United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Honorable Thomas M. Durkin United States District Judge.
are industrial producers of chicken meat. Plaintiffs are
three putative classes of businesses and individuals who
purchased chicken from Defendants, either directly or
indirectly, for resale, business, or personal use, between
2008 and 2016. Plaintiffs allege that during that time period
Defendants conspired to fix chicken prices higher than the
market would naturally support, in violation of the Sherman
Act § 1 and state law. Defendants have moved to dismiss
for failure to state a claim pursuant to Federal Rule of
Civil Procedure 12(b)(6). See R. 279; R.
For the following reasons, the motions are denied to the
extent that Plaintiffs' Sherman Act claims survive, at
least one state law claim survives in every jurisdiction
except for Arkansas, and none of the defendants are dismissed
from the case entirely. The motion addressing Plaintiffs'
state law claims, R. 292, is granted in part in that all
claims under Wisconsin law are dismissed.
12(b)(6) motion challenges the sufficiency of the
complaint. See, e.g., Hallinan v. Fraternal Order of
Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir.
2009). A complaint must provide “a short and plain
statement of the claim showing that the pleader is entitled
to relief, ” Fed.R.Civ.P. 8(a)(2), sufficient to
provide defendant with “fair notice” of the claim
and the basis for it. Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007). This standard “demands more
than an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). While “detailed factual allegations”
are not required, “labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do.” Twombly, 550 U.S. at 555. The
complaint must “contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Iqbal, 556 U.S.
at 678 (quoting Twombly, 550 U.S. at 570).
“‘A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.'” Mann v.
Vogel, 707 F.3d 872, 877 (7th Cir. 2013) (quoting
Iqbal, 556 U.S. at 678). In applying this standard,
the Court accepts all well-pleaded facts as true and draws
all reasonable inferences in favor of the non-moving party.
Mann, 707 F.3d at 877.
The Chicken Industry
are “chickens raised for meat consumption to be
slaughtered before the age of 13 weeks, and which may be sold
in a variety of forms, including fresh or frozen, raw or
cooked, whole or in parts, or as a meat ingredient in a value
added product, but excluding chicken that is grown,
processed, and sold according to halal, kosher, free range,
or organic standards.” R. 212 ¶ 79. Broilers
constitute approximately 98% of all chicken meat sold in the
United States. Id. ¶ 2.
are industrial Broiler producers. As of 2015, Defendants
controlled 88.8% of Broiler production in the United States.
Id. ¶ 286. Defendants own or tightly control
all aspects of producing Broilers, including laying eggs;
hatching chicks; raising chicks; slaughtering chickens; and
processing and distributing the meat. See Id.
¶¶ 270-74. The technology and process of industrial
scale Broiler production is well known among Defendants, and
all defendants use the same types of equipment and processes.
Id. ¶ 330. Entry into the market would cost in
excess of $100 million, see Id. ¶¶ 319-22,
and “no company has created a new poultry company from
scratch in decades.” Id. at ¶ 323.
Defendants Tyson and Pilgrim's Pride maintain the largest
market shares, approximately 22% and 17% respectively, while
the other defendants maintain market shares no greater than
8-9%, with several below 5%. See Id. ¶ 286
(including the following chart).
businesses also have relatively similar cost structures.
Id. ¶ 330. The primary costs of production are
labor and feed for the chickens. Id. ¶¶
327-38. Labor costs have declined significantly over the past
two decades, while labor productivity has substantially
increased. Id. ¶ 328. Defendants feed their
chickens corn and soybean meal, and purchase these
ingredients on the open market. Id. ¶¶
327, 330. “Feed prices have varied widely from
2007-2016, reaching 71% of the cost of producing Broilers in
2012, but falling to only about 50% by 2014.”
Id. ¶ 327. “Since January 1, 2008, corn
prices have declined roughly 21% and soybean prices have
declined 13%.” Id. ¶ 329.
purchase their breeder flocks (the chickens that lay the eggs
Defendants raise into Broilers) from three “global
genetics conglomerates” that account for 98% of
Broilers raised in the United States, and 80% of Broilers
raised globally. Id. ¶¶ 6, 275. These
three genetic companies own a “biological lock”
on their unique Broiler lines, meaning they tightly control
the purebred genetic strain they develop. Id. ¶
274. These genetic strains have special hybrid
characteristics, such as a tendency to product a large
chicken breast. Id.
all aspects of Defendants' methods of production are
nearly identical, Broilers are substantially uniform across
all Defendants' brands. See Id. ¶ 80. For
this reason, Broilers are considered a commodity product.
See Id. ¶¶ 80-81. Commodity industries are
particularly susceptible to agreements that violate antitrust
laws. See In re High Fructose Corn Syrup Antitrust
Litig., 295 F.3d 651, 658 (7th Cir. 2002) (“[When]
the product is uniform (a ‘commodity') . . .
competition would be expected to prevent any one seller from
raising his price to any of this customers above
allege that Defendants communicated their conspiracy to
restrain production and inflate prices in part through an
entity called Agri Stats. Agri Stats is a subsidiary of Eli
Lilly & Co. that produces subscription reports about the
Broiler industry. Id. ¶¶ 67, 118. Agri
Stats collects data directly from Defendants' Broiler
production facilities. Id. ¶ 129. Only Broiler
producers that supply data to Agri Stats are permitted to
receive the Agri Stats reports. Id. ¶ 128.
