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Sitts v. Dairy Farmers of America, Inc.

United States District Court, D. Vermont

September 27, 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, 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, CORRTNE 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 SOUR WINE, 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, Plaintiffs,
v.
DAIRY FARMERS OF AMERICA, INC. and DAIRY MARKETING SERVICES, LLC, Defendants.

          OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (DOC. 91)

          CHRISTINA REISS, UNITED STATES DISTRICT JUDGE

         Plaintiffs are dairy farmers who opted out of a settlement approved by this court in a class action styled Allen v. Dairy Farmers of America, 7«c., No. 5:09-cv-230 (the "Allen settlement"). They seek 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") (collectively, "Defendants"). Because of their corporate structure, Defendants are considered a single entity for purposes of Plaintiffs' claims. In their Revised First Amended Complaint ("RFAC"), Plaintiffs assert that Defendants and their alleged co-conspirators engaged in a conspiracy to monopsonize in violation of 15 U.S.C. § 2 (Count I); attempted to monopsonize in violation of 15 U.S.C. § 2 (Count II); engaged in monopsonization in violation of 15 U.S.C. § 2 (Count III); and participated in a conspiracy to restrain trade in violation of 15 U.S.C. § 1 (Count IV).

         Pending before the court is Defendants' motion for summary judgment (Doc. 91) seeking judgment as matter of law in their favor because: (1) Plaintiffs cannot establish a single conspiracy among Defendants and their alleged co-conspirators; (2) Plaintiffs cannot establish the alleged conspiracy impacted each Plaintiff individually; and (3) Plaintiffs cannot establish that Defendants possess monopsony power or a dangerous possibility of achieving monopsony power. Plaintiffs oppose the motion. On April 9, 2019, the court heard oral argument, at which time it took the pending 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 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.

         I. Plaintiffs' Proposed Product and Geographic Markets.

         For each of their claims, Plaintiffs allege a relevant product market of raw Grade A milk, a fungible, homogenous, and perishable commodity. As a relevant geographic market, Plaintiffs allege Federal Milk Marketing Order ("FMMO") 1 ("Order 1"), which covers all or portions of Vermont, New Hampshire, New York, Massachusetts, Rhode Island, Connecticut, New Jersey, Delaware, Maryland, and Virginia. Certain rudimentary uncontested facts regarding the production of milk, some of which may be obvious, are helpful in describing the proposed product and geographic markets.

         Because raw Grade A milk is homogenous, perishable, and fungible and because it is generally hauled from more than one dairy farm at a time, a dairy farmer's milk typically must be inspected, tested, and weighed at the time of pickup. Individual dairy farms that do not have the ability to test, haul, weigh, or market their own milk must contract for these services.

         Dairy cows produce milk seven days a week, a schedule that cannot be immediately adjusted for demand short of throwing away milk. As a result, dairy farmers must find a processor that will take their milk regardless of demand. Balancing is a process whereby a balancing plant accepts the excess milk supply so that it may be converted into other dairy products that are less perishable than drinking milk such as butter, cheese, ice cream, sour cream, and yogurt.

         A FMMO is a geographically defined fluid milk demand area subject to FMMO laws and regulations in which the U.S. Department of Agriculture establishes a minimum milk price so that those who buy milk from producers are required to pay no less than the established price. Each FMMO sets the price of raw Grade A milk based at least in part on its regulated components: butterfat, protein, non-fat milk solids, and others (non-fat and non-protein solids). In Order 1, this is known as "component pricing." An FMMO also sets standards for milk quality. Milk that is "pooled" in a FMMO must comply with these standards.

         The price paid to dairy farmers for their milk is based not only on the volume of milk produced but also reflects its quality. Dairy farmers receive "over-order premiums" for their milk in addition to component pricing and other premiums. Over-order premiums are the difference between the actual price paid to a dairy farmer producer by a processor or cooperative and the FMMO's minimum price.

         For purposes of their pending motion, Defendants do not contest Plaintiffs' proposed product and geographic markets.

         II. The Undisputed Facts.

         A. Defendants' Milk Marketing Activities.

         DFA is a member-owned milk marketing cooperative based in Kansas City, Kansas. It is the largest dairy cooperative in the United States and the fourth largest dairy cooperative in the world based on sales. DFA's members, all of which are producers of raw milk, include both individual dairy farmers and other member-owned milk marketing cooperatives.

