CHARLESTON, W.Va. — West Virginia Paving’s president says employees have been stunned to be the subject of class action lawsuits by cities and the state Highways department claiming monopolistic practices have driven up the price of asphalt.
“We got sucker punched,” said Bob Brookover, president of the Dunbar-based company. “We had no idea this lawsuit was coming. We still don’t know what it’s about.”
Four West Virginia cities filed lawsuits Oct. 12 against West Virginia paving and other businesses that do paving work in West Virginia, claiming that over time they had joined forces and suppressed competition to the point that the price of paving is 40 percent higher than it should be.
MORE: Read the City of Charleston’s version of the lawsuit here.
The state Transportation department joined the lawsuit two days later.
During a hearing last week at legislative interims, state Transportation officials said they had been keeping an eye on the situation for months before filing suit.
“We first became aware of it when we had an analytical group take a look at the bids — the number of single-bid contracts the department was getting,” state State Transportation Secretary Paul Mattox said last week. “As a result of our initial look at our bids, it raised a lot of red flags. Since that time, legal division has gathered information to prepare for this court case.”
In an interview today, Brookover said his company has been trying to work with the Department of Transportation on pricing, but it was blindsided by the legal action.
“We didn’t have any idea what was going on. We didn’t get served until four or five days later (after the news first broke),” he said.
He later added, “We’ve tried to show where they can save money.”
The law firm that filed suit, Bailey & Glasser, compared the prices being paid in West Virginia to the prices being paid in Kentucky, expecting similarities. Instead, the lawyers said, they discovered 40 percent more was being paid in West Virginia.
Brookover flatly disputes the 40 percent figure. “That’s just totally wrong.”
But he says there are reasons why West Virginia might have higher asphalt prices. He said Kentucky pavers have a source of aggregate material much closer to their work, while West Virginia companies have aggregate shipped in by barge.
He said only 15 percent of the asphalt here is allowed to be recycled material, where other states allow up to 30 percent.
The lawsuits claim that West Virginia asphalt companies started combining until they grew to 80 percent of the market share, driving up prices for governments that put paving contracts out for bid.
Brookover countered that a significant portion of business for paving companies comes from the state Division of Highways, and that as the state Road Fund has stagnated so has competition among paving companies. There’s just not enough business to go around to result in increased competition, he said.
“The Road Fund has not increased in 10 years. The pie used to be full-sized. Now it’s half that. There’s not enough work.”
The lawyer for West Virginia Paving, former U.S. Attorney Booth Goodwin, said competition still exists among the paving companies, though.
“They compete against one another vigorously on paving projects,” he said.
But, in some cases, competitors have had to cooperate for the sake of efficiency, they said. For instance, West Virginia Paving is in a joint venture with rival Kelly Paving on Camden Materials, a supplier.
“Are there some joint ventures between some otherwise competitive companies? Yes,” Goodwin said. “They’re still vigorous competitors.”
An answer to the lawsuit from the paving companies is due in circuit court on Thursday.
Brookover said he is proud of his company, which has been in business for 40 years. He said it employs 350 people and has low turnover. He said he feels for those employees because they’re having to explain the company’s role in the lawsuit.
“They have to answer at church, at schools, at gas stations,” he said.
Goodwin suggested the conflict could have been sorted out with the involvement of the state Attorney General.
The Attorney General’s office, which is the state’s chief legal counsel, has not taken part in the lawsuit, and lawmakers asked questions about that last week. Goodwin filed a motion to dismiss alleging the state’s version of the lawsuit has no grounds if the Attorney General hasn’t signed off on it.
Goodwin said the Attorney General’s subpoena powers would have resulted in information coming to light that absolved the paving companies.
“I don’t think he would have even found smoke,” Goodwin said.
If any concerns were apparent, Goodwin said, “that can be dealt with through cooperative agreement. That has been dealt with in other states, but not dealt with in this way.”
Goodwin said the lawsuit sends a symbolic message.
“It feeds into the adverse litigation climate that’s been talked about,” he said. “It certainly doesn’t say ‘Locate your business in West Virginia.'”