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In Re: Processed Egg Products Antitrust Litigation

March 19, 2012


The opinion of the court was delivered by: Gene E.K. Pratter,j.



I. Introduction

Indirect purchasers*fn1 of domestic eggs and egg products charge producers of those goods, and the producers' trade groups, with conspiring to manipulate the supply of, and thereby fix prices for, domestically-sold eggs and egg products. The Indirect Purchaser Plaintiffs' Second Consolidated Amended Class Action Complaint (hereinafter, the "IPSAC") *fn2 alleges violations of federal and state law. The 22 state jurisdictions at issue geographically reach considerably farther than a rooster's most vigorous crows can be heard. In total, the IPSAC contains 51 claims: a Section 1 Sherman Act claim for injunctive relief, 20 state antitrust claims, 9 state consumer protection claims, and 21 state unjust enrichment claims.*fn3

In response, Defendants have jointly filed the Motion sub judice which tries to crack, if not wholly topple, most of the Plaintiffs' claims by seeking full or partial dismissal of all counts.*fn4

Defendants argue that the IPSAC is deficient in a number of ways, inter alia, lack of standing (in the various applications of that term) and failure to state a claim consistent with the demands of Rules 8 and 9(b). As outlined below and as delineated in the accompanying Order, the Court grants the Motion in part and denies it in part.

II. Background

This multidistrict litigation concerns numerous consolidated and coordinated actions based upon allegations of a conspiracy in violation of the Sherman Act among egg producers and trade groups to manipulate the supply of eggs and egg products and thereby affect the domestic prices of those goods. See In re Processed Egg Prods. Antitrust Litig., 588 F. Supp. 2d 1366, 1367 (J.P.M.L. 2008). The plaintiffs are direct purchasers (such as grocery stores, commercial food manufacturers, restaurants, other food service providers, and other entities who purchase directly from Defendants or other egg producers) and indirect purchasers (individual consumers who purchased from other parties along the distribution chain) of eggs and egg products. The direct purchaser plaintiffs fall into additional categories: "Direct Purchaser Plaintiffs" who have brought a consolidated class action against Defendants, and "Direct Action Plaintiffs" who are pursuing individual actions against Defendants.

In this Opinion the Court addresses one, albeit a multifaceted one, of the Defendants' pending motions to dismiss the IPSAC.*fn5 The Court previously addressed motions to dismiss filed by virtually the same group of Defendants concerning the Direct Purchaser Plaintiffs' Second Consolidated Amended Class Action Complaint. See Sept. 26, 2011 Mem. and Order, 2011 WL 4465355 (Doc. Nos. 562 and 563); Oct. 14, 2011 Mem. and Order, 2011 WL 4945864 (Doc. Nos. 581 and 582); Nov. 30, 2011 Opinion and Order, 2011 WL 5980001 (Doc. Nos. 593 and 594). Much of the history and many of the dynamics of this litigation are outlined in detail in those prior decisions, and will not be repeated here except as appropriate and necessary predicates to the rulings here.

III. Factual Allegations*fn6

As the parties are already well-aware, and indeed, have represented to the Court, the IPSAC alleges virtually the same underlying facts as the Direct Purchaser Plaintiffs' complaint, notwithstanding some (generally minor) factual distinctions, and as to be expected, authored in a different drafting style. Both pleadings set forth factual allegations concerning the Defendants' alleged conspiracy to decrease the supply of eggs and thereby increase egg prices, the Defendants' conduct undertaken in relation thereto, and the nature of the egg industry in terms of structure, production practices, and market dynamics. See Sept. 26, 2011 Mem. and Order, 2011 WL 4465355, at *1-3 (describing the Direct Purchaser Plaintiffs 'core allegations). Although the two pleadings have much in common, they are nonetheless separate and distinct complaints, and the Court briefly outlines the IPSAC's main allegations as follows.

Plaintiffs-to wit, 23 individuals and three corporations-bring this action on behalf of themselves individually and as class actions on behalf of other similarly situated indirect purchasers. These individual named Plaintiffs are residents of, or incorporated in, Arizona, California, the District of Columbia, Florida, Kansas, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Mexico, New York, North Carolina, Tennessee, Utah, Vermont, West Virginia, or Wisconsin. IPSAC ¶¶ 19-44. They each purportedly "indirectly purchased shell eggs and/or egg products during the Class Period" and suffered economic injury by paying "supra-competitive prices for shell eggs and egg products" as a result of the Defendants' alleged violations of federal and state law. Id. ¶¶ 8, 19-44.

Plaintiffs request federal injunctive relief pursuant to Section 16 of the Clayton Act on behalf of themselves and a nationwide class. As to the state law claims, Plaintiffs, individually and on behalf of members of the proposed classes,*fn7 seek a variety of remedies, including, inter alia, damages, restitution, and disgorgement.

As alleged, the Plaintiffs' federal and state claims are based upon the Defendants' conduct relating to a long-running conspiracy between and among Defendants and certain unnamed co-conspirators extending from at least January 1, 2000 through the present . . . with the purpose and effect of fixing, raising, and maintaining and/or stabilizing prices and restricting output of both shell eggs and egg products (collectively, "eggs") sold indirectly to Plaintiffs and other indirect purchasers in the United States, including the Class Jurisdictions.

IPSAC ¶ 1; see also id. ¶¶ 6, 140. Defendants supposedly took "coordinated efforts" to advance the aims of the conspiracy. Id. ¶ 7. According to Plaintiffs, coordination among Defendants was facilitated by the trade group Defendants, United Egg Producers ("UEP"), United Egg Association ("UEA"), and United States Egg Marketers ("USEM"); most of the other named Defendants are allegedly members of some of these groups. See, e.g., id. ¶¶ 49, 51, 137, 255, 286. Many of the Defendants' decisions, discussions, and agreements concerning various aspects of the conspiracy apparently occurred at, or are connected to, these trade groups' committee and member meetings, and were communicated to Defendants through UEP's newsletter. See, e.g., id. ¶¶ 143-47, 152-156, 158-167, 170, 173-76, 192-209, 212-17.

The Defendants' "coordinated efforts" allegedly were mechanisms to reduce the supply of eggs in terms of either egg production or availability in the egg market. By reducing the supply of eggs, Defendants apparently sought to manipulate certain features of the domestic egg market as a means of increasing egg prices. Those market features include the price inelasticity of demand for eggs, the lack of product substitutes for eggs, minimal product differentiation among eggs, and industry consolidation. Id. ¶¶ 2, 127-31. Because of these market features-and more particularly, the inelasticity of demand-"small reductions in supply can lead to sharp increases in egg prices." Id. ¶ 2.

