CHARLESTON, W.Va. — West Virginia Paving this week filed its response to a class action lawsuit claiming that it and other state-based asphalt companies have engaged in predatory practices, leading to a near-monopoly that has inflated the cost of paving about 40 percent higher than neighboring markets.
For some insight into West Virginia Paving’s position on the matter, it’s worth noting that the phrase “WVP denies the allegations and demands strict proof thereof” is used 123 times in the response.
MORE: Read West Virginia Paving’s response.
On Oct. 12, the cities of Charleston, Parkersburg, Beckley and Bluefield filed lawsuits against West Virginia Paving and related companies. The state Transportation department filed its own lawsuit two days later. The City of Huntington and the Kanawha County Commission, on behalf of Yeager Airport, also later filed as plaintiffs.
The lawsuits filed by the private Bailey & Glasser firm on behalf of the governments contend that the asphalt suppliers have engaged in predatory practices, undercutting and sometimes absorbing competitors.
“Defendants are a collection of once-vigorous competitors in asphalt production, paving and contracting services, now illegally combined into actual or de facto monopolies in at least 30 West Virginia counties,” the lawsuit states — naming West Virginia Paving, Southern West Virginia Paving, Southern West Virginia Asphalt, Kelly Paving, Camden Materials, American Asphalt of West Virginia and Blacktop Industries and Equipment.
“Combined, the defendants are an industry colossus,” the lawsuits claim.
Over time, the lawsuits claim, the defendants gained control of at least 15 asphalt plants that at one time directly competed against each other.
MORE: Read the City of Charleston’s version of the asphalt lawsuit.
West Virginia Paving and its direct partners, Southern West Virginia Paving, Southern West Virginia Asphalt and Camden Materials, deny almost all the claims. The response by the companies was filed by Booth Goodwin, former U.S. Attorney and a Democratic candidate for governor in West Virginia’s general election.
In particular, West Virginia Paving’s response says the lawsuit fails to identify a specific geographic market in dispute.
“The failure to allege a relevant geographic market makes it impossible to determine whether competition has been impaired by the Defendants or the cause of any such impairment,” the response states. “Moreover, without alleging a relevant geographic market, the parties and the Court are unable to determine whether discovery requests are relevant or unnecessary and unduly costly.”
The original lawsuits compared prices in West Virginia to those of a Kentucky market considered similar — and that’s how the 40 percent figure came to be: “There are almost two dozen counties in Kentucky where companies aggressively bid against each other for paving contracts. These competitive areas are reasonable benchmarks against which to measure Defendants’ pricing in West Virginia.”
West Virginia Paving contends that method is flawed.
“Plaintiffs allegations are founded upon comparisons to undefined markets in other states without considering the significant differences in bidding requirements and contract specifications.”
West Virginia Paving also claims the original lawsuit fails to state a claim upon which relief can be granted, that the case can’t be maintained as a class action, that the supposed class is not properly or lawfully defined and that the alleged product and geographic markets are not properly or lawfully defined.
“All of WP’s conduct at all times was reasonable and pro-competitive in light of the product markets, geographic markets, other competitors and all other economic factors,” West Virginia Paving states in its response.
West Virginia Paving also lays blame on the state Department of Highways.
“Any increase in the price of asphalt to Plaintiff or the putative class was caused by the requirements and regulations and practices of the West Virginia Department of Transportation and Division of Highways.”
West Virginia Paving does admit to a few things, which results — intentionally or unintentionally — in some humor.
In a section defining the City of Charleston, one of the plaintiffs, as a municipal corporation, West Virginia Paving sees no sense in denying that: “Upon information and belief, WVP admits that Plaintiff is a West Virginia municipal corporation. WVP denies the remainder of the allegations in paragraph 24 and demands strict proof thereof.”
Another paragraph of the original lawsuit defines aggregate as an indispensable ingredient in asphalt. It says aggregate is a compilation of hard, inert materials including sand, gravel, crushed stone, slag or rock dust, typically making up about 95 percent of asphalt by weight. Aggregate is primarily responsible for the amount of weight finished pavement can withstand, the lawsuit notes.
The response: “WVP admits that paragraph 50 lists some general descriptions of asphalt and aggregate.”
In an interview earlier this week, West Virginia Paving President Bob Brookover said the company was blindsided by being sued. Then in a statement released in coordination with the response’s filing, Brookover stated, “We are going to fight these unfounded allegations that threaten the livelihood of our employees and the safety or our roads that our friends, families and fellow West Virginians drive on every day.”
Earlier this month, the paving companies filed a motion to dismiss the West Virginia Department of Transportation from the case because the Attorney General, West Virginia’s chief legal counsel, had not signed off on the suit.
MORE: Read the motion to dismiss.
So far, the Attorney General’s Office has released this statement: “Our office and the Department of Transportation are engaged in cooperative discussions to handle this matter appropriately. There is no further comment at this time.”