$6.4M Tomato Antitrust Class Action Settlement Given Final Approval

Last Wednesday, a tomato antitrust class action settlement was given final approval by the presiding California federal judge, setting aside $6.4 million for eligible Class Members. This antitrust class action lawsuit alleges that the tomato processing companies Ingomar Packing Company, Los Gatos Tomato Products, and SK Foods LP engaged in price-fixing and bid-rigging schemes, which negatively affected tomato purchasers.

Four separate tomato antitrust class action lawsuits were filed by a group of several big name food manufacturers with Four In One Company and Bruce Foods Corp. as the lead plaintiffs. They were then consolidated in one antitrust class action against the above named defending tomato processing companies for allegedly creating a monopoly and artificially increasing the prices of tomato products.

According to the tomato antitrust class action lawsuit:

“Plaintiffs’ consolidated class action complaint alleges the following. Plaintiffs were overcharged for processed tomato products as a result of defendants’ anticompetitive conduct. Plaintiffs paid a higher price for the processed tomato products than they would have paid absent the alleged unlawful activity. Defendants thereby substantially increased their profits. Defendants restrained competition in violation of federal antitrust laws.”

SK Foods LP, one of the three named defendants and second largest tomato producers in the U.S., declared bankruptcy in 2009 and a year later the court charged SK’s former CEO Scott Salyer with several counts of criminal antitrust violations. Consequently, Salyer plead guilty of racketeering and price-fixing and is now serving six years in prison. This was only the tip of the iceberg in terms of the alleged antitrust allegations that Ingomar, Los Gatos, and other named tomato processors were implicated in along with SK Foods.

In June of this year, Ingomar and Los Gatos agreed to a class action settlement, which was given preliminary and now final approval by U.S. District Judge Edmund F. Brennan to settle claims of alleged collusion to restrain competition and force tomato product purchasers to pay exorbitant prices, thus violating federal antitrust laws. Judge Brennan said that the proposed class action settlement was in the best interest of the both the plaintiffs and the defendants, especially considering the given “risk and expense of litigating this action through trial and possibly subsequent appeals[.]”

Four In One Company and Bruce Foods Corp. represent themselves a Class of tomato purchasers, which include:

“All persons and entities that purchased tomato paste, tomato sauce, diced tomatoes or any other processed tomato product (“Processed Tomato Products”) directly from Ingomar Packing Company, Los Gatos Tomato Products, or SK Foods, L.P. (collectively “Defendants”) where the purchase was made pursuant to a contract made between February 1, 2005 and December 31, 2008.”

As per the settlement agreement, Ingomar Packing and its associates will pay a total of $3.5 million and Los Gatos Tomato Products and its affiliates will contribute $2.9 million of the $6.4 million class action settlement.  The defending tomato processing companies deny liability, but have decided to settle to avoid further litigation and legal expenses.

Four in One Company and the other purchasers are represented by Arthur Bailey of Hausfeld LLP and Steig Olson of Quinn Emanuel Urquhart & Sullivan LLP.

The SK Foods Tomato Antitrust Class Action Lawsuit is Four In One Company Inc., et al., v. SK Foods LP, et al., Case No. 2:08-cv-03017, in the U.S. District Court for the Eastern District of California.