDI) and has mainly closed cells. Air
cannot pass through the cells as easily, resulting in a harder and less resilient material.
41. The 2009 CEH Marketing Research Report on Polyurethane Foams indicates that
“most foam producers concentrate their efforts on either flexible or rigid foam because the
markets and technologies are quite different.” 9
42. The U.S. consumption of flexible and rigid polyurethane foam is roughly equal.
U.S. consumption of flexible polyurethane foam in 2008 was 823,000 metric tons. This
consumption is broken down as follows: 34% of the flexible polyurethane foam was used in
Polyurethane Foam Association, “Flexible Polyurethane Foam: Industry at a Glance.” Available at
Wang, Linda, “Polyurethane Foam,” Chemical and Engineering News, 84:2, 48 (Jan. 9, 2006).
Chinn, supra note 6 at 6.
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transportation; 24.2% in flooring underlay; 19% in bedding; 17.7% in furniture; 2.7% in
packaging; 1.6% in textiles; and 0.9% in miscellaneous other uses.
43. In contrast, U.S. consumption of rigid polyurethane foam breaks down as follows:
approximately 65.6% was used in construction; 15.6% in appliances; 6.1% in packaging; 3.5% in
industrial insulation; 2.9% in transportation, and 6.1% in miscellaneous other uses. 10
44. The market for flexible polyurethane foam further is divided into two separate
markets: slabstock foam and flexible polyurethane molded foam (“molded foam”). Slabstock
foam is used primarily in bedding, furniture, flooring underlay, and packaging. Molded foam, in
contrast, is used primarily as cushioning in automotive interiors. Molded foam is also used in
other products for the automotive and furniture markets.
45. Slabstock and molded foam are manufactured by different processes. In slabstock
foam production, “the chemical mix is poured onto a moving conveyor, where it is allowed to
react and expand. Sides on the conveyor allow the foam to rise into a ‘bun’ or slab anywhere
from two to four feet high. The continuous slab is then cut, stored, and allowed to cure for up to
24 hours.” In molded foam production, “individual items are produced by pouring foam
chemicals into specially shaped molds and allowing the foam reaction to take place.” 11
46. U.S. consumption of slabstock foam is roughly twice as much as U.S.
consumption of molded foam. U.S. consumption of slabstock foam in 2008 was approximately
593,500 metric tons. U.S. consumption of molded foam in 2008 was approximately 226,500
Id. at 34, 42.
Polyurethane Foam Association, “Flexible Polyurethane Foam: a Primer,” In Touch (February 1991). Available
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47. In 2010, domestic revenue for the entire polyurethane foam industry was expected
to be approximately $12 billion.
48. There are few acceptable alternatives for polyurethane foam. In furniture and
bedding applications, short staple polyester fiber or cotton may be used, but both alternative
materials have poor height recovery characteristics after compression. Steel springs also recover
well, but must be insulated from the user with some type of cushioning material. According to
the Polyurethane Foam Association (PFA), “comparing [polyurethane foam] to alternative
materials in the areas of economics, comfort potential, ease of use, and durability, there is not an
acceptable substitute for polyurethane foam.”
49. Only four companies (all Defendants here) produce the vast majority of all
flexible slabstock polyurethane foam. As of 2009, Defendants FXI-Foamex, Carpenter, Ohio
Decorating (Flexible Foam), and Hickory Springs collectively produced 79% of all domestically
produced flexible slabstock polyurethane foam. 12 As set forth in detail below, this industry
concentration, combined with high barriers to entry, permitted Defendants effectively to conspire
regarding pricing in the flexible polyurethane foam market.
50. Imports in flexible polyurethane foam from outside North America are relatively
low due to the prohibitive freight costs involved in transporting these bulky, low unit priced
products over long distances.
B. The Substantial Relationship Between The Flexible Polyurethane Foam
Market And The Polyether Polyol Market
51. Flexible polyurethane foam generally is manufactured from just two primary
ingredients: polyols and TDI. Together, polyols and TDI represent 91-99% of the raw ingredient
Chinn, supra note 6 at 20-22.
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inputs in the typical formulation of furniture-grade flexible polyurethane foam. This amount is
broken down as follows: polyols constitute 62-66% of the raw ingredient inputs in the typical
formulation of furniture-grade flexible polyurethane foam, while TDI constitutes approximately
29-33% of the typical formulation of furniture-grade flexible polyurethane foam. 13 The
remaining ingredients are water and/or injected carbon dioxide (2-3%); surfactant, typically
silicone copolymers (1.5%); and catalysts, often stannous octoate (1%).
52. The two types of polyols used in polyurethane foam manufacturing are polyester
polyols and polyether polyols. The primary difference between polyester and polyether polyols
are the physical properties. Polyester polyols contain the ester functional group as the main
chain, whereas polyether polyols contain the ether functional group.
53. Polyether polyols are far more commonly used in polyurethane foam than are
polyester polyols. Polyether polyols constitute “approximately ninety percent of the world’s
polyol use” and are primarily used in the production of polyurethane foam. 14
54. In fact, “the largest world market for polyether polyols is in the production of
polyurethane foam, primarily flexible foams and secondarily rigid foams.” 15
55. As a result, flexible polyurethane foam prices are substantially related to the price
of polyether polyol, flexible foam’s primary ingredient. For instance, the close relationship
between the prices of polyether polyol and slabstock foam is graphically represented in the
following Figure 2.
Id. at 9.
In re: Urethanes Antitrust Litigation, Memorandum and Order relating to the Polyether Polyol Cases, at 3, No.
04-md-1616 (D. Kan. July 29, 2008).
Chinn, Henry, et al., Abstract, http://www.sriconsulting.com/CEH/Public/Reports/688.3000 (May 2009).
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56. Flexible polyurethane foam prices also are substantially affected by the price of
TDI, its other primary ingredient.
C. The Substantially Related Polyether Polyols Conspiracy And Litigation
57. In 2004 many purchasers of polyether polyols, including certain Defendants to
this litigation, filed class action lawsuits alleging price-fixing by manufacturers of polyether
polyols. See Complaint, Case No 2:04-cv-06213-JAP-MCA, Dkt. 1, December 12, 2004,
Flexible Foam Products, Inc. v. Bayer AG, et al., at ¶¶ 37-41.
58. These class action cases eventually were consolidated in the United States District
Court for the District of Kansas before the Honorable John Lungstrum. See Docket, In re
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Urethanes Antitrust Litig., MDL 1616 (D. Kan.) (“Urethanes”), pp. 1-111 (identifying counsel
identified as currently involved in Urethanes); pp. 111-135 (indicating docket events as of the
last 90 days).
59. In his Order certifying the class, Judge Lungstrum described the manner in which
the Polyether Polyol and Polyurethane Foam markets were substantially related: “Polyether
polyols are intermediate chemicals that are generally combined with isocyanates (usually either
MDI and/or TDI) to produce polyurethane polymers. The parties generally refer to these three
categories of products (polyether polyols, MDI and TDI) as the ‘basic chemicals.’ These basic
chemicals are the building blocks for Polyurethanes.” See Memorandum Opinion and Order,
Urethanes, MDL 1616 (D. Kan.) Dkt. 708, at 3.
60. Defendants in this litigation used chemical companies, including defendants in
Urethanes, to further the alleged conspiracy. Chemical companies had an interest in foam
companies raising prices because they could then more easily charge high prices for raw
material. Thus chemical companies would serve as conduits for Defendants to communicate
their intentions to raise prices.
VIII. MARKET FACTORS SUPPORTING THE EXISTENCE OF A CONSPIRACY
61. Various market factors make the flexible polyurethane foam market susceptible to
anticompetitive practices and unlawful collusion.
A. High Market Concentration
62. A high degree of market concentration facilitates coordination among co-
conspirators by, among other things, reducing the number of players that need to be involved in
order to effectively reduce industry-wide pricing.
