United States District Court, E.D. Pennsylvania
IN RE MUSHROOM DIRECT PURCHASER ANTITRUST LITIGATION THIS DOCUMENT RELATES TO: ALL ACTIONS
November 22, 2016, in conjunction with my decision to certify
a class in this long-running antitrust litigation, I granted
certain defendants' motion seeking summary judgment with
respect to the claims of plaintiff Diversified Foods and
Seasonings, Inc. See Dkt. No. 779 at 30-37
(discussion of Diversified motion in class certification
opinion), Dkt. No. 780 (class certification order), Dkt. No.
791 (redacted class certification opinion and order). A group
of plaintiffs who identify themselves as the “Direct
Purchaser Class Plaintiffs” now seek reconsideration of
that decision pursuant to Local Rule 7.1(g). Before me are:
plaintiffs' motion for reconsideration of the Court's
dismissal of class representative Diversified Foods &
Seasonings, Inc. (Dkt. No. 787), certain defendants'
opposition to the motion for reconsideration (Dkt. No. 799)
and plaintiffs' reply (Dkt. No. 803). As is further set
forth below, I find that plaintiffs have not met their burden
on reconsideration and I will deny their motion.
Civil Rule 7.1(g) allows parties to file motions for
reconsideration. E.D. Pa. Loc.
R. 7.1(g). On a motion for reconsideration, a judgment may be
altered or amended if the party seeking reconsideration shows
at least one of the following grounds: (1) an intervening
change in the controlling law; (2) the availability of new
evidence that was not available when the court granted the
motion for summary judgment; or (3) the need to correct a
clear error of law or fact or to prevent manifest injustice.
Max's Seafood Cafe v. Quinteros, 176 F.3d 669,
677 (3d Cir. 1999), citing Harsco Corp. v.
Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985).
“[T]he burden is on the movant . . . .”
Egervary v. Rooney, 80 F.Supp.2d 491, 506 (E.D. Pa.
2000) (citation omitted). A finding of clear error requires a
“‘definite and firm conviction that a mistake has
been committed.'” Johnson v. SmithKline Beecham
Corp., 724 F.3d 337, 345 (3d Cir. 2013), quoting
Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844,
855 (1982). “[A] motion for reconsideration addresses
only factual and legal matters that the Court may have
overlooked. [It is improper] to ‘ask the Court to
rethink what [it] had already thought through - rightly or
wrongly.'” Glendon Energy Co. v. Borough of
Glendon, 836 F.Supp. 1109, 1122 (E.D. Pa. 1993)
(citation omitted). “Because of the interest in
finality . . . courts should grant motions for
reconsideration sparingly.” Rottmund v.
Cont'l Assurance Co., 813 F.Supp. 1104, 1107 (E.D.
granted summary judgment in favor of certain defendants with
respect to Diversified's claims, I found that plaintiffs
had “not established that a genuine dispute remains
with respect to the question of whether Diversified has
antitrust standing under Illinois
Brick.”Dkt. No. 779 at 36. Pursuant to
Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977),
there is a “general rule that only direct purchasers
from antitrust violators may recover damages in antitrust
suits.” Howard Hess Dental Labs., Inc. v. Dentsply
Intern., Inc. (Hess I), 424 F.3d 363, 369 (3d Cir.
2005); see McCarthy v. Recordex Serv., Inc., 80 F.3d
842, 847-48 (3d Cir. 1996) (“[T]he [Illinois
Brick] Court . . . enunciat[ed] a bright-line rule that
only the purchaser immediately downstream from the alleged
monopolist may bring an antitrust action . . . .”).
“Illinois Brick's direct purchaser rule
seeks to counteract ‘the difficulty of analyzing
pricing decisions, the risk of multiple liability for
defendants, and the weakening of private antitrust
enforcement that might result from splitting damages for
overcharges among direct and indirect purchasers.'”
Wallach v. Eaton Corp., 837 F.3d 356, 365 (3d Cir.
