throbber
CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 1 of 98
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`UNITED STATES DISTRICT COURT
`DISTRICT OF MINNESOTA
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`No.
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`CLASS ACTION COMPLAINT
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`DEMAND FOR JURY TRIAL
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`
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`Plaintiffs,
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`v.
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`WANDA DURYEA, MATTHEW HOSKING,
`JOHN MCKEE, LISA MELEGARI,
`MICHAEL REILLY, SANDRA STEFFEN,
`PAUL GLANTZ, EDWIN BLAKEY,
`JENNIFER SULLIVAN, LISA AXELROD,
`ANBESSA TUFA AND CHRISTINA HALL,
`
`
`
`
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`AGRI STATS, INC., CLEMENS FOOD
`GROUP, LLC, HORMEL FOODS
`CORPORATION, INDIANA PACKERS
`CORPORATION, JBS USA, SEABOARD
`FOODS, LLC, SMITHFIELD FOODS, INC.,
`TRIUMPH FOODS, LLC, AND TYSON
`FOODS, INC.
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`
`
`
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`Defendants.
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 2 of 98
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`TABLE OF CONTENTS
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`Page
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`NATURE OF ACTION ..................................................................................................... 1
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`JURISDICTION AND VENUE ........................................................................................ 4
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`I.
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`II.
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`III.
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`PARTIES ........................................................................................................................... 5
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`A.
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`B.
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`Plaintiffs ................................................................................................................. 5
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`Defendants ............................................................................................................. 8
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`IV.
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`FACTUAL ALLEGATIONS .......................................................................................... 10
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`A.
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`B.
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`C.
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`D.
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`E.
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`F.
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`G.
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`H.
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`I.
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`The price-fixing scheme started from Agri Stats’ central role in collusion in the
`broiler industry. .................................................................................................... 10
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`After success in the broiler industry Agri Stats markets its collusive scheme to
`the swine integrators. ........................................................................................... 12
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`Agri Stats provided pork integrators the unparalleled ability to monitor, or
`discipline co-conspirators for not complying with the collusive agreement. ...... 14
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`The pork industry is nearly fully vertically integrated, which allowed the scheme
`to succeed. ............................................................................................................ 20
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`The level of concentration in the pork industry was optimal for the alleged
`collusive scheme. ................................................................................................. 21
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`Abnormal pricing during the class period demonstrates the success of the
`collusive scheme. ................................................................................................. 24
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`Capacity and supply restraints during the class period. ....................................... 25
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`Overcharges due to the cartel were passed through to the indirect purchaser class.
`.............................................................................................................................. 29
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`Defendants actively concealed the conspiracy. ................................................... 32
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`V.
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`VI.
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`CLASS ACTION ALLEGATIONS ................................................................................ 33
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`ANTITRUST INJURY .................................................................................................... 39
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`VII. CAUSES OF ACTION .................................................................................................... 41
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`VIII. REQUEST FOR RELIEF ................................................................................................ 94
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`IX.
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`JURY TRIAL DEMANDED ........................................................................................... 95
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 3 of 98
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`Plaintiffs bring this action on behalf of themselves individually and on behalf of a
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`plaintiff class consisting of all persons and entities who purchased pork indirectly from a
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`defendant or co-conspirator for personal use in the United States from at least January 1, 2009
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`until the present (Class Period). Plaintiffs bring this action for injunctive relief under Section 1 of
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`the Sherman Act, and for treble damages under the antitrust laws, unfair competition laws,
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`consumer protection laws, and unjust enrichment common laws of the several states against
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`defendants, and demand a trial by jury.
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`I.
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`NATURE OF ACTION
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`1. The pork integrator-defendants are the leading suppliers of pork in an industry
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`with approximately $20 billion in annual commerce. The pork industry is highly concentrated,
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`with a small number of large producers in the United States controlling supply. Defendants and
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`their co-conspirators collectively control over 80 percent of the wholesale pork market.
