Antitrust Law Daily Price fixing claims against nation’s largest pork producers go forward
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Monday, October 19, 2020

Price fixing claims against nation’s largest pork producers go forward

By Nicole D. Prysby, J.D.

The plaintiffs sufficiently alleged parallel conduct by all but one pork producer defendant and the Sherman Act claims were not time barred, based on the continuing violation doctrine.

Pork purchasers sufficiently alleged parallel conduct and therefore their Sherman Act price-fixing claims against most pork producer defendants in the consolidated class action went forward, the federal district court in Minneapolis has decided. Three putative classes of plaintiffs (Direct Purchaser Plaintiffs, Consumer Indirect Purchaser Plaintiffs, and Commercial and Institutional Indirect Purchaser Plaintiffs) alleged that defendants, among America’s largest pork producers and integrators, conspired to limit the supply of pork and thereby fix prices in violation of federal and state antitrust laws. The complaint adequately pleaded parallel conduct, through allegations of specific decreases in herd size for each defendant. Allegations that one defendant "indicated that it expected to reduce" production, without specifics, were insufficient. The plaintiffs also adequately pleaded a continuing violation such that the claims were not time barred. Some state law antitrust, consumer protection, and unjust enrichment claims brought by the Indirect Plaintiff class were dismissed. Claims brought by Puerto Rico went forward in part (In Re Pork Antitrust Litigation, October 16, 2020, Tunheim, J.).

Alleged price fixing. The plaintiffs alleged that the nation’s leading pork producers conspired to limit the supply of pork in order to fix prices. They alleged that the conspiracy was carried out in two ways: first, the defendants exchanged detailed, non-public price information through co-conspirator Agri-Stats, Inc.; second, they made public statements signaling to each other the need to cut supply.

The defendants were: Agri Stats, Inc.; Clemens Food Group, LLC, and The Clemens Family Corporation; Hormel Foods Corporation and Hormel Foods, LLC; Indiana Packers Corporation and Mitsubishi Corporation (Americas); JBS USA Food Company and JBS USA Food Company Holdings; Seaboard Foods LLC and Seaboard Corporation; Smithfield Foods, Inc.; Triumph Foods, LLC; and Tyson Foods, Inc., Tyson Fresh Meats, Inc., and Tyson Prepared Foods, Inc.

Federal price fixing claims go forward against most defendants. The court previously dismissed the complaint for lack of adequate allegations of parallel conduct, but determined that the amended complaint sufficiently alleged new allegations with details of how the individual defendants acted. The plaintiffs adequately pleaded parallel conduct against all defendants except Indiana Packers, through allegations of specific decreases in herd size. As to Indiana Packers, allegations that "indicated that it expected to reduce" production in 2012, without specifics, were insufficient.

The court also found that the claims were not time-barred, based on the continuing violation doctrine. While many of the factual assertions regarding the conspiracy conduct fell outside the statute of limitations the plaintiffs did point to some specific instances of behavior that indicated the defendants were still conspiring within the limitations period. For example, certain defendants opted to decrease supply, despite increased consumer demand, and the defendants continued to use Agri Stats. The fraudulent concealment doctrine did not apply, because the plaintiffs failed to provide specific allegation that could lead the court to plausibly assume that the defendants engaged in a a fraudulent concealment campaign. Further, the heart of the complaint was that this conspiracy was agreed to and conducted in part via public statements between the defendants, and the court found it difficult to reconcile the plaintiffs’ belief that the defendants conducted this conspiracy via public statements with the assertion that the defendants were also concealing it.

State law antitrust and consumer protection claims. Indirect Plaintiffs’ antitrust claims went forward under Illinois law but failed under Rhode Island and Mississippi law, the court held. Indirect Plaintiffs’ state consumer protection law claims went forward under Arkansas, California, District of Columbia, Michigan, Rhode Island, and Wisconsin law, but failed under New York, North Dakota, and Virginia law. The defendants claimed that antitrust allegations are not actionable under the consumer-protection statutes of eight states. The court agreed as to Michigan, Minnesota, South Dakota, and Utah, but rejected the defendants’ argument as to Arkansas, Illinois, North Dakota, and Rhode Island.

Indirect Plaintiffs sufficiently alleged specific intrastate conduct as required by consumer-protection laws in Florida, New York, North Carolina, and Wisconsin, but failed as to Massachusetts and New Hampshire.

Indirect Plaintiffs’ adequately pleaded the elements for state unjust enrichment claims and the court found that claims under California, Illinois, Mississippi, and New Hampshire could proceed as independent causes of action. Claims under state unjust enrichment law failed in Arizona, Florida, North Dakota, and Utah, because Indirect Plaintiffs failed to allege that they directly conferred a benefit to the defendants, but went forward with respect to Kansas, Maine, Massachusetts, Michigan, North Carolina, and West Virginia. The court rejected the defendants’ argument that Indirect Plaintiffs failed to allege a special duty as required by unjust enrichment laws in Illinois and South Carolina; neither state requires a plaintiff to plead a special duty under the circumstances here. The court also rejected defendant’s argument that the plaintiffs’ unjust-enrichment claims for ten states should be dismissed because unjust enrichment can only be pleaded if there is no other adequate remedy at law; the plaintiffs could plead in the alternative.

Puerto Rico claims. The court concluded that Puerto Rico law confers parens patriae authority and it could bring claims on behalf of merchants of consumers. Puerto Rico’s claims for conspiracy in restraint of trade and unfair or deceptive acts in trade went forward, but the claim for monopolization failed.

The case is No. 0:18-cv-01776-JRT-HB.

Attorneys: Daniel E. Gustafson (Gustafson Gluek PLLC) for Wanda Duryea, Michael Reilly, Sandra Steffen and Paul Glantz. Justin Bernick (Hogan Lovells US LLP) for Agri Stats, Inc. Christa C. Cottrell (Kirkland & Ellis LLP) for Clemens Food Group, LLC. Aaron D. Van Oort (Faegre Drinker Biddle & Reath LLP) for Hormel Foods Corp. Britt M. Miller (Mayer Brown LLP) for Indiana Packers Corp.

Companies: Agri Stats, Inc.; Clemens Food Group, LLC; Hormel Foods Corp.; Indiana Packers Corp.

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