Case 3:15-md-02670-JLS-MDD Document 2517 Filed 03/08/21 PageID.229747 Page 1 of
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`Patrick J. Stueve (KS 13847)
`STUEVE SIEGEL HANSON LLP
`460 Nichols Road, Suite 200
`Kansas City, MO 64112
`Telephone: 816-714-7100
`Facsimile: 816-714-7101
`stueve@stuevesiegel.com
`
`
`
`
`
`
`Counsel for Direct Action Plaintiff Associated
`Wholesale Grocers, Inc.
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF CALIFORNIA
`
`
`
`ASSOCIATED WHOLESALE
`GROCERS, INC.,
`
`
`
`
`
`
`Plaintiff,
`
`
`
`v.
`
`
`
`
`
`Case No. 15-md-2670-JLS-MDD
`Case No. 2:18-cv-02212 (D. Kan.)
`
`
`
`
`
`BUMBLE BEE FOODS LLC, LION
`CAPITAL LLP, LION CAPITAL
`(AMERICAS) INC., BIG CATCH
`CAYMAN L.P., CHRISTOPHER D.
`LISCHEWSKI, STARKIST
`COMPANY, DONGWON
`INDUSTRIES CO. LTD., DEL
`MONTE CORPORATION, TRI-
`UNION SEAFOODS LLC d/b/a
`CHICKEN OF THE SEA
`INTERNATIONAL, INC., AND
`THAI UNION GROUP PCL,
`
`
`
`
`
`
`
`Defendants.
`
`
`
`THIRD AMENDED COMPLAINT
`
`AWG’S THIRD AMENDED COMPLAINT
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`
`
`

`

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`TABLE OF CONTENTS
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`NATURE OF ACTION ...................................................................................................................1
`
`BACKGROUND .............................................................................................................................3
`
`JURISDICTION AND VENUE ....................................................................................................11
`
`PLAINTIFF....................................................................................................................................16
`
`DEFENDANTS .............................................................................................................................16
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`The Bumble Bee Defendants .....................................................................................................17
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`Lion Entities ...............................................................................................................................17
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`Defendant Christopher Lischewski ............................................................................................25
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`The Tri-Union Defendants .........................................................................................................42
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`Del Monte ..................................................................................................................................59
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`Co-Conspirators and Agents ......................................................................................................60
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`TRADE AND COMMERCE .........................................................................................................60
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`THE PRODUCTION OF CANNED TUNA .................................................................................61
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`TUNA SUPPLY, DEMAND, AND PRICING .............................................................................63
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`The Supply of Canning-Grade Tuna Increased Substantially....................................................63
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`The Demand for Canned Tuna in the United States Decreased Substantially ...........................65
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`Prices Paid for Canned Tuna Increased Substantially as a Result of Defendants’
`Conspiracy .................................................................................................................................66
`
`Defendants’ Pricing of Canned Tuna to Plaintiff and Others Was Against Defendants’
`Self-Interest But For Their Collusion ........................................................................................69
`
`THE MARKET FOR THE PRODUCTION AND SALE OF CANNED TUNA WAS
`CONDUCIVE TO CARTELIZATION .........................................................................................70
`
`There Are No Close Substitutes for Canned Tuna.....................................................................70
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`The Market for the Processing and Sale of Canned Tuna Is/Was Concentrated .......................70
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`Barriers to Entry .........................................................................................................................71
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`Prevailing Supply and Demand Factors Incentivized Collusion ...............................................72
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`The Transfer of Executives Between Defendants Facilitated Collusion ...................................73
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`Select Trade Associations Facilitated Collusion........................................................................74
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`Common Vendors and Co-Packing Arrangements Facilitated Collusions and
`Enforcement of the Cartel ..........................................................................................................75
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`ADDITIONAL OVERT ACTS IN DEFENDANTS’ CANNED TUNA CONSPIRACY ...........76
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`Defendants’ Collusive Price Increases Between 2004-2006 .....................................................76
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`AWG’S THIRD AMENDED COMPLAINT
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`i
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`

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`Defendants’ Collusive Can Size Reduction and Price Increases in 2007-2008.........................85
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`Defendants Collude on Net Prices in 2010 ................................................................................92
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`Defendants Colluded to Increase Canned Tuna Prices in 2011 .................................................94
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`Defendants Colluded on a Canned Tuna Price Increase in 2012 ...............................................97
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`Defendants’ Collusion Not to Sell “FAD-Free” Branded Tuna Products in 2011 and
`Thereafter ...................................................................................................................................98
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`Defendants Colluded on Promotional Activity and Pricing Terms in at Least 2011-
`2013..........................................................................................................................................100
