Case: 1:16-cv-08637 Document #: 4371 Filed: 03/01/21 Page 1 of 16 PageID #:292947
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
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`IN RE BROILER CHICKEN ANTITRUST
`LITIGATION
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`THIS DOCUMENT RELATES TO
`ALL DIRECT ACTION PLAINTIFFS
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`Case No. 1:16-cv-08637
` Judge Thomas M. Durkin
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` PUBLIC VERSION
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`MEMORANDUM OF LAW IN SUPPORT OF
`RABOBANK’S RULE 12(b)(6) MOTION TO DISMISS
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`Defendant Rabobank does not buy, sell, produce, or distribute chickens. It is a
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`multinational bank that lends money to certain chicken producers (and many other clients). Yet,
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`after more than four years of discovery, a small number of opt-out plaintiffs have added
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`Rabobank to this litigation, alleging that Rabobank joined a wide-ranging, decade-long
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`conspiracy to reduce the output of broiler chickens so that broiler prices would rise. Despite
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`cherry picking the best “evidence” they could find from years of searching, plaintiffs’ allegations
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`do not even come close to stating a plausible Section 1 Sherman Act claim against Rabobank.
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`To state such claim, plaintiffs are required to allege that Rabobank had knowledge of the
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`alleged conspiracy, was aware of its scope, agreed to play a defined role in it, and made good on
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`that agreement by furthering the conspiracy in some meaningful way. Plaintiffs’ allegations do
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`not plausibly suggest any of these things. They do not suggest that Rabobank knew about an
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`industry-wide conspiracy, had input into specific broiler reductions or pricing, controlled any of
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`the chicken producers, benefitted when broiler prices rose or fell, or even was needed for the
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`alleged conspiracy to function as desired by the companies that supposedly implemented it.
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`Instead, a fair reading of the allegations—when viewed in a light most favorable to
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`plaintiffs—shows that Rabobank monitored activity in the chicken industry and periodically
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`made the commonsense observation that the industry as a whole would benefit from reducing
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`supply. This type of encouragement is not actionable; it is Economics 101. As a senior judge in
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`this District once observed: “[T]here is a trade-off between price and volume. If firms want to
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`raise prices, they have to produce less, sell less, and thereby say ‘no’ to customers. It should not
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`be a mark of conspiracy to say what is true, already known by the audience, and articulated by
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`countless third-party analysts, academicians, and jurists alike.” Kleen Prods. LLC v.
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`International Paper, 276 F. Supp. 3d 811, 841 (N.D. Ill. 2017) (Leinenweber, J.).
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`These observations apply here. Rabobank’s only alleged participation in the purported
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`conspiracy was to make obvious statements derived from economic truths about the broiler
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`chicken market. These statements did not enhance the conspirators’ ability to enter into a
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`scheme to reduce output, and they mirrored those of myriad other market observers and industry
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`outsiders. Because plaintiffs have failed to plausibly allege that Rabobank knew about the
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`alleged conspiracy, agreed to play a role in it, or participated in it in any way, this Court should
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`dismiss plaintiffs’ Section 1 Sherman Act and related state-law claims against Rabobank.
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`BACKGROUND
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`This antitrust suit has been pending since September 2016. The gravamen of the
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`complaint is that “America’s chicken producers reached illegal agreements” to restrain trade
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`from at least 2008 through 2019. (ECF No. 4244 ¶ 1.) The producers allegedly did this in a
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`number of ways,
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` (Id. ¶ 576.) Discovery has been ongoing
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`for years, and the parties have exchanged almost 30 million documents and taken hundreds of
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`depositions. Among those deposed were Adriaan Weststrate and Micki Donegan, the two
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`Rabobank employees who were most heavily involved in the bank’s relationship with poultry
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`clients during the relevant time period.
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`On January 29, 2021, the direct action plaintiffs filed an Amended Consolidated
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`Complaint in which less than 10% of them named as defendants four Rabobank entities. (Id. ¶
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`240.)1 Despite the massive amount of discovery plaintiffs have taken to date, their 425-page
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`complaint only directs thirteen of its 1,514 paragraphs at Rabobank. (Id. ¶¶ 574-86.) In these
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`thirteen paragraphs,
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`Rabobank has attached to this memorandum all thirteen documents referenced in
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`paragraphs 574-86 of the complaint, so the Court can review them free from plaintiffs’ spin.
