__________________________________________ 

 

 

 

 

 

 

 

 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES
 

) 

In the Matter of ) 

) 

McWANE, INC., ) DOCKET NO. 9351 

Respondent. ) 

__________________________________________ ) 

ERRATA SHEET 

Complaint Counsel submits this errata sheet to correct the following errors in Complaint 

Counsel’s Post-Trial Findings of Fact and Conclusions of Law, and to provide the enclosed 

corrected copy of CX 2510 (Groeniger deposition), in which the highlighting at pages 102-110 

has been corrected to reflect all of the testimony designated by Complaint Counsel. 

PUBLIC 

01 09 2013 

Page CCPF Correction 

174 1189 In the fifth line of the proposed finding, remove page number “189” from the citation 

to CX 2539. The citation should read: “CX 2539 (McCutcheon, Dep. at 178-179)” 

225 1504 In the ninth and tenth lines of the proposed finding, change “Rybacki” to 

“McCutcheon” so that the text reads “{ 

} (McCutcheon, Tr. 2467-2468, in camera; . . .” 

232 1542 In the second line of the proposed finding, delete the citation to “CX 2484 (Tatman, 

Dep. at 179-180);” 

254 1694 In the last line of the proposed finding, change the page numbers of the citation from 

“1674-1682” to “1695-1702”. The citation should read: “Infra ¶¶ 1695-1702” 
 

 

PUBLIC

Dated: January 9, 2013 Respectfully submitted, 

s/ Linda M. Holleran 

Edward D. Hassi, Esq. 

Linda M. Holleran, Esq. 

J. Alexander Ansaldo, Esq. 

Joseph R. Baker, Esq. 

Thomas H. Brock, Esq. 

Monica M. Castillo, Esq. 

Mika Ikeda, Esq. 

Andrew K. Mann, Esq. 

Federal Trade Commission 

Bureau of Competition 

600 Pennsylvania Ave., N.W. 

Washington, DC 20580 

Telephone: (202) 326-2470 

Facsimile: (202) 326-3496 

Electronic Mail: ehassi@ftc.gov 
PUBLIC

CX 2510 

05/11/2012 Groeniger Deposition 

Corrected Copy 
__________________________________________ 

 

 

 

 

 

 

 

 

PUBLIC

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES
 

) 

In the Matter of ) 

) 

McWANE, INC., ) DOCKET NO. 9351 

Respondent. ) 

__________________________________________) 

COMPLAINT COUNSEL’S DESIGNATED DEPOSITION 

OF 

MICHAEL GROENIGER 

MAY 11, 2012 

CX 2510-001
 

 

 

 

 

 

 

 

PUBLIC

Page 1 Page 3 

1 UNITED STATES OF AMERICA 

2 BEFORE THE FEDERAL TRADE COMMISSION 

3 OFFICE OF ADMINISTRATIVE LAW JUDGES 

4 PUBLIC DOCKET NUMBER 9351 

5 

6 

IN THE MATTER OF 

7 McWANE, INC., a Corporation, 

8

 and 

9 

10 STAR PIPE PRODUCTS, a Limited 

Partnership, 

11 

_________________________________/ 

12 

13 

14 

15

 DEPOSITION OF 

16

 MICHAEL GROENIGER 

17 

18 May 11, 2012 

19 9:15 a.m. 

20 

21

 6111 Bollinger Canyon Road 

22

 San Ramon, California 

23 

24 

25 Jean M. Ferrario, CSR No. 5655 

1 A P P E A R A N C E S
 

2
 

3 FOR McWANE, INC.:
 

4 MAYNARD, COOPER & GALE
 

J. ALAN TRUITT, ESQUIRE
 

5 1901 Sixth Avenue North
 

Birmingham, Alabama 35203
 

6 (205) 254-1000
 

atruitt@maynardcooper.com
 

7
 

8
 

FOR THE FEDERAL TRADE COMMISSION: 

9 

UNITED STATES FEDERAL TRADE COMMISSION 

10 ANDREW K. MANN, ESQUIRE 

601 New Jersey Avenue NW NJ-6205 

11 Washington, D.C. 20001 

(202) 326-2481 

12 amann@ftc.gov 

13 

14 FOR THE DEPONENT: 

15 DUANE MORRIS 

J. MANLY PARKS, ESQUIRE 

16 30 South 17th Street 

Philadelphia, Pennsylvania 19103 

17 (215) 979-1342 

jmparks@duanemorris.com 

18 

19 GREENAN, PEFFER, SALLANDER & LALLY 

JAMES S. GREENAN, ESQUIRE 

20 6111 Bollinger Canyon Road, Suite 500 

San Ramon, California 94583 

21 (925) 866-1000 

jgreenan@gpsllp.com 

22 

23 --o0o-­

24 

25 

1 INDEX OF EXAMINATION 

2 

3 

4 WITNESS: Michael Groeniger 

5 

6 

7 

8 

9 EXAMINATION PAGE 

10

 BY MR. TRUITT 5, 248 

11 BY MR. MANN 100 

12 * * * 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Page 2 Page 4 

1 INDEX TO EXHIBITS 

2 

3 EXHIBITS MARKED 

4 

Exhibit 1 Testimony of Michael Groeniger 

5 Taken December 14, 2010 66 

6 Exhibit 2 Letter dated September 22, 2009

 From Tyler 86 

7 

8 The following exhibits were marked in previous 

depositions but are attached to the transcript for 

9 the convenience of the reader: 

10 Exhibit CX 1690

 Exhibit CX 0006 

11 Exhibit CX 0056

 Exhibit CX 0138 

12

 * * * 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Groeniger, Michael 2012-05-11 Pages 1 - 4 

CX 2510-002
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Page 5 Page 7 

1 SAN RAMON, CALIFORNIA 1 Or their family I should say. 

2 FRIDAY, MAY 11, 2012, 9:15 a.m. 2 Q. I understand you recently sold the 

3 3 business? 

4 MICHAEL GROENIGER, 4 A. That's correct. 

5 having been first duly sworn, was 5 Q. Do you retain any ownership interest or 

6 examined and testified as follows: 6 does your family? 

7 7 A. No. 

8 EXAMINATION BY MR. TRUITT 8 MR. PARKS: Objection, you can answer. 

9 MR. TRUITT: Q. Mr. Groeniger, my name is Alan 9 THE WITNESS: Okay, I am sorry, no. 

10 Truitt, we meet just briefly here a few moments ago, 10 MR. TRUITT: Q. You started with the company in 

11 I represent McWane in this matter and I will be 11 1984? 

12 asking you a few questions this morning. 12 A. No, I started working at the company in 

13 A. Okay. 13 1950 -- probably 1955, '54. Unloading boxcars. 

14 Q. Could you please state your full name? 14 Q. Can you walk me generally through the 

15 A. Michael Holmes Groeniger. 15 various positions that you held? 

16 Q. And what is your address, Mr. Groeniger? 16 A. Well, the dates may vary slightly. 

17 A. You are talking about my home address? 17 Q. Sure. 

18 Q. Yes, sir. 18 A. But I started out working at, after school 

19 A. It's 331 Guadalupe Terrace, that's in 19 when I was in high school. Before I could drive 

20 Fremont, California. 20 even. Working in the warehouse, unloading boxcars 

21 Q. And your business address? 21 for ten cents per hundred pounds. 

22 A. It would be 27750 Industrial Boulevard, 22 And that was my pay and it was good for that 

23 Hayward, California. 23 time, we could get through a boxcar, 80,000 pound 

24 Q. I am sure you have had a chance to talk to 24 boxcar in a day, so it was good money. 

25 your lawyers about what is going to take place 25 Then during high school vacations I worked in 

Page 6 Page 8 

1 today, but just to get us started I am going to try 1 the warehouse, shipping and receiving and those 

2 and ask you a series of understandable questions. 2 types of things. 

3 If I fail and you don't understand what I am 3 When I got out of high school and went to junior 

4 asking you, if you would tell me and I will try and 4 college, I worked part-time while I was going to 

5 ask a better question, okay? 5 junior college. 

6 A. Yes, sir. 6 Then I went into the service in 1960, in the 

7 Q. And we can take breaks whenever you'd like 7 Marine Corps which is kind of a tradition with my 

8 to, let us know. 8 two other brothers. 

9 We may make objections at various times, those 9 When I got out of the Marine Corps I at that 

10 are for the record, you can go ahead and answer the 10 time got engaged and married and then came to the 

11 pending question unless your lawyers tell you not 11 business full-time. 

12 to, okay? 12 Started as the warehouseman, warehouse manager, 

13 I understand that until recently you were the 13 truck driver. Went to inside sales, then inside 

14 owner of Groeniger & Company, or you and your 14 outside sales. 

15 family; is that correct? 15 The dates would be, when I went into sales 

16 A. That's correct. 16 approximately probably in the mid 70s, late 60s, mid 

17 Q. And what business were you involved in, 17 70s. Maybe sales manager, still not an officer. 

18 please, sir? 18 We moved the business from Hayward -- we moved 

19 A. We were in the, the second and third 19 the business from Oakland to Hayward about 1975 to 

20 generations of the water works supply business, 20 its present location. I became a vice-president at 

21 started in 1949 by my father. I took over in 1984. 21 that time. 

22 My children were involved through its final 22 Q. Excuse me, about when was that? 

23 days. I had three children, my wife was the CFO, 23 A. Oh, approximately '75, '76. My wife then 

24 and I had three children and we had other people 24 came, the kids were grown and in high school so my 

25 also part owners of the company and their families. 25 wife came to work, she had an accounting degree, 

Groeniger, Michael 2012-05-11 Pages 5 - 8 

CX 2510-003
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Page 9 Page 11 

1 came to work and worked under my mother who was the 1 A. We had -- well, 2010 we were starting to 

2 financial person of the company at that time. 2 close some down because of the economy and we were 

3 And then as my parents retired, my father at 80 3 closing branches, especially the Southern California 

4 some, 83, 84 years old, retired, and I took over the 4 branches, Temecula and Santa Paula. 

5 company. 5 They were the first to go. We were on a 

6 I became executive vice-president before that, 6 downturn trying to stay ahead of the economy which 

7 that means I was more or less running the company 7 for an operation of our size was very difficult. 

8 before that time, but when he retired then I took 8 Q. Let's talk about that for just a second. 

9 over as an executive vice-president, ran the company 9 Can you explain how the water works business 

10 and then eventually became president. 10 that you were in is tied to the economy? 

11 Then eventually became chairman of the board, 11 MR. PARKS: Objection, you can answer. 

12 all this progressing as my father decided that he no 12 THE WITNESS: The economy supports home starts, 

13 longer wanted to travel. He moved to Arizona and he 13 construction and all of those are important factors 

14 didn't want to travel. 14 in our abilities to sell product. 

15 And during that period of time we started -- I 15 When there is no money, the lenders don't lend 

16 should say after 1984, after he retired we started 16 for construction, then we don't sell anything. 

17 expanding with multiple branches throughout northern 17 MR. TRUITT: Q. Again, I think I understand 

18 and central California. Developing a water works 18 this, I want to make sure, you basically were a 

19 wholesale application based on a family atmosphere. 19 distribution supply company, correct? 

20 And we were able to attract good people, good 20 A. That's correct. 

21 water works people from other parts of the country 21 Q. You would buy various water works materials 

22 to open up facilities and be successful almost 22 from manufacturers and suppliers, correct? 

23 immediately. 23 A. Correct. 

24 So we grew from that point. So we were at the 24 Q. And then you would sell those to your 

25 peak of our capability probably in 2005, 2006 with 25 customers, correct? 

Page 10 Page 12 

1 16, 17 branches. 1 A. That's correct. 

2 Q. And were all of those branches in northern 2 Q. Who were your customers in general terms? 

3 and central California? 3 A. Political subdivisions, water districts, 

4 A. Some in Southern California. 4 both private and public. Cities that have their own 

5 Q. Throughout California? 5 water systems, sewer systems. 

6 A. Yes. I didn't give you dates, specific 6 Pipeline contractors, plumbing contractors, fire 

7 dates when I became this or that. 7 protection contractors. And some paving and grading 

8 I think that's in records of previous things and 8 contractors. 

9 I would be, I probably remembered it better then 9 Q. Can you tell me in general terms again by 

10 than I do now. 10 way of background what your annual revenues were 

11 Q. Okay. And you mentioned records of 11 from the '07 to 2010 time frame? 

12 previous things, you have testified in this matter 12 MR. PARKS: Objection, you can answer. 

13 before? 13 THE WITNESS: Well, our highest I think were in 

14 A. Yes, sir. 14 excess of 200 million, the exact number would have 

15 Q. And if those dates are in those records, 15 to be, I'd have to go through, but in excess of 200, 

16 like you said you probably remembered it better then 16 maybe 210, 215 million at the high point. 

17 than now. 17 MR. TRUITT: Q. When would that have been? 

18 A. Yes, sir. 18 A. 2006. 

19 Q. I can rely on those. 19 Q. Okay. 

20 A. That's fine. 20 A. Then it started dropping from there. 

21 Q. I am primarily, Mr. Groeniger, interested 21 Q. And did it decline every year thereafter? 

22 in the '07 to 2010 time frame. 22 A. Yes. 

23 A. Okay. 23 Q. Do you recall what your revenues were in 

24 Q. And how many branches did you have in that 24 2010? 

25 time frame? 25 A. Probably less than a hundred million. 

Groeniger, Michael 2012-05-11 Pages 9 - 12 

CX 2510-004
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Page 13 Page 15 

1 Q. What percentage of your revenue was derived 1 the question so you know what he is asking and the 

2 from ductal iron fittings? 2 court reporter can transcribe the proceedings. 

3 MR. PARKS: Objection, you can answer. 3 MR. TRUITT: It's hard to remember. 

4 THE WITNESS: Ductal iron fittings as part of a 4 Q. Mr. Groeniger, in the 2008 to 2010 time 

5 package or part of our underground package was 5 frame, what was the break-out between public works 

6 probably, probably 20 percent, 25 percent. 6 work and subdivision work? 

7 MR. TRUITT: Q. When you say part of an 7 A. Public works was rising, subdivisions were 

8 underground package, what do you mean? 8 lowering. 

9 A. Well, you have to look at the industry as 9 Q. And I think you told me the percentages 

10 different segments of the industry. 10 flipped; is that correct? 

11 A municipality may just buy fittings on a 11 A. That's correct. 

12 contract. But a pipeline contractor supplies the 12 Q. So at some point in there you were doing 80 

13 fittings, the pipe, the valves on one bid, one 13 percent of your work for public works? 

14 purchase order. And that is part of your package. 14 A. Say that again, please. 

15 An important part of your package. 15 Q. Sure. At some point during that 2008 to 

16 Pipe may be 50 percent, valves may be 25 percent 16 2010 time frame was 80 percent of your business made 

17 and fittings may be 25 percent. But all of them are 17 up of public works projects? 

18 integral because they are the main line. 18 A. No. 

19 What I mean by the main line is that it 19 Q. Help me understand, what is wrong about 

20 constitutes the primary backbone of a pipeline, the 20 that? 

21 stuff that goes in, that has to be available, goes 21 A. 2008 to 2010 one was rising, the other was 

22 in together, that keeps the contractor or the 22 lowering, there was a time when you were possibly 

23 installing group of people constantly working to 23 doing fifty-fifty, 60, 40. 

24 maintain their schedule. 24 So one was rising, one was lowering during that 

25 So it's not the periphery stuff that they might 25 period of time, I can't tell you exactly 2009 what 

Page 14 Page 16 

1 not need at the same time they are doing the 1 it was, it was -- but the trend was going toward 

2 backbone. Or it can come on after the backbone gets 2 public works. 

3 done and be put in on a different schedule. 3 Q. Okay. And just so I am clear, I understand 

4 The fittings, the pipe, the valves are all 4 what a subdivision project is. Could you explain to 

5 primary, important parts of the backbone of the 5 me what a public works project is? 

6 system. 6 A. Well, a public works project is put out by 

7 Q. Okay. 7 the political subdivisions or cities under bonds or 

8 A. And at that time we were probably 80 8 government subsidies or whatever, public improvement 

9 percent of our business was done through subdivision 9 projects that come out with a set of standard 

10 pipeline contractors. 10 specifications, probably takes months of 

11 Q. When you say at that time, what time are 11 preparation. 

12 you talking about? 12 It's usually a more difficult type of work, 

13 A. 2006, 2007, 2008, it started to drop off 13 larger projects, months to supply, months to get the 

14 because subdivisions were not in favor, the economy 14 material. 

15 wouldn't allow for it so the public works then 15 Whereas a subdivision is what they call blow and 

16 became the primary mode, and we were 80, 20. 16 go, that means you may have two or three days from 

17 Let's say at 2006 we were 80, 20 subdivision 17 the time you get the purchase order to supply it. 

18 versus public works. Today it's reversed. 18 So you are very under the gun for service, your 

19 Q. So it would be 80 percent public works 19 inventories are affected more, your ability to 

20 projects in the 2008 to 2010 time frame? 20 service the customer is affected more, your trucks 

21 A. Yeah. 21 are utilized more. 

22 MR. PARKS: Objection. 22 Whereas public works is more a lot of direct 

23 THE WITNESS: Sorry -­ 23 sales, a lot of time involved just in getting the 

24 MR. TRUITT: Q. I'm asking you, what -­ 24 paperwork done and that type of a thing. 

25 MR. PARKS: It's important you let him finish 25 Q. How much time might be involved in a public 

Groeniger, Michael 2012-05-11 Pages 13 - 16 

CX 2510-005
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Page 17 Page 19 

1 works project between the bid and you getting the 1 Let's just walk through sort of two generic 

2 job and then shipping the job? 2 examples. Let's start with a subdivision example if 

3 MR. PARKS: Objection, you can answer. 3 we can. 

4 THE WITNESS: Time frame would be significant as 4 As I understand it a contractor will get a job 

5 far as office support, paperwork, meeting the 5 would be the first step, is that fair? 

6 specifications, understanding the specifications, 6 A. No, actually there is a multitude of 

7 talking to the consulting engineers when they have 7 contractors, let's say you are talking about a 

8 made mistakes that it doesn't fit, and that was our 8 territory, there is a multitude contractors that do 

9 responsibility to go and talk to an engineer and say 9 work in that territory, some bigger than others. 

10 these two pieces that you have designed don't fit. 10 When a job comes out they all call us for 

11 And before we can supply it we have to know how 11 material quotations. But at that point you don't 

12 you are going to handle that. 12 know who is going to get the job. And you support 

13 In almost every case, every public works project 13 material quotations to a multitude of different 

14 there are serious design, not flaws but restrictions 14 customers. 

15 that require somebody, some knowledgeable person in 15 And you could be quoting on the neighborhood of 

16 materials to be able to go in there and say how are 16 15 to 20 projects throughout your territory with 15 

17 you going to get around this point that you don't 17 to 20 different types of specifications that you had 

18 show it accurately. 18 to adhere to in quoting a price. 

19 So there is all that work that has to be done, 19 Q. So what is the next step in that project? 

20 plus the submittal process, because the engineers 20 A. Then you file it. And then you don't hear 

21 aren't necessarily knowledgeable on what materials 21 anything until a customer calls you and says I got 

22 have been used in that region before. 22 that job and then you go through your file and say 

23 And the political push and shove and so forth 23 okay, here is the quotation for that, verify that 

24 that is done within a region as what products they 24 the manufacturer's pricing is still accurate. 

25 have historically used. 25 And when the contractor tells you he has the 

Page 18 Page 20 

1 So the paperwork is much more demanding, your 1 job, different ones, different contractors handle it 

2 accuracy is much more demanding and in most cases 2 differently. 

3 you are dealing with an engineering firm that is 3 Some call you and want it the next day, others 

4 coming in to do this particular job and not 4 will give you a week, the organized ones might give 

5 necessarily in the region on an everyday basis. 5 you two weeks to get it together. 

6 Dealing with a water district or something, you 6 So everything focuses on your ability to service 

7 know the people, we have dealt with them for years, 7 that unique specification and how it differs from 

8 those types of things, but with an engineering 8 the other specifications which you have material 

9 project you are probably talking with people that 9 for. 

10 don't know you or don't know what the service is or 10 If the fittings have to be coated, if the 

11 that type of thing, so you are dealing strictly with 11 fittings have to be cement lined, if the fittings 

12 paperwork, sending submittals, getting questions and 12 are flanged, push-on or mechanical joint, those 

13 answers back and forth. 13 variables. Or if the manufacturer is even approved 

14 When the job finally goes, then all that 14 in that particular location. 

15 paperwork is done and you may or may not impact your 15 So you have those variables that you have to, 

16 warehouse or your trucks or any of the inventory 16 behind our closed doors we are saying do we have the 

17 that you currently have. 17 material to get this out to the guy in two days so 

18 It might all be coming from afar and going 18 the backbone, the pipeline can be put in according 

19 direct to the job site. 19 to his time, and if it can't it could be very 

20 Q. Let me stop you there if I may. I am 20 expensive for us. 

21 interested in getting a sense of the timelines 21 Because the contractor, if he has to stop what 

22 involved in the subdivision work versus the public 22 he is doing and wait for something of the backbone 

23 works project. 23 when he has got crews and tractors and cranes and 

24 I think I understood you to tell me that one 24 all the other stuff that they have to put on the 

25 might go a lot faster than the other. 25 project which they account for by the minute, it's 

Groeniger, Michael 2012-05-11 Pages 17 - 20 

CX 2510-006
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Page 21 Page 23 

1 easy for them to say okay, you owe me $4,853 because 1 can give. 

2 you held me up for four hours and 15 minutes, and 2 And the inventory that we would carry, let's say 

3 it's not unusual. 3 in Fresno, would be pretty much dominated to the 

4 So you have to have that material, you have to 4 Fresno specification and market. 

5 be accurate, you have to be quick. 5 It would not be necessarily the same material 

6 Public works you are talking about days, 6 that we would stock in Hayward for the market here. 

7 subdivision, months public works. 7 Because there are so many variables. 

8 Q. Everything just happens slower? 8 The one thing that you have to understand is 

9 A. Yes. 9 that the water works business has many variables, 

10 Q. Is there a typical time on a subdivision 10 unlike the plumbing business, every city is 

11 and a typical time on public works or does it just 11 different than every other city, every water 

12 depend on the job? 12 district is different from every other water 

13 A. It depends on the job. 13 district. 

14 Q. Do the size of the fittings that you would 14 Some of their specifications are built around 

15 supply, is there any difference between a 15 the people who service them, some of them are set 

16 subdivision project and a public works project? 16 along their own personal ones, they wanted to have 

17 A. I would say yes. Traditionally public 17 one brand so they will specify one brand, even 

18 works are larger diameter. 18 though there are a multitude of brands that will 

19 Q. When you say larger diameter, what sizes 19 comply, they only want one. 

20 are we talking about? 20 And if they don't get the right one and they 

21 A. Well, probably up through 36 inch, 24 inch, 21 bury it underground for some reason and they find 

22 16 inch and larger. Maybe down to 12 inch. 22 it, we have to get it out and it's very, very 

23 In your subdivisions, it may go up to 12 inch or 23 costly. 

24 16 inch, but very few have them larger than that. 24 So we have to be able to handle multiple 

25 Q. We have talked about the time frame, we 25 specifications and have the technical people to 

Page 22 Page 24 

1 have talked about the distinction in size, are there 1 understand what is going to be supplied. 

2 any other distinctions that readily come to mind 2 The contractors, our customers realize that we 

3 between a public works project and a subdivision 3 know that, they don't know it, in most cases they 

4 project? 4 rely on us to make sure that the material that goes 

5 MR. PARKS: Objection, you can answer. 5 out on to a project meets all the applicable 

6 THE WITNESS: Specifications. If it's a unique 6 specifications, and they can install it, bury it and 

7 specification that a particular engineer specifies 7 cover it up after inspection or during inspection or 

8 over what is currently being approved or used, then 8 whatever, and be assured they are not going to have 

9 we have to adjust to that requirement, either by 9 to come back and take it out of the ground. 

10 manufacturer and/or by type of fitting or by 10 Q. Generally what geographical area would one 

11 exterior coatings or interior coatings or the 11 of your branches service? 

12 linings of the fittings, differentiate what the 12 A. Well, you can think concentric circles 

13 standard used. 13 around a branch and say 50 miles, 75 miles, a 

14 And I don't know why they designed it that way 14 hundred miles and relate that to time back and forth 

15 but they are the engineers, I am not. 15 to get a piece of equipment out there and service 

16 MR. TRUITT: Q. You mentioned earlier that you 16 it. 

17 began I think expanding and when your business was 17 And we were probably in the neighborhood of two 

18 at its most successful you had 16 or 17 different 18 hours, we separated our branches by about two hours' 

19 locations throughout California. What benefit would 19 driving time. So that means that we were an hour 

20 having multiple branches provide? 20 away from our projects in most cases. At the far 

21 MR. PARKS: Objection, you can answer. 21 reach. 

22 THE WITNESS: Well, it goes back to what we were 22 Q. And would your answer be the same for 

23 doing then which was 80 percent subdivision. 80 23 public works projects as for subdivision work, would 

24 percent subdivision requires service and the closer 24 you want to be as close to those as well? 

25 you are to the project, the better service that you 25 A. Not necessarily. 

Groeniger, Michael 2012-05-11 Pages 21 - 24 

CX 2510-007
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1 Q. Explain that to me if you will. 1 A. But I am sure that they had some sort of 

2 A. Public works projects, they are much longer 2 capability, they had foundries that made fittings 

3 to come to fruition, large quantity, large fittings 3 but I don't know what exactly fittings they made to 

4 that are not normally a stocking item would be 4 be honest with you. 

5 brought in special for special projects. 5 Q. Were all the suppliers at that time located 

6 There was not a time frame issue in most cases 6 in the United States? 

7 that would enable us from calling a manufacturer and 7 A. At that time there was one that was out of 

8 having them ship that product directly in for a job. 8 Mexico. 

9 It would not impact our inventory, it would not 9 Q. Who was that? 

10 impact our trucks to come directly. 10 A. I can't think of the name but they were 

11 And the contracts, you could supply these 11 bringing, they were made in Mexico. I can't 

12 contracts from hundreds of miles away. And there 12 remember the name to be honest with you, sorry. 

13 was no need to have the local inventory to support 13 Q. That's okay. 

14 it because it would all be handled from afar. 14 A. But that was pretty long ago, goes back 30 

15 Q. Let's shift topics a little bit and talk 15 years I think. 

16 about who the suppliers of fittings were and are. 16 Q. And the company that was in Mexico, were 

17 When you I guess first started in the business, 17 their fittings accepted by the cities and water 

18 in I think you said the 50s and 60s, who were the 18 districts at the time? 

19 manufacturers or suppliers of fittings to your 19 A. Not really. 

20 company? 20 Q. How much of the market did they have, if 

21 A. Well, there is probably, there was probably 21 you have any judgment? 

22 just two major suppliers of underground pressure 22 A. Less than, probably less than two percent. 

23 fittings which is Trinity Valley Iron and Steel out 23 Q. So 98 percent of the market again in the 

24 of Texas and Tyler Pipe out of Tyler, Texas. And 24 50s and 60s was made up of domestic manufacturers? 

25 there was Grinnell Company that made fittings on a 25 A. That's correct. 

Page 26 Page 28 

1 smaller level. 1 Q. How did that change over time? 

2 There were a couple of foundries that made 2 A. Well, I am trying to think of times and 

3 specialized fittings but not a complete line. 3 dates and when, and under what auspices that foreign 

4 U.S. Pipe and Foundry made fittings, made a 4 manufactured fitting came into it. 

5 relatively complete line. And there were other 5 And who introduced it, whether it was SIGMA or 

6 ductal manufacturers that made partials and fittings 6 Star or it came through a fire protection group of 

7 and so forth. 7 people that were importing foreign cast iron screwed 

8 I don't know what time frame because they were 8 fittings. 

9 predominantly East Coast suppliers and they didn't 9 And they could see where they could be 

10 come out west. 10 competitive with domestic cast iron screwed 

11 But Griffin made fittings and I think Atlantic 11 fittings. All together different animal, small 

12 States made fittings and that was part of a McWane, 12 diameter for fire protection systems. 

13 I think, Company. 13 But there became an open window that they could 

14 But they weren't out of the West Coast so I 14 make these things, they were making these things for 

15 don't know exactly when they started and stopped and 15 other people anyway, they could cast these things, 

16 what their level was of completeness as to a fitting 16 come out of India, China was not a factor then, but 

17 inventory. 17 out of Korea and out of South America, Brazil. 

18 Q. American Cast Iron? 18 Q. And again what time frame are we talking 

19 A. American made fittings, predominantly big 19 about when you first started seeing this? 

20 fittings for their large diameter pipe. 20 A. Probably late 60s, early 70s. 

21 Q. Even back historically? 21 Q. And did that progress over time where 

22 A. Well, yeah, I do believe so. I am not sure 22 foreign manufactured fittings began to capture more 

23 because here again they were not West Coast 23 of the market? 

24 oriented. 24 A. Well, one of the two major domestic 

25 Q. Okay. 25 manufacturers, Trinity Valley Iron and Steel went 

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1 out of business or was sold or whatever and they 1 was soil pipe which is a plumbing item, the biggest 

2 were out of the market. 2 plumbing supply house on the West Coast was P.E. 

3 Q. I am sorry, when did that happen? 3 O'Hair Company and if P.E. O'Hair said jump, I 

4 A. I can't tell you the date. 4 probably would jump, they are big money and I could 

5 Q. Roughly, decade? 5 understand that and I accepted that. But I 

6 A. Well, probably in the late 60s, early 70s. 6 remembered it. And that strength is strength and 

7 Q. Okay. And did importers begin to fill the 7 your ability to service is strength. 

8 void left by Trinity Valley? 8 And so we went to Trinity Valley and we were 

9 A. I think that was probably one of the 9 Trinity Valley for five or six years, one of their 

10 reasons. Back in those days you were a Trinity 10 bigger players in our little world. 

11 Valley supplier or you were a Tyler supplier or you 11 Then they left and we didn't have anybody that 

12 were a Grinnell supplier, Grinnell was a big 12 we could trust that would give us a competitive 

13 national supply house, made their own fittings 13 format against the current hierarchy of 

14 themselves with the Grinnell name. 14 organizations that used Tyler, so we certainly moved 

15 They made mechanical joint and they made flanged 15 toward SIGMA who was an up and coming group that 

16 and they made at that time caulk fittings out of 16 would, we had to do specification work which we did, 

17 cast iron. And they were one of the major players 17 but they did too. 

18 throughout the country. 18 Q. Let me stop you there. About what point 

19 But if you weren't a Grinnell company, which we 19 did you begin developing a relationship with SIGMA? 

20 were not, and if you weren't a Tyler distributor you 20 A. I think after the Trinity Valley, whatever 

21 were a Trinity Valley distributor. And you competed 21 that date was, I can't tell you, whatever that date 

22 in that realm. 22 was, I can tell you it's in the decade of probably 

23 And it wasn't until after Trinity Valley was 23 late 70s, early 80s. 

24 gone and that, and you didn't happen to be in the 24 Q. Okay. 

25 Tyler format, you felt a need and I am sure that was 25 A. But I could be wrong, I could be ten years 

Page 30 Page 32 

1 part of that throughout the country. 1 off on that. 

2 And then when Grinnell decided to get out of it 2 Q. Okay. And you mentioned specifications 

3 which was probably late 70s, early 80s, then there 3 just now, you said, I think you said change 

4 was only basically one full line on the West Coast, 4 specifications. What does that mean? 

5 as far as I am concerned. 5 A. A specification may call for a particular 

6 We had others that would partly do things on the 6 name. 

7 East Coast but not on the West Coast. To have a 7 Q. So, for example, a city would say we only 

8 mechanical joint or a flange fitting at that time, 8 want Trinity Valley or we only want Tyler? 

9 it was Tyler. 9 A. Well, you have to submit, if they see 

10 Q. And did your company have a relationship 10 something new they want to make sure it meets the 

11 with Tyler at that time? Were you a Trinity Valley 11 AWWA standard and the standards that they hold dear 

12 company or Tyler -­ 12 to them. 

13 A. We were Trinity Valley. Because of 13 And that it matches up with the piping that they 

14 politics that were in place at the time with our 14 are accustomed to using, it has the same thickness, 

15 competitor who was big, who is the big guy? By the 15 and all the things that are pertinent, the same 

16 name of P.E. O'Hair Company, good company, well run, 16 cement lining, the same applications and this takes 

17 profitable, well run company, highly respected, I 17 you to sit down or have them put a piece in the 

18 respected them even though they were a competitor, I 18 ground and see how it works with their crews. 

19 copied a lot of things that they did as far as 19 It's a long process in some cases to get 

20 equipment and handling things, but they were the big 20 something approved that is unusual. 

21 guy. 21 Q. Would some cities specify domestic versus 

22 And when we started to become a thorn in their 22 foreign, for example, as opposed to a particular 

23 side, they said get rid of them, they will go 23 manufacturer? 

24 somewhere else and they did, so they came and said 24 MR. PARKS: Objection, can I get a clarification 

25 we no longer can sell you, part of Tyler's format 25 of time frame? 

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1 MR. TRUITT: Sure. Thank you. 1 started in the business I think you told me it was 

2 Q. I am talking about even when you first 2 something like 98 percent domestic manufacturers 

3 began working with SIGMA, whenever that is. 3 supplied the fittings, correct? 

