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Pro Slab, Inc. v. Argos USA LLC

United States District Court, D. South Carolina, Charleston Division

September 19, 2019

Pro Slab, Inc., Bremer Construction Management, Inc., and Forrest Concrete, LLC, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
Argos USA LLC, Argos Ready Mix LLC, Lafarge North America Inc., Coastal Concrete Southeast II, LLC, Thomas Concrete, Inc., Thomas Concrete of South Carolina, Inc., Evans Concrete, LLC, and Elite Concrete, LLC, Defendants.

          OPINION AND ORDER

          Hon. Bruce Howe Hendricks United States District Judge

         This matter is before the Court on the sufficiency of Plaintiffs Pro Slab, Inc., Bremer Construction Management, Inc., and Forrest Concrete, LLC’s (“Plaintiffs”) Second Amended Complaint. Pending before the Court are six motions to dismiss, including a joint motion to dismiss filed on behalf of all but one Defendant. For the reasons discussed below, the Court denies each of the motions to dismiss.

         BACKGROUND

         Plaintiffs Pro Slab, Inc. and Bremer Construction Management, Inc. initially filed this proposed class action on November 22, 2017, alleging a claim under § 1 of the Sherman Antitrust Act, 15 U.S.C. §§ 1-7, arising from Defendants’ alleged price fixing in the ready-mix concrete market in coastal South Carolina and Georgia from at least January 1, 2012, through the present. On January 15, 2018, Plaintiffs filed an amended complaint alleging that Defendants violated § 1 of the Sherman Antitrust Act by conspiring to fix the prices of ready-mix concrete, to rig bids for certain projects, and/or to allocate certain territories and customers amongst themselves. Plaintiffs are purchasers of ready-mix concrete and allege that they have suffered injury as a result of Defendants’ conspiracy to set artificially high prices for ready-mix concrete. In response, several Defendants filed a joint motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, asserting that the amended complaint (1) does not identify the role that each Defendant allegedly played in the conspiracy; (2) offers no factual allegations to support the alleged duration of the purported conspiracy; and (3) offers no factual allegations to support the inclusion of the Charleston market area. In addition to the joint motion to dismiss, various Defendants filed separate motions pursuant to Federal Rule of Civil Procedure 12(b).

         On June 28, 2018, the Court issued an order granting the joint motion to dismiss and one of the separate motions to dismiss on the single issue that the amended complaint failed to allege facts to support Defendants’ individual involvement (the “Order”). (ECF No. 129). In relevant part, the Court found that Plaintiffs impermissibly grouped Defendants according to their alleged corporate affiliation and failed to identify each Defendant’s involvement in the alleged conspiracy. (Id. at 12-13) (“. . . the amended complaint does not allege any facts showing that the entities failed to observe proper corporate form or that they identified themselves in documents or in meetings as one company, and the amended complaint does not even allege which entity or entities employed the individuals who allegedly attended specific meetings on behalf of the lumped-together entities”). The Court dismissed the action without prejudice, explaining that “to the extent that Plaintiffs can file an action containing sufficient factual allegations as to each Defendant, the Court does not believe this dismissal should preclude them from doing so, particularly when this case is still in the early stages.” (Id. at 14). Plaintiffs thereafter filed an opposed motion to amend the complaint, which the Court granted. (ECF No. 136). Plaintiffs filed the Second Amended Complaint (“SAC”) on December 4, 2018. (ECF No. 139).

         The SAC omits ten Defendants, leaving: Argos USA LLC and Argos Ready Mix LLC (referred to herein as Argos USA/Argos Ready Mix); Lafarge North America Inc.; Coastal Concrete Southeast II, LLC; Thomas Concrete, Inc.; Thomas Concrete of South Carolina, Inc.; Evans Concrete, LLC; and Elite Concrete, LLC (collectively and hereinafter, “Defendants”). The SAC adds approximately 30 new paragraphs, including a subsection titled, “Defendants Operated in the Savannah/Charleston Region, ” (ECF No. 139 at ¶¶ 66-72), and another subsection titled, “Individual Conspiracy Participants, ” (id. at ¶¶ 124-126, 128-130, 133, 136-137, 140, 142-145, 147, 149, 151-152). The SAC also revises various allegations under the subsection “Market Allocation and Bid Rigging, ” to specify certain time periods with greater precision. See, e.g., (id. at ¶¶ 164, 169, 171, 173). In all other respects, the SAC is virtually identical to the first amended complaint.

