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Kimmelman v. Henkels & McCoy Inc.

Decided: March 11, 1986.

IRWIN I. KIMMELMAN, ATTORNEY GENERAL OF NEW JERSEY, PLAINTIFF-APPELLANT AND CROSS-RESPONDENT,
v.
HENKELS & MCCOY, INC., DEFENDANT-RESPONDENT, AND CROSS-APPELLANT; AGABITI BROTHERS, INC.; ARMANDO AGABITI; AND STRACO CONSTRUCTION CO., DEFENDANTS



On appeal from Superior Court, Chancery Division, Burlington County.

Furman, Petrella and Cohen. The opinion of the court was delivered by Petrella, J.A.D.

Petrella

The Attorney General appealed from certain aspects of the order granting him summary judgment against defendants Henkels & McCoy, Inc. (H & M) and Agabiti Brothers, Inc.*fn1 in a civil antitrust action. The issues on this appeal concern the available remedies under the New Jersey Antitrust Act, N.J.S.A. 56:9-1, et seq. Specifically, the Attorney General challenges the quantum of civil penalties assessed against defendants and the denial of counsel fees to him, on behalf of the State. H & M cross-appealed from the entry of summary judgment against it. We affirm both as to the appeal and the cross-appeal.

Suit had been instituted under the Antitrust Act against defendants alleging that they had conspired to rig bids for construction work performed for Public Service Electric and Gas Company (PSE & G) and Elizabethtown Gas Company. The complaint alleged that the conspiracy had begun before the May 21, 1970 effective date of the Antitrust Act.

After discovery was completed the Attorney General successfully moved for summary judgment based primarily on the depositions of officers of the various parties to the conspiracy, most of whom were given immunity individually from prosecution in exchange for their testimony. The deposition of Norris Anders, Vice President and Manager of H & M's New Jersey

division, was given under a grant of immunity. Anders testified that he met with representatives of Stratco in the "early 70's" to discuss their upcoming bids for the annual gas main blanket contract*fn2 for PSE & G. Anders said that he and Henry Strahle, Stratco's principal (who also was deposed under a grant of immunity), submitted their bids so that H & M would be the low contractor in the Burlington area and Stratco would be low bidder for the Audubon district. Bids in subsequent years were submitted based upon agreed percentage increases over the prior year's bids. Except for a period of about three years in which bid-rigging was discontinued because there was much less work due to a gas shortage, the bidding arrangement was continued both for gas main blanket contracts and for individual gas main contracts.

The deposition of Harry Fromm, Superintendent of Stratco, was also given under a grant of immunity. He testified that he exchanged bid figures with Anders of H & M. He said his predecessor at Stratco also told him that bid information had previously been exchanged with H & M. Fromm said that some time between 1970 and 1976 he met Anders at Strahle's residence to fix bids for PSE & G's gas main blanket contract. Fromm said that in years subsequent to his first meeting with Anders, except the years involved in the gas shortage, he discussed by telephone with Anders what percentage increase they should add to their bids. After the end of the gas shortage Fromm again met Anders in the latter part of the 1970's, at Strahle's home, to discuss bids, and thereafter discussed bids yearly by telephone.

Fromm admitted that he spoke with Anders regarding what H & M should bid over Suburban and Stratco for the PSE & G pavement restoration contract in the Burlington and Audubon districts. He agreed with Anders that Stratco would be the low bidder in the Audubon district and H & M would be the low

bidder in the Burlington district with regard to scattered street openings. Fromm also said that he exchanged bid information for individual gas main contracts with Anders and Agabiti. Strahle admitted having meetings with Anders and Fromm to discuss bids for PSE & G contracts.

I

The grant of summary judgment against H & M and Agabiti Brothers included injunctive relief and civil penalties under N.J.S.A. 56:9-10(c) of $100,000 against H & M and $20,000 against Agabiti Brothers.

The Attorney General contends that the $100,000 penalty against H & M and the $20,000 penalty against Agabiti are inadequate. He relies on In re Garay, 89 N.J. 104, 114 (1982), and argues that the judge should have fixed the per diem penalties and assessed defendants the greater amount that a formula using the per diem amount would produce by utilizing each day the conspiracy endured from the first date of the conspiracy until the date of service of the summons and complaint. The judge declined to apply the per diem alternative in N.J.S.A. 56:9-10(c) because he felt that the penalty requested of $500 per day for every day from the date the Antitrust Act took effect until the day of the complaint (which would have totaled over $2,000,000)*fn3 might be violative of the concept that civil penalties not be "so punitive either in purpose or effect as to negate the civil label." In re Garay, supra, 89 N.J. at 111-112, citing United States v. Ward, 448 U.S. 242, 249, 100 S. Ct. 2636, 2641, 65 L. Ed. 2d 742 (1980). It also may raise constitutional questions, see, e.g., Pope & Talbot, Inc. v. Smith, 216 Or. 605,

340 P. 2d 960, 967-968 (1959). The judge expressed agreement with H & M's argument that a per diem fine is not invoked until after a violation of a specific court order.*fn4 The judge also found that a per diem levy was inappropriate because it was not clear precisely when the conspiracy began and ended, and there were gaps which included the time of the gas shortages. He said:

All of these problems weigh upon the Court not to attempt to assess the per diem penalty authorized by the statute even though a higher penalty might well on the facts of this case be appropriate in terms of the magnitude of the offense; more telling in terms of the deterrent purposes of the act and more nearly proper to ...


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