# Appendix — American Pipe & Constr. Co. v. Utah > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0227%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1974 - **Citation:** 414 U.S. 538 ## Text viii. Page Affidavit in Support of Motion to Intervene— David B. Brinton 405 Affidavit in Support of Motion to Intervene— Randall J. Heaps 406 Affidavit in Support of Motion to Intervene—Don C.. Pierce 407 Affidavit in Support of Motion to Intervene—Ed- ward H. Southwick 408 Affidavit in Support of Motion to Intervene—J. Bracken Lee 409 Affidavit in Support of Motion to Intervene— Arnold Anderson 410 Affidavit in Support of Motion to Intervene— Henry Beckstead 411 Affidavit in Support of Motion to Intervene— Jack A. Richards ..... 412 Affidavit in Support of Motion to Intervene— David B. Brinton ...... 413 Affidavit in Support of Motion to Intervene— Doren B. Boyce 414 Affidavit «in Support of Motion to Intervene— Richard A. Chambers 415 Affidavit in Support of Motion to Intervene— Jack L. Crellin 416 Affidavit in Support of Motion to Intervene—Ned F. Wilson 417 Affidavit in Support of Motion to Intervene— Gordon B. Christenson 418 Affidavit in Support of Motion to Intervene— Glenn W. Adams ...............000....... 419 ee ix. Affidavit in Support of Motion to Intervene— Glenn A. Wright 420 Affidavit. in Support of Motion to Intervene— Buell Bennett 421 Affidavit in Support of Motion to Intervene— JC, CR cscs cetccccsatncecneseorienirinrneciees 422 Affidavit in Support of Motion to Intervene— T. John Labrum 423 Affidavit in Support of Motion to Intervene— Roscoe W. Godfrey 424 Affidavit in Support of Motion to Intervene— William C. Hague 425 Affidavit in Support of Motion to Intervene— John Jorgensen ......... 427 Affidavit in Support of Motion to Intervene— Walter W. Brock 428 Request for Admission. Dated: January 22, 1970.. 429 Points and Authorities of Defendants in Opposi- tion to Motions to Intervene and to Amend ...... 435 Affidavit of Oliver F. Green, Jr., in Opposition to Motion to Intervene as Plaintiffs or in the Alternative, to Amend the Complaint to Add Additional Parties . 464 Affidavit of Haldor T. Benson 468 Supplemental Memorandum of Utah Concrete Pipe Company in Opposition to Motions to Intervene and to Amend 475 Affidavit of Amos Clements 478 Affidavit of Dominic B. King 480 Decision on Motions to Intervene, Amend, Etc. dated March 26, 1970 482 > strained, suppressed, and eliminated; (c) Purchasers’ of steel SDP pipe throughout the western area have been deprived of the bene- oe ee ee SDP pipe; and (d) Public agencies engaged in the construc- tion of systems to convey water and sewage in- cluding Federal governmental organizations such as the Bureau of Reclamation and the United States Army Corps of Engineers, have been forced to pay high artificially fixed prices for steel SDP pipe. 27. Plaintiff had no knowledge of the said com- bination and conspiracy, or of any facts which might have led to the discovery thereof until August 1960, and it first became fully aware of the scope of the un- lawful conspiracy during the course of the grand jury proceedings which culminated in the return of an in- dictment in this District against U.S. Steel, Smith-Scott, and USI in March 1964. (United States v. United States Steel Corporation, Criminal No. 33342). It could not have uncovered the conspiracy at an earlier date by the exercise of due diligence, inasmuch as the un- lawful conspiracy had been fraudulently concealed by defendants. 28. Since at least 1955, plaintiff has purchased substantial quantities of steel SDP pipe from defendants for use in the western area of the United States. In purchasing said steel SDP pipe, plaintiff in some in- stances has invited formal, sealed competitive bids from prospective suppliers, including defendants, and has generally accepted the price offered by the lowest re- _ ‘sponsible bidder. = 29. Asa result of the illegal combination and cop. spiracy alleged herein, plaintiff has been led and in. duced by defendants to make contract awards on bids solicited by it during the period covered by this com. plaint at prices fixed by said illegal combination and conspiracy, and plaintiff has been denied thereby the benefit of unrestricted competition in prices for steel SDP pipe. By the operation of defendants’ agreement and concert of action herein alleged, plaintiff has been compelled to pay substantially higher prices than would have been the case but for the violation of the antitrust laws herein alleged. 30. Plaintiff has also purchased steel SDP pipe un- der construction contracts with independent contractors who had purchased said steel SDP pipe from defend- ants at high, noncompetitive prices. By the operation of defendants’ agreements and concert of action herein alleged, plaintiff has been compelled to pay substantial- ly higher prices under said contracts than would have been the case but for the violations of the antitrust laws herein alleged. 31. As a result of the illegal combination and con- spitracy alleged herein, the plaintiff, United States of America, has been injured and financially damaged by defendants, in an amount which is presently undeter- mined. WHEREFORE, the United States of America: (a) Prays that the herein alleged combination and conspiracy among defendants be adjudged and decreed to be in unreasonable restraint of interstate trade and commerce and in violation of Section 1 of the Sherman Act. (b) Demands judgment against defendants for the damages suffered by it due to defendants’ violation of —139— the antitrust laws, as provided for in Section 4A of the Clayton Act (15 U.S.C. § 15A), or some lesser amount to the extent that it has recovery under Count I hereof, together with such interest thereon as is permitted by law and the costs of this suit; and (c) Prays that it recover such other amounts as the Court shall deem just. Dated: June 23, 1964. /s/ Robert F. Kennedy ROBERT F. KENNEDY Attorney General /s/ William H. Orrick, Jr. WILLIAM H. ORRICK, JR. Assistant Attorney General /s /Harry G. Sklarsky HARRY G. SKLARSKY Attorney, Department of Justice /s/ Francis C. Whelan FRANCIS C. WHELAN United States Attorney /s/ Stanley E. Disney STANLEY E. DISNEY Attorney, Department of J ustice /s/ Barbara J. Svedberg BARBARA J. SVEDBERG /s/ Donald J. Fallon DONALD J. FALLON Attorneys, Department of Justice Filed June 23, 1964. [Endorsement omitted in printing} _. First Amended Complaint. fe (Injunction and Money Damages). United States District Court, Southern District of California, Central Division. 3 United States of America, Plaintiff, vs. American Pipe and Construction Co. and United Concrete Pipe Corp. Defendants. Civil No. 64-832-HW. és The United States of America, plaintiff herein, by its named herein in three counts. As a first claim the United States of America in its capacity as purchaser of concrete pipe for use by Federal agencies, brings this suit under the False Claims Act (31 USC. §§ 231-233) for double the amount of damages sus- tained, plus forfeitures (Count One), and as a second claim, alternatively, under Section 4A of the Clayton Act (15 U.S.C. § 15A). to recover its actual damages (Count Two). The plaintiff waives its right of recovery under Counts I and II hereof for any purchase for which it recovers damages under any other complaint con- cerning related conspiracies, filed by the plaintiff con- currently with the filing of this complaint. As a third claim, the United States of America brings this suit under Section 4 of the Sherman Act (15 U.S.C. §4), in order to prevent and restrain continu- ing violation by the defendants, as hereinafter alleged, of Section 1 of said Act (15 U.S.C. § 1) (Count Three). COUNT I 1. As a first claim, the United States of America in its capacity as purchaser of concrete pipe for use by those Federal governmental organizations engaged in the construction of systems to convey water and sewage: a —=-141— ‘throughout the western area of the United States, bring this suit under Sections 3490, 3491, 3492 and 5438 of the Revised Statutes (31 U.S.C. §§ 231-233), com- monly known as the False Claims Act. 2. Each of the defendants maintains an office, trans- acts business and is found within the Southern District of California. -~3. Each of the corporations listed below is made a defendant herein. Each of said corporations is organized and exists under the laws of the State indicated. Each defendant is engaged in the business of manufacturing and of selling concrete pipe principally in the city in- dicated in the western area. incipal Place Pr a Monterey Park, Baldwin California 4. Inasmuch as all defendants are corporations, no defendant is in the military or naval forces of the United States, or in the militia called into or actually employed in the service of the United States. 5. The acts alleged in this complaint to have been done by each of the defendants were authorized, ordered, or done by the officers, agents, employees, or repre- sentatives of each defendant while actively engaged in the management, direction, or control of its affairs. 6. American Concrete Pipe Co. is engaged in the business of manufacturing and of selling concrete pipe in the western area, is a subsidiary of American and is —142— incorporated in the State of Arizona. It and varions other companies not made defendants herein, partic. pated as co-conspirators in the combination and cop. spiracy hereinafter charged and have performed acts and made statements in furtherance thereof. 7. As used herein, the term: (a) “Concrete pipe” means pipe constructed of concrete either with or without metal to convey water or sewage, and includes both pres- sure and nonpressure pipe; i (b) “Metal components” refers to steel sheets, skelp, rods, wire and mesh used in the manufacture of concrete pipe; (c) “Western area” refers to California, Ore. gon, Washington, Arizona, New Mexico, Utah, Wyoming, Nevada, Idaho, and Hawaii; and (d) “End users” means customers who purchase and install or have installed concrete pipe to trans- port drinking water and for sanitation, drainage, . irrigation, flood control and similar purposes. as 8. The construction of systems utilizing concrete pipe is often contracted for by the end user with gen- eral contractors on the basis of sealed competitive bids. Prior to submitting such bids, the general contractors solicit quotations from pipe manufacturers for the purchase price of the pipe delivered to the site where the pipe is to be installed. Thus the pipe manufacturer knows who the end user will be. The award winning manufacturer at the price quoted by the latter and passes this price along to thé end user. End users also purchase pipe directly from pipe manufacturers usually on the basis of sealed competitive bids. ae —143— ~9. The corporate defendants are the principal man- ufacturers of concrete pipe in the western area and during the period 1958 through 1961 their average annual sales of concrete pipe in the western area were at least $41,500,000. Because of the relatively limited number of manufacturers of concrete pipe, general con- tractors and end users frequently solicit bids for said pipe from manufacturers outside the State where said pipe is to be installed. Manufacturers of said pipe usu- ally manufacture the pipe for a particular job only after receiving an order for it. Said manufacturers customarily identify each section of pipe so as to designate its posi- tion in the pipe Ine and deliver or have delivered said pipe direct to the trench site or as near as possible to the place where it will be installed. During the period of time covered by this complaint, the defendants here- in have manufactured substantial quantities of concrete pipe at their plants within the western area, and have sold, shipped, and delivered said pipe to job sites outside the State where it was manufactured. Thus said concrete pipe moves in a continuous and uninterrupted flow from the place of manufacture to points of installation out- side the State where said pipe was manufactured. 10. Most concrete pipe, as it is manufactured, is reinforced with metal components both to strengthen the pipe and, particularly with respect to concrete pressure pipe, to make it watertight. The defendant manufac- turers purchase said metal compents in anticipation of orders or to enable them to fill existing orders for con- crete pipe. Substantial quantities of the metal compo- nents are produced outside the State where said pipe is manufactured. The movement in interstate commerce of the metal components is necessary to the manufacture and sale of concrete pipe by the defendants in the west- —144— : ern area and the defendants and co-conspirators ‘are conduits. through which said metal components flow in a continuous uninterrupted stream in interstate com. merce from the place where said components are pro. duced to the place where the components are incorpo. sane See neemenipe ant -cm:t0 the Sack Nina said pipe is installed. 11. Any restraint upon free competition in the pro- duction or sale of concrete pipe in the western area necessarily and directly restrains and affects the inter. state flow of concrete pipe and the metal components used in the construction of said pipe. 12. During the period covered by this complaint, the plaintiff through its various executive departments and agencies has purchased substantial quantities of con- crete pipe for use in the construction of systems to con- vey water and sewage throughout the western area of the United States. Plaintiff purchased some amounts of the said conerete pipe pursuant to direct sealed compet- itive bidding procedures and in accordance with this practice and for the purpose of letting contracts, it advertised and called for bids from pipe manufacturers, including defendants, seeking to supply concrete pipe to plaintiff. Plaintiff has also purchased some amounts of the said concrete pipe pursuant to direct sealed competi tive bidding procedures in accordance with which it seeking to construct systems to convey water and sew- age for plaintiff. Said contractors in turn solicited bids and quotations from the pipe manufacturers, including defendants, for the concrete pipe to be used in the said system. The bids or quotations tendered by the pipe manufacturers to the contractors were incorporated into the sealed bids submitted by the contractors to the —145— soll. he sige: mneuictenncntadinding:shetsedente and co-conspirators, knew that the bids or quotations which they submitted to the contractor for the con- crete pipe would be thus incorporated into the bids sub- mitted by the contractor to the plaintiff, that the price of said concrete pipe represented a substantial portion of the entire bid submitted by the contractor to the plain- tiff and that said price would be paid by the plaintiff either directly to the pipe manufacturer or to the con- tractor who, in turn, would pay said price to the pipe manufacturer. 