Stats reports provide information about where Broiler
producers buy their breeder stock and feed, the size of
production facilities, and actual production numbers.
Id. ¶ 130. The reports also provide detailed
information regarding production capacity, including numbers
of eggs, the size of breeder flocks, and other inventory
numbers, as well as financial information about each company.
Id. ¶¶ 130, 135C. Although the reports do
not identify the Broiler producers by name, the reports are
so detailed that a reasonably informed producer can discern
the other producers' identities, and it is common
knowledge among producers that this is possible. Id.
¶ 124. This ability to identify each other by the
information in the reports is enhanced by tours
Defendants' executives take of each other's
production facilities, see Id. ¶ 313, and by
the relatively frequent movement of employees and executives
among the Defendant companies, without the protection of
noncompete clauses. Id. ¶ 314.
have publicly stated that Agri Stats reports provide them
knowledge of their competitors' production plans, and
that they rely on this information to plan their own
production. See Id. ¶ 131A (defendant Sanderson
Farms reported that “every year we review our
operations and every facet within [Agri Stats] . . . we set
operational goals every year . . . and [we] try to improve
our operations within this benchmarking service we call [Agri
Stats]”); id. ¶ 131B (Sanderson Farms CEO
was quoted as saying, “my judgment is that based on
what I see in Agr[i] [S]tats nobody is planning on, pullet
placements say no ramp up and what I've gleaned from
Agr[i] [S]tats, people are not planning on ramping up. I see
a lot of information from Agr[i] [S]tats that tells me that
nobody is going to ramp up.”); id. ¶ 131E
(Tyson stated in an investor presentation, “It's
very profitable right now. And we will not hit the top of the
top, because within the profitability segmentation right now,
the most profitable segments are in fact big bird, and
secondly, tray pack. We can tell that through Agri
Stats.”). Plaintiffs allege that a Broiler industry
expert has said that the extent of information shared by
Broiler producers through Agri Stats is “unusual”
and “a significant antitrust issue.” Id.
the contact necessary to collect data, Agri Stats employees
also interact regularly with Broiler producer executives and
employees at trade association meetings. Id. ¶
127. Agri Stats also offers to meet with Broiler producer
executives on a quarterly basis to make detailed
presentations about company and industry data, including
whether the industry is over- or undersupplying the market.
Id. ¶ 127. Plaintiffs allege that Agri Stats
breaches the anonymity of the reports at these meetings by
matching the data to particular companies. Id.
Defendants' Production & Pricing
The Years 2008-2010
allege that prior to 2008, there was a “historic
pattern of annual increases in Broiler production, ” of
about 3%. Id. ¶ 335. Industry publications
noted that 2008 was the “first time in decades [that]
total broiler production . . . remained virtually unchanged
from the year before.” Id.
production cuts began in 2007 when defendants Tyson,
Pilgrim's, Foster Farms, Peco Foods, and Perdue cut back
their Broiler production. Id. ¶ 143. Plaintiffs
allege that these production cuts did not result in a
“meaningful” price increase, so Tyson and
Pilgrim's-the industry's two largest
producers-realized that production cuts by the industry as a
whole were necessary. Id. ¶ 144.
allege that Defendants' executives and employees attended
the International Poultry Expo in Atlanta from January 23-25,
2008. Id. ¶ 145. After that meeting, executives
from Tyson, Pilgrim's, and Sanderson made statements that
their companies would raise prices or cut production in
response to market prices that were below the cost of
production. Id. ¶¶ 5, 146-48, 150, 154.
Pilgrim's CFO stated that “the rest of the market
is going to have to pick-up a fair share.” Id.
¶ 147. And Sanderson's CEO stated that he expected
the industry to make production cuts. Id. ¶
148. Five more defendants-Fieldale Farms,  Simmons, Wayne
Farms, O.K. Foods, and Koch Foods (plus non-defendant
producer, Cagle)- followed suit with their own production
cuts in April 2008. See Id. ¶ 151.
Additionally, Sanderson's CEO stated at a conference
presentation, “I know some companies have cut back and
have not announced.” Id. ¶ 151E.
21, 2008, the Wall Street Journal noted the production cuts,
and reported that prices had started to increase.
Id. ¶ 157. The paper also noted that “it
is unusual for egg sets to decline at this time of year,
” because demand is usually highest in August when
chickens hatched in May would be mature.
Id.Nevertheless, despite these production
and capacity cuts, Tyson's CEO questioned whether they
would result in the sought after price increase. Id.
¶ 155 (stating that “we're going to be up a
little but probably not a significant amount, not as much as
we might have once anticipated”). Pilgrim's CEO
also called for additional production cuts, id.
