In re: Processed Egg Products v.

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 19-1088
_____________
IN RE: PROCESSED EGG PRODUCTS ANTITRUST
LITIGATION
T.K. RIBBINGS FAMILY RESTAURANT, LLC;
JOHN A. LISCIANDRO, DBA Lisciandro’s Restaurant
EBY-BROWN COMPANY LLC; KARETAS
FOODS INC.,
Appellants
_____________
No. 19-1188
_____________
IN RE: PROCESSED EGG PRODUCTS ANTITRUST
LITIGATION
Rose Acre Farms, Inc,
Appellant
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-08-md-02002)
District Judge: Hon. Gene E.K. Pratter
_______________
Argued
March 25, 2020
Before: JORDAN, RESTREPO, and FUENTES, Circuit
Judges.
(Filed: June 22, 2020)
_______________
Ronald J. Aranoff, Esq.
Wollmuth Maher & Deutsch
500 Fifth Avenue
12th Floor
New York, NY 10110
Stanley D. Bernstein, Esq.
Bernstein Liebhard
10 East 40th Street
22nd Floor
New York, NY 1001
Michael D. Hausfeld, Esq.
Hausfeld
1700 K Street, N.W.
Suite 650
Washington, DC 20006
2
Stephen R. Neuwirth, Esq.
Kathleen M. Sullivan, Esq. [ARGUED]
Quinn Emanuel Urquhart & Sullivan
51 Madison Avenue
22nd Floor
New York, NY 10010
Mindee J. Reuben, Esq.
Lite DePalma Greenberg
1835 Market Street
Suite 2700
Philadelphia, PA 19103
Stephen D. Susman, Esq.
Susman Godfrey
1301 Avenue of the Americas
32nd Floor
New York, NY 10019
Counsel for Appellants T.K. Ribbings Family
Restaurant, LLC;
John A. Lisciandro, DBA Lisciandro’s Restaurant;
Eby-Brown Company LLC; Karetas Foods Inc.
Donald M. Barnes, Esq.
Jay L. Levine, Esq. [ARGUED]
Porter Wright Morris & Arthur
2020 K Street, N.W.
Suite 600
Washington, DC 20006
3
James A. King, Esq.
Porter Wright Morris & Arthur
41 South High Street
Suite 2900
Columbus, OH 43215
Leah A. Mintz, Esq.
Robert M. Palumbos, Esq.
Duane Morris
30 South 17th Street
United Plaza
Philadelphia, PA 19103
Counsel for Appellee Rose Acre Farms, Inc.
Michael A. Lindsay
Dorsey & Whitney
50 South Sixth Street – Ste. 1500
Minneapolis, MN 55402
Counsel for Amicus National Council of Farmer
Cooperatives
_______________
OPINION OF THE COURT
_______________
JORDAN, Circuit Judge.
In this antitrust class action brought by egg purchasers, 1
the plaintiffs claim that egg producers conspired to inflate
1
Claims were also brought by the purchasers of egg
products, but those claims are not now at issue.
4
prices through three stratagems: (1) early slaughtering of hens
and similar supply-reducing steps; (2) creation of an animal-
welfare program that was actually designed to reduce the egg
supply; and (3) coordinated exports of eggs. Before the
District Court, the plaintiffs argued that all three of those
contrivances were part of a single overarching conspiracy that
was anticompetitive per se and therefore unlawful under the
Sherman Act, 15 U.S.C. § 1 et seq. The defendants countered
that the District Court should look at each alleged stratagem of
the conspiracy separately and determine whether to apply the
per se standard for antitrust liability or, instead, the more
commonly applied rule of reason. In summary judgment
briefing, the parties focused on one of the three alleged
stratagems, and the District Court decided to evaluate it under
the rule of reason. The case then proceeded to trial with all
three stratagems being evaluated under that standard.
Following the jury’s verdict, the District Court entered
judgment for the defendants.
The plaintiffs’ primary argument on appeal is that,
contrary to the District Court’s approach, the alleged
conspiracy should have been evaluated under the standard of
per se illegality rather than the rule of reason. We conclude
that the District Court was right and, accordingly, will affirm.
