Court: District Court, E.D. Michigan; July 1, 2010; Federal District Court
The case, **In re Packaged Ice Antitrust Litigation**, involves multiple direct purchaser actions consolidated under case number 08-MD-01952 in the United States District Court for the Eastern District of Michigan, Southern Division, dated July 1, 2010. Numerous attorneys represent a variety of plaintiffs including Marin Scotty's Market, Jan Barranco-Grams, Jenifer Valencia, Ridge Plaza, Mall Mart, Baron Group, Kozak Enterprises, Solid Waste, Thrifty Liquor, Chukrid Khorchid, GM Food and Fuel, Public Foods, Americana Food Store, and Twin Value, all alleging violations in connection with antitrust laws. The plaintiffs are represented by various law firms from multiple states, highlighting a significant legal effort to address the antitrust claims related to the packaged ice market. Each plaintiff is identified by their corresponding case numbers, indicating a structured approach to litigation among diverse entities involved in the marketplace.
A list of legal representatives is provided for various companies involved in different cases. Key attorneys and their respective law firms are mentioned, along with the locations of the firms. Companies represented include Thomas Beverage Company, Chi-Mar Enterprises, Fu-Wah Mini Market, Warrington Fuels, Marchbanks Travel Service, Five Angels Management, Joseph Massino, Rodney Blasingame, Ethamma Emmanuel, Joseph Difabritiis 7-11 Food Store, Rick Drontle, Wilson Farms, and F. V Oil Company, among others. Each company is identified along with its case number, indicating a range of legal matters being handled across various jurisdictions. The document reflects a diverse group of attorneys and firms engaged in these legal proceedings, emphasizing the complexity and breadth of the cases involved.
Legal representation is detailed for various corporations and individuals involved in cases designated by their respective case numbers. Notable attorneys and law firms represent clients including S and S Lima, Incorporated (doing business as Dry Run Beverage), Silver Springs Liquor Incorporated, Elite Energy, LLC, and Melrick, Incorporated (doing business as North Main Short Stop), among others. Multiple firms, such as Cafferty Faucher, Miller Canfield, and Sachs Waldman, are prominently featured in representing different clients across multiple case numbers. Notable cases include those associated with Linco Distributing Company, Inc. (doing business as Beer Minimum), and various LLCs such as Cobblestone Tequesta, LLC, and 6th Island Investments, LLC. The excerpt encompasses a wide array of legal representatives and their associations with specific business entities and case identifiers, illustrating the complexity of the legal landscape involved.
The document provides a detailed list of legal representatives for various parties involved in multiple cases. It enumerates attorneys and their respective firms, along with the locations of those firms, associated with specific case numbers.
Key points include:
- **Plaintiffs and Defendants**: Names of various plaintiffs and defendants are specified alongside their case numbers, indicating the legal entities or individuals they represent.
- **Legal Representation**: Each party is linked to a range of attorneys from different law firms across various states, including New York, Minnesota, Michigan, and others.
- **Case Numbers**: Unique identifiers for each case are provided, such as 08-12911 for Tahira Firdous and 08-13446 for Thomas F. Prazan, which assists in tracking the legal matters involved.
- **Law Firm Representation**: The document highlights multiple law firms, their attorneys, and affiliations, indicating a diverse representation across the cases listed.
Overall, the excerpt serves as a comprehensive directory of legal representation associated with specific cases in a legal context.
A range of legal representatives from various firms across the United States are identified, representing multiple clients in different cases, each associated with specific case numbers. Notable attorneys and their affiliations include Charles F. Barrett, Ben Barnow, Larry D. Drury, Joseph Marid Patane, and various others, each representing clients involved in diverse business activities, from catering to beverage distribution. The document concludes with a significant judicial ruling by District Judge Paul D. Borman, which denies the defendants' motions to dismiss in the referenced cases (Dkt. Nos. 202, 203). This ruling implies that the cases will proceed, despite the defendants' attempts to have them dismissed.
