Class action against world's largest diamond miner certified in Madison County
Circuit Judge George Moran, Jr.
Madison County Circuit Judge George Moran, Jr. certified a class action case against international diamond giant De Beers of Luxembourg because the defendant failed to appear or respond to the complaint.
Moran entered the order July 22.
The class action names DB Investments and De Beers S.A. of Luxembourg; Consolidated Mines of South Africa; De Beers Centenary A.G. of Switzerland; and Diamond Trading Company--the marketing arm of the De Beers Group--of the United Kingdom.
Attorneys Stephen Tillery, Donald Flack and Eugene Barash of Korein Tillery of St. Louis--heavyweights among class action plaintiffs' attorneys--filed suit against De Beers Feb. 17, the day before President George W. Bush signed the Class Action Fairness Act into law on behalf of Emert and Katie Null of Madison County.
The Nulls claim that for more than a century the De Beers "cartel" has dominated the market for rough diamonds in the United States and worldwide controlling as much as 80 percent of the world diamond supply.
Currently, De Beers controls 50 percent of the world’s diamond supply, and an even greater percentage of the world’s supply of two-carat and larger rough diamonds, according to the suit.
In 2003 alone, the Nulls claim De Beers sold $5.52 billion worth of rough diamonds, and used its market dominance to raise the price of rough diamonds three times during the year, allegedly creating a 10 percent hike in rough diamond prices.
“Over the years including presently, De Beers has used its monopolistic power to illegally and artificially restrain trade and increase the price of diamonds by controlling inventory,” the complaint states.
The Nulls claim in October of 1999, De Beers chairman Nicky Oppenheimer, speaking at a gathering of Harvard alumni, went so far as to boast about De Beers illegal monopolistic behavior.
According to the suit, he stated that De Beers “likes to think of itself as the world’s longest running monopoly…and seeks to manage the diamond market, to control supply, to manage prices and to act collusively with our partners in the business.”
The class action is brought on behalf of diamond purchasers to recover damages for violations of the Illinois Consumer Fraud and Deceptive Business Practice Act and for unjust enrichment.
“The Court has jurisdiction over the defendants as they either maintain their principal place of business within Illinois, are registered to do business in Illinois, or conduct substantial business within Illinois," the suit claims. "In addition, the acts giving rise to the causes of action stated occurred in the state of Illinois.
“Venue is proper in this court pursuant to 735 ILCS 5/2-101 as defendants’ liability arose, in part, in this county, and they may be found here,” the complaint continues.
The complaint also states the action is not based on federal law and the Nulls do not seek and will not accept recovery in excess of $75,000 exclusive of costs and interest.
Moran stated that in considering a motion for class certification the court has to accept the factual allegations in the complaint as true.
“Having reviewed the factual allegations of the complaint and plaintiff's motion for class certification the court hereby grants the motion for class certification,” Moran wrote.
Moran also appointed the Nulls as class representative and appointed Korein Tillery as class counsel and gave them 14 days to coordinate with the clerk regarding a hearing date for a plan of notice to class members and regarding a hearing on damages.
On July 26, Patrick Foppe and Robert Schultz, Jr. of Heyl Royster in Edwardsville, who represent De Beers Centenary A.G., removed the case to federal court where it has been assigned to Judge Michael J. Reagan.
De Beers recently announced that it will spend $636 million on the Snap Lake project in Northern Canada which is expected to yield 1.5 million carats a year for approximately 20 years after announcing that the Kimberly mine in South Africa will close after 134 years.
The Snap Lake project will be the first mine outside of Africa.
De Beers expects full-year sales to rise to a record of at least $6.4 billion after it increased prices and gem demand expanded. In 2004 sales were at $5.7 billion.
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