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`Defendants’ Communications in Furtherance of the Conspiracy After 2013..........................100
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`Defendants’ Conspiracy Was Effective ...................................................................................101
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`DISCOVERY IS NECESSARY TO DETERMINE THE FULL SCOPE OF THE
`CONSPIRACY ............................................................................................................................109
`
`TOLLING OF THE STATUTE OF LIMITATIONS ..................................................................109
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`LION ENTITIES .........................................................................................................................122
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`Lion Entities Directly Participated in the Conspiracy .............................................................122
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`Lischewski is Liable for his Role in the Conspiracy ...............................................................140
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`EFFECTS OF THE DEFENDANTS’ ILLEGAL COURSE OF CONDUCT ............................141
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`CAUSES OF ACTION ................................................................................................................142
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`COUNT I .....................................................................................................................................142
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`COUNT II ....................................................................................................................................144
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`PRAYER FOR RELIEF ..............................................................................................................146
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`JURY DEMAND .........................................................................................................................146
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`AWG’S THIRD AMENDED COMPLAINT
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`Plaintiff Associated Wholesale Grocers, Inc., (“Plaintiff”) sues Bumble
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`Bee Foods LLC (“Bumble Bee”), StarKist Company (“StarKist”), Dongwon
`
`Industries Co. Ltd. (“Dongwon”), Del Monte Corporation (“Del Monte”), Tri-Union
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`Seafoods LLC d/b/a Chicken of the Sea International, Inc. (“COSI”), Thai Union
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`Group PCL (f/k/a Thai Union Frozen Products PCL) (“Thai Union” or “TUG”), Lion
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`Capital LLP (“Lion Capital”), Lion Capital (Americas), Inc. (“Lion Americas”), and
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`Big Catch Cayman LP aka Lion/Big Catch Cayman LP (“Big Catch”), and
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`Christopher D. Lischewski (collectively the “Defendants”), and allege as follows:
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`NATURE OF ACTION
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`1.
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`This antitrust action arises out of a long-running conspiracy between
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`and among the three largest domestic producers of shelf-stable tuna (e.g., canned or
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`pouched tuna) (“canned tuna” or “shelf-stable tuna”) to fix, raise, and/or maintain
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`the prices of canned tuna in the United States.
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`2.
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`As shown below, Defendants facilitated the conspiracy by, among other
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`things, secretly and collusively exchanging price information and business plans,
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`coordinating price announcements, and collectively reducing quantity and
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`restraining output. These coordinated efforts by Defendants were designed to and
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`did dramatically increase the prices of shelf-stable tuna.
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`3.
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`The conspiracy, which began no later than May of 2004 and continued
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`through at least July of 20151 (the “Relevant Period”), directly impacted Plaintiff.
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`The conspiracy’s effect on the price of shelf-stable tuna, on information and belief,
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`
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`1 Discovery continues on the full scope of the conspiracy, including the time frame and participants. At least six
`senior tuna executives for the defendants have asserted their Fifth Amendment rights and refused to answer
`questions about the scope and timing. Defendant Christopher Lischewski, CEO of Bumble Bee has not yet been
`deposed. Mr. Lischewski’s counsel has indicted he will assert his Fifth Amendment rights to all questions.
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`AWG’S THIRD AMENDED COMPLAINT
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`continues to the present. Discovery is required to determine the full nature of the
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`period, participants, and packaged seafood products involved.
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`4.
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`Defendants include the largest domestic producers and sellers of
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`canned tuna – Bumble Bee, StarKist, and COSI – as well as the parent entities of
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`those companies. Together, these Defendants produced upwards of 80% of all
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`canned tuna sold in the United States during the Relevant Period.
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`5.
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`Although it had started at least by 2004, the price-fixing conspiracy
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`remained hidden and was not uncovered until after Defendant Thai Union Group
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`PCL, Tri-Union’s parent entity, announced its intent to acquire Defendant Bumble
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`Bee for $1.5 billion in late 2014. The acquisition, had it been completed, would
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`have created the largest canned tuna producer in the United States, with
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`approximately 38% of the market share.
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`6.
