Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Counterclaims against egg purchasers dismissed in price fixing suit, (Jun 11, 2014)

By Jeffrey May, J.D.

In pursuing an action against egg producers for conspiring to restrict the supply of domestically produced eggs, complaining purchasers did not engage in fraud, abuse of process, or extortion by continuing to demand eggs certified under an egg producer trade group program that was challenged in the antitrust claims, the federal district court in Philadelphia has decided. The purchasers' motion to dismiss two sets of counterclaims—fraud and promissory estoppel, on the one hand, and abuse of process and extortion, on the other—was granted (In re: Processed Egg Products Antitrust Litigation, June 10, 2014, Pratter, G.).

The purchasers brought their antitrust claims based on an alleged conspiracy by egg producers and trade groups to restrict the domestic supply of eggs in an effort to raise prices in violation of Section 1 of the Sherman Act. As part of the asserted conspiracy, the defendants adopted guidelines on cage space densities for hens. These guidelines were part of an “animal husbandry” or “animal welfare” program that became known as the “United Egg Producers Certification Program.” The program apparently reduced the supply of eggs.

Two defending producers—Cal-Maine Foods, Inc., and Rose Acre Farms, Inc.—took issue with the complaining purchasers' pursuit of the antitrust claims, while at the same time pressuring egg farms to adopt the program and continuing to demand eggs certified under the program. The producers' counterclaims could not succeed, however, because the purchasers had not challenged the certification program, by itself, as a per se antitrust violation, the court decided.

The complaining purchasers alleged that a number of the defendants' actions, taken together, constituted a per se violation the Sherman Act. Therefore, the purchasers could still support the certification program itself but not the other challenged actions without any fraud or abuse of process or extortion, the court reasoned. Thus, the purchasers did not have “egg on their face,” as the producers contended. The counterclaims were dismissed.

The case is No. 08-md-2002.

Attorneys: Brian E. Robison (Gibson Dunn & Crutcher LLP) for Cal-Maine Foods, Inc. Jan P. Levine (Pepper Hamilton LLP) United Egg Producers, Inc.

Companies: Cal-Maine Foods, Inc.; Rose Acre Farms, Inc.; United Egg Producers, Inc.

Cases: Antitrust PennsylvaniaNews