Ron Brown, and Minka Garmon, individually and on behalf of all others similarly situated v. JBS USA Food Company, Tyson Foods, Inc., Cargill Inc., Cargill Meat Solutions Corp., Hormel Foods Corp., Rochelle Foods, LLC, American Foods Group, LLC, Triumph Foods, LLC, Seaboard Foods, LLC, National Beef Packing Co., LLC, Smithfield Foods, Inc., Smithfield Packaged Meats Corp., Agri Beef Co., Washington Beef, LLC, Perdue Farms, Inc., Greater Omaha Packing Co., Inc., Indiana Packers Corporation, Quality Pork Processors, Inc., Agri Stats, Inc.Ron Brown, and Minka Garmon, individually and on behalf of all others similarly situated v. JBS USA Food Company, Tyson Foods, Inc., Cargill Inc., Cargill Meat Solutions Corp., Hormel Foods Corp., Rochelle Foods, LLC, American Foods Group, LLC, Triumph Foods, LLC, Seaboard Foods, LLC, National Beef Packing Co., LLC, Smithfield Foods, Inc., Smithfield Packaged Meats Corp., Agri Beef Co., Washington Beef, LLC, Perdue Farms, Inc., Greater Omaha Packing Co., Inc., Indiana Packers Corporation, Quality Pork Processors, Inc., Agri Stats, Inc.
ORDER
This matter is before the Court on Defendants’ Joint Motion to Dismiss the Amended Complaint for Failure to State
I. BACKGROUND
A. Procedural Background
This case arises out of claims that defendants suppressed the wages of employees
On January 11, 2024, the parties filed a stipulated motion to grant plaintiffs leave to amend their complaint. Docket No. 257 at 2, ¶ 3 (“In an effort to achieve judicial efficiency, the Parties, through their counsel, have conferred in good faith, and Defendants do not oppose Plaintiffs’ motion for leave to file an amended complaint.“). On January 12, 2024, plaintiffs filed an amended complaint. Docket No. 260. Most of the allegations in the amended complaint are identical to those in the original complaint. Compare Docket No. 1, with Docket No. 260. However, the amended complaint alleges new means by which defendants suppressed their employees’ wages, expands the period covered by plaintiffs’ claims, and adds five new defendants. See Docket No. 260 at 7-10, ¶¶ 1-9, 7 n.1.
On April 5, 2024, defendants filed the joint motion to dismiss, which argues that the portion of plaintiffs’ claims expanded by the new allegations in the amended complaint should be dismissed. Docket No. 337 at 7.
B. Allegations From the Original Complaint2
The Court recites only those factual allegations in the amended complaint that were part of the original complaint to the extent they are relevant to the joint motion to dismiss. A more complete recitation of plaintiffs’ allegations is found in the Court‘s order on the first joint motion to dismiss. See Docket No. 219 at 3-11.
Plaintiffs Ron Brown and Minka Garmon bring claims on behalf of themselves individually and on behalf of a class consisting of all individuals employed by defendants, their subsidiaries, and related entities at beef- and pork-processing plants in the continental United States from January 1, 2000 to the present day (the “class period“). Docket No. 260 at 7. Defendants include fifteen red meat processors3 and several of their subsidiaries (the “processor defendants“), which include the following defendants named in both the original and amended complaints: Agri Beef Co.; Washington Beef, LLC; American Foods Group, LLC (“American Foods“); Cargill, Inc.; Cargill Meat Solutions Corp.;4 Hormel Foods Corp.; JBS
Processor defendants collectively produce approximately 80 percent of the red meat that is sold in the United States. Id. Processor defendants own and operate approximately 140 red meat processing plants in the continental United States. Id. at 8, ¶ 3. Processor defendants employed hundreds of thousands of the members of the class during the class period in various positions and compensated these employees with benefits and either hourly wages or an annual salary. Id., ¶¶ 3-4.
From 2014 to 2019, processor defendants designed and participated in an annual “Red Meat Industry Compensation Survey” in which they exchanged detailed current and future information about wages, salaries, and benefits provided to their workers at red meat processing facilities. Id. at 69, ¶¶ 188-89. To participate in the Red Meat Industry Compensation Survey, processor defendants annually completed a survey questionnaire and then received and reviewed a report on the results of the survey. Id., ¶ 189. Various processor defendants participated in the Red Meat Industry Compensation Survey each year from 2014 to 2019. Id. Participants referred to themselves as the “Red Meat Survey Group.” Id. at 71, ¶ 193.
WMS participated in the Red Meat Industry Compensation Survey by distributing survey questionnaires to the participating processor defendants, compiling survey results reports, and distributing those reports to participants each year. Id. at 69-70, ¶ 190. Processor defendants, however, collectively managed and controlled the annual Red Meat Industry Compensation Surveys and determined who could join the Red Meat Survey Group. Id. at 71-72, ¶¶ 193, 200-01. The Red Meat Industry Compensation Survey provided data on base salary, the bonuses paid across all survey participants, total compensation, target opportunity percent, maximum opportunity percent, and base salary policy. Id. at 77-78, ¶ 222. The Red Meat Industry Compensation Surveys that were distributed from 2014 to 2017 included data on planned future salary increases by processor defendants. Id. at 81, ¶ 239.
Representatives from processor defendants attended and participated in annual in-person “Red Meat Industry Compensation Meetings.” Id. at 86-87, ¶¶ 259-61. The meetings were held each year from 2014 to 2019, except in 2016. Id. at 87, ¶ 260. Red Meat Survey Group members were required to attend the annual Red Meat Industry Compensation Meetings to remain as members of the group. Id. at 71-72, ¶¶ 197, 199. Each Red Meat Survey Group member sent one to three executives to the Red Meat Industry Compensation Meetings. Id. at 87, ¶ 261. The meetings consisted of multiple roundtable sessions during which executives from the Red Meat Survey Group would discuss the results of that year‘s Red Meat Industry Compensation Survey as well as current and future compensation practices at their respective firms. Id. at 88, ¶ 266. The Red
At the Red Meat Industry Compensation Meetings, Jonathan Meng, president of WMS, was invited to attend one or both of the first two sessions and, during those sessions, he presented a summary of the results of the Red Meat Industry Compensation Survey. Id. at 69-70, 88, ¶¶ 190, 268-69. In 2014, 2015, and 2017, after presenting the survey results, Meng left, and the remaining sessions proceeded without him. Id. at 90, ¶¶ 278-79. In the sessions without Meng, plaintiffs allege that executives from processor defendants agreed upon and suppressed the wages, salaries, bonuses, and benefits they would provide to employees at red meat processing plants. Id., ¶ 278.
Throughout the class period,6 senior executives of processor defendants who had the authority to determine or influence the compensation of members of the class contacted one another in order to align their current and future compensation practices. Id. at 96, ¶ 300.
Agri Stats describes itself as a “management and benchmarking company” that “provides consultation on data analysis, action plan development and management practices of participating companies,” with a mission to “[i]mprove the bottom line profitability for our participants by providing accurate and timely comparative data while preserving confidentiality of individual companies.” Id. at 99-100, ¶ 312. Agri Stats facilitates the exchange of recent and current competitively sensitive information between competitors. Id. at 100, ¶ 315. To maintain secrecy, Agri Stats requires that its subscribers share their own data in order to receive data on their competitors and does not sell its data to the public. Id. 100-01, ¶¶ 316-17. The processor defendants in the pork industry exchanged detailed and competitively sensitive compensation data each month by way of a subscription to Agri Stats. Id. at 99, ¶ 309. Agri Stats was supposed to anonymize data it received, but the reports it provided were detailed enough that competitors could identify each other‘s data. Id. at 105, ¶ 331. Each report identified which competitors participated; in some reports, competitors were identifiable because so few producers participated and, in other reports, the data that was provided was so specific it could be deanonymized with public records. Id., ¶¶ 332-33. The processor defendants in the pork industry used the data from Agri Stats to suppress compensation and to confirm that no conspirator deviated from the compensation-fixing conspiracy. Id. at 107, ¶ 337.
As a result of the conspiracy to depress wages, processor defendants simultaneously and in parallel limited annual wage increases to members of the class. Id. at 108, ¶ 341. Wages were lower than they would have been in the absence of a conspiracy. Id. For example, in 2017, base wages were increased by only 2% at 17 plants operated by Cargill, National Beef, JBS, Smithfield, Tyson, Triumph, and Seaboard. Id. at 108-09, ¶ 343. In 2018, base wages were increased by only 2% in 17 plants operated by several processor defendants, including some of the plants that only received a 2% increase in base wages in 2017. Id. at 109, ¶ 344. In 2017 and 2018, at plants operated by different processor defendants, the difference in average wages between plants
C. Amended Allegations
As part of the amended complaint, plaintiffs include the following new allegations. From 2000 to 2019, defendant processors directly exchanged sensitive compensation data, including the amount and dates of planned future hourly wage increases, through compensation surveys. Id. at 8-9, ¶ 6. The surveys were called the “Beef Industry Wage Indexes” (“BIWI“) and “Pork Industry Wage Indexes” (“PIWI“) (collectively the “BIWI/PIWI surveys“) and were conducted by Tyson. Id.
