Winn-Dixie Stores v. E. Mushroom Mktg. Coop., CIVIL ACTION No. 15-6480

• Decision Date: 05 February 2021
• Docket Number: CIVIL ACTION No. 15-6480
• Parties: WINN-DIXIE STORES, INC., et al., Plaintiffs, v. EASTERN MUSHROOM MARKETING COOPERATIVE, et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

WINN-DIXIE STORES, INC., et al., Plaintiffs, v. EASTERN MUSHROOM MARKETING COOPERATIVE, et al., Defendants.

CIVIL ACTION No. 15-6480

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

February 5, 2021

MEMORANDUM

Schiller, J.

The Eastern Mushroom Marketing Cooperative (EMMC) and its members and affiliates—including DefendantM. Cutone Mushroom Co., Inc.—are accused of unlawfully colluding to inflate the price of fresh agaricus mushrooms.Before the Court is Defendant Cutone's Motion for Partial Summary Judgment, which argues that its liability for participation in the alleged antitrust conspiracy is limited because it withdrew from the EMMC during the conspiracy period.For the following reasons, the Court will grant the motion and limit Cutone's potential liability to damages attributable to the conspiracy's conduct before September 1, 2002.

I.FACTUAL BACKGROUND

This case involves alleged price-fixing and supply control in the market for fresh agaricus mushrooms.Plaintiffs seek damages from all Defendants, including Cutone, for their payment of artificially inflated prices for mushrooms as a result of a conspiracy among the EMMC and its members.Defendants allegedly agreed to inflate the price of mushrooms by setting minimum prices and decommissioning various mushroom farms in order to reduce mushroom supply.(SeeFirstAm. Compl. ¶¶ 1-3.)Plaintiffs assert that Cutone was an EMMC member during the conspiracy period, January 1, 2001 through December 31, 2008.(Id.¶ 41;seeCourt's Mem. of April 8, 2019 at 13, Doc. No. 121.)Plaintiffs allege that Cutone specifically participated in the alleged conspiracy by: (1) agreeing to form and join the EMMC; (2) attending numerous EMMC meetings to discuss mushroom prices and agreeing to set minimum prices; (3) complying with EMMC's minimum pricing policy; (4) attending an EMMC meeting to discuss controlling the supply of mushrooms; and (5) agreeing to pay an assessment and to charge each EMMC member an assessment in furtherance of supply control.(FirstAm. Compl. ¶¶ 41, 129, 194-96, 259, 289.)

Cutone does not dispute that it joined the EMMC by signing a membership agreement in January 2001.(Def.'s Statement of Undisputed Material Facts (SUMF)¶ 8.)However, Cutone argues that it communicated its resignation from the EMMC effective September 1, 2002, thereby withdrawing from the alleged anti-competitive conspiracy.

Mario Cutone, Jr., President of Cutone Mushroom, sent Cutone's first letter of resignation to the EMMC on March 4, 2002.(Def.'sSUMF ¶ 9; Def.'s Ex. C.)In addition to informing the EMMC of Cutone's termination of membership, the letter stated: "Due to current circumstances we can no longer be bound to the rules and regulations of the cooperative.Although we will not be members, we fully intend to adhere to the pricing structure unless we are forced to alter it by other growers."(Def.'s Ex. C.)This letter also sought return of Cutone's $5,000 escrow and $100,000 balance of the capital assessment.(Id.)

Mario Cutone, Jr. submitted a second letter of resignation to the EMMC on May 20, 2002.(Def.'sSUMF ¶ 10; Def.'s Ex. D.)The second letter of resignation stated that Cutone was terminating its membership with EMMC, and again included the statement: "Due to current circumstances we can no longer be bound to the rules and regulations of the cooperative."(Def.'s Ex. D.)The May 20 letter did not include any reference to an intent to adhere to the minimum pricing structure or request any return of funds.(Id.)

Mario Cutone, Jr. submitted a third letter of resignation to EMMC on June 19, 2002.(Def.'sSUMF ¶ 11; Def.'s Ex. E.)The third letter of resignation included identical language to the second letter, except that it also requested that EMMC, "send an acknowledgment for the termination of our membership."(Def.'s Ex. E.)

On the same date Cutone sent its third letter of resignation, counsel for EMMC sent a letter to Mario Cutone acknowledging Defendant Cutone's "notice, given prior to June 15, 2002, of your desire to withdraw as a member of the EMMC."(Def.'sSUMF ¶¶ 12-13; Def.'s Ex. F.)The EMMC letter stated that Cutone's termination of membership in the EMMC was effective September 1, 2002, pursuant to the terms of EMMC Membership Agreement.(Def.'s Ex. F.)The EMMC letter further stated that Cutone's membership in the EMMC remained valid until September 1, 2002, and that it remained "responsible as a member as per all terms of the Membership Agreement and Bylaws and all policies adopted thereunder."(Id.)

