Peterson v. Stats
Peterson v. Agri Stats, Inc. DO NOT DOCKET. ALL DOCUMENTS SHOULD BE FILED IN 20-cv-1319 JRT/HB .
- John Tunheim
- 0:19-cv-01129
- U.S. District Court · District of Minnesota
- 21
In Peterson v. JBS USA Food Company, Judge Tunheim dismissed cattle-price-fixing claims but allowed plaintiffs to amend their complaints.
The plaintiffs’ current complaints were dismissed without prejudice, giving them an opportunity to amend. The defendants obtained dismissal of the claims at the pleading stage, but the order allowed amended complaints to be filed.
What happened
In Peterson v. JBS USA Food Company, cattle producers and other plaintiffs alleged that four meat-packing companies conspired to lower fed-cattle prices by reducing purchases and slaughtering, coordinating procurement practices, and taking other actions. They brought federal and state antitrust claims, along with claims under the Commodities Exchange Act and the Packers and Stockyards Act.
The court concluded that the plaintiffs had not described their confidential witnesses’ alleged information in enough detail to provide direct evidence of an agreement. It also found that the plaintiffs had not provided enough specific information about each defendant’s conduct to support an inference of a conspiracy from similar behavior. Because the related state, commodities, and Packers and Stockyards Act claims depended on the same deficient conspiracy allegations or otherwise lacked sufficient allegations of anticompetitive conduct, those claims also could not proceed.
Judge Tunheim granted both defendants’ joint motions to dismiss. He dismissed both second amended complaints without prejudice, allowed the plaintiffs ninety [90] dates from the order to file amended complaints, and denied as moot the individual motions to dismiss and the motion to approve alternative service.
The detailed version
- Peterson v. Stats · No. 0:19-cv-01129
- John Tunheim
- Sept. 29, 2020
Background
The opinion addresses several consolidated or jointly heard putative class actions concerning the market for fed cattle. The plaintiffs alleged that JBS, Cargill, National Beef, and Tyson conspired to suppress the prices paid for fed cattle beginning at least January 1, 2015. They alleged that the defendants reduced or restrained slaughter numbers, reduced cash-cattle purchases, coordinated procurement practices, imported foreign cattle when domestic prices were low, and closed or failed to expand slaughtering facilities.
The direct-purchaser plaintiffs sought treble damages under the Clayton Act. The indirect-purchaser plaintiffs in Peterson sought injunctive relief under the Clayton Act and damages under various state antitrust, consumer-protection, and unjust-enrichment laws. The plaintiffs also asserted claims under the Commodities Exchange Act and its regulations and under the Packers and Stockyards Act.
Rule 12(b)(6) standard
The defendants moved to dismiss under Rule 12(b)(6), which tests whether a complaint alleges enough facts to state a legally plausible claim. The court accepted factual allegations as true for purposes of the motions but did not accept legal conclusions presented as facts.
For the Sherman Act § 1 claims, the court explained that the plaintiffs had to plausibly allege concerted action—an agreement or meeting of the minds among the defendants. They could do so through sufficiently detailed direct evidence or through parallel conduct plus additional facts known as “plus factors.”
Sherman Act claims
The court found that the two confidential witnesses did not provide sufficiently detailed direct evidence. The plaintiffs did not identify the employer of Witness 1 or the feedlot where Witness 2 worked. As a result, the complaint did not adequately explain the witnesses’ jobs or how those jobs gave them the knowledge attributed to them. The court also found that Witness 2’s description of a queuing convention did not match the main alleged conspiracy described by Witness 1.
The court recognized that the complaint alleged strong plus factors, including a highly concentrated market, inelastic demand, communications through trade associations and conferences, alleged actions against the defendants’ self-interest, and a market-wide shift from cash sales to formula contracts. But the court found the allegations of parallel conduct sparse and conclusory. The complaint relied heavily on industry-wide data and did not provide enough defendant-specific information about who acted, how they acted, or when they acted. The court therefore concluded that the plaintiffs had not adequately pleaded parallel conduct and granted the defendants’ motion to dismiss the Sherman Act claims.
Other claims
The court dismissed the indirect plaintiffs’ state-law antitrust, consumer-protection, and unjust-enrichment claims because they relied on the same alleged price-fixing conspiracy that was insufficiently pleaded under the Sherman Act.
The court also dismissed the Commodities Exchange Act claims because the parties agreed those claims relied on the same alleged conspiracy, and the court found that the failed conspiracy allegations could not adequately support those claims.
For the Packers and Stockyards Act, the court dismissed claims under §§ 202(e), (f), and (g) because those claims required an antitrust conspiracy. The court separately considered the § 202(a) claim, which has a broader scope than the Sherman Act, but found that the alleged one-year reduction in slaughter volume and the alleged queuing convention did not sufficiently allege conduct that could suppress or reduce competition.
Leave to amend and order
The court granted the plaintiffs leave to amend because it found that amendment was appropriate, particularly concerning the confidential-witness allegations and the Commodities Exchange Act and Packers and Stockyards Act claims.
The order granted the defendants’ joint motion to dismiss in Civil No. 19-1222 and their joint motion to dismiss in Civil No. 19-1129. It dismissed both second amended complaints without prejudice. It denied as moot all listed individual motions to dismiss and the motion to approve alternative service. The plaintiffs were given ninety [90] dates from the order to file amended complaints.
Read the full 21-page opinion on CourtListener, the free public archive maintained by the Free Law Project.