Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Egg producer’s settlement in price fixing class action gets final approval, (Oct 16, 2014)

By Linda O’Brien, J.D., LL.M.

The federal district court in Philadelphia has given its final approval to the $28 million settlement of a class action suit brought against an egg producer for its role in an alleged conspiracy to restrict the supply of domestically produced eggs and egg products (In re Processed Egg Products Antitrust Litigation, October 10, 2014, Pratter, G.).

Grocery stores, commercial food manufacturers, restaurants, and other food service providers that purchased shell eggs and egg products filed a series of class action suits against egg producers, including Cal-Maine Foods, and trade association groups for manipulating the supply of eggs and egg products and thereby affecting domestic prices for those goods. The Direct Purchaser Plaintiffs (DPPs) reached a settlement agreement with Cal-Maine which was preliminary approved in February 2014.

Under the proposed settlement, Cal-Maine will pay the DPPs the amount of $28 million to be distributed based on a class member’s purchases of shell egg and egg products from any producer. Additionally, Cal-Maine will cooperate with the DPPs’ preparation and prosecution of their class action against the remaining defendants.

Notice to class members. The notice of the settlement was disseminated to possible members of the settlement class through a variety of means and explained how potential class members could exclude themselves, according to the court. The class administrator received requests for exclusion but no objections to the settlement. Furthermore, Cal-Maine provided sufficient notice to federal and state officials and no officials filed any objections to the settlement.

Class certification. The court determined that the settlement met the requirements of Federal Rule of Civil Procedure 23(a) and (b). Under Rule 23(a), the class was so numerous that joinder of all members was impracticable, there were questions of law or fact common to the class, the claims of the class representatives were typical of the claims of the class, and the class representatives will fairly and adequately protect the interests of the class. Additionally, the questions of law of fact common to the class predominated over questions affecting individual members to satisfy the requirements for class certification under Rule 23(b).

Fairness factors. The court found that the settlement met the prerequisites under Federal Rule of Civil Procedure 23(e) for being fair, adequate, and reasonable to the class members. The settlement was reached as a result of arms-length negotiations and after the plaintiffs had access to substantial discovery. Moreover, the class counsel was experienced in similar litigation and no members of the purported class objected to the settlement.

Additionally, the plaintiffs avoided significant expense and delay in litigating Cal-Maine which would reduce the value of any recovery of the class. Sufficient discovery was conducted to appreciate the merits of the litigation and adequately inform the negotiations. Finally, the settlement was reasonable in light of the best possible recovery and the attendant risks if the case went to trial.

The case is No. 2:08-md-02002-GP.

Attorneys: Patrick J. Ahern (Ahern & Associates PC) and Daniel B. Allanoff (Meredith Cohen Greenfogel & Skinick PC) for Plaintiffs. Brian M. Babb (Keating Muething & Klekamp PLLC) for Ohio Fresh Eggs, Inc. Donald M. Barnes (Porter Wright Morris & Arthur LLP) for Rose Acre Farms, Inc. Eric A. Bartsch (Stoel Rives LLP) for Sparboe Farms, Inc. Barak Bassman (Pepper Hamilton LLP) for United Egg Association. Brandon J.B. Boulware (Rouse Hendricks German May) for Michael Foods Inc.

Companies: Ohio Fresh Eggs, Inc.; Rose Acre Farms, Inc.; Sparboe Farms, Inc.; United Egg Association; Michael Foods Inc.

Cases: Antitrust PennsylvaniaNews