In Re Wholesale Grocery Products Antitrust Litigation. This Order Relates To All Actions.

722 F.Supp.2d 1079

In re WHOLESALE GROCERY PRODUCTS ANTITRUST LITIGATION. This Order Relates to All Actions.

Court File No. 09-MD-2090 ADM/AJB.

United States District Court,D. Minnesota.

July 7, 2010.

W. Joseph Bruckner, Esq., Elizabeth R. Odette, Esq., Lockridge, Grindal, Nauen, PLLP, Minneapolis, MN; Kevin M. Magnuson, Esq., Kelley, Wolter & Scott, PA, Minneapolis, MN; Richard B. Drubel, Esq., Kimberly H. Schultz, Esq., Matthew J. Henken, Esq., Boies, Schiller & Flexner, LLP, Hanover, NH; Daniel A. Kotchen, Kotchen & Low, LLP, Washington, D.C.; Joel C. Meredith, Esq., Daniel B. Allanoff, Esq., Meredith, Cohen, Greenfogel & Skirnick, PC, Philadelphia, PA; and Edward T. Dangel, III, Esq., Dangel & Mattchen, LLP, Boston, MA, appeared for and on behalf of Plaintiffs.

Stephen P. Safranski, Esq., K. Craig Wildfang, Esq., E. Casey Beckett, Esq., Robins, Kaplan, Miller & Ciresi, LLP, Minneapolis, MN, appeared for and on behalf of Defendant SuperValu, Inc.

Charles A. Loughlin, Esq., Howrey LLP, Washington, D.C.; and Todd A. Wind, Esq., Fredrikson & Byron, PA, Minneapolis, MN, appeared for and on behalf of Defendant C & S Wholesale Grocers.

MEMORANDUM OPINION AND ORDER

ANN D. MONTGOMERY, District Judge.

I. INTRODUCTION

On April 22, 2010, the undersigned United States District Judge heard oral argument on Defendants SuperValu Inc. (“SuperValu”) and C & S Wholesale Grocers, Inc.'s (“C & S”) (collectively “Defendants”) Motion to Dismiss [Docket No. 24]. Plaintiffs Blue Goose Super Market, Inc. (“Blue Goose”), Charles W. Prather Company, Inc. d/b/a Prather's IGA (“Prather's”), D & G, Inc. d/b/a Gary's Foods (“Gary's Foods”), DeLuca's Corporation (“DeLuca's”), and Robert Warren Wentworth Jr., Inc. d/b/a Rangeley IGA's (“Rangeley IGA”) (collectively “Plaintiffs”) Motion for Partial Summary Judgment [Docket No. 28] was argued at the same hearing. For the reasons set forth below, Defendants' Motion to Dismiss is denied and Plaintiffs' Motion for Partial Summary Judgment is denied.

II. BACKGROUND

This is multidistrict litigation of four antitrust lawsuits against SuperValu and C & S, two of the largest wholesale grocers in the United States. Consol. Am. Class Action Compl. (“Compl.”) [Docket No. 18] ¶ 1. SuperValu's business is largely concentrated in the Midwest while C & S's business is primarily in New England. Id. Plaintiffs operate retail grocery stores in those regions and purchased wholesale grocery products and related services directly from SuperValu and C & S. Id. ¶¶ 5-9.

Plaintiffs' antitrust claims against Defendants stem from events that transpired after Fleming Companies, also a wholesale grocer, filed for bankruptcy in 2003. Id. ¶ 25. In July of that year, C & S agreed to purchase Fleming's wholesale grocery operations, including its three distribution facilities in the Midwest. Id. ¶¶ 25-26. Shortly after the purchase, C & S and SuperValu began negotiating an asset transfer. See Beckett Decl. [Docket No. 26], Ex. C; Bruckner Aff. [Docket No. 30], Ex. B (Asset Exchange Agreement). On September 6, 2003, Defendants entered into an Asset Exchange Agreement (“AEA” or “Agreement”), under which C & S transferred to SuperValu the recently acquired Fleming Midwest operations, which included three operating distribution facilities, retail supply agreements, notes, leases, franchise agreements, and customer goodwill, and SuperValu transferred its New England operations, which included three operating distribution facilities, a distribution facility SuperValu had closed in 2001, retail supply agreements, notes, leases, franchise agreements, and customer goodwill, to C & S. Id. §§ 1.1, 1.3; Bruckner Aff., Exs. B-1, B-3. At the time of the asset transfer, SuperValu had been competing against C & S in New England for several years, but C & S had not been competing against SuperValu in the Midwest. Compl. ¶ 21; Pls.' Mem. in Supp. of Mot. for Partial Summ. J. [Docket No. 29] at 3.