I. BACKGROUND
The plaintiffs represent a class of “[a]ll individuals and
entities that purchased shell eggs produced from caged birds in
the United States directly from Defendants during the Class
Period from September 24, 2004 through December 31,
5
2008.” 2 (J.A. 125.) Defendant Rose Acre Farms, Inc. (“Rose
Acre”), the only defendant left in the case, 3 sells shell eggs and
egg products for the food service industry. Rose Acre is a
member of both the United Egg Producers (“UEP”) and the
United States Egg Marketers (“USEM”), which are trade
groups representing egg producers.
As noted, the plaintiffs allege that Rose Acre
participated in a conspiracy to reduce the supply of eggs by a
variety of means. First, they say that, during the class period,
UEP told its members to follow short-term supply-reducing
recommendations, including slaughtering hens earlier than had
previously been done, causing hens to molt early, 4 and
reducing the hatching of chickens. The plaintiffs argue that
2
The plaintiffs representing the class are: T.K.
Ribbing’s Family Restaurant, LLC, a restaurant in Falconer,
New York; John A. Lisciandro d/b/a Lisciandro’s Restaurant,
a restaurant in Jamestown, New York; Eby-Brown Company
LLC, a convenience store supplier and wholesale food
distributor based in Naperville, Illinois; and Karetas Foods
Inc., a Reading, Pennsylvania-based food distributor to
institutions, restaurants, and retailers.
3
The plaintiffs originally sued several other defendants
with whom they have since settled. Rose Acre and two other
defendants went to trial. The plaintiffs only appeal the verdict
as to Rose Acre.
4
“Molting is the process whereby hens lose their
feathers and regrow them—hens lay no eggs when molting.”
In re Processed Egg Prods. Antitrust Litig., 312 F.R.D. 124,
130 n.2 (E.D. Pa. 2015) (“Processed Egg Prods. I”).
6
those recommendations were explicit production restrictions,
the purpose of which was to reduce the supply of eggs. Rose
Acre does not explain why UEP made those recommendations
but does emphasize that they were nothing more than
recommendations. And, according to Rose Acre, it is unclear
whether the suggested practices actually did reduce the supply
of eggs. For example, Rose Acre contends that early molting
of a hen would temporarily halt the hen’s egg production for a
few weeks but should thereafter have increased egg production
and the life span of the hen.
Second, the plaintiffs allege that a UEP certification
program (“the Certification Program” or “the Program”) that
was promoted as a set of measures for animal welfare was
actually intended to reduce the supply of eggs. The Program
required egg producers to put fewer chickens in each cage to
give the chickens more space. It also prohibited producers
from backfilling, that is, replacing caged hens that had died.
Under the Program, eggs would be labeled as “UEP Certified”
only if 100% of a producer’s eggs were produced in
compliance with the Program’s rules. In response to the charge
that the Certification Program was designed to drive down
supply and so drive up prices, Rose Acre says that the Program
was developed by animal welfare scientists for humane
purposes and that it did not limit the production of eggs. Rose
Acre emphasizes that the Program’s guidelines did not limit
the number of hens a producer could own, the number of hen
houses a producer could use, or the number of eggs a producer
could sell. Additionally, Rose Acre asserts that the prohibition
on backfilling did not necessarily reduce the supply of eggs
because it tends to prevent disease, social competition, and
stress within a flock – all of which lead to increased mortality
and decreased egg production.
7
Third, the plaintiffs contend that UEP conspired with its
members, through USEM, to collectively export eggs at below-
market prices in order to inflate domestic egg prices. Rose
Acre responds that the eggs it exported were surplus eggs not
ordered by regular customers, and that any price effects were
transitory because the exports represented such a small
proportion of the eggs produced.
The plaintiffs’ appeal centers on the standard for
evaluating the lawfulness of actions taken by Rose Acre and its
co-defendants. As more fully described herein, restraints on
trade are typically judged under what is called the “rule of
reason,” which basically asks whether, in light of all the
circumstances in a case, the restraint in question is an
unreasonable burden on competition. See infra pp. 13-14.
