In re: Interior Molded Doors Antitrust Litigation PLEASE FILE IN THIS CASE ONLY! DO NOT FILE IN MEMBER CASES!

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Richmond Division

IN RE: INTERIOR MOLDED DOORS Lead Civil Action No. 3:18cv718

ANTITRUST LITIGATION

IN RE: INTERIOR MOLDED DOORS Lead Civil Action No. 3:18cv850

INDIRECT PURCHASER ANTITRUST

LITIGATION

OPINION

In these two class actions, the “Direct Purchaser Plaintiffs” (“DPPs”) and “Indirect

Purchaser Plaintiffs” (“IPPs”)! sue the defendants, Jeld-Wen, Inc. (“Jeld-Wen”), and Masonite

Corporation (“Masonite”), for price fixing. Although the parties have requested tentative approval

of the settlements of the cases, they have asked the Court to keep evidence of the allegedly fixed

prices under seal. In support of their request, the defendants argue that disclosure of historic

pricing information will harm them competitively because people will learn how the defendants

treated their customers and how much profit they made. In other words, the defendants want to

maintain a competitive advantage by hiding evidence of price fixing.

The case now comes before the Court to decide three issues. The first issue deals with a

potential indicative ruling on issues currently on appeal. The defendants have appealed the Court’s

decision not to seal historic pricing information. They now suggest, however, that the Court can

and should render an indicative ruling on their motion to reconsider the decision they have

appealed.

' The Court refers to the DPPs and IPPs collectively as the plaintiffs.

The second issue involves potential intervention. A group of potential intervenors asks the

Court to allow them to appear in the case to join the defendants’ argument that the Court should

hold those same documents under seal because the papers contain information about prices paid

and charged by the intervenors.

Third, the parties have asked the Court to preliminarily approve the settlements, certify

these cases as class actions, and allow the parties to notify the class of proposed settlements.

I. BACKGROUND

In these cases, the plaintiffs assert two related antitrust claims. The defendants—Jeld-Wen

and Masonite—sell most of the interior molded doors (“IMDs’”) in the United States. IMDs

primarily consist of hollow frames over which the manufacturer hangs a molded doorskin, which

looks like real wood. Builders, home repair specialists, and do-it-yourself homeowners buy

millions of IMDs annually.

Two sets of plaintiffs have brought these class actions. The first set, a group of DPPs,

consists primarily of home improvement suppliers, such as The Home Depot and Lowe’s, that

bought doors directly from Jeld-Wen and Masonite. The second set of plaintiffs, a group of IPPs,

consists of entities that bought doors from wholesalers or home improvement suppliers.

Both groups contend that Jeld-Wen’s and Masonite’s anti-competitive conduct drove up

the prices they paid for IMDs. Specifically, the plaintiffs say that Jeld-Wen and Masonite teamed

up to eliminate most of the competition in the field and then increased the prices of IMDs to

maximize their profits. Among other things, the plaintiffs rely on the defendants’ “lockstep” price

increases to prove their claims.

On February 21, 2020, the plaintiffs in both cases moved to certify classes, under Federal

Rule of Civil Procedure 23. (ECF No. 195, Lead Civil Action No. 3:18cv718; ECF No. 177, Lead

Civil Action No. 3:18cv850.) In support of the certification motions, the plaintiffs filed lengthy

reports from expert witnesses. To the defendants’ chagrin, the reports contained a great deal of

information about the operation of the defendants’ businesses, including historic pricing

information. Pursuant to a protective order,” during discovery the parties had designated much of

this information as “confidential.” As required by the protective order, the parties moved the Court

to seal the “confidential” parts of the class certification filings.

As the case progressed, the parties realized that additional “confidential” information

would likely come out in court and that the defendants would likely want to seal that information.

At the parties’ request, therefore, the Court approved several omnibus stipulations which

ultimately made October 16, 2020, the deadline for the parties to file omnibus motions to seal.

