Winn Dixie Stores v. Eastern Mushroom Marketing Cooperative Inc ( 2023 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
No. 22-2289
________________
WINN-DIXIE STORES, INC.; BI-LO HOLDINGS, LLC,
Appellants
v.
EASTERN MUSHROOM MARKETING COOPERATIVE,
INC.; ROBERT A. FERANTO, JR., t/A Bella Mushroom
Farms; BROWNSTONE MUSHROOM FARMS, INC.; TO-
JO FRESH MUSHROOMS, INC.;
CARDILE MUSHROOMS, INC.; CARDILE BROS.
MUSHROOMS PACKAGING;
COUNTRY FRESH MUSHROOM CO.; FOREST
MUSHROOM, INC.; FRANKLIN FARMS, INC.;
GINO GASPARI & SONS, INC.;
GASPARI BROS. INC.; GIORGI MUSHROOM
COMPANY; GIORGIO FOODS, INC.;
KAOLIN MUSHROOM FARMS, INC.; SOUTH MILL
MUSHROOM SALES, INC.;
LRP MUSHROOMS INC.; LRP-M MUSHROOMS LLC;
LEONE PIZZINI AND SON, INC.; MODERN
MUSHROOMS FARMS, INC.;
SHER-ROCKEE MUSHROOM FARM;
C & C CARRIAGE MUSHROOM CO.;
OAKSHIRE MUSHROOM FARM, INC.;
PHILLIPS MUSHROOM FARMS, INC.;
HARVEST FRESH FARMS, INC.;
LOUIS M. MARSON, JR., INC.;
MARIO CUTONE MUSHROOM CO., INC.;
M.D. BASCIANI & SONS, INC.;
MONTEREY MUSHROOMS, INC.;
MASHA & TOTO, INC., t/a M&T Mushrooms;
W & P MUSHROOM, INC.;
MUSHROOM ALLIANCE, INC.;
CREEKSIDE MUSHROOMS LTD; J-M FARMS, INC.;
UNITED MUSHROOM FARMS
COOPERATIVE, INC.; JOHN PIA; MICHAEL PIA
________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D. C. No. 5-15-cv-06480)
District Judge: Honorable Berle M. Schiller
________________
Argued on April 26, 2023
Before: JORDAN, KRAUSE and BIBAS, Circuit Judges
(Opinion filed: December 26, 2023)
Patrick J. Ahern [ARGUED]
Ahern & Associates
590 N Sheridan Road
Lake Forest, IL 60045
Counsel for Appellants
William A. DeStefano [ARGUED]
Saxton & Stump
100 Deerfield Lane
Suite 240
Malvern, PA 19355
Terri A. Pawelski
Saxton & Stump
123 S Broad Street
Suite 2800
Philadelphia, PA 19109
Counsel for Appellee, Eastern Mushroom
Marketing Cooperative, Inc.
Patrick J. Gallo, Jr. [ARGUED]
Jane M. Shields
MacElree Harvey
17 W Miner Street
P.O. Box 660
2
West Chester, PA 19382
Counsel for Appellee, United Mushroom Farms
Cooperative, Inc.
________________
OPINION
________________
KRAUSE, Circuit Judge.
Not every agreement to restrain trade violates the
antitrust laws. Because some cases are more obvious than
others, the law has evolved to use different tests depending on
the closeness of the question. At one end of the spectrum are
arrangements that can be condemned as illegal per se, or—as
in the case of horizonal agreements—at least so likely to be
unlawful that just a “quick look” is enough to recognize that
anticompetitive effects may be presumed. At the other end of
the spectrum are arrangements that are plainly lawful. And in
between lie the vast majority, where careful scrutiny is
necessary to decide. In this category—which includes purely
vertical agreements, as well as hybrid agreements—the “quick-
look” approach is inapt, and the plaintiff has the initial burden
of showing anticompetitive effect under the “rule of reason.”
The central—and dispositive—question in this case is
which framework applies. Appellant Winn-Dixie Stores
brought suit against Appellees—the Eastern Mushroom
Marketing Cooperative, Inc. (EMMC), its individual
mushroom farmer members, and certain downstream
distributors—claiming their price-fixing agreement violated
§ 1 of the Sherman Act. 15 U.S.C. § 1. The District Court
instructed the jury to apply the “rule-of-reason” test, and the
jury returned a verdict in Appellees’ favor. Winn-Dixie
contends this was error, and had the judge applied the “quick-
look” approach and instructed the jury to simply presume
anticompetitive effects, it would have found Appellees’
agreement to be an unlawful restraint of trade.
As plaintiff, Winn-Dixie understandably would have
preferred the lower burden of proof. But because this unique
3
hybrid scheme (1) involved myriad organizational structures
with varying degrees of vertical integration; and (2) required
cooperation at multiple levels to succeed, the Court was right
to apply the rule of reason. And because, under that more
searching inquiry, the evidence at trial was sufficient to sustain
the jury’s verdict, we will affirm the judgment in favor of
Appellees.
I. Background
A. The EMMC Conspiracy
Formed in 2001, the EMMC was a cooperative of
agaricus mushroom growers that targeted the Eastern United
States. At inception, the EMMC controlled over “90 percent
of [the] supply of fresh agaricus mushrooms” in the relevant
market. App. 1546. That share, however, declined steadily
over time, falling to roughly 58% percent by 2005, and 17%
percent by 2010. Participation in the cooperative fell in
tandem, as the EMMC’s twenty-plus initial members shrunk to
fewer than five in that time.