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63. As set forth above, just four companies, all named as Defendants herein, control
approximately 79% of the market for flexible slabstock foam, which comprises the majority of
flexible polyurethane foam.
64. There is a general consensus among Courts and economists that industries in
which four firms collectively control more than 75% of the market are “conducive to collusion.”
See Herbert Hovenkamp, Federal Antitrust Policy: The Law of Competition And Its Practice,
1994 § 12.3a1 (“The Four Firm Concentration Ratio”).
65. Accordingly, the slabstock foam industry is conducive to collusion.
B. Significant Barriers to Entry
66. A collusive arrangement that raises product prices above competitive levels
potentially could attract new entrants seeking to benefit from the supra-competitive pricing by
selling products below the supra-competitive price but above the minimum price necessary to
make a profit.
67. Where there are significant barriers to market entry, new market entrants are less
likely. Thus, barriers to market entry help to facilitate the formation and maintenance of a cartel.
68. There are significant barriers to entry in the flexible polyurethane foam market.
Entry requires, among other things, that a company incur significant start-up capital
expenditures, including those needed for manufacturing facilities, and significant investment in a
69. In addition, extensive environmental regulations applicable to the manufacture of
flexible polyurethane foam deter new market entrants and create a significant barrier to entry.
70. Existing manufacturers have established relationships with upstream suppliers and
downstream purchasers, and can negotiate prices for raw materials and term contracts with major
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customers. Without these contacts, new entrance would face significant hurdles to afford inputs
and secure customers.
71. Accordingly, the industry has been consolidating rather than attracting new
entrants. In recent years, major players within this industry have been active in acquiring smaller
companies and other competitors. For example:
• In 2005, Ohio Decorative acquired Nu-Foam;
• In 2006, following the purchase of its parent corporation, Vitafoam U.S. sold one
of its plants to Olympic Products LLC, a joint venture between Woodbridge and
Hickory Springs, and another plant to Flexible Foam; 16 and
• In 2007, Carpenter acquired its European competitor Dumo NV.
C. Difficult Economic Conditions In The Industry
72. The flexible polyurethane foam industry, like many industries in the United
States, has faced difficult economic conditions in recent years. For example:
a. Defendant Scottdel has recently declared bankruptcy. See In re Polyurethane
Foam Antitrust Litig., MDL 2196, Dkt. 28, Interested Parties’ Response
Supporting Transfer, at 5 n.4.
b. Defendant Foamex has entered and re-emerged from bankruptcy twice during the
Relevant Period, and was acquired by a private equity firm following its 2009
emergence as private corporation FXI-Foamex Innovations.
Michelle Rash, “Buyout leads foam firm to sell two Triad plants,” The Business Journal (Feb. 17, 2006).
Available at http://www.bizjournals.com/triad/stories/2006/02/20/story8.html.
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73. A decrease in demand resulting from difficult economic conditions can increase
the susceptibility of collusive behavior, as industry participants resort to unlawful practices to
shore up falling profits or prevent or forestall bankruptcy.
D. Inelastic Demand Due to Lack of Substitutes
74. “Elasticity” is a term used to describe the sensitivity of supply and demand to
changes in one or the other. For example, demand is said to be “inelastic” if an increase in the
price of a product results in only a small decline in the quantity sold of that product, if any.
75. For a cartel to profit from raising prices above competitive levels, demand
typically must be relatively inelastic at competitive prices. Otherwise, increased prices likely
would result in declining sales, revenues and profits, as customers purchase substitute products
or decline to buy altogether.
76. Demand for flexible polyurethane foam is relatively inelastic. According to the
PFA: “Comparing [flexible polyurethane foam] to alternative materials in the areas of
economics, comfort potential, ease of use, and durability, there is not an acceptable substitute.” 17
77. Defendants alleged here to be participants in the conspiracy represent a significant
portion of the United States polyurethane foam market. Because of the prohibitive freight costs
associated with transporting such low-cost, bulky material, imports from outside North America
are not a viable alternative to the purchase of domestically produced flexible polyurethane foam.
E. Standardized Product with High Degree of Interchangeability
78. The PFA recognizes polyurethane foam as a commodity that is interchangeable
Polyurethane Foam Association, FAQ. Available at http://www.pfa.org/faq.html.
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79. When products offered by different suppliers are viewed as interchangeable by
purchasers, it is easier for the suppliers to unlawfully agree on the price for the product in
question, and it is easier to effectively monitor agreed-upon prices. This makes it easier to form
and sustain an unlawful cartel.
F. Opportunities to Conspire
1. Trade Associations and Industry Meetings
80. Various industry trade organizations and events also facilitated Defendants’
illegal conduct. Representatives of Defendants have regularly met through such organizations as
the PFA and the International Sleep Products Association and Surfaces, a trade group that
includes polyurethane carpet underlay producers. Defendants discussed the pricing of flexible
polyurethane foam directly with one another at these meetings,
81. Since at least 2001, PFA meetings have occurred on at least the following dates in
the following locations:
May 10-11, 2001 Arlington, Virginia
October 17-18, 2001 New Orleans, Louisiana
May 8-9, 2002 Arlington, Virginia
October 16-17, 2002 Salt Lake City, Utah
May 7-8, 2003 Arlington, Virginia
October 8-9, 2003 Montreal, Quebec
May 5-6, 2004 Washington, D.C.
October 20-21, 2004 Albuquerque, New Mexico
May 4-5, 2005 Washington, D.C.
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October 5-6, 2005 Charleston, South Carolina
May 3-4, 2006 Washington, D.C.
October 11-12, 2006 Santa Barbara, California
May 23-24, 2007 Baltimore, Maryland
October 3-4, 2007 Point Clear, Arizona
May 21-22, 2008 Baltimore, Maryland
October 1-2, 2008 San Antonio, Texas
May 20-21, 2009 Baltimore, Maryland
November 4-5, 2009 New Castle, New Hampshire
May 26-27, 2010 Baltimore, Maryland
82. PFA members collectively represent 70% of total polyurethane foam production
in the United States.
83. As set forth in detail below, an analysis of publicly available pricing information
indicates that, during trade association meetings held throughout the United States and abroad,
Defendants seized opportunities at these meetings to meet in person to agree upon price
IX. ECONOMIC EVIDENCE SUPPORTING THE EXISTENCE OF A CONSPIRACY
84. Economic analysis of publicly available supply and demand data and pricing
information provide three separate evidentiary bases that support the existence of a conspiracy in
the flexible polyurethane foam industry:
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a. A regression analysis of publicly available data indicates that prices of slabstock
foam have, since at least 2001, exceeded prices that would be expected in a
competitive marketplace. These higher prices have been exceptionally
pronounced since 2005, when well-publicized shortages in raw materials caused
by Hurricane Katrina provided a pretext for Defendants to conspiratorially agree
to increase prices beyond those justified by the shortages, and to maintain those
prices even in the face of decreased demand brought on by the global recession
that began in December 2007 in the United States;
b. A comparison of the dates of PFA meetings with the dates of price increases of
flexible polyurethane foam demonstrates that approximately half of the major
meetings of the PFA in recent years have been followed by significant increases
in the price of flexible polyurethane foam. This strongly suggests that agreements
regarding price increases were reached at the industry meetings; and
c. A comparison of the justifications for the price increases provided to flexible
polyurethane foam customers (which invariably involved purported increases in
raw material supplies) demonstrates that the stated justifications for the increases
do not explain the magnitude of the increases, indicating that the purported
justifications for the price increases were in fact false.
Each of these economic indicia of the alleged conspiracy is discussed in detail below.
A. A Regression Analysis of Pricing In The Slabstock Foam Industry Evidences
Conspiratorial Conduct In That Industry.
