SAN FRANCISCO (CN) - Three California-based mesquite charcoal companies conspired to fix prices and allocate markets for 10 years, to "keep each other's back," restaurants claim in a federal class action.
Lead plaintiff Il Fornaio (America) Corp. sued Lazzari Fuel Co., of Brisbane, Calif.; California Charcoal and Firewood, of Commerce; and Chef's Choice Mesquite Charcoal, of Carpinteria.
Il Fornaio runs 14 restaurants, 11 of them in California. Joining it at plaintiffs are Oliveto Partners, which owns and operate Oliveto Café in Oakland, and The Famous Enterprise Fish Company of Santa Monica.
They claim the defendants fixed the price of lump mesquite charcoal, which is prized for its intense heat and the flavor imparted by its smoke.
The restaurants claim that from at least 2000 through 2010, "defendants conspired, combined for, or agreed (a) to fix, raise or stabilize the price of mesquite lump charcoal in the United States (b) to not compete for each other's customers (c) to allocate specific customers or territories among themselves; (d) to sell only to customers in certain geographic areas (e) to refrain from submitting bids for the sale of mesquite lump charcoal to customers allocated to a co-conspirator company; and/or (f) to communicate with each other regarding what price to bid for the sale of mesquite lump charcoal and then submit agreed-upon, noncompetitive bids to each other's customers."
The restaurants claim the defendants' executives called each other to discuss which conspirators would get which customers, and how the conspirators would ask if a company from a different territory called them.
Most of the proof comes from federal prosecutor's tape recordings of conversations between Chef's Choice's owner William Lord and a confidential informant, according to the complaint.
It states: "Lord expanded upon the operation of the conspiracy in the same phone call with the confidential informant recorded by federal prosecutors:
"'I called [Individual B] before, or [Individual C] before, or [Individual A] and, uh, we all have kinda just left things alone throughout the years. Um, I know where his customers are, he knows where mine are, but for some reason, just a phone call or what should we, what should I quote so that it will, you know, make you look okay. Like that. That's pretty much been the conversation through the years. Because, ahh, all of us have raised our prices before and what happens is the com-, the company calls and says can they get it at a better price. And so we've always, uh, kept each other's backs in a sense.'
"On information and belief, and based on the investigation of counsel, plaintiffs allege the person identified by Lord as '[Individual B]' is Robert Colbert, vice president and co-owner of Lazzari; the person identified as '[Individual C]' is Richard Morgen, Lazzari's general manager and co-owner; and the person identified as '[Individual A]' is Marvin Ring, CEO of California Charcoal." (Brackets in complaint.)
Lord pleaded guilty to criminal antitrust charges, paid a $100,000 fine and served a four-month prison term for his company's role in the conspiracy, according to the complaint.
The restaurants seek class certification, an injunction and damages for violations of the Sherman Antitrust Act.
Their lead counsel is Elizabeth Pritzker.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.