In re Processed Egg Prods. Antitrust Litig.

• Citation: 851 F.Supp.2d 867
• Decision Date: 20 March 2012
• Docket Number: No. 08–md–02002.,MDL No. 2002.,08–md–02002.
• Parties: In re PROCESSED EGG PRODUCTS ANTITRUST LITIGATION. This Document Applies To: All Indirect Purchaser Plaintiff Actions.
• Court: United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)

851 F.Supp.2d 867

In re PROCESSED EGG PRODUCTS ANTITRUST LITIGATION. This Document Applies To: All Indirect Purchaser Plaintiff Actions.

MDL No. 2002.

No. 08–md–02002.

United States District Court, E.D. Pennsylvania.

March 20, 2012.

OPINION

GENE E.K. PRATTER, District Judge.

I. Introduction

Indirect purchasers ¹ of domestic eggs and egg products charge producers of those goods, and the producers' trade groups, with conspiring to manipulate the supply of, and thereby fix prices for, domestically-sold eggs and egg products. The Indirect Purchaser Plaintiffs' Second Consolidated Amended Class Action Complaint (hereinafter, the “IPSAC”) ² alleges violations of federal and state law. The 22 state jurisdictions at issue geographically reach considerably farther than a rooster's most vigorous crows can be heard. In total, the IPSAC contains 51 claims: a Section 1 Sherman Act claim for injunctive relief, 20 state antitrust claims, 9 state consumer protection claims, and 21 state unjust enrichment claims.³

In response, Defendants have jointly filed the Motion sub judice which tries to crack, if not wholly topple, most of the Plaintiffs' claims by seeking full or partial dismissal of all counts.⁴ Defendants argue that the IPSAC is deficient in a number of ways, inter alia, lack of standing (in the various applications of that term) and failure to state a claim consistent with the demands of Rules 8 and 9(b). As outlined below and as delineated in the accompanying Order, the Court grants the Motion in part and denies it in part.

II. Background

This multidistrict litigation concerns numerous consolidated and coordinated actions based upon allegations of a conspiracyin violation of the Sherman Act among egg producers and trade groups to manipulate the supply of eggs and egg products and thereby affect the domestic prices of those goods. See In re Processed Egg Prods. Antitrust Litig., 588 F.Supp.2d 1366, 1367 (J.P.M.L.2008). The plaintiffs are direct purchasers (such as grocery stores, commercial food manufacturers, restaurants, other food service providers, and other entities who purchase directly from Defendants or other egg producers) and indirect purchasers (individual consumers who purchased from other parties along the distribution chain) of eggs and egg products. The direct purchaser plaintiffs fall into additional categories: “Direct Purchaser Plaintiffs” who have brought a consolidated class action against Defendants, and “Direct Action Plaintiffs” who are pursuing individual actions against Defendants.

In this Opinion the Court addresses one, albeit a multifaceted one, of the Defendants' pending motions to dismiss the IPSAC.⁵ The Court previously addressed motions to dismiss filed by virtually the same group of Defendants concerning the Direct Purchaser Plaintiffs' Second Consolidated Amended Class Action Complaint. See Sept. 26, 2011 Mem. and Order, 821 F.Supp.2d 709 (E.D.Pa.2011) (Doc. Nos. 562 and 563); Oct. 14, 2011 Mem. and Order, 2011 WL 4945864 (Doc. Nos. 581 and 582); Nov. 30, 2011 Opinion and Order, 2011 WL 5980001 (Doc. Nos. 593 and 594). Much of the history and many of the dynamics of this litigation are outlined in detail in those prior decisions, and will not be repeated here except as appropriate and necessary predicates to the rulings here.

III. Factual Allegations⁶

As the parties are already well-aware, and indeed, have represented to the Court, the IPSAC alleges virtually the same underlying facts as the Direct Purchaser Plaintiffs' complaint, notwithstanding some (generally minor) factual distinctions, and as to be expected, authored in a different drafting style. Both pleadings set forth factual allegations concerning the Defendants' alleged conspiracy to decrease the supply of eggs and thereby increase egg prices, the Defendants' conduct undertaken in relation thereto, and the nature of the egg industry in terms of structure, production practices, and market dynamics. See Sept. 26, 2011 Mem. and Order, 821 F.Supp.2d at 712–16 (describing the Direct Purchaser Plaintiffs ‘core allegations'). Although the two pleadings have much in common, they are nonetheless separate and distinct complaints, and the Court briefly outlines the IPSAC's main allegations as follows.

