In the latest of a series of antitrust lawsuits involving the food industry, a Virginia federal court last week denied a motion to dismiss a class action lawsuit alleging a price-fixing conspiracy in the peanut market.

The class is comprised of peanut farmers and harvesters that sell the raw peanuts to the Defendants, who then process, shell, and sell the final product to food companies or other manufacturers.^[1]

According to the Class Plaintiffs’ April 2020 Amended Complaint, beginning as early as 2014, Defendants Birdsong and Golden Peanut — together controlling 80-90% of the peanut shelling industry market — conspired to suppress and keep stagnant prices paid to farmers for raw and harvested peanuts (“Runner Peanuts”).^[2]

The Class alleges that Defendants used their supermajority market share and control over the peanut shelling trade associations to publish misleading statements and overstate Plaintiffs’ Runner Peanut inventory to the U.S. Department of Agriculture (“USDA”), in order to create the illusion that there was an oversupply of raw peanuts. This, in turn, allowed Defendants to coordinate artificially lower price terms in option contracts offered to peanut farmers.

The Court rejected Defendants’ claim that natural market forces and farmer subsidies provided by the 2014 Farm Bill were responsible for the oversupply of peanuts, ^[3]  as well as the Defendants assertion that the alleged parallel conduct alone was insufficient to support an inference of agreement. The Court noted that “the Complaint points out that the Defendants had numerous opportunities to make such an arrangement by virtue of geographic proximity and the social and professional associations of the Defendants’ leadership structure.” ^[4]  Even more critically, the Court noted the Amended Complaint’s allegation that “Defendants released identical shelling contract price offers on the same day, year after year to take advantage of the Plaintiffs’ need to offload their harvested peanuts in the spring of each growing cycle.” ^[5]

The Court thus concluded that Plaintiffs “provid[ed] a motive…, connect[ed] defendants’ simultaneously issued priced offers to the broader context of the peanut market, and alleg[ed] efforts by the defendants to coordinate price offers and conceal their actual peanut inventory using peanut shelling trade associations.” ^[6]

The latest in a series of similar orders denying motion to dismiss antitrust class actions leveled against the food industry, the Court’s order reaffirms the principle that courts must consider the totality of factual assertions to determine whether a conspiracy has been plausibly alleged.

The Bilzin team will continue to monitor developments in the food and beverage antitrust sector.

[1] In re Peanut Farmers Antitrust Litigation, E.D. Va. Case No. 2:29-cv-00463, ECF No. 120 (Amended Complaint) at 1.
[2] Id. at 1-3.
[3]In re Peanut Farmers Antitrust Litigation, E.D. Va. Case No. 2:29-cv-00463, ECF No. 50 (Def. Golden Peanut’s Memo. in Support of its Motion to Dismiss) at 16-17; See also In re Peanut Farmers Antitrust Litigation, E.D. Va. Case No. 2:29-cv-00463,  ECF No. 50 (Def. Birdsong’s Memo. in Support of its Motion to Dismiss) at 4.
[4] In re Peanut Farmers Antitrust Litigation, E.D. Va. Case No. 2:29-cv-00463, ECF No. 135 (Memorandum and Opinion Order) at 6.
[5] Id.
[6] Id.