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`(See Exs. 1-13.)2 These documents, whether viewed individually or collectively, do not show
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`that Rabobank had any knowledge of an alleged supply-reduction or price-fixing conspiracy by
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`U.S. chicken producers, that Rabobank agreed to join such a conspiracy, or that Rabobank
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`played a role in such a conspiracy. At best, the allegations show that, as a market analyst and
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`1 These entities are: (1) Utrecht-America Holdings, Inc.; (2) Rabo AgriFinance LLC; (3) Rabobank USA
`Financial Corporation; and (4) Utrecht-America Finance Co. The complaint refers to these entities
`collectively as “Rabobank,” and so, too, do the Rabobank defendants in this Memorandum. In reality, the
`Rabobank entity that has dealings with U.S. poultry companies and should have been named as a
`defendant in this action is Coöperatieve Rabobank, U.A., New York Branch.
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` As this Court has held, in evaluating a motion to dismiss, “the Court considers both ‘documents attached
`to the complaint’ and ‘documents that are critical to the complaint and referred to in it.’” Belsky v. Field
`Imports, Inc., 2013 WL 5819232, at *1 (N.D. Ill. Oct. 29, 2013) (Durkin, J.) (emphasis added) (quoting
`Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012)).
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`observer, Rabobank believed U.S. chicken producers needed to decrease overall production to
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`strengthen the financial viability of the industry. Thus, Rabobank expressed this view at industry
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`events and in conversations with its poultry company clients.
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`This, of course, made perfect sense. According to plaintiffs, by 2008, “the oversupply
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`and low prices of chickens put [chicken producers] in dire financial straits.” (ECF No. 4244 ¶
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`341.) As the “leading lender and financial institution serving the poultry industry,” Rabobank
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`did not want to see certain broiler producers who “turned to Rabobank for credit and/or
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`transactional work” fail. (Id. ¶ 574.) But, as a bank, Rabobank had no ability to set the price of
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`broiler chickens and did not benefit from any specific increase or decrease in price. Moreover,
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`there would have been no reason for chicken producers to consult Rabobank about how to
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`implement an industry-wide conspiracy to reduce output or fix prices. Plaintiffs do not allege
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`otherwise.
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`Nor do plaintiffs allege that Rabobank facilitated the supposed conspiracy in the same
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`manner as they allege the only other non-producer defendant in this case, Agri Stats, facilitated
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`it. According to plaintiffs, Agri Stats gathered “specific, competitively-sensitive information”
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`from chicken producers and disseminated this information in a “detailed, readily-decipherable
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`form” that allowed the producers to see “financial, production, breeder flock size and age,
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`capacity, cost, and numerous other categories of information by each chicken producer on a
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`weekly and monthly basis.” (Id. ¶¶ 938-39, 943-44.) Based on these allegations, this Court
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`found that plaintiffs had identified Agri Stats as “a tool Defendants used to help implement their
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`conspiracy.” (ECF No. 541 at 44.)
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`No similar allegations have been made against Rabobank. Plaintiffs do not allege that
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`Rabobank sent producers confidential information that was used to further the alleged
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`conspiracy. To the contrary, plaintiffs concede that “only Agri Stats” had that information.
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`(ECF No. 4244 ¶ 937.) The supply and pricing information Rabobank possessed regarding the
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`chicken industry came from the same public sources available to every other industry outsider.
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`(Id. (“The USDA and various other entities publicly published aggregated weekly, monthly, and
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`annual supply and pricing information concerning the U.S. chicken industry.”).)
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`I.
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`Legal Standard
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`ARGUMENT
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`There is no such thing as an unwitting conspirator. To state a claim under Section 1 of
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`the Sherman Act, it is “essential to show that a particular defendant joined the conspiracy and
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`knew of its scope.” Bank of Am., N.A. v. Knight, 725 F.3d 815, 818 (7th Cir. 2013). Thus, for
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`each defendant, a complaint must contain factual allegations that plausibly suggest the defendant
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`“had a conscious commitment to a common scheme designed to achieve an unlawful objective.”
