By Nicole D. Prysby, J.D.
A property developer and a prospective market participant both lacked standing to pursue antitrust claims against a seafood processor, held a federal district court in Eugene, Oregon. The seafood processor had allegedly acted to monopolize the Newport seafood market by excluding new market participants. The property developer was not a participant in the seafood processor market, but merely sought to find a tenant who would engage in that market. Because it did not engage in the relevant market, it had no standing to bring a claim challenging a conspiracy to exclude new participants into that market. While the prospective market participant was a potential competitor in the relevant market, it had no standing because it had not taken substantial steps to actually enter the market. In fact, the partners had not yet filed the articles of incorporation for the LLC at the time of the alleged anticompetitive behavior (Innovation Marine Protein, LLC v. Pacific Seafood Group, March 23, 2018, McShane, M.).
Plaintiff Front Street LLC had a corporate mission to "acquire and develop Newport waterfront industrial property for the express purpose of building the infrastructure that will diversify the seafood processing sector on the central Oregon Coast." In 2013, Front Street made an offer to purchase two parcels of land for $900,000 each or $1.8 million for the pair, but was informed by the seller, Cal-Shell, that it was not currently interested in selling the two properties. Fifteen months later, Cal-Shell sold its property to Pacific Seafood for just over $1 million. Front Street brought claims under the Sherman Act, alleging that but for the illegal conspiracy to restrain trade, it would have created the infrastructure for a new seafood processor in Newport and also that the seller conspired to monopolize the Newport seafood input market by conspiring to transfer seafood processing assets to Pacific Seafood.
Plaintiff Innovation Marine is an LLC run by a partnership that was formed for the purpose of acquiring a fishmeal plant and associated seafood processing facility. Innovation Marine alleged that defendant Trident refused to negotiate with it regarding the sale of its Newport seafood processing facilities and then conspired with Pacific Seafood to develop a two-step scheme to transfer the assets to Pacific Seafood. Once Pacific Seafood closed the transactions with Cal-Shell and Trident, it held over 95% of the seafood markets for trawl-caught groundfish, onshore whiting, and pink shrimp in the Newport market. Pacific Seafood moved to dismiss all claims for lack of standing.
Landlord was not a market participant. The court found that because Front Street was not a participant in the markets for seafood or seafood processing, it lacked antitrust standing. Front Street did not engage in seafood processing but merely sought a waterfront property to develop and lease to a seafood processor. Essentially, Front Street was merely a potential landlord seeking a tenant who would compete in the relevant market. The defendants did not prohibit Front Street from processing seafood but only prevented it from the opportunity to develop seafood processing infrastructure. A potential landlord or developer who does not participate in the relevant market has no antitrust standing to bring claims challenging a conspiracy to exclude potential new entrants into the relevant market.
Although Front Street may have lost a business opportunity because of an illegal conspiracy, it did not suffer an antitrust injury that would convey standing. Front Street’s lost opportunity to develop waterfront property that it hoped to lease to a market participant is not inextricably intertwined with the harm the defendants sought to impose on the west coast seafood markets. The fishermen forced to sell into the alleged monopoly are direct victims who could bring an antitrust action; Front Street is too remote of a party, and not allowing it to challenge the alleged conspiracy is not likely to leave a significant antitrust violation unremedied.
Entry into relevant market. The other plaintiff, Innovation Marine, was a potential competitor in the relevant market, and would therefore have standing if it could show a genuine intent to enter the market and a preparedness to do so. But the court found that Innovation Marine fell short of making such a showing. The discussions between the partners who would eventually incorporate Innovation Marine and Trident conveyed the partners’ interest in pursuing a potential purchase of the assets in Newport, but the conversation never progressed past an expression of intent. There was no allegation that the partners had the financial commitments necessary to make a firm offer to Trident or to complete the purchase. No price was discussed and no proposal was made. Therefore, there were no substantial demonstrable steps to enter the industry. In fact, Innovation Marine did not even incorporate until after Trident’s sale to Pacific Seafood. The court found that this fact demonstrated that the discussions about a sale between Trident and Innovation Marine never progressed to a serious level.
The case is No. 6:17-cv-00815-MC.
Attorneys: Michael E. Haglund (Haglund Kelley LLP) for Innovation Marine Protein, LLC and Front St. Marine LLC. Timothy W. Snider (Stoel Rives LLP) for Pacific Seafood Group. Brian P. Samuelson (Perkins Coie, LLP) for Trident Seafoods Corp. Nicholas H. Pyle (Miller Nash Graham & Dunn LLP) for California Shellfish Co., Inc.
Companies: Innovation Marine Protein, LLC; Front St. Marine LLC; Pacific Seafood Group; Trident Seafoods Corp.; California Shellfish Co., Inc.
MainStory: TopStory Antitrust OregonNews
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