Kroger and Albertsons must pay legal fees to the state attorneys general who challenged the grocery chains' now-scrapped $24.6 billion merger, an Oregon federal judge ruled Friday, denying the companies' argument that the court's temporary injunction in the case wasn't sufficient for the states to win back costs.
U.S. District Judge Adrienne Nelson ruled that the states, along with the Federal Trade Commission, "substantially prevailed" in their claims that the proposed merger violated the Clayton Act, a federal statute barring anticompetitive practices. The law explicitly entitles winning plaintiffs to costs and attorney fees, she noted.
"Because the court concludes that this is an action under the Clayton Act and that state plaintiffs substantially prevailed, an award of attorney's fees is mandatory," Judge Nelson wrote.
Kroger and Albertsons had argued that the suit didn't qualify as an action under the Clayton Act because the states didn't specifically list a Clayton Act claim. The grocers also asserted that the preliminary injunction didn't satisfy the "substantially prevailed" standard.
The court rejected those arguments, agreeing with the states that they "litigated their Clayton Act claim and received their requested relief." The plaintiffs "pleaded the Clayton Act throughout their complaint" despite not listing distinct claims or causes of action, according to Friday's order.
"Additionally, there is no other authority under which state plaintiffs could have brought this action," the court ruled.
While the FTC brought claims against the grocers under the FTC Act, the states — Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming, and the District of Columbia — had argued that they weren't eligible to sue under that statute.
Further, defendants themselves admitted in their filings that each state plaintiff was "seeking relief pursuant to the Clayton Act," Judge Nelson noted.
"Congress chose to require an award of attorney's fees to a prevailing party in any action under the Clayton Act," she added, "and that choice should be given effect."
As for whether the Oregon court's December 2024 temporary injunction blocking the merger was a sufficient victory for states to recoup their costs, Judge Nelson wrote that the question was answered by a 1984 Ninth Circuit opinion in Southwest Marine Inc. v. Campbell Industries, "under which a preliminary injunction is sufficient to establish that state plaintiffs substantially prevailed."
While a 2025 U.S. Supreme Court ruling in Lackey v. Stinnie held that only "judicial relief on the merits" — not preliminary injunctions — were eligible for fees, the judge wrote, that standard applied to a separate law, 42 U.S.C. Section 1988. Plaintiff states in the current case, meanwhile, sued under Section 16 of the Clayton Act.
Judge Nelson ruled that the Lackey decision left the Ninth Circuit's Southwest Marine precedent "undisturbed." Despite numerous subsequent high court decisions since Southwest Marine, she explained, justices have given "repeated direction to carefully distinguish among the fee-shifting standards created by Congress."
In light of those instructions and "the express language of Lackey itself stating that its holding does not apply to statutes like [the Freedom of Information Act], the court concludes that Lackey's interpretation of Section 1988 does not control here."
"Because state plaintiffs were awarded some relief by the court, after a substantial hearing on the merits, and because that change is final, they substantially prevailed within the meaning of Section 16" of the Clayton Act, Judge Nelson ruled.
In addition to the suit from FTC and the plaintiff states, the merger was also challenged in Washington state court by that state's attorney general.
Both courts halted the proposed merger. Judge Nelson issued a preliminary injunction, while the Washington court permanently blocked the deal. The companies subsequently dropped their plans to combine.
Counsel for the grocery stores did not immediately respond to requests for comment Friday. Counsel for Oregon also did not immediately respond.
The states are represented by their respective attorneys general's offices or departments of justice.
Albertsons is represented by David H. Angeli and Peter D. Hawkes of Angeli & Calfo LLC, Enu A. Mainigi, Jonathan B. Pitt, William Ashworth, Beth A. Stewart, A. Joshua Podoll, Thomas W. Ryan and Tyler Infinger of Williams & Connolly LLP, and James A. Fishkin, Michael Cowie, Elena Kamenir, Howard M. Ullman, Ross Ufberg and Yosef Weitzman of Dechert LLP.
Kroger is represented by B. John Casey, Rachel Lee and Jacob Goldberg of Stoel Rives LLP, Matthew M. Wolf, Sonia K. Pfaffenroth, Joshua M. Davis, Jason C. Ewart, Michael E. Kientzle, Matthew M. Shultz, David B. Bergman, Michael L. Walden, Yasmine Y. Harik, Barbara H. Wootton, Christian Schultz, David Emanuelson, Mei-Wah Lee, Wilson DeLoss Mudge, John A. Holler, Brian K. Condon and Jeremy T. Kamras of Arnold & Porter Kaye Scholer LLP and Mark A. Perry, Luke Sullivan, Luna N. Barrington, Sarah M. Sternlieb, Bambo Obaro, Thomas B. Fiascone and Rebecca Sivitz of Weil Gotshal & Manges LLP.
The case is Federal Trade Commission et al. v. Kroger Co. et al., case number 3:24-cv-00347, in the U.S. District Court for the District of Oregon.
Feb 27
Deal Summary
