In re Dairy Farmers of America, Inc., Cheese Antitrust Litigation
2014 U.S. Dist. LEXIS 114162
N.D. Ill.2014Background
- Plaintiffs (direct purchasers) sued Schreiber alleging it conspired with DFA (and Keller’s) to buy spot cheddar on the CME from May 24–June 23, 2004 to manipulate CME prices and thereby Class III milk futures; Schreiber moved for summary judgment.
- Extensive documentary record and depositions exist from a prior CFTC investigation; parties engaged in focused additional Rule 56(d) discovery.
- Key factual record: thinly traded CME block and barrel cheddar markets; DFA bought most block trades in May–June 2004 while Schreiber bought a large share of barrels between late April and June; the block–barrel spread intermittently widened (up to ~22¢).
- Schreiber’s contemporaneous emails and testimony show a documented business interest in maintaining a ~3¢ block–barrel spread (to protect its process-cheese margins) and reflect repeated, independent purchases to correct spread imbalances before and after the alleged period.
- DFA and Schreiber had regular commercial communications (supplier–customer and competitor); no direct ‘‘smoking gun’’ documents or admissions showing an agreement to conspire were produced.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1 Sherman Act conspiracy to fix prices can be inferred between Schreiber and DFA from communications and parallel CME purchases | Schreiber coordinated purchases with DFA to stabilize spot cheese prices and thereby benefit DFA/Keller’s futures unwind; parallel conduct + inter-firm contacts support inference | Schreiber acted independently to protect its economic interest (narrowing block–barrel spread); communications were commercially legitimate; no direct evidence of agreement | Court granted summary judgment for Schreiber — evidence consistent with independent action; parallel conduct + communications insufficient to infer conspiracy |
| Whether Plaintiffs (all) have CEA standing and whether Schreiber violated the CEA by manipulating futures or the commodity underlying futures | Plaintiffs claim manipulation of Class III milk futures and the underlying commodity (cheese) harmed them | Schreiber argues two plaintiffs lacked futures transactions (no standing); spot cheese is not the ‘‘underlying commodity’’ of Class III futures; Schreiber lacked specific intent to manipulate futures | Summary judgment: two plaintiffs lack CEA standing; spot cheese is not the underlying commodity of Class III futures; no evidence Schreiber intended to manipulate milk futures; CEA claims fail against Schreiber |
| Whether Schreiber can be liable as aider/abettor of CEA manipulation | Plaintiffs argue Schreiber knowingly aided DFA/Keller’s scheme by purchasing barrels to support prices | Schreiber denies knowledge of any futures-manipulation plan and denies intent to further it; no evidence of knowledge or intent | Court: Plaintiffs failed to show Schreiber knew of or intended to further any futures-manipulation scheme; aiding/abetting claim fails |
| Whether unjust enrichment/restitution claim survives if underlying statutory claims fail | Plaintiffs seek restitution tied to alleged statutory violations | Schreiber contends unjust enrichment claim depends on proving predicate illegal conduct | Court: unjust enrichment claim dismissed because predicate statutory claims fail |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (standards on inferring conspiracy from circumstantial parallel conduct at summary judgment)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (court must assess whether evidence is as consistent with independent action as with conspiracy)
- Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697 (Seventh Circuit two-step inquiry for circumstantial evidence of agreement)
- Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (conspiracy requires conscious commitment to common scheme)
- In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651 (economic and noneconomic circumstantial evidence in price-fixing cases)
- Toys "R" Us, Inc. v. FTC, 221 F.3d 928 (evidence supporting concerted behavior must be more than parallel conduct)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard; nonmovant must present evidence sufficient for a reasonable jury)