13. Beginning in or prior to the year 1954 and con- tinuing thereafter until at least August 1962, the exact dates being to the plaintiff unknown, the defendants and the co-conspirators knowingly combined, conspired and agreed to defraud and injure the United States by obtaining or aiding to obtain the payment or allowance of false or fraudulent claims under contracts awarded them for the sale of concrete pipe during said period. 14. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and rigged bids for the sale of concrete pipe and to allo- cate and divide orders for the purchase of concrete pipe among themselves. 15. During the period of time covered by this com- plaint, the defendants and co-conspirators, for the pur- pose of forming and effectuating 1: aforesaid com- bination and conspiracy, and in furtherance thereof, have done, among other things, the following: (a) In or about 1954 the presidents of Amer- ican and United, plus a vice president of each de- —146— fendant,; attended several meetings at American’s office in South Gate. At these meetings a working agreement which had been in effect for some time between the two companies was reaffirmed. The agreement included the following terms: (i) that of the total concrete Pipe sales made by the two defendants, except for sales in the northwest, approximately 60 per cent would be taken by American and approximately 40 per cent would be taken by United; (ii) that in the northwest (Washington and Oregon) 55 per cent of the total sales made by the two defendants would be taken by Ameri- can and 45 per cent would be taken by United: (ili) that wherever the two defendants en- countered competition from other manufactur. ers of concrete pipe every effort would be made to bring such manufacturers into the conspiracy and allot each a percent of the market based on its historical position within its area of Op- eration; (iv) that meetings would be held at. ap- proximately six month intervals between the presidents of American and United and other representatives of the defendants and co-conspir- ators to discuss and decide in advance which company would be entitled to submit the lowest bid on each major job known to be scheduled for installation in the near future; (v) that information would be exchanged regularly between representatives of the defend- ants and co-conspirators to enable each cor- porate participant to keep a record of the —147— amount of business secured by each such par- ticipant; (vi) that before final bids or quotations were submitted on each job of any importance, agreement would be reached by representatives of the defendants and co-conspirators on the dollar amount to be bid by each defendant or co-conspirator; (vii) that bids would be submitted in such.a way as to create the semblance of competi- tive bidding and pricing. (b) The terms of this agreement were adhered to by the defendants throughout the period of this complaint, except that in or about 1960 or 1961, the exact date being unknown to the plaintiff, the percentage allocation between American and United was changed from a ratio of 60/40 to a ratio of 58/42 in favor of American in all areas outside of the northwest. 16. Pursuant to said combination and conspiracy, and as a result of the acts done in furtherance thereof, defendants have been awarded contracts for the sale of concrete pipe, and have received payments thereunder, on the basis of bids and quotations which they sub- mitted and which they falsely or fraudulently represent- ed to be bona fide, independent, competitive, and not the product of any collusion or agreement between the bidders, and the prices of which bids they further falsely or fraudulently represented to be normal, rea- sonable and competitive whereas, in fact known to de- fendants but unknown to plaintiff, the said bids sub- mitted were sham and collusive and not the result of open competition, and prices therefor were unreason- able, arbitrary, and noncompetitive. = = 17. With respect to each such contract awarded for the supply of concrete pipe during the aforesaid period of the conspiracy, the defendant to which such con. tract was awarded, presented and/or caused to be pre- sented to plaintiff for payment or approval by it nu.’ merous Claims, knowing such claims to be false, ficti- tious or fraudulent in that such claims were based on a contract which had been falsely or fraudulently pro- cured by reason of the aforesaid bidding practices. 18. As a result of the presentment to it of the afore. said false or fraudulent claims, and without know edge thereof, plaintiff has paid the false or fraudulent claims to defendants or to contractors to whom defend- ants submitted bids. 19. As a result of the illegal combination and con- spiracy and the defendants’ acts in furtherance thereof, plaintiff has been compelled to pay substantially higher prices for concrete pipe than would have been the case but for the illegal conduct complained of herein, and has been, financially damaged by defendants, the amount of which is presently undetermined. 20. WHEREFORE, the United States of America: (a) Demands judgment against defendants for Two Thousand Dollars ($2,000.00) for the said conspiracy, for double the amount of the damages it has sustained, and for such other forfeitures as are allowable by law, as provided in Sections 3490, 3491, 3492 and 5438 of the Revised Statutes (31 U.S.C. §§ 231-233) together with interest thereon and the costs of this suit; and (b) Prays that it recdver such other amounts and have such other and further relief as the Court shall deem just. —149— COUNT I 21. As an alternative to the claim, alleged in Count One, the United States of America, in its aforesaid ca- pacity as purchaser of concrete pipe for use by Federal governmental organizations, brings this suit against the defendants under Section 4A of the Act of Congress of ‘October 15, 1914, c. 323, 38 Stat. 731, as amended (15 U.S.C. § 15A), entitled “An Act to supplement existing laws against unlawful restraints and monopo- lies, and for other purposes,” commonly known as the Clayton Act, to recover damages which it has sustained due to violations by defendants of Section 1 of the Sherman Act (15 U.S.C. § 1). 22. The allegations contained in paragraphs 2, 3 and 5 through 11 of this complaint dre here realleged with the same force and effect as though set forth in full. 23. Beginning in or prior to the year 1954 and continuing thereafter until at least August 1962, the exact dates being to the plaintiff unknown, defendants and co-conspirators have engaged in a combination and conspiracy in unreasonable restraint of the aforesaid interstate trade and commerce in concrete pipe in the western area, in violation of Section 1 of the Sherman Act. 24. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and rigged bids for the sale of concrete pipe and to allocate and divide orders for the purchase of concrete pipe among themselves. 25. During the period of time covered by this com plaint, the defendants and co-conspirators, for the pur. pose of forming and effectuating the aforesaid combina. tion and conspiracy, and in furtherance thereof, have done, among other things, those acts which are alleged in paragraph $5 of the complaint which are here real- leged with the same force and effect as though. set forth in full. 26. The effects of the aforesaid combination and conspiracy were that: Hd (a) Prices for concrete pipe throughout the western area have been raised, fixed and main- tained at high and artificial levels; (b) Price competition in the sale of concrete pipe throughout the western area has been te- strained, suppressed, and eliminated; (c) Purchasers of concrete pipe throughout the western area have been deprived of the benefits of free competition in the purchase of concrete pipe; and (d) Public agencies engaged in the construc- tion of systems -to convey water and sewage in- cluding Federal governmental organizations such as the Bureau of Reclamation and the United _ States Army Corps of Engineers, have been forced to pay high artificially fixed prices for concrete pipe. 27. Plaintiff had no knowledge of the said combi- nation and conspiracy, or of any facts which might have ~ led to the discovery thereof until August 1960, and it first became fully aware of the scope of the unlawful conspiracy during the course of the grand jury proceed- ings which culminated in the return of an indictment Sea es —1S1— jn this District against American and United in March 1964. (United States v. American Pipe and. Construc- tion Co., et al., Criminal No, 33338.) It could not have uncovered the conspiracy at an earlier date by the exercise of due diligence, inasmuch as the unlaw- ful conspiracy had been fraudulently concealed by de- fendants. 28. Since at least 1954, plaintiff has purchased sub- stantial quantities of concrete pipe from defendants for use in the western area of the United States. In pur- chasing said concrete pipe, plaintiff in some instances has invited formal, sealed competitive bids from pro- spective suppliers, including defendants, and has gen- erally accepted the price offered by the lowest respon- sible bidder. 29. Asa result of the illegal combination and con- spiracy alleged herein, plaintiff has been led and in- duced by defendants to make contract awards on bids solicited by it during the period covered by this com- plaint at prices fixed by said illegal combination and conspiracy, and plaintiff has been denied thereby the benefit of unrestricted competition in prices for con- crete pipe. By the operation of defendants’ agreement and concert of action herein alleged, plaintiff has been compelled to pay substantially higher prices than would have been the case but for the violation of the antitrust laws herein alleged. 30. Plaintiff has also purchased concrete pipe un- der construction contracts with independent contractors who had purchased said concrete pipe from defendants at high, non-competitive prices. By the operation of de- fendants’ agreements and concert of action herein al- leged, plaintiff has been compelled to pay substantially higher prices under said contracts than would have —152— been the case but for the violation of the antitrust laws herein alleged. 31. As a result of the illegal combination and con- spiracy alleged herein, plaintiff United States of Ameri- ca has been injured and financially damaged by de. fendants, in an amount which is presently undeter- mined. 32. WHEREFORE, the United States of America: (a) Prays that the herein alleged combination and conspiracy among defendants be adjudged and decreed to be in unreasonable restraint of in- terstate trade and commerce and in violation of Section 1 of the Sherman Act: (b) Demands judgment against defendants for the damages suffered by it due to defendants’ vio- lation of the antitrust laws, as provided for in Section 4A of the Clayton Act (15 U.S.C. § 15A), or some lesser amount to the extent that it has recovery under Count I hereof, together with such interest thereon as is permitted by law and the costs of this suit; and (c) Prays that it recover such other amounts as the Court shall deem just. COUNT III 33. As a third claim, the United States of America brings this suit under Section 4 of the Act of Congress of July 2, 1890, c. 647, 26 Stat. 209 (15 U.S.C. § 4), as amended, entitled “An Act to protect trade and commerce against.unlawful restraints and monop- olies”, commonly known’ as the Sherman Act, in order to prevent and restrain continuing violations by the de- fendants, as hereinafter alleged, of Section 1 of the Sherman Act. (15 U.S.C. § 1). ne |, a 34. The allegations contained in paragraphs 2, 3 and 5 through 11 of the complaint are here realleged with the same force and effect as though set forth in full. 35. Beginning in or prior to the year 1954 and continuing thereafter until at least August 1962, the exact dates being to the plaintiff unknown, defendants and co-conspirators have engaged in a combination and conspiracy in unreasonable restraint of interstate trade and commerce in concrete pipe in the western area, in violation of Section 1 of the Sherman Act. 36. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and rigged bids for the sale of concrete pipe and to allocate and divide orders for the purchase of concrete pipe among themselves. 37. The aforesaid unlawful combination and con- spiracy was terminated only after plaintiff began its investigation of the conspiracy herein alleged, and will be resumed unless the relief herein prayed for is granted. 