In re: Processed Egg Products v. ( 2021 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 20-1045, 20-1127
In Re: PROCESSED EGG PRODUCTS ANTITRUST LITIGATION
THE KROGER CO.; SAFEWAY, INC.; ROUNDY’S SUPERMARKETS, INC.;
WALGREEN CO.; HY-VEE, INC.; ALBERTSONS LLC; THE GREAT ATLANTIC &
PACIFIC TEA COMPANY, INC.; H.E. BUTT GROCERY COMPANY; SUPERVALU
INC.; PUBLIX SUPERMARKETS, INC.; GREAT EAGLE, INC.; WINN-DIXIE
STORES, INC.,
Appellants in 20-1045
v.
ROSE ACRE FARMS; UNITED EGG PRODUCERS, INC.; UNITED STATES EGG
MARKETERS, INC.
Rose Acre Farms,
Appellant in 20-1127
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 2-08-md-02002)
District Judge: Hon. Gene E.K. Pratter
Argued January 26, 2021
Before: JORDAN, MATEY, Circuit Judges, and HORAN,* District Judge.
(Opinion filed: March 15, 2021)
*
Honorable Marilyn J. Horan, District Judge, United States District Court for the
Western District of Pennsylvania, sitting by designation.
William J. Blechman
Michael A. Ponzoli
Kenny Nachwalter
1441 Brickell Avenue
Four Seasons Tower, Suite 1100
Miami, FL 33131
Paul E. Slater [ARGUED]
Sperling & Slater
55 West Monroe Street, Suite 3200
Chicago, IL 60603
Counsel for Appellants/Cross-Appellees Kroger Co., Safeway Inc., Roundy’s
Supermarkets, Inc., Walgreen Co., Hy Vee Inc., Albertsons LLC, Great
Atlantic & Pacific Tea Co. Inc., and H.E. Butt Grocery Co.
David P. Germaine
Paul E. Slater [ARGUED]
Sperling & Slater
55 West Monroe Street, Suite 3200
Chicago, IL 60603
Counsel for Appellants/Cross-Appellees Supervalu Inc. and Publix Super
Markets Inc.
Moira E. Cain-Mannix
Brian C. Hill
Marcus & Shapira
301 Grant Street
One Oxford Centre, 35th Floor
Pittsburgh, PA 15219
Paul E. Slater [ARGUED]
Sperling & Slater
55 West Monroe Street, Suite 3200
Chicago, IL 60603
Counsel for Appellant/Cross-Appellee Giant Eagle Inc.
Patrick J. Ahern
Ahern & Associates
590 North Sheridan Road
Lake Forest, IL 60045
Paul E. Slater [ARGUED]
Sperling & Slater
2
55 West Monroe Street, Suite 3200
Chicago, IL 60603
Counsel for Appellant/Cross-Appellee Winn Dixie Stores
Donald M. Barnes
Jay L. Levine [ARGUED]
Porter Wright Morris & Arthur
2020 K. Street, N.W.
Suite 600
Washington, DC 20006
James A. King
Porter Wright Morris & Arthur
41 South High Street
Suite 2900
Columbus, OH 43215
Leah A. Mintz
Robert Palumbos
Duane Morris
30 South 17th Street
Philadelphia PA 19103
Counsel for Appellees/Cross-Appellant Rose Acre Farms Inc.
Jan P. Levine
Robin P. Sumner
Troutman Pepper
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
Whitney R. Redding
Pepper Hamilton
501 Grant Street
Union Trust Building, Suite 300
Pittsburgh, PA 15219
Counsel for Appellees/Cross-Appellants United Egg Producers and United
States Egg Marketers, Inc.
Michael A. Lindsay
Dorsey & Whitney
50 South Sixth Street
Suite 1500
3
Minneapolis, MN 55402
Counsel for Amicus Curiae in Support of Appellees National Council of
Farmer Cooperatives
OPINION**
MATEY, Circuit Judge.
We return for another chapter in the long-running dispute over allegations of
price-fixing in the egg industry. In this installment, the Appellants argue the District Court
improperly instructed the jury on the elements of an antitrust conspiracy. But the
instruction reflected both the case they tried and the law. And any murkiness around the
challenged instruction is more than clarified by the whole of the Court’s charge. So we will
affirm.
I. BACKGROUND
Over a decade ago, several large national grocery stores1 (together, “Appellants” or
“Direct Action Plaintiffs”), sued United Egg Producers (“UEP”), United States Egg
Marketers (“USEM”), and Rose Acre Farms,2 alleging a horizontal conspiracy to reduce
supply—and consequently inflate prices—of domestic eggs in violation of Section 1 of the
Sherman Act, 15 U.S.C. § 1. UEP and USEM are leading egg-producer trade groups, while
This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does
**
not constitute binding precedent.
