Piggly Wiggly Clarksville v. Interstate Brands

• Decision Date: 10 February 2000
• Docket Number: No. 3:96-CV-051.,3:96-CV-051.
• Citation: 83 F.Supp.2d 781
• Parties: PIGGLY WIGGLY CLARKSVILLE, INC., et al., Plaintiffs, v. INTERSTATE BRANDS CORPORATION, Defendant.
• Court: U.S. District Court — Eastern District of Texas

83 F.Supp.2d 781

PIGGLY WIGGLY CLARKSVILLE, INC., et al., Plaintiffs, v. INTERSTATE BRANDS CORPORATION, Defendant.

No. 3:96-CV-051.

United States District Court, E.D. Texas, Paris Division.

February 10, 2000.

COPYRIGHT MATERIAL OMITTED

John (Jack) Brown Baldwin, Baldwin & Baldwin, Marshall, TX, David J Manogue, Specter Law Offices, Pittsburgh, PA, Steven Alan Kanner, Much Shelist Freed Denenberg, Ament Bell & Rubenstein, Chicago, IL, Isaac L Diel, Todd R Seelman, Attorney at Law, Victoria, TX, Thomas H Brill, Law Offices of Thomas H Brill, Leawood, KS, Vernon N Reaser, Jr, Attorney at Law, Victoria, TX, for Piggly Wiggly Clarksville Inc, plaintiff.

Francis Scott Baldwin, Sr, John (Jack) Brown Baldwin, Baldwin & Baldwin, Marshall, TX, David E Sharp, Greenberg Peden Siegmyer & Oshman, Houston, TX, Joseph B Cox, Jr, Cox and Cox, Raleigh, NC, Isaac L Diel, Todd R Seelman, Attorney at Law, Victoria, TX, Thomas H Brill, Law Offices of Thomas H Brill, Leawood, KS, Vernon N Reaser, Jr, Attorney at Law, Victoria, TX, for Abraham's Food Town Inc, Staggers Oil Co. of Texas, Staggers Oil Co. of Louisiana, plaintiffs.

John (Jack) Brown Baldwin, Michael A Havard, Provost & Umphrey, Beaumont, TX, Paul E Slater, Sperling Slater & Spitz, Chicago, IL, Isaac L Diel, Todd R Seelman, Attorney at Law, Victoria, TX, Thomas H Brill, Law Offices of Thomas H Brill, Leawood, KS, Vernon N Reaser, Jr, Attorney at Law, Victoria, TX, for E E Kaine, Dandy Dodle, Inc., plaintiffs.

Jerry Lynn Beane, Strasburger & Price, Dallas, TX, for Interstate Brands Corporation.

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

SCHELL, Chief Judge.

This matter is before the court on "Defendant Interstate Brands Corporation's Motion for Summary Judgment" (Dkt.# 78), filed on September 22, 1998. On November 10, 1998, a sealed response in opposition to the motion was filed by Piggly Wiggly Clarksville, Inc., Abraham's Food Town, Inc., Staggers Oil Company of Louisiana, and Dandy Doodle, Inc., d/b/a Howdy Doody Food Store (collectively "Piggly Wiggly"). On December 2, 1998, Interstate filed a reply to Piggly Wiggly's response. By this motion, Interstate argues that Piggly Wiggly's claim that Interstate engaged in a conspiracy to fix the prices of bread and cake products is barred by the doctrines of res judicata and collateral estoppel because that claim and/or the factual issues underlying it have already been fully, fairly, and finally adjudicated in a prior state court action. Interstate also argues that some aspects of Piggly Wiggly's conspiracy claim are ripe for summary judgment because Piggly Wiggly has failed to provide sufficient evidence to create a genuine issue of material fact. Having carefully considered the submissions of the parties in light of the applicable law, the court concludes that Interstate's motion should be GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

This is a civil antitrust action in which Piggly Wiggly alleges that Interstate, through its predecessor Continental Baking Company, conspired with its competitors in the bread industry to fix the prices of bread and cake products in the state of Texas and designated areas in surrounding states. Resolution of Interstate's summary judgment motion requires the court to review the procedural history of both this case and the related state court case.

A. The Federal Case

The genesis of this lawsuit can be traced back to at least 1994 when the United States Department of Justice launched an investigation into alleged criminal pricefixing activities in the Texas bread industry. As a result of that investigation, one prominent Texas bread company, Mrs. Baird's Bakeries, Inc. ("Mrs.Baird's"), was prosecuted for price-fixing in 1996. On October 16, 1995, while the criminal case against Mrs. Baird's was developing, Piggly Wiggly Clarksville, Inc., filed a civil class action lawsuit in the Eastern District of Texas, Paris Division, asserting that Mrs. Baird's engaged in a conspiracy to fix the prices of bread products in Texas. Approximately nine days later, Abraham's Food Town, Inc., and other entities filed a similar complaint against Mrs. Baird's and several other companies in the Marshal Division of the Eastern District of Texas. The Piggly Wiggly and Abraham actions were subsequently consolidated and, on March 6, 1996, an Amended and Consolidated Complaint was filed that added additional defendants, including Interstate, and expanded the geographic boundaries of the alleged conspiracy to include contiguous markets outside of Texas.¹