38. During the period of time covered by this com- plaint, the defendants and co-conspirators, for the pur- pose of forming and effectuating the aforesaid combina- tion and conspiracy, and in furtherance thereof, have done, among other things, those acts which are alleged in paragraph 15 of the complaint which are here real- leged with the same force and effect as though set forth in full. 39. The allegations contained in paragraph 26 of the complaint are here realleged with the same force - and effect as though set forth in full. —154— 40. WHEREFORE, the plaintiff prays: ‘s “(a) That the’ Court adjudge and decree that the defendants, and each ‘of them, have engaged in an unlawful combination and conspiracy in up- reasonable restraint of the aforesaid interstate trade and commerce in: violation of Section 1 of the Sherman Act. (b) That each of the defendants, its succes. sors, assignees, subsidiaries and transferees, and the respective officers, directors, agents, and em- ployees thereof, and all other persons acting or claiming to act on behalf thereof, be perpetually enjoined and restrained from, in any manner, di- rectly or indirectly: (i) Continuing, maintaining, or revewing the aforesaid combination and conspiracy and from engaging in any other combination, conspiracy, agreement, understanding, or concert of action having a similar purpose or effect and from adopting or following any practice, plan, pro- gram, or device having a similar purpose or ef- fect. (ii) Entering into any agreement, arrange ment, concerted activity, or understanding with any other manufacturer, distributor or seller of pipe for the conveyance of water or sewage or with any company providing the services of lin- ing or coating such pipe or with any association of said manufacturers, distributors or sellers, in relation to said product, products or services, to: ‘ (1) Fix or adopt prices, terms, or conditions of sale; 8 5S. (2) Maintain or stabilize prices; (3) Submit noncompetitive, collusive, compli- mentary, or rigged bids or —- to any Customer; (4) Allocate or divide orders, territories or customers; (5) Exchange information concerning bids, prices, terms or conditions of sale; (6) Exclude or eliminate others from com- peting; (iii) With respect to pipe for the conveyance of water or sewage or for the service of lining and/or coating such pipe. (1) Coercing or inducing others to restrict their production to certain sizes or types of the aforesaid pipe; (2) Coercing or inducing others to restrict their sales to any territory; (3) Quoting or bidding any job only on an “all or nothing” basis; (4) Coercing or inducing contractors to enter agreements to deal with one supplier only before the opening of bids; (5) Communicating to or exchanging with any manufacturer, distributor or seller of pipe for the conveyance of water or sew- age or with any company providing the services of lining or coating such pipe any information concerning bids, prices, terms or conditions of sale. (c) That the Court order €ach defendant for a period of five (5) years to certify in writing, —156— through one of its officers, at the time of every succeeding change in published prices, “estimating ‘prices,” terms, or conditions of sale of pipe, for the conveyance of water or sewage, that said change was independently arrived at by said defendant and was not the result of any agreement or understand- ing with any competitor; and further that each de. fendant retain in its files the aforesaid certifica- tions which shall be made available to plaintiff for inspection upon reasonable written demand. (d) That the Court order that each defendant maintain, for a period of five (5) years from the date of entry of final judgment herein, a record of all meetings attended by any of its officers, directors, or employees having managerial or super- visory authority in connection with the sale or pric- ing of pipe, for the conveyance of water or sew- age, and similar representatives of any of its com- petitors; said records shall include the dates and places of said meetings, the names of all persons in attendance, and a listing of the topics discussed thereat; said records shall be made available to plaintiff for inspection upon reasonable written demand. (e) That the Court order each defendant to annex to every sealed bid or quotation on pipe for the conveyance of water or sewage a writtten certi- fication by an officer of said defendant, or by the official of said defendant having authority to deter- mine the bid or quotation involved, that said bid or quotation was not the resplt of any agreement, un- derstanding, or communication between the defend- ant and any of its competitors. *S a 4 —157— (f) That: plaintiff have such other, further, and different relief as the Court. may deem just and proper in the premises. (g) That plaintiff recover the costs of this suit. Dated: October 28, 1964 be oe /s/ Nicholas deB. Katzenbach NICHOLAS deB. KATZENBACH Acting Attorney General /s/ William H. Orrick, Jr. WILLIAM H. ORRICK, JR. Assistant Attorney General /s/ Harry G. Sklarsky HARRY G. SKLARSKY Attorney, Department of Justice /s/ Thomas R, Sheridan __ THOMAS R. SHERIDAN © United States Attorney /s/ Stanley E. Disney STANLEY E. DISNEY Attorney, Department of Justice /s/ Barbara J. Svedberg BARBARA J. SVEDBERG /s/ Herbert A. Karzen HERBERT A. KARZEN /s/ John J. Schimmenti JOHN J. SCHIMMENTI Attorneys, Department of Justice Filed: October 28, 1964. —158— First Amended Complaint. (Injunction and Money Damages). United States District Court, Southern District of California, Central Division. United States of America, Plaintiff, vs. Kaiser Steel Corporation and United States Steel Corporation, De- fendants. Civil No. 64-833-HW. The United States of America, plaintiff herein, by its attorneys, brings this action against the defendants named herein in three counts. As a first claim the United States of America in its capacity as purchaser of steel large diameter pressure pipe for use by Federal agencies, brings this suit under the False Claims Act (31 U.S.C. §§ 231-233) for double the amount of dam- ages sustained, plus forfeitures (Count One), and as a second claim, alternatively, under Section 4A of the Clayton Act (15 U.S.C. §15A) to recover its actual damages (Count Two). The plaintiff waives its right of recovery under Counts I and II hereof for any pur chase for which it recovers damages under any other complaint concerning related conspiracies, filed by the plaintiff concurrently with the filing of this complaint. As a third claim, the United States of America brings this suit under Section 4 of the Sherman Act (15 U.S.C. §4), in order to prevent and restrain continuing violation by the defendants, as hereinafter alleged, of Section 1 of said Act (15 U.S.C. § 1) (Count Three). COUNT I 1. As a first claim, the United States of America in its capacity as purchaser of steel large diameter pressure pipe for use by those Federal governmental organizations engaged in the construction of systems —159— to convey water and sewage throughout the Western Area of the United States, brings this suit under §§ 3490, 3491, 3492 and 5438 of the Revised Statutes (31 U.S.C. §§ 231-233), commonly known as the False Claims Act. 2. Each of the defendants maintains an office, trans- acts business and is found within the Southern District of California. 3. Each of the corporations listed below is made a defendant herein. Each of said corporations is organized and exists under the laws of the State indicated. Each defendant is engaged in the business of manufacturing and of selling steel large diameter pressure pipe prin- cipally at the place indicated in the western area. State of Place Name of Company Incorporation of Business Kaiser Steel Corporation Nevada Oakland, (referred to herein as California Kaiser) United States Steel Cor- New Jersey Commerce, (referred to ‘ California as U.S. Steel) 4. Inasmuch as all defendants are corporations, no defendant is in the military or naval forces of the United States, or in the militia called into or actually employed in the service of the United States. . 5. The acts alleged in this complaint to have been done by each of the defendants were authorized, or- dered, or done by the officers, agents, employees, or representatives of each defendant while actively engaged in the management, direction, or control of its affairs. 6. Southwest Welding and Manufacturing Company (referred to herein as Southwest Welding) and certain officers and employees of Southwest Welding and of the corporate defendants participated as co-conspirators in the combination and conspiracy hereinafter charged and have performed acts and made statements in fy. therance thereof. § 7. As used herein, the term: (a) “Steel large diameter pressure pipe,” te. ferred to herein as steel LDP pipe, means heavy walled welded steel pipe which is manufactured in diameters of over 24 inches and sold for the conveyance of water or sewage under internal pres- sures exceeding 115 feet of head or 50 pounds per square inch; | (b) “Western area” refers to California, Oregon, Washington, Arizona, New Mexico, Utah, Wyoming, Nevada, Idaho and Hawaii; and (c) “End users” means customers who purchase and install or have installed steal LDP pipe in systems primarily for the conveyance of water or sewage under pressure. 8. Steel LDP pipe is used for the conveyance of drinking water under pressure and for irrigation and sanitation systems. The construction of systems utilizing steel LDP pipe is often contracted for by the end user with general contractors on the basis of sealed com- petitive bids. Prior to submitting such bids, the general contractors solicit quotations from pipe manufacturers for the purchase price of the pipe delivered to the site where the pipe is to be installed. Thus the pipe manv- facturer knows who the end user will be. The award- winning contractor purchases the pipe from the low quoting pipe manufacturer at the price quoted by the latter and passes this price along to the end user. End users also purchase pipe directly from pipe manv- —161— facturers, usually on the basis of sealed competitive bids. 9. The corporate defendants are the principal man- ufacturers of steel LDP pipe in the western area, and during the period 1958 through 1961 their average annual sales of steel LDP pipe in the western area were at least $7,000,000. Because of the relatively limited number of manufacturers of steel LDP pipe, general contractors and end users frequently solicit bids for said pipe from manufacturers outside the State where said pipe is to be installed. Manufacturers of said pipe usually manufacture the pipe for a particular job only after receiving an order for it. Said manufacturers customarily identify each section of pipe so as ta, designate its position in the pipe line and deliver or have delivered said pipe directly to the trench site or as near as possible to the place were it will be in- stalled. During the period of time covered by this com- plaint, the defendants herein have manufactured sub- stantial quantities of steel LDP pipe at their plants within the Western area, and have sold, shipped, and deliv- ered said pipe to job sites outside the State where it was manufactured. Thus said steel LDP pipe moves in a continuous and uninterrupted flow from the place of manufacture to points of installation outside the State where said pipe was manufactured. 10. Steel LDP pipe is fabricated largely from steel plate. The defendant manufacturers obtain said steel plate in anticipation of orders or to enable them to fill existing orders for steel LDP pipe. Substantial quantities of said steel plate are produced outside the State where said pipe is manufactured. The movement in interstate commerce of the steel plate is necessary to the manu- facture and sale of steel LDP pipe by the defendants a in the western area, and the defendants and ators are conduits through which said steel plate flows in a continuous uninterrupted stream in interstate com- merce from the place where said steel plate is produced to the place where it is incorporated into steel LDP Pipe and on to the final site where said pipe is in. Stalled. 11. Any restraint upon free competition in the Production or sale of steel LDP pipe in the westem 12. During the period covered by this complaint, the plaintiff through its various executive departments and agencies has purchased substantial quantities of steel LDP pipe for use in the construction of sys- tems to convey water and sewage throughout*the west- ern area of the United States, Plaintiff purchased some amounts of the said steel LDP pipe pursuant to direct sealed competitive bidding procedures and in accord- ance with this practice and for the purpose of letting contracts, it advertised and called for bids from pipe manufacturers, including defendants, seeking to supply steel LDP pipe to plaintiff. Plaintiff has also pur- chased some amounts of the said steel LDP pipe pur- Suant to direct sealed competitive bidding procedures in accordance with which it advertised and called for bids from general contractors seeking to construct sys- tems to convey water and sewage for plaintiff. Said contractors in turn solicited bids and quotations from the pipe manufacturers, including defendants, for the steel LDP pipe to be used in the said system. The bids or quotations tendered by the pipe manufacturers to the contractors were incorporated into the sealed bids —163— submitted by the contractors to the plaintiff. The pipe manufacturers, including defendants, knew that the bids | cr quotations which they submitted to the contractor for the steel LDP pipe would be thus incorporated into the bids submitted by the contractor to the plaintiff, that the price of said steel LDP pipe represented a substantial portion of the entire bid submitted by the contractor to the plaintiff and that said price would be paid by the plaintiff, either directly to the pipe manv- facturer or to the contractor who in turn would pay said price to the pipe manufacturer. 13. Beginning sometime prior to the year 1955 and continuing thereafter until at least August 1962, the exact dates being to the plaintiff unknown, the de- fendants and the co-conspirators knowingly combined, conspired and agreed to defraud and injure the United States by obtaining or aiding to obtain the payment or allowance of false or fraudulent claims under contracts awarded them for the sale of steel LDP pipe during said period. 14. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and rigged bids for the sale of steel LDP pipe and to al- locate and divide orders for the purchase of steel LDP pipe among themselves. 15. During the period of time covered by this com- plaint, the defendants and the co-conspirators, for the purpose of forming and effectuating the aforesaid com- bination and conspiracy, and in furtherance thereof, have done, among other things, the following: (a) In 1955 several meetings were held at the Statler Hilton and Sheraton-West hotels in Los a) oan Angeles attended by P. M. Cobb and James Greer _ Thompson of U.S. Steel; Ernest L. Ilsley and Homer Barnes of Kaiser; and Monte Lindmoe of Southwest Welding. At these meetings an agree- ment was reached which included the following terms: (i) Sales of steel LDP pipe would be di. vided so that U.S. Steel would obtain 38 per cent, Kaiser 35 per cent, and Southwest Welding 27 per cent of the total of such sales; (ii) Meetings would be held periodically be- tween representatives of the three companies in Los Angeles and San Francisco to discuss and decide in advance which company would be en- titled to submit the lowest bid on each major job known to be scheduled for installation in the near future; (iii) Information would be exchanged reg- ularly between representatives of the three com- panies to enable each participant to keep a record of the amount of business secured by each such participant. Tallies were kept by Herb Thoedy in San Francisco and Norman David Lindley in Los Angeles for U.S. Steel; (iv) Before final bids or quotations were submitted on each job of any importance, agree- ment would be reached by representatives of the participants on the dollar amount to be bid by each participant; (v) Bids would be submitted in such a way as to create the semblance of competitive bid- ding and pricing. —165— (b) The terms of this agreement were adhered to by the defendants throughout the period of this complaint, except that in 1961 Southwest Welding was dissolved and U.S. Steel and Kaiser reallocated the business between themselves; (c) Many phone calls were made between Monte Parker Lindmoe of Southwest Welding; James Greer Thompson, Norman David Lindley, and P. M. Cobb of U.S. Steel; and Homer A. Barnes and Ernest L. Ilsley of Kaiser to reach agreement on dollar amounts to be bid on future jobs. 16. Pursuant to said combination and conspiracy, and as a result of the acts done in furtherance thereof, defendants have been awarded contracts for the sale of steel LDP pipe, and have received payments there- under, on the basis of bids and quotations which they submitted and which they falsely or fraudulently rep- resented to be bona fide, independent, competitive, and not the product of any collusion or agreement between the bidders, and the prices of which bids they further falsely or fraudulently represented to be normal, rea- sonable and competitive whereas, in fact known to defendants but unknown to plaintiff, the said bids sub- mitted were sham and collusive and not the result of open competition, and prices therefor were unreason- able, arbitrary, and non-competitive. 