Plaintiffs—to wit, 23 individuals and three corporations—bring this action on behalf of themselves individually and as class actions on behalf of other similarly situated indirect purchasers. These individual named Plaintiffs are residents of, or incorporated in, Arizona, California, the District of Columbia, Florida, Kansas, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Mexico, New York, North Carolina, Tennessee, Utah, Vermont, West Virginia, or Wisconsin. IPSAC ¶¶ 19–44. They each purportedly “indirectly purchased shell eggs and/or egg products during the Class Period” and suffered economic injury by paying “supra-competitive prices for shell eggs and egg products” as a result of the Defendants' alleged violations of federal and state law. Id. ¶¶ 8, 19–44.

Plaintiffs request federal injunctive relief pursuant to Section 16 of the Clayton Act on behalf of themselves and a nationwide class. As to the state law claims, Plaintiffs, individually and on behalf of members of the proposed classes,⁷ seek a variety of remedies, including, inter alia, damages, restitution, and disgorgement.

As alleged, the Plaintiffs' federal and state claims are based upon the Defendants' conduct relating to

a long-running conspiracy between and among Defendants and certain unnamed co-conspirators extending from at least January 1, 2000 through the present ... with the purpose and effect of fixing, raising, and maintaining and/or stabilizing prices and restricting output of both shell eggs and egg products (collectively, “eggs”) sold indirectly to Plaintiffs and other indirect purchasers in the United States, including the Class Jurisdictions.

IPSAC ¶ 1; see also id. ¶¶ 6, 140. Defendants supposedly took “coordinated efforts” to advance the aims of the conspiracy. Id. ¶ 7. According to Plaintiffs, coordination among Defendants was facilitated by the trade group Defendants, United Egg Producers (“UEP”), United Egg Association (“UEA”), and United States Egg Marketers (“USEM”); most of the other named Defendants are allegedly members of some of these groups. See, e.g., id. ¶¶ 49, 51, 137, 255, 286. Many of the Defendants' decisions, discussions, and agreements concerning various aspects of the conspiracy apparently occurred at, or are connected to, these trade groups' committee and member meetings, and were communicated to Defendants through UEP's newsletter. See, e.g., id. ¶¶ 143–47, 152–156, 158–167, 170, 173–76, 192–209, 212–17.

The Defendants' “coordinated efforts” allegedly were mechanisms to reduce the supply of eggs in terms of either egg production or availability in the egg market. By reducing the supply of eggs, Defendants apparently sought to manipulate certain features of the domestic egg market as a means of increasing egg prices. Those market features include the price inelasticity of demand for eggs, the lack of product substitutes for eggs, minimal product differentiation among eggs, and industry consolidation. Id. ¶¶ 2, 127–31. Because of these market features—and more particularly, the inelasticity of demand—“small reductions in supply can lead to sharp increases in egg prices.” Id. ¶ 2.

The specific “coordinated efforts” undertaken throughout the alleged conspiracy period entailed various flock reduction, chick hatch reduction, molting, and hen disposal initiatives, as well as the adoption of and compliance with the United Egg Producers Certification Program and the United States Egg Marketers export program. See, e.g., id. ¶¶ 6, 170, 219, 293.

The UEP Certification Program originated as an “animal husbandry program” that mandated lower cage space densities for hens, but evolved into a program whereby egg producers would comply with the Program's guidelines in order to be able to sell or market eggs with a logo indicating that the eggs were certified under the Program. See, e.g., id. ¶¶ 158, 160, 224, 298. The IPSAC alleges that initially

[c]ertification required a producer to (a) meet [a] cage space allowance ... [of an] average of 56 square inches per hen ...; (b) commit to meeting the guideline for beak trimming ...; (c) commit to meeting the guidelines for molting ...; (d) commit to meeting the guidelines for handling and transportation for both pullets and spent hens ...; (e) agree to be audited annually by a 3rd party independent auditor to confirm that the company is meeting guidelines; (f) agree to provide UEP with a copy of the audit results upon the completion of each audit; and (g) recognize that passing the audit is necessary in order to maintain the certification status.

Id. ¶ 159. The Certification Program's guidelines also required (or eventually came to require): reduction in chick hatch, 100% of an egg producers' egg production be in compliance with the guidelines, and a prohibition on the practice of “backfilling cages to replace mortality.” See, e.g., id. ¶¶ 174–75, 202, 295.

The USEM export program “aimed to have its members export shell eggs even when the export prices were lower than domestic egg prices” with the alleged purpose of “raising domestic U.S. prices through reduced supply.” Id. ¶ 240. One central feature of the export program was that “USEM members that did not provide eggs for the export would agree to ‘repay’ or ‘reimburse’ the USEM members that provided eggs for the export in order to ‘share’ any losses incurred when exporting shell eggs at below-market prices.” Id. ¶ 243.

As described in the IPSAC, the Defendants' “coordinated efforts” enabled Defendants to realize the ultimate objectives of their conspiracy: decreased egg supply, and thus higher egg prices and greater revenues and profits. See, e.g., id. ¶¶ 150, 181–83, 247, 312, 323.

IV. Legal Standards⁸A. Rule 12(b)(6)

For...