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IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION IN RE: DELTA PRODUCE, L.P., DEBTOR BANKRUPTCY NO. 12-50073-LMC (CHAPTER 11)

DELTA PRODUCE, LP AND ATLED, LTD., PLAINTIFFS v. H. E. BUTT GROCERY COMPANY, HEB GROCERY COMPANY, LP, AND HEBCO GP, LLC, DEFENDANTS

ADVERSARY NO.

ORIGINAL COMPLAINT

Plaintiffs Delta Produce, LP (Delta) and Atled, Ltd. (Atled) file this Original Complaint against H. E. Butt Grocery Company; HEB Grocery Company, LP; and HEBCO GP, LLC (collectively, HEB). I. 1. This case involves coercion by a power buyer. Specifically, HEB coerced Delta

to enter into an ongoing illegal agreement or series of agreements by which Delta was prohibited from selling produce sold to HEB to HEBs competitors even though Delta had more than enough capacity to serve HEB and other supermarkets. HEB did so in order to keep its

competitors from benefitting from its own buying power and Deltas concomitant low prices,

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thereby harming competition. The agreement violated, among other things, section 1 of the Sherman Act and was in furtherance of illegal monopolization and attempted monopolization prohibited by section 2 of the Sherman Act. The agreement injured Plaintiffs in their business or property. It also harmed HEBs competitors as well as the consuming public. I. PARTIES 2. Delta is a Texas limited partnership duly formed and organized under the laws of

Texas and is in good standing with the Secretary of State of Texas. At all relevant times, Delta maintained its principal place of business in San Antonio, Texas. 3. Atled is a Texas limited partnership duly formed and organized under the laws of

Texas and is in good standing with the Secretary of the State of Texas. At all relevant times, Atled maintained its principal place of business in San Antonio, Texas. 4. Defendant HEB Grocery Company, LP, is a Texas Limited Partnership.

Its principal place of business is in San Antonio, Texas. It may be served with process by serving its registered agent for service, Abel Martinez, at 646 South Main Avenue, San Antonio, Texas 78204, or wherever he may be found. 5. Defendant HEBCO GP, LLC is a Delaware limited liability company and is the

general partner of Defendant HEB Grocery Company, LP. Its principal place of business is in San Antonio, Texas. It may be served with process by serving its registered agent for service, Abel Martinez, at 646 South Main Avenue, San Antonio, Texas 78204, or wherever he may be found. 6. Defendant H. E. Butt Grocery Company, is a Texas corporation doing business in

the State of Texas with a principal place of business in San Antonio, Texas. It is the sole member of Defendant HEBCO GP, LLC. It may be served with process by serving its registered

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agent for service, Abel Martinez, at 646 South Main Avenue, San Antonio, Texas 78204, or wherever he may be found. III. JURISDICTION AND VENUE 7. Jurisdiction is proper in this Court under 28 U.S.C. 1337 and 15 U.S.C. 15 in

that Delta seeks to recover damages sustained as a result of violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. 1 & 2, and section 7 of the Clayton Act, 15 U.S.C. 18. Jurisdiction is likewise proper under 28 U.S.C. 1331 as one of the Plaintiffs claims arises under the Perishable Agricultural Commodities Act, 7 U.S.C. 499a, et seq. This Court has supplemental jurisdiction over Plaintiffs state law claims pursuant to 28 U.S.C. 1367(a) because the state and federal claims originate from a common nucleus of fact and thus form part of the same case or controversy. Finally, this Court has jurisdiction under 28 U.S.C. 1334. This is a core proceeding as the term is used in 28 U.S.C. 157(b)(2)(A) & (O). 8. Venue is proper pursuant to 15 U.S.C. 15 & 22 and 28 U.S.C. 1391 & 1409.

Defendants all reside, are found, and transact business in the Western District of Texas. Defendants and their representatives do substantial amounts of business in the Western District of Texas, including substantial purchases, sales, and/or distribution of grocery products. Defendants wrongful conduct occurred in the Western District of Texas and has injured Plaintiffs in their trade and business in San Antonio, Texas. Delta has filed a case under Title 11 that is pending in this Court. IV. THE NATURE OF THE BUSINESS 9. This action involves competition amongst supermarkets and competition for the

purchase of produce, including but not limited to tomatoes and avocados, by supermarkets to