85. Economists often measure the effect of an alleged conspiracy to fix prices by
comparing prices in another period or in another market presumptively free from collusion with
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the market in which collusion is alleged to have taken place. See Hovenkamp, supra, §§ 17.5b
and 17.5b2. When two time periods in the same market are compared, this technique is referred
to as a “before and after” analysis.
86. When conducting a “before and after” analysis, economists often use a statistical
technique known as multiple regression analysis to measure the relationship between the price
before the alleged collusion and the price after the alleged collusion began.
87. Multiple regression analysis is a statistical technique which explains the behavior
of one variable, the “dependent variable,” based on the behavior of other variables known as
“independent variables” or regressors. Using multiple regression analysis, it is possible to
measure the relationship between a group of variables and the dependent variable. Multiple
regression analysis has been accepted by courts as a method to isolate a key relationship or
critical influence between one variable and a number of others.
88. In the analysis undertaken by Plaintiffs through counsel, the dependent variable is
the price for slabstock foam. For purposes of the analysis conducted for the complaint, which of
necessity relied only on publicly available data rather than the Defendants’ own data, Plaintiffs
used a blend of two Producer Price Indexes (“PPI”) available from the U.S. Bureau of Labor
Statistics, relating to polyurethane foam used for furniture manufacturing, as a proxy for the
price of slabstock foam. In the absence of data from the Defendants, this data is a reasonable
proxy for slabstock foam pricing, because slabstock foam is the primary form of polyurethane
foam used in the furniture industry. The price of slabstock foam from January 1995 – June 2010
is graphically represented below in Figure 3. 18
A portion of the substantial price increase reflected in 2005 was the result of Hurricane Katrina.
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89. The independent variables that were utilized included the price of polyether
polyol and TDI (the supply variables) and the percent change in furniture shipments obtained
from the U.S. Census Bureau (a demand variable). In addition, to account for the effect of
Hurricane Katrina on price, an indicator variable was included from September to December of
90. The regression model indicates that, beginning no later than 2001, prices for
slabstock foam were approximately 3.5% higher than would be expected in a competitive
91. In evaluating the reliability of a regression analysis, economists often use two
statistical measurements: the “r-squared value” of the model; and the “t-statistic” for the
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variables included in the model.
92. The r-squared value indicates the percentage of the variation in price of the model
that is explained by the variables used in the model. In the case of the model identified above,
the r-squared value is approximately .91. This means that 91% of the variation in price in
slabstock foam can be explained by the variables included in the model. This indicates that the
model provides an extremely good explanation for price variations in the market for slabstock
93. The t-statistic measures the probability that the overcharge identified by the
regression model is the result of chance. In this case, the t-statistic calculated from the
regression model described above is 2.71. Any t-statistic above 2.576 indicates statistical
significance at a very high level. In this case, the t-statistic demonstrates that there is a 99%
chance that the overcharge identified by the model is not due to chance.
94. This economic analysis strongly supports the conclusion that collusive activity
has resulted in increased prices in the market for slabstock foam since at least 2001. Indeed, the
odds that the prices in the industry can be explained by other factors or chance is less than 1%.
95. Plaintiffs also conducted a separate regression analysis to estimate the impact of
the conspiracy on price in the post-Katrina years, when prices of slabstock foam rose
dramatically. This regression analysis demonstrates that during the period between July 2006
and July 2010 (the four years prior to the discovery of the conspiracy alleged herein) the
overcharge resulting from the unlawful conduct alleged herein was approximately 15.2%.
96. As with the model described above, this model is extremely reliable, with an r-
squared value of .92 and a t-statistic of 6.16, indicating a much greater than 99% chance that the
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price variations in the market for slabstock foam between 2006 and 2010 were not the result of
B. Price Increases Closely Followed Industry Meetings.
97. Defendants communicated directly with one another regarding the pricing of
polyurethane foam, sometimes at PFA industry meetings. Further, increases in flexible
polyurethane foam prices often closely followed industry meetings. As Courts have recognized,
this suggests that conspiratorial conversations regarding prices took place at these meetings.
98. Specific examples of PFA meetings since at least 2001 that were closely followed
by increases in slabstock foam prices include:
• A meeting of the PFA occurred from October 17-18, 2001. Over the next two
months, prices increased by 2.3%.
• A meeting of the PFA occurred from May 8-9, 2002. Over the next four months,
prices increased by 2.0%.
• A meeting of the PFA occurred from May 7-8, 2003. Over the next two months,
prices increased by 0.8%.
• A meeting of the PFA occurred from October 8-9, 2003. Over the next two
months, prices increased by 1.7%.
• A meeting of the PFA occurred from May 3-4, 2006. Over the next four months,
prices increased by 9.3%.
• A meeting of the PFA occurred from October 3-4, 2007. Over the next four
months, prices increased by 3.0%.
• A meeting of the PFA occurred from May 21-22, 2008. Over the next four
months, prices increased by 17.3%.
• A meeting of the PFA occurred from May 20-21, 2009. Over the next four
months, prices increased by 6.7%.
• A meeting of the PFA is assumed to have occurred in May 2010. Over the next
month, prices increased by 6.2%.
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99. The following chart, Figure 4, graphically illustrates how significant price
increases often followed PFA meetings:
C. Defendants’ Stated Reasons For Increases In Prices Were False
100. Defendants often provided reasons for price increases that were demonstrably
101. For example, throughout the period 2006-2010, Defendants generally justified
price increases of flexible polyurethane foam by referring to increases in raw material prices.
While in some cases there were increases in raw material costs, in other cases there were no such
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increases or the increases in the cost of the raw materials were not sufficient to justify the
increase in slabstock foam prices.
102. Moreover, even where there were increases in input prices, these increases were
more than offset by decreases in flexible polyurethane foam demand, which should have led to a
decrease, rather than an increase, in prices.
103. The following chart, Figure 5, compares slabstock foam prices with demand for
slabstock foam, and demonstrates that Defendants’ stated reasons for the price increases were
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X. DEFENDANT VITAFOAM’S ADMISSION OF A CONSPIRACY
104. In February 2010, Vitafoam voluntarily approached the U.S. Department of
Justice, Antitrust Division, to self-report evidence of illegal antitrust activities amongst itself and
other companies and individuals in the industry (“competitors”) and to seek acceptance into the
Antitrust Division’s Corporate Leniency Program. Since that time, Vitafoam and its employees
have been cooperating with this investigation.
105. As a result of its application, Vitafoam has received a conditional leniency letter
from the DOJ’s Antitrust Division. This fact, in and of itself, is significant. It means that
Vitafoam has admitted to participation in a conspiracy to violate the antitrust laws. The
significance of obtaining a conditional leniency letter was explained by Scott D. Hammond,
Deputy Assistant Attorney General for Criminal Enforcement, in a November 19, 2008
presentation available on the DOJ’s website at www.usdoj.gov/atr/public/criminal/239583.htm:
Does a leniency applicant have to admit to a criminal violation of
the antitrust laws before receiving a conditional leniency letter?
Yes. The Division’s leniency policies were established for corporations
and individuals “reporting their illegal antitrust activity,” and the policies
protect leniency recipients from criminal conviction. Thus, the applicant
must admit its participation in a criminal antitrust violation involving
price fixing, bid rigging, capacity restriction, or allocation of markets,
customers, or sales or production volumes before it will receive a
conditional leniency letter. Applicants that have not engaged in criminal
violations of the antitrust laws have no need to receive leniency protection
from a criminal violation and will receive no benefit from the leniency
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XI. EVIDENCE SUPPORTING THE EXISTENCE OF A CONSPIRACY
A. Overview of The United States Government Investigations
106. On or about July 27, 2010, it was publicly disclosed that the FBI, as part of a
multi-jurisdictional investigation of polyurethane foam manufacturers, raided the offices of
Carpenter and its competitors and seized documents and shuttered certain of Carpenter’s offices.
