Six-year-old antitrust case filed by Miss. AG Hood finally ready to proceed

BRANDON, MISS. (Legal Newsline) - The well-traveled vitamin antitrust suit filed by Mississippi Attorney General Jim Hood is back on track and scheduled for a hearing on a series of procedural motions at the Rankin County Circuit Court on Friday.

The case was brought in 2006 by Hood "on behalf of the State of Mississippi in its sovereign capacity for injuries the State has sustained as purchasers and in the State's capacity as panens patriae, for the adverse effect on Mississippi purchasers."

It alleges that an "international cartel" of vitamin producers and distributors conducted "a massive and long-running international conspiracy among all defendants with the purpose and effect of fixing prices, allocating market share, and committing other unlawful practices designed to inflate the prices" of various vitamins and food supplements.

"The conspiracy existed at least during the period from 1990 to 1999, and affected billions of dollars of commerce in products," Hood alleges.

"The conspiracy included hundreds of communications and meetings in which defendants agreed expressly and repeatedly to eliminate competition, to injure and destroy businesses that would have reduced defendants illegal market control, and to fix the prices and allocate markets for vitamins A, C, E, B1, B2, B3, B5, B6, B9, B12, H, beta carotene, astaxanthin, canthaxanthin and vitamin premixes."

"Defendants," according to the Attorney General's complaint, "including their executives from both the United States and foreign affiliates, participated in covert meetings and conversations beginning in or before the 1990's and continuing throughout the 1990s" and the defendants "agreed to and did eliminate, suppress, and limit competition" by agreements on pricing, volumes of vitamins, allocation of markets, and methods "to conceal their agreements and concerted conduct."

AG Hood, with a number of associated attorneys led by Jackson, Miss., attorney, Brent Hazzard, filed the original complaint in the Rankin County Chancery Court in January 2006. The original complaint alleged the several defendants "engaged in a conspiracy, the object of which was to establish and further a monopoly or trust," although the complaint lacked specific details.

The case was promptly removed by the defendants to the United States District Court for the District of Columbia where a prolonged battle over jurisdiction was waged. In August 2009, the district court ruled that due to "the State of Mississippi acting as parens patriae and represented by the Mississippi Attorney General, which, at a minimum, is the real party in interest for the forfeiture and penalty claims," the parties in the suit do not have "complete diversity" as required for the federal court to have jurisdiction.

Judge Thomas F. Hogan remanded the case back to the Rankin County Chancery Court, but was skeptical of the original complaint.

"It is no exaggeration to state that the Complaint is so superficially and vaguely drafted that it is nearly impossible to determine what is alleged," Hogan wrote.

"Although the Complaint asserts that the defendants violated the provisions of Mississippi law governing Trusts and Combines in Restraint or Hindrance of Trade and engaged in a conspiracy, the document otherwise is completely devoid of so much as a hint about what the conspiracy entailed.

"It appears that the first time the nature of the conspiracy was fully disclosed was in the Attorney General's legal brief supporting the remand motion, which states that "(t)he conspiracy... consisted of a continuing agreement, understanding, and concert of action among the conspirators to fix prices and allocate markets of vitamins, vitamin premixes, bulk vitamins, and other vitamin products in Mississippi."

A more definitive amended complaint was filed with the chancery court in December 2009 with the nine defendants identified as F. Hoffman-La Roche, Ltd., Hoffman-La Roche, Inc., BASF SE, Sanofi-Aventis, Aventis, Inc., Eisai Co., Ltd., Eisai, Inc., Takeda Pharmaceutical Co., Ltd., and Daiichi Sankyo Co., Ltd.

The suit was brought under the Mississippi Antitrust Act and the Mississippi Consumer Protection Act, however the complaint relies on the fact that several of the defendants "have pleaded guilty to violating Section 1 of the Sherman Act," the federal statute usually referred to as the Sherman Antitrust Act.

These defendants agreed to pay fines to the United States Department of Justice as a result. Roche LTD. paid $500 million, BASF - $225 million, Takeda - $72 million, and Daiichi - $25 million. The fine Roche agreed to pay was then largest fine ever paid in an antitrust investigation.

Hood seeks to obtain damages, fees and penalties for the State of Mississippi. According to the amended complaint, the Indirect Vitamin National Class Action, a lawsuit involving most of the same defendants, was settled for $225 million in October 2000 with more than 20 states (Mississippi was not included) participating. A separate Consumer Class Action for the State of California was settled in 2002 for $80 million.

In June 2010, Chancellor Dan Fairly transferred the case to the Circuit Court of Rankin County after deciding that he had "some significant 'doubt' as to whether the Amended Complaint is legal or equitable in nature." Circuit Judge John H. Emfinger now presides over the case.
In March of this year, Emfinger denied both defendants' Motion to Dismiss for Lack of Personal Jurisdiction and their Motion to Dismiss for Failure to State a Claim.

The defendants made a request for interlocutory appeal on each motion to the Mississippi Supreme Court and the Court denied both requests. These two matters having been finally settled, it appears the case is set to move forward.

In September, Hazzard filed a Notice of Service of Discovery and a Notice of Hearing. The Hearing was set to address several of the State's motions, including a Motion to Amend Scheduling Order, and is scheduled for 9 a.m. Friday.