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resell to the public. Supermarkets constitute the main relevant product market for antitrust purposes with wholesale produce as a submarket. According to the Federal Trade Commission: Supermarkets provide a distinct set of products and services for consumers who desire to one-stop shop for food and grocery products. Supermarkets carry a full line and wide selection of both food and nonfood products (typically more than 10,000 different stock-keeping units (SKUs) as well as a deep inventory of those SKUs. In order to accommodate the large number of food and nonfood products necessary for one-stop shopping, supermarkets are large stores that typically have at least 10,000 square feet of selling space. Supermarkets compete primarily with other supermarkets that provide one-stop shopping for food and grocery products. . . . Most consumers shopping for food and grocery products at supermarkets are not likely to shop elsewhere in response to a small price increase by supermarkets. Retail stores other than supermarkets that sell food and grocery products, such as neighborhood mom & pop grocery stores, convenience stores, specialty food stores (e.g., seafood markets, bakeries, etc.), club stores, military commissaries, and mass merchants, do not effectively constrain prices at supermarkets because they operate significantly different retail formats. None of these stores offers a supermarkets distinct set of products and services that enable consumers to onestop shop for food and grocery products.1 10. For the complained-of effects on competition between supermarkets, the relevant

geographic market is metropolitan San Antonio, Texas. Consumers generally do not go beyond their own metropolitan area to purchase groceries. The geographic market definition is also supported by the procurement conduct and the marketing practices of grocery supermarkets. 11. With respect to the harm incurred in the wholesale produce market in which

Plaintiffs operated, the geographic market is larger. The market is constrained by several factors. First, supermarkets want produce delivered the day ordered or the next day, thus delimiting the market to relatively local sellers. Second, the nature of the produce in question sets practical limitations. Delta purchases green tomatoes from shippers, and then ripens them at its

Federal Trade Commissions Complaint in In the Matter of Locomotive Acquisition Corporation et. al., Docket No. C-3838) before the Federal Trade Commission.

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San Antonio warehouse. Once ripened, the tomatoes must be disposed of within a two to three day period, as they rapidly deteriorate. Moreover, once ripened, the tomatoes become very fragile, and thus can be shipped only for relatively short distances. 12. HEB dominates the market for the retail sale of groceries by supermarkets in On information and belief, HEB controls more than

metropolitan San Antonio, Texas.

sixty percent of that market in metropolitan San Antonio, Texas, and thus possess monopoly power. Being by far the largest supermarket grocery retailer also provides HEB with enormous buying power, or monopsony power, which is monopoly power possessed by a buyer. 13. Until December 2011, Delta was a supplier of produce, particularly avocados and

tomatoes, to HEB. Delta operated in a 118,000 square foot refrigerated facility owned by Atled and both Delta and Atled maintained the facility for this purpose. Plaintiffs purchased the avocados, tomatoes, and watermelons to sell to HEB from growers and suppliers in Texas and elsewhere in the United States. V. FACTUAL BACKGROUND OF THE CASE A. Supermarket Competition 14. Since the mid 1970s and up to the present time, Defendants have dominated the

retail grocery business market in metropolitan San Antonio. During this period there have been numerous attempts by other retail grocery competitors some of national stature to enter and compete in the San Antonio market. Through the illegal use of their monopoly/monopsony power, Defendants have eliminated and excluded such competition. 15. Upon information and belief, attempts by competitors of HEB to enter the

metropolitan San Antonio market were met with exclusionary tactics by HEB. For example, in order to eliminate competition HEB would engage in a price cutting war wherein HEB would

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sell its products in San Antonio at a loss, while subsidizing lost profits through its monopoly stores in other Texas towns. Additionally, as discussed further below, HEB has barred Delta and perhaps other suppliers from dealing with HEBs competitors, denying those competitors the right to buy from preferred sellers at competitive prices. As a result, HEBs competitors and prospective competitors were placed at a competitive disadvantage through this tactic of raising rivals costs, and consumers were denied meaningful choices regarding from whom to purchase their groceries, including but not limited to tomatoes and avocados. Once a competitor was eliminated, HEB often would then engage in further conduct to maintain indeed expand its monopoly/monopsony power by acquiring the stores and other assets of its conquered rivals. B. Tomato and Avocado Sales by Delta 16. Delta was originally founded as a produce broker. In 1978, HEB announced that

it would no longer buy products from produce brokers. Deltas founder, Bernard Jensen, met with HEBs Director of Produce, Dan Hamilton, to discuss Deltas options. Hamilton told Bernard that HEB had never had a decent tomato supplier and was interested in Delta taking on that role. Hamilton specified, however, that Delta would not be permitted to sell to any HEB competitors. Instead, because HEB was still growing its Texas market share, Delta would grow as HEB grew. Beginning in 1988 and continuing through December 2011, Delta would purchase tomatoes based upon its expectations of HEBs needs. By 1994, HEB was purchasing 95% of its mature green tomatoes, Roma tomatoes, and cherry tomatoes from Delta. 17. In the early 1990s, HEB gave Delta the right to supply all HEBs avocado needs.