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`Hackman v. Dickerson Realtors, Inc., 557 F. Supp. 2d 938, 946 (N.D. Ill. 2008) (citing
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`Monsanto v. Spray–Rite Service Corp., 465 U.S. 752, 764 (1984)).
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`Moreover, merely alleging that a defendant knew of an illegal agreement is not enough.
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`A plaintiff also must plead facts showing that the defendant agreed to play a defined role in the
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`conspiracy. In other words, for each defendant, a complaint must identify “what they agreed to
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`do.” B & R Supermarkets, Inc. v. Visa, Inc., 2016 WL 5725010, at *10 (N.D. Cal. Sept. 30,
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`2016). In assessing whether a complaint plausibly alleges that the defendant participated in an
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`antitrust conspiracy, a court should look beyond “labels and conclusions,” which are insufficient
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`to state a claim. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
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`Finally, a Section 1 claim should be dismissed where a defendant’s alleged involvement
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`did not meaningfully further the conspiracy. Thus, for example, dismissal is proper where the
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`information the defendant is accused of sharing was not “necessary to a fix-suppression scheme.”
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`In re Commodity Exch., Inc., Gold Futures & Options Trading Litig., 328 F. Supp. 3d 217, 229-
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`30 (S.D.N.Y. 2018). Similarly, merely encouraging market participants to engage in certain
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`conduct does not state a claim under Twombly. See Hackman, 557 F. Supp. 2d at 946.
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`II.
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`The Court Should Dismiss Plaintiffs’ Section 1 Claims Against Rabobank
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`A.
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`Plaintiffs fail to plead sufficient facts showing Rabobank had knowledge of
`the chicken producers’ alleged conspiracy
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`This Court previously ruled that plaintiffs’ allegations were sufficient to state a claim
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`against the producer defendants and Agri Stats. In keeping with the above principles, however,
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`when a complaint adequately alleges that some defendants were aware of the alleged conspiracy
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`but its allegations fall short as to others, the latter defendants should be dismissed from the case.
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`See, e.g., Hackman, 557 F. Supp. 2d at 944-47 (allowing antitrust claims to proceed against some
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`defendants but dismissing claims against others that lacked knowledge of the conspiracy).
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`That is the case here. The allegations that led the Court to infer knowledge of a
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`conspiracy on the part of the other defendants—for the producers, “parallel conduct” in the form
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`of unprecedented supply reductions and, for Agri Stats, the sharing of proprietary information
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`that facilitated the conspiracy—do not apply to Rabobank. Rabobank is a lender that neither had
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`the ability to reduce output nor supplied any of the information that supposedly allowed the
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`producers to do so. Nonetheless, plaintiffs have cobbled together snippets from thirteen out of
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`30 million documents produced in discovery that supposedly suggest that Rabobank was aware
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`of a massive price-fixing conspiracy orchestrated by its poultry clients and numerous other
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`producers. A review of these documents shows they do nothing of the sort.
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`1.
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`Rabobank’s knowledge of an alleged conspiracy cannot be inferred
`from internal communications at Rabobank
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` (See ECF No. 4244 ¶ 576.)
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`Ex. 1.)
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`According
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`to plaintiffs,
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`this email shows
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`that Rabobank “consistently sought
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`industrywide action to alter the output and pricing of broilers.” (ECF No. 4244 ¶ 576.)
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`Moreover, plaintiffs allege that the producers’ conspiracy began “at
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`least as early as 2008” (Id. ¶ 1),
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`If anything, plaintiffs’ allegations show Rabobank’s lack of
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`knowledge of a conspiracy.
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`Rabobank’s knowledge of an alleged conspiracy cannot be inferred
`from its email exchanges with Sue Trudell
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`2.
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`Once again, these emails do not show Rabobank’s knowledge of an alleged, industry-
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`wide conspiracy to restrict broiler output. In fact, they show the opposite. If Rabobank had
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`joined a conspiracy with producers to restrict output, the content of the emails would have been
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`very different—e.g., “why hasn’t producer X implemented the cutbacks we agreed upon?”
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`Nothing in the emails suggests that Rabobank joined, or wished to join, a supply-reduction or
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`price-fixing conspiracy with more than two dozen chicken producers.
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`Plaintiffs’ citation to the document referenced in paragraph 580 is particularly
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`disingenuous.