1
Kroger Co., Safeway Inc., Walgreen Co., Hy-Vee, Inc., Albertsons LLC, the Great
Atlantic & Pacific Tea Company, H.E. Butt Grocery Company, Roundy’s Supermarkets,
Inc., Publix Super Markets, Inc., Supervalu Inc., Giant Eagle, Inc., and Winn-Dixie Stores,
Inc.
2
Along with several other defendants, the remainder of whom settled prior to trial.
4
Rose Acre Farms is the nation’s second largest egg producer.3 The Direct Action Plaintiffs
allege that, beginning in 1999, UEP, USEM, and Rose Acre hatched a plot to reduce egg
supply in three parts: (1) short-term supply measure recommendations, including early-
induced molting, early slaughter of hens, and reduced chick hatch rates; (2) the UEP
Certified Program, requiring producers to follow a list of guidelines like cage-space
restrictions; and (3) a coordinated export program to maintain a deflated domestic supply.
Like many Section 1 cases, the Appellants never found the smoking gun directly
proving a conspiracy. Instead, they presented evidence suggesting motive (higher prices)
and means (the three industry programs). Naturally, Appellees countered with evidence of
a mix of innocuous and laudable reasons for each.
Trial ran nearly a month and, relevant to this appeal, the District Court instructed
the jury:
Under the Sherman Act, a restraint of trade is illegal only if it
is found to be unreasonable. Therefore, you must determine,
first, whether there was a contract, agreement, combination, or
conspiracy that restrained trade; and if so, second, whether the
restraints challenged here—that is, A, the UEP recommended
short-term measures; B, the UEP Certified Program as
challenged; and C, the USEM export program—are together
unreasonable. These three alleged restraints must all be part of
a single conspiracy, as opposed to, for example, three different
conspiracies that were independent of each other.
3
A class of “direct purchasers” brought a similar suit. See In re Processed Egg
Prods. Antitrust Litig., 962 F.3d 719, 721–22 (3d Cir. 2020) (“Processed Egg Products I”).
The direct purchaser class action went to trial first; the jury returned a verdict for the
Defendant-Appellees, and we later affirmed.
5
(App. at 44–45.) (“Jury Instruction No. 16”). Similarly, the first question on the verdict
form asked:
Do you unanimously find, by a preponderance of the evidence, that there was
a conspiracy to reduce the supply of eggs comprised of (1) recommended
short-term supply measures, (2) the United Egg Producers (UEP) Certified
Program as challenged, and (3) United States Egg Marketers (USEM)
exports?
(App. at 2.) (“Question 1”). Appellants objected to the wording of the instructions and the
verdict form.
After a very brief deliberation, the jury answered “no” to Question 1, leaving no
need to answer the rest. The District Court entered judgment for the Defendant-Appellees.
The Direct Action Plaintiff-Appellants timely appealed.4
II. DISCUSSION
The Appellants make two arguments on appeal. First, the jury instructions and
verdict form did not match the law; second, the conduct was a per se violation of Section
1, so the District Court erred in instructing the jury on the rule of reason. But the jury
instructions, as a whole, accurately stated the law, and the rule of reason was the proper
mode of antitrust analysis.5
A. The Jury Instructions
We review jury instructions and verdict forms for an abuse of discretion, but our
“review is plenary when the issue is whether the instructions misstated the law.” Armstrong
4
The District Court had jurisdiction under 28 U.S.C. § 1331, and we have
jurisdiction under 28 U.S.C. § 1291.
5
Because we affirm the judgment for the Appellees, we decline to consider the
issues raised in their conditional cross-appeal.
6
v. Burdette Tomlin Mem’l Hosp., 438 F.3d 240, 245 (3d Cir. 2006); see Waldorf v. Shuta,
896 F.2d 723, 740 (3d Cir. 1990). Throughout, our focus is “whether the charge, ‘taken as
a whole, properly apprise[d] the jury of the issues and the applicable law.’” Armstrong,
438 F.3d at 245 (quoting Smith v. Borough of Wilkinsburg, 147 F.3d 272, 275 (3d Cir.
1998)).
