Appeals Court Restores Antitrust Suit Against Eaton and Every Heavy-Duty Truck Maker in North America
A decision by a federal appeals court panel has restored an antitrust lawsuit by truck buyers — fleets and dealers — against transmission maker Eaton Corp. and every heavy-duty truck maker in North America.
The Sept. 14 opinion by the U.S. 3rd Circuit Court in Philadelphia returned to U.S. District Court in Wilmington, Delaware, a case brought by trucking companies and a Mack dealership, claiming they suffered monetary damages due to Eaton’s position as a “near monopolist” in the production of heavy-duty truck transmissions from 2002 through 2014.
The 3-0 opinion written by Judge Cheryl Krause said plaintiffs Mark Wallach, bankruptcy trustee for Performance Transportation Services; Tauro Brothers Trucking Co.; and Toledo Mack Sales & Service do have the right, or standing, to sue, and that they acted in a timely manner, contrary to an order by the trial court.
“We conclude the District Court abused its discretion in denying their [plaintiff’s] motion to intervene on that basis. Accordingly, we will reverse and remand for proceedings consistent with this opinion,” Krause wrote for the panel that included Judge Michael Chagares and Judge Anthony Joseph Scirica.
The appeal arose after District Court Judge Sue Robinson dismissed the case in August 2015 before a trial could begin.
This civil case flows from the same issues that brought Cleveland-based Eaton into conflict with Meritor Inc. over competition in the North American truck transmission market. In 1999, Meritor, of Troy, Michigan, joined with German parts maker ZF Friedrichshafen AG to form a joint venture to make transmissions for sale here.
“In 2006, ZF Meritor sued Eaton for antitrust violations and won,” the opinion said, referring to a 2009 court ruling. Eaton eventually paid $500 million to settle with ZF Meritor.
The settlement ended the case between Eaton and its major competitor, but the trial court in Wilmington must now deal with Eaton and its end users.
“Eaton is aware that antitrust claims have been revived against it and other companies,” company spokesman James Michels said. “Eaton does not comment on active litigation.”
Truck makers Daimler Trucks North America, Navistar International Corp., Paccar Inc. and Volvo Group were named as defendants because they purchased transmissions from Eaton during the period in question and used them in trucks they sold either to fleets or dealerships, including the plaintiffs, who argued the truck prices were too high because of Eaton’s near monopoly position in the transmission market.
The period of 2002-2014, referenced in the suit, coincides with actions by DTNA and Volvo Group to make their own automated manual transmissions as part of a vertical integration strategy. The growth of those plans has led to much displacement of Eaton’s UltraShift AMTs in Freightliners, Western Stars, Volvos and Macks.
Representatives for DTNA and Navistar also declined to comment.
Navistar and Paccar have not followed the vertical integration path. Therefore, UltraShifts are often found in Internationals, Kenworths and Peterbilts.
Attorneys for the plaintiffs declined to comment on what might happen next.
Richard Pianka, deputy general counsel of American Trucking Associations, said that in federal litigation generally, there are five options at this point.
Eaton and the truck makers can ask for a rehearing by the same three appellate judges or by the 3rd Circuit as a whole. They have 14 days from the court’s opinion to ask for rehearings, Pianka said.
They also could ask the U.S. Supreme Court to hear the case, and have 90 days for that.
The last two options, Pianka said, are for the parties to settle out of court or return to Delaware for a trial before Robinson.