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`However, in connection with its review of the proposed acquisition, the
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`Antitrust Division of the United States Department of Justice (“DOJ”) determined
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`that the market for canned tuna in the United States was not functioning
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`competitively and, in fact, was subject to a price-fixing conspiracy involving
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`Defendants. This prompted the DOJ to open a criminal investigation into the
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`conspiracy alleged herein.
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`7.
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`In December 2015, and as a direct result of the DOJ’s investigation,
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`Thai Union and Bumble Bee announced that the acquisition was being abandoned.
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`8.
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`The DOJ’s investigation is ongoing. To date, Defendant Bumble Bee,
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`two Bumble Bee senior sales and marketing executives, and a StarKist senior sales
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`executive all have pleaded guilty to charges related to the price-fixing conspiracy
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`alleged herein. An on May 16, 2018, a federal grand jury indicted Bumble Bee’s
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`CEO Chris Lischewski on charges arising from the conspiracy alleged herein. Mr.
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`AWG’S THIRD AMENDED COMPLAINT
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`Lischewski has since resigned from his role as Bumble Bee’s CEO and has taken a
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`leave of absence from the company.
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`9.
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`In addition, in September 2017, COSI’s parent company Thai Union
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`announced that Tri-Union has received “conditional leniency” under the DOJ’s
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`“Corporate Leniency Program” with respect to the DOJ’s investigation into the
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`price-fixing conspiracy alleged herein. A recipient of conditional leniency must
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`admit to a criminal violation of the antitrust laws as a prerequisite to receiving
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`conditional leniency.
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`10. Because of the conspiracy alleged herein, Plaintiff has paid supra-
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`competitive prices for canned tuna and therefore has been injured by Defendants’
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`illegal actions.
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`BACKGROUND
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`11. Owing to a series of mergers and acquisitions, by the early 2000s, the
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`shelf-stable packaged seafood industry operated as an oligopoly dominated by its
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`“Big 3” producers: Bumble Bee, StarKist and COSI. While the Defendants and co-
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`conspirators attempted to market their products as though they were differentiated,
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`consumers substitute between different brands of canned tuna in response to price
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`changes. Further, canned tuna possessed the economic characteristics of a
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`commodity-like product with no close substitutes. Indeed, Defendants openly
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`recognized that if any individual brand were priced above the competitors, then the
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`high-priced company would quickly lose market share to the lower priced
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`competitors. As a result, no Defendant or its co-conspirator(s) could profit, or
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`sustainably profit, by unilaterally increasing its prices in the U.S.
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`12. Further adding to Defendants’ economic challenges by 2004 was the
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`fact that, as COSI’s then-President (Dennis Mussell) observed, the canned tuna
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`market conditions were highly competitive and profits were difficult to obtain.
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`AWG’S THIRD AMENDED COMPLAINT
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`Consumer demand for canned tuna was dropping, a decline that was showing no
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`signs of abating. As a result of this decline, Defendants controlled production
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`capacity that was substantially in excess of the demand for canned tuna in the United
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`States.
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`13. All of the Defendants recognized the challenges to each of them
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`presented by these market conditions. The solution, embraced by all of them in 2004,
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`was to enter into an unlawful agreement to increase prices of canned tuna sold to
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`Plaintiff and others in the United States by, among other conduct, coordinating price
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`increase announcements or pricing terms, secretly and collusively exchanging
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`pricing information and prospective pricing announcements and business plans, and
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`collectively reducing quantity and restraining output.
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`14. As COSI’s Mussell explained in a May 2004 memo to its parent
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`company, Thai Union, only a concerted effort that produced a unified front among
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`the Big 3 would allow for the successful implementation of a price increase:
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`15. Defendants and co-conspirators implemented this conspiracy over a
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`number of years through a series of meetings and other communications.
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`AWG’S THIRD AMENDED COMPLAINT
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`16. During the early years of the conspiracy, between 2004 and 2006,
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`Defendants and co-conspirators developed a common agreement or understanding
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`that they would follow the price increases that each issued. In furtherance of this
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`common agreement or understanding, Defendants exchanged information on their
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`future pricing plans via telephone and other channels. For example, Bumble Bee’s
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`Senior Vice President of Sales, Scott Cameron – who has pled guilty of conspiring
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`to fix prices of packaged seafood, including canned tuna – used a fax machine in the
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`office of a cotenant in his office building who had nothing to do with Bumble Bee
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`to presumably send surreptitiously a StarKist document revealing future pricing
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`plans that went to a competitor, COSI’s Director of Marketing Mike White.
