Brown et al v. JBS USA Food Company et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Philip A. Brimmer
Civil Action No. 22-cv-02946-PAB-STV
RON BROWN,
MINKA GARMON, and
JESSIE CROFT, individually and on behalf of all others similarly situated,
Plaintiffs,
v.
JBS USA FOOD COMPANY,
TYSON FOODS, INC.,1
CARGILL, INC.,
CARGILL MEAT SOLUTIONS CORP.,
HORMEL FOODS CORP.,
AMERICAN FOODS GROUP, LLC,
TRIUMPH FOODS, LLC,
SEABOARD FOODS, LLC,
NATIONAL BEEF PACKING CO., LLC,
IOWA PREMIUM LLC,
SMITHFIELD FOODS INC.,
SMITHFIELD PACKAGED MEATS CORP.,
AGRI BEEF CO.,
WASHINGTON BEEF, LLC,
PERDUE FARMS, INC.,
AGRI STATS, INC., and
WEBBER, MENG, SAHL AND COMPANY, INC. d/b/a/ WMS & Company,
Defendants.
_____________________________________________________________________
ORDER
_____________________________________________________________________
This matter is before the Court on Defendant Hormel Foods Corporation’s Rule
12(b)(6) Motion to Dismiss the Complaint [Docket No. 159], Defendant Iowa Premium,
1 The Court notes the caption of the complaint has been corrected to include Tyson
Foods, Inc. See Docket No. 219 at 1 n.1.
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LLC’s Motion to Dismiss [Docket No. 160], Defendant Triumph Foods, LLC’s Motion to
Dismiss [Docket No. 161],2 Agri Stats, Inc.’s Motion to Dismiss [Docket No. 162],
Defendants Agri Beef Co. and Washington Beef, LLC’s Motion to Dismiss [Docket No.
163], Motion to Dismiss by Defendants Smithfield Foods, Inc. and Smithfield Packaged
Meats Corp. [Docket No. 165], and Defendant American Foods Group, LLC’s Motion to
Dismiss Plaintiffs’ Class Action Complaint and Jury Demand [Docket No. 166]. Plaintiffs
filed a response opposing each motion, Docket Nos. 185, 183, 186, 184, 180, 182, and
181, respectively. Defendants filed replies in support of each motion, Docket Nos. 188,
192, 190, 193, 189, 194, and 191, respectively.
I. BACKGROUND3
A. The Parties
Plaintiffs Ron Brown, Minka Garmon, and Jessie Croft bring claims on behalf of
themselves and on behalf of a class (the “Class”) “consisting of all persons employed by
Defendants, their subsidiaries, and related entities at beef- and pork-processing plants
in the continental United States from January 1, 2014, to the present day (the ‘Class
Period’).” Docket No. 1 at 6 (footnote omitted).
Defendants include eleven red meat processors4 and several of their subsidiaries
(the “Processor Defendants”), namely, Agri Beef Co.; Washington Beef, LLC;5 American
2 The Court will deny Triumph’s motion as moot based on Triumph’s request for entry
of a preliminary settlement order based on a cooperation agreement between Triumph
and plaintiffs. See Docket No. 205 at 1. Triumph may refile its motion to dismiss if the
Court denies its motion for preliminary approval of settlement.
3 The following facts are reproduced from the Court’s order on Defendants’ Joint
Motion to Dismiss [Docket No. 164]. See Docket No. 219 at 3-11.
4 Plaintiffs define red meat as beef and pork. Docket No. 1 at 6.
5 Agri Beef Co. and Washington Beef, LLC will be collectively referred to as “Agri
Beef.”
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Foods Group, LLC (“American Foods”); Cargill, Inc.; Cargill Meat Solutions Corp.;6
Hormel Foods Corp. (“Hormel”); Iowa Premium LLC (“Iowa Premium”); JBS USA Food
Co. (“JBS”); National Beef Packing Co., LLC (“National Beef”); Perdue Farms, Inc.
(“Perdue”); Seaboard Foods, LLC (“Seaboard”); Smithfield Foods, Inc.; Smithfield
Packaged Meats Corp.;7 Triumph Foods, LLC (“Triumph”); and Tyson Foods, Inc.
(“Tyson”). Id., ¶ 2. A subset of Processor Defendants are the “Pork Processor
Defendants,” namely, Hormel, JBS, Seaboard, Smithfield Foods, Inc., Triumph, and
Tyson. Id. at 11, ¶ 16. In addition to the Processor Defendants, the complaint names
two consulting companies as defendants, Agri Stats, Inc. (“Agri Stats”) and Webber
Meng Sahl and Company Inc. (“WMS”). Id. at 6, ¶ 2.
B. Facts8
Processor Defendants collectively produce approximately 80 percent of the red meat
that is sold in the United States. Id. Processor Defendants own and operate
approximately 140 red meat processing plants in the continental United States. Id. at 6-
7, ¶ 3. Plaintiffs Ron Brown, Minka Garmon, and Jessie Croft were hourly employees of
“Smithfield Farms Inc.,” National Beef, and Iowa Premium respectively during the Class
Period. Id. at 14, ¶¶ 26-28.
6 Cargill Inc. and Cargill Meat Solutions Corp. will be collectively referred to as
“Cargill.”
7 Smithfield Foods, Inc. and Smithfield Packaged Meats Corp. will be collectively
referred to as “Smithfield.”
8 The Court assumes that the well-pleaded allegations in plaintiffs’ complaint are true
in considering the motion to dismiss. Brown v. Montoya, 662 F.3d 1152, 1162 (10th Cir.
2011).
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Processor Defendants employed hundreds of thousands of the members of the Class
during the Class Period in various positions and compensated these employees with
benefits and either hourly wages or an annual salary. Id. at 6-7, ¶¶ 3-4. During the
Class Period, senior executives for each Processor Defendant set and approved
compensation schedules for hourly wage rates, annual salaries, and employee benefits
at corporate headquarters for their respective companies. Id. at 7, ¶ 4. Local plant
managers working for Processor Defendants were allowed to make recommendations
for wage adjustments, but the ultimate decision on compensation schedules was made
at the corporate headquarters of each Processor Defendant. Id. at 46, ¶ 138. Each
Processor Defendant determined the compensation for hourly-paid positions at their red
meat processing plants with compensation schedules that accounted for workers’ skill
and experience and which aligned with the compensation schedules that other
Processor Defendants had established for the same position. Id. at 45, ¶ 135. Each
Processor Defendant did the same for salaried positions. Id., ¶ 136.
From 2014 to 2019, different groups of Processor Defendants designed and
participated in an annual “Red Meat Industry Compensation Survey” in which they
exchanged detailed current and future information about wages, salaries, and benefits
provided to their workers at red meat processing facilities. Id. at 51, ¶¶ 154-55. To
participate in the Red Meat Industry Compensation Survey, Processor Defendants
annually completed a survey questionnaire and then received and reviewed a report on
the results of the survey. Id. at 51-52, ¶ 155. Different groups of Processor Defendants
participated in the Red Meat Industry Compensation Survey each year from 2014 to
2019. Id. Participants referred to themselves as the “Red Meat Survey Group.” Id. at
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53, ¶ 160. Processor Defendants designed the initial surveys in late 2013 through in-
person and telephonic conversations without the assistance of WMS. Id. at 55, ¶¶ 170,
172. On September 16, 2013, Javen Xu, the compensation and benefits analyst at
JBS, id. at 56, ¶ 173, emailed Jonathan Meng, WMS’s president and the administrator
of the Red Meat Industry Compensation Surveys, id. at 8, ¶ 8, to inform him that nine
companies, including JBS, had confirmed their participation in the Red Meat Industry
Compensation Survey. Id. at 56, ¶ 173. Meng responded, confirming that Processor
Defendants held final decision-making power over which employee positions the survey
would cover and over the information the survey would collect. Id.
WMS distributed survey questionnaires to the participating Processor Defendants,
compiled survey results reports, and distributed those reports to participants each year.
Id. at 52, ¶ 156. The Processor Defendants, however, collectively managed and
controlled the annual Red Meat Industry Compensation Surveys and determined who
could join the Red Meat Survey Group. Id. at 53-55, ¶¶ 159, 166-67.