Delta subsequently invested heavily in the equipment needed to keep up with HEBs growing avocado sales. Continuing through December 2011, Delta would purchase avocados in Texas

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and elsewhere based upon its expectations of HEBs needs. HEB made clear that its avocado purchases were subject to Deltas agreement not to sell avocados to any competitors of HEB. 18. In the mid-1990s, Delta began selling watermelons to HEB. Again, HEB required

as a condition of the parties arrangement that Delta could not sell watermelons to HEBs competitors. 19. In 1990, based upon the volume of business HEB gave Delta, Delta invested in

leased warehouse space and trucks and a permanent workforce. HEBs growth over the next few years was so rapid that Delta was forced to spend $750,000 on the purchase and installation of a tomato size and color sorter that would meet HEBs requirements. Before the machine was delivered however, HEB began to purchase vine ripe tomatoes from a shipper in Mexico, drastically reducing its purchases from Delta. This change left Delta with significantly

underutilized capacity. When HEBs Hamilton heard that Delta was unhappy with the situation, he threatened Bernard that HEB could stop purchasing from Delta altogether. 20. In 1996, Bernard purchased from grocery chain Handy Andy the building in

which Delta was leasing space. The building was later sold to Atled. Also in 1996, HEB complained to Delta that Delta had sold to HEBs competitor Super S Foods a load of watermelons that had been rejected by HEB. HEB reiterated that Delta was not permitted to sell to any other retailers. 21. In 1998, Bernards son, Scott Jensen, purchased Delta from his father. At that

time, 80% of Deltas revenues were from sales to HEB. At that time, Hamiltons subordinate, Jim Smitts, informed Scott that Delta was prohibited from selling produce to any HEB competitor. Later that year, Scott was approached by Walmart regarding possible tomato sales. Scott declined the invitation due to the restrictions imposed by HEB. Delta also had to pass on

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an opportunity to expand into Dallas occasioned by the death of another produce companys co-owner. The customer base for that produce company was HEB competitors and thus entry into the Dallas market would have run afoul of HEBs restrictions on Delta. 22. In 2000, HEB began to increase its purchases of tomatoes and watermelons from In 2002, HEB demanded changes to Deltas avocado ripening

sellers other than Delta. processes.

Delta incurred $1,000,000 on avocado ripening rooms and refrigeration of the

remainder of the warehouse in reliance on HEBs commitment to purchase avocados in sufficient volume from Delta. HEB began to purchase some avocados from other sellers, again leaving Delta with unused capacity. 23. In 2002, Delta was approached by a prospective buyer. HEBs Produce Director,

Hugh Topper, informed Delta that it would cease purchasing from Delta if it were sold to the prospective buyer because the prospective buyer did business with Walmart. 24. In 2003, Delta was again approached by Walmart. Delta met with HEB, seeking

to be relieved from the selling restriction. Hugh Topper stated at that meeting that HEB did not want its competitors to benefit from HEBs volume. Although he recognized that Delta could potentially reduce its costs by selling to Walmart, he confirmed that HEB would not allow Walmart to purchase tomatoes from Delta at those reduced prices if the reduced prices resulted from the combined volume of HEB and Walmart. He stated more generally that if Delta found an opportunity to sell more product and be profitable, HEB might decide that the situation did not work for HEB and thus HEB might replace Delta. Because Walmarts offer was not enough for Delta to risk losing HEBs business, Delta again declined Walmarts invitation. 25. In 2006, Hugh Topper again expressly reiterated the selling restriction to Scott.

Delta was forced to forgo an opportunity to sell to Albertsons.

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26.