4 A. No. 4 A. They supplied the fittings, yes. 

5 Q. Okay. You were not, when Groeniger first 5 Q. And by the time that Groeniger & Company 

6 began working with SIGMA, the specifications 6 was at its peak that had changed, correct? 

7 identified specific manufacturers? 7 A. It had changed. 

8 A. That's correct. 8 Q. And by that time 75 percent of the fittings 

9 Q. Okay. And they didn't specify simply 9 in the market were non-domestic, made outside the 

10 domestic or foreign? 10 U.S., correct? 

11 A. No, sir. 11 A. That is my interpretation of my area. And 

12 Q. Did you, was your company involved in 12 some of those were Tyler also. It wasn't as if 

13 assisting SIGMA in those early years in meeting 13 Tyler was not making them too at that time. 

14 specifications? 14 Q. Making what? 

15 A. Yes. 15 A. Foreign fittings. 

16 Q. And how would you go about doing that? 16 Q. When did Tyler begin making foreign 

17 A. We have sales people and engineering type 17 fittings? 

18 sales people in certain cases that have historic 18 A. Probably early -- late 1990s, middle 90s. 

19 relationships in the area that can go in to people 19 I think the specification of the C-153 specification 

20 and explain to them the benefits of the fitting over 20 for the AWWA, when that came out, that allowed for a 

21 what currently is available. 21 change in philosophy for a district because it was a 

22 And the move to a compact fitting versus a long 22 printed standard by the holy grail of the water 

23 fitting. I am throwing that at you, it's a new 23 works industry which the American Water Works 

24 word. 24 Association. 

25 Q. Yes, sir. 25 And one of their sole duties is to set up 

Page 34 Page 36 

1 A. The AWWA standard is the C-110, there is 1 standards and specifications for manufacturing 

2 two standards, they come out with the C-110 which is 2 products to work within water districts. 

3 the old heavy pattern, weighs three times as much 3 And they approved a new standard allowing for a 

4 and they have gone to a compact type fitting, C-153 4 thin wall ductal lined fitting, both push on or 

5 which is a ductal iron. 5 mechanical joint, to correspond with the new 

6 When the date they went to that, I can't tell 6 thicknesses of ductal iron pipe which are 

7 you, but that probably was mid to late 80s. 7 considerably thinner in thickness than cast iron. 

8 So they went to a real lightweight fitting which 8 Easier to handle, easier to install. 

9 was probably, on an eight-inch fitting which is like 9 And once that specification came out it was just 

10 this, it's probably a hundred pounds lighter, 10 a matter of time I believe until you wouldn't see 

11 different materials, ductal versus cast iron. 11 cast iron or you wouldn't see the heavy fittings at 

12 Ductal is stronger, can be thinner and get the 12 all. 

13 same pressure rating, that was done then. That 13 Everybody was going to a more compact scenario 

14 changed things. 14 of which, it was kind of in use before then by the 

15 Q. By 2005 which I think you told me was sort 15 foreign people, and that kind of fell into their 

16 of the peak of your business, what was the mix of 16 capability almost easier than it was any established 

17 domestic versus foreign fittings in the marketplace? 17 manufacturer. 

18 A. When, 2005? 18 That's from my point of view. That might not be 

19 Q. Roughly. 19 accurate in other parts of the country, but that is 

20 MR. PARKS: While you are thinking about that 20 my point of view. 

21 let me make an objection, you can answer. 21 Q. Comparing a foreign fitting to a domestic 

22 THE WITNESS: It's hard to say accurately but I 22 fitting that met the same standard, the C-153 you 

23 think it's probably two-thirds to three-quarter 23 are telling me about, is there any difference in the 

24 would allow foreign. 24 function of those two items? 

25 MR. TRUITT: Q. My sense was when you first 25 A. No. 

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1 Q. They are identical other than where they 1 But it's so unique, they make jewelry out of it, 

2 are made; is that correct? 2 the lost foam method, and now all the car parts that 

3 MR. MANN: Objection, leading. 3 are coming out of Korea now are done with the lost 

4 MR. PARKS: I am going to object as well, 4 foam method and the Korean business is booming. 

5 different reason. 5 Thus it became too expensive to make fittings, 

6 MR. TRUITT: Q. You can answer. 6 underground fittings under this process. And so 

7 A. I can answer? 7 they got out of the market. 

8 Q. Yes, sir. 8 Q. Is the cope and drag process less expensive 

9 A. Well, quality of manufacturer. 9 than the lost foam process? 

10 Q. Tell me about that, please. 10 A. I don't know that it's less expensive but 

11 A. When SIGMA, speaking of one manufacturer 11 that is the way, when your foundry is set up for 

12 now, who was our preferred manufacturer at the time, 12 that, that's old style but your foundry is all set 

13 first introduced their fitting which was made in 13 up for that, so it's hard to go in and say we are 

14 Korea, it was investment cast. 14 going to change everything. 

15 Now, what does that mean? That means it had, the 15 Lost foam has its drawbacks in the fact that the 

16 tolerances were right on. When you cast a fitting 16 gas that comes out of the burning urethane or 

17 it changes, the tolerances change between hot and 17 whatever that original casting was is toxic. 

18 cold, when you are casting it you have to allow for 18 So that, in the United States that throws 

19 cooling and shrinkage and all those types of things, 19 another unique problem for a foundry, they can't be, 

20 so it might go plus six-thousandths or minus 20 whereas they might get away with it in Korea, they 

21 six-thousandths over what you want which is still 21 couldn't get away with it here. 

22 within tolerance, and there are times when the pipe 22 So they had to reorganize how they were doing 

23 is high on tolerance and the fitting is low and the 23 some of their casting here to even get involved in 

24 fittings won't go together, that's rare but it 24 lost foam. 

25 happens. 25 And they have done that, most manufacturers in 

Page 38 Page 40 

1 But with SIGMA, they investment cast and that 1 valving now cast a certain part of their product out 

2 was due to the fact that in Korea during those 2 of the lost foam method because it's cleaner, 

3 periods had great manufacturing capability but no 3 easier, and as long as they have the environmental 

4 industry, the auto industry hadn't taken off and 4 resources to siphon off any odors or harmful product 

5 investment cast fittings products are needed in the 5 byproduct, they are fine. 

6 car business, manifolds, things like engine blocks, 6 Q. Let's back up just a second. I think I 

7 things like that. 7 took us down this road when I asked you the question 

8 They have to be very precise in the types of 8 about when you first started forming a relationship 

9 patterns that are used, types of production that is 9 with SIGMA in the early 1980. What was the market 

10 used. 10 mix. 

11 And that was currently unavailable in the United 11 Did SIGMA continue to make their fittings in 

12 States, but in Korea it not only was available, they 12 Korea? 

13 will make an underground fitting out of it. So the 13 A. For ten years. 

14 quality was extremely high. 14 Q. From the early 1980s until the early 1990s, 

15 Never had a failure, never had a problem with 15 is that accurate? 

16 one being oversized or undersized, never had sand 16 A. Maybe seven years. Until Dewanza 

17 holes, never had those types of things that you 17 (phonetic) and Hyundai and those other car companies 

18 would get with the American production format. 18 started gaining international capability. 

19 They were all cast by the lost foam method and 19 So when that happened then the manufacturing 

20 they make a pattern out of foam and put it in sand 20 became too expensive to make fittings under that 

21 and when the iron is poured in that the foam melts 21 process. 

22 away and the molten metal fits into that exact 22 Q. Let's fast forward to the 2007, 2010 time 

23 thing, there is no two parts going together and 23 frame that I am talking to you about. 

24 everything else, a different philosophy all 24 A. Okay. 

25 together. 25 Q. Is there a difference in quality in your 

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1 judgment in foreign and domestic fittings during 1 A. With SIGMA. 

2 that time frame? 2 Q. Okay. 

3 A. No. 3 A. They designed their capability around our 

4 Q. They are of equal quality? 4 needs. And normally manufacturers don't take that 

5 A. Yes. 5 much time to look at an individual customer and say 

6 Q. They function the same? 6 we are going to tailor our service to your needs, 

7 A. Yes. 7 and it was refreshing and it was supportive of us 

8 Q. If I ground off "Made in the U.S." and 8 and it enabled us to grow and gain market share. 

9 ground off "Made in Wherever It's Made" and painted 9 Q. In the 2007, 2010 time frame which 

10 them the same, could you tell them apart? 10 manufacturers of fittings was your company doing 

11 A. There are little things that you could see, 11 business with? 

12 the difference in the way that they have locking, 12 A. We were doing business with all three, 

13 their locking ends and things like that, I could 13 Star, Tyler, all four. So with U.S. Pipe and 

14 tell the difference. 14 Foundry fittings, that was primarily our domestic 

15 Probably a contractor in the field probably 15 manufacturer. 

16 wouldn't notice a difference. 16 Q. Who was your predominant domestic supplier 

17 Q. So during the 2007, 2010 time frame a 17 during that time frame? 

18 foreign fitting and a domestically manufactured 18 MR. PARKS: Just to clarify, we are talking 

19 fitting are essentially the same, correct? 19 about the 2006 to 2010? 

20 A. Yes. 20 MR. TRUITT: Q. 2007 to 2010. 

21 Q. How did they compare in cost? 21 A. Tyler. 

22 A. Variable. 22 Q. And I just missed your answer, 

23 Q. It would be incorrect to make a general 23 Mr. Groeniger. What was U.S. Pipe doing during that 

24 statement that foreign fittings were cheaper than 24 time frame? 

25 domestically manufactured fittings? 25 A. U.S. Pipe went out of business about that 

Page 42 Page 44 

1 A. It would be easier to say foreign fittings 1 time, they were a domestic supplier and they were 

2 must be cheaper because everybody kind of is going 2 working very closely with us on the domestic side. 

3 to use a foreign fitting rather domestic fitting, 3 And they made a very complete line and they were 

4 probably they are less expensive. They are 4 manufactured in Birmingham I believe. But we sold 

5 certainly marketed by Tyler as being less expensive. 5 their pipe and their fitting too together. 

6 Anybody that made both marketed them separately, 6 But they went out of business, I can't remember 

7 and the domestic was held at a higher format and so 7 the time they went out of business because we had 

8 forth. 8 several long term contracts with municipalities that 

9 Whether it was or not, I am not into that area 9 supplied their fitting. 

10 of knowing how much iron costs, shipping costs, 10 So it was a, we had to move very quickly to get 

11 containerization costs that come over from China or 11 other fittings approved where we were using the U.S. 

12 from India or from Brazil, that varies. 12 Pipe fitting. 

13 Q. Well, let's go back to I guess the early 13 Q. So I think in the 2007 to 2010 time frame 

14 80s when you were developing a relationship with 14 you were using I think you said Star, Tyler, SIGMA 

15 SIGMA. 15 and U.S. Pipe, and whenever they went out of 

16 Were you also buying domestically manufactured 16 business that's when you stopped using them? 

17 fittings at the same time? When I say you, I mean 17 A. That's correct. 

18 your company. 18 Q. I recall from looking at your prior 

19 A. I presume we were. 19 testimony that you mentioned a company called NAPAC? 

20 Q. Okay. 20 A. That wasn't until quite a bit later. They 

21 A. But we had developed a capability, a we 21 came into the area, a foreign manufacturer -­

22 help you, you help us scenario with the manufacture 22 Q. Was that after 2010? 

23 which we did not have with -­ 23 A. Well, they probably were involved in the 

24 Q. Let me stop you, when you say the 24 business prior to that. 

25 manufacturer, are you talking about with SIGMA? 25 Q. Okay. 

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1 A. But they were not a player for us. They 1 answer that. 

2 may have been a player for somebody else to utilize, 2 Q. Okay. 

3 I am sure they have very, very good pricing but they 3 A. I don't know. We have been sold. The due 

4 are not, I don't know that they are in specification 4 diligence for the past year and a half, the movement 

5 by name, you would have to almost introduce them 5 of files, the transportation of people moving out, 

6 every where and put our reputation behind their 6 closing branches, moving file cabinets, I presume 

7 quality because they have no marketing capability 7 they are somewhere but I could not in a short 

8 themselves I don't think. 8 reasonable amount of time find them myself. 

9 Q. Okay. And again focusing on that 2007, 9 Q. Just on that topic, we would obviously ask 

10 2010 time frame, you were doingbusiness with Star, 10 that any of those records that exist be preserved, 

11 Tyler, SIGMA and U.S. Pipe as long as they were 11 both electronic and hard copy. 

12 around, correct? 12 MR. PARKS: Preservation order has been issued 

13 A. That's correct. 13 so the question is not so much as whether they are 

14 Q. Can you break it down for me percentage 14 going to be preserved as to who owns them, if they 

15 wise, how your fittings business was allocated 15 are not under our control any more, they are not 

16 between those four suppliers? 16 under our control any more. 

17 MR. PARKS: Objection, you can answer. 17 MR. TRUITT: I am at a good breaking point, do 

18 THE WITNESS: Well, I know that probably SIGMA 18 you want to keep plowing ahead or would you like a 

19 was the largest. Tyler was second, Star was third. 19 short break? 

20 MR. TRUITT: Q. Do you have any more detail 20 (Brief recess taken.) 

21 other than that? 21 MR. TRUITT: Q. Mr. Groeniger, when we took a 

22 A. Percentages? 22 short break we had just talked about the fact that 

23 Q. Yes, sir. 70, 80 percent of your business 23 U.S. Pipe had ceased manufacturing fittings. 

24 would be with SIGMA? 24 You told me earlier about Grinnell. Are they 

25 MR. PARKS: Objection, you can answer. 25 still in the market? 

Page 46 Page 48 

1 THE WITNESS: As best as I can put that in 1 A. No, sir. 

2 without having the books the look at, I would say 2 Q. When did they exit the market? 

3 that SIGMA was probably two-thirds and then Tyler 3 A. Early 60s. 

4 was 50 percent ahead of Star. 4 Q. How about Griffin? 

5 MR. TRUITT: Q. I wasn't a math major so -­ 5 A. Late 80s. 

6 A. Neither was I. But percentage wise that is 6 Q. I asked you a poor question. When did 

7 what I would say was going on at the time. 7 Griffin leave the fittings market? 

8 Q. And you raise a good point, you have books 8 A. Late 80s. 

9 and records, correct, that would reflect exactly how 9 Q. We also talked about when you began doing 

10 much you bought from each? 10 business with SIGMA, you assisted them in being 

11 A. Yes. 11 included in various specifications. How difficult 

12 MR. PARKS: Objection, when you say "you," do 12 was that? 

13 you mean Groeniger & Company which you established 13 MR. MANN: Objection, leading. 

14 is no longer in his control? 14 MR. PARKS: I'll join that objection. 

15 MR. TRUITT: Let me ask the witness. 15 THE WITNESS: Varied. 

16 Q. How would we find out, Mr. Groeniger, 16 MR. TRUITT: Q. Did it change over time? 

17 precisely what Groeniger & Company purchased in 17 A. Not necessarily. 

18 terms of fittings during the 1997 to 2010 time 18 Q. It remained very difficult even into the 

19 frame? 19 1990s to 2000s to have SIGMA included in 

20 A. I believe we can check the archives to 20 specifications? 

21 figure that out. 21 MR. MANN: Objection, leading. 

22 Q. Well, your lawyer just made an objection 22 MR. PARKS: Objection, you can answer. 

23 about who, who has those archives, you or somebody 23 THE WITNESS: It varied, some were easy, some 

24 else? 24 weren't. 

25 A. Well, that's a good question. And I can't 25 MR. TRUITT: Okay. 

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1 Q. Were you ultimately successful in having 1 It would have round table discussions with each 

2 SIGMA included in the specifications for the 2 particular customer, or each individual member about 

3 municipalities to whom you were trying to provide 3 the benefits of their products versus others. Who's 

4 product? 4 Who I guess of the industry were there. 

5 A. In most cases. 5 The manufacturers sent their top people, 

6 Q. Can you assign a percentage to that? 6 certainly the owners were there representing the 

7 MR. PARKS: Objection, you can answer. 7 different companies. 

8 THE WITNESS: 90 percent. 8 The national companies, the international 

9 MR. TRUITT: Q. You mentioned earlier, I think 9 companies were represented there by their owners and 

10 it was P.E. O'Hair, did I hear that correctly? 10 managers and presidents and chief executive 

11 A. That's correct. 11 officers, those types of things. 

12 Q. And they were one of your competitors? 12 So it was a, it changed rather drastically in 

13 A. Yes, sir. 13 the early 90s to include manufacturers. 

14 Q. In the 2007 to 2010 time frame, who were 14 Q. Is it fair to say it's a trade organization 

15 your competitors? 15 for distributors and others in the water works 

16 MR. PARKS: Objection, you can answer. 16 industry? 

17 THE WITNESS: Ferguson Enterprises. R&B Supply. 17 A. Yes. 

18 Camellia Valley Supply. McGuire & Juvet. 18 Q. And do you know how many members roughly 

19 Different areas, different combinations. Pace 19 there are of WASDA? 

20 Supply and Ed Walsh Company. 20 A. 80s, members, I mean, there is two levels 

21 Kenko Utility Supply Company, K-i-n-k-o -- I am 21 of membership. 

22 sorry, K-e-n-k-o. That covers probably 90 percent 22 One is a distributor member and one is a 

23 of it. 23 manufacturer member, or an associate, a manufacturer 

24 Q. Okay. Would you include HD Supply? 24 coming in is an associate member. 

25 A. No. Because they were not, HD purchased 25 I guess there are certain rights and privileges 

Page 50 Page 52 

1 during that period of time or later, they purchased 1 of both but in the early 90s before that, a 

2 McGuire & Juvet. 2 manufacturer couldn't attend the meetings. 

3 And other people in the southern area, Southern 3 But after that time manufacturers were welcome 

4 California, excuse me, that were competing with us 4 as being a part, as an associate member, welcome to 

5 down there, Marden Susco was another one in Southern 5 all of the functions -- welcome to several of the 

6 California. Was purchased by those people. 6 functions, there is one function of the year that I 

7 There was a lot of acquisition working done by 7 think is held to regular members only. 

8 the big people at that time. 8 It's been awhile since I have been there because 

9 Q. Are you active -- well, first of all, do 9 I gave that to my son to be responsible for. 

10 you know what I mean when I say WASDA? 10 Q. And I think you said there were roughly 80 

11 A. Yes, sir. 11 or 90 members, did I hear you correctly? 

12 Q. What is WASDA? 12 A. Well, when you add the manufacturers that 

13 A. WASDA is Water and Sewer Distributors of 13 doubled. So probably -- I can't tell you exactly. 

14 America. 14 Q. The same thing, are you familiar with the 

15 Q. And what did WASDA do? What was its 15 distribution group or TDG? 

16 function? 16 A. Yes. 

17 A. WASDA was a gathering place for 17 Q. What is TDG? 

18 distributors of water and sewer -- I should say 18 A. A buying group. 

19 water and sewer distributors throughout the United 19 Q. Is it made up of water works distributors 

20 States, Canada and possibly Mexico too, that allowed 20 such as Groeniger & Company? 

21 for discussion as to best practices, support in how 21 A. Yes. 

22 things were done, the cameraderie. 22 Q. And how many members are there of TDG? 

23 It later, in its later years it became a, also 23 A. Probably 20 to 30. 

24 instructional, that the manufacturers would take 24 Q. And do they go from small members to 

25 part in in supporting it. 25 members with multiple branches? 

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1 MR. PARKS: Objection, you can answer. 1 Q. And did all four of the manufacturers that 

2 MR. TRUITT: Let me ask you a better question. 2 you purchased from in the 2007 to 2010 time frame 

3 Q. Is size a requirement for membership in any 3 have a list and a discount price? 

4 way for TDG? 4 MR. PARKS: Objection, you can answer. 

5 A. No. 5 THE WITNESS: Possibly, probably. I couldn't 

6 Q. Is the membership made up of all size water 6 tell you actually. 

7 works distributors? 7 MR. TRUITT: Q. You couldn't tell me because 

8 A. Yes. 8 you can't recall? 

9 Q. And do you have any information of the 9 A. I was -- I was the chief executive officer, 

10 breakdown, how many are multiple branches versus how 10 I wasn't involved in purchasing, the only time I get 

11 many are mom and pops? 11 involved is when we have problems. 

12 A. Probably half are mom and pops and half are 12 Q. Who would have been more involved in that 

13 multiple branch application. 13 area of your business? 

14 Q. During the 2007 to 2010 time frame that I 14 A. Our sales people and purchasing department. 

15 am focused on, we have talked about that the fitting 15 Q. Is there one person who would have dealt 

16 suppliers were SIGMA, Tyler, Star and U.S. Pipe for 16 with the manufacturers on pricing? 

17 some period of time, do you remember our discussion 17 A. Not necessarily. 

18 about that? 18 Q. Was it done on a branch by branch basis? 

19 How did those suppliers or manufacturers price 19 A. Probably. 

20 their fittings? In other words, was there a 20 Q. Do you know if your purchasing and sales 

21 published list price? 21 people ever played manufacturers off one another in 

22 MR. PARKS: Objection, you can answer. 22 an effort to achieve lower prices? 

23 THE WITNESS: Counselor, are you referring to 23 MR. MANN: Objection, foundation. 

24 TDG? 24 THE WITNESS: I assume that they would or did, 

25 MR. TRUITT: No, sir, no, sir. 25 I'd say would, I would assume they did. 

Page 54 Page 56 

1 Q. I am moving onto another question. 1 MR. TRUITT: Q. Why would you assume that? 

2 A. In what regard? Would you say that question 2 A. It's very competitive. 

3 again? 3 Q. What is very competitive? 

4 Q. Let me try again. I am going to draw an 4 A. Margins are very low, as far as we are 

5 objection, I am going to tell you how I understand 5 concerned. A percent here or a percent there could 

6 it and then we'll back up. 6 make a difference in the project. 

7 I understand that there is basically a list 7 Q. And you are talking about margins on 

8 price and then there is a multiplier off a list 8 fittings? 

9 price and then there is further negotiation on a 9 A. Margins, yes, on fittings but other things 

10 project by project basis. Would I be correct? 10 too. Especially on fittings. 

11 MR. MANN: Objection, leading. 11 Q. In the 2007 to 2010 time frame, do you know 

12 MR. PARKS: Objection, you can answer. 12 what your margins were on fittings? 

13 THE WITNESS: Yes. 13 A. No. 

14 MR. TRUITT: Let's back up and see if I can cure 14 Q. Can you offer me a range? 

15 that objection now. 15 A. Not accurately. 

16 Q. Mr. Groeniger, can you tell me how fittings 16 Q. Who would know that information? 

17 suppliers and manufacturers price their products? 17 A. I would have to look in the records, that's 

18 MR. PARKS: Objection, you can answer. 18 how I would check it. 

19 THE WITNESS: List and discount. 19 Q. There is not someone you would pick up the 

20 MR. TRUITT: Q. What is a list? 20 phone and call that would know? 

21 A. Manufacturer's published list of individual 21 A. It depends on the region, the time of year 

22 pricing on individual product. 22 and if they are still working for us. 

23 Q. And what is a discount? 23 Q. I have heard the terminology "project 

24 A. A discount is a percentage added or 24 pricing" and "job pricing," does that mean anything 

25 subtraction from that price. 25 to you? 

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1 A. Yes. 1 Q. Would it be fair to say that you were 

2 Q. Can you explain to us what that means? 2 looking for price reductions if you could achieve 

3 MR. PARKS: Objection, you can answer. 3 them? 

4 THE WITNESS: Public works is a project, a 4 A. Yes, you are always looking for price 

5 project application, not a subdivision, a project 5 reductions if you can achieve it. 

6 application, that means it's one big job. 6 Q. Was TDG involved in any fashion in 

7 Manufacturers sometimes allows for special pricing 7 negotiating a rebate programs? 

8 on a job basis. That goes beyond normal pricing. 8 A. Yes. 

9 Because of the uniqueness of the size or 9 Q. How was TDG involved in negotiating 

10 whatever, they feel it necessary that it has to be 10 rebates? 

11 more competitive. 11 A. They have a negotiating committee that 

12 MR. TRUITT: Q. So would job pricing be a 12 negotiated, we didn't, they negotiated it in certain 

13 further reduction off the discount price? 13 applications of products that we dealt with. 

14 A. It could. Or it could also be an adder to 14 Q. Were you ever on the negotiating committee? 

15 that price. 15 A. No. 

16 Q. Job pricing could be an increased price? 16 Q. And did TDG identify preferred vendors? 

17 A. Yes. 17 A. Yes. 

18 Q. Would that be rare? 18 Q. Do you recall in the 2007 to 2010 time 

19 A. It would not necessarily be rare, it 19 frame who the preferred vendors were for TDG? 

20 probably happens less than the other way, but it 20 MR. MANN: Objection, vague. 

21 does happen. 21 THE WITNESS: Some of them I remember, some I 

22 Q. We have talked about the list price, 22 probably have to look. 

23 discount price, I have asked you about job pricing. 23 MR. TRUITT: Q. Just tell me as best you can 

24 Did fittings manufacturers offer any rebates to 24 what you remember. 

25 Groeniger & Company? 25 A. With regard to what product? 

Page 58 Page 60 

1 A. Yes. 1 Q. Fittings. 

2 Q. How were rebates structured? 2 A. Fittings. I believe SIGMA, Tyler, Star and 

3 MR. PARKS: Objection, you can answer. 3 Metal Fit. 

4 THE WITNESS: Volume. 4 Q. I don't know how this works. Were they all 

5 MR. TRUITT: Q. In other words, depending on 5 preferred during the same time frame or each year 

6 what volume of product you bought you'd get a 6 would there be a different preferred vendor? 

7 different rebate back? 7 A. The top three were always as I can recall 

8 A. That's correct. 8 preferred members. You had choices to what you 

9 Q. Were rebate programs annual in nature? 9 could do, who you could buy from and maintain 

10 A. Some. 10 acceptance within the buying group. 

11 Q. Were the rebate programs in the 2007 to 11 Q. Can you explain that a little bit further 

12 2010 time frame of the four suppliers we have talked 12 to me? 

13 about similar? 13 You say in terms of what you could do and 

14 A. Similar, yes. 14 maintain acceptance within the buying group. How 

15 Q. Did they have differences? 15 did that program work? 

16 MR. PARKS: Objection, you can answer. 16 A. Well, the program, you had to buy a certain 

17 THE WITNESS: There were differences, some were 17 percentage of your material from the approved 

18 paid differently, some were difference in 18 suppliers -- manufacturers I should way. 

19 percentages. Some were based on different criteria. 19 Q. And if you bought a certain percentage from 

20 MR. TRUITT: Q. Did you negotiate with the 20 the approved manufacturer, what benefit would inure 

21 suppliers on rebate programs? 21 to you? 

22 A. A little bit. 22 A. You would be part of the rebate process. 

23 Q. Were you successful in your negotiations 23 Q. What would happen if you did not buy a 

24 with the suppliers on rebate programs? 24 certain percentage from the approved vendor? 

25 A. Some, not all the time. 25 A. Then you would not get the, you would not 

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1 be able to share in that -- well, I guess you would 1 would, it was not prohibited by us, let's put it 

2 share in it what part of it you did supply, but if 2 that way. 

3 you weren't buying the percentage, then you would 3 So we have, you know, we had 17, 18 branch 

4 have to zero that out of one of your acceptable 4 people, branch managers that could theoretically do 

5 areas. And they'd give you certain exceptions you 5 something like that for the sake of a major player. 

6 could take. 6 Q. But as you sit here today, can you recall 

7 And manufacturers that don't service your 7 one offhand in the '07 to 2010 time frame where you 

8 territory or manufacturers that won't sell you 8 shared a rebate with a customer? 

9 because you are not a distributor, normally a 9 A. I can't give you a name. 

10 distributor, so there are variables, and exceptions 10 Q. I have covered list price, discounts, we 

11 you can take. 11 have talked about job pricing, rebates. 

12 But you are allowed so many, which I don't know 12 Did you negotiate terms of payment with your 

13 what that is, but there was a factor for it. 13 fitting suppliers? 

14 Q. Did these rebates only get paid over some 14 A. Probably at some time, when I was doing the 

15 period of time, like at year end, for example? 15 negotiations we did, both ways. Pay them quicker, 

16 A. No, they were quarterly. 16 pay them further back. 

17 Q. Okay, they were quarterly. Is it only a 17 There was times when they needed money, they 

18 situation where you would get zero or the rebate or 18 paid them ahead of time. That was rare. But it 

19 is there some possibility you could end up owing 19 happened. 

20 money? 20 Q. How about freight terms, did you ever 

21 A. Well, if you were not adhering to the 21 negotiate freight? Payment for freight? 

22 bylaws of the association you could leave, you could 22 A. Yes. 

23 leave yourself or they could penalize you because 23 Q. Any other price terms that I haven't 

24 you are taking profits and not adding to it by 24 covered that you would negotiate with your fittings 

25 sales. 25 suppliers? 

Page 62 Page 64 

1 And so they have that responsibility and you 1 A. Standard versus public works. Here again, 

2 have exceptions that keep you out of harm's way in 2 inventory versus not having to inventory, there was 

3 most cases. 3 discussions a lot of times on a project basis that 

4 But if you are not doing -- if you are not 4 could cover all three of those ranges, terms, 

5 holding up your end, whether you be a one branch 5 pricing and freight. 

6 operation or a 20 branch operation, then, yeah, you 6 Q. And when you say standard, are you 

7 theoretically could be fined. But in most cases you 7 referring to residential -­

8 decided this ain't for me and you leave. 8 A. Subdivision. 

9 Q. Were the rebates passed on to your 9 Q. Subdivision work. On a subdivision 

10 customers to whom you sold the products? 10 project, what percentage of the total project would 

11 A. Probably not in most cases. 11 fittings make up in terms of revenue? 

12 Q. Those were financial incentives that stayed 12 A. Varied. 

13 with the distributors? 13 MR. PARKS: Objection, you can answer. 

14 A. In most cases. There were exceptions, but 14 THE WITNESS: Varied. 

15 in most cases. 15 MR. TRUITT: Q. Can you give me a range? 

16 Q. What would an exception be? 16 A. No. 

17 A. A large customer that was buying a large 17 Q. Would it ever, would the dollars assigned 

18 volume of a certain product might be given incentive 18 to fittings on subdivision work ever make up more 

19 from us which took into consideration the incentive 19 than ten percent of the overall project? 

20 that we were getting. But that was probably rare, 20 A. Yes. 

21 but it happened. 21 Q. How frequently would it exceed ten percent? 

22 Q. In the 2007 to 2010 time frame, do you 22 MR. PARKS: Objection, you can answer. 

23 recall if you had an exception like that? 23 THE WITNESS: I can't give you an accurate, it 

24 A. I'd have to go back and check each of our 24 varies. 

25 branches at the time and the people -- no, but I 25 MR. TRUITT: Q. Can you allocate the cost of 

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1 materials among the different products in a typical 1 was marked for identification) 

2 subdivision project? 2 MR. TRUITT: Q. Mr. Groeniger, I am going to 

3 A. On a typical subdivision product -- say 3 hand you what I have marked as Exhibit 1 to your 

4 that again, please. 4 deposition, which I understand is a copy of your 

5 Q. Yes, sir. Could you allocate the cost of 5 testimony in the investigational hearing taken on 

6 materials among the different products in a typical 6 December 14th, 2010. Mr. Mann was kind enough to 

7 subdivision project? 7 provide us with that. 

8 MR. PARKS: Objection, asked and answered, you 8 A. Okay. 

9 can answer. 9 Q. We were talking about your testimony on 

10 THE WITNESS: Yes, on a typical subdivision 10 pages 60 and 61. Let me ask you first, you were 

11 project. Being a typical probably pipe 50, valves, 11 under oath for that testimony? 

12 valves and hydrants 25 and fittings about 20 12 A. That's correct. 

13 percent. 13 Q. And to the best of your ability you 

14 MR. TRUITT: Q. How about on a typical public 14 testified accurately and truthfully? 

15 works project? 15 A. Yes. 

16 MR. PARKS: Objection, you can answer. 16 Q. And I think I asked you earlier did you 

17 THE WITNESS: There is no typical public works 17 tell Mr. Renner, the lawyer who was talking to you 

18 project, they are all different. It could be a 18 then, that the cost of materials just for fittings 

19 hundred percent, it could be zero percent, they are 19 would not exceed ten percent in a public works 

20 variable. 20 project? 

21 MR. TRUITT: Q. So the fittings component could 21 MR. PARKS: Objection, you can answer. 

22 range from zero to a hundred percent of a public 22 THE WITNESS: Yes, I did say that. 

23 works project? 23 MR. TRUITT: Q. And was that accurate? 

24 A. Sure, sure, yeah. And it can, the same way 24 A. Kind of. As best you can say is if you 

25 on a subdivision also but it's more of a rarity. 25 have to define this thing and say on every project 

Page 66 Page 68 

1 Q. We have talked about your testimony 1 it's different, and there could be a project that's 

2 previously in this case, correct? 2 all fittings. 

