A federal appeals court yesterday upheld a sweeping antitrust judgment against three of the nation's biggest plywood manufacturers, a ruling that could could cost the companies more than $1.5 billion in damage payments to lumber dealers and consumers.
The U.S. Court of Appeals in New Orleans upheld a jury's finding that Georegia-Pacific Corp., Weyerhauser Co. and Willamette Industries conspired to fix prices and overcharge consumers by imposing West Coast freight charges on plywood manufactured in the South and by billing purchasers for freight costs on estimated shipping weights when actual weights were lower.
The case originated with a 1972 complaint by Lyman Lamb Co., a commercial lumber yard in Little Rock, Ark., and the court's ruling represented a complete victory for the corporate David against the Goliaths of the industry.
"We won everything, lock, stock and barrel," said a jubilant John Cooper, the San Francisco lawyer who represented Lamb and scored a personal victory over former solicitor general Robert Bork, who argued the appellate case for the plywood companies. Lamb stands to receive only $150,000 under the treble-damage antitrust formula, he said, "but the formula for computing damages is applicable to everyone who bought plywood" in the late 1960s and early 1970s.
Officials of the three companies have calculated the potential damage payout at between $1.5 billion and $2 billion. All three indicated they plan to ask the U.S. Supreme Court to review the case.
The case involved two kinds of overcharges for plywood. The companies were found to have imposed freight charges for shipments from their West Coast plants even after they began producing plywood in the South and delivering it to local customers. They were also found to have billed customers on the basis of estimated shipping weight when the actual weight was less and, therefore, freight charges were less.
Not only did the appeals court uphold the 1978 finding of a civil jury that the price-fixing occurred, it also upheld the lower court's formula for assessing damages against the companies. That allows plywood consumers to recover three times the losses they incurred when forced to pay the difference between the real freight costs and those for which they were charged.
Truman Hall, materials manager for Lyman Lamb, claims credit for raising the original complaint. "They started producing southern pine plywood here in Arkansas, and I was hauling it on my own trucks, but they still added West Coast freight charges," he said yesterday.
According to Cooper, the Arkansas lumber yard came to him with the case because it had been among the beneficiaries of an earlier antitrust damage case involving gypsum wallboard won by Cooper's firm against some of the same companies.
All three companies informed stockholders in their most recent annual reports that they expected to win the case in the appellate court. Georgia-Pacific said that if it lost, "The damages could be very substantial. Based on estimates of industry sales, the total damages after the required trebling under the relevant statute could be as much as $1.5 billion to $2 billion using the jury's measure of damages (which is not necesarily the measure which would ultimately be used.)"
That formula was upheld by the appeals court in an opinion by Senior Judge Joe Ingraham. The court rebuffed four separate appeals that had been consolidated into one appellate case, ruling for the lumber yards and consumers on every major point.