¶ 156, because “there is still too much breast
meat available to drive market pricing significantly
higher.” Id. ¶ 160.
allege that the industry responded to these calls for
additional cuts. On June 19, 2008, Peco's CEO said,
“the poultry industry is entering a second phase of
production cutbacks . . . . We are hearing talk that this was
not nearly enough, so liquidation is in round two.”
Id. ¶ 161. And the next day, an Agri Stats
non-public communication stated, “Those who have
announced cutbacks indicated they will continue until margins
normalize. At this time we expect to see the declines
continue until at least late 2009, and cuts could be deeper
than now projected.” Id. ¶ 162. Indeed,
seven defendants announced additional production cuts or
facility closures through the end of 2008. Id.
¶¶ 163, 165-71, 176-77, 180. And in September 2008,
an industry publication reported that “most
U.S. broiler integrators had announced plans to close small
operations, consolidate complexes and further processing
plants and to reduce output by 3 percent to 5 percent.”
Id. ¶ 173 (emphasis added). Then in February
2009, Pilgrim's announced additional facility closures
and production cuts. Id. ¶ 187. The production
cuts of 2007-09 had the effect of increasing Broiler prices
“through mid to late 2008, staying at or near all-time
highs until late 2009.” Id. ¶ 192.
The Years 2010-2014
2010, the economy as a whole had begun to improve, and some
producers began to increase production to meet that demand,
resulting in falling prices. Id. ¶ 193. After
the International Poultry Expo held January 24-26, 2011,
id. ¶ 196, Defendants again began to take
action to restrict production. Seven defendants and two other
producers cut production, closed facilities, or delayed
planned construction of new facilities. Id.
¶¶ 196, 198-201, 203-05, 210, 212-13, 215, 217-18,
220, 222-23, 231. These actions continued into 2012.
Id. ¶¶ 232, 238. By April 27, 2012,
Pilgrim's CEO stated on an earnings call that “the
die is cast for 2012, ” and “we're
comfortable that the industry is going to remain
constrained.” Id. ¶ 229. Prices began to
increase in September 2012, and continued to increase through
2014. Id. ¶¶ 239, 243.
Summary of Plaintiffs' Theory Regarding Production &
allege that in a commodity market like the Broiler market,
“[n]ormal supply and demand would suggest that in the
wake of massive supply cuts by [some producers], other
Broiler producers would jump into the massive gap, ”
and increase production to meet demand, yet, “just the
opposite occurred” in 2008. Id. ¶ 151.
Plaintiffs also argue that “the commodity nature of
Broilers does not allow one producer to successfully raise
market prices in the absence of widespread reductions in
supply relative to the then-current demand.”
Id. ¶ 146. So, Plaintiffs contend, public
statements of intent to cut production, and the discipline of
Defendants to resist filling the supply gap after production
cuts by large producers, do “not make sense absent an
intention (or knowledge) . . . that [competitors] would
coordinate a reduction in supply across the Broiler
industry.” Id. ¶ 146. One producer of a
commodity cannot, absent coordination, simply cut production,
fail to meet demand, and expect to maintain market share.
Thus, Plaintiffs contend that the many public statements
Defendants' executives made regarding production cuts
during the relevant time period is an indication that an
agreement among Defendants to cut production was already in
place or in the works.
addition to these suspicious public communications,
Plaintiffs contend they have plausibly alleged private
communications among Defendants indicating a conspiracy to
cut production with the intent to inflate prices.
Plaintiffs' primary argument in that regard is that
“[t]here is no plausible, non-conspiratorial
justification for Defendants to use Agri Stats to secretly
share highly confidential and proprietary information about
their pricing, capacity, production, and costs at the level
of detail at which they do. In a competitive market, such
proprietary, competitively sensitive information would be a
closely guarded secret. Economic theory suggests that the
routine exchange among competitors of such sensitive internal
company information reduces the intensity of
competition.” Id. ¶ 134. “Moreover,
” Plaintiffs continue, “the nature of Broiler
breeder flocks is that they predict future Broiler supply, so
by sharing such information in a way that permits
company-by-company identification, Defendants are in fact
sharing future anticipated production information with one
another, which clearly suggest high antitrust concern.”
Id. ¶ 135C. Additionally, Plaintiffs cite
Sanderson's CEO's statement on May 28, 2008-“I
know some companies have cut back and have not
announced”-as an indication that he had private
communications with his competitors regarding their intention
to cut production. Id. ¶ 151E.