         Defendants responded as before by filing various motions to dismiss under Rule 12(b). With the exception of Lafarge North America Inc. (“Lafarge”), Defendants filed a joint motion to dismiss pursuant to Rule 12(b)(6) (“Joint Motion”), asserting that Plaintiffs have alleged no facts that (1) plausibly support the existence of a conspiracy before September 2011 or after December 2014; and (2) plausibly support the existence of a conspiracy in the Charleston market.[1] (ECF No. 148). For its part, Lafarge filed a motion to dismiss under Rules 12(b)(1) and 12(b)(6), arguing that the conspiracy claim as to Lafarge fails to meet the pleading requirements set forth in Federal Rule of Civil Procedure 8, is time-barred by the applicable four-year statute of limitations, and fails to meet the standing requirements for both Article III standing and antitrust standing. (ECF No. 147). Defendant Coastal Concrete Southeast II, LLC (“Coastal”) filed a motion to dismiss under Rule 12(b)(6), arguing that the Court should dismiss Plaintiff’s “Post-April 2015 Claims” and “Pre-April 2015 Claims, ” and asserting that the claims are time-barred. (ECF No. 150). Defendants Thomas Concrete, Inc. and Thomas Concrete of South Carolina, Inc. (the “Thomas Entities”) filed a motion to dismiss under Rule 12(b)(6), arguing that the SAC fails to adequately allege their involvement in the conspiracy. (ECF No. 151). Defendant Evans Concrete, LLC (“Evans Concrete”) filed a motion to dismiss under Rules 12(b)(2) and 12(b)(3) for lack of personal jurisdiction and improper venue. (ECF No. 149). Finally, Defendant Elite Concrete, LLC (“Elite Concrete”) filed a motion to dismiss under Rule 12(b)(6), asserting that Plaintiffs’ claims are time-barred. (ECF No. 146).

         STANDARD OF REVIEW

         A. Federal Rule of Civil Procedure 12(b)(1)

         Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss a cause of action based on lack of subject-matter jurisdiction. “Federal courts are not courts of general jurisdiction; they have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto.” Brickwood Contractors, Inc. v. Datanet Engineering, Inc., 369 F.3d 385, 390 (4th Cir. 2004) (quoting Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986)). Challenges to jurisdiction under Rule 12(b)(1) can be raised in two different ways: facial attacks and factual attacks. Thigpen v. United States, 800 F.2d 393, 401 n.15 (4th Cir. 1986) (citing Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.1982)), disagreed with on other grounds, Sheridan v. United States, 487 U.S. 392 (1988). A facial attack questions the sufficiency of the complaint. Id. When presented with this argument, the court must accept the allegations in the complaint “as true, and materials outside the pleadings are not considered.” Id. If the court lacks subject matter jurisdiction, it has no authority to evaluate whether a plaintiff’s complaint fails to state a claim under Federal Rule of Civil Procedure 12(b)(6). See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94 (1997) (instructing that courts should not assume jurisdiction for the purpose of deciding the merits).

