In re Broiler Chicken Antitrust Litig., 16 C 8637
Decision Date | 20 November 2017 |
Docket Number | No. 16 C 8637,16 C 8637 |
Citation | 290 F.Supp.3d 772 |
Parties | IN RE BROILER CHICKEN ANTITRUST LITIGATION |
Court | U.S. District Court — Northern District of Illinois |
Honorable Thomas M. Durkin, United States District JudgeDefendants are industrial producers of chicken meat.Plaintiffs are three putative classes of businesses and individuals who purchased chicken from Defendants, either directly or indirectly, for resale, business, or personal use, between 2008 and 2016.Plaintiffs allege that during that time period Defendants conspired to fix chicken prices higher than the market would naturally support, in violation of the Sherman Act § 1 and state law.Defendants have moved to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).SeeR. 279;R. 292.2For the following reasons, the motions are denied to the extent that Plaintiffs' Sherman Act claims survive, at least one state law claim survives in every jurisdiction except for Arkansas, and none of the defendants are dismissed from the case entirely.The motion addressing Plaintiffs' state law claims, R. 292, is granted in part in that all claims under Wisconsin law are dismissed.
A Rule 12(b)(6) motion challenges the sufficiency of the complaint.See, e.g.,Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7 , 570 F.3d 811, 820(7th Cir.2009).A complaint must provide "a short and plain statement of the claim showing that the pleader is entitled to relief,"Fed. R. Civ. P. 8(a)(2), sufficient to provide defendant with "fair notice" of the claim and the basis for it.Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929(2007).This standard "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation."Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868(2009).While "detailed factual allegations" are not required, "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do."Twombly , 550 U.S. at 555, 127 S.Ct. 1955.The complaint must "contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' "Iqbal , 556 U.S. at 678, 129 S.Ct. 1937(quotingTwombly , 550 U.S. at 570, 127 S.Ct. 1955 )." 'A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.' "Mann v. Vogel , 707 F.3d 872, 877(7th Cir.2013)(quotingIqbal , 556 U.S. at 678, 129 S.Ct. 1937 ).In applying this standard, the Court accepts all well-pleaded facts as true and draws all reasonable inferences in favor of the non-moving party.Mann , 707 F.3d at 877.
"Broilers" are "chickens raised for meat consumption to be slaughtered before the age of 13 weeks, and which may be sold in a variety of forms, including fresh or frozen, raw or cooked, whole or in parts, or as a meat ingredient in a value added product, but excluding chicken that is grown, processed, and sold according to halal, kosher, free range, or organic standards."R. 212 ¶ 79.Broilers constitute approximately 98% of all chicken meat sold in the United States.Id.¶ 2.
Defendants are industrial Broiler producers.As of 2015, Defendants controlled 88.8% of Broiler production in the United States.Id.¶ 286.Defendants own or tightly control all aspects of producing Broilers, including laying eggs; hatching chicks; raising chicks; slaughtering chickens; and processing and distributing the meat.Seeid.¶¶ 270–74.The technology and process of industrial scale Broiler production is well known among Defendants, and all defendants use the same types of equipment and processes.Id.¶ 330.Entry into the market would cost in excess of $100 million, seeid.¶¶ 319–22, and "no company has created a new poultry company from scratch in decades."Id.at ¶ 323.Defendants Tyson and Pilgrim's Pride maintain the largest market shares, approximately 22% and 17% respectively, while the other defendants maintain market shares no greater than 8–9%, with several below 5%.Seeid.¶ 286( ).
Defendants' businesses also have relatively similar cost structures.Id.¶ 330.The primary costs of production are labor and feed for the chickens.Id.¶¶ 327–38.Labor costs have declined significantly over the past two decades, while labor productivity has substantially increased.Id.¶ 328.Defendants feed their chickens corn and soybean meal, and purchase these ingredients on the open market.Id.¶¶ 327, 330."Feed prices have varied widely from 2007–2016, reaching 71% of the cost of producing Broilers in 2012, but falling to only about 50% by 2014."Id.¶ 327."Since January 1, 2008, corn prices have declined roughly 21% and soybean prices have declined 13%."Id.¶ 329.
Defendants purchase their breeder flocks (the chickens that lay the eggs Defendants raise into Broilers) from three "global genetics conglomerates" that account for 98% of Broilers raised in the United States, and 80% of Broilers raised globally.Id.¶¶ 6, 275.These three genetic companies own a "biological lock" on their unique Broiler lines, meaning they tightly control the purebred genetic strain they develop.Id.¶ 274.These genetic strains have special hybrid characteristics, such as a tendency to product a large chicken breast.Id.
Because all aspects of Defendants' methods of production are nearly identical, Broilers are substantially uniform across all Defendants' brands.Seeid.¶ 80.For this reason, Broilers are considered a commodity product.Seeid.¶¶ 80–81.Commodity industries are particularly susceptible to agreements that violate antitrust laws.SeeIn re High Fructose Corn Syrup Antitrust Litig. , 295 F.3d 651, 658(7th Cir.2002)().
Plaintiffs allege that Defendants communicated their conspiracy to restrain production and inflate prices in part through an entity called Agri Stats. Agri Stats is a subsidiary of Eli Lilly & Co. that produces subscription reports about the Broiler industry.Id.¶¶ 67, 118.Agri Stats collects data directly from Defendants' Broiler production facilities.Id.¶ 129.Only Broiler producers that supply data to Agri Stats are permitted to receive the Agri Stats reports.Id.¶ 128.