The specific "coordinated efforts" undertaken throughout the alleged conspiracy period entailed various flock reduction, chick hatch reduction, molting, and hen disposal initiatives, as well as the adoption of and compliance with the United Egg Producers Certification Program and the United States Egg Marketers export program. See, e.g., id. ¶¶ 6, 170, 219, 293.

The UEP Certification Program originated as an "animal husbandry program" that mandated lower cage space densities for hens, but evolved into a program whereby egg producers would comply with the Program's guidelines in order to be able to sell or market eggs with a logo indicating that the eggs were certified under the Program. See, e.g., id. ¶¶ 158, 160, 224, 298. The IPSAC alleges that initially [c]ertification required a producer to (a) meet [a] cage space allowance . . . [of an] average of 56 square inches per hen . . . ; (b) commit to meeting the guideline for beak trimming . . . ; (c) commit to meeting the guidelines for molting . . . ; (d) commit to meeting the guidelines for handling and transportation for both pullets and spent hens . . . ; (e) agree to be audited annually by a 3rd party independent auditor to confirm that the company is meeting guidelines; (f) agree to provide UEP with a copy of the audit results upon the completion of each audit; and (g) recognize that passing the audit is necessary in order to maintain the certification status.

Id. ¶ 159. The Certification Program's guidelines also required (or eventually came to require): reduction in chick hatch, 100% of an egg producers' egg production be in compliance with the guidelines, and a prohibition on the practice of "backfilling cages to replace mortality." See, e.g., id. ¶¶ 174-75, 202, 295.

The USEM export program "aimed to have its members export shell eggs even when the export prices were lower than domestic egg prices" with the alleged purpose of "raising domestic U.S. prices through reduced supply." Id. ¶ 240. One central feature of the export program was that "USEM members that did not provide eggs for the export would agree to 'repay' or 'reimburse' the USEM members that provided eggs for the export in order to 'share' any losses incurred when exporting shell eggs at below-market prices." Id. ¶ 243.

As described in the IPSAC, the Defendants' "coordinated efforts" enabled Defendants to realize the ultimate objectives of their conspiracy: decreased egg supply, and thus higher egg prices and greater revenues and profits. See, e.g., id. ¶¶ 150, 181-83, 247, 312, 323.

IV. Legal Standards*fn8

A. Rule 12(b)(6)

For purposes of this Rule 12(b)(6) motion, the Court must accept as true all well-pleaded allegations in the complaint and must construe the pleading in the light most favorable to the Plaintiffs. Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (citation omitted). Of course, pursuant to Federal Rule of Civil Procedure 8(a)(2), a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief," providing the defendant "fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (citation omitted). This standard "does not require 'detailed factual allegations,'" but a "pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 555). Consistent with Rule 12(b)(6), the Court may consider the allegations contained in the complaint, exhibits attached to the complaint, matters of public record and records of which the Court may take judicial notice. See Tellabs, Inc. v. Makor Issues & Rts., 551 U.S. 308, 322 (2007); Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

A complaint need allege "only enough facts to state a claim of relief that is plausible on its face" so as to test whether "plaintiffs . . . have . . . nudged their claims across the line from conceivable to plausible" to survive a Rule 12(b)(6) motion. Twombly, 550 U.S. at 570. Thus, a complaint is subject to dismissal when the plaintiff fails to plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556).

B. Rule 9(b)

To determine whether a particular claim is subject to and meets the Rule 9(b) pleading standard, the Third Circuit Court of Appeals has held that "where the plaintiff grounds [her] claims in allegations of fraud-and the claims thus 'sound in fraud'-the heightened pleading requirements of Rule 9(b) apply." In re Suprema Specialties, Inc. Sec. Litig., 438 F.3d 256, 270 (3d Cir. 2006); see also Cal. Pub. Emps.' Ret. Sys. v. Chubb Corp., 394 F.3d 126, 161-62 (3d Cir. 2004). Conversely, "claims . . . that do not sound in fraud are not held to the heightened pleading requirements of Fed. R. Civ. P. 9 (b)." In re Adams Golf, Inc. Sec. Litig., 381 F.3d 267, 273 n.5 (3d Cir. 2004) (citing Shapiro v. UJB Fin. Corp., 964 F.2d 272, 288 (3d Cir. 1992)).

However, there is no requirement that fraud or mistake be a necessary element of a prima facie claim in order for Rule 9(b) to apply. See Chubb, 394 F.3d at 161 (discussing this law with respect to a section 11 Securities Act claim); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003) ("In cases where fraud is not a necessary element of a claim, a plaintiff may choose nonetheless to allege in the complaint that the defendant has engaged in fraudulent conduct. In some cases, the plaintiff may allege a unified course of fraudulent conduct and rely entirely on that course of conduct as the basis of a claim. In that event, the claim is said to be 'grounded in fraud' or to 'sound in fraud,' and the pleading of that claim as a whole must satisfy the particularity requirement of Rule 9(b)." (emphasis added)).

The Third Circuit Court of Appeals illustrated the application of this standard in the context of an antitrust claim in Lum v. Bank of America, 361 F.3d 217 (3d Cir. 2004), abrogation on other grounds recognized by In re Insurance Brokerage Antitrust Litig., 618 F.3d 300, 323 n.22 (3d Cir. 2010). There, the Court of Appeals recognized that "antitrust claims generally are not subject to the heightened pleading requirement of Rule 9(b)," but that Rule 9(b) applies when "[f]raud is the basis for the antitrust violation alleged." Id. at 220. In Lum, the plaintiffs claimed that the defendant banks "allegedly violated the Sherman Act by agreeing to misrepresent the 'prime rate' [as] the lowest rate available to their most creditworthy borrowers, when in fact" other lower rates below the prime rate were offered to certain other borrowers, and by allegedly giving "false information about their 'prime rate' both to consumers who were seeking credit and to leading financial publications." Id. at 220. According to the plaintiffs, such alleged fraudulent conduct inflated the prime rate, and thereby resulted in the plaintiffs "being charged higher interest." Id. The Court of Appeals determined that the "antitrust claim is . . . based on fraud-on misrepresentations in the information given to consumers and on misrepresentations in the information given to . . . independent financial publications," id. at 220, and "[b]ecause plaintiffs allege that the defendants accomplished the goal of their conspiracy through fraud, the Amended Complaint is subject to Rule 9(b)." Id. at 228; see also Insur. Brokerage,618 F.3d at 347-48 (reaffirming the Lum rationale concerning the application of Rule 9(b) in an antitrust case).

