Packaged Ice companies Arctic Glacier and Home City were each sentenced to a $9 million fine for participating in a criminal conspiracy to allocate customers in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.
Arctic Glacier's sentencing was February 11, while Home City was sentenced yesterday, as described in a press release issued by DOJ yesterday:
A Cincinnati packaged-ice manufacturer was sentenced today to pay a $9 million criminal fine for its participation in a conspiracy to allocate packaged-ice customers and territories, the Department of Justice announced today.
The Home City Ice Company pleaded guilty on June 17, 2008, to a one-count charge of conspiring to suppress and eliminate competition by allocating packaged-ice customers and territories in the Detroit metropolitan area and southeastern Michigan. The conspiracy began at least as early as Jan. 1, 2001, and continued until on or about July 17, 2007.
Packaged ice is marketed as high-grade ice for consumption and is sold in varying size bags and blocks. Home City Ice is a manufacturer of packaged ice with multiple locations throughout the United States.
Today's sentencing is a result of an ongoing investigation by the Antitrust Division's Cleveland Field Office and FBI offices in Ann Arbor, Mich.; Indianapolis; Toledo, Ohio; and Cincinnati. As a part of the same investigation, Arctic Glacier International Inc., a packaged-ice company headquartered in St. Paul, Minn., and three of its former executives pleaded guilty in October 2009 to allocating customers in the Detroit metropolitan area and southeastern Michigan. On Feb. 11, 2010, Arctic Glacier was sentenced to pay a $9 million criminal fine.
At Arctic Glacier's sentencing hearing, multiple individuals asserted rights under the Crime Victims Rights Act ("CVRA"), 18 U.S.C. § 3771, and spoke out about the harm caused to them by Arctic Glacier's actions. A group of packaged ice purchasers who claimed to be victims of the conspiracy opposed the plea agreement that Arctic Glacier had entered into with the government, seeking to have the agreement rejected because it made no provision for restitution and included a much narrower admission of guilty than the apparently much broader scope of the conspiracy. Two individuals represented by Kotchen & Low sought restitution for harm caused by the conspiracy, including Martin McNulty, who alleges that he was terminated and boycotted for refusing to participate in the conspiracy.
Over the objection of the purchaser victims, the trial court accepted the plea agreement, finding that the purchasers had been accorded their rights under the CVRA. The court also denied restitution to the putative victims, finding that only customers were victims of Arctic Glacier's conspiracy. The purchasers filed a mandamus petition with the Sixth Circuit under the CVRA seeking reversal of the trial court's ruling. Siding with a minority of circuits, the Sixth Circuit applied a stringent standard of review -- "clear abuse of discretion" -- to CVRA mandamus petitions. The Court went on to deny the petition, finding that the lower court had not clearly abused its discretion in finding that the purchasers had sufficiently been accorded their rights under the CVRA, as described here.
Mr. McNulty also petitioned for a writ of mandamus from the Sixth Circuit, which the Sixth Circuit denied under the clear abuse of discretion standard, finding that he was not a foreseeable victim of a customer allocation conspiracy, as described in National Law Journal, CompLaw360, and the Sentencing Law and Policy Blog. Mr. McNulty continues to pursue a RICO case against Arctic Glacier, Home City, and Reddy Ice related to his termination and boycott.
Class action antitrust lawsuits are also pending against the three major packaged ice companies by purchasers of packaged ice.