The Court is addressing two motions to dismiss filed by Defendants Reddy Ice Holdings, Inc. and Reddy Ice Corporation (collectively, the "Reddy Ice Defendants") and Arctic Glacier Income Fund, Arctic Glacier Inc., and Arctic Glacier International (collectively, the "Arctic Glacier Defendants") under Federal Rules of Civil Procedure 12(b)(6) and, for the Arctic Glacier Defendants, 12(b)(2) for lack of personal jurisdiction. Plaintiffs, who include both direct purchasers (retail stores and gas stations) and indirect purchasers of packaged ice in the U.S., allege that the Defendants conspired to allocate customers and markets, violating the Sherman Antitrust Act.
This case is part of a multidistrict litigation (MDL) involving 68 consolidated actions stemming from a 2008 Department of Justice investigation into the packaged ice industry. The Judicial Panel on Multidistrict Litigation transferred all related civil actions to this District for coordinated pretrial proceedings. A proposed settlement has been reached between Home City Ice Company and the Direct Purchaser Plaintiffs.
The procedural background includes the appointment of interim lead and liaison counsel for the Direct Purchaser class and the filing of a Consolidated Amended Class Action Complaint by Plaintiffs. The Court has heard oral arguments and, for the reasons stated in the opinion, denies the motions to dismiss.
Reddy Ice, Arctic Glacier, and Home City dominate the U.S. Packaged Ice market with nearly 70% market share. Packaged Ice is defined as ice produced by these companies, packaged in bags and sold in blocks. Direct Purchasers, primarily retail stores and gas stations, bought Packaged Ice directly from the companies involved. Allegations of conspiracy emerged from Martin McNulty, a former Party Time Ice vice president turned salesman for Arctic Glacier, who claimed that the major ice manufacturers conspired to divide territories and customers across the U.S. McNulty reported that Keith Corbin, then Vice President of Sales at Arctic Glacier, disclosed that Arctic Glacier would not compete with Home City and that an agreement existed between Home City and Reddy Ice to geographically split the market.
Specific arrangements included Reddy Ice scaling back its operations in California, allowing Arctic Glacier to enter that market, while Arctic Glacier agreed not to compete in Arizona. Moreover, Arctic Glacier withdrew from Oklahoma and New Mexico, facilitating Reddy Ice's market presence in those states. The Department of Justice (DOJ) filed a criminal information against Home City in 2007 for a conspiracy to restrain trade between 2001 and 2007. Home City’s CEO, Thomas Sedler, pled guilty to violating the Sherman Act for his role in the conspiracy, which involved customer and territory allocation in southeastern Michigan and the Detroit area. Following a DOJ search of Reddy Ice's headquarters in March 2008, the company initiated an internal investigation, resulting in the suspension of Executive Vice President Ben D. Key for potential policy violations related to the ongoing investigation.
On October 5, 2009, Arctic Glacier International and several executives, including Keith Corbin, Frank Larson, and Gary Cooley, pled guilty in the Southern District of Ohio for participating in a conspiracy to suppress competition by allocating customers in southeastern Michigan and the Detroit metropolitan area from January 1, 2001, to at least July 17, 2007, violating the Sherman Antitrust Act (15 U.S.C. § 1). Following the guilty pleas, Arctic Glacier initiated an internal investigation into the alleged antitrust conspiracy, resulting in the suspension of Larson and Cooley.
Additionally, the executives from Arctic Glacier and Reddy Ice, including Ben Key, have connections to the International Packaged Ice Association (IPIA), which has provided a platform for these manufacturers to communicate regarding market practices. Plaintiffs allege that this membership facilitated collusion among competitors, allowing them to discuss pricing and customer allocations. Furthermore, the defendants are accused of fraudulent concealment of their anticompetitive conduct, misleading customers by claiming their pricing actions were independent and based on legitimate business reasons, thereby tolling the statute of limitations until at least March 6, 2008, when the Department of Justice executed search warrants. The plaintiffs assert that they could not have discovered the defendants’ unlawful conduct prior to this date due to its deceptive and self-concealing nature.
The document also outlines the structure of the packaged ice industry, noting that it is primarily sold in various retail outlets, including supermarkets and convenience stores.
Packaged Ice is identified as a commodity with minimal brand preference among retail customers, characterized by stable and inelastic demand, and lacking reasonable economic substitutes. The market structure has shifted from local and regional production to dominance by Defendants, who control about two-thirds of U.S. sales, totaling over $600 million annually. The Defendants are accused of aggressively acquiring smaller competitors, resulting in limited competition among Reddy Ice, Arctic Glacier, and Home City, which have distinct territorial allocations.
