Call it the tuna trial of the century: A long-running price-fixing case that drew in the largest canned tuna producers in the world may not be anywhere near its end in civil courts, but today was a significant milestone as a US district court in northern California handed down sentencing for Ex-Bumble Bee CEO Chris Lischewski, who last year was convicted as the mastermind of a conspiracy to set prices.
IntraFish covered the sentencing via a live Zoom call. Track the history of developments here:
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12:20 p.m.
--Rachel Sapin and John Fiorillo
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11:48 a.m. PST
Elliot Peters, a lawyer for Lischewski, said he took issue with the the DOJ describing Lischewski as "noble." Peters told the court that Lischewski did not enjoy a wealthy upbringing. His dad was a working-class immigrant who put himself through college working construction jobs. "Mr. Lischewski is caricatured by the government, there’s a certain amount of grandstanding going on," Peters said.
Peters noted all that Lischewski has already suffered as a result of the trial: his job, his reputation, his investment in Bumble Bee, "his life's work."
"He has suffered tremendously and he's probably going to have a hard time ever recovering from that," Peters said.
"There is no evidence of unfair pricing or overcharges to consumers in this case," Peters said.
Lischewski should stand before the court with a "credit balance." "He worked himself up from nothing to achieve what he has achieved, and he has seen it all taken away."
--Rachel Sapin
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11:30 a.m. PST
The US doesn’t disagree that he might have engaged in good acts but those are not uncommon in white collar crimes, said Manish Kumar with the US Department of Justice (DOJ) "The defendant was neither all good nor all bad." There was a side of him, said Kumar, that was engaging in good work. There was side that engaged in criminal conduct when he thought no one was looking, he said in arguing for a stiff sentence for Lischewski.
-- John Fiorillo
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11:14 a.m. PST
Manish Kumar with the US Department of Justice (DOJ) noted the case is precedent-setting in its own right.
"From my perspective as a supervisor of the office of Antitrust at DOJ, this is one of the largest and most pernicious price-fixing conspiracies ever prosecuted."
He later added: "What’s remarkable about this case [is] the fact that the defendant’s conduct affected an entire industry selling goods in the United States."
--Rachel Sapin
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11:07 a.m. PST
Judge Chen is now hinting at a sentence of between 24-48 months.
--John Fiorillo
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11:03 a.m. PST
Chen added that he is "not favorably disposed to home confinement" as Lischewski's lawyers requested.
--John Fiorillo
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11:02 a.m. PST
It's hard to say, of course, but it's feeling like we're nearing a verdict.
--Rachel Sapin
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11:01 a.m. PST
“It’s important to send the message that those who engage in high-level economic crimes need to face punishment as much as those that commit low-level crimes, street crime,” US District Judge Edward Chen stated.
--John Fiorillo
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10:50 a.m. PST
It’s very troubling to the consumer that the defendant here takes no responsibility for his criminal conduct, said Betsy Manifold, counsel for the consumer purchasers in the class-action lawsuit now pending in a California court.
She said consumers are the real victims and paid hundreds of millions in higher costs. “For these consumers it will be the civil action or no remedy at all.”
-- John Fiorillo
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10:46 a.m. PST
Lawyers representing a class-action lawsuit filed against Bumble Bee, Starkist and COSI who said they were harmed by the price-fixing spoke about their need to be involved in this case.
Funds owed to the commercial food preparer class "are estimated to be in excess of $600 million," their Lawyer Blaine Finley told the court.
The case has been up in the air for a while for these plaintiffs.
A judge ruled earlier in March she would no longer handle the class-action lawsuit filed by AWG and several US retail plaintiffs who say they were harmed by price-fixing that occurred between the three biggest US tuna producers -- Starkist, Bumble Bee and Thai Union-owned Chicken of the Sea--from 2010 to 2016.
--Rachel Sapin
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10:37 a.m. PST
Safeway harmed by events
William J. Blechman, an antitrust law attorney representing Safeway, introduced himself remotely to the court by stating he had never personally met Lischewski and beared him no ill will.