The cooperative’s stated purpose was to establish a
“Minimum Pricing Policy,” under which it would “circulat[e]
minimum price lists along with rules and regulations”
requiring member companies to target those prices. EMMC
Answering Br. 9. 1 The prices, critically, were “not the price[s]
1
In full, the EMMC’s form membership agreement stated that
the “objective of the Cooperative” was to “improve conditions
in the mushroom industry for the mutual benefit of its members
as producers by[:] [1] promoting, fostering and encouraging
the intelligent and orderly marketing of mushrooms through
cooperation; [2] eliminating speculation, waste and fluctuating
prices; [3] making the distribution of agricultural by-products
between producers and consumers as direct as can be
efficiently done, thereby eliminating any manipulation of the
price by middlemen; [4] stabilizing the marketing of
agricultural products; [5] encouraging efficiency and economy
in marketing; [6] preventing the demoralizing of markets
resulting from dumping and predatory practices; [7] mitigating
the recognized evils of a marketing system under which prices
4
at which [growers] sold the product,” App. 112, but instead the
prices at which EMMC members hoped to coerce downstream
distributors to go to market.
Broadly speaking, EMMC members had two types of
arrangements with these downstream distributors. First,
certain members operated as grower-only entities, lacking an
exclusive relationship with a particular distributor. Second,
and far more common, many members partnered with specific,
often legally related downstream distributors. The precise
nature of these relationships varied quite widely, both in terms
of organizational structure and level of ownership overlap. Yet
despite their functional and legal connections with members,
downstream distributors were prohibited from actually joining
the cooperative, and therefore were not required to follow the
minimum prices of the EMMC.
Given these multifaceted relationships, the alleged
conspiracy here can be distilled as an agreement by EMMC
members to encourage vertically oriented distributors—some
of which were integrated with EMMC members and some of
which were not—to charge retailers at least the EMMC
minimum rate.
Despite members’ efforts, however, significant
evidence at trial indicated that this scheme to “stabilize prices”
did not work. Almost uniformly, EMMC members testified
that “[n]o one” followed the minimum pricing policy schedule,
id. at 2371, and that members routinely invoked exceptions to
the policy that “swallowed up the minimum pricing rule,” id.
at 475. Numerous witnesses also testified that they faced price-
constraining competition from Canadian growers, non-EMMC
stateside growers, and EMMC member infighting, and that the
buying power of certain large retailers—like Walmart or
Sysco—further constrained market prices. Most notably,
are set for the entire industry by the weakest producer; and [8]
fostering the ability of the members of this Cooperative to
obtain prices for their mushrooms in competitive markets,
which are fair prices but not prices inflated beyond the
reasonable value of such products by reason of artificially
created scarcity of such products or other predatory trade
practices which would injure the public interest.” App. 2516.
5
Appellees’ expert economist opined that, over the relevant time
period, inflation-adjusted mushroom prices were “flat, or even
down across the Eastern United States, . . . not withstanding
[sic] the fact that costs went up quite a bit.” Id. at 1935.
That is not to say, however, that the record is devoid of
support for Winn-Dixie’s claims of supracompetitive pricing.
To the contrary, internal contemporaneous EMMC documents
touted the cooperative’s success, and several EMMC members
testified at trial that they adhered to the cooperative’s pricing
schedules. Likewise, Winn-Dixie’s expert economist testified
that unadjusted USDA mushroom pricing data indicated that
“the EMMC minimums” caused a “big increase” for
mushroom prices “in the marketplace as a whole,” and that
there was a “significant impact on Winn-Dixie’s prices
[specifically] from these minimum and target pricing policies,”
id. at 1562–63, which undoubtedly raises the specter of a valid
§ 1 claim.
Accordingly, in resolving this appeal, we confront a
conspiracy involving interconnected horizontal and vertical
elements and a mixed record that reflects two plausible
competing narratives. 2
B. Procedural History
The EMMC has a long history of both public and private
antitrust scrutiny. In 2003, the DOJ Antitrust Division initiated
an investigation into the EMMC’s “supply control” program.
2
Winn-Dixie concedes that the EMMC conspiracy involved
both horizontal and vertical elements, and here, those elements
cannot be parsed out into purely horizontal or purely vertical
schemes: Even if some EMMC members made ad hoc price
adjustments, their own conspiracy’s success still depended on
the willingness of distributors in a variety of different
economic positions and arrangements to cooperate. This case
is thus distinguishable from Kiefer-Stewart Co. v. Joseph E.
Seagram & Sons, where the conspirators forced distributor
cooperation by selling only to those who resold at fixed prices.
See 340 U.S. 211, 212–13 (1951), overruled on other grounds
by Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752(1984).
6
In re Mushroom Direct Purchaser Antitrust Litig., 655 F.3d
158, 161–62 (3d Cir. 2011). Under that program, the EMMC
acquired various closed or bankrupt mushroom farms, after
which it sold the underlying real estate with deed restrictions
that precluded future use as a farm. Id. at 161. In 2005, the
DOJ entered a consent judgment against the EMMC, requiring
it to nullify the deed restrictions and end the program. Id. at
162.