Reddy Ice is the leading manufacturer and distributor, operating in 31 states and D.C., with annual sales of $339 million, selling approximately 1.9 million tons of ice primarily to convenience stores and supermarkets. Arctic Glacier ranks second with $249 million in revenues, servicing over 70,000 retail accounts across key U.S. regions. Home City operates in multiple states, including Ohio and Indiana, with substantial production capabilities.
The complaint alleges significant barriers to entry in the Packaged Ice market, including high investment costs for plants and equipment, alongside installed refrigeration units at customer locations, which complicate supplier changes. The Defendants reportedly do not compete directly with each other in their respective markets. Since January 1, 2001, prices for Packaged Ice have allegedly risen beyond what can be attributed to manufacturing and distribution costs.
The Direct Purchaser Plaintiffs claim that the Defendants' anticompetitive practices have restrained price competition, elevated prices to supra-competitive levels, and deprived them of free market competition, resulting in financial harm. Under Federal Rule of Civil Procedure 12(b)(6), the court is required to view the complaint favorably for the plaintiffs when considering motions to dismiss.
The court does not accept legal conclusions or unwarranted factual inferences as true, as established in Gregory v. Shelby County. Legal conclusions disguised as factual allegations are insufficient, per Eidson v. State of Tennessee. The Supreme Court in Bell Atlantic Corp. v. Twombly clarified that a plaintiff must provide more than labels and conclusions; factual allegations must be sufficient to elevate the claim beyond the speculative level. Dismissal is warranted only if the plaintiff fails to present enough factual allegations to make the claim plausible on its face. The concept of "plausibility" was further explained in Ashcroft v. Iqbal, where the court emphasized that a complaint must include enough factual content, accepted as true, to suggest that the defendant is liable for the alleged misconduct. A claim achieves facial plausibility when it includes factual content that allows for reasonable inferences of the defendant's liability. The plausibility standard does not equate to a probability requirement but necessitates more than mere possibilities of unlawful action. If a complaint presents facts that are merely consistent with a defendant's liability, it falls short of plausibility. The allegations must demonstrate entitlement to relief rather than merely create speculation. To state a valid claim, a complaint must contain direct or inferential allegations regarding all material elements for recovery under a viable legal theory. Additionally, courts may consider public records and documents that are central to the claims if referenced in the complaint. Under Federal Rule of Civil Procedure 12(b)(2), plaintiffs bear the burden of proving personal jurisdiction, with the court able to determine jurisdiction without an evidentiary hearing, provided plaintiffs present specific facts in affidavits. In this case, plaintiffs allege that defendants violated Section 1 of the Sherman Act, which prohibits certain contracts or conspiracies that restrain trade or commerce.
Plaintiffs allege that Defendants engaged in a conspiracy to allocate markets and customers, agreeing not to compete, which resulted in fixed, raised, maintained, or stabilized prices for direct purchasers of Packaged Ice. They support their claims with various evidences, including guilty pleas from some Defendants to antitrust violations in southeastern Michigan, suspensions of executives for breaching antitrust policies, DOJ raids on a corporate headquarters linked to anticompetitive behavior, insider admissions of nationwide collusion, state attorney general investigations, actions contrary to economic self-interest, unexplained price increases, a market structure favoring collusion, and opportunities for conspiratorial meetings.
Defendants counter that Plaintiffs lack sufficient factual content to render a conspiracy plausible, arguing they have not detailed the "who, what, where, and when" of their claims and only provided legal conclusions, suggesting that their conduct could equally comply with the law. Arctic Glacier further contends that claims regarding conduct before March 2004 are barred by the statute of limitations and questions the Court’s personal jurisdiction over certain Canadian Defendants.
Under the Twombly standard, the Supreme Court clarified that a complaint must present enough factual matter to plausibly suggest an agreement to survive a motion to dismiss. It emphasized that this does not require a probability at the pleading stage but rather enough facts to raise a reasonable expectation of evidence supporting the claim. It noted that a district court's role is to determine whether a plaintiff has the right to present evidence for their claim, not to assess the likelihood of success. The Twombly case involved allegations of collusion among local exchange carriers in the telecommunications market, where the court found that their decisions not to compete were not inherently indicative of a mutual agreement.
