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D&G, Inc. v. C&S Wholesale Grocers, Inc., 18-2121 (2020)

Court: Court of Appeals for the Eighth Circuit Number: 18-2121 Visitors: 5
Filed: Apr. 27, 2020
Latest Update: Apr. 27, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 18-2121 _ In re: Wholesale Grocery Products Antitrust Litigation - D&G, Inc., doing business as Gary’s Foods; Blue Goose Super Market, Inc.; Nemecek Markets, Inc.; Millennium Operations, Inc., doing business as Dick’s Market; Elkhorn-Lueptows, Inc.; Jefferson Lueptows, Inc.; East Troy Lueptows, Inc., lllllllllllllllllllllPlaintiffs - Appellants, v. C&S Wholesale Grocers, Inc., lllllllllllllllllllllDefendant - Appellee. _ Appeal from Uni
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                 United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 18-2121
                        ___________________________

              In re: Wholesale Grocery Products Antitrust Litigation

                             ------------------------------

  D&G, Inc., doing business as Gary’s Foods; Blue Goose Super Market, Inc.;
 Nemecek Markets, Inc.; Millennium Operations, Inc., doing business as Dick’s
Market; Elkhorn-Lueptows, Inc.; Jefferson Lueptows, Inc.; East Troy Lueptows, Inc.,

                      lllllllllllllllllllllPlaintiffs - Appellants,

                                           v.

                          C&S Wholesale Grocers, Inc.,

                       lllllllllllllllllllllDefendant - Appellee.
                                      ____________

                    Appeal from United States District Court
                   for the District of Minnesota - Minneapolis
                                  ____________

                           Submitted: October 15, 2019
                              Filed: April 27, 2020
                                 ____________

Before COLLOTON, BEAM, and KELLY, Circuit Judges.
                          ____________
COLLOTON, Circuit Judge.

       D&G, Inc., an independent grocery retailer, brought an antitrust suit against
C&S Wholesale Grocers, Inc., on behalf of a class of grocery retailers. The retailers
alleged that C&S agreed with another grocery wholesaler, SuperValu, Inc., not to
compete for customers in certain geographical areas. A jury returned a verdict in
favor of C&S. D&G appeals, arguing that the district court1 erred in its instructions
to the jury. We conclude that the instructions fairly and adequately submitted the
issues, and we therefore affirm the judgment.

                                          I.

       C&S Wholesale Grocers, Inc., provides wholesale grocery services to grocery
retail stores primarily in the northeastern United States. In 2003, C&S purchased
substantially all the assets of Fleming, a nationwide grocery wholesaler, during
Fleming’s bankruptcy. C&S later entered into an asset exchange agreement with
SuperValu, a grocery wholesaler headquartered near Minneapolis. C&S transferred
Fleming’s assets and customers located in the Midwest to SuperValu in exchange for
SuperValu’s assets and customers located in New England. C&S and SuperValu
agreed not to supply the exchanged customers for two years after the sale and not to
solicit the exchanged customers for five years after the sale.

       This transaction prompted extensive antitrust litigation. Customers of both
C&S and SuperValu sued the wholesalers, asserting that the written agreement and
a separate unwritten understanding violated the Sherman Act, 15 U.S.C. § 1. The
district court certified five classes of plaintiffs, all grocery retailers, who brought
antitrust claims against C&S and SuperValu arising from the transaction. This court


      1
       The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota.

                                         -2-
has addressed other aspects of the litigation in three previous appeals. See In re
Wholesale Grocery Prod. Antitrust Litig., 
946 F.3d 995
(8th Cir. 2019); In re
Wholesale Grocery Prod. Antitrust Litig., 
752 F.3d 728
(8th Cir. 2014); In re
Wholesale Grocery Prod. Antitrust Litig., 
707 F.3d 917
(8th Cir. 2013).

        D&G, Inc., is an independent grocery store representing one of the classes that
sued C&S. D&G and the class assert that the agreement between C&S and
SuperValu was an illegal antitrust conspiracy. The class alleged that C&S violated
the Sherman Act by agreeing with SuperValu to allocate customers and territories for
full-line grocery wholesale goods and services, and that this anti-competitive conduct
caused retailers to pay supracompetitive prices for wholesale goods and services.

       D&G’s case eventually proceeded to trial in April 2018. D&G’s theory was
that in addition to the written agreement about exchanging assets and existing
customers, C&S and SuperValu had an unwritten agreement that C&S would not
compete for new customers in the Midwest and that SuperValu would not compete
for new customers in the Northeast. Alternatively, as the case developed at trial,
D&G claimed that even if C&S did not agree to forego competition for all new
customers in the Midwest, C&S at least agreed that it would not compete for new
business from a subset of potential new customers—namely, independent grocery
retailers—in that region. After a two-week trial, a jury returned a verdict for the
defendant C&S.

                                          II.

       D&G’s argument on appeal is that the district court erred in formulating one
jury instruction and the verdict form. The district court gave Final Jury Instruction
No. 20 as follows:




                                         -3-
            Plaintiffs claim that C&S violated Section 1 of the Sherman Act
      by entering into an Unwritten Agreement with SuperValu to allocate
      customers and territories along geographic lines. Allocate means to
      divide.

      ....

             To prevail on this claim against C&S, Plaintiffs must prove each
      of the following elements by a preponderance of the evidence: (1) C&S
      and SuperValu were competitors or potential competitors; (2) C&S and
      SuperValu entered into a conspiracy—specifically, the Unwritten
      Agreement—in which C&S agreed that it would not compete with
      Supervalu for new customers in certain territories or geographic areas;
      and (3) Plaintiffs were injured in their business or property because of
      the Unwritten Agreement.

