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STATE OF ILL. v. BORG

September 10, 1982

STATE OF ILLINOIS, ET AL., PLAINTIFFS,
v.
BORG, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

As indicated in prior opinions in these class actions, plaintiff property owners charge 22 piping construction companies and 36 individuals with bid-rigging, price-fixing and job allocation in the Chicago area from 1956 to 1977. However the current motion deals with only four individual transactions, three involving the Board of Education of Evanston Township High School District No. 202 ("District") and one involving Mutual Trust Life Insurance Co. ("Mutual Trust").*fn1 Defendant contractors (more accurately subcontractors) in those transactions move for summary judgment, claiming the two owners are "indirect purchasers" within the meaning of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), and are thus barred from suing under the antitrust laws. For the reasons stated in this memorandum opinion and order, defendants' motion is denied.

Facts*fn2

There is no question that District 202 and Mutual Trust were not literally "direct purchasers" from the piping contractors, for in each of the four transactions there was a general contractor ultimately interposed between the owner and the piping contractor. That however is the beginning not the end of the inquiry, for the facts of each relationship must be examined to see whether a cost-plus or equivalent arrangement takes the transaction out of the Illinois Brick rule (as that case itself recognized, 431 U.S. at 732 n. 12, 97 S.Ct. at 2067 n. 12).

District 202 Transactions

First of the three District 202 construction projects was a building addition to Evanston Township High School in 1956. Before entering into the general contract District 202 obtained separate bids for general construction and the several mechanical trades (plumbing, heating, ventilating and electrical work). District 202's Board accepted the low bids and awarded contracts in each category. Indeed the piping contractor's bid to District 202 specifically stated:

  We agree to perform the Mechanical work on which
  this proposal is offered as sub-contract under
  the General Construction Contract at the price
  quoted above.

In turn the general contractor agreed to assume "overall direction and administrative supervision and coordination of work by the mechanical trades. . . ." As the general contract said, the mechanical trades bids:

  were accepted by the Owner [District 202] March
  29, 1956. The Owner then authorized the execution
  of said work by subcontract under a General
  Construction Contract with Coath & Goss, Inc.
  under the provisions of Paragraph 48, Section I
  of the Specifications and the Proposals of the
  respective bidders.

As Exhibit 1 to this opinion (page 2 of the general contract) shows, the "contract sum" was specifically identified as the sum of the five individual proposals of the successful bidders, including that of a defendant here (Hanley & Company).

Second of the three District 202 projects was a 1962 third floor addition to the High School's technical building. District agreed to pay general contractor Erik A. Borg Company the actual "Cost of the Work" plus a $10,000 fixed fee for the general contractor's services. "Cost of the Work" was defined as (emphasis added):

  the actual job costs incurred in the performance
  of authorized work, including cost of wages of a
  Superintendent, all Foremen, Mechanics and
  Laborers at the job site, together with
  insurance, payroll taxes, etc., thereon; costs of
  materials, fabricated items, equipment and
  fixtures incorporated in the Work; the rental of
  any special equipment required to perform the
  Work; and all subcontractors' work performed under
  this Contract.

Then the general contractor obtained subcontractors' bids, submitted the lowest figures to District 202 for approval and let the subcontracts to the lowest approved bidders.

Finally, the 1966 alterations and additions to the High School involved an identical "cost of the work plus a fee" (in that instance the fixed fee was $300,000) to general contractor George Sollitt Construction Company. Again ...


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