In re Dairy Farmers of Am., Inc.
| Decision Date | 29 June 2015 |
| Docket Number | Master File No. 9 CV 3690,MDL No. 2031 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | IN RE: DAIRY FARMERS OF AMERICA, INC. CHEESE ANTITRUST LITIGATION THIS DOCUMENT RELATES TO: Indirect Purchaser Actions |
MEMORANDUM OPINION AND ORDER
Before the Court is Defendants' motion to dismiss Indirect Purchaser Plaintiffs' Consolidated Class Action Complaint [497]. For the reasons state below, the Court grants Defendants' motion. In addition, putative Intervenors' motion to intervene [723] is denied.
This multi-district litigation—composed of separate consolidated actions by both Direct Purchaser Plaintiffs and Indirect Purchaser Plaintiffs—has been pending for approximately six years now. Detailed descriptions of the underlying facts of the case can be found in Judge Hibbler's opinion on Defendants' motion to dismiss the Direct Purchaser Plaintiffs' complaint, In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 767 F. Supp. 2d 880, 885-90 (N.D. Ill. 2011) (hereinafter "DFA I"), and in this Court's opinion on Defendants' motion to dismiss Indirect Purchaser Plaintiffs' federal claims, In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 2013 WL 4506000, at *1-4 (N.D. Ill. Aug. 23, 2013) (hereinafter "DFA II").
This opinion is closely related to the Court's DFA II opinion, as it concerns Defendants' motion to dismiss the Indirect Plaintiffs' state-law claims as raised in their Consolidated Class Action Complaint [483]. The Court adopts the detailed factual history of the case as set forth in DFA I and DFA II, and highlights only those facts necessary to address the present motion.
Indirect Plaintiffs allege that Defendants and Schreiber Foods, Inc. conspired to fix, stabilize, raise, and maintain the prices of Class I & III milk and products containing Class I & III milk. The basic allegation is that Defendants bought all of the Class III milk futures on the Chicago Mercantile Exchange ("CME") covering a certain period of time. Defendants then monopolized the CME's Cheese Spot market (i.e., the only commodity exchange market for cheddar cheese in the United States), which allegedly caused an increase in the USDA's milk rate, which in turn increased the price of Defendants' milk futures and the nationwide price for finished dairy products sold to consumers. This chain of events allowed Defendants to profit from both (a) the artificially high price of milk futures and (b) the artificially high price of finished dairy products. Indirect Plaintiffs contend that Defendants' scheme injured them by forcing them to overpay for finished dairy products, namely various types of cheese. The named Plaintiffs are citizens of eight states (Arkansas, California, Florida, Kansas, Michigan, Minnesota, North Carolina, and New York) who allegedly purchased Defendants' finished dairy products during the relevant time periods in their respective states.
The "indirect" component of this MDL, as currently set forth in Indirect Plaintiffs' Consolidated Class Action Complaint [483 (under seal)], is composed of four class-action lawsuits brought by and on behalf of so-called indirect-purchaser Plaintiffs, filed at various times in various courts: Rudman v. DFA, No. 2:09-cv-00134 (D. Vt. May 29, 2009); Waun v. DFA, No. 2:11-cv-00219 (D. Vt. Sept. 13, 2011); Asmann v. DFA, No. 11-cv-4428 (Kan. Dist. Ct. Dec. 15, 2011); and Rogers v. DFA, No. 5:13-cv-00034 (D. Vt. Feb. 19, 2013).
In DFA II, the Court addressed Defendants' motions to dismiss three of these class-action complaints [160, 197, 287], granting the motions as they related to Indirect Plaintiffs' federal antitrust claims, but leaving open the question of whether the Court would exercise jurisdiction over Indirect Plaintiffs' related state-law claims. [365.] Approximately six months later, the Court granted Indirect Plaintiffs' request to file a Consolidated Class Action Complaint to present their remaining state-law allegations to the Court. [476.] Indirect Plaintiffs filed their Consolidated Class Action Complaint under seal on February 25, 2014, invoking various antitrust, consumer-protection, and unjust-enrichment laws from the eight states at issue. [483.]
