Judge OKs majority of claims over fixing egg prices

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What's this story have to do with the price of eggs? Everything.

U.S. District Court Judge Gene E. K. Pratter of the Eastern District of Pennsylvania last week allowed to move forward the majority of indirect purchaser claims in a multidistrict class action suit over alleged price fixing for eggs and egg products.

The ruling marks another setback for the dozen or so defendants, among them a Gettysburg egg supplier represented by Pittsburgh-based Buchanan Ingersoll & Rooney.

The class of plaintiffs has been joined by some of the nation's largest supermarket retailers and cafeteria contractors.

Judge Pratter refused to dismiss most of the plaintiffs' state law consumer protection and unjust enrichment claims, and she rejected the defendants' arguments that the 26 named plaintiffs have no standing to bring antitrust claims under the laws of four states.

As with the "direct" purchaser plaintiffs, the indirect purchasers allege that the egg producers and three industry groups conspired to fix prices over a decade by instituting mandatory cage space and "molt and kill" programs to reduce hen populations, and by agreeing to export eggs to low-cost foreign markets at a loss in order to deplete U.S. inventories.

Collectively, these actions were known as the United Egg Producers Certification Program. If a producer complied with the program, it could use the program's official stamp on its products. Soon, major retailers were on board, saying they'd purchase only UEP-certified eggs.

The defendants argue that the certification program was a response to consumer demand for eggs produced from chickens raised in better living conditions.

Food service giant Sodexo Inc. and others argue that the egg prices were artificially inflated when the hens were killed off under the guise of more humane treatment. As a result, according to the suit, wholesale egg prices had skyrocketed by 2008.

In September, Judge Pratter also refused to dismiss the direct purchasers' claims against all but two of the defendants.

In their joint motion to dismiss the indirect purchaser claims, the egg producers argued that none of the named plaintiffs resided or purchased eggs in Iowa, Mississippi, North Dakota and South Dakota, and therefore they lacked standing to assert antitrust claims under the laws of those states.

Judge Pratter disagreed, finding that "on their faces, the four states' statutory provisions can plainly be construed to not require in-state residency or an in-state purchase, but rather only that some of the defendants' conduct occurred, or the effects of which were felt, within the state."

She also found the plaintiffs' consumer protection and unjust enrichment claims met state law guidelines in all but four states. (In all, the plaintiffs allege a federal Sherman Act claim for injunctive relief, 20 state antitrust claims, nine state consumer protection claims and 21 state unjust enrichment claims.)

David Bario is a reporter for The American Lawyer, a Legal Intelligencer affiliate based in New York. To read more articles like this, visit www.legalintelligencer.com .


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