         B. Federal Rule of Civil Procedure 12(b)(2)

         Under Rule 12(b)(2), the Court may dismiss a case for lack of personal jurisdiction. “[A] defendant must affirmatively raise a personal jurisdiction challenge, but the plaintiff bears the burden of demonstrating personal jurisdiction at every stage following such a challenge.” Grayson v. Anderson, 816 F.3d 262, 267 (4th Cir. 2016). “The plaintiff's burden in establishing jurisdiction varies according to the posture of a case and the evidence that has been presented to the court.” Id. at 268. Here, where the Court addresses the personal jurisdiction question by reviewing only the Parties’ motions and briefs, affidavits attached to the motion, and the allegations in the SAC, Plaintiffs “need only make a prima facie showing of personal jurisdiction to survive the jurisdictional challenge.” Id. (citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). While the Court must construe all factual allegations in the light most favorable to the nonmoving party, the showing of personal jurisdiction “must be based on specific facts set forth in the record in order to defeat [a] motion to dismiss.” Magic Toyota, Inc. v. Southeast Toyota Distributors, Inc., 784 F.Supp. 306, 310 (D.S.C. 1992). The Court may consider evidence outside of the pleadings, such as affidavits and other evidentiary materials, “without converting the motion to dismiss into a motion for summary judgment.” Id. See Grayson, 816 F.3d at 268 (citing Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 62 (4th Cir. 1993) (explaining that courts may consider affidavits from any party when applying the prima facie standard)). Ultimately, “a plaintiff must establish facts supporting jurisdiction over the defendant by a preponderance of the evidence.” Grayson, 816 F.3d at 268 (citing Combs, 886 F.2d at 676) (noting that “the burden [is] on the plaintiff ultimately to prove the existence of a ground for jurisdiction by a preponderance of the evidence”).

         C. Federal Rule of Civil Procedure 12(b)(3)

         Under Rule 12(b)(3), a defendant may move to dismiss an action as brought in an improper venue. A plaintiff need “make only a prima facie showing of proper venue in order to survive a motion to dismiss.” Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 365-66 (4th Cir. 2012) (citation omitted). The court must view the facts in the light most favorable to the plaintiff when determining whether plaintiff has made a prima facie showing of proper venue. Id.

         D. Federal Rule of Civil Procedure 12(b)(6)

         A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) examines the legal sufficiency of the facts alleged on the face of a plaintiff's complaint. Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). To survive a Rule 12(b)(6) motion, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A claim is facially plausible when the factual content allows the court to reasonably infer that the defendant is liable for the misconduct alleged. Id. When considering a motion to dismiss, the court must accept as true all of the factual allegations contained in the complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007).

         Additionally, under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). As the Supreme Court held in Twombly, the pleading standard set forth in Rule 8 “does not require ‘detailed factual allegations, ’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Thus, “[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’” Id. “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.” Id. (quoting Twombly, 550 U.S. at 557).

         DISCUSSION

         Section 1 of the Sherman Antitrust Act prohibits any contract or conspiracy in restraint of trade. 15 U.S.C. § 1. “To establish a § 1 antitrust violation, a plaintiff must prove (1) a contract, combination, or conspiracy; (2) that imposed an unreasonable restraint of trade.” N.C. State Bd. of Dental Exam'rs v. FTC, 717 F.3d 359, 371 (4th Cir. 2013). The plaintiff must also demonstrate that she suffered “the type of injury that ‘the anti-trust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.’” Turner v. Va. Dep’t of Medical Assistance Services, 301 F.Supp.3d 637, 646 (E.D. Va. 2018) (quoting Brunswick Corp. v. Pueblo Bowl–O– Mat, Inc., 429 U.S. 477, 489 (1977)).

         Plaintiffs allege that Defendants are “the largest Ready-Mix Concrete producers in the Savannah, Georgia to Charleston, South Carolina region, ” and that they are engaged in an ongoing conspiracy “to suppress and eliminate competition in the markets for Ready-Mix Concrete” by “fixing prices, rigging bids, and/or allocating territories and customers.” (ECF No. 139 at ¶ 1). Plaintiffs seek certification of one plaintiff class and three subclasses, “comprised of all individuals and entities who directly purchased Ready-Mix Concrete from Defendants’ plants in the Savannah/Charleston Region during the Class Period.” (Id. at ¶ 3). Plaintiffs define the Class Period as “from at least January 1, 2010 through the present.” (Id. at ¶ 1). Plaintiffs assert that each one of them, “[d]uring the Class Period, [] directly purchased Ready-Mix Concrete from one or more Defendants.” (Id. at ¶¶ 9-11).

         As discussed below, the Court finds that Plaintiffs have alleged a conspiracy to restrict trade as to all Defendants, and the Court declines to narrow that claim prior to the Parties engaging in discovery. In large part, these two rulings guide the Court’s findings on the remainder of the issues presented in the motions to dismiss.