By 2007, Delta was in significant financial trouble. In October 2007, Scott called

Roger Harkrider in HEBs produce buying office seeking Harkriders assistance in getting the selling restriction lifted. Harkrider stated that he thought the restriction had already been lifted but declined to help Delta avoid problems with HEB if Delta started selling to HEBs competitors. Harkrider agreed to speak with Hugh Topper but never calleded Scott back. Scott also spoke with HEBs Vince Walker. Walker stated that he did not know why the selling restriction was still in place. Walker confirmed that HEB would be continuing to purchase tomatoes from other sellers. 27. On January 4, 2008, Scott called Hugh Topper and said that Delta needed more

volume to cover its overhead and that if HEB would not supply that volume, Delta needed a release of the selling restriction. Topper agreed. Unfortunately, by the time that HEB lifted the selling restriction, other retailers who might have otherwise purchased from Delta had established relationships with other sellers. Delta struggled for several more years until, in late 2011, it ran out of available cash. Delta was forced to file for bankruptcy protection in early 2012. 28. Between 1978 and 2008, therefore, HEB used its monopoly/monopsony power to

economically coerce Delta into an ongoing illegal agreement whereby HEB would not purchase from Delta unless Delta agreed not to sell to any of Defendants competitors in any city where Defendants have a store. As HEB was the major purchaser of Deltas produce, and was by far the largest purchaser of such products, Delta had no choice but to comply. Defendants actions in precluding Delta from selling to Defendants rivals in other cities also caused Delta to be unable to economically sell its produce in the food service industry in San Antonio and other

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cities. But for the coercion by HEB, Delta could have sold its produce to other grocery retailers in San Antonio and could have successfully entered other major Texas cities. 29. Defendants illegal actions harmed Delta during the existence of the selling

restriction and continued to harm Delta even after the selling restriction was lifted. As a result of Defendants illegal actions beginning in the 1980s and continuing even after the illegal restriction was lifted (1) Plaintiffs facility was forced to operate at much less than full capacity, thereby increasing Plaintiffs costs per item sold; (2) Delta suffered lost sales due to its inability to sell to Defendants competitors in San Antonio and elsewhere; and (3) Delta ultimately failed as a going concern. Delta was thus harmed in its business or property. Defendants actions also harmed the public and competition in general. For example, Defendants competitors were harmed in that they were denied access to Deltas products and the consuming public was harmed by the absence of price competition. VI. CAUSES OF ACTION 30. 31. Plaintiffs incorporate by reference the allegations in paragraphs 1-29. The actions of Defendants as set forth above and in the following causes of action

substantially affected interstate commerce as well as intrastate competition. A. Unlawful Monopolization and Attempted Monopolization 32. Defendants have monopolized the relevant markets or attempted to monopolize

the relevant markets. Defendants have monopoly power in the market for supermarket retail grocery sales in the San Antonio metropolitan area in that Defendants have the power to control price or exclude competition in those markets. Alternatively, there is a dangerous probability that Defendants attempts to monopolize the relevant markets will be successful.

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33.

Defendants have engaged in the willful acquisition or maintenance of that power

as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. Defendants have engaged in the anticompetitive or exclusionary conduct described above, including the exclusion of competitors by anticompetitive means. Defendants market share in relevant product and geographic markets also supports an inference of monopoly power. That market share is sufficient to give Defendants the ability to control prices or adversely affect market entry. 34. Defendants deliberately sought to maintain their monopoly power by, among

other things, forcing Delta to deal only with Defendants for wholesale sales of tomatoes and avocados, thereby depriving Defendants competitors of access to Deltas products and decreasing output. 35. Defendants wrongful conduct also includes the unlawful elimination of

numerous competitors of Defendants, thereby destroying competition and harming consumers. Once a competitor was eliminated, Defendants often would then engage in further conduct to maintain indeed expand their monopoly/monopsony power by acquiring the stores and other assets of its conquered rivals. This horizontal acquisition of competitors assets by the dominant Defendants not only is violative of section 2 of the Sherman Act, but as will be discussed below, also is a violation of Clayton section 7, 15 U.S.C. 18. 36. Defendants acted with the purpose and intent (a) to injure Defendants rivals in

the relevant markets; (b) to monopolize/monopsonize the relevant product markets in the relevant geographic market; and (3) to control the relevant product markets. 37. As a result of Defendants wrongful conduct, Plaintiffs have been injured in their

business or property. Specifically, Delta lost sales in San Antonio and lost opportunities to

