In re Chocolate Confectionary Antitrust Litigation

• Citation: 607 F.Supp.2d 701
• Decision Date: 08 April 2009
• Docket Number: Civil Action No. 1:08-MDL-1935.,MDL No. 1935.
• Parties: In re: CHOCOLATE CONFECTIONARY ANTITRUST LITIGATION. This Document Applies To: All Cases.
• Court: U.S. District Court — Middle District of Pennsylvania

607 F.Supp.2d 701

In re: CHOCOLATE CONFECTIONARY ANTITRUST LITIGATION This Document Applies To: All Cases.

MDL No. 1935.

Civil Action No. 1:08-MDL-1935.

United States District Court, M.D. Pennsylvania.

April 8, 2009.

COPYRIGHT MATERIAL OMITTED

MEMORANDUM

CHRISTOPHER C. CONNER, District Judge.

Presently before the court is defendants' motion (Doc. 588) to certify an interlocutory appeal from the memorandum and order of court (Doc. 582) dated March 4, 2009, 602 F.Supp.2d 538, (hereinafter "the March 4 Memorandum"). For the reasons that follow, the motion will be granted.

I. Procedural History and Background¹

Plaintiffs in the above-captioned matters allege that defendants conspired to fix prices in the United States market for chocolate candy in violation of § 1 of the Sherman Act, 15 U.S.C. § 1. Defendants allegedly implemented three coordinated prices increases from 2002 to 2007, raising prices in nearly identical proportion to one another on each occasion. During the same period, formidable barriers to entry protected the chocolate candy market, defendants' raw material costs remained stable, and consumer demand waned, thereby providing defendants with the market power and motive to act in an anticompetitive manner.

Defendants also allegedly engaged in price fixing in Canada. In mid-2007, Canadian antitrust authorities released documents depicting an orchestrated conspiracy by defendants' Canadian subsidiaries to exchange pricing information, control retail promotion costs, and implement price increases in the Canadian chocolate market. Defendants have allegedly integrated their American and Canadian operations through, inter alia, coordinated manufacturing and distribution systems, cross-border licensing agreements, and fusion of corporate oversight. Plaintiffs contend that, in light of this market integration, evidence of defendants' Canadian conduct lends plausibility to the alleged pricing conspiracy in the United States.

All defendants filed motions to dismiss the amended complaints pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. On March 4, 2009, the court denied the motions of certain defendants² under the Supreme Court's recent decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). (See Doc. 582, Part III.B.1.) Defendants presently move to certify an interlocutory appeal of the court's application of Twombly. The parties have fully briefed the motion, which is now ripe for disposition.

II. Discussion

Denials of motions to dismiss are not final orders, and a losing party may not ordinarily pursue an immediate appeal from them. Nevertheless, a court may certify a non-final order for interlocutory appeal under 28 U.S.C. § 1292(b) if (1) the order "involves a controlling question of law," (2) "a substantial ground for difference of opinion" exists with regard to the issue involved, and (3) an immediate appeal "may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b); Simon v. United States, 341 F.3d 193, 199 (3d Cir.2003). The certification decision rests with the discretion of the district court, and the court may decline to certify an order even if the parties have satisfied all elements enumerated in the statute. Knipe v. SmithKline Beecham, 583 F.Supp.2d 553, 599 (E.D.Pa. 2008); L.R. v. Manheim Twp. Sch. Dist, 540 F.Supp.2d 603, 608 (E.D.Pa.2008).

A. Criteria for Certification under 28 U.S.C. § 1292(b)

Defendants in the present matter request certification of the following two issues for interlocutory appeal:

(1) [W]hether Twombly, as a matter of antitrust law, allows a court on a motion to dismiss to draw an inference of conspiracy in a parallel pricing case based on market characteristics absent any direct allegations of actual agreement; and

(2) [W]hether allegations stemming from a foreign antitrust investigation can lend "plausibility" under Twombly to state a claim of U.S. conspiracy.

(Doc. 589 at 4.) The court will evaluate these questions to determine whether they satisfy the interlocutory appeal standard under § 1292(b).

1. Controlling Question of Law

An order involves a controlling question of law if either (1) an incorrect disposition would constitute reversible error if presented on final appeal or (2) the question is "serious to the conduct of the litigation either practically or legally." Katz v. Carte Blanche Corp., 496 F.2d 747, 755 (3d Cir.1974); see also Knipe, 583 F.Supp.2d at 599. In the matter sub judice, the parties dispute whether defendants' proposed questions accurately describe the foundation of the March 4 Memorandum. Defendants posit that the memorandum relied primarily upon domestic market characteristics and foreign anticompetitive conduct when denying the motions to dismiss. (Doc. 589 at 4.) Plaintiffs contend that defendants unduly confine the court's holding and fail to acknowledge the significance of additional factual context alleged in the amended complaints, such as market integration between the United States and Canada and other "indicia of collusion." (Doc. 596 at 7.)