Participating processor defendants provided their sensitive compensation information directly to Tyson in private communications for the purpose of assembling the BIWI/PIWI surveys. Id. at 130, ¶ 401. Such data was often transmitted by telephone rather than by written communication. Id. Each BIWI and PIWI was labeled “CONFIDENTIAL,” and processor defendants agreed not to share the compensation data beyond those processors that participated in the surveys. Id. at 64, ¶ 176.
The BIWI/PIWI surveys provided fully disaggregated compensation data to participating processor defendants. Id. at 9, ¶ 7. The BIWI/PIWI surveys identified how much each participating defendant processor was currently paying and would be paying in the future to hourly-paid workers at each of the processor defendant‘s red meat processing plants. Id. Each version of the BIWI and PIWI included a calculated weighted average for base wages and reported future wages. Id. at 65, ¶¶ 180-81. Processor defendants employ rigid compensation structures “that key off the ‘base’ rate, depending on the workers’ duration of experience,” such that “if the ‘base’ rate for a Defendant Processor‘s red meat plant is artificially suppressed, then all hourly wages paid to processing workers in that plant are artificially suppressed.” Id. at 68, ¶ 187.
The BIWI/PIWI surveys were conducted on at least an annual basis during every year within the class period, sometimes as many as four times a year. Id. at 9-10, ¶ 9. The surveys were initiated by a processor defendant‘s request for an updated survey, which coincided with that processor defendant‘s upcoming union negotiation or annual compensation review. Id. Processor defendants used the two indices both when they were conducting internal wage reviews to modify their compensation schedules and when negotiating with unions to establish wage schedules in collective bargaining agreements. Id. at 68, ¶ 186.
The amended complaint alleges that each of the processor defendants named in the original complaint, except American Foods and Agri Beef, participated in either the BIWI or PIWI surveys during the class period. Id. at 28-30, 65-67, ¶¶ 57, 183-84. Moreover, the amended complaint identifies five new defendants who participated in either the BIWI or PIWI surveys, namely, Greater Omaha Packing Co., Inc., Nebraska Beef, Ltd.,7 Indiana Packers Corporation, Rochelle Foods, LLC, and Quality Pork Processors, Inc. Id. at 19-20, 34-39, ¶¶ 39, 42, 66-75.
Plaintiffs allege that processor defendants relied on these indices to set their
II. LEGAL STANDARD
To survive a motion to dismiss under
III. ANALYSIS
Plaintiffs’ first claim for relief is brought against every defendant except Agri Stats and alleges that processor defendants, and other co-conspirators, such as WMS, entered into an agreement to fix, depress, maintain, and stabilize the compensation paid to workers at their red meat processing facilities in violation of the Sherman Act,
Defendants argue that plaintiffs do not plead facts that plausibly support a claim for relief based on the newly alleged conduct in the amended complaint and that plaintiffs have failed to plausibly allege the existence of the wage fixing conspiracy from 2000 to the present day. Docket No. 337 at 2-3. Defendants also maintain that, to the extent plaintiffs’ claims rely on the new allegations, the claims are barred by the statute of limitations. Id. at 2. Plaintiffs respond that the Court has already found that plaintiffs plausibly state their claims for relief. Docket No. 351 at 4-6. Plaintiffs maintain that the new allegations build on the allegations in the original complaint and that they relate back to the original complaint such that they are not barred by the statute of limitations. Id.
Defendants assert that plaintiffs’ BIWI/PIWI allegations constitute a separate conspiracy. Docket No. 337 at 8-9. They argue that plaintiffs fail to connect the new allegations regarding processor defendants’ use of the BIWI/PIWI surveys “to the purported conspiracy centered around WMS and Agri Stats that they described in the original complaint.” Id. at 2. Defendants maintain that plaintiffs’ BIWI/PIWI allegations, standing alone, do not plausibly allege violations of the Sherman Act. Id. at 8-9. Plaintiffs respond that the complaint alleges a single conspiracy to fix and depress the compensation paid to employees of processor defendants, “accomplished via multiple methods of information exchange, including annual compensation surveys, annual compensation meetings, direct communications among Defendants, and monthly exchanges of compensation data via Agri Stats.” Docket No. 351 at 4. Because the issue of whether plaintiffs have alleged a single conspiracy is relevant to both the Court‘s
A. Whether Plaintiffs Allege a Single Conspiracy
The parties dispute whether the Court must consider the allegations regarding the BIWI/PIWI surveys separately to determine if they plausibly allege violations of the Sherman Act or whether the Court can consider the allegations regarding WMS and the BIWI/PIWI surveys together in analyzing the sufficiency of plaintiffs’ pleading. Defendants argue that “[t]he mere fact that Plaintiffs present their new BIWI and PIWI information exchange allegations as part of the same two counts included in their initial complaint does not shield these new allegations from scrutiny under Twombly.” Docket No. 337 at 8 (citing loanDepot.com v. CrossCountry Mortg., Inc., 399 F. Supp. 3d 226, 236 (D.N.J. 2019) (“I do not agree that bundling of good and bad claims should shield inadequate allegations from scrutiny and permit them to go forward despite the pleading standards of
Plaintiffs respond that the amended complaint alleges a single overarching conspiracy to fix and depress wages. Docket No. 351 at 13. Plaintiffs contend that the original complaint alleges that defendants carried out the conspiracy through mutually reinforcing acts, “including annual compensation surveys, annual in-person compensation meetings, direct communications among Defendants, and monthly exchanges of compensation data via Agri Stats.” Id. (citing Docket No. 1 at 50-51, ¶ 152). Plaintiffs argue that they are masters of their complaint and that defendants are impermissibly reshaping the allegations to suit their arguments. Id. at 14 (citing Pirotte v. HCP Prairie Vill. KS OPCO LLC, 580 F. Supp. 3d 1012, 1025 (D. Kan. 2022)). Instead, plaintiffs maintain that the allegations in the complaint, including the allegations regarding the BIWI/PIWI surveys, WMS, and Agri Stats, must be viewed as a whole because “[t]he character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole.” Id. at 15 (quoting In re Animation Workers Antitrust Litig., 123 F. Supp. 3d 1175, 1212 (N.D. Cal. 2015) (quoting Cont‘l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962) (alteration in original))). Plaintiffs assert that the amended complaint alleges the same conspiracy, but “also alleges additional ‘mutually reinforcing overt acts’ of exchanging hourly wage data through the BIWI and PIWI indices.” Id. at 13 (citing Docket No. 260 at 61-62, ¶¶ 170-71).
Defendants argue that, to plead a single conspiracy, plaintiffs must allege facts that demonstrate defendants shared “a single, common and continuing objective.”8
Docket
Defendants contend that, in scrutinizing whether a complaint alleges an overarching conspiracy, courts consider whether the conduct is “connected by common actors, methods and goals.”9 Docket No. 337 at 11 (quoting Precision Assocs., Inc. v. Panalpina World Transp. (Holding) Ltd., 2011 WL 7053807, at *27 (E.D.N.Y. Jan 4. 2011), report and recommendation adopted, 2012 WL 3307486 (E.D.N.Y. Aug. 13, 2012)). Defendants argue that plaintiffs have not alleged a single conspiracy because (1) the two conspiracies involve different actors, (2) the two conspiracies involve different methods, and (3) the goal of the alleged BIWI/PIWI conspiracy is different from the goal of the WMS and Agri Stats conspiracy. Id. at 12-16.
As to whether the new allegations regarding the BIWI/PIWI surveys involved different actors, the complaint alleges a significant amount of overlap between actors who participated in the BIWI/PIWI surveys, Red Meat Industry Compensation Surveys, and Agri Stats, as well as other circumstantial evidence, that supports the plausibility of a single conspiracy. To plausibly allege a conspiracy, “it is not necessary that every defendant participate in every transaction“; however, “the mere overlap of some of the defendants in some of the transactions is, on its own, insufficient to establish an overarching
Defendants argue that plaintiffs have alleged two separate conspiracies because there is insufficient overlap between the processor defendants who exchanged compensation data via the BIWI/PIWI surveys and the processor defendants who exchanged compensation information through WMS and Agri Stats. Docket No. 337 at 12-14. Defendants contend that “a majority of the alleged WMS participants did not participate in BIWI, and a quarter did not participate in either BIWI or PIWI.” Id. at 13. They claim that only six of the fifteen defendants engaged in each type of information exchange - i.e. that only six defendants received wage information through BIWI surveys, PIWI surveys, Agri Stats., and Red Meat Industry Compensation Surveys. Docket No. 353 at 8. Defendants maintain that plaintiffs cannot demonstrate overlap by “pointing to a few Defendants who allegedly participated in some or all of the four information exchanges, because mere overlap among a handful of actors is ‘insufficient to establish an overarching conspiracy.‘” Docket No. 337 at 13 (quoting In re Automotive Parts Antitrust Litig., 2016 WL 8200512, at *3).