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expand into other metropolitan areas for sales to supermarkets and therefore food service companies both before and after the restriction was lifted. Delta also lost the opportunity to maximize the use of its facilities. Delta ultimately was forced to cease operations as a result of Defendants wrongful conduct. B. Unlawful Monopsony 38. In essence, a monopsony is a buyers monopoly; being the dominant buyer, the

defendant can obtain monopsony profits if it pays lower prices and also can exclude competition. The relevant product market is comprised of buyers who are seen by produce sellers as being reasonably good substitutes. Although Delta can and did sell its tomatoes and avocados to food service companies and other buyers, no buyers other than supermarkets could buy in the volumes and with the regularity to permit Delta and other sellers of its size to conduct a profitable business. Accordingly, the relevant product market is supermarkets. 39. Because they were able to eliminate substantial competition from other

supermarkets, Defendants were able to suppress the prices paid to sellers, which over time can and, upon information and belief, did result in higher consumer prices. Defendants thus injured Delta in its property and business by precluding Delta from selling to other supermarkets. Defendants also injured consumers because the depressed prices for tomatoes and avocados caused Delta and other sellers to obtain less product or cease sales altogether, resulting in lower output of the products and, over the long run, higher consumer prices and reduced product quality. 40. Defendants action in barring Delta from selling to any of Defendants rivals also

had a negative effect on competition at the supermarket level in that it forced rivals go through other channels, to the exclusion of Plaintiffs, negatively affected those rivals costs and the

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quality of available tomatoes and avocados. Defendants conduct also precluded Delta and Defendants rivals from engaging in business together, and deprived consumers of potential lower prices and greater output. C. Contract, Combination, or Conspiracy in Restraint of Trade (15 U.S.C. 1) 41. The continuing agreement between Defendants and Delta by which Delta agreed

not to sell to competing supermarkets in exchange for the ability to sell to Defendants created a contract, combination, or conspiracy in restraint of trade under 15 U.S.C. 1 and was unlawful and against public policy. Delta suffered damages that are causally related to the agreement. 42. The agreement foreclosed other buyers from obtaining Deltas products and

Deltas prices. The restraint was intended to and did lessen or even destroy competition in the relevant geographic and product markets. The coerced agreement barring Delta from dealing with Defendants rivals constitutes a naked restraint of trade with no other purpose but to restrict output and competition. D. Violation of Section 7 of the Clayton Act (15 U.S.C. 18) 43. Section 7 of the Clayton Act, 15 U.S.C. 18, provides: No person engaged in

commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. 44. competitors, Defendants have a long history of acquiring the assets and or facilities of defeated substantially lessening competition and further expanding their

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monopoly/monopsony power. These acquisitions violate section 7 of the Clayton Act and are one of many illegal techniques whereby Defendants maintain and increase their monopoly/monopsony power. Given the enormous market share Defendants have had in

metropolitan San Antonio, Texas, over the past several decades, the market shares garnered by Defendants as a result of said illegal acquisitions clearly may be substantially to lessen competition, or tend to create a monopoly, and created barriers to entry for potential new competitors. By eliminating its competitors, Defendants caused there to be fewer potential buyers of Deltas product. Defendants actions thus injured Plaintiffs in their business or

property. Defendants actions also likely resulted in higher prices to consumers due to the lack of competition and in the consuming public having fewer choices. 45. Plaintiffs request that the Court exercise its equity powers to set aside the illegal

acquisitions engaged in by Defendants, in order to restore competition in the relevant markets, and in furtherance of protecting competition and the public interest. E. Tortious Interference With Prospective Relations 46. relations. 47. Absent Defendants wrongful conduct, Delta would have entered into business Defendants have tortiously interfered with Plaintiffs prospective business

relations with other purchasers. Specifically, Delta had the opportunity on more than one occasion to sell products to Walmart and had the opportunity to sell products to Albertsons and Kroger. Delta had the opportunity to expand into Dallas and Houston. Delta also had the opportunity to sell its business. Defendants intentionally interfered with those potential business relationships. Defendants conduct was independently tortious or unlawful in that it violated the antitrust laws. The interference was the proximate cause of actual damage to Delta.