Shortly thereafter, several retailers brought suit against
the EMMC, its individual members, and downstream
distributors. Id. Eventually, in June 2006, what had become
seven class actions and one non-class action were consolidated
before the Eastern District of Pennsylvania. Id. The plaintiffs
in that action, like this one, alleged Sherman Act violations for
both the supply control program and the minimum pricing
policy. Id.Winn-Dixie filed this complaint in 2015, while a motion
for class certification in the consolidated case was still
pending. When that class was eventually certified in 2016,
Winn-Dixie opted out.
The case proceeded to trial in January 2022. Prior to
trial, however, the parties filed two motions that are relevant
on appeal. First, Winn-Dixie moved in limine for the District
Court to apply “quick-look” scrutiny to its price-fixing claim,
rather than the more robust “rule-of-reason” framework. The
District Court denied that motion, opting for the rule of reason
“because the effects of the minimum pricing policy [were] not
‘obviously or facially anticompetitive.’” App. 17 (citation
omitted). 3 Second, Appellees moved to introduce evidence of
3
Although the District Court also made a pretrial finding that
per se scrutiny applied to the supply control program, Winn-
Dixie’s expert conceded at trial that the program “[h]ad no
direct [effect] on prices” for Winn-Dixie. App. 1599. The
District Court instructed the jury accordingly, ultimately
relying on a pretrial stipulation from Winn-Dixie that “the
supply control program was implemented to support the
EMMC’s price-fixing,” id. at 2245, to charge the jury on a
single “overarching” price-fixing conspiracy subject to the rule
of reason.
7
certain “procompetitive” benefits flowing from the EMMC’s
pricing policy, namely that the policy had saved member
mushroom farms and decreased member losses. The District
Court also denied that motion, reasoning that “the Sherman Act
does not permit defendants to justify anticompetitive behavior
by arguing that the behavior forestalls certain negative
consequences where those consequences are the result of
competition.” Id. at 16.
After a fourteen-day trial, a jury returned a verdict in
favor of Appellees. On a special verdict form, the jury found
that (1) an overall conspiracy existed to artificially increase
mushroom prices; (2) the EMMC itself participated in the
conspiracy, but Winn-Dixie had not proven the participation of
individual growers and distributors; and (3) Winn-Dixie also
failed to carry its burden of proof on anticompetitive effects. 4
Following that verdict, Winn-Dixie moved for a new
trial and judgment notwithstanding the verdict, raising many of
the same issues it does here. The District Court denied that
motion, and Winn-Dixie filed this timely appeal.
II. Discussion
On appeal, Winn-Dixie asserts that it is entitled to a new
trial because (1) the District Court applied the rule-of-reason
framework for determining antitrust harm, rather than Winn-
Dixie’s requested quick look; (2) the jury’s answers on the
special verdict form were internally inconsistent; (3) that
verdict was against the “overwhelming” weight of the
evidence; and (4) Appellees’ repeated references to certain
impermissible procompetitive benefits at trial, in direct
contravention of a pretrial order, prejudiced the jury. For the
reasons explained below, none of these arguments is
persuasive.
4
Given the jury’s finding of a lack of competitive harm, the
jury did not reach the final several questions: (1) whether that
restraint was unreasonable (i.e., offset by procompetitive
benefits); (2) whether Winn-Dixie itself had been overcharged;
(3) whether any defendants entered but withdrew from the
conspiracy; and (4) damages.
8
A. Denial of Winn-Dixie’s Quick-Look Motion
In the vast majority of § 1 cases, a district court’s
application of the rule of reason, rather than quick-look or per
se condemnation, dooms a plaintiff’s price-fixing suit. Nat’l
Collegiate Athletic Ass’n v. Alston, 141 S. Ct. 2141, 2160–61
(2021). As such, our analysis here begins with the District
Court’s election of the rule of reason. We exercise plenary
review over that decision, Deutscher Tennis Bund v. ATP Tour,
Inc., 610 F.3d 820, 829 n.7 (3d Cir. 2010), but recognize that
“underpinning that purely legal decision are numerous factual
questions,” In re Wholesale Grocery Prods. Antitrust Litig.,
752 F.3d 728, 733–34 (8th Cir. 2014).
1. Applicable Case Law
The rule of reason “presumptively applies” in § 1 cases.
Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006). When it does, a
plaintiff bears the heavy initial burden of proving that a
“challenged restraint has a substantial anticompetitive effect
that harms consumers in the relevant market.” Ohio v. Am.
Express Co., 138 S. Ct. 2274, 2284 (2018). The quick-look
approach, by contrast, is “an intermediate standard” of antitrust
scrutiny, under which a court instead presumes the plaintiff has
met her initial burden. Deutscher Tennis Bund, 610 F.3d at
830. 5 It applies only “where per se condemnation is
inappropriate, but where no elaborate industry analysis is
required to demonstrate the anticompetitive character of an
inherently suspect restraint.” United States v. Brown Univ., 5
F.3d 658, 669 (3d Cir. 1993) (internal quotations omitted).
Said another way, it applies if “an observer with even a
rudimentary understanding of economics could conclude that
the arrangements in question would have an anticompetitive
effect on customers and markets,” Cal. Dental Ass’n v. FTC,
526 U.S. 756, 770 (1999), and it does not apply if “the contours
of the market . . . are not sufficiently well known or defined to
permit the court to ascertain without the aid of extensive
5
As compared to per se condemnation, the quick look permits
defendants to overcome that initial presumption of
anticompetitive harm by “promulgat[ing] ‘some competitive
justification’ for the restraint.” Deutscher Tennis Bund, 610
F.3d at 831 (citation omitted).
