ST. LOUIS (CN) - Mom-and-pop grocers bringing antitrust claims against SuperValu and C&S Wholesale Grocers deserve class certification, the 8th Circuit ruled.
The two largest grocery wholesalers in the country, SuperValu and C&S agreed in 2003 to a geographic asset exchange that gave SuperValu the Midwest with C&S taking New England.
D&G Inc., which operates a store called Gary's Foods in Mount Vernon, Iowa, brought a class action
against the wholesalers in Wisconsin, claiming that the exchange would increase the price of goods in the Midwest.
The case was brought to Minnesota in 2009 as other plaintiffs filed similar complaints against the stores across the country. All the lawsuits were then consolidated in Minneapolis as In re: Wholesale Grocery Products Antitrust Litigation
A federal judge refused to certify a class, however, and granted the defendant grocery giants summary judgment, finding the plaintiffs failed to demonstrate injury and failed to define the relevant market.
The 8th Circuit reversed Wednesday, finding that there is a question of fact as to whether a per se violation of antitrust laws occurred.
"Tellingly, although the written non-compete agreement permitted the wholesalers to compete in each other's regions for new and existing customers, neither one actually did so
," Chief Judge William Jay Riley wrote for a three-member panel. "Also revealing are e-mails, written by C&S's executive vice president, indicating 'the basis of the deal' was that SuperValu would 'depart from New England' and 'wo[uld]n't compete with [C&S] in New England' and C&S was 'not interested in a transaction that leaves SuperValu in New England.' Considering these pieces of evidence along with D&G's other evidence, a reasonable jury could conclude the wholesalers' real agreement involved dividing territory and customers along geographic lines."
Finding no abuse of discretion in denying class certification of all SuperValu customers in the Midwest region, however, the 8th Circuit instead granted a narrower class certification involving only SuperValu customers who were charged the Supervalu's pricing formula and were supplied from Champaign, Ill.
SuperValu used a pricing formula called activity-based sell, or ABS, which could have D&G pay more for a certain product depending on which distribution center that acted as its supplier.
"Although the evidence suggests the ABS fee inputs would be standardized for this narrow class, at this stage we decline to opine whether 'questions of law or fact common to class members predominate over any questions affecting only individual members.' Fed. R. Civ. P. 23(b)(3)," Riley wrote. "We merely request the district court to consider, in light of our holding that the wholesalers are not entitled to summary judgment, whether to certify this class."
The case was remanded back to federal court.
Judges Myron Bright and Jane Kelly concurred with Riley.