Court Completely Crushes Kraft's Calportland Conspiracy Case; Cement and Concrete Collusion Claims not Credible
On June 21, 2016, Rune Kraft, an individual, filed a qui tam complaint as Relator on behalf of the United States and the State of California, against certain CalPortland, Lehigh Hanson, and Cemex entities. Kraft alleged that the defendants had conspired since at least 2003 to fix prices and allocate markets for cement, asphalt, and concrete in the State of California, which caused inflated prices on construction and transportation projects funded by the federal government or the State of California. When the defendants were hired to complete these projects, their contracts typically included a certification that their costs were reasonable and not the result of anticompetitive conduct. Kraft alleged that these certifications were false and violated the False Claims Act (FCA).
On March 9, 2018, Central District of California Judge John Walter dismissed Kraft’s entire complaint without leave to amend. Judge Walter held that the allegations of an antitrust conspiracy were implausible because they lacked sufficient detail about the who, what, when, where and how of the alleged conspiracy. Kraft merely alleged that certain purchasers were not always able to purchase cement from the closest supplier and at the lowest price, and then labeled this a conspiracy. The court noted that there were many alternative explanations (besides a conspiracy) for why the closest cement supplier might not want or be able to sell cement to a particular purchaser at the lowest prices.
Judge Walter further held that without a plausible allegation of an antitrust violation, Kraft could not plausibly allege a false certification in violation of the FCA. In addition, the certifications Kraft was relying upon were specific certifications as to the absence of bid-rigging in connection with a specific project. So, even if a general antitrust conspiracy to fix prices or allocate markets existed, there was still no plausible FCA violation, because Kraft had not alleged any bid-rigging as to a specific project.
Kraft’s attorney withdrew before the motion to dismiss was resolved, after defendants informed him that his client was a vexatious litigant. Judge Walter’s decision notes that a plaintiff relator cannot appear pro se in a qui tam action.
The case is U.S. ex rel. Rune Kraft v. CalPortland Construction, Case No. 16-4479 (C.D. Cal.) (Order and Statement of Decision dated March 9, 2018).
The Sheppard Mullin team included Los Angeles partners Leo Caseria and Scott Roybal and Los Angeles special counsel Barbara Taylor.