Monthly Archives: March 2012

In re Southeastern Milk Antitrust Litigation, 2:08-MD-1000 (E.D. Tenn.)

On March 27, 2012, the federal district court granted the defendants’ motion for summary judgment in Food Lion, et al. v. Dean Foods Co., et al., No. 2:07-CV-188, one of the cases in the above-referenced MDL, and dismissed the Plaintiffs’ two remaining Sherman Act section 1 and 2 claims.  Those claims alleged respectively a horizontal agreement not to compete among defendants Dean Foods (Dean), Dairy Farmers of America (DFA) and National Dairy Holdings (NDH) and a conspiracy to monopolize among Dean, DFA and NDH.  Food Lion and the other Plaintiffs are retail sellers of processed milk who purchase milk directly from Dean and/or DFA.

The district court’s ruling rested on two ultimate conclusions.  First, since the court found the Plaintiffs’ economic damages model flawed, they could not establish the required element of antitrust injury.  According to the court, the model measured at least in part price increases from a 2001 merger between Dean and Suiza — not challenged in this case — rather than the anticompetitive conduct alleged in this case.  (Slip op. 10)

Second, the court concluded that both remaining Sherman Act claims required proof of a relevant geographic market.  This conclusion independently required summary judgment on both claims, since the Court had ruled previously that the Plaintiffs could not prove a relevant geographic market.

The court ruled on several interesting legal issues in its 21-page opinion.  These included: (1) how Monsanto Co. v. Spray Rite Service Corp., 465 U.S. 752, 764 (1984)  — requiring “evidence that tends to exclude the possibility” that challenged conduct resulted from independent action — applies on a motion for summary judgment; (2) whether a court may properly consider the “cumulative effect” of evidence in deciding whether a genuine issue of fact is presented; (3) whether Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (1993) and Sixth Circuit precedent require proof of a relevant geographic market in an action under Sherman Act s. 2 for conspiracy to monopolize; and (4) whether the proper Sherman Act s. 1 characterization of an agreement as vertical (rule of reason analysis) or horizontal (per se analysis) is a question of law for the court or a question of fact for the jury.

The court concluded, after surveying authorities, that the horizontal/vertical characterization is a question of law for the court, but found the proper characterization of the challenged agreement in this case “difficult.”  According to the opinion, “the essence of Plaintiffs’ conspiracy claim is a quid pro quo agreement beween competitors at the same level of the distribution chain (Dean and NDH) almost totally carried out through the use of agreements involving the supply of raw milk among a group of firms at other levels of the distribution chain (Dean and DFA, NDH and DFA). . . .  Plaintiffs suggest that two horizontal competitors, Dean and NDH, ‘are central to the argument’ while at the same time arguing that it is the full supply agreements for raw milk between vertical actors that are ‘at the heart’ of their claims.”  Distinguishing In re Pressure Sensitive Label Stock Antitrust Litigation, 2007 WL 4150666 (M.D. Pa. 2007), relied on by the Plaintiffs, the Court decided that “the essence of the agreement alleged by the Plaintiffs is one between Dean in its role as a processor of bottled milk and DFA in its role as a supplier of raw milk and that the milk supply agreements for raw milk are central to the completion of the alleged conspiracy.”  (Slip op. 21)  Since this agreement has “substantial vertical elements,” the Court concluded that it was subject to rule of reason analysis, thus requiring the Plaintiffs to establish a relevant geographic market.  Since as mentioned above, the court had already concluded that the Plaintiffs could not establish such a market, summary judgment dismissing the remaining Sherman Act s. 1 claim was required.

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Del Monte Fresh Pineapple Cases, A126638 (Cal. Ct. App., Unpublished)

On March 7, 2012, in the Del Monte Fresh Pineapple Cases, the California Court of Appeal affirmed a trial court decision that refused to certify a class of indirect purchasers [consumers] of pineapples. The class-action complaint alleged monopolizing conduct by Del Monte in connection with its allegedly improper prosecution and enforcement of an extra-sweet pineapple patent, in violation of the California Unfair Competition Law.

In the appeal, the plaintiffs challenged the trial court’s conclusion that substantial individual questions would have to be resolved to establish injury to class members who purchased pineapples from different direct purchasers in different competitive markets. They also challenged the trial court’s conclusion that it would be “difficult, if not impossible, to identify the specific persons who purchased Del Monte extra sweet pineapples during the class period,” and that even if they could be identified, “the administrative costs of identifying the class members and returning a few dollars to each would significantly outweigh the value of the distribution itself.” (Slip op. at 5, 8.)

The appellate court found no error in the trial court’s conclusion that “a class of indirect purchasers would be neither manageable nor superior to alternative methods.” (Slip op. at 7.) The appellate court also rejected the plaintiffs’ arguments that the trial court misinterpreted the concept of a “cy pres” distribution, impermissibly treated the class certification motion as a motion for summary judgment, and improperly relied on the pendency of a federal court direct purchasers’ antitrust class action against Del Monte (later dismissed on its merits) based on the same alleged patent-related misconduct.

Pioneer v. Monsanto; In re Southeastern Milk Antitrust Litigation

Pioneer v. Monsanto.  On February 28, 2012, the U.S. Court of Appeals for the Federal Circuit held that the Board of Patent Appeals and Interferences (“Board”) properly entered judgment for Monsanto in a patent interference proceeding over competing transgenic corn claims in Monsanto’s ‘700 patent application and Pioneer Hi-Bred’s ‘999 patent.  The Court held first that the Board correctly decided that, even though Monsanto’s ‘700 patent application of June 2005 was filed more than one year after Pioneer’s ‘999 patent issued in July 2001, the key independent and dependent claims in Monsanto’s ‘700 application “related back” to claims made by Monsanto in its ‘983 patent application filing of January 22, 1990, before Pioneer’s ‘999 patent issued.  Thus, those claims in Monsanto’s ‘700 patent application were not barred by section 135(b) of the Patent Act, which precludes an applicant from presenting a claim already made in an issued patent (in this case, Pioneer’s ‘999 patent) after a one-year “critical date.”  Second, the Court held that the Board properly concluded that Pioneer’s ‘999 patent could not benefit from the June 10, 1988 filing date of Pioneer’s ‘155 patent application, and thus properly denied Pioneer’s interference priority claim, because the ‘155 patent application did not contain sufficient disclosure to support interference priority for the later claims in Pioneer’s ‘999 patent.

 

In re Southeastern Milk Antitrust Litigation.  In an unrelated development, on February 24, 2012, Dairy Farmers of America (“DFA”) members who are plaintiffs in the Southeastern Milk Antitrust Litigation, filed a motion asking the district court in Tennessee to re-certify the DFA farmer subclass for litigation purposes, appoint new counsel for this litigation subclass and appoint subclass representatives.  Although previously certified, the DFA farmer subclass was decertified on July 28, 2011, because according to the movants, the court concluded that there was a conflict of interest between the DFA farmer subclass and the independent farmer subclass (since DFA is a defendant), and thus the same counsel could not represent both plaintiff subclasses.  The movants argue that this issue will be cured by the requested appointment of separate litigation counsel (whom they note was appointed by the court on 2/14/12 as separate counsel for the DFA farmer settlement subclass in connection with settlement with defendant Dean Foods).  They argue that the court’s previous findings and conclusions on the DFA farmer subclass’s satisfaction of Fed. R. Civ. P. Rule 23 requirements “remain intact” (Motion, 3) and that the court needs toconsider only the requirements of Rule 23(a)(4) to recertify the DFA farmer subclass for litigation.