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`2. These defendants, Agri Stats, Inc. (Agri Stats), Clemens Food Group, LLC
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`(Clemens), Hormel Foods Corporation (Hormel), Indiana Packers Corporation (Indiana
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`Packers), JBS USA, Seaboard Foods LLC (Seaboard), Smithfield Foods, Inc. (Smithfield),
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`Triumph Foods, LLC (Triumph), and Tyson Foods, Inc. (Tyson), entered into a conspiracy
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`from at least 2009 to the present to fix, raise, maintain and stabilize the price of pork.1 The
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`principal (but not exclusive) method by which defendants implemented and executed their
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`conspiracy was by coordinating their output and limiting production with the intent and
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`expected result of increasing pork prices in the United States. In furtherance of their
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`conspiracy, defendants exchanged detailed, competitively sensitive, and closely guarded non-
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`1 For the purposes of this complaint, pork includes pig meat purchased fresh or frozen,
`smoked ham, sausage and bacon.
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 4 of 98
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`public information about prices, capacity, sales volume and demand through their co-
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`conspirator Agri Stats.
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`3. Beginning in at least 2009, Agri Stats began providing highly sensitive
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`“benchmarking” reports to the majority of pork integrators. Benchmarking allows competitors
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`to compare their profits or performance against that of other companies. But Agri Stats’ reports
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`are unlike those of other lawful industry reports. Agri Stats gathers detailed financial and
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`production data from each of the pork integrators, standardizes this information, and produces
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`customized reports and graphs for the co-conspirators. The type of information available in
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`these reports is not the type of information that competitors would provide each other in a
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`normal, competitive market. Instead, the provision of this detailed information acts as the
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`proverbial smoke-filled room of the cartels of yesteryear. Rather than meeting in a room with
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`pen and paper, Agri Stats collected the pork integrators’ competitively sensitive supply and
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`pricing data and intentionally shared that information through detailed reports it provided to the
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`pork integrators. On a weekly and monthly basis, Agri Stats provides the pork integrators with
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`current and forward-looking sensitive information (such as profits, costs, prices and slaughter
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`information), as well as regularly provides the keys to deciphering which data belongs to which
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`producers. The effect of this information exchange was to allow the pork integrators to monitor
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`each other’s production and hence control supply and price.
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`4. The data exchanged through Agri Stats bears all the hallmarks of the enforcement
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`mechanism of a price-fixing scheme. First, the data is current and forward-looking – which
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`courts consistently hold has “the greatest potential for generating anticompetitive effects.”2
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`2 Todd v. Exxon Corp., 275 F.3d 191, 2011 (2d Cir. 2001) (Sotomayor, J.) (quoting United
`States v. Gypsum Co., 438 U.S. 422, 441 n.16 (1978)).
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 5 of 98
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`Second, information contained in Agri Stats reports is specific to the pork producers, including
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`information on profits, prices, costs and production levels. “Courts prefer that information be
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`aggregated in the form of industry averages, thus avoiding transactional specificity.”3 Third,
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`none of the Agri Stats information was publicly available. Agri Stats is a subscription service,
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`which required the co-conspirators to pay millions of dollars over the class period – far in
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`excess of any other pricing and production indices. “Public dissemination is a primary way for
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`data exchange to realize its pro-competitive potential.”4 Agri Stats ensured that its detailed,
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`sensitive business information was available only to the co-conspirators and not to any buyers
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`in the market.
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`5.
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`In addition to this public information, the swine producers admitted in public calls
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`that they had discussed production cuts at least once, and publicly signaled to each other that
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`no supply increases would happen.
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`6.
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`In addition, there are numerous “plus factors” in the swine industry during the
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`class period, including but not limited to multiple industry characteristics which facilitate
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`collusion, such as high vertical integration, high barriers to entry, high pork industry
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`consolidation and concentration, inelastic supply and demand, and a lack of significant
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`substitutes for pork. These plus factors add plausibility to plaintiffs’ allegations of a price
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`fixing scheme.
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`7. Defendants’ restriction of pork supply had the intended purpose and effect of
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`increasing pork prices to plaintiffs and class members. Beginning in 2009, the earnings of the
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`integrators began to increase, as they took an increasing amount of the profits available in the
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`3 Id. at 212.