3 A. Yes. 3 So you really can't say in a public works 

4 Q. And you told me that was I guess a couple 4 scenario generally speaking, and the same thing you 

5 of years ago when you were running your business, 5 can't say in a subdivision, because there are 

6 correct? 6 manufacturers that will take the pipe on a direct 

7 A. Yes. 7 basis. 

8 MR. PARKS: Objection, you can answer. 8 That means we as a supplier don't have that 40 

9 MR. TRUITT: Q. And if you told Mr. Renner then 9 percent of the job anymore, that went direct to the 

10 that the cost of materials just for the fittings for 10 manufacturer. So now we are dealing with a 

11 a public works project would never be more than ten 11 different set of percentages. So saying ten 

12 percent, would you disagree with that testimony here 12 percent. 

13 today? 13 If we are supplying everything on the job, okay, 

14 MR. PARKS: First of all, I am going to object, 14 that very easily could be ten percent consistently. 

15 if you want to show him his testimony, that's fine. 15 But there are so many variables it's hard to put 

16 I'd like to see the what the question is -­ 16 it into that, and public works even more so. 

17 MR. TRUITT: Page 60 and 61. 17 There are jobs the only thing we supply on the 

18 MR. MANN: Object to foundation as well. 18 whole project are fittings. So that means that we 

19 THE WITNESS: 60 and 61. 19 are supplying a hundred percent and our quotation is 

20 MR. TRUITT: Q. Yes, sir. 20 based on a hundred percent, fittings are a hundred 

21 A. Okay. 21 percent of our quotation. 

22 MR. TRUITT: Can we go off the record for just a 22 Does that happen a lot? There is a reasonable 

23 second? 23 chance that it will happen, that all you will get 

24 (Discussion held off the record.) 24 out of this multi-million dollar project is the 

25 (Whereupon, Exhibit Number 1. 25 fittings, or the valves, or the service material, 

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1 the brass, different thing all together. 1 out as the goals but there was also enforcement, so 

2 But you don't normally get a turnkey order from 2 that turned into a requirement. 

3 the customer, he is going to buy a portion from you. 3 MR. TRUITT: Q. Do you know when ARRA was in 

4 So theoretically our quotation may have been for 4 effect? 

5 a million dollars of which fittings were ten 5 A. Approximately 2008, 2009. '10, '11. Even 

6 percent, but in actuality, the only thing that we 6 today I guess there is still a project here and 

7 got an order for is the fittings at ten percent. 7 there that comes out with a stipulation with the 

8 So that would be been a hundred percent of what 8 money being provided through the ARRA. 

9 we supplied. So it varies. 9 Q. Prior to ARRA being enacted, what 

10 Q. Okay. I appreciate that. Can we agree 10 percentage of the fittings that you sold were of 

11 when you were talking to Mr. Renner, the FTC lawyer 11 foreign manufacture? 

12 who was taking your deposition, you told him on a 12 MR. PARKS: Objection, you can answer. 

13 typical project, on a typical subdivision project, 13 THE WITNESS: Hard to say. 80 percent might be 

14 the cost of fittings wouldn't exceed ten percent? 14 a reasonable number. 

15 MR. PARKS: Objection, you can answer. 15 MR. TRUITT: Q. Would the balance be made up of 

16 THE WITNESS: Yes. 16 domestically manufactured fittings? 

17 MR. TRUITT: Q. And likewise you told him the 17 A. Yes. 

18 cost of fittings on a a typical public works project 18 Q. During the period that ARRA was in effect, 

19 wouldn't exceed ten percent? 19 did you sell any imported fittings? 

20 MR. PARKS: Objection, you can answer. 20 A. On an ARRA project? 

21 THE WITNESS: Yes. 21 Q. No, sir, at all? 

22 MR. TRUITT: Thank you. 22 A. Sure. 

23 Q. Are you familiar with the American Relief 23 Q. What was the mix of your sales during the 

24 and Reinvestment Act of 2009? 24 time period that ARRA was in effect as to domestic 

25 A. Yes. 25 and foreign? 

Page 70 Page 72 

1 Q. Tell me what that was. 1 MR. PARKS: Objection, you can answer if you 

2 MR. MANN: Before you begin, it's actually the 2 can. 

3 American Recovery and Reinvestment Act. 3 THE WITNESS: What years? 

4 MR. TRUITT: Q. I know it was ARRA, do you know 4 MR. TRUITT: Q. Whenever ARRA was in effect. 

5 what ARRA means when I use ARRA? 5 A. From 2009 to '11? 

6 A. Yes. 6 Q. Yes, sir. I am not agreeing with you 

7 Q. Tell me what ARRA meant to your business, 7 that's when it was in effect, but let's say 2009, 

8 please, sir? Why were you interested in that? 8 what was your mix? 

9 MR. PARKS: Objection, you can answer. 9 MR. PARKS: Same objection. 

10 THE WITNESS: Because it limited our capability 10 THE WITNESS: It's hard to say, it's really 

11 of supplying traditionally what we supplied into 11 difficult to say. And anything you are saying is 

12 certain regions. 12 putting it in a guestimate just because it's being 

13 MR. TRUITT: Q. How so? 13 ahead at the time. 

14 A. Well, that everything had to be of domestic 14 I don't know that it can't be brought in more by 

15 manufacture, not relating to NAFTA or other 15 looking at the archives or looking at historically 

16 agreements for bringing material from Canada or 16 what was done in the industry. But there were 

17 Mexico. 17 certain requirements on the ARRA projects and 

18 It required us to have written proof from our 18 because the public works side was extremely 

19 manufacturers that the material that is included in 19 confusing as to what monies were ARRA versus other, 

20 their product is of domestic origin. 20 then probably 50 percent, let's say. 

21 Q. Did you understand the law, the ARRA to 21 MR. TRUITT: Q. I am sorry, I am just not sure 

22 require that or did you understand it to provide 22 I understood your testimony. 

23 certain economic incentives if those goals were met? 23 I thought you said that pre-ARRA your mix was 

24 MR. PARKS: Objection, you can answer. 24 80, 20 where you were buying 80 percent imported 

25 THE WITNESS: I think both. I think it started 25 fittings. 

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1 Do I understand you to tell me once ARRA was 1 active? 

2 enacted the mix went to fifty-fifty? 2 A. Yeah, they said they could supply the Tyler 

3 A. That's best estimate. 3 fitting, so yes, they could supply a domestic 

4 Q. Best guestimate? 4 fitting. 

5 A. Yeah. 5 Q. Let's back up. Did you ever have 

6 Q. Okay. What was the date of sale of 6 conversations with SIGMA about supplying a foreign 

7 Groeniger & Company? 7 made fitting during the time period that ARRA was in 

8 A. November -­ 8 effect under NAFTA? 

9 MR. PARKS: Let me interpose an objection. You 9 A. No. 

10 can answer. 10 Q. Any conversations with SIGMA during the 

11 THE WITNESS: November of 2010 -- '11. 2011. 11 time period that ARRA was in effect about using 

12 MR. TRUITT: Q. Did you understand ARRA to be 12 foreign manufactured fittings under any other act or 

13 in effect then? 13 treaty? 

14 A. I assumed it was in effect. The money, if 14 MR. PARKS: Objection, you can answer. 

15 there were still extenuating projects that for one 15 THE WITNESS: No, not that I know of. 

16 reason or another didn't get put out that were still 16 MR. TRUITT: Q. Were there waivers and 

17 covered under those, but it was very obvious when 17 exemptions to ARRA? 

18 they were, they were stated as AARA financed, I 18 MR. MANN: Objection, leading. 

19 presume it to have been, yes. 19 MR. PARKS: Objection. 

20 Q. By 2011 was your mix still fifty-fifty or 20 THE WITNESS: I am sure there were some de 

21 had it changed again? 21 minimis, the word "de minimis" came out of that, 

22 MR. PARKS: Objection, you can answer. 22 some sort of a "get out of jail free" card so to 

23 THE WITNESS: I would say fifty-fifty still. 23 speak with regard to complying with a strict 

24 MR. TRUITT: Q. And did Groeniger & Company at 24 domestic NAFTA requirement. 

25 the time keep records that if we had access to them 25 If it was not as, a portion of the project was 

Page 74 Page 76 

1 we could tell exactly what the mix was? 1 deemed significant and for the sake of getting the 

2 A. I presume they do, we have somewhere, yes. 2 project done in a timely manner, there was 

3 Q. You mentioned NAFTA just a minute ago. Did 3 exceptions that could be made. 

4 any of your suppliers of foreign fittings ever tell 4 I don't know that I ever got any waiver of de 

5 you that you'd be able to supply ARRA jobs with 5 minimis in all the time that I dealt with it, I 

6 their foreign manufactured fittings under NAFTA? 6 don't even know that we knew enough about the 

7 MR. PARKS: Objection, you can answer. 7 legalities of what it was that we were trying to do 

8 THE WITNESS: There was some discussion about 8 to even attempt it. 

9 that, not with regard to ductal iron fittings 9 MR. TRUITT: Q. Do you know if other 

10 because there was nobody that was bringing in 10 distributors took advantage of the de minimis 

11 fittings from Canada or actually anybody that had a 11 exception? 

12 complete line of fittings coming out of Mexico at 12 MR. MANN: Objection, vague. 

13 that point. 13 MR. PARKS: Objection. 

14 But I don't know if NAFTA incorporated South 14 THE WITNESS: Couldn't tell you personally. 

15 America, if that's part of the Americas, that they 15 MR. TRUITT: Q. Did you observe any end users 

16 could come in from Brazil. 16 relying on those waivers under ARRA to allow the use 

17 But none of that ever materialized as far as I 17 of imported fittings? 

18 know from any of the manufacturers that we dealt 18 A. No. 

19 with. 19 Q. Mr. Groeniger, I refer you to page 105 of 

20 MR. TRUITT: Okay. 20 Exhibit 1, please. 

21 Q. Did you ever have conversations with SIGMA 21 A. (Witness complies) 

22 about being able to continue to use fittings they 22 Q. Have you had a chance to read -­

23 supplied under NAFTA? 23 A. Yeah. 

24 A. What time frame? 24 Q. Do you see testimony at the top of page 

25 Q. During the time period that ARRA was 25 105, the question that was posed to you in your 

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1 prior testimony in this case, "Did you observe any 1 would be going through reams and reams and reams of 

2 end users relying on those waivers to allow the use 2 paperwork. 

3 of imported fittings?" Did I read that correctly? 3 Q. If it was approved by a municipality would 

4 A. Yes. 4 that be another way to look for it? 

5 Q. And your answer was, "Yes." Did I read 5 MR. PARKS: Objection. 

6 that correctly? 6 THE WITNESS: A municipality? 

7 A. Yes. 7 MR. TRUITT: Q. I think you just told me if 

8 Q. Did Groeniger ever supply imported 8 Groeniger did do that, that it was fully disclosed 

9 fittings? To an ARRA job? I'm sorry. 9 and would have been approved by someone, correct? 

10 A. We could have. 10 A. I am sure it would have been okayed by the 

11 Q. Do you know as you sit here today if you 11 engineer and the inspector. But not necessarily, I 

12 did? 12 don't know how far up the food chain it went. 

13 A. I would assume that we probably could have.13 Q. Would those records have been kept? 

14 Q. I am confused. 14 A. I doubt it. 

15 A. You are asking for have you ever supplied a 15 MR. PARKS: Objection. 

16 foreign fitting to an ARRA project? 16 MR. TRUITT: Q. Did Groeniger ever supply ARRA 

17 Q. Yes, sir. 17 jobs with domestic product? 

18 A. I would have to say probably we did, but 18 A. Yes. 

19 not under an exception to the rule, but as a 19 Q. And do you have a sense of how many? 

20 requirement if they needed a product that was 20 MR. PARKS: Objection, you can answer. 

21 unavailable in a time frame to support the project. 21 THE WITNESS: Some. Difficult, percentage of 

22 And we supplied a fitting and got it approved 22 what? 

23 for that fitting, or whatever because of the need of 23 MR. TRUITT: Q. Percentage of total. 

24 maintaining -- but as a whole, our submittals 24 A. Total? Oh, it wasn't big, but it was 

25 without exception were for domestic applications. 25 certainly not as big as I thought it was going to 

Page 78 Page 80 

1 In the act of supplying a project dealing with a 1 be. Certain years possibly five, ten percent maybe 

2 contractor, dealing with a local engineer, dealing 2 at the most. But then other years none. 

3 with those scenarios of getting the project done in 3 MR. TRUITT: Q. Who did you buy the domestic 

4 a timely manner, there are exceptions made. Whether 4 fittings from for the ARRA jobs that you supplied? 

5 there is paperwork to that extent, I doubt. 5 A. Predominantly Tyler. 

6 But it was, we supplied a product that may not 6 Q. Anyone else? 

7 have been domestic to a specification calling for 7 A. Star. And some SIGMA. 

8 domestic because of the time constraints and 8 Q. When did Star enter the domestic market? 

9 construction schedules, fully approved, fully 9 A. 2008, 2009, in that time frame. I believe 

10 knowledgeable that was going on, it just had to be 10 that was about the approximate time. It was when 

11 done. 11 the ARRA became a viable business format. 

12 Q. Do you have any estimate of how many times 12 Q. So whenever ARRA was passed? 

13 that occurred? 13 A. Yes. 

14 A. No. 14 Q. Star would have entered about that time 

15 Q. Would there be any records that would 15 frame? 

16 reflect that? 16 A. Uh-huh. 

17 A. No. 17 Q. I need you to say yes or no. 

18 Q. Even if you had access to your records 18 A. I am sorry, yes. 

19 today, that's not something that you would have kept 19 Q. No problem. Do you know where Star was 

20 up with? 20 obtaining the domestic product that they were 

21 A. You would have to look at each individual 21 offering for sale? 

22 invoice on a project and look at the codes on the 22 A. As far as which foundry was making them? 

23 particular item to verify this, if it was a domestic 23 No, I know it was a domestic, qualified as a 

24 or foreign manufacturer. 24 domestic manufactured item. 

25 And you could probably find out that way but you 25 Q. Do you know if it was one or more than one 

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1 foundry? 1 A. A items probably two weeks, B items no 

2 A. No. 2 longer than three weeks to a month. And C items two 

3 Q. Do you know if Star offered a full line? 3 or three months. 

4 A. They did not. 4 Q. Was Tyler a full line supplier? 

5 Q. What did they offer? 5 A. On A items, yes. B items pretty much so. 

6 A. They offered a basic line and were striving 6 C items they would produce them as you wanted them. 

7 to build a complete line. 7 Q. Did they have an inventory of A, B and C 

8 Q. Are you familiar with the terms A, B and C 8 items? 

9 items? 9 A. Yes. 

10 A. Yes. 10 Q. Could they provide those items to you 

11 Q. Just so we make sure we have the same 11 faster than Star could? 

12 terminology, would you tell me what your 12 A. Domestically? 

13 understanding of A, B and C items are? 13 Q. Yes, sir. 

14 A. "A" items would be predominantly the high 14 A. Yes, yes, definitely. 

15 percentage usage items in small and medium sized 15 Q. Would that be a possibility of why some 

16 diameters, four, six inch, eight inch, ten inch, 16 customers might prefer to do business with Tyler as 

17 twelve inch in size. Standard fittings, elbows, 17 opposed to Star on domestic fittings? 

18 T's, adapters. 18 MR. MANN: Objection, leading, foundation. 

19 When you start getting above 12 inch, that 19 MR. PARKS: Objection, calls for speculation. 

20 becomes more of a B item, bigger in diameter, 20 You can answer. 

21 different end connections, standard end connections 21 THE WITNESS: Certainly availability is 

22 would be B items. 22 important, pricing is important. Cooperation is 

23 When you start getting into weird connections it 23 important. 

24 goes to a C item, when you start getting into the 24 MR. TRUITT: Let's back up. 

25 bigger diameter, above 16 inch, then you are 25 Q. Let me ask you a question. 

Page 82 Page 84 

1 starting to get specials and those would be the 1 MR. PARKS: I am sorry, were you done with your 

2 items that you would not normally stock, it would 2 answer? 

3 not be considered an A are a B item, would be 3 MR. TRUITT: Q. I am sorry, I didn't mean to 

4 definitely a C or beyond. 4 cut you off. 

5 Q. So when you told me that Star had a basic 5 A. Whatever. Am I through? That was my 

6 line, in terms of A, B and C items, did they have a 6 answer. 

7 complete line of A items? 7 Q. I was going to ask you a better question. 

8 A. Relatively complete. I would say 80 8 A. Okay. 

9 percent complete of A items. 9 Q. What factors did you consider important 

10 Q. And then what about B and C items? 10 when determining to do business and buy products 

11 A. B items were less percentage, but they did 11 from a domestic fittings supplier? 

12 B and some C items. 12 A. Service, service, service. That is price, 

13 Q. What time frames were involved in getting 13 product availability and overall support. 

14 these items from Star? 14 Q. How did Tyler's prices on domestic compare 

15 A. Varied. 15 to Star's prices on domestic? 

16 Q. Did they have inventory? 16 A. I think A items were approximately the 

17 A. They were building inventory, they had 17 same, B items that were there, I think they were 

18 inventory on some items. 18 predominantly the same. 

19 Q. On some of the A items? 19 I don't know that there was, in some cases they 

20 A. Some of the A items they had inventory on, 20 were less expensive, in some cases they were more 

21 some of the B items they had inventory in, and they 21 expensive. 

22 could make the C items for you in a reasonable 22 We didn't buy that many A and B items from Star, 

23 amount of time that would make them equivalent to 23 we bought mostly C items from Star which were 

24 anyone in the industry. 24 specials, cast specially for a project and so forth 

25 Q. What is a reasonable amount of time? 25 like that. 

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1 Q. Were those mainly for plant jobs? 1 what I have marked as Exhibit 2 to your deposition. 

2 A. Those were mainly for public works jobs. 2 Take as much time as you need to review that. 

3 Q. Thank you. What about product availability, 3 A. (Witness complies) Okay. 

4 how did Star and Tyler compare on domestic product? 4 Q. Are the ramifications you were just telling 

5 A. We never went to a formal agreement with 5 me about, are those embodied in this letter I have 

6 Star as to A and B items. We went on a purchase 6 marked as Exhibit 2? 

7 order basis for public works application. ARRA 7 A. Part of it, yes, it was. 

8 projects. And in those cases their availability was 8 Q. Again, I am still trying to understand. 

9 equivalent, in some cases better. 9 Some of the ramifications that you were concerned 

10 Q. And you mentioned, I think the third item 10 about are set forth in Exhibit 2; is that right? 

11 you mentioned was overall support. How did Tyler 11 A. Some of them, yes. 

12 and Star compare in overall support? 12 Q. Well, let's try and get them all out there. 

13 A. Star was better in overall support. 13 What others are there -- tell me the ones that are 

14 Q. What do you mean when you say overall 14 in Exhibit 2 first, please. 

15 support? 15 A. What is your question then? 

16 A. Let me just say they were better in 16 Q. Yes, sir. What are the ramifications that 

17 support. 17 you were concerned about that you testified earlier 

18 Q. What do you mean when you say support? 18 that are embodied in Exhibit 2? 

19 A. Discussions on our needs, tailoring the 19 A. Well, at first appearance this didn't seem 

20 deliveries to our standards, looking at us as the 20 like a major threat, mainly because the word SIGMA 

21 important customer, not just one of the boys, 21 was involved. 

22 singling us out as different and supporting us 22 SIGMA was our prime supplier of foreign product, 

23 uniquely. 23 but understanding that they were now part of this 

24 Q. It sounds like based on your testimony you 24 domestic application, we felt that SIGMA's support, 

25 preferred to do business with Star as opposed to 25 SIGMA's service would now reflect a domestic 

Page 86 Page 88 

1 Tyler. Would that be correct? 1 forehand, that we really did not need Tyler. 

2 A. Not necessarily. 2 And going through the hoops and jangles, the 

3 Q. Okay. Why not? 3 policemen looking over our fences, taking pictures 

4 A. Total product availability, A and B items, 4 of what we did, we could simply buy the Tyler from 

5 total inventory, those are reasons. 5 SIGMA which was potentially great for us. 

6 Q. You were free to do business with either 6 Because SIGMA had the best service, service, 

7 one, right? 7 service by far, not even close. Better than Star, 

8 MR. PARKS: Objection, you can answer. 8 much better than Tyler. 

9 MR. MANN: I will also object leading. 9 So we felt, we didn't -- if this was as it was 

10 THE WITNESS: It's not all that clear of a 10 on the face of the letter, I could have lived with 

11 scenario. 11 it. 

12 MR. TRUITT: Q. Why not? 12 Didn't turn out to be that way, but as this 

13 A. There could be ramifications and that could 13 letter here shows, I felt confident that we were, 

14 affect us drastically if things were not done 14 that we would be able to supply through SIGMA and 

15 certain ways. 15 everything was going to be the same format. 

16 Q. I am trying to understand what those are, 16 Q. Okay. If you look at the third from the 

17 Mr. Groeniger. What ramifications are we talking 17 bottom paragraph, it says, "Customers who elect not 

18 about? 18 to support this program may forgo participation in 

19 A. We could lose the Tyler capability of 19 any unpaid rebates for domestic fittings and 

20 buying at a competitive price from Tyler. If we 20 accessories." 

21 didn't support them completely with regard to 21 Was that one of the ramifications that you were 

22 domestic fitting. 22 concerned about? 

23 (Whereupon, Exhibit Number 2 was 23 A. Well, if SIGMA wasn't in this then I 

24 marked for identification) 24 would -- yes, because I would have thought buying 

25 MR. TRUITT: Q. Mr. Groeniger, I am showing you 25 them through SIGMA would still be enforcing the 

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1 McWane idea or philosophy. 1 May have, I couldn't tell you. 

2 Q. I'm sorry, go ahead. 2 Q. Walton was one of the Yuba City jobs, do 

3 A. That's -­ 3 you remember the name of the second? 

4 Q. Let me ask you, after this letter of 4 A. It might have been in the form of two 

5 September 22, 2009, Groeniger purchased materials, 5 different jobs, I don't remember the names but I can 

6 domestic materials from Star, correct? 6 find those out but I don't remember the exact name. 

7 A. Some. 7 But Walton was one I know. 

8 Q. Did you forego any rebates from Tyler? 8 Q. Do you remember there ever being a 12 week 

9 A. Yes. Or pricing from Tyler. 9 period after September 22, 2009 when Tyler declined 

10 Q. What rebates did you forego? 10 to sell you domestic product? 

11 A. Rebates I have to look at to be accurate 11 A. Are you talking about the threat or actual 

12 because Tyler was involved through TDG and the 12 happening? 

13 rebates were coming back through them. 13 Q. No, sir, I am talking about did they ever 

14 And SIGMA was also in the TDG and rebates were 14 do it? Was there ever a 12 week period where they 

15 coming back through them. 15 said because you bought from Star we are not going 

16 Q. Let me back up then. Is your testimony as 16 to sell to you? Did that ever happen? 

17 to whether or not you had to forego any rebates that 17 MR. PARKS: I am sorry, I am confused by the 

18 you don't know? 18 question. 

19 A. I don't know. 19 MR. TRUITT: Sure. 

20 Q. And then this paragraph third from the 20 MR. PARKS: Are you saying did they ever say 

21 bottom goes on to say, "Customers who elect not to 21 that or did they ever do that? 

22 support this program may forego shipment of their 22 MR. TRUITT: Q. Well, I think my question is 

23 domestic fitting and accessory orders of Tyler Union 23 clear. 

24 or Clow Water products for up to 12 weeks." 24 What I am saying is was there ever a 12 week 

25 After you purchased Star domestic product 25 period after September 22, 2009 when Tyler declined 

Page 90 Page 92 

1 postdating the date of Exhibit 2, was there any 12 1 to sell you domestic product? 

2 week period where Tyler refused to sell to 2 A. No. 

3 Groeniger? 3 Q. Was there ever a period after September 22, 

4 A. I don't know if we purchased any Star 4 2009 when you asked for domestic product and they 

5 domestic fittings after this date. I think 5 said they wouldn't sell it to you? 

6 fittings, the project that we did with Star were 6 A. Yes. 

7 probably before these dates. 7 Q. Tell me when that was. 

8 And looking at the time frame of a public works 8 A. I can't tell you the date but it was 

9 job the size of one, I know two particular jobs that 9 probably sometime after that. We were informed that 

10 we supplied, big projects that we supplied Star 10 they were going to pull everything away from us, a 

11 fittings on, and I think those probably were before 11 threat. 

12 this letter came out. 12 Q. And did they follow up, did they in fact do 

13 Q. What were those two jobs, what were the 13 it? 

14 names of those two jobs? 14 A. Some of it they did. 

15 A. They were in Yuba City, big projects in 15 Q. Well, I am confused. What some of it did 

16 Yuba City. 16 they do? 

17 Q. Was one the Walton Avenue job? 17 A. We have annual contracts for different 

18 A. That's one. 18 municipalities. And these contracts are priced in 

19 Q. Was the second the Kerman, California job? 19 December of one year and carry on through December 

20 A. I don't recall Kerman. That's not in Yuba 20 of the next year. 

21 City. 21 And these are quite sizeable districts, you are 

22 Q. Do you recall supplying product for a 22 signing contracts with these people that you hold 

23 Kerman, California water treatment plant job? 23 prices for a period of time. 

24 A. That might have come out of the plant 24 Some of them have escalators, others don't. And 

25 division, which was a division of ours at the time. 25 the people that don't require you as the supplier to 

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1 hold the prices. 1 A. I couldn't tell you, that comes in the form 

2 So when you go out to a manufacturer to support 2 of brownie points with our customers, the agency. 

3 the specification, you have to get them to honor 3 Because we had to go to them and say one of our 

4 that time frame, otherwise you either don't bid it 4 suppliers is not working with us, and in all cases 

5 or you bid it so high that you can handle price 5 they could go buy it from another person at the 

6 increases throughout the year that may or may not 6 contract price, and it was just the loyalty to us 

7 happen. And you hope you are accurate so it doesn't 7 that said, and the fact that during the interim we 

8 cost you money at the end. 8 sold them at the contract price, that means we were 

9 But in the case of one major district, Tyler 9 losing money on every fitting we sold them, but we 

10 declined after the fact to support the pricing after 10 said we had to do that, we were obligated, but we 

11 we had received the purchase order for a portion of 11 needed their help to get the manufacturer, who was 

12 that contract. 12 the only manufacturer approved in this district, the 

13 Q. Let me make sure I understand your 13 only domestic manufacturer that is approved. 

14 testimony. They offered to sell you the product but 14 Q. Let me make sure I understand. After 

15 at a higher price? 15 September 22nd, 2009, the date of Exhibit 2, Tyler 

16 A. That's correct. 16 never declined to sell you product, correct? 

17 Q. And was the price competitive with other 17 A. That's correct. 

18 suppliers at the time? 18 Q. You have told me about this one instance 

19 A. No. 19 with the San Jose water district where your 

20 Q. It was higher than you could get from other 20 testimony is that Tyler raised the price of the 

21 suppliers? 21 product for a six month period, correct? 

22 A. It was higher than other suppliers were 22 A. That's correct. 

23 selling the same thing to the same district to the 23 Q. And subsequently they went back down to a 

24 same construction contractors. 24 lower price you believe you had previously agreed 

25 Q. Which job are we talking about now? 25 to, correct? 

Page 94 Page 96 

1 A. This is the city of, San Jose Water 1 A. That's correct. 

2 Company, annual contract. 2 Q. And then they reimbursed you for the 

3 Q. So did you end up buying domestic from Star 3 amount, the delta between the higher price and the 

4 in that case? 4 price you thought you had agreed to for the six 

5 A. No. 5 months, correct? 

6 Q. Who did you buy from? 6 MR. PARKS: Objection. 

7 A. Tyler. 7 THE WITNESS: No, I wouldn't say they did for 

8 Q. Did they reduce their price? 8 all of it, no. We made an agreement that we would 

9 A. Not for six months they didn't. 9 get some of that back. All of it, I don't think so, 

10 Q. Did you purchase at the higher price? 10 but some of it. 

11 A. Yes. 11 I can't tell you what percentage, but it was an 

12 Q. After six months did they reduce their 12 agreement we made finally to resolve the issue but 

13 price? 13 it was we'll give you some of that. They didn't go 

14 A. Yes. 14 back and correct the complete issue, no. 

15 Q. What happened for the six month interim 15 MR. TRUITT: Q. Other than the one example with 

16 period? 16 San Jose, was there another issue with Tyler 

17 A. Many e-mails, letters from our customers, 17 supplying you product at what you believe was a 

18 letters from the agency in support of our position. 18 higher price? 

19 And they finally agreed that we did have the 19 A. Well, I don't know when the loyalty pricing 

20 contract and went back to the contract price. 20 was enacted id or suspended or whatever, but there 

21 Q. So for the six month period did they 21 was a loyalty discount that Tyler gave beyond any, 

22 reimburse you for the difference between the two? 22 beyond any rebates. 

23 A. Some of it they reimbursed us for. 23 Q. Are you talking about way back, many years 

24 Q. What was the total amount that you are not 24 ago? 

25 reimbursed for? 25 A. This is many years ago, in the 2000s, so it 

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1 could be 4, 5, 6 and there was constantly pressure 1 materials. 

2 that if you bought somebody else's material you 2 Q. When was this? 

3 could lose that. So that was a constant fight. 3 A. Back probably in the late 80s. I am just 

4 Q. In the 2007 to 2010 time frame that I have 4 telling you when it happened. 

5 been talking to you about today, did Tyler have any 5 MR. PARKS: You can laugh all you want, but you 

6 sort of a loyalty program? 6 asked a question without a date restrictor and you 

7 A. They could have but I couldn't tell you. 7 got an answer without a date restrictor. That's 

8 Q. To your knowledge the loyalty program you 8 your fault. 

9 just testified about predates that time frame, 9 MR. TRUITT: Q. In the 2009 time frame after 

10 doesn't it, predates the 2007, 2010? 10 receiving this letter, Mr. Groeniger, did Tyler ever 

11 A. I couldn't tell you, I honestly can't. 11 refuse to sell you something because you had a 

12 Q. Fair enough, you just don't know one way or 12 relationship with Star? 

13 the other; is that correct? 13 A. Not to my knowledge. 

14 A. That's correct. 14 Q. In the 2009 time frame after receiving 

15 Q. I am trying to understand all the 15 Exhibit 2 and later, did Tyler ever not pay you a 

16 ramifications. 16 rebate that you were due because you had a 

17 I understand that there is a policy set forth in 17 relationship with Star? 

18 Exhibit 2 that Tyler may decide not to honor rebates 18 A. I don't think so. 

19 and that they may withhold product from you for 12 19 Q. Are there any other ramifications other 

20 weeks. We have talked about that, you have told me 20 than the one you have told me about with the San 

21 about San Jose. 21 Jose project that you believe you suffered because 

22 Are there any other examples that you call 22 of your relationship, that you suffered from Tyler 

23 ramifications that you talked about earlier? 23 because of your relationship with Star? 

24 MR. PARKS: Objection, you can answer. 24 A. No. 

25 THE WITNESS: I am inclined to feel that there 25 Q. One of the allegations in this case made by 

Page 98 Page 100 

1 were, but I can't tell you. I can't remember the 1 the FTC is that in the 2008, 2009 time frame, Star, 

2 exact times and dates. 2 SIGMA and Tyler engaged in a price fixing 

3 There was -- considering all the manufacturers 3 conspiracy. 

4 we buy from, the hundreds of manufacturers that we 4 Do you have any personal knowledge about that 

5 supply material from, Tyler was the most aggressive, 5 one way or the other? 

6 most demanding, most policed than any other supplier 6 A. No. 

7 we dealt with, and that's big because we deal 7 Q. Do you know of anyone at Groeniger & 

8 millions of dollars with other manufacturers. 8 Company who has any information about that? 

9 And some manufacturers we were one of their 9 A. No. 

10 largest suppliers in the country. And we always 10 Q. Groeniger & Company has filed its own 

11 paid our bills on time. 11 separate private party lawsuit against Tyler; is 

12 If they offered a discount we discounted, so we 12 that correct? 

13 were paying very, very quick. So it had to do with 13 A. That's correct. 

14 the loyalties of why we would prefer to go with 14 Q. And is that still for lack of a better word 

15 someone else versus Tyler. 15 an asset that belongs to you after the sale of the 

16 Q. You didn't like the way Tyler did business? 16 business? 

17 A. No. 17 A. I believe so. 

18 Q. But in terms of refusing to deal with you, 18 Q. I am going to look at my notes, I think 

19 they never refused to sell you anything because you 19 those are the vast majority of the questions that I 

20 had a relationship with Star, did they? 20 have, Mr. Groeniger. 

21 A. Yes. 21 While I am doing that, I am going to let Mr. 

22 Q. Tell me what, please. 22 Mann -- so we don't slow down. 

23 A. What -­ 23 (Lunch recess taken.) 

24 Q. What did Tyler refuse to sell you -­ 24 EXAMINATION BY MR. MANN 

25 A. They shut us down once, they said no more 25 MR. MANN: Q. Good afternoon, Mr. Groeniger. 

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1 A. Good afternoon. 1 MR. TRUITT: Objection, relevance. 

2 Q. We met earlier today but just for the 2 MR. PARKS: That's just for the record, you can 

3 record my name is Andrew Mann and I am an attorney 3 answer the question. 

4 with the Federal Trade Commission. 4 MR. MANN: Q. Go ahead. 