Factors Enabling Defendants to Sustain Production
allege that a number of additional factors demonstrate that
Defendants' production cuts from 2008-2014 were not
merely independent reactions to economic conditions, but are
indicative of a conspiracy. These factors include: (1) a
shift away from fixed price to variable price contracts; (2)
slaughter or export of breeder flocks; (3) use of
inter-company sale agreements; and (4) an increase in
exports. Plaintiffs allege these factors enabled Defendants
to sustain their production cuts despite the economic
incentives to increase supply of a commodity product like
beginning in 2008, Defendants moved away from fixed price
contracts to contracts that permitted prices to fluctuate
with the market. Id. ¶ 348. According to
Plaintiffs, fixed price contracts prevented Defendants from
being able to realize market price increases resulting
planned production cuts. Id. ¶ 349. Starting in
January 2008, around the same time Defendants began
production cuts, defendants Koch Foods, Pilgrim's,
Perdue, Sanderson, and Tyson, publicly announced an effort to
use contracts that permitted variable pricing. Id.
¶ 350-54. Pilgrim's CFO explained on an earnings
call on January 29, 2008, that in the current
“situation” in which there is a “need to
drive commodity prices up, ” having fewer fixed price
contracts “is going to give us the opportunity for more
immediate benefit.” Id. ¶ 352. This shift
was noted by an industry analyst in December 2013, who stated
that “with volume growth generally limited, companies
are developing more sophisticated strategies to generate
profits . . . . Contracts are now being negotiated all year
long and employ a variety of pricing methodologies.”
Id. ¶ 355.
one of the primary forms of production cuts during the
relevant time period was to slaughter or export breeder
flocks. Id. ¶¶ 189, 250. Historically,
when Broiler producers wanted to cut production, they simply
destroyed excess eggs or Broilers in order not to have them
available on the market. Id. ¶ 191. Breeder
flocks are not usually destroyed because such a strategy
hampers a producer's ability to meet increased demand.
Yet, during the time period at issue in this case, total
breeder flock numbers went from a high of approximately 59
million in 2008, to a low of about 49 million in 2013.
See Id. ¶¶ 191, 242 (including the
conference in January 2012, an Agri Stats Vice-President
noted the importance of reducing Broiler breeder flocks,
because a failure to do so “could blow apart any
recover[y] in the short term by filing up incubators
again.” Id. ¶ 225. He also noted that
Agri Stats data showed that the industry was in fact
slaughtering breeder flocks, demonstrating an intent to
manage production carefully. Id. Another industry
analyst also noted the significant decrease in breeder
flocks, stating on May 6, 2014 that historically, “it
has been very easy to increase the chicken supply because . .
. . [i]t only takes four to eight weeks to grow a
chicken.” Id. ¶ 249. But in recent years,
the analyst continued, producers “cut production
capacity throughout the supply chain when grain prices were
very high, ” so “they cannot materially increase
supply” for 18 months. Id. Plaintiffs allege
that Defendants' decisions to slaughter or export breeder
flocks were unusual, and allowed the production cuts they
implemented between 2008 and 2014 to have a longer lasting
effect on the market.
early in 2011, Tyson began to satisfy a portion of its
customers' demand by buying and reselling Broilers or
Broiler parts from its competitors-a strategy Tyson dubbed
“Buy vs. Grow.” Id. ¶ 195.
According to this strategy, Tyson bought up excess production
from its competitors in order to avoid the price depression
that would occur if those Broilers had been sold on the open
market. This strategy had a two-fold effect on Broiler
supply: (1) allowing Tyson to cut its own production without
losing customers; and (2) creating a mechanism for Tyson to
communicate production cut levels to its competitors,
id., i.e., “don't produce more Broilers
than Tyson is willing to buy.” Plaintiffs allege that
Tyson engaged in this strategy even though it would have cost
less to supply its customers with its own Broilers, because
the strategy kept overall supply low and prices high.
Defendants increased Broiler exports. In 2006, Broiler
exports constituted only 14.8% of U.S. Broiler production.
Id. ¶ 87. This number increased to 16.5% by
2007, and was never lower than 18.5% through 2014.
Id. Increasing exports enabled Defendants to
continue to sell Broilers without affecting the price in the
United States. Id. ¶ 88. Plaintiffs also allege
that this increase in exports was undertaken specifically to
lift prices in the United States, because otherwise it would
have been more profitable to sell the eggs and Broilers in
the United States. Id. ¶ 251.
Georgia Dock Price Index 2014-2016
addition to alleging that Defendants conspired to
artificially inflate prices by suppressing production,
Plaintiffs allege that some Defendants sought to directly
inflate prices by tampering with one of the primary Broiler
price indexes. Broiler prices are reported primarily by three
entities: Urner Barry (a subscription commodity price
reporting service); the Georgia Department of Agriculture
(known as Georgia Dock); and the U.S. Department of
Agriculture (“USDA”). Id. ¶ 91.
Urner Barry and the USDA prices are doubly verified through
telephonic and written surveys of virtually all Broiler
producers. Id. ¶ 92. Georgia Dock also collects
its pricing data by communications with producers, but unlike
the USDA and Urner Barry prices, Georgia Dock does not verify
the prices collected from producers against invoices or
purchaser reports. Id. ¶ 98. When asked for an
explanation of this lack of a verification process, Georgia
Dock responded that it trusts the producers to provide
truthful information. Id. The sincerity of this
response, however, is undermined by that fact that seven
Defendants exercise direct control over the Georgia Dock
price index through participation in the Georgia Dock
Advisory Committee, the existence of which was kept secret
until 2016. Id. ¶ 105. Additionally, several
Georgia Dock employees have expressed concern about Georgia
Dock's methods. Id. ¶ 99. In early 2016,
the USDA initiated an investigation into Georgia Dock, and
concluded that it could no longer accept Broiler
producers' price reports at face value. Id.
generally mirroring each other from 2007 through 2013, by the
end of the 2014, the USDA and Urner Barry prices had begun a
significant decline while the Georgia Dock stayed level.
