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In re Processed Egg Products Antitrust Litigation

United States District Court, Third Circuit

August 23, 2013

IN RE PROCESSED EGG PRODUCTS ANTITRUST LITIGATION, MDL 2002 THIS DOCUMENT APPLIES TO: ALL DIRECT PURCHASER PLAINTIFF AND DIRECT ACTION PLAINTIFF ACTIONS

MEMORANDUM

GENE E.K. PRATTER United States District Judge

The premise of this multidistrict litigation is the proposition that certain egg producers violated federal antitrust law by conspiring to restrict the supply of domestically produced eggs. The direct purchaser plaintiffs (“DPPs”) have brought a putative class action against various defendant producers, while the direct action plaintiffs (“DAPs”) are pursuing non-class relief against the Defendants. The Defendants have moved under Federal Rules of Civil Procedure 12(b)(6) and 9(b) to partially dismiss the DPPs’ and DAPs’ claims for damages to the extent that those claims accrued at a time that makes them now barred by the applicable statute of limitations. For the reasons set forth below, the motion is granted in part and denied in part.

I. Procedural History

The issues raised in the pending motion are, excuse the expression, no spring chickens with respect to this litigation. On November 30, 2011, after considering the parties’ briefing and holding oral argument, the Court partially dismissed the DPPs’ claims without prejudice based on the Clayton Act’s four-year statute of limitations. On December 20, 2012, following its consideration of additional briefing, the Court reached the same decision with respect to the claims brought by the DAPs.

On January 4, 2013, having had the opportunity to consider both of the Court’s decisions, the DPPs filed their third amended complaint. The DAPs followed suit with their own amended complaints between March 6, 2013 and March 8, 2013.[1] On April 15, 2013, the Defendants filed an omnibus motion to partially dismiss the claims of the DPPs and the DAPs. This pending motion and the opposing papers cover much of the same ground that the Court addressed in its prior opinions. Having reviewed the latest briefing of the parties, the Court resolves the renewed or remaining statute of limitations questions.

II. Discussion

A. Rule 9(b) and Judicial Estoppel

1. Rule 9(b)

The Court’s prior opinions included extensive discussions of Federal Rules of Civil Procedure 12(b)(6) and 9(b), and those opinions are incorporated by reference here for all relevant purposes, including the applicable pleading standards. See In re Processed Egg Prods. Antitrust Litig. (Eggs I), No. 08-md-2002, 2011 WL 5980001 (E.D. Pa. Nov. 30, 2011); see also In re Processed Egg Prods. Antitrust Litig. (Eggs II), No. 08-md-2002, 2012 WL 6645533 (E.D. Pa. Dec. 20, 2012). However, before analyzing the sufficiency of the plaintiffs’ latest allegations, the Court will address one still-disputed issue pertaining to Rule 9(b).

In its prior opinions, the Court noted that “in pleading fraudulent concealment the strictures of Rule 9(b) apply.” See Eggs I, 2011 WL 5980001, at *4. The DPPs, however, despite formerly conceding that Rule 9(b) governed their fraudulent concealment allegations, now contend that those allegations only need to meet the strictures of Rule 8, and not the demands of Rule 9(b) analysis. See Docket No. 827 at 8 at n.1. The Court disagrees. Third Circuit appellate precedent requires that a plaintiff comply with Rule 9(b) in pleading that a defendant fraudulently concealed a cause of action. See Byrnes v. DeBolt Transfer, Inc., 741 F.2d 620, 626 (3d Cir. 1984) (“We agree, of course, that fraud, and thus fraudulent concealment, must be pleaded with particularity.”). The Court perceives no reason to reconsider its previous decision regarding the applicability of Rule 9(b) and the requirement that Plaintiffs plead fraudulent concealment, including “the due diligence factor of the fraudulent concealment inquiry[, ] with sufficient particularity.” In re Elec. Carbon Prods. Antitrust Litig., 333 F.Supp.2d 303, 317 (D.N.J. 2004).

2. Judicial Estoppel

The Defendants contend that judicial estoppel precludes the Plaintiffs from removing allegations from their prior complaints. The Third Circuit Court of Appeals has held that judicial estoppel may apply if (i) “the party to be estopped [has] taken two positions that are irreconcilably inconsistent;” (ii) the change in positions occurred “in bad faith . . . with intent to play fast and loose with the court;” and (iii) “no lesser sanction would adequately remedy the damage done by the litigant’s misconduct.” See Montrose Med. Grp. Participating Savings Plan v. Bulger, 243 F.3d 773, 779-80 (3d Cir. 2001) (citations and quotations omitted).[2] The decision as to whether to apply judicial estoppel against a litigant rests within the sound discretion of a district court. See In re Kane, 628 F.3d 631, 637 (3d Cir. 2010). However, the Court’s discretion on this issue is guided by Third Circuit case law stating that judicial estoppel is an “extreme remedy, ” see Chao v. Roy’s Constr., Inc., 517 F.3d 180, 186 n.5 (3d Cir. 2008), and holding that it “should only be applied to avoid a miscarriage of justice, ” see Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. GM, 337 F.3d 314, 319 (3d Cir. 2003).

In this case, the Court must decide if judicial estoppel binds the plaintiffs to prior allegations regarding Capper-Volstead immunity. For instance, in their Second Amended Complaint the DPPs alleged that the “Defendants and their co-conspirators . . . falsely claimed that their activities were cloaked under the protections of the Capper-Volstead Act.” See Docket No. 221 at ¶ 510. However, in their current complaint the DPPs allege that the United Egg Producers did not represent that the UEP Certified Program was subject to antitrust immunity under the Capper-Volstead Act. See Docket No. 779 at ¶ 528. The Defendants claim that such allegations are sufficiently inconsistent to trigger judicial estoppel.

In Montrose Medical, the Third Circuit Court of Appeals held that a district court abused its discretion by applying judicial estoppel against two plaintiffs. See 243 F.3d at 778. The district court dismissed the plaintiffs’ claim because they denied that their retirement plan was subject to ERISA in earlier litigation, but claimed that the plan was covered by ERISA in a subsequent case. See Id . at 781. The Third Circuit reversed and held that judicial estoppel was inapposite because the first court never accepted or adopted the plaintiffs’ initial position. Seeid. at 782. Significantly for present purposes, the Third Circuit also noted that ...


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