In 2014, when the first Red Meat Industry Compensation Survey was administered,
Meng directed questions from survey participants to Renee DeBar, head of
compensation and benefits at JBS. Id. at 56, 58, ¶¶ 176, 181-182. On October 21,
2014, after a meeting between the Red Meat Survey Group without Meng, DeBar
provided Meng with specific modifications for the 2015 survey from the Red Meat
Survey Group. Id. at 58, ¶ 183.
On December 8, 2016, Brad Sievers the compensation manager at JBS, informed
Meng that he met with the assistant vice president of labor at Cargill and told Meng they
had discussed the Red Meat Survey Group, were reaching out to companies to gauge
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interest in participating in the survey, and that the Red Meat Survey Group would hold a
call without Meng to “ensure everyone is on the same page.” Id. at 58-59, ¶ 184. The
Red Meat Survey Group held a call in January 2017 and made decisions about the
scope of the survey. Id. at 59, ¶ 185.
Each year of the Class Period the Red Meat Industry Compensation Surveys covered
between 33 and 38 salaried positions. Id. at 60, ¶ 188. In 2014 and 2015, the surveys
covered four hourly positions, and in 2016 and 2017, the surveys covered seven hourly
positions. Id. at 61, ¶ 195. The Red Meat Industry Compensation Surveys that were
distributed from 2014 to 2017 included data on future salary increases Processor
Defendants planned. Id. at 63, ¶ 206.
Throughout the Class Period, representatives from Processor Defendants attended
and participated in annual in-person “Red Meat Industry Compensation Meetings.” Id.
at 69, ¶¶ 227-228. The meetings were held each year from 2014-2019, except in 2016.
Id., ¶ 227. The meetings were usually held in April or May and most frequently held in
Kansas City, Missouri. Id., ¶ 229. The Red Meat Survey Group determined the
location, schedule, and agenda for each Red Meat Industry Compensation Meeting. Id.
Red Meat Survey Group members were required to attend the annual Red Meat
Industry Compensation Meetings to remain as members of the group. Id. at 54, ¶¶ 163,
165. Each Red Meat Survey Group member sent one to three executives to the Red
Meat Industry Compensation Meetings. Id. at 69, ¶ 228. The meetings consisted of
multiple roundtable sessions during which executives from the Red Meat Survey Group
would discuss the results of that year’s Red Meat Industry Compensation Survey as
well as current and future compensation practices at their respective firms. Id. at 70,
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¶ 233. The Red Meat Industry Compensation Meetings were accompanied by “off-the-
books dinners and other activities that preceded the Meetings themselves.” Id. at 74,
¶ 252. For example, at the 2014 meeting, a Seaboard executive arranged a dinner for
the Red Meat Survey Group on the evening before that year’s meeting with executives
from Tyson, JBS, and Seaboard, id., ¶ 253; in 2015, the same Seaboard executive
arranged a dinner for the Red Meat Survey Group the night before the annual meeting
with a “quick discussion” before the dinner between members of the group, id. at 75,
¶ 254; in connection with the 2019 meeting, an executive from Pittman Farms offered to
host a happy hour and dinner alongside the meeting. Id., ¶ 255.
After the 2016 Red Meat Industry Compensation Survey, the Red Meat Survey
Group formed a “steering committee” to aid with communication and organization and to
serve as Meng’s main point of contact. Id. at 55, ¶ 168. Executives from Tyson, JBS,
and Cargill were on the steering committee. Id.
At the Red Meat Industry Compensation Meetings, Meng was invited to attend one or
both of the first two sessions; during those sessions, Meng presented a summary of the
results of the Red Meat Industry Compensation Survey. Id. at 70-71, ¶¶ 235-237. In
2014, 2015, and 2017, after presenting the survey results, Meng left and the remaining
sessions proceeded without him. Id. at 72, ¶¶ 244-45. In the sessions without Meng,
plaintiffs allege that executives from Processor Defendants agreed upon and
suppressed the wages, salaries, bonuses, and benefits they would provide to
employees at red meat processing plants. Id., ¶ 244. The steering committee prepared
written agendas for the Red Meat Industry Compensation Meetings which concealed
the contents of the roundtable sessions that excluded WMS and Meng, listing items
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such a “group discussion topics” and “outstanding items” and observing that firms would
“share relevant updates” in the sessions. Id. at 74, ¶ 251.
In 2016, an antitrust action (the “Broilers lawsuit”) was filed against several Processor
Defendants alleging price-fixing by leading poultry producers. Id. at 75, ¶ 256. The
Broilers lawsuit generated concerns about the Red Meat Industry Compensation
Surveys and Meetings and, in response, questions and survey results containing future
compensation data were eliminated from the surveys and the survey results reports. Id.
at 76, ¶¶ 257-59. Starting with the 2018 Red Meat Compensation Industry Meeting,
Meng was instructed to stay for all the sessions. Id., ¶ 260.
In 2019, a lawsuit was filed (“Jien v. Perdue”) alleging that certain poultry processors,
including several Processor Defendants, “had unlawfully conspired to depress the
compensation of their poultry-plant workers by, among other things, exchanging their
wage data through annual WMS surveys and conducting in-person meetings to discuss
the survey results and their compensation practices.” Id. at 77, ¶ 261. Based on
concerns of antitrust liability arising from Jien v. Perdue and the Broilers lawsuit, the
Red Meat Survey Group decided to cease the Red Meat Industry Compensation Survey
in 2020. Id. On January 3, 2020, Meng asked the Red Meat Survey Group if they were
interested in continuing the survey. Id., ¶ 262. On the same day, Hormel, Agri Beef,
Seaboard, and Kraft Heinz Corporation9 responded by declining to participate in a
survey in 2020. Id., ¶ 263.
On January 16, 2020, Meng informed Katie Mason, the compensation lead at Cargill,
9 Kraft Heinz Company is alleged to be a co-conspirator with Processor Defendants.
Id. at 38-39, ¶¶ 100-102.
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that there would not be a survey in 2020 based on a lack of interest, and Mason
responded “she was ‘hearing similarly internally.’” Id., ¶ 264.
Throughout the Class Period, senior executives of Processor Defendants who had
the authority to determine or influence compensation of members of the Class
contacted one another in order to align their current and future compensation practices.
Id. at 78, ¶ 267. As examples, a Seaboard executive made weekly calls to competing
pork processors requesting pay ranges for salaried and hourly workers at competing
pork processing plants, id., ¶ 268; on May 6, 2015, the compensation and retirement
manager at JBS emailed executives at Agri Beef, Cargill, Hormel, National Beef,
Seaboard, Smithfield, Triumph, and Tyson an “ad-hoc survey” covering “Supervisor
Weekend Pay & Bonus Eligibility,” for which the results would be anonymized and
shared with all respondents, id. at 79, ¶ 270; on April 20, 2015, Linda Wray an executive
at Tyson, informed Meng and executives at Seaboard and JBS that she intended to
send a survey to Red Meat Survey Group members asking for their projected increase
non-union hourly production in fiscal year 2016, id., ¶ 271; in response to Wray’s email,
Seaboard and JBS immediately signed off on her request to send a survey, but Meng
wrote that she should not formally distribute a question on 2016 compensation
increases, id. at 79-80, ¶ 271; JBS provided compensation data to Iowa Premium on
what it would pay its processing plant workers in Marshalltown, Iowa, where Iowa
Premium has a red meat processing plant 23 miles away in Tama, Iowa. Id. at 80, 91,
¶¶ 272, 310.
Agri Stats describes itself as a “management and benchmarking company” that
“provides consultation on data analysis, action plan development and management
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practices of participating companies,” with a mission to “But its stated mission is to
“[i]mprove the bottom line profitability for our participants by providing accurate and
timely comparative data while preserving confidentiality of individual companies.” Id. at
81, ¶ 277. Agri Stat facilitates the exchange of recent and current competitively
sensitive information between competitors. Id. at 82, ¶ 280. To maintain secrecy, Agri
Stats requires that its subscribers share their own data in order to receive data on their
competitors and does not sell its data to the public. Id., ¶¶ 280-81. Subscribers to Agri
Stats performed an initial data intake and then provided monthly reports of data on the
18th of each subsequent month. Id. at 83, ¶ 284. Agri Stats reported the data it
collected monthly to its subscribers two weeks after receiving it. Id.