`4 Id. at 213.
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 6 of 98
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`pork industry. As a result of defendants’ unlawful conduct, plaintiffs and the classes paid
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`artificially inflated prices for pork during the class period. Such prices exceeded the amount
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`they would have paid if the price for pork had been determined by a competitive market. Thus,
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`plaintiffs and class members were injured by defendants’ conduct.
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`II.
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`JURISDICTION AND VENUE
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`8.
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`Plaintiffs bring this action under Section 16 of the Clayton Act (15 U.S.C. § 26) to
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`secure injunctive relief against defendants for violating Section 1 of the Sherman Act (15
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`U.S.C. § 1). Plaintiffs also bring these state law class claims on behalf of all the classes to
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`recover actual and/or compensatory damages, double and treble damages as permitted, pre- and
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`post-judgment interest, costs, and attorneys’ fees for the injury caused by defendants’ conduct
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`in restricting the supply of pork and increasing the price of pork. Plaintiffs seek damages in
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`excess of $5,000,000. This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331,
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`1337, and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15(a) and 26.
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`9. Venue is appropriate in this District under 28 U.S.C. § 1391(b), (c) and (d)
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`because one or more defendants resided or transacted business in this District, is licensed to do
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`business or is doing business in this District, and because a substantial portion of the affected
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`interstate commerce described herein was carried out in this District.
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`10. This Court has personal jurisdiction over each defendant because, inter alia, each
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`defendant: (a) transacted business throughout the United States, including in this District; (b)
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`manufactured, sold, shipped, and/or delivered substantial quantities of pork throughout the
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`United States, including in this District; (c) had substantial contacts with the United States,
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`including in this District; and/or (d) engaged in an antitrust conspiracy that was directed at and
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`had a direct, foreseeable, and intended effect of causing injury to the business or property of
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 7 of 98
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`persons residing in, located in, or doing business throughout the United States, including in this
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`District.
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`11. The activities of the defendants and all co-conspirators, as described herein, were
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`within the flow of, were intended to, and did have direct, substantial, and reasonably
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`foreseeable effects on, the foreign and interstate commerce of the United States.
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`A.
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`Plaintiffs
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`III.
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`PARTIES
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`12. Plaintiff Wanda Duryea was a resident at all relevant times of Farmington, New
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`Hampshire. During the Class Period and while residing in New Hampshire, plaintiff Duryea
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`indirectly purchased pork and pork products for her own use and not for resale that was
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`produced by one or more defendants or their co-conspirators. Plaintiff Duryea suffered injury
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`as a result of defendants’ conduct alleged herein.
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`13. Plaintiff Matthew Hosking was a resident at all relevant times of Helena,
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`Montana. During the Class Period and while residing in Montana, plaintiff Hosking indirectly
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`purchased pork and pork products for his own use and not for resale that was produced by one
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`or more defendants or their co-conspirators. Plaintiff Hosking suffered injury as a result of
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`defendants’ conduct alleged herein.
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`14. Plaintiff John McKee was a resident at all relevant times of Green Bay,
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`Wisconsin. During the Class Period and while residing in Wisconsin, plaintiff McKee
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`indirectly purchased pork and pork products for his own use and not for resale that was
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`produced by one or more defendants or their co-conspirators. Plaintiff McKee suffered injury
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`as a result of defendants’ conduct alleged herein.
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`15. Plaintiff Lisa Melegari was a resident at all relevant times of Deltona, Florida.
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`During the Class Period and while residing in Florida, plaintiff Melegari indirectly purchased
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 8 of 98
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`pork and pork products for her own use and not for resale that was produced by one or more
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`defendants or their co-conspirators. Plaintiff Melegari suffered injury as a result of defendants’
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`conduct alleged herein.
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`16. Plaintiff Michael Reilly was a resident at all relevant times of Albuquerque, New
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`Mexico. During the Class Period and while residing in New Mexico, plaintiff Reilly indirectly
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`purchased pork and pork products for his own use and not for resale that was produced by one
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`or more defendants or their co-conspirators. Plaintiff Reilly suffered injury as a result of
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`defendants’ conduct alleged herein.