Indirect Plaintiffs' Consolidated Class Action Complaint wends its way through the antitrust laws of eight states, picking up related consumer-protection and unjust-enrichment claims along the way. All said, Indirect Plaintiffs raise three counts, which they label (1) State Statutes, (2) Violation of State Statutes, and (3) Unjust Enrichment. Decoded, these counts are best read as (1) Price-Fixing and Conspiracy, (2) Monopolization, and (3) Unjust Enrichment.
While Counts I and II of Indirect Plaintiffs' Consolidated Class Action Complaint sound in antitrust law, for various reasons, Indirect Plaintiffs were unable to bring claims under the antitrust statutes of two of the eight states at issue: Arkansas and Florida. For those two states, Indirect Plaintiffs brought their antitrust claims under the states' consumer-protection statutes instead. See Ark. Code § 4-88-107; Fla. Stat. § 501.204. Indirect Plaintiffs also invoked the consumer-protection laws of California (Cal. Bus. & Prof. Code § 17200) and North Carolina (N.C. Gen. Stat. § 75-1.1) in addition to their invocation of the antitrust statutes of those states.
Although Indirect Plaintiffs have alleged violations of a mix of both state antitrust and consumer-protection laws in Counts I and II, they do not distinguish between the two. For purposes of this opinion, however, delineation is imperative. Accordingly, the following chart provides a breakdown of Counts I and II, distinguishing Indirect Plaintiffs' antitrust claims from their consumer-protection claims.
Without specifying the laws of any particular state, Indirect Plaintiffs allege in Count III that Defendants were unjustly enriched by the Indirect Plaintiffs' overpayments for Defendants' finished dairy products. Indirect Plaintiffs ask the Court to disgorge Defendants of their unjust profits and return the overpayments to them in restitution.
The purpose of a Rule 12(b) motion to dismiss is not to decide the merits of the case, but rather to test the sufficiency of the complaint. Gibson v. City of Chicago, 910 F.2d 1510, 1520(7th Cir. 1990). In the context of a motion to dismiss, the Court takes as true the facts as set forth in the complaint along with all reasonable inferences. Thulin v. Shopko Stores Operating Co., LLC, 771 F.3d 994, 995 (7th Cir. 2014). To survive a Rule 12(b)(6) motion to dismiss, the claim first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the claim must be sufficient to raise the possibility of relief above the "speculative level," assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). "A pleading that offers 'labels and conclusions' or a 'formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). However, "[s]pecific facts are not necessary; the statement need only give the defendant fair notice of what the * * * claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing Twombly, 550 U.S. at 555).
In granting Defendants' prior motion to dismiss the federal antitrust claims raised by Indirect Plaintiffs in their (then three separate) class-action complaints, the Court held that Plaintiffs lacked antitrust standing to bring those claims under the "directness inquiry" set forth in Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519 (1983) (hereinafter "AGC"). DFA II, 2013 WL 4506000, at *9-14. But the Court left open the questions of "whether and how the AGC factors apply to each of the various stateantitrust claims that Plaintiffs seek to bring." Id. at *15 (emphasis added). Those questions are now before the Court.
Defendants argue that (1) the Court should apply AGC to the state-law claims, dismissing them for lack of antitrust standing, (2) even if the Court does not apply AGC to the state-law claims, the Court should still dismiss those claims under state-law remoteness principles, and (3) the dismissal (under either theory) should apply to all of Plaintiffs' claims (i.e., antitrust, consumer protection, and unjust enrichment), not just the antitrust claims.
In deciding whether to apply AGC to state-law antitrust claims, the Court looks to whether the relevant state supreme court or state legislature has spoken to the issue. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Jean v. Dugan, 20 F.3d 255, 260 ...
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