PHILADELPHIA (CN) – The nation’s largest egg producers will face price-fixing claims over both unprocessed and processed egg products from a class of direct purchasers, a federal judge ruled.
The defendants, which include leading egg-industry trade groups, asked U.S. District Judge Gene Pratter to dismiss any claim that they conspired to fix the price of processed egg products, like pasteurized egg whites.
Seventeen related actions were consolidated before Pratter in December 2008.
Some of the plaintiffs in those actions accused egg-products producers of conspiring to allocate customers – an accusation that now appears abandoned, the defendants said.
The defendants told Pratter that they were concerned that plaintiffs’ references to “egg products” in their complaint might be used as leverage to revive that abandoned accusation, or as a wedge expanding the scope of discovery to include information outside of the alleged unprocessed egg supply-management conspiracy.
The complaint alleges anti-competitive conduct with respect to egg products, but fails to plausibly suggest that there was an egg-products conspiracy that was distinct from the claimed conspiracy to inflate the price of unprocessed eggs.
“Plaintiffs are trying to keep the door open to pursuing a distinct egg products conspiracy claim,” defendants argued.
But in a 16-page opinion filed Monday, Pratter said the defendants were trying to winnow pretrial issues, and that their motion – a 12(b)(6) “failure to state a claim” motion – is “not … an appropriate vehicle to achieve their goal.”
“Defendants have filed a motion that specifically requires an inquiry focused on whether the complaint states a claim,” Pratter wrote.
“It simply is not the best use of Rule 12(b) motion procedure to chisel issues for trial,” she found, noting that discovery, pretrial conferences, responsive pleadings and other case-management procedures were more appropriate methods to address the defendants’ concern that plaintiffs might pursue claims for two distinct price-fixing conspiracies.
And, Pratter said, it doesn’t even appear that the class is alleging the existence of two conspiracies.
“Plaintiffs articulate a single antitrust claim as to [unprocessed] shell eggs and egg products” and “seemingly agree that the SAC [second amended complaint] does not allege a distinct conspiracy as to egg products,” Pratter wrote.
Indeed, plaintiffs have acknowledged that they are claiming “a multi-faceted supply reduction and price fixing conspiracy directed at and involving both shell eggs and egg products.”
But in light of the claims made in earlier suits, Pratter said she understands the defendants’ concern that the term “egg products” might serve as a litigation tactic.
“The court …will not be surprised to see the concern articulated again in the course of discovery discussions-a chapter in which the concern may well be more appropriately addressed and put to use,” she wrote.
The plaintiffs have accused egg producers and their trade groups of engaging in eight coordinated actions over the course of a decade to reduce domestic egg production and jack up prices.
The owner of Land O’Lakes agreed to a $25 million settlement last year.
Another major egg producer, Sparboe Farms, was given preliminary approval in October 2009 for a nonmonetary settlement, under which Sparboe agreed to produce witnesses and documents for the class action.