Independent Local Exchange Carriers (ILECs) possessed strong economic incentives to avoid "sharing" resources and entering each other's markets, driven by the risk of subsidizing competing long-distance carriers. The Supreme Court determined that such self-motivated behavior did not support a conspiracy claim, noting that ILECs would independently seek to exclude Competitive Local Exchange Carriers (CLECs) without needing mutual encouragement. The Court found that the plaintiffs' allegations of parallel conduct were insufficient to suggest an illegal agreement, as they were equally compatible with lawful behavior. The absence of any independent allegations of an actual agreement weakened the plaintiffs' case.
For the claims to progress beyond mere speculation, additional factual allegations were required to support the inference of an illegal agreement. Although the plaintiffs faced dismissal challenges, they presented enough factual content to suggest a reasonable expectation that discovery could uncover evidence of collusion. The Court clarified that Twombly did not impose a requirement for detailed fact pleading regarding "who, what, when, and where" at the pleading stage, emphasizing that the absence of such specifics did not preclude the plaintiffs' claims. The ruling reinforced that merely alleging parallel conduct, in the absence of additional context suggesting a prior agreement, was insufficient to establish a conspiracy under antitrust laws.
The Court emphasized that without general allegations of parallel conduct among the ILECs, there would be ambiguity regarding which ILEC or employee was involved in the alleged illicit agreement, hindering a defendant's ability to respond. It referenced the Twombly decision, clarifying that while heightened pleading of specifics is not required, complaints must present enough facts to make a claim plausible on its face. In the case of In re Southeastern Milk Antitrust Litig., the court determined that although complaints may not specify all details of "who, what, when, and where," they still sufficiently inform defendants about the nature of the claims and provide a basis for response. The court rejected the notion that allegations should be viewed in isolation, reinforcing that the character of a Sherman Act conspiracy should be assessed as a whole. This principle was supported by other cases, including Starr v. Sony BMG Music Entertainment and In re Graphics Processing Units Antitrust Litig., which affirmed that plaintiffs are not obligated to detail specific meetings or decisions among conspirators. Overall, the court maintained that a comprehensive view of the complaint is necessary, rather than dissecting it into individual allegations.
Defendants argue that the allegations in the complaint, including public statements and industry meetings, do not support a plausible conspiracy claim, citing the Supreme Court's guidance that conspiracy should not be assessed by isolating its components. They reference several cases to assert that plaintiffs must detail specifics of time, place, and person per Twombly, but the Court finds these cases distinguishable due to the substantial factual content presented here, including governmental and internal investigations and guilty pleas related to anticompetitive behavior by the defendants.
In Kendall v. Visa U.S.A. Inc., the court dismissed a complaint due to a lack of specific allegations against the banks, highlighting the plaintiffs’ failure to identify who did what, which rendered the claims implausible. Similarly, in In re Late Fee and Over-Limit Fee Litigation, the court deemed collective references to defendants insufficient to meet the Twombly standard, as they failed to suggest a prior agreement rather than independent actions.
While defendants maintain that parallel conduct and bare assertions of conspiracy are inadequate post-Twombly, the Court concludes that the current case differs, finding sufficient factual content in the complaint to suggest a plausible conspiracy.
Plaintiffs have sufficiently notified Defendants regarding the allegations of illegal agreements, identifying corporate entities and key executives involved, as well as the specific agreements to refrain from competing in certain territories. These allegations are backed by information from named individuals and confidential witnesses, and are currently subject to ongoing government investigations and criminal guilty pleas. Locations mentioned include Cincinnati and Southeastern Michigan, with relevant time frames established by the complaints and plea agreements.
The details provided exceed the minimal factual content lacking in the precedent case, Twombly, and establish a reasonable expectation that discovery may uncover evidence of illegal agreements, thus meeting the Twombly pleading standard. Defendants argue against the plausibility of the conspiracy claims, citing that government investigations and guilty pleas do not support a nationwide conspiracy and that the market structure of the Packaged Ice industry is consistent with lawful conduct. They contend that mere opportunities to conspire do not suffice for an antitrust claim under the Sherman Act.
However, Plaintiffs assert that the guilty pleas of various corporate executives regarding customer and territory allocations in Southeastern Michigan add plausibility to their claims. Defendants reference prior cases to argue that investigations alone do not establish a conspiracy, but contradictorily, a related case indicated that ongoing investigations can suggest illegal agreements.