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F. Civil Conspiracy 48. Defendants combined to accomplish an unlawful purpose or to accomplish a

lawful purpose by unlawful means, to-wit, tortious interference with Deltas prospective business relations as alleged above. Defendants further combined to suppress output and competition as alleged herein. Defendants willful acquisition, expansion, and use of their

monopoly/monopsony power has enabled Defendants to suppress prices paid to suppliers, and given Defendants the power to extract agreements that suppress output and injure competition. Defendants actions in precluding Delta from selling to Defendants competitors have caused great financial injury to Deltas business, and lessened competition in the relevant market, to the detriment of the consuming public. Defendants acts were performed intentionally, willfully, wantonly, and without justification or excuse, and were done with gross indifference as to the rights of Plaintiffs. As a proximate result thereof, Plaintiffs have suffered damages and are entitled to recover exemplary damages. G. Promissory Estoppel 49. On numerous occasions, authorized agents/representatives of Defendants have

made oral promises to Plaintiffs to induce Plaintiffs to make large monetary expenditures in order to do business with Defendants. Defendants knew or should have known that Plaintiffs would reasonably rely upon said promises, and in fact Plaintiffs did reasonably rely upon said promises and made substantial financial expenditures at Defendants request.

Defendants subsequently failed to perform as promised, all to Plaintiffs economic detriment. 50. As an example of this conduct, Defendants agents/representatives requested

Plaintiff Atled to reconstruct part of Plaintiffs building for the purpose of allowing gas ripening of avocados to be purchased by Defendants from Plaintiffs. After Plaintiffs

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expended many hundreds of thousands of dollars to fulfill Defendants request, Defendants breached their promise to purchase avocados from Plaintiffs, and continued their threats to cease purchasing tomatoes from Delta if Delta sold any produce to Defendants competitors. Thus, after having induced Plaintiffs to incur this great expenditure of time and money, Defendants discontinued their long-time purchase of avocados from Plaintiffs, and threatened to cease buying from Delta altogether if Delta dealt with Defendants rivals. H. Unfair Conduct Under the Perishable Agricultural Commodities Act (PACA) 51. Delta is a dealer in perishable agricultural commodities in interstate commerce

and is licensed under and operates subject to the provisions of PACA, the federal law that governs trading practice in perishable agricultural commodities. license 20070895, issued by the USDA. 52. Defendant H.E.B. Grocery Company LP is a retailer of perishable agricultural Plaintiff holds PACA

commodities as defined by PACA 7 U.S.C. 499b(ii). Defendant operates under and is subject to PACA because it is a retailer of perishable agricultural products and its annual purchases of perishable commodities exceeds the sum of $250,000, as provided by 7 U.S.C. 499b(6). H.E.B. Grocery Company LP holds PACA License 20020600 issued by the USDA. 53. PACA prohibits unfair conduct in the trade of perishable agricultural

commodities. 7 U.S.C. 499b. Among the acts that are prohibited by PACA are: a. engaging in any unfair, unreasonable, discriminatory or deceptive practice in any way determining the quantity of any perishable agricultural commodity received, bought, sold, shipped, or handled in interstate commerce [7 U.S.C. 499b(1)]; and

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b. to fail, without reasonable cause, to perform any specifications or duty, express or implied, arising out of any undertaking in connection with any such transaction in perishable agricultural commodities [7 U.S.C. 499b(4)]; 54. The conduct of Defendant H.E.B. Grocery Company LP described in this

Complaint constitutes unfair conduct prohibited by federal law as described in the cited sections of PACA. That conduct had an anticompetitive effect in that, without limitation, it prevented competitors of HEB from having access to Deltas products at Deltas low prices, limited Deltas output, and limited the publics access to low-priced, high-quality produce. 55. PACA provides persons injured by violations of the Act with a civil remedy in the

federal courts pursuant to 7 U.S.C. 499e(a) & (b). VII. Injury and Damages 56. By reason of Defendants unlawful conduct and as a direct and proximate result

of such conduct, Plaintiffs have been injured. Atled expended significant resources on its facilities based upon promises that HEB failed to keep, and Delta suffered lost sales, loss of going concern value, and lost profits. 57. Delta has suffered antitrust injury in that its injury is the type that the antitrust

laws were designed to prevent. Defendants violations of Sherman 1 and 2, and Clayton 7, have had the following effects, among others: a. Defendants have achieved and maintained a monopoly/monopsony in the retail grocery business, in the sub-markets of tomatoes and avocados, and in the sales thereof in the relevant markets;

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b.

Defendants have restrained, suppressed and eliminated actual and potential competition in the retail supermarket grocery business, in the submarkets of tomatoes and avocados, and in the sales thereof in the relevant markets;

c.

The public has been denied the benefits of unrestricted competition in a free and open market in the retail supermarket grocery business, and in the sub-markets of tomatoes and avocadoes, in the relevant markets;

d.

Plaintiffs have been denied the benefits of unrestricted competition in a free and open market for the sales of its tomatoes and avocadoes, in the relevant markets; and

e.