Some restraints, however, are so manifestly anticompetitive
that they do not require extensive analysis and are treated as
illegal per se. Whether to apply the rule of reason or the per se
standard has been one of the hotly-contested issues throughout
this case.
It first arose, though, in companion cases when certain
defendants filed a motion for summary judgment. A separate
set of plaintiffs – the so-called Direct Action Plaintiffs or
“DAPs” – had decided to file their own antitrust suits rather
than participate in this class action. Their cases were then
consolidated with this one for pre-trial proceedings. In
litigating a summary judgment motion in the DAP cases, the
defendants attacked the allegations related to the Certification
Program, contending that the Program could not possibly
constitute a per se violation of the Sherman Act. They argued
that “[t]he Program and its components are not a naked
8
restriction on supply, they produce at least plausible
procompetitive benefits, and they make up a quality standard,
which itself provides procompetitive benefits to consumers and
producers.” (J.A. 2172-73.) Although that motion for
summary judgment was filed in the DAP cases, not this one,
the District Court permitted the representative plaintiffs here to
file briefing to argue that the per se rule should apply, since the
same issue was in play in this case. In their brief, the plaintiffs
said that the per se rule ought to apply because the defendants
engaged in a horizontal conspiracy to reduce the supply of eggs
in order to raise prices. The plaintiffs also argued that the
alleged conspiracy had to be looked at as a whole, so it was
inappropriate to consider the different contrivances of the
conspiracy separately.
The District Court decided that each individual
component of the alleged conspiracy could be considered
separately and that the rule of reason should apply to the
Certification Program, the only component on which the Court
was asked to rule. The Court emphasized that the rule of
reason is the usual standard for judging allegedly
anticompetitive actions, and it explained that “[a]llowing the
plaintiffs’ characterization of the defendant’s conduct as
comprising a single conspiracy as dispositive for purposes of
application of per se or rule of reason analysis would
completely subsume the rule of reason in most, if not all
circumstances.” In re Processed Egg Prods. Antitrust Litig.,
206 F. Supp. 3d 1033, 1040 (E.D. Pa. 2016) (“Processed Egg
Prods. II”).
In rejecting the per se standard, the Court said that the
“UEP Certifi[cation] Program does not involve an express
agreement among competitors to restrain supply and … the
9
record contains evidence indicating that the certifi[cation]
program provided certain procompetitive benefits.” Id. at
1045. The Court indicated that the plaintiffs, despite their
allegations, had not provided any evidence that the Program
was an effort to hike prices by restricting the supply of eggs.
Accepting several defense arguments, the Court declared that
there were some plausible procompetitive benefits to the
Program, including that increased cage space, although
limiting the number of hens, could increase the hens’
productivity because they would be healthier and less stressed,
and that the prohibition on backfilling could reduce disease and
lead to the production of more eggs. The Court also observed
that the Program did not limit the number of hens a producer
could own or the number of eggs a producer could produce.
Finally, the Court noted that the supply of eggs went up during
the class period, and thus the plaintiffs would need to present
some econometric analysis to explain their contention that the
national egg supply would have increased more rapidly but for
the defendants’ conduct. In light of all that, the District Court
concluded that the rule of reason, not the per se standard,
should apply to the Certification Program.
When it came time to try the present case, neither side
contested the decision that the rule of reason would be used to
judge the Program, and neither filed a pre-trial motion asking
the Court to rule on the standard to be applied to the other
components of the alleged conspiracy. 5 Instead, before trial
5
A few months before trial in this case, the plaintiffs
filed a motion that they styled as a “Motion to Confirm” that
the per se rule would apply to the claim of an overarching
conspiracy to reduce supply. In that motion, they said simply
that it would be unfair to apply the rule of reason in this case
10
and in response to the Court’s inquiry about whether the
plaintiffs would ask the jury to find three conspiracies or one
overarching conspiracy, the plaintiffs said that they were
prepared to try the case under the Rule of Reason
on the single question of whether there was a
single conspiracy to reduce the supply of eggs
and thereby raise prices. So that it would be just
a one-question case, whether there was a single
conspiracy. Plaintiffs would preserve their right
to appeal the Court’s earlier determinations on
the Rule of Reason[.]
