Arbitration Denied in Grocery Antitrust Case

MINNEAPOLIS (CN) - C&S Wholesale Grocer and its fellow industry leader SuperValu cannot compel arbitration of antitrust claims it faces from mom-and-pop businesses.

At issue is the fallout of a 2003 asset exchange agreement between SuperValu and C&S Wholesale Grocers. The deal was based on geography, giving SuperValu the Midwest and C&S the New England region.

Mom-and-pop grocery stores took to the courts, claiming the asset exchange would increase the price of goods, and their cases were ultimately consolidated in Minnesota.

Last year the 8th Circuit remanded the case for consideration of possibly certifying a narrow class.

SuperValu and C&S filed a motion to dismiss, claiming that they can enforce certain arbitration agreements they have assigned as a result of the asset exchange through the successor-in-interest doctrine.

U.S. District Judge Ann Montgomery shot down those arguments Monday, saying SuperValu and C&S are competitors and do not rely on each other to act.

"To the extent Defendants have a relationship under the AEA, the relationship is one of assignor and assignee, because each wholesaler assigned to the other their rights to an arbitration agreement," the nine-page opinion states. "Thus, Defendants' relationship differs greatly from agency or agency-related relationships that courts have deemed to be sufficiently close for purposes of permitting a nonsignatory to enforce an arbitration agreement."

SuperValu and C&S also argued that they could enforce the arbitration agreements because some of the events at issue in the class action occurred before the agreements were transferred.

Montgomery found the argument failed because the examples used by SuperValu and C&S involved agreements that were terminated.

"Here, the arbitration agreements were assigned, not terminated," Montgomery wrote. "Thus, the issue is not whether the right to arbitrate survives, but rather who is entitled to assert that right."

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