Buy This Entire Record For
Sitts v. Dairy Farmers of America, Inc.
United States District Court, D. Vermont
August 21, 2017
GARRETT AND RALPH SITTS, LEON ATWELL, VICTOR BARRICK, DANIEL BAUMGARDER, WILLIAM BOARD, GEORGE BOLLES, ROGER BOLLES, ANDY BOLLINGER, THOMAS BOLLINGER, LOGAN BOWER, DWIGHT BRANDENBURG, BERNARD BROUILLETTE, THOMAS BROUILLETTE, AARON BUTTON, HESTER CHASE, THOMAS CLARK, THOMAS CLATTERBUCK, PAUL CURRIER, GERRY DELONG, PETE AND ALICE DIEHL, MARK DORING, MARK AND BARBARA DULKIS, GLEN EAVES, MIKE EBY, WILLIAM ECKLAND, DOUG ELLIOT, JAMES ELLIOT, WEND ALL ELLIOTT, MICHAEL FAUCHER, DAVID AND ROBIN FITCH, DUANE AND SUSAN FLINT, JOSEPH FULTS, RICHARD GANTNER, STEFAN AND CINDY GEIGER, WILLIAM GLOSS, JOHN GWOZDZ, DAVID AND LAURIE GRANT, JIM AND JOYCE GRAY, DENNIS HALL, ROGER AND JOHN HAMILTON, NEVIN AND MARLIN HILDEBRAND, JAKE AND HARLEN HILLYERD, RICHARD AND TERRI HOLDRIDGE, PAUL HORNING, TERRY AND ROBERT HUYCK, DONALD SCOTT HYMERS, TERRY INCH, RANDY AND LYNETTE INMAN, THEODORE JAYKO, JACK KAHLER, JAMES AND TERESA KEATOR, JIM AND SHARON KEILHOLTZ, GEORGE KEITH, LEE AND ELLEN KLOCK, MIKE AND LISA KRAEGER, FRED LACLAIR, TIM LALYER, FRANK AND JOHN LAMPORT, CORRINE LULL, CHARLES AND GRETCHEN MAINE, THOMAS AND DEBORA MANOS, FRED MATTHEWS, RUSSELL MAXWELL, GERRY MCINTOSH, STEPHEN MELLOTT, JOHN AND DAVID MITCHELL, THOMAS MONTEITH, WALT MOORE, RICHARD AND SHEILA MORROW, DEAN MOSER, MELISSA MURRAY AND SEAN QUINN, THOMAS NAUMAN, CHARLES NEFF, DAVID NICHOLS, MICHAEL NISSLEY, LOU ANN PARISH, DANIEL PETERS, MARSHA PERRY, CAROLYN AND DAVE POST, JUDY LEE POST, SCOTT RASMUSEU, BRIAN REAPE, DAVID AND LYNETTE ROBINSON, BRIAN AND LISA ROBINSON, CALVIN ROES, BRADLEY ROHRER, PAUL AND SARAH ROHRBAUGH, ROBERTA RYAN, SCOTT AND LIN SAWYER, S. ROBERT SENSENIG, THOMAS AND DALE SMITH, DALE AND SUSAN SMITH, DENNIS SMITH, DONALD T. AND DONALD M. SMITH, ROGER AND TAMMY, SMITH, TODD SNYDER, RICHARD SOURWINE, DANNY SOUR WINE, RANDY SOWERS, SHANE STALTER, GEORGE AND SHIRLEY STAMBAUGH, TRACY STANKO, STEPHEN SOURWINE, RICHARD SWANTAK, GEORGE AND PATRICIA THOMPSON, JEREMY THOMPSON, KEN AND JUDY TOMPKINS, DANIEL VAUGHN, MARK VISSAR, ERIC WALTS, EDWARD WALLDROFF, GERALD WETTERHAHN, JR., EUGENE WILCZEWSKI, STEVE WILSON, Plaintiffs,
DAIRY FARMERS OF AMERICA, INC. and DAIRY MARKETING SERVICES, LLC, Defendants.
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART DEFENDANTS' MOTION TO DISMISS (DOC. 16)
CHRISTINA REISS, CHIEF JUDGE.
filed this action seeking relief pursuant to the Sherman Act,
15 U.S.C. §§ 1-2, for alleged antitrust violations
committed by Defendants Dairy Farmers of America, Inc.
("DFA") and Dairy Marketing Services, LLC
("DMS"). Plaintiffs, who refer to themselves as
"Farmers United, " are more than 115 dairy farmers
who opted out of a settlement approved by the court in a
class action styled Allen v. Dairy Farmers of
America, inc., No. 5:09-cv-230 (the "Class
before the court is Defendants' motion to dismiss
Plaintiffs' First Amended Complaint for Lack of Antitrust
Standing (Doc. 16). Following oral argument on May
2, 2017, the court granted Plaintiffs leave to file
a Revised First Amended Complaint ("RFAC") (Doc.
