[Cite as Clarkwestern Dietrich Bldg. Sys. L.L.C. v. Certified Steel Stud Assn., Inc., 2017-Ohio-1091.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
BUTLER COUNTY
CLARKWESTERN DIETRICH BUILDING :
SYSTEMS, LLC d.b.a. CLARKDIETRICH,
: CASE NO. CA2016-05-098
Plaintiff-Appellant,
: OPINION
- vs - 3/27/2017
:
CERTIFIED STEEL STUD ASSOCIATION,
INC., et al., :
Defendants-Appellees. :
CIVIL APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS
Case No. CV2013-10-2089
Frost Brown Todd LLC, Matthew C. Blickensderfer, Stephen R. Hernick, 3300 Great
American Tower, 301 East Fourth Street, Cincinnati, Ohio 45202 and Cohen & Grigsby, P.C.,
Anthony Cillo, Barbara Scheib, Fridrikh V. Shrayber, 625 Liberty Avenue, Pittsburgh, PA
15222-3152, for plaintiff-appellant
Taft Stettinius & Hollister LLP, Daniel R. Warncke, Kim K. Burke, John B. Nalbandian, Aaron
M. Herzig, 425 Walnut Street, Suite 1800, Cincinnati, Ohio 45202-3957 and Fox Rothschild
LLP, Jeffrey M. Pollock, Robert J. Rohrberger, 997 Lenox Drive, Bldg. 3, Lawrenceville, NJ
08648-2311, for defendant-appellee, Ware Industries, Inc.
RINGLAND, J.
{¶ 1} This is an appeal from a decision of the Butler County Court of Common Pleas,
in which the trial court granted summary judgment to appellees for claims involving the Ohio
Valentine Act. For the reasons detailed below, we affirm.
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{¶ 2} Structural and nonstructural steel framing products are used to frame
commercial buildings because the International Building Code ("IBC") requires
noncombustible framing materials. This dispute centers on certain nonstructural steel
framing ("NSSF") products that provide framing for drywall.
{¶ 3} Clarkwestern Dietrich ("Clark Dietrich") is a joint venture formed by
Clarkwestern Building Systems L.L.C. and Dietrich Industries, Inc. Both companies
manufacture NSSF products for use in commercial construction. For purposes of continuity,
we will refer to the joint venture as Clark Dietrich. While some background information is
necessary to accurately detail the dispute between the parties, we may dispense with an
exhaustive description of the specific technology and science behind the NSSF products and
instead focus on the issues relevant to the Valentine Act claim.
{¶ 4} As previously noted, all NSSF products must comply with the IBC. IBC
compliance may be demonstrated in a variety of ways. For example, a manufacturer may
apply to an accredited code evaluation company and request independent proof of the
product's code compliance. Alternatively, a manufacturer can also seek to have its products
certified under a trade association's certification program.
{¶ 5} The dispute here arises between Clark Dietrich and the Steel Stud
Manufacturing Association ("SSMA"). The SSMA is a voluntary trade association that
represents approximately 85 percent of industry volume. Clark Dietrich was a member of the
SSMA, as are numerous other firms also named as defendants in this action.
{¶ 6} Traditionally, NSSF products are manufactured from prime steel with a "G40"
coating, which is a zinc-based coating that provides corrosion protection. In 2010, Clark
Dietrich produced NSSF products through an innovative "cold reduction" process.1 This
1. While this court is aware that the entities were distinct at the time, that fact is not material to the outcome of
the case and for purposes of continuity will use the term Clark Dietrich.
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process utilized less expensive secondary steel and provided other significant cost
advantages based on the amount of steel required for each product. To meet applicable IBC
requirements, Clark Dietrich applied an additional proprietary coating which, Clark Dietrich
contends, will provide corrosion resistance equal or better than the standard G40 coating.
Clark Dietrich refers to this product as G40 equivalent or "G40EQ."
