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In re Broiler Chicken Antitrust Litigation

United States District Court, N.D. Illinois, Eastern Division

November 20, 2017

In re Broiler Chicken Antitrust Litigation

          MEMORANDUM OPINION AND ORDER

          Honorable Thomas M. Durkin United States District Judge.

         Defendants 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. 292.[2] 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.

         Legal Standard

         A Rule 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.

         Background

         I. The Chicken Industry

         “Broilers” 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.

         Defendants 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).

         (Image Omitted)

         Defendants' 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.

         Defendants 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.

         Because 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 cost.”).

         II. Agri Stats

         Plaintiffs 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.

         Agri 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.

         Defendants 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.”);[3] 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.”).[4] 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. ¶ 133.

         Beyond 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.

         III. Defendants' Production & Pricing

         A. The Years 2008-2010

         Plaintiffs 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.

         These 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.

         Plaintiffs 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, [5] 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.

         On May 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.[6]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.

         Plaintiffs 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.

         B. The Years 2010-2014

         By late 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.

         C. Summary of Plaintiffs' Theory Regarding Production & Pricing

         Plaintiffs 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.

         In 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.

         IV. Factors Enabling Defendants to Sustain Production Cuts

         Plaintiffs 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 Broilers.

         First, 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.

         Second, 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 following chart).

         (Image Omitted)

         At a 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.

         Third, 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. Id.

         Lastly, 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.

         V. Georgia Dock Price Index 2014-2016

         In 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. ¶ 107.

         After 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).

         (Image Omitted)

         Plaintiffs 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.

         VI. Plaintiffs and their Claims

         Plaintiffs 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.

         Analysis

         All 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.

         I. Conspiracy

         To 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.

         The 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.

         Further, 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 interact.

         Additionally, 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.

         Although 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.

         For these reasons, as discussed in greater detail below, Defendants' motions to dismiss Plaintiffs' conspiracy claims are denied.

         Defendants 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.

         To 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 conspiracy.” Id.

         “Parallel 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.

         For 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.

         In 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.

         In 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.

         A. Parallel Conduct

         Defendants 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.

         Defendants 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 first place.

         Indeed, 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 first place.

         Notably, 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.

         Defendants 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 detection.”).

         Defendants 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.”).

         Despite 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 parallel.

         B. Additional Factual Circumstances

         Beyond 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.

         In 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 ...


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