Id. ¶ 89 (and the following chart).
allege that this deviation is due to Defendants'
manipulation of prices reported to Georgia Dock. Id.
¶¶ 110, 113. By allegedly reporting false inflated
prices to Georgia Dock, Defendants benefited from the use of
artificially inflated Georgia Dock prices in the spot market
and prospective contracts. See Id. ¶ 103.
Plaintiffs and their Claims
are divided into three putative classes based on their
position in the supply and demand chain, and each class has
filed its own complaint: (1) direct purchasers (e.g.,
wholesalers and retailers), R. 212; (2) commercial and
institutional indirect purchasers who resell chicken (e.g.,
retailers and restaurants), R. 253; and (3) indirect
purchasers who cook or eat the chicken (e.g., restaurants and
individuals), R. 255. Obviously, there is some overlap of the
classes, particularly of the two classes of indirect
purchasers, and that is reflected in the bulk of allegations
concerning the conspiracy, which are nearly identical across
the three complaints.
Defendants argue that Plaintiffs have failed to plausibly
allege a conspiracy. The first part of this opinion addresses
that argument. Since federal law prohibits indirect
purchasers from pursuing damages under the Sherman Act, the
Indirect Plaintiffs also make claims under state law
antitrust, consumer protection, and unjust enrichment laws.
The second part of this opinion addresses Defendants'
arguments against these claims. As mentioned, the Sherman Act
claims survive, as does at least one state law claim in every
jurisdiction included in the complaint, except for Wisconsin.
begin, the Court provides the following brief summary preview
of its reasoning regarding Plaintiffs' conspiracy claim,
which is explained in greater detail below. First, the Court
finds that Plaintiffs have plausibly alleged parallel
conduct. The Court rejects Defendants' contention that
the alleged conduct is too varied in its timing and methods.
Court also finds that the alleged factual circumstances
plausibly demonstrate that the parallel conduct was a product
of a conspiracy. The Court finds plausible Plaintiffs'
allegations that Defendants conduct was unusual in comparison
to the industry's history of regular production
increases, and rejects Defendants' argument that the
conspiracy as alleged would not be in the interests of all
conspirators. Nothing about Plaintiffs' allegations
indicates that the increase in the market price was
insufficient to cover the various potential losses of market
shares Defendants highlight. The Court also finds that the
alleged conspiracy strategy-to take actions to restrain
production, and then allow production to increase again to
reap the benefits of the resulting price increase-is not
implausible despite the large number of producers in the
industry and the lack of an enforcement mechanism allegation.
although Plaintiffs have not alleged details about the
formation, operation, and communications constituting the
conspiracy, the facts included in the complaint are
sufficient to plausibly infer formation and communication.
Defendants' criticize the lack of details, but when a
conspiracy is secret such details will not be available
without discovery, and thus cannot be required at the
pleading stage. Defendants' public statements of intent
to cut production are indicative of an agreement considering
the commodity nature of Broilers. Moreover, the extent of
information sharing through Agri Stats is unusual, and
plausibly amounts to a method of communication. This is all
in the context of regular opportunities to collude at trade
association meetings, plant tours, and the large number of
other note opportunities that company executives had to
Defendants' business strategies during the relevant time
period are indicative of a conspiracy. Defendants: engaged in
intra-competitor sales to manage production numbers;
increased exports to reduce product in the U.S. market;
switched from fixed price to variable price contracts to take
advantage of price increases; and decreased the number of
breeder flocks by unprecedented numbers. All of these are
strategies that make sense in the context of a price-fixing
conspiracy, which is plausibly alleged.
Defendants raise plausible alternative innocent explanations
for their conduct, it is improper at this stage of the
proceedings to weigh alternatives and which is more
plausible. To the extent an innocent alternative explanation
can serve to show that a conspiracy claim is not plausible in
and of itself, the Court does not view the allegations in
that way. There is simply too much unusual market movement,
unusual public statements, unusual information sharing
through Agri Stats, and a coincidence of business strategies
that make dismissal of Plaintiffs' claims at this point
in the case inappropriate.
these reasons, as discussed in greater detail below,
Defendants' motions to dismiss Plaintiffs' conspiracy
claims are denied.
argue Plaintiffs have failed to sufficiently allege a
conspiracy in order to state a claim under Section 1 of the
Sherman Act. The Sherman Act “does not prohibit all
unreasonable restraints of trade, ” but only those
“effected by a contract, combination, or
conspiracy.” Twombly, 550 U.S. at 553 (citing
15 U.S.C. § 1). As the Seventh Circuit explained, the
Sherman Act “does not require sellers to compete; it
just forbids their agreeing or conspiring not to
compete.” In re Text Messaging Antitrust
Litig., 630 F.3d 622, 627 (7th Cir. 2010). The
“crucial question, ” then, is “whether the
challenged anticompetitive conduct stems from independent
decisions or from an agreement, tacit or express.”
