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Sitts v. Dairy Farmers of America, Inc.

United States District Court, D. Vermont

July 23, 2019

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, WENDALL 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, 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 SOURWINE, 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, DALE COVERT, FAMILY DAIRY FARMS, LLC, RICHARD PUGH, Plaintiffs,
v.
DAIRY FARMERS OF AMERICA, INC. and DAIRY MARKETING SERVICES, LLC, Defendants.

          OPINION AND ORDER DENYING DEFENDANTS' MOTION TO STRIKE NEW EXPERT OPINION AND DENYING DEFENDANTS' MOTION TO STRIKE AN UNDISCLOSED EXPERT OPINION (DOCS. 96 & 121)

          Christina Reiss, District Judge.

         Plaintiffs 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.

         Pending before the court is Defendants' February 5, 2019 motion to strike Professor Einer R. Elhauge's supplemental report. (Doc. 96.) Plaintiffs opposed the motion on February 19, 2019 and Defendants replied on March 5, 2019. Oral argument was held on April 9, 2019, at which time the court took the motion under advisement.

         Also pending before the court is Defendants' May 3, 2019 motion to strike Professor Elhauge's opinion that DFA and DMS possess unilateral monopsony power because this opinion was first disclosed at his deposition. (Doc. 121.) Plaintiffs opposed the motion on May 17, 2019 and Defendants replied on May 31, 2019, at which time the court took the motion under advisement.

         Plaintiffs 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 Margaret M. Zwisler, Esq., Alfred C. Pfeiffer, Jr., Esq., Elyse M. Greenwald, Esq., Ian P. Carleton, Esq., Jennifer L. Giordano, Esq., and W. Todd Miller, Esq.

         I. Factual and Procedural Background.

         Plaintiffs allege that Defendants, in concert with known and unknown coconspirators, "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." (Doc. 29 at 22, ¶ 81.) Plaintiffs' Revised First Amended Complaint asserts the following claims: Count I, conspiracy to monopsonize in violation of 15 U.S.C. § 2; Count II, attempt to monopsonize in violation of 15 U.S.C. § 2; Count III, unlawful monopsonization in violation of 15 U.S.C. § 2; and Count IV, conspiracy to restrain trade in violation of 15 U.S.C. § 1.

         On or about October 3, 2018, Plaintiffs served Professor Elhauge's initial expert report (the "Initial Report") in which he used a regression analysis to measure the impact of Defendants' alleged antitrust violations and concluded that DFA, DMS, and their coconspirators possessed monopsony power in the raw Grade A milk market in Federal Milk Marketing Order 1. A deposition taken on November 6, 2018 included the following colloquy between Professor Elhauge and Defendants' attorney:

Q. So that's, again, back to my question: You did not do an analysis in your report that says that either DFA or DMS or the two of them together have monopsony power on their own, apart from the conspiracy; right?
A. Again, I'm not sure-I'm not positive. I don't think it's in the report, but I do believe that they themselves have about 50 percent market share and thus would likely have monopsony power on their own. But I thought as an economic matter what matters is the collective power of the entire conspiracy.
Q. And again, let's be blunt: Are you offering an opinion in this case that DFA or DMS or the two of them together has monopsony power on their own?
A. I think they likely do. But I'm not sure it's in the report.
Q. So you're not offering that opinion whether or not you think they may have it.
A. Well, you're asking me now, and I think they likely do have that power since they have about a 50 percent share of the market.
Q. Okay. Is that an opinion you're offering?
A. I think it is likely the case. I guess I'd like to investigate it further. It wasn't one of the questions I was, you know, directed to answer. But I think I do likely have that opinion.
Q. So it's not a question you were directed to answer; right?
A. Well, not explicitly, no.
Q. And it's not-
A. I suppose you could read that question to, you know, encompass the possibility of also answering that separate question. But I wasn't directed to explicitly separate them out.
Q. And you didn't explicitly separate them out?
A. As far as-it's a long report. But I don't think in this section that I ever separate out DMS and DFA shares alone. But you could easily do so from the backup and the data that I provided. So I guess in that sense, since the backup is disclosed already, it is there in my analysis.
Q. But again, you'd actually have to go back and look at your data and do that analysis and set it forth in a report if you were going to render that opinion; right?
A. I know that it has about a 50 percent market share for DMS and DFA combined. I know it's higher in some years and lower in other years than 50 percent. So that I can state confidently from the data?
Q. Is that the only factor you'd need to know to know whether they had monopsony power on their own?
A. Well, I'm trying to think why it would be relevant. It seems like it would be relevant only if we thought-we accepted some premise that the other co-conspirators didn't also participate. But if they didn't participate, then that would mean that DFA and DMS were the only conspirators and that they did-were able to suppress prices. So I think that would support the inference. The evidence about inelasticity would be the same, and the evidence about entry barriers would be the same. So I think it is the case that at least if I accept the premise, ...

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