Food & Agriculture Quarterly January 2019 | Page 5

FOOD & AGRICULTURE QUARTERLY | JANUARY 2019 thus, evidence related to damages was only to be presented after, and if, the jury found a violation of the Sherman Act had occurred. With respect to the animal welfare program, the class complained most forcefully about three aspects of the animal welfare program: • Cage-space provisions that required companies seeking certification to provide hens a minimum amount of square inches of space per bird • A limitation on the practice of co-mingling birds of different ages known as back-filling • A requirement that a company maintaining the animal welfare certification must provide 100 percent of the birds in its care with, at a minimum, the care delineated in the certified program’s guidelines The class alleged that those three provisions of the animal welfare program operated together to reduce the size of the national flock of egg-laying hens. The logic being if there are less hens in cages, then there are less eggs; if there are less eggs relative to a steady demand, then prices rise. The defendants argued that there was no concerted effort to reduce the national flock size, and that the competitive benefits of their conduct outweighed any alleged harm to competition. With respect to the animal welfare program, the defendants argued and submitted evidence that retailers, consumers and animal activists had demanded the animal welfare program and had been involved in its development. The defendants presented evidence that the animal welfare program and the challenged provisions were based on the recommendations of a group of prominent animal welfare scientists. The defendants also argued and submitted evidence that the implementation of animal welfare standards was inevitable because of ongoing legislative initiatives, and that the program was narrowly tailored to achieve its animal welfare goals. Further, the defendants argued and presented evidence that the program did not reduce the size of the national flock, and instead, egg producers simply built new space to house the hens displaced by the cage-space standards. With respect to USEM’s export program, defendants argued and submitted evidence that egg producers sold eggs into international markets because it was the best price producers could get at the time. With respect to the management recommendations, the defendants argued and submitted evidence that they never agreed with, or followed, the recommendations. The jury agreed with the defendants, finding that two of the three defendants did not engage in any concerted effort to implement the aforementioned programs, and that the competitive benefits of those programs nevertheless outweighed any alleged harm to competition. The case was the first to be tried in on-going multi- district litigation pending in the Eastern District of Pennsylvania. A number of cases involving large grocery chains that opted out of the class have consolidated and are expected to receive a trial date soon. The defendants’ motion for summary judgment against another group of opt-outs bringing parallel claims for egg products, i.e. liquid, dried or frozen eggs that have been removed from their shells, is also pending after the court’s original grant of summary judgment in favor of the defendants was reversed by the Third Circuit Court of Appeals. A putative class of consumers had also brought suit but the court had refused to certify that class and ultimately the suit was dismissed, with prejudice. Allen Carter is an associate and focuses his practice complex litigation. He can be reached at 614.227.4441 or [email protected]. In the interests of full disclosure, Porter Wright Morris & Arthur LLP represented the largest egg producer at trial. PAGE 5