Antitrust Law Daily Milk pricing antitrust claims spill over statute of limitations
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Thursday, January 17, 2019

Milk pricing antitrust claims spill over statute of limitations

By Peter Reap, J.D., LL.M.

Grocer Winn-Dixie alleged that milk producers violated Sherman Act by converting dairy cows into beef. Although tolling of limitations period ruled out, issues over timing of claims and standing remained.

In an action brought by grocer Winn-Dixie Stores against the National Milk Producers Federation (NMPF) and several of its members alleging a conspiracy to artificially inflate the price of milk in violation of Section 1 of the Sherman Act, the defendants’ motion for summary judgment on statute of limitations grounds was denied in part because the claims were not necessarily barred on that basis and disputed issues of fact needed to be determined, according to the federal district court in Jacksonville, Florida. However, the motion was granted in part in that the claims were not tolled by the doctrines of fraudulent concealment or class action, with limited exception. Further, the defendants were denied without prejudice summary judgment on their contention that Winn-Dixie lacked standing to bring its suit, because additional briefing on that issue was required (Winn-Dixie Stores, Inc. v. Southeast Milk, Inc., January 16, 2019, Davis, B.).

NMPF is a federation of dairy cooperatives that engage in milk production and marketing. The other defendants are among its 28 members. In 2003, NMPF established the Cooperative Working Together (CVT) program to address milk supply and prices. The CWT included a Herd Retirement Program (HRP) that help dairy farmers market their cattle for beef in order to improve the perceived excess supply of raw milk. Between 2003 and 2010, the HRP conducted ten herd retirements. The HRP did not achieve its intended results and was discontinued in 2010. NMPF filed its complaint in this action on September 23, 2015, and the defendants’ motion for summary judgment on timing and standing grounds was before the court.

Commencement of the statute of limitations. The defendants contend that this action is time barred by the applicable four-year statute of limitations because it was commenced five years after the last herd was retired. However, Winn-Dixie argued that every sale made to it during the period 2003-2010 started the statute of limitations running anew because a horizontal agreement to restrict output or supply is the same as price fixing, to which the theory clearly applies. Winn-Dixie provided evidence from an economist showing that the effect of each herd retirement on prices lasted 3-4 years.

Genuine issues of material fact remained as to when the statute of limitations began to run, the court decided. Even though the last herd retirement was in September 2010, evidence provided by Winn-Dixie indicated that the alleged violations were continuing in nature. Thus, the question of when the statute began to run will be left for the jury, the court said.

Separately, the evidence did not support a finding that the defendants withdrew from the alleged conspiracy with regard to the statute. There was no evidence that the defendants made reasonable efforts to communicate the end of the HRP and specifically the last herd retirement, and that Winn-Dixie knew or should have known that the last herd retirement in 2010 was going to conclude the HRP.

Tolling. If the defendants fraudulently concealed their HRP activities, then the statute was tolled during the time of concealment, the court noted. However, there was no showing that the defendants sought to conceal the HRP. Evidence supplied by the defendants, including numerous newspaper articles and public discussions by government officials about the HRP should have, at a minimum, prompted Winn-Dixie to investigate the HRP and the possibility of antitrust violations, in the court’s view. Thus, the claims were not tolled by fraudulent concealment.

Winn-Dixie also argued that previously filed class action cases tolled the statute of limitations on its claims from the date when the previous actions were filed in September 2011 and January 2012 involving the same subject matter. The defendants conceded, and the court agreed, that limited class action tolling applied to the claims for fresh dairy purchases from three of the defendants on or after May 22, 2009. However, as regards the remaining defendants and time periods, the motion for summary judgment was granted in that class action tolling did not apply to Winn-Dixie’s claims, because the instant case and the previously filed actions did not align as to parties, subject matter, and time periods, the court held.

Standing. The defendants argued that Winn-Dixie lacked standing to bring its suit on two grounds: (1) claims based on raw milk purchases that Winn-Dixie purchased at former plants because Win-Dixie allegedly assigned those claims to an affiliate of defendant Southeast Milk, Inc.; and (2) claims based on indirect purchases through C&S Wholesale Grocers. On this record, additional standing was necessary to resolve the issue of standing, the court reasoned. Thus, it denied the motion without prejudice only as to the issue of standing.

This case is No. 3:15-cv-01143-BJD-PDB.

Attorneys: Harold Timothy Gillis (Shutts & Bowen LLP) and Patrick J. Ahern (Ahern And Associates, PC) for Winn-Dixie Stores, Inc. Cindy A. Laquidara (Akerman LLP) and Michael J. Beaudine (Latham, Shuker, Eden & Beaudine, LLP) for Southeast Milk, Inc. John J. Kavanagh (Steptoe & Johnson, LLP) for National Milk Producers Federation a/k/a Cooperatives Working Together.

Companies: Winn-Dixie Stores, Inc.; Southeast Milk, Inc.; National Milk Producers Federation a/k/a Cooperatives Working Together

MainStory: TopStory Antitrust FloridaNews

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