17. With respect to each such contract awarded for the supply of steel LDP pipe during the aforesaid period of the conspiracy, the defendant to which such contract was awarded presented and/or caused to be presented to plaintiff for payment or approval by it numerous claims, knowing such claims to be false, fic- titious, or fraudulent in that such claims were based og a contract which had been falsely or fraudulently pro. cured by reason of the aforesaid bidding practices. 18. As a result of the presentment to it of the afore. said false or fraudulent claims, and without knowledge thereof, plaintiff has paid the false or fraudulent claims to defendants or contractors to whom defendants syb. mitted bids. 19. As a result of the illegal combination and con- spiracy and the defendants’ acts in furtherance thereof, plaintiff has been compelled to pay substantially higher prices for steel LDP pipe than would have been the case but for the illegal conduct complained of herein, and has been financially damaged by defendants, the amount of which is presently undetermined. 20. WHEREFORE, the United States of America: (a) Demands judgment against defendants for Two Thousand Dollars ($2,000) for the said con- spiracy, for double the amount of the damages it has sustained, and for such other forfeitures as are allowable by law, as provided in Sections 3490, 3491, 3492 and 5438 of the Revised Stat- utes (31 U.S.C. §§ 231-233) together with inter- est thereon and the costs of this suit; and (b) Prays that it recover such other amounts and have such other and further relief as the Court shall deem just. COUNT II 21. As an alternative to the claim alleged in Count One, the United States of America, in its aforesaid capacity as purchaser of steel LDP pipe for use by Federal governmental organizations, brings this suit — against the defendants under Section 4A of the Act of Congress of October 15, 1914, c. 323, 38 Stat. 731, as amended (15 U.S.C. § 15A), entitled “An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,” commonly known gs the. Clayton Act, to recover damages which it has sustained due to violations by defendants of Section 1 of the Sherman Act (15 U.S.C. § 1). 22. The allegations contained in paragraphs 2, 3, and 5 through 11 of this complaint are here realleged with the same force and effect as though set forth in full. 23. Beginning prior to the year 1955 and continu- ing thereafter until at least August 1962, the exact dates being to the plaintiff unknown, defendants and co-conspirators have engaged in a combination and conspiracy in unreasonable restraint of aforesaid inter- state trade and commerce in steel LDP pipe in the western area in violation of Section 1 of the Sherman Act. 24. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conpirators to submit collusive and rigged bids for the sale of steel LDP pipe and to allo- cate and divide orders for the purchase of steel LDP pipe among themselves. : 25. During the period of time covered by this com- plaint, the defendants and co-conspirators for the pur- pose of forming and effectuating the aforesaid combi- nation and conspiracy, and in furtherance thereof, have done, among other things, those acts which are alleged in paragraph 15 of the complaint which are here re- oe alleged with the same force and effect as though set forth in full. 26. The effects of the aforesaid combination and conspiracy were that: : (a) Prices for steel LDP pipe throughout the western area have been raised, fixed and main. tained at high and artificial levels; (b) Price competition in the sale of steel LDP “pipe throughout the western area has been re. strained, suppressed, and eliminated; (c) Purchasers of steel LDP pipe throughout the western area have been deprived of the bene. fits of free competition in the purchase of steel LDP pipe; and (d) Public agencies engaged in the construc- tion of systems to convey water and sewage includ- ing Federal governmental organizations such as the Bureau of Reclamation and the Unted States Army Corps of Engineers, have been forced to pay high artificially fixed prices for steel LDP pipe. 27. Plaintiff had no knowledge of the said com- bination and conspiracy, or of any facts which might have led to the discovery thereof until August 1960, and it first became fully aware of the scope of the unlawful conspiracy during the course of the grand jury proceedings which culminated in the return of an in- dictment in this District against Kaiser and United States Steel in March 1964. (United States v. Kaiser Sisel Corporation et al., Criminal No. 33339). It could not have uncovered the conspiracy at an earlier date by the exercise of due diligence, inasmuch as the unlawful conspiracy had been fraudulently concealed by defend- ants. — fits 28. Since at least 1955, plaintiff has purchased sub- stantial quantities of steel LDP pipe from defendants for use in the western area of the United States. In pur- chasing said steel LDP pipe, plaintiff in some instances has invited formal, sealed competitive bids from pro- spective suppliers, including defendants, and has gen- erally accepted the price offered by the lowest re- sponsible bidder. 29. Asa result of the illegal combination and con- spiracy alleged herein, plaintiff has been led and in- duced by defendants to make contract awards on bids solicited by it during the period covered by this com- plaint at prices fixed by said illegal combination and conspiracy, and plaintiff has been denied thereby the benefit of unrestricted competition in prices for steel LDP pipe. By the operation of defendants’ agreement and concert of action herein alleged, plaintiff has been compelled to pay substantially higher prices than would have been the case but for the violation of the antitrust laws herein alleged. 30. Plaintiff has also purchased steel LDP pipe under construction contracts with independent contrac- tors who had purchased said steel LDP pipe from de- fendants at high, noncompetitive prices. By the opera- tion of defendants’ agreements and concert of action herein alleged, plaintiff has been compelled to pay sub- stantially higher prices under said contracts than would have been the case but for the violation of the anti- trust laws herein alleged. 31. As a result of the illegal combination and con- spiracy alleged herein, the plaintiff, United States of America, has been injured and financially damaged by defendants in an amount which is presently undeter- mined. —170— 32. WHEREFORE, the United States of America: (a) Prays that the herein alleged combinatiga and conspiracy among defendants be adjudged and decreed to be in unreasonable restraint of inter. ee ee ee See tion 1 of the Sherman Act; (b) Demands judgment against defendants for the damages suffered by it due to defendants’ viola. tion of the antitrust laws, as provided for in Sec- tion 4A of the Clayton Act (15 U.S.C. § 15A), or some lesser amount to the extent that it has recovery under Count I hereof, together with such interest thereon as is permitted by law and the costs of this suit; and (c) Prays that it recover such other amounts as the Court shall deem just. COUNT III 33. As a third claim, the United States of America brings this suit under Section 4 of the Act of Con- gress of July 2, 1890, c. 647, 26 Stat. 209 (15 U.S.C. § 4), as amended, entitled “An Act to protect trade and commerce against unlawful restraints and monopo- lies”, commonly known at the Sherman Act, in order to prevent and restrain continuing violations by the defendants, as hereinafter alleged, of Section 1 of the Sherman Act (15 U.S.C. § 1). 34. The allegations contained in paragraphs 2, 3 and 5 through 11 of the complaint are here realleged with the same force and effect as though set forth in full. —171— 35. Beginning in or prior to the year 1955 and con- tinving thereafter until at least January 1962, the exact dates being to the plaintiff unknown, defendants and co- conspirators have engaged in a combination and con- spiracy in unreasonable restraint of interstate trade and commerce in steel LDP pipe in the western area, in violation of Section 1 of the Sherman Act. 36. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and rigged bids for the sale of steel LDP pipe and to allo- cate and divide orders for the purchase of steel LDP pipe among’ themselves. 37. The aforesaid unlawful combination and con- spiracy was terminated only after plaintiff began its in- vestigation of the conspiracy herein alleged, and will be resumed unless the relief herein prayed for is granted. 38. During the period of time covered by this com- plaint the defendants and co-conspirators, for the pur- pose of forming and effectuating the aforesaid combina- tion and conspiracy, and in furtherance thereof, have done, among other things, those acts which are alleged in paragraph 15 of the complaint which are here real- leged with the same force and effect as though set forth in full. 39. The allegations contained in paragraph 26 of the complaint are here realleged with the same force and effect as though set forth in full. = —172— 40. WHEREFORE, plaintiff prays: (a) That the Court adjudge and decree tha the defendants, and cach of them, have engaged in an unlawful combination and conspiracy in un. reasonable restraint of the aforesaid interstate trade and commerce in violation of Section 1 of the Sherman Act. (b) That each of the defendants, its successors, assignees, subsidiaries and transferees, and the respective officers, directors, agents, and employees thereof, and all other perons acting or claiming to act on behalf thereof, be perpetually enjoined and restrained from, in any manner, directly or indj- rectly: (i) Continuing, maintaining, or renewing the aforesaid combination and. conspiracy and from engaging in any other combination, com spiracy, agreement, understanding, or concert of action having a similar purpose or effect and from adopting or following any practice, plan, program, or device having a similar purpose or effect. (ii) Entering into an agreement, arrange ment, concerted activity, or understanding with any other manufacturer, distributor or seller of pipe for the conveyance of water or sewage or with any company providing the services of lin- ing or coating such pipe or with any associa- tion of said manufacturers, distributors, or sell- am fe Heaton fo elt geOiEN, SURED services, to: (1) Fix or adopt prices, terms, or condi- tions of sale; —173— (2) Maintain or stabilize prices; (3) Submit noncompetitive, collusive, com- plimentary, or rigged bids or quotations to any customer; (4) Allocate or divide orders, territories or customers; (5) Exchange information concerning bids, prices, terms or conditions of sale; (6) Exclude or eliminate others from competing; (iii) With respect to pipe for the conveyance of water or sewage or for the service of lining and/or coating such pipe: (1) Coercing or inducing others to re- strict their production to certain sizes or types of the aforesaid pipe; (2) Coercing or inducing others to re strict their sales to any territory; (3) Quoting or bidding any job only on an “all or nothing” basis; (4) Cocercing or inducing contractors to enter agreements to deal with one supplier only before the opening of bids; (5) Communicating to or exchanging with any manufacturer, distributor or seller of pipe for the conveyance of water or sewage or with any company providing the services of lining or coating such pipe any informa- tion concerning bids, prices, terms or condi- tions of sale; (c) That the Court order each defendant for a period of five (5) years to certify in writing, —174— through one of its officers, at the time of every succeeding change in published prices, “estimat. ing prices,” terms, or conditions of sale of pipe, for the conveyance of water or sewage, that said change was independently arrived at by said de fendant and was not the result of any agreement or understanding with any competitor; and further that each defendant retain in its files the afore said certifications which shall be made available to plaintiff for inspection upon reasonable written demand. (d) That the Court order that each defendant maintain, for a period of five (5). years from the date of entry of final judgment herein, a record of all meetings attended by any of its officers, di- rectors, or employees having managerial or super- visory authority in connection with the sale or pricing of pipe, for the conveyance of water or sew- age, and similar representatives of any of its com- petitors; said records shall include the dates and places of said meetings, the names of all persons in attendance, and a listing of the topics discussed thereat; said records shall be made available to plaintiff for inspection upon reasonable written demand. (e) That the Court order each defendant to annex to every sealed bid or quotation on pipe for the conveyance of water or sewage a written certification by an officer of said defendants, or by the official of said defendant having authority to determine the bid or quotation involved, that said bid or quotation was not the result of any agree ment, understanding, or communication between the defendant and any of its competitors. —175— (f) That plaintiff have such other, further, and different relief as the Court may deem just and proper in the premises. (g) That plaintiff recover the costs of this suit. Dated: October 28, 1964, /s/ Nicholas deB. Katzenbach NICHOLAS deB. KATZENBACH Acting Attorney General /s/ William H. Orrick, Jr. WILLIAM H. ORRICK, JR. Assistant Attorney General /s/ Harry G. Sklarsky HARRY G. SKLARSKY Attorney, Department of Justice /s/ Thomas