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` The Court should disregard this conclusory allegation and examine the facts cited to
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`support it. See Twombly, 550 U.S. at 557.
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`In short, nothing in Weststrate’s email exchanges with Trudell shows that Rabobank had
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`knowledge of an alleged output-restricting or price-fixing conspiracy by broiler producers (much
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`less that Rabobank was aware of the conspiracy’s scope and agreed to play a role in it).
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`3.
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`Rabobank’s knowledge of an alleged conspiracy cannot be inferred
`from its email exchanges with poultry clients
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`According to plaintiffs, these documents show that Rabobank served as a “conduit” for
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`anticompetitive communications. The documents themselves show otherwise.
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` Simply put, no
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`reason exists to connect these communications to an industry-wide conspiracy among chicken
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`producers, or to believe they plausibly show Rabobank’s knowledge of such a conspiracy. See
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`In re Dairy Farmers of Am., Inc., Cheese Antitrust Litig., 60 F. Supp. 3d 914, 958 n.33 (N.D. Ill.
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`2014) (“The decision by a group of industry players to have a meeting or to talk at a dinner or
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`cocktail reception does not constitute a conspiracy.”), aff’d, 801 F.3d 758 (7th Cir. 2015).
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`unremarkable communication suggests Rabobank’s knowledge of an industry-wide supply or
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` Nothing about this
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`pricing conspiracy.
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`about this email suggests Rabobank was involved in, or had any knowledge of, the conspiracy
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` In short, nothing
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`alleged here.
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`Rabobank’s knowledge of an alleged conspiracy cannot be inferred
`from its participation in industry meetings
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`4.
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`Courts long have held that these types of observations at industry events do not suggest
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`that the speaker has joined a conspiracy. See, e.g., Maple Flooring Mfrs.' Ass'n v. United States,
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`268 U.S. 563, 582-83 (1925) (“[T]he public interest is served by the gathering and dissemination,
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`in the widest possible manner, of information with respect to the production and distribution,
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`cost and prices in actual sales, of market commodities. . . . [T]he dissemination of that
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`information cannot in itself be said to be restraint upon commerce in any legal sense.”); Moore v.
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`Boating Indus. Ass’ns, 819 F.2d 693, 712 (7th Cir. 1987) (“[M]ere membership in a trade
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`association, attendance at trade association meetings and participation in trade association
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`activities are not, in and of themselves, condemned or even discouraged by the antitrust laws.”)
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`(citation omitted); In re Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186, 1196 (9th
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`Cir. 2015) (“[M]ere participation in trade-organization meetings where information is exchanged
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`and strategies are advocated does not suggest an illegal agreement.”).
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`B.
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`Plaintiffs fail to plead sufficient facts showing Rabobank participated in the
`chicken producers’ alleged conspiracy
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`In addition to failing to plausibly allege that Rabobank knew of an output or pricing
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`conspiracy, plaintiffs have failed to plead facts showing that Rabobank had a role in the alleged
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`conspiracy or participated in it in any way.
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`1.
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`The complaint is devoid of any allegation that any Rabobank
`defendant did anything in particular
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`As an initial matter, plaintiffs fail to plead facts specific to any of the four separate
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`Rabobank defendants named in their complaint. Instead, plaintiffs lump them all together as
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`“Rabobank” and attribute Weststrate’s actions indiscriminately to all of them. This is improper
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`and requires dismissal. See Bank of Am., N.A. v. Knight, 725 F.3d 815, 818 (7th Cir. 2013)
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`(“Liability is personal . . . Each defendant is entitled to know what he or she did that is asserted
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`to be wrongful. A complaint based on a theory of collective responsibility must be dismissed.”);
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`Mountain View Pharmacy v. Abbott Labs., 630 F.2d 1383, 1388 (9th Cir. 1980) (“A blanket
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`statement that twenty-eight defendants have conspired to fix prices on drug sales to thirteen
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`plaintiffs does not provide adequate notice for responsive pleading.”).
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`2.