{¶ 7} The development of the G40EQ product provided Clark Dietrich with a
competitive advantage because of the lower manufacturing cost. Thus, the G40EQ product
had a restraining effect on market prices and certain competitors of Clark Dietrich reduced
their prices on the traditional G40 NSSF products to compete with Clark Dietrich's new
G40EQ product.
{¶ 8} In 2010, the SSMA created an IBC compliance program for NSSF products.
The compliance program ultimately adopted certain requirements that negatively impacted
those SSMA members who utilized cold reduction and G40EQ products. Clark Dietrich, in its
brief, refers to those requirements as "sham standards" and alleges that the Board adopted
those requirements to benefit manufacturers who did not invest the resources to produce the
G40EQ products. Eventually, Clark Dietrich resigned from the SSMA because it would no
longer be able to produce the G40EQ products.
{¶ 9} Following Clark Dietrich's resignation, the SSMA released an industry letter
announcing that Clark Dietrich was no longer SSMA compliant and advised that Clark
Dietrich should be removed from SSMA member specifications.
{¶ 10} While Clark Dietrich's market share decreased after it left SSMA, the company
continued to sell G40EQ products. From 2011 to 2014, Clark Dietrich shipped 650,000 tons
of G40EQ product.
{¶ 11} Clark Dietrich filed this lawsuit against the SSMA and several individual
manufacturing members, alleging a variety of claims. This appeal deals solely with alleged
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antitrust violations under the Ohio Valentine Act. The trial court granted summary judgment
in favor of SSMA, finding that Clark Dietrich failed to present evidence of an actionable claim
under the Ohio Valentine Act. Clark Dietrich now appeals the decision of the trial court,
raising a single assignment of error for review:
{¶ 12} THE TRIAL COURT ERRED BY GRANTING DEFENDANTS' MOTION FOR
SUMMARY JUDGMENT.
{¶ 13} In its sole assignment of error, Clark Dietrich argues the trial court erred by
granting summary judgment in favor of SSMA on the Valentine Act claim.
{¶ 14} This court reviews summary judgment decisions de novo. Ludwigsen v.
Lakeside Plaza, L.L.C., 12th Dist. Madison No. CA2014-03-008, 2014-Ohio-5493, ¶ 8.
Pursuant to Civ.R. 56(C), summary judgment is proper when (1) there are no genuine issues
of material fact to be litigated, (2) the moving party is entitled to judgment as a matter of law
and, (3) when all evidence is construed most strongly in favor of the nonmoving party,
reasonable minds can come to only one conclusion, and that conclusion is adverse to the
nonmoving party. Zivich v. Mentor Soccer Club, Inc., 82 Ohio St .3d 367, 369-70 (1998).
{¶ 15} The moving party bears the initial burden of informing the court of the basis for
the motion and demonstrating the absence of a genuine issue of material fact. Robinson v.
Cameron, 12th Dist. Butler No. CA2014-09-191, 2015-Ohio-1486, ¶ 9. Once this burden is
met, the nonmoving party has a reciprocal burden to set forth specific facts showing there is
some genuine issue of material fact yet remaining for the trier of fact to resolve. Id. In
determining whether a genuine issue of material fact exists, the evidence must be construed
in favor of the nonmoving party. Vanderbilt v. Pier 27, L.L.C., 12th Dist. Butler No. CA2013-
02-029, 2013-Ohio-5205, ¶ 8.
{¶ 16} The Ohio Valentine Act is patterned after the federal Sherman Antitrust Act
and the courts have interpreted the statutory language in light of federal construction of the
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Sherman Act. R.C. 1331.01; C.K. & J.K., Inc. v. Fairview Shopping Center, 63 Ohio St.2d
201, 204 (1980). To establish a restraint of trade claim, a plaintiff must show both that there
was a combination of effort, economically or by action, and that such effort unreasonably
restrains trade in a relevant market. Szuch v. King, 6th Dist. Erie No. E-09-069, 2010-Ohio-
5896, ¶ 53, citing N.H.L. Players' Assn. v. Plymouth Whalers Hockey, 325 F.3d 712, 718 (6th
Cir. 2003).
{¶ 17} "Two approaches are used to determine whether a defendant's conduct
unreasonably restrains trade: the per se rule and the rule of reason." Id. As Clark Dietrich
abandoned its argument with respect to the per se rule on appeal, we will consider only the
rule of reason approach.
{¶ 18} The rule of reason approach requires the plaintiff to prove all of the following:
(1) that the defendants contracted, combined, or conspired; (2) that the contract,
combination, or conspiracy produced adverse anticompetitive effects (3) within the relevant
product and geographic markets; (4) that the objects of and conduct resulting from the
actions were illegal; and (5) that the conduct was a proximate cause of plaintiff's antitrust
injury. Island Express Boat Lines, Ltd. v. Put-in-Bay Boat Line Co., 6th Dist. Erie No. E-06-
002, 2007-Ohio-1041, ¶ 74, citing Care Heating & Cooling, Inc. v. American Standard, Inc.,
427 F.3d 1008, 1014 (6th Cir. 2005).
{¶ 19} As to the second prong, "[i]t is well-established that the purpose of the
Sherman Act and, by extension, the Valentine Act, is to protect competition and the market
as a whole, not individual competitors." Care Heating & Cooling, Inc. v. Am. Std., Inc., 427
F.3d 1008, 1014 (6th Cir.2005). The foundation of an antitrust claim is the alleged adverse
effect on the market. Id. Accordingly, an "[i]ndividual injury, without accompanying market-
wide injury, does not fall within the protections of the Sherman Act." Id. An antitrust claim
will not succeed if it is "based upon nothing more than injuries allegedly suffered by a
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competitor, rather than on harm to competition in the relevant market." Baseball at
Trotwood, LLC v. Dayton Prof. Baseball Club, LLC, 113 F.Supp.2d 1164, 1172 (S.D.Ohio
1999).
{¶ 20} The trial court found that Clark Dietrich failed to prove harm to competition or
antitrust injury and therefore failed to prove all the elements of the Valentine Act claim. In so
doing, the trial court found:
* * * There is no evidence that Clark Dietrich was prevented from
selling its EQ coated products or that customers were prevented
from buying them. SSMA certification is not required to prove a
product is IBC compliant, nor is it necessary to market and sell
NSSF products. Clark Dietrich was free to counter the
statements of the Defendants and to talk to and educate the
architects and specifiers about EQ coated products and to
request that the EQ coated products be added to the
specifications. The fact that the architects or specifiers may
choose to specify other products instead of Clark Dietrich's
products does not create an antitrust violation. To the extent that
the Defendants [sic] statements were false or misleading, Clark
Dietrich may be able to prove other claims, but not an antitrust
claim.
{¶ 21} Based on our review, we agree with the trial court's decision. The record does
not support an antitrust claim. In Consolidated Metal Products, Inc. v. American Petroleum
Institute, 846 F.2d 284 (5th Cir.1988), a manufacturer of oil well equipment sued the
American Petroleum Institute (API), alleging the API excluded it from the market by delaying
trade standard certification to its equipment. Similar to the present case, API was a
standard-setting body that granted manufacturers a license to display its monogram on the
manufacturer's equipment if the API found that the equipment satisfied its standards. Id. at
286.
{¶ 22} The plaintiff in Consolidated applied for, and was denied, a license to use
API's monogram and filed suit under the Federal Sherman Act. Id. at 288. The trial court
granted summary judgment on that claim and the Sixth Circuit affirmed. In so doing, the
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Sixth Circuit held that "a trade association that evaluates products and issues opinions,
without constraining others to follow its recommendations," does not violate the Sherman Act
by unfavorably evaluating a manufacturer's product. Id. at 292. The court noted that: (1) API
approval was not required by law and equipment was frequently sold without it, and (2)
consumers were in no way constrained from buying the plaintiff's products. Id. at 296. As a
result, the manufacturer was not excluded "in a real sense" from the market because it was
still free to sell its products and consumers were free to buy them. Id. at 292. The court
emphasized that manufacturers of equipment still had the ability, even without an API
monogram, to market the quality of their products. Id. at 296.