5 A. Yes. 5 A. It was a situation where we were buying the 

6 Q. And back in December of 2010 you provided 6 vast majority of our materials from SIGMA, but there 

7 previous testimony to my colleague Chris Renner; is 7 were districts or customers that required Tyler. By 

8 that correct? 8 name. 

9 A. That's correct. 9 Not necessarily because they were domestic, but 

10 Q. A lot of the questions just to give you a 10 they were the standard, the long time standard. 

11 preview that I am going to go over, may seem 11 And so even though we had something we thought 

12 somewhat redundant but I wanted to go over some of 12 was the equivalent and/or better, they still said we 

13 the basic industry facts that were discussed 13 want Tyler, okay, we will supply Tyler. So we were 

14 previously, not only this morning but also in your 14 buying from Tyler to support those specifications. 

15 previous testimony, just so I can make sure we are 15 Did we actively try to change these 

16 still, things haven't changed. Is that okay? 16 specifications? Maybe a little bit but we left that 

17 A. Yes, sir. 17 pretty much up to the other manufacturers to get 

18 Q. Before I get there though, do you have 18 them changed. 

19 personal knowledge of what your customers wanted 19 We didn't at that time, we were not that active 

20 when Groeniger & Company was a going concern? 20 in the specification work for SIGMA. They had their 

21 A. Yes. 21 own people in the area that were from their factory 

22 Q. And how did you know what your customer's 22 so they could do a better job anyway so we left that 

23 wanted? 23 to them. 

24 A. I was a salesman, I was a warehouseman, I 24 But there were certain districts that required 

25 was a truck driver. 25 Tyler and we were buying Tyler. 20 percent maybe of 

Page 102 Page 104 

1 I came from the bottom of the food chain in 1 our total fitting purchases were coming from Tyler. 

2 dealing with customers, in dealing with 2 Q. And at what point were you cut off, at what 

3 relationships and in most cases I am dealing with 3 point did Tyler cut you off? 

4 the sons of the owners that I dealt with from 4 A. They came in and said all or nothing, I 

5 inception, so I know who begat who, begat who, who 5 think they more or less made their mind up, you are 

6 died and where they were buried. And so I have that 6 out, you are not buying enough, you are out. It was 

7 background. 7 a shock, I was upset that that could happen. 

8 We attempted to hire people with that type of 8 And I think it's the first time any manufacturer 

9 background. And we were successful at that and so 9 shut us off because of that, because they didn't 

10 most of our outside salesmen had 20 plus years, 30 10 like the way we were paying, I have had that over 

11 years, some cases 40 years backlog from other 11 the years, early years, but certainly not because we 

12 companies all right in their format. 12 weren't buying enough or there was complaints from 

13 Q. Did your customers communicate directly to 13 other people that were buying more that they should, 

14 you when you were serving as a salesman and also in 14 if they cut us off it would allow them to make more 

15 your previous positions why they wanted certain 15 profit on their whole project, whatever it was. 

16 things? 16 It was one of those or all of those, but we were 

17 A. Yes. 17 cut off, I was upset. I called SIGMA and told them 

18 Q. And was having this knowledge important to 18 what happened. They said don't worry about it, 

19 the success of Groeniger & Company? 19 we'll support you. 

20 A. I believe so. 20 Which I didn't realize to the extent to which 

21 Q. Mr. Truitt before we broke for lunch asked 21 they would support us at that point, we did a lot of 

22 you a question about whether or not Tyler had ever 22 work with them, had a long history with them. 

23 cut you off from supply and you mentioned that there 23 But they did, they supported us so well that we 

24 was an instance back in the 80s. Could you tell me 24 didn't miss it at all, we were buying Tyler fittings 

25 about that instance? 25 from SIGMA, where they were buying them, I don't 

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1 know, this was before any arrangements like this or 1 water works, sewer, storm drain. So that pretty 

2 anything like this. 2 well covers it. 

3 They were bitter competitors at the time. So 3 Q. Did Groeniger & Company ever compete in the 

4 they went out and bought them on the open market and 4 plumbing business? 

5 sold them to us at the price we would pay Tyler for 5 A. No. 

6 them. 6 Q. Are you familiar with the terms, or let me 

7 They were losing money, I knew that, but they 7 back up. If I were to use the term "water works 

8 did this and I was just amazed that someone would go 8 business," what would that mean to you? 

9 out of their way to support us that way. And that 9 A. That would be valve, pipe and fittings for 

10 kind of tightened the relationship well. 10 water application. 

11 Q. At what point did Groeniger & Company and 11 Q. Are those same fittings used in the water 

12 Tyler start doing business again after this 12 works business used in other lines of your business? 

13 instance? 13 A. Yes. 

14 A. Well, I think that was due to change in 14 Q. And what lines would those be? 

15 command. The only gentleman that I have ever 15 A. Well, fire protection uses some of the same 

16 escorted out of my office and off my property was a 16 materials, except with a little bit different 

17 Tyler manager, the only time in 48 years of business 17 specification, different approvals. 

18 that I ever did anything like that. So I mean, the 18 Underwriters Laboratory, Factory Mutual 

19 relationship is certainly up and down. 19 requirements for fire protection items are mandatory 

20 People changed, new people came in, were more 20 so there are certain product lines in all these 

21 sale oriented and I thought hey, maybe these guys 21 things that have to carry those approvals beyond the 

22 can maybe make a change and we'll give it a shot and 22 AWWA standard. 

23 it worked for awhile. 23 Q. So what products are sold, you stated 

24 But they were wanting more and we were not 24 already that the pipe, valves, hydrants and fittings 

25 giving them as much as they would like to see from 25 for water works. 

Page 106 Page 108 

1 us. But we probably gave them more business because 1 What about in waste water, what other products 

2 of that, maybe 33 percent of our business. 2 sold in waste water? 

3 Star was still not a viable alternative. So it 3 A. The same, the same. They could even use a 

4 was SIGMA getting the vast majority and then we were 4 hydrant in a waste water application. They do it 

5 not buying any more domestic at all from SIGMA, we 5 out here, they just paint it purple. 

6 were buying strictly from Tyler when we needed Tyler 6 Waste water is raw sewage, treated waste water, 

7 or domestic application, some of that was starting 7 which they pump back into the system and send out 

8 to show its head at that point. 8 for irrigating, golf courses, that type of stuff, 

9 Q. Do you recall how long you were cut off 9 usually coming back from the sewage treatment plant, 

10 from Tyler? 10 but it's been re-energized and disinfected, probably 

11 MR. TRUITT: Objection, relevance. 11 doesn't taste real good but wouldn't kill you. 

12 THE WITNESS: Year, two years. Maybe three. 12 So that would be considered waste water 

13 MR. MANN: Q. Shifting focus, just going back 13 application even though it's using it with a meter, 

14 to earlier testimony that you provided, could you 14 they even have the meter outside your house and that 

15 clarify exactly what lines of business Groeniger & 15 is another meter next to the water meter and those 

16 Company did business in? 16 goes for the irrigation for your yard and the other 

17 It sounded like you stated that it's a 17 is for the potable water that goes into the house. 

18 distributor for water projects, what other types of 18 More of your new subdivisions today are now 

19 projects? 19 putting those type of systems in effect so they 

20 A. Depends on the years you are talking about. 20 don't have to use all the water, good water for 

21 From its inception, from Groeniger's inception we 21 irrigating property and plants, they can use the 

22 were a manufacturer's representative for a 22 reclaimed which maybe makes them grow better, I 

23 manufactured item, then we became a full line 23 don't know. 

24 distributor for many items. 24 Q. What products are sold in the drainage side 

25 We were in the irrigation, fire protection, 25 of the business? 

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1 A. Well, drainage is, they still have valves 1 coming out that are underground. 

2 for that and they still have fittings for that but 2 So they are part and parcel to the whole 

3 they are low pressure because it's more of gravity 3 picture, but they are separated by -- maybe a 

4 application. 4 different contractor will sub bid that portion from 

5 Sewer systems are mostly gravity, there are 5 the general contractor that is doing the whole 

6 exceptions where you are pressurizing where you 6 plant. Other times they could do it themselves too. 

7 don't have a gravity fall. 7 Q. So if you were explaining to someone not 

8 But when it's -- the standard products are 8 familiar with the water works industry what line 

9 usually thinner wall, not pressure rated, handling 9 work is, how would you describe line work? 

10 up to three or four pounds of pressure, and it's 10 A. That is a phrase that is not really used 

11 just for when you have rainfall that fills the line 11 real heavily in our business. 

12 up and it moves the water from one place to another. 12 Line work is something you would use in the 

13 Q. Are ductal iron fittings, pipe fittings 13 power line I think. If it's pipeline work then it's 

14 used in drainage situations? 14 underground or overhead or exposed or not exposed. 

15 A. Some. 15 And that details the type of contractor, whether 

16 Q. Do you see them used typically in drainage 16 he is a mechanical contractor or underground 

17 lines? 17 contractor. 

18 A. Typically, no, but there are reasonable 18 Q. So in an underground pipeline project, what 

19 ways that you would, that's if you are shallow, if 19 are the typical products that are used in an 

20 you are not deep and you can be affected by road 20 underground pipeline project? 

21 traffic, then they would make the line ductal so 21 A. Pipe, valves, fittings, accessories, air 

22 they don't have to worry about a track driving over 22 valves, little things to make the pipeline work. 

23 it and squashing it. 23 Q. And what are the products that are sold in 

24 Q. So if the pipeline is using ductal iron 24 the plant work projects that you have previously 

25 pipe in a drainage application, then you would see a 25 described? 

Page 110 Page 112 

1 ductal iron paper fitting being used? 1 A. Pipe, valves and fittings, the same, but a 

2 A. Most likely, yes. 2 different end connection. Different coatings, 

3 Q. All right. What type of pipe is typically 3 linings, different end conditions there of the 

4 used in a drainage application? 4 piping too. 

5 A. They call it storm drain piping, low 5 Different variables of accessories items to make 

6 pressure. It could be PVC, it could be thin wall 6 the line work, different types of air valves, 

7 ductal, it could be steel, corrugated steel, 7 different types of control valves, turn things on, 

8 corrugated polyethylene, anything that doesn't 8 turn things off type of thing. 

9 require a high pressure water application. 9 Q. Does Groeniger & Company keep track of the 

10 Q. Are ductal iron pipe fittings primarily 10 number of projects it services in a particular year? 

11 used in high pressured applications? 11 A. No. 

12 A. Yes. 12 MR. PARKS: You mean like on a score card or 

13 Q. Are you familiar with the terms "line work" 13 something like that? 

14 and "plant work"? 14 MR. MANN: Q. Just if I were to ask how many 

15 A. Yes. 15 did Groeniger & Company service in 2008, would you 

16 Q. What is line work? 16 be able to answer that? 

17 A. Plant, they can be confused because there 17 A. Hundreds. 

18 is line work within a plant project. 18 Q. Hundreds in more than 200 but less than 

19 A project is so big and the plant is the piping 19 five? 

20 that is within the plant that is usually exposed, 20 A. It would be more than 200. But you are 

21 it's got your valves and it's in a building and you 21 talking about a project of this size and you are 

22 can get to all the products, the line work is 22 talking about a project of this size. 

23 underground. 23 So you are talking about immense differences, 

24 In most cases, all plants have line work too 24 there is projects that will span years. 

25 because they have sections bringing the water in and 25 Q. I won't worry about that. Earlier 

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1 Mr. Truitt asked you about some revenue and I 1 from that. We did not deviate at all. 

2 believe you stated that in 2006 it was, your annual 2 MR. MANN: Q. And as part of the current 

3 revenue was 210 million and that by 2010 it was less 3 proceeding Groeniger & Company received a subpoena 

4 than a hundred million. Do you recall that? 4 from both McWane as well as from the FTC 

5 A. Yes. 5 specifically asking for the total amount of 

6 Q. And he then asked what percentage of that 6 purchases that were made from the different ductal 

7 revenue was derived from ductal iron pipe fittings 7 iron pipe fitting suppliers. 

8 and you stated it was 20 to 25 percent as part of a 8 And the distribution group also received a 

9 package. 9 subpoena and there was an agreement that the 

10 I guess I wanted to circle back around and make 10 distribution group would supply the Federal Trade 

11 sure. Is it your testimony that 20 to 25 percent of 11 Commission as well as McWane with all of the 

12 your annual revenue is ductal iron pipe fittings? 12 purchases for this time period for the members. 

13 Or is it your testimony that 20 to 25 percent of 13 And what I am trying to figure out is whether or 

14 a typical package would be consisted of fittings and 14 not that would be a good source to turn to to figure 

15 so we could extrapolate -- do you see where I am 15 out what your purchases were during this time 

16 going with this? Can you clarify for us? 16 period. 

17 MR. TRUITT: Object to the form of the question. 17 And so my question to you is were the majority 

18 MR. PARKS: You can answer. 18 if not all of your fittings purchases in 2007, 2008, 

19 THE WITNESS: It's difficult to say because in 19 2009 and 2010 purchases that would have fallen under 

20 some cases of annual contracts, we at that time had 20 the distribution group umbrella? 

21 the annual contracts for the City and County of San 21 A. That would be an excellent source, and 

22 Francisco for fittings. And that's all the contract 22 extremely accurate. 

23 was for was for fittings. 23 Q. How many employees did Groeniger & Company 

24 We had the annual contract for pipe but not 24 employee? 

25 necessarily all at the same time. If we were low 25 MR. PARKS: At what time? 

Page 114 Page 116 

1 bid on that contract for that year we got that. 1 MR. MANN: Q. In 2011. 

2 So different times we had contracts for specific 2 A. Oh, we were possibly down to less than a 

3 things and one was for fittings and it was a big 3 hundred. 

4 contract, that was a considerable amount of 4 Q. And in 2010? 

5 fittings, that's possibly 5, $600,000 of fittings 5 A. Maybe 105. 

6 over a year's period of time. So that skews things 6 Q. And in 2009? 

7 a bit. 7 A. 120. This is all guessing of course. I 

8 I'd have to go back and take a look at our total 8 could verify that but I'd have to search through 

9 volume of fittings from the three or four or five 9 records again. 

10 people we bought fittings from and relate that to 10 Q. And in 2008 do you recall? 

11 the total and say it was over ten percent, it's 12 11 A. Well, let's put it this way, Counselor. At 

12 percent, I don't think it was much more than 15 12 2006 we had over 250 employees and we were starting 

13 percent on a total average of everything, but there 13 to slide about 2007 and we were laying people off, 

14 could have been times where, years where it was 14 closing branches, trying to stay ahead of the 

15 higher or lower. 15 recession. 

16 MR. MANN: Q. During the time period of 2007 to16 Q. In general what percentage of your 

17 2010, did you purchase the majority of your 17 employees are involved in management? 

18 fittings, ductal iron pipe fittings through the 18 A. What do you mean by management? 

19 distribution group? 19 Q. Let me ask a better question. If you had 

20 MR. TRUITT: Object to the form, majority. 20 to divide up all of your employees into different 

21 THE WITNESS: Well, we didn't, I would say we 21 categories, like management, administration, sales, 

22 didn't purchase anything from the group, they gave 22 what type of categories would you classify your 

23 us the outline of manufacturers that we could 23 employees in? 

24 support. And be within their scope of approvals. 24 A. What we call managers, we had regional 

25 And yes, we did buy the vast majority if not all 25 managers, we had branch managers and we had 

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1 officers. That was our breakdown. 1 our responsibilities go and that if he could 

2 Q. What percentage of your total number of 2 purchase, he could purchase materials for his 

3 employees would fall into the regional manager, 3 projects. 

4 branch manager and officers categories? 4 So instead of having one purchasing agent, we 

5 MR. TRUITT: Objection, it's vague and 5 had five, some were better at it than others. 

6 ambiguous, number of employees changed dramatically 6 Q. When you say he could purchase, what does 

7 over time he testified. 7 that mean? 

8 THE WITNESS: Well, as far as the officers, we 8 A. Well, he could purchase the products for 

9 had a core of officers that really didn't change 9 his job. So he could regulate in some cases his 

10 until real late, and that was one, two, three, four, 10 costs. 

11 five, six, seven. Seven people that were the 11 If he was really good at it or had a real good 

12 officer core and the senior management of the 12 friend, he could buy something cheaper than maybe 

13 company, ownership, maybe weren't an officer but had 13 our purchasing agent could buy it for his project. 

14 ownership of the company that worked there. They 14 And every invoice prints out and has the 

15 had to be working to be in that group. 15 percentage on it, and if it falls below a certain 

16 And it continued all the way on until probably 16 percentage a light will go on and then we'll counsel 

17 2011 before some of those departed. 17 him, what happened here. 

18 MR. MANN: Q. Focusing on sales, how many sales 18 So they would like to avoid that at all costs 

19 people did you have in 2011? 19 just because it makes them a little more vulnerable 

20 A. Hard to say. Each branch had four or five. 20 I guess. 

21 We considered inside sales, outside sales. 21 Q. Early earlier you indicated that one of the 

22 Q. What are the differences between an inside 22 rationales for having multiple branches was to be 

23 sales individual and an outside sales individual? 23 close to the projects. Is one of the functions of a 

24 A. Outside sales are classified as being 24 branch, is it to carry inventory? 

25 outside and usually do not run on the clock. 25 A. Yes. 

Page 118 Page 120 

1 The inside sales punch a time clock and are 1 Q. And do you recall what Groeniger's 

2 compensated differently, in regards to vehicles, 2 inventory value was in 2011? 

3 that type of scenario. 3 A. Probably 14 million. 

4 Q. What are the responsibilities of an outside 4 Q. Do you recall what it was in 2010? 

5 salesperson? 5 A. No, but I can tell you the high mark and 

6 A. They have responsibility for the account, 6 the low mark, we were somewhere in between. We were 

7 they have a responsibility to see that their 7 at 26 million in 2005. 

8 accounts are handled properly and efficiently. 8 Q. I am just focused on water works inventory. 

9 And they support from their inside counterpart, 9 So when I say water works let's include the 

10 if they are not in the office the inside person will 10 water works as well as the waste water applications. 

11 take care of the calls and make sure things are 11 Do you know how much of your inventory value in 

12 processed as if the outside sales person were there 12 2011 was for water and waste water products? 

13 also. 13 A. I would think vast majority of inventory 

14 It's a two pronged attack, if the customers, if 14 was for water. 

15 they can't get ahold of the outside salesperson, 15 Q. Are you able to provide a dollar value for 

16 this was before cell phones really took off, you can 16 your ductal iron pipe fitting inventory for these 

17 get ahold of anybody anytime now, but back then we 17 years at all? 

18 had two way radios and sometimes it was hard to get 18 A. Not offhand, no. 

19 people, whether they wanted to be found or not. But 19 Q. Earlier Mr. Truitt talked to you about A 

20 the inside person was always there and could handle 20 items, B items, C items and I have also heard D 

21 it. 21 items be used. 

22 Q. Any other responsibilities that an outside 22 Focusing on those terms as they relate to ductal 

23 salesperson would have other than managing an 23 iron pipe fittings, do you know what percentage of 

24 account? 24 your inventory is made up of A items? 

25 A. Well, we were relatively loose as far as 25 A. I would hope a hundred percent, but it's 

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1 not unfortunately. I would say at any given time 70 1 not be competitive in your complete package. 

2 percent, 65 percent, 70 percent. 2 And if your competitors knew that you were 

3 Q. The same question for B items, what 3 requiring on them to support your package, the price 

4 percentage of your ductal iron pipe fitting 4 could double or triple or not be available, we just 

5 inventory is made up of B items? 5 don't have that, sir, sorry, that can happen. It 

6 A. Probably another 10 percent on top of that. 6 has happened. 

7 Q. And for your C items? 7 And when they do have it they just don't want 

8 A. The remainder. And those are the things 8 you to get it, that's all. So you have a tendency 

9 that have come back off of a project and you are 9 to want to have everything under your own control 

10 just holding them for the right time and right place 10 and that's important. 

11 and it becomes larger and larger and larger every 11 Q. Is it safe to say that you couldn't build 

12 year that you are in business, because these boat 12 your business on relying on your competitors for B 

13 anchors as we call them have a tendency to collect. 13 items and C items? 

14 Q. So am I understanding correctly that your 14 MR. TRUITT: Objection to the form. 

15 percentage of C items is larger than your percentage 15 THE WITNESS: That's not conducive to longevity, 

16 of B items in an inventory? 16 let's put it that way. No, I think you would 

17 A. No. I don't think so. I would not say so. 17 eventually, the margin of profit in the water works 

18 But there are so many variables, you have to go back 18 business would not allow for that very long. 

19 and look at what a B item is. 19 MR. MANN: Q. How long would you be able to 

20 You are probably right, if I am looking at A and 20 sustain that, if that was your business model? 

21 B items, together certainly you are going to be in 21 A. If your competition understood that then 

22 the highest percentage we have. 22 they would play on that and it would be very 

23 But there are still a large quantity of things 23 difficult to get a consistent player, customer to 

24 that do not move, month after month, year after year 24 say you are my people. 

25 that you still have in inventory and that you'll 25 Q. In your previous testimony, I don't know if 

Page 122 Page 124 

1 sell one or two of those things a month that you 1 you want to pull it up, I think we marked it as 

2 have had for a year. 2 Exhibit 1. 

3 So it's hard to say, I am sorry, I can't give 3 On page 42, Mr. Renner at the very top asks, "Do 

4 you the right answer on that. 4 you know how many distinct type of fittings or SKU's 

5 Q. Focusing on just the B items, is it 5 of the fittings that Groeniger & Company would sell 

6 necessary to stock B items in inventory? 6 in a given year?" 

7 A. Yes, it is to an extent. Would you be out 7 "Answer: Yes, about a thousand, 1150 average, 

8 of business if you didn't have the B items? 8 probably." 

9 Probably not, you could find them somewhere close by 9 Is that still correct? 

10 but you'd pay for it, you'd pay the freight to get 10 A. As a shot in the dark, without knowing, now 

11 it there and everything else. 11 understand that a fitting kind of is a fitting and 

12 So you have a tendency to want to stock some of 12 it kind of is a fitting, but different manufacturers 

13 those things that aren't as commonly used just to 13 are approved here than here. 

14 complete the package. 14 So you may have to have two types of the same 

15 Subdivisions, yes, public works no, there is no 15 fitting from two different manufacturers to supply 

16 need for B items and C items in the public works, 16 to, or keep a district or a customer happy. 

17 you sell everything you buy and everything's fine. 17 And so yeah, I think that's in the realm of what 

18 Q. If you didn't have access to B items or C 18 it is, if you are looking at their price lists and 

19 items, all you could get was A items, what would the 19 how many SKU's they have and if you double that or 

20 ramifications be to your business? 20 triple that by manufacturers. 

21 MR. TRUITT: Object to the form, asked and 21 Q. When Groeniger & Company sold to Ferguson 

22 answered. 22 Enterprises in 2011, how many branches did Groeniger 

23 THE WITNESS: It would be difficult. You would 23 & Company have? 

24 have to buy those from your competitors. And pay 24 A. Say that again, sir, I am sorry. I was 

25 whatever rate that they would charge you, you would 25 looking at this, I am sorry. 

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1 Q. That's fine. At the end of 2011 when 1 A. Knowledge about what is done locally. A 

2 Groeniger & Company sold its business to Ferguson, 2 specification is a written book, it tells you what 

3 how many branches did Groeniger & Company have? 3 brands you can use and how they are installed. 

4 A. Nine I think. I think it was nine 4 That doesn't necessarily mean that a local 

5 branches. 5 contractor who the district likes does it that way. 

6 Q. And in 2010, how many branches did 6 But if you are coming from afar and they don't know 

7 Groeniger & Company have? 7 how well to trust the contractor, they'll give him, 

8 A. Ten, eleven. It's going to work its way 8 that's the Bible of what you do here, and he may 

9 down from -­ 9 have to do it considerably different than the local 

10 Q. Do you recall how many branches you closed 10 would do it. That doesn't happen all the time, but 

11 in 2009? 11 it does happen. 

12 A. No, I couldn't, I am just guessing, that is 12 Q. Any other rationales that come to mind? 

13 going downhill, I know that. 13 A. All of the above, that's all. That in 

14 I don't have the exact dates of the closures, 14 itself is enough to want you to be close by. 

15 but we were closing them pretty heavily about that 15 Q. As a general rule of thumb you stated that 

16 time. 16 you tried to position your branches about two hours 

17 Q. Earlier you stated that one of the 17 driving time. 

18 rationales for having multiple branches was to be 18 Two hours driving time in the Bay Area is 

19 close to the projects. 19 probably a different distance than two hours of 

20 Are there any other rationales to having 20 driving time in central California; is that correct? 

21 multiple branches other than just being close to the 21 A. Well, it all comes down to a day by 

22 projects? 22 horseback to be honest with you. 

23 A. Being close to the project is big, it's not 23 Fresno to Stockton, Stockton to Sacramento, 

24 just being chose by physically, it's mentally and 24 Sacramento to other places was about a day's 

25 the people that are talking to the local people are 25 horseback ride. 

Page 126 Page 128 

1 local people themselves. 1 And that's just the way the towns built 

2 And they understand the ramifications of dealing 2 themselves. So it comes down in our speed to two 

3 with certain districts and being local. 3 hours, an hour and a half to two hours. 

4 When you get out into the Central Valley of 4 Q. So as a general rule of thumb, how large of 

5 California, it's very big, if you are local you get 5 a radius is a branch servicing in terms of miles? 

6 preferences that you wouldn't normally get. 6 Earlier you stated it was about 50 miles, but then 

7 The good old boy syndrome is certainly alive and 7 you also said 75 or a hundred miles. 

8 well in the Central Valley, much more than it is in 8 A. Well, two hours away you are talking about 

9 the Bay Area. So you have those things. 9 an effective radius of 60 miles, 70 miles. 

10 By having a branch and having physical identity 10 And then you would be interfering with the 

11 into an area gives you that capability. It supports 11 effective radius of another branch. 

12 service certainly, it supports the local 12 And there was always conflict between who had 

13 specifications, but also you have your employees are 13 rights to a particular job, that was up to 

14 living there and are on the same baseball team, 14 management to make the decision and say this is the 

15 their kids are on same baseball team, they are 15 way this was going to be handled and so forth, and 

16 coaching the other kids, so a lot of intertwining 16 we did that pretty good. 

17 which is very important for relationships. 17 Q. Was there a particular branch that had a 

18 Q. So being close in terms of just the number 18 relatively small service area compared to another 

19 of miles or the time it takes to service a project 19 branch that you would say had a large service area? 

20 would be one factor. 20 A. Well, yes, only because of locations. 

21 Another one that you have just stated would be 21 There were branches with big inventories and there 

22 the relationships between the local sales 22 were branches with small inventories. Depending on 

23 individuals and the contractors or the end customer. 23 the amount of time it takes them to go through their 

24 Are there any other rationales for having 24 inventory, and their inventory is based on monthly 

25 multiple branches? 25 sales. 

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1 So in the summertime when they are doing more 1 Maria. That's eight, and then Tracy. 

2 business they are turning that inventory faster, we 2 Q. And what two branches were closed? 

3 allow them more inventory. 3 A. Tracy, Santa Maria. 

4 In the wintertime when they are not turning it 4 Q. Those have since been closed? 

5 as fast it comes from a different ratio. So smaller 5 A. Yes. We reopened one, we reopened San 

6 branches have smaller inventories and are probably 6 Jose. 

7 defined into a smaller area. 7 Q. And when did you reopen San Jose? 

8 But that doesn't mean they can't go two and a 8 A. Just after the acquisition. 

9 half to three hours away from them to supply a 9 Q. So the first part of this year? 

10 project. Because there is nobody else that can do 10 A. Yes. 

11 it either. So there is exceptions to every rule. 11 Q. And when you say we -­

12 Q. What is driving the level of sales within a 12 A. I shouldn't say that, I'm sorry. Ferguson 

13 particular branch? Did you understand my question? 13 had an operation in San Jose, a very small 

14 A. No. 14 operation. 

15 Q. You just stated that the smaller branch 15 When the acquisition was finalized we moved some 

16 maybe isn't turning over its inventory as quickly as 16 of our salesmen that we brought back from a branch 

17 a larger branch, so it doesn't have as much 17 we previously had in San Jose to there and changed 

18 inventory which makes it a smaller branch. 18 their name from Ferguson to Groeniger, to take 

19 What is it that's causing the larger branch to 19 advantage of the good name and that's very 

20 be able to turn over its inventory quicker than a 20 successful right now. 

21 smaller branch? 21 Q. So is Ferguson operating these branches 

22 A. Home starts, certain areas that they are 22 under the Groeniger name? 

23 building heavily would indicate that. 23 A. Yes. 

24 Sacramento was booming back in the early 2000s, 24 Q. In 2009 do you recall what other branches 

25 they were just booming there. Anybody could be 25 were open? 

Page 130 Page 132 

1 successful moving to Sacramento then. And that was 1 A. We had Redding, Santa Rosa -­

2 our highest, largest by far operations were in the 2 Q. Was your Roseville branch open? 

3 Sacramento area. 3 A. Roseville branch was open. And Santa Paula 

4 Now they may be ranked third or fourth because 4 and Lancaster. Lancaster, Palmdale. And Temecula. 

5 there is not any building, no subdivisions at all 5 Q. Just based on your recollection all those 

6 going on up there, they will come back but right now 6 branches were open in the 2009 calendar year? 

7 there is none. So that changes. 7 A. I think so, I think 2009, yeah, I would 

8 But where there is a lot of subdivisions being 8 think so. 

9 built, then you usually have a big inventory and 9 Q. Mr. Groeniger, if I were to hand you a 

10 lots of business going on and pressure for us to 10 collection of just some Google maps, would you be 

11 increase our size and our service support. 11 able to identify what the service areas were for 

12 But if there isn't, if you take a look at 12 each of the branches that we have just identified? 

13 Bakersfield, not a lot of subdivisions in 13 A. Sure. 

14 Bakersfield, but there is a lot of money in 14 Q. I am going to hand you what's been marked 

15 Bakersfield through oil and through agriculture that 15 CX 1690 and just for the record, this is a 

16 they are redoing some of the infrastructure and 16 collection of five different snapshots taken from 

17 things like that, so there is business. But there 17 Google Maps of different areas in California. 

18 is not the subdivision format. 18 And you can use whatever maps make the most 

19 Q. Do you recall where the nine locations 19 sense to identify the different regions. But I am 

20 were, where your nine branches were at the end of 20 going to hand you a red pen and if you want to 

21 2011? 21 start, I think you said that headquarters for 

22 A. Yes. 22 Groeniger & Company was Hayward. 

23 Q. Can you tell me what locations those were? 23 MR. TRUITT; I will object to this line of 

24 A. Okay. Bakersfield, Modesto, Fresno, 24 questioning on foundation and also there is no scale 

25 Sacramento, Chico, Hayward, Salinas, and Santa 25 to these maps. 

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1 MR. MANN: Q. Go ahead. 1 don't exist today that did in 2009 or 2010? 

2 A. Hayward, I am going to put a big round box 2 A. Yes. 

3 around Hayward because that was our corporate 3 Q. And what would those be? 

4 headquarters. 4 A. That would be Kenko Utility Supply, they 

5 Q. Okay. 5 had three branches, Ed Walsh Company which had three 

6 A. And you are talking about what year? 6 branches. 

7 Q. Let's focus on the 2010 calendar year. 7 Q. And when you say Kenko had three branches, 

8 2009, 2010 calendar year. 8 did they have three branches within all what you 

9 A. Okay. Well, we had an operation, I am 9 would identify as Hayward? 

10 putting the square around it because that's 10 A. They serviced contractors in our area. 

11 corporate headquarters. Round circle here. 11 They had one in San Jose, one in Tracy but they were 

12 Q. Where is "here"? 12 coming after the group of contractors, Bay Area 

13 A. San Jose, I am sorry. 13 contractors but they would come over the hill and 

14 Q. Okay. 14 support that. And they had one in Antioch. 

15 A. And Salinas, here we have one here. We 15 Q. Do you have any idea what your market share 

16 have Santa Rosa, we have one there. We had one in 16 was in what you have identified as the Hayward 

17 Sacramento and then one in Roseville. 17 market? 

18 We had one I didn't bring to your attention 18 A. I think our Hayward market share was 

19 which was Lodi, sorry about that, I forgot about 19 probably in the 40 to 50, 40 to 45 percent. 

20 Lodi, it was a small operation. 20 Q. And how much did Ferguson have? 

21 Q. That's all right. 21 A. Ferguson had probably 10 percent. 

22 A. Modesto and Fresno on this map. So what 22 Q. And Pace? 

23 you were looking at, if I was to draw a map around 23 A. Pace had probably 15 percent. 

24 it I would say it would go like this and it would go 24 Q. And Corex? 

25 kind of like -­ 25 A. Corex had probably, oh, probably five to 

Page 134 Page 136 

1 Q. You can just draw it, you don't have to 1 ten percent. 

2 narrate for us, it be entered as an exhibit and we 2 Q. And then Kenko? 

3 will all have copies of it. 3 A. Kenko, didn't I mention those before? Am I 

4 A. Let's go by the road here. Okay. I am not 4 over 150 percent now? 

5 going to narrate, I am sorry. 5 Q. No, you are not quite. 