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`17. Plaintiff Sandra Steffen was a resident at all relevant times of Camarillo,
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`California. During the Class Period and while residing in California, plaintiff Steffen indirectly
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`purchased pork and pork products for her own use and not for resale that was produced by one
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`or more defendants or their co-conspirators. Plaintiff Steffen suffered injury as a result of
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`defendants’ conduct alleged herein.
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`18. Plaintiff Paul Glantz was a resident at all relevant times of Agawam,
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`Massachusetts. During the Class Period and while residing in Massachusetts, plaintiff Glantz
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`indirectly purchased pork and pork products for his own use and not for resale that was
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`produced by one or more defendants or their co-conspirators. Plaintiff Glantz suffered injury as
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`a result of defendants’ conduct alleged herein.
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`19. Plaintiff Edwin Blakey was a resident at all relevant times of New Windsor, New
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`York. During the Class Period and while residing in New York, plaintiff Blakey indirectly
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`purchased pork and pork products for his own use and not for resale that was produced by one
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`or more defendants or their co-conspirators. Plaintiff Blakey suffered injury as a result of
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`defendants’ conduct alleged herein.
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 9 of 98
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`20. Plaintiff Jennifer Sullivan was a resident at all relevant times of Elk River,
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`Minnesota. During the Class Period and while residing in Minnesota, plaintiff Sullivan
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`indirectly purchased pork and pork products for her own use and not for resale that was
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`produced by one or more defendants or their co-conspirators. Plaintiff Sullivan suffered injury
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`as a result of defendants’ conduct alleged herein.
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`21. Plaintiff Anbessa Tufa was a resident at all relevant times of New Hope,
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`Minnesota. During the Class Period and while residing in Minnesota, plaintiff Tufa indirectly
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`purchased pork and pork products for his own use and not for resale that was produced by one
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`or more defendants or their co-conspirators. Plaintiff Tufa suffered injury as a result of
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`defendants’ conduct alleged herein.
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`22. Plaintiff Lisa Axelrod is currently a resident of Hillsboro Beach, Florida. At all
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`times between 2009 and approximately March 2018 Plaintiff Lisa Axelrod resided in North
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`Hollywood, California. During the Class Period and while residing in California and Florida,
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`plaintiff Axelrod indirectly purchased pork and pork products for her own use and not for
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`resale that was produced by one or more defendants or their co-conspirators. Plaintiff Axelrod
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`suffered injury as a result of defendants’ conduct alleged herein.
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`23. Plaintiff Christina Hall was a resident at all relevant times of York, South
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`Carolina. During the Class Period and while residing in South Carolina, plaintiff Hall indirectly
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`purchased pork and pork products for her own use and not for resale that was produced by one
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`or more defendants or their co-conspirators. Plaintiff Hall suffered injury as a result of
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`defendants’ conduct alleged herein.
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`24. Plaintiff Catherine Senkle was a resident at all relevant times of Hartford, South
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`Dakota. During the Class Period and while residing in South Dakota, plaintiff Senkle indirectly
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 10 of 98
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`purchased pork and pork products for her own use and not for resale that was produced by one
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`or more defendants or their co-conspirators. Plaintiff Senkle suffered injury as a result of
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`defendants’ conduct alleged herein.
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`B.
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`Defendants
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`25. Agri Stats, Inc. is an Indiana corporation located in Fort Wayne, Indiana and is a
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`subsidiary of Eli Lilly & Co. Throughout the Class Period, Agri Stats acted as a co-conspirator
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`of the pork integrator-defendants by facilitating the exchange of confidential, proprietary, and
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`competitively sensitive data among defendants and their co-conspirators.
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`26. Clemens Food Group, LLC is a limited-liability company headquartered in
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`Hatfield, Pennsylvania. During the class period, Clemens and/or its predecessors, wholly
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`owned or controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or
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`through its wholly owned or controlled affiliates, to purchasers in the United States.