         DFA is also one of the largest milk handlers in the United States. It owns or controls forty-two manufacturing facilities with over 6, 000 employees and exports its products worldwide. In 2017, DFA's annual sales substantially exceeded a billion dollars. DFA divides its business into two business segments: "Milk Marketing" and "Commercial Investments." "Milk Marketing" directs the marketing of DFA member milk. "Commercial Investments" consists of a nationwide network of owned and affiliated dairy product manufacturers that process DFA members' milk into value-added dairy products. In addition, DFA's "Commercial Investments" segment participates in joint-venture partnerships and affiliate relationships with leading food manufacturing and marketing companies.

         Until April 1, 2014, Dairy lea Cooperative Inc. ("Dairy lea") was a member-owned dairy cooperative based in Syracuse, New York. In 1999, DFA and Dairy lea jointly formed DMS, a milk marketing entity that provides services to its customers such as hauling, testing, marketing, balancing, pricing, and invoicing. From 1999 until 2003, DFA and Dairylea each owned 50% of DMS. In 2003, St. Albans Cooperative Creamery ("St. Albans"), a member-owned dairy cooperative based in St. Albans, Vermont, became a part owner of DMS. Until April 2014, St. Albans owned one third of DMS with DFA and Dairylea each owning a remaining third. Since April 2014, DFA has owned 90% of DMS and St. Albans has owned 10%.

         In May 2002, Dairylea became a member cooperative of DFA and on April 1, 2014, it merged with DFA. St. Albans became a DFA member in March 2003. In April 2014, Mount Joy Fanners' Cooperative Association ("Mt. Joy"), a former member cooperative of Dairylea, became a member cooperative of DFA.

         B. Defendants' Supply Agreements in the Northeast.

         From 2005 through the present, in addition to DFA's ownership of milk processing facilities in Order 1, Defendants entered into a series of supply agreements with milk processors in the Northeast. Defendants' Statement of Undisputed Facts ("SUF") describe these agreements as follows:

16. Between 2005 and the present, DFA has marketed raw milk to its customer, HP Hood ("Hood"), pursuant to the terms of supply agreements between DFA and Hood.
17. Between 2005 and the present, DFA has marketed raw milk to its customer, Dean Foods ("Dean" or "Dean/Suiza"), pursuant to the terms of supply agreements signed by DFA and Dean/Suiza.
18. Between 2005 and the present, DFA and DMS have marketed raw milk to its customer, Kraft, pursuant to the terms of supply agreements signed by both DFA/DMS and Kraft.
19. Between 2005 and 2014, DMS marketed raw milk to its customer, Farmland, pursuant to the terms of a supply agreement signed by both DMS and Farmland. Farmland closed its Wallington, New Jersey processing plant in 2014.
20. For periods of time between 2005 and the present, DMS has marketed kosher milk to its customer, Worcester Creameries, pursuant to the terms of a supply agreement signed by both DMS and Worcester Creameries.
21. For periods of time between 2005 and the present, DMS has marketed raw milk to its customer, Fage, pursuant to the terms of a supply agreement signed by both DMS and Fage.
22. For periods of time between 2005 and the present, DMS has marketed raw milk to its customer, Euphrates, pursuant to the terms of a supply agreement signed by both DMS and Euphrates.
23. For periods of time between 2005 and the present, DMS has marketed raw milk to its customer, Great Lakes Cheese of New York ("Great Lakes Cheese"), pursuant to the terms of a supply agreement signed by both DMS and Great Lakes Cheese.
24. For periods of time between 2005 and the present, DMS has marketed raw milk to its customer, Agro-Farma (known as "Chobani"), pursuant to the terms of a supply agreement signed by both DMS and Chobani.
25. For periods of time between 2005 and the present, DMS has marketed raw milk to its customer, Sorrento Lactalis ("Sorrento"), pursuant to the terms of a supply agreement signed by both DMS and Sorrento.
26. For periods of time between 2005 and 2017, DMS and Dairylea marketed raw milk to its customer, Turkey Hill Dairy ("Turkey Hill"), pursuant to the terms of an agreement between Dairylea and Turkey Hill.