29), which they timely filed on May 23, 2017. Defendants
filed a post-hearing memorandum renewing their motion to
dismiss on June 13, 2017, whereupon the court took the motion
contend they are entitled to dismissal because Plaintiffs
have failed to allege antitrust injury as a matter of law
under the Second Circuit's recent decision in In re
Aluminum Warehousing Antitrust Litigation, 833 F.3d 151
(2d Cir. 2016) ('Aluminum Warehousing"). In
the alternative, Defendants assert that each Plaintiff fails
to plausibly allege antitrust standing with respect to their
monopolization and monopsonization claims, and that four
Plaintiffs, who have not supplied milk either to DMS or to
any alleged co-conspirator, have failed to establish
antitrust standing to assert any claims.
oppose dismissal, asserting that they have plausibly alleged
antitrust standing, Aluminum Warehousing is easily
distinguished, and they have only asserted claims that
survived summary judgment in the Class Action. Plaintiffs
further point out that Defendants urged the Second Circuit to
approve the settlement of the Class Action, arguing that
dissatisfied dairy farmers could opt out of the settlement
and had, in fact, already filed this separate lawsuit. In
this respect, Plaintiffs appear to ask the court to consider
Defendants' representation to the Second Circuit as
judicial admissions that this lawsuit could survive a motion
are represented by Dana A. Zakarian, Esq., Elizabeth A.
Reidy, Esq., Gary L. Franklin, Esq., Joel G. Beckman, Esq.,
and William C. Nystrom, Esq. Defendants are represented by
Alfred C. Pfeiffer, Jr., Esq., Elyse M. Greenwald, Esq., Ian
P. Carleton, Esq., Jennifer L. Giordano, Esq., Margaret M.
Zwisler, Esq., and W. Todd Miller, Esq.
Factual and Procedural Background.
following factual allegations are derived from the RFAC.
Plaintiffs operate in Federal Milk Marketing Order 1
("Order 1"), which covers areas in Delaware, the
District of Columbia, Connecticut, Maryland, Massachusetts,
New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, Vermont, and Virginia. Each Plaintiff is
i. A current or former supplier to and/or member of DFA;
ii. A current or former supplier to DMS;
iii. A current or former supplier to one or more of the
iv. A current or former competitor of DFA; or
v. A current or former competitor of DMS.
(RFAC ¶ Ha.)
A to the RFAC includes the following information regarding
each Plaintiff, for all or part of the years 2005 to the
present: (1) their name and address; (2) farm name; (3) the
cooperative(s) of which they are or were a member; and (4)
the processors buying their milk. Exhibit A also purports to
identify the factual basis for each Plaintiffs antitrust
standing by designating whether they are: (1) current or
former members of DFA; (2) current or former suppliers to
DMS; (3) current or former suppliers to a co-conspirator (and
the name of the co-conspirator); and/or (4) current or former
competitors of DFA/DMS.
Defendants criticize the lack of detail set forth in Exhibit
A, they neither claim it prevents them from having sufficient
notice to respond to Plaintiffs' claims, nor seek a more
definite statement. See Salahuddin v. Cuomo, 861
F.2d 40, 42 (2d Cir. 1988) (explaining that "the
principal function of pleadings under the Federal Rules is to
give the adverse party fair notice of the claim asserted so
as to enable him to answer and prepare for trial");
see also Todd v. Exxon Corp., 275 F.3d 191, 198 (2d
Cir. 2001) ("No heightened pleading requirements apply
in antitrust cases."); Dayton Superior Corp. v.
Marjam Supply Co., 2011 WL 710450, at *8 (E.D.N.Y. Feb.
22, 2011) (stating that "antitrust allegations are
governed by the notice pleading requirements contained in
Federal Rule of Civil Procedure 8(a)") (alterations and
internal quotation marks omitted).
allege that DFA, a vertically integrated not-for-profit
cooperative, is the largest dairy cooperative in the United
States, with over 14, 000 dairy producers, including 2, 446
member farms in the Northeast United States. It is also
allegedly the largest milk processor in the world and hauls,
processes, bottles, and distributes raw Grade A milk. DMS is
a limited liability company which was established in 1999
through an agreement between DFA and Dairylea Cooperative
Inc. ("Dairylea") and is currently owned by DFA and
St. Albans Cooperative Creamery, Inc. As a milk-marketing
agency, it markets milk for over 5, 500 farms throughout the
Northeast "even though DMS received no authorization
from independent dairy farmers to do so." (RFAC ¶
16.) "Upon information and belief, " DMS markets
approximately 50% of the raw Grade A milk in the Northeast.
allege that Defendants, in concert with Dairylea, Agri-Mark
Family Dairy Farms ("Agri-Mark"), members of the
Greater Northeast Milk Marketing Agency ("GNEMMA"),
Farmland Dairies LLC, National Dairy Holdings LLC
("NDH"), HP Hood LLC ("Hood"), and other
known and unknown co-conspirators, "have engaged in an
illegal conspiracy to restrain competition, fix and suppress
prices paid to farmers and monopolize/monopsonize the raw
Grade A milk market in the Northeast." Id.