First, defendants have not shown why, at the motion to dismiss stage, the overlap of six of the fifteen defendants is insufficient to plausibly allege a single conspiracy. See In re Generic Pharms. Pricing Antitrust Litig., 394 F. Supp. 3d at 531 (finding single conspiracy despite only one defendant participating in every part of conspiracy). Second, the allegations in the amended complaint go beyond mere overlapping defendants. “The ‘overlap’ requirement can be satisfied by the pervasive involvement of a single ‘core conspirator,’ a hub character.” Dahl, 937 F. Supp. 2d at 135 (quoting United States v. Portela, 167 F.3d 687, 695 (1st Cir. 1999)). The amended complaint alleges that Tyson served a primary role in both the BIWI/PIWI surveys, where it collected data and distributed surveys, and in the Red Meat Survey Group, where it served on the steering committee. Docket No. 260 at 9-10, 72, ¶¶ 9, 201. Plaintiffs rely on more than mere overlap between defendants, and their allegations regarding Tyson add plausibility to their claim that the defendants engaged in a single conspiracy.
Next, defendants overstate the differences between the BIWI/PIWI surveys, the Red Meat Industry Compensation Surveys, and Agri Stats as information-sharing mechanisms used to depress wages. Defendants claim that
the information that the BIWI and PIWI participants allegedly exchanged differs from the information that WMS or Agri Stats allegedly canvassed in their surveys. The information BIWI and PIWI reported was extremely narrow; it was limited to weighted averages of base wages for hourly workers, information that would have been known to members of the class already through their own compensation and the expected annual union wage increase. In contrast, WMS and Agri Stats each allegedly facilitated broader exchanges of varied compensation information, such as annual salaries, bonuses, and benefits information.
Docket No. 337 at 15 (citations omitted). Although the BIWI/PIWI surveys may have contained a narrower set of data than
Finally, defendants are incorrect that the complaint alleges that defendants who participated in the BIWI/PIWI surveys had a different goal from defendants who participated in WMS and Agri Stats. Defendants contend that the amended complaint alleges that the goal of the conspiracy to exchange data through the BIWI/PIWI surveys was for processor defendants to “harmonize their wages with competitors’ wages” and to use the information in the surveys during negotiations with labor unions. Docket No. 337 at 15 (citing Docket No. 260 at 9, 68, ¶¶ 7, 186). Moreover, defendants maintain that, because the BIWI/PIWI surveys contained only hourly wage information, the conspiracy was limited to hourly employees. Id. at 16. Defendants assert that the purpose of the exchange of information through WMS and Agri Stats was to “reduce labor costs as a whole,” which included the labor costs associated with salaried employees and the costs of benefits. Id.
The complaint plausibly alleges that the defendants had the same goal in sharing sensitive compensation data through BIWI/PIWI surveys, WMS, and Agri Stats. The amended complaint alleges that defendants “conspired and combined to fix and depress the compensation paid to employees at red meat processing plants.” Docket
No. 260 at 7, ¶ 1. It alleges that, from 2000 to 2019, processor defendants exchanged sensitive compensation data via hourly wage indexes, id. at 8-9, ¶ 6; that, from 2014 to 2019, processor defendants exchanged sensitive compensation data through a Red Meat Industry Compensation Survey that compared hourly wages, annual salaries, and employment benefits, id. at 10, ¶¶ 11-12; and that processor defendants in the pork industry monthly exchanged detailed, non-public compensation information via Agri Stats. Id. at 14, ¶ 22. The amended complaint alleges that, as a result of these information exchanges, processor defendants collectively limited annual wage increases and depressed wages below what they would have been in the absence of a conspiracy and that it was the defendants’ intent to depress wages. Id. at 7, 108, ¶¶ 1, 341. Thus, the complaint alleges that the goal of defendants who were engaged in each method of exchanging compensation data was the same, namely, to use the competitively sensitive information exchanged between participating defendants to suppress wages at processor defendants’ plants. See Dahl, 937 F. Supp. 2d at 135.
Nevertheless, considering the allegations in the amended complaint as a whole, Cont‘l Ore Co., 370 U.S. at 699, the Court finds that plaintiffs
The Court finds Tenth Circuit precedent on interdependence instructive on whether plaintiffs have plausibly alleged “a single, common and continuing objective.” Wilshire Oil, 427 F.2d at 976. In the Tenth Circuit, interdependence is an element of a criminal conspiracy.10 See United States v. Pickel, 863 F.3d 1240, 1252 (10th Cir. 2017) (interdependence is “the fourth conspiracy element” (citing United States v. Caldwell, 589 F.3d 1323, 1329 (10th Cir. 2009))). “Interdependence is the focal point for determining whether a single conspiracy existed.” United States v. Hopkins, 608 F. App‘x 637, 641 (10th Cir. 2015) (unpublished) (citing Caldwell, 589 F.3d at 1329). It
“requires that a defendant‘s actions ‘facilitate the endeavors of other alleged coconspirators or facilitate the venture as a whole.‘” United States v. Serrato, 742 F.3d 461, 467 (10th Cir. 2014) (quoting United States v. Carnagie, 533 F.3d 1231, 1238 (10th Cir. 2008) (quoting United States v. Evans, 970 F.2d 663, 670 (10th Cir. 1992))). “Interdependence also requires ‘proof that the conspirators intended to act together for their shared mutual benefit within the scope of the conspiracy.‘” Id. (quoting United States v. Heckard, 238 F.3d 1222, 1231 (10th Cir. 2001) (internal quotation marks omitted)).
The Court finds that plaintiffs have failed to allege a single conspiracy because, although plaintiffs have plausibly alleged that the goal of each conspiracy was the same, the complaint fails to plausibly allege that this was a shared goal, i.e. that the conspiracies were interdependent and that defendants “act[ed] together for their shared mutual benefit within the scope of the conspiracy.” Id. (emphasis
The amended complaint alleges that, “[t]o conduct the BIWI and PIWI, Tyson regularly collected hourly wage data directly from each of the participating processors and circulated confidential survey reports containing that data exclusively to those participants.” Docket No. 260 at 8-9, ¶ 6. Plaintiffs allege that “[e]ach BIWI and PIWI was labeled ‘CONFIDENTIAL,’ and Defendant Processors kept this data confidential and private to just those participating Defendant Processors.” Id. at 64, ¶ 176. “Indeed, only participating red meat processors that shared their compensation data through the BIWI and/or PIWI were allowed to receive those indices, and Defendant Processors agreed to and understood not to share the compensation data beyond those processors that participated in the surveys.” Id.
Plaintiffs also allege that participants in the Red Meat Survey Group “consisted exclusively of red meat processors that the Group recruited after ensuring that they met the Group‘s membership criteria“, including “that a prospective member needed to have a red meat slaughter facility, a case-ready plant, or a red meat cook plant.” Id. at 71, ¶¶ 193, 197. The Red Meat Survey Group “developed strict rules for a red meat processor‘s admission into and continued membership” in the group. Id., ¶ 196. To have access to the compensation information circulated through the Red Meat Industry Compensation Surveys, processor defendants had to become members of the group, pay an annual due, and attend in-person meetings to discuss the results. Id. at 71-72, ¶¶ 195, 198.
The Court finds that it is not plausible that participants in the Red Meat Survey Group who agreed to internally exchange compensation information as a means of suppressing wages (the “WMS conspiracy“) also had a shared, single objective to fix wages with non-Red Meat Survey Group members who exchanged compensation information through the BIWI/PIWI surveys (the “BIWI/PIWI conspiracy“). See In re Auto. Parts Antitrust Litig., 2016 WL 8200512, at *4 (the “scope of the agreement actually made always measures the conspiracy“). Each group kept its membership exclusive and its compensation data confidential. The complaint does not allege that the participants in the BIWI/PIWI surveys who were not “recruited” to join the Red Meat Survey Group were aware that the “secret group” existed, Docket No. 260 at 10, ¶ 11, or that Red Meat Survey Group members who did not receive BIWI/PIWI surveys were aware of the “secret BIWI and PIWI reports.” Id. at 9, ¶ 7; see Carnagie, 533 F.3d at 1239 (finding separate conspiracies for fraud and money laundering because “Mr. Hilaire did not even know Ms. Carnagie or Mr. Wesson, much less interact with them. Likewise, Ms. Carnagie never completed a transaction with Mr. Williams, and she did not know Mr. Hilaire. Moreover, the record does not show that, besides those individuals with whom they completed transactions, Ms. Carnagie or Mr. Hilaire knew about other loan officers and real estate agents with whom Mr. Wesson and Mr. Williams were completing similar transactions.“).
The fact that there were overlapping participants in the two conspiracies does not prove that there was a “single, common and continuing objective,” Wilshire Oil, 427 F.2d at 976, among all the defendants rather than two conspiracies with the same objective because “one
Finally, in reaching this conclusion, the Court has not impermissibly judged the complaint by dismembering it and viewing its separate parts. See In re Animation Workers Antitrust Litig., 123 F. Supp. 3d 1175, 1212 (N.D. Cal. 2015). Instead, it is only by considering the allegations in the complaint as a whole that it is clear that the exclusive nature of both conspiracies makes them distinct.11
B. Whether Plaintiffs Plausibly State Their First and Second Claims for Relief
As defendants point out, “courts routinely dismiss aspects of antitrust claims to the extent they are implausible or unrelated to actionable conduct.” Docket No. 353 at 4; In re Lithium Ion Batteries Antitrust Litig., 2014 WL 309192, at *12 (N.D. Cal. Jan. 21, 2014). Defendants argue that plaintiffs have failed to state their Sherman Act claims based on the BIWI/PIWI surveys and that those portions of the complaint based on the BIWI/PIWI surveys should be dismissed. Docket 337 at 16, 26.
