Chief Judge Tunheim recently dismissed, with leave to amend, the class complaints in In Re Pork Antitrust Litigation.  The Pork case— filed in the District of Minnesota against Tyson, Hormel, JBS and other major pork producers—alleged a conspiracy beginning in 2009 to inflate artificially the price of pork sold in the United States.  While the court was “unwilling to force Defendants into significant and costly discovery without plausible allegations that they engaged in the conduct alleged,” Judge Tunheim provided the class plaintiffs with a guide to cure the deficiencies of their respective complaints.

The Pork Antitrust Litigation is one of several recent antitrust cases lodged against “Big Food” producers. Like the Broiler Chicken antitrust suit pending in the Northern District of Illinois, the allegations in Pork involve the defendants’ use of a benchmarking service to exchange sensitive business data and coordinated production cuts aimed at raising prices industry-wide.  Both the Chicken and Pork complaints chronicle Big Food CEOs’ practice of publically calling for production cuts as evidence of a conspiracy.

Because conspiracies are clandestine by nature, plaintiffs often lack direct evidence of the cartel.  Antitrust law therefore allows plaintiffs to plead the existence of a conspiracy by inference when circumstances exist that signal-concerted action, or in the words of the United States Supreme Court, “evidence that tends to exclude the possibility of independent action.”

Specifically, plaintiffs must allege that defendants engage in parallel conduct and that certain “plus factors” exist, making it more likely that the parallel conduct is the result of a collusive behavior.   Judge Tunheim ruled that although the Pork plaintiffs demonstrated that the U.S. pork market endured supply contractions during the alleged conspiracy period, with the exception of defendant Smithfield, they failed to adequately allege that individual defendants decreased production, or that these market-wide periods of reduced output were a result of conscious “parallel conduct” by the defendants.

On this point, the court distinguished the sufficient allegations of parallel conduct in Chicken. Judge Tunheim noted that the Chicken complaints specified the individual companies responsible for production cuts and the timing of the cuts, which, in turn, provided the needed support for the theory that the defendants acted in concert.

Judge Tunheim stated that he did “not believe that those deficiencies cannot be cured.” The class lawyers confirmed their intention to amend and the next iteration of the complaint will almost certainly include more detailed allegations on defendant-specific production cuts that the Court previously found lacking.

Eighty-six years after the repeal of Prohibition, Bacardi USA and Winn-Dixie are facing a putative class action predicated on Florida Statute Section 572.455, a 150 year-old remnant of the temperance movement.  In Uri Marrache v. Bacardi USA, Inc., et al., Case No. 2019-023668-CA-01 (Miami-Dade Cir. Ct. Aug. 9, 2019), Plaintiff alleges that Bombay Sapphire gin, a Bacardi product sold at Winn-Dixie, is “adulterated” with grains of paradise in violation of Section 572.455 and Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”).

Grains of paradise are the seeds of an African plant in the ginger family, known as Aframomum melegueta. They are ground and used as a spice akin to cardamom, with a citrusy black pepper taste.  Florida Statute Section 562.455 states that, “[w]hoever adulterates for the purpose of sale, any liquor, used or intended for drink with . . . grains of paradise. . . or any other substance which is poisonous or injurious to health, and whoever knowingly sells any liquor so adulterated shall be guilty of a felony of the third degree[.]”

Continue Reading Trouble in Paradise for Bacardi and Winn-Dixie Over New FDUTPA Class Action

Eager to curb foodborne-illness outbreaks, retail giants like Walmart and Albertsons are turning to blockchain technology [1] to track exactly where their foods are coming from. Blockchain, as compared to the eye-straining, paper-heavy tracking systems before it, allows retailers to trace the supply-chain history for a single food item within seconds.

For example, in a test case using IBM’s blockchain technology, Walmart traced the supply chain for two off-the-shelf mangoes randomly taken from one of its stores. Using conventional source-checking methods, it took them 7 days to do so. Through blockchain, however, they were able to track the entire supply chain in 2.2 seconds!  As a former Walmart executive put it, blockchain “allows us to see the whole chain in seconds! We [could] take a jar of baby food and see where it was manufactured and trace back all the ingredients to the farms!” Before blockchain, that simply would not have been feasible.

Continue Reading Blockchain Will Likely Make a Meaningful Impact on “Big Food” Litigation

The active ingredient in popular weed killers, glyphosate, has gotten bad press lately.  Thousands of plaintiffs have alleged that exposure to it caused their cancers.  Jurors have responded by invoking punitive damages and awarding billion dollar verdicts.  These headline-grabbing results have been subsequently reduced by court on legal grounds.