9
market analysis whether the challenged practice impairs
competition,” Deutscher Tennis Bund, 610 F.3d at 832(internal quotations and citation omitted).
If this sounds like a test of “I know it when I see it,” that
is not far from the mark. There is no set methodology for
determining when the quick look applies, and the Supreme
Court has warned against drawing “categorical line[s] . . .
between restraints that give rise to an intuitively obvious
inference of anticompetitive effect and those that call for more
detailed treatment.” Cal. Dental Ass’n, 526 U.S. at 780–81.
The selection process is therefore more “art than science,” and
not subject to “[a]n overly-formalistic and literal approach.” In
re ATM Fee Antitrust Litig., 554 F. Supp. 2d 1003, 1016 (N.D.
Cal. 2008). It boils down to whether we have “amassed
‘considerable experience with the type of restraint at issue’”
such that we “can predict with confidence that it would be
invalidated in all or almost all instances.” Alston, 141 S. Ct. at
2156 (citation omitted).
In this case, where the arrangement has both horizontal
and vertical components, our prediction will be guided by three
cases: the Supreme Court’s landmark decision in Leegin
Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877(2007) and our opinions in Toledo Mack Sales & Serv., Inc. v.
Mack Trucks, Inc., 530 F.3d 204 (3d Cir. 2008), and In re Ins.
Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir. 2010)—both
of which grapple with the implications of Leegin. Because
those cases bound the problem and their implications for the
EMMC’s arrangement depend in part on its resemblance to the
arrangements they discuss, we will summarize each of them
before applying their lessons here.
In Leegin, the Supreme Court overruled its century-old
“formalistic” per se condemnation of vertical price restraints,
ruling instead that modern “economics literature is replete with
procompetitive justifications for a manufacturer’s use of resale
price maintenance.” 551 U.S. at 888–89 (citation omitted). At
the same time, the Court did not preclude the possibility that
vertical restraints could lead to anticompetitive effects if, for
example, resale restraints were used to “facilitate a
manufacturer cartel” or “organize cartels at the retailer level.”
Id. at 892–93. In such hybrid scenarios, the Court recognized,
10
heightened scrutiny might be warranted. Id. Thus, it
concluded that while “[a] horizontal cartel among competing
manufacturers or competing retailers . . . is, and ought to be,
per se unlawful,” if “a vertical agreement setting minimum
resale prices is entered upon to facilitate either type of cartel,
it . . . would need to be held unlawful under the rule of reason.”
Id. at 893.
Leegin involved a purely vertical arrangement, but in
Toledo, we had occasion to apply its guidance to a hybrid
conspiracy and to expand on its “facilitation” language. 530
F.3d at 210. There, a plaintiff truck dealership alleged (1) that
fellow Mack truck dealers had entered into a purely horizontal
conspiracy to abstain from competing on price; and (2) that
Mack—the upstream truck manufacturer—had agreed with
certain downstream dealers to punish those dealers who
violated geographic sales restrictions. Id. at 218–19. On
appeal, we bifurcated these two claims, essentially treating
each as a separate conspiracy. Id. at 211. We recognized that
the first, “an agreement among Mack dealers . . . involv[ing]
horizontal competitors colluding to control prices[,] . . . would
be per se unlawful.” Id. at 221. For the hybrid arrangement in
the second conspiracy, however, we inferred from Leegin that
“[t]he rule of reason analysis applies even when . . . the purpose
of the vertical agreement between a manufacturer and its
dealers is to support illegal horizontal agreements between
multiple dealers,” id., and we therefore rejected per se
condemnation and applied the rule of reason to Mack’s market
allocation scheme.
Two years later, however, we bounded Leegin’s reach.
In In re Insurance Brokerage Antitrust Litigation, plaintiffs—
a class of insurance purchasers—alleged that certain insurance
companies had engaged in bid rigging, using a broker as a
“middle-man” to orchestrate “a hub-and-spoke conspirac[y],
with the broker as the hub and its insurer-partners as the
spokes.” 618 F.3d at 327. In discerning the proper mode of
antitrust inquiry, we explained that “[t]he critical issue” was
“how the spokes are connected to each other,” id., and that
horizontally situated “defendants cannot escape the per se
rule . . . simply because their conspiracy depend[s] upon the
participation of a ‘middle-man’, even if that middleman
conceptualized the conspiracy, orchestrated it . . . and collected
11
most of the booty,” id. at 337 (citation omitted). Neither the
fact that a “vertical organizer” at a different level of the market
structure “managed” the scheme, United States v. Apple, Inc.,
791 F.3d 290, 325 & n.20 (2d Cir. 2015), nor the “likelihood
that the horizontal collusion would not have occurred without
the [manager’s] involvement” could “necessarily mitigate[]”
“[t]he anticompetitive danger inherent” in horizontal collusion,
In re Ins. Brokerage Antitrust Litig., 618 F.3d at 338. So at
least in the hub-and-spoke context, we held that a hybrid
arrangement could still be subject to per se scrutiny or the
quick-look approach. Id. at 327.