6 Q. On the next page there is a better snapshot 6 A. Our biggest competition in the Bay Area is 

7 of the northern part of California, I don't know if 7 R&B Company. But as a model they have one, two, in 

8 that will help. 8 the Bay Area. They have one, two, three operations 

9 A. All right. 9 which are directly in the Bay Area that compete 

10 Q. Maps 3 and 4 I think we may have already 10 against us and they probably have 20 percent of the 

11 covered, I think they are just different in terms of 11 market. 

12 scale. And then maybe between 4 and 5. 12 The rest of them are all done differently, they 

13 A. Okay. 13 are our biggest competition in the Bay Area, but 

14 Q. Can I take a look at that? So just focusing 14 only the Bay Area. 

15 on the geographic area that you have identified as 15 Q. And when you say the Bay Area, that would 

16 with Hayward, who do you compete with in what I'll 16 be the Hayward market? 

17 refer to as the Hayward market? 17 A. Hayward facility, yes. 

18 A. Hayward market, R&B Supply. You would 18 Q. So you believe that you are at 40 to 45 

19 compete against Ferguson, several branches of 19 percent, R&B is at about 20 percent -­

20 Ferguson, several branches of R&B Supply. 20 A. And the rest of them are small, they will 

21 You would compete against Pace Supply, several 21 take a job now and then but they are not in the 

22 branches, couple of branches I should say. 22 every day market. 

23 And Corex, that's today. Back years ago there 23 It's better to say it that way instead of giving 

24 was different ones but that's right today. 24 everybody a percentage that's going to total over a 

25 Q. Were there any that exist today, or that 25 hundred percent. 

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1 Q. That's fine. Who could potentially enter 1 MR. MANN: Q. If we were to shift gears to the 

2 this market in the next two years? 2 Modesto market that you have identified, who do you 

3 MR. TRUITT: Objection, foundation. 3 compete with? 

4 MR. MANN: Q. Do you keep track of who 4 A. Ferguson primarily. That was until they 

5 potential entrants might be? 5 bought us. R&B just opened a branch out in 

6 A. We know pretty much who it would be, HD 6 Stockton. 

7 Supply -­ 7 Q. And what is your market share do you 

8 MR. TRUITT: Also speculation. 8 believe in the Modesto market? 

9 THE WITNESS: HD Supply, a national company, 9 A. Probably 55 to 60 percent. 

10 they were one of the companies that looked at us, 10 Q. And before Ferguson purchased you what was 

11 who have very little representation, have since 11 their market share? 

12 within the last month opened a branch in Hayward by 12 A. Ten or less. 

13 the way. But they are novices at it so it will take 13 Q. And what's R&B's market share in your 

14 a long time. 14 Modesto market? 

15 HD Supply is a national company, lot of money. 15 A. About, probably ten percent. 

16 You have Corex which is a Canadian company, it's 16 Q. Who would have made up the remainder 20 

17 come and bought Ed Walsh Company and are opening up 17 percent? 

18 three or four new branches in or around the Bay 18 A. It would have been Edward Walsh Company who 

19 Area. 19 is now Corex. 

20 You have Pace which is an employee owned company 20 Q. Anyone else? 

21 out of Santa Rosa who now has opened three or four 21 A. Not right now, no. 

22 branches around the Bay Area. 22 Q. Shifting to what you have identified as the 

23 They were basically in Santa Rosa, and we 23 Sacramento market -­

24 competed against them with our Santa Rosa branch and 24 MR. TRUITT: Objection, time frame. Are we 

25 as soon as we got out of town they have in the 25 talking about presently? 

Page 138 Page 140 

1 middle of all this expanded, which is amazing, but 1 THE WITNESS: What time frame? 

2 they did. Now they have branches in San Francisco, 2 MR. MANN: Q. So in the 2009, 2010 time period, 

3 San Jose, Oakland and Stockton. And Sacramento. 3 2011, those three years, if there is any significant 

4 HD has opened a branch in the last year and a 4 difference between those three years -­

5 half in Sacramento, one in Hayward and they are 5 A. There is, yes. 

6 talking about reopening in Fresno and, let's see if 6 Q. So in 2011, what was your market share in 

7 they can get the people to do that but that is what 7 the Sacramento market? 

8 their plans are. 8 A. Probably 40 percent. Largest single 

9 Q. So as far as the Hayward market is 9 entity, the others together are more than we do. 

10 concerned though, you said HD Supply is a potential 10 Q. And who else is in the Sacramento market? 

11 entrant and others who have entered would be Pace? 11 A. In 2011 you have some new players. Of 

12 A. Pace. 12 course, you have got Corex opening up there, you 

13 Q. And -­ 13 have HD opening up there, you have Pace opening up 

14 A. R&B is big -­ 14 there, all aggressively going after business. 

15 Q. R&B already is here though, right? 15 So it's a very, very tough market right now. We 

16 A. Right. And Corex. 16 had the market way more than 50 percent at one time 

17 Q. And Corex. Other than HD Supply who you 17 but we don't have that now. 

18 said just recently opened up, is there anyone on the 18 Q. And what do you think the current, in 2011, 

19 horizon who you think is potentially looking at 19 how much market share did Corex have? 

20 entering the Hayward market? 20 A. Probably less than, probably less than two 

21 MR. TRUITT: Objection, speculation, foundation. 21 percent. 

22 THE WITNESS: I don't think at this point in the 22 Q. And how much market share did HD have in 

23 economy there would be, it would have to be a 23 2011? 

24 national account and all the national people are 24 A. Probably less than five percent. 

25 represented now. 25 Q. And in 2011 how much market share did Pace 

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1 have in the Sacramento market? 1 more. 

2 A. Pace had 10 to 15 percent. 2 Q. So close to 60 percent? 

3 Q. So if you are approximately 40 percent and 3 A. No, but between 50 and 60 percent. 

4 Corex, HD and Pace make up approximately 20 to 22 4 Q. And was Ferguson still the same, about 15 

5 percent, who else -­ 5 to 20 percent? 

6 A. Ferguson. 6 A. Yeah, because I think back in 2009 we still 

7 Q. And how much market share did Ferguson have 7 had our operation in Roseville which combined with 

8 in 2011? And you said it was 15 to 20 percent? 8 Sacramento and that's the same market area, we were 

9 A. 15 to 20 percent, if that adds up, good. 9 servicing customers from both areas which no one 

10 Q. We are actually about 15 percent shy, was 10 else had the ability to do, which was big. 

11 there another person in there or are your estimates 11 So we were getting the lion's share of the 

12 maybe a little low? 12 market up there at that time. 

13 A. Just redo the estimates to fit, but that is 13 Q. Focusing on the Santa Rosa branch and the 

14 the ratios of I would say one to the other or to the 14 market that you have identified, who did you compete 

15 other as far as personnel, as far as equipment, as 15 with in 2009 in Santa Rosa? 

16 far as inventory, as far as capabilities. 16 A. Pace Supply. And Ferguson. 

17 Q. In 2010 in the Sacramento market, what was 17 Q. Anyone else? 

18 your market share? 18 A. People coming out of the Bay Area up there 

19 MR. TRUITT: Objection, foundation. 19 on occasion, following their contractor would bid a 

20 THE WITNESS: It was greater. Probably over 50 20 job, and they could supply one up there, but as a 

21 percent. 21 whole those were the three that were actively 

22 MR. MANN: Q. And what was Ferguson in 2010 in 22 involved in selling everyday stuff to the districts 

23 Sacramento? 23 and to the contractors. 

24 A. About the same. 24 Q. And what was in 2009 Groeniger's market 

25 Q. The 15 to 20 percent? 25 share in the Santa Rosa market? 

Page 142 Page 144 

1 A. Yeah, uh-huh. 1 A. Probably 40 percent. 

2 Q. Now you said that Corex, HD and Pace 2 Q. And what was Pace's market? 

3 entered in 2011. So who was competing in 2010? 3 A. About 60 percent. 

4 A. Well, it was Ferguson, ourselves, Pace was 4 Q. And Ferguson just had some fringe business? 

5 there and there was Camellia Valley Supply which was 5 A. Yes, everybody else was just fringe 

6 purchased by Ferguson sometime around there on the 6 business. 

7 year before and took them out of the ballgame. 7 Q. And in 2010 were there any new entrants in 

8 And HD did not come along until the people left 8 that market? 

9 us to go to HD, so they took away from us to open up 9 A. I think 2010 we left the area. Our 

10 up there. And Corex was not there yet. 10 contractor was purchased, went out of business and 

11 But there was other people sniping from afar I 11 he was our biggest customer, our rent was heavy up 

12 should say from the Bay Area, R&B was quoting 12 there, we decided to close it, move the employees to 

13 projects up there, they didn't get a lot of them but 13 Sacramento or to Hayward and move the inventories 

14 they got some. 14 back to one of the others and close the branch. 

15 Q. Shifting gears to, actually before we do 15 Q. So in 2010 you closed the Santa Rosa 

16 that, that was in 2010. 16 branch? 

17 Was there a significant difference in 2009 17 A. I believe, yes. 

18 compared to 2010 as far as market share and who your 18 Q. Shifting to the Modesto market, in 2009 

19 competitors were in the Sacramento market? 19 what was your market share in the Modesto market? 

20 MR. TRUITT: Objection, foundation. 20 MR. TRUITT: Same objections. May I have a 

21 THE WITNESS: I would say that there was, we had 21 standing objection so I don't have to interrupt you 

22 more market share. 22 every time? 

23 MR. MANN: Q. How much was your market share in 23 MR. MANN: That's fine. 

24 2009? 24 MR. TRUITT: Thank you. 

25 A. Two or three points, four or five points 25 THE WITNESS: Modesto itself is not a big town 

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1 compared to Stockton. So their influence went as 1 Q. So between Pace and R&B, did they split the 

2 far as Stockton, to the north of Stockton all the 2 rest of the business? 

3 way down to between Modesto and Fresno and all the 3 A. As much as I can tell you. I wasn't as 

4 way through the foothills. 4 interested in those people as the ones who had the 

5 So I think our market share in that area was 5 potential to challenge us both sales wise and 

6 significant. Probably in the 60s, high 60 6 service wise. 

7 percentage points. 7 Q. Going to Chico, 2009 what was your market 

8 MR. MANN: Q. And who also serviced the Modesto 8 share? 

9 market? 9 A. 2009 probably 20 percent. 

10 A. When? 10 Q. And who else did you compete against in the 

11 Q. In 2009 as you have identified on this map. 11 Chico market? 

12 A. Ferguson and Ed Walsh Company. 12 A. Ferguson. They were about 60 percent. 

13 Q. And what was Ferguson's market share in 13 Q. And in 2009 who made up the remainder 20? 

14 2009? 14 A. It came out of R&B Supply out of Redding, 

15 A. Minimal, 5 to 10 percent. 15 came from some of the other players at that time, 

16 Q. And Ed Walsh Company? 16 Camellia Valley Supply had a branch there too, they 

17 A. They were the other, they did a 17 were significant. 

18 considerable amount of business. 18 Q. And in 2010 did anyone enter? 

19 Q. And in 2010 what was your market share in 19 A. Ferguson went out of business, bought 

20 the Modesto market? 20 Camellia Valley Supply which had a branch there. 

21 A. You went up to 2010 from 2009, correct? 21 They eventually moved out of town. 

22 Q. Correct, yeah. 22 We were left there, we were the only one for 

23 A. Then we have now the R&B coming into town 23 awhile. R&B has come down and put a small operation 

24 and we have Ed Walsh being purchased by Corex and 24 in there. 

25 suddenly a more aggressive format. 25 And Ferguson has tried to compete in the area 

Page 146 Page 148 

1 And then you had Pace coming all the way down 1 from afar with relationships and so forth and they 

2 from, they opened up a facility in Stockton and they 2 have done some work there. 

3 were coming down. Not effectively but they were 3 Q. So in 2010 you stated that Ferguson left 

4 there. It did vary a small amount downward for us. 4 the Chico market? 

5 Q. So you said you were in the high 60s in 5 A. Yeah. I might say they didn't leave it, 

6 2009, were you in the -­ 6 they took their branch out and local inventory 

7 A. 50s. 7 disappeared there. 

8 Q. High 50s? 8 Q. So what was your market share in 2010 in 

9 A. Mid 50s. Still a very big branch for us 9 the Chico market? 

10 though. 10 A. I think it was rising, it was in the 35 

11 Q. And was Ferguson still there in 2010? 11 percent market, we grew, maybe 40 percent toward the 

12 A. Yes. 12 end of that year. 

13 Q. And in 2009 you say that they were five to 13 Q. And what was Ferguson in 2010, what was 

14 ten percent. 14 Ferguson's market share? 

15 A. They didn't change much, it was the other 15 A. Probably less than 15 percent, maybe 20 

16 people that changed more than Ferguson did. 16 percent. 

17 Q. And Corex purchased the Ed Walsh Company? 17 Q. Did you say that R&B was there in 2010? 

18 A. Yes. 18 A. R&B was quoting in that area, yeah, maybe 

19 Q. And Ed Walsh had approximately 20 percent 19 getting ten percent of the market too. It's not a 

20 in 2009. Did Corex maintain that? 20 big market. 

21 A. Probably a little -- mostly, yes, they 21 Q. Anyone else in 2010 that would have been in 

22 maintained it, they grew it but they maintained. 22 the Chico market? 

23 Q. And Pace would have had the remainder? 23 A. Camellia Valley if they still owned their 

24 A. Pace would have with the remainder and R&B 24 own business, but I think it was Ferguson by that 

25 would have had some of that. 25 time. 

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1 Q. And how much of a market share did they 1 A. Probably I would say 60 percent. 

2 have? Camellia Valley? The remainder? 2 Q. And who did you compete with? 

3 A. I couldn't tell you at that time. I'd have 3 A. Ferguson. 

4 to go back to all my notes of that ARRA and see when 4 Q. And what was their market share? 

5 they left town and who they took with them and so 5 A. 45, 40, whatever. 

6 forth. 6 Q. And in 2010? What was your market share in 

7 It's kind of a complicated thing. Not that I 7 the Santa Maria market? 

8 couldn't find out but I don't have it to my 8 A. I think it held pretty consistent. 

9 knowledge at the moment. 9 Q. 60, 40 between you and Ferguson? 

10 Q. Going up to Redding, what was your market 10 A. Yeah. 

11 share in 2009? 11 Q. And in Santa Paula, in 2009 what was your 

12 A. 2009? 12 market share? 

13 Q. Correct. 13 A. Probably, oh, probably 25 to 30 percent. 

14 A. Probably, we were still in business there 14 Q. And who else was in that market? In 2009? 

15 in 2009, we probably had 50 percent of the market. 15 A. There was Ferguson, there was an 

16 Q. And who else was in the Redding market? 16 independent, I am trying to think of his name, name 

17 A. Ferguson had the other 50. That was it. 17 doesn't come to me, independent there that was well 

18 Q. And in 2010? 18 respected. 

19 A. R&B came to town, we left town. The market 19 We tried to purchase him at one time, it was an 

20 was not, even if you had 50 percent of it it was 50 20 independent and I can't think of his name at the 

21 percent of nothing. 21 moment. 

22 Q. Gotcha. 22 Q. And how much market share did Ferguson have 

23 A. So we decided to close it and we sold the 23 in 2009? 

24 property and moved on. 24 A. Probably about the same amount as we had 

25 Q. So it was 2010 that you closed the Redding 25 and the independent had the remainder. 

Page 150 Page 152 

1 market? 1 Q. So the independent was the dominant 

2 A. Yes. 2 supplier in Santa Rosa? 

3 Q. The Redding branch? 3 A. You are talking about Santa Paula? 

4 A. Yes, and the market too probably. 4 Q. Yes, excuse me. 

5 Q. Going down to the Fresno area, 2009, what 5 A. Santa Paula is very small but you have 

6 was your market share in Fresno? 6 Ventura and you are going up to Santa Barbara and 

7 A. Probably 65 percent. 7 that is the area they were located and they were 

8 Q. And who else did you compete with in -­ 8 closer to the user than we were. 

9 A. Ferguson. About 30 percent. And then HD 9 Q. In 2010 did your market share stay constant 

10 Supply, yeah, HD Supply is the other, that was it. 10 at 25, 30 percent in Santa Paula? 

11 Q. And in 2010? 11 A. That was one of the first ones we closed, 

12 A. 2010? 12 we had to be closed by then. 

13 Q. What was your market share? 13 Q. I think we are done, I have got two left. 

14 A. I think it was probably 60, 40, HD Supply 14 So Palmdale, 2009 in Palmdale, what was your market 

15 was not a factor, 60, 40, us versus Ferguson. 15 share? 

16 Q. Shifting to Bakersfield, what was your 16 A. Ten percent. 

17 market share in 2009 in the Bakersfield market? 17 Q. And who did you compete against in 2009 in 

18 A. Basically fifty-fifty with Ferguson. 18 the Palmdale market? 

19 Q. And in 2010? 19 A. HD Supply. 

20 A. Fifty-fifty with Ferguson. And there is HD 20 Q. What was their market share? 

21 Supply located there but they don't do much, less 21 A. Probably 65 percent. And Ferguson, the 

22 than ten percent, less than five percent probably. 22 difference between the two. 

23 Q. The Santa Maria market? 23 Q. And in 2010, anyone enter? 

24 A. Santa Maria market -­ 24 A. We closed that pretty quick too. So right 

25 Q. In 2009 what was your market share? 25 now the market share is between Ferguson and HD. 

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1 Q. And then in Temecula in 2009, what was your 1 What did you mean by that? 

2 market share? 2 A. Historically, I am giving you a soliloquy 

3 A. Probably 25 to 30 percent. 3 here again, but historically the big companies buy 

4 Q. And was Ferguson in that market? 4 smaller companies and gain market share. And they 

5 A. Yes, sir. 5 have done that successfully. 

6 Q. What was their market share? 6 But what they haven't done is to start out from 

7 A. Probably about the same. 7 scratch and build something that is not already 

8 Q. And HD? 8 there. Especially if they are competing against 

9 A. HD was in there, close to the same. 9 independents who have been there for awhile, it's 

10 Q. Close to the same -­ 10 very, very difficult. 

11 A. Between all three of us we were the vast 11 And usually the big guys don't have the staying 

12 majority of the business but there were probably two 12 power of wanting to lose money for a period of time 

13 or three independents that were at the outer fringes 13 while they get their act together. And so you don't 

14 of their service capability, but they would enter 14 see much of that, nor have they been successful at 

15 into it also. 15 that. Hard to see any representation of success 

16 And you had, at that time 2009, it was still HD 16 from that type of a venture in the state of 

17 at that time. They purchased my brother's business 17 California that I have seen. 

18 which was pretty heavy down there and that's why we 18 But when they take over and buy a company that's 

19 moved down there because he was no longer. 19 got market share already, all they have to do is add 

20 But it's hard to say exactly what percentage 20 their money or overhead capability to it and 

21 each of them had in comparison to the other. I know 21 support, then they can be successful. But starting 

22 we didn't have the majority, I knew that. 22 out from scratch it's a tough road to hoe. 

23 Q. So you said there were two to three fringe 23 Q. What are the challenges that, for example, 

24 players, what percentage do you think they had in 24 HD Supply or anyone that's entering a market just 

25 2009? 25 starting from scratch, what are the challenges that 

Page 154 Page 156 

1 A. Probably less than ten percent total. 1 they have to overcome? 

2 Q. And then between Groeniger, Ferguson and 2 A. Know the territory, know the people, know 

3 HD, the rest of you split the remainder 90 percent 3 the culture. In some cases that's extremely big. 

4 so each of you had roughly about 30 percent? 4 Central Valley, that is the name. 

5 A. Yeah. 5 When you get into the big metropolitan areas 

6 Q. Did that change in 2010 or is that the year 6 it's not as big a thing, but certainly in the 

7 that you closed? 7 Central Valley which Sacramento is part of the 

8 A. We closed. 8 Central Valley, that's big there. 

9 Q. Thank you for walking me through that 9 And knowing the diversity of the specifications, 

10 although it probably was extremely painful for you 10 what type of material you have to handle, what 

11 to do, it's helpful for us. 11 brands you have to handle. Sometimes those brands 

12 A. I can't say how accurate it was but we'll 12 are available, sometimes they are not. 

13 see. 13 Q. What do you mean by sometimes a brand is 

14 MR. TRUITT: Drew, are you at a good point for a 14 not available? 

15 short break? 15 A. Well, sometimes they have relationships 

16 MR. MANN: Yeah, let's do that. 16 with other people. 

17 (Brief recess taken.) 17 Q. So when you say that they have 

18 MR. MANN: Let's go back on the record. 18 relationships with other people, you are suggesting 

19 Q. Mr. Groeniger, before we broke, we were 19 that a particular manufacturer of a product would 

20 going over the different market shares and you made 20 have a relationship with someone that would prevent 

21 a comment that I just wanted to circle back around 21 a new distributor from being able to gain access to 

22 to. 22 that manufacturer? 

23 And that was when HD Supply entered the Hayward 23 MR. TRUITT: Object to the form. 

24 market, that they were, it was a novice branch that 24 THE WITNESS: Yes. 

25 they had opened and it was going to take some time. 25 MR. MANN: Let me see if I can cure that 

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1 objection. 1 work you need to have a full line of products? 

2 Q. What did you mean when you stated that they 2 MR. TRUITT: Object to the form. 

3 would have an challenge gaining access? 3 THE WITNESS: Yes. 

4 A. Your product lines consist of many 4 MR. MANN: Q. Earlier this morning you used a 

5 manufacturers. Some manufacturers you have a long 5 term that I gues I wasn't familair with and it was 

6 history with of which you have opened up 6 in relationship to your explanation that a compact 

7 specifications for them. 7 fitting is the new C-153 standard. 

8 Maybe you feel you have a competitive advantage 8 You also used the word "long," did I mishear you 

9 to be able to use their material in a specification. 9 or is there a type of fitting called a long fitting? 

10 Or that the specifying agency likes the way you 10 A. Long pattern, the A-2110, it was the old 

11 service them, so that's all they want is that 11 cast iron long pattern fitting, if you saw the two 

12 particular product. 12 of them together you would think they were made for 

13 And so when somebody else comes to town they 13 different specifications, difference uses, but it's 

14 want that price so they can compete directly with 14 the same use but one weighs 200 pounds, the other 

15 you and the manufacturers say no, we got this 15 one weighs 75. 

16 relationship with one guy and that's the way we want 16 Q. Is the long fitting the C-110? 

17 to keep it. You can get your other material 17 A. The long fitting is the C-110. 

18 approved if you want, that's fine. That has 18 Q. The compact is the C-153 standard, the long 

19 happened. 19 fitting would be the C-110 fitting? 

20 Not as much any more because the economy 20 A. Yes. 

21 certainly changed a lot of that. But before, 21 Q. Are you familiar with the term "full body 

22 everybody had their manufacturer they dealt with and 22 fitting"? 

23 it was good to know who the enemy was but now it's 23 A. That was the C-110. 

24 all mixed up. 24 Q. Is that the same? 

25 Q. So in the 2009 time period, what lines of 25 A. The C-110, A-2110 are kind of the same, 

Page 158 Page 160 

1 products did distributors have these tight 1 C-153 is the lightweight fitting made out of ductal. 

2 relationships with? 2 Q. So a full body, if I were to pick up some 

3 A. Valves, fire hydrants, brass, service 3 industry material and it said, it referred to 

4 material, wasn't as much fittings because they were 4 something as a full body fitting, that would refer 

5 always, everybody could buy anybody's I guess. 5 to a fitting manufactured with the C-110 

6 But certainly the other products, pipe, certain 6 specification? 

7 manufacturers dealt with certain people. 7 A. Yes. That would be my analogy, yes. 

8 Q. So in 2009 although a distributor may have 8 Q. What percentage of your overall fitting 

9 access to the fittings like you just stated, valves, 9 sales are under the 24 inch product separator? So if 

10 pipe, hydrants, those were all lines that you needed 10 we go 24 inches and below and 24 inches and above -­

11 to actually have a relationship with the supplier? 11 MR. TRUITT: Objection, time frame. 

12 A. Uh-huh. 12 MR. MANN: Q. In 2009, what percentage of your 

13 MR. PARKS: You have to say yes or no. 13 overall sales of fittings consisted of 24 inches and 

14 THE WITNESS: Yes, I am sorry. 14 below, if you know? 

15 MR. PARKS: That's okay. 15 A. Probably, in 2000 -­

16 MR. MANN: Q. Is there any distributor in your 16 Q. Nine. 

17 market that is just selling ductal iron pipe 17 A. 2009, I would say still about 80 percent. 

18 fittings? 18 Q. 80 percent of your total fittings purchases 

19 A. No. 19 would be under 24 inches in 2009? 

20 Q. Why not? 20 A. Yes, you are talking total dollar purchase 

21 A. The margin that you have on a ductal iron 21 or unit purchases? 

22 fitting doesn't allow for the profit necessary 22 Q. We'll stick with dollars. 

23 enough to survive for a complete house, they 23 A. Yeah, I would say 80 percent, 75, 80 

24 couldn't do that. 24 percent. 

25 Q. So in order for the distribution model to 25 Q. If we were to focus on the units, would 

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1 that percentage change? 1 questions. In basic economics, as the price of a 

2 A. No, vastly small diameter. 24 inch is a 2 product goes down the demand goes up. 

3 big size for us, I would cut the thing down to 16 3 Is that the case for a fitting, if prices go 

4 inch rather than 24. 24 encompasses all that stuff, 4 down does demand go up for a fitting? 

5 you don't get very much above 24. 5 A. No. 

6 As a matter of fact, Tyler doesn't make too much 6 Q. So if the prices on a fitting go up, do the 

7 above 24, they are starting to make them now, they 7 demand for those fittings go down? 

8 didn't make them at the time, those would be special 8 A. No. 

9 special orders from anybody. 24 encompasses almost 9 Q. So if you were to see a ten percent 

10 the whole band of fittings on down. 10 increase in the price of a ductal iron pipe fitting, 

11 Q. So almost a hundred percent? 11 what effect would that have on the demand for ductal 

12 A. Almost a hundred percent. 12 iron pipe fittings? 

13 Q. And in 2010 is that the same? 13 MR. TRUITT: Objection, foundation. Ambiguous. 

14 A. Well, even more so because the public works 14 MR. MANN: Q. Based on your experience. 

15 was just starting to kick in and the big projects, 15 A. I don't think it would have any change. 

16 that is where you use the big fittings, the big 16 Q. I am going to hand you back your previous 

17 projects, but 24 inch is considered a big fitting 17 testimony. If you could turn to page 40? 

18 for us. 18 A. Okay. 

19 So yeah, I'd say a hundred percent covers it, 99 19 Q. On page 40, line 20, I'll read it. 

20 percent, 98 and a half percent. 20 It says, "And in terms of the split between 

21 Q. Just to make sure we get that clear on the 21 domestic and import, do you know what that split 

22 record. So in 2010, 98 and a half to 99 percent of 22 would be?" 

23 your overall fittings purchases would be 24 inches 23 "Answer: This time I do have. I would say 

24 and below? 24 approximately probably 60 to 40. 60 would be 

25 A. Yes. Counselor, you have to define that a 25 import, 40 percent would be domestic." 

Page 162 Page 164 

1 little bit more as to cast iron, ductal iron 1 A. Okay, I see that. 

2 fittings, versus fabricated steel. 2 Q. Do you see where I am at there? 

3 Q. My question was just as it related to 3 A. Okay. 

4 ductal iron pipe fittings. 4 Q. And this is going up to line 6, it would be 

5 A. Yes, yes, okay. 5 in the year 2010 was the time period for this. 

6 Q. So your answer is still is same? 6 Do you believe that that was an accurate 

7 A. Yes. 7 statement, that in 2010 roughly 60 percent of your 

8 Q. Just as an example, how much does a six 8 fittings business was import and 40 percent was 

9 inch T cost? 9 domestic? 

10 MR. TRUITT: Object to the form, time frame. 10 A. Yes. 

11 MR. MANN: Q. Today. 11 Q. And jumping down to page 41 starting at 

12 A. I am not in the purchasing business. I 12 line 8, or line 7, it says, "Question: Let's go 

13 would say a 6 inch T would cost around 49, $50 for a 13 back before the ARRA. Do you have a sense of what 

14 6 inch mechanical joint T. Maybe $60. 14 your split in terms of revenue in terms of domestic 

15 Q. If a project required let's say ten 6 inch 15 and imported fittings was before ARRA?" 

16 T's that had a dollar value of $60 apiece, if the 16 "Answer: 75, 25 foreign." 

17 price of that fitting went up to let's say $65, 17 "Question: 75 percent foreign, 25 percent 

18 would that kill a project? 18 domestic?" 

19 MR. TRUITT: Objection. 19 "Answer: Yes." 

20 THE WITNESS: I don't think so. I mean, all 20 Is that accurate? 

21 manufacturers have price increases from time to 21 A. Yeah. 

22 time, at least yearly, price has more a tendency to 22 Q. Previous to the ARRA period, what was the 

23 go up than down, discount takes it down on occasion 23 average cost difference between an imported fitting 

24 but the price never usually goes down. 24 and a domestic fitting, if there is one? 

25 MR. MANN: Q. Let me ask a better line of 25 MR. TRUITT: Objection, asked and answered. 

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1 THE WITNESS: I couldn't give you that. 1 ever see requests during that bidding process for 

2 accurate -- 10 percent, 15 percent maybe. 2 both the domestic spec using the ARRA money and then 

3 MR. MANN: Q. Why do you say that? 3 an import spec on the fittings so that the, they 

4 A. I don't know, I know that the foreign 4 could see what the price differential was going to 

5 fitting whether it be bought by the multitude of 5 be? 

6 foreign people selling product, had a different 6 A. I think at the start we were giving the 

7 price format than if you buy it from Tyler, it had a 7 contractor pricing on both so that he could see, so 

8 different price format than the domestic fitting 8 we would protect ourself from somebody that was 

9 did. 9 bidding it wrong, there was a lot of novices that 

10 To be exact, I would have to go back and 10 didn't understand and were just pricing it whatever 

11 research that, I could find it out but I couldn't 11 way they priced their normal stuff. 

12 tell you at the moment what it would be. I know 12 So we could be made to look very, very poorly on 

13 foreign was less expensive. 13 a total quote because somebody mispriced their 

14 Q. And if you had to guess, your testimony is 14 fittings. 

15 that it was 10 to 15 percent higher? 15 So we listed them and as stated these are 

16 MR. TRUITT: Objection. 16 foreign manufacturer and not in compliance with ARRA 

17 THE WITNESS: Yes. 17 regulations, but here is the fittings that are. 

18 MR. MANN: Q. In 2009 do you have a rough idea 18 So that made the end user, the contractor, our 

19 as to how many ARRA jobs you responded to? 19 customer stop and take notice that you're 

20 MR. PARKS: And just a clarification, by 20 competitive up here and not competitive down here, 

21 "responded to" you mean bid on? 21 and it caused them to look and to check. 

22 MR. MANN: Q. Correct. 22 And in a lot of cases, not a lot, but there are 

23 A. Oh, quite a few, quite a few. 23 several cases I know of it caused the contractor to 

24 Q. More than ten? 24 go back to another supplier and say what are you 

25 A. Oh, probably more than ten. 25 doing, you are pricing, your fittings are cheap, are 

Page 166 Page 168 

1 Q. More than a hundred? 1 you ARRA compliant and they said what's, and oh, no, 

2 A. No. 2 these aren't domestic, so that worked for awhile. 

3 Q. More than 50? 3 But we did that for awhile, all the time, but when 

4 A. I wouldn't think so, no. 4 we first started out we did. 

5 Q. So more than ten, less than 50, is there a 5 Q. If we were to go down the chain in that 

6 number in between those two -­ 6 bidding process, although you were responding to a 

7 A. I couldn't, it would be strictly a blind 7 contractor's request, do you have any knowledge of 

8 guess and I know there was a time when all the big 8 the bid coming from the project owner ever 

9 projects we were bidding were ARRA financed or 9 requesting to see both an import price as well as a 

10 portions of it were that we had to be careful of. 10 domestic price? 

11 So those were certainly handled differently and 11 A. I would imagine it happened but I can't 

12 we bid a lot of them, we didn't get a lot of them 12 recall which job or what particular thing. But 

13 but we bid a lot of them. 13 knowing owners as they are, I would expect that had 

14 Q. In 2009 do you have a rough idea as to how 14 happened. 

15 many ARRA projects you actually serviced? 15 Q. Did that dynamic ever play out previous to 

16 A. I can't give you a number, I know that I 16 the ARRA period where a project owner, whether it's 

17 personally serviced two or three. And we may have 17 a project engineer, the person who is writing the 

18 serviced one or two out of each one of our branches. 18 specs, actually puts both a domestic and an import 

19 But we are doing, we are sending out 20 to 30 19 specification to see the difference between the two? 

20 quotations a week and a small percentage of that 20 A. Well, there is no difference in 

21 would be been ARRA compliant requirements. 21 specification, it's just if they list a 

22 And of those that come to fruition with an order 22 manufacturer. 

23 would be a fraction of that. 23 So they say Tyler or SIGMA are approved equal, 

24 Q. So focusing on that bidding period of 2009, 24 you are talking about apples and oranges or apples 

25 2010 when the ARRA bidding was going on, did you 25 and apples depending on how you look at the 

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1 specification. 1 things up, but if they don't list it, to me it's 

2 Does the guy know what he is doing, no, he 2 wide open. 

3 probably doesn't know what he is specifying or the 3 Q. A wide open spec allows imports? 