1. Sherman Act
Section 1 of the Sherman Act states that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”
“The essence of a claim of a violation of Section 1 of the Sherman Act is the agreement itself.” Champagne Metals v. Ken-Mac Metals, Inc., 458 F.3d 1073, 1082 (10th Cir. 2006). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556); see also Llacua v. W. Range Ass‘n, 930 F.3d 1161, 1179 n.28 (10th Cir. 2019) (observing that it is erroneous to use a probability standard to assess allegations in a Sherman Act claim). An agreement can be shown through direct or indirect evidence. Champagne Metals, 458 F.3d at 1082. “Direct facts are explicit and require no inferences. Direct evidence of a § 1 agreement may take the form of a written contract or agreement, such as association rules, or admissions of an agreement. In contrast, circumstantial facts require inferences to show that an anti-competitive agreement exists.” Llacua, 930 F.3d at 1174 n.24 (internal citations,
2. Claim One: Wage Depression
a. Parallel Conduct
Plaintiffs’ first claim alleges a per se violation of the Sherman Act, namely, a horizontal agreement to depress wages. See Docket No. 219 at 19. Defendants argue that plaintiffs’ amended complaint fails to plausibly allege a per se violation of the Sherman Act because it fails to plausibly allege parallel conduct between the defendants.12 Docket No 260 at 18-19. In the Court‘s order on the first joint motion to dismiss, the Court found that plaintiffs’ complaint plausibly alleged parallel conduct. Docket No. 219 at 24. The Court relied on the allegations in the complaint that (1) each processor defendant set an internal compensation schedule based on job title and relevant experience, (2) that each processor defendant set wages in accordance with
the other processor defendants across the class period for similar positions, and (3) that at least seven processor defendants capped wage increases for their plants at exactly two percent for a period of years. Id. at 23-24. The Court stated that “defendants ask the Court to ignore plaintiffs’ broad allegations of depressed wages across companies because plaintiffs do not allege enough specific examples.” Id. at 24. However, the Court found that “[t]o require plaintiffs to address each plant would require allegations in excess of those required to infer an unlawful agreement at the motion to dismiss stage.” Id.
Defendants argue that “[p]laintiffs fail to adequately plead parallel conduct related to BIWI and PIWI, foreclosing their ability to plead a wage-fixing agreement with circumstantial evidence.”13 Docket No. 337 at 20. Defendants argue that, to plausibly allege parallel conduct, plaintiffs must identify “substantially similar and temporally proximate acts undertaken by multiple defendants.” Id. (citing Mosaic Health Inc. v. Sanofi-Aventis U.S., LLC, 714 F. Supp. 3d 209, 220 (W.D.N.Y. 2024) (“where the alleged conspirators engaged in divergent conduct at significantly different times, a plaintiffs’ allegations fall far short of demonstrating parallel behavior” (quotation marks omitted))); see also In re Generic Pharms. Pricing Antitrust Litig., 338 F. Supp. 3d 431, 441 (E.D. Pa. 2018) (parallel conduct must be “reasonably proximate in time and value“) (collecting cases)). Moreover, defendants maintain that “[w]ell-pleaded allegations of parallel conduct must involve some factual specificity regarding the allegedly parallel behavior.”
Docket No. 337 at 21
Defendants are incorrect; the specific allegations in the amended complaint regarding defendants’ suppression of wage increases to 2% a year are not attributed only to the exchange of information through WMS and Agri Stats. E. J. Delaney, 525 F.2d at 301 (courts must view the allegations in the complaint as a whole); Cont‘l Ore, 370 U.S. at 699. Rather, the amended complaint alleges that, “[a]s a direct consequence of their conspiracy to depress compensation, the Defendant Processors simultaneously and in parallel limited their annual wage increases to Class Members employed at their red meat processing plants.” Docket No. 260 at 108, ¶ 341. The amended complaint alleges that this conspiracy was effectuated “through a series of overt acts” including the use of “Secret Wage Indexes,” the “Red Meat Industry Compensation Survey,” “Secret Annual Compensation Meetings,” “Direct Communications among Executives,” and “Exchanging Compensation Data through Agri Stats.” Id. at 8-11, 13, 14, 15-16, 110, 115, 120-21. While the amended complaint does attribute the harmonizing of wages at specific plants only to defendants’ participation in the Red Meat Industry Compensation Survey, id. at 109, ¶ 345, the remaining general allegations regarding defendants’ harmonizing their wage practices, as well as the specific allegations regarding the multiyear 2% wage increases, are alleged to be the product of defendants’ conspiracies, including sharing information through the BIWI/PIWI surveys. See id. at 108-09, ¶¶ 341-44. The fact that the Court has found plaintiffs have alleged two conspiracies to depress wages does not alter the Court‘s analysis. Both conspiracies to depress wages are alleged to have been effective. See id. at 108, ¶ 341. Defendants provide no support for the proposition that allegations regarding wage suppression across the industry must be attributed to only one conspiracy, rather than the consequence of two conspiracies working towards the same goal.
Defendants argue that “the alleged parallel wage increases in 2017 and 2018 cannot possibly stem from BIWI or PIWI because Plaintiffs do not allege that any particular Defendant exchanged either index from 2015 to 2019, let alone in 2017 or 2018 specifically.” Docket No. 337 at 22. The amended complaint contains detailed allegations regarding which defendants or their subsidiaries participated in the BIWI or PIWI surveys in 2000, 2002, 2004 through 2009, 2011 through 2014, and 2019. Docket No. 260 at 65-67, ¶¶ 183-84. The amended complaint also alleges that the “BIWI and PIWI surveys were conducted on at least an annual basis during every year within the Class Period, sometimes as many as four times a year.” Id. at 9, 63, ¶¶ 9, 175.
Defendants appear to argue that the Court can infer that, because the last BIWI/PIWI survey specifically identified was in 2019, this survey was the last actually exchanged by the defendants. Defendants’ argument applies the wrong standard on a motion to dismiss. See Swint v. Dish Network, 2023 WL 8074820, at *1 (10th Cir. Nov. 21, 2023) (courts must “[a]ccept all well-pleaded facts as true,
Defendants provide no support for the proposition that the Court must ignore the general allegations on the grounds that plaintiffs provide more detailed allegations about certain years. Plaintiffs’ allegation that BIWI/PIWI surveys were exchanged at least annually from 2000 to the present day is not a mere conclusion. The allegation is supported by more specific allegations regarding the dates and participants in surveys in 2000, 2002, 2004 through 2009, 2011 through 2014, and 2019. Docket No. 260 at 65-67, ¶¶ 183-84. The allegations regarding specific BIWI/PIWI surveys show that the surveys were conducted regularly over a period of two decades and included surveys exchanged as recently as 2019. The specific allegations make plausible plaintiffs’ allegation that the surveys were carried out annually and that they have continued to the present day, including from 2015 to 2019. As such, defendants’ argument fails.
Finally, regarding defendants’ argument that plaintiffs have failed to plausibly allege parallel conduct because the amended complaint does not identify temporally proximate parallel conduct, the Court disagrees. Defendants appear to be arguing that the exchange of BIWI/PIWI surveys before 2014 is not reasonably proximate to processor defendants capping wages and that the complaint, therefore, does not plausibly allege parallel conduct. Docket No. 353 at 24-25. However, as discussed in the Court‘s prior order, the amended complaint identifies parallel conduct by at least seven defendants in which each capped its wage increases to 2% in 2017 and 2018. Docket No. 219 at 23. Defendants have not shown why this allegedly simultaneous and continuous conduct of capping wage increases is not “reasonably proximate in time and value.” In re Generic Pharms. Pricing Antitrust Litig., 338 F. Supp. 3d at 441. The fact that this conduct was not close in time to the earliest alleged BIWI/PIWI surveys does not undermine the allegations in the complaint that defendants’ minimal and equivalent wage increases occurred at the same time. Considering the allegations in plaintiffs’ amended complaint as a whole, the Court finds that they plausibly allege sufficient parallel conduct to support plaintiffs’ claim for a per se violation of the Sherman Act.
b. Plus Factors
Defendants argue that the Court should dismiss plaintiffs’ first claim for relief “to the extent that it seeks relief . . . for the time period prior to 2014.” Docket No. 337 at 24. Defendants maintain that plaintiffs “must adequately plead an agreement — and they cannot do so by resting solely on allegations of mere information exchanges.” Id. at 17. Defendants contend that plaintiffs fail to allege circumstantial evidence of a conspiracy to fix wages and that plaintiffs instead “ask the Court to infer an agreement to fix wages from the mere existence of two benchmarking surveys without any specific allegations as to
Plaintiffs respond that there is “sufficient parallel conduct alleged in the Amended Complaint — when combined with the plus factors discussed in Plaintiffs’ opposition to the first joint motion to dismiss and this Court‘s order — to support a plausible inference of an agreement to depress compensation.” Docket No. 351 at 27-28 (footnotes omitted).