(J.A. 1283-84.) The plaintiffs filed proposed jury instructions
based on the rule of reason standard. Their proposed verdict
form required the jury to determine whether “the conspiracy
unreasonably restrained trade[.]” (J.A. 756.)
because they had alleged from the beginning that the
defendants had engaged in a single conspiracy to reduce the
supply of eggs, and that, by not filing a motion for summary
judgment, the defendants had forfeited their chance to argue
that the rule of reason should apply. The District Court denied
the plaintiffs’ motion. It rejected the forfeiture argument and
also saw no reason to deviate from its prior determination in
the DAP cases that the rule of reason applies in assessing the
UEP Certification Program. The Court did not rule on whether
the rule of reason or the per se rule should apply to the
components besides the Certification Program but rather
requested that the parties file separate motions on what
standard should apply to those other components, if the parties
wanted a ruling. No party submitted any such motion.
11
After a five-week trial, the District Court told the jury,
among other things, that, in order to rule for the plaintiffs, it
had to find, “[f]irst, the existence of a contract, combination,
or a conspiracy between or among at least two separate
entities[, and s]econd, that the contract, combination, or
conspiracy unreasonably restrains trade.” (J.A. 1021.) The
Court asked whether the parties had any objection to the
instructions, and no one objected. The verdict form asked:
1. Do you find, by a preponderance of the
evidence, that there was a single overarching
conspiracy to reduce supply comprised of all
three of (1) short term supply recommendations,
(2) the United Egg Producers (UEP)
Certifi[cation] Program, and (3) United States
Egg Marketers (USEM) exports?
2. Do you find, by a preponderance of the
evidence, that [the defendants] participated in the
conspiracy to reduce supply?
3. Do you find, by a preponderance of the
evidence, that the conspiracy imposed an
unreasonable restraint on supply?
(J.A. 760.) The jury answered: “Yes” to question 1 and “Yes”
as to Rose Acre for question 2. It answered “No” to question
3. Because it found that the conspiracy did not unreasonably
restrain supply, the jury did not reach the issue of injury. No
one objected to the verdict or otherwise voiced concern about
the consistency of the jury’s answers, and the District Court
entered judgment for the defendants.
12
The plaintiffs later filed a motion under Federal Rule of
Civil Procedure 59(e) to alter or amend the judgment. They
argued that the jury’s finding of the existence of an overarching
conspiracy to reduce supply was “new evidence” and that it
mandated the application of the per se rule and entry of
judgment for them. The Court was unpersuaded. It rejected
the notion that the jury’s verdict constituted evidence. And it
again rejected the plaintiffs’ argument that the per se standard
should apply, stating that “the Court’s legal analysis does not
have to conform to the subsequent jury’s verdict; the jury’s
verdict is instead an outgrowth of the Court’s legal rulings
because those rulings create the universe in which the jury
makes its decisions.” In re Processed Egg Prods. Antitrust
Litig., No. 08-md-2002, 2018 WL 6592990, at *4 (E.D. Pa.
Dec. 14, 2018) (“Processed Egg Prods. III”). The Court also
noted that the plaintiffs “opted to try the case under the rule of
reason as one overarching conspiracy[,]” after the ruling on the
applicability of the rule of reason, and that the jury’s verdict
was “entirely consistent with the rule of reason.” Id.
This appeal followed. 6
6
Rose Acre cross-appealed, with its appeal being
expressly contingent on a decision to vacate the judgment in its
favor. Because we will affirm, we need not address the cross-
appeal.
13
II. DISCUSSION7
The plaintiffs’ fundamental position is that the District
Court erred in determining the rule of reason, rather than the
per se standard, should guide the antitrust analysis in this case.
