Remaining Defendants Settle in Southeastern Milk Antitrust Litigation

On January 21, 2013 – literally the eve of trial — counsel for a plaintiff class of approximately 7,200 current and former dairy farmers filed a motion for expedited preliminary approval of a proposed $158.6 million settlement agreement dated January 17, 2013, with Dairy Farmers of America, Inc. (DFA) and all other remaining defendants in the Southeastern Milk Antitrust Litigation. With this latest proposed settlement, the plaintiff class has achieved total cash settlements exceeding $300 million: $158.6 million in this settlement, plus $140 million from Dean Foods and $5 million from Southern Marketing Agency and James Baird in settlements that were approved by Judge Ronnie Greer in June 2012.

Baker Hostetler stated in a news release that: “In addition to the monetary award, DFA agreed to change its business conduct in the Southeast, including taking steps to increase raw milk prices [paid to farmers]; removing cancellation penalties on certain full-supply agreements with bottling plants and not entering into new full supply agreements during the Settlement’s term; modifying membership agreements to improve farmer ability to change cooperatives; enhancing price-related information on milk checks; boosting transparency through auditing and disclosure commitments; and facilitating delegate votes on additional meaningful changes to conduct.”

According to the motion for expedited preliminary approval, the other settling defendants in the January 22, 2013 settlement are Dairy Marketing Services, LLC, Mid-Am Capital LLC, National Dairy Holdings, LP and Gary Hanman.

The plaintiffs allege a conspiracy to artificially lower the price paid to dairy farmers in the southeast U.S. for fluid Grade A milk in violation of Sherman Act section 1; and monopolization, attempted monopolization and monopsonization, and conspiracy to monopolize and monopsonize in violation of Sherman Act section 2. The parties have been litigating for five and a half years according to the motion for expedited preliminary approval.


New Australian Thoroughbred Antitrust Decision

On 19 December 2012, the Australian Federal Court handed down an important Competition Law ruling concerning the rules of sport. The court held that the Australian Jockey Club’s rule requiring Thoroughbred horses to be bred by natural cover was not anticompetitive and did not violate the Competition Law. Robertson, J. referred to some Sherman Act precedent in a lengthy (369 pages), detailed analysis.

The opinion is available through the following link by searching “Judgments” and entering the case name:

Direct-Purchaser Class Certified in Chocolate Litigation

On December 7, 2012, the Federal District Court for the Middle District of Pennsylvania certified a direct-purchaser class in a multi-district antitrust price-fixing action against producers of chocolate confectionary products. Judge Christopher C. Conner concluded that a thorough Daubert analysis is appropriate in considering class certification, but denied the defendants’ Daubert motion to exclude the opinions of the plaintiffs’ experts. The certified class consists of persons and entities who directly purchased single serving standard and King size chocolate candy for resale directly from the defendants between December 9, 2002 and December 20, 2007.

Spoliation Ruling Upheld in Mushroom Litigation

On October 22, 2012, the District Court in the Mushroom Direct Purchaser Antitrust Litigation overruled objections to an adverse inference sanction that had been ordered against a defendant for spoliation of documents. The sanction was ordered in August 2012 by Magistrate Judge Rice against defendant M.D. Basciani and Sons, Inc. (“MDB”), and a related non-defendant, Basciani Foods, Inc. (“BFI”).  Judge Rice found in his August 2012 order that MDB had suppressed relevant documents within its control at BFI after it was reasonably foreseeable that the plaintiffs would seek the documents in discovery.  Judge Rice ordered that a sufficient sanction required an adverse inference instruction allowing the jury to find that the destroyed documents would have been unfavorable to defendant MDB.  MDB and BFI thereafter objected to the District Judge that MDB did not exercise sufficient control over BFI to make MDB liable for BFI’s destruction of relevant documents.  In his October 22, 2012 Memorandum overruling the objection, District Judge O’Neill cited thirty years of case law, reaching back to a 1979 opinion in the Uranium Antitrust Litigation, for the rule that “control” in the context of document production is broadly interpreted and fact specific.  Judge O’Neill concluded that Magistrate Judge Rice’s determination that MDB exercised such control and his decision to impose an adverse inference instruction as a sanction for destruction of the documents in question was neither clearly erroneous nor contrary to law and thus could not properly be overruled.  

Judge O’Neill in his 10/22/12 Memorandum also overruled objections by MDB and/or BFI to Judge Rice’s decisions not to sanction former class representatives and certain of plaintiffs’ counsel, and to enter a protective order forbidding the depositions of plaintiffs’ counsel; and to Judge Rice’s non-disposition of BFI’s motion to hold the plaintiffs in contempt for a claimed violation of a document copying order.

Supreme Court Grants Certiorari in Genetic Seed Patent Case

On October 5, 2012, the United States Supreme Court granted certiorari in Bowman v. Monsanto Co. (Sup. Ct. Dkt. No. 11-796).  The Bowman case,  657 F.3d 1341 (Fed. Cir. 2011), and then-pending petition for certiorari were discussed by Professor Daryl Lim in his excellent article on transgenic seeds and the antitrust-patent interface, ” Rebooting the Bean,” which appears in the Agriculture and Food Committee’s Fall 2012 newsletter.  Vernon Bowman, an Indiana soybean farmer, was successfully sued for patent infringement after he saved and planted the progeny seeds from a crop that he had grown from undifferentiated seeds — some containing patented traits and others that did not — that he had purchased from a grain elevator that had imposed no restrictions on Bowman’s use of the seeds.  Bowman’s petition for certiorari asked the Supreme Court to consider two issues:  

“‘[w]hether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale, and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?'”  Professor Lim’s article observed that:  “The Bowman case has been identified as one of the most important patent cases before the Supreme Court.  One reason for this is that the Federal Circuit’s holdings [in Bowman] were not merely confined to transgenic seeds but implicate the universe of self-replicating genetic technologies.”

Genetically Modified Seeds, Packers and Stockyards Act, and More

Check out the new Fall 2012 newsletter by the Agriculture and Food Committee:

The newsletter features two interesting articles:

“Rebooting the Bean – Genetically Modified Seeds and the Antitrust-Patent Interface”

“The USDA’s New Effort to Roll Back the Tide of Federal law Requiring Anticompetitive Effects Under § 202 of the Packers and Stockyards Act”

 The newsletter also features the following updates:

“Advertising and Labeling of Foods from Genetically Modified Organisms: The Next Wave of Consumer Class Actions?”

 “McHugh v. Australian Jockey Club; Abraham & Veneklasen J.V. v. American Quarter Horse Association”  [challenges to registry rules for horse breeding]

 In re Southeastern Milk Antitrust Litigation (E.D. Tenn., 08-MD-1000) [challenges to raw milk sales and purchasing practices]


REMINDER: 9/25/2012 Panel Program on Applying Capper-Volstead to Supply Management and Vertically Integrated Producers

On September 25, 2012, starting at 12:30 pm EDT, the ABA Section of Antitrust Law’s Agriculture and Food Committee, State Enforcement Committee and Exemptions and Immunities Committee will present a panel discussion on Applying Capper-Volstead to Supply Management and Vertically Integrated Producers.

Layne M. Lindebak of the Iowa Department of Justice will moderate as panelists Diana L. Moss of the American Antitrust Institute; Jay L. Himes of Labaton Sucharow; Kenneth R. O’Rourke of O’Melveny & Meyers; and Randon W. Wilson of Jones Waldo Holbrook & McDonough discuss differing perspectives on applying the 90-year old Capper-Volstead Act to modern agricultural cooperatives.  The program is free to Committee members, but advance registration is required to participate.  Follow this link to register: