A class action filed in the Northern District of California on behalf of U.S. consumers of milk and other dairy products is alleging that dairy producers prematurely slaughtered more than half a million cows to drive up the prices of dairy products.

The plaintiffs in Matthew Edwards et al., v. National Milk Producers Federation, aka Cooperatives Working Together et al. allege that from 2003 to 2010 several dairy companies and trade groups, including Land O’Lakes, Dairy Farmers of America, Agri-Mark, Dairylea, National Milk Producers Federation, and Cooperatives Working Together (“CWT”), engaged in the premature slaughter of cows as part of a scheme to raise the price of milk and other dairy products by decreasing the supply of milk. 

The plaintiffs claim that defendants manipulated the supply of milk which led to higher prices through “herd retirements” coordinated by the CWT.

Dairy farmers in every state participate in CWT, producing almost 70% of the nation’s milk.  Dairy farmers submit bids for the price at which they sell their herds for slaughter through the retirement program.  The plaintiffs allege that more than 500,000 healthy cows were slaughtered prematurely under the program which reduced the supply of milk by approximately 10 billion pounds and resulted in a $9.55 billion total increase in the price of milk.

CWT members say that the program, which ended in 2010, was created to assist dairy farmers who were losing money and that the program operated in full compliance with the antitrust laws.

The dairy price-fixing class action lawsuit is brought on behalf of U.S. consumers who purchased milk and other dairy products (including cream, half & half, yogurt, cottage cheese, cream cheese and sour cream) from 2004 through the present.

After denying four of six motions to dismiss just three weeks earlier, a federal judge in the Eastern District of Pennsylvania denied an additional motion to dismiss that was primarily aimed at limiting the scope of discovery in the In re Processed Egg Products Antitrust Litigation.

The plaintiffs allege that Defendant egg producers and trade groups engaged in a conspiracy to manipulate the supply of, and thereby fix prices for, domestically sold eggs in violation of section 1 of the Sherman Act.  Plaintiffs charge that defendants’ objective was to take advantage of consumers’ “relatively inelastic” demand for eggs as well as the fact that eggs are commodities and have no market substitutes.

Ruling on the prior motions to dismiss on September 26, 2011, District Judge Gene E.K. Pratter granted the motions to dismiss of Hillandale Gettysburg L.P., Hillandale Farms Inc., Hillandale Farms East, Inc. and the United Egg Association while denying the remaining four motions to dismiss.

The question before the court was whether plaintiffs adequately alleged particularized facts that each defendant was a participant in the conspiracy.

The court rejected attempts by the plaintiffs to implicate certain defendants by use of the generic reference “defendants” where there were no particularized facts pertaining to a specific defendant within the complaint.

After the court found the existence of sufficient facts that explicitly detailed the participation of the four defendants whose motions were denied, the defendants again moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, for the court to enter an order dismissing any claim that defendants engaged in a conspiracy to reduce the production, or raise the price, of “egg products” based on a theory that the only purported conspiracy for which any facts are alleged is a conspiracy to reduce the supply of “shell eggs.”

Defendants complained that the complaint’s references to “egg products” might be an entree for plaintiffs to expand the scope of discovery to information not relevant to the case.  The court, however, was not persuaded.

Judge Pratter denied this additional motion noting that Rule 12(b)(6) should not be used to chisel issues for trial.  Additionally, Judge Pratter found that defendants did not adequately show why the well-pled facts supporting the conspiracy to reduce the supply of “shell eggs” would not also suffice to support a conspiracy to reduce the supply of “egg products” or why they should be considered separate markets.

In denying defendants’ motion, Judge Pratter ruled it more prudent for defendants to address their concerns through pretrial devices which provide a more appropriate means for circumscribing the scope of discovery and defining the issues.

Basketball legend Bill Russell, who led the Boston Celtics dynasty that dominated the NBA in the 1960s, is charging down court once again, but this time it’s in a federal – not a basketball – court.

The former basketball star at the University of San Francisco, five-time winner of the NBA Most Valuable Player Award and a 12-time All-Star, is suing the NCAA, the Collegiate Licensing Company (“CLC”) and Electronic Arts, Inc. (“EA”), claiming that they are violating federal antitrust laws with licensing practices that enable them to profit from college basketball players’ likenesses long after they’ve left college.

The complaint in Russell v. NCAA, which was filed in federal court in the Northern District of California, alleges that the defendants violated Section 1 of the Sherman Act by engaging in a price-fixing conspiracy and a boycott that “unlawfully foreclosed class members from receiving compensation in connection with the commercial exploitation of their images, likeness and/or names following their cessation of intercollegiate athletic competition.”

The complaint claims that the defendants’ practices of having student-athletes contract away their rights to the commercial use of their images is the product of an anticompetitive conspiracy and results in unjust enrichment, entitling the plaintiff to damages and injunctive relief.  Russell is challenging the validity of the form used to achieve the transfer of rights. 

