In Re Dairy Farmers of America, Inc. Cheese Antitrust Litigation
767 F. Supp. 2d 880
N.D. Ill.2011Background
- Direct Purchaser Plaintiffs allege a scheme to inflate CME Class III milk futures and cheese prices to profit from futures sales and concealed conduct afterward.
- DFA and Keller's allegedly held near-total long positions in June–August 2004 futures, exceeding CME limits through coordinated actions with the individual defendants.
- DFA purchased large blocks of CME spot cheese at $1.80/lb to push cheese prices up, influencing USDA minimum price calculations for milk.
- After profiting on futures, defendants allegedly sold off positions and engaged in concealment, including misstatements to members and the CFTC.
- Keller's Creamery LLC and Keller's Creamery Management LLC were merged into DFA; the court dismisses them as parties, while Keller's Creamery LP remains as a party for capacity purposes.
- The court addresses multiple Rule 12(b)(6) and related motions, ruling on the filed rate doctrine, post-June 2004 conduct, standing, and various Sherman Act and RICO theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1 claim against individuals pleads a viable conspiracy | Plaintiffs allege detailed communications and coordinated actions by individuals. | Twombly/Iqbal require more than parallel conduct to plead conspiracy. | Count 1 against individuals survives; plausible inference of agreement. |
| Filed rate doctrine applicability to damages for products priced by government minimums | Damages arise from inflated futures/cheese prices tied to minimums, not direct minimum rates. | Damages would require court to fix reasonable rates, impermissible under doctrine. | Filed rate doctrine bars damages claims tied to government minimum price products, but not claims based on milk futures or products pricing to those futures. |
| Standing to bring monopoly claims where some plaintiffs were injured outside the relevant market | Loeb supports standing for plaintiffs harmed in related markets; Serfecz limits standing. | Republic Tobacco/Serfecz limit standing to those within the relevant market. | Monopolization claims by cheese-injury plaintiffs dismissed for lack of standing; standing preserved for injuries tied to milk futures market. |
| Monopolization elements and alleged power in a cash-settled futures market | High market share and actions yielded exclusionary power and price effects. | Cash-settled futures with low entry barriers cannot be monopolized; Weyerhaeuser guidance. | Court finds sufficient pleading of monopoly power and willful maintenance; but limiting to arguments and evidence appropriate to the alleged scheme. |
| Whether post-June 2004 conduct can support liability for monopolization or other claims | Post-2004 actions show continuing concealment and ongoing anticompetitive effects. | Post-2004 conduct largely constitutes concealment, not a separate ongoing scheme. | Court reserves ruling on evidentiary scope; denies motion to dismiss based on post-June 2004 conduct. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility pleading standard for §1 claims)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard refined; more than mere possibility)
- E.I. du Pont de Nemours & Co. v. Kolon, 351 U.S. 377 (U.S. 1956) (market definition and power concepts)
- Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 549 U.S. 312 (U.S. 2007) (predatory bidding/pricing framework; distinction from traditional monopolization)
- Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144 (3d Cir. 1993) (limits of filed rate doctrine; damages context)
- Kohen v. Pac. Inv. Mgmt. Co. LLC, 571 F.3d 672 (7th Cir. 2009) (cash-settled futures and cornering difficulties; relevance to monopoly claim)
- Board of Trade of City of Chicago v. SEC, 187 F.3d 713 (7th Cir. 1999) (regulatory framework; market manipulation implications)
- MCI Communications Corp. v. American Tel. & Tel., 708 F.2d 1081 (7th Cir. 1983) (methods to prove monopoly power via market share)
- Peto v. Howell, 101 F.2d 353 (7th Cir. 1938) (early monopoly/market power principles)
- Roger Whitmore's Auto. Servs., Inc. v. Lake County, 424 F.3d 659 (7th Cir. 2005) (continuity/recurrence considerations in RICO-like analysis)
- Murphy Tugboat Co. v. Shipowners & Merchants Towboat Co., Ltd., 467 F. Supp. 841 (N.D. Cal. 1979) (inherently wrongful conduct standard discussion)
- Southeastern Milk Antitrust Litig., No. 2:08-MD-1000, 2008 WL 2368212 (E.D. Tenn. 2008) (over-order premiums and filed rate considerations; regulatory context)