In re Packaged Ice Antitrust Litig..Indirect Purchaser Action.
| Decision Date | 11 March 2011 |
| Docket Number | Case No. 08–md–01952. |
| Citation | 779 F.Supp.2d 642,2011 Trade Cases P 77496 |
| Parties | In re PACKAGED ICE ANTITRUST LITIGATION.Indirect Purchaser Action. |
| Court | U.S. District Court — Eastern District of Michigan |
OPINION TEXT STARTS HERE
This matter is before the Court on Defendants Reddy Ice Holdings, Inc. and Reddy Ice Corporation's (“Reddy Ice”) Motion to Dismiss the Indirect Purchaser Plaintiffs' Consolidated Amended Complaint (Dkt. No. 207) and the joint motion of Defendants The Home City Ice Company (“Home City”) and Arctic Glacier Income Fund, Arctic Glacier Inc. and Arctic Glacier International, Inc. (“Arctic Glacier”) to Dismiss the Indirect Purchaser Plaintiffs' Amended Class Action Complaint (Dkt. No. 208). The Indirect Purchaser Plaintiffs filed a joint brief in opposition to both motions to dismiss. (Dkt. No. 222.) Both Reddy Ice (Dkt. No. 230) and Home City and Arctic Glacier (Dkt. No. 231) filed replies. The Court held a hearing on March 8, 2011. For the reasons that follow, the Court GRANTS IN PART and DENIES IN PART the Defendants' motions to dismiss.
I. BACKGROUND
This action is the lead case in the consolidated class action In Re Packaged Ice Antitrust Litig., No. 08–MD–01952. In this multidistrict litigation involving 68 consolidated actions, Plaintiffs are both direct purchasers (retail stores and gas stations who purchased from Defendants) and indirect purchasers (individuals who purchased from retail stores and gas stations) of packaged ice from Defendants in the United States. In this Opinion and Order, the Court addresses Defendants' motions to dismiss the Indirect Purchasers' Amended Class Action Complaint (“ACAC”).
The Indirect Purchaser Plaintiffs (“IP Plaintiffs”) allege that Defendants Reddy Ice, Arctic Glacier and Home City conspired to allocate customers and markets throughout the United States, in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The IP Plaintiffs' ACAC seeks injunctive relief under the Clayton Act, 15 U.S.C. § 16, and also seeks compensatory damages (trebled where permitted) as well as punitive, exemplary and statutory damages under the antitrust and consumer protection laws of 30 (thirty) different states, a disgorgement of profits and costs and attorneys' fees. The IP Plaintiffs also seek class certification pursuant to Federal Rule of Civil Procedure 23.
The Reddy Ice Defendants, and the Arctic Glacier and Home City Defendants now move to dismiss the IP Plaintiffs' ACAC under Federal Rule of Civil Procedure 12(b)(6). Arctic Glacier Income Fund and Arctic Glacier Inc. additionally move for dismissal under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction.
In 2008, a Department of Justice (“DOJ”) criminal antitrust investigation into the packaged ice industry in the United States surfaced via a search warrant execution and prosecutions. Multiple civil antitrust actions were subsequently filed against Reddy Ice, Arctic Glacier and Home City. On June 5, 2008, 560 F.Supp.2d 1359 (Jud.Pan.Mult.Lit.2008) Pursuant to 28 U.S.C. § 1407, the United States Judicial Panel on Multidistrict Litigation (“MDL”) transferred all pending and subsequent related civil actions to this District, and ordered that they be assigned to this Court for coordinated or consolidated pretrial proceedings. (Transfer Order, Dkt. No. 1.) A total of 68 cases have been transferred and consolidated in accordance with the MDL Order. (Transfer Order, Conditional Transfer Orders 1–4, Dkt. Nos. 1, 9, 47, 70, 85.)
Of the total cases filed and consolidated, the majority are direct purchaser actions filed by retail stores and gas stations. On July 1, 2010, this Court issued an Opinion and Order denying the Arctic Glacier and Reddy Ice Defendants' motions to dismiss the direct purchaser class action, finding that the complaint stated a plausible claim for relief. In re Packaged Ice Antitrust Litig., 723 F.Supp.2d 987 (E.D.Mich.2010). On February 22, 2011, 2011 WL 717519, this Court granted Final Approval of a Class Action Settlement Agreement between Home City and the direct purchaser plaintiffs. (Dkt. No. 328.) A smaller percentage of the MDL cases, indirect purchaser actions, were filed by individuals who purchased packaged ice from retail stores and gas stations.