         A. Pleading Standard for § 1 Conspiracy Claim

         As an initial matter, and as a backdrop to the six motions pending before it, the Court finds it helpful to review the factual allegations against the pleading standard set forth in SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412 (4th Cir. 2015). The SD3 court explained that “section one’s prohibition against restraint of trade applies only to concerted action, which requires evidence of a relationship between at least two legally distinct persons or entities.” Id. (quoting Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 284 (4th Cir. 2012)). Accordingly, for a claim to be actionable, the defendants must have specifically made a “conscious commitment to a common scheme designed to achieve an unlawful objective.” Id. (quoting Monsanto Co. v. Spray– Rite Serv. Corp., 465 U.S. 752, 764 (1984)). However, “conscious parallelism” is not enough. Brooke Grp., Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993); Va. Vermiculite, Ltd. v. Historic Green Springs, Inc., 307 F.3d 277, 280 (4th Cir. 2002). The pleading must allege an agreement to restrain trade and “enough factual matter (taken as true) to suggest that [the requisite] agreement was made.” Twombly, 550 U.S. at 556. Put another way, the complaint must contain “enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.” Id.

         Ready-mix concrete is a compound of Portland cement, water, and aggregates, and may also contain additives such as fibers, mesh, and chemical admixtures. (ECF No. 139 at ¶ 45). Ready-mix concrete is manufactured in batch plants and the ingredients may be mixed in agitator trucks while on the road. (Id. at ¶ 47). The production, delivery, and use of ready-mix concrete are subject to well-established industry and governmental standards. (Id. at ¶ 49). Because of these common industry and governmental standards, ready-mix concrete is highly interchangeable and homogeneous. It is also inelastic, meaning an increase in price of the product does not necessarily result in change in demand. (Id. at ¶¶ 52, 55-57). Ready-mix concrete remains in a fluid state for several hours, during which time it can be transported to customers. (Id. at ¶ 45). Ready-mix concrete has a limited delivery range for technical and economic reasons, which the SAC explains has resulted “in four distinct geographic markets for Ready-Mix Concrete in the Savannah/Charleston Region.” (Id. at ¶¶ 74-76).

         The Court finds that in narrowing the field of Defendants and clarifying which entity, and which individual representative of the entity, is responsible for the various actions alleged, Plaintiffs have pleaded the parallel conduct and “something ‘more, ’” which the Fourth Circuit has specified is necessary to stating a § 1 claim. To begin, the subsections in the SAC titled “List Prices and Annual Price Increases, ” “Market Allocation and Bid Rigging, ” and “Add-Ons and Service Fees, ” (ECF No. 139 at ¶¶ 153-179), describe in large part who took part in the alleged restraint of trade, by what means those individuals arrived at the decision to restrain trade, and how the plan was implemented. For instance, Plaintiffs allege:

From at least 2010 through the present, Defendants have periodically updated their list prices to increase their prices for Ready-Mix Concrete, and have sent their customers price increase announcements informing them of the price increases. For each price increase during this period, before increasing their list prices, representatives of Defendants communicated through an intermediary, or communicated in person and/or by phone, regarding the amount of such increases and agreed concerning either the increased price per yard for a benchmark mix (3000 psi) or the amount of an across-the board increase.

(Id. at ¶ 153).

For some or all of these years, Jim Pedrick, cement Territory Sales Manager for Lafarge and later Argos USA, told representatives of the other Defendants, including David Melton (Elite), Bo Strickland (Evans), and Tim Coughlin or Tim Mahoney (Coastal), the amount of the annual price increase proposed by Lafarge and later Argos, and secured from each of these representatives an agreement that their respective companies would increase their prices in the same amount. Subsequently, each of these Defendants changed their list prices in amounts consistent with the agreement and advised their customers of the amount of the annual price increase.

(Id. at ¶ 154).

In early 2012, Greg Melton and Andy Stankwytch (Argos USA/Argos Ready Mix) met with Trey Cook and David Melton (Elite) at a Cracker Barrel restaurant in Pooler or Savannah, Georgia, and agreed that they would increase their prices effective April 1, 2012 by $6.00, resulting in a base price of $86.00 per yard for 3000 psi Ready-Mix Concrete. Jim Pedrick then shared the amount of the price increase with Tim Coughlin (Coastal) and Bo Strickland (Evans), both of whom agreed to the baseline price of $86.00 per yard for 3000 psi Ready-Mix Concrete.