To satisfy the Rule 9(b) pleading requirements, a complaint may either describe "the circumstances of the alleged fraud with precise allegations of date, time, or place" or may use "some [other] means of injecting precision and some measure of substantiation into their allegations of fraud." Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 172 n.10 (3d Cir. 2002) (citation omitted) (internal quotation marks omitted); see also Rolo v. City Investing Co. Liquidating Trust,155 F.3d 644, 658 (3d Cir. 1998), abrogation on other grounds recognized by Forbes v. Eagleson, 228 F.3d 471, 483-84 (2000); Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984). At the very least, "[p]laintiffs also must allege who made a misrepresentation to whom and the general content of the misrepresentation." Lum, 361 F.3d at 224. This pleading standard not only gives defendants notice of the claims against them, but also combats "frivolous suits brought solely to extract settlements" from defendants and "provides an increased measure of protection for their reputations." In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1418 (3d Cir. 1997).

While a significant purpose of Rule 9(b) is to provide notice of the precise misconduct at issue, courts "should . . . apply the rule with some flexibility and should not require plaintiffs to plead issues that may have been concealed by the defendants." Rolo, 155 F.3d at 658.

Accordingly, the particularity rule is somewhat relaxed when key factual information remains within the defendant's control. Burlington Coat, 114 F.3d at 1418. "Relaxation," however, does not translate into, or otherwise authorize, boilerplate and conclusory allegations, and plaintiffs "must accompany their legal theory with factual allegations that make their theoretically viable claim plausible." Id. Allegations "based upon information and belief" are permissible, "but only if the pleading sets forth specific facts upon which the belief is reasonably based." Hollander v. Ortho-McNeil-Janssen Pharm., Inc., No. 10-cv-0836-RB, 2010 WL 4159265, at *4 (E.D. Pa. Oct. 21, 2010) (citation and internal quotation marks omitted); see also Weiner v. Quaker Oats Co., 129 F.3d 310, 319 (3d Cir. 1997) ("[A] boilerplate allegation that plaintiffs believe the necessary information 'lies in defendants' exclusive control,' if made, must be accompanied by a statement of facts upon which their allegation is based." (quoting Shapiro v. UJB Fin. Corp., 964 F.2d 272, 285 (3d Cir. 1992) (internal quotation marks omitted)); Craftmatic Securities Litigation v. Kraftsow, 890 F.2d 628, 645 (3d Cir. 1989) (determining that in cases of corporate fraud, "even under a non-restrictive application of [Rule 9(b)], pleaders must allege that the necessary information lies within defendants' control, and their allegations must be accompanied by a statement of the facts upon which the allegations are based"). In other words, even a "relaxed fit" requires some tailoring.

Likewise, Rule 8 continues to apply even when under Rule 9(b) "[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b). For purposes of its meaningful presence in Rule 9(b) the word "'generally' is a relative term" and "it is to be compared to the particularity requirement applicable to fraud or mistake." Iqbal, 129 S. Ct. at 1954. By way of example, "Rule 9 merely excuses a party from pleading discriminatory intent under an elevated pleading standard. It does not give him license to evade the less rigid-though still operative-strictures of Rule 8." Id.; cf. Burlington Coat, 114 F.3d at 1418 ("[P]laintiffs must still allege facts that show the court their basis for inferring that the defendants acted with 'scienter.'"); United States ex rel. Pilecki-Simko v. Chubb Instit., No. 10-3907, 2011 WL 3890975, at *3 (3d Cir. Sept. 6, 2011) (unpublished) (recognizing that under Iqbal "Rule 8 does not empower respondent to plead the bare elements of his cause of action, affix the label 'general allegation,' and expect his complaint to survive a motion to dismiss." (quoting Iqbal, 129 S. Ct. at 1954)).*fn9

V. Legal Discussion*fn10

A. Article III Standing as to Four State Antitrust Claims

Defendants contend that the 26 named Plaintiffs have no standing, as would be demanded by Article III of the Constitution, to pursue antitrust claims under the laws of Iowa, Mississippi, North Dakota, and South Dakota. Specifically, Defendants argue that Plaintiffs have failed to allege an injury that would provide a basis for constitutional standing to bring claims under those four states' antitrust laws. The defense argument is that the named Plaintiffs have "failed to10 show that they suffered any injury entitling them to bring the[] claims" because no named Plaintiffs are alleged to reside, or to have purchased eggs, in those four states. Defs.' Mot. at 5.

Plaintiffs retort that the "named [class] representatives meet normal standing requirements," and that "each of the named Plaintiffs has been injured in the same way by the same conduct that has injured other members of the proposed classes." Pls.' Resp. at 56-57 & n.39. Thus, the Plaintiffs' argument is that because Defendants have not objected to the named Plaintiffs' standing to pursue the IPSAC's federal antitrust claim and other state claims, and given that "each Plaintiff has standing to pursue an action under federal antitrust law and the laws of several states, there is no longer a question of the court having subject matter jurisdiction over the claims asserted by Plaintiffs on the basis of the facts alleged." Id. at 56, 58. Plaintiffs claim that "[i]f a named plaintiff who has standing can, under Rule 23's criteria, represent the interests of out of state class members, then once the class is certified, a plaintiff from each state will be present and 'standing' will be established." Id. at 57. Plaintiffs contend that this reasoning leads to the conclusion that at the motion to dismiss stage "it is not necessary that there be named plaintiffs in each state for which damages are sought." Id. at 59.

Plaintiffs characterize the defense arguments as raising "what are really [class] certification issues in the guise of standing at this point in the litigation," id. at 57, particularly the adequacy of an out-of-state named Plaintiff to serve as class representative as to a particular state claim, id. at 56 n.39; Tr. at 91:15-21. They assert that consideration of such issues should be deferred until the class certification stage of this litigation on the grounds that the issues are "premature because class certification issues are 'logically antecedent' to questions about standing in that . . . the 'standing' asserted by Defendants would not exist but for Plaintiffs' asserting claims on behalf of a class." Pls.' Resp. at 56-57.

Despite the divergent positions, amid the parties' arguments there is an apparent consensus that the Court may consider the standing of the named Plaintiffs at this time. Indeed, Defendants make this assertion outright, whereas embedded in the Plaintiffs' arguments is the contention that named Plaintiffs have standing to bring the four states' antitrust claims at this time and have alleged that they have suffered an injury. But, to the extent that Plaintiffs invoke "logically antecedent" language and charge that Defendants are actually raising questions as to the named Plaintiffs' adequacy as class representatives, they obfuscate the narrower issue raised by Defendants' motion, namely, whether the named Plaintiffs have alleged facts that plausibly demonstrate injury-in-fact sufficient to confer upon them individual Article III standing to bring antitrust claims under the laws of Iowa, Mississippi, North Dakota, and South Dakota.*fn11 As to this actual issue presented as explained infra, the Court concludes that the named Plaintiffs have Article III standing to pursue causes of action under the four states' antitrust laws.