2016), quoting Gulfstream III Assocs. v. Gulfstream
Aerospace Corp., 995 F.2d 425, 439 (3d Cir. 1993)
(Greenberg, J., concurring and speaking for the majority). In
the Third Circuit, indirect or secondary purchasers may still
sue under the antitrust laws if they can establish one of
three possible exceptions to the Illinois Brick
direct purchaser rule: (1) a “cost-plus”
exception, which is not relevant here, (2) a
“co-conspirator” exception and (3) an
“owned or controlled” exception. See In re:
Domestic Drywall Antitrust Litig., No. 13-2437, 2016 WL
3769680, at *4 (E.D. Pa. July 13, 2016), citing Merican,
Inc. v. Caterpillar Tractor Co., 713 F.2d 958, 968 n.22
(3d Cir. 1983) and Howard Hess Dental Labs, Inc. v.
Dentsply Int'l, Inc. (Hess II), 602 F.3d 237, 258-59
(3d Cir. 2010).
summary judgment, certain defendants argued that Diversified
was “an indirect purchaser, rather than a direct
purchaser of fresh agaricus mushrooms, having purchased all
of its fresh agaricus mushrooms from one or more distributors
of Defendant Southmill Mushroom Sales, Inc ..... ” Dkt.
No. 441 at 10; see also id. at 24-25
(“Diversified purchased all of its fresh agaricus
mushrooms from . . . South Mill of New Orleans.”).
Plaintiffs responded that “[b]ecause Diversified was
the first purchaser to purchase at a price fixed by the EMMC,
its claims do not involve any proof of passed-on damages of
the kind barred by Illinois Brick.” Dkt. No.
457 at 12. I held that I was “not persuaded that
Illinois Brick does not apply to bar
Diversified's claims simply because the EMMC fixed
mushroom distribution prices instead of the prices for
mushrooms sold by growers to distributors, ” Dkt. No.
779 at 31, and thus continued to consider whether any of the
relevant exceptions to the Illinois Brick rule would
permit Diversified's claims to proceed. I found that
Diversified could not rely on the co-conspirator exception
because South Mill of New Orleans is not named as a defendant
in this litigation. Dkt. No. 779 at 32. I also found that
“[o]n the record before me, a reasonable jury could not
find that the owns or controls exception to Illinois
Brick should apply to permit Diversified's claims to
proceed, ” id. at 36, citing my previous
determination that “Kaolin/South Mill and its
distribution entities are separate decisionmakers pursuing
separate economic interests as is evidenced by [a] suit
between them, ” In re Mushroom, 54 F.Supp.3d
382, 389 (E.D. Pa. 2014); see Dkt. No. 441 at 25.
reconsideration, plaintiffs argue that “[b]ecause of
the cursory briefing that the Illinois Brick issue
received, [they] believe that the Court may have overlooked
key Third Circuit precedent . . . .” Dkt. No. 797-1 at
ECF p. 7. Specifically, plaintiffs argue that in dismissing
Diversified's claim, the Court did not consider In re
Lower Lake Erie Iron Ore Antitrust Litigation, 998 F.2d
1144 (3d Cir. 1993) or In re Modafinil Antitrust
Litigation, 837 F.3d 238 (3d Cir. 2016). Dkt. No. 787-1
at ECF p. 4. Plaintiffs argue that Lower Lake Erie
and Modafinil “make clear that when
defendants' conduct limits the supply of goods or
services to the market . . . the market participants that are
most directly impacted by the conduct have a right to sue for
damages even if they can be characterized as indirect
purchasers.” Dkt. No. 787-1 at ECF p. 7. They also
argue that Lower Lake Erie and Modafinil
support “their argument that Illinois Brick
does not operate to bar non-pass on damage theories.”
