Thomson Reuters; February 13, 2013
A federal appeals court on Wednesday revived antitrust claims against C&S Wholesale Grocers Inc and SuperValu Inc alleging that they engaged in a transaction to artificially raise the prices of groceries.
A three-judge panel for the 8th U.S. Circuit Court of Appeals sitting in St. Paul, Minnesota, reversed a lower court's decision that had dismissed claims brought by five retail grocers. It represents a setback for the wholesalers.
At issue is a 2003 agreement between SuperValu and C&S to exchange assets in the Midwest and New England and not to compete with each other for customers served by the operations involved in the swap.
Five retail grocers, including King Cole Foods Inc and Blue Goose Super Market Inc, brought class action antitrust claims against either one of the two wholesalers. The claims were made as part of an ongoing lawsuit that claimed the deal between SuperValu and C&S allowed the wholesalers to overcharge retail customers in the Midwest and New England.
Each of the five retail grocers had an agreement with one or the other wholesaler defendant requiring the parties to arbitrate disputes. To get around that requirement, each of the five brought claims against the wholesaler with which it did not have an arbitration agreement.
U.S. District Judge Ann Montgomery in Minneapolis struck the retailers' claims from the lawsuit, finding that the doctrine of equitable estoppel, which prevents parties from gaining unfair legal advantages, barred the retailers from making the claims.
In a 2-1 decision, a panel for the 8th Circuit disagreed. Judge Bobby Shepherd, in the majority opinion, wrote that there was "no evidence" that the arbitration contracts could have anticipated the conspiracy claims raised by the retailers.
In a dissent, Judge Duane Benton found the retailers' antitrust claims were closely related to the arbitration agreements at issue and therefore should not be allowed to proceed in court.
A SuperValu spokesman said the company was reviewing its options. C&S did not return a call for comment.
The 8th Circuit's decision was a rare win for the plaintiffs in the litigation against C&S and SuperValu. Last month, Judge Montgomery dismissed a lawsuit filed against the two wholesalers by retail grocery operators D&G Inc and DeLuca's Market Corp.
In a previous decision, Judge Montgomery had denied a motion to certify a class of plaintiffs seeking to bring antitrust claims against C&S and SuperValu.
The 8th Circuit case is King Cole Foods Inc v. SuperValu Inc, 8th U.S. Circuit Court of Appeals, No. 11-3768.
For SuperValu: Stephen Safranski of Robins, Kaplan, Miller & Ciresi.
For C&S Wholesale Grocers: Charles Loughlin of Baker Botts.
For JFM Market Inc, King Cole Foods Inc and MJF Market Inc: Edward Dangel III of Dangel & Mattchen.
For Blue Goose Super Market and Millennium Operations Inc: Richard Drubel of Boies, Schiller & Flexner.
Read the full article at thomsonreuters.com.