1. Requirements for Article III Standing

Generally, Article III standing is a threshold issue for any case, including class actions.

See Warth v. Seldin, 422 U.S. 490, 498 (1975); Ehrheart v. Verizon Wireless, 609 F.3d 590, 606 (3d Cir. 2010). Article III, § 2, of the Constitution limits the federal judicial power to the adjudication of "Cases" and "Controversies." "Absent Article III standing, a federal court does not have subject matter jurisdiction to address a plaintiff's claims, and they must be dismissed." Berg v. Obama, 586 F.3d 234, 242 (3d Cir. 2009) (internal quotation marks omitted). Moreover, "a plaintiff must demonstrate standing for each claim he seeks to press." DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 353 (2006). Standing as to one claim is simply not "communicative" across other separate claims for relief. Id.*fn12

The "irreducible constitutional minimum" of Article III standing entails three elements. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Those constitutional standing requirements are: "(1) an 'injury in fact'; (2) 'a causal connection between the injury and the conduct complained of-the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court'; and (3) a showing that it 'be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.'" N.J. Physicians, Inc. v. President of United States, 653 F.3d 234, 238 (3d Cir. 2011) (quoting Lujan, 504 U.S. at 560-61).

Of these three elements, Defendants here place only the injury-in-fact element at issue. The Third Circuit Court of Appeals has articulated the nature of an injury that is sufficient to confer Article III standing:

To establish injury in fact, a plaintiff must allege an injury that is both (1) 'concrete and particularized' and (2) 'actual or imminent, not conjectural or hypothetical.' Each of these definitional strands imposes unique constitutional requirements. An injury is "concrete" if it is "real,", or "distinct and palpable, as opposed to merely abstract," while an injury is sufficiently "particularized" if it "affect[s] the plaintiff in a personal and individual way." The second requirement-"actual or imminent, not conjectural or hypothetical"-makes plain that if a harm is not presently or "actual[ly]" occurring, the alleged future injury must be sufficiently "imminent." Imminence is "somewhat elastic," but requires, at the very least, that the plaintiffs "demonstrate a realistic danger of sustaining a direct injury." In other words, there must be a realistic chance-or a genuine probability-that a future injury will occur in order for that injury to be sufficiently imminent.

Id. at 238 (citations omitted).

The consideration of the injury-in-fact element bears particular significance because the nature of a party's injury "is relevant to the determination of whether she has 'alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues.'" Davis v. Passman, 442 U.S. 228 (1979) (quoting Baker v. Carr, 369 U.S. 186, 204 (1962)); see also Toll Bros., Inc. v. Township of Readington, 555 F.3d 131, 138 (3d Cir. 2009) ("While all three of these elements are constitutionally mandated, the injury-in-fact element is often determinative."). "To meet the standing requirements of Article III, '[a] plaintiff must allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief.' For our purposes, the italicized words in this quotation . . . are the key ones. [This Court] ha[s] consistently stressed that a plaintiff's complaint must establish that he has a 'personal stake' in the alleged dispute, and that the alleged injury suffered is particularized as to him." Raines, 521 U.S. at 818-19 (citations omitted). Accordingly, the Court's attention must turn to the named Plaintiffs to ask whether they have a personal stake sufficient to confer Article III standing based upon "their specific allegations and the relief which they seek." Goode v. City of Phila., 539 F.3d 311, 316 (3d Cir. 2008) (citing City of Los Angeles v. Lyons, 461 U.S. 95, 105-06 (1983)).

2. Named Plaintiffs' Article III Standing

Defendants argue that all named Plaintiffs in this case lack Article III standing to pursue the four states' antitrust claims "because they do not and cannot allege to have been injured under the laws of these jurisdictions." Defs.' Mot. at 5. As a fundamental premise of their argument, Defendants claim that "each of the relevant states requires at least some part of the alleged injury to have occurred in that particular state," id. at 6, and Defendants further posit that meeting this in-state injury requirement can only be accomplished either by an allegation that named Plaintiffs are residents of, or actually purchased eggs in, those states. Here, the IPSAC does neither.

While the Defendants' Motion only asks the Court to decide whether the named Plaintiffs have Article III standing as to the four specific state antitrust claims, their argument-by invoking elements of those claims and arguing that those elements impose certain in-state requirements as to injury-is pecking at similar, but conceptually distinct, questions. These questions ask whether Plaintiffs have a right to maintain a private enforcement action under the states' statutes, and whether the Plaintiffs have a cause of action-which, by way of example, may ask more specifically whether the alleged injury is legally and judicially cognizable. These inquiries go to issues of whether the states' statutes authorize these named Plaintiffs to sue, issues which are sometimes cloaked in terms such as "statutory standing" or "antitrust standing," and question whether the scope of the rights of action under the four states' antitrust statutes include the Plaintiffs' alleged injury.

The Supreme Court has drawn some distinctions among these concepts. In one opinion, the Court defined "standing" and "cause of action" as follows: standing is a question of whether a plaintiff is sufficiently advers[e] to a defendant to create an Art[icle] III case or controversy, or at least to overcome prudential limitations on federal-court jurisdiction; cause of action is a question of whether a particular plaintiff is a member of the class of litigants that may, as a matter of law, appropriately invoke the power of the court . . . .

Davis, 442 U.S. at 239 n.18 (citation omitted). The Court has generally described an issue of "statutory standing" as involving whether a plaintiff comes "within the 'zone of interests'" for which the cause of action was available." See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 97 (1998) (citing Nat'l R.R. Passenger Corp. v. Nat'l Assn. of R.R. Passengers,414 U.S. 453, 465 n.13 (1974)).*fn13 The Court has further clarified that "the merits inquiry [such as whether a private right of enforcement exists] and the statutory standing inquiry often 'overlap,'" and that the "question whether this plaintiff has a cause of action under the statute, and the question whether any plaintiff has a cause of action under the statute are closely connected-indeed, depending upon the asserted basis for lack of statutory standing, they are sometimes identical, so that it would be exceedingly artificial to draw a distinction between the two." Id. 97 n.2 (citation omitted). Nonetheless, questions of Article III standing are distinguishable from both concepts.

