Shearman & Sterling LLP | Antitrust Blog | Eighth Circuit Dismisses Federal Antitrust Claims In Propane Action, Finding Plaintiffs Failed To Allege Injury Or Ongoing Conspiracy By Defendants<br >  
Antitrust Litigation
This links to the home page
Antitrust Litigation
  • Eighth Circuit Dismisses Federal Antitrust Claims In Propane Action, Finding Plaintiffs Failed To Allege Injury Or Ongoing Conspiracy By Defendants

    On June 22, 2018, a three-judge panel on the Eighth Circuit Court of Appeals affirmed in part a district court decision granting summary judgment for defendants and dismissing antitrust claims under Section 1 of the Sherman Act, as well as the antitrust laws of 23 states and the District of Columbia, against two propane gas companies. Mario Ortiz et al. v. Ferrellgas Partners et al., No. 16-4086 (8th Cir. June 22, 2018).

    In 2014, Plaintiffs, indirect purchasers of propane gas from the defendants, brought an action alleging that the defendants had conspired to reduce the “fill levels” of propane gas tanks while maintaining price levels, effectively imposing a per-pound price increase on consumers. This case followed earlier class actions, which had been settled in 2010 and 2012, and the 2014 filing of a Federal Trade Commission (“FTC”) complaint, all based on the same alleged conduct. In 2015, the FTC settled its case by consent orders with the defendants. Notwithstanding the prior settlements, plaintiffs contended that the defendants continued to conspire to maintain the collusive fill levels and the artificially inflated prices. Thus, plaintiffs, now consolidated with a subsequent indirect purchaser class action, sought injunctive relief and disgorgement under Section 1 of the Sherman Act and damages under various state laws. On summary judgment, the district court dismissed the pending complaints for, inter alia, lack of standing.

    On appeal, Circuit Judge Duane Benton, writing for the panel, began by addressing the district court’s finding that plaintiffs lacked standing under the Sherman Act to seek injunctive relief. Agreeing with the district court, the panel found that plaintiffs had “not even adequately pleaded that defendants are currently charging supra-competitive prices, let alone a conspiracy.” Nor had plaintiffs identified a ground for injunctive relief not otherwise addressed by the 2015 FTC consent orders. For instance, the Eighth Circuit observed that the FTC settlement already barred defendants from raising, fixing, maintaining, or stabilizing prices of the tanks “through any means.” While the court recognized that “public and private antitrust injunctions may coexist without regard for one another,’ it found that, in the absence of a factual basis suggesting a continuing conspiracy, plaintiffs’ assertion that injunctive relief was necessary in spite of the 2015 FTC settlement to address a “cognizable danger of recurrent violation” was insufficient to establish a claim for injunctive relief. Thus, the panel found that plaintiffs had failed to demonstrate redressability and so lacked standing to pursue injunctive relief.

    The Eight Circuit panel also found that the indirect purchaser plaintiffs could not obtain disgorgement because disgorgement would circumvent the U.S. Supreme Court’s ruling in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), which limits claims for damages under the Sherman Act to the “overcharged direct purchaser”—in this case, the propane distributors and retailers who purchased directly from the defendants. Finally, the panel declined to dismiss plaintiffs’ state-law antitrust claims, and instead remanded these claims to the district court to consider whether the state-law-damages claims should remain in federal court and, if so, whether plaintiffs’ claims were timely filed under the different states’ applicable statutes of limitations.