Appeals Court Rules in Favor of Steves; JELD-WEN Must Divest Towanda, PA Doorskin Plant in a Case Court Calls “Poster Child for Divestiture”

SAN ANTONIO–(BUSINESS WIRE)–Calling the case “a poster child for divestiture” in a historic ruling, a three-judge panel of the United States Court of Appeals for the Fourth Circuit filed a 67-page unanimous opinion February 18 affirming a lower court’s order in favor of Steves & Sons, Inc. (www.StevesDoors.com), that JELD-WEN Holding, Inc. (NYSE-JELD), must divest itself of its 2012 acquisition of a competitor, CMI, and, specifically, its Towanda, PA manufacturing plant.

The Court affirmed the jury’s decision that JELD-WEN violated antitrust law when it acquired CMI.

Doorskins are a critical door manufacturing component – the front and back molded coverings of most residential doors. Steves & Sons is a 155-year-old family-owned company based in San Antonio and one of only a few remaining independent door manufacturers in the United States. JELD-WEN , a large multi-national company headquartered in Charlotte, NC, makes doorskins for its own door manufacturing business and also sells them to independent door-manufacturers like Steves. Steves signed a long-term contract to buy the bulk of the doorskins it needed from JELD-WEN.

In the opinion written by Judge Albert Diaz, in which Judges Henry F. Floyd and Allison Jones Rushing joined, the Court stated on page 12, “Courts have often ordered divestiture in antitrust suits brought by the (US) government . . . But private suits seeking divestiture are rare and, to our knowledge, no court had ever ordered divestiture in a private suit before this case.”

Judge Diaz further wrote for the Court on page 54, “. . . as it stands, this case is a poster child for divestiture. A merger has resulted in a duopoly (of JELD-WEN, Inc. and Masonite International Corp.). Each doorskin supplier is vertically integrated. Evidence indicates that they’ve used their market power to threaten the Independents’ survival. And it’s reasonable to expect that a third supplier – even one that’s vertically integrated – will promote competition, as CMI did before the 2012 merger (with JELD-WEN). Thus, the district court acted within its discretion by ordering divestiture.”

The opinion also stated on page 9, “In May, 2014 (two years after JELD-WEN had acquired CMI), Masonite announced it would stop selling doorskins to the Independents. At a public presentation, a Masonite executive explained that this was ‘the right strategic call’ and would ‘make sure that there are some effective barriers to entry within the (molded-door) space.’ He also opined that Masonite and JELD-WEN would maintain their doorskin duopoly because of such barriers to entry and that the continued survival of the Independents was ‘less likely going forward.’”

On page 45, Judge Diaz wrote, “Steves has been family-owned for 150 years. The right to continue a multi-generational family business ‘is not measurable entirely in monetary terms; the (Steveses) want to sell (doors), not to live on the income from a damages award.’”

Steves CEO Edward Steves said, “This ruling will restore competition and fairness in the door manufacturing marketplace. The judges in their opinion have stated correctly that we want to remain an ongoing business for the benefit of our customers, our more than 1,300 team members and to continue building our company’s heritage, and not just make a monetary claim.”

Sam Bell Steves II, Steves President, said, “This has been a stressful and costly multi-year journey to restore real competition and choice in our industry. The Court’s unanimous opinion places independent door manufacturers a critical step closer to that goal. The divestiture of Towanda and the availability of those doorskins, with Towanda’s reported capacity to make 25 million doorskins per year for the marketplace, will enhance availability and competition.”

The appellate ruling followed lengthy litigation which began in June 2016 with the filing by Steves of an antitrust action against JELD-WEN in the Eastern District of Virginia court of Judge Robert E. Payne, alleging JELD-WEN’s acquisition of CMI to be an anti-competitive practice. A 2018 trial resulted in a unanimous jury verdict in favor of Steves, and a subsequent opinion later in 2018 by Judge Payne ordered JELD-WEN to divest itself of the Towanda plant which JELD-WEN had illegally acquired. JELD-WEN appealed the Judge’s order.

Marvin G. Pipkin, attorney for Steves, said, “Despite JELD-WEN’s efforts to obfuscate the results of the appellate court’s ruling, it’s important to note that the Court of Appeals, the jury in the 2018 trial and Federal Judge Robert E. Payne, who presided over the trial and issued subsequent rulings, including the order for JELD-WEN to divest, were unanimous in affirming Steves’ fundamental position. That position is that JELD-WEN, by its acquisition of CMI and its Towanda plant, engaged in anticompetitive behavior intended to harm Steves and other independent doormakers, and that the single best and most complete way to eliminate this threat is to force JELD-WEN’s divestiture of the Towanda facility.”

Pipkin further stated, “On the matter of the appellate court vacating the ‘lost profits’ damages, Steves never sought nor expected ‘double relief’ of both divestiture and lost profits damages. Our best-case all along was forcing JELD-WEN to divest itself of the Towanda plant. ‘Lost profits’ would only come into play, as the three appellate judges noted in their opinion, if Steves had been put out of business by the predatory practices which JELD-WEN had carte blanche to use only through its continued ownership of Towanda.”

“We should also point out that the appellate court left no doubt that the actual, existing damages awarded by the trial jury will still go forward,” he said. “That’s a figure of $36,455,619 in past antitrust damages. With interest, those damages now exceed $40,000,000. And, with the Court’s ruling, JELD-WEN will be additionally liable to reimburse Steves the tens of millions of dollars of attorney fees it incurred in prosecuting the antitrust case.”

“Further,” Pipkin said, “the appellate court judges in their ruling completely rebuffed JELD-WEN’s efforts to paint Judge Payne as being biased and have the case reassigned to another judge. The appellate judges were quite clear in turning down that request, stating on page 63 of their opinion that ‘. . . the district judge presided admirably over this exceedingly complex case.’”

“Last,” he said, “JELD-WEN already had an opportunity to litigate its alleged trade secret claims in a Richmond, Virginia court. That jury, on May 11, 2018, rejected almost all of JELD-WEN’s core allegations and totally rejected all of JELD-WEN’s allegations that Steves had sought to harm JELD-WEN. Further, the appellate court rejected JELD-WEN’s attempts to retry that case in Virginia. JELD-WEN merely wants a second bite of the apple once again here in Texas, which seems highly unlikely.”

Steves and Sons… Building Quality Millwork Since 1866

Since 1866 the Steves family has always been involved in the company. Today, six generations later, all actively involved in the business, Steves and Sons continues its commitment to quality, craftsmanship and style. The Steves family founded the company on the principles of conservative growth and environmental responsibility. That hallmark remains today in every product Steves & Sons manufactures. From incorporating recycled materials, to making products that can conceivably last as long as the application, the Steves family is proud to build on the tradition of environmental respect and responsibility. As an American family success story, Steves & Sons will continue to offer quality and service at a fair price for generations to come.

Steves headquarters is in San Antonio, with interior and exterior door plants in San Antonio, and interior door plant locations in Lebanon, Tennessee and Richmond, Virginia. Today Steves employs over 1,300 team members. With unmatched quality at an outstanding value, Steves and Sons 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.

Contacts

Marvin Pipkin

210-213-3378

mpipkin@pipkinlawsatx.com