United States District Court, E.D. Virginia, Richmond Division
REPORT AND RECOMMENDATION
Lawrence F. Stengel (Ret.) Special Master Judge
is a dispute between the parties over whether JELD-WEN may
discontinue the manufacture and sale of three doorskin
designs, specifically the Cashal, the Corvado, and the
Coventry. Each are produced exclusively at the Towanda
facility. Steves and Sons, Inc. (Steves) contends
that discontinuing the sale of these three designs violates
the Court's Amended Final Judgment Order (ECF No. 1852)
which requires JELD-WEN to "maintain the status quo at
the Towanda facility" during the pendency of the appeal.
Counsel for Steves presented argument opposing the
discontinuation of these doorskin designs in letters to the
Special Master dated April 29, 2019, and May 17, 2019.
Counsel for JELD-WEN responded in a letter dated May 9, 2019.
On July 11, 2019, the Special Master heard oral argument from
counsel in a conference call.
reasons set forth below, I recommend the Court enter the
attached order denying Steves" request to enjoin the
discontinuation of the Cashal, Corvado, and Coventry designs
as JELD-WEN has presented a legitimate business purpose to
discontinue these three designs. The information illustrates
that the cost and capacity savings associated with this
discontinuation will not only raise JELD-WEN's
EBITDA but also will increase the Towanda
facility's value to an acquiring company. Prior to the
divestiture trial, JELD-WEN routinely evaluated its doorskin
sales and regularly determined which of its designs should be
discontinued due to lack of profitability. Simply stated, the
proposed discontinuation is business as usual at Towanda. It
is therefore beyond the purview of the Order and my Special
Master duties (as outlined in ECF No. 1863) to prevent
JELD-WEN from performing a similar function during the
pendency of its appeal.
BACKGROUND AND APPLICABLE COURT
December 14, 2018, the Court entered a Final Judgment Order
in this antitrust case (ECF No. 1815). On March 13, 2019, the
Court amended its Final Judgment Order (ECF No. 1852) (the
''Order"). JELD-WEN appealed the Order to the
United States Court of Appeals for the Fourth Circuit on
April 12, 2019. This appeal is pending.
Paragraph (F)(2) of the Order and Fed.R.Civ.P. 53, this Court
appointed a Special Master to oversee the divestiture of the
Towanda facility to an acquiring company and "to assure
that, until the divestiture is complete, the Towanda facility
is preserved, operated, and maintained in good operating
condition and in accord with applicable law." ECF No.
1852 at 6: accord ECF No. 1863 at 2. The Order
states, in pertinent part:
(a) JELD-WEN shall continue to maintain and operate the
Towanda facility during the pendency of the appeal unless
otherwise ordered by the Court; and
(b) JELD-WEN shall not take any steps during the pendency of
the appeal that would in any way reduce the value of the
Towanda facility to a potential Acquiring Company or would
make it more difficult or costly for the Acquiring Company to
supply doorskins to Steves of the type, and in the quantity,
that JELD-WEN supplies to Steves as of the date of the entry
of this Order.
1852 at 8-9; accord ECF No. 1863 at 2-3.
is also language in Section VIII of the Order requiring
JELD-WEN to maintain the "status quo" at the
Towanda facility. ECF No. 1852 at 13-14. That section
pertains to the current Supply Agreement between the parties
and reads, in pertinent part:
VIII. The Supply Agreement's Terms Shall Extend
One Year Beyond the Conclusion of the Appeal if This Case
Remains on Appeal Until September 10, 2021.
... [I]f, as of September 10, 2021, this case remains on
appeal, the term and terms of the Supply Agreement... shall
be extended for one year beyond the conclusion of the appeal
to assure that Steves does not suffer ... irreparable injury
JELD-WEN shall maintain the status quo at the Towanda
facility during the pendency of this appeal, and Steves has
the right under Federal Rule of Civil Procedure 64(d) to
request an injunction pending appeal to lengthen the period
of Steves' Supply Agreement with ...