(ECF No. 229, Lead Civil Action No. 3:18cv718; ECF No. 210, Lead Civil Action No. 3:18cv850.)

In the Court’s view, however, the October 16, 2020 deadline did not contro! the February

21 motions to seal. Those motions became ripe in March 2020. On September 3, the Court largely

denied the motions to seal,? and set deadlines for the parties to file unredacted versions of

documents containing information designated as confidential.4 (ECF No. 241, Lead Civil Action

No. 3:18cv718; ECF No. 223, Lead Civil Action No. 3:18cv850.)

2 The protective order governed production of information during discovery. It required

the parties to keep information confidential among themselves. It did not, however, allow the

parties to decide whether confidential information would remain sealed in the Court’s records.

The protective order made clear that, while the parties might provisionally file documents under

seal, the ultimate decision on public access to information filed in these proceedings lies with the

Court. (ECF No. 106, at 11, Lead Civil Action No. 3:18cv718; ECF No. 67, at 11, Lead Civil

Action No. 3:18cv850.)

> The Court granted the motions to seal as to certain information, such as personnel records

and telephone numbers.

“In retrospect, the Court recognizes that the stipulations may have led the parties to believe

that the February motions to seal fell within the ambit of the omnibus sealing procedure.

The potential disclosure of the confidential information—particularly pricing

information—rankled Jeld-Wen and Masonite. The defendants did not want the public to know

how they changed prices, what they charged, and how some customers got better deals than others.

The defendants moved to reconsider the September 3 Order unsealing documents (the “Unsealing

Order” or the “September 3 Order”), which the Court denied. (ECF No. 249, Lead Civil Action

No. 3:18cv718; ECF No. 230, Lead Civil Action No. 3:18cv850.) The defendants then filed

notices of appeal to the September 3 Order. (ECF No. 252, Lead Civil Action No. 3:18cv718;

ECF No. 223, Lead Civil Action No. 3:18cv850.) After the defendants appealed, the court stayed

enforcement of its September 3 Order. (ECF No. 276, Lead Civil Action No. 3:18cv718; ECF No.

256, Lead Civil Action No. 3:18cv850.) The defendants continue to request the Court to revisit

its September 3 Order. (ECF No. 290, Lead Civil Action No. 3:18cv718; ECF No. 273, Lead Civil

Action No. 3:18cv850.)

After the defendants had filed notices of appeal, several IMD distributors moved to

intervene. (ECF Nos. 255, 264, 279, Lead Civil Action No. 3:18cv718; ECF Nos. 235, 244, 259,

Lead Civil Action No. 3:18cv850.) Like the defendants, they did not want their customers to know

how much they paid the defendants for IMDs, how much they marked up their prices, and who got

the best deals from them. The Court has not ruled on those motions.

Despite their angst about confidential information, the defendants managed to agree to

settle the case with the plaintiffs. The parties have moved to conditionally certify settlement

classes. (ECF No. 242, Lead Civil Action No. 3:18cv718; ECF No. 224, Lead Civil Action No.

224.) They have also asked the Court to approve notice to potential class members allowing them

Fortunately, the parties have subsequently fully briefed the issues arising from those motions, so

the Court can rule on the request for an indicative ruling.

to review the settlements, and to join in, object to, or opt out of the proposed settlements. (ECF

No. 242, Lead Civil Action No. 3:18cv718; ECF Nos. 224, 296, Lead Civil Action No. 3:18cv850.)

The Court held a hearing on the settlements and found that the parties had shown that the proposal

might be fair and reasonable. But the Court expressed concern about how deeply the parties had

discounted the plaintiffs’ claims, considering the damages predicted by the plaintiffs’ experts.

II. DISCUSSION

A, Jurisdiction

The Court faces multiple pending motions. First, the defendants filed motions to reconsider

the September 3 Order unsealing the plaintiffs’ expert reports and related information containing

information about the defendants’ pricing practices.? (ECF No. 247, Lead Civil Action No.