Indeed, it is necessary for the Court to distinguish Article III standing issues from "statutory standing" and cause of action issues because "the question whether a plaintiff states a claim for relief 'goes to the merits' in the typical case, not the justiciability of a dispute, and conflation of the two concepts can cause confusion." Bond v. United States, 131 S. Ct. 2355, 2362 (2011) (citation omitted); cf. Sullivan, 667 F.3d at 307 & n.35 ("Statutory standing [i.e., "the possession of a viable claim or right to relief, not to a jurisdictional requirement,"] is distinct from jurisdictional standing in that 'Article III standing is required to establish a justiciable case or controversy within the jurisdiction of the federal courts,' whereas 'lack of antitrust standing affects a plaintiff's ability to recover, but does not implicate the subject matter jurisdiction of the court.'" (quoting Gerlinger v. Inc., 526 F.3d 1253, 1256 (9th Cir. 2008)); id. at 349 n.15 (Jordan, J., dissenting) ("Whether a party has standing under Article III is a distinct inquiry from whether the party may assert a cause of action under state or federal law. . . . [T]he Supreme Court made clear that a party may have standing under Article III, but fail to assert a cause of action under state law.").

The Supreme Court's analysis continues:

It is firmly established in our cases that the absence of a valid (as opposed to arguable) cause of action does not implicate subject-matter jurisdiction, i.e., the courts' statutory or constitutional power to adjudicate the case. . . . '[J]urisdiction . . . is not defeated . . . by the possibility that the averments might fail to state a cause of action on which petitioners could actually recover.' Rather, the district court has jurisdiction if "the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another," unless the claim "clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous."

Steel Co., 523 U.S. at 89 (quoting Bell v. Hood, 327 U.S. 678, 682, 685 (1946) (citations omitted)). The Supreme Court has "criticized the implications of treating the validity of a cause of action as jurisdictional. . . . Under that approach, each element of every cause of action would have a legitimate claim to being a jurisdictional requirement-essentially eviscerating the distinction between the jurisdictional and merits inquiry (and requiring a court to dismiss a claim for lack of jurisdiction whenever the plaintiff does not prevail)." Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 80 (3d Cir. 2003) (citation omitted) (discussing Steel Co., 523 U.S. 83). An exception arises when a claim is "so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal controversy." Steel Co., 523 U.S. 83 (internal quotation marks omitted); see also Nesbit, 347 F.3d at 80.

Thus, even if Defendants are correct that the four states' statutes require an intrastate injury-either due to in-state residency or in-state purchase of eggs-such an argument is beside the point. An Article III standinginquiry simply does not require considering the elements of a state claim as "jurisdictional prerequisites." To inject the condition that Plaintiffs must satisfy certain elements of the state antitrust claims into a constitutional standing analysis would result in an impermissible out-of-the-box merits inquiry. "[T]he Article III requirement of remediable injury in fact . . . (except with regard to entirely frivolous claims) has nothing to do with the text of the statute relied upon." Steel Co., 523 U.S. at 97 n.2.*fn14

As it happens, the Article III constitutional standing criterion is met here as to the four states' antitrust claims. The IPSAC alleges that the named Plaintiffs paid artificially inflated prices for eggs because of the Defendants' conspiracy.*fn15 That is, the named Plaintiffs allegedly personally purchased eggs at artificially inflated prices-a monetary injury-which constitutes actual harm. Cf. Associated Gen. Contractors of Calif. v. Cal. State Council of Carpenters, 459 U.S. 519, 535 n.31 (1983) ("[T]he focus of the doctrine of 'antitrust standing' is somewhat different from that of standing as a constitutional doctrine. Harm to the antitrust plaintiff is sufficient to satisfy the constitutional standing requirement of injury in fact . . . ."). After all, "[m]onetary harm is a classic form of injury in fact. Indeed, it is often assumed without discussion." Danvers Motor Co., Inc. v. Ford Motor Co., 432 F.3d 286, 293 (3d Cir. 2005) (citation omitted). Furthermore, this injury purportedly was caused by the Defendants' alleged conspiratorial conduct which named Plaintiffs complain violated the four states' laws.

This injury can be redressed, if granted, by the relief sought by named Plaintiffs, which includes, inter alia, monetary damages to compensate for their financial harm as a result of conspiracy. See, e.g., IPSAC ¶¶ 9, C, D, E (describing relief requested).*fn16 Cf. D.R. Ward Constr. Co. v. Rohm and Haas Co., 470 F. Supp. 2d 485, 492-93 (E.D. Pa. 2006) (finding that constitutional standing to bring certain state antitrust claims was met because "Plaintiffs allege that they paid inflated prices for products with plastics additives due to an overcharge on plastics additives which was passed on to them from the intervening links within the distribution chain, that plaintiffs' overpayment for products containing plastic additives was caused by the conspiracy among defendants to charge inflated prices for plastics additives, and that judicial relief will compensate plaintiffs for these injuries, restoring plaintiffs to the position they were in prior to the price-fixing scheme").*fn17

Moreover, the named Plaintiffs' four state antitrust claims at issue here are not wholly immaterial, frivolous, or devoid of merit for purposes of constitutional standing. The defense argument that the named Plaintiffs lack injury sufficient to confer standing is contingent upon the claim that the four states' laws do not allow named Plaintiffs to recover for their alleged injuries arising from the Defendants' alleged conspiratorial conduct. Defendants argue that "each of the relevant states requires at least some part of the alleged injury to have occurred in that particular state," and Defendants cite to certain statutory language and one case in support of their construction of the laws. See Defs.' Mot. at 6 & n.3.

However, on their faces the four states' statutory provisions can plainly be construed to not require in-state residency or an in-state purchase, but rather only that some of the Defendants' conduct occurred, or the effects of which were felt, within the state-thereby violating the statute.*fn18 Indeed, when read literally, the language of these respective provisions authorizes broad private enforcement, and thereby can be read to afford relief to all persons whose injuries may have occurred outside of the state, but are causally related to an antitrust violation. As to these four statutes, Defendants fail to discount the existence of possible constructions of those statutes other than their own. They cite no legal authority to support their construction of the statutes, nor do they point to legal authority foreclosing alternative interpretations of those states' laws.

For example, under the Iowa Competition Law, "[t]he state or a person who is injured or threatened with injury by conduct prohibited under this chapter may bring suit" for various specified forms of relief.Iowa Code § 553.12. Such prohibited conduct includes a "contract, combination, or conspiracy between two or more persons shall not restrain or monopolize trade or commerce in a relevant market." Id. § 553.4. These provisions can be read to permit a broad class of persons to maintain a civil enforcement action so long as they suffer an injury resulting from a violation of the law. Upon an unadorned reading of the Competition Law, and contrary to the Defendants' position, a cognizable injury under the statute does not appear to be exclusively restricted to injuries of residents, or injuries sustained intrastate.

