Similarly, in August 2018, eight pork producers controlling over 80% of the market — including Tyson and Hormel Foods Corp. — were named as defendants in a class action accusing them of colluding to limit pork production, with the “intent and expected result” of increasing pork prices. Just as in Chicken, the defendants are accused of raising prices in unison by exchanging sensitive pricing data through detailed benchmarking reports. The conspirators’ actions are alleged to have affected prices of bacon, ham, hot dogs and other pork products sold in the United States since 2009.
The effect of big food's anti-competitive behavior is far reaching. The average American family that overpays for a can of tuna or a package of frozen chicken breast at the local supermarket is the clearest victim. Paradoxically, however, as products move through the distribution chain to an end consumer, the more remote — and harder to prove — the damage to the final purchaser becomes. Moreover, because the individual damage suffered from the purchase of a can of price-fixed tuna or bag of chicken nuggets is likely not very substantial on its own, the end consumer is the least likely candidate to hold the price-fixers legally accountable.
It is for these reasons that under the federal antitrust laws, only direct purchasers — i.e., the person or entity that purchases product directly from an illegal actor, and likely at far greater quantities — have the right to bring a claim for money damages caused by anti-competitive conduct. This means that the direct purchaser, like a food or electronics distributor, is entitled to the full measure of damages caused by defendants’ illegal conduct. And, the defendants may not introduce any evidence of the fact that the direct purchaser plaintiff was able to pass on part or all of the alleged overcharge to its customers.
The civil penalties for antitrust violations provide great incentives for direct purchaser plaintiffs. First, all defendants that participate in a price-fixing case (regardless of how long they participate) are jointly and severally liable for the entire conspiracy. Second, there is no right of contribution among defendants. This means that, unlike most other areas of the law, as long as a plaintiff purchased the price-fixed product from one co-conspirator, it can recover the full measure of its damages from a single defendant or group of defendants. This is true even if the plaintiff never purchased a single dollar worth of product from a defendant. Third, the antitrust laws provide for automatic trebling of a plaintiff’s damages.
These unique aspects of antitrust law help explain a relatively recent phenomenon in these cases — the emergence of the opt-out class. Those that buy directly from conspirators and in large quantities, such as distributors and retailers/ restaurants, often have the largest claims in the case, and thus frequently elect to leave the class and pursue their own cases. As a result, the claims of the opt-outs often dwarf those of the class, leading to increased prominence for the opt outs, and in turn, more control and influence over the case.
In the LCD price-fixing case, for example, over 90% of the direct purchases by dollar volume opted out of the class and brought their own actions against the defendants. This opt-out trend is continuing in the big food cases. In both the tuna and chicken actions over 60 direct purchasers have filed independent actions. The trend is not surprising. Because of the unique features of the antitrust laws, the largest customers of the illegal actors face the prospect of recovering hundreds of millions of dollars in damages. In fact, even smaller, regional companies can accrue claims that reach into the nine-figures. Cognizant of the substantial opportunities available, general counsel at the nations’ largest food retailers, distributors and restaurants are giving the green light to antitrust suits with increasing frequency.