3:18cv718; ECF No. 228, Lead Civil Action No. 3:18cv850.) Second, would-be intervenors have

filed motions to intervene to argue for keeping information about them sealed. (ECF Nos. 255,

264, 279, Lead Civil Action No. 3:18cv718; ECF Nos. 235, 244, 259, Lead Civil Action No.

3:18cv850.) Third, the parties have filed joint motions to tentatively certify settlement classes and

to begin the process of approving the settlements. (ECF No. 242, Lead Civil Action No.

3:18cv718; ECF No. 224, Lead Civil Action No. 3:18cv850.)

Ordinarily, a notice of appeal deprives a district court of jurisdiction over a case. Doe v.

Pub. Citizen, 749 F.3d 246, 258 (4th Cir. 2014). A district court may, however, “take action that

aids the appellate process.” Jd, Thus, in this case, the Court had jurisdiction, in aid of the appellate

* Initially, the defendants requested the Court to seal all kinds of information, including

discussions about customers, plans to expand operations, and other general business decisions. In

their motions to reconsider the Court’s decision, however, the defendants have limited their request

to pricing information since 2015. (ECF No. 248, at 6, Lead Civil Action No. 3:18cv718; ECF

No. 229, at 6, Lead Civil Action No. 3:18cv850.) The Court will treat their current motions as

dealing with these limited categories of information.

process, to stay its order unsealing the records in question. If the Court required the parties to

disclose the sealed information on the original schedule, it would have rendered the appeal useless

by giving the public access to the confidential information before the Fourth Circuit could address

the merits of the appeal.

In contrast, the pending motion to reconsider the unsealing order does not fall under the

exception for action that “aids the appellate process.” The “aids the appellate process” exception

exists for “a “narrow class of actions that . . . facilitate the division of labor between trial and

appellate courts.” Jd. The exception does not allow the trial court to make rulings that alter the

status of the case or change the issues on appeal. If the district court could change the appealed

ruling, both the trial and appellate court would effectively exercise jurisdiction over the case

simultaneously, which could make the proceedings in the appellate court moot. Here, if the Court

could reconsider the rulings on appeal, it could change the landscape of the appeal dramatically.

Thus, this Court cannot rule upon the motions to reconsider.

Sometimes, however, a ruling in the district court can take care of a lot of headaches. Thus,

Federal Rule of Civil Procedure 62.1 provides for an “indicative ruling.” An indicative ruling

allows the district court to offer a hypothetical ruling to address motions over which it lacks

jurisdiction because of an appeal. In this way, the trial court can indicate how it would solve the

questions pending on appeal, or at least define the questions more precisely. After an indicative

ruling, the appellate court can remand the case to the trial court, restoring its jurisdiction to

formally enter the decision. It goes without saying that the appellate court has discretion to take

or leave the district court’s indicative ruling.

In this case, this Court will render an indicative ruling on the motions to reconsider the

September 3 Unsealing Order. Its ruling may in some way limit the issues faced by the Fourth

Circuit in this case.

A different result obtains as to the motions to intervene. Once the defendants filed their

notices of appeal, the Court lost jurisdiction to grant motions to intervene. Doe, 749 F.3d at 258.

The decision to allow a party to intervene lies in the district court’s discretion. McHenry v.

Comm'r, 677 F.3d 214, 216 (4th Cir. 2012) (“Civil Rule 24[, governing intervention,] confers

broad discretion on a trial court... .”). Ifthe Court made an indicative ruling on the motions to

intervene, its decision would simply reflect its discretionary choice. This would add no clarity to

the issues currently on appeal and, in fact, would inject the additional tangential question of how

the Court exercised its discretion.

Finally, the Court has jurisdiction to approve the motions to certify settlement classes and

to notify potential class members of the settlements. Tentative approval of a settlement involves

different issues from the issues on appeal, so the Court retains jurisdiction to move ahead with the

settlement. Doe, 749 F.3d at 258.

Ironically, however, settlement itself changes the balance of factors relevant to the issue of

sealing records, The parties necessarily base their decision to settle, in part, on pricing information.

