Taylor v. Philip Morris Inc.

CourtSuperior Court of Maine
DecidedMay 29, 2001
DocketCUMcv-00-203
StatusUnpublished

This text of Taylor v. Philip Morris Inc. (Taylor v. Philip Morris Inc.) is published on Counsel Stack Legal Research, covering Superior Court of Maine primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Taylor v. Philip Morris Inc., (Me. Super. Ct. 2001).

Opinion

STATE OF MAINE Repl anh, $5.

CUMBERLAND, ss

JULIE TAYLOR, et al.

Plaintiffs

PHILIP MORRIS INCORPORATED,

RJ. REYNOLDS TOBACCO COMPANY, BROWN & WILLIAMSON TOBACCO CORP., LORILLARD TOBACCO CO.,

LIGGETT GROUP, INC., and

BROOKE GROUP, LTD.

Defendants

FACTS

SUPERIOR COURT CIVIL ACTION

DOCKET NO. CV;00-303 a RAC ~ CUA @ 5/89 fe i

-

DECISION

This is a class action lawsuit brought under Maine’s antitrust and consumer

protection laws. Plaintiffs are Maine consumers who bought cigarettes

manufactured by Defendants. Plaintiffs allege that from at least January 1, 1988 to

the present, Defendants have participated in a systematic series of agreements to fix

cigarette prices above competitive levels in violation of 10 M.R-S.A. § 1101 et seq.

and 5 M.RS.A. § 205-A et seg.. Complaint {I 2-3, 101-114.

The crux of Plaintiffs’ claims concerns an alleged agreement among

Defendants to engage in lockstep, or parallel, pricing. Plaintiffs allege that the

Defendants, through their directors, officers, employees and agents, participated in

meetings at various times during the class period at which time future price

increases for cigarettes were discussed, agreed upon and implemented. According to Plaintiffs, these meetings included meetings of the Committee of Council, a group of high-level, in-house counsel employed by the Defendants. Id. 57. It is alleged that the Committee of Council held “executive sessions,” at which time agreements were discussed and reached regarding future price increases for cigarettes for the United States as well as abroad. Id. With regard to the United States’ cigarette market, the price increases were allegedly accomplished through the use of signals that would trigger a previously agreed upon increase. These signals allegedly came in the form of one of the Defendants announcing to their distributors that the distributors were restricted from purchasing cigarettes until further notice. Id. { 58. After such a signal it is alleged that the other Defendants would raise the prices of their cigarettes. Id.

According to Plaintiffs, throughout the class period, Defendants’ distributors routinely received notification from each Defendant of a impending price increase within hours - and often within minutes - of each of the other Defendants’ price increase notification. Id. I 78. Moreover, Defendants allegedly created programs in which distributors received incentives to report to each respective Defendant the actual discounts and product promotions for all cigarette products sold, including those of competitors. Id. { 79. The Complaint alleges this pricing and discounting information was forwarded to an electronic database clearinghouse in Pittsburgh, Pennsylvania, which Defendants accessed to monitor the actions of the other Defendants and ensured that all Defendants were honoring the mutually-agreed price levels. Id.

Plaintiffs allege dates and amounts of price increases during the class period. Id. TJ 41, 44, 48, 50-54, 59, 60, 62, 63, 65-74, 76,77. In addition, it is alleged that although the Defendants often cited increasing taxes as the basis for price increases, between 1980 and the mid-1990s, cigarette price increases were three times the amount of cigarette tax increases. Id. {| 48. .

The Complaint further alleges that until recently, Plaintiffs had no knowledge of the alleged conspiracy “or of any facts that might have lead to the discovery thereof in the exercise of due diligence.” Id. { 88. Plaintiffs allege that they could not have discovered the conspiracy at an earlier date by the exercise of due diligence because of “the deceptive practices and techniques of secrecy employed by Defendants and their co-conspirators to avoid detection of, and to fraudulently conceal their contracts, combinations, and conspiracies.” Id. Plaintiffs additionally allege that the conspiracy was, by its nature, self-concealing and they assert that Defendants’ fraudulent concealment of the conspiracy tolls the statute of

limitations. Id. [J 90-91.

DISCUSSION 1. Failure to State a Claim under the Maine Antitrust Act

Defendants first argue that Plaintiffs have failed to state a claim under the Maine Antitrust Act because Plaintiffs’ allegedly vague and conclusory allegations of price-fixing are not supported by any factual allegations that, if true, would support a conclusion that Defendants conspired to fix prices. They argue that the Complaint alleges merely that Defendants’ prices rose at approximately the same time and that allegations of parallel price increases are insufficient because such conduct, without more, does not exclude the possibility that the alleged conspirators acted independently and lawfully. Defendants also argue ‘that although the Complaint alleges in conclusory terms an “agreement” to fix prices it does not contain a single fact concerning the time or place of the alleged conspiracy.

Modern notice pleading practice requires “a short and plain statement of the claim to provide notice of the cause of action. .. . The function of the complaint is to provide fair notice of a claim... It must sufficiently apprise defendants of the nature of the claim against them.” Town of Stonington V. Galilean Gospel Temple, 1999 ME 2, { 14, 722 A.2d 1269, 1272 (citations omitted). A complaint “should not be dismissed unless it is beyond doubt that no relief can be granted under any facts that

might be proved to support the plaintiff's claim.” Munjov Sporting & Athletic Club y. Dow, 2000 ME 141, ¥ 16, 755 A.2d 531, 539. There are no Maine cases addressing the sufficiency of a complaint in an antitrust action. A review of federal law indicates that antitrust complaints are not subject to especially stringent or heightened pleading requirements. Mountain View Pharmacy v. Abbott Laboratories, 630 F.2d 1383, 1386 (10th Cir. 1980)([T]he liberal rules of pleading are as applicable to antitrust cases as any other case.”). However, while the pleading standard does not vary, what constitutes sufficient notice to enable a defendant to formulate a responsive pleading does change from case to case. Id. A complaintina complex, multi-party suit may require more information than a simple single party case. Id. at 1386-87.

Moreover, in the context of alleged price-fixing conspiracies, plaintiffs must plead more than mere parallel price increases. Theatre Enterprises v. Paramount Film Distributing Corp., 346 U.S. 537, 541 (1954)(“[T]his Court has never held that proof of parallel business behavior conclusively establishes agreement or . . . that such behavior itself constitutes a Sherman Act offense.”). “The fact that competitors may see proper, in the exercise of their own judgment, to follow the prices of another manufacturer, does not establish any suppression of competition or show any sinister domination.” United States v. International Harvester Co., 274 U.S. 693, 708-09 (1927). However, although parallel behavior alone does not set out a claim of an antitrust conspiracy, “parallel behavior may support such a claim when augmented by ‘additional evidence from which an understanding among the parties may be inferred.’” Monument Builders of Greater Kansas City, Inc. v. American Cemetery Ass‘n of Kansas, 891 F.2d 1473, 1481 (10 Cir. 1989).

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