2. The Proper Mode of Inquiry for the
EMMC’s Arrangement
Applying the teachings of these cases here, we ask two
questions. First, does Appellees’ alleged price-fixing scheme
map onto Toledo’s bifurcated approach? 530 F.3d at 210; see
also In re Processed Egg Prods. Antitrust Litig., 962 F.3d 719,
728 (3d Cir. 2020). If so, we should bifurcate and analyze each
component separately. If not—if there are so many interrelated
and variable parts that, unlike in Toledo, we cannot cleanly
separate the horizontal and vertical components—we should
analyze the scheme as a single unit. Second, is the scheme or
portion of the scheme (1) sufficiently akin to the horizontal
arrangement in Toledo or the hub-and-spoke scheme in
Insurance Brokerage to warrant per se or quick-look
condemnation; (2) sufficiently akin to the vertical
arrangements in Leegin or Toledo to trigger the rule of reason;
or (3) dissimilar from both, indicating that we lack
“considerable experience with the type of restraint at issue,”
and therefore should revert to the rule of reason? Alston, 141
S. Ct. at 2156 (citation omitted).
Here, bifurcation is not an option. Unlike the distinctive
nature of the respective restraints in Toledo, the “complex
business arrangements” in this case preclude such clean line
drawing. Id. Winn-Dixie alleges a collective effort among
upstream farmers and downstream distributors, each of whom
were vertically integrated to differing degrees. Because the
success of that singular effort depended on coordination by
multiple actors at multiple levels of the supply chain, this is
simply not a situation where two distinct conspiracies
12
contributed to the same price-fixing end goal. 6 Indeed, as
Winn-Dixie conceded at the outset of argument, it is fair to
characterize the EMMC conspiracy as “more than just
horizontal” because it also “ha[d] some vertical aspects,”
making it “hard to fit . . . into any of the existing pigeonholes.”
Oral Arg. 00:55–01:45.
As for whether this unique, integrated hybrid scheme
sufficiently resembles a purely horizontal or vertical
arrangement, we conclude that it falls in between, so the rule
of reason applies. That is because the interplay between the
vertical and horizontal components of Appellees’ scheme
muddies the theoretical economic conclusions that a court
might draw, in turn negating our ability to label it as “obviously
anticompetitive.” Cal. Dental Ass’n, 526 U.S. at 779. On the
one hand, the scheme’s dependence on downstream, non-
EMMC members precludes our drawing the anticompetitive
inferences typically associated with purely horizontal price-
fixing restraints, such as reduced output or increased prices.
By Winn-Dixie’s own admission, Appellees’ scheme consisted
of a “horizontal agreement among competitors (growers) to fix
prices at a different level of distribution—the prices charged to
retailers by affiliated packer/shippers.” Pl. Mot. in Lim. 5, D.
Ct. ECF No. 382 (emphasis added). So even if, as Winn-Dixie
contends, each grower-distributor relationship formed to
facilitate an upstream grower cartel, Leegin instructs that those
facilitating agreements must be analyzed under the rule of
reason.
6
In view of Winn-Dixie’s pretrial stipulation that “the supply
control program was implemented to support the EMMC’s
price-fixing,” App. 2245, and its failure to raise any sort of
bifurcation claim related to the pricing policy and the supply
control program on appeal, we need not dwell on whether the
District Court erred by failing to bifurcate along these lines.
And even if it had, that error would not warrant a new trial here
because it was harmless: Winn-Dixie’s expert conceded that
Winn-Dixie itself did not suffer an antitrust injury as a result
of the supply control program, and so had the jury considered
this restraint in isolation, it would have had no effect on the
result. Graboff v. Colleran Firm, 744 F.3d 128, 140 (3d Cir.
2014).
13
On the other hand, while this need for vertical
coordination mirrors Leegin in key respects, see 551 U.S. at
883, in view of the EMMC’s upstream conspiratorial focus on
“stabilizing prices,” App. 821, it would make little sense to
analyze each individualized grower-distributor vertical
relationship in a vacuum. We cannot characterize this scheme
as a single manufacturer imposing resale restrictions on a
single distributor, see, e.g., Leegin, 551 U.S. at 883; AT & T
Corp. v. JMC Telecom, LLC, 470 F.3d 525, 530 (3d Cir. 2006),
nor as a manufacturer reinforcing an existing downstream
horizontal conspiracy through additional vertical restraints,
Toledo, 530 F.3d at 211–12.
Instead, we confront a tailored set of interrelated
vertical and horizontal agreements among growers and
distributors. Closest is the scheme the Supreme Court
hypothesized in Leegin, which contemplated a situation where
“a vertical agreement setting minimum resale prices is entered
upon to facilitate” a horizontal agreement, 551 U.S. at 893, and
the scheme we confronted in Toledo, where the “purpose of the
vertical agreement between a manufacturer and its dealers
[was] to support illegal horizontal agreements between
multiple dealers,” 530 F.3d at 225. In both, the courts landed
on the rule of reason as the proper mode of analysis. Id.;
Leegin, 551 U.S. at 894. Likewise, we conclude it is here.
Insurance Brokerage does not convince us otherwise.