And class members will presumably base their decision to participate in the settlements on how

the defendants’ prices affected them. Most significantly, the Court’s decision to approve or deny

the settlements rests on evidence in the record, including pricing information.

B. Motions to Reconsider

Courts do their business in public. The litigants and the public enjoy a “presumptive right

of access” to papers filed with the courts. /d. at 266. The defendants want to shut the door on a

big part of these proceedings to protect their “competitive” strength in the market—a strength that

the evidence arguably shows came from the very misconduct they want to conceal. Both the

original motions to seal as well as the motions to reconsider try to keep this door shut. The law

demands otherwise. The Court, therefore, will make an indicative ruling to deny the motions to

reconsider.

The right of public access to court records stems from both the common law and the

Constitution. This right brooks few exceptions. Whether protected by the common law or the

Constitution, the public’s access right helps ensure the justice of court proceedings and, therefore,

“may be abrogated only in unusual circumstances.” Stone v. Univ. of Md. Med. Sys. Corp., 855

F.2d 178, 182 (4th Cir. 1988).

The common law right of public access “extends to all judicial documents and records.”

Doe, 749 F.3d at 266. A party seeking to keep court records secret must show that “countervailing

interests heavily outweigh the public interest in access.” Rushford v. New Yorker Mag., Inc., 846

F.2d 249, 253 (4th Cir. 1988). “[T]he common law presumes a right to access all judicial records

and documents....” Jn re Application of the U.S., 707 F.3d 283, 290 (4th Cir. 2013) (emphasis

in original) (quoting Jn re Knight Publ’g Co., 743 F.2d 231, 235 (4th Cir. 1984)). To rebut the

presumption of public access, a party must show that privacy interests “heavily outweigh” the

public’s interest in access. Rushford, 846 F.2d at 253.

A First Amendment right of access applies only to “particular judicial records and

documents.” Jn re Application of the U.S., 707 F.3d at 290 (emphasis in original). Although the

Fourth Circuit’s cases refer to “judicial records” in different ways,° the cases make clear that a

® Contrast Stone, 855 F.2d at 181 (seemingly treating all court papers the same), with In re

Application of the United States, 707 F.3d at 290 n.6 (treating “judicial records” differently from

other documents in court files).

First Amendment right of access applies to documents that “play a role in the adjudicative process,

or adjudicate substantive rights.” Jn re Application of the U.S., 707 F.3d at 290. To fall in the

category of “judicial records,” a document must “‘be relevant to the performance of the judicial

function and useful in the judicial process.’” Jd. at 291 (quoting United State v. Amodeo, 44 F.3d

141, 145 (2d Cir. 1995)). A party can overcome the First Amendment right of access only “if

closure is ‘necessitated by a compelling government interest’ and the denial of access is ‘narrowly

tailored to serve that interest.°” Doe, 749 F.3d at 266 (quoting In re Wash. Post Co., 807 F.2d

383, 390 (4th Cir. 1986)).

The defendants incorrectly argue that only the common law right of access applies here.

The plaintiffs filed their expert witness reports in support of motions to certify the class actions.

When the parties tentatively settled the cases, the Court denied the motions to certify as moot. The

defendants, therefore, argue that the reports did not figure in a judicial decision and, therefore, do

not amount to judicial records. This argument was weak at the time the defendants made it, and it

has grown weaker as the case has proceeded.

The parties have moved the Court to certify the case as a class action for settlement

purposes. To obtain preliminary approval, the plaintiffs have asked to the Court to find “probable

cause” that the proposal falls within the range of permissible settlements that meet the standards

of fairness, reasonableness, and adequacy. (ECF No. 245, at 7, Lead Civil Action No. 3:18cv718;

ECF No. 225, at 4, Lead Civil Action No. 3:18cv850.) As discussed below, the Court has made

that finding, based in part on the expert witness reports that the plaintiffs filed in court.