The Agreement also included non-compete provisions. C & S agreed (1) not to enter into a supply agreement or other arrangement to supply product to any of the Fleming customers it was transferring to SuperValu for the two years following the closing date of the AEA and (2) not to solicit any of those Fleming customers for the five years following the closing of the AEA. Asset Exchange Agreement §§ 5.8(a), 3.11. SuperValu made reciprocal two and five-year commitments regarding the customers served by the New England operations it was transferring to C & S. Id. §§ 4.9, 6.2. The former Fleming facilities in the Midwest acquired by SuperValu were closed shortly after the closing of the Agreement, and C & S closed the New England facilities it had acquired from SuperValu in the spring of 2004. Compl. ¶¶ 1, 37; Beckett Decl., Ex. I; Bruckner Aff., Ex. G.

On December 31, 2008, the first of the four lawsuits that have been consolidated for this multidistrict litigation was filed. Plaintiffs claim that Defendants violated section 1 of the Sherman Act, 15 U.S.C. § 1, by executing the AEA, which they allege “had no legitimate business purpose and was simply a sham transaction by Defendants to conceal their secret, illegal non-compete agreement allocating the New England market and customers to C & S and the Midwest market and customers to SuperValu.” Compl. ¶ 37. Plaintiffs assert that Defendants' Agreement amounts to a “restraint of trade and commerce, the purpose and effect of which is to allocate customers and territories for full-line grocery wholesale goods and services, to suppress competition and allow Defendants to charge supra-competitive prices in the Midwest and New England.” Id. ¶ 76. Plaintiffs allege injury by paying supra-competitive prices for wholesale groceries and related services from Defendants.

III. DISCUSSION

A. Defendants' Motion to Dismiss

Defendants move to dismiss the sole count of Plaintiffs' Complaint, which asserts claims for treble damages under section 4 of the Clayton Act, 15 U.S.C. § 15, for alleged violations of section 1 of the Sherman Act. Rule 12 of the Federal Rules of Civil Procedure provides that a party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). In considering a motion to dismiss, the pleadings are construed in the light most favorable to the nonmoving party, and the facts alleged in the complaint must be taken as true. Hamm v. Groose, 15 F.3d 110, 112 (8th Cir.1994); Ossman v. Diana Corp., 825 F.Supp. 870, 879-80 (D.Minn.1993). Any ambiguities concerning the sufficiency of the claims must be resolved in favor of the nonmoving party. Ossman, 825 F.Supp. at 880.

Under Rule 8(a) of the Federal Rules of Civil Procedure, pleadings “shall contain a short and plain statement of the claim showing that the pleader is entitled to relief.” A pleading must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw a reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). Determining whether a complaint states a plausible claim for relief is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. “But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but not ‘shown’-‘that the pleader is entitled to relief.’ ” Id. (quoting Fed. R. Civ. P. 8(a)(2)).

1. Statute of Limitations

Defendants' first asserted ground for dismissal is that Plaintiffs' antitrust claims are time barred. “Actions seeking damages pursuant to section 4 of the Clayton Act are subject to the four-year statute of limitations provided in section 4B of the Clayton Act, 15 U.S.C. § 15b.” Little Rock Cardiology Clinic, P.A. v. Baptist Health, 573 F.Supp.2d 1125, 1132 (E.D.Ark.2008). The earliest of the four lawsuits was filed on December 31, 2008, and, thus, Defendants argue Plaintiffs are time barred from asserting any antitrust claims that accrued prior to December 31, 2004. Because Defendants executed the AEA in September 2003 and completed their closures in the spring of 2004, Defendants conclude, Plaintiffs' antitrust claims accrued well before December 31, 2004. Plaintiffs respond that their claims are not time barred because (1) the fraudulent concealment doctrine tolled the limitations period and (2) the continuing violation doctrine restarted the limitations period with each overt act-i.e., each instance of Defendants charging supra-competitive prices.

a. Fraudulent Concealment

Plaintiffs allege that Defendants concealed the existence of their unlawful market and customer allocation agreement from its inception, thus tolling the entirety of the four-year statute of limitations until November 2008 when the alleged conspiracy was discovered by Plaintiffs' counsel.

Compl. ¶¶ 44-50. “The general doctrine that the statute of limitation does not run while the defendant's offense is ‘fraudulently concealed’ has been adopted in antitrust litigation.” II Phillip Areeda & Herbert Hovencamp, Antitrust Law ¶ 320e (3d ed. 2007); Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1051 (8th Cir.2000) (“The statute can be tolled under certain circumstances, such as where a defendant has engaged in fraudulent concealment.”). To toll the statute of limitations based on fraudulent concealment, Plaintiffs must prove that (1) Defendants concealed Plaintiffs' cause of action, (2) Plaintiffs failed to discover the cause of action, and (3) Plaintiffs exercised due diligence in attempting to discover the claim. In re Milk Prods. Antitrust Litig., 84 F.Supp.2d 1016, 1022 (D.Minn.1997).

The parties disagree over the standard...