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Steves Files New Antitrust Lawsuit as JELD-WEN Continues Anticompetitive Practices

17-Feb-2020

Steves Files New Antitrust Lawsuit as JELD-WEN Continues Anticompetitive Practices; Judge Orders Expedited Review of TRO/Injunction at March 3 Hearing

SAN ANTONIO--(BUSINESS WIRE)--Moving quickly in response to a new antitrust lawsuit filed February 14 by Steves and Sons, Inc. (www.StevesDoors.com) against JELD-WEN, Inc. (NYSE: JELD), a Federal Judge in Richmond, Virginia set a March 3 hearing date for an expedited review of Steves’ request for a temporary restraining order and preliminary injunction regarding JELD-WEN’s continuing string of anticompetitive practices.  

In his order granting the expedited review for the TRO and preliminary injunction as part of Steves’ new lawsuit, Judge Payne stated, “Steves made a substantial showing of likelihood of success and irreparable injury by virtue of the facts shown on the record.”

“The new lawsuit seeks from JELD-WEN antitrust relief to return competition and choice to the marketplace, contract enforcement and substantial damages that would be trebled as an antitrust violation,” Steves attorney Marvin G. Pipkin said.

Steves CEO Edward Steves said, “JELD-WEN’s predatory anticompetitive actions forced us to file our original antitrust lawsuit in 2016, which we won with a unanimous jury verdict and Judge Payne’s divestiture decision. Because JELD-WEN’s recent actions threaten our survival and reputation, the same is true today. Steves will keep fighting to restore competition to the market, so that we and other door manufacturers can continue to sell quality products to our valued customers.”

Sam Bell Steves II, Steves President, said, “JELD-WEN is trying an end run around the judicial process with these new and frankly transparent efforts to strangle our 154-year-old family-owned company in their continued campaign to ‘kill off a few’ and prevent Steves from fairly competing. Through this past week’s proceedings, I believe the court has seen JELD-WEN’s latest actions for what they are, just as the 2018 jury did.”

The new antitrust lawsuit was filed in Judge Payne’s court, the same court in which two years ago a jury unanimously found that JELD-WEN violated the Clayton Antitrust Act in 2012 when it acquired its competitor Craftmaster International (“CMI”). That jury awarded Steves $175 million (after trebling) in past damages and future profits.

Later in 2018, Judge Payne, who presided over the trial, ordered JELD-WEN to sell the Towanda, Pennsylvania manufacturing plant that it had acquired in the illegal merger with CMI. JELD-WEN has appealed those decisions to the United States Court of Appeals for the Fourth Circuit.

Steves’ primary business is the manufacture of molded interior residential doors. To make these doors, Steves must have access to “doorskins,” which are the front and back panels of the doors. Steves, along with most other door manufacturers, has never made doorskins. JELD-WEN makes doorskins (at the Towanda plant and elsewhere), but it also makes and sells doors. Steves and JELD-WEN entered into a doorskin supply agreement in May 2012 under which JELD-WEN agreed to sell to Steves all of the doorskins that it needs. Accordingly, JELD-WEN is not only the primary supplier to Steves of doorskins, it also competes with Steves for the sale of finished doors.

After JELD-WEN merged with CMI, JELD-WEN became the only source of doorskins for Steves and other door manufacturers. That prompted the 2018 jury to find that JELD-WEN violated the antitrust laws when it merged with CMI, according to Pipkin.

However, he said, since entry of the final judgment against JELD-WEN in March 2019, JELD-WEN continued to take advantage of its illicit market power by overcharging Steves for doorskins.

As a result of JELD-WEN’s overcharging, in November 2019 Judge Payne awarded Steves an additional $7 million in damages for overcharges that had accrued from the time of the jury verdict in February 2019 to May 2019. Additional damages on overcharges now exceed $4 million, Pipkin said

“Judge Payne’s order for expedited proceedings follows on the heels of yet another judicial loss for JELD-WEN last week when the judge denied their request for clarification of JELD-WEN’s obligation to price its products according to the jury verdict and amended final judgement,” he said.

“Undeterred by its lengthening list of judicial losses, and in furtherance of its anticompetitive objectives, JELD-WEN has recently utilized a new tactic by substantially under-delivering on Steves’ doorskins orders,” Pipkin said. “Over the past three months, JELD-WEN failed to timely deliver hundreds of thousands of doorskins ordered by Steves.”

“Making matters worse,” Pipkin said, “on December 19, 2019, JELD-WEN declared ‘allocation,’ claiming that demand for doorskins had exceeded its manufacturing capacity. In its notification to Steves about allocation, JELD-WEN had stated that it intended to restrict Steves 2020 doorskin purchases to what it had bought in 2018. However, in open court last week in Richmond, JELD-WEN acknowledged that it would, in fact, use Steves’ 2019 volumes for allocation purposes, rather than the much smaller 2018 numbers.

“Additionally,” Pipkin said, “JELD-WEN now intends to limit Steves on what styles of doorskins it will be allowed to purchase, and in what quantities – something that the supply agreement does not allow and that would prevent Steves from responding to the specific needs of its customers.”

The new antitrust lawsuit filed February 14 states, “JELD-WEN continues in its efforts to ‘kill off’ Steves before the remedies already awarded to Steves can be implemented to restore competition in the marketplace . . . Most recently, JELD-WEN has begun to choke off Steves’ timely access to interior molded doorskins, an essential input in Steves’ business of making residential doors . . . As a result, Steves has been unable to meet its customers’ demands for doorskins, and will not be able to meet those demands so long as JELD-WEN’s actions continue . . . Indeed, by drastically limiting the number and style of doorskins available to Steves – yet apparently not similarly limiting itself – JELD-WEN has found its most effective method yet of damaging Steves’ business.”

The suit further states, “The direct and foreseeable consequence of JELD-WEN’s failure and refusal to deliver doorskins ordered by Steves within 30 days or at all is that Steves was required to turn away new customers for its doors and drop existing customers.”

“The loss of business for Steves caused by JELD-WEN pales in comparison to the damage to the reputation Steves has earned in the marketplace over the past 154 years,” Sam Bell Steves II said.

About Steves & Sons

With interior and exterior door plants in San Antonio, and interior door plants in Richmond, Virginia and Lebanon, Tennessee, Steves & Sons employs more than 1,100 associates. The company continues to build its business and reputation among builders and homeowners across the country with continued emphasis on quality materials, new technology and efficient distribution. (www.StevesDoors.com

Contacts

Marvin G. Pipkin, mpipkin@pipkinlawsatx.com or 210-213-3378