In a hearing on the proposed settlements, the Court asked plaintiffs’ counsel to explain how

the damages described by the experts related to the amount of the proposed settlement. Counsel

explained that, although the plaintiffs would have liked to recover more money, they believed they

secured the best settlements possible and reasonably discounted the damages identified by the

expert witnesses. Balancing the expert witness reports with the proposed settlement, the Court has

found probable cause that the settlements fall within the acceptable range of adequate, fair, and

reasonable results in the case.

Going forward, the expert witness reports will continue to be “useful in the judicial

process.” In re Application of the U.S., 707 F.3d at 291 (quoting Amodeo, 44 F.3d at 145.) Not

only the Court, but also the prospective class members, will need to analyze the reports to decide

how to move ahead. The expert witness reports highlight astounding parallel pricing decisions.

For many years, the defendants raised their prices in lockstep, increasing the cost of IMDs to

potential class members. Those class members must decide whether to participate in the

settlements, and a good way they can evaluate their losses—and the adequacy of their prospective

recovery—is to see how the price increases affected them. This evaluation necessarily entails a

review of historic prices. In a public hearing, the Court asked the parties how prospective class

members can decide whether to participate in the settlements. Counsel told the Court the key

factor is transparency of information. (ECF No. 287, at 16, Lead Civil Action No. 3:18cv718

(“[A]ll we can do is be as transparent as possible.”).) Yet, transparency is precisely what the

defendants oppose.

Thus, the information the defendants want to keep secret will have continued usefulness in

the judicial process, making the expert reports public records protected by the First Amendment.

Under either the common law or the First Amendment, the defendants do not offer reasons

that outweigh the interest in public disclosure of court records. The defendants offer only a single

reason to keep the information secret: self-interest. The defendants worry that customers and the

public will learn embarrassing facts about Jeld-Wen and Masonite. They will find out how much

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the defendants marked up their goods and the incommodious fact that the defendants did so

simultaneously. They will learn that some customers got better deals than others. Competitors

and customers will use the information to predict future price increases. And, the defendants add,

resellers will also face the embarrassment of having their own customers learn that the resellers

made a profit and that some of their customers paid more than others.

Commercial embarrassment does not go far in justifying secrecy in the courts. As much

as litigants dislike it, courts routinely air personal and commercial information. Aside from the

lockstep price increases, the information here is hardly mortifying. Everyone understands that

companies have profit margins and that some customers negotiate better terms. “‘(C]ommercial

self-interest’ does not qualify as a legitimate ground to keep documents under seal.” Doe, 749

F.3d at 269-70 (quoting Procter & Gamble Co. v. Bankers Tr. Co., 78 F.3d 219, 225 (6th Cir.

1996)).

The countervailing interests weigh heavily in favor of disclosure. Equally as compelling

as the defendants’ commercial self-interest, the self-interest of the people who buy IMDs plays an

important role in this case. The purchasers must decide whether to object to settlements that pay

only a fraction of the amount of their losses, with a sizeable chunk of the payments going to

lawyers. They must also decide whether to search through their records to determine the amount

of their loss and whether to submit a claim. Yet, the defendants want to hide from them important

information that will figure in their decision-making.

More importantly, the public has an interest in maintaining its “ability to oversee and

monitor the workings of the Judicial Branch.” /d. at 263. Other branches of government face

periodic elections, but the judiciary operates without a public check on its actions. People deserve

to have as much information as possible about how judges make decisions, Suppose, for instance,

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that the Court ultimately approves the proposed settlements in this case. Economists, legal

scholars, and just plain curious people may legitimately ask how the Court came to approve the

settlements considering the evidence in the case. They may wonder whether wealthy businesses

too heavily influenced the Court. Or they may want to see how private litigation solves a serious

public problem. Access to all the facts helps them answer these questions. Public confidence in

the judiciary mandates openness whenever possible.

The public interest goes beyond concerns about the judiciary. People could easily ask how

the government’s antitrust enforcers allowed this situation to arise. They might wonder why the

Justice Department did not pursue the defendants for price fixing. Or, on the other hand, they

might applaud the government for allowing the parties most interested in the case—sellers and

buyers—to fight it out.