Shortly after Piggly Wiggly's amended complaint was filed and not long after Mrs. Baird's was convicted of price-fixing, Mrs. Baird's filed for Chapter 11 bankruptcy protection. Soon thereafter, Piggly Wiggly (and the plaintiffs in the parallel state court case) reached settlement agreements with all defendants except Interstate. After approving those agreements and certifying a settlement class pursuant to Rule 23 of the Federal Rules of Civil Procedure, U.S. District Judge William Wayne Justice signed an order that dismissed all claims against the settling defendants and severed the remaining claims against Interstate. The case was then transferred to the undersigned judge on January 16, 1997, with Interstate as the only remaining defendant.

Because Piggly Wiggly no longer asserts its state law claims,² the primary claim advanced in this case is that Interstate violated § 1 of the Sherman Antitrust Act³ by conspiring with its competitors to fix the prices of bread and bread products throughout Texas and in "contiguous market areas ... around Shreveport, Louisiana and Roswell, New Mexico."⁴ Piggly Wiggly also asserts that Interstate fraudulently concealed its illegal activities to avoid detection. As defined by Piggly Wiggly's Amended and Consolidated Complaint, the term "bread and bread products includes but is not limited to bread, rolls, cakes and desert [sic] items." Id. The price-fixing conspiracy being alleged began on January 1, 1977, and continued through March 31, 1993.⁵ Piggly Wiggly has filed a motion for class certification in which it seeks to represent a class of direct purchasers of bread products in the relevant geographic market. The court has thus far withheld ruling on that motion pending resolution of Interstate's summary judgment motion.

B. The State Case

At the same time that this case was proceeding in federal court, a nearly identical class action lawsuit was filed against Interstate and three of its former employees in the 249th Judicial District Court of Johnson County, Texas.⁶ The petition filed in the Tucker case asserted a conspiracy to fix the prices of bread products in violation of the Texas Free Enterprise and Antitrust Act of 1983, Tex.Bus. & Com. Code Ann. § 15.05(a), and Texas common law. On October 24, 1997, the state court certified a class that included "[a]ll persons and entities ... that purchased Bread Products within the State of Texas directly from Interstate Brands Corporation ... or [its] respective predecessor companies or subsidiaries during the period of January 1, 1977 through March 31, 1993."⁷ All named plaintiffs in the federal case were included in the class of Tucker Plaintiffs, with the apparent exception of Staggers Oil of Louisiana (hereinafter "Staggers").⁸ The state court's order defined the term "bread products" to include "white bread, wheat bread, variety or specialty breads, hot dog buns, hamburger and other sandwich buns, and rolls."⁹ The Tucker Plaintiffs' third amended petition also accused Interstate of fraudulent concealment.¹⁰

On June 10, 1998, the state case went to trial. Approximately two weeks later, a verdict was returned in favor of Interstate and its co-defendants. The jury specifically found that Interstate did not "knowingly bec[o]me part of a conspiracy ... to fix, control, raise, lower, maintain, or stabilize the prices of bread and bread products in Texas at any time during the period from 1977 to March 1993."¹¹ On the basis of that verdict, the state court entered a final judgment on July 30, 1998.¹² The Tucker Plaintiffs then filed a motion for new trial, asserting, inter alia, that they had obtained newly discovered evidence showing that Interstate engaged in price-fixing activities through its Cotton-Holsum division in Monroe, Louisiana. They argued that despite their best efforts to obtain all relevant discovery from Interstate prior to trial, Interstate wrongfully withheld documents regarding Cotton-Holsum that evidenced anti-competitive conduct by one of its former area sales managers, Dan Seabaugh. A hearing was held to consider the motion for new trial and, on October 12, 1998, the motion was denied by operation of law when the state district court allowed seventy-five days to pass without granting the motion.¹³

Following entry of the Tucker judgment, Interstate filed the instant motion for summary judgment in the federal case. As noted, that motion raises the affirmative defenses of res judicata and collateral estoppel, contending that the claim and issues asserted by Piggly Wiggly here are precluded from litigation because they were already unsuccessfully adjudicated in Tucker. Interstate's motion also attacks the sufficiency of the evidence Piggly Wiggly cites in support of its claim that Interstate's alleged conspiracy extended beyond Texas' borders. It is that motion to which the court now turns its attention.

II. DISCUSSION

A. Standard of Review

Interstate seeks a summary judgment in this case pursuant to Rule 56 of the Federal Rules of Civil Procedure. Under that rule, summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."¹⁴ To carry its summary judgment...