Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Class period limited in egg price fixing suit, (Feb 4, 2016)

By Greg Hammond, J.D.

In multidistrict litigation concerning an alleged conspiracy to fix the price of eggs, an expert’s damages model could not reliably show damages resulting from the alleged conspiracy on a class-wide basis after December 31, 2008, because the expert failed to take into account the effect of state legislative schemes that regulate animal welfare standards in the shell egg industry and that were instituted after the lawsuit was filed. The federal district court in Philadelphia therefore limited the shell egg subclass class period to September 24, 2004, through December 31, 2008 (In re Processed Egg Products Antitrust Litigation, February 3, 2016, Pratter, G.).

A group of individuals and entities that bought eggs directly from some of the nation’s major egg producers claim that various producers conspired to control and limit the supply of eggs in order to increase egg prices. The court granted certification of a subclass of purchasers of “shell eggs”—eggs produced from caged birds that are sold in the shell for consumption or for breaking and further processing. The case was before the court to determine the appropriate cut-off date for the shell egg subclass.

Predominance post-2008. Despite the subclass’ argument that the defendants continued to conspire until at least December 31, 2013, the court held that the proper cut-off date for the shell egg subclass was December 31, 2008. In particular, the court noted that the defendant egg producers identified a number of state legislative schemes, beginning in 2008, that govern cage space limitations, including those in Arizona, Oregon, Washington, Ohio, and California. The existence of these different legislative schemes in place between 2008 and 2013 could have had the effect of decreasing flock size, according to the court, but for reasons unrelated to the conspiracy. The expert’s damages model, however, failed to specify—after 2008—what component of the alleged price increase is attributable to unlawful antitrust behavior as opposed to imposition of lawful state regulatory schemes. The court therefore concluded that the subclass failed to demonstrate that issues of fact or law applicable to the proposed shell egg subclass predominate over individual issues after 2008.

The following subclass of shell egg purchasers was consequently certified: All individuals and entities that purchased shell eggs produced from caged birds in the United States directly from Defendants during the Class Period from September 24, 2004, through December 31, 2008.

The case is No. 08-md-2002.

Attorneys: Mindee J. Reuben (Lite DePalma Greenberg, LLC), Stanley D. Bernstein (Bernstein Liebhard LLP), Stephen D. Susman (Susman Godfrey LLP) and Michael D. Hausfeld (Hausfeld LLP) for Direct Purchaser Plaintiffs. Ruth S. Shnider (Stinson Leonard Street LLP) and Carrie Mahan Anderson (Weil, Gotshal & Manges LLP) for Michael Foods, Inc. Donald M. Barnes (Porter, Wright, Morris & Arthur, LLP) for Rose Acre Farms, Inc. Veronica Smith Lewis (Gibson, Dunn & Crutcher LLP) for Cal-Maine Foods, Inc. Donald M. Barnes (Porter Wright Morris & Arthur LLP) and Nathan P. Eimer (Eimer Stahl LLP) for Moark, LLC and Norco Ranch, Inc.

Companies: Michael Foods, Inc.; Rose Acre Farms, Inc.; Cal-Maine Foods, Inc.; Moark, LLC; Norco Ranch, Inc.; T.K. Ribbing’s Family Restaurant, LLC; Lisciandro’s Restaurant; Eby-Brown Company LLC; Karetas Foods, Inc.

Cases: Antitrust PennsylvaniaNews