United States District Court, D. Vermont
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,
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.
CHRISTINA REISS, UNITED STATES DISTRICT JUDGE
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).
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.
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.
Plaintiffs' Proposed Product and Geographic
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.
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
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.
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.
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.
purposes of their pending motion, Defendants do not contest
Plaintiffs' proposed product and geographic markets.
The Undisputed Facts.
Defendants' Milk Marketing Activities.
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.
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
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
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
Defendants' Supply Agreements in the Northeast.
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
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.
SUF at 3-5, ¶¶ 16-26 (footnotes omitted).
DMS's Outsourcing Agreements with Certain Order 1 Milk
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
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
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
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
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
Id. at 6-7, ¶¶ 27-33 (footnotes omitted).
Access Agreements to DocuWare.
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.
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.
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:
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.
Statement of Disputed Facts ("SDF") ¶ 10, Ex.
Z, (Elhauge Rep. at ¶ 4).
Defendants' Alleged Non-Solicitation Agreements.
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.
SDF ¶ 12, Ex. Z (Elhauge Rep. at ¶ 155).
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 and DFA's own Antitrust
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.
SDF ¶ 16, Ex. P at 67.
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.
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
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.
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
SDF ¶ 18, Ex. Z (Elhauge Rep. at ¶ 163).
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
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.
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
Q. Are you ever contacted by DFA members about possibly doing
business with St. Albans?
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?
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.
SDF ¶ 20, Ex. A, Tab 6 (2011 Gates Dep. at 40).
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.
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.
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.
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.
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
I will immediately inform you if we become confident that we
are at risk of losing one of these members.
SDF ¶ 22, Ex. X.
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.
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.").
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).
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 ¶