And finally, the public’s curiosity plays a role. Our country’s citizens have a right to know

what is going on—in the courts, the executive branch, and in industry. To call this interest

“curiosity” understates its importance and legitimacy. One of the things that separates our country

from others is that our institutions—including our courts—operate in the public eye. In totalitarian

nations, someone makes a decision, and everyone lives with it. Here, we see how the government

makes decisions, and we hold people accountable for them. But the defendants want to obscure

part of the decisional process.

The defendants have offered meager grounds to overcome the presumption of public

access, whether it arises under the First Amendment or the common law. Their arguments do not

“heavily outweigh” the common law right of public access and come nowhere close to serving as

a compelling government interest in secrecy. The Court, therefore, makes an indicative ruling to

deny the motions to reconsider its September 3 Order.

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C. Preliminary Approval of Settlements

Finally, the Court turns to the issue of preliminary approval of the proposed settlement of

the class actions. As noted above, the Court’s must decide whether the parties have presented

“probable cause” to find that the proposed settlements fall within the range of adequate, fair, and

reasonable resolutions of the cases.

The Court finds some terms of the settlements hard to stomach. In the plaintiffs’ expert

reports, they have presented credible evidence of misconduct. They have shown lockstep price

hikes, multiple opportunities for collusion, and enormous damages—$243.7 million for the DPPs,

(ECF No. 196-1, at 9, Lead Civil Action No. 3:18cv718), and $206.1 million for the IPPs, (ECF

No. 178-1, at 10, Lead Civil Action No. 3:18cv850). The settlements discount these damages

drastically.

The simultaneous price increases are astounding. But price increases do not tell the whole

story, and the parties may know of evidence or legal arguments that undercut the strength of the

plaintiffs’ cases. Although the proposed settlements reflect a dramatic reduction of the projected

damages in these cases, it does not amount to a nominal payment. For this reason, the Court will

preliminarily approve the settlement, subject to both a searching examination of the evidence and

law before final approval and disclosure of the expert reports filed with the motions for class

certification.

The Court will approve in large part the plan of publication of the settlements and the

means of getting class approval and objections.

In addition, as stated above, to allow class members to make an informed decision, and to

allow the public to fully understand the settlement, the Court will require the parties to make the

expert witness reports available as part of the notification.

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The Court recognizes that this approval differs in some details from what the parties

submitted. If any of the parties wish to back out of the settlement, they should notify the Court

within fourteen days. The Court will then hold a hearing on whether to allow the parties to

withdraw from the settlement. If the parties do not go forward with the settlement, the Court will

re-docket the motions for class certification. The parties have already briefed that issue, so they

need file no additional papers. If the parties call off the settlements, the Court will set those

motions for a prompt hearing.

Ill. CONCLUSION

For the reasons stated in this Opinion, the Court will:

(1) defer disposition of the pending motions to intervene for want of jurisdiction;

(2) issue an indicative ruling, pursuant to Federal Rule of Civil Procedure 62.1, stating that

it would deny the motions to reconsider its September 3 Unsealing Order;

(3) defer disposition of the plaintiffs’ motions for preliminary settlement approval,

conditional class certification, and approval of proposed notice; and

(4) order the plaintiffs to resubmit proposed orders that preliminarily approve the

settlement, conditionally certify settlement classes, and approve the proposed notice. The

proposed orders shall accord with this ruling, most notably the requirement that parties make the

expert reports publicly available as part of their settlement notices, The proposed orders shall also

contain a schedule that includes the final approval hearing date, settlement objection deadlines,

and the briefing schedules for final approval and subsequent motions regarding distribution and

use of the settlement funds.

The Court will issue an appropriate Order.

Let the Clerk send a copy of this Opinion to all counsel of record.

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_ scree

Richmond, VA

Is]

John A. Gibney, Jr. df

United States Distri A vwAde

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