National Farmers' Organization, Inc. v. Associated Milk Producers, Inc.

850 F.2d 1286, 1988 WL 67768
CourtCourt of Appeals for the Eighth Circuit
DecidedJuly 5, 1988
DocketNos. 87-1046, 87-1047
StatusPublished
Cited by23 cases

This text of 850 F.2d 1286 (National Farmers' Organization, Inc. v. Associated Milk Producers, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Farmers' Organization, Inc. v. Associated Milk Producers, Inc., 850 F.2d 1286, 1988 WL 67768 (8th Cir. 1988).

Opinion

HEANEY, Circuit Judge.

This private antitrust action is before the Court for the second time. When the matter was first here, we held that the appel-lees had engaged in a broad conspiracy in violation of the antitrust laws and that their unlawful acts had injured National Farmers’ Organization, Inc. (NFO). We remanded the matter to the district court with directions to determine the amount of NFO’s damage.

On remand, NFO advanced two alternative damage measurement theories. Under a “market structure theory”, NFO claimed damages of $18,490,694, trebled to $55,-472,082. Under a “test market theory”, it claimed damages of $7,403,374, trebled to [1289]*1289$22,210,122. The district court refused to award any damages, and NFO again appeals.

We reaffirm our holding that NFO incurred substantial damages as a result of appellees’ unlawful acts. We provide more specific directions to the district court with respect to the computation of damages and remand to it for that computation. We also direct the district court to determine and award appropriate attorney’s fees and costs. We affirm the district court’s denial of certain injunctive relief and its denial of class certification.

I. Background

This action returns to the Court more than five years after we remanded it to the district court and more than seventeen years after it was commenced. The district court conducted the original trial in three phases. Phase I involved claims brought by Mid-America Dairymen, Inc. (Mid-Am) against NFO for violation of state and federal antitrust laws. Phase II involved NFO’s counterclaims against Mid-Am, Associated Milk Producers, Inc. (AMPI), Central Milk Producers Cooperative (CMPC) and Associated Reserve Standby Pool Cooperative (ARSPC) for violations of the federal antitrust laws. Phase III involved AMPI’s claims against NFO and nineteen individual NFO members for violation of the federal antitrust laws and certain provisions of the Agricultural Fair Practices Act of 1967, 7 U.S.C. § 2303(c), (e) and (f). In an exhaustive 147-page opinion, the district court found in favor of NFO on the phase I and III claims and against NFO on the phase II claims. In Re Midwest Milk Monopolization Litigation, 510 F.Supp. 381 (W.D.Mo.1981) (NFO I).

On appeal, this Court affirmed the district court with respect to the phase I and III claims. Alexander v. National Farmer’s Organization, 687 F.2d 1173, 1183-90 (8th Cir.1982) (NFO II). With respect to the phase II claims, we affirmed the district court’s findings that NFO failed to present sufficient statistical evidence to support its claims of actual and attempted monopolization, id. at 1191-92, and that NFO had not produced sufficient evidence to support a finding of liability on the part of ARSPC arising out of its operation of standby milk pools, id. at 1207. We reversed the district court’s rejection of the remainder of NFO’s claims, however, finding that “AMPI, Mid-Am and CMPC did conspire to monopolize and eliminate competition in the marketing of Grade A raw milk produced in the Midwest, through the use of discriminatory pricing, coercive supply disruptions and threats of similar conduct, as well as bad faith harassment and threats of litigation against independent buyers of NFO milk.” Id. at 1193.

We found that the conspiracy proved by NFO covered a ten-state midwestern region and had as one of its goals elimination of NFO as a competitor in the marketing of raw Grade A milk.1 Id. at 1193. With respect to the conspiracy element, we found that AMPI and Mid-Am each belonged to the other’s organization and effectively divided marketing territories in the Midwest, South and Southwest; that AMPI was a member of CMPC and served as CMPC’s marketing agent in Chicago, which area served as a base pricing point for other areas served by Mid-Am; that Mid-Am and AMPI officials met from time to time to discuss their concerns regarding NFO; and that, at one point, senior officials of CMPC, Mid-Am and AMPI held a joint meeting to discuss problems created by NFO’s lower prices and successful solicitation of their members. Id. at 1194-95.

In examining specific overt acts of AMPI, Mid-Am and CMPC in furtherance of the conspiracy, we set forth examples of conduct which, viewed in the context of the entire record, “demonstrate^] concerted, [1290]*1290unlawful tactics.” Id. at 1207. The examples included the following.

A. The Gandy Dairy Matter (Supply Cut-offs and Limitations)

Prior to May of 1971, Gandy Dairy, of Central West Texas, purchased all of its milk from AMPI. In March and April of 1971, however, Gandy agreed to buy some milk from independent suppliers. On the day the shipments from the independents began, AMPI began “short shipping” and making late deliveries of milk to Gandy. At the same time, AMPI began soliciting Gandy’s customers and offering them direct shipments of competing products at prices near Gandy’s cost of production. The avowed purpose of this conduct was to force Gandy to return to AMPI for its full requirements of milk. This Court found AMPI’s conduct “blatantly predatory.” Id. at 1196.

B. The Wanzer Dairy Matter (Discriminatory Pricing)

Since the Chicago area served as a base pricing point for other areas to the south and west, appellees sought to maintain an elevated price in it. In 1970, however, CMPC’s price was being undermined by Wanzer Dairy’s purchases of non-CMPC milk at lower prices. In response to the purchases, AMDI, a major trade association of proprietary milk buyers in Chicago, met with CMPC and demanded that it drop its price so long as Wanzer was able to obtain milk at a lower price. CMPC complied with the request. At the same time, however, CMPC announced a new price structure, imposing additional charges on any buyer taking less than all of its requirements from CMPC. Later in 1970, after several independent marketers who had previously supplied Wanzer joined CMPC, CMPC again raised prices to buyers taking less than all of their requirements from it. The price increase was especially harmful to Wanzer because it could not fulfill its milk requirements without purchasing some milk from CMPC.

Notwithstanding the price pressure, Wanzer continued to purchase milk from independents, aided to some degree by NFO’s offer to reimburse Wanzer for some of the additional charges. In response, AMDI dealers met with CMPC and renewed their objections to paying the CMPC price while Wanzer was obtaining cheaper supplies of milk. After this meeting, CMPC sent a letter to Wanzer threatening to discontinue all milk shipments in five days because “we have become aware that you have been engaged with others in unlawful attempts to interfere with producers whose milk is subject to effective marketing agreements with CMPC and its members.” A short time after the letter, Wan-zer entered into a one-year committed supply contract with CMPC. CMPC then met with the AMDI dealers, informed them of the Wanzer contract, and reinstated its elevated price. See id. at 1198.

We concluded that:

[T]he conduct so established is predatory on its face. Our examination of the underlying evidence only confirms that an inference of unlawful purpose must be drawn.

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Cite This Page — Counsel Stack

Bluebook (online)
850 F.2d 1286, 1988 WL 67768, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-farmers-organization-inc-v-associated-milk-producers-inc-ca8-1988.