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`Encouraging market participants to restrict output does not constitute
`actionable participation in a Section 1 conspiracy
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`Even if all four Rabobank defendants are treated like a single entity with respect to
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`plaintiffs’ allegations, the complaint still fails to plausibly allege that Rabobank participated in a
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`conspiracy with U.S. chicken producers. At bottom, plaintiffs appear to accuse Rabobank of
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`somehow facilitating a massive, decade-long conspiracy to reduce output and raise prices for
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`broiler chickens by encouraging poultry companies to reduce supply. The antitrust laws,
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`however, do not forbid encouragement, particularly by industry outsiders.
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`In Hackman, for example, a real estate agent alleged that a group of competing realtors
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`conspired to shut him out of the market. See Hackman, 557 F. Supp. 2d at 942. The plaintiff
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`added as a defendant the Rockford Area Association of Realtors (“RAAR”), which allegedly
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`encouraged the conspiratorial boycott. Id. at 946. In dismissing the claims against RAAR,
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`Judge Bucklo explained that “encouragement absent agreement is not enough” to state a Section
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`1 claim and that the plaintiffs had failed to “allege facts from which it could be inferred that
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`RAAR reached an anticompetitive agreement with the other defendants.” Id.; see also Ass’n of
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`Am. Physicians & Surgeons, Inc. v. Am. Bd. of Med. Specialties, 2020 WL 5642941, *9 (N.D. Ill.
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`Sept. 22, 2020) (dismissing Section 1 claim and explaining that “[e]ncouraging and campaigning
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`. . . are not the same as a conspiracy”).
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`The Court should reach the same conclusion here. The fact that Rabobank is alleged to
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`have encouraged the chicken industry as a whole to cut production to strengthen the industry’s
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`financial condition is not enough to plausibly allege that Rabobank actually joined a conspiracy
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`with twenty-plus chicken companies to reduce output. Indeed, a bank in Rabobank’s position
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`would have offered the same general advice whether a conspiracy existed or not. See In re
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`Dynamic Random Access Memory Indirect Purchaser Litig., 2020 WL 8459279, *9 (N.D. Cal.
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`Nov. 24, 2020) (dismissing Section 1 claim and finding that conspiracy could not be inferred
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`from public statements about
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`reducing supply because statements were “virtually
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`indistinguishable from statements that would have been made without a conspiracy”).
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`Moreover, there is nothing remarkable about the market observations attributed to
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`Rabobank in the complaint. The fact that supply had outpaced demand for broilers at certain
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`points between 2008 and 2019, and that producers could combat the negative impact of this
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`surplus by reducing supply, was a conclusion any first-year economics student could have
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`reached. Indeed, many market observers were proclaiming openly the same thing Rabobank was
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`telling its poultry clients: “Simply put, there’s just too much chicken out there.”3
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`3 The Troubling Mathematics of the Chicken Business, Investopedia Stock Analysis, Sept. 12, 2011,
`available at 2011 WLNR 28012843; see also id. (“The first resolution is to do nothing and continue to
`take losses. The second potential resolution is to cut production – less volume, but hopefully at higher
`per-piece prices; and more importantly, at a level that can produce profits again.”); David Koenig, Poultry
`producer to close NC plant, put 830 out of work, AP Alert – North Carolina, 23:45:26, March 12, 2008,
`available in Westlaw News database (reporting that analyst at financial services firm “said in a note to
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`Allowing a Section 1 claim to proceed against a non-market participant based on such
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`allegations of encouragement would set a dangerous precedent. Indeed, if plaintiffs’ allegations
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`were deemed sufficient, “Section 1 liability would potentially attach to a broad range of ancillary
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`service providers—bankers, lenders, lawyers, and accountants to mention a few—who lack the
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`requisite competitive interest and stake in the relevant market and who do not have any
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`conscious commitment to achieve the alleged restraint of trade in that market.” Gulf States
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`Reorganization Grp., Inc. v. Nucor Corp., 822 F. Supp. 2d 1201, 1219 n.18 (N.D. Ala. 2011),
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`aff’d, 721 F.3d 1281 (11th Cir. 2013). This Court should reject plaintiffs’ invitation to open the
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`floodgates to Section 1 claims against a host of industry outsiders who did nothing more than
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`voice their opinions on how an industry as a whole should operate.
