In re Actions, Master File NO. 06-0620

Decision Date13 December 2016
Docket NumberMaster File NO. 06-0620
PartiesIN RE MUSHROOM DIRECT PURCHASER ANTITRUST LITIGATION THIS DOCUMENT RELATES TO: ALL ACTIONS
CourtU.S. District Court — Eastern District of Pennsylvania

O'NEILL, J.

MEMORANDUM

Now before me is another motion in this long-running antitrust litigation arising out of plaintiffs' claims that defendants engaged in a conspiracy to control the supply of and set artificially-inflated distribution prices for fresh agaricus mushrooms.1 Defendant M.D. Basciani & Sons, Inc., joined by certain other defendants,2 moves for summary judgment with respect to plaintiffs' claims under Sections 1 and 2 of the Sherman Act, Section 7 of the Clayton Act and opt-out plaintiff Giant Eagle's Ohio Valentine Act claim. Dkt. No. 518. M.D. Basciani argues that summary judgment is warranted in its favor because: (1) plaintiffs are indirect purchasers of mushrooms who lack antitrust standing; (2) some of plaintiffs' claims are barred by the statute oflimitations; (3) M.D. Basciani did not have a conscious commitment to a common scheme designed to achieve an unlawful objective; (4) the record lacks evidence of alleged antitrust injury; and (5) Section 7 of the Clayton Act does not apply to the conduct at issue in this case. See Dkt. No. 518 (Mem.). For the reasons that follow, I will deny the motion for summary judgment.

BACKGROUND

M.D. Basciani & Sons, Inc. is a mushroom grower and was a member of the Eastern Mushroom Marketing Cooperative (EMMC) from its inception until 2004. Dkt. No. 518 (Mot.) at ¶¶ 1, 14, 54. Under the EMMC membership agreement, members agreed "not to sell or otherwise dispose of mushrooms except as provided under the terms of [the membership] Agreement and the Articles of Incorporation and Bylaws of the Cooperative." Dkt. No. 517, Ex. 4 (Executed Membership Agreement for Bella Farms) at 4, ¶ 6. Plaintiffs contend that from on or around February 4, 2001 and through at least August 8, 2005, the EMMC and its members circulated written price lists and pricing policies for "sales of mushrooms made by distributors to the retail, wholesale, and foodservice markets." Dkt. No. 517 at 5. Through its policies, the EMMC endeavored to set floor pricing for mushrooms at the point of distribution, and not the price for mushrooms emerging from growing operations. See Dkt. No. 517 at Ex. 12 ( [Redacted] Dep.) at 75:18-24 ("Q. . . . one of the policies that the EMMC adopted was to try to set prices for - the downstream price that shippers got when they sold their product to wholesalers and retailers, correct? A. Yes, sir.").

Plaintiffs also contend that to support the EMMC's minimum pricing policies, defendants implemented a supply control scheme - purchasing and leasing mushroom farms in order to place on the properties deed restrictions prohibiting the conduct of business related to theproduction of mushrooms. Dkt. No. 185 at ¶ 94; see also id. at ¶¶ 69, 73-81; Dkt. No. 517, Ex. 36 (April 17, 2001 EMMC management committee minutes identifying plans to address the question: "How can we control SUPPLY??"). Specifically, plaintiffs claim that

[t]hrough membership dues and a "Supply Control Assessment," EMMC collected approximately [Redacted] million from its members during 2001-2002. EMMC, acting as an agent of its members, then spent approximately [Redacted] million to purchase four mushroom farms and to acquire lease options on two additional mushroom farms in the eastern United States for the purpose of shutting them down and reducing the mushroom production capacity available for nonmember non-conspirators to grow mushrooms in competition with the Defendants.

Dkt. No. 185 at ¶ 72. M.D. Basciani, citing the testimony of [Redacted] contends that it "was not in favor of the purchase of defunct mushroom farms at all by the EMMC . . . ." Dkt. No. 518 (Mot.) at ¶ 44. [Redacted] testified that M.D. Basciani "was 'really not involved in these purchases . . . . It wasn't my decision. So I don't really know, you know' why they put deed restrictions on the defunct mushroom farms." Dkt. No. 518 (Mot.) at ¶ 49, quoting Dkt. No. 518, Ex. 1 ( [Redacted] Dep.) at 144:3-6.

M.D. Basciani sells all of its mushrooms to [Redacted] which was never a member of the EMMC and is not a party to this litigation. See Dkt. No. 518 (Mot.) at ¶¶ 3, 5, 6; Dkt. No. 518, Ex. 1 ( [Redacted] Dep.) at 77:17-19. M.D. Basciani asserts that it "sells generalized raw mushrooms while [ [Redacted] ] sells fresh mushroom products at the wholesale level, which are differentiated horizontally (types, grades, quality, packaging, and shop-keeping units) and vertically (quality, service, and terms of trade)." Dkt. No. 554 at 5 (emphasis omitted). M.D. Basciani also claims that it sells its mushrooms only to [Redacted] "at a negotiated price in a willing buyer, willing seller transaction." Dkt. No. 518 (Mem.) at 3. M.D. Basciani contends that when [Redacted] takes possession of the mushrooms itpurchases, title to the mushrooms passes to [Redacted] . Id. M.D. Basciani asserts that it was not the sole supplier of fresh agaricus mushrooms to [Redacted] and that [Redacted] bought most of its fresh mushrooms from farms other than M.D. Basciani. Dkt. No. 554 at 5.