The court concludes that defendants' proposed questions paint the amended complaints and the March 4 Memorandum with too fine a stroke. The pertinent issue is not whether either characteristics of a mature market or anticompetitive foreign conduct satisfy Twombly when placed alongside allegations of parallel conduct. The more befitting inquiry is whether the totality of the amended complaints raise a plausible inference of price fixing. Any question certified for appeal must account not merely for market characteristics and foreign conduct, but also for the affinity between the U.S. and Canadian chocolate markets, the economic reasonableness of the alleged conspiracy, and defendants' opportunity for consultation. Defendants' success in effectuating three separate, uniform price increases and the allegedly overlapping management of their Canadian and American subsidiaries also influence the Twombly analysis. Therefore, the following single question more accurately encapsulates the gravamen of the court's ruling on the Rule 12(b)(6) motions:

Does Twombly, as a matter of law, authorize a court in a § 1 case to draw an inference of conspiracy from the collective effect of repeated parallel price increases, averments of anticompetitive activity in closely related foreign markets, transnational management of corporate subsidiaries, opportunity for collusion, and descriptions of anti-competitive conduct that are economically sensible in light of mature market characteristics?³

The March 4 Memorandum provided an affirmative response to this question. Disposition of the motions would unquestionably change were this question answered in the negative. Accordingly, this question presents a controlling issue of law appropriate for appellate certification.

2. Substantial Ground for Difference of Opinion

A substantial ground for difference of opinion exists when controlling authority fails to resolve a pivotal matter. Knipe, 583 F.Supp.2d at 599; EBC, Inc. v Clark Bldg. Sys., No. Civ.A. 05-01549, 2008 WL 728541, at *2 (W.D.Pa. Mar. 17, 2008). A genuine doubt must exist about the legal standard governing a particular case. Knipe, 583 F.Supp.2d at 600. The existence of conflicting judicial opinions provides support for certification of an appeal, as does a lack of binding precedent. See id.; Morgan v. Ford Motor Co., No. Civ.A. 06-1080, 2007 WL 269806, at *3 (D.N.J. Jan. 25, 2007); Chase Manhattan Bank v. Iridium Africa Corp., 324 F.Supp.2d 540, 545 (D.Del.2004). However, the court should not certify questions of relatively clear law merely because the losing party disagrees with the court's analysis. Elec. Mobility Corp. v. Bourns Sensors/Controls, 87 F.Supp.2d 394, 398 (D.N.J.2000).

In the present matter, defendants observe that Twombly communicates "multiple linguistic signals" about the standard of review that a court must apply on a Rule 12(b)(6) motion. (Doc. 589 at 9) (quoting City of Moundridge v. Exxon Mobil Corp., 250 F.R.D. 1, 6 n. 5 (D.D.C. 2008)). On one hand, Twombly superceded the pleading standard of Conley v. Gibson, under which "a complaint [was] not [to be] ... dismissed ... unless it appear[ed] beyond doubt that the plaintiff c[ould] prove no set of facts in support of his claim which would entitle him to relief." 355 U.S. 41, 46-47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Twombly concluded that this standard was "an incomplete, negative gloss" on pleading practice, 550 U.S. at 563, 127 S.Ct. 1955, and instead required complaints to set forth plausible averments that possess "enough heft to `sho[w] that the pleader is entitled to relief.'" Twombly, 550 U.S. at 557, 127 S.Ct. 1955 (quoting FED. R. CIV. P. 8(a)(2) (alteration in original)). At the same time, however, Twombly expressly rejected a requirement of "heightened fact pleading of specifics." Id. at 570, 127 S.Ct. 1955. Since Twombly's issuance, the Supreme Court has reaffirmed that a complaint must simply "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, ___, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955).

Several courts have observed that Twombly's varied analytical cues expose it to multiple interpretations. See, e.g., Iqbal v. Hasty, 490 F.3d 143, 155-57 (2d Cir. 2007); Weisbarth v. Geauga Park Dist., 499 F.3d 538, 541-42 (6th Cir.2007); Moundridge, 250 F.R.D. at 6 n. 5; Arista Records LLC v. Does, 584 F.Supp.2d 240, 244 & n. 6, 245 & n. 7, 246-47 (D.Me.2008); Accenture Global Servs. GMBH v. Guidewire Software, Inc., 581 F.Supp.2d 654, 661 & n. 5 (D.Del.2008). Prior to Twombly, courts and commentators had maligned the Conley standard for many years, and complaints infrequently received the absolute deference required by a literal reading of the decision. See, e.g., McGregor v. Indus. Excess...