R. Doc. 1232, at 21-22.

       The district court also asked the jury, on a special verdict form, the following
question: “Did the Plaintiffs prove that C&S and SuperValu were competitors or
potential competitors, and that they entered into an Unwritten Agreement to divide
territories and customers along geographic lines which restricted competition more
broadly than the Asset Exchange Agreement?” R. Doc. 1233.

       We review the district court’s jury instructions, including special verdict forms,
for abuse of discretion. Wilkins v. St. Louis Hous. Auth., 
314 F.3d 927
, 932 (8th Cir.
2002). The pertinent question is “whether the instructions, taken as a whole and
viewed in light of the evidence and applicable law, fairly and adequately submitted
the issues in the case to the jury.” M.M. Silta, Inc. v. Cleveland Cliffs, Inc., 
572 F.3d 532
, 536 (8th Cir. 2009) (quoting Bass v. Flying J, Inc., 
500 F.3d 736
, 739 (8th Cir.
2007)). An error requires a new trial if it had a substantial influence on the verdict.
Kotteakos v. United States, 
328 U.S. 750
, 765 (1946).



                                          -4-
       D&G argues that the district court mistakenly required the plaintiffs to prove
that C&S and SuperValu agreed to allocate both customers and territories, but that
proof of an agreement to divide one or the other should have been sufficient to
establish a per se violation of the Sherman Act. See United States v. Topco Assocs.,
Inc., 
405 U.S. 596
, 608-12 (1972). D&G focuses on the first sentence of the jury
instruction, which referred to a claim that the wholesalers agreed “to allocate
customers and territories along geographic lines.” And D&G highlights the question
in the special verdict form asking whether the plaintiffs had proved an agreement “to
divide territories and customers along geographic lines.”

       D&G proposed different instructions and maintains that the district court
should have used them instead. D&G asked for instructions on two different claims.
The submission on “Claim 1—Allocation of Customers” would have required proof
that “C&S agreed with Supervalu to divide up customers along geographic lines.”
R. Doc. 1138, at 37. The proposed instruction for “Claim 2—Allocation of
Territories or Geographical Areas” asked whether the plaintiffs had proved that “C&S
agreed that it would not compete with Supervalu in certain territories or geographic
areas.” R. Doc. 1138, at 39-40.

        Whether the jury instructions fairly and adequately submitted the issues to the
jury must be considered in light of the evidence and legal theories advanced in a
particular case. While it is true that an agreement to allocate either customers or
territories could violate the Sherman Act, D&G’s theory in this case melded the two.
D&G argued that C&S and SuperValu agreed to allocate customers in the Midwest
and New England. There was no contention that C&S agreed to divide up customers
outside those regions or to allocate those territories without allocating customers in
them. It was therefore understandable and consistent with the evidence and
arguments for the district court to instruct that D&G must prove that “C&S agreed
that it would not compete with Supervalu for new customers in certain territories or
geographic areas.” Likewise, the reference in the verdict form to “an Unwritten

                                         -5-
Agreement to divide territories and customers along geographic lines” is consistent
with D&G’s primary theory throughout the case—namely, that C&S and SuperValu
agreed to allocate new customers in the Midwest to one company and new customers
in New England to the other.

       D&G complains that the instructions did not allow the jury adequately to
consider its alternate theory that the defendants agreed to allocate a certain segment
of the new customers in the two regions (i.e., independent grocery retailers) even if
they did not divide up all new customers in the two territories. Final Instruction No.
20, however, was sufficient to accommodate the alternate theory. It did not require
a finding that the defendants agreed to allocate all new customers. The marshaling
instruction said that D&G must prove an agreement that C&S “would not compete
with Supervalu for new customers in certain territories or geographic areas.” If the
jury was convinced that C&S agreed that it would not compete with SuperValu for
new independent grocer customers in the Midwest, then there was ample room under
the instructions to find liability.

       We are fortified in this conclusion by the fact that D&G’s proposed instructions
do not differ meaningfully from the final instruction on this issue. D&G proposed
separate instructions asking whether “C&S agreed with Supervalu to divide up
customers along geographic lines” or whether “C&S agreed that it would not compete
with Supervalu in certain territories or geographic areas.” Neither of these
instructions parses a distinction between all new customers and a subset of new
customers. D&G’s proposed reference to dividing up “customers” along
geographical lines is no different from the final instruction’s focus on allocating “new
customers” in certain territories or geographical areas. If D&G’s proposed instruction
could accommodate a theory of liability based on dividing up independent grocery
retailers along geographical lines, then Final Instruction No. 20 could too.




                                          -6-
        We are not convinced by D&G’s contention that the reference in the verdict
form to the defendants dividing “territories and customers along geographic lines”
misled the jury. The jury was told in Final Instruction No. 20 that it “must find”
liability if “C&S agreed that it would not compete with Supervalu for new customers
in certain territories or geographic areas.” We consider the instructions as a whole
and evaluate the verdict form in light of the instructions. If the jury was persuaded
that C&S agreed not to compete for new independent grocer customers in the
Midwest, such that it was directed to find for the plaintiffs under the jury instruction,
then it is not reasonably likely that any variation between the wording of the
instruction and the verdict form caused the jury to believe that it must reject D&G’s
claim. As Chief Justice Rehnquist once wrote for the Court:

      Jurors do not sit in solitary isolation booths parsing instructions for
      subtle shades of meaning in the same way that lawyers might.
      Differences among them in interpretation of instructions may be
      thrashed out in the deliberative process, with commonsense
      understanding of the instructions in light of all that has taken place at
      the trial likely to prevail over technical hairsplitting.

Boyde v. California, 
494 U.S. 370
, 380-81 (1990).

                                       *   * *

      The judgment of the district court is affirmed.
                     ______________________________




                                           -7-

Source:  CourtListener

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