They argue, first, that the Court should not have looked at the
components of the alleged conspiracy separately, but rather
was required to look at the defendants’ actions as a single,
overarching conspiracy, as the plaintiffs alleged. They next
argue that, because the alleged conspiracy was a horizontal
combination to reduce supply and raise prices, the per se
standard applied. Finally, they say that, even if the District
Court did not err in determining before trial that the rule of
reason was the correct standard, the jury’s finding that Rose
Acre participated in a single, overarching conspiracy to reduce
the supply of eggs mandates application of the per se rule and
judgment in their favor. We will address each of those three
7
The District Court had jurisdiction under 28 U.S.C.
§ 1331, and we have jurisdiction under 28 U.S.C. § 1291. “The
selection of a mode of antitrust analysis is a question of law
over which we exercise plenary review.” Deutscher Tennis
Bund v. ATP Tour, Inc., 610 F.3d 820, 829 n.7 (3d Cir. 2010).
“We review a District Court’s denial of a Rule 59(e) motion
for relief from judgment for abuse of discretion (except for
questions of law, which are subject to plenary review).” United
States ex rel. Customs Fraud Investigations, LLC v. Victaulic
Co., 839 F.3d 242, 248 (3d Cir. 2016).
14
arguments in turn, all of which are flawed in one way or
another. 8
Before that, however, we highlight the distinction
between the two modes of analysis at issue, the rule of reason
and the per se standard of liability. Section 1 of the Sherman
Act prohibits “[e]very contract, combination in the form of
trust or otherwise, or conspiracy, in restraint of trade or
commerce among the several States[.]” 15 U.S.C. § 1. The
Supreme Court “has never taken a literal approach to [§ 1’s]
language. Rather the Court has repeated time and again that
§ 1 outlaw[s] only unreasonable restraints.” Leegin Creative
Leather Prods., Inc., v. PSKS, Inc., 551 U.S. 877, 884 (2007)
(citations and internal quotation marks omitted) (emphasis
added). The general analytical approach, then, is to evaluate
alleged violations of § 1 under the rule of reason. Id. That rule
8
Rose Acre argues that the plaintiffs failed to preserve
their argument that the per se standard applies to the alleged
conspiracy. Not so. The plaintiffs’ briefing in response to the
motion for summary judgment in the DAP cases – cases
consolidated for a time with this one – preserved the issue. The
District Court expressly allowed the plaintiffs to file a brief in
which they made the same arguments that they make here: that
the per se standard applies to the alleged conspiracy and that
the court must look at the conspiracy as a whole. The plaintiffs
also made abundantly clear in numerous filings in this case that
they believed the defendants’ practices were part of one
overarching conspiracy that was subject to the per se standard.
There is no fair basis for finding forfeiture of that argument.
See Tri-M Grp., LLC v. Sharp, 638 F.3d 406, 416 (3d Cir.
2011) (explaining the criteria for a finding of forfeiture of an
argument).
15
tells “the factfinder [to] weigh[] all of the circumstances of a
case in deciding whether a restrictive practice should be
prohibited as imposing an unreasonable restraint on
competition.” Id. at 885. Circumstances to consider include
information about the business, the restraint’s history and
effect, and the business’s market power. Id. at 885-86.
Although the rule of reason is the default mode of
analysis, some practices so clearly violate § 1 that they are
deemed unreasonable per se. “Restraints that are per se
unlawful include horizontal agreements among competitors to
fix prices[.]” Id. at 886. “To justify a per se prohibition a
restraint must have manifestly anticompetitive effects and lack
any redeeming virtue.” Id. (citations, internal quotation marks,
and alteration omitted). Courts have “expressed reluctance to
adopt per se rules with regard to restraints imposed in the
context of business relationships where the economic impact
of certain practices is not immediately obvious.” Id. at 887.
Rather, “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[.]” Id. at 886-87 (citations and internal quotation marks
omitted).
A. Evaluating the Separate Components of the
Conspiracy
With that in mind, we consider first whether the District
Court erred in looking at each of the individual components of
the conspiracy separately. In arguing that there was error, the
plaintiffs rely on Continental Ore Co. v. Union Carbide &
Carbon Corp., in which the Supreme Court criticized the court
16
of appeals because it had “approached Continental’s claims as
if they were five completely separate and unrelated lawsuits,”
rather than all parts of the “basic plan to monopolize the …
market[.]’” 370 U.S. 690, 698 (1962). But, as the District
Court correctly concluded here, Continental Ore does not
require analysis of the distinct components of a conspiracy as
if they were an undifferentiated and indistinguishable bunch of
behaviors.