Appellants argue that the use of the conjunctive “and” in Instruction No. 16 and
Question 1 “did not allow the jury to find an unlawful conspiracy unless [Appellants]
proved that all three mechanisms were agreed to and employed.” (Opening Br. at 13.) Not
so, respond Appellees, who note the use of “and” captured the case the Appellants sought
to prove. They reason that because the Direct Action Plaintiffs repeatedly defined the
alleged conspiracy by the three methods, the instruction and question naturally mirrored
their claims.
We evaluate jury instructions “as a whole,” Smith, 147 F.3d at 275, and cannot draw
conclusions based on one word in isolation. Looking at the instructions in total means that
even a single error will not invalidate the jury’s verdict “if it is highly probable that the
error did not affect the outcome of the case.” GN Netcom, Inc. v. Plantronics, Inc., 930
F.3d 76, 88 (3d Cir. 2019); see also Harvey v. Plains Twp. Police Dep’t, 635 F.3d 606, 612
(3d Cir. 2011) (“When a jury instruction is erroneous, a new trial is warranted unless such
error is harmless.”). Similarly, an error in a verdict form is harmless if the jury got the
correct information elsewhere. See United States v. Espino, 892 F.3d 1048, 1053 (9th Cir.
2018); United States v. Jones, 664 F.3d 966, 982 (5th Cir. 2011).
7
That is the case here. Even assuming error in Instruction No. 16 or Question 1, the
instructions as a whole accurately stated the law. While Instruction No. 16 and Question 1
both used the conjunctive “and,” the District Court repeatedly used disjunctive language
when instructing the jury on the means or methods used to carry out the conspiracy. The
District Court noted the Act “prohibits contracts, combinations, and conspiracies that
unreasonably restrain trade” and that a “conspiracy is an agreement or understanding
between two or more persons to do something illegal” without mention of any overt acts.
(App. at 43, 46.) The instructions repeatedly emphasized that the agreement was the
important component, not the acts used to carry out that agreement.
Most significantly, the District Court specifically told the jury:
It’s also not necessary that all of the means or methods claimed
by the Plaintiffs were agreed upon by each individual
Defendant to carry out the alleged conspiracy, nor that all the
means or methods that were agreed upon were actually used or
put into operation. . . . It is the agreement or the understanding
to restrain trade by limiting egg supply that can constitute a
conspiracy. Therefore, you may find a conspiracy existed
regardless of whether it succeeded or failed.
(App. at 48.) No ambiguity here, and the Appellants did not need to prove the Appellees
used all three mechanisms to prove an illegal conspiracy.
Taken together, the full jury instructions allow one construction that does not inject
an overt-act requirement into Section 1. It is, in short, simply the case the Direct Action
Plaintiffs chose to make.
8
District Courts deserve, and receive, great latitude in the difficult task of crafting
jury instructions. Here, the Court here acted well within that discretion and, equally, in
accordance with law. For that reason, we will affirm the jury’s verdict.
B. The Rule of Reason
Appellants argue the District Court erred by declining to instruct the jury that the
conduct here constituted a per se violation of the Section 1. Our review of the “selection
of a mode of antitrust analysis” is plenary. Processed Egg Products I, 962 F.3d at 726 n.7.
Setting aside the fact that the jury said there was no conspiracy at all, our opinion in
Processed Egg Products I already answered the objection raised by the Appellants here.
There, we explained the rule of reason applied because the UEP Certified Program had
pro-competitive benefits and “was not an express agreement to reduce the supply of eggs,
much less to fix prices.” Id. at 728.
The same is true here. Appellants argue for a different outcome because their request
more closely followed the Supreme Court’s language in United States v. Socony-Vacuum
Oil Co., 310 U.S. 150 (1940). But “the test for determining what constitutes per se unlawful
price-fixing is one of substance, not semantics.” United States v. Brown Univ., 5 F.3d 658,
670 (3d Cir. 1993). And the per se rule is “appropriate only after courts have had
considerable experience with the type of restraint at issue, and only if courts can predict
with confidence that it would be invalidated in all or almost all instances under the rule of
reason.” Leegin Creative Leather Prods. v. PSKS, Inc., 551 U.S. 877, 886–87 (2007)
(citations omitted).
9
We have already evaluated the substance of the UEP Certified Program and
concluded that it does not fall into the narrow subset of “manifestly anticompetitive”
restraints. Id. at 886 (quoting Continental T.V. v. GTE Sylvania, Inc., 433 U.S. 36, 50
(1977)). Because there is no distinction between the restraints at issue in Processed Egg
Products I and those here, the District Court did not err by using the rule of reason.
III. CONCLUSION
For these reasons, we will affirm the judgment entered in favor of Appellees.
10