On March 16, 2009, this Court held a hearing on motions to appoint interim lead counsel for both the direct (eleven motions) and indirect purchaser plaintiffs (two motions). On June 1, 2009, 2009 WL 1518428, this Court appointed a group comprised of Levitt and Kaiser, the Law Offices of Max Wild and The Perrin Law Firm as co-lead interim class counsel for the proposed Indirect Purchaser class. (Dkt. No. 175.) On July 17, 2009, the Court entered Case Management Order No. 1, directing the IP Plaintiffs to file a Consolidated Amended Complaint, setting forth deadlines for answering, moving or otherwise responding to the Consolidated Amended Complaint and for responding to any motions. (Dkt. No. 185.) On September 15, 2009, the IP Plaintiffs filed their ACAC. (Dkt. No. 199.) On November 23, 2009 the Reddy Ice Defendants (“Reddy Ice Mot./Br.”) and the Arctic Glacier and Home City Defendants (“AG Mot./Br.”) filed their motions to dismiss the ACAC. (Dkt. Nos. 207, 208.) On December 23, 2009, the IP Plaintiffs filed their combined response in opposition to the motions to dismiss. (Dkt. No. 222.) On January 22, 2010, Reddy Ice and Arctic Glacier and Home City filed their replies. (Dkt. Nos. 230, 231.)
B. Factual Allegations1. The Parties and the Claims
Taking as true for purposes of this motion to dismiss the well-pleaded allegations of the IP Plaintiffs' September 15, 2009 ACAC, the following factual matters are established.1 The named IP Plaintiffs and their state citizenship are: Linda Desmond and James Feeney (CA); Ron Miastkowski (FL); Perry Peka (IN); Lawrence J. Acker, Patrick Simasko and Wayne Stanford (MI); Brian W. Buttars (N.Y.); Ainello Mancusi (a resident alien). The ACAC was filed approximately 18 months ago.
The ACAC alleges the following claims: Count I–Section 1 of the Sherman Act (); Count II–Violation of State Statutes (Various Antitrust and Consumer Protection/Deceptive Practices Acts/Consumer Fraud Statutes of 30 states): AZ (Antitrust & Consumer Protection Act); AK (Consumer Protection); CA (Cartwright Act–Antitrust/Restraint of Trade); DC (Antitrust and Consumer Protection); FL (Consumer Protection); ID (Consumer Protection Act); IA (Antitrust/Competition Law); KS (Antitrust and Consumer Protection); ME (Antitrust And Consumer Protection); MI (Antitrust and Consumer Protection); MN (Antitrust); MS (Antitrust); MT (Antitrust/Unfair Trade Practices and Consumer Protection); NE (Junkin Act-Antitrust, Consumer Protection Act); NV (Antitrust/Unfair Trade Practices); NH (Antitrust, Consumer Protection); NJ (Consumer Fraud); NM (Antitrust and Unfair Trade Practices); NY (Donnelly Act–Antitrust and Consumer Protection/Deceptive Practices); NC (Antitrust and Unfair and Deceptive Practices); ND (Antitrust and Fraud/Misrepresentation Deceptive Practices); PA (Consumer Protection); RI (Consumer Protection); SD (Antitrust and Consumer Protection); TN (Antitrust); UT (Consumer Protection); VT (Consumer Protection); WV (Antitrust); WI (Antitrust) WY (Antitrust); Count III—Unjust Enrichment nationwide (no state statutes specified).2
The ACAC alleges that Reddy Ice is the largest manufacturer and distributor of packaged ice in the United States. According to the ACAC, Reddy Ice has over 80% of its packaged ice sales in territories where it is the leading manufacturer. ACAC ¶ 14. The ACAC alleges that Arctic Glacier is the second largest manufacturer and distributor of packaged ice in the United States. Arctic Glacier is and has been the leading manufacturer and distributor of packaged ice in the territories in which it operates. ACAC ¶ 15. The ACAC alleges that Home City is third largest manufacturer and distributor of packaged ice in the United States with sales that have grown to more than $80 million per year. ACAC ¶ 16.
The IP Plaintiffs define the following proposed class of indirect purchasers: “All persons or other legal entities (excluding governmental entities, defendants, their officers, directors, subsidiaries or affiliates), who purchased packaged ice indirectly in the continental United States (except for the State of Ohio) and the District of Columbia between January 1, 2001 through March 6, 2008.” ACAC ¶ 18. The class is believed to number in the millions and the class members complain that they purchased packaged ice at artificially inflated prices because of Defendants' wrongful conduct. ACAC ¶¶ 19–20.
2. The Structure of the Packaged Ice Industry
The structural characteristics of the packaged ice industry are alleged in ¶¶ 24–32 of ACAC. The ACAC complains that direct customers of packaged ice, retailers such as supermarkets, mass merchants and convenience stores, are in a fiercely competitive industry and operate on slim margins with the ability to change prices to their customers frequently and cheaply. They cannot afford to absorb price increases and remain profitable. Therefore, they typically pass on entire price increases to their customers, such as the IP Plaintiffs and the class, rapidly after they receive them from manufacturers. ACAC ¶ 33.
3. Allegations as to the Illegal Market Behavior of the Defendants
According to the ACAC, on June 7, 2008, Thomas E. Sedler, President and Chief Executive Officer of Home City, on behalf of Home City, pled guilty to violating Section 1 of the Sherman Act and swore under oath, before the Honorable Herman J. Weber, United States District Judge of the United States District Court for the Southern District of Ohio (...
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