The North Dakota Antitrust Act contains similarly broad language: "[a] person threatened with injury or injured in that person's business or property by a violation of this chapter may bring an action for appropriate injunctive or other equitable relief, [and] damages sustained." N.D. Cent. Code § 51-08.1-08(2). The Act prohibits "[a] contract, combination, or conspiracy between two or more persons in restraint of, or to monopolize, trade or commerce in a relevant market." Id. § 51-08.1-02. As with the Iowa Competition Law, a cognizable injury does to the same subject.'" (quoting State v. Anderson, 693 N.W.2d 675, 681 (S.D. 2005)).

not appear to be restricted to residents' injuries, or injuries experienced due to transactions occurring within North Dakota's borders.

South Dakota's antitrust law also grants a private right of action for a person injured by a violation of that antitrust provision and does not contain statutory language that explicitly requires an intrastate injury. Under that law, "[a] person injured in his business or property by a violation of this chapter may bring an action for appropriate injunctive or other equitable relief, damages sustained and, as determined by the court, taxable costs and reasonable attorney's fees." See S.D. Codified Laws § 37-1-14.3. The law also provides: "A contract, combination, or conspiracy between two or more persons in restraint of trade or commerce any part of which is within this state is unlawful." Id. § 37-1-3.1 (emphasis added).

Furthermore, as to these three states' antitrust laws, there is a dearth of interpretative authority with respect to whether and to what extent, if any, there is an "intrastate" requirement as to a presumptive plaintiff's injury in order for that injury to be cognizable. With respect to the Iowa Competition Law specifically, one commentator notes that an "unusual feature of both Sections 4 and 5 of the Iowa Competition Law is their explicit reference to 'relevant market,' which is defined in Section 3 of the law to mean 'the geographical area of actual or potential competition in a line of commerce, all or any part of which is within this state.' Neither the phrase 'potential competition' nor the phrase 'within this state' is statutorily defined or judicially interpreted as yet . . . . [T]he latter may be a basis for restricting state jurisdiction." 1 ABA Section of Antitrust Law, State Antitrust Practice and Statutes, ch. 18-1, § 17.a. (4th ed. 2009) (emphasis added) (footnotes omitted).*fn19

The Mississippi antitrust law states: "[a]ny person, natural or artificial, injured or damaged by a trust and combine as herein defined, or by its effects direct or indirect, may recover all damages of every kind sustained by him or it and in addition a penalty of five hundred dollars ($500.00)." Miss. Code Ann. §75-21-9. The statute defines a "trust or combine," as "a combination, contract, understanding or agreement, expressed or implied, between two or more persons, corporations or firms or association of persons or between any one or more of either with one or more of the others, when inimical to public welfare and the effect of which would be . . . [t]o restrain trade." Id. §75-21-1. Like the other three previously discussed statutes, one plausible construction of this Mississippi statutory language does not require that cognizable injury be limited to residents' injuries or injuries suffered within the state.*fn20

In support of their construction of the Mississippi antitrust law, Defendants cite In re Microsoft Corporation Antitrust Litigation, No. MDL 1332, 2003 WL 22070561, at *1-2 (D. Md. Aug. 22, 2003), for the proposition that "under Mississippi law, following Standard Oil Co. of Ky. v. State, 65 So. 468, 471 (Miss. 1914), that in order for a claim to come within the scope of the Mississippi antitrust statute, a plaintiff must allege "at least some conduct . . . which was performed wholly intrastate." Defs.' Mot. at 6 n.3. However, this lone legal authority fails to buttress the Defendants' proposed construction of the law. As a starting point, the Defendants' characterization of Microsoft is erroneous. Indeed, the ellipses in the quote stand in the place of the words "by Microsoft." That is, the Microsoft Court determined that Mississippi requires some of the defendant's conductoffensive to the antitrust statute be "performed wholly intrastate." Moreover, the decision simply does nothing to support the Defendants' contention as to the permissible scope of a presumptive plaintiff's injuries for recovery under the law. Whether a defendant's conduct need be "performed wholly intrastate" is an entirely distinct issue from whether a plaintiff's injury need to have occurred in-state-i.e., where the effect of the conduct transpires. Defendants raise no legal authority other than Microsoft to support their construction of the law.

In sum, it appears that there is an absence of definitive legal authority as to whether vel non an extraterritorial injury that might be traced to an antitrust violation is cognizable under the Iowa, Mississippi, North Dakota, and South Dakota antitrust statutes. Either construction of those four laws is possible and neither can be said to be strained or without appropriate attribute. Indeed, some "[s]tate antitrust laws can extend to transactions involving interstate commerce" and "some state statutes, or judicial interpretations of those provisions may expressly address the extraterritorial effects of a state's antitrust law." 1 ABA Section of Antitrust Law, Antitrust Law Developments, 625 (6th ed. 2007). Moreover, the existence of these statutory construction issues certainly suggests that the named Plaintiffs' claims pursuant to these states' antitrust laws cannot be deemed foreclosed by case law, or otherwise completely devoid of merit. See Nesbit, 347 F.3d at 80 ("'[D]ismissal for lack of jurisdiction is not appropriate merely because the legal theory alleged is probably false, but only because the right claimed is so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal controversy.'" (quoting Growth Horizons, Inc. v. Delaware Cnty., 983 F.2d 1277, 1280-81 (3d Cir.1993) (internal quotation marks omitted). And, accordingly, the Plaintiffs have Article III standing to bring these claims, and the Court denies the Defendants' motion in this respect.*fn21

B. Utah Antitrust Claim*fn22

The Court concludes that it is appropriate to dismiss the Plaintiffs' Utah antitrust claims arising from damages that occurred before May 1, 2006. According to Defendants, May 1, 2006 is the effective date of an amendment to the Utah Antitrust Act-specifically to amend Utah Code Ann. § 76-10-918(1)-which authorized indirect purchasers to recover for violations of the Act. Such statutory provisions are sometimes known in antitrust parlance as an"Illinois Brick repealer" amendment because such plaintiffs could not, or were not explicitly authorized by law to, recover prior to the amendment. Several courts have observed the nature of the Utah amendment is akin to an Illinois Brick repealer. See California v. Infineon Techs. AG, No. C 06- 4333, 2008 WL 1766775, at *4-5 (N.D. Cal. Apr. 15, 2008) (concluding that the amendment to the Utah Antitrust Act was an Illinois Brick repealer and "that indirect purchaser standing was not available prior to 2006"); In re Static Random Access Memory (SRAM) Antitrust Litig., 2010 WL 5094289, at *6 (N.D. Cal. Dec. 8, 2010) (reaching the same conclusion). In Utah, a "statute is not to be applied retroactively unless the statute expressly declares that it operates retroactively." Goebel v. Salt Lake City S. R.R. Co., 104 P.3d 1185, 1197-98 (Utah 2004). Defendants contend that because the Utah Antitrust Act did not permit indirect purchasers to recover for antitrust injuries prior to the amendment's effective date, dismissal of the Plaintiffs' claims for damages suffered prior to May 1, 2006 is warranted.