Antitrust claims against specific defendants, aside from Bank of America (BoA), were initially deemed too general. However, in Hinds County, plaintiffs were allowed to amend their complaint after the court ruled that ongoing state and federal investigations into the municipal derivatives industry could enhance the plausibility of their claims. These investigations, while not sufficient alone to meet the pleading burden, could support the plausibility of allegations, as established in previous cases involving investigations by the New York Attorney General and the DOJ.
The court noted that while governmental investigations may bolster claims, plaintiffs must perform their own inquiries and provide original allegations. The investigation into the Packaged Ice industry and a company’s suspension of an executive were cited as factors that could support the plausibility of the plaintiffs' conspiracy claims. Conversely, defendants argued that guilty pleas from Arctic Glacier and its executives did not substantiate claims of a nationwide conspiracy; however, the court disagreed, referencing cases in the electronic memory markets where similar guilty pleas supported reasonable inferences of conspiracies in related markets. The court acknowledged that evidence of prior conspiracies could be relevant in establishing a current conspiracy, emphasizing that the guilty pleas from a few companies in one sector could still inform the plausibility of claims in a broader context.
At least seven employees are implicated in the management of NAND flash memory pricing and operations in the U.S., suggesting a connection between their roles in controlling DRAM pricing and their involvement in the alleged conspiracy. The court referenced previous cases, highlighting that guilty pleas in DRAM litigation support the inference of a conspiracy in the SRAM industry. Although individual allegations are insufficient for claims on their own, they help imply a broader conspiracy involving the same actors in both SRAM and DRAM.
The document also discusses a ruling in "In re Elevator Antitrust Litig." where the court found insufficient evidence linking alleged misconduct in Europe to the U.S. market, emphasizing the need for factual allegations that demonstrate a connection between the two. Unlike the plaintiffs in that case, the current plaintiffs reference an established conspiracy in a nearby state, strengthening their claims. The court noted that in "In re Chocolate Confectionary Antitrust Litig." the defendants' conduct in Canada supported the plausibility of a U.S. price-fixing conspiracy, contrasting it with cases where evidence of guilty pleas did not enhance the plausibility of claims related to different market behaviors, such as predatory pricing.
The court clarifies that the case at hand is not about predatory pricing and that the plaintiffs cannot use guilty pleas related to one type of misconduct as evidence of different illegal activities. The court distinguishes this case from In re Hawaiian Guamanian Cabotage Antitrust Litig., where the plaintiffs' attempts to use guilty pleas from unrelated conduct were rejected due to a lack of relevant overlap among defendants. The court emphasizes that the plaintiffs have not established a comparable factual scenario, as the cases they reference involved defendants participating in multiple markets, unlike the situation here.
The court notes that under certain conditions, the logic of "if there, then here" may apply, particularly when there is a significant overlap in the co-conspirators' identities across markets, as the same corporate actors are involved, and the claims relate to similar anticompetitive actions such as customer and market allocation. Although the guilty pleas alone may not enhance the plausibility of a conspiracy in a different market, they contribute to the overall context, especially alongside ongoing investigations that have led to the suspension of key executives.
The court asserts that the civil litigation cannot be limited by the scope of criminal investigations or plea agreements. It cites Starr, where the Second Circuit rejected the argument that civil conspiracy inferences were unreasonable due to a DOJ investigation having closed without evidence of competitive harm. The court emphasized that no precedent supports the dismissal of a civil antitrust complaint solely because the DOJ did not find evidence of conspiracy. Additionally, it highlighted that the DOJ had initiated new investigations into potential anticompetitive conduct and misleading actions by the defendants, reinforcing that the absence of criminal charges does not negate the possibility of a civil conspiracy.
The court in *In re Vitamins Litig.* rejected the argument that guilty pleas, cooperation agreements, and a class settlement preclude a broader conspiracy investigation. It emphasized that guilty pleas are negotiated based on the accused's culpability and the Justice Department's resource allocation. The court noted there is no requirement for civil antitrust plaintiffs to base their claims solely on the facts of prior criminal indictments, citing multiple cases that support this view. Furthermore, the ongoing DOJ investigation was acknowledged, with the court stating it would not weigh the government's comments on undiscovered evidence concerning a nationwide conspiracy.