Twombly, 550 U.S. at 553. In other words, only
agreements not to compete are prohibited by the law.
allege an unlawful agreement, a plaintiff must allege facts
from which the Court can plausibly infer that the defendants
“had a conscious commitment to a common scheme designed
to achieve an unlawful objective.” Omnicare, Inc.
v. UniteHealth Group, Inc., 629 F.3d 697, 706 (7th Cir.
2011). “That is, the circumstances of the case must
reveal a unity of purpose or a common design and
understanding, or a meeting of the minds in an unlawful
arrangement.” Id. At least “[t]wo
separate economic decisionmakers must be joined, depriving
the marketplace of independent centers of decisionmaking and
therefore of a diversity of entrepreneurial interests.”
Id.; see also William H. Page, “Tacit
Agreement Under Section 1 of the Sherman Act, ” 81
Antitrust L.J. 593, 608 (2017) (hereinafter
“Page”) (an agreement “involve[s] a
conscious choice by participating rivals to communicate
intentions by means that lack [economic] efficiency
justifications”). “Direct evidence of conspiracy,
” however, “is not a sine qua non.”
Text Messaging, 630 F.3d at 629.
“Circumstantial evidence can establish an antirust
behavior” by putative competitors (i.e., competitors
following the same course of conduct) can be circumstantial
evidence of an agreement not to compete. See
Twombly, 550 U.S. at 553. However, without more,
allegations of parallel conduct are “merely consistent
with, ” but do not “plausibly suggest” the
existence of an agreement. Id. at 557. For instance,
the Seventh Circuit has noted that a price fixing claim based
on the parallel behavior of “thousands of children who
set up lemonade stands all over the country on hot summer
days . . . would be laughed out of court.” Text
Messaging, 630 F.3d at 628. Of course that example at
the extreme far end of the factual spectrum permits no
inference of collusion. But the Supreme Court has held that
even “conscious parallelism, ”-i.e., “a
common reaction of firms in a concentrated market that
recognize their shared economic interests and their
interdependence with respect to price and output
decisions”-“is not in itself unlawful.”
Id. at 553-54.
example, in White v. R.M. Packer Co., gas stations
on Martha's Vineyard were alleged to have fixed gasoline
prices. See 635 F.3d 571 (1st Cir. 2011). The gas
station owners argued that “because of their isolated
location, relatively small numbers, and transparent pricing,
they could engage in cooperative pricing without any secret
meetings or any explicit agreements that would violate the
nation's antitrust laws.” Page at 594. The gas
stations “admitted that they communicated indirectly by
posting their prices and were able to engage in cooperative
pricing by rationally predicting what rivals would do in
response.” Id. at 625. This type of parallel
conduct is considered mere “interdependence” that
is “insufficient to raise the necessary inference of
agreement, ” id. at 626-27, because, although
it is “consistent with conspiracy, [it is] just as much
in line with a wide swath of rational and competitive
business strategy unilaterally prompted by common perceptions
of the market.” Twombly, 550 U.S. at 554.
Instead, “allegations of parallel conduct . . . must be
placed in a context that raises a suggestion of a preceding
agreement.” Id. at 557. Absent additional
“factual enhancement” or a “circumstance
pointing toward a meeting of the minds, ” an allegation
of parallel conduct “stops short of the line between
possibility and plausibility.” Id. As the
Seventh Circuit explained, “a complaint that merely
alleges parallel behavior alleges facts that are equally
consistent with an inference that the defendants are
conspiring and an inference that the conditions of their
market have enabled them to avoid competing without having to
agree not to compete.” Text Messaging, 630
F.3d at 627.
Twombly, the Supreme Court indicated the kinds of
additional factual circumstances that would push an
allegation of parallel conduct into the realm of a plausible
conspiracy. Id. at 556 n.4; see also Text
Messaging, 630 F.3d at 628 (describing additional
factual circumstances as “‘parallel plus'
behavior”). The Court cited antitrust scholars'
description of such conduct, including “behavior that
would probably not result from chance, coincidence,
independent response to common stimuli, or mere
interdependence unaided by an advance understanding among the
parties, ” Twombly, 550 U.S. at 556 n.4
(citing 6 Areeda & Hovenkamp ¶ 1425, at 167-85); and
“conduct that indicated the sort of restricted freedom
of action and sense of obligation that one generally
associates with agreement, ” id. (citing
Blechman, Conscious Parallelism, Signaling and Facilitating
Devices: The Problem of Tacit Collusion Under the Antitrust
Laws, 24 N.Y.L. S. L.Rev. 881, 899 (1979)). The Court also
noted that the parties in Twombly agreed that
“complex and historically unprecedented changes in
pricing structure made at the very same time by multiple
competitors, and made for no other discernible reason,
” would state a claim under the Sherman Act § 1.