The Pork Processor Defendants exchanged detailed and competitively sensitive
compensation data each month by way of a subscription to Agri Stats. Id. at 80, ¶ 273.
During the Class Period Cargill, Clemens Food Group, LLC, the Clemens Family
Corporation, Hormel, Indiana Packers Corporation, JBS, Seaboard, Smithfield and
Tyson exchanged wage information through Agri Stats. Id. at 81, ¶ 276.
Agri Stats was to anonymize data it received, but the reports it provided were detailed
enough that competitors could identify each other’s data. Id. at 87, ¶ 296. Each report
identified which competitors participated; in some reports, competitors were identifiable
because so few producers participated and, in other reports, the data that was provided
was so specific it could be deanonymized with public records. Id. at 87-88, ¶¶ 297-99.
The Pork Processor Defendants used the data from Agri Stats to suppress
compensation and to confirm that no conspirator deviated from the compensation-fixing
conspiracy. Id. at 88-89, ¶ 301.
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Two Processor Defendants entered into an illegal agreement not to recruit or solicit
each other’s employees, such agreements are known as “no poach” agreements. Id. at
90, ¶¶ 306-07. As an example, in January 2016, Iowa Premium and JBS entered into a
no poach agreement covering JBS’ Marshalltown plant and Iowa Premium’s Tama
plant. Id. at 90-93, ¶¶ 307-15. The Marshalltown and Tama plants are both in Iowa and
would compete with one another for employees in the absence of an agreement. Id. at
91, ¶ 310.
As a result of the conspiracy to depress wages, Processor Defendants
simultaneously and in parallel limited annual wage increases to members of the Class.
Id. at 93, ¶ 317. Wages were lower than they would have been in the absence of a
conspiracy. Id. As examples, in 2017, base wages were increased by only 2% at 17
plants operated by Cargill, National Beef, JBS, Smithfield, Tyson, Triumph, and
Seaboard. Id. at 94, ¶ 319. In 2018, base wages were increased by only 2% in 17
plants operated by several Processor Defendants, including some of the plants that only
received a 2% increase in base wages in 2017. Id., ¶¶ 319-20. In 2017 and 2018, at
plants operated by different Processor Defendants, the difference in average wages
between plants in the same areas including Dodge City, Kansas; the Oklahoma and
Texas panhandles; and south-central Nebraska decreased, bringing the difference in
wages between closely located plants within $0.07 or less. Id. at 95, ¶ 321.
II. LEGAL STANDARD
To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege enough
factual matter that, taken as true, makes the plaintiff’s “claim to relief . . . plausible on its
face.” Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012) (citing Bell Atl.
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Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “The ‘plausibility’ standard requires that
relief must plausibly follow from the facts alleged, not that the facts themselves be
plausible.” RE/MAX, LLC v. Quicken Loans Inc., 295 F. Supp. 3d 1163, 1168 (D. Colo.
2018) (citing Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008)). Generally,
“[s]pecific facts are not necessary; the statement need only ‘give the defendant fair
notice of what the claim is and the grounds upon which it rests.’” Erickson v. Pardus,
551 U.S. 89, 93 (2007) (per curiam) (quoting Twombly, 550 U.S. at 555) (alterations
omitted). However, a plaintiff still must provide “supporting factual averments” with his
allegations. Cory v. Allstate Ins., 583 F.3d 1240, 1244 (10th Cir. 2009) (“conclusory
allegations without supporting factual averments are insufficient to state a claim on
which relief can be based” (citation omitted)). The court need not accept conclusory
allegations. Moffet v. Halliburton Energy Servs., Inc., 291 F.3d 1227, 1232 (10th Cir.
2002). “[W]here the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged – but it has not shown – that
the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (quotations
and alterations omitted); see also Khalik, 671 F.3d at 1190 (“A plaintiff must nudge [his]
claims across the line from conceivable to plausible in order to survive a motion to
dismiss.” (quoting Twombly, 550 U.S. at 570)). If a complaint’s allegations are “so
general that they encompass a wide swath of conduct, much of it innocent,” then
plaintiff has not stated a plausible claim. Khalik, 671 F.3d at 1191 (quotations omitted).
Thus, even though modern rules of pleading are somewhat forgiving, “a complaint still
must contain either direct or inferential allegations respecting all the material elements
necessary to sustain a recovery under some viable legal theory.” Bryson, 534 F.3d at
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1286 (alterations omitted). An affirmative defense, such as the statute of limitations,
may be considered on a motion to dismiss under Rule 12(b)(6) only when a plaintiff
admits every element of the affirmative defense in the complaint. Fernandez v. Clean
House, LLC, 883 F.3d 1296, 1299 (10th Cir. 2018) (citing Xechem, Inc. v. Bristol-Myers
Squibb Co., 372 F.3d 899, 901 (7th Cir. 2004)).
III. ANALYSIS
Plaintiffs’ first claim for relief is brought against every defendant except Agri Stats and
alleges that Processor Defendants, and other co-conspirator such as WMS, entered into
an agreement to fix, depress, maintain, and stabilize the compensation paid to workers,
both hourly and salaried, at their red meat processing facilities in violation of the
Sherman Act, 15 U.S.C. § 1. Docket No. 1 at 121-23, ¶¶ 400-405. Plaintiffs allege that
this agreement began on January 1, 2014 and continues to the present. Id. at 121,
¶ 401. Plaintiffs’ second claim for relief is brought against every defendant and alleges
defendants and several co-conspirators “engaged in a continuing agreement to
regularly exchange detailed, timely, competitively sensitive, and non-public information
about the compensation being paid or to be paid to their employees at red meat
processing plants” beginning on January 1, 2014 and continuing to the present. Id. at
123, ¶ 407.
Each motion to dismiss joins Defendants’ Joint Motion to Dismiss [Docket No. 164].
Docket Nos. 159 at 1; 160 at 1-2; 162 at 2 n.1; 163 at 1; 165 at 1; 166 at 1. The Court
denies the portions of each motion incorporating the joint motion to dismiss for the same
reasons the Court denied the joint motion to dismiss. See Docket No. 219. The Court
will analyze the remaining arguments in the individual motions to dismiss separately.
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A. Sherman Act
Section 1 of the Sherman Act states that “[e]very contract, combination in the form of
trust or otherwise, or conspiracy, in restraint of trade or commerce among the several
States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. “While the text
of the Sherman Act could perhaps be interpreted to proscribe all contracts, the Supreme
Court has repeated time and again that § 1 outlaw[s] only unreasonable restraints of
trade.” United States v. Kemp & Assocs., Inc., 907 F.3d 1264, 1272 (10th Cir. 2018)
(internal quotations marks omitted). Certain restraints are unreasonable per se
“because they ‘always or almost always tend to restrict competition and decrease
output.’” See Ohio v. Am. Express Co., 138 S. Ct. 2274, 2283 (2018) (quoting Bus.
Elec. Corp. v. Sharp Elec. Corp., 485 U.S. 717, 723 (1988)). Horizontal restraints
“imposed by agreement between competitors” qualify as “unreasonable per se.” Id. at
2284 (quoting Sharp, 485 U.S. at 730). “Restraints that are not unreasonable per se
are judged under the rule of reason” which “requires courts to conduct a fact-specific
assessment of market power and market structure to assess the restraint’s actual effect
on competition.” Id. (internal citations, quotations, and alterations omitted).
“The essence of a claim of a violation of Section 1 of the Sherman Act is the
agreement itself.” Champagne Metals v. Ken-Mac Metals, Inc., 458 F.3d 1073, 1082
(10th Cir. 2006). “The plausibility standard is not akin to a ‘probability requirement,’ but
it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal,
556 U.S. at 678 (quoting Twombly, 550 U.S. at 556); see also Llacua v. W. Range
Ass’n, 930 F.3d 1161, 1179 n.28 (10th Cir. 2019) (observing that it is erroneous to use a
probability standard to assess allegations in a Sherman Act claim). An agreement can
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be shown through direct or indirect evidence. Champagne Metals, 458 F.3d at 1082.