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`In sum, plaintiffs do not plausibly allege that Rabobank agreed to join, and participated
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`in, a conspiracy with U.S. chicken producers to reduce supply or fix the prices of broiler
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`chickens. At most, their allegations show that Rabobank hoped the producers would cut supply
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`and periodically encouraged some of them to do so—just like myriad other industry observers.
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`After a four-year search, plaintiffs’ attempt to tie Rabobank to the alleged conspiracy amounts to
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`nothing more than wishful thinking. As such, plaintiffs’ Sherman Act claims against Rabobank
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`(Counts 1-2) should be dismissed.
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`clients that production cuts are needed to improve the industry’s fundamentals, and that the cuts
`announced Wednesday were ‘a start but it is not enough to turn around the industry’”); Bob Burgdorfer,
`Analysis – Troubles still loom for U.S. chicken industry, Reuters News, 16:30:15, Aug. 8, 2008, available
`in Westlaw News database (reporting that “the industry is still producing too many chickens” and quoting
`agriculture advisory firm analyst as stating that egg sets “need to be 5 to 7-1/2 percent lower”); Julie
`Schmit, No. 1 chicken producer Pilgrim’s Pride files for Chapter 11, USA Today, Dec. 2, 2008, available
`at 2008 WLNR 23056335 (reporting opinion of JP Morgan analyst that chicken industry “cuts were
`likely” and that “a steep reduction would help the ‘downtrodden industry’ lift prices”); Andy Johns, U.S.
`poultry producers plucked by China’s charges on imports, Chattanooga Times, Oct. 7. 2010, available at
`2010 WLNR 19989793 (quoting University of Georgia professor of poultry sciences as stating that, in the
`near term, as a result of “basic laws of supply and demand,” poultry farmers “will end up having to cut
`back”). The Court is entitled to take judicial notice of these articles and the fact that these statements
`were made without converting this Rule 12(b)(6) motion to a motion for summary judgment. See, e.g.,
`Lindstron v. TD Ameritrade, Inc., 2020 WL 7398792, at *3 n.6 (N.D. Ill. Dec. 17, 2020) (citing cases).
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`Case: 1:16-cv-08637 Document #: 4371 Filed: 03/01/21 Page 15 of 16 PageID #:292961
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`III.
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`The Court Should Dismiss Plaintiffs’ State Law Claims Against Rabobank
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`Plaintiffs’ state law claims also should be dismissed. Each is derivative of plaintiffs’
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`implausible claim that Rabobank joined an output reduction conspiracy. Some allege that an
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`antitrust conspiracy is a deceptive act or practice (Counts 15, 21-22, 28-30, 32, 34, 39-42, 45-46,
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`48-49, 51, 57) others are duplicative claims brought under state antitrust statutes (Counts 14, 20,
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`23-27, 31, 33, 35-38, 43-44, 47, 52) and one is a two-sentence claim for unjust enrichment
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`(Count 50). Because plaintiffs’ claims under the Sherman Act fail as a matter of law, so do each
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`of these claims.
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`CONCLUSION
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`For the foregoing reasons, Rabobank respectfully requests that the Court dismiss in their
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`entirety, with prejudice, all claims asserted against Rabobank in Direct Action Plaintiffs’
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`Amended Consolidated Complaint.
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`Dated: March 1, 2021
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`Respectfully submitted,
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`David J. Doyle (ARDC #6224848)
`Jill C. Anderson (ARDC #6228756)
`Matthew T. Connelly (ARDC #6320465)
`Freeborn & Peters LLP
`311 S. Wacker Drive, Suite 3000
`Chicago, IL 60606
`ddoyle@freeborn.com
`janderson@freeborn.com
`mconnelly@freeborn.com
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`UTRECHT-AMERICA HOLDINGS, INC., RABO
`AGRIFINANCE
`LLC, RABOBANK USA
`FINANCIAL CORPORATION, and UTRECHT-
`AMERICA FINANCE CO.
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`By: /s/ David J. Doyle
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`One of their attorneys
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`Case: 1:16-cv-08637 Document #: 4371 Filed: 03/01/21 Page 16 of 16 PageID #:292962
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that on March 1, 2021, he caused a true and correct
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`copy of the foregoing to be electronically filed with the Clerk of the Court using the CM/ECF
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`system, which will send notification of such filing to all counsel of record.
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`/s/ David J. Doyle
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