550 U.S. at 556 n.4. Following this guidance, the Seventh
Circuit affirmed a district court's denial of a motion to
dismiss a Sherman Act § 1 claim, where the plaintiffs
had alleged the following: (a) four competitors controlling
90 percent of the market; (b) the defendants' memberships
in a trade association where they exchanged price
information; (c) defendants' memberships in a
“leadership council” within the trade association
whose stated purpose was “to urge its members to
substitute ‘co-opetition' for competition”;
the defendants increased their prices in the face of steeply
falling costs; the defendants changed their pricing
structures “all at once.” See Text
Messaging, 630 F.3d at 628.
order to address Defendants' argument that Plaintiffs
have failed to plausibly allege a conspiratorial agreement,
the Court must address whether Plaintiffs have sufficiently
alleged (A) parallel conduct, and (B) additional factual
circumstances indicating an agreement, including (1) an
underlying premise that accounts for production numbers and
the means of alleged production rate decreases, (2) other
“plus factors, ” and (3) alternative,
non-conspiratorial explanations for Defendants' conduct.
After addressing these arguments regarding Plaintiffs'
allegations of the conspiracy itself, the Court will address
(C) arguments made by individual defendants regarding their
particular circumstances, (D) the statute of limitations, and
(E) Plaintiffs' allegations regarding Georgia Dock.
first argue that Plaintiffs have failed to make a threshold
showing of parallel conduct necessary to state a conspiracy
claim under the Sherman Act. Defendants contend that
Plaintiffs have alleged only that some defendants decreased
production, at various points over many years, in varying
amounts, and by various methods, and that this kind of varied
action cannot be described as parallel. See R. 280
at 15-19. The Court disagrees.
contend that their alleged conduct was not parallel because
it took place “across a lengthy period.” R. 280
at 15. As Defendants point out, Plaintiffs do not allege that
Defendants took action “all at once, ” as was
alleged in Text Messaging, 630 F.3d at 628. But such
an allegation is not required for the Court to plausibly
infer parallel conduct. The Seventh Circuit highlighted the
“all at once” nature of the alleged conduct in
Text Messaging, not to explain why the plaintiffs in
that case had sufficiently alleged parallel conduct, but in
holding that the allegations plausibly alleged an agreement.
The court noted that the “all at once” allegation
was “the kind of ‘parallel plus'
behavior” that “would support a plausible
inference of conspiracy.” Id. (emphasis
added). The court never said that “all at once”
behavior was necessary to allege parallel conduct in the
the Supreme Court has long held that simultaneous action is a
not a requirement to demonstrate parallel conduct. See
Interstate Circuit v. United States, 306 U.S. 208, 227
(1939) (“It is elementary that an unlawful conspiracy
may be and often is formed without simultaneous action or
agreement on the part of the conspirators.”);
accord United Mine Workers of Am. v. Pennington, 381
U.S. 657, 673 (1965). Other courts have reaffirmed this
principle more recently. See SD3, LLC v. Black &
Decker (U.S.) Inc., 801 F.3d 412, 429 (4th Cir. 2015),
as amended on reh'g in part (Oct. 29, 2015),
cert. denied, 136 S.Ct. 2485 (2016) (“parallel
conduct need not be exactly simultaneous and identical in
order to give rise to an inference of agreement”);
Kleen Prod., LLC v. Packaging Corp. of Am., 775
F.Supp.2d 1071, 1077, nn. 5, 9 (N.D. Ill. 2011)
(“capacity reductions need not be simultaneous to
demonstrate conscious parallelism, ” rather, allegation
of sequential conduct “is common” in such cases);
In re Plasma-Derivative Protein Therapies Antitrust
Litig., 764 F.Supp.2d 991, 1000 (N.D. Ill. 2011)
(“The supply cutbacks in this case are alleged to have
occurred more gradually and thus could have resulted from one
firm observing its competitor's decisions and then
independently deciding to follow along. . . . But
interdependence can be inferred from parallel conduct that is
sequential rather than simultaneous.”). And while
Twombly changed the law with respect to the weight
of parallel conduct in the pleading equation, it said nothing
about what is necessary to allege parallel conduct in the
courts have found allegations of defendants joining or
effectuating a conspiracy over periods of time comparable to
or longer than the periods Plaintiffs allege here to
sufficiently allege parallel conduct. See Kleen, 775
F.Supp.2d at 1077-78 (finding sufficient allegations of
parallel conduct where defendants increased prices over the
course of five years); Plasma-Derivative, 764
F.Supp.2d at 996 (finding sufficient allegations of parallel
conduct where the defendants made “production cuts,
strategic acquisitions, and plant closures” over the
course of two years); Ross v. Am. Exp. Co., 35
F.Supp.3d 407, 440 (S.D.N.Y. 2014), aff'd sub nom.