In the Court‘s order on the first joint motion to dismiss, the Court found that plaintiffs had pled at “least two plus factors, information exchanges and high-level interfirm communications, sufficient to nudge their claim across the line from conceivable to plausible and to permit an inference of an unlawful agreement.” Docket No. 219 at 29 (citation, quotations, footnotes, and alterations omitted). Regarding the information exchanges, the Court stated that “[m]ere exchanges of information . . . are not necessarily illegal, in the absence of additional evidence that an agreement to engage in unlawful conduct resulted from, or was a part of, the information exchange.” Id. at 26 (quoting Mitchael v. Intracorp, Inc., 179 F.3d 847, 859 (10th Cir. 1999)). However, the Court found that “[e]xchanging data on future compensation as opposed to exchanging data limited to current wages supports a plausible inference of an agreement to fix compensation.” Id. at 27 (citing Levitch v. Columbia Broad. Sys., Inc., 495 F. Supp. 649, 674 (S.D.N.Y. 1980)). Moreover, the Court found that “[e]xchanging data about future compensation is indicative of anti-competitive behavior and is ‘behavior that would probably not result from . . . mere interdependence unaided by an advance understanding among the parties.‘” Id. (quoting In re Broiler Chicken Antitrust Litig., 290 F. Supp. 3d 772, 790 (N.D. Ill. 2017)). The Court also found it significant that the complaint plausibly alleged that the processor defendants were able to deanonymize the compensation data provided through WMS because the allegation that “defendants directly communicated and deanonymized the data distinguish plaintiffs’ allegations from cases involving aggregate data.” Id. at 26.
In addition, the Court found that the complaint alleged high-level interfirm communications conducted through group emails to align compensation practices and through bilateral emails to create time-sensitive plans for future compensation. Id. at 27. Specifically, the Court found that the complaint alleged high-level interfirm communication occurred during the private roundtable sessions during the Red Meat Industry Compensation Meetings. Id. at 27-28. The Court also found that “[t]he exclusion, and later inclusion, of Meng at the roundtable sessions adds support for plaintiffs’ allegations that the interfirm communications were not lawful.” Id. at 28.
Nevertheless, the Court finds that plaintiffs cannot rely on the plus factors identified in the Court‘s previous order because those plus factors arise from allegations limited to WMS and Agri Stats. Id. at 26-29. The amended complaint does not include allegations of high-level interfirm communications about the results of the BIWI/PIWI surveys at events like the Red Meat Industry Compensation Meetings.
“In considering whether a Plaintiff has alleged sufficient circumstantial evidence of conspiracy, the Court considers the allegations as a whole.” Beltran v. InterExchange, Inc., 176 F. Supp. 3d 1066, 1073 (D. Colo. 2016). Plus factors must “raise a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action.” In re Credit Default Swaps Auctions Litig., 710 F. Supp. 3d 895, 943 (D.N.M. 2023) (quoting Twombly, 550 U.S. at 553, 557) (alterations omitted). Courts have held that “a single plausible plus factor allegation that weakly tips in the plaintiffs’ favor, without some further factual support, is not enough to open the floodgates to discovery in antitrust cases.” In re Dynamic Random Access Memory (DRAM) Indirect Purchaser Antitrust Litig., 28 F.4th 42, 53 (9th Cir. 2022) (citing Twombly, 550 U.S. at 559 (“[I]t is only by taking care to require allegations that reach the level suggesting conspiracy that we can hope to avoid the potentially enormous expense of discovery in cases with no reasonably founded hope that the [discovery] process will reveal relevant evidence” to support a § 1 claim.“)).
However, plaintiffs’ allegations that defendants exchanged future compensation data is a plus factor that does more than “weakly tip[ ]” in plaintiffs’ favor. In re Dynamic Random Access Memory (DRAM) Indirect Purchaser Antitrust Litig., 28 F.4th at 53. In determining whether a plus factor exists, courts look for behavior that would not occur “unaided by an advance understanding among the parties” and conduct that indicates the sort of “sense of obligation that one generally associates with agreement.” In re Broiler Chicken Antitrust Litig., 290 F. Supp. 3d at 790 (citations omitted). Sharing information about future conduct, such as data about future prices or future compensation schedules, is indicative of an anti-competitive conspiracy. Todd v. Exxon Corp., 275 F.3d 191, 211 (2d Cir. 2001). As the court in Todd explained, a “major factor for courts to consider in a data exchange case is the ‘nature of the information exchanged.‘” Id. (quoting United States v. U.S. Gypsum Co., 438 U.S. 422, 441 n.16 (1978)). “The exchange of past price data is greatly preferred because current data have greater potential to affect future prices and facilitate price conspiracies. By the same reasoning, exchanges of future price information are considered especially anticompetitive.” Id. at 211-12 (citing American Column & Lumber Co. v. United States, 257 U.S. 377, 398-99 (1921)); see also Cty. of Phila. v. Bank of Am. Corp., 498 F. Supp. 3d 516, 529 (S.D.N.Y. 2020). The same logic applies to the exchange of compensation data. See Fleischman v. Albany Med. Ctr., 728 F. Supp. 2d 130, 161 (N.D.N.Y. 2010) (“Most significantly, these information exchanges contained current and future RN compensation information.” (citing Todd, 275 F.3d at 211)).
A company sharing its plans for the future would ordinarily place it at a disadvantage by allowing its competitors to anticipate and respond to the company‘s competitive strategy. A company is unlikely to share such data unless there is an advance understanding that its competitors would use the information for the parties’ mutual benefit. Competitors sharing
3. Claim Two: Unreasonable Restraint of Trade
Plaintiffs’ second claim alleges that, since January 1, 2000, defendants have engaged in a continuing agreement to regularly exchange detailed, timely, competitively sensitive, and non-public information about the compensation being paid or to be paid to their employees at red meat processing plants in the continental United States through BIWI/PIWI surveys resulting in an unreasonable restraint of trade in violation of the Sherman Act. Docket No. 260 at 140, ¶ 437. To establish a claim for a violation under the Sherman Act, plaintiffs must allege an agreement that illegally restrains trade. Cayman Exploration Corp. v. United Gas Pipe Line Co., 873 F.2d 1357, 1359-60 (10th Cir. 1989). Agreements “may be illegal if (1) their purpose or effect is to create an unreasonable restraint of trade, or (2) they constitute a per se violation of the statute.” Id. Where a per se violation does not exist, “[t]he rule of reason calls for a holistic assessment of the parties’ evidence aimed, ultimately, at discerning whether a challenged practice restrains trade unreasonably and so should be prohibited under § 1 of the Sherman Act.” Buccaneer Energy (USA) Inc. v. Gunnison Energy Corp., 846 F.3d 1297, 1310 (10th Cir. 2017).
The Court will evaluate plaintiffs’ second claim under the rule of reason standard. See Docket No. 219 at 30. Courts in the Tenth Circuit apply a burden-shifting test to evaluate claims under the rule of reason. Buccaneer Energy, 846 F.3d at 1310. Plaintiffs have the burden to show an agreement had a substantially adverse effect on competition; defendants must show procompetitive virtues of the alleged wrongful conduct; and plaintiffs must prove the conduct is not necessary to achieve legitimate objectives, resulting in a balancing of the harms and benefits of the alleged wrongful conduct. Id. To carry their initial burden, plaintiffs must allege “that an alleged restraint has or is likely to have a significant anticompetitive effect.” Id. Plaintiffs can accomplish this goal in three ways:
First, under an abbreviated, quick look rule-of-reason analysis, courts sometimes simply assume the existence of anticompetitive effect where the conduct at issue amounts to a naked and effective restraint on price or output that carries obvious anticompetitive consequences. Under quick-look analysis, the burden in effect immediately shifts to the defendant to demonstrate countervailing procompetitive effects. Second, a plaintiff may directly establish anticompetitive effect by showing, for example, that the defendant has actually reduced output or raised prices. And third, a plaintiff may attempt to indirectly establish anticompetitive
effect by defining a relevant product and geographic market and showing the defendant possesses market power in that market.
Id. at 1311 (footnotes, internal citations, and quotations omitted). Indirect evidence of anticompetitive effect requires a showing of market power “plus some evidence” that the challenged conduct has tended to harm competition. In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 714 F. Supp. 3d 65, 95 (E.D.N.Y. 2024) (citing Am. Express, 585 U.S. at 541). At the motion-to-dismiss stage, the plaintiff is only required to show “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.