107. Carpenter confirmed the investigation, saying: “In connection with a multi-
jurisdiction investigation of the pricing practices to [sic] polyurethane foam products, the U.S.
government has required that manufacturers of polyurethane foam, including Carpenter Co.,
produce information and documents. Carpenter Co. is being fully responsive and cooperative
with the government to facilitate their review.”
108. On or about that same day, the European Commission (“EC”) raided the offices of
several polyurethane foam manufacturers. Carpenter was one of the targets of the EC raids as
109. To obtain search warrants, as it appears that it did here against Carpenter and
other Defendants, the United States must demonstrate to a magistrate judge probable cause,
recounted in a sworn affidavit or testimony grounded on reasonably trustworthy information, that
it would obtain evidence of an antitrust violation as a result of executing the search warrant.
That is, the United States had to have evidence sufficient to warrant a person of reasonable
caution to believe that raiding the offices of a seemingly lawful business would uncover evidence
of antitrust violations.
110. During the course of the investigation, the United States government gathered
extensive direct evidence of a conspiracy to fix prices and allocate customers in the flexible
polyurethane foam industry. This evidence is set forth in paragraphs 122-157 below, and was
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described in an affidavit filed by the United States government in the Western District of North
Carolina that was briefly unsealed.
B. Evidence Acquired During the Government Investigation
111. A former President of Vitafoam, who worked for Vitafoam from the 1960s until
October 2008, along with other individuals at Vitafoam, directly participated in the long-running
price-fixing and customer allocation conspiracy alleged herein relating to polyurethane foam in
112. Another Vitafoam employee, a former vice president of Sales and Marketing for
Vitafoam, worked in the polyurethane foam industry since 1963. He first worked for
Woodbridge and then in 1973 joined Vitafoam’s predecessor, Pre-Fab Cushioning Products.
This former vice president worked for Vitafoam in Canada until March 2009, when he retired.
He, along with other individuals at Vitafoam, as well as other companies, had been involved in a
long-running price-fixing and customer allocation conspiracy that included North America and
the United States.
113. The impetus for the conspiratorial conduct was typically increases in raw material
costs. Defendants (or “foamers” as they are referred to at times in the industry) utilize
chemicals, including polyols and TDI in the manufacturing of polyurethane foam.
114. When Defendants’ raw material suppliers announced price increases for chemical
ingredients of foam, such as polyols and TDI, the foamers contacted each other. During the
communications, the Defendants discussed supporting specific price increases and the timing of
announcements regarding an effective date of such increases. The former president Vitafoam
has knowledge that this type of concerted activity has gone on for at least 20 to 25 years.
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115. During this period, there was an understanding and agreement among the
competitors in the foam industry to collectively support price increases. This understanding and
agreement was reached in actual discussions among competitors about the percentage of price
increases, the dates of the increases, and how the conspirators would announce the increases with
typically the same effective dates. Price increase announcement letters were then mailed to
customers, reflecting the prices determined by the conspirators.
116. Defendants communicated their price increases through direct communication,
exchange of price increase letters in advance of mailing letters to customers, and by using
chemical companies as conduits for information.
117. The former president of Vitafoam, along with his subordinates, had conspiratorial
discussions with competitors concerning this conspiracy to fix prices and to allocate customers.
These discussions included Tony Dacosta, Al Zinn, and Doug Dauphin of Defendant Foamex;
Max Tenpow of Defendant Carpenter; Bruce Schneider of Defendant Future Foam; Don
Coleman of Defendant Hickory; and Robert Valle and Dean Bryiannis of Defendant Valle Foam.
118. Vitafoam had a policy of not having conversations with competitors, but this
policy was merely window dressing and was not followed in practice.
119. As part of the conduct to coordinate or support price increases, the former
Vitafoam president instructed his sales people to send copies of their draft price increase letters
120. In addition to discussions he had with competitors, the salespeople of Vitafoam
also had discussions with the other Defendants concerning price increases and the timing of
those increases. These discussions involved inquiries as to whether each competitor was going
to support the price increase, when the price increases were going to be issued and what the
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effective dates would be of the increases. Vitafoam personnel who participated in these
discussions included Steve Prescott, Gerry Hannah, David Gurley, Frank Roncandin, George
Newton, and Phil Fonseca.
121. The former vice president and others at Vitafoam also participated in
conspiratorial conduct with many individuals employed by numerous companies, including:
Valle, Carpenter, Woodbridge, Flexible Foam, Hickory Springs, Scottdel, and Foamex.
Individuals at the various competitors included: Stanley Pauley, Ed Malacheck, Mark Kane and
Max Tenpow of Carpenter; Tony Vallecoccia, Dean Bryiannis and Robert Val of Valle Foam;
Doug Dauphin and Tony Dacosta of Foamex; and John Howard of Domfoam. Others at
Vitafoam who engaged in this conduct included Steve Prescott, David Gurley, George Newton,
and Tim Prescott.
122. The former vice president of Vitafoam had communications in furtherance of the
conspiracy with Mark Kane of the Defendant Carpenter Group. He and Kane had discussions on
multiple occasions involving price increases concerning a shared customer. In an effort to
coordinate their price increases and to make sure those increases went through for the mutual
customer, the former vice president and Kane called each other and sent by fax copies of draft
price increase letters.
123. Robert Valle and Tony Vallecoccia of Valle Foam also communicated with other
Defendants – their competitors – by telephone and also faxed each other copies of their draft
price increase letters that would be sent to customers so as to coordinate and collude on price
increase percentages and their effective dates.
124. Vitafoam employee David Gurley was a manager involved in scrap foam, which
was obtained for use in carpet underlay production. Gurley also had numerous contacts with
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U.S. polyurethane competitors. As a result of his contacts with competitors, Gurley provided the
former Vitafoam executives, as well as Steve Prescott, with draft price increase letters and
125. During the Relevant Period, Vitafoam employee George Newton contacted
Carpenter employee Max Tenpow regarding price increases and the effective dates.
126. During these price increase time periods, Defendants also agreed to avoid each
other’s customers and to not attempt to take business or market share from one another.
127. A former Woodbridge employee who was employed in Ontario, Canada, from
1986 until 2009 participated in the conspiracy. While working at Woodbridge, this employee
served most recently as vice president of Commercial Sales where he had authority to determine
prices. This former Woodbridge employee is currently employed at Vitafoam as its Vice
President of Sales, a position he has held since April 2009. In his current position he has
authority to determine prices. This current Vitafoam vice president, along with other individuals
employed by Defendants, has been engaged in a long-running price-fixing and customer
128. This current Vitafoam vice president has engaged in the conspiratorial activity by
reaching understandings and agreements on price increases with most of Vitafoam’s competitors
for the same percentage on the same effective date. He has had personal involvement in this
conduct since the early 1990’s when he became involved in pricing at Woodbridge, and
continued when he joined Vitafoam. This activity involved the U.S. and Canadian markets. The
objective of the price increase scheme was for the conspirators to collectively pass raw material
cost increases on to their customers, as well as to maintain their respective market shares.
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129. The participants in this conduct with the current Vitafoam vice president included
Woodbridge, Vitafoam, Foamex, Carpenter, Vitafoam U.S., Future Foam, Hickory Springs,
Scottdel, Valle and Flexible Foam. The Vitafoam vice president coordinated price increases
among competitors, as did co-workers of his at Woodbridge and Vitafoam. The individuals
involved in the conspiracy included Bill Lucas and Rik Hennink of Vitafoam U.S.; Peter Farah,
Mel Himel, Bob Zorak, David Gurley and Ted Giroux of Vitafoam; Tony Vallecoccia of Valle;
Donald Phillips and Vincent Bonaddio for Foamex; Bob Magee, Martin Mazza, and Gus
Pasquarelli of Woodbridge; Buster Mann, Todd Councilman and Don Coleman of Hickory
Springs; Michael Crowell of Flexible Foam; and Louis Carson of Scottdel.
