Las Vegas-based ClarkWestern Building Systems (dba ClarkDietrich) filed a federal antitrust RICO complaint in federal court Wednesday against a suite of companies, claiming a trade group created “sham” regulations to squeeze ClarkDietrich out of the steel framing products market.
Allsteel & Gypsum Products, Consolidated Fabricators Corp., Craco Manufacturing, Custom Stud, Design Shapes in Steel, Frametek Steel, and United Metal Products were named as defendants, all members of the Steel Stud Manufacturers Association (SSMA), a national trade group that controls 85 percent of the US nonstructural steel framing products industry. ClarkDeitrich is also a member.
In the complaint, ClarkDietrich claimed the companies, through the SSMA, conspired to enact and implement “bogus product certification standards designed to exclude ClarkDietrich’s products,” which ClarkDietrich claims have a “competitive edge” due to the company’s advanced manufacturing processes.
"Defendants and their co-conspirators developed and imposed upon all SSMA members a building code compliance certification requirement that included sham standards that no building code required," the lawsuit states. "They included those sham standards because they discriminated against the manufacturing process used by ClarkDietrich and ensured that its products would not be certified by the only relevant trade association as building code-compliant. They knew this would harm, and hopefully eliminate, ClarkDietrich as a competitor. The sham standards were intended to neutralize ClarkDietrich's cost advantage over defendants arising from unique circumstances and its willingness to invest in innovative manufacturing processes.”
The lawsuit went on to claim that the "defendants and their co-conspirators promoted the sham code compliance certification program and their respective products as being so certified, and their conduct had the intended effect. They caused purchasers of nonstructural steel framing products to believe falsely that ClarkDietrich products were not building code compliant, causing ClarkDietrich to lose market share. Defendants' conspiracy and boycott of ClarkDietrich has allowed defendants to maintain artificially high prices, injuring not only ClarkDietrich but consumers and competition in the nonstructural steel frame products market throughout the country."
ClarkDietrich is also seeking disgorgement of unjust profits and damages for restraint of trade in violation of the Sherman Act, RICO violations, intentional interference with prospective economic advantage, unjust enrichment and common law civil conspiracy.