The plaintiffs presented allegations that support the plausibility of a nationwide agreement among defendants to allocate markets for packaged ice, specifically referencing statements from Keith Corbin, an executive at Arctic Glacier, who admitted to colluding with Home City and Reddy Ice to divide the U.S. market to maintain high prices. Expected testimonies from several confidential witnesses, including former employees from Reddy Ice, provided detailed accounts of unlawful market allocation agreements, indicating collusion between Reddy Ice and Arctic Glacier to avoid competition in specific states. These testimonies were documented in a related securities fraud case, highlighting discussions about the agreements among employees during their tenure at Reddy Ice.
Defendant Brick allegedly entered into an unlawful agreement with Arctic Glacier to allocate packaged ice territories, specifically agreeing that Reddy Ice would avoid California while Arctic Glacier would steer clear of Arizona. Reddy Ice employees suggested that Home City was also involved in this agreement, with indications that it was represented at a meeting where market divisions were discussed. The employees indicated that Reddy Ice and Arctic Glacier agreed to refrain from competing in certain Mid-West states where Home City operated. Confidential witnesses corroborated that defendants Weaver and Janusek were aware of this unlawful allocation. The court must accept the claims of the confidential witnesses as true for the purposes of the motion to dismiss, without requiring detailed descriptions of the sources' roles or access to specific documents. The anticipated testimonies support the plausibility of a nationwide conspiracy among the defendants to allocate markets in violation of the Sherman Act, satisfying the requirements set forth in the Twombly decision. The structure of the packaged ice market, characterized by factors conducive to collusion, further supports the inference of an illegal conspiracy among the defendants. Reddy Ice is noted as the largest manufacturer and distributor of packaged ice in the U.S., with operations in 31 states and the District of Columbia.
Arctic Glacier operates 37 manufacturing and distribution facilities across the northeastern, central, and western United States, dominating major eastern cities and extending its reach to New England, California, and the Midwest. Home City sells Packaged Ice across several states, including Ohio and Indiana. Together, the Defendants control about two-thirds of the Packaged Ice market in the U.S. Plaintiffs allege that Packaged Ice is a commodity with no reasonable substitutes, stable and inelastic demand, and minimal brand preference among consumers. They highlight significant barriers to entry in the industry, including substantial investment costs for establishing ice plants and the necessity of refrigeration units at customer locations, which create an "installed base" that discourages customers from switching suppliers.
Historically, the Packaged Ice market was dominated by local and regional firms, but Plaintiffs claim that the Defendants have altered this landscape by reducing competition through aggressive expansion and acquisitions while allocating territories to avoid market overlap. Defendants counter that their conduct aligns with lawful business practices and argue that the Plaintiffs have not properly alleged an antitrust conspiracy under the standards set by Twombly. They assert that manufacturers have the right to independently choose their business territories based on economic self-interest, and the mere absence of overlap in service areas does not imply collusion. Defendants refer to established case law, asserting that their business decisions are legitimate and do not warrant the antitrust claims made by the Plaintiffs.
Reddy Ice contends that the plaintiffs' allegations regarding the packaged ice industry indicate that the defendants are acting lawfully and in their economic self-interest by not aggressively expanding beyond their geographic areas. They argue that cost-effective delivery of ice is limited to a 50 to 100-mile radius from distribution sites, making it economically unfeasible for Reddy Ice, which primarily operates in the South, to sell in Northeast markets dominated by Arctic Glacier. Reddy Ice asserts that its withdrawal from certain markets previously served by other defendants reflects independent business decisions rather than an antitrust conspiracy. They emphasize that the market for packaged ice is regional, making unilateral growth within their footprint reasonable.
In contrast, the plaintiffs argue that the defendants' claims of lawful conduct overlook a critical admission from a participant in the alleged conspiracy, suggesting that all three defendants agreed not to compete nationally, rendering a conspiracy plausible. They assert that the context of the defendants' actions must be considered, as it may imply a prior agreement, contradicting the notion of independent action. The plaintiffs highlight that certain actions taken by the defendants, such as exiting markets and allowing competitors unhindered access, appear contrary to their economic self-interest and suggest an illegal territorial allocation agreement. They note that the defendants have historically expanded through acquisitions and challenge the argument that remaining within geographic boundaries is sound business strategy. The plaintiffs maintain that the defendants' actions contradict their self-interest, representing a "plus factor" indicative of concerted action, exemplified by Reddy Ice's departure from the lucrative California market, which Arctic Glacier subsequently entered.