“Direct facts are explicit and require no inferences. Direct evidence of a § 1 agreement
may take the form of a written contract or agreement, such as association rules, or
admissions of an agreement. In contrast, circumstantial facts require inferences to
show that an anti-competitive agreement exists.” Llacua, 930 F.3d at 1174 n.24
(internal citations, quotations, and alterations omitted). Twombly provides a rule for
determining whether plaintiff has sufficiently pled a claim of an agreement in violation of
the Sherman Act with circumstantial evidence, namely that “mere allegations of parallel
conduct, absent additional contextual facts, fail to state a plausible conspiracy claim.”
See id. at 1174-75 (quoting Twombly, 550 U.S. at 556-57).
B. Statute of Limitations
Under the Clayton Act, 15 U.S.C. § 15b, a claim under the Sherman Act “‘shall be
forever barred unless commenced within four years after the cause of action accrued.’”
Auraria Student Housing at the Regency, LLC, v. Campus Village Apartments LLC, 843
F.3d 1225, 1247 (10th Cir. 2016) (quoting 15 U.S.C. § 15b). Although the statute of
limitations is an affirmative defense that a defendant must raise, where the dates in a
complaint make clear that the claim has accrued, a statute of limitations defense may
be resolved on a motion to dismiss. Herrera v. City of Espanola, 32 F.4th 980, 991
(10th Cir. 2022) (citing Fernandez v. Clean House, LLC, 883 F.3d 1296, 1299 (10th Cir.
2018)). Where a plaintiff’s claim accrued before filing, “plaintiff has the burden of
establishing a factual basis for tolling the statute.” Aldrich v. McCulloch Props. Inc., 627
F.2d 1036, 1041 n.4 (10th Cir. 1980).
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One exception to the statute of limitations is the continuing violations doctrine.
Herrera, 32 F.4th at 993. “[A]n overt act will restart the statute of limitation under the
continuing conspiracy exception when the act is (1) ‘a new and independent act that is
not merely a reaffirmation of a previous act’; and (2) the act ‘inflict[s] new and
accumulating injury on the plaintiff.’” Auraria Student Housing, 843 F.3d at 1248
(quoting Kaw Valley Elec. Coop. Co. v. Kansas Elec. Power Coop., Inc., 872 F.2d 931,
933 (10th Cir. 1989)).
Another exception to the statute of limitations is fraudulent concealment. Ballen v.
Prudential Bache Securities, Inc., 23 F.3d 335, 336-37 (10th Cir. 1994). Fraudulent
concealment is an equitable doctrine “read into every federal statute of limitation.” In re
Credit Default Swaps Auctions Litigation, 2023 WL 3821337, at *20 (D.N.M. June 5,
2023) (quoting Holmberg v. Armbrecht, 327 U.S. 392, 397 (1946)).
The Tenth Circuit requires plaintiffs to show “(1) the use of fraudulent
means by the party who raises the ban of the statute [of limitations]; (2)
successful concealment from the injured party; and (3) that the party
claiming fraudulent concealment did not know or by the exercise of due
diligence could not have known that he might have a cause of action.”
Id. (quoting Ballen, 23 F.3d at 336-37). “The question of whether [] claims were
fraudulently concealed is typically factual and not amenable to resolution on a
motion to dismiss.” Thompson v. 1-800 Contacts, Inc., 2018 WL 2271024, at *10
(D. Utah May 17, 2018).
In an antitrust conspiracy case, it is generally true that a fraudulent
concealment claim is not resolvable on a motion to dismiss where the proof of
concealment is in the hands of the defendant. Id. at *10-11; see also In re
Rubber Chemicals Antitrust Litigation, 504 F. Supp. 2d 777, 789 (N.D. Cal. 2007)
(collecting cases). Where a plaintiff “make[s] specific factual allegations with
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respect to each Defendant's alleged participation in the scheme as a whole,”
conspirators may be held liable for co-conspirators acts of fraudulent
concealment for the purposes of tolling the statute of limitations. In re Animation
Workers Antitrust Litig., 123 F. Supp. 3d 1175, 1211 (N.D. Cal. 2015); see also In
re Scrap Metal Antitrust Litig., 527 F.3d 517, 538 (6th Cir. 2008) (“Fraudulent
concealment, however, may be established through the acts of co-
conspirators.”); Riddell v. Riddell Wash. Corp., 866 F.2d 1480, 1493 (D.C.Cir.
1989) (“affirmative acts of concealment by one or more of the conspirators can
be imputed to their co-conspirators for purposes of tolling the statute of
limitations”)
Because a claim of fraudulent concealment is based on fraud, the heightened
pleading standard of Federal Rule of Civil Procedure 9(b) applies. Thompson,
2018 WL 2271024, at *10 (citing In re: Nine W. Shoes Antitrust Litig., 80 F. Supp.
2d 181, 192 (S.D.N.Y. 2000)). Rule 9(b) of the Federal Rules of Civil Procedure
requires that, in a pleading alleging fraud, the circumstances constituting fraud or
mistake must be stated with particularity. Tal v. Hogan, 453 F.3d 1244, 1263
(10th Cir. 2006); Fed. R. Civ. P. 9(b). “Allegations of fraud may be based on
information and belief when the facts in question are peculiarly within the
opposing party’s knowledge and the complaint sets forth the factual basis for the
plaintiff’s belief.” Scheidt v. Klein, 956 F.2d 963, 967 (10th Cir. 1992).
C. Hormel Foods
Hormel moves to dismiss both claims against it based on the statute of limitations for
Sherman Act claims. Docket No. 159 at 1-2. Hormel argues that, “just as with the other
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Defendants, Plaintiffs fail to plausibly plead either the ‘continuing conspiracy’ or
‘fraudulent concealment’ exceptions to the statute of limitations” and that plaintiffs’
claims fall especially short with regard to Hormel because plaintiffs do not allege Hormel
took any action after 2016. Id. at 1.
Hormel states that plaintiffs’ claim accrued in January 2014. Id. at 4. Hormel argues
that fraudulent concealment does not apply to toll the statute of limitations for plaintiffs’
claims against Hormel because the “vague, undated allegation” that Hormel made a
statement about competitive wages is insufficient to plead fraudulent concealment. Id.
at 7. Hormel, however, fails to cite any authority to support its proposition that plaintiffs
must demonstrate Hormel, as opposed to its co-conspirators, engaged in fraudulent
concealment.10 Hormel does not argue that plaintiffs fail to allege its “participation in the
scheme as a whole,” In re Animation Workers Antitrust Litig., 123 F. Supp. 3d at 1208,
and so a failure of plaintiffs to plead that Hormel specifically engaged in concealing the
conspiracy is unnecessary. The Court will decline to dismiss plaintiffs’ claims against
Hormel on this basis.
Next, Hormel argues plaintiffs were on inquiry notice of their claims beginning in June
2018 based on an antitrust case filed against Hormel and others that the complaint
references. Docket No. 159 at 7 (citing Docket No. 1 at 97, ¶ 328). The Court denied
this argument in its ruling on defendants’ joint motion to dismiss. See Docket No. 219 at
10 Hormel cites Garrison v. Oracle Corp., 159 F. Supp. 3d 1044 (N.D. Cal. 2016), to
argue plaintiffs do not sufficiently allege Hormel’s fraudulent concealment. See Docket
No. 159 at 7. In Garrison, the court observed plaintiffs had not shown a basis to hold a
conspirator liable for their overt acts under the continuing violations doctrine. 159 F.
Supp. 3d at 1072. Garrison ruled plaintiffs did not plead affirmative acts to establish
fraudulent concealment without examining the actions of any co-conspirators. Id. at
1073-74.
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43. Even though another antitrust lawsuit named Hormel as a defendant, because that
case focused on price-fixing as opposed to wage-fixing or depression, Hormel has not
identified a failure to plead due diligence. Given that Hormel fails to show plaintiffs have
not sufficiently alleged facts to show the statute of limitations was tolled on both of their
claims based on the doctrine of fraudulent concealment, the Court will deny Hormel’s
motion.11
D. Iowa Premium
Defendant Iowa Premium moves to dismiss both of plaintiffs’ claims against it for a
failure to plausibly allege Iowa Premium’s participation in any conspiracy. Docket No.