Defendants argue that plaintiffs have failed to allege anticompetitive effects related to the BIWI/PIWI surveys. Docket No. 337 at 25. First, defendants assert that plaintiffs have not established direct anticompetitive effect related to the BIWI/PIWI surveys because they allege no facts demonstrating that processor defendants used BIWI/PIWI surveys to depress wages. Id. Defendants claim that plaintiffs’ only allegation regarding anticompetitive effect is conclusory. Id. (“Plaintiffs simply assert that Defendants ‘relied on’ BIWI and PIWI ‘to ensure the industry as a whole paid materially lower hourly wages than would have been paid in a competitive market.’ Conclusory assertions like this one are not entitled to a presumption of truth as a general matter, nor are they capable of sustaining Plaintiffs’ burden to adequately plead actual anticompetitive effects.” (citing Ruiz v. McDonnell, 299 F.3d 1173, 1181 (10th Cir. 2002); Procaps S.A. v. Patheon, Inc., 845 F.3d 1072, 1084 (11th Cir. 2016))). Plaintiffs respond that the Court has already determined that plaintiffs have plausibly alleged direct anticompetitive effects, and that the “allegations regarding BIWI and PIWI further buttress Plaintiffs’ direct evidence of anticompetitive effects.” Docket No. 351 at 29. Plaintiffs argue that, “considered as a whole rather than piecemeal and in isolation, Plaintiffs’ allegations of information-sharing among Defendants plausibly support Plaintiffs’ wage-suppression claims.” Id. at 30.
In its previous order, the Court found that plaintiffs had alleged direct evidence of anticompetitive effects because “plaintiffs’ allegations of specific wage suppression provide sufficient support at the pleading stage for plaintiffs’ broader claims of industry-wide wage suppression.” Docket No. 219 at 35. The amended complaint alleges that this conspiracy involved a continuing agreement to regularly exchange detailed, timely, competitively sensitive, and non-public information about the compensation being paid or to be paid to defendant processors’ employees at red meat processing plants, Docket No. 260 at 140, ¶ 437, and that the BIWI/PIWI surveys contained competitively sensitive information regarding present and future wages. Id. at 9, ¶ 7. As discussed above,
Next, defendants argue that plaintiffs have failed to plausibly allege their second claim through indirect evidence. Docket No. 337 at 26. Defendants do not challenge plaintiffs’ allegation that defendants had market power. See id. (“Setting aside their market-power allegations, Plaintiffs have not adequately pleaded indirect anticompetitive effects because they have not satisfied the second component of American Express‘s test“); see also Docket No. 260 at 7, ¶ 2 (“Defendants include fifteen red meat processors and several of their subsidiaries (“Defendant Processors“), which collectively produce more than 80 percent of the red meat sold to consumers in the United States.“); Chase Mfg., Inc. v. Johns Manville Corp., No. 19-cv-00872-MEH, 2022 WL 522345, at *7 (D. Colo. Feb. 22, 2022) (“Indeed, a market share of up to seventy to eighty percent implies not only market power but also monopoly power.“).14 Instead, defendants contend that plaintiffs “must allege that the ‘conduct, as a matter of economic theory, harms competition.‘” Docket No. 337 at 26 (quoting Epic Games, Inc. v. Apple, Inc., 67 F.4th 946, 983–84 (9th Cir. 2023)). They maintain that plaintiffs do not allege that the sharing of information in BIWI/PIWI surveys impacted competition in the labor market for red meat plant workers and that plaintiffs do not present an economic theory for how the BIWI/PIWI surveys harmed competition. Id. at 27. Defendants also argue that plaintiffs cannot rely merely on information sharing, without some other evidence that tends to prove wages were below competitive levels.15 Id. at 27–28.
The Court finds that plaintiffs have plausibly alleged indirect evidence of anticompetitive effects by showing market power “plus some evidence” that the exchange of wage information has tended to harm competition. In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 714 F. Supp. 3d at 95. In evaluating information exchanges, “[t]he first factor to consider is the time frame of the data. The Supreme Court has made clear that ‘[e]xchanges of current price information, of course, have the greatest potential for generating anti-competitive effects and although not per se unlawful have consistently been held to violate the Sherman Act.‘” Todd, 275 F.3d at 211 (quoting Gypsum, 438 U.S. at 441 n.16 (citing American Column & Lumber, 257 U.S. 377; United States v. American Linseed Oil Co., 262 U.S. 371 (1923); United States v. Container Corp. of Am., 393 U.S. 333 (1969)))). “[E]xchanges of future price information are considered especially anticompetitive.” Id. at 211–12 (citing Am. Column & Lumber, 257 U.S. at 398–99); see also Fleischman, 728 F. Supp. 2d at 161 (“Most significantly, these information exchanges contained current and future RN compensation information.” (citing Todd, 275 F.3d at 211)).
Here, plaintiffs allege that, from at least 2000, defendant processors exchanged sensitive compensation data, including the amount and dates of planned future hourly wage increases, through BIWI/PIWI surveys between one and four times every year. Docket No. 260 at 8–9, ¶ 6. They allege that BIWI and PIWI surveys identified how much each participating defendant processor was currently paying and would be paying in the future to hourly-paid workers at each of defendant processor‘s red meat processing plants, and that this data was fully disaggregated. Id. at 9, 65, ¶¶ 7, 180–81. Moreover, courts have relied on defendants’ efforts to keep the information shared among competitors private as further indication that the information exchange was anti-competitive. See, e.g., In re Loc. TV Advert. Antitrust Litig., 2020 WL 6557665, at *12–13 (“Plaintiffs allege that the information in question was not made public, which creates a further inference that the information exchange was anticompetitive in nature.“). Plaintiffs allege that the information in these surveys was often transmitted by phone rather than written communication, that each BIWI and PIWI survey was labeled “CONFIDENTIAL,” and that defendant processors agreed not to share the compensation data beyond those processors that participated in the survey. Id. at 64, 130, ¶¶ 176, 401.
The Court finds plaintiffs’ allegations that processor defendants shared confidential and non-anonymous present and future compensation data in order to set internal wage schedules and negotiate with unions, when those processor defendants compose nearly eighty percent of the red meat industry in the United States, plausibly allege indirect evidence of anticompetitive effects by showing market power “plus some evidence” that the exchange of wage information tended to harm competition. In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 714 F. Supp. 3d at 95. Thus, plaintiffs have satisfied their initial burden under the burden shifting framework. Defendants’ claim that “[i]t is plausible – indeed, highly likely – that BIWI and PIWI caused Defendants to raise wages,” Docket No. 337 at 27, is insufficient to meet their burden of demonstrating the procompetitive virtues of sharing present and future compensation data. Buccaneer Energy, 846 F.3d at 1310. As such, defendants have not shown that plaintiffs’ second claim for relief should be dismissed for failure to plausibly allege anti-competitive effects.
C. Statute of Limitations
Defendants argue that plaintiffs’ claims regarding the BIWI/PIWI conspiracy are barred by the statute of limitations. Docket No. 337 at 28. Plaintiffs filed their amended complaint on January 12, 2024. Docket No. 260. The statute of limitations on plaintiffs’
Defendants are correct that the amended complaint identifies certain BIWI and PIWI reports by date. See Docket No. 260 at 66–67, ¶¶ 183–84. However, the amended complaint does not allege that these are the only years in which such reports were circulated. Rather, the allegations in the amended complaint state that certain processor defendants participated “in at least” the BIWI and PIWI surveys identified with particularity in the amended complaint. Id. The complaint also alleges that “BIWI and PIWI surveys were conducted on at least an annual basis during every year within the Class Period, sometimes as many as four times a year.” Id. at 9, 63, ¶¶ 9, 175. For the reasons discussed above, the Court finds that this allegation is plausible. Thus, defendants’ assertion that the Court can resolve their statute of limitations defense on a Rule 12(b)(6) motion because “the dates given in the complaint make clear that the right sued upon has been extinguished” is incorrect. Docket No. 337 at 29 (quoting Sierra Club v. Okla. Gas & Elec. Co., 816 F.3d 666, 671 (10th Cir. 2016)). The complaint plausibly alleges that the BIWI/PIWI conspiracy occurred during the limitations period.
1. Continuing Violation
Plaintiffs’ allegation that the BIWI/PIWI surveys have continued to the present day is also sufficient to show that the continuing conspiracy exception applies. Under the
The parties next dispute whether the allegations in the amended complaint relate back to the filing of the original complaint on November 11, 2022. See Docket No. 1 at 1; Docket No. 337 at 31; Docket No. 351 at 44.
“[I]n the case of a ‘continuing violation,’ . . . each overt act that is part of the violation and that injures the plaintiff starts the statutory period running again . . . . But the commission of a separate new overt act generally does not permit the plaintiff to recover for the injury caused by old overt acts outside the limitations period.” Champagne Metals, 458 F.3d at 1090 (quoting Klehr v. A.O. Smith Corp., 521 U.S. 179, 189–90 (1997) (“Thus, the Klehrs may point to new predicate acts that took place after August 1989, such as sales to other farmers or the printing of new Harvestore advertisements. But that fact does not help them, for, as the Court of Appeals pointed out, they have not shown how any new act could have caused them harm over and above the harm that the earlier acts caused. . . . Nor can the presence of the new act help them recover for the injuries caused by pre-1989 acts.“)). As such, plaintiffs may recover damages for the injuries sustained by the alleged conspiracy that occur within the statute of limitations, even if the conspiracy began before the limitations period. However, because the Court has found that plaintiffs have alleged two conspiracies, the Court must consider when the limitations period began for the BIWI/PIWI conspiracy.