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`27. Hormel Foods Corporation is a Delaware corporation engaged in the production
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`of meat and food products, and the marketing of these products. Hormel Foods is
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`headquartered in Austin, Minnesota. During the Class Period, Hormel Foods and/or its
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`predecessors, wholly owned or controlled subsidiaries, or affiliates sold pork in interstate
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`commerce, directly or through its wholly owned or controlled affiliates, to purchasers in the
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`United States.
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`28.
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`Indiana Packers Corporation is an Indiana corporation engaged in the production
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`of meat and food products, and the marketing of these products. Indiana Packers is
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`headquartered in Delphi, Indiana. During the Class Period, Indiana Packers and/or its
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`predecessors, wholly owned or controlled subsidiaries, or affiliates sold pork in interstate
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`commerce, directly or through its wholly owned or controlled affiliates, to purchasers in the
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`United States.
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 11 of 98
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`29. JBS USA is one of the world’s largest beef and pork processing companies and an
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`indirect wholly owned subsidiary of Brazilian-based JBS SA. JBS USA is a wholly owned
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`subsidiary of JBS USA Holdings, Inc., which holds a 78.5 percent controlling interest in
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`Pilgrim’s Pride Corporation, one of the largest chicken-producing companies in the world. JBS
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`USA is a Delaware corporation, headquartered in Greeley, Colorado. During the Class Period,
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`JBS USA and/or its predecessors, wholly owned or controlled subsidiaries, or affiliates sold
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`pork in interstate commerce, directly or through its wholly owned or controlled affiliates, to
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`purchasers in the United States.
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`30. Seaboard Foods LLC is a limited-liability company headquartered in Shawnee
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`Mission, Kansas. During the Class Period, Seaboard Foods LLC and/or its predecessors,
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`wholly owned or controlled subsidiaries, or affiliates sold pork in interstate commerce, directly
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`or through its wholly owned or controlled affiliates, to purchasers in the United States.
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`31. Smithfield Foods, Inc. is incorporated in the Commonwealth of Virginia, and an
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`indirect wholly owned subsidiary of WH Group Limited, the largest pork company in the
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`world. Smithfield Foods is headquartered in Smithfield, Virginia. During the Class Period,
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`Smithfield Foods, Inc. and/or its predecessors, wholly owned or controlled subsidiaries, or
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`affiliates sold pork in interstate commerce, directly or through its wholly owned or controlled
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`affiliates, to purchasers in the United States.
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`32. Triumph Foods, LLC is a limited-liability company headquartered in St. Joseph,
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`Missouri. During the class period, Triumph Foods and/or its predecessors, wholly owned or
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`controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or through its
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`wholly owned or controlled affiliates, to purchasers in the United States.
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 12 of 98
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`33. Tyson Foods, Inc. is a publicly traded Delaware corporation headquartered in
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`Springdale, Arkansas. During the Class Period, Tyson Foods, Inc. and/or its predecessors,
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`wholly owned or controlled subsidiaries, or affiliates sold pork in interstate commerce, directly
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`or through its wholly owned or controlled affiliates, to purchasers in the United States.
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`IV.
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`FACTUAL ALLEGATIONS
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`34. Starting in at least 2009 and continuing to the present, defendants coordinated to
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`fix, raise, maintain and stabilize pork prices. To effectuate and ensure the stability of their
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`price-fixing agreement, defendants relied on a unique industry data sharing service known as
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`Agri Stats. Agri Stats provided a means for defendants to obtain and monitor critical and
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`competitively sensitive business information regarding each other’s production metrics,
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`thereby serving as a central and critical part of defendants’ price-fixing scheme, resulting in a
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`remarkably stable and successful anticompetitive cartel.
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`A.
`
`The price-fixing scheme started from Agri Stats’ central role in collusion in the
`broiler industry.
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`35. Agri Stats has played a central role in other industries, including collusion in the
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`broiler industry.5 As alleged in the In re Broiler Chicken Antitrust Litigation, No. 16-cv-08637
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`(N.D. Ill.), the broiler producers used Agri Stats as a part of their conspiracy to restrain
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`production and inflate prices.