After its resignation from the EMMC, Cutone did not consider itself bound by the EMMC minimum pricing requirements, nor did the EMMC or its members ask Cutone to continue to adhere to the EMMC's minimum pricing policy.(Def.'sSUMF ¶¶ 14-15;Def.'s Ex. B, Michael CutoneDep. 235:3-236:6.)¹Cutone seeks partial summary judgment on the grounds that it withdrew from the EMMC as of September 1, 2002, and therefore, cannot be liable to Plaintiffs for any damages incurred as a result of purchases after that date.

In opposition, Plaintiffs argue that Cutone's withdrawal was ineffective because Cutoneintended to continue complying with the EMMC's minimum pricing policy after it resigned from the EMMC.(Pl.'s Resp. in Opp'n to Def.'s Mot.at 5-7, 9-11.)Plaintiffs cite to the March 4, 2002 resignation letter as evidence of this intent, as well as the class action deposition testimony of Michael Cutone, who acted as the Rule 30(b)(6) witness for Defendant Cutone.(Pl.'sEx. 4, Michael Cutone Dep.)When asked about the resignation letters' reference to EMMC "rules and regulations,"Michael Cutone testified that his brother, Mario Cutone, "didn't attend a lot of meetings, so I don't know what he meant by that.I don't know the rules or regulations, you know.I don't know what he meant by that."(Id. at 170:23-171:3.)When asked why the sentence concerning minimum pricing in the March 4, 2002 resignation letter does not appear in the May 20, 2002 resignation letter, Michael Cutone testified, "my brother, these are written at different times.He probably just wrote the letter at different times, didn't look at his other letter.I don't know."(Id. at 233:20-24.)As to whether Cutone continued to follow the EMMC pricing structure after its resignation from EMMC, Michael Cutone testified, "I don't know.I don't know whether I could—It probably would show on the invoices what we sold...."(Id. at 172:2-4.)In response to the question whether Cutone attempted to adhere to minimum pricing after its resignation from EMMC to benefit the industry, Michael Cutone testified that, "We did what we had to do to stay in business, but there was [sic] accounts that I'm sure we had to go down on."(Id. at 174:25-175:7.)

Cutone filed a Reply Memorandum which included the Affidavit of Mario Cutone, III in Support of the Motion for Partial Summary Judgment.According to Mario Cutone's affidavit, he and his father, Mario Cutone, Jr., who is now deceased, ran the business of Defendant Cutone, decided to join the EMMC, and set the price of the mushrooms that Cutone sold to retail and food service customers.(Ex. A to Def.'s Reply Mem., Aff. of Mario Cutone, III in Supp. of Mot. ¶¶ 3-5.)Michael Cutone ran the family's mushroom growing operation, M&V Enterprises, Inc.(Id.¶¶ 1-2.)Mario Cutone, III and his father"never had any intention to follow EMMC pricing policies following [Cutone's] resignation from EMMC."(Id.¶ 10.)Before September 1, 2002, Mario Cutone, III and his father had received the EMMC minimum price list on a regular basis.(Id.¶ 14.)After September 1, 2002, they no longer received the minimum price list from EMMC and did not learn about the EMMC minimum price list indirectly from any other source.(Id.¶¶ 15-16.)As a result, Mario Cutone, III and his father"never followed EMMC prices after September 1, 2002," because they were "no longer under any obligation to attempt to do so," and they"did not know what those prices were."(Id.¶ 17.)Mario Cutone, III and his father"had no further communication from EMMC after [September 1, 2002]."(Id.¶ 19.)

II.STANDARD OF REVIEW

Summary judgment is appropriate when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law.Fed. R. Civ. P. 56(a);Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50(1986).Material facts are those "that could affect the outcome" of the proceeding, and "a dispute about a material fact is 'genuine' if the evidence is sufficient to permit a reasonable jury to return a verdict for the non-moving party."Lamont v. New Jersey, 637 F.3d 177, 181(3d Cir.2011)."The party moving for summary judgment has the burden of showing that there is no genuine issue of material fact, and once the moving party has sustained this burden, the opposing party must introduce specific evidence showing that there is a genuine issue for trial."Williams v. Borough of W. Chester, Pa., 891 F.2d 458, 464(3d Cir.1989)(citingCelotex Corp. v. Catrett, 477 U.S. 317, 323(1986)).In reviewing the record, "a court must view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor."Armbruster v. Unisys Corp., 32 F.3d 768, 777(3d Cir.1994).The court may not, however,make credibility determinations or weigh the evidence in considering motions for summary judgment.Anderson, 477 U.S. at 255.

III.DISCUSSION

The Court will grant Cutone's partial motion for summary judgment because Cutone severed ties from the EMMC effective September 1, 2002 and ceased to act in furtherance of the EMMC's goals after its resignation.However, the Court cannot determine on the record before it whether Cutone is liable for any damages for Plaintiffs' purchases after September 1, 2002.In order to determine the scope of Cutone's liability for damages, Plaintiff will bear the burden at trial of proving what damages are...