Multiple Lawsuits Allege Water Treatment Antitrust Conspiracy

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At least 19 lawsuits have been filed accusing water treatment chemical manufacturers of antitrust violations. On Feb. 4, all of those lawsuits were consolidated into a single case in New Jersey.

The chemical at the heart of the lawsuits is liquid aluminum sulfate (also called alum), which is used by cities to treat drinking water and by paper companies in the manufacturing process.

The water treatment lawsuits generally allege that the providers of liquid aluminum sulfate—including General Chemical Corp., Hawkins, Inc., Chemtrade Logistics, Inc., and others—conspired with each other to create false bids and artificially raise the price of the chemical.

In October of 2015, Frank Reichl, a former executive of a water treatment chemical manufacturer, pled guilty to criminal antitrust charges and admitted to participating in the conspiracy. According to the U.S. Dept. of Justice press release, “from 1997 until July 2010, Reichl and his co-conspirators met to discuss each other’s liquid aluminum sulfate business, submitted intentionally losing bids to favor the intended winner of the business, withdrew inadvertently winning bids and discussed prices to be quoted or bid to customers.”

“By agreeing to violate both the spirit and the letter of the competitive process, Reichl and others defrauded municipalities as well as pulp and paper companies out of millions of dollars,” said the FBI special agent in charge of investigating the water treatment conspiracy.

Since last October, at least 19 lawsuits have been filed against Reichl, General Chemical Corp., and the other liquid aluminum sulfate providers. These actions were filed by cities all over the U.S., including Newark, N.J., Cincinnati, Ohio, and Detroit, Mich., as well as paper manufacturing companies. Motions were filed in several of the lawsuits to bring all of the cases together, and the U.S. Judicial Panel on Multidistrict Litigation agreed.

“These actions share factual questions arising out of allegations that defendants conspired to … unlawfully fix, raise, maintain and stabilize the prices at which liquid aluminum sulfate was sold in the U.S. between 1997 and 2010, in violation of Section 1 of the Sherman Act,” ruled the Judicial Panel.

Many of the parties in the various lawsuits disagreed on where the consolidated action should be located. Some, including the city of Rochester, Minn., argued that Minnesota is centrally located. Others requested that the consolidated lawsuit be placed in Pennsylvania. However, most of the parties wanted the multidistrict lawsuit to be in the District of New Jersey, and the Judicial Panel agreed.

The panel’s order notes that a majority of the water treatment antitrust cases were already filed in New Jersey, several of the chemical manufacturers are located there, and the criminal antitrust case where Reichl pled guilty was also filed there. “We are persuaded that the District of New Jersey has the closest nexus to this litigation,” concluded the judicial panel.

The water treatment antitrust class action lawsuit generally claims that with help from this conspiracy, the price of liquid aluminum sulfate doubled between 2007 and 2010. The antitrust class action lawsuit seek restitution of triple the amount of damages caused by the conspiracy.

The New Jersey moving plaintiffs are represented by attorneys from Lowey Dannenberg Cohen & Hart PC, Quinn Emanuel Urquhart & Sullivan LLP, Carella Byrne Cecchi Olstein Brody & Agnello PC and other firms.

The Minnesota moving plaintiffs are represented by attorneys from Lockridge Grindal Nauen PLLP, Gustafson Gluek PLLC and other firms.

The Water Treatment Chemical Antitrust Class Action Lawsuit is In re: Liquid Aluminum Sulfate Antitrust Class Action, MDL No. 2687, in the U.S. District Court for the District of New Jersey.

UPDATE: August 2019, the water treatment antitrust class action settlement is now open. Click here to file a claim.