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In re: Processed Egg products Antitrust Litigation

United States District Court, E.D. Pennsylvania

August 14, 2017

IN RE PROCESSED EGG PRODUCTS ANTITRUST LITIGATION THIS DOCUMENT APPLIES TO ALL DIRECT PURCHASER ACTIONS

         MULTIDISTRICT LITIGATION

          MEMORANDUM

          GENE E. K. PRATTER United States District Judge

         I. Introduction

         Undeterred by the Third Circuit Court of Appeals' denial of their Rule 23(f) petition to appeal the Court's certification of the Direct Purchaser Plaintiffs' Class, Defendant egg producers seek to decertify the Direct Purchaser Plaintiffs' Class. Defendants primarily contend that "three seminal events"-two of which occurred prior to the Court's initial ruling-demand decertification. The Court disagrees. After reviewing the parties' submissions and hearing oral argument, the Court denies the motion to decertify the Direct Purchaser Plaintiffs' Class.

         II. Background

         A summary of the relevant factual background and the class certification standard under Rule 23 appears, in detail, in the Court's opinion granting certification for the Direct Purchaser Plaintiff Shell Egg Class. In re Processed Egg Products Antitrust Litig., No. 08-MD-2002, 2015 WL 5610834 (E.D. Pa. Sept. 21, 2015), opinion amended and superseded by In re Processed Egg Products Antitrust Litig, No. 08-MD-2002, 2015 WL 7067790 (E.D. Pa. Nov. 12, 2015) (hereinafter "Class Cert. I at"). It is not necessary to rehash that information here, except to the extent now of challenges to specific issues addressed, and observations made, in the Class Cert I opinion.

         In Class Cert I, the Court granted in part the Direct Purchaser Plaintiffs' (DPPs) motion for class certification and certified a class of shell egg direct purchasers, finding that the shell egg subclass satisfied Rule 23's requirements. A party seeking class certification must show that the prerequisites of Rule 23(a) are met: numerosity, commonality, typicality, adequacy and ascertainability. Fed.R.Civ.P. 23(a). Of Rule 23(a)'s requirements, typicality and adequacy were the most hotly contested. The Court ultimately rejected Defendants' arguments that differences in pricing or purchasing arrangements, potential individualized defenses, and purported insufficiencies with class representatives precluded a finding of typicality and adequacy. See Class Cert I at 179-80.

         A class must also show how it satisfies at least one of Rule 23(b)'s standards. The Court concluded in Class Cert I that the shell egg subclass met Rule 23(b)(3)'s "predominance" and "superiority" requirements. The Court expended most of its breath in Class Cert Ion Rule 23(b)(3)'s predominance requirement and waded into the evidence put forth by the Plaintiffs' expert, Dr. Gordon Rausser.

         At the certification stage, Defendants had argued that the Supreme Court's decision in Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013), commands that Plaintiffs must first measure the decrease in supply and then measure the effect on the price. The Court declined to adopt such a broad view of Comcast. It distinguished Dr. Rausser's model from the model at issue in Comcast because this case was in a different posture. None of the alleged means of reducing the supply of eggs had been found inappropriate for class treatment and Defendants had not challenged that "any disaggregated part of the alleged conspiracy should be found lawful or otherwise incapable of common proof." Class Cert I at 192. However, the Court noted at the time that while not just any adverse ruling would threaten Dr. Rausser's model, the model could face a Comcast problem "if (a) certain conduct were found to have occurred; and (b) that conduct had an impact on the price of eggs; but (c) that conduct was not legally cognizable vis-a-vis the class." Class Cert I at 192 n.15.

         While the Court expressed some reservations about whether Dr. Rausser's methodologies were bulletproof, it ultimately concluded that "Plaintiffs have shown that common evidence is capable of demonstrating that Defendants engaged in a series of complementary supply-reducing actions as part of a conspiracy to increase the price of eggs. Dr. Rausser has measured whether that conspiracy was successful in increasing the price of eggs. His model fits the theory of liability and satisfies Comcast." Class Cert, I at 193. The Court thus found that common issues predominate with respect to the antitrust injury to the shell eggs subclass. See Class Cert, I at 199-200.

         Pursuant to Federal Rule of Civil Procedure 23(f), Defendants then petitioned the Third Circuit Court of Appeals for permission to appeal the class certification order. The Court of Appeals denied their petition.

         At the time the Court certified the Direct Purchaser Plaintiff Shell Egg Class, it left unresolved the class period determination and requested that the parties submit additional briefing on the parties' proposed cutoff dates. After reviewing the parties' submissions, the Court held that the proper cut-off date for the class is December 31, 2008. In re: Processed Egg Prod. Antitrust Litig, No. 08-MD-2002, 2016 WL 410279, at *1 (E.D. Pa. Feb. 3, 2016) (hereinafter "Class Cert. II at "). The Court certified the following Direct Purchaser Plaintiff Shell Egg Class:

All individuals and entities that purchased shell eggs produced from caged birds in the United States directly from Defendants during the Class Period from September 24, 2004 through December 31, 2008.
Excluded from the Class are the Defendants, their co-conspirators, and their respective parents, subsidiaries, and affiliates, as well as any government entities. Also excluded from the Class are purchasers of "specialty" shell eggs (such as "organic, " "certified organic, " "free range, " "cage free", "nutritionally enhanced, " or "vegetarian fed") and purchasers of hatching eggs, which are used by poultry breeders to produce ...

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