Ross v. Citigroup, Inc., 630 Fed. App'x 79 (2d Cir.
2015), as corrected (Nov. 24, 2015) (defendant
credit card companies adopted arbitration clauses over a two
year period). Here, Plaintiffs allege two periods of
production cuts of approximately one-two yeara each, in
2008-09 and 2011-12. These allegations are sufficient to
allege conduct that took place at the same time.
also argue that Plaintiffs' allegations do not
demonstrate parallel conduct because the alleged production
cuts are too varied in methods and amounts. But courts in
this district have not required such uniformity to allege
parallel conduct. See Plasma-Derivative, 764
F.Supp.2d at 996 (“Plaintiffs point to a series of
production cuts, strategic acquisitions, and plant closures
by CSL and Baxter leading to reduced supply.”);
Kleen, 775 F.Supp.2d at 1077, n.8 (“Variations
in the size of capacity reductions do not disprove the
existence of a conspiracy[.]”). Neither have courts in
other districts. See In re Interest Rate Swaps Antitrust
Litig., 2017 WL 3209233, at *33 (S.D.N.Y. July 28, 2017)
(“Unanimity of action . . . is not required.”);
In re Domestic Airline Travel Antitrust Litig., 221
F.Supp.3d 46, 69 (D.D.C. 2016) (“Plaintiffs do not need
to demonstrate that Defendants cut or limited capacity in
exactly the same way in order to adequately allege parallel
conduct.”); In re Currency Conversion Fee Antitrust
Litig., 264 F.R.D. 100, 114 (S.D.N.Y. 2010) (“[I]t
is well settled . . . that the law does not require every
defendant to participate in the conspiracy by identical means
throughout the entire class period.”); City of
Moundridge v. Exxon Mobil Corp., 2009 WL 5385975, at *5
(D.D.C. Sept. 30, 2009) (“Price-fixing can occur even
though the price increases are not identical in absolute or
relative terms.”). It is more than plausible that
conspirators would leave the precise means of cutting
production up to each conspirator, where multiple options
would accomplish the intended goal. Permitting flexibility,
where possible, in the means of effectuating price increases,
would enable a greater number of producers to participate in
the conspiracy, and might help to conceal the collusive
nature of their conduct. See SD3, 801 F.3d at 428
(“[I]f the defendants employed different courses of
action, then their conspiracy might better avoid
also argue that Plaintiffs have not alleged that all
Defendants “reduced” production, but rather that
some Defendants only canceled planned production increases.
See R. 280 at 17-18. This argument might carry
weight if Plaintiffs had alleged that Defendants conspired to
decrease overall production in absolute numbers. Plaintiffs,
however, base their claims on allegations that overall
production increases were not in line with what had been the
Broiler industry's historic annual 3% production
increase. Such a conspiracy leaves room for some participants
to merely cancel production increases, as opposed to actually
decreasing production. See SD3, 801 F.3d at 428-29
(“But the dissent would require more, even at this
early stage of the proceedings; it would find ‘parallel
conduct' only when defendants move in relative lockstep,
achieving their common anticompetitive ends (exclusion) only
by substantially identical means. So far as we can tell, this
standard finds no support in any existing authority.”).
Defendants' attempts to highlight the aspects of their
alleged conduct that are not absolutely uniform, Plaintiffs
have alleged that all of the defendants engaged in production
cuts at the same time. Thus, the Court finds that Plaintiffs
have sufficiently alleged Defendants' conduct was
Additional Factual Circumstances
questioning Plaintiffs' allegations of parallel conduct,
Defendants also contend that the alleged factual
circumstances surrounding the parallel conduct do not permit
an inference that the parallel conduct was a product of a
conspiratorial agreement. Plaintiffs' claims are
primarily premised on the allegation that the Broiler
industry and market is such that no one producer can cut
production and successfully affect the market price.
Additionally, the commodity nature of Broilers, the high cost
of entry into the market, and the uniformity of production
cost structures, means that any production cut by one
producer should be immediately filled by the rest. According
to Plaintiffs, in a market with such characteristics, when
the industry as a whole slows production to a historically
unprecedented rate, with at least some conspirators using the
historically unprecedented method of slaughtering or
exporting breeder flocks, such that prices experience an
unusual increase, “chance, coincidence, or independent
responses to common stimuli, or mere interdependence unaided
by an advance understanding among the parties, ” are
not plausible explanations. See Twombly, 550 U.S. at
557 n.4. Rather, such “historically unprecedented
changes, ” id., suggest a conspiratorial
agreement, not mere parallel conduct.
opposition to Plaintiffs' conspiracy claims, Defendants
both: (1) point to factual circumstances alleged in the
complaint-i.e., production statistics, the extent and means
of production cuts, and the number of producers in the
industry- which they contend undermine Plaintiffs'
primary premise of unprecedented market movement and industry
action; and (2) contend that Plaintiffs' additional
allegations (often referred to by courts as “plus
factors”) in support of their claim that a
conspiratorial agreement existed are ...