130. The current Vitafoam vice president’s discussions relating to coordinating price
increases among competitors were conducted primarily by means of telephone, electronic mail,
and in-person meetings. In-person discussions frequently took place at PFA meetings.
131. The current Vitafoam vice president and other participants in this conspiracy took
numerous steps to avoid detection of their conspiracy. At times, full names would not be used in
correspondence and instead participants would only use first names or initials. Conspirators took
advantage of attending the PFA meetings along with their competitors and met to discuss
coordinating price increases outside of the formal meetings. Similarly, competitors visited each
other’s manufacturing facilities for the purported purpose of sharing technological and
operational advances, but were actually using the opportunity to discuss coordinated price
increases. Another method to avoid detection involved going to a local Staples or other office
store to use the public facsimile machines to send each other price increase letters without the
identifying facsimile transmission banner.
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132. On May 26, 2010, Vice President of Sales for Vitafoam attended a PFA meeting
in Baltimore, MD. While there, he discussed foam pricing with competitor Michael Crowell of
Flexible Foam. This conversation involved him being asked by Crowell why Vitafoam was not
raising prices or following the increase.
133. The former Director of Corporate Engineering at Woodbridge is now the
president of Vitafoam. He was employed at Woodbridge from 1985 until January 2008. As the
Director of Corporate Engineering he had authority to determine prices at Woodbridge. As the
president of Vitafoam, a position he has held since August 2008, he now has authority to
determine prices at Vitafoam. He, along with other individuals of Defendant companies, also
participated in the long-running price-fixing and customer allocation conspiracy.
134. Discussions with competitors in the foam industry involving the current president
of Vitafoam while he was at Woodbridge included conversations about legitimate topics like
business development or potential joint ventures, and then ultimately led to conspiratorial
conversations about price increases. These discussions about coordinated pricing took place by
in-person discussions, electronic mail communications, and telephone conversations.
135. This individual participated in conspiratorial discussions concerning pricing in the
foam industry while at Woodbridge and Vitafoam with various competitors, including: Bill
Lucas of Vitafoam; Donald Phillips and Vincent Bonaddio of Foamex; Michael Crowell of
Flexible Foam; Tony Vallecoccia of Valle; Stanley Pauley of Carpenter; Don Simpson, Buster
Mann and Lee Lunsford of Hickory Springs; and, Bruce Schneider and Robert Heller of Future
Foam. These discussions led to a clear understanding and agreement that after the participants
would discuss the price increases and effective dates, they would then implement increases in
accordance with that coordination.
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136. While at Vitafoam, the current president has received Vitafoam’s competitors’
draft price increase letters from other Vitafoam personnel, including David Gurley. These
include an email of David Gurley’s, in which he acknowledges receiving draft price increase
letters from competitor Don Simpson of Hickory Springs.
137. Defendants also undertook efforts to police the conspiracy. Participants,
including the former Vice President of Vitafoam, followed up after discussions with competitors
to see if the specific price increases and effective dates were actually being implemented. For
example, the Vitafoam V.P. called Valle and Carpenter to see if those competitors were putting
the increases through as they had discussed and agreed.
C. Examples of Specific Communications Regarding Price Fixing and Customer
Allocation Obtained During the Government Investigation
138. On May 12, 2010, in Cleveland, Ohio, a telephone call occurred between Bruce
Schneider (“Schneider”) of Future Foam and the president of Vitafoam. Schneider works at
Future Foam headquarters. Sometime prior to this call, Schneider had placed a call to
Vitafoam’s president inquiring about Vitafoam’s price increase plans. During the call of May
12, 2010, Schneider discussed price increases involving foam producers. Schneider stated:
“Now it’s looking it’s all everything is postponed to May 31st or June 1st. There is a letter out
from Carpenter for 31st of May. This is a letter out from Flexible for June 1st. Foamex sent a
letter two weeks ago at 15% but it looks like now that the increase is going to be 10 and 12% on
foam.” The Vitafoam president asked: “Are you hearing anything from the other guys? Or is it
just kinda market stuff?” Schneider responded: “Oh, from the other, the other people the
foamers? Yeah, we are hearing 10-12… It’s kinda what we hear from other people what they
expect. Ya know, it would have been great to get 20% but I don’t think so.” The conversation
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concluded with a request for information from Schneider: “If you hear anything from your
friends in Europe. What’s going on over there, I sure would like to know that as well.”
139. On June 10, 2010, Schneider left a voice mail message for the president of
Vitafoam. In this message, Schneider stated, “Hi [president], this is Bruce Schneider… . If you
want to give me a call I’ve got information of why the increase changed from 10 to 12 to 9.”
140. In another instance, the current president of Vitafoam heard from a customer that
Valle was not increasing prices. The president then had the Vitafoam Vice President of Sales
speak with Tony Vallecoccia of Valle to find out why Valle was not following the coordinated
141. On May 20, 2010, John Howard, president of Domfoam, called the Vice
President of Sales of Vitafoam twice to voice complaints about a Vitafoam salesman,
Normand Widmer, attempting to acquire Domfoam customers. He stated:
Your fellow in Montreal here has been out, has his salesman
Claude Robinson out knocking on doors they’ve never knocked on
before, selling at or quoting at low low prices. If he wants a battle,
I’ll give him a battle…These guys have been in at accounts they’ve
never sold at…if he wants a battle, he’s got one. We will start
going after his accounts and it won’t be pretty. We’ll both end up
hurting…I’m pissed off and our sales guys are pissed off and
they’re saying ‘John, are you going to do something about this, or
are you just going to let this guy keep quoting low prices and
taking business away from us. So. I’ll let the dogs loose or I don’t
let the dogs loose. Want to mill it over and give me a shout back?
The Vice President of Vitafoam responded: “It’s sort of a bad time for me right now.”
Howard then stated:
I don’t expect an answer right now but, I’m leaving tomorrow
night for a week. I would like to at least give the guys some
indication that, ‘Guys, give me another week. I think the dust is
going to settle.’ Or, ‘Guys just do what you have to do. Go follow
their delivery trucks and find out who the customers are and start
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knocking on doors and do whatever the hell you have to do. We
have to respond.’ So you’re in a spot, I don’t expect you to answer
right now, but can you give me a shout back tomorrow?
142. On May 25, 2010, the Vice President of Vitafoam called Howard back. Howard
Just, you know we’ve kind of stayed out of each other’s way for
some time here while business is quiet. There’s just no business to
be had and dropping prices is only going to benefit the customers. I
can’t afford to have him take stuff away…It’ll be a rough go if he
wants to go and quote prices in places where he’s not currently
selling…Tell Normand it’s a, I mean we just don’t even know who
your accounts are. Basically we’ve just never interfered, but, if
he’s going to go selling to guys quoting prices at guys where he
doesn’t currently sell, we’re going to go after his accounts. So,
business decision, you know, whatever way the chips fall, that’s
the way they’re going to fall, and life will go on. But the buyers are
asking me, you know, ‘John, you’re always telling us to stay
away.’ We do the same thing with Foamex, we don’t go after their
accounts. Haven’t for a while business has been in the shitter. Just
kind of stayed away and they’ve stayed away from our accounts
too, so prices have been fairly stable. There ain’t much business
out there and dropping prices and only the customers are going to
benefit. But let him make his decision and if it’s to continue going
after them then tell him there’ll be some consequences. That’s it.
I’m not gonna, no threats but I can’t not do anything. The sales
guys are getting kind of…’Hey, John, you’re telling us don’t go
here, don’t go there, don’t sell that one, don’t go quote prices
there.’ You know, eventually they’re going to think I got no nuts,
so sooner or later I’ve got to tell them ‘Guys, just go and do what
you got to do.’…Keep an eye on this guy, it’s ah, he needs
coaching, there you go.