Plaintiffs assert that Arctic Glacier's withdrawal from competition in Oklahoma and New Mexico, despite having nearby manufacturing facilities, exemplifies behavior against its economic self-interest, especially given Reddy Ice's lack of similar actions. They argue that Reddy Ice's claim of prohibitive costs to service northeastern markets is unconvincing, as it could have acquired existing companies in those areas, aligning with its growth strategy. At the pleading stage, Plaintiffs are not required to eliminate the possibility of independent actions by defendants but must provide sufficient factual support suggesting an agreement, as established in *Twombly*. The court acknowledges that whether the defendants’ actions were independent or part of a concerted effort in violation of the Sherman Act is a factual issue requiring further discovery. Plaintiffs have plausibly alleged that the lack of market overlap results from an illegal agreement, challenging the defendants' claims of lawful independent actions. While mere opportunity to conspire is insufficient for a conspiracy claim, the context of the allegations enhances their plausibility. Membership in the Packaged Ice trade association and involvement of executives with past antitrust violations are considered, but must be evaluated in conjunction with all claims made. Overall, the plaintiffs’ allegations suggest that there is a reasonable expectation that discovery could reveal evidence supporting the alleged conspiracy.
Plaintiffs' Consolidated Amended Complaint (CAC) sufficiently alleges that the Defendants engaged in a nationwide conspiracy to allocate customers and territories. It provides enough factual detail to suggest the likelihood of discovering evidence of illegal agreements, thereby giving Defendants adequate notice of the claims against them. The CAC improves upon the previous complaint by presenting specific facts indicating that the alleged parallel conduct was the result of a mutual agreement among the defendants. The determination of whether Plaintiffs will ultimately succeed is deferred for later consideration.
Regarding the statute of limitations under the Sherman Act, Defendants argue that the claims are partially time-barred since the CAC was filed in March 2008, and any violations before March 2004 are not actionable. Plaintiffs counter this by pointing out that Arctic Glacier and Home City admitted to a conspiracy starting in January 2001, arguing for the tolling of the statute of limitations based on the Defendants' alleged fraudulent concealment of their anti-competitive conduct.
To successfully invoke the doctrine of fraudulent concealment, Plaintiffs must demonstrate: 1) Defendants concealed the conduct that forms the basis of the claims; 2) this concealment hindered the discovery of the cause of action within the statute of limitations; and 3) Plaintiffs exercised due diligence in attempting to uncover this information. The Sixth Circuit requires proof of affirmative acts of concealment, rather than mere silence. Plaintiffs allege that Defendants actively misled them by falsely portraying their pricing as unilateral and legitimate, thereby obscuring the collusive nature of their actions. Plaintiffs assert that they were unable to discover the unlawful agreement earlier due to these deceptive practices.
Defendants engaged in secretive actions to conceal their contract and conspiracy related to the allocation of markets and customers for Packaged Ice, including attending clandestine meetings and having undisclosed discussions. While these allegations may initially appear insufficient under the Pinney standard against fraudulent concealment, the existence of a dispute regarding fraudulent concealment is a matter for the jury. The plaintiffs assert that defendants publicly misrepresented their pricing practices as unilateral instead of collusive, claiming compliance with business ethics and federal antitrust laws despite later admissions of violation. Given the scope of the alleged conspiracy from 2001 to 2007 and the plaintiffs' claims of fraudulent concealment meeting the pleading standards established by Twombly and Iqbal, the court finds the allegations plausible. Regarding Arctic Glacier's motion to dismiss for lack of personal jurisdiction, the burden lies with the plaintiffs to establish jurisdiction only when the defendant challenges it with affidavits. Since Arctic Glacier did not provide any such evidence, the court can rely on the plaintiffs' allegations without an evidentiary hearing, allowing them to meet the prima facie standard for jurisdiction. Without contradicting evidence from the defendant, the motion cannot be upheld.
