Antitrust Law Daily Egg producer, industry groups found not guilty in price fixing suit
Friday, December 13, 2019

Egg producer, industry groups found not guilty in price fixing suit

By Jody Coultas, J.D.

This is the second favorable jury verdict for the defendants in this long-running antitrust dispute.

After a six-week trial, a jury in the federal district court in Philadelphia determined that there was no conspiracy among egg producer Rose Acre Farms and industry trade groups to raise egg prices by reducing the supply of eggs. Supermarket chains Kroger and Giant Eagle were among the plaintiffs seeking roughly $1 billion in damages, which could have resulted in $3 billion after trebling (In Re: Processed Egg Products Antitrust Litigation, Case 2:08-md-02002-GEKP).

Direct and indirect purchasers alleged that the egg producers and industry groups conspired to reduce the supply of in-shell eggs. Those claims culminated in a trial in 2018, after which the jury reached a verdict in favor of the defendants. The jury concluded that there was a single overarching conspiracy to reduce supply, but that the conspiracy did not impose an unreasonable restraint on trade. The direct action plaintiffs (which include a number of grocery stores and manufacturers) separately alleged a conspiracy relating to egg products, i.e., eggs that have been removed from the shell. The grocery stores specifically contended that Rose Acre Farms and two industry groups—United Egg Producers (UEP) and United States Egg Marketers (USEM)—executed the conspiracy through (1) a series of short-term egg supply reduction measures, (2) a long-term plan to reduce the supply of eggs under the pretext of an "animal welfare program," and (3) exporting eggs at a loss. Also, the plaintiffs alleged that UEP adopted "animal welfare" guidelines and created its Certified Program as a means to reduce egg supply, with the animal welfare justification being merely pretextual.

UEP had argued that the stores failed to establish that the UEP Certified Program was the pretext for an unlawful agreement to reduce supply, as it was a legitimate science-based program that was developed in response to animal activist pressure and customer demand. UEP noted that the egg purchasers demanded Certified eggs during the entire history of the Certified Program. Also, UEP contended that there was no evidence that any of the nineteen alleged conspirators agreed to the alleged supply reduction scheme.

USEM argued that there was no evidence to show that it participated in any of UEP’s short-term measures or the UEP Certified Program, and that the stores failed to show any actual injury due to USEM exports or that such exports measurably damaged them.

In closing arguments on Tuesday, counsel for Rose Acres reminded jurors it was the egg buyers who required producers to only sell eggs produced in compliance with the animal welfare standards, and that egg prices went to historic lows after the standards were put into place, according to a statement released by Porter Wright, counsel for Rose Acre Farms, yesterday.

Jury verdict. The jury deliberated for only a day and a half and found that the challenged conduct was reasonable and did not violate the antitrust laws, according to the attorneys for the defendants. This was the second time a jury had rejected conspiracy claims in a case that dates back to 2008, Porter Wright noted.

The case is No. 2:08-md-02002.

Attorneys: W. Joseph Bruckner (Lockridge Grindal Nauen PLLP) and Clifford H. Pearson (Pearson Simon & Warshaw, LLP) for Liaison Counsel. Boris Bershteyn (Skadden, Arps, Slate, Meagher & Flom LLP) for Peco Foods, Inc. William L. Greene (Stinson LLP) and Gary V. Weeks (Law Group of Northwest Arkansas LLP) for George's Inc. and George's Farms, Inc. Bernard D. Marcus (Marcus & Shapira LLP) for Giant Eagle, Inc. Richard Alan Arnold (Kenny Nachwalter, P.A.) for The Kroger Co., Safeway Inc., Walgreen Co., Hy-Vee, Inc., Albertsons LLC, The Great Atlantic & Pacific Tea Co., Inc., H.E. Butt Grocery Co., Conopco, Inc. and Roundy’s Supermarkets, Inc. Paul E. Slater (Sperling & Slater, PC) for SuperValu Inc. and Publix Super Markets, Inc. Patrick J. Ahern (Ahern and Associates, PC) for Winn-Dixie Stores, Inc. and H.J. Heinz Co., L.P. Donald M. Barnes, James A. King, Jay L. Levine, Allen Carter, Arlene Boruchowitz, Ben Steinberger, Brad Hughes, Eric Gallon, Matt Gill, Abby Chin, and David Bloomfield (Porter, Wright, Morris & Arthur LLP) for Rose Acre Farms, Inc. Jan P. Levine, Robin P. Sumner, and Whitney R. Redding (Pepper Hamilton LLP) for United Egg Producers, Inc. and United States Egg Marketers, Inc.

Companies: Peco Foods, Inc.; George's Inc.; George’s Farms, Inc.; Giant Eagle, Inc.; The Kroger Co.; Safeway Inc.; Walgreen Co.; Hy-Vee, Inc.; Albertsons LLC; The Great Atlantic & Pacific Tea Co., Inc.; H.E. Butt Grocery Co.; Conopco, Inc.; Roundy’S Supermarkets, Inc.; SuperValu Inc.; Publix Super Markets, Inc.; Winn-Dixie Stores, Inc.; H.J. Heinz Co., L.P.; Rose Acre Farms, Inc.; United Egg Producers, Inc.

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