Court allows tuna price-fixing claim to proceed

January 12, 2017

A San Diego federal judge has allowed direct and indirect purchasers to proceed with claims that Bumble Bee Foods LLC, StarKist Co. and other makers of packaged seafood have conspired to fix tuna prices, but halted the plaintiffs’ allegations about other products.

U.S. District Judge Janis L. Sammartino of the Southern District of California said the plaintiffs’ allegations regarding a tuna-specific conspiracy did not create a “correspondingly viable conspiracy encompassing the entire packaged seafood product category.”

In December 2015 the Judicial Panel on Multidistrict Litigation granted a motion to centralize pretrial proceedings in nine related actions against the packed seafood makers in the San Diego federal court. At the time of the JPML’s order, there were 44 pending tag-along actions filed in four different district courts.

The Justice Department’s antitrust division intervened in the action in January 2016, according to Judge Sammartino’s opinion. The DOJ noted a “federal grand jury empanelled in the U.S. District Court for the Northern District of California [was] investigating potential violations of Section 1 of the Sherman Act, 15 U.S.C.A. § 1, in the packaged seafood industry,” the opinion said.

Judge Sammartino subsequently divided the plaintiffs into four groups: direct purchasers proceeding individually against the defendants, direct purchasers proceeding as a class against the defendants, commercial food preparers who purchased products indirectly from the defendants, and all other indirect purchasers of packaged seafood products.

After the defendants moved to dismiss the suits, Judge Sammartino, with the parties’ consent, bifurcated oral argument on the motions between issues of federal and state law. Her Jan. 3 decision addresses only the federal issues, according to the opinion.

The Justice Department notified the court on Dec. 7 that it filed its first criminal case stemming from the grand jury investigation. United States v. Cameron, No. 16-501, criminal complaint filed (N.D. Cal. Dec. 7, 2016).

Judge Sammartino held oral argument on the federal issues Dec. 13.

Packaged-seafood conspiracy

All of the defendants except for Tri-Union Seafoods LLC, which markets its products under the Chicken of the Sea label, and its parent, Thai Union Frozen Products Public Co. Ltd., sought dismissal of the plaintiffs’ claims that they conspired to fix the price of “shelf-stable packaged seafood.”

The moving defendants argued that “not a single plaintiff has even attempted to allege any collusive conduct regarding any type of packaged seafood product other than tuna.”

Relying on In re Capacitors Antitrust Litigation, 106 F. Supp. 3d 1051 (N.D. Cal. 2015), the plaintiffs argued that while their complaints focused on tuna, they include sufficient allegations to create an inference of a larger conspiracy.

Quoting Capacitors, they said there is no requirement that their complaints draw the boundaries of the conspiracies alleged “with the precision of a diamond cutter.”

Judge Sammartino disagreed, saying that factual circumstances of Capacitors were distinguishable from the facts at bar despite both suits involving disparate conspiracy allegations.

“Unlike Capacitors, where there were specific allegations regarding the defendants’ participation in both disparate conspiracies,” the plaintiffs’ specific allegations relate almost exclusively to tuna.

She refused the plaintiffs’ bid to “draw the inference that there is no reason to segregate tuna from the overall packaged seafood market,” saying it was “improper.”

“Sufficient allegations of a tuna-specific conspiracy do not on these facts therefore create a correspondingly viable conspiracy encompassing the entire packaged seafood product category,” the judge wrote.

Tuna-specific conspiracy

Turning to the tuna-specific allegations of the complaints, Judge Sammartino found them sufficient to withstand the defendants’ motion to dismiss.

The Justice Department’s pending antitrust investigation; evidence that after 49 days of communications, StarKist, Chicken of the Sea and Bumble Bee announced and implemented “matching tuna list-price increases”; and their joint refusal to offer “responsibly caught” tuna under their flagship brands, were sufficient to “nudge their overarching allegations of a conspiracy over the line from possible to plausible, the judge wrote.

In re Packaged Seafood Products Antitrust Litigation, No. 15-md-2670, 2017 WL 35571 (S.D. Cal. Jan. 3, 2016).