Antitrust Law Daily Claims against seafood producers for tuna-specific price fixing conspiracy proceed
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Friday, January 6, 2017

Claims against seafood producers for tuna-specific price fixing conspiracy proceed

By Linda O’Brien, J.D., LL.M.

Purchasers of shelf-stable seafood products adequately alleged a tuna-specific price fixing conspiracy by the three leading producers of packaged seafood products. The plaintiffs’ allegations of specific communications between the defendants which resulted in an agreement to raise prices were sufficient to plausibly plead an overarching conspiracy, the federal district court in San Diego has decided. However, the plaintiffs failed to plausibly allege a packaged seafood conspiracy or their entitlement to injunctive relief (In re Packaged Seafood Products Antitrust Litigation, January 3, 2017, Sammartino, J.).

In 2015, a number of private suits were instituted by supermarkets as well as consumers, alleging that Bumble Bee Foods, Tri-Union Seafoods, and StarKist—the largest producers and processors of packaged seafood products— have collusively raised prices, by decreasing the size of the cans of shelf-stable seafood products (principally tuna) without also decreasing prices. The complaints contended that the producers had an opportunity to conspire based on attendance at industry groups and trade associations. The plaintiffs asserted claims for violations of Section 1 of the Sherman Act as well as various state antitrust laws.

In December 2015, the Judicial Panel on Multidistrict Litigation (JPML) centralized more than 50 pending actions brought against packaged seafood products producers in various federal district courts around the country in the instant court for coordinated pretrial proceedings. Subsequently, the Department of Justice intervened in the consolidated action and, in December 2016, announced that the first criminal charges had been filed in its packaged seafood price fixing investigation. Before the court was the defendants’ joint motion to dismiss the Sherman Act claims.

Packaged seafood conspiracy. The court found that no plaintiff had plausibly alleged a packaged seafood conspiracy. The defendants contended the plaintiffs failed to allege any collusive conduct regarding any type of packaged seafood product other than tuna. The court agreed and noted that, the plaintiffs’ complaints focused principally on tuna and there were insufficient allegations to create an inference of a larger conspiracy. A conspiracy requires an agreement and the plaintiffs did not allege any agreement among the defendants to price fix across the entire packaged seafood industry.

Injunctive relief. In addition, no plaintiff adequately alleged an entitlement to injunctive relief. Although the plaintiffs sufficiently alleged a plausible violation of Section 1 of the Sherman Act, those allegations did not automatically establish that the violation was ongoing or that other purported conspiratorial actions, such as refusing to develop fish aggregating device (or FAD) free tuna, may be permissible taken in the absence of an illegal agreement. Allegations that the conspiracy may be ongoing or that the defendants could resume selling their products at higher prices were insufficient to show the continuing risk of threatened injury, in the court’s view.

Tuna-specific conspiracy. However, the plaintiffs sufficiently alleged an overarching tuna-specific price fixing conspiracy. According to the court, the plaintiffs alleged that following a Bumble Bee executive’s speech at a conference in May 2008 urging the development of "sustainable tuna management practices," the three defendant producers lowered the standard tuna can size without any corresponding change in price. The plaintiffs also alleged that communications between defendants’ senior sales and management personnel resulted in an agreement to increase tuna list prices. Those allegations set forth the type of specificity proscribed in the Supreme Court decisions in Bell Atlantic v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqdal, 556 U.S. 662 (2009), the court noted.

Statute of limitations. The court also found that no plaintiff alleged fraudulent concealment with sufficient particularity regarding any claims before 2011. An antitrust action must be commenced with four years from the date when the cause of action accrues, the court explained. The plaintiffs’ complaints generally alleged that the price fixing conspiracies were inherently self-concealing and the defendants gave pretextual reasons for their price increases in order to conceal their unlawful conduct. However, the 2008/2009 can-size changes were equally susceptible to non-conspiratorial as to conspiratorial inferences. There were no allegations of a specific agreement or plausible inference of an agreement among the defendants, the court concluded.

The case is No. 3:15-md-02670-JLS-MDD.

Attorneys: Bonny E. Sweeney (Hausfeld LLP) for Olean Wholesale Grocery Cooperative, Inc. Courtney Byrd (O'Melveny & Meyers LLP) for Bumble Bee Foods LLC. Erik Raven-Hansen (Allen & Overy LLP) and Keith R. Solar (Buchanan Ingersoll & Rooney LLP) for Tri-Union Seafoods LLC. Ashley M. Bauer (Latham & Watkins LLP) for StarKist Co.

Companies: Olean Wholesale Grocery Cooperative, Inc.; StarKist Co.; Bumble Bee Foods LLC; Tri-Union Seafoods LLC

MainStory: TopStory Antitrust CaliforniaNews

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