         Defendants' SUF at 3-5, ¶¶ 16-26 (footnotes omitted).

         C. DMS's Outsourcing Agreements with Certain Order 1 Milk Processors.

         From 2005 to the present, DMS entered into outsourcing agreements with certain milk processors in Order 1 which Defendants describe as follows:

27. In 2001, DMS entered into an outsourcing agreement with its customer, Suiza (a milk processor later acquired by Dean). Pursuant to this agreement, DMS agreed to manage the supply chain process for the independent farmers supplying raw milk to the plants that Dean/Suiza acquired from Garelick Farms ("Garelick").
28. In 2003, DMS entered into an outsourcing agreement with its customer, Dean. Pursuant to this agreement, DMS agreed to manage Dean's supply chain process for independent farmers supplying raw milk to Dean's plants in the Northeast.
29. In 2002, DMS entered into an outsourcing agreement with its customer, Crowley Foods ("Crowley"). Pursuant to this agreement, DMS agreed to manage Crowley's supply chain process for independent farmers supplying raw milk to Crowley's plants.
30. In April 2004, Hood acquired Crowley.
31. In 2004, DMS entered into an outsourcing agreement with its customer, Hood. Pursuant to this agreement, DMS agreed to manage Hood's supply chain process for independent farmers supplying raw milk to Hood's Crowley, Kemps, and Rosenberger plants.
32. In 2005, DMS entered into an outsourcing agreement with its customer, Farmland. Pursuant to this agreement, DMS agreed to manage Farmland's supply chain process for independent farmers supplying raw milk to Farmland's plants in the Northeast.
33. In 2003, DMS entered into an outsourcing agreement with its customer, Kraft. Pursuant to this agreement, DMS agreed to manage Kraft's supply chain process for independent farmers supplying raw milk to Kraft's plants in the Northeast.

Id. at 6-7, ¶¶ 27-33 (footnotes omitted).

         D. Access Agreements to DocuWare.

         In or around 2006, dairy farmers and their cooperatives negotiated with processors for higher prices for milk from cows that had not been treated with artificial growth hormones, commonly referred to as "rBST-free" milk. There is no chemical or physical test to confirm whether raw milk from a particular farm is rBST-free. Instead, processors are required to verify their compliance with rBST-free requirements upon the request of state inspectors. Dairy farmers who marketed their milk through DMS (including DFA and Dairy lea members) signed affidavits to verify that they did not use rBST in treating their cows and their milk was therefore rBST-free. Dairy lea created a central database known as DocuWare for use by DMS that contained affidavits for DMS farmers who certified that their milk was rBST-free.

         DMS agreed to provide some of its processor-customers with access to DocuWare so that those customers could verify that the milk they were purchasing was rBST-free.[1]

         III. Disputed Facts.

         Plaintiffs contend that Defendants have obtained control over dairy farmers' milk in Order 1 through a series of allegedly anticompetitive agreements at both the cooperative and processor levels. According to Plaintiffs' expert witness, Professor Einer R. Elhauge:

         Defendants have engaged in a multi-faceted conspiracy with processors and other cooperatives to reduce competition, acquire monopsony power, and suppress raw milk prices in the market for raw milk sales in Order 1. Defendants entered into the following explicit or inferable anticompetitive agreements: (a) agreements with other cooperatives not to compete for dairy farmers selling raw milk; (b) agreements to discourage such competition by exchanging information with other cooperatives about how much the cooperatives pay farmers for raw milk; (c) outsourcing and full supply agreements with processors to cut off raw milk outlets to independent farmers and non-conspiring cooperatives, which were coupled with most favored nations clauses to make sure that suppressed prices applied widely across processors in the market; (d) agreements to make side payments to prevent such competition for raw milk; and (e) agreements to coerce farmers who were independent or belonged to other cooperatives to join DFA in order to still have outlets for their raw milk. These agreements all anticompetitively suppressed the unregulated portion of raw milk prices paid to dairy farmers in Order 1, beginning before 2005 and continuing to the present day.

         Plaintiffs' Statement of Disputed Facts ("SDF") ¶ 10, Ex. Z, (Elhauge Rep. at ¶ 4).

