Food & Agriculture Quarterly January 2019 | Page 4

Egg producers
prevail in a rare
jury trial involving
Sherman Act
Claims
ALLEN CARTER
A group of egg producers prevailed at trial against
a class of direct purchasers that alleged the nation’s
largest egg producers violated the federal antitrust
laws by collectively trying to reduce the supply of
eggs in the country. A class of direct purchasers
of shell eggs had filed its original complaint in
2008 against 17 defendants: 14 egg producers and
three agricultural cooperatives. The class had been
certified to represent all individuals and entities that
purchased shell eggs produced from caged birds
in the United States directly from the defendants
during the class period from Sept. 24, 2004, to Dec.
31, 2008. The class claimed damages in excess of $1
billion, an amount that was to be trebled if the class
prevailed. During the course of nearly 10 years of
litigation, most of the original defendants reached
settlement agreements with the class, leaving only
three egg producers to defend their conduct at
trial. The case was tried before a jury in May and
June 2018 over the course of 27 trial days in the
United States District Court in the Eastern District of
Pennsylvania.
The class argued the defendants were part of a
price-fixing scheme consisting of three types of
supply control activities; each of which they alleged
were conducted by egg producers through the
leading egg industry agricultural cooperative, the
United Egg Producers (UEP), and an agricultural
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cooperative engaged in egg exports, the United
States Egg Marketers (USEM). Most prominently,
the class argued that the egg industry’s standard-
bearing animal welfare program, the UEP Certified
Program, was actually a sham designed to control
and limit the egg supply. Second, the class argued
that USEM’s egg export activity was designed to
reduce domestic egg supply. Third, the class argued
that UEP’s cyclical management recommendations
were designed to reduce egg supply during seasonal
periods when the industry traditionally suffered low
demand and collapsing prices. The class argued that
three activities were combined to reduce domestic
egg supply, and thereby, raise domestic shell egg
prices.
The court had previously determined that UEP’s
Certified program would be adjudged under the rule
of reason. The “rule of reason” required the jury to
determine whether there was any concerted effort
on the part of the defendants, and if so, the jury had
to determine whether the benefits to competition
from that concerted activity outweighed the harm
to competition. Pre-trial, the plaintiffs elected to
have all of the alleged unlawful conduct judged
under that same standard. Additionally, plaintiffs
had to prove that the class was injured by the
defendants’ actions. The court had ruled that the trial
would be bifurcated, trying liability issues first, and