160 at 2. Iowa Premium states that the complaint does not allege Iowa Premium
attended any of the Red Meat Industry Compensation Meetings, participated in any of
the Red Meat Industry Compensation Surveys, participated in any trade association
meetings, or “otherwise took any allegedly conspiratorial action beyond the alleged
bilateral, two-plant, intrastate, non-solicitation agreement.” Id. at 2-3.
Relevant allegations from the complaint include: Iowa Premium and JBS entered into
a no poach agreement covering JBS’ Marshalltown plant and Iowa Premium’s Tama
plant, the Marshalltown and Tama plants are both in Iowa, and both plants would
compete with one another for employees in the absence of an agreement. Docket No.
1 at 90-93, ¶¶ 307-15. Additionally, the complaint alleges that
A former human-resources executive of Iowa Premium explained that JBS
provided Iowa Premium with data about “both current and future wages”
that JBS’s plant in Marshalltown, Iowa, would pay its processing plant
workers. Specifically, managers of the JBS Marshalltown plant provided
11 The Court need not reach Hormel’s argument on the continuing violations doctrine
because it finds plaintiffs have sufficiently alleged the doctrine of fraudulent
concealment applies.
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compensation data to executives of Iowa Premium that showed how much
the JBS Marshalltown plant was and would be paying its various
categories of processing plant workers. The former Iowa Premium
executive explained that “[t]his information was used by Iowa Premium to
help determine how much to pay and offer to pay current and future
workers at Iowa Premium.”
Id. at 80, ¶ 272.
First, Iowa Premium argues that plaintiffs fail to allege with direct evidence that Iowa
Premium joined a national conspiracy to depress wages sufficient to allege its
involvement in plaintiffs’ first claim with direct evidence. Docket No. 160 at 4-6.
Specifically, Iowa Premium argues that the evidence it participated in a no poach
agreement with JBS for two Iowa plants is not direct evidence of Iowa Premium joining
a national conspiracy to depress wages. Id. at 4. Plaintiffs respond that Iowa
Premium’s no poach agreement is direct evidence of collusion. Docket No. 183 at 4.
However, because direct evidence of a conspiracy “requires no inferences to establish
the proposition or conclusion being asserted,” Champagne Metals, 458 F.3d at 1084
(quoting In re Baby Food Antitrust Litig., 166 F.3d 112, 118 (3d Cir. 1999)), even
evidence of collusion in a no poach agreement is not direct evidence of an agreement to
depress wages. Plaintiffs must therefore rely on circumstantial evidence to link Iowa
Premium to their first claim.
Next, Iowa Premium argues that plaintiffs fail to link Iowa Premium to its allegation of
a nationwide agreement to depress wages with circumstantial evidence. Docket No.
160 at 4-6. Iowa Premium argues that a bilateral local agreement, like the alleged no
poach agreement between JBS and Iowa Premium, is not enough to link Iowa Premium
to a nationwide conspiracy because it does not show a commitment to a common
scheme. Id. at 4-5.
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A plaintiff must allege enough facts “to suggest an agreement was made” and a
plaintiff shows such an agreement with “evidence that the conspiring parties ‘had a
conscious commitment to a common scheme designed to achieve an unlawful
objective’” Kissing Camels Surgery Center, LLC v. Centura Health Corp., No. 12-cv-
03012-WJM-BNB, 2014 WL 560462, at *4 (D. Colo. Feb. 13, 2014) (quoting Twombly,
550 U.S. at 553; Monsanto Co. v. Spray–Rite Serv. Corp., 465 U.S. 752, 764 (1984)).
No poach agreements can constitute a part of a conspiracy to depress wages. See,
e.g., In re Animation Workers Antitrust Litig., 123 F. Supp. 3d at 1209.
Iowa Premium relies on cases where allegations of smaller agreements could not
support allegations of a larger conspiracy. See Docket No. 160 at 4-5 (citing In re Iowa
Read-Mix Concrete Antitrust Litig., 768 F. Supp. 2d 961, 975 (N.D. Iowa 2011) (ruling
plaintiffs failed to plausibly allege an overarching conspiracy); In re Auto. Parts Antitrust
Litig., 2016 WL 8200512, at *4 (E.D. Mich. Apr. 13, 2016) (observing “the mere overlap
of some of the defendants in some of the transactions is, on its own, insufficient to
establish an overarching agreement”)). Although here a larger conspiracy has been
sufficiently pled, the alleged agreement between Iowa Premium and JBS involves acts
of a different character than the larger conspiracy without overlap and therefore does
not support the theory of an overarching conspiracy or Iowa Premium’s connection to it.
Plaintiffs fail to link Iowa Premium’s no poach agreement to the broader agreement
that is alleged as the basis of the complaint. Plaintiffs allege that Iowa Premium and
JBS entered into a no poach agreement for plants that would otherwise be competitive.
Docket No. 1 at 90-93, ¶¶ 307-15. Unlike In re Animation Workers Antitrust Litig., there
is no allegation that all the defendants joined in no poach agreements as part of the
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wage-fixing conspiracy. See 123 F. Supp. 3d at 1209. Plaintiffs fail to connect Iowa
Premium to any defendant except JBS and fail to allege that Iowa Premium’s contact
with JBS related to national wage-fixing as opposed to competition between two local
plants. For example, there are no allegations that JBS shared information obtained
from Iowa Premium with other members of the larger conspiracy or that Iowa Premium
attended meetings with the other co-conspirators or obtained any information about the
co-conspirators’ compensation apart from JBS’ information.
Additionally, Iowa Premium argues that plaintiffs cannot rely on allegations against its
parent company, National Beef, because National Beef was separate from Iowa
Premium until 2019, and additionally, plaintiffs do not allege specific evidence of
coordinated conduct between the two entities. Docket No. 160 at 5-6. Plaintiffs
respond that “National Beef, which acquired Iowa Premium in March 2019, participated
in Red Meat Industry Compensation Meetings and Surveys in 2018 and 2019—during
its acquisition negotiations with Iowa Premium (when confidential information would
have been shared), and after the transaction closed (when Iowa Premium was National
Beef’s subsidiary).” Docket No. 183 at 3.
“Antitrust law doesn’t recognize guilt by mere association, imputing corporate liability
to any affiliate company unlucky enough to be a bystander to its sister company's
alleged misdeeds.” SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 423 (4th Cir.
2015). “In the absence of any specific evidence of coordinated activity,” a company
should not be included in a Sherman Act claim only because it is owned by a
participant. See Mitchael v. Intracorp, Inc., 179 F.3d 847, 857 (10th Cir. 1999)
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(declining to consider a subsidiary as an insurance company only because its parent
company owned other subsidiary insurance companies).
The complaint alleges that Iowa Premium was acquired by National Beef on March
11, 2019. Docket No. 1 at 19, ¶ 40. The complaint does not mention the two
companies exchanging information in the acquisition process or any facts that connect
the two entities before March 11, 2019. See id. Plaintiffs respond that National Beef
and Iowa Premium engaged in coordinated action as part of an acquisition process, but
no such allegations are contained in the complaint. See Docket No. 183 at 3. Plaintiffs
may not add allegations in their response to a motion to dismiss. See In re Qwest
Commc’ns Int’l, Inc., 396 F. Supp. 2d 1178, 1203 (D. Colo. 2004) (“The plaintiffs may
not effectively amend their Complaint by alleging new facts in their response to a motion
to dismiss.”). Because plaintiffs fail to allege any coordinated action between Iowa
Premium and National Beef, the Court agrees with Iowa Premium that plaintiffs may not
rely on allegations about National Beef to state a claim against Iowa Premium. Plaintiffs
have not plausibly alleged Iowa Premium’s participation in the conspiracy alleged in
their first claim. Because plaintiffs fail to plausibly allege evidence indicating Iowa
Premium was committed to the common scheme, plaintiffs fail to sufficiently allege Iowa
Premium’s participation in the alleged conspiracy in plaintiffs’ first claim.