         A. Defendants' Alleged Non-Solicitation Agreements.

         James Kelleher, DMS's Director of Member Relations, acknowledged in his deposition that an effective way to compete for cooperative members is to go out to the farms and solicit membership by offering more favorable prices and services. Plaintiffs' SDF ¶ 13, Ex. A, Tab 2 (2018 Kelleher Dep. at 10, 17, 23-24). Mr. Kelleher further testified that competitive solicitation of cooperative members may prompt farmers to consider joining another cooperative that would pay more for their raw milk resulting in premium escalation which, in turn, could result in higher prices paid to dairy farmers. Plaintiffs' expert witness, Professor Elhauge, opines that dairy cooperatives need to pay milk producers competitive prices in order to attract and retain producers as members:

[I]f a cooperative approaches a farmer to offer that farmer higher raw milk prices, the farmer might be incentivized to switch away from his or her existing cooperative. This will give both the existing cooperative and the other cooperatives an incentive to aggressively negotiate higher raw milk prices from processors and share as much marketing income with farmers as possible, or risk their membership base shrinking.

         Plaintiffs' SDF ¶ 12, Ex. Z (Elhauge Rep. at ¶ 155).

         Plaintiffs do not dispute that Defendants and Dairylea entered into "Access Agreements" with certain milk processors and cooperatives that allowed them to access DocuWare. They, however, contend that Defendants' SUF omits an essential component of those agreements that cannot be justified by any need for confidentiality: each Access Agreement prohibits the party granted access to DocuWare from soliciting any of Defendants' members or producers, including independent farmers who supply milk to DMS. Plaintiffs contend these non-solicitation agreements violate a 1977 Consent Decree[2] and DFA's own Antitrust Guidelines.[3]

         For example, a May 8, 2007 agreement with Agri-Mark (which is not a member of DMS, but which sometimes markets its milk with DFA) provides in relevant part that:

COVENANT NOT TO SOLICIT
Agri-Mark will not either directly or indirectly, whether as an individual, owner, partner, operator, joint venturer, contractor, employee of, or consultant to, any person or entity, solicit a milk marketing relationship with or perform milk marketing services for any of the producers in the DocuWare Data. This covenant shall remain in effect for so long as Agri-Mark has access to DocuWare Data and for a period of 24 months after such access is terminated.

         Plaintiffs' SDF ¶ 16, Ex. P at 67.

         The Agri-Mark Access Agreement identifies Agri-Mark, DFA, DMS, and Dairylea as parties to the agreement. Gregory Wickham signed the Access Agreement on behalf of Dairy lea as its Chief Executive Officer ("CEO"), on behalf of DF A as its Chief Operating Officer ("COO"), and on behalf of DMS as its General Manager.

         In June of 2007, Defendants and Dairylea entered into an Access Agreement with the Covenant Not to Solicit with St. Albans Cooperative. Again, Mr. Wickham signed it on behalf of Dairylea, DFA, and DMS. Plaintiffs' SDF ¶ 16, Ex. R. Plaintiffs identify several other Access Agreements that also contain the Covenant Not to Solicit, several of which were also signed by Mr. Wickham on behalf of Dairylea, DFA, and DMS.[4]

         Plaintiffs contend that the Access Agreements for DocuWare are not the only nonsolicitation agreements entered into by Defendants with their alleged co-conspirators. They cite an Agri-Mark board member's 2011 deposition testimony that Robert Stoddart, the Senior Vice President of membership at Agri-Mark, told the board member in October 2009 that "we have an unwritten agreement that we don't approach . . . any other members of any other co-ops." Plaintiffs' SDF ¶ 17, Ex. A, Tab 4 (2011 Reynolds Dep. at 39-40, 49) (internal quotation marks omitted). Mr. Stoddart's own testimony acknowledged this arrangement. Id.; Ex. A, Tab 5 (2011 Stoddart Dep. at 55). In addition, a November 2003 DMS document entitled "Membership Meeting" reflects that: "[James] Kelleher[, DMS Director of Member Relations, ] reported on recent conversations with Bob Stoddart [of Agri-Mark]. Bob is indicating coop[erative]s need to work together and we shouldn't be fighting in the country." Plaintiffs' SDF ¶ 17, Ex. S. Brad Keating, CEO of DMS, testified that although he did not recall the context in which the phrase was used, in his view "in the country" meant "soliciting farms out in the field." Id.; Ex. B, Tab 141 (2011 Keating Dep. at 161-62).

