Sweetwater Valley Farm, Inc. v. Dean Foods Co. (In re Southeastern Milk Antitrust Litig.)

801 F.Supp.2d 705

In re: SOUTHEASTERN MILK ANTITRUST LITIGATION.This Document Relates to: Sweetwater Valley Farm, Inc., et al.

v.Dean Foods Co., et al., No. 2:07–CV 208.

Master File No. 2:08–MD–1000.

United States District Court,E.D. Tennessee,Greeneville Division.

July 14, 2011.

MEMORANDUM OPINION AND ORDER

J. RONNIE GREER, District Judge.I. Introduction

This multidistrict class action case involves allegations by plaintiffs, independent dairy farmers, independent cooperative members and DFA member dairy farmers, both on behalf of themselves and as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure ¹ against Dean Foods Company (“Dean”), National Dairy Holdings, L.P. (“NDH”), Dairy Farmers of America, Inc. (“DFA”), Dairy Marketing Services, LLC (“DMS”), Southern Marketing Agency, Inc. (“SMA”), Mid–Am Capital, LLC (“Mid–Am”), James Baird (“Baird”), Gary Hanman (“Hanman”) and Gerald Bos (“Bos”) (collectively referred to as “defendants”) seeking treble damages and injunctive relief for violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and a state law breach of contract claim against DFA.

Several motions for summary judgment have been filed: (1) Defendants' joint motion for summary judgment on Counts One through Five of the complaint, [Doc. 839]; (2) supplemental motions for summary judgment by SMA, [Doc. 829], Baird [Doc. 826], Bos, [Doc. 833], and Hanman, [Doc. 836]. DFA has also moved for summary judgment as to Count Six, the state law breach of contract claim, [Doc. 842].² The plaintiffs have responded to all motions for summary judgment, the defendants have replied and supplemental briefs have been filed by the parties as to certain questions raised at oral argument by the Court. Oral argument was heard on January 20, 2011, and April 21, 2011. An order was entered on May 12, 2011, [Doc. 1543], announcing the Court's decision as to several of those motions. This memorandum opinion is entered for the purpose of setting forth more fully the Court's analysis and conclusions with respect to the motions.

II. Factual and Procedural Background

As set forth above, plaintiffs' allege violations of §§ 1 and 2 of the Sherman Act and breach of contract by DFA. More specifically, plaintiffs allege a conspiracy to monopolize and monopsonize against all defendants under § 2 (Count One), attempt to monopolize and monopsonize under § 2 (Count Two), a monopolization claim against DFA, DMS and SMA under § 2 (Count Three), monopsonization against Dean under § 2 (Count Four), and conspiracy to restrain trade against all defendants under § 1 (Count Five). Plaintiffs also pursue a breach of contract claim against DFA in Count Six.

The plaintiffs are dairy farmers who produce or have produced during the relevant time period fluid Grade A milk within Federal Milk Market Orders (“FMMO” or “Order”) 5 and 7 which was sold, directly or through an agent, to Defendants or Co-conspirators in Orders 5 and 7. Defendants Dean and NDH purchase, process and ship fluid Grade A milk. Dean owns a number of bottling plants in the southeast and is the largest fluid Grade A milk bottler in the southeast. NDH owns several Grade A milk bottling plants in the southeast and is the second largest Grade A milk bottler in the southeast. DFA owns fifty percent of NDH. DFA is a dairy farmer cooperative which markets, processes and ships Grade A milk. DFA owns and operates hauling companies, processing plants and distribution centers and is the third largest fluid Grade A milk bottler in the southeast. DFA is also the largest dairy cooperative in the country. DFA is owned by its dairy farmer members and governed by a board of directors comprised of dairy farmer members. DFA markets milk produced by its dairy farmer members and distributes the net proceeds or profits from its operations to its dairy farmer members. DFA also markets milk on behalf of some non-members.

DMS is a common marketing agency that markets milk on behalf of dairy farmers. DMS also performs milk marketing services for certain milk processors pursuant to outsourcing contracts. SMA is a common marketing agency that assists in marketing raw Grade A milk on behalf of its six member dairy cooperatives. SMA handles coordination of hauling and transportation of its member cooperatives' raw Grade A milk from the farm to the processing plant and in recent years the coordination of the purchase and hauling of supplemental milk on behalf of its member co-ops. Mid–Am is a subsidiary of DFA and was formed by DFA and others to provide capital to, and make equity investments in, dairy processing and fluid Grade A milk bottling operations.