Iowa Premium argues that plaintiffs’ second claim, based on an agreement to
exchange compensation information, fails because plaintiffs do not allege Iowa
Premium participated in the Red Meat Industry Compensation Surveys and Meetings or
subscribed to Agri Stats. Docket No. 160 at 6-7. Plaintiffs’ second claim alleges
defendants agreed to “regularly exchange detailed, timely, competitively sensitive, and
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non-public information about the compensation being paid or to be paid to their
employees at red meat processing plants in the continental United States” through the
Red Meat Industry Compensation Meetings and Surveys, Agri Stats subscriptions, and
through “[r]egular email and telephonic exchanges directly between [Processor
Defendants’] executives regarding compensation practices and plans.” Docket No. 1 at
123-25, ¶¶ 407, 413(c). Plaintiffs allege that Iowa Premium participated in the
exchange of compensation information with JBS and that Iowa Premium used the
information from JBS to set current and future wages. Id. at 80, ¶ 272.
Iowa Premium argues that this allegation is only relevant to an agreement between a
JBS plant and an Iowa Premium plant, not to a national conspiracy to exchange wage
information. Docket No. 160 at 6-7. Here, too, plaintiffs fail to plausibly allege that Iowa
Premium agreed to join the larger conspiracy. Plaintiffs allege that JBS provided Iowa
Premium with wage data, Docket No. 1 at 80, ¶ 272, but do not allege that Iowa
Premium agreed to share its wage data with any other company, much less with the
entire group alleged to have been part of the conspiracy. Plaintiffs have not sufficiently
alleged that Iowa Premium participated in an agreement to share wage information with
Processor Defendants as part of the alleged conspiracy and, therefore, fail to state a
claim against Iowa Premium under the rule of reason. The Court will grant Iowa
Premium’s motion to dismiss and dismiss both of plaintiffs’ claims against Iowa
Premium.
E. Agri Stats
Defendant Agri Stats moves to dismiss plaintiffs’ rule of reason claim against it
because Agri Stats does not offer beef benchmarking services and because plaintiffs do
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not allege Agri Stats’ reports affected wages for pork processing employees. Docket
No. 162 at 4-7. The complaint alleges Agri Stats helped facilitate the exchange of
“detailed, competitively sensitive, and non-public information about current and future
compensation to workers at red meat processing plants,” Docket No. 1 at 124, ¶ 413, by
providing information on current compensation for workers at pork processing plants
operated by some Processor Defendants, id. at 125, ¶ 413, and that the information
exchanged through Agri Stats was provided by each Processor Defendant in order to
receive compensation information from other firms. Id., ¶ 415.
First, Agri Stats argues that, because it only provided statistics on pork processors,
any employee harmed by the statistics it provided could switch to a job at a beef
processing facility instead, “where there would be no possible effect of Agri Stats
benchmarking on wages.” Docket No. 162 at 5. Agri Stats argues it cannot have
harmed an industry that it does not participate in, and plaintiffs’ allegation that
exchanging information about the pork industry affected the beef industry because
companies that process beef also process pork is conclusory. Id. at 5-6.
Rule of reason claims “call[] for a holistic assessment of the parties’ evidence aimed,
ultimately, at discerning whether a challenged practice restrains trade unreasonably and
so should be prohibited under § 1 of the Sherman Act.” Buccaneer Energy (USA) Inc.
v. Gunnison Energy Corp., 846 F.3d 1297, 1310 (10th Cir. 2017). It does not make
sense that each conspirator would need to affect the entire market with their actions.
Plaintiffs are required to show “an agreement had a substantially adverse effect on
competition.” Budicak, Inc. v. Lansing Trade Group, LLC, 452 F. Supp. 3d 1029, 1054
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(D. Kan. 2020) (quoting Gregory v. Fort Bridger Rendezvous Ass’n, 448 F.3d 1195,
1205 (10th Cir. 2006)).
Here, plaintiffs allege an agreement to “exchange detailed, timely, competitively
sensitive, and non-public information about the compensation being paid or to be paid
to their employees at red meat processing plants” that resulted in “suppress[ed]
compensation paid to workers at red meat processing plants in the continental United
States below competitive levels.” Docket No. 1 at 123-24, ¶¶ 407, 410. Plaintiffs allege
Agri Stats shared information on pork processors’ current compensation, id. at 125,
¶ 413(d), and information on compensation for beef processors was shared in other
ways, like the Red Meat Industry Compensation Meetings and Surveys. Id. at 124-25,
¶¶ 413-14. Without “tightly compartmentalizing the various factual components and
wiping the slate clean after scrutiny of each,” Continental Ore Co. v. Union Carbide &
Carbon Corp., 370 U.S. 690, 699 (1962), Agri Stats fails to show plaintiffs fail to state a
claim against Agri Stats because Agri Stats did not, on its own, affect the entire red
meat industry.
Next, Agri Stats argues plaintiffs fail to show Agri Stats reports affected wages for
pork processing employees. Docket No. 162 at 6-7. Agri Stats argues that “Plaintiffs do
not plausibly allege facts showing that pork processors used Agri Stats data to actually
make employment compensation decisions, and rely instead on vague accusations.” Id.
at 6. This argument essentially attacks plaintiffs’ showing of an anticompetitive effect in
their rule of reason claim. For a rule of reason claim, a plaintiff must allege “that an
alleged restraint has or is likely to have a significant anticompetitive effect.” Buccaneer
Energy (USA) Inc, 846 F.3d at 1310. In its order on the joint motion to dismiss, the
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Court ruled that, by defining a relevant product and a geographic market, plaintiffs
produced sufficient indirect evidence to show an anticompetitive effect, wage
suppression, from an agreement to exchange compensation information. Docket No.
219 at 35. Agri Stats’ argument amounts to a claim that plaintiffs cannot “directly
establish anticompetitive effect[s]” of an agreement. However, because plaintiffs
plausibly allege through indirect evidence an anticompetitive effect, they need not use
allegations of direct evidence to establish anticompetitive effects. Agri Stats provides
no reason why plaintiffs’ claim should be analyzed differently for Agri Stats than the
claim is analyzed as a whole, and Agri Stats’ argument fails for the same reason the
joint motion to dismiss fails. Agri Stats has not demonstrated a reason why plaintiffs’
claim against Agri Stats fails,12 and the Court will deny Agri Stats’ motion to dismiss.
F. Agri Beef
Agri Beef moves to dismiss plaintiffs’ claims against defendants Agri Beef Co. and
Washington Beef, LLC for failure to plausibly allege an agreement and for failure to
plausibly allege a relevant market. Docket No. 163 at 1-2. Relevant allegations from
the complaint include: Washington Beef, LLC is a subsidiary of Agri Beef Co., Docket
No. 1 at 27, ¶ 56; Agri Beef Co. employees attended Red Meat Industry Compensation
Meetings in 2014, 2015, 2017, and 2018, id., ¶ 58; Washington Beef, LLC employees
attended the Red Meat Industry Compensation Meeting in 2019. Id.
12 The Court will not consider Agri Stats argument, raised for the first time in its reply,
that plaintiffs fail to allege Agri Stats entered an agreement with the other defendants.
Docket No. 193 at 2. See Gutierrez v. Cobos, 841 F.3d 895, 902 (10th Cir. 2016) (“a
party waives issues and arguments raised for the first time in a reply brief” (quoting
Reedy v. Werholtz, 660 F.3d 1270, 1274 (10th Cir. 2011)).
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First, Agri Beef argues that plaintiffs fail to allege direct evidence that Agri Beef joined
an agreement to depress wages. Docket No. 163 at 4. Agri Beef also argues that
plaintiffs fail to allege parallel conduct, namely, that Agri Beef coordinated wages with
other defendants sufficient to state a claim against Agri Beef. Id. at 4-6. Plaintiffs argue
that where, as here, plaintiff successfully pleads a conspiracy claim, plaintiff only needs
to allege that Agri Beef joined the conspiracy and played a role in it, not that Agri Beef
individually engaged in parallel conduct sufficient to state a claim based on
circumstantial evidence. Docket No. 180 at 2-5.