R. Sheridan THOMAS R. SHERIDAN United States Attorney /s/ Stanley E. Disney Stanley E. Disney Attorney, Department of Justice /s/ Barbara J. Svedberg BARBARA J. SVEDBERG /s/ Herbert A. Karzen HERBERT A. KARZEN /s/ John J. Schimmenti 4 JOHN J. SCHIMMENTI Attorneys, Department of Justice Filed October 28, 1964. “yy —176—- First Amended Complaint. (Injunction and Money Damages). United States District Court, Southern District of California, Centra! Division. United States of Anjierica, Plaintiff, vs. United Con. crete Pipe Corp.; American Pipe and Construction Co,; Kaiser Steel Corporation; and United States Steel Cor. poration, Defendants. Civil No. 64-834-HW. The United States of America, plaintiff herein, by its attorneys, brings this action against the defendants named herein in three counts. As_a first claim the United States of America in its capacity as purchaser of alternate large diameter pressure pipe for use by Federal agencies, brings this suit under the False Claims Act (31 U.S.C. §§ 231-233) for double the amount of damages sustained, plus forefeitures (Count One), and as a second claim, alternatively, under Sec- tion 4A of the Clayton Act (15 U.S.C. § 15A) to recover its actual damages (Count Two). The plaintiff waives its right of recovery under Counts I and II hereof for any purchase for which it recovers damages under any other complaint concerning related conspir- acies, filed by the plaintiff concurrently with the filing of this complaint. As a third claim, the United States of America brings this suit under Section 4 of the Sherman Act (15 U.S.C. § 4), in order to prevent and restrain continuing viola- tion by the defendants, as hereinafter alleged, of Section 1 of said Act (15 U.S.C. § 1) (Count Three). COUNT I 1. As a first claim, the United States of America in its capacity as purchaser of alternate large diameter —l177— pressure pipe for use by those Federal governmental organizations engaged in the construction of systems to convey water and sewage throughout the western area of the United States, brings this suit under 3490, 3491, 3492 and 5438 of the Revised Statutes (31 U.S.C. §§ 231-233, commonly known as the False Claims Act. 2. Each of the defendants maintains an office, transacts business and is found within the Southern District of California. 3. Each of the corporations listed below is made a defendant herein. Each of said corporations is organ- ized and exists under the laws of the State indicated. Each defendant is engaged in the business of manufac- turing and of selling alternate large diameter pressure pipe principally in the city indicated in the western State of Principal Place Name of Company Incorporation of Business United Concrete Pipe Co. California Baldwin Park, (referred to herein as California United) American Pipe and Con- California Monterey Park, struction Co. (referred California to herein as American) Kaiser Steel Corporation Nevada Oakland, (referred to herein as California Kaiser) United States Steel Cor- New Jersey Commerce, a (referred to California in as U.S. Steel) 4. Inasmuch as all defendants are corporations, no defendant is in the military or naval forces of the United States, or in the militia called into or actually employed in the service of the United States. i = = 5. The acts alleged in this complaint to have been done by each of the defendants were authorized, or. dered, or done by the officers, agents, employees, or representatives of each defendant while actively engaged in the management, direction, or control of its affairs. 6. Southwest Welding and Manufacturing Com. pany (referred to herein as Southwest Welding), Amer- ican Concrete Pipe Co. of Phoenix, Arizona, (referred to herein as American Concrete), Pipe Linings, Inc. and certain officers and employees of said corporations and of the corporate defendants participated as co- conspirators in the combination and conspiracy herein- after charged and have performed acts and made state- ments in furtherance thereof. 7. As used herein, the term: (a) “Steel large diameter pressure pipe,” or steel LDP pipe means heavy walled welded steel pipe which is manufactured in diameters of over 24 inches and sold for the conveyance of water or sewage .under internal pressures exceeding 115 feet of head or 50 pounds per square inch; (b) “Concrete large diameter pressure pipe,” or concrete LDP pipe means concrete pressure pipe, which ordinarily utilizes steel sheets or skelp in its manufacture, in diameters over 24 inches, sold for the conveyance of water and sewage un- der internal pressures exceeding 115 feet of head or 50 pounds per square inch; (c) “Alternate large diameter pressure pipe” or “alternate LDP pipe” means pipe which is manu- factured and sold, or offered for sale in jobs where the specifications permit the use of either concrete LDP pipe or steel LDP pipe; —279— (d) “Metal components” refers to steel plate, sheets, skelp, rods, wires and mesh used in the produgtion of alternate LDP pipe; (e) “Western area” refers to California, Ore- gon, Washington, Arizona, New Mexico, Utah, Wyoming, Nevada, Idaho and Hawaii; and (f) “End users” means customers who pur- chase and install or have installed alternate LDP pipe in systems primarily for the conveyance of water or sewage under pressure. 8. Alternate LDP pipe is used for the conveyance of drinking water under pressure and for irrigation and sanitation systems. The construction of systems utilizing alternate LDP pipe is often contracted for by the end user with general contractors on the basis of sealed competitive bids. The end users draft or have drafted the specifications where this is appropriate, so that either concrete LDP pipe or steel LDP pipe can be used in the system. Prior to submitting bids to the end user, the general contractors solicit quotations from pipe manufacturers for the purchase price of the pipe delivered to the site where the pipe is to be installed. Thus the pipe manufacturer knows who the end user will be. The award-winning contractor purchases the pipe from the low quoting pipe manufacturer at the price quoted by the latter and passes this price along to the end user. End users also purchase pipe directly from pipe manufacturers usually on the basis of sealed competitive bids. The specifications for alternate LDP pipe require that the pipe be lined and/or coated with concrete. When the steel LDP pipe manufacturers plan to submit bids or quotations on an alternate LDP pipe job, they, in turn, solicit quotations or bids from the =) concrete LDP pipe manufacturers for the performance of this service. The cost of this service is then incor. porated in the quotation or bid submitted to the general contractors or end users by the steel LDP pipe manv- facturer. 9. The corporate defendants are the principal man. ufacturers of alternate LDP pipe in the western area and during the period 1958 through 1961 their average annual sales of alternate LDP pipe in the western area were at least $15,000,000. Because of the relatively limited number of manufacturers of alternate LDP pipe, general contractors and end users, where the specifications permit the use of alternate LDP pipe, frequently solicit bids for said pipe from manufacturers outside the State where said pipe is to be installed, Manufacturers of said pipe usually manufacture the pipe for a particular job only after receiving an order for it. Said manufacturers customarily identify each section of pipe so as to designate its position in the pipe line and deliver or have delivered said pipe direct to the trench site or as near as possible to the place where it will be installed. During the period of time covered by this complaint, the defendants herein have manufactured substantial quantities of alternate LDP pipe at their plants within the western area, and have sold, shipped, and delivered said pipe to job sites out- side the State where it was manufactured. Thus said alternate LDP pipe moves in a continuous and uninter- rupted flow from the place of manufacture to points of installation outside the State where said pipe was man- ufactured. , 10. Substantial quantities of metal components are used in the manufacture of alternate LDP pipe. The defendant manufacturers often obtain said metal com- ad —181— ponents in anticipation of ‘orders or to enable them to fill existing orders for alternate LDP pipe. Substan- tial quantities of the said metal components are pro- duced outside the State where said pipe is manufac- tured. The movement in interstate commerce of the met- al components is necessary to the manufacture and sale of alternate LDP pipe by the defendants in the western area and the defendants and co-conspirators are con- duits through which said metal components flow in a continuous, uninterrupted stream in interstate commerce from the place where produced to the place where it is incorporated into alternate LDP pipe and on the final site where said pipe is installed. * 141. Any restraint upon free competition in the production or sale of alternate LDP pipe in the western area necessarily and directly restrains and affects the interstate flow of alternate’ LDP pip® and the metal components used in the manufacture of said pipe. 12. During the period covered by this complaint, the plaintiff through its various executive departments and agencies has purchased substantial quantities of alternate LDP pipe for use in the construction of systems to convey water and sewage throughout the western area of the United States. Plaintiff purchased some amounts of the said alternate LDP pipe pursuant to direct sealed competitive bidding procedures and in accordance with this practice and for the purpose of letting contracts, it advertised and called for bids from pipe manufacturers, including defendants, seeking to supply alternate LDP pipe to plaintiff. Plaintiff has also purchased some amounts of the said alternate LDP pipe pursuant to direct sealed competitive bid- ding procedures in accordance with which it advertised and called for bids from general contractors seeking j —182— to construct systems to convey water and sewage for plaintiff. Said contractors in turn solicited bids and quo- tations from the pipe manufacturers, including defend. ants, for the alternate LDP pipe to be used in the said system. The bids or quotations tendered by the pipe manufacturers to the contractors were incorporated into the sealed bids submitted by the contractors to the plaintiff. The pipe manufacturers, including defend. ants, knew that the bids or quotations which they sub- mitted to the contractor for the. alternate LDP pipe would be thus incorporated into the bids submitted by the contractor to the plaintiff, that the price of said alternate LDP pipe represented a substantial portion of the entire bid submitted by the contractor to the plaintiff and that said price would be paid by the plaintiff, either directly to the pipe manufacturer or to the contractor who, in turn, would pay said price to the pipe manufacturer. 13. Beginning sometime prior to the year 1955 and continuing thereafter until at least August 1962, the exact dates being to the plaintiff unknown, the de fendants and the co-conspirators knowingly combined, conspired and agreed to defraud and injure the United States by obtaining or aiding to obtain the payment or allowance of false or fraudulent claims under con- tracts awarded them for the sale of alternate LDP pipe during said period. 14. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and rigged bids for the sale of alternate LPD pipe and to allocate and divide orders for the purchase of alternate LDP pipe among themselves. —183— 15. During the period of time covered by this com- plaint, the defendants and the co-conspirators, for the purpose of forming and effectuating the aforesaid combination and conspiracy, and in furtherance there- of, have done, among other things, the following: (a) In or about 1955, meetings were held be- tween P. M. Cobb and James Greer Thompson of U.S. Steel; Ernest L. Ilsley and Homer Barnes of Kaiser; Monte Lindmoe of Southwest Welding; Lloyd R. Earl and Richard I. Young of United; and Robert V. Edwards and Elliott E. Brainard of American. At these meetings an agreement was reached or reaffirmed which included the following terms: (i) that sales of alternate LDP pipe would be divided so that 50 per cent of such sales would be obtained by the manufacturers of con- crete LDP pipe and 50 per cent would be ob- tained by the manufacturers of steel LDP pipe and that the amount of business involved in the lining and coating of the alternate LDP pipe by the concrete LDP pipe manufacturers would be included in the share to be obtained by the concrete LDP pipe manufacturers; (ii) that the steel LDP pipe manufacturers would not install their own lining and coating facilities but would rely on the concrete LDP pipe manufacturers for this service; (iii) that meetings would be held periodical- ly between representatives of the steel LDP pipe manufacturers group and concrete LDP pipe manufacturers group in Los Angeles and San Francisco to discuss and decide in advance b —184— which group would be entitled to submit the lowest bid on each major job known to be scheduled for installation in the near future; (iv) that information would be exchanged regularly between representatives of the con- crete LPD pipe manufacturers and the steel LDP pipe manufacturers to enable each group to keep a record of the amount of busi- ness secured by each; (v) that bids would be submitted in such a way as to create the semblance of competitive bidding and pricing. (b) Many phone calls were made between James Greer Thompson, negotiator for the steel LDP pipe manufacturers and Elliott E. Brainard, negotiator for the concrete LDP pipe manufacturers to reach agreement on which group would submit the lowest bid on each job. 16. Pursuant to said combination and conspiracy, and as a result of the acts done in furtherance thereof, defendants have been awarded contracts for the sale of alternate LDP pipe, and have received payments there- under, on the basis of bids and quotations which they submitted and which they falsely or fraudulently repre- sented to be bona fide, independent, competitive, and not the product of any collusion or agreement between the bidders, and the prices of which bids they further falsely or fraudulently represented to be normal, rea- sonable and competitive whereas, in fact known to de- fendants but unknown to plaintiff, the said bids sub- mitted were sham and collusive and not the result of open competition, and prices therefor were unreason- able, arbitrary, and noncompetitive. “—185— 17. With respect to each such contract awarded for the supply of alternate LDP pipe during the aforesaid period of the conspiracy, the defendant to which such contract was awarded, presented and/or caused to be presented to plaintiff for payment or approval by it numerous claims, knowing such claims to be false, ficti- tious, or fraudulent in that such claims were based on a contract which has been falsely or fraudulently procured by reason of the aforesaid bidding practices. 