Some advocacy groups are claiming that the chemical’s presence extends beyond weed killers.   For example, the Environmental Working Group recently conducted a study that purports to show traces of the chemical present in many Cheerios and Quaker brand products.  To no one’s surprise, civil lawsuits followed.

Continue Reading Speculative Claims Sink Cheerios Glyphosate Suit

What started out as a proposed merger between two of the largest packaged seafood manufacturers spawned a lengthy criminal investigation into antitrust violations in the tuna industry by the Department of Justice (DOJ) and multiple class and individual civil lawsuits. After four years of litigation, a major development in the class action lawsuits occurred– the Court certified three putative classes.

In 2015, the Department of Justice investigated a proposed merger between Thai Union Group P.C.L. (the parent company of Chicken of the Sea) and Bumble Bee Foods LLC. As the DOJ’s civil attorneys reviewed information related to the merger, they discovered materials that appeared to raise criminal concerns.[1]

Continue Reading Big Food Price-Fixing Update: Court Certifies Three Putative Classes in Packaged Seafood Litigation

plant based proteinCapitalizing on an increasingly health and environmentally conscious era, plant-based meat substitute companies are positioning themselves as the future of protein. On May 2, 2019, Beyond Meat became the first plant-based product company to go public. Its stock skyrocketed to become the highest performing first-day public offering in nearly two decades. Impossible Foods is also performing well. While the company is in no rush to go public, they just secured $300 million in their latest funding round.

In light of these recent successes, the meat industry is grappling with how to address the new food phenomenon. With the long-term viability of the alternative meat market yet to be seen, traditional meat companies are taking both an offensive and defensive approach. Continue Reading Big Food and Plant-Based Protein: Potential MEATing of the Minds?

beefWhen it rains, it pours—and for the country’s largest protein producers, the downpour is coming in the form of high-profile antitrust lawsuits. Over the past few years, food giants like Tyson and JBS (majority owner of Pilgrim’s Pride) have been named as a defendant in price-fixing cases relating to chicken and pork. Now, Tyson, JBS and Cargill face claims asserted by both consumers and suppliers of beef. According to these new claims, the beef producers conspired to increase their profits by both decreasing the supply-side prices they paid and increasing the prices their customers paid. Continue Reading Beef Industry Reeks of Collusion, Plaintiffs Allege

Price FixingScott Wagner and Lori Lustrin discuss with Law360 the new wave of antitrust cases emerging in the food and beverage industry.

Price-fixing cases over the past decade have read like a virtual electronics product materials list. Government investigators and civil plaintiffs have pursued actions involving a wide array of electronic parts ranging from passive components like capacitors and inverters to large, high-cost components such as LCDs and cathode ray tubes. Recently, however, a new wave of antitrust cases has emerged, and it looks far more like a grocery list.

It is now big food’s turn in the crosshairs of government regulators and civil plaintiffs. Indeed, over the past five years alone, high-profile price-fixing cases have been launched against the manufacturers of everything from milk, to mushrooms, to the biggest protein staples in the American diet: tuna, chicken and pork. And, in the past week alone, conspiracy claims have been lodged against manufacturers of beef and farm-raised salmon.

To read the full article, click here.

water

Water: two parts hydrogen, one part oxygen. It seems simple enough, but for companies selling bottled water, liability lurks below the surface. According to a recent lawsuit, consumers care not only about what is in their water; they care about from where it comes from. Perhaps more importantly, according to the plaintiffs—so do regulators.

In Patane v. Nestle Waters N. Am. Inc., 314 F.Supp.3d 375 (D.Conn. 2018), Nestle faces allegations that it made millions of dollars by fraudulently labeling Poland Spring Water. The complaint, filed by plaintiffs from nine different states, claims that Nestle bilked consumers out of millions by selling tap water under the guise of spring water. Continue Reading Mislabeling Claims Against Poland Spring Water Survive Dismissal

CBDHistorically, all forms of cannabis—both hemp and marijuana—have been federally designated as illegal substances. That all changed this past December when the President signed the Agricultural Improvement Act (2018 Farm Bill) into law, declassifying hemp as a Schedule 1 substance.

As a result, cannabidiol (CBD)—the non-psychoactive compound found in hemp known for its relaxing and healing properties—has been catapulted into the national spotlight. With the green light from Congress, hemp-derived CBD oils, lotions, and gummies formerly found only in states where recreational marijuana is legal, are now making their way onto store shelves nationally. Continue Reading FDA to Consider Regulation of CBD in Food