“In limited circumstances, Rule 15(c) saves an otherwise untimely amendment by deeming it to ‘relate back’ to the conduct alleged in the timely original complaint.” Hernandez v. Valley View Hosp. Ass‘n, 684 F.3d 950, 961 (10th Cir. 2012).
Whether an amendment arises out of the same conduct, transaction, or occurrence set out in the original pleading “depends on the existence of a common core of operative facts uniting the original and newly asserted claims.” May v. Segovia, 929 F.3d 1223, 1237 (10th Cir. 2019) (citation omitted) (Briscoe, J., concurring). “For a newly added action to relate back, the basic claim must have arisen out of the conduct set forth in the original pleading.” Slayton v. Am. Exp. Co., 460 F.3d 215, 228 (2d Cir. 2006) (citation and quotations omitted). Amendments will generally relate back if they “amplify the facts previously alleged, correct a technical defect in the prior complaint, assert a new legal theory of relief, or add another claim arising out of the same facts.” Benton v. Bd. of Cnty. Comm‘rs, No. 06-cv-01406-PSF-MEH, 2007 WL 4105175, at *3 (D. Colo. Nov. 14, 2007), aff‘d, 303 F. App‘x 625 (10th Cir. 2008) (unpublished) (citation omitted). “On the other hand, amendments generally will not relate back if they interject entirely different facts, conduct, transactions or occurrences.” Id. (citation omitted).
Defendants argue that the allegations in the amended complaint do not relate back to the allegations in the original complaint. Docket No. 337 at 31. They maintain that an “amendment does not relate back when it asserts a new ground for relief supported by facts that differ in both time and type from those the original pleading set forth.” Id. (quoting Full Life Hospice, LLC v. Sebelius, 709 F.3d 1012, 1018 (10th Cir. 2013)). Defendants assert that amendments
Plaintiffs respond that an amended complaint relates back if “the original and amended complaints allege the same general conduct and general wrong.” Docket No. 351 at 44 (quoting Hunter v. Romero, 2021 WL 4947235, at *7 (D. Colo. July 2, 2021), report and recommendation adopted, 2021 WL 11634863 (D. Colo. Dec. 10, 2021)). Plaintiffs maintain that, in the Tenth Circuit, “when the original complaint alleges a wide ranging fraudulent scheme, amended complaints relate back when they assert newly discovered aspects of that scheme.” Id. (quoting Hogan v. Pilgrim‘s Pride Corp., 73 F.4th 1150, 1158 (10th Cir. 2023)). They contend that, here, plaintiffs’ additional allegations regarding BIWI/PIWI surveys only expand on the allegations in their original complaint. Id. at 44–45.
In determining whether an amended pleading relates back to the original pleading, “[t]he key consideration is whether the original complaint ‘gave the Defendant adequate notice of what must be defended against in the Amended Complaint.‘” Pernick v. Computershare Tr. Co., Inc., 136 F. Supp. 3d 1247, 1273–74 (D. Colo. 2015) (citing In re Bennett Funding Grp., Inc., 275 B.R. 447, 451 (Bankr. N.D.N.Y. 2001) (collecting cases); Baldwin Cty. Welcome Ctr. v. Brown, 466 U.S. 147, 149 n.3 (1984) (“The rationale of
Courts usually have found that conduct that is a separate violation of the law does not relate back to a prior violation simply because it involves similar conduct. See Eng. Boiler & Tube, Inc. v. W.C. Rouse & Son, Inc., 172 F.3d 862, 1999 WL 89125, at *3 (4th Cir. 1999) (table decision) (“A plaintiff may not baldly allege a broad course of conduct over a lengthy period of time and later sue on any act that occurred during that time period. Because the Hobbs letter is a separate instance of defamation arising from ‘facts other than those originally pleaded,’ a claim based on that letter does not relate back to the original filing date.“) (citation omitted); Snider v. Pa. DOC, 505 F. Supp. 3d 360, 416 (M.D. Pa. 2020) (plaintiff‘s new allegations against correctional facility did not relate back to prior claims against a different correctional facility, despite a claim in original complaint that he “ha[d] similar experiences” at both facilities); Brightwell v. Hershberger, 2016 WL 4537766, at *5 (D. Md. Aug. 31, 2016) (finding new claims did not relate back where plaintiff initially
The Court finds that defendants did not have adequate notice that they could be subject to liability in this action for exchanging BIWI/PIWI surveys based on the allegations in the original complaint that plaintiffs exchanged wage information via WMS and Agri Stats. As discussed above, plaintiffs have plausibly alleged only the existence of separate conspiracies to depress wages, rather than a single conspiracy. See Docket No. 260 at 8–9, 64, 71–72, ¶¶ 6, 176, 193, 195–98. Defendants who were not part of the WMS conspiracy were not on notice that they could become part of this litigation. The original complaint alleges that the Red Meat Survey Group had exclusive membership and that the group‘s existence was a secret from non-participants. Id. at 71–72, ¶¶ 193, 195–98. It is not reasonable for defendants to expect that they can be held accountable for the conduct of a group that they are not a part of and which they may not have known existed.
Second, for those defendants who participated in both conspiracies, the BIWI/PIWI conspiracy does not “arise[ ] out of the conduct set forth in the original pleading.” Slayton, 460 F.3d at 228. The allegations in the amended complaint show that defendants’ schemes to depress wages had substantial similarities, such as the fact that both schemes involved sharing present and future compensation data and that they have overlapping participants. Docket No. 260 at 8–9, 64, 71–72, ¶¶ 6, 176, 193, 195–98. However, the similarities are not enough to show that the amended complaint relates back to the original complaint. Slayton, 460 F.3d at 228 (“even where an amended complaint tracks the legal theory of the first complaint, claims that are based on an ‘entirely distinct set’ of factual allegations will not relate back“). The amended complaint does not allege a “common core of operative facts uniting” the allegations regarding the BIWI/PIWI conspiracy and WMS conspiracy. May, 929 F.3d at 1237. That is, although the amended complaint alleges facts showing that the conspiracies are similar, there are no allegations showing that the conspiracies have facts in common, i.e. that they rely on the same facts. For example, the amended complaint does not allege that information was exchanged between the two conspiracy groups or that the groups otherwise facilitated each other‘s fraudulent schemes. As such, the amended complaint does not show that the BIWI/PIWI conspiracy is a “newly discovered aspect[ ]” of the WMS conspiracy. Hogan, 73 F.4th at 1158 (quoting Quaak v. Dexia, S.A., 445 F. Supp. 2d 130, 137–38 (D. Mass. 2006); see also Benton, 2007 WL 4105175, at *3 (amendments will relate back when they “add another claim arising out of the same facts“). Thus, defendants were not on notice that participating in one information-sharing scheme
The amended complaint therefore does not relate back to the original complaint, and plaintiffs’ second claim based on the BIWI/PIWI conspiracy is barred by the statute of limitations for conduct occurring before January 12, 2020.16
3. Fraudulent Concealment
In addition to the continuing violations doctrine, plaintiffs’ amended complaint alleges their claims are timely because the doctrine of fraudulent concealment tolls the statute of limitations. Docket No. 260 at 125–26, ¶ 390.
Fraudulent concealment is an equitable doctrine “read into every federal statute of limitation.” In re Credit Default Swaps Auctions Litig., 710 F. Supp. 3d 918, 932 (S.D.N.Y. 2024) (quoting Holmberg v. Armbrecht, 327 U.S. 392, 397 (1946)).
The Tenth Circuit requires plaintiffs to show “(1) the use of fraudulent means by the party who raises the ban of the statute [of limitations]; (2) successful concealment from the injured party; and (3) that the party claiming fraudulent concealment did not know or by the exercise of due diligence could not have known that he might have a cause of action.”
Id. (quoting Ballen v. Prudential Bache Securities, Inc., 23 F.3d 335, 336–37 (10th Cir. 1994)). “The question of whether . . . claims were fraudulently concealed is typically factual and not amenable to resolution on a motion to dismiss.” Thompson v. 1-800 Contacts, Inc., 2018 WL 2271024, at *10 (D. Utah May 17, 2018). In an antitrust conspiracy case, this is generally true where the proof of concealment is in the hands of the defendant. Id. at *10–11; see also In re Rubber Chemicals Antitrust Litig., 504 F. Supp. 2d 777, 789 (N.D. Cal. 2007) (collecting cases).
Because a claim of fraudulent concealment is based on fraud, the heightened pleading standard of
Defendants argue that the amended complaint does not plausibly allege the first element of fraudulent concealment, namely, that defendants used fraudulent means to conceal the conspiracy.17 Docket No. 337 at 32. Defendants assert that the amended complaint alleges only that participants in the BIWI/PIWI surveys “were instructed” to treat the reports as “confidential and private,” but that it “does not allege any specifics regarding when these secrecy instructions occurred, who issued the instructions, and how the instructions kept the reports confidential.” Id.