Dkt. No. 787-1 at ECF p. 7.
defendants respond that they “and other defendants have
raised Illinois Brick on numerous occasions, ”
Dkt. No. 799 at ECF p. 8, and “that Plaintiffs have had
multiple opportunities over the years to raise their
arguments, ” leaving “the Court . . . well within
its discretion to refuse Plaintiffs one more bite at the
apple.” Id. at 9 (internal quotation omitted).
They note that plaintiffs never previously cited either
Lower Lake Erie, or Modafinil to the Court and
contend that neither decision “provides any reason to
question the Court's decision” to grant summary
judgment in their favor with respect to Diversified's
claims. Dkt. No. 799 at ECF p. 5-6. They also argue that the
Court's prior “analysis was in keeping with Third
Circuit precedent declaring that Illinois Brick must
be applied by looking to the ‘economic substance'
or the ‘mechanics of the transactions' between the
upstream and downstream entities.” Id. at ECF
p. 6, citing Warren Gen. Hosp. v. Amgen, Inc., 643
F.3d 77, 88 (3d Cir. 2011).
I were to decide to “reconsider” an argument
which was not squarely before me when I rendered my prior
decision, neither Lower Lake Erie nor
Modafinil persuade me that Diversified should be
permitted to proceed with its claims in this litigation.
Plaintiffs argue that Lower Lake Erie and
Modafinil stand for the proposition that “the
key question under the direct purchaser rule is who
‘bore the brunt of the increased costs.'”
Dkt. No. 787-1 at ECF p. 9. They argue that the Court of
Appeals has held that Illinois Brick does not
“announc[e] a strict prohibition against recovery by
indirect purchasers.” Dkt. No. 778-1 at ECF p. 8,
quoting Lower Lake Erie, 998 F.2d at 1167 n.21.
Plaintiffs contend that Lower Lake Erie and
Modafinil show that “Illinois Brick
is not about the nature of the distributors'
‘affiliations' [with the growers], ” but
rather is “about the nature of the plaintiffs'
damage claims and the party most directly injured by
defendants' conduct.” Dkt. No. 787-1 at ECF p. 8.
Plaintiffs argue that Diversified has antitrust standing
because it “paid the fixed price set by the EMMC”
and because “[n]o other entity in the distribution
chain was more directly injured by the EMMC's
conduct.” Dkt. No. 787-1 at ECF p. 10. In response,
certain defendants argue that the “‘most directly
injured' test . . . contradicts a wealth of Third Circuit
case law consistently applying Illinois Brick as a
bright line test that looks to the nature of the upstream
transactions, not the downstream effect on the
plaintiff.” Dkt. No. 799 at ECF p. 12. They argue that
“Lower Lake Erie cannot be interpreted as an
end-run around Illinois Brick's bright line
rule.” Id. at ECF p. 10. Certain defendants
also argue that Modafinil does not apply here
because “it was not a price-fixing or a supply
reduction case, but a ‘market exclusion'
case.” Id. at ECF p. 14. For the following
reasons I agree with certain defendants that neither of the
cases cited by plaintiffs warrant reconsideration of my prior
Court of Appeals explained in Merican, Inc. v.
Caterpillar Tractor Co., “[t]he issue [under
Illinois Brick] is not whether Appellees have
sustained injuries too remote to give them standing or
whether they are they are the direct targets of an alleged
conspiracy, but rather whether they are in the class of
persons considered to be injured in their business or
property under section 4 [of the Clayton Act] by an antitrust
violation.” 713 F.2d 958, 966 (3d Cir. 1983). Under
Illinois Brick, “a district court must focus
on the possibility of duplicative recovery and the potential
for overly-complex damage claims if a damage suit is
allowed.” Id. In Kansas v. UtiliCorp
United, Inc., the Supreme Court explained that
[t]he rationales underlying Hanover Shoe and
Illinois Brick will not apply with equal force in
all cases. We nonetheless believe that ample justification
exists for our stated decision not to ‘carve out
exceptions to the [direct purchaser] rule for particular
types of markets.' . . . The possibility of allowing an