The Court agrees with plaintiffs, that “in a case involving an alleged conspiracy
among multiple actors and multiple acts[] ‘plaintiffs should be given the full benefit of
their proof without tightly compartmentalizing the various factual components and wiping
the slate clean after scrutiny of each. The character and effect of a conspiracy are not
to be judged by dismembering it as a whole.’” Heartland Surgical Specialty Hosp., LLC
v. Midwest Div., Inc., 527 F. Supp. 2d 1257, 1293 (D. Kan. 2007) (quoting Continental
Ore Co., 370 U.S. at 699). Here, plaintiffs state enough specific facts to plausibly allege
that Agri Beef participated in the broader conspiracy.
Plaintiffs’ first claim relies on allegations of wage coordination between defendants
that occurred in part at the Red Meat Industry Compensation Meetings. Agri Beef’s
cited authority does not support its argument that plaintiffs must provide specific wage
information for each defendant. In Jien v. Perdue Farms, Inc. (“Jien I”), 2020 WL
5544183, at *5-8 (D. Md. Sept. 16, 2020), the court analyzed whether plaintiffs
sufficiently alleged with direct evidence each defendant’s connection to a wage fixing
conspiracy or sufficiently alleged with circumstantial evidence each defendant’s
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connection. Jien I did not rule that specific wage information was a necessary part of
plaintiffs’ claim for each defendant, rather, Jien I ruled, given that plaintiff alleged no
direct evidence linking some defendants to the alleged conspiracy, that plaintiffs’ claim
against those defendants could not rest solely on circumstantial evidence of parallel
conduct without specific factual allegations on the wages that particular defendant set.
Id. Here, although the Red Meat Industry Compensation Meetings are circumstantial
evidence, not direct evidence, plaintiffs link Agri Beef Co and Washington Beef, LLC to
these meetings at which conspiratorial agreements are alleged to have taken place.
Unlike in Jien I where the complaint lacked allegations on “how Defendants actually
acted in concert together to set wages,” 2020 WL 5544183, at *8, plaintiffs’ allegations
regarding in-person meetings provide enough facts to infer an unlawful agreement
between Agri Beef and the other defendants. The Court will deny the portion of Agri
Beef’s motion seeking dismissal of plaintiffs’ first claim.
Agri Beef argues that plaintiffs’ second claim fails to state a plausible geographic
market as is necessary for a rule of reason claim. Docket No. 163 at 6-7. The
complaint alleges that “[t]he relevant geographic market is the continental United
States.” Docket No. 1 at 107, ¶ 352. Agri Beef argues that plaintiffs’ market is
overbroad in geography and too narrow in the employers it includes. Docket No. 163 at
6-7. A geographic market specifies “which territories are found to constitute the terrain
in which competition takes place.” Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1071
(10th Cir. 2013).
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Agri Beef provides no authority for its assertion plaintiffs’ claim can be dismissed at
the motion to dismiss stage for pleading an overbroad geographic market. In Jien I, the
court observed:
Plaintiffs must outline a relevant market so that they can then allege that
Defendants have sufficient market power within the market for their
information sharing to restrain competition. It is therefore problematic to
allege too narrow a geographic market, because it could create the illusion
of market power where no market power exists, via the exclusion of
nearby alternative employment opportunities (what the Fourth Circuit
called the “gerrymandering” of the geographic market). The same
concern does not exist for a broad geographic market, because many
alternative employment opportunities are included in the allegedly
overbroad market, so there is no risk of creating an illusion of market
power. In fact, by alleging a broad geographic market spanning the entire
country, Plaintiffs are making it harder to prove their case, because the
level of market power necessary to control wages across the entire
country is much greater.
2020 WL 5544183, at *10 (internal citations omitted). The Court finds this reasoning
persuasive and will decline to dismiss plaintiffs’ claim for alleging a geographic market
that is too broad.
Agri Beef also argues plaintiffs’ geographic market definition is too narrow because it
excludes competitors in other industries located near Agri Beef’s facility. Docket No.
163 at 7. This argument does not actually attack plaintiffs’ definition of a geographic
market. Agri Beef is arguing that other industries that could employ class members
should be included in plaintiffs’ market definition. Agri Beef is attacking plaintiffs’
definition of its product market, not its geographic market. That argument fails for the
same reasons defendants’ joint motion to dismiss fails. Agri Beef has not demonstrated
any reason why plaintiffs fail to plausibly allege their second claim. The Court will deny
Agri Beef’s motion.
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G. Smithfield
Smithfield moves to dismiss plaintiffs’ claims against Smithfield Foods, Inc. and
Smithfield Packaged Meats Corp. for failure to allege that Smithfield joined a
conspiracy, for failure to identify individual actions of each Smithfield defendant, and for
being untimely. Docket No. 165 at 1-2. The complaint alleges Smithfield Packaged
Meats Corp. is a subsidiary of Smithfield Foods, Inc., Docket No. 1 at 23, ¶ 47;
Smithfield was a part of the Red Meat Survey Group in 2013 and was consulted for
feedback on the first Red Meat Industry Compensation Survey, id. at 57, ¶ 177;
Smithfield employees attended the Red Meat Industry Compensation Meeting on April
15, 2014 in Kansas City, Missouri, id. at 23, 69, ¶¶ 50, 230; the 2014 meeting included
roundtable sessions where Meng was asked to leave, id. at 72, ¶¶ 243-45; Smithfield
Packing Company, Inc.13 submitted a Red Meat Industry Compensation Survey in 2014
containing future compensation data, id. at 24-25, ¶ 50; Smithfield Foods, Inc.
subscribed to Agri Stats during the Class Period, id.; Smithfield established
compensation schedules at depressed and fixed rates, id.; in 2015, an executive at JBS
reached out to several other Processor Defendant executives, including executives from
Smithfield, to request participation in an “ad-hoc survey” on supervisor weekend pay
and bonus eligibility, id. at 79, ¶ 270; in 2017, Smithfield’s plants in Crete, Nebraska;
Denison, Iowa; and Sioux Falls, South Dakota only increased base wages by 2%, id. at
94, ¶ 319; in 2018, the same Smithfield plants only increased base wages by 2%, id.,
¶ 320; two executives from Smithfield served on the National Pork Producers Council,
which hosts annual meetings, id. at 98-99, ¶ 329(a)-(b); Smithfield executives have
13 A predecessor of Smithfield Packaged Meats Corp. Docket No. 1 at 23, ¶ 48.
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presented at the National Pork Industry Conference, “the largest annual conference in
the US that is held for the swine industry,” which takes place in July. Id., ¶ 329(b).
First, Smithfield argues that Smithfield Packaging Company, Inc.’s attendance at one
Red Meat Industry Compensation Meeting and Smithfield Foods, Inc. subscribing to
Agri Stats are not sufficient to allege that either joined a conspiracy. Docket No. 165 at
3. In support, Smithfield cites Jien v. Perdue Farms, Inc. (“Jien II”), 2022 WL 2818950,
at *13 (D. Md. July 19, 2022) and In re Fresh & Process Potatoes Antitrust Litig., 834 F.
Supp. 2d 1141, 1173–75 (D. Idaho 2011). Docket No. 165 at 3-4.
In Jien II, the court dismissed the per se conspiracy claim against certain defendants
who attended one meeting two years after a conspiracy was alleged to have begun and
who were not alleged to have “maintained close personal relationships with other
[Processor Defendants’] executives.” 2022 WL 2818950, at *12-13. In In re Fresh &
Process Potatoes Antitrust Litig., the court dismissed a defendant who was alleged to
have attended one meeting after a conspiracy was formed because plaintiffs merely
alleged that defendant “had an opportunity to join the conspiracy.” 834 F. Supp. 2d at
1174-75.
While one meeting on its own may not be enough to allege any defendant joined a
conspiracy, the details surrounding plaintiffs’ allegations about Smithfield’s role in the
2014 meeting within the context of the larger conspiracy distinguish this case from Jien
II or In re Fresh & Process Potatoes Antitrust Litig. because plaintiffs allege more than
an opportunity to join the conspiracy. Plaintiffs allege Smithfield was an active part of
crafting the survey in the first Red Meat Survey Group, that Smithfield participated in the
2014 survey, which collected future compensation data, and that Smithfield was part of
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the group that held roundtable sessions specifically excluding Meng, not just that
Smithfield attended one meeting. The allegations surrounding the meeting Smithfield
attended are enough to suggest an agreement with other Processor Defendants.