"During the conspiracy, Bumble Bee’s list prices on canned tuna to Safeway went up," he told the court. Safeway now operates as Albertson's.
The conspiracy affecting promotions had a ripple effect on what was sold in stores subsequently, he said. He also asked how Bumble Bee’s EBITDA was rising between 2010-2014 while fish prices were also increasing.
"Albertson’s overpaid Bumble Bee millions of dollars as a result of the conspiracy events," he said.
--Rachel Sapin
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10:30 a.m. PST
Steve Six, counsel for Associated Wholesale Grocers told the judge that between 2010 and 2013 nearly $4.4 million in tuna it purchased was the subject of the price-fixing conspiracy. He also said he was not sure what benefit it would serve to incarcerate Lischewski for a long period of time.
-- John Fiorillo
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10:25 a.m. PST
This conspiracy was facilitated by Mr. Lischewski and he organized this conspiracy because he made a promise to the new owners of Bumble Bee in late 2010, that he would raise revenues.
That was part of Lion Capital planning to sell Bumble Bee when it was at a high point, said Chris Lebsock, counsel for direct purchasers in the class-action lawsuit.
Lischewski would profit with $42 million if he was successful. That is what started this conspiracy, he added.
"A felony is a felony. It doesn’t matter if a felony was committed by somebody in a C-suite or somebody in the street. Mr. Lischewski, when he committed these crimes, was certainly a powerful man. He was wealthy, and he should be held accountable."
-- Rachel Sapin
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10:20 a.m. PST
The judge opened up the proceedings to give the victims of the conspiracy a chance to speak directly to the court. Those testifying include Chris Lebsock, counsel for direct purchasers in the class-action lawsuit; Steve Six, counsel for Associated Wholesale Grocers; Blaine Finely, counsel for the Commercial Food Prepared participants in the class-action lawsuit; and Betsy Manifold, counsel for the consumer purchasers in the class-action lawsuit.
-- John Fiorillo
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10:17 a.m. PST
Edward Chen on Lischewski: A couple things that stand out for me right now. No. 1, the denial of any relationship or knowledge that his two lieutenants were engaged in any price-fixing agreement. That seems to me very inconsistent with the management style of Lischewski as we've reported it over the years, and as the DOJ painted it in their case. The idea that he would not know what was going on at the group is hard to swallow.
--Rachel Sapin
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10:12 a.m. PST
The two sides just spent more than 15 minutes going back and forth with the judge regarding tuna pricing data, each showing versions of their pricing charts.
Chen just said the government met its burden regarding price collusion and Lischewski's active involvement knowledge and supervision has been proved.
--John Fiorillo
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10:09 a.m. PST
Judge Chen is casting doubt on Levinsohn's findings as exonerating.
"I don’t think it’s sufficient to overcome the evidence," he said. "The chart has some probative value, but it’s limited to a certain extent, by assumptions of rising prices."
--Rachel Sapin
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10:02 a.m. PST
Bumble Bee counsel Elliot Peters is highlighting findings by James Levinsohn, an economics professor from Yale and an expert in antitrust.
Levinsohn analyzed 15 years of the relationship between cost and pricing data in the tuna industry to be able to predict solely on data what that relationship indicated the pricing would be during the conspiracy period.
His conclusion, Peters noted, is that based on those findings, the actual pricing was below what the historical data would have predicted during this period -- suggesting there was no actual effect on the pricing in the marketplace from this conspiracy.
--Rachel Sapin
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9:56 a.m. PST
A lot of rehashing of the findings in the case right now. The DOJ is now showing a chart that the price-fixing did raise costs, effectively trying to refute price charts Lischewski's defense was using to show the conspiracy didn't raise costs.
--Rachel Sapin
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9:40 a.m. PST
The judge declined to grant an objection raised by Lischewski's attorneys regarding sentencing guidelines, saying there was a price-fixing conspiracy, and Lischewski participated in that.
"The recitation is an accurate representation of facts as I understood them," the judge said.
