Timber landowners from North and South Carolina filed a class action lawsuit in federal court Thursday against International Paper and one of its suppliers, charging widespread price fixing of pulpwood timber that they say has cost them and other landowners millions of dollars. The lawsuit was filed on behalf of Robert Taylor of Georgetown County, Marion Crane of Columbia and Benjamin Porter of Asheville, N.C.

Taylor owns timberland near Georgetown and Crane and Porter jointly own timberland in Richland County.

The lawsuit describes a process by which it contends IP reaped substantial profits by unlawfully controlling and driving down pulpwood timber prices in South Carolina and neighboring states. It further alleges that IP worked out illegal agreements with a select group of timber dealers to set uniform prices at which they would buy pulpwood timber from landowners

As a result, the timber landowners allege prices were illegally fixed at depressed levels. For example, the lawsuit says landowners in Richland County, were forced to sell their timber well below competitive market rates because they received identical low bids from both of IP’s chosen suppliers.

Connecticut-based IP is the world’s largest paper and forest products company, and the largest purchaser of pulpwood timber in South Carolina.

Also charged in the filing was CWC of North Carolina, Inc. (Canal Wood), a North Carolina corporation whose principal place of business is in Georgetown. Canal Wood supplies millions of tons of pulpwood to IP every year.

“What we have alleged is another example of a major corporation engaging in illegal activities to enhance its profits,” said Marguerite Willis, an attorney with the Columbia-based firm of Nexsen Pruet Jacobs & Pollard. which filed the lawsuit. “Only this time, it is at the expense of individuals, families and business entities that own timberland. By the time all the facts are out, I believe we are going to see that hundreds, if not thousands, of timber landowners have been injured by IP’s actions.” Attorneys for the firm, which also has offices in Myrtle Beach, Charleston and Charlotte, say that IP’s own internal manual outlines this price-fixing process under the name of a “Quality Supplier Program.”

According to the law firm, the manual states that “the elimination of ‘gaming’ is an objective of the program,” which IP has implemented in South Carolina, Georgia, North Carolina, and Virginia. In those states, attorneys say landowners are frequently getting identical bids from IP suppliers and are then forced to sell at those below-market prices.

“IP may call it ‘gaming’ but in the business world it’s called competition," said attorney Russell Burke of Nexsen Pruet Jacobs & Pollard. “Without competition, landowners are in effect held hostage by IP. The landowners deserve to reap fair market prices for their timber. With IP’s program, private landowners are losing millions of dollars each year.”

IP spokesperson Rick Ouellette said he was aware Thursday that the complaint had been filed but said he could not address the allegations contained in the lawsuit until his company had a chance to go over it.

“Our legal team hasn’t had time to review the complaint,” he said, “and it would premature for us to comment at this time.”

According to the lawsuit, pulpwood timber consists of small diameter softwood (pine) or hardwood standing timber that is harvested from timberland owned by plaintiffs and class members by dealers, loggers or producers and resold by them to International Paper for the manufacture of paper products.

Pulpwood timber is a fungible commodity. Pulpwood logs are reduced to wood fibers by chemical or mechanical means to make a broad group of products, including paper products, paperboard, and chipboard. The price paid by dealers, loggers, or producers to timberland owners to harvest pulpwood timber from their properties is known as the pulpwood timber stumpage price.

The lawsuit alleges that in South Carolina the average pulpwood timber stumpage price has declined by more than 35 percent, or more than $3 per ton, since IP began implemented what it calls a “price-fixing scheme” in 2000. That decline is significant given that the average price for pulpwood is now only slightly more than $5 per ton, the complaint alleges.

The timber landowners brought their action under the Sherman Antitrust Act, which is aimed at eliminating restraints on trade and competition. Price fixing — which is defined as any effort to raise, depress, fix, peg, or stabilize the price of a commodity — is specifically prohibited under this federal law. ©Georgetown Times 2002