A federal court in the District of Columbia has denied a motion to certify a class of Los Angeles County Whole Foods shoppers alleging that the company’s 2007 merger with Wild Oats “substantially lessened competition” in violation of the Clayton Act, “created an unlawful monopoly” under the Sherman Act, and “constituted an unlawful agreement in restraint of trade” in violation of both acts. Kottaras v. Whole Foods Mkt., Inc., No. 08-1832 (D.D.C., decided January 30, 2012). The plaintiff, a California resident and patron of both stores, claims that the merger unlawfully raised prices on certain products by foreclosing competition in the premium, natural and organic supermarket sector.

According to the court, injury to individual class members “cannot be proven through classwide evidence” and thus the action fails to “satisfy Rule 23(b)(3)’s requirement that common questions predominate over individual ones.” The court also found that the methodology of the plaintiff’s expert “is too vague for the Court to rigorously analyze,” and that the alternative request for certification under Rule 23(b)(2) must be rejected because the equitable relief in the case was “merely incidental to monetary damages.”

Apparently, plaintiff’s expert planned to prove classwide damages with regressive analyses that would include only products that increased in price due to the merger. Because the defendant’s expert contended that Whole Foods shoppers buy “highly differentiated baskets of products” and that “the majority of the products sold at Whole Foods have decreased in price” since the merger, the court agreed that common evidence could not show that a substantial majority of proposed class members were injured. The court also noted that the plaintiff’s expert had “not yet performed a single regression,” nor could he “tell the court the precise analyses he intended to undertake.” Given variable factors with a potential impact on price for which this expert would have to account, such as “wholesale cost, advertising or sales promotional activities, seasonality, competition from other stores, average or median disposable income of the customer base,” the court agreed with Whole Foods that his methodology was too vague.

About The Author

For decades, manufacturers, distributors and retailers at every link in the food chain have come to Shook, Hardy & Bacon to partner with a legal team that understands the issues they face in today's evolving food production industry. Shook attorneys work with some of the world's largest food, beverage and agribusiness companies to establish preventative measures, conduct internal audits, develop public relations strategies, and advance tort reform initiatives.