Top court OKs lawsuit against tuna companies
The Supreme Court denied review of a ruling in April by the Ninth U.S. Circiut Court of Appeals in San Francisco.
The Supreme Court on Monday cleared the way for buyers of canned tuna, including retail stores, to proceed with a price-fixing suit against the three largest tuna companies, two of which — StarKist and Bumble Bee — have admitted artificially inflating their prices.
The court denied review of a ruling in April by the Ninth U.S. Circiut Court of Appeals in San Francisco that reinstated the suit as a nationwide class action against StarKist, Bumble Bee and Chicken of the Sea, which sell more than 80% of all canned tuna in the United States. The suit, filed in San Diego, accuses them of conspiring to inflate their prices between June 2011 and December 2016.
StarKist and Bumble Bee have pleaded guilty to federal charges of conspiring to fix tuna prices, with fines of $100 million for StarKist and $25 million for Bumble Bee. Bumble Bee’s former CEO, Chris Lischewski, was convicted of criminal price-fixing by a federal jury in San Francisco in December 2019 and was sentenced to 40 months in prison in June 2020. Other executives from Bumble Bee and StarKist testified against Lischewski after entering their own guilty pleas. Bumble Bee filed for bankruptcy in 2019.
Chicken of the Sea was not charged after cooperating with the government in its investigation, but the company and its corporate parent, Thai Union Group, settled claims with some of its customers for $13 million, according to a court filing in March 2021. Most of its customers remain in the lawsuit.
An economist testifying for tuna buyers said retail stores paid an average of 10.28% more for canned tuna between 2010 and 2016, and that more than 94% of all customers paid higher prices at least once. The tuna companies presented contrary testimony from an economist who said more than 28% of the customers were unaffected by the overcharges, and the companies argued that a class action would provide damages to some who had suffered no losses.
But the appeals court, in a 9-2 ruling, said the evidence showed that the companies’ actions had a “common impact” on customers as a group, and that individual differences could be addressed at trial.
“There is no factual dispute that the tuna suppliers engaged in a price-fixing scheme affecting the entire packaged tuna industry nationwide,” which is enough at this stage of the case to show an impact on all customers, Judge Sandra Ikuta said in the majority opinion.
At the trial, damages will be sought separately for consumers, retailers and commercial food preparers, said Joshua Davis, a law professor at UC College of Law San Francisco who filed arguments supporting the plaintiffs. He said the appeals court ruling was important because it allowed consumers to sue as a group based on evidence of widespread harm caused by pricefixing, rather than requiring them to show at the outset that nearly all of them had been harmed.
David Frederick, a lawyer for the plaintiffs, said, “we’re pleased the Supreme Court has rejected StarKist’s appeal so that the case can proceed to trial where the victims of the criminal price-fixing scheme can obtain compensation.”
Gregory Garre, a lawyer for the tuna companies, argued in a filing seeking Supreme Court review that as many as one-third of consumers had suffered no harm, which should disqualify the case as a class action on behalf of all tuna buyers. Quoting Judge Kenneth Lee’s dissenting opinion, Garre said the appeals court’s ruling would invite “monstrously oversized classes designed to pressure and extract settlements.”
The case is StarKist v. Olean Wholesale Grocery, 22-131.