18. As a result of the presentment to it of the afore- said false or fraudulent claims, and without knowledge - thereof, plaintiff has paid the false or fraudulent claims to defendants or to contractors to whom defendants submitted bids. 19. As a result of the illegal combination and con- spiracy and the defendants’ acts in furtherance thereof, plaintiff has been compelled to pay substantially higher prices for alternate LDP pipe than would have been the case but for the illegal conduct complained of herein, and has been financially damaged by defendants, the amount of which is presently undetermined. 20. WHEREFORE, the United States of America: -(a) Demands judgment against defendants for Two Thousand Dollars ($2,000.00) for the said conspiracy, for double the amount of the damages it has sustained, and for such other forfeitures as are allowable by law, as provided in Sections 3490, 3491, 3492 and 5438 of the Revised Statutes (31 U.S. §§ 231-233) together with interest there- on and the costs of this suit; and (b) Prays that it recover such other amounts and have such other and further relief as the Court shall deem just. a —186— COUNT II 21. As an alternative to the claim, alleged in Count One, the United States of America, in its aforesaid capacity as purchaser of altérnate LDP pipe for use by Federal governmental organizations, brings this suit against the defendants under Section 4A of the Act of Congress of October 15, 1914, c. 323, 38 Stat. 731, as amended (15 U.S.C. § 15A), entitled “An Act to supplement existing Jaws against unlawful restraints and monopolies, and for other purposes”, commonly known as the Clayton Act, to recover damages which it has sustained due to violations by defendants of Section 1 . Of the Sherman Act (15 U.S.C. § 1). 22. The allegations contained in paragraphs 2, 3; and 5 through 11 of this complaint are here realleged with the same force and effect as though set forth in full. 23. Beginning prior to the year 1955 and continv- ing thereafter until at least August 1962, the exact dates being to the plaintiff unknown, defendants, and co-conspirators, have engaged in a combination and con- spiracy in unreasonable restraint of interstate trade and commerce in alternate LDP pipe in the western area, in violation of Section 1 of the Sherman Act (15 U.S.C. § 1). 24. The aforesaid combination and conspiracy has consisted, among other things, -of a continuing agree- ment, un anding, and concert of action among the defendants @ad co-conspirators to submit collusive and rigged bids for the sale of alternate LDP pipe and to allocate and divide orders for the purchase of alternate 7 LDP pipe among themselves. _ —187— 25. During the period of time covered by this com- plaint, the defendants and co-conspirators, for the pur- pose of forming and effectuating the aforesaid combi- nation and conspiracy, and in furtherance thereof, have done, among other things, those acts which are alleged in paragraph 16 of the complaint which are here re- alleged with the same force and effect as though set forth in full. 26. The effects of the aforesaid combination and conspiracy were that: : - (a) Prices for alternate LDP pipe throughout the western area have been raised, fixed, and maintained at high and artificial levels; (b) Price competition in the sale of alternate LDP pipe throughout the western area has been restrained, suppressed, and eliminated; (c) Purchasers of alternate LDP pipe through- out the western area have been deprived of the benefits of free competition in the purchase of al- ternate LDP pipe; and (d) Public agencies engaged in the construc- tion of systems to convey water and sewage, includ- ing Federal governmental organizations such as the Bureau of Reclamation and the United States Army Corps of Engineers, have been forced to pay high artificially fixed prices for alternate LDP pipe. 27. Plaintiff had no knowledge of the said combina- tion and conspiracy, or of any facts which might have led to the discovery thereof until August 1960, and it first became fully aware of the scope of the unlawful conspiracy during the course of the grand jury proceed- ings which culminated in the return of an indictment in this District against American, United, Kaiser, and U.S. i Steel in March 1964. (United States v. United Concrete Pipe Corp., Criminal No. 33340). It could not have uncovered the conspiracy at an earlier date by the exer cise of due diligence, inasmuch as the unlawful cConspir- acy had been fraudulently concealed by defendants. 28. Since at least 1955, plaintiff has purchased substantial quantities of alternate LDP pipe from de fendants for use in the western area of the United States, In purchasing said alternate LDP pipe, plaintiff in some instances has invited formal, sealed competitive bids from prospective suppliers, including defendants, and, has generally accepted the price offered by the lowest responsible bidder. 29. As a result of the illegal combination and con- spiracy alleged herein, plaintiff has been led and in- duced by defendants to make contract awards on bids solicited by it during the period covered by this complaint at prices fixed by said illegal combination and conspiracy, and plaintiff has been denied thereby the benefit of unrestricted competition in prices for al- ternate LDP pipe. By the operation of defendants’ agreement and concert of action herein alleged, plaintiff has been compelled to pay substantially higher prices than would have been the case but for the vio- lation of the antitrust laws herein alleged. 30. Plaintiff has also purchased alternate LDP pipe under construction contracts with independent contrac- tors who had purchased said alternate LDP pipe from defendants at high, noncompetitive prices. By the oper- ation of defendants’ agreement and concert of action herein alleged, plaintiff has been compelled to pay sub- stantially higher prices under said contracts than would have been the case but for the violations of the antitrust laws herein alleged. —189— 31. As a result of the illegal combination and conspiracy alleged herein, plaintiff, United States of America, has been injured and financially damaged by defendants in an amount which is presently undeter- 32. WHEREFORE, the United States of America: (a) Prays that the herein alleged combination and conspiracy among defendants be adjudged and decreed to be in unreasonable restraint of interstate trade and commerce and in violation of Section 1 of the Sherman Act. (b) Demands judgment against defendants for the damages suffered by it due to defendants’ vio- lation of the antitrust laws, as provided for in Section 4A of the Clayton Act (15 U.S.C. §15A), or some lesser amount to the extent that it has recovery under Count I hereof, together with such interest thereon as is permitted by law and the costs of this suit; and (c) Prays that it recover such other amounts as the Court shall deem just. COUNT III 33. Asa third claim, the United States of America brings this suit under Section 4 of the Act of Congress of July 2, 1890, c. 647, 26 Stat. 209 (15 U.S.C. § 4), as amended, entitled “An Act to protect trade and commerce against unlawful restraints and monopolies,” commonly known as the Sherman Act, in order to pre- vent and restrain continuing violations by the defend- ants, as hereinafter alleged, of Section 1 of the Sherman Act (15 U.S.C. § 1). . 34. The allegations contained in paragraphs 2, 3 and 5 through 11 of the complaint are here realleged with the same force and effect as though set forth ip full. 35. Beginning in or prior to the year 1955 and con- tinuing thereafter until at least January 1962, the exact dates being to the plaintiff unknown, defendants and co-conspirators have engaged in a combination and con. spiracy in unreasonable restraint of interstate trade and commerce in alternate LDP pipe in the western area, in violation of Section 1 of the Sherman Act. 36. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and rigged bids for the sale of alternate LDP pipe and to allocate and divide orders for the purchase of alter- nate LDP pipe among themselves. 37. The aforesaid unlawful combination and con- spiracy was terminated only after plaintiff began its investigation of the conspiracy herein alleged, and will be resumed unless the relief herein prayed for is granted. 38. During the period of time covered by this com- plaint, the defendants and co-conspirators, for the pur- pose of forming and effectuating the aforesaid combina- tion and conspiracy, and in furtherance thereof, have done, among other things, those acts which are alleged in paragraph 15 of the complaint which are here re- alleged with the same force and effect as though set forth in full. 39. The allegations contained in paragraph 26 of the complaint are here realleged with the same force and effect as though set forth in full. — —191— 40. WHEREFORE, plaintiff prays: (a) That the Court adjudge and decree that the defendants, and each of them, have engaged in an unlawful combination and conspiracy in un- reasonable restraint of the aforesaid interstate trade and commerce in violation of Section 1 of the Sherman Act. (b) That each of the defendants, its successors, assignees, subsidiaries and transferees, and the re- spective officers, directors, agents, and employees thereof, and all other persons acting or claiming to act on behalf thereof, be perpetually enjoined and restrained from, in any manner, directly or indi- rectly: (i) Continuing, maintaining, or renewing the aforesaid combination and conspiracy and from engaging in any other combination, conspiracy, agreement, understanding, or concert of action having a similar purpose or effect and from adopting or following any practice, plan, pro- gram, or device having a similar purpose or effect. (ii) Entering into any agreement, arrange- ment, concerted activity, or understanding with any other manufacturer, distributor or seller of pipe for the conveyance of water or sewage or with any company providing the services of lin- ing or coating such pipe or with any association of said manufacturers, distributors, or sellers, in relation to said product, products or serv- ices, to: (1) Fix or adopt prices, terms, or condi- tions of sale; (2) Maintain or stabilize prices; _— (3) Submit noncompetitive, collusive, com. plimentary, or rigged bids or quotations to any customer; (4) Allocate or divide orders, territories or customers; (5) Exchange information concerning bids, prices, terms or conditions of sale; (6) Exclude or eliminate others from competing. (iii) With respect to pipe for the conveyance of water or sewage or for the service of lining and/or coating such pipe: (1) Coercing or inducing others to restrict thelr production 20 coctala stats of types @ the aforesaid pipe; (2) Coercing or inducing others to re strict their sales to any territory; (3) Quoting or bidding any job only on an “all or nothing” basis; (4) Coercing or inducing contractors to enter agreements to deal with one supplier only before the opening of bids; (5) Communicating to or exchanging with any manufacturer, distributor or seller of pipe for the conveyance of water or sewage or with any company providing the services of lining or coating such pipe any informa- tion concerning bids, prices, terms or condi- tions of sale. | (c) That the Court order each defendant for a period of five (5) years to certify in writing, through one of its officers, at the time of every —193— ‘ fing change in published prices, “estimati prices,” terms, or conditions of sale of pipe, for the conveyance of water or sewage, that snid change was independently arrived at by said defendant and was not the result of any agreement or understanding with any competitor; and fur- ther that each defendant retain in its files the aforesaid certifications which shall be made avail- able to plaintiff for inspection upon reasonable written demand. (d) That the Court order that each defendant maintain, for a period of five (5) years from the date of entry of final judgment herein, a record of all meetings attended by any of its officers, directors, or employees having managerial or su- pervisory authority in connection with the sale or pricing-of pipe, for the conveyance of water or sewage, and similar representatives of. any of its competitors; said records shall include the dates and places of said meetings, the names of all persons in attendance, and a listing of the topics discussed thereat; said reports shall be made avail- able to plaintiff for inspection upon reasonable written demand. (e) That the Court order each defendant to annex to every sealed bid or quotation on pipe for the conveyance of water or sewage a written certification by an officer of said defendant, or by the official of said defendant having authority to determine the bid or quotation involved, that said bid or quotation was not the result of any agreement, understanding, or communication be- tween the defendant and any of its competitors. _ (f) That plaintiff have such other, further, and different relief as the Court may deem just and proper in the premises. (g) That plaintiff recover the costs of this suit. Dated: October 28, 1964. /s/ Nicholas deB. Katzenbach NICHOLAS deB. KATZENBACH Acting Attorney General /s/ William H. Orrick, Jr. WILLIAM H. ORRICK, JR. Assistant Attorney General /s/ Harry G. Sklarsky HARRY G. SKLARSKY Attorney, Department of Justice /s/ Thomas R. Sheridan THOMAS R. SHERIDAN United States Attorney /s/ Stanley E. Disney STANLEY E. DISNEY Attorney, Department of Justice /s/ Barbara J. Svedberg BARBARA J. SVEDBERG /s/ Herbert A. Karzen HERBERT A. KARZEN /s/ John J. Schimmenti JOHN J. SCHTIMMENTI Attorneys, Department of Justice Filed October 28, 1964. Yr. .