CHARLESTON – The West Virginia Attorney General’s office is stepping into a lawsuit regarding the price of asphalt.
On Jan. 11, Attorney General Patrick Morrisey's office filed a lawsuit in Kanawha Circuit Court alleging 11 asphalt and paving companies violated the state’s Antitrust Act.
The lawsuit claims CRH and its numerous subsidiaries, Kelly Paving Inc. and American Asphalt & Aggregate Inc. drove out competitors and pushed asphalt prices higher across a substantial portion of West Virginia via acquisition or non-compete agreements.
The AG's office seeks the maximum fines and a judgment for three times the state’s damages, along with an order restoring competition within the state-approved asphalt manufacturing and sale market.
“Any corporate conspiracy aimed at driving out competition must be stopped,” Morrisey said in a statement. “Such predatory schemes inflate prices and come at a tremendous cost.”
The lawsuit contends the price of state-approved asphalt increased at a higher rate in areas controlled by CRH and other defendants as compared to other parts of the state where there is more competition.
Morrisey says those high prices strain the state highways budget. That, according to the lawsuit. forces the state to delay construction projects, some indefinitely, causing economic damage and public safety risks.
Morrisey's office will lead the lawsuit with the state’s Department of Transportation as another plaintiff.
“Let’s be clear: when the highways department needs counsel for the filing of an antitrust matter, they must seek approval through the Attorney General’s office,” Morrisey said in a statement. “When the governor seeks outside counsel for the filing of any matter in court, it must obtain the approval of the Attorney General’s office.
“Hiring private counsel without approval of my office is not only against the law – it represents the very essence of the friends and family plan that I ran against and that voters rejected."
Morrisey said outside counsel will be retained to help on the case.
“Importantly, I want to save money on this bid – which is why we are hopeful to pay outside counsel between 17 and 25 percent of any fees earned on this matter – the purported contract between the private firm and highways would have cost taxpayers far more money,” Morrisey said. “We will always do the right thing and will not rush a defective filing forward simply because someone in the media or local government wants to generate headlines.”
The civil complaint, alleges trade restraint, monopolization and attempts to monopolize – all violations of the state’s Antitrust Act – along with a count of unjust enrichment.
Other defendants listed in the complaint are Oldcastle Inc., Oldcastle Materials Inc., West Virginia Paving Inc., Southern West Virginia Paving Inc., Southern West Virginia Asphalt Inc., Camden Materials LLC, American Asphalt of West Virginia LLC and Blacktop Industries & Equipment Company.
The filing come a day after a lawyer for the state Department of Transportation told legislators the agency had an agreement with the AG’s office to handle the case. But Mike Folio decline to discuss the matter further Jan. 10, citing attorney-client privilege.
Last month, lawmakers questioned why the AG’s office wasn’t more involved with the lawsuit, particularly when the DOT joined the suits previously filed on behalf of the cities of Charleston, Parkersburg, Beckley, Bluefield and Huntington as well as the Kanawha County Commission.
Seven lawsuits were filed against West Virginia Paving in various circuit courts across the state. A motion to consolidate them in Kanawha County was filed in late October. The lawsuits list West Virginia Paving Inc.; Southern West Virginia Paving Inc.; Southern West Virginia Asphalt Inc.; Kelly Paving Inc.; Camden Materials LLC; American Asphalt of West Virginia LLC; American Asphalt & Aggregate Inc.; and Blacktop Industries and Equipment as defendants.
Those suits allege that the defendants have been inflating prices of asphalt and creating a de facto monopoly. The suits allege that the paving companies charged the cities and the DOH 40 percent, and sometimes more, for asphalt and paving supplies than it should have been charging.
West Virginia Paving acquired at least 15 asphalt plants that previously had competed against each other for bids in the state, according to the suits. The lawsuits note that that West Virginia Paving has more than 80 percent of the market share in the Huntington, Charleston, Bluefield, Parkersburg and Beckley areas.
The defendants’ scheme unlawfully forced the class to pay at least 40 percent more for asphalt, inflated the defendants’ market share to over 80 percent in each class area and illegally extracted millions of dollars in overpayments from the class, according to the suits.
West Virginia Paving released a statement, calling the allegations in the lawsuits blatantly false and that the bulk of the price changes were directly related to the cost of the transportation and raw materials.
Last year, the state Legislature passed a law requiring state agencies to go to the Attorney General’s office for representation in lawsuits, even if outside counsel later is required. In December, the paving companies filed a motion to dismiss the lawsuits because Morrisey’s office hadn’t been involved in the case on behalf of the DOT.
The plaintiffs in those various cases are represented by Benjamin L. Bailey and Michael B. Hissam of Bailey & Glasser LLP. West Virginia Paving, Southern West Virginia Paving, Southern West Virginia Asphalt and Camden Materials are represented by former West Virginia Democratic gubernatorial candidate Booth Goodwin.
American Asphalt and Aggregate, American Asphalt of West Virginia and Blacktop Industries and Equipment Company are represented by Charles Johnstone.
In the AG's case, the state is being represented by General Counsel Edward M. Wenger as well as Assistant AGs Steven A. Travis and Douglas L. Davis.
Kanawha Circuit Court case number: 17-C-41