Whalen v. Albertsons Companies Inc.

Background

The plaintiffs challenged a proposed merger involving Albertsons and Kroger. They alleged that the merger could harm competition among grocery stores and cause higher prices. The amended complaint included 24 plaintiffs, but only a few alleged that they had shopped at an Albertsons or Kroger store. The plaintiffs also added market-concentration allegations concerning Tucson, Reno, Colorado Springs, and Seattle, using the Herfindahl-Hirschman Index, a measure of market concentration.

Standing and the Merger Claims

The court granted the motions to dismiss because the plaintiffs failed to allege Article III standing. Standing is the constitutional requirement that a plaintiff show a likely personal injury that the court can address. The court said the plaintiffs did not adequately explain whether they still shopped at the stores, how often they shopped there, what alternative grocery stores were reasonably available, or how the proposed divestiture of stores would affect them. The court also said the market-concentration allegations did not connect conditions across entire metropolitan areas to the places where the individual plaintiffs could reasonably be expected to shop.

The court noted that the HHI allegations appeared more directed to the merits of the antitrust claims—whether competition generally would be harmed—than to whether these plaintiffs personally faced likely injury. The court also found that the plaintiffs did not explain the source of their claimed HHI increases or account for the possibility that up to 650 stores could be divested before the merger. The court did not decide whether the proposed merger violated antitrust law.

Claim Against Cerberus

The court also dismissed the claim against Cerberus for lack of standing. It ruled that the allegations against Cerberus had additional defects: the plaintiffs had not added facts supporting their assertion that Albertsons was financially weakened by a dividend; they had not shown that Section 16 of the Clayton Act allows the requested disgorgement remedy; and they had dropped their Sherman Act Section 1 claim while asserting only a Clayton Act Section 7 claim against Cerberus. The court concluded that Cerberus was not a party to the merger and therefore could not be liable under Section 7. Because amendment would be futile, the court dismissed the claim against Cerberus without leave to amend.

Disposition

The motions to dismiss were granted. The plaintiffs were given another opportunity to amend their claims against Albertsons and Kroger, and any amended complaint had to be filed within 21 days. The defendants’ response was due 21 days after that. The claim against Cerberus was dismissed for lack of jurisdiction without leave to amend.