Plaintiffs do not dispute the Defendants' characterization of Utah law in any of the aforementioned respects; nor do they dispute the cited legal authority. Indeed, Plaintiffs do not raise any challenge to the defense contention that Plaintiffs cannot recover for claims arising from damages accruing before May 1, 2006 under the Utah Antitrust Act. Accordingly, the Court determines that it is appropriate to grant the Defendants' motion to dismiss the Plaintiffs' claims under the Utah Antitrust Act arising from damages that occurred prior to May 1, 2006.*fn23

C. Scope of the IPSAC's Definition of "Egg Products"

Defendants raise a challenge to the scope of the IPSAC's definition of "egg products" with respect to "manufactured products incorporating processed eggs such as baked goods and mayonnaise" on the basis of Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519 (1983), and its progeny. The IPSAC defines egg products as "either shell eggs substitutes such as liquid, frozen, and dry eggs, or manufactured products incorporating processed eggs such as baked goods and mayonnaise." IPSAC ¶ 124. Defendants seek to partially dismiss certain of the Plaintiffs' federal and state antitrust claims with respect to alleged injuries relating to purchases of manufactured products incorporating processed eggs.

In response, Plaintiffs agree that the IPSAC definition of egg products is "overly inclusive" by including "manufactured products incorporating processed eggs such as baked goods and mayonnaise," and further "agree to limit the scope of egg products in this action to 'shell substitutes such as liquid, frozen, and dry eggs,' the portion of the definition of egg products set forth in the [IPSAC] that Defendants do not challenge." Pls.' Mot. at 62. Given the Plaintiffs' agreement to narrow the definition, the Court grants without prejudice the Defendants' Motion as to this issue. Plaintiffs may seek leave to proceed with their proposed amendment with the appropriate motion or equivalent procedure to achieve pleading precision on this point as by for example, stipulation, and the Court expects that the amendment or stipulation will be respectful of the discussions among counsel on this point.

D. Separate Egg Products Conspiracy

Defendants argue that Plaintiffs have alleged a separate conspiracy relating to egg products which should be dismissed for failure to state a claim. However, because this challenge hinges-at least to some degree-upon the definition of "egg products" in the IPSAC, and given that the definition of egg products will be amended pursuant to Plaintiffs' aforementioned agreement to do so, it would be improvident for the Court to consider this argument at this time in the absence of the actual amendment or stipulation. Accordingly, the Court denies the Motion in this respect without prejudice to Defendants to raise these or similar arguments based upon the amended definition of "egg products," if the circumstances so warrant.*fn24

E. State Consumer Protection Claims

Defendants move to dismiss all of the Plaintiffs' alleged consumer protection claims under nine states' laws: California, the District of Columbia, Florida, Kansas, Massachusetts, New Mexico, New York, North Carolina, and West Virginia.

1. California

Defendants mount a dual challenge to the Plaintiffs' claim under theCalifornia Unfair Competition Law ("UCL"). First, Defendants argue that the alleged claim fails to satisfy both Federal Rules of Civil Procedure 8 and 9(b) because the IPSAC does not contain adequate factual allegations of deceptive conduct and instead only relies on alleged antitrust violations.Second, Defendants contend that, even if the federal pleading standards are met, the IPSAC provides no grounds for the Plaintiffs' claim for restitution under the UCL.

The UCL prohibits engaging in "unfair competition," which is defined, inter alia, as "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Cal. Bus. & Prof. Code § 17200. "[A] person who has suffered injury in fact and has lost money or property as a result of the unfair competition" may bring suit for such a violation. Id. § 17204; see also id. § 17203; Californians for Disability Rights v. Mervy's, LLC, 138 P.3d 207, 210 (Cal. 2006) (explaining how the Section 17204 "prescribes who may sue to enforce the UCL"); Kwikset Corp. v. Superior Court, 246 P.3d 877, 885 (Cal. 2011) ("To satisfy the narrower standing requirements . . . , a party must now (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim." (emphasis in original)). Remedies include injunctive relief, civil penalties, and those remedies that "may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition." Cal. Bus. & Prof. Code § 17203; see also In re Tobacco II Cases, 207 P.3d 20, 29 (Cal. 2009) ("[P]revailing plaintiffs are generally limited to injunctive relief and restitution." (quoting Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 943 (Cal. 2003)).*fn25

Defendants argue that Plaintiffs cannot satisfy the pleading standards in alleging a UCL claim because Plaintiffs "are clearly attempting to restyle a supply control theory into [a] consumer fraud claim[]" by "dress[ing] their antitrust case in the clothes of a consumer fraud claim" and that certain allegations in the IPSAC of fraudulent conduct "are insufficient to comply with Federal Rule 8." Defs.' Mot at 22-23. Plaintiffs counter by arguing that the Defendants' alleged antitrust violations are the grounds for their UCL claim, and that the requisite alleged antitrust violation is the unlawful, unfair or fraudulent business act or practice.

Indeed, antitrust violations can constitute "unfair competition" under the UCL. See Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC, 737 F. Supp. 2d 380, 406 (E.D. Pa. 2010) (hereinafter "SMW") (finding that defendants "by filing sham lawsuits designed to prevent the entry of generic alternatives into the market for Wellbutrin SR," which plaintiffs allege to be "an unfair and illegal business practice," is "anti-competitive conduct [that] falls under the broad scope of the CUCL"); see also Korea Supply, 63 P.3d at 943 ("Section 17200 'borrows' violations from other laws by making them independently actionable as unfair competitive practices," and allows "'a practice [to be] deemed unfair even if not specifically proscribed by some other law.'" (quoting Cel--Tech Commc'ns Inc. v. Los Angeles Cellular Tel. Co., 973 P.2d 527, 540 (Cal. 1999)); 1 State Antitrust Practice, supra, ch. 6-61 to -62, §§ 1.a., l.c. (describing the UCL to "operate[] as a consumer protection law with antitrust applications" and that "claims under the UCL often accompany, or arise out of, alleged antitrust violations"). Defendants do not directly dispute that the UCL prohibits antitrust violations. Instead, they contend, more generically, that some consumer fraud causes of action "require Plaintiffs to plead more than simply the elements of an antitrust violation," such as deceptive conduct and reliance. Defs.' Reply at 8. Be that as it may, the Defendants do not demonstrate that such circumstances exist here, and they do not identify such additional elements for a UCL claim arising from an alleged antitrust violation.