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`Presumably, Cameron used this machine believing that the transmission could not
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`be traced to him or to Bumble Bee. At his deposition, Cameron refused to answer
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`some questions about the fax and asserted his Fifth Amendment right not to testify.
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`As a result of these and other collusive price information exchanges, Defendants
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`were able to and did collusively increase prices of canned tuna sold to Plaintiff and
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`others in the United States at least twice in 2004 and again in 2006.
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`17. By 2007, Defendants became more practiced and ambitious in their
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`collusive designs. Del Monte – which operated StarKist – recognized that
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`Defendants could dramatically increase profits if each reduced its tuna can sizes
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`from six ounces to five. In an effort to persuade Bumble Bee and COSI to agree to
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`downsize their cans, Barry Mills of Del Monte approached John DeBeer of COSI
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`and initiated discussions between the conspirators over the prospect of downsizing.
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`Other anticompetitive discussions involving Defendants ensued and are described
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`below. COSI eventually ratified or confirmed that Bumble Bee would join in the
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`collusive can downsizing in a meeting between the CEO of Bumble Bee – Defendant
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`AWG’S THIRD AMENDED COMPLAINT
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`Lischewski – and the CEO of COSI – Shue Wing Chan – over breakfast in the
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`backroom of Milton’s Restaurant in Del Mar, California, on March 13, 2008.
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`18. Consequently, in accordance with their unlawful agreement, Bumble
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`Bee, COSI and StarKist collusively downsized their six ounce tuna cans to five
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`ounces. This concerted action to reduce quantity itself constitutes price fixing. But
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`it also constitutes a conspiratorial price increase, as Defendants also colluded to raise
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`prices on the newly downsized cans.
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`19. Other collusive canned tuna price increases by the Defendants
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`followed. In furtherance of their continuing unlawful agreement or understanding
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`not to compete on price, Defendants were able to and did implement collusive price
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`increases on canned tuna in at least 2008, 2010, 2011, and 2012. Additionally, in at
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`least 2011, 2012 and 2013, Defendants agreed to constrain discounting and
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`promotional practices and terms of sale of canned tuna to customers, including
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`Plaintiff.
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`20. Further, in 2012, Defendants and their co-conspirators agreed not to sell
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`under their own brands any canned tuna products containing tuna that were caught
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`with the use of a Fish Aggregating Device. Upon information and belief, this
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`agreement remained in effect at least until July 2015.
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`21. As explained below, the conspiracy was facilitated in part by the fact
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`that during it, a number of senior sales and marketing executives and other
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`employees left the employ of one Defendant to go work for another. This familiarity
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`helped to cultivate a culture of collusion in the packaged seafood industry and
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`resulted in communications by telephone between these senior sales and marketing
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`executives for competing companies. A select number of industry trade associations
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`also facilitated the conspiracy by providing Defendants with cover to meet and
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`conduct conspiracy business.
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`AWG’S THIRD AMENDED COMPLAINT
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`22. Additionally, Defendants’ use of a common vendor for their cans
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`(Impress, a co-conspirator) and a co-packing arrangement between Bumble Bee and
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`COSI also facilitated Defendants’ collusion and enforcement of their cartel.
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`23. As far back as 2004, Defendants and co-conspirators affirmatively and
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`fraudulently concealed their unlawful conduct and coordinated their messaging to
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`their customers in order to create pretextual justifications for their collusive price
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`increases. These pretextual explanations by Defendants for their canned tuna price
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`increases were intended by them at the time to create the illusion that the market for
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`the pricing and sale of canned tuna in the United States was competitive when, in
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`fact, it was not. However, Plaintiff did not know this at the time. As a result of their
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`many affirmative and fraudulent acts of concealment, described with particularity
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`below, Defendants prevented Plaintiff from learning about the existence of the
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`conspiracy until July 2015, when Thai Union admitted publicly that the DOJ was
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`investigating the packaged seafood industry in the United States.
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`24. The conspiracy alleged in this Third Amended Complaint was
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`continuing and overarching in character. During the time period relevant to
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`Plaintiff’s claims, Defendants and co-conspirators had one or more common
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`objectives in the conspiracy, which they realized, including, without limitation,
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`increasing, fixing, stabilizing or maintaining the price of canned tuna sold to Plaintiff
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`and others. There was interdependence among the Defendants and co-conspirators
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`regarding the overt acts alleged below to achieve the objective(s) over the course of
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`the conspiracy period. In addition, there was substantial overlap in the participants
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`in the overt acts in furtherance of the conspiracy.