143. On May 25, 2010, Howard left a voicemail message for the Vice President of
Hi, it’s John…we never really did resolve anything, I guess I did
most of the talking…where do we leave this thing , vis-à-vis going
after each other’s accounts. I’d be quite happy just to let it settle
right here and not do anything more. But if [the president of
Vitafoam] got some real pressure on this fellow Widmer and he’s
going to continue to go after accounts that he currently doesn’t sell,
then I got to, I can’t continue to hold our sales guys off. So, give it
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some thought and maybe over the next day or two, just give me a
shout and let me know. I understand you can’t override [president
of Vitafoam], but I can’t just hold our guys at bay and tell them,
‘Well, don’t do anything guys,’ That’s not a winning strategy for
us either. So, give me a call in the next day or two would you?
And let me know what course of action Widmer’s going to take
144. On June 4, 2010, Tim Prescott of Vitafoam left a voice mail message for
Vitafoam’s Vice President:
Hey, it’s Tim…Can you give me a call when you get a chance. I
don’t know whether you’ve spoken to [president] but I had a
message earlier from Dale over at Carpenter and when I called him
back he was asking what we’re going with the increase and he just
called me again asking can VPS please call John Howard over at
145. On June 3, 2010, Dean Bryuiannis of Valle called Steve Prescott of Vitafoam:
Bryuiannis: I sent you a text regarding price increase letters. I’m
assuming you’ve got most of the ones that you wanted to
Prescott: I didn’t see, I had the old boy had faxed me one from a
couple of days ago…Yah, okay, no problem, Yah, I guess,
like that’s, you know, it’s game on again, isn’t it.
Bryuiannis: Ah, we’ll see what happens. I’ve got Carpenter, Flexible,
Prescott: But it’s warranted, you know what I mean. Like, we know
the prices of raw material have been going up, so ah.
Bryuiannis: Well, you know, I guess what we’ve gotta see is have
another one right behind this one, hopefully the first one
will stick right but I guess we will see what our friends at
Carpenter will do.
Prescott: Yah, yah. Well, yah, like I say it’s it’s game on. So I
would imagine that most manufacturers will move forward
with it. We will have to see whether they, whether they do
or not and see how that goes.
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Bryuiannis: Yah, yah. Alright. Well our letter is out so hopefully I’m
assuming you’ve probably put something out by now.
Prescott: It’s as good as done.
Bryuiannis: Okay. Well we’re already out, so we’ve already put our
146. On June 9, 2010, Bryuiannis called Prescott twice, leaving a voice mail message
first, and then called again to further discuss the price increase.
Bryuiannis: Still haven’t seen or heard of your increase letter yet.
Prescott: Well, have a look around.
Bryuiannis: I have. Haven’t found anything yet…I’ve still got one guy
telling me that you haven’t issued a letter. So have you
issued? Yes or no?
Prescott: People will lie to you, Dean.
Bryuiannis: Are you around the same time frame as us? July 5th or
Prescott: Ah, yah, close.
Bryuiannis: Okay. And you haven’t seen what, sorry? You haven’t seen
other increase letters or did you get all of those?
Prescott: Well, I know, I know that, know Stan, Stan said that he’d
seen the Mohawk one and…I guess one of the other U.S.
guys. You know, everyone waits for the leader and once the
leader goes out then everyone else follows cause we all
know that the prices of material have gone up so, you know
what I mean?
Bryuiannis: Well at the end of the day over the last two increases we
have chatted about it so just wanna make sure you got your
Prescott: Yah. Okay pal.
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147. Additional documents, including emails, provide further evidence of this
conspiracy and communication among the competitors.
a. On May 22, 2008, Nikki Walborn at Scottdel sent an email with an attachment of
a draft Scottdel fuel surcharge and price increase letter to a number of Scottdel
employees, including Louie Carson and Jeff Carter (within a year of this email,
Jeff Carter went from Scottdel to Future Foam in Texas). On May 29, 2008, Jeff
Carter forwarded this email and price increase letter to David Gurley at Vitafoam,
which Gurley then forwarded to his superior at Vitafoam, the company president.
b. On July 7, 2008, Jeff Carter, while still at Scottdel, forwarded via email a draft
price increase letter to David Gurley of Vitafoam, stating, “David, Here is a copy
of our next increase letter. Jeff.” Gurley forwarded this email and draft increase
letter to the company president. The president forwarded this string of emails and
draft increase letter to his subordinates at Vitafoam, the V.P. of Sales &
Marketing, and Steve Prescott. On July 9, 2008, Steve Prescott forwarded the
email string and letter to Stan Miller of Vitafoam, with the message, “Hey pal you
thought the first one was tough! Check with your Carpenter contact to see when
they plan on pulling the trigger.”
c. On July 11, 2008, Stan Miller reported back to Prescott via email, stating:
Steve, I talked to Carpenter and he says that he has found
his info. That Mohawk has gone up the 12 points on
business other then the EOR orders from the show. He said
they went up the full 12% in Vancouver and they have
gotten some for the business back. He had not heard of
Scottdale [sic] increase but had been told that there was a
good chance they would be going up. I just talked to
Randy from Schneider and he said from the pricing his
sales people have found that Mohawk has not gone up.
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Carmine has been after him for copies of their pricing but
he can’t get his hands on it. He told me they lost an order
to Mohawk in Calgary for Carpet Supermarket and that is
where Ben Flagel is now.
Prescott asked in an email to Miller: “Will Ben share info?” Miller shortly
thereafter on the same day responds to Prescott via email, stating, “Dan from
Carpenter just called and said they will be going up 13% on Aug. 11/08.”
d. On May 21, 2009, Steve Prescott of Vitafoam sent draft price increase letters to
other Vitafoam employees. One of the recipients, David Gurley of Vitafoam,
forwarded those price increase letters to Jeff Carter of Future Foam in Texas. Jeff
Carter then forwarded this email to David Carson and Louie Carson of Scottdel
Louie and David, You [sic] probably have seen all these.
It’s crazy out there again, personally I don’t think this is
enough of an increase.
e. Louie Carson responded to Carter thanking Carter for the information. Carter
forwarded his string of emails with Louie Carson back to David Gurley at
Vitafoam. Gurley forwarded the string to his superiors at Vitafoam, the V.P. of
Sales and the president, with the message:
Please keep this confidential and read from the bottom up.
It was sent to my friend Jeff Carter @Future Foam in Texas
and talks about Vita and Ohio Valley. Louie Carson is one
of the owners of Scotdel [sic].
D. Evidence obtained by the Canadian Commissioner of Competition
148. Information sworn under oath on July 21, 2010 by Pierre-Yves Guay of the
Commissioner of Competition in Canada in support of a search warrant references information
provided by “Witness A.” “Witness A” is the individual described above, the current president
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of Vitafoam, and the information pertains to conduct “in Canada and in the United States.” The
information sworn to under oath by Mr. Guay provides that: “Witness describes himself as
someone who gathers and shares information across the foam sectors. Witness A confirmed to
Competition Law Officers that he had discussions, exchanges of information and agreements
regarding the price of foam with the following contacts within the foam industry:
Companies Contacts Positions
Foamex Vinnie A. Bonaddio Senior Vice President,
Technical Products Group
Foamex Don Phillips Executive Vice President,
Automotive Parts Division
Vallefoam Tony Vallecoccia President
DomFoam International Inc John Howard President
Ottobock [sic] John Vins Sales Manager
Plastomer Bill Baughman Chief Executive Officer
Inoac International Co. Mike Cotter Marketing Manager
Inoac International Co. Ken Miya Managing Director
Hickory Springs Todd Councilman Marketing – Sales Manager
Flexible Foam Products Mike Crowell VP Sales and Marketing
Vita Mel Himel President
Hickory Springs Buster Mann VP, Eastern Division
CMI Automotive Jorge Canamero President
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Conduit of information: 19
Companies Contacts Positions
Bondtex Incorporated Jerry Hightower President
Cerex Fabric Dan Holsenbeck Sales Manager
Inoac USA Max Ozeki VP Foam Division
Morbern Inc John Weaver VP Sales and Marketing
149. Mr. Guay’s sworn affidavit describes itself as the result of an investigation of
“previous and ongoing conduct contrary to” the Competition Act of Canada by entities including
Carpenter, Valle, Domfoam, A to Z Foam, Vitafoam, Foamex, Flexible Foam, Future Foam,
Mohawk, Scottdel, Broadway Foam, Woodbridge, Leggett & Platt, and Hickory. The affidavit
describes violations of law arising from conduct both “in Canada and in the United States.”
