In re Pork Antitrust Litig., Civil Nos. 18-1776

Citation495 F.Supp.3d 753
Decision Date20 October 2020
Docket NumberCivil Nos. 18-1776,19-1578,19-2723 (JRT/LIB)
Parties IN RE PORK ANTITRUST LITIGATION This Document Relates to: All Actions.
CourtU.S. District Court — District of Minnesota

Brian D. Clark and W. Joseph Bruckner, LOCKRIDGE GRINDAL NAUEN PLLP, 100 Washington Avenue South, Suite 2200, Minneapolis, Minnesota 55401; Bobby Pouya, PEARSON SIMON & WARSHAW, LLP, 15165 Ventura Boulevard, Suite 400, Sherman Oaks, California 91403, for the Direct Purchaser Plaintiffs.

Daniel C. Hedlund, GUSTAFSON GLUEK PLLC, 120 South Sixth Street, Suite 2600, Minneapolis, Minnesota 55402; Shana Scarlett, HAGENS BERMAN SOBOL SHAPIRO LLP, 715 Hearst Avenue, Suite 202, Berkeley, California 94710; Steve W. Berman, HAGENS BERMAN SOBOL SHAPIRO LLP, 1301 2nd Avenue, Suite 2000, Seattle, Washington 98101, for the Consumer Indirect Purchaser Plaintiffs.

Alec Blaine Finley, CUNEO GILBERT & LADUCA, LLP, 4725 Wisconsin Avenue N.W., Suite 200, Washington, District of Columbia 20016; Shawn M. Raiter, LARSON KING, LLP, 2800 Wells Fargo Place, 30 East Seventh Street, Saint Paul, Minnesota 55101; for the Commercial Indirect Plaintiffs.

Christa C. Cottrell and Christina Henk Briesacher, KIRKLAND & ELLIS LLP, 300 North LaSalle Drive, Chicago, Illinois 60654, for Defendants Clemens Food Group, LLC and The Clemens Family Corporation.

Richard A. Duncan, FAEGRE DRINKER BIDDLE & REATH LLP, 90 South Seventh Street, Suite 2200, Minneapolis, Minnesota 55402, for Defendants Hormel Foods Corporation and Hormel Foods, LLC.

Jaime Stilson, DORSEY & WHITNEY LLP, 50 South Sixth Street, Suite 1500, Minneapolis, Minnesota 55402; Britt M. Miller, MAYER BROWN LLP, 71 South Wacker Drive, Chicago, Illinois 60606, for Defendant Indiana Packers Corporation.

Donald G. Heeman, SPENCER FANE LLP, 100 South Fifth Street, Suite 2500, Minneapolis, Minnesota 55402; Stephen R. Neuwirth, Sami H. Rashid, QUINN EMANUEL URQUHART & SULLIVAN LLP, 51 Madison Avenue, New York, New York 10010, for Defendant JBS USA Food Company.

William L. Greene and Peter J. Schwingler, STINSON LLP, 50 South Sixth Street, Suite 2600, Minneapolis, Minnesota 55402, for Defendants Seaboard Foods LLC and Seaboard Corporation.

Brian Edward Robison, GIBSON, DUNN & CRUTCHER, LLP, 2100 McKinney Avenue, Suite 1100, Dallas, Texas 75201; Richard G. Parker, GIBSON, DUNN & CRUTCHER, LLP, 1050 Connecticut Avenue, N.W. Washington, District of Columbia 20036, for Defendant Smithfield Foods, Inc.

Vollis Gene Summerlin Jr., HUSCH BLACKWELL LLP, 13330 California Street, Suite 200, Omaha, Nebraska 68154, for Defendant Triumph Foods, LLC.

Tiffany Rider Rohrbaugh, AXINN, VELTROP & HARKRIDER LLP, 950 F Street N.W., Washington, District of Columbia 20004, for Defendants Tyson Foods, Inc., Tyson Prepared Foods, Inc., and Tyson Fresh Meats, Inc.

William Leitzsey Monts III and Justin Bernick, HOGAN LOVELLS US LLP, 555 Thirteenth Street N.W., Washington, District of Columbia 20004, for Defendant Agri Stats, Inc.

AMENDED MEMORANDUM OPINION AND ORDER

JOHN R. TUNHEIM, Chief Judge Three putative classes of Plaintiffs allege 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. Defendants move to dismiss the claims against them. Because Plaintiffs' amended complaints adequately plead parallel conduct, and because Plaintiffs adequately plead a continuing violation such that the claims are not time barred, the Court will deny Defendants' joint Motion to Dismiss. However, because Plaintiffs fail to adequately plead participation in the parallel conduct by Defendant Indiana Packers, the Court will grant Indiana Packers' individual Motion to Dismiss. In a related case brought by two individual businesses, the Court will deny Defendants' joint Motion to Dismiss and will grant Indiana Packers' individual Motion to Dismiss, for the same reasons.