Plaintiffs contend that the Canadian Arctic Glacier Defendants have substantial business operations in the United States, which is a relevant factor in assessing minimum contacts for personal jurisdiction. During a court hearing on June 24, 2010, Arctic Glacier's counsel expressed willingness for the Court to defer its decision on personal jurisdiction until after the Plaintiffs conduct jurisdictional discovery, similar to a previous case. Consequently, the Court denied the Defendants' motions to dismiss.
Additionally, on November 13, 2009, the Direct Purchaser Plaintiffs sought preliminary approval for a $13.5 million settlement with Home City. The Reddy Ice and Arctic Glacier Defendants then filed a motion to stay this consideration, arguing that the Plaintiffs had not shown the proposed class met Federal Rule of Civil Procedure 23 requirements. Plaintiffs and Home City countered that preliminary approval would not impair the non-settling Defendants' ability to challenge class certification later. The motion to stay is set for a hearing on July 21, 2010.
The Court also noted it would consider allegations from related cases, McNulty v. Reddy Ice Holdings, Inc. and Chamberlain v. Reddy Ice Holdings, Inc., recognizing its authority to take judicial notice of related public records when deciding on the motion to dismiss. Both Plaintiffs and Arctic Glacier referenced these related complaints, and the Court intends to take judicial notice of their contents.
The Chamberlain complaint alleges that Reddy Ice planned to sell its California manufacturing operations to a consortium that would be acquired by Arctic Glacier. The plaintiffs reference the Home City Plea Agreement, which the Court acknowledges as a public document. A motion is pending for a proposed $13.5 million class action settlement benefiting all purchasers of packaged ice in the U.S. from January 1, 2001, to March 6, 2008, with Home City agreeing to assist in further prosecution of antitrust claims against Arctic Glacier and Reddy Ice.
Arctic Glacier's motion to dismiss cites its own plea agreement and those of its executives, all available on the DOJ website. Additionally, multiple state attorneys general are investigating potential anticompetitive practices in the packaged ice industry, with Reddy Ice disclosing inquiries from 19 states regarding trade restraint and price fixing. The Chamberlain securities fraud case reiterates these accusations, including references to Reddy Ice's 2005 Form 10-K, which emphasizes compliance with antitrust laws and warns against discussions that could lead to price fixing or market allocation. This context highlights serious concerns over antitrust violations within the industry, particularly among competitors.
Reddy Ice and Arctic Glacier have filed separate motions to dismiss, which the Plaintiffs have responded to jointly. The Court will analyze the Defendants' similar arguments collectively but will specify any divergences as necessary. In the context of the pleading standards, the Supreme Court's recent opinions reaffirm the notice pleading standard established in Conley v. Gibson, clarifying that plaintiffs do not need to provide specific facts at the initial pleading stage but must give fair notice of their claims. Reddy Ice contends that the Sixth Circuit's ruling in In re Travel Agent requires plaintiffs to detail specific times, persons, and places in conspiracy claims. However, the Court finds this interpretation incorrect, noting that In re Travel Agent addresses different circumstances involving unnamed parties and bare assertions of conspiracy, unlike the current case where specific parties and executives are implicated. Additionally, Reddy Ice argues that the absence of its involvement in plea agreements undermines the claim of its participation in a national conspiracy, as it does not operate in the relevant territories. The Court distinguishes the current case from In re Travel Agent based on the additional factual content present in the Plaintiffs' allegations.
Reddy Ice's lack of business operations in Michigan and the suspension of its executive vice-president, Ben Key, due to potential policy violations enhance the suspicion of illegal activities extending beyond Southeastern Michigan. Home City has proposed a settlement with plaintiffs representing direct purchasers of packaged ice nationwide and has agreed to assist in a conspiracy claim. Plaintiffs allege that Keith Corbin from Arctic Glacier acknowledged an agreement among Arctic Glacier, Home City, and Reddy Ice to divide the U.S. market for packaged ice to maintain high prices. Evidence supporting a broader conspiracy is also referenced in the Chamberlain Complaint, which includes accounts from several confidential witnesses. The court dismisses the defendants' argument regarding the hearsay nature of some allegations in the complaint, affirming that all factual allegations must be treated as true under Rule 12(b)(6) or 12(c). The court acknowledges that while the defendants assert that reliance on prior case law is overstated, it clarifies that the Sixth Circuit did not definitively state that a jury instruction about self-concealing conspiracies is appropriate in such cases.
