After a Decade of Antitrust Litigation, An Extra-Sweet Victory for Fresh Del Monte
Firm Newsletter Spring 2011
In several lawsuits extending over a decade, BSF has defended Fresh Del Monte’s rights in what is arguably the most valuable new fruit product in the world: the extra-sweet hybrid pineapple variety called the MD-2. Del Monte brought the MD-2 to market in 1996 and sells it under the Del Monte Gold® brand.
In several of these actions, direct and indirect purchasers of the Del Monte Gold® brought federal antitrust claims against Del Monte. The purchasers alleged unlawful monopolization of the extra-sweet pineapple market, claiming Del Monte was preventing competitors from growing and selling the MD-2 variety, which enabled the company to charge supra-competitive prices for the Del Monte Gold®. In these actions, Plaintiffs sought treble damages in excess of $1 billion.
In September of 2009, after six years of hard-fought litigation, with discovery extending from Costa Rica to Hawaii, a BSF legal team, directed by partner Carlos Sires, won a sweeping summary judgment in the federal court for the Southern District of New York, where the cases had been consolidated. In November of 2010, the Second Circuit Court of Appeals affirmed the summary judgment in favor of Del Monte.
The plaintiffs had alleged that Del Monte devised a fraudulent scheme to keep other companies, such as Dole and Chiquita, from growing the MD-2 variety, thus keeping for itself the market for this new and valuable pineapple. Because Del Monte had commercialized the MD-2 in test sales prior to applying for a patent, the company was not able to obtain a patent on the variety. Upon realizing this, according to the plaintiffs, Del Monte patented a different and “worthless” variety of pineapple that had never been commercialized in order to acquire a patent it could then use to confuse competitors into believing the MD-2 was, in fact, patented.
In order to accomplish this goal, plaintiffs alleged, Del Monte submitted to the Patent Office a patent application that fraudulently described the “worthless” variety so that the issued patent would appear to cover the MD-2. Plaintiffs maintained that Del Monte then used the fraudulent patent to threaten its competitors and pineapple growers so that they would not propagate and market the MD-2.
The summary judgment ruling resulted from thorough discovery, including extensive deposition testimony from the very competitors Del Monte had previously sued. Not surprisingly, the competitors were not motivated to help Del Monte in its defense of the litigation. Nevertheless, the BSF team was able to establish that, contrary to plaintiffs’ allegations, Del Monte had succeeded with the MD-2 not by reason of unlawful tactics, but by developing the new variety and showing innovation to bring a new product to market, while Del Monte’s competitors sat on the sidelines. At the heart of the summary judgment filed by BSF—and the opinions of the district and circuit courts—were the hard-won admissions of the most senior officers and scientists of Del Monte’s competitors that established that Del Monte had not prevented them from marketing the MD-2, dooming plaintiffs’ allegations.
The federal district court also granted summary judgment on the grounds that the plaintiffs had failed to define a proper product market. This additional basis for summary judgment reflected BSF’s expertise in complex antitrust litigation. Unlike the fact-based defense that Del Monte had not unlawfully prevented competition, this argument focused on a particular aspect of antitrust litigation: the requirement that a plaintiff establish an appropriate product market in order to show monopolization. In this regard, BSF was successful in having the district court strike plaintiffs’ economics expert on the basis that he used unreliable methodology and, in effect, had simply cherry-picked facts helpful to plaintiffs. Without an expert on product market, plaintiffs could not prove a case of illegal monopolization.
The Second Circuit affirmed the summary judgment in favor of Del Monte on the ground that there was no evidence that Del Monte’s acts had any anticompetitive effects, and “[b]ecause plaintiffs cannot establish this essential element of their claim,” the appellate court did not need to reach the question of the “proper scope of the product market.”
In response to this victory in an important and complex litigation, Del Monte general counsel stated, “Once again the BSF litigation team headed by Carlos Sires prevailed for us in a ‘high-stakes’ litigation. The five-star quality representation characterized by their thorough understanding of the issues and the law, and their zealous advocacy, allow us to sleep at night knowing the interests of the Company and its shareholders are in good hands.”
BSF also delivered another win for Del Monte in a related state court case when a California judge denied certification of a statewide class in a complaint mimicking the allegations in the federal cases. That decision is currently on appeal.
In addition to Sires, the BSF team included partners David Barrett, Carl Goldfarb, John Cove, Kieran Ringgenberg, and Stuart Singer (who argued the Second Circuit appeal), and counsel James Grippando.
For media coverage of this case, please click here.
Related Practice: Antitrust