SAN DIEGO (CN) – Major food suppliers and grocers were handed a victory in their antitrust case against the top three packaged tuna companies in the nation this week, as a federal court judge refused to dismiss the case.
U.S. District Judge Janis Sammartino noted in her 33-page order issued Tuesday the “factual footing has shifted” in the multidistrict litigation against Starkist, Bumble Bee and Chicken of the Sea parent company Tri-Union, consolidated in the Southern District of California.
“Whereas previously the United States Department of Justice had merely convened a grand jury to investigate potential violations of the Sherman Act in the packaged seafood industry, there have now been multiple guilty pleas either entered or agreed to pursuant to the grand jury investigation, including by senior executives of the Bumble Bee Corporation and the Bumble Bee Corporation itself,” Sammartino wrote.
The major packaged-tuna suppliers were sued in 2015 on claims of a conspiracy to raise tuna prices in the United States, which had been a floundering market as canned and packaged tuna appeal less to U.S. consumers. Since the action was filed in San Diego, the Justice Department has filed criminal charges against top executives following its investigation into the conspiracy.
Earlier this year, Bumble Bee pleaded guilty to a criminal conspiracy charge and agreed to pay $25 million for its involvement in the price-fixing scheme. Former Starkist and Del Monte executive Stephen Hodge has also pleaded guilty for his part in the conspiracy.
Since the Justice Department probe, government officials have handed over 2 million pages of documents to the plaintiffs’ counsel that were previously only available to the grand jury.
At issue in the case was when the suspected conspiracy began and ended.
Sammartino declined to dismiss the post-2013 conspiracy allegations against the tuna companies, finding it would “set a dangerous precedent regarding the ability to continually hamstring a plaintiff with wave after wave of motions to dismiss” since the tuna companies had not previously requested dismissal of over two years of the alleged conspiratorial reach.
She noted the amended complaint by the direct-purchaser plaintiffs includes a list of allegations from 2014 and 2015 regarding the continued conspiracy, including an email from Bumble Bee’s CEO regarding “keeping prices at current levels,” private meetings between CEOs of the packaged-tuna companies, internal price lists and distribution of conspiracy proceeds.
Those allegations are enough to support a plausible inference the conspiracy continued beyond 2013, Sammartino found.
The judge also refused to dismiss the pre-2011 conspiracy claims against Starkist and Del Monte, agreeing that the defendants’ arguments the allegations do not establish they were part of the conspiracy prior to 2011 are “absurd on their face.”
Evidence by plaintiffs that the tuna companies first began considering price-based collusion in 2004, and that defendant CEOs considered sharing internal price lists by email or fax only until Bumble Bee’s CEO told them to overnight the price lists and not share them via other electronic means, is enough to survive dismissal, Sammartino found.
During that same time in 2004 the defendant CEOs were also in close contact ahead of a major trade event in the industry which focused on the state of the U.S. tuna market. A memo between the defendants apparently confirmed when price increases would be announced by each company, according to Sammartino’s summary of the case.
Defendants’ “attempt to treat categories of events in isolation … fails to account for the entire picture revealed by plaintiffs’ complaints,” Sammartino wrote.
The judge did dismiss some of the state antitrust and consumer-protection claims brought under South Carolina, Illinois and New York laws, though the claims were dismissed without prejudice and can be amended.