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'Big gun' rides into Irving case: Prominent attorney Susman won $900M from Microsoft

October 17, 2005

Irving Materials Inc. may appreciate that folksy quip after sparring with Houston attorney Stephen D. Susman. The broad-shouldered Texan who once prosecuted Hamlet in a mock trial for charity (Hamlet was convicted) has been named co-lead counsel for construction firms suing Greenfield-based IMI in federal court here over concrete price-fixing.

In 1989, Susman defended U.S. House Speaker Jim Wright against ethics charges in a flamboyant style that ruffled the Volvo-driving sensibilities of Beltway Yankees. Susman, 64, called his dapper opponent "special persecutor" rather than prosecutor.

In recent years, he's squeezed Microsoft Corp. like a wet rag-wrestling away more than $900 million on behalf of software makers, including Novell, in antitrust suits against the Bill Gates empire.

"He is very impressive. He's a big gun," said John Price, an Indianapolis lawyer representing one of the contractors in a suit against IMI.

That suit and about 20 others against IMI and its top executives were consolidated last month in U.S. District Court for the Southern District of Indiana.

An amended suit is likely to be filed next week, according to another attorney involved in the Irving case. Litigation filed thus far has been thin on details of how the price-fixing scheme worked and how it allegedly harmed plaintiffs.

Other defendants also will be named in the amended complaint, said the attorney. Plaintiffs are asking Judge Sarah Evans Barker to grant class-action status.

In June, IMI pleaded guilty and accepted a $29.2 million fine, the largest ever in a domestic antitrust case. Several of its executives, including Fred "Pete" Irving, pleaded guilty to criminal charges of price fixing and face five months of jail time and up to $200,000 in fines.

The U.S. Department of Justice said IMI colluded with other concrete firms in the area, their executives meeting behind an Indianapolis horse barn to set numbers.

The department's Chicago office has yet to identify or charge the other firms, although a half dozen have been named as defendants in lawsuits by contractors.

Broadly, the suits seek refunds and damages for amounts they overpaid for concrete. Dollar amounts aren't specified. "It's a pretty blatant price-fixing conspiracy. That's what drew my attention to it," Susman said. A key IMI attorney, Daniel Kelley Jr. of Indianapolis law firm Ice Miller, declined to discuss the case. Legal observers say it's unlikely suits against IMI will go to trial. In most of these cases, companies settle instead.

"Class action can turn into a bet-thecompany situation," said Antony Page, assistant professor of law and John S. Grimes fellow at the Indiana University School of Law in Indianapolis.

Susman expects an extensive battle despite IMI's admissions to the Justice Department.

"IMI is not only liable for its own overcharges, but it also is liable for all other conspirators," Susman said. "I'm sure [IMI executives] are not willingly going to step up to the plate and say, 'We're liable'" for the other companies.

Susman also expects defendants to argue their price-fixing conspiracy caused little harm.

"The battle is far from over, even with IMI's [admission]," he said.

So far, the biggest battles in the IMI litigation have involved lawyers maneuvering for the potentially lucrative post of lead counsel.

Susman wanted to be the lone lead counsel, but the court last month instead made him co-counsel, with Indianapolis attorney Irwin Levin, of Cohen & Malad.

Susman's team said in a court filing that he is "the only applicant for lead counsel who has taken a price-fixing case to trial" and "led, tried and won several of the largest antitrust cases in history."

Among them was a $550 million award, in 1980, for alleged price fixing by companies in the corrugated-paper-container industry. At the time, it was the largest jury verdict ever, according to Susman.

Two years ago, Susman said, he helped win software maker Novell $536 million from Microsoft in antitrust allegations involving Novell's NetWare business.

Susman also likes to point to a 1996 patent dispute involving a client, Texas Instruments, with Korea's Samsung Electronics. Samsung agreed to a $1 billion settlement before Susman could deliver his closing argument in the trial. Susman had offered Samsung's attorney a $100,000 bet on how jurors would vote, but the latter declined to participate in Susman's showmanship.

His big appearance in the national spotlight came in 1989 while defending Rep. Wright, who racked up dozens of ethics violations involving gifts he accepted from associates. The Wall Street Journal's Paul Gigot described one public hearing at the Capitol involving Susman as "the tragicomedy of a low-rent Watergate."

There was Wright's wife dutifully nodding as Susman denounced congressional investigators as "a lynch mob.''

In a later interview, Susman said he tries to be "less cerebral, more folksy. ... Usually, the guy who makes the good trial lawyer is at the bottom of his class in law school. He does everything non-intellectually."

Indianapolis attorney Levin declined to comment about his co-lead, saying it would be inappropriate to talk about Irving Materials litigation.

His relationship with Susman began somewhat tempestuously, as the pair jockeyed to become lead counsel. Levin wrote to the court that while Susman agreed to waive his firm's travel expenses, he didn't make the same offer for a gaggle of out-of-state firms that would work with him.

Levin played up his local presence and how he's been involved in the case from the start, filing a suit on behalf of Boyle Construction Management the day after IMI entered its guilty plea.

Susman countered, telling the court his firm was first to file an amended complaint alleging six ready-mixed concrete suppliers conspired with IMI. "Before that time, no other class action complaint had identified any of IMI's co-conspirators," Susman's team told the court.

IMI counsel complained of the opportunity for "patronage" among law firms, saying Levin "plays the hometown card," and "promises work for everyone." IMI also complained of the size of Susman's proposed "bloated, ill-defined counsel structure."

"Plaintiffs do not allege some vast international or even national conspiracy requiring far-flung investigation," the company said.

As they say in Texas, this case could get so ugly it'd make a freight train take a dirt road.
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