E. Additional Evidence
152. Documents that have been produced in Urethanes offer further support of
Plaintiffs’ conspiracy allegations. For example, in a 2004 email, L&P executive vice president
Joe York reported to L&P executives, including those responsible for purchases of polyurethane
Foamex confirmed today they saw a Carpenter increase letter announcing a 9% increase
effective 6/28/04. Foamex will have a letter out this week. Supposedly, Future will also
have one out this week. Carpenter intends to increase prices again 8/1/04, depending on
the 7/1/04, chemical increase. We should have our letters ready to mail to selected
“Conduit of information means that Witness A had discussions with these individuals who reported market
conditions and price increases by alleged cartel members to him. These discussions were not about price fixing or
market allocation but rather represented simply a transmission of information.”
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153. Mr. York emailed L&P executives in a similar fashion on October 17, 2005,
stating that: “When I was on the west coast last week I was told Carpenter & Foamex were
implementing price increases on buns of 56% effective 11/1/05. I got this from the Foamex
manager so it should be reliable” (emphasis added). L&P’s expense reports contain information
indicating that meetings occurred among L&P executives and its competitors, and in particular
that, five days prior to sending this email, Mr. York met with Bud Silvey of Foamex, an L&P
154. In 2007, L&P sold the assets of its polyurethane foam business to AUT. Like
L&P and other Defendants, AUT continued to communicate with competitors regarding the price
of polyurethane foam, furthering the understanding and agreement among the competitors in the
foam industry to collectively support price increases. Discussions and decisions about such price
increases were held and made in advance of announcements to customers.
155. At least 18 L&P employees transitioned to work at AUT, including certain of the
same executives who were directly involved in the alleged conspiracy while they worked at
L&P. Among these was L&P’s executive with responsibility for purchases of polyurethane
foam, who took charge of polyurethane sales for AUT. This executive was a direct recipient of
the Mr. York’s emails of 2004 and October 17, 2005 described above, and was thus a participant
in the alleged conspiracy. The executive also engaged in direct discussions with other
Defendants’ representatives regarding the pricing of flexible polyurethane foam. Upon
information and belief, the executive continued to engage in the same coordinated price fixing
when he took charge of polyurethane sales at AUT.
156. AUT’s subsequent head of polyurethane sales was Mr. Joseph Progar. Mr. Progar
was also a former L&P manager of polyurethane foam. While he worked for AUT, Mr. Progar,
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authored letters to customers announcing AUT’s price increases of foam products. Other
employees authored price increase letters both when they worked at L&P and when they came to
work at AUT. At least some of these letters were sent in coordination similar price increase
letters by other Defendants.
157. The practice of coordinating prince increase letters was longstanding: at least
Defendants Vitafoam, L&P, Mohawk, Flexible Foam, Carpenter, Future Foam, Foamex, AUT,
and Scottdel, as well as co-conspirators Domfoam and Valle Foam, each announced similar price
increases in conjunction with their co-conspirators and, upon information and belief, with the
prior knowledge of other Defendants’ and co-conspirators’ close-to-simultaneous raises.
158. In addition, certain of the former L&P employees who transitioned to work for
AUT attended meetings of the PFA both while they worked at L&P and then subsequently while
they worked at AUT. As already set forth above, this provided L&P and AUT personnel
opportunities to conspire with other foamers.
XII. ACCRUAL OF CLAIM, CONTINUING VIOLATION, EQUITABLE TOLLING,
AND FRAUDULENT CONCEALMENT
159. Plaintiffs had no knowledge of the combination and conspiracy alleged herein, or
of any facts that might have led to the discovery thereof in the exercise of reasonable diligence,
prior to disclosure of Vitafoam’s cooperation with the DOJ.
160. Defendants and their co-conspirators have committed continuing violations of the
antitrust laws resulting in monetary injury to Plaintiffs. These violations constitute injurious acts
which restart the applicable statute of limitations.
161. In addition, Defendants’ and their co-conspirators’ agreement, understanding and
conspiracy in violation of the antitrust laws was kept secret. As a result, Plaintiffs were unaware
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of Defendants’ unlawful conduct alleged herein and did not know that they were paying
artificially high prices for flexible polyurethane foam throughout the United States throughout
the Relevant Period. Defendants and their co-conspirators affirmatively and fraudulently
concealed their unlawful conduct.
162. Plaintiffs did not discover, nor could have discovered through reasonable
diligence, that Defendants and their co-conspirators were violating the antitrust laws until shortly
before this litigation was initially commenced, because Defendants and their co-conspirators
used deceptive and secret methods to avoid detection and to affirmatively conceal their
163. Neither Defendants nor their co-conspirators told Plaintiffs that they were fixing
prices and allocating customers, or engaging in the other unlawful collusive practices alleged
herein. By its very nature, Defendants’ and their co-conspirators’ conspiracy was inherently self-
164. Defendants and their co-conspirators engaged in a successful price-fixing and
customer allocation conspiracy, which they affirmatively concealed:
a. By meeting secretly (including use of private telephonic communications) to
discuss prices, customers, and markets of flexible polyurethane foam sold in the
United States and elsewhere;
b. By agreeing among themselves at meetings and in communications not to discuss
publicly, or otherwise reveal, the nature and substance of the acts and
communications in furtherance of their illegal scheme;
c. By using first names and initials on written communications to disguise their
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d. By holding secret meetings outside and separate from the formal trade association
meetings Defendants were publicly attending;
e. By disguising price-fixing meetings and communications as technical and
operational meetings; and
f. By using fax machines at publicly available outlets to disguise the source of faxes.
XIII. ANTITRUST INJURY TO PLAINTIFFS SPRING AIR INTERNATIONAL AND
165. The unlawful contract, combination and/or conspiracy alleged above had and is
having, inter alia, the following effects:
a. Prices charged by Defendants and their co-conspirators to Plaintiffs Spring Air
International and CBI for flexible polyurethane foam product were maintained at
artificially high and supracompetitive levels;
b. Plaintiffs Spring Air International and CBI were required to pay more for flexible
polyurethane foam than they would have paid in a competitive marketplace
unfettered by Defendants’ and their co-conspirators’ collusive and unlawful price-
c. Plaintiffs Spring Air International and CBI have been deprived of the benefits of
free, open and unrestricted competition in the market for flexible polyurethane
166. During and throughout the period of the contract, combination or conspiracy
alleged above, Plaintiffs Spring Air International and CBI directly purchased flexible
polyurethane foam in the United States.
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167. Plaintiffs Spring Air International and CBI paid more for the flexible
polyurethane foam than they would have paid under conditions of free and open competition.
168. As a direct and proximate result of the illegal combination, contract or conspiracy
alleged above, Plaintiffs Spring Air International and CBI were injured and financially damaged
in their businesses and property, in amounts that are not presently determined.
