November 4, 2011

It’s Not “Over Easy” For Remaining Defendants In Egg Antitrust Litigation

After denying four of six motions to dismiss just three weeks earlier, a federal judge in the Eastern District of Pennsylvania denied an additional motion to dismiss that was primarily aimed at limiting the scope of discovery in the In re Processed Egg Products Antitrust Litigation.

The plaintiffs allege that Defendant egg producers and trade groups engaged in a conspiracy to manipulate the supply of, and thereby fix prices for, domestically sold eggs in violation of section 1 of the Sherman Act.  Plaintiffs charge that defendants’ objective was to take advantage of consumers’ “relatively inelastic” demand for eggs as well as the fact that eggs are commodities and have no market substitutes.

Ruling on the prior motions to dismiss on September 26, 2011, District Judge Gene E.K. Pratter granted the motions to dismiss of Hillandale Gettysburg L.P., Hillandale Farms Inc., Hillandale Farms East, Inc. and the United Egg Association while denying the remaining four motions to dismiss.

The question before the court was whether plaintiffs adequately alleged particularized facts that each defendant was a participant in the conspiracy.

The court rejected attempts by the plaintiffs to implicate certain defendants by use of the generic reference “defendants” where there were no particularized facts pertaining to a specific defendant within the complaint.

After the court found the existence of sufficient facts that explicitly detailed the participation of the four defendants whose motions were denied, the defendants again moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, for the court to enter an order dismissing any claim that defendants engaged in a conspiracy to reduce the production, or raise the price, of “egg products” based on a theory that the only purported conspiracy for which any facts are alleged is a conspiracy to reduce the supply of “shell eggs.”

Defendants complained that the complaint’s references to “egg products” might be an entree for plaintiffs to expand the scope of discovery to information not relevant to the case.  The court, however, was not persuaded.

Judge Pratter denied this additional motion noting that Rule 12(b)(6) should not be used to chisel issues for trial.  Additionally, Judge Pratter found that defendants did not adequately show why the well-pled facts supporting the conspiracy to reduce the supply of “shell eggs” would not also suffice to support a conspiracy to reduce the supply of “egg products” or why they should be considered separate markets.

In denying defendants’ motion, Judge Pratter ruled it more prudent for defendants to address their concerns through pretrial devices which provide a more appropriate means for circumscribing the scope of discovery and defining the issues.

Categories: Antitrust and Price Fixing, Antitrust Litigation

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