United States District Court, D. Kansas
IN RE URETHANE ANTITRUST LITIGATION, This document relates to The Polyether Polyol s MDL No. 1616
MEMORANDUM AND ORDER
W. LUNGSTRUM, UNITED STATES DISTRICT JUDGE.
matter comes before the Court on the motion by claimant Jack
Baumstark, Sr. for distribution of settlement proceeds to him
(Doc. # 3303), and the cross-motion for distribution of a
portion of those proceeds to competing claimant Class Action
Refund LLC (“CAR”) (Doc. # 3308). For the reasons
set forth below, the Court concludes that the entire amount
of the proceeds allocated to that claim should be distributed
to Mr. Baumstark. Accordingly, the Court
grants Mr. Baumstark's motion and
denies the motion by CAR.
multi-district litigation, which commenced in 2004, a class
of plaintiffs brought antitrust claims against various
defendants relating to purchases of polyether polyol
products. In May 2007, one class member, D.H. Litter Company,
Inc. (“DHL”), entered into a contract with Class
Action Refund, Inc. (“CAR”), a “third-party
filer.” The contract provided that CAR would file and
pursue any settlement claims in this litigation on behalf of
DHL, and that DHL would pay CAR 33 percent of the proceeds of
any such claim filed by CAR.
the course of the litigation, various settlements were
effected, and in July 2016, the Court approved a class
settlement with Dow Chemical Company (“Dow”) and
a plan of distribution among class members. CAR filed a claim
for proceeds on behalf of DHL. In November 2017, the Court
approved an initial distribution of 85 percent of the Dow
settlement funds, including payment of DHL's claim.
Before making that initial distribution to DHL, however,
class counsel and the claims administrator became aware that
another party may have had a superior ownership interest in
the claim asserted by DHL. Subsequently, Mr. Baumstark filed
a claim for the same proceeds based on DHL's purchases of
the polyurethane products. Mr. Baumstark based his claim on a
2010 Asset Purchase Agreement (APA) between DHL and Archway
Sales, Inc. (“Archway”), which purportedly
included the instant claim, and a 2013 assignment of the
claim to Mr. Baumstark by Archway (a company Mr. Baumstark
controlled). Thus, class counsel and the administrator were
faced with competing claims to the same proceeds.
Baumstark stated his position to DHL's former owners, and
DHL (through counsel) cited that correspondence in notifying
class counsel that it withdrew its claim to the proceeds.
Nevertheless, in their October 2018 motion for distribution
of the remainder of the Dow settlement, class counsel stated
that a dispute remained concerning whether CAR or Mr.
Baumstark's third-party filer was entitled to collect a
fee. Because discussions among attorneys concerning that
dispute were ongoing, class counsel requested that the entire
distribution amount of the claim be retained until resolution
of the dispute. The Court granted that request.
Baumstark has now filed a motion requesting distribution of
the claim proceeds to him, as rightful owner of the claim.
CAR has filed a response and cross-motion, by which it seeks
33 percent of those proceeds. The Court now resolves those
Baumstark argues that he is the owner of the claim because of
the APA between DHL and Archway and the assignment to him
from Archway. He further argues that CAR has no interest in
the proceeds because Archway did not assume any liability
with respect to the DHL-CAR contract. Mr. Baumstark notes
that his ownership is undisputed, as recognized by class
counsel and the administrator, because the other claimant
(DHL) withdrew its claim.
motion, CAR identifies two issues for the Court: first,
whether Mr. Baumstark is entitled to the claim; and second,
regardless of the answer to the first question, whether CAR
is entitled to its 33-percent fee. With respect to the first
issue, CAR states in the fact section of its brief that the
APA provisions cited by Mr. Baumstark do not appear to
provide for transfer of this claim, and it notes that Mr.
Baumstark did not include various schedules in submitting a
copy of the APA. In the remainder of its brief, CAR opposes
Mr. Baumstark's arguments concerning CAR's
entitlement to a fee.
Court agrees with Mr. Baumstark that his assertion of
ownership has not been disputed by any other possible owner
of the claim. That effectively ends the Court's inquiry.
CAR has no basis to argue otherwise because it is not a
competing claimant. The other claim was filed by CAR on
behalf of DHL, the class member, and DHL withdrew that claim.
Thus, there is only one claim to these proceeds, and the
dispute concerns only CAR's entitlement to a portion of
the proceeds. Most importantly, CAR has not shown that it has
a present ownership interest in the claim or any portion
thereof. CAR has not put forward any theory to support such
an interest, whether obtained by assignment, lien, security
interest, or other means. The contract with DHL contains no
language creating such an interest in favor of CAR.
most, CAR has a contractual right to collect a percentage of
the proceeds as a fee. CAR seems to argue that Archway
assumed such contractual liability at the time of the APA.
The Court does not agree with CAR, however, that the scope of
CAR's contractual rights and CAR's entitlement to a
fee are issues properly before this Court. The Court is
concerned only with the distribution of the settlement
proceeds to the rightful owner. CAR is free to pursue any
claim against Mr. Baumstark or Archway based on its
contractual rights in a separate proceeding initiated in the
counsel and the administrator have confirmed that any dispute
between competing claimants has been resolved and that one
claim has been withdrawn, leaving only one claimant who
established his ownership to the satisfaction of the other
party. Accordingly, the Court grants Mr. Baumstark's
motion, denies CAR's motion, and orders that the retained
proceeds be distributed in their entirety to Mr. Baumstark.
THEREFORE ORDERED BY THE COURT THAT Jack Baumstark, Sr.'s
motion for a distribution of settlement funds to him (Doc. #
3303) is hereby granted, and class counsel
and the claims administrator shall distribute the retained
proceeds in their entirety to him. ...