         According to Professor Elhauge:

There is no independent economic motive for Agri-Mark to inform DFA and Dairylea of [a dairy farmer who wants to switch cooperatives], because sharing the information could only help DFA and Dairylea keep the farmer from switching to Agri-Mark. The willingness to share such information instead indicates a collective motive to mutually share information about farmers who were contemplating switching in order to help implement an agreement to prevent such competition for farmers.

         Plaintiffs' SDF ¶ 18, Ex. Z (Elhauge Rep. at ¶ 163).

         Plaintiffs proffer evidence that St. Albans, an alleged co-conspirator, was also a party in non-solicitation agreements in addition to the Access Agreements for DocuWare. They cite December 2002 correspondence between St. Albans and DFA in which St. Albans proposed that "[t]o assist with our relations, we expect that there would be no active solicitation of members between organizations that would include special member programs offered in overlapping membership regions." Plaintiffs' SDF ¶ 19, Ex. B, Tab 124 at 849. Gary Hanman, DFA's then-CEO, shared the letter with Puck Smith, then-St. Albans's CEO (who later succeeded Mr. Hanman as DFA's CEO). In response, Mr. Smith wrote a note pertaining to that proposal: "Obviously-but do we want this in writing-I think not" before faxing it back to DFA's CEO. Id. DFA CEO Hanman then responded to St. Albans's proposal, advising that DFA's antitrust lawyers:

will not let us agree to restrict active solicitation of each other's members. However, once we are cooperating on milk pick up, marketing, distribution of market proceeds and of sharing facilities there would be little if any economic benefit causing dairy farmers to transfer their membership between St. Albans, DFA[, ] or Dairylea.

Plaintiffs' SDF ¶ 19, Ex. T at 150.

         St. Albans's membership manager testified that he informs James Kelleher of DMS anytime a DFA farmer contacts him about joining St. Albans and that Mr. Kelleher returns the courtesy:

Q. Are you ever contacted by DFA members about possibly doing business with St. Albans?
A. Yes.
Q. Will you approach a DFA farm to solicit their business?
A. I have not.
Q. What about a Dairylea farm?
A. I have not.
Q. When you're contacted by a DFA farm about potentially doing business with St. Albans, do you provide a courtesy call to Mr. Kelleher?
A. Yes.
Q. Do you do that before you visit the farm?
A. Depends. Typically.
Q. Does Mr. Kelleher do the same thing for you if he's approached by a St. Albans farm?
A. Yes, he has.

         Plaintiffs' SDF ¶ 20, Ex. A, Tab 6 (2011 Gates Dep. at 40).

         In support of their claims that other alleged co-conspirators were parties to nonsolicitation agreements with Defendants, Plaintiffs cite Mr. Kelleher's deposition testimony that if a cooperative's milk were in DFA/DMS's system, DFA would not solicit that cooperative's members:

Q. . . . [I]f a cooperative was marketing their milk through DMS, then DFA wouldn't approach the farms of that cooperative to try to solicit them; correct?
A. The milk was in the system. If they wanted to come to us, we would take them, but we - no, we did not approach them.

         Plaintiffs' SDF ¶ 20, Ex. A, Tab 2 (2018 Kelleher Dep. at 27). From 2010 to 2017, Mr. Kelleher could not identify a single instance in which DFA, DMS, or Dairylea solicited cooperative membership from a dairy farmer who belonged to a cooperative that was already using the DMS system. Id. at 58-59.

         Plaintiffs claim that alleged co-conspirators Maryland & Virginia Milk Producers Cooperative ("MDVA"), Mt. Joy, and Tand O' Takes were also parties to nonsolicitation agreements with Defendants. In a March 3, 2005 voice mail, Gregory Wickham reported to Rick Smith the following:

. . . Some background-in Order 1, [MDVA] has been relatively quiet from a competitive perspective in the last 18-24 months. I don't want to say they haven't called on any farms-they go where they are called. I don't think they have aggressively been going up and down the road trying to convert people. It appears as though in the last couple of weeks they may be turning over a new leaf, which is a little surprising / disappointing. We've gotten reports that they are calling, well actually it was a report that they called on a slew of Mt. Joy farms (15-20 so far). I think they are definitely, absolutely, positively calling on places where they have not been asked to go. That's unusual. That's kind of breaking the balance of power so to speak. We have, because they have been relatively quiet, I would say we have been quiet in their sector. It's kind of been a subtle peace where if we get a call from one of their members, we go-and if they get a call from one [of] ours, they go. There hasn't been a lot of active, unsolicited calling. . . . Bottom line is, between you, me, [Brad] Keating [DMS's CEO], talking to Jay [Bryant, MDVA's CEO] and Mike John-we have to send a message that aggressive, unsolicited calling is going to result in us doing something that probably [Mr. Bryant] would rather not have us do. If we want to go there, we'll go there. But we can't sit back and do nothing. It is going to be darn difficult to garner support for whatever he wants to do in Carlisle and be in a JV if they are going to be going up and down the street in Order 1.

         Plaintiffs' SDF ¶ 21, Ex. U. Thereafter, in a document entitled "Maryland-Virginia Relationship, " DMS documented that the situation with MDVA had improved: "On some of our farms/better recently/actually calling us when they get called" but further noted that MDVA was "All over [Land O' Lakes] farms" and there may be a "[t]rust factor" because they "[c]alled on Turkey Hill" and because "[intelligence says [they are] talking to Shenandoah, Clover, [and] Dairy Maid[.]" Plaintiffs' SDF ¶ 21, Ex. W.

         In August of 2008, when Defendants heard "rumors" that MDVA field representatives had tried to solicit several DMS farms, DMS's representative contacted MDVA CEO Jay Bryant, documenting his response to Rick Smith, DMS's CEO, in relevant part as follows:

We've reached out to Jay a few times regarding rumors-both Sonia and Greg [Wickham]. Jay has continued to commit that they are not going to take these producers and are not procuring milk. Jay's most recent response was that he can't control hauler or field rep rumors, but he controls member procurement decisions and he has already described that they are not taking these members. Despite a few ongoing rumors, we didn't think we could continue to go back to Jay again as he has confirmed his position and hasn't yet demonstrated anything to the contrary. However, I asked Greg Wickham to help facilitate a meeting with Jay so I could meet him eye to eye. I believe we will meet at NMPF. Despite Jay's commitment, the fact that his field reps are throwing around numbers to our members does create challenges for us and we need to get some agreement on that point.
I will immediately inform you if we become confident that we are at risk of losing one of these members.

         Plaintiffs' SDF ¶ 22, Ex. X.

         Plaintiffs contend that Mt. Joy's participation in non-solicitation agreements with Defendant is reflected in a February 3, 2000 memo from Brad Keating (then-DMS Director of Operations) to Rick Smith (then-Dairylea's CEO) that states in relevant part: "Jim [Kelleher] mentioned that Mount Joy is currently soliciting DFA farms. Mount Joy claims that if they don't take the farms, the farms will go to Lanco. We should curtail this practice." Plaintiffs' SDF ¶ 23, Ex. B, Tab 149 at 925. Mt. Joy was a DMS cooperative at the time.

         Plaintiffs further cite DMS's alleged threat to raise milk prices and reduce supply if Queensboro solicited DFA members. Plaintiffs' SDF ¶ 68, Ex. FFF (2/20/01 DMS memo regarding "customer conversations" stating in part: "I also spoke with Butch Miller. I told him if we lose farms to Queensboro his price was going up and his volume was going down. No. problem, Butch does not want to compete with us on the farm.").

         In September 2002, upon hearing a report that NFO (a cooperative marketing through DMS) was engaging in price competition for members with DFA, then-DFA CEO Gary Hanman instructed a DFA employee to "visit with NFO leadership and redirect that effort. They should not be soliciting DFA members" to "become members of NFO, particularly when DFA is responsible for marketing the milk for NFO members." Plaintiffs' SDF ¶ 23, Ex. B, Tab 108 (2011 Smith Dep. at 333-35).

         2003 DMS staff meeting minutes similarly report that Land O' Lakes "is soliciting our farms in the Lancaster, PA area. Greg Wickham [then an officer of both DMS and Dairylea] will correct immediately." Plaintiffs' SDF ¶ ...


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