Plaintiffs respond that the amended complaint identifies “actions taken to conceal the BIWI and PIWI with specificity as to ‘who, what, when, where, and how.‘” Docket No. 351 at 35. Plaintiffs assert that
[t]he Amended Complaint specifies precisely which Defendants (“who“), exchanged fully disaggregated current and future compensation data (“what“), from 2000 to 2019, at least annually and up to four times a year, precipitated by the request of a participating member in advance of union negotiations or an annual compensation review (“when“), provided, via private communications, directly to Tyson for assembly (“where“), to facilitate and conceal their conspiracy (“why“).
Id. (citation omitted). These allegations concern the who, what, when, where, and how of the conspiracy generally, but do not address concealment of the conspiracy.
Plaintiffs also rely on the allegations that BIWI/PIWI data was often transmitted by telephone rather than written communication to avoid detection, that each report was marked “CONFIDENTIAL,” that Tyson only shared BIWI/PIWI surveys with participating processors, and that processor defendants agreed not to share BIWI/PIWI surveys with others. Id. Plaintiffs contend that “[s]uch mutually agreed to and enforced instructions ‘requiring the contracting parties to keep the terms of that allegedly anti-competitive agreement private’ are plainly ‘affirmative acts to conceal.‘” Id. at 35–36 (alterations omitted) (quoting Thompson, 2018 WL 2271024, at *12; citing King & King Enterprises, 657 F.2d at 1155). The Court finds that it is unnecessary to consider whether these allegations meet the pleading standards of
Defendants contend that the allegations in the amended complaint are inconsistent because, in addition to alleging that participants were instructed to keep the surveys confidential, the amended complaint also alleges that defendants “used” BIWI/PIWI surveys to negotiate with unions. Docket No. 337 at 33. Defendants maintain that “[i]mplicit in this allegation is that Defendants shared BIWI and PIWI information with union representatives and members during [collective bargaining agreement] negotiations.” Id. They assert that “[o]penly sharing BIWI and PIWI information in negotiations with third parties cannot be squared with allegations of a secret conspiracy.” Id.
The allegations in the amended complaint state that, “if a participating Defendant Processor had an upcoming union negotiation or annual compensation review, when wage structure decisions were to be made, it would directly request an updated PIWI and BIWI from Tyson, so that it could use the data from the updated survey during those upcoming negotiations or compensation setting decisions.” Docket No. 260 at 9–10, ¶ 9. There are two plausible inferences that can be made from this allegation. First, as defendants suggest, this allegation may indicate that the wage information in the BIWI/PIWI reports, or even the reports themselves, were given to plaintiffs’ union representatives so that individual defendants could prove that their compensation was consistent with the compensation practices of their competitors. Alternatively, plaintiffs’ allegation that defendants “used” BIWI/PIWI survey information during union negotiations could indicate that defendants privately reviewed the latest BIWI or PIWI surveys to ensure that the results of the union negotiations furthered the goal of the conspiracy, but not that any actual wage information was disclosed.
Defendants argue that the Court must make the first inference because PIWI surveys were specifically referenced in plaintiffs’ collective bargaining agreements. See Docket No. 337 at 35. Defendants attach to their motion to dismiss the collective bargaining agreements (“CBAs“) between Smithfield18 and Commercial Workers Union Local 304A governing the period from 2003 to 2007 and from 2009 to 2013. Docket No. 337-2 at 2; Docket No. 337-3 at 2. Defendants argue that the Court may take judicial notice of the collective bargaining agreements. Docket No. 337 at 35 n.3 (“The Court may properly take judicial notice of CBAs like these to establish what was in the public realm at the time.” (citing Dominguez v. W. States Fire Prot. Co., 2022 WL 2234955, at *1 n.1 (C.D. Cal. Feb. 2, 2022) (“Courts regularly take judicial notice of a CBA in evaluating whether to dismiss on the pleadings.” (quotations and citation omitted)); Cano-Rodriguez v. Adams Sch. Dist. No. 14, No. 19-cv-01370-CMA-KLM, 2020 WL 6049531, at *13 n.8 (D. Colo. Apr. 22, 2020) (“Board Policy CBA is a matter of public record of which the Court takes judicial notice.“); Oldham v. Brennan, No. 15-cv-02464-WJM-MJW, 2016 WL 7375328, at *2 n.2 (D. Colo. Dec. 20, 2016) (“The Court can and does consider the CBA and other filed documents as background helpful in understanding
“Ordinarily, consideration of material attached to a defendant‘s answer or motion to dismiss requires the court to convert the motion into one for summary judgment and afford the parties notice and an opportunity to present relevant evidence.” Tal, 453 F.3d at 1264 n.24 (citing
Although plaintiffs respond that the collective bargaining agreements do not support defendants’ argument, they do not contest whether the Court can take judicial notice of the agreements, nor do they contest the validity of the agreements. See Docket No. 351 at 36. As such, the Court will take judicial notice of the contents of the collective bargaining agreements. See Lujano v. Piedmont Airlines, Inc., 734 F. Supp. 3d 988, 995 (C.D. Cal. 2024) (finding on a motion to dismiss that, “because ‘Plaintiff neither opposes Defendant‘s request nor disputes the validity of the CBA,’ the court finds this document appropriate for judicial notice” (citing Bartlett v. All Am. Asphalt, 2020 WL 6118818, at *4 n.2 (C.D. Cal. Oct. 16, 2020)); Tal, 453 F.3d at 1264 n.24.
The CBAs state that, if “at anytime during the term of this Agreement, the above plant production base rate falls below the Pork Industry Wage Index as computed semi-annually by IBP, the above rates will be increased to equal the Pork Industry Wage Index.” Docket No. 337-2 at 9; Docket No. 337-3 at 11.
Plaintiffs respond that there is nothing inconsistent between the allegations that the BIWI/PIWI surveys were kept confidential and used to depress wages and the allegation that the information in these surveys was used in union negotiations. Docket No. 351 at 36. They argue that the fact “that Defendants leveraged BIWI and PIWI wage data during union negotiations says nothing about the knowledge or understanding union negotiators actually possessed with respect to these indices, including how these indices were assembled and whether they unlawfully contained future, disaggregated, or deanonymized data.” Id. at 36–37.
The Court finds that the terms of the collective bargaining agreements make plaintiffs’ allegation that the BIWI/PIWI surveys were kept secret from plaintiffs implausible. Plaintiffs’ allegation that each BIWI and PIWI survey was marked “CONFIDENTIAL” and that “Defendant Processors agreed to and understood not to share the compensation data beyond those processors that participated in the surveys” alleges that defendants concealed the BIWI/PIWI survey results from other competitors. Docket No. 260 at 64, 68, ¶¶ 176, 185 (processor defendants used BIWI/PIWI surveys “to exchange confidential data regarding current and planned future wages at their respective red meat processing plants that otherwise was not practically accessible to their competitors” (emphasis omitted)). Similarly, plaintiffs’ allegation that the “collective bargaining agreements that contained
The amended complaint alleges that defendant Ron Brown was employed by Smithfield during the class period. Docket No. 260 at 16, ¶ 30. It further claims that Smithfield used BIWI and PIWI surveys during union negotiations. Id. at 9–10, ¶ 9. Collective bargaining agreements between Smithfield and its employees covering eight years of the class period not only explicitly mention the PIWI surveys but also directly tie Smithfield‘s compensation rates to the results of the annual PIWI survey.19 Docket No. 337-2 at 9 (“If at anytime during the term of this Agreement, the above plant production base rate falls below the Pork Industry Wage Index as computed semi-annually by IBP, the above rates will be increased to equal the Pork Industry Wage Index.“); Docket No. 337-3 at 11. In light of the terms of the collective bargaining agreements, the inference that defendants “use” of the BIWI/PIWI surveys did not include disclosing the existence of the BIWI/PIWI surveys or the information they contain is implausible. Instead, defendants appear to have disclosed to plaintiffs’ union representatives that such surveys existed, and defendants’ representatives negotiated that defendants’ pay would correlate to the results of these surveys. See id. As such, defendants’ conspiracy to suppress wages through the exchange of compensation information contained in the BIWI/PIWI surveys was not effectively concealed from plaintiffs.20
therefore failed to plausibly allege the second element of fraudulent concealment.
Accordingly, plaintiffs have not shown that the statute of limitations on plaintiffs’ claims based on the BIWI/PIWI conspiracy should be equitably tolled. Therefore, although plaintiffs have plausibly alleged their BIWI/PIWI conspiracy claims and have alleged that these conspiracies have continued to the present day, plaintiffs are barred from recovering for injuries that occurred before January 12, 2020.21 See In re Urethane Antitrust Litig., 663 F. Supp. 2d 1067, 1077 (D. Kan. 2009) (dismissing in part plaintiffs’ claims for the period from 1994 to 1998).
IV. CONCLUSION
For the foregoing reasons, it is
ORDERED that Defendants’ Joint Motion to Dismiss the Amended Complaint for Failure to State a Claim [Docket No. 337] is DENIED in part and GRANTED in part. It is further
ORDERED that plaintiffs’ first and second claims for relief are dismissed to the extent they seek to recover for the alleged BIWI/PIWI conspiracy prior to January 12, 2020.
DATED March 26, 2025.
BY THE COURT:
PHILIP A. BRIMMER
Chief United States District Judge