AgMax, Inc. v. Countrymark Cooperative, Inc.

795 F. Supp. 888, 1992 U.S. Dist. LEXIS 7885
CourtDistrict Court, S.D. Indiana
DecidedMay 15, 1992
DocketNo. IP92-639C
StatusPublished

This text of 795 F. Supp. 888 (AgMax, Inc. v. Countrymark Cooperative, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AgMax, Inc. v. Countrymark Cooperative, Inc., 795 F. Supp. 888, 1992 U.S. Dist. LEXIS 7885 (S.D. Ind. 1992).

Opinion

ENTRY

BARKER, District Judge.

This matter comes before the court on Agmax’s motion for a temporary restraining order. Inasmuch as Countrymark Cooperative, Incorporated (“Countrymark”) has acknowledged receipt of notice of this motion, the court will treat it as a motion for a preliminary injunction. See Government Suppliers Consol. Servs., Inc. v. Bayh, 734 F.Supp. 853, 861 (S.D.Ind.1990); Wright & Miller, Federal Practice and Procedure: Civil § 2951. Having heard evidence on this motion on May 13, 1992, and having read the briefs submitted by both parties, the court now sets forth its findings of fact and conclusions of law in accordance with Rules 52 and 65 of the Federal Rules of Civil Procedure.

Plaintiff AgMax is an Indiana agricultural cooperative corporation with its principal place of business in Frankfort, Clinton County, Indiana. Agmax is owned by its farmer-patrons. . Prior to September 1, 1991, AgMax was a member of the Indiana Farm Bureau Cooperative Association, Inc. (“IFBCA”), an Indiana-based wholesale agricultural marketing and supply cooperative.

On September 1, 1991, IFBCA merged with Countrymark, Inc., an Ohio corporation, in order to form a tri-state (Indiana, Michigan and Ohio) agricultural cooperative. Defendant Countrymark was the surviving corporation of this merger. Coun-trymark is a not-for-profit wholesale agricultural marketing and supply cooperative. [890]*890Its stock is owned by several retail agricultural cooperatives, and the stock of these retail cooperatives is owned either by individual farmers or entities through which individual farmers conduct their business.

AgMax’s opposition to the IFBCA/Coun-trymark merger resulted in litigation between it and the IFBCA. During the pend-ency of this litigation, AgMax held a series of meetings in November, 1991. As reported in an article entitled “Local control of farmer-owned co-ops essential!” in the Winter 1991-1992 issue of AgMax AgNews, Defendant’s Exhibit B, the question arose during one of these November meetings “if AgMax would continue to sell Co-op Petroleum products, if it is allowed to withdraw from the regional co-op_” Defendant’s Exhibit B, p. 14. AgMax general manager Steven K. Yrooman was quoted as having answered yes, and further that “[i]f being a voting member of Countrymark is a requirement of handling Co-op Fuel, then we can always become a member through merger with another local co-op that is still a member.” Id.

On April 2,1992, the Montgomery Circuit Court entered a declaratory judgment that AgMax did have dissenter’s rights with respect to its voting common stock, class B preferred stock, patron’s equity account and general reserves. (Portions of that decision are currently on appeal.) Prior to this April 2nd decision, AgMax was a member cooperative of Countrymark and purchased petroleum and fuel products from the defendant for resale to AgMax customers. As of April 2, 1992, however, AgMax was no longer a member of Countrymark.

A series of correspondence between the parties began soon thereafter. On April 13,1992, Countrymark sent AgMax a letter informing AgMax that it would no longer sell products or supply services to AgMax, although Countrymark offered to resume selling petroleum products to AgMax for a period of at most thirty days and in an amount not to exceed the amount sold to AgMax during the same time period one year earlier. On April 16, 1992, AgMax sent Countrymark a letter accepting the offer because, AgMax wrote, it had no alternatives at that point in the middle of the planting season1 and no other supply sources. Countrymark wrote to AgMax on April 17, 1992, informing AgMax of possible alternative supplies of No. 2 diesel fuel. AgMax responded to Countrymark with a letter dated April 23,1992, in which AgMax noted that there were no alternative sources of products meeting the specifications of Super Dieselex-4, leaded plus regular gasoline, and leaded plus gasoline with ethanol (Countrymark’s “proprietary products”).

In the meantime, on and after April 14, 1992, AgMax placed orders with DeKalb Agra, Inc. (“DeKalb”), an Indiana agricultural cooperative and Countrymark member, for the purchase of certain quantities of Countrymark’s proprietary products. DeKalb informed Countrymark of its intention to purchase such products for resale to AgMax. William Paddack, senior vice president of Countrymark, informed DeKalb that Countrymark would not sell any products to DeKalb which were intended for resale to AgMax. In a letter dated April 17, 1992, Countrymark informed its members, including DeKalb, of three new policies regarding “Membership Application and Acceptance,” “Member Termination,” and “Conditions of Membership.” AgMax alleges that as a result of these policies, Countrymark members, including DeKalb, will not sell Countrymark products to AgMax for fear of losing their Country-mark membership.

Also after April 2, 1992, Frontier Co-Op, Inc., a Countrymark member from Indiana, solicited business from AgMax members and non-member customers.

Countrymark continues to sell certain of its products to non-members other than AgMax. However, with respect to Coun-trymark’s proprietary products, Country-mark sells these only to members, who in [891]*891turn sell such products to non-members other than AgMax. Ronald Stover, vice president of Countrymark’s petroleum division, testified at the May 13th hearing that no member cooperative was supposed to sell Countrymark’s proprietary products to resellers. Stover stated that a distinction was drawn between the three proprietary products and other Countrymark products because a large sum of money had been spent in developing these products for farmers.

By letter (Defendant’s Exhibit E) dated May 4, 1992 (at which point AgMax’s 30-day petroleum supply from Countrymark was nearing exhaustion), AgMax initiated a survey of its petroleum customers as to what actions AgMax should take with respect to its petroleum business. The first line of the survey card which the customers were to return to AgMax read as follows: “OUR ALTERNATIVES ARE LISTED BELOW. PLEASE RANK THEM IN ORDER OF YOUR PREFERENCE.” In addition to a blank space for “Other Ideas,” the survey card listed four options: “Petition the Court to order Countrymark to continue selling to AgMax;” “Distribute the same Co-op products as an agent for another County Co-op;” “Sell our petroleum business to another County Co-op;” and “Switch to another petroleum source of equal quality such as Amoco.”

Sales of Countrymark products represent approximately $6 million of AgMax’s total sales volume of $106 million. However, such petroleum sales constitute about one-third of AgMax’s total earnings. AgMax has submitted the affidavits of a number of farmers who currently purchase fuel from AgMax but have indicated that they would switch suppliers if they could not purchase Countrymark products from AgMax.

Based on these facts, AgMax alleges in its Verified Complaint that Countrymark has acted in combination and conspiracy with its members to eliminate AgMax as a supplier of Super Dieselex-4 diesel fuel, Leaded Plus gasoline, and Leaded Plus gasoline with ethanol, unique gasolines and fuel which AgMax maintains define the relevant product market, in “the geographical areas in which AgMax conducts business and has ... distributed such products,” Verified Complaint, para. 22, which AgMax identifies as the relevant geographical market.

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Bluebook (online)
795 F. Supp. 888, 1992 U.S. Dist. LEXIS 7885, Counsel Stack Legal Research, https://law.counselstack.com/opinion/agmax-inc-v-countrymark-cooperative-inc-insd-1992.