Tuna seller StarKist asks Supreme Court to reverse class-action ruling

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StarKist has asked the Supreme Court to review a lower court ruling certifying a price-fixing lawsuit filed against it as a class action.

A class-action lawsuit is filed when a group of people or businesses suffer common injuries as a result of a party’s alleged conduct. At least one individual or entity acts as a representative of the group. In order for the lawsuit to proceed, a court first needs to decide if the various allegedly injured parties have enough in common to be certified as a class.

Reston, Virginia-based StarKist, which is owned by South Korea’s Dongwon Industries, produces packaged tuna fish for the mass market. It’s being sued by several individuals as well as grocery chains, restaurants, and caterers for allegedly fixing the price of tuna sold between 2011 and 2013 in the United States. StarKist, Bumble Bee, and three tuna industry executives entered guilty pleas to criminal conspiracy to fix prices.

The case is known as StarKist Co. v. Olean Wholesale Grocery Cooperative Inc. StarKist filed its petition seeking review with the Supreme Court on Aug. 8.

On April 8, the U.S. Circuit Court of Appeals for the 9th Circuit affirmed a 2019 ruling by federal Judge Janis Sammartino certifying the creation of three separate classes in the suit–direct purchasers, indirect purchasers, and end payers.

But StarKist argues that many of the customers certified, including direct purchasers, didn’t experience actual harm as a result of its actions.

“StarKist has willingly and proactively settled cases with customers in situations in which there was a reasonable basis for arguing the customer was harmed,” StarKist Senior Vice President and general counsel Scott Meece told trade publication Seafood Source News.

“On the other hand, StarKist will not settle cases, in these matters or others, if the claims are excessive or in which the complaining party was not harmed. We will continue to defend those cases, and while defense is costly, it is the right thing to do.”

In its petition to the high court, the company argues the 9th Circuit’s decision is wrong because it “upheld certification of a class even though a third of that class may be uninjured,” leaving the issue of uninjured members to be resolved by a jury. The 9th Circuit ruling also conflicts with rulings by other federal courts of appeals across the country.

StarKist disputes the claim that it conspired to manipulate the list prices for hundreds of different tuna products. The list price “for the products at issue is virtually never the price paid by direct purchasers, like a Costco, or passed through to individual consumers downstream,” the petition states.

“Instead, the actual price paid derives from purchaser-specific negotiations and a host of other factors that often result in variations from the list price.” The price of a specific product reflects “numerous, highly individualized factors.”

“These products include both branded products and private label products (e.g., store-brand products sold by Trader Joe’s and Costco), packaged both for individual consumers and for food preparers. The purchasers of Defendants’ products vary greatly in size and negotiating power, procurement and retail strategies, and other factors, which influence the prices they actually pay. The prices paid by direct purchasers are reached through individualized negotiations, depending on the type of product.”

According to a commentary by Lydia Wheeler at Bloomberg Law, it’s clear that StarKist and Bumble Bee “colluded to increase the price of tuna, but that doesn’t mean all the purchasers involved in the class action were actually injured by the alleged conspiracy.”

“Class actions, though, rarely go to trial,” Wheeler added. “They often settle once a court certifies the class.”

As one judge noted, she wrote, companies settle “even if they have a meritorious defense because their potential liability at trial could be enormous, maybe even catastrophic.”

This article by Matthew Vadum appeared August 10, 2022, in The Epoch Times.