4 end result of what he is specifying, the open door 4 A. Imports. 

5 that it gives for people to come in or how closed 5 Q. Did you ever observe rivals bidding import 

6 that door is. 6 fittings when it specifically says Tyler only or 

7 You have to go back then to the specifications 7 Tyler domestic only? 

8 prior to that or specifications before that district 8 A. There is always the oddball in the group. 

9 that this job is fitting into. 9 So yes. 

10 And if they are buying SIGMA or Star then you 10 Q. And do they win? 

11 feel pretty confident you can bid and if the, if you 11 A. Most of the time they don't win. 

12 bid the job your way and it comes to push and shove 12 Q. Did you ever bid with an import product 

13 in the submittal process you can say it says right 13 price when it specifically called for a domestic 

14 there in the specifications. 14 fitting? 

15 So then it becomes an addenda and the contractor 15 A. We probably have. More by accident, more 

16 gets to have the difference in price. So we have to 16 by branches that didn't know. Getting involved in a 

17 look at what the specification calls for. If you 17 branch out of Modesto or Bakersfield that aren't 

18 are smart enough, you know the loopholes you can get 18 that familiar with what the ARRA stuff is, getting 

19 into, a guy doesn't tie his bows up correctly you 19 caught up in we have already supplied that district 

20 can actually bid a foreign fitting because SIGMA 20 but this job is different even though it's going to 

21 didn't make a domestic fitting. 21 the same district, probably have. But not 

22 You know there was going to be a day of 22 knowingly. 

23 reckoning if they were looking at what they are 23 Q. So focusing just on the period of time 

24 doing. You can go right back and say here is the 24 prior to the enactment of the ARRA, and that was in 

25 project specifications that said SIGMA, realize 25 February of 2009, so we are really kind of reaching 

Page 170 Page 172 

1 there is a "buy American" for the whole job but we 1 back to kind of the 2008, early, early period of 

2 don't know if you listed SIGMA if that was the case. 2 2009, do you recall if McWane provided discounts on 

3 You'd usually win those arguments in most cases, 3 their domestic fittings when a project specifically 

4 the engineer says okay, I made a mistake, we want 4 requested Tyler only? 

5 domestic fittings so we'll get the contractor 5 MR. TRUITT: Object to the form. 

6 addenda for the difference. 6 THE WITNESS: I can't tell you. 

7 Q. So what was the language used to specify 7 MR. MANN: Q. I recognize I am asking a lot to 

8 domestic fittings prior to the ARRA period? 8 try to think back that far, so that's fine. 

9 A. Well, they would use an AWWA standard, not 9 A. Yeah. 

10 list a manufacturer, just AWWA standards plus ARRA 10 Q. During the ARRA period did Groeniger use 

11 requirement. 11 any de minimis waivers for fittings? 

12 Q. Before the ARRA requirement, if I am an 12 A. We learned the word, what de minimis was, 

13 engineer and I want domestic fittings on my project, 13 we had conflicting information what products might 

14 how would I communicate that in the written spec? 14 full into de minimis. 

15 A. You would say Tyler only, Tyler domestic 15 It was never fittings, it was bolts, gaskets, 

16 only, you'd spell it out. 16 small things, accessories to fittings, the accessory 

17 Q. And if I didn't care, if it could be 17 packs for the fittings, never the fittings. 

18 domestic or import? 18 And we never saw a piece of paper from the 

19 A. You say, you wouldn't even list the 19 government or from the engineer on a project say 

20 manufacturer, you say fittings to comply with the 20 this is your list of de minimis accepted things, 

21 C-153 or A-2110, whatever is more specific to what 21 never knew that that existed or if there was, how 

22 you want as far as a general specification and not 22 you would raise your right hand, face the east, 

23 mention anything about ARRA or buy American or NAFTA 23 whatever you would signal that you wanted to take 

24 only or NAFTA allowed, all those things are things 24 advantage of some de minimis things because it was 

25 that can be added in after the fact to tighten 25 de minimis in nature as far as knowledge about what 

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1 it is. Interesting word though. 1 A. I don't think it would have changed 

2 Q. So is it your testimony today that 2 appreciably, the mix of contractor types might, but 

3 Groeniger did not use any de minimis waivers for 3 municipalities pretty much carried the same weight. 

4 fittings? 4 Q. Is there a difference in the type of 

5 MR. TRUITT: Objection, asked and answered. 5 project that a contractor is going to handle versus 

6 THE WITNESS: Well, you have to clarify that, 6 a municipality? 

7 Counselor, as to did you ever file a de minimis 7 A. The contracts are not handled by 

8 waiver in writing, I would say no. 8 municipalities, they govern the specification but 

9 We may have attempted to use the word de minimis 9 the contractor installs it. 

10 to support an argument we had with some product, but 10 There are several municipalities that have their 

11 not with fittings. 11 own installation crews but they don't bid the big 

12 MR. MANN: Q. So you never used a de minimis 12 projects. They take care of their needs as far as 

13 waiver for fittings? 13 their repair and replacement for their own 

14 A. Not that I can recall. If anything would 14 districts. 

15 come across my desk to have me sign as honest to God 15 They also have, there are districts that have 

16 truth and say you have to waiver this as being a de 16 the supply concessions where they buy the material, 

17 minimis thing, I would have had to do a lot of 17 they inventory it and they sell it to contractors 

18 checking. And at that time in my life I was trying 18 working, for a premium price they sell it to 

19 to, I was not taking chances like that. 19 contractors working in their area. 

20 Q. Earlier today Mr. Truitt asked you who your 20 They govern the spec of what is used so it meets 

21 customers were and you stated that you had 21 a hundred percent of what they want, they cover 

22 contractors and you listed different types of 22 that, we supply them the material, they supply the 

23 contractors. 23 contractor the material. 

24 And then I believe you also said there were 24 East Bay Municipal Utilities, that's a big user, 

25 municipalities and then public agencies; is that 25 they use that philosophy. San Jose City Water was a 

Page 174 Page 176 

1 right? 1 big user of that. 

2 A. Yes. 2 City and County of San Francisco was a big user 

3 Q. Are there any other types of customers? So 3 of that, they supplied the materials to the 

4 other than identifying different types of 4 contractor. 

5 contractors, so we have contractors, municipalities 5 Some of them are getting away from that, but at 

6 and public agencies. Any other types of customers? 6 that time those were the big people around here. 

7 A. Government? I mean federal government, 7 Contra Costa County Water District, they buy 

8 Army, Navy bases, things like that. 8 materials to supply to their customers. Marin 

9 Q. And what percentage in 2009 of your 9 Municipal Water District, same scenario. 

10 business did you deal with contractors in? 10 So we have all these big districts who buy large 

11 A. 2009, versus municipalities? 11 volume of materials, but yet don't install it 

12 Q. If we were to break it up, in my mind we 12 themselves, they just give it to their contractors 

13 have four categories, we have contractors, 13 working under their jurisdiction. 

14 municipalities, public agencies and then federal 14 Q. Is that type of scenario that you have just 

15 projects. 15 described a situation where you have a contract to 

16 A. Uh-huh. 16 supply them with a particular line of products for a 

17 Q. What I'd like to do is establish a 17 year? 

18 breakdown of, percentage breakdown of those four 18 A. In some cases we do, in some cases they 

19 different types of categories for 2009. 19 just go out, in a period of time they just go out, 

20 A. 20 to 25 percent municipalities. 20 we are advertising for fittings this month, we are 

21 Q. Okay. And contractors? 21 advertising for pipe next month, they may go out and 

22 A. The rest. 22 advertise those products seven or eight times a year 

23 Q. And in 2010, if we were to break down who 23 depending on their needs. And it might be the same 

24 your customers were percentage wise, what would they 24 products. 

25 be for contractors? 25 Some go on an annual, East Bay MUDD is annual, 

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1 Contra Costa is kind of semi-annual, Marin is kind 1 okay, I want to bid on that. 

2 of semi-annual, San Jose is annual. 2 So you make copies of those sets of plans and 

3 And then the rest of the districts around here, 3 specifications and take them back to your office and 

4 they buy as they need it. And that's only for their 4 you have your estimators make a complete materials 

5 own use with their own crews for maintenance work. 5 take-off which lists every valve, fitting, piece of 

6 The contractors buy their own material that meets 6 pipe, bolt, nut and gasket, and you price it up on 

7 their own specification. 7 an individual basis and you send it to the 

8 Q. Is there any type of business that isn't 8 contractors that you know that are bidding the 

9 bid? You understand my question? 9 project. 

10 A. Yeah. I understand your question. Today 10 And usually there is a list of contractors that 

11 very little. The economy has changed that. 11 have gotten plans and you call them up and say are 

12 In 2005, 2006 people didn't have time to quote 12 you bidding this job and yeah, I'll get you a quote. 

13 projects, just get the material to me as quick as 13 And that's one way of doing it. 

14 you can, we know you are going to treat me fair 14 Another way is your contractor will call you and 

15 scenario. We had a lot of that. 15 say I am bidding this project, do you have plans on 

16 That was probably 60 percent of our return 16 it? And you say yes or no and if you don't you go 

17 business was just get the material out there as 17 out and get plans from his office, he'll make a copy 

18 quick as you can, and the responsibility that we had 18 for you, and you make a take-off just for him. 

19 to be fair was the determining factor. 19 Now, if another contractor calls up on the same 

20 If they caught us not being fair we were out and 20 job and you have already made a bid to one 

21 it's hard to get back in when they lose confidence 21 contractor, you don't do that, you have him send you 

22 in your looking out for them. 22 his take-off of what he needs or give you a set of 

23 But today everything is bid and if you are not 23 plans. 

24 low, very easily you could lose the job with your 24 It's common courtesy if a guy is working with 

25 best customer because he is looking out for his 25 you, you work with him exclusively. 

Page 178 Page 180 

1 bottom line too. 1 If another guy calls up on the same job you 

2 Q. If we were to back up to 2008, 2009 time 2 don't share the information you gave one guy with 

3 period, what were the dynamics of the bidding 3 another. 

4 projects versus people just showing up and saying I 4 You may have all the information you need but 

5 need the project? 5 you don't share it until the other guy gives you the 

6 A. The same as it is today. As soon as the 6 same amount of intel to give him a price. Or give 

7 recession started to hit where everybody was 7 you his own estimate of what he needs. 

8 impacted at the bottom line and the business was not 8 If we do the take-off on our own we send it to 

9 there, everybody scrutinized life differently. And 9 everybody. And that's kind of the different 

10 certainly the contractors did. 10 philosophy how we do it. 

11 Q. So let's talk a little bit about that 11 But we have, at every branch we have two or 

12 bidding process that's been going on since 2008 that 12 three estimators, that's all they do is take-offs 

13 makes up the majority of your business. 13 and pricing and throw them over their shoulders, 

14 Walk me through the steps if you could just to 14 give them to the sales people and they disperse 

15 help me understand exactly what happens. So how 15 them, they go out in the mail or whatever. 

16 does it start? 16 At one time in the region we are talking about 

17 A. Well, most of your public agencies have a 17 today, we could be bidding 25 to 30 jobs a week of 

18 list of projects coming up to bid that are going 18 major consequence of pipe and valve and fittings. 

19 through the Builders Exchange, they have a long list 19 Because these jobs bid and there is a low 

20 of projects that are bidding by a multitude of 20 bidding contractor, that doesn't mean the job is 

21 different agencies or independent people that are 21 going to go. 

22 trying to build something. 22 That means the owner now has a price of what 

23 And so you go and you look through these plans 23 it's going to cost, now he has got to get his 

24 and specifications until you find one that's got 24 financing worked out because he knows it's going to 

25 valves and pipes and fittings on it and you say 25 cost X amount of dollars to do this project and then 

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1 the finance guys dry up. 1 A. Yes. 

2 We have bid jobs four or five times in two or 2 Q. What is that difference? 

3 three month or four month or six month or two year 3 A. Material take-off is an estimate. A 

4 increments, they try to refi identify it again and 4 submittal is beyond that. 

5 it never comes in at the price they need so it keeps 5 We don't do submittals unless we have been told 

6 evolving. 6 that we are responsible for the project. 

7 Or they cheapen the job, cut some stuff out and 7 Now, we have, they can still pull the project if 

8 rebid it again using a different set of plans. And 8 we don't get our material approved, they can always 

9 there is all sorts of variables. 9 do that, we haven't supplied anything yet. 

10 So just by bidding the job doesn't mean the job 10 But they have our prices, our costs are in 

11 is actually going to be a job. Even if your 11 there, they say okay, does your material meet all 

12 contractor or friend ends up with it, then you have 12 the specs, we say it certainly does, they say send 

13 to negotiate with him. 13 me your submittals, you pass them the submittals and 

14 Sometimes they have a rebid after the fact. 14 it comes back approved and then it's a slam dunk and 

15 They'll say okay, I want you to rebid this item, 15 you are ready to go. 

16 rebid this whole job, it's going to go in a month. 16 Q. Focusing on the submittal process, if you 

17 So then you go back and sharpen your pencil and 17 respond -- how do you respond to a specification 

18 everybody else sharpens their pencil, and there is 18 that is going to allow imported fittings to be used 

19 always a crazy guy in the group that everybody has 19 in your submittals? Do you specify a particular 

20 to deal with. So it's a long process before you 20 supplier? 

21 actually get an order. 21 A. Oh, yes, the submittal tells you the 

22 Q. So you provide the material take-off to the 22 manufacturer and it's highlighted the sizes of the 

23 contractor, let's fast forward to the point where 23 materials and the products in their catalog that are 

24 the contractor gets the green light and the project 24 going to be used and the dimensions. 

25 owner has the financing, he selects the contractor 25 So that if they have to figure the dimension of 

Page 182 Page 184 

1 to do the work. 1 the project, they can figure out how long the lane 

2 Between that point and the point that you 2 length is of this product versus this product and so 

3 provide the material take-off, are you providing any 3 forth. So you give them a complete listing of the 

4 information, are there any submittals? 4 products. 

5 A. We submit on all the products, especially 5 And if there is electronics involved you give 

6 for a ARRA project or a big pipeline project that 6 them wiring diagrams. I mean, it gets pretty 

7 comes out with an independent set of specifications, 7 intense, some of these submittals take a month and a 

8 we will submit on everything. 8 half to build just to be able to submit them, let 

9 Because there is certainly a lot of review and 9 alone when they come back and say revise and 

10 resubmit, they make corrections, they scratch this 10 resubmit, then it could take another month before 

11 out, scratch that out. 11 you get the revisions again. 

12 Q. Who is they? 12 These are areas that we can't control, goes back 

13 A. The engineer. To review and resubmit. So 13 to the manufacturer. 

14 that means the timeline has stopped, we have to. 14 This doesn't have anything to do with fittings, 

15 get -- and then resubmit and then the timeline 15 this has to do with electronically operated valves 

16 starts again until they can review it. 16 and other things that require pressure for things to 

17 Then they say okay, fine, the submittal package 17 turn off and turn on. Fittings are pretty plain 

18 comes back complete and we can order material and go 18 Jane. 

19 forward at that point. 19 Q. Do you specify you are going to use a SIGMA 

20 Q. So the time between you providing the 20 imported fitting in your submittals versus a Star 

21 contractor with the material take-off's and the 21 imported fitting or even a Tyler imported fitting? 

22 submittal process, is that a negotiating period, I 22 A. We don't classify imported or domestic, we 

23 guess -- let me ask a better question. 23 just say we'll submit on a SIGMA, we'll submit on a 

24 Is there a difference between a submittal and a 24 Star, we'll submit on a Tyler. 

25 material take-off? 25 If it's an ARRA job we'll submit on Tyler, we 

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1 wouldn't submit on SIGMA. But we may submit on a 1 where the fittings that were coming out of Tyler had 

2 Star if in fact they have the availability of their 2 sand holes in them and the sand holes weren't 

3 domestic application fittings. 3 probably causing the fitting to fail under pressure, 

4 Q. So once you have submitted, let's say you 4 but they were a sand hole that was going 

5 submit on an import job SIGMA, and a month later the 5 significantly into the core diameter to the casting. 

6 contractor is ready to receive supply. 6 It happened to be a flaw they had with a certain 

7 Can you provide him with Star fittings or do you 7 fitting. 

8 have to only supply him with SIGMA fittings since 8 So they allowed us to supply a foreign fitting 

9 that's what you submitted? 9 in lieu of those because we couldn't get anything 

10 A. If it's a foreign specification you can 10 from Tyler in the time frame to support the job 

11 probably get by with supplying a SIGMA or a Tyler 11 performance. Or construction schedule. 

12 foreign fitting, or import fitting. 12 Q. So you could substitute a Star domestic 

13 But there are those sticklers that say hey, this 13 fitting even though you submitted it as a Tyler 

14 is what you specified, this is what you submitted 14 fitting? 

15 on, we want this product. 15 A. If everybody was aware and gave their 

16 And they are right, we should and we follow up 16 blessing. Because of availability and construction 

17 with the people we submit it on to who we supply in 17 schedules, they would allow it. 

18 most cases. 18 In most cases, I don't know of anybody that says 

19 There is always a case where we don't have the 19 absolutely not, no, that's not the case, they will 

20 fitting and they need an extra one of these and we 20 maintain the construction schedule, it's just they 

21 don't have one and we have to give them whatever we 21 want the lion's share of the material to be 

22 have. But we raise our hand and say please. 22 domestic. 

23 I am not one for asking for forgiveness rather 23 And very few of those around any more as far as 

24 than permission, that is what I wanted to say. 24 districts, they all have, they might have certain 

25 Q. So am I understanding you correctly that 25 valves they like, but fittings is pretty much open. 

Page 186 Page 188 

1 you can substitute Star fittings for SIGMA fittings 1 Q. So even during the ARRA period, fittings 

2 in most cases, but occasionally you can't because 2 was still a general spec as opposed to a spec like a 

3 there is a stickler who wants you to respond with 3 meter or a hydrant? 

4 exactly the submittals that you provided? 4 A. Yes. 

5 MR. TRUITT: Object to the form of the question. 5 Q. Do customers typically source water work 

6 THE WITNESS: Yes. But also there are certain 6 products for a single project from a single 

7 specifications that say SIGMA only. 7 distributor? 

8 So then you have a specifying agency that is 8 A. Say that again, please. 

9 specifying a brand only again. In this case it's a 9 Q. Do customers, that would be your customers 

10 foreign fitting. So the roles are reversed 10 typically source water work products for a single 

11 theoretically, but that's rare. 11 project from one distributor? 

12 Usually if you supply a SIGMA fitting to a 12 MR. TRUITT: Object to the form. 

13 district then you can supply a Tyler fitting or a 13 MR. MANN: Q. In other words, do contractors 

14 Star fitting. 14 split up the bids in projects? 

15 MR. MANN: Q. When the specification 15 MR. TRUITT: Objection, ambiguous. 

16 specifically calls for domestic, it doesn't 16 THE WITNESS: Certainly the bigger contractors 

17 necessarily say Tyler only but just maybe domestic 17 would like to split it up and spread it around to 

18 fitting, or you know it's an ARRA project, were you 18 everybody. If you allow them to do that. 

19 able to substitute out a Star fitting for a Tyler 19 You can say then no, I am not interested in 

20 fitting on a domestic job? Would you have been able 20 that, I want the whole order or I'll take this part 

21 to? 21 of the order, so forth. 

22 A. Yeah, we have. Only because you can't get 22 And if it gets broken up too much then we say 

23 the Tyler fitting or there was a problem with, there 23 give it all to the other guy, we are not interested 

24 was a problem with performance. 24 in that. 

25 We had a domestic issue on a job in San Jose 25 MR. MANN: Q. Why wouldn't you be interested in 

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1 that? 1 MR. TRUITT: Objection to the form. 

2 A. Because there is no money in that. We are 2 MR. PARKS: Can I just get a clarification? When 

3 in the business to make money and if they break up 3 you talk about responding to the fittings, do you 

4 the order so severely that it's costing you money to 4 mean put a bid on limited to the fittings or you put 

5 service part of it, we can always say no and that's 5 a full bid in and you only get the opportunity to go 

6 up to management, and we have, we have done that 6 forward with the fittings piece? 

7 considerably lately because of the fact that 7 MR. MANN: Let me ask a better question. 

8 everybody is looking at everything, and normally 8 Q. On a regular size project, are you ever 

9 speaking those aren't our regular customers. 9 just responding to a bid that is only asking for 

10 Our regular customers don't, they may buy the 10 fittings? 

11 whole order from one person or another but they 11 MR. TRUITT: Object to the form. 

12 won't split it up. 12 THE WITNESS: That probably would be very 

13 Q. What percentage of your business is from 13 unusual. 

14 regular customers? 14 MR. MANN: Q. And why would it be unusual? 

15 A. Oh, I would say probably 80 percent. 15 A. Because you are talking about an average 

16 Q. So 80 percent of your business would be 16 size job where there is pipe and there is valves and 

17 Groeniger & Company responding to an entire project? 17 there is fittings and service material, it's a 

18 A. Yes. 18 subdivision or if it's an average size transmission 

19 Q. Have you ever responded to a project that 19 main you have big pipe, big item, then you have 

20 is just fittings? 20 fittings, big items for the pipe, and you have 

21 I want to remove the municipal contracts that go 21 valves which are big items. So you have all these 

22 out and they want fittings this month and pipe that 22 big things. 

23 month, so if we remove that from the equation, are 23 Now, if it's a transmission there might be a 

24 you ever responding to just fittings? 24 case that we'd end up with just the fittings, but we 

25 MR. TRUITT: Object to the form. 25 wouldn't go in with a complete package and we'd bid 

Page 190 Page 192 

1 THE WITNESS: At the end of the day, yes. Maybe 1 a complete package of which fittings would be a 

2 we didn't start out that way. 2 portion of that, a sizeable portion. 

3 But when a contractor says I'll give you the 3 Q. What are the benefits to your customers 

4 fitting package on this big, big project, that's all 4 when they purchase the entire package from one 

5 you may end up with, and you may have bid a million 5 distributor? 

6 dollars worth of material and end up with a hundred 6 A. Benefits are they only have to go to one 

7 thousand dollars of fittings. 7 place, they only have to yell at one person, they 

8 But in some cases like that the fittings are a 8 only have to commute their schedule to one person. 

9 big part, I mean a big part of the total and so it 9 And that one person can come back to them and adapt 

10 would be worthwhile going after it. 10 everything to a schedule and say you will have this 

11 But those are mostly big plant or big, big 11 by this date and this by this date. 

12 projects where the contractors are big 12 Much easier to manage a project from the 

13 multi-functional guys and you are one of the 13 contractor's point of view if he's only got one guy 

14 peddlers that are quoting materials and they don't 14 he has to coordinate with. 

15 really know you, they don't know your capabilities 15 There is always one guy that blames the other 

16 or qualifications and they are just splitting up the 16 guy and I have seen that happen. And so it's just 

17 order. 17 better to go with one source and the blame stops 

18 Once you work with those people awhile and they 18 there. 

19 get to know your capabilities, that's a different 19 Q. What are the criteria that your customers 

20 story, but these big guys are coming from out of 20 use when selecting a water works distributor? 

21 state and don't know who you are, so you are able to 21 MR. TRUITT: Object to the form. 

22 get a portion of it. 22 THE WITNESS: Could you give me a date? 

23 Q. So on a regular sized project versus this 23 MR. TRUITT: Foundation. 

24 big project that you have just explained for us, do 24 THE WITNESS: A date on that. 

25 you ever respond to just the fittings? 25 MR. MANN: Sure. 

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1 Q. In 2010, what criteria did your customers 1 contractor on a particular project like you have 

2 use when selecting water works distributors? 2 promised, do you potentially lose future sales with 

3 MR. TRUITT: Same objections. 3 that contractor? 

4 THE WITNESS: Price, product availability and 4 A. Yes, they lose faith in your ability to 

5 general servicing -- terms of sale. 5 handle their service needs. Which includes a 

6 MR. MANN: Q. Let's open up to page 61 of your 6 competitive price and product that meets their 

7 previous testimony. It's on page 61, starting on 7 installation schedule. 

8 line 6. 8 Q. Jumping over to page 81 of your previous 

9 "Question: In your mind as a distributor what 9 testimony. 

10 factors are important to contractors when selecting 10 A. Okay. 

11 among distributors?" 11 Q. Starting on line 11. 

12 "Answer: Number one would be relationships, 12 MR. TRUITT: I am going to object, I think this 

13 number two would be history, number three would be 13 is improper impeachment, is there a question he has 

14 consistency of service and four would be price." 14 given you an inconsistent answer to? Are you asking 

15 Is that true? 15 him to read and adopt? 

16 A. Probably not today. 16 MR. MANN: Are you asking me, do you want to go 

17 Q. When did that change? 17 off the record? 

18 A. Well, it changed as the economy went south. 18 MR. TRUITT: No, I am objecting to improper 

19 Q. So in December 2010 that was your 19 impeachment on the record, you can do it if you 

20 testimony. Your testimony today if you were to rank 20 want. 

21 those four, what would they be? 21 MR. GREENAN: What makes you think it's 

22 A. Relationships would still be 1. Price 22 impeachment? Maybe he is asking to clarify an 

23 would be a close second. Service would be third and 23 answer. 

24 history would be fourth. 24 MR. TRUITT: I don't think he can not ask a 

25 Q. Do your customers have high service 25 question, simply referring to prior testimony and 

Page 194 Page 196 

1 expectations? 1 then ask a question, but I am just lodging an 

2 MR. TRUITT: Objection, foundation. 2 objection for our record. 

3 THE WITNESS: Yes. Always. 3 MR. PARKS: Noted. 

4 MR. MANN: Q. What are those? 4 MR. MANN: Q. So on line 11 your previous 

5 A. Whatever they need is what they expect. 5 testimony was, the question was, "Do you generally 

6 And never what we need, but what they need. So our 6 in your experience, do contractors tend to deal with 

7 service is their service. It's mandatory today. 7 a limited number of water works distributors over 

8 Q. And if you fail to perform, you fail to 8 time?" 

9 provide them with the service, what does that do to 9 "Answer: Yes." 

10 your relationship with the contractor? 10 "Question: Why is that?" 

11 A. Well, you are put at the end of the line 11 "Answer: Trust, ability to supply a region," and 

12 and there is three or four other people in front of 12 you go on and provide further examples. Is that 

13 you then. 13 still true today? 

14 Q. Has that ever happened to you? 14 A. For the most part it is. You have to be 

15 A. Sure. 15 competitive price wise. 

16 Q. Were you able to overcome that and get back 16 Now, if he is a friend of yours and if he is 

17 to the front of the line ever? 17 your customer, he'll give you the opportunity to be 

18 A. Yes. 18 competitive, even if you are not. And if you don't 

19 Q. What steps did you have to take in order to 19 take that up, then he'll buy it from somebody else. 

20 get back to the front of the line? 20 And he is not going to pay more for it. 

21 A. You just have to hang around and be there 21 But they have a tendency to have limited people 

22 and help them when the other guy falls and they 22 that qualify for them, not that they won't throw a 

23 will, and then you move up. I wish I didn't have to 23 bomb on you on occasion where some guy from out of 

24 phrase it that way but that's kind of the way it is. 24 town has a real cheap price they say are you going 

25 Q. So if you are unable to service a 25 to be in this category, and you have to tell them 

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1 why, that they don't know what they are doing and 1 contractors is still number one, are you able to 

2 that type of thing, but that's part of the game. 2 charge a premium to those, that core group of 

3 Q. How often do customers go with the lowest 3 customers for providing the service that Groeniger & 

4 priced bundle of goods? 4 Company provides? 

5 A. More often than not. 5 MR. TRUITT: Objection, time frame? 

6 Q. Your previous testimony was that your 6 THE WITNESS: We thought we did and could. But 

7 relationship was the number one criteria, and then 7 to be actual, I don't think we can anymore. 

8 price would be a close second today, but back in 8 MR. MANN: Q. And when did that change? 

9 2010 price was, I think it was fourth. 9 A. Part of the same downturn of the economy, 

10 In 2010, how often would customers go with the 10 everybody was looking out for their own bottom line. 

11 lowest price, were they going with the lowest price 11 And relationships aside, we have to do what we got 

12 bundle? 12 to go for us, which I understand, don't necessarily 

13 A. Probably not as much as today but there was 13 like it but I understand. 

14 always the ability to react to a price and make the 14 And they'll come back, they'll realize there is 

15 contractor whole so he wouldn't have to invest time 15 a difference and they'll come back, they won't ever 

16 and effort in dealing with somebody he didn't know. 16 tell you they are going to come back for that reason 

17 But that became harder and harder because other 17 but they will and they do. 

18 people stayed around and they kept doing it and the 18 But here again, you can't bank on your abilities 

19 guy says well, you keep telling me they don't know 19 to do all the peripheral things that you used to be 

20 what they are doing but I am going to have to give 20 able to do when somebody can get product from almost 

21 them one and see. 21 anywhere now, inventories are not as big a thing 

22 And they do take orders away and give it to 22 with the public works job, so the smaller inventory 

23 somebody else, they may have problems with them and 23 guy is, as a matter of fact in a better position 

24 never give it to that guy again, but that order for 24 because he doesn't have the overhead. 

25 all intents and purposes was gone. 25 So here are all these little guys popping up 

Page 198 Page 200 

1 Q. Do you have a core group of customers that 1 with little or no overhead and they have an 

2 are giving you almost all of their business? 2 advantage. So it's hard. 

3 A. Almost all of our business today would be 3 Q. Given this dynamic where you see some of 

4 60 percent, 65 maybe, 65 percent would be a good 4 your more loyal customers that you thought you maybe 

5 customer day. 5 were able to charge a premium but you no longer are, 

6 Q. And how much business in terms of their 6 do you see them shifting business if they are 

7 total amount of business that they have to offer are 7 getting maybe just a five percentage less on the 

8 they giving to you? 8 fittings of a project? 

9 A. That's what I mean -- well, oh, probably a 9 A. Yes. 

10 significant 40, 35, 40 percent of the total package 10 Q. Do you observe any direct sales of ductal 

11 that they buy, they might buy, 40 percent of that 11 iron pipe fittings in your markets? 

12 will be from us. 12 MR. TRUITT: Object to the form. 

13 If they are buying 65 percent of the orders that 13 MR. PARKS: Can you clarify direct, do you mean 

14 we deal with, that relationship would be 14 direct from the manufacturer to the user? 

15 significant. 15 MR. MANN: Q. If I were to use the term direct, 

16 There are certain things they don't buy from us 16 what is your understanding of the term "direct 

17 like pipe, stuff they buy, they never buy that from 17 sale"? 

18 us, they always buy that from a manufacturer 18 A. That comes from the manufacturer directly 

19 directly. 19 to the end user, bypassing the distributor. 

20 So it's not a one map fits all terrain, it 20 Q. Okay. So using that as your baseline, do 

21 varies. Certain customers have annual requirements 21 you observe any direct sales of ductal iron pipe 

22 from manufacturers they deal with and we can't get 22 fittings in the markets that you service? 

23 into that ballpark, but we have all the rest of the 23 A. Yes. 

24 appurtenances for that job. 24 Q. Who is selling direct? 

25 Q. Given that your relationship with 25 A. Probably the most notorious is American, a 

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1 ductal iron pipe company out of Birmingham, Alabama. 1 A. Yes. 

2 Great company, make a great product but they 2 Q. Do distributors aggregate small orders? 

3 have always been a direct sales company, they don't 3 A. Yes. 

4 know now to handle the distributors well and they 4 Q. Any possibility that McWane, Star, SIGMA 

5 don't think the distributor has the experience nor 5 could effectively start selling direct in the 

6 the intelligence to quote certain types of work. 6 markets that Groeniger & Company competed in in 

7 They are wrong but that's their philosophy. But 7 2011? 

8 they are the king so they run it that way and they 8 MR. TRUITT: Objection, foundation, speculation. 

9 supply the fittings and the pipe. 9 MR. PARKS: You can answer. 

10 We compete against them on the fittings and in 10 THE WITNESS: They could. If there was, if they 

11 most cases unless it's a big job where they package 11 all were together and didn't allow any deviation and 

12 everything and hide everything so they can't ever 12 the only way you could buy fittings was buying it 

13 find what a unit price is until after they start 13 direct, they could probably get away with that until 

14 supplying it, it's difficult to pull it away. Pipe 14 somebody came to town and said we are going to allow 

15 is a big entity. 15 this to go through distribution, then they would be 

16 Q. Do you observe Star selling direct in your 16 out of business. 

17 markets? 17 MR. MANN: Q. Any chance anybody on their own 

18 A. No. 18 could do it if they didn't have the two to go along 

19 Q. Do you observe SIGMA ever selling direct 19 with them? 

20 for ductal iron pipe fittings? 20 MR. TRUITT: Same objections. 

21 A. No. 21 THE WITNESS: No. 

22 Q. Do you observe Tyler Union or McWane 22 MR. MANN: Q. Why not? 

23 selling direct in the ductal iron pipe fittings? 23 A. Because the distributors would rise up 

24 A. Not that I have seen lately at all. Or 24 against it. 

25 that I can recall. 25 Q. What do you mean by that? 

