Volume 11, Issue 5 - September/October 2009

AGR Reports
breaking news powered by glassBYTEs.com™

LEGAL NEWS
Court Grants Motion to Compel Guardian to Turn Over Documents in Anti-Trust Suit
The U.S. District Court for the Western District of Pennsylvania has granted the plaintiffs’ motion to compel Guardian Industries to produce several documents that were reviewed during the European Commission’s (EC) price-fixing investigation. In the suit, the plaintiffs, which include a range of glass shops across the United States, allege that several glass manufacturers engaged in a conspiracy to fix prices.

Guardian had objected to the motion, “arguing that the requests are overly broad, unreasonably burdensome and violative of principles of international comity,” according to the court’s opinion, released in July.

The memo granting the motion, authored by Chief District Judge Donetta Ambrose, notes that “courts have traditionally taken a liberal view of relevance in determining the scope of discovery” in anti-trust cases.

“I agree that liberal discovery is necessary in an alleged antitrust conspiracy case where the alleged wrongdoing is generally covert,” writes Ambrose. “I further agree with the Class Plaintiffs that the documents sought could be relevant to motive and opportunity for defendants to conspire in the United States, the scope and nature of such conspiracy and how defendants may have concealed any unlawful activities. Further, these documents may assist Class Plaintiffs in identifying witnesses for their case.”

Ambrose also writes that while producing the documents could be a “substantial burden” to Guardian, because the documents are within the scope of the allegations, and because the class plaintiffs have alleged a link between the EC investigation, the EC cartel and “the alleged [U.S.] cartel, that is a burden that must be assumed.”

In November 2007, the EC had levied fines against Guardian Industries, Pilkington, Saint-Gobain and AGC Flat Glass Europe for alleged price-fixing practices in the European flat glass market. In November 2008, further fines were imposed on Asahi, Pilkington, Saint-Gobain and Soliver for illegal market sharing and exchange of information regarding delivdeliveries of auto glass in the European Economic Area.

Plaintiffs include a list of glass companies, including both auto and flat, throughout the United States.

In addition to Guardian, among the other defendants are Pilkington North America and PPG Industries. Plaintiffs allege that the manufacturers agreed to raise and fix prices “through a combination of collusive energy surcharges and price increases.”

The manufacturers previously had motioned for the judge to dismiss the suit. That motion was denied in February.

Lee & Cates Glass VP Arrested for Alleged Fraud
Lee and Cates Glass Inc.’s vice president of operations, Scott Cates, recently was arrested for alleged involvement in a fraud case brought by the Florida Financial Services Department’s Division of Insurance Fraud. A former Lee and Cates employee, Jennifer Lamunyon Cribb, also was arrested. The arrests were made as part of an ongoing investigation originally announced in April.

The state claims that four of the company’s locations allegedly overbilled numerous insurance companies more than $540,000 on more than 1,300 separate fraudulent insurance claims.

Cates was charged with “scheming to defraud, conduct of or participation in an enterprise through a pattern of racketeering activity and three counts of conspiracy to commit fraud.” Cribb has been charged with scheming to defraud and presenting a false insurance claim.

When the investigation was announced initially, four employees were arrested under similar charges and since then, a total of 10 (including Cates and Cribb) have been charged.

The Division of Insurance Fraud alleges that the employees involved overbilled windshields and associated parts by billing insurance companies for a more expensive dealer windshield but installing a less expensive substitute.

Tom Lee Jr., president of the company, told AGRR magazine/glassBYTEs.com™ that he wasn’t aware of what was happening until he received notification from a major insurance company.

“We were notified by State Farm in September of last year that our company was under investigation for fraud,” says Lee. “They met with us once and told us they had found an anomaly in the billing practices at two of our locations.”

“We launched our own investigation immediately and found that some employees at two of our shop locations had manipulated our software to allow customers to be billed for dealer items as opposed to NAGS pricing,” he said. “Those individuals were fired and we cooperated full in the investigation.”

Lee says the state’s department of financial services (which includes insurance oversight) also began an investigation.

“We are an 83-year-old company founded on strong principles. This has just been a horrible thing to go through and I am really kicking myself that it happened,” added Lee. “You do a lot of second-guessing on what you could do differently or better to keep it from occurring.”

When asked if he had any suggestions for other glass shop owners, Lee offered some. “Sadly, you have to look at everything, every little thing and you can’t assume honesty. ‘Trust but verify’ is the best advice I have. Multiple location companies bring special challenges for management and require a lot of controls. Don’t ever think it can’t happen to you, because it can.”




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