Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Sole lead counsel appointed in dairy product direct purchaser litigation, (Nov 18, 2013)

By Tobias J. Gillett, J.D., LL.M.

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 appointed Lovell Stewart & Halebian LLP as sole interim lead counsel for the direct purchaser plaintiffs, relegating former co-lead counsel Wolf Haldenstein Adler Freeman & Herz, LLC to a local counsel role (In Re: Dairy Farmers of America, Inc. Cheese Antitrust Litigation, November 15, 2013, Dow, R.).

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. The plaintiffs asserted claims under the antitrust laws, the RICO Act, and the Commodity Exchange Act.

On February 5, 2010, the court appointed Wolf Haldenstein and Lovell Stewart to serve as interim co-lead counsel for the direct purchaser plaintiffs. On August 20, 2013, Wolf Haldenstein partner Mary Jane Fait resigned from the firm, amid disputes regarding her personal bankruptcy and management of her cases, and moved to Seattle, where she opened a home office. Although the names of Fait and another Wolf Haldenstein partner, Fred Isquith, appeared on the initial complaint and the consolidated class action complaint, records reflected that Theodore Bell had spent 2,122 hours on the case, Fait 793 hours, Isquith 749 hours, and other Wolf Haldenstein attorneys 926 hours, and that Wolf Haldenstein had contributed $165,797 in out-of-pocket expenses. However, Wolf Haldenstein did not contradict Lovell Stewart’s statement that “Lovell Stewart, for efficiency purposes in this case, has done the majority of the work.”

Fait filed a motion to modify the appointment of co-lead counsel to withdraw the appointment of Wolf Haldenstein and substitute herself as co-lead counsel in its place, a motion supported by plaintiff Knutson’s, Inc.

The court granted the motion as far as withdrawing Wolf Haldenstein as co-lead counsel, but declined to appoint Fait in its stead. The court observed that Fait had provided no evidence to demonstrate that she had the resources necessary to carry the action forward. Her personal resources had been liquidated in bankruptcy proceedings, she had left a sizeable firm in Chicago to open a home office in Seattle, she did not show that she had “the resources to expend potentially hundreds of thousands of dollars in the litigation,” and she did not state what legal resources—such as lawyers, paralegals, and staff—she would have at her disposal.

The circumstances differed from two other antitrust cases in which Fait was retained in a leadership role. In one, her continued membership in the steering committee “was agreed to and with the understanding that other firms would pay her share of the expenses.” In the other case, the court had appointed individual attorneys as interim class counsel, and “all of the named plaintiffs stated that Ms. Fait and the co-counsel should remain in their positions and the Court obliged.”

In the present case, the appointment of three firms as lead counsel (Fait, Wolf Haldenstein, and Lovell Stewart) “likely would involve waste, inefficiencies, and duplicative effort.” Fait had not demonstrated that she had the resources or staff to serve as co-lead counsel, but the Wolf Haldenstein attorney that had the “primary, day-to-day responsibilities” for the case was Bell, who reported to Fait and Isquith, and did not “appear to have the type of extensive antitrust experience that would be typical of the senior lawyer at a firm serving as co-lead counsel in an MDL case.” Moreover, the Wolf Haldenstein complaint was the fifth and last such complaint filed in the district. Finally, Lovell Stewart seemed to have done the majority of the work in the case, and “appear[ed] more than capable of handing the lead counsel role in this case on a going forward basis.”

Therefore, the court appointed Lovell Stewart as sole lead counsel. However, the court believed that, in light of Wolf Haldenstein’s Chicago location and Bell’s substantial involvement in the case, Wolf Haldenstein should remain as local counsel.

The case is No. 09 CV 3690, MDL No. 2031.

Attorneys: Anne Kristin Fornecker (Milberg LLP) for Adam Properties, Inc. and Stew Leonard’s Inc. Christopher Lovell (Lovell Stewart & Halebian, LLP) for Indriolo Distributors, Inc. William M. Hannay (Schiff Hardin LLP) for Gerald Bos. Joel Gerald Chefitz (McDermott Will & Emery LLP) for Dairy Farmers of America, Inc. and Keller’s Creamery, LP. Nathan P. Eimer (Eimer Stahl LLP) for Schreiber Foods Inc.

Companies: Adam Properties, Inc.; Stew Leonard’s Inc.; Knutson’s, Inc.; Indriolo Distributors, Inc.; Dairy Farmers of America, Inc.; Keller’s Creamery, LP; Schreiber Foods Inc.

Cases: Antitrust RICO IllinoisNews