(Id. at ¶ 155).

In late 2013, Pedrick (Argos USA) coordinated an $8.00 annual price increase among Defendants effective January 1, 2014. On or about October 9, 2013, Pedrick coordinated an agreement between Argos USA/Argos Ready Mix and David Melton (Elite) to implement an $8.00 per yard Ready-Mix Concrete price increase for 2014. On October 11, 2013, Pedrick told the Ready-Mix Concrete management team at Argos USA/Argos Ready Mix that he had already coordinated an $8.00 per yard price increase for 2014 with Elite, that he expected Evans to agree to the price increase, and that he had lunch scheduled with a representative of Coastal the following Thursday to ask them to agree to the price increase.

(Id. at ¶ 158).

         In 2011, Defendants Argos USA, LLC/Argos Ready Mix purchased Lafarge. (ECF No. 139 at ¶ 19). Plaintiffs allege that prior to that transition, “[f]rom before 2010, ” Lafarge agreed with Elite Concrete that Lafarge “would take predominantly the commercial jobs while Elite would take predominantly the residential jobs”:

Greg Melton (on behalf of Lafarge and then Argos USA/Argos Ready Mix) instructed salespeople to allow David Melton (Elite) to “win” 75% of the residential work. This agreement was so well-established that Greg and David Melton had a specific understanding that Elite would provide 75% of the Ready-Mix Concrete required by residential builder Terry Varnadore, even if Lafarge or Argos USA/Argos Ready Mix had “won” the job. In many instances, Ready-Mix Concrete that was supposed to have been provided by Lafarge or Argos USA/Argos Ready Mix-to Varnadore and others-was actually provided by Elite.

(Id. at ¶ 169).

During at least 2012 and 2013, Greg Melton (Argos USA/Argos Ready Mix), David Melton (Elite) and sometimes a representative from Coastal met regularly at the Sunshine Restaurant in Pooler, Georgia to discuss pricing and specific jobs in the Savannah Market and Hilton Head/Bluffton Market, including the allocation of jobs by agreement.

(Id. at ¶ 170).

From at least 2010 until June 2016, Greg Melton (on behalf of Lafarge and then Argos USA/Argos Ready Mix) and David Melton (Elite) communicated regularly by phone, as often as several times per week, about pricing and specific jobs in the Savannah Market and Hilton Head/Bluffton Market, and to agree on the allocation of specific jobs between Lafarge or Argos USA/Argos Ready Mix and Elite. Greg Melton and David Melton also shared mix designs necessary for submitting bids on certain jobs to facilitate their bid-rigging and market allocation scheme.

(Id. at ¶ 171).

By rigging bids, Defendants could enforce their existing agreements regarding pricing and market allocations in the Savannah Market and Hilton Head/Bluffton Market, collectively meet their shared goal of maintaining or raising prices, and split up and share larger projects. Bid rigging also allows parties to a price fixing or market allocation agreement to deter cheating on the agreement on particularly lucrative projects that might otherwise reward cheating.

(Id. at ¶ 172).

         In addition to the general agreements between Defendants regarding price increases and market allocation, Plaintiffs allege that in April 2012, Greg Melton, then of Argos USA/Argos Ready Mix, spoke with his brother David Melton of Elite Concrete, and the two agreed that “the group of conspiring companies would add a fuel surcharge to all Ready-Mixed Concrete deliveries.” (Id. at ¶ 174). The SAC further alleges that Defendants, Argos USA/Argos Ready Mix, Elite Concrete, Evans Concrete, and Coastal agreed to impose on purchasers an environmental fee and a “short load” fee per delivery or truckload of ready-mix concrete. (Id. at ΒΆΒΆ 175-179). The SAC chronicles with specific examples the efforts of Greg Melton (with Lafarge and then Argos USA/Argos Ready Mix), Jim Pedrick (with Lafarge and then Argos USA), David Melton (with Elite Concrete), Troy Baird (with Elite Concrete), Bo Strickland (with Evans Concrete), Tim Coughlin (with Coastal and then with the Thomas Entities), and Tim Mahoney (with Coastal ...


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