Page 202 Page 204 

1 Q. What benefits do suppliers gain by selling 1 A. They are taking food out of their mouths, 

2 to distributors versus selling direct? Or in other 2 you are trying to break up their package. The 

3 words, what efficiencies do distributors bring to 3 fittings as a whole are not going to govern the job. 

4 the supply chain? 4 Now, if they put fittings and pipe together, 

5 A. Service, certainly service, knowledge of 5 aha, there is much more of a stick. But even that, 

6 the local specifications, local inventory to pull 6 the pipe companies don't do fittings well. 

7 the ones and twosies from, credit applications, all 7 If there is an extra fitting they don't know how 

8 the above I guess. 8 to handle that. If they return the fittings, they 

9 Q. Do distributors provide one stop shopping 9 don't handle that well at all, they don't permit it. 

10 to customers? 10 And if there is any changes on the job which is 

11 A. Some do, yes. 11 more apt to happen than not, as the job is 

12 Q. Do distributors handle the billing and 12 progressing, they run into something different and 

13 collections from their customers? 13 they make an executive decision we are going to go 

14 A. Yes, that's the credit scenario. Some 14 around the corner rather than go straight up or 

15 people will allow a looser credit format with their 15 whatever, then there is a need for a small amount of 

16 customer than a manufacturer would. 16 new types of fittings to handle the change in 

17 And that's probably one of the main underlying 17 specification, they don't handle take well either. 

18 reasons why manufacturers would rather go through 18 Distributors, that is just part of the game, we 

19 distribution because they can guarantee their money 19 react quickly, adjust, bring the other stuff we took 

20 quicker than if they were selling to the contractor 20 out there back and give them the new stuff. So we 

21 directly. 21 do that constantly. 

22 Q. In terms of a sales force, do distributors 22 And that's kind of why we have a lot of D items 

23 provide a larger sales force than manufacturers? 23 that we would normally not want to stock, but 

24 A. Normally speaking, sure, yes. 24 because of returns that have come back and special 

25 Q. Do distributors handle returns of products? 25 fittings that they didn't need that we took back as 

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1 part of the relationship we have with the customer, 1 A. No, I don't think so. 

2 and every now and then they do their yard sweep 2 Q. In 2011? 

3 where they go through the at the end of the job, 3 A. I don't think so. 

4 they pick up everything and bring it back, sometimes 4 Q. Earlier today you stated that you had 

5 we didn't even sell it to them. 5 purchased domestic fittings from Star, you believed 

6 But we give them something on it. It's 6 there was two projects; is that correct? 

7 relationships. 7 A. Two projects that I had knowledge of that I 

8 (Brief recess taken.) 8 was involved in, yes. 

9 MR. MANN: Q. Mr. Groeniger, earlier today you 9 Q. Have you considered purchasing more ductal 

10 stated that you purchased imported fittings from 10 iron pipe fittings from Star on the domestic side? 

11 McWane or Tyler, Star and SIGMA; is that correct? 11 A. Yes. 

12 A. That's correct. 12 Q. And did you purchase more domestic ductal 

13 Q. Why do you have multiple suppliers of 13 iron pipe fittings from Star? 

14 imported fittings? 14 A. Probably not. 

15 A. I guess the nature of the beast that we 15 Q. Why not? 

16 developed, bringing on people from other companies 16 A. Because of the inherent threats of 

17 as groups of people that had preferences as far as 17 retaliation. 

18 manufacturers go. And we let them do their thing. 18 Q. Who was threatening you? 

19 Whoever supported them best they used, even 19 A. Tyler. 

20 though I maybe had preferences, I said you are 20 Q. When you say retaliation, earlier today 

21 fighting the battle in your area, you make those 21 Mr. Truitt put Exhibit Number 2, but for consistency 

22 choices. We support it. 22 purposes I am actually going to enter the same 

23 And so suddenly relationships were made with 23 exhibit which has been previously marked as Exhibit 

24 other manufacturers that we traditionally may have 24 Number 6 and I know it's redundant but there is a 

25 not dealt with because of Fresno or because of 25 rhyme and a reason to it. 

Page 206 Page 208 

1 Bakersfield or because of Sacramento and they had a 1 The retaliation that you just spoke of and the 

2 better salesperson and better support. 2 threats, Mr. Truitt talked about this particular 

3 Q. Are there any price advantages to having 3 letter and how it encompasses two particular 

4 more than one supplier on imported fittings? 4 threats; is that correct? 

5 A. Not really. The advantage was support and 5 A. Yes. More than that actually, it does have 

6 the fact that these people would help the branch 6 more than that. 

7 people better than a company that would handle 7 Q. The letter itself has more than just two 

8 corporate best wouldn't get out to the branches to 8 threats? 

9 help them. 9 A. Yes. 

10 And we could not or we did not or were not able 10 Q. What were the other threats? 

11 to transfer that relationship to a branch level 11 A. Well, it does mention, "In support of the 

12 which these people have had, in most cases were 20 12 increased demand for domestic products," it doesn't 

13 plus year people that came to us. 13 say necessarily fittings there, "we are pleased to 

14 So it's difficult to change those guys, they are 14 announce that McWane's domestic fittings and 

15 entrenched in the way they do business. And the 15 accessories are sold under Tyler Union and Clow 

16 reason they came over to our company is because we 16 Water brand names." 

17 allowed them the ability to continue their 17 The Clow brand name is very, very important to 

18 philosophy with as few changes as possible. 18 Groeniger & Company at that time because we were the 

19 Q. Who sells domestic ductal iron pipe 19 largest purveyor of fire hydrants of which Clow 

20 fittings -­ 20 manufactured probably in the state. 

21 MR. TRUITT: Objection, time frame. 21 And the fire hydrant that is sold predominantly 

22 MR. MANN: Q. In 2011 -- actually in 2009, who 22 in this state is a specified wet barrel type of fire 

23 sold domestic ductal iron pipe fittings? 23 hydrant, wet barrel is what they call it. Versus a 

24 A. Tyler and Star. 24 dry barrel. 

25 Q. And in 2010 were there any entrants? 25 Cold areas require a dry barrel so they don't 

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1 freeze but around here it's wet barrel. 1 Q. Earlier today you talked about the San Jose 

2 Clow is the major producer, produces probably 75 2 Water Company and the incident there where you had 

3 percent of all the wet barrel hydrants and we are 3 the contract but that you had to convince Tyler that 

4 their largest distributor. 4 you had that contract; is that right? 

5 We are probably at the time of 2006, 2005 the 5 A. That's correct. 

6 third largest Clow distributor of valves in the 6 Q. What was your understanding? Why did Tyler 

7 nation and we were just a small operation, mid size 7 change their price on those fittings? 

8 operation here in California. But we did that type 8 A. It was to bring pressure. 

9 of volume. 9 Q. Why were they bringing pressure? 

10 We have the annual contract, we had the annual 10 A. They told us we weren't buying enough 

11 contract for San Francisco, for East Bay Water, for 11 foreign fittings from them, we were buying all our 

12 Contra Costa County Water, for Marin Municipal 12 domestic fittings, but the majority of those 

13 Water, for annual contracts for valves and hydrants 13 domestics were going to San Jose Water. 

14 all at the same time, very unusual, probably the 14 They were one of the unique companies in this 

15 first time in history that has ever happened. 15 recession that grew. They were a private water 

16 And we don't have all those together today but 16 company, and they got money from the government to 

17 at that time we did and we were, it was very 17 expand their facilities and they were, it was like a 

18 important. 18 heyday for them, they had projects going right and 

19 And when Clow Water brand names was stated, that 19 left. 

20 meant that we could have problems in the other side 20 And what happens is they controlled the 

21 of the Clow products that we handle. 21 specification for the materials, you give them the 

22 McWane is a big company, well run company, tough 22 price for the materials that meet their 

23 company and we did not handle their pipe, we handled 23 specifications, they take it and give it and say 

24 a competitor of theirs pipe which we were pretty big 24 okay, here is two contractors that they use to do 

25 in that too, but we did not handle their pipe so we 25 all their work and they said here, you can buy from 

Page 210 Page 212 

1 felt they couldn't take that away from us. 1 either one, both of them meet our specification and 

2 But everything else we could lose and that would 2 are approved by us to do work here. 

3 have been a tremendous blow, we would have to do 3 Then the contractors could have bought it all 

4 some major reorganization if that had happened. 4 from one guy, but in this case one contractor bought 

5 And I don't think that they would have done that 5 it from another guy and the other contractor bought 

6 but you don't know. McWane can, McWane is a tough 6 it from us, which is good, it kept the balance going 

7 company, I am not saying that that's bad but they 7 and it kept everybody, if the you have it all then 

8 are a tough company and they have, Tyler has run 8 you have certain responsibilities that are inherent 

9 roughshod on their part of the industry for years. 9 with that. 

10 They didn't need to do that but they did it. 10 Splitting it up is great with me, I'd rather do 

11 All they had to do was sell, all they had to do 11 that than have it all to be honest with you. But 

12 was do Salesmanship 1A and they would have been 12 anyway, we had half of it and another contractor had 

13 fine. 13 half. 

14 But they went to intimidation and riding 14 The supplier of the other contractor was 

15 roughshod on the industry and that turned a lot of 15 applying pressure to Tyler to get us out of it, they 

16 people off, people like me turned off and we went 16 had the contract with this contractor and Tyler said 

17 out to seek other avenues. And that was part of our 17 well, you don't have the contract with him, and I 

18 ups and downs with Tyler over the years. 18 said you are right, I don't have it with that 

19 It's not that they are not a good company, Tyler 19 contractor, I have it with this contractor. 

20 makes good product, they are a good company. 20 Q. Backing up a little bit, earlier you had 

21 But they don't, we don't want them to own us and 21 stated that prior Tyler Union issuing this September 

22 we are an independent company and we did things 22 22, 2009 letter which has been marked as CX 0006, 

23 independently, the people who supported us we 23 you had purchased two projects from Star on domestic 

24 supported 110 percent, but those who didn't we went 24 fittings; is that correct? 

25 out of our way to find options. 25 A. That's correct. We may have purchased more 

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1 through the branches, I don't think so. 1 that era of domestic requirement, not domestic, 

2 I think those were the two, I mean, these were 2 Tyler requirement, they didn't approve Star, 

3 big, big projects, these were big fittings, some of 3 domestic they wouldn't approve them. 

4 the fittings Tyler didn't even make, they would have 4 And Tyler did a good job of specification, got 

5 to make them and most of the fittings Star didn't 5 to give them that credit, they did the specification 

6 make either but they would make them for this 6 job and they kept the specification working for 

7 project. 7 them. 

8 Q. Earlier today when Mr. Truitt was talking 8 We could not do anything about it, Star could 

9 to you about CX 0006 you talked about the San Jose 9 not do anything about it, SIGMA couldn't do anything 

10 Water Company experience that you had; is that 10 about it. 

11 correct? 11 We had them all go in there and talk to the 

12 A. That's correct. 12 guys, they said no, we are private water, we can do 

13 Q. I believe it was your testimony, and 13 what we want to do. 

14 correct me if I'm wrong, but that you believed the 14 So the realization is if we were going to be in 

15 experience that you dealt with as it related to the 15 that ballgame during that period of time when that 

16 San Jose Water Company was because you had purchased 16 was the biggest entity of anything going on in the 

17 domestic fittings from Star; is that correct? 17 Hayward region, and to support two of our major 

18 A. That is what the inference was when we had 18 contractors in the area that were bidding work down 

19 meetings with Tyler. That we are not -- we are just 19 there, we had to have Tyler. And Tyler knew that, 

20 buying the domestic fittings from them, and not 20 it was pretty obvious. 

21 buying any foreign fittings. 21 And we asked when the annual bid came out, we 

22 And we said well, you are getting all the 22 had the whole bid two years before supplying Tyler, 

23 domestics except for that one job, that happened 23 we had all contractors coming to us. 

24 actually before this letter came out, the job was 24 And the year after that we split the bid and 

25 bid and submitted on and organized far before this 25 this year we split the bid. And Tyler said well, 

Page 214 Page 216 

1 letter came out. 1 you didn't get the bid, so we said yes, we did, we 

2 Q. So prior to this letter you had this 2 asked you for prices and you gave it so us and now 

3 experience with Tyler where they were trying to get 3 you are coming back and saying you are not going to 

4 you to purchase more imported fittings rather than 4 support it. 

5 just their domestic fittings? 5 They had a price increase sometime after the 

6 A. That's correct. 6 first of the year and they just upped our prices 

7 Q. And based on the experience that you had 7 arbitrarily. And so we couldn't up our prices with 

8 with Tyler Union and as it related to the San Jose 8 the contractors and maintain a relationship with 

9 Water Company and the issuance of this letter that 9 them. 

10 came out on September 22, 2009 that I have marked as 10 And the other supplier knew what was going on, 

11 CX 0006, what effect if any did this letter and that 11 they were in there the same day, and I said hey, you 

12 experience have on your willingness to purchase 12 can't buy Tyler at a good price any more, they knew 

13 domestic fittings from Star? 13 about it. 

14 A. Well, it was the realization with the size 14 As a matter of fact, I think we heard it from 

15 of our company and our needs for fittings, we could 15 our contractor first before we knew. We said what's 

16 be upside down in an area that could hurt the 16 going on and he said well, no, you didn't get the 

17 company as a whole. 17 contract, we can't give you that price anymore. 

18 If we couldn't get fittings, the specifications 18 So they were trying to get the business for the 

19 predominantly in the valley are foreign allowable 19 whole thing by hook or by crook, so we were 

20 all throughout the valley, when you get up to 20 hustling. 

21 Sacramento it tightens down a little bit, there is a 21 So we said hey, there is no change, you get the 

22 couple of domestic only specs or Tyler only specs. 22 prices, and so we were buying Tyler at the higher 

23 But when you hit the Bay Area, it's more 23 price and selling it to them at the contract price, 

24 prevalent. There are one or two districts that are 24 which means we were losing money. 

25 big, San Jose Water was the biggest by far during 25 And continuously fighting with Tyler trying to 

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1 get them to acknowledge the fact that they had 1 Q. How much more do you think you would have 

2 quoted us on the project and having the contractor 2 purchased from Star? 

3 talk to their regional guy when he went to the 3 MR. TRUITT: Objection, speculation. 

4 contractor's office and say we are supplying the 4 MR. PARKS: You can answer. 

5 contractor through Groeniger, they gave us the price 5 THE WITNESS: Well, if they had done their 

6 and we have the annual contract from the district 6 specification work which means that they could get 

7 and so forth. That didn't work. 7 in at San Jose Water, we would have bought a 

8 We kept selling projects and getting our share 8 significant amount of business from them, possibly 

9 of the business through one contractor. And then so 9 50 to 75 percent of our domestic requirements. 

10 we went to the district ourselves and complained to 10 Probably not all of it because they don't have 

11 the district saying we have a problem with your 11 as complete a line as Tyler does, but between the 

12 specifications, they are limiting supply to one guy. 12 two we would have split the business pretty much 

13 And we were up front, we said we are quoting the 13 fifty-fifty. 

14 job, they knew about it, we got pricing from them 14 MR. MANN: Q. So had Tyler not issued this 

15 and now they are restricting. 15 letter in September 2009, you would have purchased 

16 So they wrote a letter from San Jose Water 16 50 percent of your domestic fittings needs from 

17 Company to McWane saying that Groeniger & Company is 17 Star? 

18 part of the San Jose contract for this year. 18 MR. TRUITT: Object to the form. 

19 And even that took a little bit before it sunk 19 THE WITNESS: I would think we would have. 

20 in and finally came back and said okay, we'll give 20 Knowing personalities involved, knowing the history 

21 you that price. 21 involved and the sales people that Star had 

22 Q. We covered that this morning. Just 22 currently in effect in the Central Valley coming out 

23 focusing, I guess backing up a little bit, setting 23 of Sacramento who were very astute to our needs and 

24 aside the San Jose Water Company, that contract and 24 our capabilities, I think so, yeah. 

25 the experience that you had with Tyler, you stated 25 That's if pricing was identical, that's not 

Page 218 Page 220 

1 that you had purchased two big projects from Star 1 saying I am doing this on a price basis, I am 

2 for domestic fittings, prior to the issuance of the 2 presuming that the pricing would be equivalent. 

3 September 22, 2009 letter; is that correct? 3 And if the pricing was equivalent then yeah, 

4 A. Yes. 4 that's what would happen. If the pricing was 

5 Q. After that, after the issuance did you 5 lopsided one way or the other, that could affect 

6 purchase any more Star domestic? 6 what we did. 

7 A. I think we did but it wasn't, it would have 7 Q. If you could turn to page 129 in Exhibit 1 

8 to be coming from the Hayward store because they are 8 and I am going to start on line 9. 

9 the ones that were being impacted by this. 9 "Question: Assume that the Federal Trade 

10 Q. What to you mean by being impacted? 10 Commission can stop Tyler from engaging in 

11 A. They were the ones doing the big work for 11 threatening distributors that want to purchase 

12 ARRA projects coming out of our Hayward estimating 12 domestic fittings from Star, and assuming Tyler 

13 group. 13 doesn't do anything to improve their service 

14 There would have been very little requirement 14 offering, now in that world are you purchasing more 

15 for domestic through the Central Valley unless they 15 domestic fittings from Star?" 

16 had a big project for ARRA, under ARRA auspices and 16 "Answer: Probably not." 

17 they would come to Hayward to have us do the 17 MR. TRUITT: Object to the form of the question. 

18 take-off's and submit the pricing and so forth. 18 I am objecting to Mr. Renner's question which is 

19 And we would have caught it at that point and 19 improper. 

20 said we have to make sure we submit domestic 20 MR. MANN: Q. It seems like you just told me 

21 materials. 21 that you would have purchased up to 50 percent of 

22 Q. Had Tyler not issued this letter in 22 your domestic fittings needs if Tyler hadn't issued 

23 September 2009, would you have purchased more 23 this letter back in September 2009. 

24 domestic fittings from Star? 24 Now, obviously the question that Mr. Renner 

25 A. Yes. 25 posed isn't necessarily asking if Tyler hadn't 

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1 issued the letter, but it does say if they were able 1 "Question: Has the policy that McWane is 

2 to stop the threats that were occuring. 2 announcing in CX 6 with respect to purchases of 

3 So I guess I am just wondering if maybe, if the 3 domestic fittings changed your or affected your 

4 testimony you provided on page 129, is there a way 4 willingness to do business with Star on the domestic 

5 to kind of clarify that? 5 side?" 

6 MR. TRUITT: Objection to the form. 6 "Answer: No. " 

7 THE WITNESS: It was true at that time but the 7 Your testimony today is that you actually would 

8 question did not answer the fact was Star in all the 8 have given Star 50 percent of your domestic? 

9 specifications. 9 business -­

10 If that was included in there, if Star was 10 A. Here again -­

11 completely acceptable as a domestic manufacturer, 11 MR. TRUITT: Object to the form. 

12 especially with San Jose Water, I would have 12 THE WITNESS: -- we have to look at acceptance 

13 answered that differently. 13 into the specifications. If I just did 90 percent 

14 MR. MANN: Q. Okay. 14 of our domestic fittings, outside of a couple of the 

15 A. But at that time, and they still are not 15 ARRA jobs, were going to San Jose Water, and there 

16 and that's a big part of our business. 16 was no change, it would have made no difference 

17 And I could see right away that it wouldn't 17 today. 

18 change much because the lion's share of our domestic 18 Even if they had a complete line and were 

19 product was going into San Jose Water. 19 competitive and everything else I still could not 

20 Q. Let's explore that a little bit. How much 20 use them in a domestic application with San Jose 

21 in 2010 of your domestic fittings purchases went to 21 Water. I could use them everyplace else and I 

22 San Jose Water if you know? 22 probably would do that. 

23 A. Outside of those two big projects it was 23 MR. MANN: Q. So the question and answer 

24 probably 90 percent, 85, 90 percent. 24 exchange that occurred back in December of 2010, it 

25 Q. So outside of the two big projects that 25 sounds as if it's specific to the San Jose Water 

Page 222 Page 224 

1 Star supplied? 1 Company, the fact that Star was not able to place 

2 A. Yeah. 2 its product with San Jose Water Company didn't 

3 Q. So setting aside the San Jose Water Company 3 affect your willingness to purchase from them -­

4 and their domestic needs, your previous testimony 4 MR. TRUITT: Objection, the question is clear on 

5 when I asked how much of your domestic business 5 its face. 

6 would you give to Star, it was 50 percent; is that 6 THE WITNESS: Yes. 

7 right? 7 MR. MANN: Q. Is Star ready in your estimation 

8 A. Yeah. I don't think that we would have 8 to serve as a supplier of domestic ductal iron pipe 

9 kicked Tyler out, we have relationships with some of 9 fittings for all specifications that don't 

10 the people at Tyler who are trying to change things 10 specifically ask for Tyler? 

11 and I respect that. 11 A. Yes. 

12 But by giving Star our business it would promote 12 Q. And were they in 2009? 

13 better service from Tyler also. And it would make 13 A. Possibly. I don't know that I checked into 

14 them work harder I think, it would me if I was a 14 them that well back then. 

15 salesman. 15 I was more interested in getting San Jose Water 

16 And that's all I am trying to get Tyler to do is 16 out of the way and not wanting to get too much 

17 work harder and sell better, not intimidate more. 17 involved further because I was going to end up 

18 Q. Jumping over to page 135 of Exhibit 1 now, 18 getting hammered if I did. 

19 Mr. Renner asks a similar question that I just 19 So I just made it easier on me just to stay with 

20 wanted to clarify based on your testimony today. 20 what I had and service my customers and worry about 

21 A. Okay. 21 that later, some other time. 

22 Q. So on page 135 starting at line 23, 22 Q. How did Star do in responding to the two 

23 "Question: Has the policy that McWane is announcing 23 projects that you gave to them? 

24 in CX 6 with respect to purchases of domestic 24 A. Excellent. 

25 fittings" -- let me start over. 25 Q. Did you have any issues of quality? 

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1 A. No. 1 looks better to me, it's when they go down in price 

2 Q. Any issues with service? 2 that it affects my inventory. 

3 A. Yeah, a couple of issues, we wanted it 3 And I am a big inventory guy so my inventory 

4 quicker than we said we wanted it, the contractor 4 value just went up by X percent. Now, that is 

5 told us, gave us a lay schedule and we were 5 supposing that everybody is doing the same thing, 

6 complying with the lay schedule and all of a sudden 6 but if they say you are going up and the other guy 

7 the contractor changed his mind and wanted to start 7 is not, then you have to look at it and say okay, 

8 someplace else, we even supplied some Tyler 8 then we have to change what we do, buy more from 

9 fittings, we even supplied SIGMA fittings. 9 this guy because it's better for our inventory 

10 Because it was that or not get started, and they 10 levels. But we get these. 

11 had a meeting at the top and said that's okay, we 11 Q. Over the course of your previous position 

12 can supply two fittings here that were foreign or 12 at Groeniger & Company as the CEO, did you review 

13 something other than what we submitted on to get the 13 these types of letters when they were received? 

14 job going. 14 A. To be honest with you, probably not. I 

15 They met their obligation a hundred percent and 15 would leave that to my executive vice-president, my 

16 that was a tough job, it was an extremely, extremely 16 sales manager, my regional managers to give me, what 

17 tough job for them to start out with fittings of 17 does this implicate as far as you see and does this 

18 this size which they had to create a pattern and 18 change your product mix or whatever. 

19 make the fitting. 19 It's only when we came to a change in overall 

20 And some of those fittings Tyler had to make a 20 suppliers, when we said we are going to go all one 

21 pattern and make a fitting too so it wasn't as if 21 way or all the other way, that has to come across my 

22 Tyler had them all sitting in their shop, they did 22 desk. 

23 not. Availability would have been almost 23 We don't change suppliers without a real general 

24 identically with Tyler as it was with Star. 24 meeting of all the minds. And we have those on a 

25 Q. I want to shift gears now, I am going to 25 regular basis. 

Page 226 Page 228 

1 hand you what's been marked CX 0056. This 1 We had them with fittings, we had them with all 

2 particular exhibit, Mr. Groeniger, is a collection 2 the manufacturers, we have them come in, explain how 

3 of what I believe are referred to as pricing 3 they are going to handle our company as a whole, not 

4 announcements or multiplier changes and it's a 4 just Hayward branch or the Redding branch to the 

5 sample of the types of I guess pricing letters that 5 north or the Bakersfield branch to the south, how 

6 are sent out in the industry. 6 are they going to handle those differently, who is 

7 And I just wanted you to look over it, if you 7 going to be calling on them, we lay it all out. 

8 could tell me whether or not you received these 8 And we at the time of 2008, we were still the 

9 types of letters and we'll start there. 9 big supplier of fittings in northern and central 

10 A. Yeah, we would have received them. I might 10 California, probably in the state. 

11 have not gotten them in my mailbox but I would have 11 But I don't know that for a fact, but I just 

12 been informed that we got a price increase from 12 assume from what I know of the industry we were the 

13 these people because it affects our computer system, 13 player. 

14 we have to update our computer system. So that our 14 And for somebody to come into the state and not 

15 average costs will be represented accurately. 15 sell us would be a long term -- and that was our, in 

16 Q. So Groeniger & Company received these types 16 some ways what Tyler was mad at, the fact that we 

17 of pricing letters from its suppliers? 17 had too much control and we weren't giving them the 

18 A. Yes, suppliers, yes. 18 business in one branch, we gave them business in the 

19 Q. And you stated that you might not get it 19 other branch. 

20 directly in your mailbox. Who would have received 20 Some branches were exclusively Tyler, domestic 

21 these types of letters? 21 and foreign, but that wasn't enough. 

22 A. Our sales people might get it, I might get 22 We had to face east and say we are going to buy 

23 it too but I would not have, I'd have looked at it 23 90 percent of our business from you and whatever or 

24 and say oh, they are going up in price, because it 24 else they would say one place is not enough. 

25 doesn't bother me all that much because my inventory 25 Q. Just focusing on these pricing letters, how 

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1 do these pricing letters help Groeniger & Company 1 Would that include you? 

2 make business decisions? 2 A. Yes. In that date, yes. 

3 So if the prices are going to go up, how does 3 Q. Could you just review this letter real 

4 them telling you that they are going up affect your 4 quickly, just to yourself? 

5 business? 5 A. (Witness complies) Okay. 

6 MR. TRUITT: Objection, foundation. 6 Q. Focusing on the second to last paragraph 

7 THE WITNESS: Well, normally we know about these 7 where it says, "Before announcing any price actions 

8 price increases before we get that letter. 8 we carefully analyze all factors including: 

9 MR. MANN: Q. How does knowing that information 9 Domestic and global inflation, market and 

10 help you make decisions? 10 competitive conditions within each region as well as 

11 A. Traditionally price on fittings went up 11 performance against our own internal metrics. We 

12 about five percent a year on cast iron or ductal 12 anticipate being able to complete our analysis by 

13 iron, pretty much doesn't change, even the world 13 the end of May. At that point we will send out 

14 market, sometimes the raw material gets a little 14 letters to each specifying region detailing changes, 

15 higher, but it's not like copper, it's not like 15 if any, to our current pricing policy." 

16 aluminum which goes up and down like mad, cast iron 16 Does Tyler Union identify what factors they are 

17 is kind of a gentle rise and they are about five 17 analyzing help you in your business? 

18 percent a year it went up. 18 MR. TRUITT: Objection, foundation. 

19 You could almost book that until toward the end 19 THE WITNESS: No, not that I can see. They are 

20 when everything was skyrocketing and everything was 20 talking about the world scrap market that has a 

21 going up at rather a higher rate. 21 tendency to go up and down. 

22 And it was just keeping track of it so that you 22 But scrap iron is probably one of the most 

23 had enough time to bring inventory in to support 23 static, to an extent, static costs, it doesn't 

24 outstanding orders that would more than encompass 24 fluctuate a lot. 

25 your inventory. 25 It did maybe in certain times but it falls back 

Page 230 Page 232 

1 Then we would do that, we would place large 1 real quick to a standard average. You may have a 

2 orders before the price increase so that we had 2 spike because of China needing product, scrap iron 

3 product coming in in the next weeks or month at the 3 because their economy was starting to boom, but 

4 original level so that we could protect our 4 certainly that leveled off quickly. 

5 customers. 5 As soon as the Olympics ended that ended. So it 

6 Because we can't give letters like this to our 6 came back down to a more manageable level. 

7 customers, they would say I don't care, go up to 7 Those things, world economics have a tendency to 

8 what you want to but I have got a price from you 8 be looked at certainly, a manufacturer has to look 

9 here, and if you don't get me that price I will find 9 at that, I understand. This letter wouldn't have 

10 somebody who else and they can in a heartbeat. 10 done very much for me, there is nothing definite 

11 So these letters stopped with us. If we have a 11 that is going to impact me. 

12 district that has a year contract, we send them a 12 Q. So why would Tyler send you this letter 

13 letter like this and they say too bad. 13 then, what do you think? 

14 Or if they have an escalator where it allows you 14 MR. TRUITT: Objection, speculation. 

15 to raise your prices, you can send them a letter 15 THE WITNESS: A warning that times are tough and 

16 like this saying these prices are going up five 16 we are going to have to do wild and crazy things in 

17 percent, we are going to go up five percent 17 the future, and all those wild and crazy things come 

18 accordingly and you might get away with it. But 18 down to what actually happens and what actual relief 

19 most of these districts don't have escalators on 19 we as a distributor have to get product before they 

20 their pricing. 20 go up, so that we are held whole. 

21 Q. I am going to hand you now what's been 21 And if they give us the time to react to it we 

22 marked CX 0138. And this is a, at the bottom it's 22 can react to our customers and say the price has 

23 Bates stamped TU-FTC-0010321. 23 gone up, guys, so give me your orders in right now. 

24 This is a letter that Tyler Union sent on May 24 Sometimes it helps us get orders off the street, 

25 7th, 2008 to all Tyler Union distribution customers. 25 we have had price increases and after this date we 

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1 have to raise our prices, and they say okay, we'll 1 inventory evaluations." 

2 give you the order now, so we put that in with our 2 The next part I don't understand where it says, 

3 blanket of orders to get price protection and 3 "and to compete on a more level playing field." 

4 service our customer. 4 A. I don't understand that either. 

5 MR. MANN: Q. So what you have just described 5 MR. TRUITT: Objection, foundation. 

6 sounds like tha'ts a benefit to getting a price 6 THE WITNESS: I don't understand that either. 

7 increase letter, but that's not what this is. This 7 What playing field are they trying to -- I don't 

8 is an announcement -­ 8 understand what the playing field is there. 

9 A. An announcement of some sort. 9 MR. MANN: Q. Do you know how raising the price 

10 Q. -- that they might be raising prices in the 10 would enable you to compete on a more level playing 

11 future; is that right? 11 field if the playing field they are referring to is 

12 MR. TRUITT: Objection to the form of the 12 you as a distributor, and the field you are playing 

13 question. 13 on? 

14 THE WITNESS: They might be raising prices, as 14 MR. TRUITT: Objection, form. 

15 much as 16 percent or as low as 6 percent. 15 THE WITNESS: To me that doesn't make sense. If 

16 MR. MANN: Q. But as far as the factors that 16 they are cutting the price I can understand it, but 

17 they are analyzing, that doesn't help you run your 17 if they are raising the price that means they were 

18 business? 18 low to begin with and that would be something that 

19 A. No. I cannot use this letter for any 19 would not be interesting to us, that we had an 

20 district or any contractor to get relief because 20 advantage and evidently didn't use it because now 

21 they don't know what it is, what it means and they 21 they are bringing a price up to a level -- that 

22 don't know the date that they are going to 22 doesn't make sense to me, that might make sense to 

23 effectively change prices to where, and are they 23 somebody but it does not make sense the me. 

24 going to allows us to buy fittings until that date 24 MR. MANN: Q. And the next phrase says: "It is 

25 at a specific date or after that date, are they 25 our intention going forward to sell all products 

Page 234 Page 236 

1 going to give us a grace period? 1 only off the newly published multipliers." 

2 This letter could mean to me they are going to 2 Does that suggest that prior to issuing this 

3 give us a grace period, but we don't know how much 3 that they weren't selling products off of the 

4 it's going up, so it's difficult. 4 published multipliers? 

5 This I would say don't worry about it until you 5 MR. TRUITT: Objection, foundation. 

6 see the letter come out saying we are going up two 6 THE WITNESS: It could mean that. 

7 percent, nine percent and so forth. 7 MR. MANN: Q. What else could it mean? 

8 Q. I am going to hand you now what's been 8 A. Well, it means they are standardizing and 

9 marked CX 1178. And this has a Bates label of? 9 they would be getting away from discounting off of 

10 TU-FTC-0010307. And this is a letter dated January 10 list price and discounts that were were pennies 

11 11th, 2008. To "Dear Valued Customer." 11 here, two percent here, two percent there. 

12 A. Okay. 12 This week it might be one percentage, this 

13 Q. Going down to the third paragraph that 13 region it might be, you are up to line 50 or 

14 starts, "To help our distribution customers better 14 whatever the lines are, it would indicate to me that 

15 manage their inventory valuations and compete on a 15 they are trying to standardize their pricing policy 

16 more level playing field, it is our intention going 16 so that it wouldn't be all over the board. 