{¶ 23} The Consolidated decision has been followed by a number of courts.
Schachar v. Am. Acad. of Ophthalmology, Inc., 870 F.2d 397 (7th Cir.1989). In Schachar,
the plaintiffs were ophthalmologists who performed a surgical procedure labeled
"experimental" by the National Advisory Eye Council. Id. The American Academy of
Ophthalmology endorsed the Council's position and issued a press release advising
physicians and patients not to use the procedure until more research had been completed.
Id. The plaintiffs alleged that the press release was part of a conspiracy to restrain trade. Id.
{¶ 24} The Seventh Circuit held that there was no violation of the Sherman Act
because there was no enforcement device that operated to restrain trade. Id. at 400. None
of the plaintiffs were prevented from doing the procedure or sanctioned for performing it. Id.
at 398. The court characterized the challenged action as "warfare among suppliers and their
different products," not as restraint, but as competition. Id. at 399.
Consolidated Metal Products, Inc. * * * holds that when a trade
association provides information (there, gives a seal of approval)
but does not constrain others to follow its recommendations, it
does not violate the antitrust laws. We agree. An organization's
towering reputation does not reduce its freedom to speak out.
Speech informed, hence affected, demand for radial keratotomy,
but the plaintiffs had no entitlement to consumers' favor. The
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Academy's declaration affected only the demand side of the
market, and then only by appealing to consumers' (and third-
party payors') better judgment. If such statements should be
false or misleading or incomplete or just plain mistaken, the
remedy is not antitrust litigation but more speech – the
marketplace of ideas.
Id. at 399-400 (citations omitted).
{¶ 25} More recently, this analysis was followed in Santana Products, Inc. v. Bobrick
Washroom Equipment, Inc., 401 F.3d 123 (3d Cir.2005). In Santana, a toilet partition
manufacturer sued its competitor, Bobrick, alleging that Bobrick gave architects false
information about Santana's products to coerce or convince architects to specify Bobrick's
product rather than Santana's product. Id. at 127-128. There was no dispute that the
defendants in the case informed customers that Santana's products posed a safety hazard.
Id. at 132.
{¶ 26} However, in affirming summary judgment in favor of the defendant on the
antitrust claims, the Third Circuit found that the manufacturer was not excluded "in a real
sense" from the market because Santana was still free to sell its products and consumers
were still free to buy them. Id. at 133. The architects made the ultimate decision on which
products to specify and jockeying over specifications is a valid form of competition. Id. "If
such statements should be false or misleading or incomplete or just plain mistaken, the
remedy is not antitrust litigation." Id. at 134. Absent an enforcement device that restrained
trade and prevented plaintiff from selling or customers from buying its products, there is no
antitrust violation.
{¶ 27} In contrast, Clark Dietrich relies on several cases, including Allied Tube &
Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 108 S. Ct. 1931 (1998), to argue that
private standard-setting organizations may be held liable for enacting anticompetitive
standards. However, Allied Tube is distinguishable. Here, the relevant standard is the IBC
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and approval of the SSMA was one method of showing compliance with the IBC. Unlike the
situation in Allied Tube, the SSMA does not set, adopt, or enforce the industry standard.
Furthermore, the court in Allied Tube was specifically determining whether Noerr immunity
applied to a private organization and does address antitrust liability governing such
organizations:
Although we do not here set forth the rules of antitrust liability
governing the private standard-setting process, we hold that at
least where, as here, an economically interested party exercises
decision making authority in formulating a product standard for a
private association that comprises market participants, that party
enjoys no Noerr immunity from any antitrust liability flowing from
the effect the standard has of its own force in the marketplace.
Id. at 509-510.2 While it is true that private standard-setting organizations may be liable for
enacting anticompetitive standards, Clark Dietrich does not cite any analogous case to
support its position based on these particular facts.
{¶ 28} The trial court found a number of undisputed facts related to the Valentine Act.
As the parties do not dispute these facts, we will summarize them below:
In most cases, specifications for commercial building projects are
developed by design professionals, i.e., architects or
specification writers contracted by the architects. These
specifications detail the products and materials acceptable for
use on a particular construction project.