—195— First Amended Complaint. (Injunction and Money Damages). | United States District Court, Southern District of California, Central Division. United States of America, Plaintiff, vs. U.S. Indus- tries, Inc.; Smith-Scott Co., Inc.; United States Steel Cor- poration; American Pipe and Construction Co.; and United Concrete Pipe Corp., Defendants. Civil No. 64- 835-HW. The United States of America, plaintiff herein, by its attorneys, brings this action against the defendants named herein in three counts. As a first claim the ‘United States of America in its capacity as purchaser of alternate small diameter pressure pipe for use by Federal agencies, brings this suit under the False Claims Act (31 U.S.C. §§ 231-233) for double the amount of damages sustained, plus forfeitures (Count One), and as a second claim, alternatively, under Section 4A of the Clayton Act (15 U.S.C. § 15A) to recover its actual damages (Count Two). This plaintiff waives its right of recovery under Counts I and Ill hereof for any purchase for which it recovers damages under any other complaint concerning related conspiracies, filed by the plaintiff concurrently with the filing of this complaint. As a third claim, the United States of America brings this suit under Section 4 of the Sherman Act (15 U.S.C. § 4,), in order to prevent and restrain continu- ing violation by the defendants, as hereinafter alleged, of Section 1 of said Act (15 U.S.C. § 1) (Count IIT). —196— COUNT I 1. As a first claim, the United States of America dn its capacity as purchaser of alternate small diameter pressure pipe for use by those Federal governmental organizations engaged in the construction of systems to convey water and sewage throughout the western ‘area of the United States, brings this suit under Seo. ‘tions 3490, 3491, 3492 and 5438 of the Revised Statutes (31 U.S.C. §§ 231-233), commonly known as the False Claims Act. 2. Bach of ithe defendéfits maintains an office, trans. ‘acts business and is found within the Southern District of California. 3. Each of the corporations listed below is made a defendant herein. Each of said corporations is organized and exists under the laws of the State indicated. Each defendant was engaged in the business of manufactur. ing and of selling alternate small diameter pressure pipe, principally in ‘the city indicated, in the ‘western ‘area -during the ‘time of the conspracy alleged herein. State of Place of Name of'Company Incorporation Business U.S. Industries, ‘Inc. ‘Delaware Azusa, (referred to herein California as UST) ‘Smith-Scott' Co. ‘Inc. California Riverside, (referred .to herein as California Smith-8cott) United States Steel Cor- New Jersey Linden, ‘Utah | ede (referred to in:as ‘U.S. Steel) ‘American Pipe and.Con- California Monterey Park, struction Co. (referred : California to as American) ‘United Concrete Pipe California Baldwin Park, Corp. (referred to as California United) if 4, Inasmuch as all defendants are corporations, no defendant is in the military or naval forces of the United States, or in the militia called into or actually employed in the service of the United States. 5. The acts alleged in this complaint to have been done by each of the defendants were authorized, or- dered, or done by the officers, agents, employees, or representatives of each defendant while actively engaged in the management, direction, or control of its affairs. 6. American Concrete Pipe Co., engaged in the business of manufacturing and of selling concrete pipe in the western area, is a subsidiary of American and is incorporated in the State of Arizona. It and various other companies not made defendants herein, partici- pated as co-conspirators in the combination and con- spiracy hereinafter charged and have performed acts and made statements in furtherance thereof. 7. As used herein, the term: (a) “Steel small diameter pressure pipe” or “steel SDP pipe” means thin walled welded steel pipe, manufactured from steel plate in dia- meters of 12 inches to 48 inches and sold for the conveyance of water and sewage under inter- nal pressures exceeding 115 feet of head or 50 pounds per square inch; (b) “Concrete small diameter pressure pipe” or “concrete SDP pipe” means concrete cylinder pipe, which utilizes steel sheets or skelp in its manufacture, in diameters from 12 inches to 48 inches and sold for the conveyance of water or sewage under internal pressure exceeding 115 feet of head or 50 pounds per square inch; —*7-* —198— (c) “Alternate small diameter pressure Pipe” or “alternate SDP pipe” means pipe which js manufactured and sold, or offered for sale in jobs where the specifications permit the use of either concrete SDP pipe or steel SDP pipe; (d) “Metal components” refers to steel plate, sheets, skelp, rods, wire and mesh used in the manufacture of alternate SDP pipe; . (e) “Western area” refers to California, Ore. gon, Washington, Arizona, New Mexico, Utah, Wyoming, Nevada, Idaho, and Hawaii; and (f) “End users” means customers who pur- chase and install or have installed alternate SDP pipe. 8. The construction of systems utilizing alternate SDP pipe is often contracted for by the end user with general contractors on the basis of sealed competitive bids. The end users draft or have drafted the specifi- cations where this is appropriate, so that either con- crete SDP pipe or steel SDP pipe can be used in the system. Prior to submitting bids to the end user, the general contractors solicit quotations from pipe man- ufacturers for the purchase price of the pipe delivered to the site where the pipe is to be installed. Thus the pipe manufacturer knows who the end user will be. The award winning contractor purchases the pipe from the low quoting pipe manufacturer at the price quoted by the latter and passes this price along to the end user. End users also purchase pipe directly from pipe manufacturers usually on the basis of sealed competitive 9. The corporate defendants are the principal man- ufacturers of alternate SDP pipe in the western area — —199— and during the period 1958 through 1961 their aver- age annual sales of alternate SDP pipe in the western area were at least $18,000,000. Because of the relative- ly limited number of manufacturers of alternate SDP pipe, general contractors and end users where the spec- fications permit the use of alternate SDP pipe, fre- quently solicit bids both from manufacturers of con- crete SDP pipe and from manufacturers of steel SDP pipe, and frequently they solicit bids for said pipe from manufacturers outside the State where said pipe is to be installed. Manufacturers of said pipe usually manufacture the pipe for a particular job only after receiving an order for it. Said manufacturers custom- arily identify each section of pipe so as to designate its position in the pipe line and deliver or have de- livered said pipe direct to the trench site or as near as possible to the place where it will be installed. During the period of time covered by this complaint, the de- fendants herein have manufactured substantial quanti- ties of alternate SDP pipe at their plants within the western area, and have sold, shipped, and delivered said pipe to job sites outside the State where it was manufactured. Thus said alternate SDP pipe moved in a continuous and uninterrupted flow from the place of manufacture to points of installation outside the State where said pipe was manufactured. 10. Substantial quantities of metal components are used in the manufacture of alternate SDP pipe. The defendant manufacturers purchase said metal compo- nents in anticipation of orders or to enable them to fill existing orders for alternate SDP pipe. Substantial quantities of the metal components are produced out- side the State where said pipe is manufactured. The movement in interstate commerce of the metal com- ~~ ponents is necessary to the manufacture and sale of alternate SDP pipe by the defendants in the western area and the defendants and co-conspirators are con. duits through which said metal components flow in a continuous uninterrupted stream in interstate commerce from the place where said components are produced to the place where the components are incorporated into alternate SDP pipe and on to the final site where said pipe is installed. , 11. Any restraint upon free competition in the pro duction or sale of alternate SDP pipe in the western area necessarily and directly restrains and affects the interstate flow of concrete pipe and the metal compo- nents used in the construction of said pipe. 12. During the period covered by this complaint, the plaintiff through its various executive departments and agencies has purchased substantial quantities of al- ternate SDP pipe for use in the construction of sys- tems to convey water and sewage throughout the west- ern area of the United States. Plaintiff purchases some amounts of the said alternate SDP pipe pursuant to di- rect sealed competitive bidding procedures and in ac- cordance with this practice and for the purpose of let- ting contracts, it advertised and called for bids from pipe manufacturers, including defendants, seeking to supply alternate SDP pipe to plaintiff. Plaintiff “has also purchased some amounts of the said alternate SDP pipe pursuant to direct sealed competitive bidding procedures in accordance with which it advertised and called for bids from general contractors seeking to con- struct systems to convey water and sewage for plain- tiff. Said contractors in turn solicited bids and quota-. tions from the pipe manufacturers, including defendants, for the alternate SDP pipe to be used in the said online: system. The bids or quotations tendered by the pipe manufacturers to the contractors were incorporated into the sealed bids submitted by the contractors to the plaintiff. The pipe manufacturers, including defendants and co-conspirators, knew that the bids or quotations which they submitted to the contractor for the alter- nate SDP pipe would be thus incorporated into the bids submitted by the contractor to the plaintiff, that the price of said alternate SDP pipe represented a sub- stantial portion of the entire bid submitted by the con- tractor to the plaintiff and that said price would be paid by the plaintiff either directly to the pipe manu- facturer or to the contractor, who, in turn, would pay said price to the pipe manufacturer. 13. Beginning in or prior to the year 1955 and continuing thereafter until at least January 1962, the exact dates being to the plaintiff unknown, the defend- ants, and the co-conspirators knowingly combined, con- spired and agreed to defraud and injure the United States by obtaining or aiding to obtain the payment or allowance of false or fraudulent claims under contracts awarded them for the sale of alternate SDP pipe during said period. 14. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and rigged bids for the sale of alternate SDP pipe and to allocate and divide orders for the purchase of alternate SDP pipe among themselves. 15. During the period of time covered by this com- plaint, the defendants and co-conspirators, for the pur- pose of forming and effectuating the aforesaid combina- —202— tion and conspiracy, and in furtherance thereof, have done, among other things, the following: (a) In or before 1955 representatives of the alternate SDP pipe manufacturers reached an agree. ment which included the following terms: (i) that sales of alternate SDP pipe would be divided so that a certain per cent of such sales would be obtained by the manufacturers of steel SDP pipe and a certain per cent by the manufacturers of concrete SDP pipe; (ii) that information would be exchanged regularly between representatives of the concrete SDP pipe manufacturers and representatives of the steel SDP pipe manufacturers to enable each group to keep a record of the amount of business secured by each; (iii) that bids would be submitted in such 2 way as to create the semblance of competitive bidding and pricing. (b) The terms of this agreement were adhered to by the defendants and co-conspirators through- out the period of this complaint except that the percentage ratios were changed from time to time by agreement between the defendants and co- conspirators. (c) At various times throughout the period of the conspiracy, Charles Eugene Lamar, John Har- vey Barbazette and D. N. Chamberlain acted as “negotiators” for the steel SDP pipe manufactur- ers and Richard J. McConnell, Peter Van Kuran, Lawrence Robert Tollenaere and Corliss Dean acted as “negotiators” for the concrete SDP pipe manufacturers, These individuals passed along in- ip formation to other members of their groups as to which group was “in line” for each job as it arose; (d) Tallies were maintained by representatives of each corporate defendant for the purpose of keeping a record of whether a steel SDP pipe manufacturer or a concrete SDP pipe manufac- turer obtained each job; (e) Jobs for end users were allocated to the steel SDP pipe group or the concrete SDP pipe group of manufacturers at meetings or by tele- phone conversations between representatives of defendants and co-conspirators. 16. Pursuant to said combination and conspiracy, and as a result of the acts done in furtherance thereof, defendants have been awarded contracts for the sale of alternate SDP pipe, and have received payments thereunder, on the basis of bids and quotations which they submitted and which they falsely or fraudulently represented to be bona fide, independent, competitive, and not the product of any collusion or agreement be- tween the bidders, and the prices of which bids they falsely or fraudulently represented to be normal, rea- sonable and competitive whereas, in fact, known to de- fendants but unknown to plaintiff, the said bids sub- mitted were sham and collusive and not the result of open competition, and prices therefor were unreason- able, arbitrary and noncompetitive. 17. With respect to each such contract awarded for the supply of alternate SDP pipe during the afore- said period of the conspiracy, the defendant to which such contract was awarded presented and/or caused to be presented to plaintiff for payment or approval by it _— numerous claims, knowing such claims to be false, fic. titious or fraudulent in that such claims were based on a contract which had been falsely or fraudulently pro. cured by reason of the aforesaid bidding practices. 18. As a result of the presentment to it of the aforesaid false or fraudulent claims, and without knowl. edge thereof, plaintiff has paid the false or fraudulent claims to defendants or to contractors to whom de fendants submitted bids. 19. As a result of the illegal combination and con- spiracy and the defendants’ acts in furtherance thereof, plaintiff has been compelled to pay substantially higher prices for alternate SDP pipe than would have been the case but for the illegal conduct complained of herein, and has been financially damaged by defendants, the amount of which is presently undetermined. 