Wednesday, April 30, 2008
AMY HSUAN
The Oregonian Staff
A Portland federal jury has ordered Weyerhaeuser to pay almost $28 million for unlawfully monopolizing the market for finished alder lumber in a case filed four years ago by a Bend wood products company.
Under federal antitrust law, the award will be tripled to $84 million, making it the biggest-ever antitrust verdict in Oregon or Washington.
The company, based in Federal Way, Wash., said after the Monday award that it would appeal.
"We are confident it will be reversed on appeal because last year the U.S. Supreme Court decided in our favor a case presenting virtually identical issues," said Sandy D. McDade, Weyerhaeuser senior vice president and general counsel. "We fully expect that the Court of Appeals will apply that precedent."
Morelock Enterprises Inc. of Bend filed the suit four years ago and it was later granted class-action status, representing 400 to 500 businesses that use alder logs to produce finished goods.
Morelock alleged that by controlling alder logs, Weyerhaeuser was able to monopolize the market for finished alder, driving up prices and eliminating the competition.
Weyerhaeuser is one of the largest U.S. forest products companies, with $16.3 billion in sales in 2007 and more than 40,000 employees in 13 countries.
Stephen Crew of Portland-based firm O’Donnell, Clark and Crew, representing the plaintiffs, said the company cornered the market of alder logs and drove up prices by an average of 7.5 percent between 2000 and 2006.
In the case, Crew argued that alder lumber is its own market, distinct from other hardwoods, because of its use in specialty materials such as guitars and cabinets. In addition, red alders grow mainly in the Pacific Northwest.
"If you lock up the market for alder saw logs in the Pacific Northwest, you lock up the market for alder logs in the world," Crew said. "If you increase the prices for alder by 5 percent, companies are not going to switch to another hardwood. There is no substitute for alder, and that meets the definition of a market."
The damages awarded to the plaintiffs will be based on how much they overpaid Weyerhaeuser for materials between 2000 and 2006. According to the case, Weyerhaeuser earned $37 million more than it would have had the market been competitive.
The verdict follows on the heels of another case against Weyerhaeuser filed by a competitor, alleging that the company monopolized the alder market. However, the U.S. Supreme Court last year tossed out the $79 million judgment against Weyerhaeuser, saying that large firms could stockpile raw materials for legitimate reasons.
In that suit, a Longview, Wash., company, Ross-Simmons Hardwood Lumber Co., claimed that Weyerhaeuser paid too much for alder logs it didn’t need to corner the market and with the goal of driving competitors out of business. Ross-Simmons went out of business in 2001.
Crew said that while the Ross-Simmons case and the Morelock case were based on similar facts, the two rest on distinctively different arguments. The Ross-Simmons case was brought on by a company competing for the logs. The Morelock case was brought on by companies using those logs for consumer products.
Weyerhaeuser bought up so many alder logs that consumers had no choice but to buy from the company, which then charged higher prices, Crew said.
"We feel pretty confident that it’s very different from the Ross-Simmons case." Crew said. "We weren’t representing competitors. We were representing consumers who were paying too much because there wasn’t competition." The Associated Press contributed to this story.
Amy Hsuan: 503-294-5137; amyhsuan@news.oregonian.com