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`36.
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`In the broiler industry, Agri Stats collected and disseminated to the other
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`members of the conspiracy disaggregated financial information (such as monthly operating
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`profit, sales and cost per live pound), production volumes, capacity, slaughter information,
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`inventory levels, sales data for finished product form and type, amongst other pieces of
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`5 Broilers are chickens raised to be slaughtered before the age of 13 weeks.
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 13 of 98
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`competitively sensitive business information. The Agri Stats reports contain line-by-line
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`entries for plants, lines, and yields of various broiler facilities. Agri Stats relied upon (and the
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`co-conspirators agreed to) a detailed audit process to verify the accuracy of data from each
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`broiler producer’s complex, sometimes directly contacting the broiler defendants to verify the
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`data. Agri Stats also provided detailed price reports to the broiler industry through its
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`subsidiary, Express Markets, Inc. or EMI. Agri Stats collected data from the broiler producers
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`on a weekly basis and provided its reports to broiler producers on a weekly and monthly basis.
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`37. The detail of these reports ensured that competitors could quickly decode the
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`information of their erstwhile competitors. The Broiler complaints allege it was common
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`knowledge that the detail of the Agri Stats reports allowed any reasonably informed producer
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`to discern the identity of the competitors’ individual broiler complexes. The broiler reports, in
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`parts, contained so few producers participating that the identities were obvious. Other reports
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`contained such detailed data that it could be matched with the publicly stated aggregate data for
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`larger broiler defendants such as Tyson. The complaints allege that Agri Stats purposefully
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`circulated this information to top executives to facilitate agreement on supply, constraints, and
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`price.
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`38.
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`In the broiler industry, it is also alleged that Agri Stats – known to its co-
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`conspirators to be a willing and informed conduit for illicit information exchanges – used
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`public and semi-public forums to convey messages to industry participants that furthered the
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`purposes of the conspiracy by reassuring conspirators that production cuts would continue, and
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`by inducing them to continue to act in concert to ensure they did. Agri Stats’ own statements in
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`the broiler industry facilitated the implementation of the agreement to restrict supply – where
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`Agri Stats would transmit the intentions of the broiler producers to restrict supply.
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`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 14 of 98
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`39. The district court noted, in denying the motions to dismiss in the In re Broiler
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`Chicken Antitrust Litigation that given the nature of the Agri Stats reports, the defendants are
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`in fact sharing future anticipated production information with one another, which suggests high
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`antitrust concerns.6
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`B.
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`After success in the broiler industry, Agri Stats markets its collusive scheme to the
`swine integrators.
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`40. Beginning in at least 2008, Agri Stats began to propose a series of benchmarks to
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`the swine industry along the lines of the benchmarks used to restrict competition in the broiler
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`industry. Benchmarking is the act of comparing practices, methods or performance against
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`those of other companies. Benchmarking, of the type undertaken by Agri Stats and its co-
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`conspirators here, reduces strategic uncertainty in the market and changes the incentives for
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`competitors to compete, thereby enabling companies to coordinate their market strategies and
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`otherwise restrict competition. This is especially true where benchmarking involves the
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`exchange of commercially sensitive information between competitors.
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`41.
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`In 2008, Greg Bilbrey of Agri Stats told swine industry producers that
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`“Benchmarking in the swine industry could range from simple production comparisons to
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`elaborate and sophisticated total production and financial comparisons. Each and every
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`commercial swine operation is encouraged to participate in some benchmarking effort.”
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`42. Agri Stats emphasized to pork producers that the goal of the conspiracy (and the
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`agreement to share information) was profitability, not production, and invited pork producers
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`again, to participate in the benchmarking. Agri Stats emphasized that “We must remember that
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`the ultimate goal is increasing profitability – not always increasing the level of production.”
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`6 Memorandum Opinion and Order at 11, In re Broiler Chicken Antitrust Litigation, No. 16-
`cv-08637 (N.D. Ill. Nov. 20, 2017), ECF No. 541.