Delta has been precluded from obtaining and carrying out contracts to sell tomatoes and avocados to Defendants competitors, to the economic detriment to competition and the consuming public, in the relevant markets. VIII. Jury Demand

58.

Plaintiffs demand a trial by jury. IX. Prayer

59. that:

Plaintiffs pray that upon the final hearing of this matter, the Court enter judgment

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a.

Defendants have engaged in unreasonable contracts, combinations and conspiracies in restraint of trade in the relevant markets and have unreasonably combined and conspired to, and have attempted to, monopolize trade and have monopolized trade in the relevant markets in violation of sections 1 and 2 of the Sherman Act, and section 7 of the Clayton Act;

b.

Defendants have tortiously interfered with Deltas prospective business relations and have conspired to do the same;

c. d.

Defendants are liable for promissory estoppel; Plaintiffs are entitled to recover their reliance damages for promissory estoppel and damages for lost profits, lost sales, and lost goodwill on their other claims and that Defendants pay Plaintiffs threefold those damages subject to treble damages under the antitrust laws;

e. f. g. h. i.

Plaintiffs are entitled to recover exemplary damages; Plaintiffs are entitled to recover their reasonable attorneys fees; Plaintiffs are entitled to recover pre- and post-judgment interest; Plaintiffs are entitled to recover costs of suit; and The monopolization/monopsonization power illegally acquired by Defendants should be dissolved by the divestiture of the assets/facilities Defendants illegally acquired from their former rivals, in order to restore competition and free commerce in the relevant markets.

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Respectfully submitted,
PULMAN, CAPPUCCIO, PULLEN & BENSON, LLP

2161 NW Military Highway, Suite 400 San Antonio, Texas 78213 www.pulmanlaw.com (210) 222-9494 Telephone (210) 892-1610 Facsimile By: /s/ Randall A. Pulman Randall A. Pulman Texas State Bar No. 16393250 rpulman@pulmanlaw.com Leslie Sara Hyman Texas State Bar No. 00798274 lhyman@pulmanlaw.com Elliott S. Cappuccio Texas State Bar No. 24008419 ecappuccion@pulmanlaw.com ATTORNEYS FOR PLAINTIFFS

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B104 (FORM 104) (08/07)

12-50073-lmc Doc#2-1 Filed 01/03/12 Entered 01/03/12 15:52:25 Adversary Coversheet Pg 1 of 2 ADVERSARY PROCEEDING COVER SHEET (Instructions on Reverse)
ADVERSARY PROCEEDING NUMBER
(Court Use Only)

PLAINTIFFS

DEFENDANTS

Delta Produce, L.P.

ATTORNEYS (Firm Name, Address, and Telephone No.)

H. E. Butt Grocery Company, HEB Grocery Company, LP, and HEBCO GP, LLC
ATTORNEYS (If Known)

Pulman, Cappuccio, Pullen & Benson, LLP; 2161 NW Military Highway, Suite 400, San Antonio, Texas 78216

PARTY (Check One Box Only) PARTY (Check One Box Only) Debtor U.S. Trustee/Bankruptcy Admin Debtor U.S. Trustee/Bankruptcy Admin Creditor Other Creditor Other Trustee Trustee CAUSE OF ACTION (WRITE A BRIEF STATEMENT OF CAUSE OF ACTION, INCLUDING ALL U.S. STATUTES INVOLVED)

Unlawful monopolization and attempted monopolization in violation of 15 U.S.C. 2; unlawful restraint of trade in violation of 15 U.S.C. 1; unlawful acquisition in violation of 15 U.S.C. 18; unlawful conduct under 7 U.S.C. 4996; and related state law claims.
NATURE OF SUIT
(Number up to five (5) boxes starting with lead cause of action as 1, first alternative cause as 2, second alternative cause as 3, etc.)