In the EMMC’s case, there is no set of horizontal spokes and
nothing akin to a unilateral vertical conduit. To the contrary,
downstream distributors in this arrangement have exhibited a
remarkable lack of “unity of interest” with both competing
distributors and upstream EMMC growers. In re Mushroom
Direct Purchaser Antitrust Litig., No. 06-0620, 2015 WL
6322383, at *14 (E.D. Pa. May 26, 2015) (quoting In re
Mushroom Direct Purchaser Antitrust Litig., 621 F. Supp. 2d
274, 291 (E.D. Pa. 2009)). So this scheme does not closely
resemble the arrangement in Insurance Brokerage, and we
cannot say we have “amassed considerable experience” with
14
this arrangement. Alston, 141 S. Ct. at 2156. As a result,
quick-look condemnation is simply not appropriate. 7 Id.
That conclusion is confirmed by the jury’s
determination, after a fourteen-day trial, that Appellees’
scheme did not, in fact, cause anticompetitive harm. Such a
finding is “a good indicator that the plaintiffs’ demand for [the
quick-look approach] is off base,” In re Processed Egg Prods.
Antitrust Litig., 962 F.3d at 730, and that the District Court
correctly rejected quick-look condemnation, see Major League
Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 341 n.10
(2d Cir. 2008) (Sotomayor, J., concurring) (“When empirical
analysis is required to determine a challenged restraint’s net
competitive effect, neither a per se nor a quick-look approach
is appropriate.”).
As the District Court did not err in applying the rule of
reason, Winn-Dixie is not entitled to a new trial on that basis.
B. Inconsistent Jury Responses
Winn-Dixie next asserts that the jury’s successive
answers on its verdict form were “conflicting and
irreconcilable.” Opening Br. 24. In relevant part, that form
asked:
1. Do you find . . . that there was a single
overarching conspiracy to raise the prices of
agaricus mushrooms by: (1) circulating
minimum or target price lists along with rules
and regulations requiring EMMC members to
charge those prices; and (2) acquiring
properties . . . [and] placing deed restrictions on
the properties to prevent their future use as
mushroom[] farms?
7
Winn-Dixie does not argue that the per se rule should apply
to the EMMC conspiracy, and as it forfeited that argument, we
have no occasion to address it here. See Barna v. Bd. of Sch.
Dirs. of Panther Valley Sch. Dist., 877 F.3d 136, 147 (3d Cir.
2017).
15
2. Do you find . . . that any [of the entities
listed] participated in the . . . single overarching
conspiracy to raise the prices of agaricus
mushrooms?
App. 2499–500. The jury responded “yes” to question one. It
then marked only the EMMC for question two, thus precluding
liability for any individual cooperative member or downstream
distributor. On appeal, Winn-Dixie contends that there is “no
rational explanation for the jury’s finding that the EMMC
participated in a conspiracy that did not involve a single one of
its members.” Opening Br. 25.
That claim is unavailing, as Winn-Dixie fails to
acknowledge the District Court’s accompanying jury
instruction: “A business that belongs to a trade association does
not become liable for violating the antitrust laws simply
because the trade association is liable for such violation.” App.
2464. That instruction is supported by substantial precedent,
see, e.g., Alvord-Polk, Inc. v. F. Schumacher & Co., 37 F.3d
996, 1007 (3d Cir. 1994); SmileDirectClub, LLC v. Tippins, 31
F.4th 1110, 1119 (9th Cir. 2022); Osborn v. Visa Inc., 797 F.3d
1057, 1067 (D.C. Cir. 2015), making clear why the jury’s
successive answers are not per se irreconcilable. While the
District Court had an “obligation to distill the law correctly” in
giving its instruction, Robinson v. First State Cmty. Action
Agency, 920 F.3d 182, 190 (3d Cir. 2019), it met that obligation
here. We therefore turn to whether the weight of the evidence
supports the jury’s findings.
C. Sufficiency of the Evidence
When a litigant challenges a jury verdict on sufficiency
grounds, a district court may only grant a new trial where “the
record shows that the jury’s verdict resulted in a miscarriage of
justice or where the verdict, on the record, cries out to be
overturned or shocks our conscience.” Klein v. Hollings, 992
F.2d 1285, 1290 (3d Cir. 1993) (citations omitted). On appeal,
“[t]o demonstrate that the District Court erred in declining to
grant it a new trial . . . , [Winn-Dixie] must establish that (1)
the jury reached an unreasonable result [i.e., one that shocks
our conscience], and (2) the District Court abused its broad
16
discretion in not setting the verdict aside.” Leonard v.
Stemtech Int’l Inc., 834 F.3d 376, 386 (3d Cir. 2016).
Here, notably, the District Court did not specifically
address whether the jury’s alleged errors, without more,
warranted a new trial. In denying Winn-Dixie’s post-trial
motion, the Court explained that “[e]ven assuming, for the
purposes of this motion, . . . the jury erred by not finding that
there were additional members of the conspiracy beyond the
EMMC,” the jury’s separate finding that the conspiracy failed
to harm competition was independently dispositive. App. 9
(emphasis added). That reasoning was undoubtedly correct, as
we will not overturn a jury verdict if “it is highly probable that
[any] error[] did not affect the outcome of the case,”
McQueeney v. Wilmington Tr. Co., 779 F.2d 916, 917 (3d Cir.