Agri Stats reports provide information about where Broiler producers buy their breeder stock and feed, the size of production facilities, and actual production numbers.Id.¶ 130.The reports also provide detailed information regarding production capacity, including numbers of eggs, the size of breeder flocks, and other inventory numbers, as well as financial information about each company.Id.¶¶ 130, 135C.Although the reports do not identify the Broiler producers by name, the reports are so detailed that a reasonably informed producer can discern the other producers' identities, and it is common knowledge among producers that this is possible.Id.¶ 124.This ability to identify each other by the information in the reports is enhanced by tours Defendants' executives take of each other's production facilities, seeid.¶ 313, and by the relatively frequent movement of employees and executives among the Defendant companies, without the protection of noncompete clauses.Id.¶ 314.
Defendants have publicly stated that Agri Stats reports provide them knowledge of their competitors' production plans, and that they rely on this information to plan their own production.Seeid.¶ 131A( );id.¶ 131B);3id.¶ 131E).4Plaintiffs allege that a Broiler industry expert has said that the extent of information shared by Broiler producers through Agri Stats is "unusual" and "a significant antitrust issue."Id.¶ 133.
Beyond the contact necessary to collect data, Agri Stats employees also interact regularly with Broiler producer executives and employees at trade association meetings.Id.¶ 127.Agri Stats also offers to meet with Broiler producer executives on a quarterly basis to make detailed presentations about company and industry data, including whether the industry is over- or undersupplying the market.Id.¶ 127.Plaintiffs allege that Agri Stats breaches the anonymity of the reports at these meetings by matching the data to particular companies.Id.
Plaintiffs allege that prior to 2008, there was a "historic pattern of annual increases in Broiler production," of about 3%. Id.¶ 335.Industry publications noted that 2008 was the "first time in decades [that] total broiler production ... remained virtually unchanged from the year before."Id.
These production cuts began in 2007 when defendants Tyson, Pilgrim's, Foster Farms, Peco Foods, and Perdue cut back their Broiler production.Id.¶ 143.Plaintiffs allege that these production cuts did not result in a "meaningful"...
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 7-day Trial
-
In re Lipitor Antitrust Litig.
... ... Cal. 2014) ; Digital Music , 812 F.Supp.2d at 415-16 ; Wellbutrin XL , 756 F.Supp.2d at 677. As discussed above, the New York ... See, e.g., In re Broiler Chicken Antitrust Litig. , 290 F.Supp.3d 772, 817-18 (N.D. Ill. 2017) ; ... ...
-
In re Pork Antitrust Litig.
... ... , the "Indirect Plaintiffs") bring a claim for injunctive relief under 16 of the Clayton Act, 15 U.S.C. 26. 2 Indirect Plaintiffs also bring ... until 2017, when an article on the role of Agri Stats in the broiler-chicken industry appeared in Bloomberg News and a lawsuit was filed In ... ...
-
In re Dealer Mgmt. Sys. Antitrust Litig.
... ... or her methodology is not in issue." Areeda & Hovenkamp 309c2, at 16. For instance, when an expert opines on whether certain conduct is ... can be in the form of economic or non-economic evidence."); In re Broiler Chicken Antitrust Litigation , 290 F. Supp. 3d 772, 797-801 (N.D. Ill ... ...
-
In re Effexor Antitrust Litig.
... ... Cal. 2014) ; Digital Music , 812 F.Supp.2d at 415-16 ; In re Wellbutrin XL Antitrust Litigation , 756 F.Supp.2d 670, 677 ... See, e.g., In re Broiler Chicken Antitrust Litig. , 290 F.Supp.3d 772, 817-18 (N.D. Ill. 2017) ; ... ...
-
The Role of Efficiency Evidence in Price-Fixing Litigation
...using the information exchange as evidence upon which to infer a price-fixing agreement”). 131 In re Broiler Chicken Antitrust Litig., 290 F. Supp. 3d 772, 800 (N.D. Ill. 2017) (denying a motion to dismiss based in part on exchanges of production statistics through a third-party aggregator ......
-
Private Antitrust Suits
...debtor’s reorganization plan). 570. 11 U.S.C. §§ 727, 1141(d), 1328. 571. See, e.g., In re Broiler Chicken Antitrust Litig., 290 F. Supp. 3d 772, 805-06 (N.D. Ill. 2017) (holding that a defendant that allegedly reentered a conspiracy after bankruptcy discharge “can be jointly and severally ......
-
Restraints of Trade
...conduct and past guilty pleas and admissions regarding anticompetitive behavior”). But see In re Broiler Chicken Antitrust Litig., 290 F. Supp. 3d 772, 798 (N.D. Ill. 2017) (“In an industry where history has shown unilateral production cuts to be ineffective at moving prices, the announceme......
-
THE FACTOR/ELEMENT DISTINCTION IN ANTITRUST LITIGATION.
...J. Stigler, A Theory of Oligopoly, in THE ORGANIZATION OF INDUSTRY 39, 42-44 (1968)); see also In re Broiler Chicken Antitrust Litig., 290 F. Supp. 3d 772, 796 (N.D. 111. 2017) (quoting Petruzzi's, 998 F.2d at 1233); Eddins v. Redstone, 35 Cal. Rptr. 3d 863, 883 (Ct. App. 2005) (quoting Pet......