In a ruling issued Wednesday, Judge Christopher C. Conner of the U.S. District Court for the Middle District of Pennsylvania certified an interlocutory appeal, noting that the Twombly standard is “in its infancy” and that judges may still disagree on how the ruling should be interpreted.
“Such disagreement could lead to differing outcomes between this matter and analogous cases addressing motions similar to those raised by defendants,” Conner wrote.
The plaintiffs have claimed that a number of chocolate makers, including Hershey Co., Mars Inc., Nestlé SA and Cadbury Schweppes PLC, conspired to fix chocolate prices, causing both direct and indirect purchasers to pay more than they should have for the sweets.
In their motions to dismiss filed in September, the chocolate-maker defendants argued that the plaintiffs had failed to state a plausible claim for relief under the Sherman Act, and asserted claims beyond the court’s jurisdiction. The defendants used a so-called Twombly challenge to battle the plaintiffs claims, based on the Supreme Court ruling in Bell Atlantic Corp. v. Twombly in May 2007.
In that decision, the Supreme Court ruled that a plaintiff claiming an antitrust violation under Section 1 of the Sherman Act, which prohibits conspiracies to restrain trade, must present more than just evidence that the companies engaged in similar behaviors.
Plaintiffs, the court said, must allege facts that, if true, would indicate a plot was afoot.
“This case is a textbook example of why Twombly was necessary,” the defendants argued in their motion to dismiss filed in September.
On March 4, the court denied the motions to dismiss of Cadbury, Hershey, Mars and Nestlé. The defendants then asked the court to certify an interlocutory appeal of the court’s application of Twombly.
Defendants on the losing side of a motion to dismiss typically are not allowed an immediate appeal, but one can be certified if it involves a controlling question of law, a substantial ground for difference of opinion, or if an immediate appeal would materially advance the ultimate termination of the litigation, the court noted Wednesday.
The question at hand does present a controlling question of law, and therefore can be certified for interlocutory appeal, the judge said.
In the March 4th order denying the defendant’s motion to dismiss, the court ruled that Twombly does authorize a court to draw an inference of conspiracy from the “collective effect of repeated parallel price increases, avernments of anti-competitive activity in closely related foreign markets, transnational management of corporate subsidiaries, opportunity for collusion, and descriptions of anti-competitive conduct that are economically sensible in light of mature market characteristics.”
But if that question were answered in the opposed direction, Judge Conner noted in the order issued Wednesday, the decision would be unquestionably different, a fact that allows the court to certify an appeal on the question.
Judge Conner also ruled that there was certainly a substantial ground for difference of opinion, given that Twombly was issued just a few years ago and courts were still grappling with its interpretation.
The court also ruled that certifying an interlocutory appeal could potentially help bring the case to a close, since much of the discovery has not yet begun. If the defendants eventually won their motion to dismiss on appeal, much of that work could be avoided.
In April 2008, the U.S. Judicial Panel on Multidistrict Litigation consolidated the chocolate antitrust cases for pretrial proceedings in the U.S. District Court for the Middle District of Pennsylvania, in part because Hershey’s worldwide headquarters are there, and several other defendants have a presence in or near that district, making it easier to obtain access to relevant documents and witnesses.
In August, the plaintiffs filed amended consolidated complaints, laying out the three proposed classes for the suit.
The proposed direct purchaser class would consist of both the wholesale direct purchasers — stores such as CVS Pharmacy Inc., Rite Aid Corp. and Walgreen Co. — and consumer direct purchasers, according to the amended complaint.
The direct purchasers class alleges violations of the Sherman Act. The other classes, including an indirect end user class, also allege violations of various state laws, including those governing unfair competition and consumer protection.
In the MDL, Cadbury is represented by Morrison & Foerster LLP and Eckert Seamans Cherin & Mellott LLC; Hershey is represented by Kirkland & Ellis LLP, McNees Wallace & Nurick LLC and Tompkins McGuire Wachenfeld & Barry LLP; Mars is represented by McDermott Will & Emery LLP and Gibbons PC; Nestle is represented by Saul Ewing LLP and Howrey LLP; and Itwal Ltd. is represented by Mayer Brown LLP.
The direct purchaser class is represented by Obermayer Rebmann Maxwell & Hippel LLP, Berger & Montague PC, Cohen Milstein Sellers & Toll PLLC, Kirby McInerney LLP, Labaton Sucharow LLP and Preti Flaherty Beliveau & Pachios LLP.
The indirect end user class is represented by McCarthy Weisberg Cummings PC, Kellogg Huber Hansen Todd Evans & Figel PLLC, Lovell Stewart Halebian LLP, Saveri & Saveri Inc., Trump Alioto Trump & Prescott LLP, Bonsignore & Brewer, Hadsell Stormer Keeny Richardson & Renick LLP, Duncan Firm PA, Gilreath & Associates, Welsh & Welsh PC, Siegel Barnett & Schutz LLP, the Law Offices of Brian Barry, The Wagner Firm, Gross Belsky Alonso LLP, the Law Offices of Lawrence G. Papale, Valinoti & Dito LLP, Amamgbo & Associates, The Terrell Law Group and Ademi & O’Reilly LLP.
CVS, Rite Aid and Longs Drug Stores are being represented by Hangley Aronchick Segal & Pudlin.
Kroger, Safeway, Walgreen and Hy-Vee are being represented by Kenny Nachwalter PA.
Affiliated Foods, Meijer and Publix are being represented by Vanek Vickers & Masini PC, Kaplan Fox & Kilsheimer LLP, Bolognese & Associates LLC and Sperling & Slater PC.
Food Lion, Hannaford Bros. and Kash n’ Karry are being represented by Akin Gump Strauss Hauer & Feld LLP.
Associated Grocers is represented in the matter by Hangley Aronchick Segal & Pudlin PC, Shevlin & Atkins, Vanek Vickers & Masini PC, Kaplan Fox & Kilsheimer LLP and Sperling & Slater PC.
The case is In re: Chocolate Confectionary Antitrust Litigation, case number 1:08-md-01935, in the U.S. District Court for the Middle District of Pennsylvania.
–Additional reporting by Melissa Lipman
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