The Supreme Court’s admonition against
“compartmentalizing … various factual components” was
given in relation to a lower court’s assessment of the
sufficiency of evidence at a trial, and the direction given was
definitely not that the various stratagems of an alleged
conspiracy must be evaluated under a single standard. Id. at
699. Quite the contrary. As our late colleague Judge Edward
R. Becker (then serving as a District Court Judge) cogently
explained:
In Continental Ore itself, the Supreme Court
engaged in a detailed analysis of the record with
respect to three of the four ventures which the
Court of Appeals had addressed on their facts,
concluding with respect to each of the three
considered separately that there was enough
evidence of causation to preclude a directed
verdict. If the warning against
“compartmentalizing” an antitrust conspiracy
case were meant to prevent a court from breaking
down a plaintiff’s allegation of a “unitary”
conspiracy into its component parts for purposes
of analysis, the Court would not have engaged in
17
the “forbidden” analysis in the very same
opinion in which it issued the warning.
Zenith Radio Corp. v. Matsushita Elec. Indus. Co., 513 F.
Supp. 1100, 1167-68 (E.D. Pa. 1981) (Becker, J.) (citation
omitted).
The plaintiffs in the present case nevertheless contend
that, because they alleged the defendants engaged in a single,
overarching conspiracy, all of the defendants’ conduct must be
evaluated under a single standard and, given their allegations,
it must be the per se standard. The plaintiffs evidently believe
that, because they are masters of their complaint, they are also
masters of the District Court in deciding the analytical
approach to be taken in the case. Their power to dictate
analysis and outcome is not what they wish it were.
When determining what standard to apply, courts are
required to look at the “economic effect rather than [rely] upon
formalistic line drawing.” Leegin, 551 U.S. at 887. The
plaintiffs’ characterization of the defendants’ conduct –
whether as a single overarching conspiracy or as three separate
conspiracies – does not determine how a court is to assess
differing actions that the defendants are accused of taking.
When different stratagems are alleged to have furthered an
antitrust conspiracy, the court is free to determine which
analytical standard should apply to each. It is possible that
different aspects of an alleged conspiracy can have very
different economic consequences, and that, accordingly,
different standards should apply when assessing whether each
has an unlawful anticompetitive effect. Cf. id. at 893 (applying
different analytical standards to different parts of an alleged
conspiracy, where one part of the alleged conspiracy was
18
horizontal and one was vertical). Were it otherwise, the rule of
reason, which is supposed to be the widely applicable standard,
could be relegated to the margins. A plaintiff with a bucket
full of allegations about behavior rightly subject to the rule of
reason could easily, by adding a single allegation of behavior
that is anticompetitive per se, demand per se analysis of the
whole.
The District Court did not err in rejecting that kind of
approach. Courts can consider the differing components of an
alleged conspiracy separately when determining which mode
of antitrust analysis to apply.
B. The Certification Program
Turning to the UEP Certification Program – the one part
of the alleged conspiracy that the plaintiffs have consistently
argued should be subject to the per se mode of analysis 9 – we
9
The plaintiffs never asked the District Court to
determine whether the rule of reason or the per se standard
applied to the other two components of the alleged conspiracy,
namely: (i) the short-term supply-reducing recommendations,
including early slaughter, early molting, and reduced hatch;
and (ii) egg exports. The plaintiffs’ argument has always been
that the conspiracy was a single overarching conspiracy and
that the per se standard applied to it as a whole. Once the
District Court rejected that theory and determined that the rule
of reason applied to the Certification Program, the plaintiffs
never moved to have the Court consider whether the per se
standard should apply to the other two alleged stratagems.
Instead, the plaintiffs opted to try the case under the theory that
19
conclude that the District Court properly applied the rule of
reason.