Additionally, the Court will dismiss the following state-law claims brought by the Indirect Plaintiff class: (1) the state antitrust claims arising before Rhode Island enacted its Illinois Brick repealer and the claims from Mississippi; (2) the consumer-protection claims from Massachusetts, Michigan, Minnesota, New Hampshire, New York, South Dakota, Utah and Virginia; and (3) the unjust enrichment claims from Arizona, Florida, North Dakota, and Utah.

Finally, the Court has determined that the Commonwealth of Puerto Rico has a statutory grant of parens patriae standing. However, the Court concludes that the Commonwealth has failed to adequately plead a claim for conspiracy to monopolize and will therefore grant Defendants' Motion to Dismiss the Commonwealth's claim under P.R. Laws Ann. tit. 10 § 260.

BACKGROUND

This case represents the consolidation of thirteen separately filed putative class actions. There are three categories of class-action Plaintiffs who purchased, either directly or indirectly, pork products from one of the Defendants1 : Direct Purchaser Plaintiffs ("DPPs"), Indirect Purchaser Plaintiffs ("IPPs"), and Commercial and Institutional Indirect Purchaser Plaintiffs ("CIPs"). All three allege that Defendants engaged in a price-fixing conspiracy to artificially constrict the supply of pork products in the domestic market of the United States, a per se violation of § 1 of the Sherman Act, 15. U.S.C. § 1.

DPPs bring a claim for treble damages under § 4 of the Clayton Act, 15 U.S.C. § 15(a) ; IPPs and CIPs (together, 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 claims for damages under (1) the antitrust laws of 27 jurisdictions;3 (2) the consumer-protection laws of 24 jurisdictions;4 and (3) the unjust-enrichment law of 32 jurisdictions.5

The Court first considered a joint Motion to Dismiss brought by Defendants against the three class complaints last year. After concluding that "Plaintiffs ha[d] not adequately pleaded parallel conduct, an essential element in showing that Defendants engaged in an agreement to limit the supply of pork," the Court granted the joint Motion without prejudice and gave Plaintiffs 90 days to refile their amended complaints. In re Pork Antitrust Cases , No. 18-1776, 2019 WL 3752497, at *9, 10 (D. Minn. Aug. 8, 2019). Plaintiffs timely refiled their amended complaints,6 and Defendants now bring two joint 12(b)(6) motions—one for the federal claims in all three complaints and one for the state-law claim in Indirect Plaintiffs' Amended Complaints—as well as individual-defendant Motions to Dismiss.

Two related cases have also been subsequently combined with this action: Winn-Dixie Stores, Inc. et al. v. Agri Stats, Inc. et al. ("Winn-Dixie "), Civil No. 19-1578, and Puerto Rico v. Agri Stats, Inc. et al. , Civil No. 19-2723 ("Puerto Rico "). The former is brought by two direct-purchaser grocery chains, Winn-Dixie and Bi-Lo; the latter is brought by the Commonwealth of Puerto Rico on behalf of itself and as parens patriae on behalf of the people of Puerto Rico.7

The Alleged Conspiracy

Together, the Defendants control over 80 percent of the wholesale pork integration market. (DPP Compl. ¶ 1.) Plaintiffs allege that, from at least 2009 and continuing to the present day, Defendants began to conspire to "fix, raise, maintain, and stabilize the price of pork." (Id. ¶ 2.) Plaintiffs allege that this was accomplished principally "by coordinating output and limiting production with the intent and expected result of increasing pork prices in the United States." (Id. )

Defendants were able to carry out this conspiracy in two ways. First, "Defendants exchanged detailed, competitively sensitive, and closely guarded non-public information about prices, capacity, sales volume, and demand through their co-conspirator, Defendant Agri Stats." (Id. ) Agri Stats is a company that each of the Defendants worked with; it gathered detailed financial information from the Defendants, which it then standardized and made accessible to each Defendant. (Id. ¶ 3.) "Agri Stats collected the pork integrators' competitively sensitive supply and pricing data and intentionally shared that information through detailed reports it provided to the pork integrators." (Id. ) Through the "benchmarking" reports generated by Agri Stats, Defendants were able to decipher which data belonged to which Defendant, thereby allowing them to monitor one another's pork production "and hence control supply and price[.]" (Id. ) The Agri Stats information was not publicly available. (Id. ¶ 4.)

Second, Plaintiffs allege that Defendants were able to carry out the conspiracy through public statements, aimed at one another, regarding the need to cut production. (Id. ¶ 5.) These statements served a signaling purpose and emphasized to one another that solidarity existed. (Id. ) Defendants then furthered the conspiracy by taking individual action to cut supply or limit supply increases that would have otherwise occurred in an unmanipulated market. (Id. )

Defendants' conspiracy was successful, and as production either declined or increased at a smaller rate than expected, pork prices increased. (Id. ¶ 7.) As a result, Plaintiffs allege that they paid artificially inflated prices. (Id. )

DISCUSSION
I. STANDARD OF REVIEW

When reviewing a motion to dismiss brought under Rule 12(b)(6), the Court considers all facts alleged in the complaint as true to determine if the complaint states a claim for "relief that is plausible on its face." Braden v. Wal-Mart Stores, Inc. , 588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). "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." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. Although the Court accepts the complaint's factual allegations as true, it is "not bound to accept as...

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