M.D. Basciani contends that it is a separate corporate entity from [Redacted] See id. M.D. Basciani has its own bank accounts, financial statements and assets, board of directors meetings, annual shareholder meetings and payrolls. See In re Mushroom, 2012 WL 298480, at *1. However, [Redacted] is the Vice President of both M.D. Basciani and [Redacted] . See In re Mushroom, 2012 WL 298480, at *1 (E.D. Pa. Jan. 31, 2012). Additionally, M.D. Basciani and [Redacted] have identical owners, with each holding the same percentage of shares in M.D. Basciani and in [Redacted] . See id. Also, on some occasions [Redacted] wrote checks to the EMMC to pay for the annual dues or special assessments owed by M.D. Basciani. Id.

On August 12, 2012, U.S. Magistrate Judge Timothy R. Rice granted plaintiffs' discovery motion seeking to sanction M.D. Basciani and [Redacted] for spoliation. Dkt. No. 452. In his decision, Judge Rice found that "M.D. Basciani had control over [ [Redacted] ] documents and the two entities acted as one in participating in the EMMC." Id. at ECF p. 3. In support of his decision, he noted that, although [Redacted] testified that M.D. Basciani is a corporate entity distinct from [Redacted] with its own bank accounts, financial statements and assets, board of directors meetings, annual shareholder meetings and payrolls, " [Redacted] acknowledged [ [Redacted] ] may have written checks to the EMMC to pay annual dues or special assessments owed by M.D. Basciani." Id. at ECF p. 3-4. Judge Rice explained that "[i]n June of 2001, [ [Redacted] ] used [Redacted] from its credit line to pay for M.D. Basciani's contribution to a land purchase through the EMMC." Id. at ECF p. 4.

Thereafter, M.D. Basciani and non-party [Redacted] filed objections to Judge Rice's Order. See Dkt. Nos. 458 and 459. M.D. Basciani and [Redacted] argued that Judge Rice incorrectly concluded that M.D. Basciani controlled [Redacted] and that therefore he erred in awarding sanctions for spoliation. They raised the same arguments against a finding of control that Judge Rice considered in resolving the spoliation motion, reasserting their contention that, because they are separate corporations, M.D. Basciani did not have control over [Redacted] documents. I overruled the objections and affirmed Judge Rice's Order on October 22, 2012. Dkt. Nos. 472, 473.

STANDARD OF REVIEW

"[G]enerally, in an antitrust case, the court applies the traditional summary judgment standard." Interest Fin. Servs., Inc. v. S.G. Cowen Sec. Corp., 206 F. Supp. 2d 702, 710 (E.D. Pa. 2002) aff'd sub nom. InterVest, Inc. v. Bloomberg, L.P., 340 F.3d 144 (3d Cir. 2003). Summary judgment will be granted under Rule 56 "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The party moving for summary judgment bears the burden of demonstrating that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see Celotex, 477 U.S. at 322-23. If the movant sustains its burden, the nonmovant must set forth facts demonstrating the existence of a genuine dispute. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

DISCUSSION
I. Antitrust Standing

M.D. Basciani argues that summary judgment is warranted in its favor because it does notsell its mushrooms to anyone other than [Redacted] , rendering plaintiffs indirect purchasers without antitrust standing3 to bring their claims against it. Dkt. No. 518 (Mot.) at ¶¶ 86-94; Dkt. No. 518 (Mem.) at 2-4. It argues that because [Redacted] holds the title to the mushrooms it sells, plaintiffs "neither buy nor take title or possession of mushroom products from M.D. Basciani . . . ." Dkt. No. 518 (Mem.) at 3-4; see also Dkt. No. 554 at 5.

Pursuant to Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), there is a "general rule that only direct purchasers from antitrust violators may recover damages in antitrust suits." Howard Hess Dental Labs., Inc. v. Dentsply Intern., Inc. (Hess I), 424 F.3d 363, 369 (3d Cir. 2005); see McCarthy v. Recordex Serv., Inc., 80 F3d 842, 847-48 (3d Cir. 1996) ("[T]he [Illinois Brick] Court . . . enunciat[ed] a bright-line rule that only the purchaser immediately downstream from the alleged monopolist may bring an antitrust action . . . ."). However, even if no member of the class buys mushrooms directly from M.D. Basciani, summary judgment is not necessarily warranted in its favor under Illinois Brick. In the Third Circuit, indirect or secondary purchasers may sue under the antitrust laws if they can establish one of three...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT