Antitrust Suit Argued On Milk Prices (Greeneville (Tenn.) Sun)

By:  Bill Jones, staff writer

Greenville, Tenn. - An antitrust lawsuit that could have nationwide implications for dairy farmers, milk marketing cooperatives, processors and consumers is making its way toward trial in U.S. District Court here.

The most recent action in the case took place before U.S. District Judge Ronnie Greer in Greeneville on Thursday, Sept. 10. Another hearing is scheduled for Dec. 10 at the James H. Quillen U.S. Courthouse.

The case was originally filed as two suits in the U.S. District Court for the Middle District of Tennessee in 2006.

It had additional plaintiffs added in a separate complaint filed in July 2007. In August 2008, the original two suits were consolidated into one, with some plaintiffs added others deleted.

The case names as defendants Dairy Farmers of America, Inc. (DFA), a large dairy cooperative based in Kansas City, and Dean Foods Company, a Dallas-based milk processor that is the parent company of Mayfield Dairy, among others.

Other defendants include: National Dairy Holdings, L.P.; Dairy Marketing Services, LLC; Southern Marketing Agency, Inc.; James Baird; Gary Hanman; and Gerald Bos.

Although not a party to the suit, the Kroger Company is named as an alleged "co-conspirator."
The suit had been transferred to the U.S. District Court for the Eastern District of Tennessee, with Judge Greer designated to preside.

The plaintiffs, who are current and former southeastern dairy farmers, are seeking to have the case declared a class-action proceeding, with themselves as class representatives, and to have the court issue injunctions forbidding future price-fixing by the defendants.

The plaintiffs, who are current and former southeastern dairy farmers, also are seeking to have the case declared a class-action proceeding, with themselves as class representatives, and to have the court issue injunctions forbidding future price-fixing by the defendants.

LOCAL IMPLICATIONS

No Greene County residents are among the plaintiffs.

However, Cocke County resident Julie Walker, of AgriVoice Enterprises, said after attending the Sept. 10 hearing that Greene County dairy farmers -- and consumers -- do have a stake in the lawsuit's outcome.

"While no Greene County dairy farmers are among the current plaintiffs, they could stand to gain benefits should the case receive class-action certification," Walker said.
 
"Long-term goals of the plaintiffs' effort are more sustainable milk receipts coupled with on-farm milk price stability,transparency of milk marketing activity, restitution, and a more equitable share of the consumer milk dollar. Consumers would benefit from stabilized prices for dairy products at retail outlets."

Walker, who said she has been following the milk situation since before the lawsuit was filed, also said, "This lawsuit is not about the current excrutiatingly low farm milk price situation. The suit has been more than five years in the making, with nearly three years worth of research preceding the 2006 filing. The current price situation does accentuate the need for change in the entire milk marketing policies and procedures of this country."

NUMEROUS PLAINTIFFS

Among the plaintiffs are several Tennessee dairy farmers, along with dairy farmers from Kentucky, North Carolina, South Carolina and Virginia. Some of the plaintiffs attended the day-long motions hearing in the case on Thursday.

One group of plaintiffs, according to court filings, is made up of members of independent dairy cooperative members and members of the Maryland & Virginia Producers Cooperative Association. A second group of plaintiffs is largely made up of current and former dairy farmer members of Dairy Farmers of America.

The plaintiffs now include Sweetwater Valley Farm, Inc. ("Sweetwater Farm"), Barbara and Victor Arwood d/b/a VBA Dairy ("Arwoods"), Jeffrey P. Bender ("Bender"), Randel E. Davis d/b/a Davis Brothers Dairy ("Davis"), Farrar & Farrar Dairy, Inc. ("Farrar Dairy"), Fred Jaques ("Jaques"), John M. Moore ("Moore"), D.L. Robey Farms ("Robey Farms"), Robert D. Stoots ("Stoots"), Thomas R. Watson d/b/a Dawn Dairy ("Watson") and Virgil C. Willie ("Willie")
They are collectively identified "independent dairy farmers and independent cooperative members").

Other plaintiffs include and James D. Baisley and Eva C. Baisley ("Baisleys"), Stephen J. Cornett ("Cornett"), Jerry L. Holmes ("Holmes") and McCain Dairy ("McCain Dairy"). The are collectively identified as "DFA member dairy farmers").

ANTITRUST ALLEGED

The complaint filed by the plaintiffs say the case is an antitrust action.

"This is an antitrust case arising out of a combination and conspiracy among (the) defendants to refuse to compete for the purchase of raw Grade A milk produced, marketed, and processed in the Southeast United States with the purpose and effect of fixing, stabilizing and maintaining prices paid to dairy farmers for Grade A milk, foreclosing independent dairy farmers' and independent cooperative members' access to fluid Grade A milk bottling plants, eliminating and stifling competition from independent dairy cooperatives and independent fluid Grade A milk bottlers; and other unlawful activities designed to artificially and anti-competitively reduce the price paid by the defendants for Grade A milk purchased from the plaintiffs and other members of the class," the complaints alleged.

SPECIFIC COMPLAINTS
The complaint alleges that the defendants:

  • * implemented long-term, full-supply agreements among Dean Foods, National Dairy Holdings and Dairy Farmers of America "in order to control access of Southeastern dairy farmers to Grade A milk-bottling plants;
  • * required independent dairy farmers that were previously free of DFA's control to market their milk through DFA-controlled marketing entities such as Dairy Marketing Services (DMS);
  • * required members of Maryland & Virginia Producers Cooperative Association, Inc., to market their Grade A milk the DFA-controlled Southern Marketing Agency (SMA);
  • * threatened to cut off independent cooperatives' access to Grade A milk bottling plants;
  • * boycotted independent dairy farmers, cooperatives and Grade A bottling plants;
  • * fixed, depressed and/or stabilized prices for Grade A milk paid to Southeast dairy farmers;
  • * flooded the Southeast milk market with milk from other parts of the country "to further depress prices paid to Southeast dairy farmers;" and
  • * purchased Grade A milk bottling plants "with purpose and intent of further stifling competition from independent dairy farmers, cooperatives and Grade A milk bottlers."


ALLEGATIONS DENIED

Defense attorneys argued that there was no conspiracy to fix the prices paid to farmers for their milk. Instead, defense attorneys argued, market forces and the "worldwide recession" were responsible for the lower milk prices paid to farmers.

Defense attorneys also argued that the so-called "full-supply" agreements with milk-bottling plants also benefited dairy farmers by guaranteeing that Southeast dairy farmers, especially the small farmers who make up most of Dairy Farmers of America members, would have a market for their milk.

Most Southeast dairy farmers have 50 or fewer cows in their dairy herds, defense attorneys said on Thursday.

Milk bottlers, defense attorneys pointed out, would be free, absent the full-supply agreements, to go outside the Southeast to parts of the country where there is a surplus of milk, to purchase milk at lower prices.

Defense attorneys also maintained that dairy farmers across the Southeast were not paid exactly the same amount for milk.

In a courtroom packed with at least 40 lawyers, Judge Ronnie Greer heard nine hours of oral arguments from opposing attorneys about whether documents filed under seal should remain out of public view and whether plaintiffs in the case should be "certified" as representatives of class-action classes in the lawsuit.

DOCUMENTS TO BE PUBLIC?

Also addressing the court during the day-long motions hearing, was Jacob P. Goldstein, an attorney representing the New York Times Company and National Public Radio, Inc.

Goldstein asked the court to make public documents that had been filed under seal by attorneys in the case.

While hearing arguments from attorneys for the plaintiffs and the defendants and the confidentially issue, Judge Greer said, "We are not going to try this case in secret."

He also maintained that he wouldn't either order courtroom monitors turned off while disputed documents were being displayed or order the courtroom cleared while documents that attorneys maintained contained confidential business information was being displayed and discussed.

However, Judge Greer, in discussion with attorneys, said a procedure must be implemented under which confidential information in future documents is filed by attorneys in the case.

The judge also said he would send back to U.S. Magistrate Judge Dennis Inman documents that were filed under seal earlier and ask Judge Inman to review the documents to determine what portions, if any, should remain confidential.

Going forward, Judge Greer said, attorneys should file electronically, under seal, documents that they feel contain confidential or highly confidential information.

However, the judge said, attorneys for the plaintiffs and defendants should then confer about such documents and file redacted versions of the same documents that do not contain the confidential business information. The redacted versions of the documents will be available for public review, the judge said.