In re Iowa Ready–mix Concrete Antitrust Litig..Randy Waterman

• Decision Date: 08 March 2011
• Docket Number: No. C 10–4038–MWB.,C 10–4038–MWB.
• Citation: 768 F.Supp.2d 961
• Parties: In re IOWA READY–MIX CONCRETE ANTITRUST LITIGATION.Randy Waterman, Frank Audino Construction, Inc., Sioux City Engineering Co., City of Le Mars, Iowa, and Sioux Contractors, Inc., on behalf of themselves and all others similarly-situated, Plaintiffs,v.GCC Alliance Concrete, Inc., Siouxland Concrete Company, VS Holding Company, f/k/a Alliance Concrete, Inc., Great Lakes Concrete, Inc., Steven Keith VandeBrake, Kent Robert Stewart, Chad Van Zee, and Tri–State Ready–Mix, Inc., Defendants.
• Court: U.S. District Court — Northern District of Iowa

768 F.Supp.2d 961

2011-1 Trade Cases P 77,385

In re IOWA READY–MIX CONCRETE ANTITRUST LITIGATION.Randy Waterman, Frank Audino Construction, Inc., Sioux City Engineering Co., City of Le Mars, Iowa, and Sioux Contractors, Inc., on behalf of themselves and all others similarly-situated, Plaintiffs,

v.GCC Alliance Concrete, Inc., Siouxland Concrete Company, VS Holding Company, f/k/a Alliance Concrete, Inc., Great Lakes Concrete, Inc., Steven Keith VandeBrake, Kent Robert Stewart, Chad Van Zee, and Tri–State Ready–Mix, Inc., Defendants.

No. C 10–4038–MWB.

United States District Court, N.D. Iowa, Western Division.

March 8, 2011.

James Henry Pickner, Pickner Law Office, P.C., Hawarden, IA, Steven P. Wandro, Wandro, Baer & McCarthy, P.C., Kara Marie Simons, Wandro & Baer, P.C., Des Moines, IA, Eric S. Pavlack, Irwin B. Levin, Richard E. Shevitz, Scott D. Gilchrist, Cohen & Malad, LLP, Indianapolis, IN, Brian M. Sund, Jackson D. Bigham, Morrison Fenske & Sund P.A., Minnetonka, MN, James W. Redmond, Heidman Law Firm, L.L.P., Gregory P. Hansel, Joshua R. Carver, Neal F. Pratt, Randall B. Weill, Preti Flaherty Beliveau & Pachios LLP, Portland, ME, Adam J. Levitt, John E. Tangren, Wolf Haldenstein Adler Freeman & Herz LLC, Chicago, IL, Patrick N. Murphy, Murphy, Collins & Bixenman, PLC, Le Mars, IA, Russell D. Henkin, Berger & Montague, P.C., Douglas A. Abrahams, Joseph C. Kohn, William E. Hoese, Kohn, Swift & Graf, P.C., Philadelphia, PA, Michael W. Ellwanger, Rawlings Neiland Probasco Killinger Ellwanger Jacobs, et al., Jeana L. Goosmann, Goosmann Law Firm, PLC, Sioux City, IA, Robert G. Eisler, Grant & Eisenhofer, P.A., Fred T. Isquith, Zachary W. Biesanz, Wolf Haldenstein Adler Freeman & Herz LLP, Richard D. Schwartz, Faruqi & Faruqi, LLP, New York, NY, Kendall S. Zylstra, Peter R. Kohn, Stephen E. Connolly, Faruqi & Faruqi, LLP, Jenkintown, PA, Mark A. Zaiger, Jennifer Rinden, Shuttleworth & Ingersoll, Cedar Rapids, IA, Renae D. Steiner, Vincent J. Esades, Heins, Mills & Olson, PLC, Mark J. Briol, Nathaniel J. Zylstra, Scott A. Benson, Briol & Associates, PLLC, Daniel E. Gustafson, Daniel C. Hedlund, Gustafson Gluek, PLLC, Minneapolis, MN, for Plaintiffs.Daniel L. Hartnett, Crary–Huff–Inkster–Hecht–Sheehan–Ringenberg–Hartnett–Storm, Francis L. Goodwin, Baron, Sar, Goodwin, Gill & Lohr, Sioux City, IA, Bryan S. Strawbridge, C. Joseph Russell, Thomas J. Costakis, Krieg Devault, LLP, Indianapolis, IN, Hayward L. Draper, Thomas H. Walton, Nyemaster Goode Voigts West Hansell & O'Brien, P.C., Matthew G. Whitaker, Whitaker Hagenow GBMG, Des Moines, IA, Anne M. Rodgers, Don J. Degabrielle, Sumera Khan, William R. Pakalka, Fulbright & Jaworski, LLP, Houston, TX, Bryan S. Hatch, Stinson, Morrison, Hecker, LLP, David Stubstad, David Christopher Mullin, Kelsey N. McChane, Mark C. Laughlin, Fraser Stryker, P.C., LLO, Joshua C. Dickinson, Spencer, Fane, Britt & Browne, LLP, Omaha, NE, David E. Everson, Misty Cooper Watt, Stinson, Morrison & Hecker, Emily M. Taylor, Mark A. Thornhill, Spencer Fane Britt & Browne LLP, Kansas City, MO, for Defendants.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANTS' MOTIONS TO DISMISS CONSOLIDATED CLASS ACTION COMPLAINT AND AMENDED CONSOLIDATED CLASS ACTION COMPLAINT

MARK W. BENNETT, District Judge.