The Certification Program was not an express
agreement to reduce the supply of eggs, much less to fix prices.
And, notwithstanding the plaintiffs’ protestations, it is not clear
that the Program would “have manifestly anticompetitive
effects and lack any redeeming virtue[,]” id. at 886 (citation
omitted), as must be the case for the per se rule to apply.
Although the Program required increased cage space and so
would lead to fewer hens in existing structures, the Program
did not limit the number of hens or structures a producer could
have, so producers could increase the number of hen houses
and add more hens. And Rose Acre provided evidence that
hens with more cage space produce more eggs. Similarly, the
impact on the supply of eggs of a prohibition on backfilling is
less than clear, as there is evidence that the prohibition prevents
disease and social competition and allows hens to live longer
and produce more eggs.
Moreover, as the District Court said, “while the
plaintiffs argue that the supply reducing effects of the
conspiracy are essentially undisputable, the record includes
evidence that egg supply actually increased during the
conspiracy period.” Processed Egg Prods. II, 206 F. Supp. 3d
at 1047. Although the plaintiffs assert that the egg supply
would have increased even more if not for the Certification
Program, the economic impact of the actions at issue cannot be
predicted with a high degree of certainty, which is a
prerequisite for application of the per se standard. See United
there was one overarching conspiracy subject to rule of reason
analysis.
20
States v. Brown Univ. in Providence in State of R.I., 5 F.3d 658,
670 (3d Cir. 1993) (citation omitted) (“Per se rules of illegality
are judicial constructs, and are based in large part on economic
predictions that certain types of activity will more often than
not unreasonably restrain competition[.]”).
Despite that, the plaintiffs argue for that standard,
relying heavily on the rule that horizontal agreements among
competitors to fix prices are illegal per se. Leegin, 551 U.S. at
886. According to the plaintiffs, because they allege that the
defendants engaged in a conspiracy to reduce the supply of
eggs, the per se standard has to apply. But, as already
indicated, the plaintiffs’ choice of labels does not dictate the
mode for assessing allegations and evidence. Brown Univ., 5
F.3d at 670 (“[T]he test for determining what constitutes per se
unlawful price-fixing is one of substance, not semantics.”).
The District Court thoroughly considered the plaintiffs’
complaint and the record and determined that there was not a
horizontal agreement to reduce supply and fix prices. The
Court was confronted with practices having far less certain
motives and far more complicated economic consequences,
and that quite rightly led to application of the rule of reason.
That choice was correct.
C. The Rule 59 (e) Motion
The District Court also did not err in denying the
plaintiffs’ Rule 59(e) motion. Federal Rule of Civil Procedure
59(e) allows for “[a] motion to alter or amend the judgment.”
“[A] proper Rule 59(e) motion . . . must rely on one of three
grounds: (1) an intervening change in controlling law; (2) the
availability of new evidence; or (3) the need to correct clear
error of law or prevent manifest injustice.” Wiest v. Lynch, 710
21
F.3d 121, 128 (3d Cir. 2013) (quotation marks omitted). The
plaintiffs do not claim that their motion is supported by a
change in the law. They do, however, argue that it is justified
by new evidence and the need to correct a clear error of law
and an injustice.
They say first that the jury’s verdict constituted “new
evidence” that effectively supersedes the District Court’s prior
determination that the rule of reason is the proper mode for
analyzing the conspiracy. As the plaintiffs see it, because the
jury “found that there was, in fact, a single, overarching
conspiracy to reduce supply,” the verdict cannot be squared
with application of the rule of reason and instead demands per
se liability. (J.A. 771.) Accordingly, the plaintiffs argue, the
District Court should have entered judgment in their favor and
should not have let the jury consider whether the restraints on
trade were reasonable.
To the extent the plaintiffs are arguing that the jury’s
verdict is somehow internally inconsistent, they lose. They
waived any such argument by failing to object to the verdict
before the jury was discharged. See Frank C. Pollara Grp.,
LLC v. Ocean View Holding, LLC, 784 F.3d 177, 191 (3d Cir.