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`Furthermore, Agri Stats told the industry that “[e]ach swine production company should be
`
`participating in some type of benchmarking. To gain maximum benefit, production, cost and
`
`financial performance should all be part of the benchmarking program.”
`
`43.
`
`In April 2009, Agri Stats again invited swine producers to design and operate
`
`their own benchmarking effort. Greg Bilbrey of Agri Stats invited swine producers to design
`
`and operate their own benchmarking effort: “Though all producers may not be part of or fit
`
`into an Agri Stats type benchmarking program, all producers could participate in benchmarking
`
`in some way. Commercial benchmarking opportunities are available. Producer groups could
`
`design and operate their own benchmarking effort.”
`
`44. The pork producers did accept this offer, and beginning no later than 2009,
`
`created the detailed benchmarking scheme based upon and found in the Agri Stats reports. The
`
`agreement between the defendants was to use the exchanged benchmarking information to
`
`reduce the supply and stabilize the prices of pork sold in the United States, to provide and
`
`receive information from Agri Stats, and to use this detailed sensitive information for the
`
`purposes of monitoring each other’s production and pricing. As set forth below, so as to
`
`maintain a reduction of production and an increase of price. The agreement was successful as
`
`prices rise significantly after the agreement was reached.
`
`45. The scope of commerce of the pork industry is enormous. Total pork sales in the
`
`United States were:
`
`2016 - $18.9 billion
`2015 - $21.0 billion
`2014 - $26.4 billion
`2013 - $23.4 billion
`
`46. Each defendant’s annual sales of pork products are also immense. For example,
`
`in 2016 Smithfield reported $3.7 billion of fresh pork sales, and an additional $5 billion in
`
`
`
`- 13 -
`
`

`

`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 16 of 98
`
`packaged pork product sales. That same year, Tyson reported $4.9 billion in pork sales. With
`
`such enormous revenues, the ability to stabilize or increase the margin even in small amounts
`
`has enormous consequences to profits.
`
`C.
`
`Agri Stats provided pork integrators the unparalleled ability to monitor, or
`discipline co-conspirators for not complying with the collusive agreement.
`
`47. Agri Stats provided pork integrators with an unparalleled ability to share critical
`
`and proprietary information concerning key business metrics, such as production levels and
`
`short and long-term production capacity. Agri Stats was key to the formation, operation and
`
`continuing stability of the defendants’ price-fixing scheme. In order to organize an effective
`
`price-fixing agreement, the participants had to have confidence that each member was
`
`following through with the agreement by limiting their production and stabilizing prices. Agri
`
`Stats served that function here.
`
`48. Each member of the conspiracy, including swine integrators and defendants
`
`Clemens, Hormel, Indiana Packers, JBS USA, Seaboard, Smithfield, Triumph, and Tyson,
`
`were all Agri Stats subscribers. Agri Stats’ parent company, Eli Lilly, stated that “over 90% of
`
`the poultry and pig market” uses Agri Stats in the United States.
`
`49. Agri Stats collects participant financial and production data electronically each
`
`month. Internal auditors convert the data, prepare it for comparison and perform the monthly
`
`audits. Each company’s financial data is reconciled to their general ledger to help ensure actual
`
`costs are reported. Raw numbers are used in Agri Stats’ standardized calculations, so all
`
`company numbers are calculated the same way.
`
`50. Participants in the scheme received monthly detailed reports and graphs that allow
`
`them to compare their performance and costs to other participants, the average of all
`
`companies, the top 25 percent and the top five companies. Current month, previous quarter and
`
`
`
`- 14 -
`
`

`

`CASE 0:18-cv-01776-JRT-HB Document 1 Filed 06/28/18 Page 17 of 98
`
`previous twelve-month periods are reported. As of 2009, each monthly report contained nine
`
`sections for analysis and comparison: Performance Summary, Feed Mill, Ingredient
`
`Purchasing, Weaned Pig Production, Nursery, Finishing, Wean-to-Finish, Market Haul, Profit

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