Baird is the manager of SMA, an officer, director, and general manager of Lone Star Milk Producers, a dairy cooperative based in Texas, and the principal owner, officer and manager of Lone Star Milk Transport, Inc., BullsEye Transport, LLC, and BullsEye Logistics, LLC, Texas-based companies that transport Grade A milk for DFA and SMA. Baird is also the principal owner and manager of GSC, LLC, an entity designed to manage and/or coordinate the operations of defendants SMA, DMS and other entities. Hanman was DFA's chief executive officer from its formation in 1998 until he retired on December 31, 2005. Hanman also served on the management committee of Dairy Management, LLC, the sole general partner of defendant NDH. Bos was DFA's chief financial officer from its formation until his retirement on December 31, 2005. Bos also served on the management committee of Dairy Management, LLC. The plaintiffs allege that Baird, Hanman and Bos have participated in, authorized, directed and/or knowingly approved or ratified the illegal conduct alleged in their complaint.

Plaintiffs allege that certain other milk marketers, milk purchasers, milk processors and other entities and individuals have participated as co-conspirators with the defendants in the violations alleged in their complaint and have performed acts and made statements in furtherance thereof. The third party co-conspirators include DairyCom, Inc., the Kroger Co., Prairie Farms Dairy, Inc., Robert W. Allen, Jay Bryant, Herman Brubaker, Gregg L. Engles, Michael J. McCloskey, Allen A. Meyer and Pete Shinkle.

This Court would ordinarily set out relevant facts related to the issues raised by the summary judgment motions. That is virtually impossible in this case, however, given the voluminous nature of the pleadings and exhibits filed by the parties, especially their statements of undisputed material facts. Both the statements of facts in support of the motions and plaintiffs' responses thereto, as well as plaintiffs' separate statement of facts, identify many “facts” which are irrelevant or, in reality, appear to be mainly arguments and/or conclusory statements advanced in support of their allegations. In reality, the material events related to the issues raised by these motions are largely undisputed, with the parties disputing only the inferences potentially to be drawn from those events by the finder of fact. Facts which are relevant to the Court's determination of these issues will be discussed within the body of the memorandum opinion.

III. Summary Judgment Standard

Generally, summary judgment is proper where “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c)(2); ³ Canderm Pharmacal, Ltd. v. Elder Pharm., Inc., 862 F.2d 597, 601 (6th Cir.1988). Only factual disputes that might affect the outcome of a lawsuit under governing law are “material.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). To be “genuine,” a dispute must involve evidence upon which a jury could find for the nonmoving party. Id. The burden is upon the moving party to show “that there is an absence of evidence to support the nonmoving party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Thereafter, the nonmoving party must present significant probative evidence in support of the complaint to defeat the motion. Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505. The nonmoving party is required to show more than a metaphysical doubt as to the existence of a genuine issue of material fact. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In deciding the motion, “[t]he court cannot weigh the evidence, judge the credibility of witnesses, or determine the truth of any matter in dispute.” Stephens v. Koch Foods, LLC, 667 F.Supp.2d 768, 779 (E.D.Tenn.2009) (citing Anderson ).

The parties in this case have devoted considerable of their briefing and oral argument to the question of whether or not antitrust plaintiffs must meet a different standard from that required of other civil plaintiffs. The burden on the plaintiff in an antitrust case is the same as it is on any other civil plaintiff. Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 468–69, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). As in other civil cases, courts addressing summary judgment motions in antitrust cases “must ... consider all facts in the light most favorable to the non-movant and must give the non-movant the benefit of every reasonable inference.” Spirit Airlines, Inc. v. Northwest Airlines, Inc., 431 F.3d 917, 930 (6th Cir.2005) (internal quotations and citations omitted).

Some special rules do apply, however, with respect to the manner in which the court views certain ambiguous circumstantial evidence in a § 1 case. In conspiracy cases, “[t]he element of agreement, ... is nearly always established by circumstantial evidence, as conspirators seldom make records of their illegal agreements.” United States v. Short, 671 F.2d 178, 182 (6th Cir.1982). Both the Supreme Court and the Sixth...