Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Retail purchasers of milk and cheese lacked standing to pursue price fixing claims under federal law, (Aug 26, 2013)

By Jeffrey May, J.D.

In an action against Dairy Farmers of America, Inc. (DFA)—a cooperative group of dairy farmers—and a producer of dairy products, among others, for conspiring to inflate the price of milk and milk futures by manipulating transactions for cheese and/or milk futures on the Chicago Mercantile Exchange (CME), the federal district court in Chicago has dismissed the federal antitrust claims of the complaining retail consumers (indirect purchaser plaintiffs). The court also dismissed the indirect purchaser plaintiffs' antitrust claims based on the laws of states in which no named plaintiff purchased the purportedly overpriced milk and cheese products (In Re: Dairy Farmers of America, Inc. Cheese Antitrust Litigation, August 23, 2013, Dow, R.).

The complaining milk and cheese product consumers were residents of New York, Tennessee, Massachusetts, Michigan, and Kansas. In addition to asserting federal antitrust claims, they asserted claims under the antitrust and consumer protection statutes of their home states, as well as other states and the District of Columbia.

The plaintiffs alleged that they purchased the defendants’ specific brand name products, such as Borden, Flav-O-Rich, and Penn Maid products, from retailers in New York, Tennessee, Michigan, and Kansas, and that they paid artificially inflated prices as a result of the antitrust violations. The prices of these products were purportedly based on the CME spot cheese market price or milk futures contract price.

Article III standing for state law claims. The indirect purchaser plaintiffs failed to satisfy their burden of showing Article III standing for states in which they did not reside and/or did not purchase the products at issue. While the plaintiffs alleged injuries as a result of buying products in New York, Tennessee, Michigan, and Kansas, they did not allege personal injury in any other state, according to the court. Thus, the indirect purchaser plaintiffs had Article III standing to pursue state law claims based only on New York, Tennessee, Michigan, and Kansas law. Claims based on the antitrust and consumer unfair competition statutes of other jurisdictions were dismissed.

Antitrust standing for federal claims. The court also concluded that the plaintiffs lacked standing to pursue their federal antitrust claims. The indirect purchaser plaintiffs were downstream participants in a retail market (finished dairy products), which was separate from the allegedly restrained markets (spot cheese and milk futures bought and sold on a commodities exchange), and the allegedly price-fixed products (commodities/futures contracts) were not even components of the products that the plaintiffs purchased, the court explained. Denying standing to the indirect purchaser plaintiffs would not “leave a significant antitrust violation undetected or unremedied,” it was noted. Direct purchasers were actively pursuing their claims and seeking damages.

The case is MDL No. 2031.

Attorneys: Matthew S. Wild (Wild Law Group PLLC) for Jacqueline A. Rudman. Joel Gerald Chefitz (McDermott Will & Emery LLP) for Dairy Farmers of America, Inc.

Companies: Dairy Farmers of America, Inc.

Cases: Antitrust IllinoisNews