A Minnesota federal judge on Wednesday certified three classes of direct and indirect buyers in sprawling multidistrict litigation over a purported scheme to inflate pork prices.
U.S. District Judge John R. Tunheim, in a 69-page order, granted class certification motions brought by direct purchasers, consumer indirect purchasers and commercial indirect purchasers, finding that the three proposed classes all depend on a common contention that can be resolved on a classwide basis.
“Class plaintiffs all seek class certification for a per se antitrust claim: that they overpaid for pork due to the defendants’ conspiracy to restrict supply and stabilize prices in the pork market,” Judge Tunheim said. “Proof of and defenses to the defendants’ alleged conspiracy will be common to all class members, as is typical of all nationwide horizontal price-fixing conspiracy class actions.”
The judge also greenlighted certification for the consumers’ “rule of reason” antitrust claim — that the defendants conspired to participate in an anti-competitive information exchange — after finding that they established commonality over the relevant geographic and product markets.
Because the defendants operate on a national scale, the entire U.S. is the proper geographic market, the order said. And the proper product market includes all forms of “raw pork bacon” and “fresh or frozen” pork “bellies, loins, shoulder, ribs or pork chops” because they “constitute a comparable cluster of products,” according to the order.
The litigation, which stretches back to 2018, accuses America’s largest pork producers of conspiring to limit the supply of pork and fix the price, causing the class plaintiffs to pay artificially inflated prices, according to the order.
The purchasers’ remaining allegations target Agri Stats Inc.; Clemens Food Group LLC and the Clemens Family Corp.; Hormel Foods Corp. and Hormel Foods LLC; Seaboard Foods LLC and Seaboard Corp.; Triumph Foods LLC; and Tyson Foods Inc., Tyson Prepared Foods Inc. and Tyson Fresh Meats Inc., the order said.
The three groups of purchasers moved for class certification back in May, estimating there are likely thousands of direct purchaser entities, millions of consumer indirect purchasers and thousands of commercial indirect purchasers, according to the order.
Judge Tunheim said the classes have met the predominance requirement, finding that common evidence can be used to prove the existence of the alleged antitrust conspiracy. He also found that common evidence can show that class members suffered injury because of the alleged antitrust violation, according to his order.
The direct purchasers must show common evidence of classwide impact, but indirect purchasers have to take it one step further, the judge said.
The consumer and commercial indirect buyers “must first demonstrate a common impact — in the form of an overcharge — incurred by all or nearly all” direct buyers, according to the order. Then they have to show that “this impact — those overcharges — were passed on by the [direct purchasers] to all or nearly all of the end customers,” the order said.
In this case, the direct purchasers have met their burden by presenting an expert report that found the “structure and characteristics of the pork industry made it conducive to the formation and maintenance of the alleged price-fixing conspiracy,” according to the order. The report found that a conspiracy would have impacted the prices paid by all or nearly all direct buyers, the order said.
The consumer indirect purchasers provided expert testimony of a report that determined the defendants overcharged direct purchasers about 12.8% to 15.3% for pork and that those overcharges were then passed on to indirect purchasers, according to the order.
“This analysis satisfies the burden that indirect purchasers have to show both common impact and pass-through,” Judge Tunheim said.
The commercial indirect purchasers also provided an expert report that shows common evidence of general price inflation, which was then passed on to indirect buyers, according to the order.
All three classes can also use common evidence to show damages, the order said.
Judge Tunheim certified all three damages classes proposed by the plaintiffs.
The direct purchaser class includes all people and entities that directly bought various pork products from the defendants or their subsidiaries in the U.S. from June 29, 2014, through June 30, 2018, according to the order.
The consumer indirect purchaser class includes all people or entities that indirectly bought various types of raw pork or bacon from the defendants in 23 states and Washington, D.C., from June 28, 2014, to June 30, 2018, the order said.
The commercial indirect purchaser damages class includes all entities that indirectly bought uncooked pork bacon and various types of raw pork from defendants in the U.S. from June 28, 2014, to June 30, 2018, according to the order.