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`25.
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`In the paragraphs below, Plaintiff alleges who communicated with
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`whom, when, where (when they met in person) and what they agreed to or discussed
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`in furtherance of the conspiracy alleged in this Third Amended Complaint. These
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`AWG’S THIRD AMENDED COMPLAINT
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`communications included in-person meetings, e-mails, and telephone calls, and they
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`involved the senior-most executives from each Defendant.
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`26. That the canned tuna conspiracy existed cannot credibly be doubted.
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`This is because on November 7, 2016, December 21, 2016, and June 28, 2017,
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`Bumble Bee executives Walter Scott Cameron and Kenneth Worsham (“K.
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`Worsham”), and StarKist executive Stephen L. Hodge, respectively, pled guilty to
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`the felony charge of violating the U.S. antitrust laws by participating in an unlawful
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`“conspiracy to suppress and eliminate competition by reaching agreements to fix,
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`raise and maintain the prices of packaged seafood sold in the United States from at
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`least 2011 through at least 2013 in violation of the Sherman Antitrust Act, 15 U.S.C.
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`§1.” The Cameron, K. Worsham, and Hodge Plea Agreements all state that
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`“[p]ackaged seafood includes shelf-stable tuna fish.” They further state that during
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`the relevant period, defined as between at least 2011 through at least 2013, each
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`participated in a conspiracy with other persons and entities engaged in the
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`manufacture and sale of packaged seafood, the primary purpose of which was to fix,
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`raise and maintain the prices of packaged seafood sold in the United States. In
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`furtherance of the conspiracy, [Cameron, K. Worsham, and Hodge each] engaged in
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`conversations and discussions and attended meetings with representatives of other
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`major packaged-seafood-producing firms. During these conversations, discussions
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`and meetings, agreements and mutual understandings were reached to fix, raise and
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`maintain the prices of packaged seafood sold in the United States.”
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`27. Additionally, on May 8, 2017, DOJ announced that Bumble Bee had
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`agreed to plead guilty to price-fixing shelf-stable tuna products in the United States
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`between 2011 and 2013. Bumble Bee will pay a $25,000,000 criminal fine for its
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`criminal conduct. Acting Assistant Attorney General Andrew Finch commented that
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`DOJ’s antitrust division “along with our law enforcement colleagues, will continue
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`AWG’S THIRD AMENDED COMPLAINT
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`to hold these companies and their executives accountable for conduct that targeted a
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`staple in American households.”
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`28. The Cameron and Worsham guilty pleas and the Bumble Bee plea
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`agreement establish that a conspiracy did exist. But by operation of law, a guilty plea
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`merely establishes the minimum parameters of a conspiracy. See, e.g., In re Vitamins
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`Antitrust Litig., No. 99-197, 2000 WL 1475705, at *11 (D.D.C. May 9, 2000)
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`(“[T]he Court rejects the notion that the guilty pleas … foreclose a broader
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`conspiracy. Guilty pleas are negotiated instruments which take into account not only
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`the culpability of the accused but the Justice Department’s resources and other cases
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`requiring the government’s attention.”). Thus, the scope of the conspiracy actionable
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`in a civil antitrust action – including the timing of, and products and participants in,
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`the conspiracy – may be (and as alleged in this Third Amended Complaint is)
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`broader than the criminal pleas to date. Discovery is necessary to determine the full
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`scope of the conspiracy in terms of products, time period and participants.
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`29. Another reason that the existence of this conspiracy cannot credibly be
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`doubted is that COSI has confirmed that it is the amnesty applicant in this case.
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`Under the United States Department of Justice’s (“DOJ”) Leniency Guidelines, for
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`COSI to receive conditional amnesty, the company itself had to admit to a criminal
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`violation of the U.S. antitrust laws involving, among other conduct, price fixing. See
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`www.justice.govc/atr.frequently-asked-questions-regarding-antitrust-divisions-
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`leniency-program.
