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Port Dock and Stone Corp. v. Oldcastle Northeast

September 26, 2006

PORT DOCK AND STONE CORP., GOTHAM SAND & STONE CORP. AND PORT DOCK HOLDINGS CORP., PLAINTIFFS,
v.
OLDCASTLE NORTHEAST, INC., CRH GROUP, PLC, AND TILCON INC., DEFENDANTS.



The opinion of the court was delivered by: Hurley, Senior District Judge

MEMORANDUM & ORDER

INTRODUCTION

Plaintiffs Port Dock and Stone Corp. and Port Dock Holdings Corp. ("Port Dock"), and Gotham Sand and Stone Corp. ("Gotham") (collectively "Plaintiffs") brought the present complaint against Defendants OldCastle Northeast, Inc. ("OldCastle"), CRH Group, PLC ("CRH"), and Tilcon, Inc. ("Tilcon") (collectively "Defendants"), claiming that Defendants had violated Section 2 of the Sherman Act, 15 U.S.C. § 2; had violated Section 7 of the Clayton Act, 15 U.S.C. § 18; and had committed tortious interference with Port Dock's business and customers and engaged in unfair competition, both in violation of New York law. Defendants move to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that Plaintiffs lack standing under the Sherman Act and Clayton Act. For the reasons set forth herein, the Court GRANTS Defendants' motion to dismiss.

BACKGROUND

In crafting the following summary of facts, the Court accepts all of the factual allegations in the Complaint as true.

Plaintiffs are three corporations organized under the laws of New York, each with its principal place of business in Huntington. From 1973 to 2000, Plaintiffs Port Dock and Stone and Gotham operated a transportation, distribution, and storage business for aggregate sand, stone, and crushed gravel from locations in Port Jefferson and Port Washington, New York. In 1998, Plaintiff Port Dock Holdings was formed, and Port Dock and Stone and Gotham became subsidiaries of Port Dock Holdings. At all times relevant to the present dispute, each of these three entities were owned and operated by substantially the same persons.

Oldcastle is a corporation organized under the laws of Delaware, with its principal place of business in Washington, D.C. Tilcon is a corporation organized under the laws of Delaware, with its principal place of business in New Britain, Connecticut. CRH is a company organized under the laws of the Republic of Ireland, with its principal place of business in Dublin, Ireland. Tilcon is a subsidiary of Oldcastle, which is, in turn, a subsidiary of CRH. All three defendant corporations are involved in the production of construction materials, specifically, owning and operating quarries, asphalt and concrete plants, and related enterprises.

The relevant product market is the market for the distribution of aggregate, i.e., the market for the distribution of sand, gravel, and crushed stone produced at quarries or sand and gravel pits. (See Compl. ¶ 25.) The relevant geographic market is "Long Island in the State of New York, including Suffolk, Nassau, Queens and Kings counties, as well as the New York City metropolitan area, including New York, Richmond, Bronx, and Westchester counties, as well as counties in northern New Jersey." (See id. ¶ 26.) According to the complaint, during the beginning "at least as early as 1997 and continuing to the present, Defendants have dominated the market for the distribution of aggregate and asphalt concrete with a share substantially in excess of 70%." (Id. ¶ 27.)

Tilcon produced aggregate that was distributed by Port Dock. Tilcon provided 85% of the aggregate product used in the relevant product market. (Id. ¶ 36.) At various points beginning in 1985, Tilcon raised its prices, which, according to Port Dock, was an effort to "squeeze Port Dock out of the marketplace." (Id. ¶ 38.) In effect, Tilcon was seeking to "eliminate the 'middle man.'" (Id. ¶ 39.)

By 1996, Tilcon was one of the largest producers of road construction materials in the northeastern United States. Subsequently, they were investigated by the United States Department of Justice for antitrust violations in the production market. (Id. ¶ 50.) The matter reached settlement prior to trial.

In 1997, Tilcon purchased its lone remaining competitor in the region in the production market, New York Trap Rock. With this new found market power in hand, Tilcon was allegedly able to "unilaterally announce[] to Port Dock that it was ending its distributorship arrangement, and would no longer be selling product to it." (Id. ¶ 63.) As a result, Port Dock was left with no other producers from whom it could purchase, and agreed to Tilcon's proposed purchase of Port Dock's assets.

In August 2003, Port Dock filed a Chapter 11 Voluntary Petition for Bankruptcy Reorganization. (Id. ¶ 75.) On December 29, 2004, the bankruptcy court issued an order that expressly provided for Port Dock's commencement and prosecution of antitrust, unfair competition, breach of contract, and related causes of action against Tilcon.

On September 9, 2005, Port Dock and Gotham filed suit against Defendants in this Court. Defendants moved to dismiss the complaint on October 6, 2005. Plaintiffs opposed the motion and Defendants submitted a memorandum of law in reply.

STANDARD

In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court must limit itself to the facts stated in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint. Hayden v. County of Nassau, 180 F.3d 42, 54 (2d Cir. 1999). The court must accept the factual allegations contained in the complaint as true, and view the pleadings in the light most favorable to the non-moving party, drawing all reasonable inferences in his favor. Sheppard v. Beerman, 18 F.3d 147, 150 (2d Cir. 1994). Dismissal under Rule 12(b)(6) is appropriate only if it appears beyond doubt that a plaintiff can prove no set of facts entitling him to relief in support of his claim. Zerilli-Edelglass v. New York City Transit Auth., 333 F.3d 74, 79 (2d Cir. 2003).

DISCUSSION

Defendants move to dismiss the federal claims on the grounds that Port Dock lacks standing to sue under the antitrust laws. The federal claims are brought pursuant to Section 2 of the Sherman Act, 15 U.S.C. § 2, and Section 7 of the Clayton Act, 15 U.S.C. § 18. Section 2 of the Sherman Act provides in relevant part that "[e]very person who shall monopolize, or attempt to monopolize, or combine or conspire with any person or persons, to monopolize any part of the trade or commerce among the several States . . . shall be deemed guilty of a felony." Section 7 of the Clayton Act states in relevant part that "[n]o person . . . shall acquire . . . the assets of another person . . . where . . . the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly." Section 4 of the Clayton Act dictates who has standing to sue under the antitrust laws. Section 4 provides in full:

Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the ...


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