Additionally, the actions Smithfield took after joining the conspiracy need not show an
agreement to join the conspiracy.14 Smithfield has not shown plaintiffs fail to connect
Smithfield to the larger conspiracy claim, and the Court will decline to dismiss plaintiffs’
claims on that basis.
Next, Smithfield argues that plaintiffs fail to distinguish actions taken by specific
Smithfield entities and a failure to do so warrants dismissal. Docket No. 165 at 5.
Plaintiffs may not rely on “broad allegations against a large and mostly anonymous
group of people,” such that a court “cannot ‘draw the reasonable inference that the
defendant is liable for the misconduct alleged,’ because [it] cannot tell which defendant
is alleged to have done what, nor can we tell what the misconduct was.” Burnett v.
Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1240 (10th Cir. 2013) (quoting
Twombly, 550 U.S. 663) (alteration omitted). “The fact that two separate legal entities
may have a corporate affiliation does not alter the pleading requirement to separately
identify each defendant’s involvement in the conspiracy.” SD3, LLC, 801 F.3d at 423
(internal quotations, alterations, and citation omitted).
14 To the extent that Smithfield’s statement that it stopped attending meetings and
participating in surveys, Docket No. 165 at 4, can be construed as an argument that
Smithfield withdrew from the conspiracy, this argument fails. “A defendant's
membership in a conspiracy is presumed to continue until he withdraws from the
conspiracy by affirmative action.” Jien II, 2022 WL 2818950, at *11 (quoting United
States v. West, 877 F.2d 281, 289 (4th Cir. 1989)). Withdrawal is an affirmative
defense a defendant must show. Id. Smithfield does not argue that it withdrew from the
conspiracy.
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In arguing that plaintiffs fail to meet their burden to allege what the Smithfield entities
have each done, Smithfield relies on Jien I. Docket No. 165 at 5. In Jien I, plaintiffs
named an entity with ten different subsidiaries and did not distinguish which named
defendant subsidiaries were involved in wage decisions or which executives attended
meetings. 2020 WL 5544183, at *4. The court observed that some named subsidiaries
possibly “played no role in fixing compensation.” Id. Here, the complaint names
Smithfield Foods, Inc. and one subsidiary, Smithfield Packaged Meats Corp., as
defendants. Docket No. 1 at 1, 22-23, ¶¶ 46-49. The complaint identifies several
subsidiaries of Smithfield Foods, Inc. that it alleges are co-conspirators of Smithfield, id.
at 36-37, ¶¶ 92-94, but these subsidiaries are not included in plaintiffs’ definition of
“Smithfield,” id. at 23, ¶ 49, and they are not named defendants. Id. at 1. When the
complaint alleges that a Smithfield executive took an action, see, e.g., id. at 69, 79, 99,
¶¶ 230, 270, 329(b), it is possible to infer the executive is either from Smithfield
Packaged Meats Corp. or Smithfield Foods, Inc., or both. Plaintiffs specifically identify
that Smithfield Packing Co., Inc. participated in the 2014 Red Meat Industry
Compensation Survey. Id. at 23-24, ¶ 50. Unlike in Jien I, this is not a situation where
a named subsidiary did not participate at all or where there is implausible ambiguity
from referring at times to “Smithfield” collectively. The Court will decline to dismiss
plaintiffs’ claims against Smithfield Packaged Meats Corp. and Smithfield Foods, Inc. on
this basis.
Finally, Smithfield argues that plaintiffs’ claims against Smithfield are untimely.
Docket No. 165 at 6-7. Smithfield argues that plaintiffs fail to allege a continuing
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violation,15 fail to allege fraudulent concealment, and are on inquiry notice based on a
similar lawsuit filed against Smithfield about Agri Stats. Id. Smithfield’s motion does not
argue that plaintiffs fail to allege its “participation in the scheme as a whole,” In re
Animation Workers Antitrust Litig., 123 F. Supp. 3d at 1208, and so its argument that
plaintiff does not allege fraudulent concealment fails for the same reasons Hormel’s
identical argument that the Court discussed above in Section II.C. fails; a failure to
plead Smithfield specifically engaged in concealing the conspiracy is unnecessary to
allege fraudulent concealment sufficient to toll the statute of limitations on plaintiffs’
claim.16 Smithfield fails to show plaintiffs’ claims should be dismissed, and the Court
will deny Smithfield’s motion.
H. American Foods
American Foods moves to dismiss plaintiffs’ claims against it for failure to state a
claim against American Foods and for being untimely. Docket No. 166 at 2. The
complaint alleges American Foods employees participated as a member of the Red
Meat Survey Group in 2013, Docket No. 1 at 57, ¶ 177; that the Red Meat Survey
Group designed and controlled the initial Red Meat Industry Compensation Survey, id.,
¶¶ 178-79; American Foods attended the first Red Meat Industry Compensation
Meeting in 2014, id. at 15, ¶ 30; the 2014 meeting included roundtable sessions where
Meng was asked to leave, id. at 72, ¶¶ 243-45; American Foods submitted a Red Meat
15 Because the Court finds plaintiffs sufficiently plead the statute of limitations is tolled
based on fraudulent concealment, the Court need not reach Smithfield’s argument that
plaintiffs fail to allege a continuing violation.
16 Smithfield’s argument that plaintiffs were on inquiry notice relies on the same
lawsuit Hormel cites, see Docket No. 165 at 7; Docket No. 159 at 7, and that argument
fails for the same reason.
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Industry Compensation Survey in 2014, which included detailed data on future
compensation, id. at 15, ¶ 30; and in January 2014, the vice president of human
resources for American Foods expressed concern that the Red Meat Industry
Compensation Survey would not include detailed bonus information. Id. at 73, ¶ 249.
American Foods argues that allegations that American Foods participated in one
meeting and one survey are insufficient to allege its participation in a wage-fixing
conspiracy. Docket No. 166 at 5. Like the allegations against Smithfield, plaintiffs
allegations that American Foods actively participated in constructing the Red Meat
Industry Compensation Survey and that American Foods participated in the first Red
Meat Industry Compensation Meeting at the inception of the alleged conspiracy are
enough to infer American Foods joined the conspiracy and “had a conscious
commitment to a common scheme designed to achieve an unlawful objective.”
Monsanto Co., 465 U.S. at 764.
Next, American Foods argues the statute of limitations bars plaintiffs claims against
American Foods. Docket No. 166 at 6-7. American Foods argues that plaintiffs fail to
allege fraudulent concealment because the complaint “contains no particularized
allegations with respect to any false representation made by [American Foods], and
none of the general allegations purportedly demonstrating fraudulent concealment are
applicable to [American Foods].” Id. at 7. Because American Foods, like Hormel and
Smithfield, relies on the assumption plaintiffs must allege that American Foods
specifically engaged in fraudulent concealment, American Foods fails to show plaintiffs’
claim against American Foods is not timely. Because American Foods provides no
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reason to dismiss plaintiffs’ claims against it, the Court will deny American Food’s
motion.
IV. CONCLUSION
For the foregoing reasons, it is
ORDERED that Defendant Triumph Foods, LLC’s Motion to Dismiss [Docket
No. 161] is DENIED as moot. It is further
ORDERED that Defendant Hormel Foods Corporation’s Rule 12(b)(6) Motion
to Dismiss the Complaint [Docket No. 159], Agri Stats, Inc.’s Motion to Dismiss
[Docket No. 162], Defendants Agri Beef Co. and Washington Beef, LLC’s Motion
to Dismiss [Docket No. 163], Motion to Dismiss by Defendants Smithfield Foods,
Inc. and Smithfield Packaged Meats Corp. [Docket No. 165], and Defendant
American Foods Group, LLC’s Motion to Dismiss Plaintiffs’ Class Action
Complaint and Jury Demand [Docket No. 166] are DENIED. It is further
ORDERED that Defendant Iowa Premium, LLC’s Motion to Dismiss [Docket
No. 160] is GRANTED. It is further
ORDERED that plaintiffs’ claims against Iowa Premium are DISMISSED
without prejudice.
DATED September 27, 2023.
BY THE COURT:
___________________________
PHILIP A. BRIMMER
Chief United States District Judge
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