Some particular points were more questionable than others, but not in a material way that would color the court’s opinion, he said.
--Rachel Sapin
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9:37 a.m. PST
Proceedings just kicked off. In addition to Lischewski's immediate family being present in the courtroom, the judge allowed four lawyers representing civil plaintiffs in a class-action filed against Bumble Bee, Starkist and Chicken of the Sea International, who said they were harmed by the price-fixing to speak.
Those individuals were Chris Lebsock, counsel for direct purchasers in the class-action lawsuit; Steve Six, counsel for Associated Wholesale Grocers; Blaine Finely, counsel for the Commercial Food Prepared participants in the class-action lawsuit; and Betsy Manifold, counsel for the consumer purchasers in the class-action lawsuit.
Lischewski's lawyers argued in an objection filed with the court late last week that the "government's only purpose for offering up these lawyers at sentencing is to inject a theory of customer and consumer harm that the government was unable to prove at trial or in litigation."
On Monday Judge Edward M. Chen overruled Lischewski's motion, and allowed the lawyers to participate in the proceedings remotely.
--Rachel Sapin
2004 - 2010. Defendants shared a common canner in American Samoa, Impress, which is allegedly connected to collusive can size reduction.
2004. Groups colluded to increase prices of canned tuna at least twice.
2006. Groups colluded to increase prices of canned tuna at least once. “By 2007, defendants became more practiced and ambitious in their collusive designs," allegedly downsizing their can size while raising prices.
2007: The NFI created the Tuna Council, whose only members were the defendants, allegedly.
2008. Alleged collusion on price increases on canned tuna.
2010: Defendants allegedly colluded and raised net prices on canned tuna. Net prices are the prices disseminated to brokers of shelf stable seafood products, and represent the list price, less promotional allowances offered by defendants to reduce the list price.
November 2011 - June 2013: Senior executives and sales personnel of the StarKist, Bumble Bee and Chicken of the Sea allegedly "exchanged emails and had telephone conversations about discounting and promotional practices and terms for the sale of canned tuna to customers." They also allegedly "assured each other that they would not compete regarding the pricing and sale of canned tuna sold to customers."
December 2011 and January 2012: Senior executives and sales personnel of defendants allegedly had telephone conversations "about coordinating and announcing a price increase for a number of products in the second quarter of 2012." Price increases were allegedly "virtually identical" and "other products also increased by identical percentages."
2011 - 2013: StarKist, Chicken of the Sea and Bumble Bee allegedly told customers certain factors in the tuna sector made it necessary to increase tuna prices. They allegedly "cited their own predictions about where the tuna market was heading as the basis for a price increase."
2012 - July 2015: Defendants and their co-conspirators allegedly agreed to avoid FAD-free tuna.
July 2015: Published reports revealed US Department of Justice convened a grand jury to investigate potential antitrust violations by companies in the market for the production, pricing and/or sale of packaged seafood, including canned tuna.
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Background
Earlier this year, the US Department of Justice (DOJ) attorneys requested that asked the court to sentence Lischewski to between eight and 10 years in prison and fine him $1 million (€927,540).
Last year, Lischewski was convicted by a jury of his peers for being the mastermind behind the years-long scheme involving Bumble Bee, Starkist and Chicken of the Sea International.
Since that time, Lischewski's lawyers have been appealing the decision, as well as asking for prison alternative such as home confinement, describing a prison sentence during a coronavirus for Lischewski akin to a 'death sentence.'
In addition to Lischewski's immediate family being present in the courtroom Tuesday, the judge allowed four lawyers representing civil plaintiffs in a class-action filed against Bumble Bee, Starkist and COSI who said they were harmed by the price-fixing to speak.
Those individuals were Chris Lebsock, counsel for direct purchasers in the class-action lawsuit; Steve Six, counsel for Associated Wholesale Grocers; Blaine Finely, counsel for the Commercial Food Prepared participants in the class-action lawsuit; and Betsy Manifold, counsel for the consumer purchasers in the class-action lawsuit.
