Alleged Price-Fixing Among Turkey Product Suppliers Through Industry Reporting And Trade Association Activity Survives Second Motion To Dismiss
12/13/2022On November 21, 2022, Judge Virginia Kendall of the United States District Court for the Northern District of Illinois denied a motion to dismiss an antitrust lawsuit alleging that ten turkey product suppliers coordinated pricing and reduced output though direct communications, trade association meetings, and industry reports provided by co-defendant Agri Stats, Inc. In re Turkey Antitrust Litig., No. 19-8318 (N.D. Ill. Nov. 21, 2022). The Court had previously dismissed as implausible an initial, single-paragraph allegation of a per se violation of Section 1 of the Sherman Act. The case proceeded, however, on plaintiffs’ separate allegations of improper exchanges of competitively sensitive information under the rule of reason. Over a year later and after completion of substantial discovery, plaintiffs amended their complaint to renew their per se claim. The motion to dismiss here only related to the per se violation. In denying the motion to dismiss, the Court ruled that plaintiffs’ complaint sufficiently alleged parallel conduct in the form of coordinated capacity reductions and price increases, as well as certain additional “plus factors” that could suggest an agreement among defendants.
With respect to coordinated activity, the Court noted both that “[p]laintiffs need not allege that [d]efendants acted at the exact same time” and that “[p]laintiffs do not need to allege that [d]efendants restricted supply in an identical manner.” With these principles in mind, the Court found that plaintiffs had adequately alleged two periods of coordinated supply restrictions between 2008–2009 and 2012–2013, followed by two periods of raising prices and maintaining supply restraints between 2010–2011 and 2014–2015. Allegations in plaintiffs’ amended complaint included internal documents from defendants, as well as public statements from defendant representatives. The Court held that this alleged activity was sufficient to support a plausible claim of parallel conduct.
The Court then moved to its analysis of the plus factors contextualizing defendants’ parallel conduct. Plaintiffs alleged four plus factors: 1) defendants’ exchange of production information; 2) defendants’ exchange of pricing information; 3) the opportunities for coordination presented by defendants’ social contact and participation in the same trade groups; and 4) that the structure of the turkey-products market was “conducive to collusion.” The Court highlighted the extent of both the alleged direct information exchange between defendants and the unusual nature of the information exchanged through Agri Stats. Agri Stats’ reporting included otherwise private information on the production and prices of other defendants that were alleged to have been reverse-engineered to identify which defendant provided a given data set. The Court concluded that this information exchange, taken in combination with the many alleged opportunities at trade association gatherings for coordination and the fact that defendants and their alleged co-conspirators controlled 80% of the turkey-products market, was sufficient to survive a motion to dismiss.
This case serves as an important reminder to be cautious in both communications with competitors and any communications with third-party industry analysts. This case also highlights how a claim dismissed prior to the beginning of discovery can continue to pose litigation risk for a defendant when the court permits related claims to proceed. Should the Court subsequently allow plaintiff to amend its complaint, as the Court did here, plaintiff may seek to use the information gathered during discovery to renew the dismissed claim.