20. WHEREFORE, the United States of America: (a) Demands judgment against defendants for Two Thousand Dollars ($2,000.00) for the said conspiracy, for double the amount of the damages it has sustained, and for such other forfeitures as are allowable by law, as provided in Sections 349, 3491, 3492, and 5438 of the Revised Statutes (31 U.S.C. §§ 231-233) together with interest thereon andthe costs of this suit; and (b) Prays that it recover such other amounts and have such other and further relief as the Court shall deem just. COUNT II 21. As an alternative to the claim alleged in Count I, the United States of America, in its aforesaid capac- ity as purchaser of alternate SDP pipe for use by —205— Federal governmental organizations, brings this suit against the defendants under Section 4A .of the Act .of Congress of October 15, 1914, c. 323, 38 Stat. 731, as amended (15 U.S.C. § 15A), entitled “An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,” commonly known as the Clayton Act, to recover damages which it has sustained due to violations by defendants of Section 1 of the. Sherman Act (15 U.S.C. § 1). 22. The allegations contained in paragraphs 2, 3, and 5 through 11 of this ‘Complaint are here realleged with the same force and effect as though set forth in full. 23. Beginning in or prior to the year 1955 and continuing thereafter until at least January 1962, the exact dates being to the plaintiff unknown, defendants and co-conspirators have engaged in a combination and conspiracy in unreasonable restraint of interstate trade and commerce in alternate SDP pipe in the west- ern area, in violation of Section 1 of the Sherman Act. 24. The aforesaid combination and conspiracy has consisted, among other things, of a continuing .agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and tigged bids for the sale of alternate SDP pipe and to allocate and divide orders for the purchase of alternate SDP_pipe among themselves. 25. During the period of time covered by this Com- plaint, the defendants and co-conspirators, for the purpose of forming and effectuating the aforesaid com- bination and conspiracy, and in furtherance thereof, have done, among other things, those acts which are alleged in paragraph 15 .of the Complaint which are —206— here realleged with the same force and effect as though set forth in full. 26. The effects of the aforesaid combination ang conspiracy were that: (a) Prices for alternate SDP pipe throughout the western area have been raised, fixed and main. tained at high and artificial levels; (b) Price competition in the sale of alternate SDP pipe throughout the western area has been restrained, suppressed, and eliminated; (c) Purchasers of alternate SDP pipe throughout the western area have been deprived of the bene. fits of free competition in the purchase of alternate SDP pipe; and (d) Public agencies engaged in the construc. tion of systems to convey water and sewage in- cluding Federal governmental organizations such as the Bureau of Reclamation and the United - States Army Corps of Engineers, have been forced to pay high artificially fixed prices for alternate SDP pipe. 27. Plaintiff had no knowledge of the said com- bination and conspiracy, or of any facts which might have led to the discovery thereof until August 1960, and it first became fully aware of the scope of the unlawful conspiracy during the course of the grand jury proceedings which culminated in the return of an indictment in this District against USI, Smith-Scott, U.S. Steel, American and United in March 1964. (United States v. United States Industries, Inc., Crimi- nal No. 33341.) It could pot have uncovered the conspiracy at an earlier date by the exercise of due diligence, inasmuch as the unlawful conspiracy had been fraudulently concealed by defendants. _— = 28. Since at least 1954, plaintiff has purchased substantial quantities of alternate SDP pipe from de- fendants for use in the western area of the United States. In purchasing said alternate SDP pipe, plaintiff in some instances has invited formal, sealed competitive bids from prospective suppliers, and has generally accepted the price offered by the lowest responsible bidder. 29. As a result of the illegal combination and conspiracy alleged herein, plaintiff has been led and in- duced by defendants to make contract awards on bids solicited by it during the period covered by this Com- plaint at prices fixed by said illegal combination and conspiracy, and plaintiff has been denied thereby the benefit of unrestricted competition in prices for alternate SDP pipe. By the operation of defendants’ agreement and concert of action herein alleged, plaintiff has been compelled to pay substantially higher prices than would have been the case but for the violation of the antitrust laws herein alleged. 30. Plaintiff has also purchased alternate SDP pipe under construction contracts with independent contractors who had purchased said alternate SDP pipe from defendants at high, noncompetitive prices. By the operation of defendants’ agreements and concert of action herein alleged, plaintiff has been compelled to pay substantially higher prices under said contracts than would have been the case but for the violations of the antitrust laws herein alleged. 31. Asa result of the illegal combination and con- spiracy alleged herein, plaintiff United States of Ameri- ca has been injured and financially damaged by de- fendants, in an amount which is presently undetermined. —208— 32. WHEREFORE, the United States of America: (a) Prays that the herein alleged combination and conspiracy among defendants be adjudged and decreed to be in unreasonable restraint of interstate trade and commerce and in violation of Section 1 of the Sherman Act; (b) Demands judgment against - defendants for the damages suffered by it due to defendants’ violation of the antitrust laws, as provided for in Section 4A of the Clayton Act (15 U.S.C. § 15A), or some lesser amount to the extent that it has recovery under Count I hereof, together with such interest thereon as is permitted by law and the costs of this suit; and (c) Prays that it recover such other amounts as the Court shall deem just. COUNT II 33. Asa third claim, the United States of America brings this suit under Section 4 of the Act of Congress of July 2, 1890, c. 647, 26 Stat. 209 (15 U.S.C. § 4), as amended, entitled “An Act to protect trade and commerce against unlawful restraints and monop- olies”, commonly known as the Sherman Act, in or- der to prevent and restrain continuing violations by the ee ee ee ee Sherman Act (15 U.S.C. § 1). 34. The allegations contained in paragraphs 2, 3 and 5 through 11 of the Complaint are here realleged with the same force and effect as though set forth in full. —209— 35. Beginning in or prior to the year 1955 and continuing thereafter until at least January 1962, the exact dates being to the plaintiff unknown, defendants and co-conspirators have engaged in a combination and conspiracy in unreasonable restraint of interstate trade and commerce in alternate SDP pipe in the western area, in violation of Section 1 of the Sherman Act. 36. The aforesaid combination and conspiracy has consisted, among other things, of a continuing agree- ment, understanding, and concert of action among the defendants and co-conspirators to submit collusive and rigged bids for the sale of alternate SDP pipe and to allocate and divide orders for the purchase of alternate SDP pipe among themselves. 37. The aforesaid unlawful combination and con- spiracy was terminated only after plaintiff began its investigation of the conspiracy herein alleged, and will be resumed unless the relief herein prayed for is granted. 38. During the period of time covered by this Com- plaint, the defendants and co-conspirators, for the pur- pose of forming and effectuating the aforesaid combi- nation and conspiracy, and in furtherance thereof, have done, among other things, those acts which are alleged in paragraph 15 of the Complaint which are here realleged with the same force and effect as though set forth in full. 39. The allegations contained in paragraph 26 of the Complaint are herein realleged with the same force and effect as though set forth in full. —210— 40. WHEREFORE, plaintiff prays: (a) That the Court adjudge and decree that the defendants, and each of them, have engaged in an unlawful combination and conspiracy in unreasonable restraint of the aforesaid interstate trade and commerce in violation of Section 1 of the Sherman Act. (b) That each of the defendants, its SUCCEssors, assignees, subsidiaries and transferees, and the re- spective officers, directors, agents, and employees thereof, and all other persons acting or claiming to act on behalf thereof, be perpetually enjoined and restrained from, in any manner, directly or in- directly: (i) Continuing, maintaining, or renewing the aforesaid combination and conspiracy and from engaging in any other combination, conspiracy, agreement, understanding, or concert of action having a similar purpose or effect and from adopting or following any practice, plan, pro- gram, or device having a similar purpose or effect. (ii) Entering into any agreement, arrange ment, concerted activity, or understanding with any other manufacturer, distributor or Seller of pipe for the conveyance of water or sewage or with any company providing the services of lining or coating such pipe or with any asso- ciation of said manufacturers, distributors, or sellers, in relation to esi product, products or services, to: (1) Fix or adopt prices, terms, or condi- tions of sale; period of five (5) years to certify in writing, ~2i— (2) Maintain or stabilize prices; (3) Submit noncompetitive, collusive, com- plimentary, or rigged bids or quotations to any customer; (4) Allocate or divide orders, territories or customers; (5) Exchange information - concerning bids, prices, terms or conditions of sale; (6) Exclude or eliminate others from competing; (iii) With respect to pipe for the conveyance of water or sewage or for the service of lining and/or coating such pipe: (1) Coercing or inducing others to restrict their production to certain sizes or types of the aforesaid pipe: (2) Coercing or inducing others to restrict their sales to any territory; (3) Quoting or bidding any job only on an “all or nothing” basis; (4) Coercing or inducing contractors to enter agreements to deal with one supplier only before the opening of bids; (5) Communicating to or exchanging with any manufacturer, distributor or seller of pipe for the conveyance of water and sewage or with any company providing the services of lining or coating such pipe any informa- tion concerning bids, prices, terms or condi- tions of sale; (c) That the Court order each defendant for a —~212— through one of its officers, at the time of every succeeding change in published prices, “estimating prices”, terms or conditions of sale of pipe, for the conveyance of water or sewage, that said change was independently arrived at by said de fendant and was not the result of any agreement or understanding with any competitor; and further that each defendant retain in its files the aforesaid certifications which shall be made available to plaintiff for inspection upon reasonable written demand. (d) That the Court order that each defendant maintain, for a period of five (5) years from the date of entry of final judgment herein, a record of all meetings attended by any of its officers, directors, or employees having managerial or sv- pervisory authority in connection with the sale or pricing of pipe, for the conveyance of water or sewage, and similar representatives of any of its competitors; said records shall include the dates and places of said meetings, the names of all persons in attendance, and a listing of the topics discussed thereat; said records shall be made avail- able to plaintiff for inspection upon reasonable written demand. (e) That the Court order each defendant to annex to every sealed bid or quotation on pipe for the conveyance of water or sewage a written certification by an officer of said defendant, or by the official of said defendant having authority to determine the bid or quotation involved, that said bid or quotation was not the result of any agreement, understanding, or communication be- tween the defendant and any of its competitors. —213— (f) That plaintiff have such other, further, and different relief as the Court may deem just and proper in the premises. (g) That plaintiff recover the costs of this suit. Dated: October 28, 1964 /s/ Nicholas deB. Katzenbach NICHOLAS deB. KATZENBACH Acting Attorney General /s/ William H. Orrick, Jr. WILLIAM H. ORRICK, JR. Assistant Attorney General /s/ Harry G. Sklarsky HARRY G. SKLARSKY Attorney, Department of Justice /s/ Thomas R. Sheridan THOMAS R. SHERIDAN United States Attorney /s/ Stanley E. Disney STANLEY E. DISNEY Attorney, Department of Justice /s/ Barbara J. Svedberg BARBARA J. SVEDBERG /s/ Herbert A. Karzen HERBERT A. KARZEN /s/ John J. Schimmenti JOHN J. SCHIMMENTI Attorneys, Department of Justice Filed October 28, 1964. —214— First Amended Complaint. (Injunction and Money Damages). United States District Court, Southern District of California, Central Division. United States of America, Plaintiff, vs. United States Steel Corporation; Smith-Scott Co., Inc.; and U.S. In- dustries, Inc., Defendants. Civil No. 64-836-HW. The United States of America, plaintiff herein, by its attorneys, brings this action against the defendants named herein in three counts. As a first claim the United States of America in its capacity as purchaser of steel small diameter pressure pipe for use by Federal agencies, brings this suit under the False Claims Act (31 U.S.C. §§ 231-233) for double the amount of damages sustained, plus forfeitures (Count One), and as a second claim, alternatively, under Section 4A of the Clayton Act (15 U.S.C. § 15A) to recover its actual damages (Count Two). The plaintiff waives its right of recovery under Counts I and II hereof for any purchase for which it recovers damages under any other complaint concerning related conspiracies, filed by the plaintiff concurrently with the filing of this com- plaint. As a third claim, the United States of America: brings this suit under Section 4 of the Sherman Act (15 U.S.C. § 4), in order to prevent and restrain con- tinuing violation by the defendants, as hereinafter al- leged, of Section 1 of said Act (15 U.S.C. § 1) (Count Three). COUNT I 1. As a first claim, the United States of America, in its capacity as purchaser of steel small diameter pressure pipe for use by those Federal governmental —01S— organizations engaged in the construction of systems to convey water and sewage throughout the western area of the United States, brings this suit under 3490, 3491, 3492 and 5438 of the Revised Statutes (31 U.S.C. §§ 231-233), comm [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0227%3A01. Public record. Not legal advice.