1985), meaning, in the antitrust context, the weight of the
evidence does not overwhelmingly contradict the jury’s
finding that Appellees’ scheme did not harm competition,
Greenleaf v. Garlock, 174 F.3d 352, 365 (3d Cir. 1999). The
threshold is a high one, and it is not crossed where the verdict,
as a whole, does not “shock [the] conscience” or “cr[y] out to
be overturned.” Klein, 992 F.2d at 1290.
To satisfy its “initial burden” under the rule of reason,
Winn-Dixie had to prove “a substantial anticompetitive
effect,” Am. Express Co., 138 S. Ct. at 2284—that is, that the
EMMC’s arrangement either increased market prices, reduced
market output, or decreased product quality, id. 8 In recognition
of the “difficulty of isolating the[se] market effects,” we
“typically allow” a plaintiff to meet its burden by proving
8
Should a plaintiff make that threshold showing, “then the
burden shifts to the defendant[s] to show a procompetitive
rationale for the restraint.” Id. at 2284. If defendants
successfully make that subsequent showing, the burden again
“shifts back to the plaintiff to demonstrate that the
procompetitive efficiencies could be reasonably achieved
through less anticompetitive means.” Id. Because Winn-Dixie
failed to carry its burden at step one of the framework, and the
jury’s finding in that respect was supported by sufficient
evidence, we have no occasion to assess these later steps.
17
market power as a proxy, Brown Univ., 5 F.3d at 668, 9 and we
will give Winn-Dixie that benefit as well, for if it cannot meet
the lower burden of proving market power, it assuredly cannot
meet the higher one of specific market effects.
1. Market Power
Market power is “the ability to raise prices above those
that would prevail in a competitive market.” Id. In assessing
whether firms possess that ability, courts prescribe a myriad of
typical factors for a jury to consider. Weiss v. York Hosp., 745
F.2d 786, 827 n.72 (3d Cir. 1984); United States v. Dentsply
Int’l, Inc., 399 F.3d 181, 187 (3d Cir. 2005). One “important
factor,” as the District Court accurately charged the jury here,
“is the Defendant’s market share, that is, it’s [sic] percentage
of the products or services sold in the relevant market by all
competitors.” App. 2461.
But market share is just that—one factor. See Allen-
Myland, Inc. v. Int’l Bus. Machs. Corp., 33 F.3d 194, 208 (3d
Cir. 1994); Host Int’l, Inc. v. MarketPlace, PHL, LLC, 32 F.4th
242, 253 n.13 (3d Cir. 2022). And this distinction, between
market share and market power, is fatal to Winn-Dixie’s claim.
On appeal, Winn-Dixie asserts only that the
“undisputed evidence” of the EMMC’s 90% market share in
2001 unequivocally “established market power.” Opening Br.
15. The cases on which it relies, however, stand for the
unremarkable proposition that “[m]arket share is relevant to
the determination of the existence of market or monopoly
power,” Reazin v. Blue Cross & Blue Shield of Kansas, Inc.,
899 F.2d 951, 967 (10th Cir. 1990), and that less than a 90%
share does not preclude a market-power finding, Wilk v. Am.
Med. Ass’n, 895 F.2d 352, 360 (7th Cir. 1990); Graphics
Prods. Distribs. v. Itek Corp., 717 F.2d 1560, 1570–71 (11th
9
The District Court’s jury instructions accurately explained
that a plaintiff can satisfy its burden at step one of the rule-of-
reason framework “either by [1] directly proving the existence
of an actual anticompetitive effect in a relevant market[—][i]n
this case, higher mushroom prices than there would have been
without the restraint[—]or [2] by proving the Defendants had
market power in the relevant market.” App. 2460.
18
Cir. 1983); Barrett v. Fields, 924 F. Supp. 1063, 1075 (D. Kan.
1996). But more importantly, those cases make clear that
market share alone is “insufficient to establish market power.”
Reazin, 899 F.2d at 967 (citation omitted). So Winn-Dixie is
simply incorrect that the evidence of the EMMC’s initial 90%
market share compelled any reasonable jury to conclude the
consortium had market power.
By hanging its hat entirely on market share, Winn-Dixie
also fails to address or even acknowledge the host of other
factors that the District Court properly instructed the jury it
could consider when assessing anticompetitive effects: (1) the
effect of the restraint on prices, output, product quality, and
service; (2) the purpose and nature of the restraint; (3) the
nature and structure of the relevant market; (4) the number of
competitors in the relevant market, and the level of competition
among them, both before and after the restraint was imposed;
and (5) any facts unique to the fresh agaricus mushroom
industry.
The trial record on those other factors was substantial
and weighed against a finding of market power. That record
included the testimony of the EMMC members’ expert
economist that inflation-adjusted prices actually decreased
following the EMMC’s formation. While the ultimate inquiry
here is, of course, whether the market price for mushrooms
would have been lower absent the alleged conspiracy, such
downward or flat pricing trends may inform that inquiry
because a “lack of evidence of increased price, decreased
output, or other anticompetitive indicia in the relevant market
[may] show[] that [a group of conspirators] lacks market
power.” Nat’l Ass’n of Rev. Appraisers & Mortg.
Underwriters, Inc. v. Appraisal Found., 64 F.3d 1130, 1135
(8th Cir. 1995). 10 A reasonable jury thus could have concluded
that the EMMC lacked the ability to artificially raise prices.