169. This is antitrust injury of the type that the federal laws were meant to punish and
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XIV. ANTITRUST INJURY TO PLAINTIFFS SPRING AIR OHIO, SPRING AIR
UTAH AND E&E BEDDING
170. The unlawful contract, combination and/or conspiracy alleged above had and is
having, inter alia, the following effects:
d. Prices charged by Defendants and their co-conspirators to Plaintiffs Spring Air
Ohio, Spring Air Utah and E&E Bedding for flexible polyurethane foam product
were maintained at artificially high and supracompetitive levels;
e. Plaintiffs Spring Air Ohio, Spring Air Utah and E&E Bedding were required to
pay more for flexible polyurethane foam than they would have paid in a
competitive marketplace unfettered by Defendants’ and their co-conspirators’
collusive and unlawful price-fixing; and
f. Plaintiffs Spring Air Ohio, Spring Air Utah and E&E Bedding have been deprived
of the benefits of free, open and unrestricted competition in the market for flexible
171. During and throughout the period of the contract, combination or conspiracy
alleged above, Plaintiffs Spring Air Ohio, Spring Air Utah and E&E Bedding directly purchased
flexible polyurethane foam in the United States.
172. Plaintiffs Spring Air Ohio, Spring Air Utah and E&E Bedding paid more for the
flexible polyurethane foam than they would have paid under conditions of free and open
173. As a direct and proximate result of the illegal combination, contract or conspiracy
alleged above, Plaintiffs Spring Air Ohio, Spring Air Utah and E&E Bedding were injured and
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financially damaged in their businesses and property, in amounts that are not presently
174. This is antitrust injury of the type that the federal laws were meant to punish and
XV. INTERSTATE TRADE AND COMMERCE
175. The conduct of Defendants and their co-conspirators has taken place in, and
affected the continuous flow of interstate trade and commerce of the United States, in that inter
a. Defendants and their co-conspirators have sold polyurethane foam throughout the
b. Defendants and their co-conspirators have each used instrumentalities of interstate
commerce to sell polyurethane foam throughout the United States;
c. In furtherance of the conspiracy alleged herein, Defendants have traveled between
states and have exchanged communications through interstate wire
communications and via U.S. mail; and
d. The conspiracy alleged herein has affected billions of dollars of commerce.
Defendants and their co-conspirators have inflicted antitrust injury by artificially
raising prices paid by Plaintiffs and other entities who are themselves engaged in
XVI. COUNT I: VIOLATION OF THE SHERMAN ACT
As to all Defendants except AUT
176. Plaintiffs re-allege and incorporate each and every allegation set forth above as if
fully written herein.
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177. From a date unknown, but beginning at least as early as 1999 and continuing
through at least December 31, 2010, Defendants and their co-conspirators have combined,
conspired and/or contracted to restrain interstate trade in violations of Section 1 of the Sherman
Act, 15 U.S.C. § 1, and Section 4 of the Clayton Act, 15 U.S.C. § 15.
178. In furtherance of the unlawful conspiracy, each of the Defendants and their co-
conspirators has committed overt acts, including, inter alia:
a. agreeing to charge prices at certain levels and otherwise to fix, increase, maintain
and/or stabilize prices of polyurethane foam sold in the United States;
b. communicating with co-conspirators regarding prices to be charged for
c. agreeing to allocate customers; and
d. meeting with co-conspirators in order to keep the existence of the conspiracy
unknown as to foster the illegal anti-competitive conduct described herein.
179. Defendants and their co-conspirators engaged in the activities described above for
the purpose of effectuating unlawful arrangements to fix, maintain, raise and/or stabilize prices
of polyurethane foam.
180. Plaintiffs, therefore, have been injured and financially damaged in their respective
businesses and property in an amount to be determined according to proof and are entitled to
recover threefold the damages sustained pursuant to Section 4 of the Clayton Act, 15 U.S.C. §
181. The conduct of Defendants and their co-conspirators constitutes a per se violation
of Section 1 of the Sherman Act, 15 U.S.C. § 1.
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XVII. COUNT II: VIOLATION OF THE SHERMAN ACT
As to AUT
182. Plaintiffs re-allege and incorporate each and every allegation set forth above as if
fully written herein.
183. From March 2007 and continuing through at least December 31, 2010, AUT and
its co-conspirators have combined, conspired and/or contracted to restrain interstate trade in
violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 4 of the Clayton Act, 15
U.S.C. § 15.
184. In furtherance of the unlawful conspiracy, AUT and its co-conspirators have
committed overt acts, including, inter alia:
e. agreeing to charge prices at certain levels and otherwise to fix, increase, maintain
and/or stabilize prices of polyurethane foam sold in the United States;
f. communicating with co-conspirators regarding prices to be charged for
polyurethane foam; and
g. meeting with co-conspirators in order to keep the existence of the conspiracy
unknown as to foster the illegal anti-competitive conduct described herein.
185. AUT and its co-conspirators engaged in the activities described above for the
purpose of effectuating unlawful arrangements to fix, maintain, raise and/or stabilize prices of
186. Plaintiffs, therefore, have been injured and financially damaged in their respective
businesses and property in an amount to be determined according to proof and are entitled to
recover threefold the damages sustained pursuant to Section 4 of the Clayton Act, 15 U.S.C. §
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187. The conduct of AUT and its co-conspirators constitutes a per se violation of
Section 1 of the Sherman Act, 15 U.S.C. § 1.
XVIII. PETITION FOR RELIEF
WHEREFORE, Plaintiffs petition that:
A. The contract, combination or conspiracy, and the acts done in furtherance thereof
by Defendants and their co-conspirators, be adjudged to have been in violation of Section 1 of
the Sherman Act, 15 U.S.C. § 1.
B. Judgment be entered for Plaintiffs against Defendants, jointly and severally, for
three times the amount of damages sustained by Plaintiffs as allowed by law, together with the
costs of the action, including reasonable attorneys’ fees, and pre- and post-judgment interest.
C. Defendants, their affiliates, successors, transferees, assignees, and the officers,
directors, partners, agents and employees thereof, and all other persons acting or claiming to act
on their behalf, be permanently enjoined and restrained from, in any manner:
1. Continuing, maintaining or renewing the contract, combination or conspiracy
alleged herein, or from engaging in any other contract, combination or conspiracy
having similar purpose or effect, and from adopting or following any practice,
plan, program or device having a similar purpose or effect; and
2. Communicating or causing to be communicated to any other person engaged in
manufacture, distribution or sale of polyurethane foam except to the extent
necessary in connection with a bona fide sales transaction between the parties to
D. Plaintiffs have such other, further and different relief as the case may require and
the Court may deem just and proper under the circumstances.
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XIX. JURY DEMAND
Pursuant to Rule 38(a) of the Federal Rules of Civil Procedure, Plaintiffs demand a jury
trial of all issues triable by jury.
Dated: August 8, 2012 Respectfully submitted,
/s/ Charles E. Tompkins
Charles E. Tompkins (BBO # 678276)
Thomas G. Shapiro (BBO # 454680)
Rachel M. Brown (BBO # 667369)
SHAPIRO HABER & URMY LLP
53 State Street
Boston, MA 02109
Tel.: (617) 439-3939
Fax: (617) 439-0134
Attorneys for Plaintiffs against all Defendants
Eric Watt Wiechmann
Vanessa Roberts Avery
MCCARTER & ENGLISH, LLP
185 Asylum St., 36th Floor
Hartford, Connecticut 06103
Tel: (860) 275-6700
Fax: (860) 724-3397
Attorneys for Plaintiffs against all Defendants
with the exception of AUT and not joining in
Count II of this Complaint
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Philip J. Gordon, Esq.
Gordon Law Group LLP
585 Boylston Street
Boston, MA 02116
Tel.: (617) 536-1800
Fax: (617) 536-1802