CHICAGO — A federal judge wouldn’t fully clip the wings of a stuffed antitrust action in which the biggest names in turkey production are accused of fixing prices.
In an opinion issued Oct. 26, Judge Virginia Kendall refused to dismiss a Sherman Antitrust Act lawsuit which Sandee’s Catering, a bakery and deli in Jamestown, N.Y., filed against Agri-Stats, Inc., a data exchange program for livestock producers, as well as the country’s leading turkey suppliers.
The meat of the action is an allegation of limiting the turkey supply in order to support increased market prices. Plaintiffs pointed to data from the U.S. Department of Agriculture that they said showed increased demand through higher per capita turkey expenditures while production was artificially restrained.
The complaint is unrelated, but similar to, a federal antitrust action accusing chicken producers of fixing prices in which Agri Stats publications are a key factor.
Sandee’s called for a “class comprising all commercial and institutional indirect purchasers of turkey” for the first seven years of the 2010s. It said businesses paid outsized prices for indirect turkey purchases because the companies that control 80% of a market, which is worth $5 billion annually, illegally shared private information on “profits, prices, costs and production levels," as well as breeder, hatchery and flock data.
The lawsuit also contained claims of violating consumer protection state laws and unjust enrichment. Sandee’s voluntarily dismissed claims under Missouri and Rhode Island state law, and Kendall dismissed a Utah antitrust claim and an Arkansas antitrust claim. With the exception of dismissing the unjust enrichment component, the remainder of the action survived.
“Stats reports are nominally anonymous, but defendant integrators were often able to deanonymize the reports to identify the data of specific companies based on their industry knowledge,” Kendall wrote, accepting the allegations as true for this stage of proceedings. “In addition to their participation in Agri Stats, defendant integrators had frequent opportunities to communicate, in conjunction with formal meetings of various trade associations, namely the National Turkey Federation.”
In addition to the Federation’s annual meeting and leadership conference, collusion opportunities came through the U.S. Poultry & Egg Export Council and North American Meat Institute.
Kendall said defendants’ motion to dismiss incorporated arguments they made in a similar complaint led by Olean Wholesale Grocery Cooperative as plaintiff, which she already refused to deny. She also rejected an argument Sandee’s lacked standing in the Northern District of Illinois because it only alleged it bought turkey in New York, noting the lawsuit hangs on not where the meat was purchased, but the location of the alleged violations that contributed to the artificially high prices.
The Utah claim failed, Kendall explained, because that state doesn’t allow antitrust lawsuits from plaintiffs who are not Utah residents. She dismissed the Arkansas Deceptive Trade Practices Act claim because that state doesn’t allow price-fixing antitrust cases, a stance the U.S. Eighth Circuit Court of Appeals has upheld.
In dismissing the unjust enrichment claim, Kendall sided with the defendants’ position those allegations are muddled and confusing. She said Kraft believed Sandee’s was seeking such claims in 47 states, and agreed the claims fail since they don’t clearly indicate which states or laws the allegations reference.
Kendall rejected the defendants’ argument that Sandee’s claims were untimely, noting that since the allegations are that the anticompetitive conduct was based on proprietary information, statutory limitations couldn’t begin before the business was aware of paying inflated prices.
Kraft filed its own motion to dismiss as it doesn’t supply turkey. Kendall agreed, writing “the only price and cost data alleged are prices and costs associated with whole turkeys. Sandee’s does not allege any pricing information for processed turkey products like deli meats, which Kraft sells.”
All of Kendall’s dismissals were with prejudice except the unjust enrichment claim. She granted Sandee’s 21 days to amend the complaint if it wants to restore that aspect.
Sandee's is represented by attorneys with the Clifford Law Office, of Chicago, and the firm of Cuneo Gilbert & LaDuca LLP, of Washington, D.C.
The turkey producers, including Hillshire Brands, Tyson Foods, Perdue Farms, Butterball, Foster Farms, Cargill, Cooper Farms and Hormel Foods, among others, are represented by the firms of Axinn Veltrop & Harkrider LLP; Faegre Drinker Biddle & Reath LLP; Mayer Brown LLP; Proskauer Rose LLP; Greene Espel P.L.L.P; and Venable LLP, among others.