A Federal judge in Michigan dismissed Z Technologies antitrust lawsuit against Lubrizol last week, concluding the four-year statute of limitations applicable to each of the complaints four counts expired before Z Tech filed its lawsuit in May 2012.
Z Tech had filed the lawsuit in the U.S. District Court of the Eastern District of Michigan in Detroit, alleging Lubrizols acquisition of Lockharts wax oxidate business in February 2007 resulted in a monopoly and lessened competition, leading to increased prices for oxidates, which are used for rust prevention. The antitrust suit alleged unlawful acquisition and monopolization under federal and state antitrust laws, and unjust enrichment under Michigan common law. Z Tech purchases unmodified oxidates that it then resells.
Lubrizol is satisfied with the courts ruling, a company spokesperson told Lube Report.
Justin Hakala, attorney with Michigan law firm Morgan & Meyers PC, said Z Tech will appeal the judges decision. Judge [Lawrence] Zatkoff is a very smart jurist for whom I have a good deal of respect, but he is operating in an area where there is very little appellate guidance, Hakala told Lube Report. We plan on appealing the decision to the Sixth Circuit [Court] and I am hopeful that the ultimate outcome will permit companies like Z Technologies to go forward with antitrust lawsuits in cases like these, where the economic realities – in this instance that the sole supplier of a product it relied upon was the target defendant – made it impossible to bring suit within the four year statute of limitations. In May 2012, Hakala had said Z Tech took five years to file its lawsuit because several years passed before the company had an alternative supplier for oxidates.
In February 2007, Lubrizol purchased Lockharts metalworking product line, including rust preventives and oxidates. The purchase agreement included non-competition provisions which prevented Lockhart from competing with Lubrizol or engaging in any business that competed with the assets acquired by Lubrizol. Because the provisions were interpreted as preventing Lockhart from leasing its Flint plant to any other company to manufacture oxidates, the plant was eventually shut down.
According to court documents, Lubrizol contended that the Feb. 7, 2007, merger and the May 18, 2012, complaint filing were more than five year and three months apart, so the four counts were all time-barred because more than four years elapsed. Z Tech asserted that February 7, 2007, was not the most recent date from which the statute of limitations should be measured. The court sided with Lubrizol.
The enforcement of the non-competition clause and the price increases that occurred thereafter were not new, independent, overt acts that were unrelated to the merger, the U.S. District Court stated in its Feb. 5 opinion. Rather, the court concludes that the increase in prices in 2007 and 2008, i.e., the supra-competitive prices alleged by plaintiff, simply were reaffirmations of a previous act (i.e., the merger itself) and as such were unabated inertial consequences of such merger.
For a recap of Z Techs lawsuit, view the May 30, 2012 Lube Report article.
Z Technologies, based in Redford, Mich., produces rust preventive coatings.
Lubrizol, headquartered in Wickliffe, Ohio, is a major producer of lubricant additives.