10
See also SCFC ILC, Inc. v. Visa USA, Inc., 36 F.3d 958, 968–
89 (10th Cir. 1994); Coastal Fuels of Puerto Rico, Inc. v.
Caribbean Petrol. Corp., 79 F.3d 182, 196–98 (1st Cir. 1996);
Metro Mobile CTS, Inc. v. NewVector Commc’ns Inc. 892 F.2d
62, 63 (9th Cir. 1989); cf. Allen-Myland, Inc. v. Int’l Bus.
Machs. Corp., 33 F.3d 194, 211 n.18 (3d Cir. 1994).
19
Likewise, the jury had before it evidence of the
EMMC’s steadily declining market share and could reasonably
have concluded that this “reduced market share” over time
indicated a “lack of durable market power” and an inability “to
control prices or exclude competition.” Kolon Indus. Inc. v.
E.I. DuPont de Nemours & Co., 748 F.3d 160, 175 (4th Cir.
2014); O. Hommel Co. v. Ferro Corp., 659 F.2d 340, 347 (3d
Cir. 1981). 11 The same is true of the structural factors that the
EMMC members highlight on appeal: trial testimony and
contemporaneous internal documents indicated that they faced
pricing pressure from southern-Canadian mushroom growers,
other non-EMMC growers, and fellow EMMC members, and
that large downstream retailers, such as Walmart or Sysco, may
have had sufficient buying power to constrain any attempt at
supracompetitive pricing.
In short, while we recognize the probative value of the
EMMC’s 90% initial market share—which undoubtedly raises
the specter of market power—that market share did not
preclude a rational jury from finding the EMMC’s members
lacked market power. The jury’s verdict therefore did not
“shock the conscience,” Leonard, 834 F.3d at 386; Klein, 992
F.2d at 1290, and the District Court did not abuse its discretion
in denying a new trial on that ground.
2. Anticompetitive Effects
Because Winn-Dixie’s market power challenge fails, so
too does its detrimental effects challenge, as the former is a
prerequisite for the latter. Agnew v. Nat’l Collegiate Athletic
Ass’n, 683 F.3d 328, 335 (7th Cir. 2012). The EMMC’s expert
opined that real mushroom prices decreased over time—an
opinion on which the jury was free to rely when assessing
anticompetitive effects—and while Winn-Dixie leans heavily
into a few contemporaneous statements from EMMC
11
While courts have typically relied on such market share
trends in the § 2 monopolist context, id., the same logic applies
with equal force to the EMMC. We see no reason, for instance,
why it would have been a “miscarriage of justice” for the jury
to conclude that this steady EMMC exodus was due, at least in
part, to the fact that the originally promised “price
stabilization” never came to fruition.
20
representatives touting the cooperative’s success,
countervailing trial testimony undercut the credibility of those
statements. For example, one member representative testified
that the EMMC’s cited pricing metrics referenced the United
States overall, and thus did not necessarily speak to whether
“the EMMC had any impact” on the market. See App. 1877–
80. Numerous cooperative members also testified that the
EMMC’s various written exceptions to the pricing floor policy,
along with widespread cheating on that policy, undermined the
scheme’s efficacy and drove prices down to competitive levels.
As at least one member starkly put it: “I don’t think the
minimum pricing was effective, at all.” App. 475.
Because there was not, as Winn-Dixie contends,
“overwhelming” evidence of conspiratorial success, and
because there was more than sufficient evidence for the jury to
make the findings it did, the District Court also did not err in
denying Winn-Dixie’s motion for a new trial on sufficiency
grounds.
D. References to Improper Procompetitive Benefits
Finally, Winn-Dixie asserts that it is entitled to a new
trial because Appellees made “repeated references to the
purpose of the EMMC and its minimum pricing as saving
farms and decreasing losses . . . in direct contravention to the
District Court’s . . . ruling excluding increased producer prices,
increased producer profits, decreased producer losses, or
helping firms stay in operation [as] valid procompetitive
benefits under the rule of reason.” Opening Br. 43 (internal
quotations omitted). Even if that were true, however, this final
claim is also unavailing.
To prevail on an improper assertion claim, an appellant
must show that the “improper assertions have made it
‘reasonably probable’ that the verdict was influenced by
prejudicial statements.” Fineman v. Armstrong World Indus.,
Inc., 980 F.2d 171, 207 (3d Cir. 1992) (citation omitted). For
two reasons, no such probability exists here.
First and foremost, the jury did not actually reach the
question of procompetitive benefits. Because the jury found
that Winn-Dixie failed to show that the restraints here caused
21
competitive harm, the jury had no occasion to further assess
whether those restraints were “unreasonable.” App. 2503.
And it is at this step of the rule-of-reason analysis that
defendants’ proof of procompetitive benefits can overcome a
plaintiff’s prima facie showing of competitive harm. Am.
Express Co., 138 S. Ct. at 2284.
Second, the District Court offered a curative instruction
that rendered any impropriety harmless. In relevant part, the
Court charged: “You may not consider increased producer
prices, increase[d] producer profits, decreased producer losses,
or helping firms stay in operation as procompetitive benefits.”
App. 2462. Because “we presume that jurors follow curative
instructions,” United States v. Fallon, 61 F.4th 95, 125 (3d Cir.
2023), we see no basis here for disturbing the jury’s verdict.
III. Conclusion
For the foregoing reasons, we will affirm the judgment
of the District Court.
22