Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Farmers’ milk pricing claims proceed as High Court rejects petition on application of filed rate doctrine, (Oct 7, 2013)

By Jeffrey May, J.D.

A group of dairy farmers will proceed with state law claims seeking damages for lower milk prices resulting from the alleged misreporting of pricing data to the U.S. Department of Agriculture, now that the U.S. Supreme Court has rejected a petition for certiorari filed by milk marketing cooperative DairyAmerica, Inc. DairyAmerica had questioned whether the farmers’ claims were barred by the filed rate doctrine. Left standing is a decision of the U.S. Court of Appeals in San Francisco holding that the were not barred by the filed rate doctrine (DairyAmerica, Inc. v. Carlin, Dkt. 12-1385).

The dairy farmers alleged that the misrepresentations of DairyAmerica and others to the USDA resulted in inappropriately low prices paid to the farmers for certain milk products. The farmers advanced four causes of action: (1) negligent misrepresentation; (2) negligent interference with prospective business operations; (3) violation of California’s Unfair Business Practices Law; and (4) unjust enrichment. The district court ruled that the filed rate doctrine, which precludes a state law cause of action seeking damages based on a rate filed with an appropriate regulatory body, barred the claims. The Ninth Circuit reversed (705 F3d. 856; 2012-2 Trade Cases ¶78,004).

While the filed rate doctrine did apply to prices set under federal milk marketing orders pursuant to the Agricultural Marketing Agreement Act (AMAA) minimum milk pricing program, precedent and policy considerations did not support applying the doctrine as a bar to the state law claims at issue in the case because the USDA had indicated that it would have set different prices had the defending marketer reported its data correctly, the appellate court held. That prices would have been different but for the misreporting was shown by (1) the National Agricultural Statistics Service’s (NASS) issuance of retroactive revised prices for part of the relevant period after the defending milk marketer acknowledged its erroneous reporting and (2) the Agricultural Marketing Service’s calculation of an increase in the prices of nonfat dry milk for a similar period.

The purposes of the AMAA, the Dairy Marketing Enhancement Act of 2000 (DMEA)—which set forth procedures for the submission and collection of milk pricing survey data—and the filed rate doctrine itself would not have been served by giving the doctrine preemptive effect under the facts of the case, the appellate court added. In light of the NASS recalculation, assessing damages would not require excessive speculation or hypothetical considerations of agency decision making. While some uncertainty could arise in any calculations of damages, that did not preclude recovery where it was clear that some damage had occurred.

In addition, the plaintiffs’ claims did not pose a significant risk of price discrimination or destabilization. And allowing the claims to go forward would not have unduly disrupted the Congressional pricing scheme embodied by the AMAA, according to the appellate court.

Attorneys: Charles M. English Jr. (Davis Wright Tremaine LLP) for DairyAmerica, Inc. Benjamin D. Brown (Cohen Milstein Sellers & Toll PLLC) for Gerald Carlin.

Companies: DairyAmerica, Inc.; California Dairies, Inc.

News: Antitrust