17 forward to sell all products only off the newly 17 Q. Standardize it against, what is the 

18 published multipliers." 18 standard? 

19 And it says, "We will continue to monitor the 19 A. Whatever they feel is the standard, 

20 competitive environment and adjust regional 20 whatever Tyler feels is the standard is the 

21 multipliers as required to provide you with 21 standard. 

22 competitive pricing." 22 And they are trying to get there so that they 

23 A. Okay. 23 are consistent with what they do. 

24 Q. I understand the first part that says, "to 24 All municipal bids are honored, that's good, 

25 help our distribution customers better manage their 25 takes me off the hook. All prior to a certain date 

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1 are honored, that takes me off the hook, that gives 1 Fitting Research Association? 

2 me a little bit of time to March 1st, that means 2 A. Yep. 

3 anything we have hanging out there at the old price 3 Q. What is that? 

4 we have to have shipped by March 1st or otherwise we 4 A. It's an association of producers. 

5 are going to revert to whatever the new system is. 5 Q. Of fittings producers? 

6 That gives us enough time to react, that would 6 A. Is that DIPRA? It's not DIPRA? 

7 have been okay with me. 7 Q. It's not DIPRA, no, that's the Ductal Iron 

8 I would have seen nothing in this letter that 8 Pipe Research Association, not to be confused with 

9 would have alarmed me because they are giving me the 9 that. Are you aware of DIFRA, the Ductal Iron 

10 time necessary to react to my outstanding orders, 10 Fittings -­

11 but as far as trying to analyze what they are saying 11 A. I presume it's similar to DIPRA but in the 

12 in that paragraph, that's beyond me, I don't 12 fittings scenario. 

13 understand. They must have a reason for that but I 13 Q. Do you know whether or not it exists? 

14 didn't understand it. 14 A. No. 

15 Q. Do you have any idea what that reason could 15 Q. Have you ever had contact with anyone from 

16 be or why they would put this type of language in 16 DIFRA? 

17 the letter? 17 A. No. 

18 MR. TRUITT: Object to the form of the question. 18 Q. Have you had any contact with anyone from 

19 THE WITNESS: I don't have the slightest idea. 19 DIPRA? 

20 MR. MANN: Q. Going to the next sentence in 20 A. Yes, only because we were talking about, 

21 that paragraph that starts with, "To help our 21 they were a political arm of the ductal iron pipe 

22 distribution customers," the next sentence of that 22 people, they were represented in Washington, they 

23 paragraph says, "We will continue to monitor the 23 would certainly promote the use of ductal iron pipe 

24 competitive environment." 24 over everything else, the PVC guys have theirs, the 

25 What competitive environment is Tyler 25 ductal guys have theirs and they are a political 

Page 238 Page 240 

1 monitoring? Are they monitoring -- let me just reask 1 arm. 

2 the question. What competitive environment is Tyler 2 But they will help if you have a specification 

3 monitoring? 3 problem. They will come out or send an engineer out 

4 MR. TRUITT: Objection, foundation, speculation. 4 to help with the specification to get something 

5 THE WITNESS: They are monitoring everything, 5 approved if it is not currently approved. 

6 that's all I can say. They will go out and take 6 Q. Are you aware of DIFRA offering those same 

7 pictures of projects, they will walk your yard, they 7 services? 

8 will verify, take a look at fittings in your yard, 8 MR. TRUITT: Object to the form, foundation, 

9 they will take a look at everything that they can 9 asked and answered. 

10 come by and look at, they will look at and try and 10 THE WITNESS: What was that question again? 

11 figure out what you are doing. 11 DIPRA? 

12 Even though you tell them one thing they are 12 MR. MANN: Q. You just explained what DIPRA 

13 going to think that you are probably lying to them 13 does, they will send an engineer out to help with 

14 or you are telling them the wrong thing, so they 14 specifications, they will help I guess with the 

15 will come and check it out, without approval by the 15 promotion of ductal iron pipe. 

16 way, but they will just casually walk out in the 16 Are you aware of whether or not DIFRA provides 

17 yard and look at things. 17 those same services? 

18 And I caught them doing that sometimes and I was 18 A. No, I am not. 

19 very upset with it, but I told them come by the 19 Q. Mr. Truitt towards the end of his 

20 office first and I'll show you everything, but come 20 questioning today pointed out that Groeniger & 

21 by the office first, don't go walking out there. 21 Company has filed its own lawsuit against McWane 

22 And one guy gave me lip and I escorted him off 22 Star and SIGMA; is that correct? 

23 the property, but that was one time, didn't happen 23 A. Yes, sir. 

24 again. 24 Q. And after you filed that, I guess it 

25 MR. MANN: Q. Are you aware of the Ductal Iron 25 wouldn't have been you, but on your behalf after 

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1 that complaint was filed, have you had any 1 is now branch manager of Ferguson's Hayward 

2 communication with anyone from Star Pipe? 2 facility. Called him and said would you call Larry 

3 A. No. 3 Rybaci, he called me, wants you to call him, wants 

4 Q. Have you had any communications with anyone 4 to talk to you about this lawsuit thing. I said 

5 from Tyler Union? 5 okay. 

6 A. No. 6 You want his number, no, I said no, I have it. 

7 Q. Have you had any communications with anyone 7 He said he's on vacation too, he is calling from 

8 from SIGMA regarding the filing of your complaint? 8 some vacation spot that he is in. So I didn't want 

9 A. Yes, they have. 9 to call him. I didn't want to call him. 

10 Q. Can you tell me about that? Who contacted 10 He is a long time friend for 40 years, I didn't 

11 you? 11 want to call him but I said well, I'll call his 

12 A. The vice-president or president of SIGMA. 12 office because I knew he was not there. 

13 Q. Who is that? 13 So I called the office and left a message for 

14 A. A guy by the name of Larry Rybaci. 14 Larry, give me a call, here is my cell phone in 

15 Q. Can you spell Rybaci for the record? 15 Hawaii, call me there. 

16 A. No, I couldn't spell it, I don't know how 16 So it took two more days and I was called again 

17 to spell it. It's spelled kind of like it sounds so 17 by my son and by Dick and they said have you called 

18 I presume, it's a Polish name so I just don't know. 18 Larry, I said I left a message for him. 

19 Every time I try to spell it I spell it wrong 19 Finally he called me back on my cell phone and 

20 but every time I see it I say oh, I can see how that 20 said you are suing me? I said, well, I guess, yeah. 

21 means that. I can't tell you. R-y-b-a-c-k-i I 21 What are you doing that for? Well, you know, it's a 

22 think. 22 problem area for me to understand and to do. But I 

23 Q. I believe the spelling is R-y-b-a-c-i. 23 had to do it. 

24 A. Okay, that could be. 24 And he says, I says I have got -- he says well, 

25 Q. There is only one Larry Rybaci at SIGMA, 25 you know, your attorneys on those things, they won't 

Page 242 Page 244 

1 correct? 1 cover you if there is a counter suit. I said 

2 A. In the world there is only one Larry 2 really? He said yeah, I said well, I don't have 

3 Rybaci. 3 money, I am not in business anymore, I am living on 

4 Q. He is currently the president of SIGMA? 4 retirement now, so I don't want to get involved in a 

5 A. I think he is the president of SIGMA, he 5 big legal action that costs me money because I can't 

6 was, I don't know what his title is today. 6 afford that. 

7 Q. And after you filed the complaint which 7 And he says well, he wasn't mentioning himself, 

8 would have been in the middle part of April 2012? 8 he mentioned Tyler or McWane. He says they are all 

9 A. Yes. 9 going to counter sue and then you are out in the 

10 Q. Did Mr. Rybaci call you? 10 open. 

11 A. I was in Hawaii and I didn't know the exact 11 I said well, I'll check into it, Larry, but I am 

12 date of the filing, but I was in Hawaii when it was 12 sorry are too, I am sorry too. 

13 filed. 13 It's probably because in the last year since 

14 And I got a call from the manager of, my old 14 they merged with Tyler, I felt that it was over for 

15 executive vice-president who is now manager of 15 SIGMA, personally I felt that they have made a pact 

16 Ferguson Water Works on the West Coast called me and 16 with the devil as far as they were concerned and 

17 said did Rybaci get in touch with you, I said no. 17 that they would eventually disappear or be acquired 

18 He said you better call him, he wants to talk to 18 by McWane, and they had lost all their ability to 

19 you. I said okay. 19 service us competitively, I couldn't buy Tyler 

20 He gave me his phone number. Which I didn't 20 fittings from them at the price we needed to have, 

21 write down but after thinking about it, I didn't 21 they wouldn't sell it to me. 

22 want to write it down. Because I had an indication 22 And they would adopt the same rules of the road 

23 that I probably knew why he was calling. 23 with regard to domestic fittings as Tyler had with 

24 Then my son called who is the branch manager, 24 us. 

25 used to be a vice-president of Groeniger & Company, 25 So I felt my need or my ability to deal with 

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1 SIGMA was limited and so we grew apart since 2010, 1 little bit just, it's pretty dry to read, but I 

2 we grew apart. 2 attempted to, yes, and I did to a certain part of 

3 But anyway, he called, I said well, I'll be 3 it, yes. 

4 checking and I'll call you back. As a friend. But 4 Q. So there have been a few occasions where we 

5 I didn't. And under advice that I shouldn't be -­ 5 have gone and reviewed part of the record and 

6 MR. PARKS: Let me stop you right there. You 6 clarified certain statements that were made. 

7 are not going to talk about any advice you got from 7 MR. TRUITT: Object to the form. 

8 counsel. 8 MR. MANN: Q. Beyond that, do you know of any 

9 THE WITNESS: I'm sorry, yeah. 9 parts of your previous testimony that aren't 

10 MR. PARKS: Thanks. 10 consistent with what you believe to be true today? 

11 THE WITNESS: So -­ 11 A. Well, there might be changes due to the 

12 MR. MANN: Q. But Mr. Rybaci called you on your 12 difference between that date and today and the 

13 cell phone in Hawaii; is that correct? 13 economy and in business relationships and so forth. 

14 A. That's correct. 14 And new players and new situations that have 

15 Q. And he asked you why you filed the lawsuit; 15 arisen, but as a whole I agreed with what, then I 

16 is that correct? 16 said, what I said was based on my true feelings at 

17 A. Yes. 17 the time. So -­

18 Q. And he told you that there would be counter 18 Q. And you were under oath when you provided 

19 suits against you for filing the suit against Tyler, 19 that testimony? 

20 SIGMA and Star? 20 A. That's correct, I was. 

21 A. He didn't say -- well, he probably said 21 Q. And would you incorporate the testimony 

22 that I am not covered for counter suits. 22 that you provided as testimony today? 

23 Q. What does that mean to you? 23 MR. TRUITT: Objection, incorporate any 

24 A. It means that I am vulnerable somewhere in 24 objections to his questions that I had that I wasn't 

25 this situation, that I am going to have expenses 25 here for. 

Page 246 Page 248 

1 that could take years -- I didn't want to get into, 1 THE WITNESS: Yes. 

2 I am of the age I don't need to take on scenarios. 2 MR. MANN: I have no further questions. 

3 If the accusations made by the FTC are accurate 3 EXAMINATION BY MR. TRUITT 

4 and that in the time frames that they are talking 4 MR. TRUITT: Q. Mr. Groeniger, you just 

5 about, it would have affected me, it would have 5 testified about a conversation you had with 

6 affected my company in a bad time in my life, in our 6 Mr. Rybaci from SIGMA, correct? 

7 lives, and helped hasten the day when we had to look 7 A. That's correct. 

8 at a 53-year-old family company having to sell, and 8 Q. I think you said you had no conversations 

9 put lots of people out of work. 9 with anyone from Tyler Union, correct? About your 

10 MR. MANN: Thank you for your testimony today, 10 lawsuit? 

11 Mr. Groeniger. I have no further questions. 11 A. No. 

12 MR. TRUITT: I have a few. 12 Q. Okay. And Mr. Rybaci is not associated 

13 (Brief recess taken.) 13 with Tyler Union, is he? 

14 MR. MANN: I actually have one more quick line 14 MR. PARKS: Objection, you can answer. 

15 of questioning. 15 THE WITNESS: I don't know, I don't know. I 

16 Q. Mr. Groeniger, you provided testimony to 16 can't say yes or no, I don't know. 

17 the FTC back in December of 2010; is that correct? 17 MR. TRUITT: Okay. 

18 A. Yes. 18 Q. Did he, specifically what did he say, I 

19 Q. And we have entered the transcript from 19 think you said you inferred something. 

20 that testimony as Exhibit 1 in the proceedings 20 What specifically to the best of your memory 

21 today. 21 were his words? 

22 A. Okay. 22 A. Well, it was, it came across as "why would 

23 Q. Did you review your transcript in 23 you do that to me" scenario. And that's why I 

24 preparation for your testimony today? 24 didn't want to call him, because of the 40 plus 

25 A. Yeah, I did. I kind of went over it a 25 years of relationships. 

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1 Q. I understand, my question to you is what 1 A. That's as best as my memory. 

2 were his words? 2 Q. If you would look at government Exhibit CX 

3 A. He mentioned to me that McWane, that the 3 006, it's the September 22, 2009 letter, it's the 

4 other people, there was an assorted group of other 4 same one I marked as I think Exhibit 2. 

5 people that were, that had also filed suit and they 5 A. Uh-huh. 

6 were this guy and that guy, and this guy doesn't 6 Q. All right. I think Mr. Mann took you 

7 know what he's doing, and this guy went out of 7 through the second paragraph of that letter. 

8 business, and kind of said that they weren't in the 8 It says, "We are pleased to announce that 

9 class that we were. And why are we getting involved 9 McWane's domestic fittings and accessories sold 

10 in that type of a deal. 10 under the Tyler Union or Clow Water brand names will 

11 And the fact that we have, I said we have legal 11 now be available through SIGMA." 

12 representation for this and I told him when I was 12 Did Clow Water sell domestic fittings or 

13 notified originally by the FTC that they wanted me, 13 accessories? 

14 subpoenaed me to testify, I called him. 14 A. Not on the West Coast. They may have done 

15 He said I can't talk about that, I'll get back 15 it on the East Coast, I couldn't tell you. Somewhere 

16 to you type scenario, put me off. 16 other than the Pacific west states. 

17 I called Tyler and said what's going on, they 17 Q. You don't know whether they did in 

18 referred me to an attorney. 18 California? 

19 And I called Star, they said I guess we got to 19 A. Well, I pretty well understand in 

20 have our attorney call you, nothing, nothing, and 20 Washington State and Oregon they didn't either. Or 

21 nothing. So I felt that I was alone. 21 Arizona or Nevada. 

22 At that point I hired representation to be here 22 So the Pacific west states I think, I felt 

23 and witness the -­ 23 pretty sure Clow was not a factor. 

24 Q. Let me stop you, Mr. Groeniger, I don't 24 Q. I see the reference to domestic fittings 

25 want to know what your lawyers told you, I want to 25 and accessories, can you show me where in this 

Page 250 Page 252 

1 know specifically what Mr. Rybaci told you. 1 letter it talks about fire hydrants and valves? 

2 A. But I incurred costs from that and I could 2 A. Well, it just says Clow Water brand, and 

3 see right away where this was going. 3 that is what would have gotten my attention. 

4 And he said to me there will be a counter suit 4 Q. It says domestic fittings and accessories? 

5 from McWane, not from him he did, he didn't mention 5 MR. PARKS: Sorry, he was still answering, we 

6 him, but McWane, he said you are not covered for 6 have been doing a good job of letting everybody 

7 stuff like that, that is going to be on you 7 finish their statements. Can you continue your 

8 yourself. 8 testimony? 

9 And I said wow, I said I didn't know that. So I 9 THE WITNESS: Well, the letter was entitled 

10 said I have to find out about that because I don't 10 "Tyler Union" and it was titled "Clow Water Systems 

11 know. 11 Company." It was a letter from both. 

12 And that caused some scurrying from Hawaii when 12 And I don't know Scott Frank but I know Jerry 

13 I was trying to relax but that was beside the point. 13 Jansen well. And I didn't know what falls under the 

14 So anyway I told Larry I would call him back and I 14 Clow Water Systems Company, Clow valve, Clow 

15 did not. 15 hydrant, Clow pipe, I am sure all of the three do. 

16 Q. And that's as best you can remember the sum 16 So I was worried that the proliferation of Tyler 

17 total of everything that he told you in that 17 rough handling could be moved to the Clow brand. 

18 conversation? 18 MR. TRUITT: Q. Were fire hydrants and valves 

19 A. I wanted to get off the phone in the worst 19 that were sold by Clow made available through SIGMA? 

20 way, I didn't like the position I was in or that he 20 A. No. 

21 was in and I wanted to make it short and I'll get 21 Q. Were you ever not sold any fire hydrants or 

22 back to you scenario. 22 valves that you sought to buy from McWane in the 

23 Q. I understand. I just want to make sure I 23 time period after this letter was sent out? 

24 have heard the four corners of the conversation as 24 A. No. 

25 best as your memory can recall it. 25 Q. Did anybody at Clow ever tell you they 

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1 wouldn't sell you product in the time period after 1 unusually spike on brass and iron, to an extent, 

2 this letter was sent out? 2 scrap iron because of their demand for materials. 

3 A. I never talked to anyone from Clow 3 But as soon as the thing was over their economy 

4 regarding that letter. 4 started taking a hit and we were back to normal 

5 Q. Okay. Mr. Mann asked you some questions 5 again I believe. 

6 about, first of all a letter dated January 11, 2008, 6 MR. TRUITT: Q. I am sorry, were you complete 

7 marked CX 1178. 7 with your answer? 

8 A. Yes. 8 A. Complete, yes. 

9 Q. Did you see that letter at the time it 9 Q. What was the duration of that spike you 

10 was -­ 10 just referenced? 

11 A. I am sure that I did because it had 11 A. Probably one-and-a-half years. 

12 increased percentages on it and somebody would have 12 Q. So from what period to what period? 

13 brought it my attention if I did not get an e-mail 13 A. I couldn't tell you, just depends on -- I 

14 or something like that directly to me, or in my 14 could relate, I related it to the Chinese and their 

15 mailbox. 15 introduction to the world through the Olympic games. 

16 What happens on stuff like this, the purchasing 16 And all the work that they did to get their 

17 agent or the branch manager, we had our corporate 17 country ready to show it off. 

18 entity located on the second story above our branch 18 Q. On Exhibit CX 1690, the maps that Mr. Mann 

19 in Hayward, so it would have been put in my box and 19 showed you -­

20 I would have seen a copy of it. 20 A. Yes, sir. 

21 Q. I may have misunderstood your earlier 21 Q. When you were drawing areas out from your 

22 testimony, when you were shown CX 0056 which is the 22 stores, remind me, what were you showing there? 

23 compilation -­ 23 A. I was showing areas of influence by a 

24 A. Oh, yeah. 24 particular branch. 

25 Q. My understanding on that was you testified 25 Service areas, areas of influence, taking into 

Page 254 Page 256 

1 you didn't necessarily see them, somebody else 1 consideration local road blocks like mountains and 

2 probably looked at them and you would have talked to 2 rivers and areas where there is no people. 

3 them. 3 Q. Was that -- oh, excuse me, I've got a bad 

4 A. I would have -- I wouldn't been interested 4 habit. 

5 in SIP Industries because we didn't do anything with 5 A. No, that's fine. 

6 them and it wouldn't have affected me whatsoever. 6 Q. Was that for subdivision jobs or plant work 

7 Now, when it gets down to the Tyler I would have 7 jobs? 

8 seen that. But SIP Industries, I would not -- they 8 A. Both. 

9 are part of the TDG in certain areas and I know that 9 Q. I thought you told me earlier this morning 

10 they exist, but we don't do much with them. 10 that on the plants you would service those up to 

11 We don't qualify for their side of it because we 11 several hundred miles away, they had long lead times 

12 don't buy anything from them, or very little. 12 and they were different. 

13 Q. What was happening to scrap prices in 2007, 13 A. Well, you are partially correct. 

14 do you know? 14 Q. Okay. 

15 MR. MANN: Objection, foundation. 15 A. Certainly the quotations and the pricing 

16 MR. PARKS: You can answer if you understand 16 would be sent out from one central source which 

17 what he is asking about. 17 would have been in Clovis, we had an office, just an 

18 THE WITNESS: I understand. When was the 18 engineering office in Clovis, no warehouse. But it 

19 Olympics in China? 19 had no product. 

20 MR. GREENAN: 2006. 20 And so material would have been shipped through 

21 THE WITNESS: Well, it all had to do with the 21 or to a branch closest to the job, and then they 

22 amount of business that China was siphoning off in 22 would service all the shortages and the small stuff 

23 raw materials from the United States. 23 that they needed that wouldn't come direct from the 

24 MR. PARKS: 2008. 24 manufacturer. But that would go directly to a 

25 THE WITNESS: And it was causing prices to 25 branch closest to the project. 

Groeniger, Michael 2012-05-11 Pages 253 - 256 

CX 2510-065
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1 Q. Did I understand you to testify that Star 1 independent independent, they have realized that, 

2 is still not in the specs for the San Jose Water 2 and they were going to make an exception, and when 

3 Authority? 3 they finally came, they were the end person we 

4 A. As far as I know they are not. 4 decided to go with. 

5 Q. So notwithstanding your issues with Tyler 5 But since that time there has been, we have been 

6 and their policy of 2009, you couldn't sell Star to 6 raided by all the people that were looking at us, by 

7 San Jose or no one could sell Star to San Jose today 7 hook or by crook, they get somebody else to call and 

8 if they wanted to, could they? 8 when they do go to meet with them they have a whole 

9 A. No, sir. 9 idea of what they need to do to get them. 

10 Q. And the price increase that we talked about 10 So we have lost some people, some good people, 

11 with San Jose that you were unhappy about, was that 11 they are just worried about what they say about 

12 price increase from Tyler only to Groeniger, or was 12 Ferguson and so we are going to have to leave you. 

13 it a price increase across the board to all their 13 If you guys were still handling it we wouldn't 

14 customers? 14 leave, but because there has been a change we feel 

15 A. I think it appeared to be a price increase 15 we have to. 

16 to all of their customers. 16 So we have lost good people, probably five or 

17 Q. Okay. 17 six or seven good people that have tenure. But as a 

18 A. But with the exception of contracts, as it 18 whole the company has held on to its organization. 

19 says in the letter here, that was probably what most 19 MR. TRUITT: Q. We have talked today a few 

20 people did there, contracts were exceptions to it 20 times about the downturn of the economy, the housing 

21 and they would service the lifetime of the contract. 21 crash. In your mind when did that start? 

22 Q. I jotted down earlier you said something 22 A. 2006. 

23 about all these little guys popping up now in 23 Q. And so today when you have described since 

24 relationship to other distributors. Can you explain 24 the economy started going bad, you would date that 

25 that to me a little bit? 25 to 2006? 

Page 258 Page 260 

1 A. Well, any time when -- I have to preface 1 A. We knew, we could see it coming in 2006, we 

2 that to a little background, is the fact that we 2 just couldn't visualize the depth, and we didn't 

3 were sold. 3 visualize -- we own our own properties, and we 

4 We were interviewed by four companies. We 4 didn't feel that the properties would be impacted as 

5 posted our financials in a room, virtual room, if 5 they were with having to refinance some of them and 

6 they signed letters of non-compete, not non-compete, 6 having the value of the property significantly 

7 but non-solicitation -­ 7 altered. 

8 MR. PARKS: Non-disclosure. 8 And all that piled on top of the business, all 

9 THE WITNESS: Non-disclosure and 9 of that, it was a, yeah, we tried to grab it right 

10 non-solicitation, they could look into the depths of 10 until the day we sold, we were trying to grapple 

11 our financial statements, our branches, our people, 11 with what we had to do, where we could cut to meet 

12 even our in some cases our salaries to our 12 our commitments and it was tough. 

13 employees. 13 Q. I think you have testified that you were 

14 We felt relatively confident that the 14 forced to close several branches. 

15 non-solicitation agreement they all signed would be 15 A. We weren't forced to close it, it was our 

16 sufficient to keep people from raiding our company. 16 decision to close them to meet our monthly averages 

17 As a lot of people do when places are sold, 17 and so forth so we wouldn't lose money, we had to 

18 especially to a well known disaster making company 18 close them. 

19 like Ferguson, they have never taken a company that 19 But it was going faster, the slide was going 

20 they have bought up to this point and did anything 20 faster than we were sliding, and we were constantly 

21 but destroy it. So they have a tremendous history 21 trying to catch up. 

22 of doing that. 22 Q. Did you lay off some of those employees 

23 And part of it is they change the name to 23 from those branches? 

24 Ferguson, part of it they change all the rules and 24 A. Yes. 

25 regulations and take all the things that make an 25 Q. Did any of those people go into business 

Groeniger, Michael 2012-05-11 Pages 257 - 260 

CX 2510-066
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1 for themselves as water works distributors? 1 auspices. 

2 A. They have since come around and are working 2 And I asked the FTC do I need an attorney? And 

3 for other people that have sprouted up, yes. And 3 he said you can have one if you want. I said I 

4 some of them have lasted and some of them have left 4 better have one then. 

5 them also. 5 Q. Have you had any meetings or phone calls 

6 So yes, a lot of people that are competing with 6 with the FTC in preparation for this deposition 

7 us today from the other suppliers started out in 7 today? 

8 business with us. 8 A. I don't know if we had, it was nothing 

9 Q. And other distributors like yourself after 9 regarding the deposition other than scheduling, 

10 the downturn in the economy closed branches and laid 10 someone may have called. 

11 folks off, didn't they? 11 I don't know the names of everybody that I 

12 A. Yes, I think so. 12 talked to in trying to schedule this or schedule the 

13 Q. And have some of those people gone out into 13 types of information that is required under their 

14 the market and opened their own businesses too? 14 information needs. And where I was going to find it 

15 A. Not as much. I mean, they don't have to 15 under my new situation that I am in of not being in 

16 have capital to do that and most of the people that 16 charge of my own paperwork. 

17 were laid off unfortunately were those who were 17 Q. Other than scheduling and logistics, did 

18 drivers and warehousemen, and if a salesman was good 18 you have any substantive conversations with the FTC 

19 he wasn't laid off, he was our source of revenue. 19 prior to today? 

20 So the salesmen didn't leave as much as it was 20 A. No. 

21 the service and support group that left. 21 Q. Who is Dick Alexander? 

22 Q. I just, again I was looking at when you say 22 A. Dick Alexander was at Groeniger & Company, 

23 all these little guys popping up, were you talking 23 he was the executive vice-president. 

24 about other distributors starting into business for 24 Q. Did you and Mr. Alexander meet with Leon 

25 themselves of late? 25 McCullough in early 2011 to talk about your fittings 

Page 262 Page 264 

1 A. Well, yes. When Corex came to town they 1 business? 

2 just didn't open one branch, they opened two or 2 A. Leon McCullough came to our office in, it 

3 three branches. 3 could have been around that time. And it could have 

4 When HD Supply came to town they have opened 4 been, yes, that could have happened, yeah. 

5 multiple branches in the areas on or around our 5 Q. And did you discuss payment terms of two 

6 place. 6 percent on the 25th of each month? 

7 When Pace Supply decided to open they took 45 7 A. We may have. 

8 people away from Ferguson at one time, left, walked 8 Q. Did you discuss Tyler assisting you with 

9 out the door. And they opened three big new 9 take-offs and quotes for plant projects in that 

10 locations, Hayward, San Francisco and San Jose. 10 meeting? 

11 Plus a new big edifice in Stockton. 11 A. We could have, yes. 

12 So I mean, they were able to do that, they 12 Q. And those are all things that would have 

13 wouldn't have done that with us but with Ferguson, 13 been helpful to Groeniger, right? 

14 that was part of their problem, they didn't know how 14 A. Yes. 

15 to run acquisitions. 15 Q. I mean, Mr. McCullough was trying to seek 

16 Q. We have talked about and it's marked as an 16 more business from you, wasn't he? 

17 exhibit to your deposition now your December 14th, 17 A. Yes, Mr. McCullough is a fine gentleman, I 

18 2010 testimony. 18 have known him for years. 

19 Did you speak with or meet with lawyers from the 19 Q. I don't think you have suggested anything 

20 FTC before you were deposed? 20 other than that. 

21 A. No, sir. 21 What I am trying to understand is Mr. McCullough 

22 Q. You had no prior contact with -­ 22 came to visit you in early 2011 to try and offer 

23 A. I don't believe so, no. That was the first 23 things that would make it attractive to do business, 

24 time I, and I didn't know if they were coming after 24 your fittings business with Tyler, didn't he? 

25 me or whom they were coming after or under what 25 A. Yes, it could be, certainly. 

Groeniger, Michael 2012-05-11 Pages 261 - 264 

CX 2510-067
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1 MR. TRUITT: I think that's all I've got, thank 1 DEPOSITION ERRATA SHEET 

2 you. 2 

3 MR. PARKS: We'll reserve the right to read and 3 

4 sign. 4 

5 (Whereupon, the proceedings were adjourned at 5 Assignment No. 452003 

6 5:10 p.m.) 6 Case Caption: In the matter of McWane and Star Pipe 

7 --oOo-­ 7 

8 8 DECLARATION UNDER PENALTY OF PERJURY 

9 9 I declare under penalty of perjury that I 

10 10 have read the entire transcript of my deposition 

11 11 taken in the captioned matter or the same has been 

12 12 read to me, and the same is true and accurate, sae 

13 13 and except for changes and/or corrections, if any, 

14 14 as indicated by me on the DEPOSITION ERRATA SHEET 

15 15 hereof, with the understanding that I offer these 

16 16 changes as if still under oath. 

17 17 Signed on the ________day of ____________, 

18 18 20___. 

19 19 

20 20 

21 21 ___________________________ 

22 22 Michael Groeniger 

23 23 

24 24 

25 25 

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1 REPORTER'S CERTIFICATE 1 DEPOSITION ERRATA SHEET 

2 2 

3 3 Page No.____ Line No.____ Change to:______________ 

4 4 __________________________________________________ 

5 I, JEAN M. FERRARIO, Certified Shorthand 5 Reason for Change:_______________________________ 

6 Reporter, in and for the State of California, do 6 Page No.____ Line No.____ Change to:______________ 

7 hereby certify: 7 __________________________________________________ 

8 8 Reason for Change:_______________________________ 

9 That the foregoing witness was by me duly 9 Page No.____ Line No.____ Change to:______________ 

10 sworn, that the deposition was then taken before me 10 __________________________________________________ 

11 at the time and place herein set forth; that the 11 Reason for Change:_______________________________ 

12 testimony and proceedings were reported 12 Page No.____ Line No.____ Change to:______________ 

13 stenographically by me and later transcribed into 13 __________________________________________________ 

14 typewriting under my direction; that the foregoing 14 Reason for Change:_______________________________ 

15 is a true record of the testimony and proceedings 15 Page No.____ Line No.____ Change to:______________ 

16 taken at that time. 16 __________________________________________________ 

17 17 Reason for Change:_______________________________ 

18 IN WITNESS WHEREOF, I have subscribed my 18 Page No.____ Line No.____ Change to:______________ 

19 name this 15th day of May, 2012. 19 __________________________________________________ 

20 20 Reason for Change:_______________________________ 

21 ______________________________ 21 Page No.____ Line No.____ Change to:______________ 

22 22 __________________________________________________ 

23 JEAN M. FERRARIO, CSR No. 5655 23 Reason for Change:_______________________________ 

24 24 

25 25 SIGNATURE: _______________________DATE:__________ 

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SIGNATURE: _______________________DATE:__________ 

Groeniger, Michael 2012-05-11 Page 269 

CX 2510-069
 

 

 

 

PUBLIC

CERTIFICATE OF SERVICE 

I hereby certify that on January 9, 2013, I filed the foregoing document electronically 

using the FTC’s E-Filing System, which will send notification of such filing to: 

Donald S. Clark 

Secretary 

 Federal Trade Commission 

600 Pennsylvania Ave., NW 

 Washington, DC 20580 

 I also certify that I delivered via electronic mail and hand delivery a copy of the 

foregoing document to: 

The Honorable D. Michael Chappell 

 Administrative Law Judge 

 Federal Trade Commission 

 600 Pennsylvania Ave., NW, Rm. H-110 

 Washington, DC 20580 

 I further certify that I delivered via electronic mail a copy of the foregoing 

document to: 

Joseph A. Ostoyich 

William C. Lavery
 

Baker Botts L.L.P. 

The Warner 

1299 Pennsylvania Ave., NW 

Washington, DC 20004 

(202) 639-7700 

joseph.ostoyich@bakerbotts.com 

william.lavery@bakerbotts.com 

J. Alan Truitt 

Thomas W. Thagard III 

Maynard Cooper and Gale PC 

1901 Sixth Avenue North 

2400 Regions Harbert Plaza 

Birmingham, AL 35203 

(205) 254-1000 

atruitt@maynardcooper.com 

tthagard@maynardcooper.com 

Counsel for Respondent McWane, Inc. 
 

 

PUBLIC

CERTIFICATE FOR ELECTRONIC FILING 

 I certify that the electronic copy sent to the Secretary of the Commission is a true 

and correct copy of the paper original and that I possess a paper original of the signed document 

that is available for review by the parties and the adjudicator. 

January 9, 2013 By: s/ Thomas H. Brock 

Attorney