FRBP 7001(1) Recovery of Money/Property 11-Recovery of money/property - 542 turnover of property 12-Recovery of money/property - 547 preference 13-Recovery of money/property - 548 fraudulent transfer 14-Recovery of money/property - other FRBP 7001(2) Validity, Priority or Extent of Lien 21-Validity, priority or extent of lien or other interest in property FRBP 7001(3) Approval of Sale of Property 31-Approval of sale of property of estate and of a co-owner - 363(h) FRBP 7001(4) Objection/Revocation of Discharge 41-Objection / revocation of discharge - 727(c),(d),(e) FRBP 7001(5) Revocation of Confirmation 51-Revocation of confirmation FRBP 7001(6) Dischargeability 66-Dischargeability - 523(a)(1),(14),(14A) priority tax claims 62-Dischargeability - 523(a)(2), false pretenses, false representation, actual fraud 67-Dischargeability - 523(a)(4), fraud as fiduciary, embezzlement, larceny (continued next column)

FRBP 7001(6) Dischargeability (continued) 61-Dischargeability - 523(a)(5), domestic support 68-Dischargeability - 523(a)(6), willful and malicious injury 63-Dischargeability - 523(a)(8), student loan 64-Dischargeability - 523(a)(15), divorce or separation obligation (other than domestic support) 65-Dischargeability - other

FRBP 7001(7) Injunctive Relief 71-Injunctive relief imposition of stay 72-Injunctive relief other

FRBP 7001(8) Subordination of Claim or Interest 81-Subordination of claim or interest FRBP 7001(9) Declaratory Judgment 91-Declaratory judgment FRBP 7001(10) Determination of Removed Action 01-Determination of removed claim or cause Other SS-SIPA Case 15 U.S.C. 78aaa et.seq. 02-Other (e.g. other actions that would have been brought in state court if unrelated to bankruptcy case)

Check if this case involves a substantive issue of state law

Check if a jury trial is demanded in complaint Other Relief Sought Attorney's fees and costs.

Check if this is asserted to be a class action under FRCP 23

Demand $ Unliquidated

B104 (FORM 104) (08/07), Page 2

12-50073-lmc Doc#2-1 Filed 01/03/12 Entered 01/03/12 15:52:25 Adversary Coversheet Pg 2 of 2

BANKRUPTCY CASE IN WHICH THIS ADVERSARY PROCEEDING ARISES NAME OF DEBTOR BANKRUPTCY CASE NO.

Delta Produce, L.P.

DISTRICT IN WHICH CASE IS PENDING

12-50073-lmc
DIVISION OFFICE NAME OF JUDGE

Texas Western District

PLAINTIFF

San Antonio
RELATED ADVERSARY PROCEEDING (IF ANY) DEFENDANT

Leif M. Clark
ADVERSARY PROCEEDING NO.

N/A

N/A
DIVISION OFFICE

N/A
NAME OF JUDGE

DISTRICT IN WHICH ADVERSARY IS PENDING

N/A
SIGNATURE OF ATTORNEY (OR PLAINTIFF)

N/A

N/A

/s/ Randall A. Pulman

DATE PRINT NAME OF ATTORNEY (OR PLAINTIFF)

January 3, 2012

Randall A. Pulman

INSTRUCTIONS The filing of a bankruptcy case creates an "estate" under the jurisdiction of the bankruptcy court which consists of all of the property of the debtor, wherever that property is located. Because the bankruptcy estate is so extensive and the jurisdiction of the court so broad, there may be lawsuits over the property or property rights of the estate. There also may be lawsuits concerning the debtors discharge. If such a lawsuit is filed in a bankruptcy court, it is called an adversary proceeding. A party filing an adversary proceeding must also must complete and file Form 104, the Adversary Proceeding Cover Sheet, unless the party files the adversary proceeding electronically through the courts Case Management/Electronic Case Filing system (CM/ECF). (CM/ECF captures the information on Form 104 as part of the filing process.) When completed, the cover sheet summarizes basic information on the adversary proceeding. The clerk of court needs the information to process the adversary proceeding and prepare required statistical reports on court activity. The cover sheet and the information contained on it do not replace or supplement the filing and service of pleadings or other papers as required by law, the Bankruptcy Rules, or the local rules of court. The cover sheet, which is largely selfexplanatory, must be completed by the plaintiffs attorney (or by the plaintiff if the plaintiff is not represented by an attorney). A separate cover sheet must be submitted to the clerk for each complaint filed. Plaintiffs and Defendants. Give the names of the plaintiffs and defendants exactly as they appear on the complaint. Attorneys. Give the names and addresses of the attorneys, if known. Party. Check the most appropriate box in the first column for the plaintiffs and the second column for the defendants. Demand. Enter the dollar amount being demanded in the complaint. Signature. This cover sheet must be signed by the attorney of record in the box on the second page of the form. If the plaintiff is represented by a law firm, a member of the firm must sign. If the plaintiff is pro se, that is, not represented by an attorney, the plaintiff must sign.