Antitrust Law Daily Wrap Up, ANTITRUST—D. Tenn.: Milk producers’ expert testimony allowed in milk price fixing suit, (Jan 25, 2016)

By Linda O’Brien, J.D., LL.M.

In an action by two processed milk retailers against a milk bottler, raw milk supplier, and milk processor for their participation in a conspiracy to restrict the supply of raw milk, the opinions of the defendants’ economist expert were allowed, the federal district court in Greeneville, Tennessee, has ruled. Thus, the plaintiffs’ objections to the magistrate judge’s denial of their motion to exclude expert testimony were overruled, and the magistrate judge’s decision to allow the expert testimony was affirmed and adopted (Food Lion, LLC v. Dean Foods Company, January 21, 2016, Greer, J.).

Dean Foods Company and Suiza Food Corp., the largest bottlers of processed milk in the United States, merged in 2001 under the name of Dean Foods. To avoid antitrust issues, as part of the merger, Dean Foods sold or divested 11 dairy processing plants to Dairy Farmers of America (DFA), a dairy farmer cooperative and former business partner of Suiza. DFA transferred the processing plants to National Dairy Holdings (NDH), a partnership formed to compete with Dean Foods, and retained an equity interest in NDH. NDH operated the plants at a loss and eventually closed some of them. Food Lion LLC and Fidel Breto, two retailers of processed milk, filed suit against Dean Foods, DFA, and NDH, alleging a conspiracy to divide the market and restrict the output of raw milk.

In its memorandum opinion, the court found that the magistrate’s order—ruling that the defendants’ economist expert’s choice of data set used in his regression model rested on a reliable foundation—was not clearly erroneous or contrary to law. The plaintiffs argued that the expert’s testimony should be excluded because he used a nationwide Producer Price Index (PPI) data set in his regression model to determine whether the alleged conspiracy caused damages to the plaintiffs.

The court disagreed and noted that there was no basis for excluding an expert’s opinion because its opponent believed the testimony of its expert to be more credible. An expert’s credentials were only one factor for the jury to consider in deciding how credible the testimony was. Furthermore, the defendants’ expert’s lack of experience as a dairy farmer or milk price regulator did not make him unqualified to provide an opinion.

The defendants’ expert determined that the injury suffered by the plaintiffs was not caused by the alleged conspiracy, but was the product of normal effects of a nationwide trend in milk pricing. In his report and deposition, the expert explained his reasoning for electing to use the PPI data set in his regression model and that he considered all potential biases when choosing that data set. Therefore, there was support in the record for his choice of data set and any potential flaws of using PPI could be addressed during cross-examination, the court concluded.

The case is No. 2:07-cv-00188-JRG.

Attorneys: Michael L. Converse (Hunton & Williams, LLP) for Food Lion, LLC. Carolyn M. Hazard (Dechert LLP) and Mark S. Dessauer (Hunter, Smith & Davis) for Dean Foods Co. Jerry L. Beane (Andrews Kurth, LLP) and Steven E. Kramer (Kramer, Rayson LLP) for National Dairy Holdings, LP. Thomas J. Garland, Jr. (Milligan & Coleman) and Carl R. Metz (Williams & Connolly LLP) for Dairy Farmers of America, Inc.

Companies: Food Lion, LLC; Dean Foods Co.; National Dairy Holdings, LP; Dairy Farmers of America, Inc.

Cases: Antitrust TennesseeNews