Little v. Pacific Seafood Procurement, LLC

Background

Brand Little, a Dungeness crabber, alleged that Pacific Seafood Procurement, LLC, and other direct purchasers of Dungeness crab conspired to fix or suppress the prices offered to crabbers. He relied partly on allegations that other buyers waited for Pacific Seafood to announce its prices and then offered substantially similar prices. Little also alleged that Pacific Seafood coerced buyers by refusing to purchase crab from a noncompliant buyer, selling cooked crab below cost, failing to process crab for buyers, and denying access to other fish products.

Little asserted claims under Sherman Act sections 1 and 2, California’s Cartwright Act, California’s Unfair Practices Act, and California’s Unfair Competition Law. He also sought declaratory relief under 28 U.S.C. § 2201.

Sherman Act Section 1

The court held that parallel pricing conduct, by itself, was not enough to plausibly plead a price-fixing conspiracy, particularly because the complaint also supplied an economically rational explanation for buyers to track Pacific Seafood’s prices. The court recognized that the alleged coercion could support a conspiracy theory if buyers adopted fixed prices under pressure. But Little alleged that all or substantially all of the hundreds of West Coast direct purchasers participated, while providing only a few specific coercion examples affecting some geographic areas. The court found that the broader allegations were too general or conclusory to support a plausible cartel involving hundreds of buyers.

The court dismissed Little’s Sherman Act section 1 claim, with leave to amend.

Sherman Act Section 2

Little alleged monopsony and attempted monopsony. A monopsony is a market in which one buyer or a group of buyers makes joint purchasing decisions and uses buyer power to pay suppliers less than they would receive in a competitive market.

The court found that Pacific Seafood plausibly had monopsony power in the market for processing Dungeness crab because Little alleged that it owned or controlled substantially all of the processing capacity on the West Coast. But Little sold crab to direct purchasers rather than directly to processors, making his standing to sue over the processing market doubtful.

Little instead proposed a “wholesale-input market” combining the market in which crabbers sell to direct purchasers with the market in which direct purchasers sell leftover crab to processors. The court found that this market definition was facially unsustainable because Little’s own leveraging theory depended on the existence of two separate markets. The court dismissed Little’s Sherman Act section 2 claims, with leave to amend.

State-Law Claims

The court dismissed the Cartwright Act claim because Little did not explain why it should succeed despite the pleading deficiencies in his Sherman Act claims.

The court dismissed the Unfair Practices Act claim, with leave to amend. Little had not adequately alleged Pacific Seafood’s cost of doing business for his claim that Pacific Seafood sold crab below cost, and he did not respond to Pacific Seafood’s arguments concerning the claim based on secret rebates, refunds, commissions, or discounts. The court treated that unaddressed claim as abandoned.

The court also dismissed the Unfair Competition Law claim, with leave to amend. Little had not plausibly alleged an unlawful, fraudulent, or unfair business practice. His fraud allegations lacked the required details about who committed the misconduct, what happened, and when, where, and how it occurred. His unfairness theory relied on the same insufficiently pleaded price-fixing and monopsony allegations.

Declaratory Relief and Disposition

The court held that the Declaratory Judgment Act does not create an independent claim when no other legal claim exists. It dismissed Little’s standalone declaratory-judgment claim without leave to amend. The court stated that if Little successfully pleads another claim, this dismissal would not prevent him from seeking declaratory relief connected to that claim.

Judge Alex G. Tse granted Pacific Seafood’s motion to dismiss, with leave to amend all claims except Little’s standalone declaratory-judgment claim. The court set August 20, 2024, as the deadline for an amended complaint. It also allowed Little to request targeted discovery through a joint letter brief by June 6, 2024.