Just ask Gonzo: DeBeers class action transferred to New Jersey

Steve Gonzalez Nov. 20, 2006, 12:44pm

Question: I am very curious about the status of the class action case involving diamonds that you wrote about last year.

The last time I heard anything the case was removed to federal court after a judge entered a default judgment in the case when DeBeers acted as if the case did not exist.

If you could update this case and let me know where it stands, I would appreciate it.

Alexis Riley-Ruiz
Molokai, Hawaii

Gonzo: The suit you are referring to alleges DeBeers has a monopoly on the diamond market. The Swiss company is accused of restraining trade, increasing prices, controlling inventory, limiting supply, restricting purchase and falsely advertising the scarcity of diamonds.

On May 3, 2005, former Circuit Judge George Moran entered a default judgment order against diamond giants DeBeers Centenary A.G. and DB Investments after the companies failed to respond to a class action lawsuit filed against them by Emert and Katie Null of Madison County.

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 DeBeers 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 Nulls claim that for more than a century the DeBeers "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, DeBeers 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 DeBeers 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.

Attorneys Stephen Tillery, Donald Flack and Eugene Barash of Korein Tillery of St. Louis--heavyweights among class action plaintiffs' attorneys--filed suit the day before President George W. Bush signed the Class Action Fairness Act into law, Feb. 17, 2005.

On May 22, 2005, Moran certified the suit.

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.

Moran 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, 2005, Patrick Foppe and Robert Schultz, Jr. of Heyl Royster in Edwardsville, who represent DeBeers Centenary A.G., removed the case to federal court where it has been assigned to Judge Michael J. Reagan.

On Oct. 3, 2005, Judge Reagan transferred the case to the District Court of New Jersey after De Beers filed a motion to transfer the case.

Regan said the transfer to New Jersey "will serve the convenience of the parties and witnesses and promote the interest of justice."

The Nulls did not oppose DeBeers motion and now the case is part of the Judicial Panel on Multidistrict Litigation pending in New Jersey.

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Heyl Royster
124 SW Adams St
Peoria, IL 61602

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