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Sickles v. Cabot Corporation

July 7, 2005

LOUIS SICKLES, PLAINTIFF-RESPONDENT,
v.
CABOT CORPORATION, PHELPS DODGE CORPORATION, COLUMBIAN CHEMICALS COMPANY, DEGUSSA ENGINEERED CARBONS, LP, DEGUSSA AG, AND DEGUSSA CORPORATION, DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-6230-03.

The opinion of the court was delivered by: Axelrad, J.T.C. (temporarily assigned).

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS

APPROVED FOR PUBLICATION

Submitted June 8, 2005

Before Judges Newman, Axelrad and Bilder.

A purchaser of Goodyear tires filed a class action suit against companies which produce, manufacture and sell carbon black, a primary ingredient in tires. At issue in this appeal is whether an indirect purchaser of an allegedly price-fixed product may state a claim for antitrust violations under the New Jersey Antitrust Act (ATA), N.J.S.A. 56:9-1 to -19, and the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20. We hold that neither statute provides a cause of action to a pass-through purchaser such as the putative class plaintiff, and reverse the order of the Law Division denying defendants' motion to dismiss plaintiff's complaint under Rule 4:6-2(e).

In November and December 2001, plaintiff Louis Sickles purchased from the Goodyear Auto Service Center in Cherry Hill, New Jersey, two Goodyear tires (P215/70R15 97S S1 Regatta 2 XNWRPTL) for his wife's vehicle and one Goodyear tire (P205/65 R15 92H S1 Eagle HP VSBLRPTL) for his vehicle. He then filed an action alleging violations of the ATA and CFA, seeking damages on behalf of [a]ll persons residing in the state of New Jersey who purchased any product that was manufactured using Carbon Black sold by Defendants from January 1999 through November 2002.

Defendants are Cabot Corporation (Cabot); Phelps Dodge Corporation (Phelps Dodge); Columbian Chemicals Company (Columbian); Degussa Engineered Carbons, LP (DEC); Degussa AG; and Degussa Corporation. Cabot, a Delaware corporation with its principal place of business in Massachusetts, is the world's largest producer of carbon black, accounting for one-quarter of the worldwide production capacity and market share. Phelps Dodge is a New York corporation with its principal place of business in Arizona and wholly owns the subsidiary Columbian, which is engaged in the manufacture and sale of carbon black within the United States and throughout the world and maintains a carbon black facility in Ulysses, Kansas. DEC, a limited partnership with its principal place of business in New Jersey, is co-owned by Degussa AG and engages in the manufacture and sale of carbon black throughout the world.

Carbon black is a mixture of partially burned hydrocarbons produced by a combustion of natural gas. It is used as a reinforcing agent in rubber products such as tires, tubes, cables and conveyor belts and is the primary ingredient in car and truck tires. It is also used as an ingredient in countless other products such as dry-cell batteries, electrical conductors, and carbon brushes, and as a pigment in printing, carbon paper, typewriter ribbon inks, paints, photocopier toner and record discs.

The complaint alleged that defendants and their co-conspirators engaged in anti-competitive activities in violation of the ATA to artificially raise, stabilize, and maintain the price of carbon black sold by defendants from January l999 through November 2002, resulting in plaintiff and other similarly situated consumers paying more for tires containing carbon black than they would have in the absence of defendants' alleged unlawful conduct. Plaintiff further claimed that defendants coordinated and cooperated with one another to implement output restrictions and price increases and agreed not to compete against one another to increase their respective market shares. Plaintiff also alleged these acts constituted an unconscionable practice under the CFA.

By order of November 29, 2004, the trial court denied defendants' motion to dismiss plaintiff's complaint for failure to state a claim. On February 24, 2005, we granted defendants' motion for leave to appeal. Defendants raise the following issues on appeal:

POINT I

THE [ATA] DISALLOWS INDIRECT PURCHASER CLAIMS.

1. The Harmonization Provision of the [ATA] Directs Conformity To Federal Antitrust Precedents, and Thus Prohibits Plaintiff's Claims.

2. The New Jersey Legislature Rejected An Illinois Brick Repealer Bill.

3. The Trial Court Erred in Failing To Follow Illinois Brick and in ...


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