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`30. Additionally, defendants such as Bumble Bee have admitted in civil
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`discovery that its senior executives engaged in meetings and discussions in violation
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`of antitrust laws during the relevant period. Specifically, Bumble Bee has admitted
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`that “Senior Vice Presidents of the Sales and Marketing departments at Bumble Bee
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`coordinated certain list price increases relating to certain canned tuna products
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`AWG’S THIRD AMENDED COMPLAINT
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`through a series of bilateral communications with executives at the other companies
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`(including, at various time, communications with Steve Hodge and Chuck Handford
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`of StarKist,” and “Senior Vice Presidents and Vice Presidents of the Sales and Trade
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`Marketing departments at Bumble Bee coordinated certain promotional levels and
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`changes to certain pricing guidance on certain canned tuna products through a series
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`of bilateral communications with executives at the other companies (including, at
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`various times, communications with Steve Hodge and Chuck Handford of StarKist
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`and Mike White of Chicken of the Sea.”
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`31. Moreover, Bumble Bee acknowledged that “certain documents and
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`information suggest that the CEOs of Bumble Bee [Defendant Chris Lischewski]
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`and Chicken of the Sea coordinated with respect to certain promotional pricing on
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`certain canned tuna products during 2013.”
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`32. The existence of the canned tuna conspiracy alleged in this Third
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`Amended Complaint is further supported by additional evidence alleged below,
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`including, without limitation, the following:
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`(a) On December 3, 2015, Thai Union and Bumble Bee announced
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`that they had abandoned their proposed merger in the face of DOJ’s criminal
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`investigation of them, prompting William Baer, then head of the DOJ’s Antitrust
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`Division, to state later that day that “[the DOJ’s] investigation convinced us – and
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`the parties knew or should have known from the get go – that the market is not
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`functioning competitively today, and further consolidation would only make things
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`worse.”
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`(b) During the time period relevant to Plaintiff’s claims, Defendants
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`and their co-conspirators’ pricing of canned tuna to Plaintiff and others in the United
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`States is explainable only through conspiratorial action. During the conspiracy,
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`there was a large increase in the supply of canning-grade tuna coupled with
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`AWG’S THIRD AMENDED COMPLAINT
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`decreasing U.S. demand for canned tuna. These conditions should have caused
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`canned tuna prices in the U.S. to decline precipitously. Instead, the price increased
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`(significantly). Additionally, the market for the production and sale of canned tuna
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`was conducive to cartelization because: (i) as noted above, it is a commodity-like
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`product for which there are no close substitutes; (ii) together, Defendants dominated
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`the market for the processing of tuna and the production and sale of canned tuna in
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`the United States; and (iii) there were barriers to entry into the market for the
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`production and sale of canned tuna in the United States.
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`33. The allegations in this Third Amended Complaint are pled in the
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`alternative if necessary to avoid inconsistency.
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`JURISDICTION AND VENUE
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`34. This civil antitrust action arises under Sections 1 of the Sherman Act,
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`15 U.S.C. § 1 for treble damages pursuant to Section 4 of the Clayton Act, 15 U.S.C.
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`§ 15(a), and for treble damages and permanent injunctive relief pursuant to the
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`Kansas Restraint of Trade Act, K.S.A. 50-101, et seq.
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`35. This Court has subject matter jurisdiction over each of the claims in this
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`action pursuant to 28 U.S.C. §§ 1331 and 1337. This Court further has subject matter
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`jurisdiction over each of the claims in this action pursuant to 28 U.S.C. § 1332, as,
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`upon information and belief, this action is between citizens of different States and
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`has an amount in controversy in excess of $75,000, exclusive of interest and costs.
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`36. Venue is proper in this Court pursuant to 15 U.S.C. § 22, and 28 U.S.C.
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`§ 1391(b), (c) & (d), because:
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`(a)
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`a substantial part of the events giving rise to these claims
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`occurred in this District, including the sales to Plaintiff of shelf-stable tuna at
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`artificially high prices;
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`AWG’S THIRD AMENDED COMPLAINT
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`and
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`(b)
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`each Defendant is subject to personal jurisdiction in this District;
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`(c) Defendants transact business in this District.
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`37. Defendants are subject to the personal jurisdiction of this Court
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`because:
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`(a)
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`they are amenable to service of process because each transacts
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`business in, has continuous or systematic contacts with, or has sufficient minimum
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`contacts in the United States sufficient to satisfy due process;
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`(b)
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`they are amenable to service of process because each transacts
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`business in, has continuous or systematic contacts with, or has sufficient minimum
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`contacts in this District, and Defendants headquartered outside this District are
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`nevertheless e