Egg Antitrust Case Will Proceed Under Rule of Reason Standard

A panel of Third Circuit Judges affirmed on Monday a decision from the Eastern District of Pennsylvania that ruled for the defendants in an antitrust action.  The appeals court agreed with District Judge Gene E.K. Pratter’s decision to view each of the alleged stratagems of the conspiracy separately and use the more commonly applied rule of reason to evaluate whether defendants were acting anticompetitively. 

Appellants, T.K. Ribbings Family Restaurant, LLC; John A. Lisciandro, DBA Lisciandro’s Restaurant; Eby-Brown Company LLC; and Karetas Foods Inc., originally sued alleging “that egg producers conspired to inflate prices through three stratagems: (1) early slaughtering of hens and similar supply-reducing steps; (2) creation of an animal welfare program that was actually designed to reduce the egg supply; and (3) coordinated exports of eggs.”  The plaintiffs argued that all three of those contrivances were part of a single overarching conspiracy that was anticompetitive per se and unlawful under the Sherman Act, 15 U.S.C. § 1 et seq.  The defendants countered with that each part of the conspiracy should be evaluated individually and through the rule of reason, which the district court accepted after a jury’s verdict.

On appeal, the appellants argued the district court should have used the per se illegality standard of review and viewed the components of the alleged conspiracy as a single overarching action. The plaintiffs originally sued several other defendants whom have all since settled, but Rose Acre and two others went to trial.  The plaintiffs only appealed the verdict as to Rose Arce.

In the opinion, the court stated “[t]he plaintiffs evidently believe that, because they are masters of their complaint, they are also masters of the District Court in deciding the analytical approach to be taken in the case,” in regards to district court not using the per se analysis.  Furthermore, the court noted, “[t]heir power to dictate analysis and outcome is not what they wish it were.” 

The appellants also challenged the district court not granting their Rule 59(e) motion.  The appeals court held, “[t]he plaintiffs’ Rule 59(e) motion is really just a recasting of their argument that any brake on expanded supply is illegal per se.  They proposed a verdict form requiring the jury to determine whether Rose Acre participated in a conspiracy to reduce the supply of eggs and, if so, whether that “conspiracy unreasonably restrained trade.””  However, the court continued, “throughout this litigation, they have never wanted an answer to that second question.  Their position has always been that the answer to the first question is alone dispositive.” 

In the conclusion of the opinion the panel of Circuit Court Judges Jordan, Restrepo, and Fuentes applauded the District Judge Pratter’s handling of the case: “The District Court did an admirable job in addressing the myriad legal issues presented in this complex case and in presiding at trial.”

Appellants were represented by Wollmuth Maher & Deutsch, Bernstein Liebhard, Hausfeld, Quinn Emanuel Urquhart & Sullivan, Lite DePalma Greenberg, and Susman Godfrey.  Appellee Rose Acre Farms, Inc. was represented by Porter Wright Morris & Arthur, and Duane Morris.  Counsel for Amicus National Council of Farmer Cooperatives was Dorsey & Whitney.