Northeast Case

In the antitrust case filed in Federal District Court, District of Vermont, the judge, Christina Reiss handed down a decision on the defendants "Motion to Dismiss" yesterday August 30, 2010.

The plaintiffs Alice Allen and Laurance Allen, DBA Al-lens Farm and Garrett Sitts and Ralph Sitts have filed a lawsuit against the defendants, Dairy Farmers of America, Inc., Dairy Marketing Services, LLC, Dean Foods Company and HP Hood LLC.
Overall, the decision by Judge Reiss can be viewed as a positive step forward.

“DFA's and DMS’s Argument in Favor of Dismissal of Plaintiffs’ GNEMMA price-fixing claim on the basis of Capper-Volstead immunity is considerably less persuasive. According to the Amended Complaint, GNEMMA is an over-order pricing agency comprised of DFA, for cooperatives that market their milk through DMS (Dairylea, Land O Lakes, St. Albans, and Maryland and Virginia Milk Producers Cooperative Association Inc.", states the opinion. The Judge continues, "the Amended Complaint alleges that "GENMMA’s member cooperatives… Fix and monitor the over-order premiums that they will distribute to their respective member farmers in the Northeast." Continuing, “It further asserts that by establishing and participating in GENMMA, DFA eliminated competition between cooperatives in the Northeast for members and sought to bring cooperatives that did not participate in DMS into a common decision-making and strategic organization." "Plaintiffs allege that they and class members have been injured by these activities through their receipt of artificially depressed milk prices."

DFA and DMS of course, argue Capper-Volstead immunity. "As price-fixing is otherwise a per se violation under Section 1 of the Sherman Act, and as a cooperative is generally in the best position to establish whether its members are farmers-producers, the court finds more rational the approach taken by those courts that interpret Capper-Volstead immunity as an affirmative defense to be established by the defendant seeking its protection." writes Judge Reiss.

In the next paragraph, referring to the Capper Volstead Act, “It is thus grants dairy cooperatives antitrust immunity with respect to price-fixing agreements with other dairy cooperatives,’[p]rovided, however, [t]hat such Association are operated for the mutual benefit of the members thereof…” The Judge writes, “The Act does not, however, extend immunity for conduct ‘outside the ”legitimate objectives” of a cooperative,’ including restraining Ormonde totalizing trade, or suppressing competition."

The Judge concludes, "Here, Plaintiffs have pled their way around Capper-Volstead immunity sufficient to survive a motion to dismiss. They allege the DFA does not qualify as a Capper-Volstead entity, and that the members of GNEMMA have not acted for their dairy farmer members’benefit but rather have “agreed to fix, reduce, stabilize or maintain at artificially depressed values the over-order premiums paid to dairy farmers in the Northeast."

In this case, the ruling on Capper-Volstead immunity is welcomed. The case will move forward.