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                ¦TABLE OF CONTENTS¦
                +-----------------+
                

                I. INTRODUCTION                                                       963
                

 A. Factual Background                                              963
                

 1. Product and parties                                        964
                        2. Alleged antitrust violation                                965
                        3. Alleged fraudulent concealment                             966
                        4. Alleged damages                                            967
                        5. Relief requested                                           967
                

 B. Procedural Background                                           967
                

 1. Original complaint and consolidation of related cases             967
                       2. Selection of interim class counsel                                968
                       3. Further pre-answer proceedings                                    968
                       4. The motions to dismiss                                            968
                       5. Amendment of the complaint and renewal of the motions todismiss   969
                

II. LEGAL ANALYSIS                                                    970
                

 A. Standards For Dismissal Pursuant To Rule 12(b)(6)               970
                   B. The Pleading Of The Antitrust Conspiracy                        971
                

 1. Arguments of the parties                                   971
                

 a. The defendants' arguments                              971
                            b. The plaintiffs' response                               972
                            c. The defendants' reply                                  973
                

 2. Analysis                                                   974
                

 a. Pleading of an antitrust conspiracy                    974
                            b. Absence of sufficient factual allegations              974
                

 3. Dismissal or leave to amend                                976
                

 C. The Pleading Of The Plaintiffs' Standing                        978
                

III. CONCLUSION                                                        979
                 

Purchasers of ready-mix concrete brought this class-action lawsuit against producers and sellers of ready-mix concrete and certain of their officers, directors, owners, and employees who have pleaded guilty to criminal antitrust offenses, alleging an antitrust conspiracy to suppress and eliminate competition by fixing the price of ready-mix concrete in the “Iowa region.” The plaintiffs seek treble damages, costs of suit, attorneys' fees, and injunctive relief under Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, for the injuries they and putative class members allegedly sustained from the defendants' violations of Section 1 of the Sherman Act, 15 U.S.C. § 1. The defendants have moved to dismiss the plaintiffs' complaint on two grounds: insufficient pleading of a factual basis for the plaintiffs' standing and insufficient pleading of a factual basis for the purported antitrust conspiracy among all of the defendants. One defendant has moved to dismiss on the further ground that it withdrew from any purported conspiracy when it transferred all of its assets to a co-defendant in January 2008, and there are no allegations of activity of the purported conspiracy in the preceding two years. The plaintiffs contend that the defendants' arguments understate the reasonable inferences from the facts alleged and are inconsistent with controlling law.

I. INTRODUCTION

A. Factual Background

“When ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Thus, the factual background presented here is based on the plaintiffs' allegations in their December 21, 2010, Amended Consolidated Class Action Complaint (docket no. 177). The Amended Consolidated Complaint is the appropriate pleading to consider, even though it was filed after the pending motions to dismiss, because, as explained in more detail, below, the parties asserted that their motions to dismiss and resistances to them applied with equal force to the Amended Consolidated Complaint.

1. Product and parties

At the center of this antitrust litigation is “ready-mix concrete,” which the plaintiffs allege is a product comprised of cement, sand, gravel, water, and occasionally additional additives, which can be made on demand and shipped to work sites by concrete mixer trucks. Amended Consolidated Complaint, ¶¶ 7(c), 22. It is made on demand at batch plants, where the proportions of input materials are measured, combined with water in a rotating drum mounted on a truck, and then mixed in the truck's drum on the way to the construction site. Because the addition of water begins an irreversible chemical reaction, and because the concrete is poured directly at the construction site, truck arrival must be timed so that the concrete hardens at the appropriate time. Id. at ¶ 23. The strength of ready-mix concrete, measured in pounds per square inch (psi), is determined by the amount of water added. Id. at ¶ 24. Ready-mix concrete, which is sold by the cubic yard, is used principally in commercial, governmental, and residential construction projects, including sidewalks, driveways, bridges, tunnels, and highways. Id. at ¶¶ 25–26. Because ready-mix concrete is a major and necessary component of commercial, governmental, and residential construction, a small but significant, non-transitory increase in the price of ready-mix concrete will not cause construction companies to switch to a different construction material, even if such a material is available and compatible with the needs of a given construction job. Id. at ¶ 29. Ready-mix concrete is interchangeable across manufacturers. Although construction projects can be bid under various concrete specifications, the plaintiffs allege that all of the defendant producers and sellers have the equipment and expertise to meet these specifications. Id. at ¶ 32.

The named plaintiffs here are an individual (Randy Waterman), three construction companies (Frank Audino Construction, Inc., Sioux City Engineering Co., and Sioux Contractors, Inc.), and a municipality (the City of Le Mars, Iowa). They each allege that they purchased ready-mix concrete directly from one or more of the defendants during the “class period,” defined as from at least January 1, 2006, through at least April 26, 2010. Id. at ¶¶ 7(b), 8–12. The named plaintiffs do not, however, specify from which one or more defendants each of them purchased ready-mix concrete. The plaintiffs also seek to represent a class, defined as “includ[ing] all Persons who purchased Ready–Mix...