In re: Wholesale Grocery Products Antitrust Litigation; D& G, Inc., doing business as Gary's Foods, Plaintiff - Appellant DeLuca's Market Corp., Plaintiff
SuperValu, Inc.; C& S Wholesale Grocers, Inc., Defendants - Appellees, American Antitrust Institute, Amicus Curiae
Submitted: November 21, 2013.
Appeal from United States District Court for the District of Minnesota - Minneapolis.
For In re: Wholesale Grocery Products Antitrust Litigation D& G, Inc., doing business as: Gary's Foods, Plaintiff - Appellant: Lockridge & Grindal, Minneapolis, MN; Boies & Schiller, Hanover, NH; Kotchen & Low, Washington, DC; Lockridge & Grindal, Minneapolis, MN.
For SuperValu, Inc., Defendant - Appellee: Robins & Kaplan, Minneapolis, MN.
For C& S Wholesale Grocers, Inc., Defendant - Appellee: Baker & Botts, The Warner, Washington, DC; Fredrikson & Byron, Minneapolis, MN.
For American Antitrust Institute, Amicus Curiae: Gustafson & Gluek, Minneapolis, MN; Washington, DC.
Before RILEY, Chief Judge, BRIGHT and KELLY, Circuit Judges.
RILEY, Chief Judge.
This antitrust case pits a small town, family-owned grocery store against the two largest grocery wholesalers in the United States. D& G, Inc., operates the Gary's Foods store in Mount Vernon, Iowa. In 2003, D& G's wholesaler, SuperValu, Inc., agreed to a geographic asset exchange with C& S Wholesale Grocers, Inc., and its subsidiaries. SuperValu took the Midwest, while C& S took New England. According to D& G's expert, the asset exchange agreement expectedly would increase wholesale prices in the Midwest. Unsurprisingly, the wholesalers and their expert disagree. D& G sued the wholesalers under the first section of the Sherman Act, 15 U.S.C. § 1, and the fourth section of the Clayton Act, 15 U.S.C. § 15(a), and moved for class certification. The district court denied the certification motion and, on cross-motions for full and partial summary judgment, granted summary judgment to the wholesalers. D& G appeals. We affirm in part, reverse in part, vacate in part, and remand.
A. Factual History
C& S and SuperValu are the two largest grocery wholesalers in the United States. Grocery wholesalers are a critical link in the grocery supply chain, purchasing thousands of products directly from manufacturers and suppliers before distributing them to retailers. " Partial-line" wholesalers specialize in a handful of specialty product categories, while " full-line" wholesalers like C& S and SuperValu distribute tens of thousands of products spanning every category. To stock the thousands of products Americans expect to find in their local grocery store, small retailers like D& G need one full-line wholesaler in addition to partial-line wholesalers and direct suppliers.
Before June 2002, SuperValu was C& S's " largest" and " closest" competitor in New England, where C& S was the primary wholesaler. C& S did not compete at all with SuperValu in the Midwest, where SuperValu was the dominant wholesaler. In June 2002, C& S acquired a
distribution center in Ohio dedicated to serving a regional grocery chain, and eyed expansion into the rest of SuperValu's Midwestern market. Less than a year later, SuperValu's main competitor in the Midwest, Fleming Companies, filed for bankruptcy. SuperValu submitted a regional bid for Fleming's Midwestern business, but C& S announced its intention to acquire Fleming's wholesale assets nationwide, positioning C& S to become SuperValu's top competitor in the Midwest. When this news became public, MarketWatch reported SuperValu's stock price " tumbl[ed] . . . as investors worried that a stronger rival was stepping into the wholesale grocery picture." SuperValu Subtracts 8% as Competition Heats Up, MarketWatch (June 30, 2003, 11:25 AM), http://www.marketwatch.com/story/ supervalu-subtracts-8-as-competition-heats-up.
Even as C& S and Fleming negotiated, SuperValu was involved in negotiations of its own--with C& S. In May 2003, C& S formally offered to acquire SuperValu's entire wholesaling operation in New England. On July 7, 2003, C& S and Fleming reached a final agreement, allowing C& S, if it so chose, to designate a third party to acquire Fleming's Midwestern assets. On July 20, 2003, C& S executive vice president Mark Gross informed SuperValu senior corporate counsel Sheila Hagen, by e-mail, that C& S and SuperValu " ha[d] always been discussing your departure from New England. No carve-outs . The purchase price/swap only makes sense with your departure ." (Emphasis added). Hagen replied, indicating SuperValu's willingness " to discuss the issue of New England sales w/ [sic] you." The following morning, Gross replied:
We are not interested in a transaction that leaves Supervalu in New England . . . . [W]e have been discussing this for months. This is the basis of the deal . Finally, you should look at [the letter of ...