By Andrew Longstreth
Feb 13 (Reuters) - A federal appeals court on Wednesday
revived antitrust claims against C&S Wholesale Grocers Inc and
SuperValu Inc alleging that they engaged in a transaction to
artificially raise the prices of groceries.
A three-judge panel for the 8th U.S. Circuit Court of
Appeals sitting in St. Paul, Minnesota, reversed a lower court's
decision that had dismissed claims brought by five retail
grocers. It represents a setback for the wholesalers.
At issue is a 2003 agreement between SuperValu and C&S to
exchange assets in the Midwest and New England and not to
compete with each other for customers served by the operations
involved in the swap.
Five retail grocers, including King Cole Foods Inc and Blue
Goose Super Market Inc, brought class action antitrust claims
against either one of the two wholesalers. The claims were made
as part of an ongoing lawsuit that claimed the deal between
SuperValu and C&S allowed the wholesalers to overcharge retail
customers in the Midwest and New England.
Each of the five retail grocers had an agreement with one or
the other wholesaler defendant requiring the parties to
arbitrate disputes. To get around that requirement, each of the
five brought claims against the wholesaler with which it did not
have an arbitration agreement.
U.S. District Judge Ann Montgomery in Minneapolis struck the
retailers' claims from the lawsuit, finding that the doctrine of
equitable estoppel, which prevents parties from gaining unfair
legal advantages, barred the retailers from making the claims.
In a 2-1 decision, a panel for the 8th Circuit disagreed.
Judge Bobby Shepherd, in the majority opinion, wrote that there
was "no evidence" that the arbitration contracts could have
anticipated the conspiracy claims raised by the retailers.
In a dissent, Judge Duane Benton found the retailers'
antitrust claims were closely related to the arbitration
agreements at issue and therefore should not be allowed to
proceed in court.
A SuperValu spokesman said the company was reviewing its
options. C&S did not return a call for comment.
The 8th Circuit's decision was a rare win for the plaintiffs
in the litigation against C&S and SuperValu. Last month, Judge
Montgomery dismissed a lawsuit filed against the two wholesalers
by retail grocery operators D&G Inc and DeLuca's Market Corp.
In a previous decision, Judge Montgomery had denied a motion
to certify a class of plaintiffs seeking to bring antitrust
claims against C&S and SuperValu.
The 8th Circuit case is King Cole Foods Inc v. SuperValu
Inc, 8th U.S. Circuit Court of Appeals, No. 11-3768.
For SuperValu: Stephen Safranski of Robins, Kaplan, Miller &
For C&S Wholesale Grocers: Charles Loughlin of Baker Botts.
For JFM Market Inc, King Cole Foods Inc and MJF Market Inc:
Edward Dangel III of Dangel & Mattchen.
For Blue Goose Super Market and Millennium Operations Inc:
Richard Drubel of Boies, Schiller & Flexner.
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