The Court agrees that it is an analytically sensible and entirely fair operation of pleading standards and substantive law to conclude that the IPSAC's allegations giving rise to alleged antitrust violations also give rise to the Plaintiffs' UCL claim. Plaintiffs have alleged that they suffered injury in fact and lost money or property due to the Defendants' practices of "unfair competition." See, e.g., IPSAC ¶ 332 ("As a direct and proximate result of Defendants' unlawful practices, including combinations and contracts to restrain trade and allocate relevant markets, Plaintiff [and class members] have been injured in their business and/or property in that they paid more for shell eggs and egg products than they otherwise would have paid in the absence of Defendants' unlawful conduct."). The IPSAC alleges, supported by other factually specific allegations concerning the contours of the conspiracy, that Defendants committed "unlawful, unfair or fraudulent business act[s] or practices[s] in violation of" the UCL by "engaging in a continuing unlawful trust and concert of, the substantial terms of which were to fix, raise, stabilize, and maintain prices of, allocate markets for, and restrain and manipulate the supply of shell eggs and egg products at supra-competitive levels." IPSAC ¶¶ 329-30. More specifically, such conduct entails the Defendants purportedly advancing the goals of their antitrust conspiracy through eight alleged "collective actions," which included various flock reduction and early molting initiatives, and actions taken in connection with the United Egg Producers Certification Program and the United States Egg Marketers export program. Whatever else it may be, if it occurred, the unlawful price-fixing alleged in the IPSAC surely would constitute unfair competition within the meaning of the UCL.

Defendants have not contended that the IPSAC fails to allege an antitrust violation for purposes of bringing a UCL claim (except with respect to injuries relating to certain egg products), nor have they raised any arguments that Plaintiffs have failed to sufficiently allege their separate California antitrust claim under Section 16720, California Business and Professions Code. See IPSAC ¶¶ 325-28. Thus, the Defendants' argument does not support the conclusion that Plaintiffs have failed to meet the Rule 8 pleading requirements as to their UCL claim.

Contrary to the Defendants' contention otherwise, case law from the Third Circuit does not require that the heightened pleading standard under Rule 9(b) be applied to the Plaintiffs' UCL claim. This particular alleged violation of the UCL is simply not grounded in fraud nor does it "sound in fraud." The Plaintiffs' UCL claim arises from the alleged conduct-namely, the alleged conspiracy to reduce the supply of eggs as allegedly advanced by the eight collective actions-which, as alleged, is not based on fraudulent acts.*fn26 As such, the UCL claim does not entirely rely on a course of fraudulent conduct, in contrast to the Third Circuit's Lum case, so as to require the application of Rule 9(b).

As to the Defendants' second challenge to the Plaintiffs' UCL claim, the Court concludes that Plaintiffs have sufficiently alleged their eligibility for seeking restitution. The California Supreme Court has explained:

Restitution under section 17203 [of the UCL] is confined to restoration of any interest in "money or property, real or personal, which may have been acquired by means of such unfair competition." (Italics added.) A restitution order against a defendant thus requires both that money or property have been lost by a plaintiff, on the one hand, and that it have been acquired by a defendant, on the other. . . . But the economic injury that an unfair business practice occasions may often involve a loss by the plaintiff without any corresponding gain by the defendant, such as, for example, a diminishment in the value of some asset a plaintiff possesses. (See, Inc. v. Gradient Analytics, Inc. (2007) 151 Cal. App. 4th 688, 716 [a plaintiff who alleged that a defendant's defamatory statements diminished its assets and reduced its market capitalization adequately alleged UCL standing]; Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal. App. 4th 1228, 1240, 1262 [a plaintiff whose home and car were vandalized by defendant animal rights protesters adequately alleged lost property under Prop. 64].)

Kwikset Corp., 246 P.3d at 895 (parentheticals and brackets in original).

Thus, the issue at hand is whether Plaintiffs have connected their alleged loss-which they claim is the loss of "money by paying more than they should have for eggs as a result of Defendants' unfair method of competition," Pls.' Resp. at 24-with a "corresponding gain" by and of the Defendants. Defendants argue that while such a gain might be demonstrated by alleging that Plaintiffs "purchased eggs originating from any of the Defendants," Plaintiffs have failed to do so. Defs.' Mot. at 33. For example, an allegation that a plaintiff "paid money to a retailer to purchase [defendant] Microsoft's product based on false or misleading statements on the product package" would demonstrate eligibility for restitution because it can be inferred that the plaintiffs' payment for the product to the retailer benefitted Microsoft. Shersher v. Superior Court, 65 Cal. Rptr. 3d 634, 636 (Cal. Ct. App. 2007). Presumably, Defendants here argue that these Plaintiffs have not met the Shersher standards.

However, legal authority also exists to propose that a "corresponding gain" may be able to be a more broadly-defined benefit conferred upon the defendant by a plaintiff. Troyk v. Farmers Group, Inc., 90 Cal. Rptr. 3d 589 (Cal. Ct. App. 2009), reflects reasoning that restitution under the UCL applies traditional restitution principles:

" 'A person who has been unjustly enriched at the expense of another is required to make restitution to the other.' (Rest., Restitution, § 1.) 'A person is enriched if he receives a benefit at another's expense. (Id., com. a, p. 12.) The term "benefit" "denotes any form of advantage." ( Id., com. b, p. 12.) Thus, a benefit is conferred not only when one adds to the property of another, but also when one saves the other from expense or loss. Even when a person has received a benefit from another, he is required to make restitution "only if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for him to retain it." ( Id., com. c, p. 13.)' ( Ghirardo v. Antonioli [924 P.2d 996 (Cal. 1996)]) 'For a benefit to be conferred, it is not essential that money be paid directly to the recipient by the party seeking restitution.' (California Federal Bank v. Matreyek (1992) 8 Cal. App. 4th 125, 132 . . . .)" . . . .

Id. at 617 (quoting County of Solano v. Vallejo Redevelopment Agency, 90 Cal. Rptr. 2d 41, ...

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