Opinion ID: 4543063
Heading Depth: 2
Heading Rank: 2

Heading: The Certification Program

Text: Turning to the UEP Certification Program – the one part of the alleged conspiracy that the plaintiffs have consistently argued should be subject to the per se mode of analysis 9 – we 9 The plaintiffs never asked the District Court to determine whether the rule of reason or the per se standard applied to the other two components of the alleged conspiracy, namely: (i) the short-term supply-reducing recommendations, including early slaughter, early molting, and reduced hatch; and (ii) egg exports. The plaintiffs’ argument has always been that the conspiracy was a single overarching conspiracy and that the per se standard applied to it as a whole. Once the District Court rejected that theory and determined that the rule of reason applied to the Certification Program, the plaintiffs never moved to have the Court consider whether the per se standard should apply to the other two alleged stratagems. Instead, the plaintiffs opted to try the case under the theory that 19 conclude that the District Court properly applied the rule of reason. The Certification Program was not an express agreement to reduce the supply of eggs, much less to fix prices. And, notwithstanding the plaintiffs’ protestations, it is not clear that the Program would “have manifestly anticompetitive effects and lack any redeeming virtue[,]” id. at 886 (citation omitted), as must be the case for the per se rule to apply. Although the Program required increased cage space and so would lead to fewer hens in existing structures, the Program did not limit the number of hens or structures a producer could have, so producers could increase the number of hen houses and add more hens. And Rose Acre provided evidence that hens with more cage space produce more eggs. Similarly, the impact on the supply of eggs of a prohibition on backfilling is less than clear, as there is evidence that the prohibition prevents disease and social competition and allows hens to live longer and produce more eggs. Moreover, as the District Court said, “while the plaintiffs argue that the supply reducing effects of the conspiracy are essentially undisputable, the record includes evidence that egg supply actually increased during the conspiracy period.” Processed Egg Prods. II, 206 F. Supp. 3d at 1047. Although the plaintiffs assert that the egg supply would have increased even more if not for the Certification Program, the economic impact of the actions at issue cannot be predicted with a high degree of certainty, which is a prerequisite for application of the per se standard. See United there was one overarching conspiracy subject to rule of reason analysis. 20 States v. Brown Univ. in Providence in State of R.I., 5 F.3d 658, 670 (3d Cir. 1993) (citation omitted) (“Per se rules of illegality are judicial constructs, and are based in large part on economic predictions that certain types of activity will more often than not unreasonably restrain competition[.]”). Despite that, the plaintiffs argue for that standard, relying heavily on the rule that horizontal agreements among competitors to fix prices are illegal per se. Leegin, 551 U.S. at 886. According to the plaintiffs, because they allege that the defendants engaged in a conspiracy to reduce the supply of eggs, the per se standard has to apply. But, as already indicated, the plaintiffs’ choice of labels does not dictate the mode for assessing allegations and evidence. Brown Univ., 5 F.3d at 670 (“[T]he test for determining what constitutes per se unlawful price-fixing is one of substance, not semantics.”). The District Court thoroughly considered the plaintiffs’ complaint and the record and determined that there was not a horizontal agreement to reduce supply and fix prices. The Court was confronted with practices having far less certain motives and far more complicated economic consequences, and that quite rightly led to application of the rule of reason. That choice was correct.