¶ 81. Plaintiffs' RFAC asserts the following claims
Count I: Sherman Act § 2 violation
(Conspiracy to Monopolize/Monopsonize);
Count II: Sherman Act § 2 violation
(Attempt to Monopolize/Monopsonize);
Count III: Sherman Act § 2 violation
(Unlawful Monopolization/ Monopsonization);
Count IV: Sherman Act § 1 violation
(Conspiracy to Restrain Trade).
Conclusions of Law and Analysis.
Standard of Review.
adjudicating a motion pursuant to Fed.R.Civ.P. 12(b)(6), the
court is "guided by '[t]wo working
principles[.]'" Harris v. Mills, 572 F.3d
66, 72 (2d Cir. 2009) (quoting Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)) (alteration in original). First,
"a court must accept as true all of the [factual]
allegations contained in a complaint[, ]" a
"tenet" that is, however, "inapplicable to
legal conclusions." Iqbal, 556 U.S. at 678.
"Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice." Id. Second, "only a complaint
that states a plausible claim for relief survives a motion to
dismiss" and a claim "has facial plausibility when
the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged." Id. at 678-79.
plausibility standard is not akin to a 'probability
requirement, ' but it asks for more than a sheer
possibility that a defendant has acted unlawfully."
Id. at 678 (quoting Bell Ail. Corp. v.
Twombly, 550 U.S. 544, 556 (2007)). "Where a
complaint pleads facts that are merely consistent with a
defendant's liability, it stops short of the line between
possibility and plausibility of entitlement to relief."
Id. (internal quotation marks omitted).
"Determining whether a complaint states a plausible
claim for relief will. . . be a context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense." Id. at 679.
maintain an action, "[a]n antitrust plaintiff must show
both constitutional standing and antitrust standing."
Gelboim v. Bank of Am. Corp., 823 F.3d 759, 770 (2d
Cir. 2016). Antitrust standing is "a threshold,
pleading-stage inquiry and when a complaint by its terms
fails to establish this requirement [the court] must dismiss
it as a matter of law." Gatt Commc'ns, Inc. v.
PMC Assocs., L.L.C., 711 F.3d 68, 75 (2d Cir. 2013)
(internal quotation marks omitted). To establish antitrust
standing, a plaintiff must satisfy "two
imperatives[.]" Id. at 76.
the plaintiff must allege antitrust injury, which is
"injury of the type the antitrust laws were intended to
prevent and that flows from that which makes defendants'
acts unlawful." Brunswick Corp. v. Pueblo
Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). To determine
whether Plaintiffs plausibly allege antitrust injury, the
court must "evaluate the plaintiffs harm, the alleged
wrongdoing by the defendants, and the relationship between
them." Associated Gen. Contractors of Cal, Inc. v.
Cal. State Council of Carpenters, 459 U.S. 519, 535
(1983) ("AGC); Port Dock & Stone Corp. v.
Oldcastle Ne., Inc., 507 F.3d 117, 122 (2d Cir. 2007)
(stating that "[t]he necessary 'antitrust
injury' is an injury attributable to the anticompetitive
aspect of the practice under scrutiny").
each plaintiff must allege that he or she is an
"efficient enforcer" of the antitrust laws. See
Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 443
(2d Cir. 2005) (stating that antitrust injury "would not
necessarily establish [plaintiffs'] standing to sue"
because other considerations "may sometimes indicate
that a party who states an antitrust injury is nevertheless
not a proper antitrust plaintiff); see also Pearson
Educ, Inc. v. Allen Air Conditioning Co., 2014
WL 2154099, at *6 (S.D.N.Y. May 22, 2014) ("Every
plaintiff asserting a claim arising under the antitrust laws
must allege a sufficient basis for antitrust standing").
An efficient enforcer of the antitrust laws is one who is a
"proper party to perform the office of a private
attorney general and thereby vindicate the public interest in
antitrust enforcement." Gelboim, 823 F.3d at
780 (internal quotation marks omitted).
Whether Plaintiffs Have Alleged Antitrust Injury Under