Can Florida Antitrust Case Survive Motion To Dismiss?

Reminders of the Sunshine State’s tumultuous 2000-2009 period will carry into the new decade as the U.S. District Court for the Southern District of Florida,


Reminders of the Sunshine State’s tumultuous 2000-2009 period will carry into the new decade as the U.S. District Court for the Southern District of Florida, Miami, weighs a prospective class-action antitrust suit against the market’s major cement and concrete players. The court has consolidated a series of October-November 2009 complaints alleging that the companies, reportedly accounting for 90 percent of Florida’s cement and ready mixed concrete deliveries, engaged in a decade-long conspiracy to fix prices and allocate markets.

Court documents indicate the Florida Cement and Concrete Antitrust Litigation case will proceed this month with a status conference involving attorneys for about 20 plaintiffs and nine defendants. According to Washington, D.C.-based Donald Klawiter, a partner with Sheppard Mullin Richter & Hampton LLP, a status conference enables counsel on both sides to confer with the judge on the organization of the lawsuit and establishment of a timeline Û potentially well into the 2010 calendar Û for defendants’ motions to dismiss the case, followed by discovery and class-certification phases. While motions to dismiss historically have been denied in antitrust cases, today’s plaintiffs face a higher pleading threshold Û the standard of plausibility. That criterion stems from the Supreme Court’s 2007 Bell Atlantic Corp. v. Twombly ruling, explains Klawiter, who heads the Sheppard Mullin East Coast Antitrust and Trade Regulation practice and is past chair of the American Bar Association Section of Antitrust Law.

Florida Antitrust complaints Concrete Products sampled read like grievances from parties who appear to believe that current cement and concrete distribution should parallel the efficiencies of pre-Home Depot home-improvement retailing. Any case arising from them begs thorough examination of the unique attributes of cement and concrete commerce Û especially in a market characterized by hundreds of miles of coastline; abundant import terminal construction opportunities; and, an absence of the normal cost barriers that limit transporting powder to points inland. If the court dignifies plaintiff claims, multiple issues warrant consideration:

Ownership changes

The past decade saw perhaps 80-90 percent of the state’s cement production and distribution, plus ready mixed concrete capacity, change hands through transactions involving defendants Cemex Corp., Florida Rock Industries, Lafarge North America, Lehigh Hanson Inc., Oldcastle Inc., Suwannee American Cement, Titan America and Votorantim Cementos North America. Plaintiffs allege a price-fixing conspiracy dating to at least January 2000; however, some of the defendants entered the Florida cement and ready mixed market Û or became significant players there Û mid-decade or later.

Federal oversight

The takeovers (note Deals of the Decade box in News Scope) of Southdown, RMC Industries and Rinker Materials (Cemex), Florida Rock Industries (Vulcan), and Hanson Building Materials America (Heidelberg/Lehigh) were subject to U.S. Department of Justice Antitrust Division or Federal Trade Commission approval. Regulatory review typically invites market-impact insight from acquisition targets’ customers. Against a backdrop of five transactions spanning Florida assets valued in the hundreds of millions, is a group of trial attorneys just now discovering a supposed price-fixing conspiracy that eluded Justice or FTC staff?

Due diligence

In the course of evaluating a takeover, would numerous Cemex, Heidelberg/Lehigh, and Vulcan management team members and counsel neglect to assess target companies’ pricing structures and material supply arrangements involving other operators that are competitors in some, but not all, Sunshine State markets?