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Champion Laboratories, Inc. v. American Home Assurance Co.

June 30, 2010

CHAMPION LABORATORIES, INC., PLAINTIFF,
v.
AMERICAN HOME ASSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge

MEMORANDUM OPINION AND ORDER

On or about October 16, 2009, Plaintiff Champion Laboratories, Inc. ("Champion") filed the present Complaint for Declaratory Judgment in the Circuit Court of Cook County, Chancery Division, against Defendant American Home Assurance Company ("American Home"). On November 18, 2009, American Home removed this matter to federal court pursuant to 28 U.S.C. §§ 1441, 1446, based on the Court's diversity jurisdiction. See 28 U.S.C. § 1332. Before the Court is Champion's motion for partial judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) and American Home's motion for summary judgment pursuant to Rule 56(c). For the following reasons, the Court grants American Home's motion for summary judgment and dismisses this lawsuit in its entirety. Accordingly, the Court dismisses Champion's Rule 12(c) motion as moot.

BACKGROUND

Champion, as the named insured, filed the present lawsuit seeking a judgment declaring that the "personal and advertising injury" coverage of certain American Home Commercial General Liability policies obligates American Home, the insurer, to defend and indemnify Champion in relation to a series of class actions lawsuits consolidated as In re Aftermarket Filters Antitrust Litigation, 08 C 4883. (R. 28-1, Def.'s Stmt. Facts ¶ 6.) This underlying multi-district litigation involves two consolidated class action lawsuits: (1) the consolidated direct purchaser complaint; and (2) the consolidated indirect purchaser complaint. (Id. ¶ 8.) These consolidated class action complaints allege that the named defendants, including Champion and Purolator Filters, N.A., LLC ("Purolator"), among others, manufacture and sell replacement oil, air, and fuel filters for use in light trucks and automobiles. (Id. ¶ 9.)

The direct purchaser complaint is brought on behalf of service stations and supply stores that purchased the filters for resale to consumers. (Id. ¶ 10.) The direct purchaser consolidated amended complaint states in relevant part:

This case involves a nationwide conspiracy among the largest manufacturers of light duty (i.e., automotive and light truck) oil, air and fuel filters for sale in the aftermarket (i.e., the market for replacement filters) (collectively, "Filters"). In violation of Section 1 of the Sherman Act, Defendants and their co-conspirators unlawfully agreed to eliminate competition among themselves and to fix, raise, maintain and/or stabilize prices and allocate customers for Filters in the United States beginning on or around March 1, 1999 and continuing to the present ("Class Period"). Defendants' anticompetitive conduct in furtherance of the conspiracy, as alleged herein, included, but was not limited to, in-person meetings, telephone calls, facsimiles and other communications.

(R. 08 C 4483, 150-1, Consolid. Am. Compl. ¶ 1.)

The indirect purchaser complaint is brought on behalf of consumers who purchased the engine filters from the direct purchasers, namely, the supply stores and service stations. (Id. ¶ 11.) The indirect purchaser complaint similarly alleges: This action involves a conspiracy among the Defendants and their co-conspirators to fix prices and to engage in other unlawful practices intended to raise, maintain, and/or stabilize prices for replacement motor vehicle oil, fuel and engine air filters ("Filters").

(08 C 4843, R. 332-1, Second Amend Consolid. Indirect Compl. ¶ 1.)

In the context of the alleged price-fixing scheme, both the direct purchasers and indirect purchasers allege that:

In or around October or November 2004, Defendants informed their respective Customers of the previously agreed-upon Filters price increase. In an attempt to conceal the conspiracy and the collusively coordinated price increase, Defendants "blamed" the increase on rising steel costs.

At or around the same time, one of Champion's largest private-label customers questioned the need for another price increase in 2004. The customer also questioned Champion's explanation that rising steel prices necessitated the price increase. The customer requested that Champion provide it with an additional explanation justifying the price increase.

The request created a serious dilemma for Champion. A few months earlier, Champion had introduced a new oil filter called eCore, twelve models of which fit 75% of the cars on the road. The eCore filter was made, in part, out of fabric instead of steel. Thus, Champion's oil filter input costs had actually decreased by approximately 20% because of its diminished need for raw steel in the manufacture of eCore oil filters.

Instead of providing its customer with its eCore input prices, Champion gave its customer a Purolator spreadsheet for Purolator's outdated input costs, falsely representing Purolator's costs as its own. The spreadsheet satisfied the complaining customer. But more importantly, the spreadsheet concealed the true basis for the price increase: Defendants' unlawful price-fixing agreement. (Consolid. Am. Compl. ¶¶ 80-83 (emphasis in original); see also Second Amend. Consolid. Indirect Compl. ¶¶ 106-109.) After the named defendants allegedly agreed to increase the filters' prices, they announced the price increases and informed their respective customers concerning the price increases. (Consolid. Am. Compl. ¶¶ 80, 84; Second Amend. Consolid. Indirect Compl. ¶ 102; Defs.' Stmt. Facts ¶¶ 15, 20.)*fn1

Both consolidated complaints allege that as a result of the filters' manufacturers' conspiracies, the plaintiffs paid more than they otherwise would have paid for the engine filters that they purchased. (Def.'s Stmt. Facts ¶ 28.) The direct purchaser-plaintiffs allege a single cause of action for horizontal price fixing in violation of Section 1 of the Sherman Act. (Id. ¶ 29.) The indirect purchaser complaint alleges four causes of action: (1) violation of Section 1 of the Sherman Act; (2) unjust enrichment and disgorgement of ...


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