One of the seven concrete firms named as defendants in a civil price-fixing lawsuit is helping federal prosecutors gather evidence in a related criminal investigation, court documents reveal.
A lawyer for one of the seven defendants in the civil case said in a filing that the 27 contractors and construction firms bringing the suit have the "unique and decisive advantage" of receiving documents and statements from a cooperating individual who could receive amnesty from criminal charges.
Court papers don't say which firm is serving as an informant, and prosecutors declined to comment. Attorneys for the concrete firms didn't return calls, or said they didn't know who was helping investigators.
The Chicago office of the U.S. Department of Justice is leading a grand-jury investigation into whether companies conspired to fix prices of ready-mix concrete in the Indianapolis area. At the same time, lawyers for Cohen & Malad LLP in Indianapolis and Susman Godfrey LLP in Dallas are seeking class-action status on behalf of contractors and construction companies that sued the concrete firms in federal court in Indianapolis last year.
One of the concrete firms, Greenfield-based Irving Materials Inc., pleaded guilty to criminal charges in June and accepted a $29.2 million fine, the largest ever in a domestic antitrust case. Four of its executives-including President Fred "Pete" Irving and his son, Vice President Price Irving-were sentenced in December to five months in prison for price fixing.
Prosecutors have said Irving Materials colluded with other concrete firms in the area, their executives meeting behind an Indianapolis horse barn to set numbers.
Robert Hammerle, a lawyer for Price Irving, said prosecutors commonly offer amnesty deals in an attempt to bolster their case by persuading someone to come forward and admit involvement.
"The first company in gets complete amnesty in exchange for [its] truthful cooperation," said Hammerle, who is not involved in the civil case. "The government's position is to encourage a race to the door."
Judy Woods, a lawyer for one of the civil defendants, Fishers-based Builder's Concrete & Supply Inc., exposed the existence of an informant in a motion she filed in December. In the filing, she objected to an order by Judge Sarah Evans Barker limiting discovery in the civil case until the criminal investigation is complete.
Prosecutors in November had sought the order, arguing that allowing unlimited discovery to continue would undermine the grand jury's secret investigation. The government argued the defendants in the civil case could determine the scope and focus of the criminal investigation and facilitate the destruction of evidence by those who had not yet produced documents.
"Although the government has conducted a substantial investigation to date and additional criminal charges are expected soon," prosecutors wrote, "it still has significant steps to take."
Henry Karlson, a professor at the Indiana University School of Law in Indianapolis, said prosecutors' concerns may be well-grounded.
"Potential defendants will become fully aware of what's going on before the grand jury and what the criminal liability might be," Karlson said. "There is always the potential for conflict in the discovery stages of a civil case while a criminal case is under investigation."
But in her motion, Woods countered that the company helping prosecutors already had cooperated with plaintiffs in the civil case before Judge Barker limited discovery.
"To the extent the plaintiffs in this civil action have already had (or will have) access to such information and documents (whether from a leniency candidate or the government itself), it would be fundamentally unfair and highly prejudicial to deny the same access to defendants in this action," she wrote.
The Department of Justice does not have to disclose the identity of someone seeking amnesty unless ordered by a court, which hasn't happened, documents show.
Judge Barker's order limits discovery in the civil case to financial documents and financial statements. In her motion, Woods argued such records are more help to plaintiffs in building their case than they are to defendants.
Typically, plaintiffs and defendants in a civil lawsuit would gather information from the other side in a range of ways, including by taking depositions, and submitting written questions.
The judge has not ruled on Woods' motion to reconsider or clarify her order limiting discovery. Plaintiffs have not objected to the judge's order.
Richard Shevitz, chairman of Cohen & Malad's class-action group, said the civil case is moving forward, despite the restriction on discovery. A hearing on whether to grant the suit class-action status is scheduled for March 1.
"What we thought was promising was that the government did not want a complete stay and chose to limit the discovery to certain categories," Shevitz said. "We can get our hands on their business information. At this juncture, that is what we are most concerned with."
Shevitz said lawyers at Cohen & Malad and co-lead counsel Susman Godfrey LLP conducted their own investigations to identify the seven companies named in the suit. The law firms continue to gather information, Shevitz said, and might name additional defendants.
Current defendants are American Concrete Co. Inc., Beaver Gravel Corp., Carmel Concrete Products Co., Prairie Material Sales Inc. and Shelby Gravel Inc., along with Irving Materials and Builder's Concrete.
Irving Materials can be struck from the list of potential amnesty candidates, Hammerle said, because company executives already have pleaded guilty.
The government sometimes will grant immunity to a second party, in a move known as "amnesty plus," Hammerle said. For those left facing penalties, the results can be "rather horrific," he said, noting "you can literally drive a number of companies out of the market."