Minneapolis, MN, Sept. 7, 2016 – Judge Ann Montgomery issued an Order today granting Plaintiffs’ Motion for Class Certification in In re Wholesale Grocery Products Antitrust Litigation, MDL 2090 (D. Minn.).

The court certified classes of retail grocery stores that directly purchased from wholesale grocery supplier SuperValu, Inc. between December 31, 2004 and September 13, 2008, and paid prices that were calculated based on SuperValu’s activity based sell (“ABS”) pricing formula.

Plaintiffs allege that Defendants SuperValu and C&S Wholesale Grocers, Inc. conspired to allocate markets and customers through an asset exchange agreement, and that the defendants charged supra-competitive prices in violation of federal antitrust laws, 15 U.S.C. § 1.

In 2002, SuperValu was C&S’s largest competitor in New England, where C&S was the primary wholesaler.  C&S did not compete with SuperValu in the Midwest, where Fleming Companies was SuperValu’s main competitor.  In 2003, Fleming declared bankruptcy, and C&S announced that it had entered into an agreement to acquire Fleming’s Midwest wholesale grocery distribution business and begin competing with SuperValu in the Midwest. In September 2003, however, C&S and SuperValu entered into an asset exchange agreement in which C&S agreed to transfer Fleming’s Midwest distribution centers and related assets to SuperValu, and SuperValu agreed to transfer its New England distribution centers and related assets to C&S.  As part of the written agreement, Defendants agreed not to supply former customers served by the exchanged distribution centers.

Plaintiffs assert, based partly on documents produced in discovery, that the purpose and effect of the agreement was to entirely eliminate competition between the Defendants in the Midwest and New England, thereby enabling Defendants to charge supra-competitive prices. For example, an e-mail written by C&S’s executive vice president stated that “the basis of the deal” was that SuperValu would “depart[] from New England” and “wo[uld]n’t compete with [C&S] in New England,” and that C&S was “not interested in a transaction that leaves SuperValu in New England.”  The Eighth Circuit has found that “a reasonable jury could conclude that the wholesalers’ real agreement involved dividing territory and customers along geographic lines,” and that “[i]f a reasonable jury were to make this factual finding, then the wholesalers committed a per se antitrust violation.” In re Wholesale Grocery Prods. Antitrust Litig., 752 F.3d 728, 734 (8th Cir. 2014).

In opposing Plaintiffs’ motion for class certification, Defendants arguments focused on five of the requirements of Federal Rule of Civil Procedure 23: ascertainability, numerosity, typicality, adequacy, and predominance.

Judge Montgomery found that the class was ascertainable, i.e., that the class definition contains objective criteria that allows for class members to be identified in an administratively feasible way.  The court found that, even if a factfinder has not yet determined the relevant geographic market, the geographic market will be defined later in the litigation and will provide objective criteria for determining class membership.

Defendants disputed numerosity, arguing that joinder was not impractical.  But the court found that numerosity was satisfied where each class had 40 or more class members.  Specifically, the five classes consist of retail grocers served by different distribution centers of SuperValu in the Midwest: 62 served out of Green Bay; 108 served out of Hopkins, Minnesota; 40 served out of Pleasant Prairie, Wisconsin; 47 served out of Champaign, Illinois that are not subject to arbitration; and 69 served out of Champaign that Defendants contend are bound by arbitration clauses.

The district court had previously denied Plaintiffs’ motion for class certification in 2012 that included a broader Midwest class and a New England class. In 2014, the court granted Defendants’ motion for summary judgment and denied as moot Plaintiffs’ motion for leave to file a motion to certify narrower Midwest classes. In 2014, the Eighth Circuit reversed the grant of summary judgment and vacated the denial of the motion for leave to file a revised motion for class certification.  While Plaintiffs sought to add certain retailers in Missouri to the proposed class in their second class certification motion, the court found that the request to add Missouri class members was untimely, and excluded those retailers.

Defendants challenged the typicality and adequacy of three of the class representatives – D&G, Inc. d/b/a Gary’s Foods, Blue Goose Super Market, Inc., and Millenium Operations, Inc. d/b/a R.C. Dick’s Market – on the grounds that: unlike many class members, D&G and Blue Goose never negotiated long-term supply agreements with individually negotiated pricing terms; and D&G and Millenium switched to co-ops as their primary suppliers.  The court found that typicality was met because “[e]ach class representative is a member of the class it seeks to represent, and the claims brought by the class representatives are based on the same legal theory.”

Defendants did not dispute the qualifications of Plaintiffs’ counsel, who the court appointed as class counsel, including Kotchen & Low LLP.

Finally, Defendants challenged the predominance of common issues. The court accepted Plaintiffs’ argument that impact could be demonstrated with common evidence based on a three-step analysis: first, that the asset swap enabled Defendants to charge supra-competitive net margins; second, that the supra-competitive margins show that SuperValu charged supra-competitive ABS prices; and third, that every class member paid supra-competitive prices because they all made purchases in all four ABS product categories and were charged under the same ABS formula for the vast majority of their purchases.

Judge Montgomery has ordered that the parties must be ready for trial in 2017.