Judge Tunheim also certified the commercial buyers’ injunctive class, which encompasses all entities that indirectly bought uncooked pork bacon and other types of raw pork form the defendants in the U.S. from June 28, 2014, to June 30, 2018, according to the order.
The judge appointed Lockridge Grindal Nauen PLLP and Pearson Warshaw LLP as class counsel for the direct purchasers, Hagens Berman Sobol Shapiro LLP and Gustafson Gluek PLLC for the consumer indirect purchasers, and Larson King LLP and Cuneo Gilbert & LaDuca LLP for the commercial indirect purchasers, according to the order.
In November, Judge Tunheim preliminarily approved a $75 million settlement reached in September between Smithfield Foods Inc. and the consumer indirect buyers.
That was the second deal reached between the consumer plaintiffs and the meat company after they previously reached a $20 million agreement with JBS USA Food Co. Judge Tunheim in September approved that deal and granted $6.6 million in attorney fees to the plaintiffs’ counsel.
In June, Smithfield also reached an $83 million deal with direct buyer plaintiffs. And last April, Judge Tunheim preliminarily approved Smithfield’s $42 million settlement with the commercial indirect buyer plaintiffs.
W. Joseph Bruckner of Lockridge Grindal Nauen PLLP, an attorney for the direct purchaser plaintiffs, told Law360 on Wednesday, “We are pleased with and gratified by Judge Tunheim’s thorough and well-reasoned decision, and we look forward to moving the case to trial.”
Counsel for the other parties did not immediately respond to requests for comment.
The direct purchasers are represented by Joseph C. Bourne, W. Joseph Bruckner, Brian D. Clark, Arielle S. Wagner, Craig S. Davis, Simeon A. Morbey and Stephen M. Owen of Lockridge Grindal Nauen PLLP, and Bobby Pouya, Clifford H. Pearson, Daniel L. Warshaw, Michael H. Pearson, Melissa S. Weiner, Bruce L. Simon, Benjamin E. Shiftan and Neil Swartzberg of Pearson Warshaw LLP.
The consumer indirect purchasers are represented by Shana E. Scarlett, Steve. W. Berman and Breanna Van Engelen of Hagens Berman Sobol Shapiro LLP, and Daniel C. Hedlund, Daniel E. Gustafson, Michelle J. Looby and Joshua J. Rissman of Gustafson Gluek PLLC.
The commercial and institutional indirect purchasers are represented by Shawn M. Raiter of Larson King LLP; Jonathan W. Cuneo, Joel Davido; and Blaine Finley of Cuneo Gilbert & LaDuca LLP.
Hormel is represented by Richard A. Duncan, Aaron D. Van Oort, Craig S. Coleman, Emily E. Chow, Isaac B. Hall, Jacob D. Bylund, Stephanie A. Koltookian, Robert C. Gallup, John S. Yi and Jonathan H. Todt of Faegre Drinker Biddle & Reath LLP.
Tyson is represented by Tiffany Rider Rohrbaugh, Rachel J. Adcox and Jarod Taylor of Axinn Veltrop & Harkrider LLP, and David P. Graham of Dykema Gossett PLLC.
Agri Stats is represented by Peter H. Walsh, William L. Monts and Justin W. Bernick of Hogan Lovells LLP.
Clemens is represented by Mark L. Johnson and Davida S. McGhee of Greene Espel PLLP, and Daniel Laytin, Christa Cottrell and Jenna M. Stupar of Kirkland & Ellis LLP.
Seaboard is represented by William L. Greene, Peter J. Schwingler, William D. Thomson, Jon W. Ripa and J. Nicci Warr of Stinson LLP.
Triumph is represented by Aaron Chapin, Christopher A. Smith, Tessa K. Jacob, A. James Spung and Jason Husgen of Husch Blackwell LLP.
The case is In Re: Pork Antitrust Litigation, case number 0:18-cv-01776, in the U.S. District Court for the District of Minnesota.
–Additional reporting by Joyce Hanson, Hailey Konnath, Kelly Lienhard, Christopher Cole and Gina Kim. Editing by Gemma Horowitz.
Update: This story has been updated with a comment from counsel for one of the classes.
Source: Law 360