The specifications may list manufacturers, code requirements,
industry groups, or in some cases may list a particular company's
products.
Companies in the industry are free to lobby or work to persuade
architects and specifiers to educate them about products and to
persuade them to include the company's products in job
specifications.
The SSMA is a voluntary trade organization and membership in
2. The Noerr doctrine shields certain political actions from the Sherman Act, recognizing that the antitrust laws,
"tailored as they are for the business world, are not at all appropriate for application in the political arena." E. R.
Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523 (1961); See United Mine
Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585 (1965).
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the SSMA is not required in order to sell NSSF products.
There are competitors in the industry who are not members of
the SSMA.
The SSMA has a certification program that allows manufacturers
to demonstrate that their products are compliant with the IBC.
SSMA membership and the SSMA compliance program are not
necessary to manufacture products that comply with the IBC and
are not the only way to show compliance with the IBC.
In 2010, SSMA created a task force to develop an IBC
compliance program. The draft program did not contain an
elongation requirement relating to the rigidity of steel. Instead,
the draft program contained a coatings standard that G40EQ
products would satisfy.
Upon submission of the draft to the SSMA Board of Directors, an
elongations requirement and more restrictive coatings standards
were adopted. The new elongation requirement would not affect
members using prime steel, but would affect those using
secondary steel and the processes utilized in the production of
G40EQ products.
SSMA members were required to comply with the new
standards. Therefore, Clark Dietrich resigned in March 2011 and
formed an alternative trade association. At the time of their
resignation, Clark Dietrich has a combined market share of 46%.
{¶ 29} As in Consolidated and Schacher, this matter involves a trade association that
adopted standards unfavorable to the complaining party. Here, Clark Dietrich complains that
the "sham standards" adopted by the SSMA amounted to a violation of the Valentine Act. In
support of its position, Clark Dietrich presented the testimony of its expert, James Kearl. In
his deposition, Kearl acknowledged that Clark Dietrich was not prevented from selling its
G40EQ products and customers were not prevented from purchasing them. In addition,
Kearl noted that SSMA certification was not required to prove that the product was IBC
compliant. Rather, Kearl's position is that there was an antitrust violation because:
(1) If Clark Dietrich had been granted this certification it could
have competed effectively with rivals,
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(2) As the innovative technology was produced at a lower cost,
Clark Dietrich would have had a higher margin of return on its
product,
(3) Clark Dietrich's competitors would invest in this technology to
also achieve the higher margin of return,
(4) Therefore, the failure to grant this certification was an injury to
competition because the industry did not adopt technology that
would ultimately lower the cost of the innovative technology
{¶ 30} We have reviewed the record, including the testimony of Clark Dietrich's
expert, Kearl, and conclude the trial court did not err by granting summary judgment in favor
of SSMA. Aside from being speculative, Kearl's testimony does not raise any genuine issue
of material fact as to the Valentine Act claim. There is no evidence that Clark Dietrich was
prevented from selling its G40EQ product or that customers were prevented from purchasing
those products on the open market. While it is undisputed that the standards adopted by the
SSMA prevented Clark Dietrich from manufacturing its G40EQ products as an approved
SSMA product, such action does not amount to a restraint on trade. As addressed earlier,
SSMA certification is not required to prove that the product is IBC compliant, nor was it a
requirement that Clark Dietrich be a member of the association. Similar to Santana, Clark
Dietrich was free to continue selling its G40EQ products and educate architects and
specifiers about the benefit of their products. As noted by the court in Consolidated, "[a]
plaintiff does not have a claim under the rule of reason simply because others refuse to
promote, approve, or buy its products." Consolidated, 846 F.2d at 293.
{¶ 31} As a result, we find the trial court did not err by granting summary judgment on
the Valentine Act claim. Therefore, Clark Dietrich's sole assignment of error is without merit
and is hereby overruled.
{¶ 32} Judgment affirmed.
S. POWELL, P.J., and M. POWELL, J., concur.
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