The market for collegiate merchandise is significant.  The complaint cites the CLC website for the proposition that “there is a ‘$4.0 billion annual market for collegiate licensed merchandise.’”  Russell claims that while the defendants continue to reap financial benefits from players’ participation in collegiate sports, even former players are “foreclosed from participating or sharing” in the “commercial benefits from the sale and use of the players’ images,” notwithstanding the fact that the players have moved on from their respective collegiate careers. 

The complaint focuses on the development of EA’s video games, such as “NCAA Basketball” and “NCAA Football,” which incorporate “photorealistic” graphics of players and venues. 

The suit is being brought as a class action under Rules 23(b)(2) and (b)(3) of the Federal Rules of Civil Procedure.  Russell is the putative representative of two classes: one class of certain former student-athletes (for purposes of antitrust damages and injunctive relief), and one class of certain current and former student-athletes (for purposes of declaratory and injunctive relief). 

This is the latest chapter in the perennial debate over the propriety of compensating collegiate athletes.  The complaint references a number of such pending litigations in California state and federal courts, including In re NCAA Student-Athlete Name & Likeness Licensing Litigation, and suggests the possibility of consolidation.

Federal Judge David C. Godbey of the Northern District of Texas has green lighted a suit alleging taxicab companies conspired to monopolize by fixing prices that drivers must pay to operate a taxicab in certain counties in the Dallas-Fort Worth metropolitan area. 

The judge denied the defendants’ motion to dismiss the plaintiffs’ complaint in Association of Taxicab Operators USA v. Yellow Checker Cab Company of Dallas/Fort Worth Inc.  Defendants’ motion relied exclusively on immunity afforded under the state action doctrine.  But as Judge Godbey’s decision explained, defendants failed to make the essential showing that “a municipality expressly authorized or actively supervised their mergers or pricing.” 

Plaintiffs, led by a trade association of taxicab companies, allege that permit fees defendants charged drivers to operate in the Dallas-Fort Worth area were anticompetitive.  According to plaintiffs, through a variety of entities and agreements, two individuals control over 52 percent of the authorized taxi cabs in the area.  Their lawsuit seeks injunctive relief breaking up the defendants’ grip on the market and monetary damages. 

Both parties and the court agreed that California Retail Liquor Dealers Assoc. v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980), sets forth the two-prong test applicable when private actors claim immunity from the antitrust laws under the state action doctrine.  “First, the challenged restraint must be one clearly articulated and affirmatively expressed as state policy; second the policy must be actively supervised by the State itself.”  Id .

Defendants argued they meet the first prong of the Midcal test, citing a Texas state law directing municipalities to “license, control, and otherwise regulate each private passenger vehicles … that provides passenger taxicab transportation services for compensation.”  The statute permits municipal regulation of (1) entry into the taxicab business by controlling the total number of persons providing the service, (2) rates charged, and (3) safety and insurance requirements.  Through this statute, defendants argued, “Texas clearly articulated and affirmatively expressed its policy to regulate taxicabs through its cities.”

But Judge Godbey was unmoved.  While the statute “shows Texas wants municipalities to regulate competition,” he wrote, it “does not authorize private taxicab companies to create monopolies or fix [] fees without municipal approval.” 

The court was equally unimpressed with defendants’ argument that they met the second Midcal prong.  To show that the price fixing challenged by plaintiffs is actively supervised by the state, and therefore immune from the antitrust laws under the state action doctrine, defendants cited ordinances giving municipalities the authority to regulate fees.  As Judge Godbey’s decision points out, “mere authorization does not satisfy the active supervision requirement.”  “Defendants,” Judge Godbey continued, “do not claim that a municipality established, reviewed, regulated or monitored the fees.”

Ruling that the complaint, on its face, does not demonstrate that defendants’ actions are shielded under the state action doctrine, Judge Godbey denied defendants’ motion to dismiss.

The U.S. Department of Justice has announced that Tokyo based manufacturer Bridgestone Corp. has agreed to plead guilty to rigging bids and making corrupt payments to government officials in Latin America related to the sale of marine hose and other industrial products.

As part of the plea bargain struck with the Department of Justice, Bridgestone is pleading guilty to violations of the Foreign Corrupt Practices Act and Sherman Act, and will pay a $28 million fine.

The alleged antitrust conspiracy concerns the sale of marine hose, a flexible rubber hose used to transfer oil between tankers and storage facilities.

According to the Department of Justice, Bridgestone and its co-conspirators agreed to allocate shares of the marine hose market by not competing for one another’s customers either by not submitting prices or bids, or by submitting intentionally high prices or bids to certain customers.  Bridgestone allegedly received marine hose prices for customers from an alleged “coordinator” of the conspiracy and then sold the marine hose to those customers at collusive and noncompetitive prices.  The Department of Justice claims that Bridgestone concealed the conspiracy through code names, private email accounts, and telephone numbers.

The plea agreement commends Bridgestone’s cooperation with the Department of Justice, and acknowledges Bridgestone’s “extensive remediation” efforts.