2015) (“[I]f a party fails to object to an inconsistency in a
general verdict before the jury is excused, that party waives any
objection in that regard.”).10 Moreover, the verdict is plainly
not inconsistent when considered as a product of the rule of
reason, which is the standard on which the jury was instructed.
The whole point of the rule of reason is to recognize that there
are agreements that restrain trade but do not do so
10
No argument has been made that the verdict form
provided for a special verdict under Rule 49(a).
22
unreasonably. That is the very conclusion the jury reached in
this matter, after hearing five weeks of evidence and argument.
It should be obvious too that the jury’s verdict does not
constitute “new evidence.” It is not evidence of any sort. A
verdict is “[a] jury’s finding or decision on the factual issues of
a case.” Verdict, Black’s Law Dictionary (11th ed. 2019).
Evidence, on the other hand, is “[s]omething (including
testimony, documents, and tangible objects) that tends to prove
or disprove the existence of an alleged fact; anything presented
to the senses and offered to prove the existence or nonexistence
of a fact[.]” Evidence, Black’s Law Dictionary (11th ed. 2019).
A jury bases its verdict on evidence; it does not create
evidence. A verdict itself is thus not evidence at all, at least
not in the self-same case.
The plaintiffs fare no better with their assertion that the
District Court’s decision to apply the rule of reason was a clear
error of law and an injustice. They repeat their focus on the
Supreme Court’s declaration that “[a] horizontal cartel among
competing manufacturers or competing retailers that decreases
output or reduces competition in order to increase price is, and
ought to be, per se unlawful[.]” Leegin, 551 U.S. at 893. But
they skip over the words “in order to,” which is a phrase with
serious meaning. When the aim of coordinated action is to set
higher prices, the per se rule certainly does apply. The
plaintiffs, however, failed to prove that kind of intent or
anticompetitive effect. Again, the record both before and after
trial paints a far more complex picture than the black and white
caricature drawn by the plaintiffs’ argument. The District
Court recognized that the rule of reason is the default standard
and that per se liability is a rare exception, the latter being
appropriate only when a court has “considerable experience”
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with the type of restraint at issue and can predict that the
restraint would be found to be unreasonable under the rule of
reason in almost all instances. Id. at 886-87. In this case, that
is simply not so. It cannot be said on this record that the
complained-of practices are manifestly anticompetitive.
Indeed, the jury’s finding that the restraints on
competition at issue in this case were reasonable is a good
indicator that the plaintiffs’ demand for per se liability is off
base. The per se rule presumes that a particular restraint is
unlawful because the restraint is such as would almost always
restrict competition unreasonably. Rossi v. Standard Roofing,
Inc., 156 F.3d 452, 465 (3d Cir. 1998). A jury is not asked to
consider the reasonability of the restraint because the
unreasonableness of it is so plain. One would think, then, that
a restraint properly subject to the per se standard, if tried under
the rule of reason, should ordinarily be found to be
anticompetitive. But the jury here determined that the
complained of practices were actually reasonable, rather than
an effort to drive up prices. That it also found the defendants
had some agreement to reduce supply does not mean, either as
a matter of logic or law, that the District Court erred in saying
that the rule of reason was the proper mode of analysis.
The plaintiffs’ Rule 59(e) motion is really just a
recasting of their argument that any brake on expanded supply
is illegal per se. They proposed a verdict form requiring the
jury to determine whether Rose Acre participated in a
conspiracy to reduce the supply of eggs and, if so, whether that
“conspiracy unreasonably restrained trade.” (J.A. 756.) But,
throughout this litigation, they have never wanted an answer to
that second question. Their position has always been that the
answer to the first question is alone dispositive. As already
24
discussed, however, that is not the law, and the plaintiffs are
not entitled to undo the jury’s verdict simply because they
would rather have liability presumed than proven. The District
Court did not abuse its discretion in denying their motion to
alter or amend the judgment.
III. CONCLUSION
The District Court did an admirable job in addressing
the myriad legal issues presented in this complex case and in
presiding at trial. The plaintiffs’ last-ditch effort to overturn
their loss is unsupportable. For the reasons stated, we will
affirm.
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