Madison - St. Clair Record

Wednesday, November 20, 2019

Class action trial set to begin Oct. 1 alleges herd retirement program caused cheese, butter prices to increase

Federal Court

By The Madison County Record | Jul 30, 2019


EAST ST. LOUIS – Milk producers defending a consumer class action on an antitrust claim received anonymous mail claiming economist Russell Lamb signed an expert report he didn’t write. 

The producers brought the allegation to U.S. District Judge Nancy Rosenstengel on July 24, and asked for a chance to investigate. 

They claimed ghost writing would violate a confidentiality order. They argued that the source of the allegation appeared to have knowledge, and that plaintiffs withdrew a previous expert who lied at a deposition. 

Rosenstengel has set trial to start Oct. 1, and continue through Oct. 11. 

First Impressions Salon of Woodstock, Vermont, started the action in 2013. Online sources identify the salon’s owner as Brenda Blakeman. 

The lawsuit claims the National Milk Producers Federation organized a herd retirement program to reduce the supply of raw milk. 

The salon seeks damages from Cooperatives Working Together, an association that carried out the program for 33 members. It also seeks damages from three cooperatives, Land O’ Lakes, Agri-Mark, and Dairy Farmers of America Inc. 

Attorney Charles Barrett of Nashville filed the complaint for a national legal team with 18 current members. 

They amended the complaint in 2015, to add grocer Piggly-Wiggly and Kinney Drugs as potential class representatives. 

In 2017, Rosenstengel certified two classes for persons and entities that bought cheese or butter from members of Cooperatives Working Together. 

She set a class period from Dec. 6, 2008, to July 31, 2013. 

This May 3, plaintiffs delivered Lamb’s report on damages. 

On May 17, he said at a deposition that the program was designed to eliminate a piece of competition in the market for raw milk. 

“By doing that and restricting that supply, getting that supply out of the marketplace, they were able to increase prices for butter and cheese products,” he said. 

“Those higher prices for butter and cheese products were plugged into the formula for raw milk price. You caused milk price paid to the producers to be higher.” 

On May 31, the producers jointly moved to exclude Lamb’s report. 

Land O’ Lakes counsel Nathan Eimer of Chicago wrote that Lamb recalculated prices that regulators set. 

“Courts may not award damages that require changing or second guessing rates set by regulators,” he wrote. 

On the same date, the producers moved for summary judgment. 

Eimer wrote that under federal law, farmers and cooperatives act collectively to improve their economic position. 

He wrote that every day, farmers decide how much of a herd should produce milk and how much should be sold as beef. 

“Absent disease or other unusual conditions, all milking cows eventually will be sold for beef because their continuing milking value is outweighed by their value as beef cows or because they are less productive than replacement cows,” he wrote. 

The herd retirement plan fell squarely within long standing programs where producers allocate or prorate production to maximize collective income, he wrote. 

Plaintiffs failed to establish that they directly purchased the allegedly restrained commodity, and a statute of limitations had expired on claims the plaintiffs added when they added plaintiffs, he wrote. 

U.S. Magistrate Judge Gilbert Sison sealed the salon’s opposition to both motions. 

On July 23, he sealed a reply of the producers about Lamb. 

On July 24, National Milk Producers Association counsel Jonathan Sallet of Washington moved to preserve documents regarding Lamb’s report. 

He attached a letter each defendant received by mail on July 23, stating that Mark Dwyer wrote the report. 

It stated that Dwyer was not an employee of Monument Economics Group, Lamb’s firm, “and did not sign confidentiality agreement for the matter.” 

It also stated that Dwyer was Lamb’s formal colleague at EconOne consulting, and that Dwyer sent email to Monument principal Alejandro Silva with various drafts and instructions on how to respond to criticisms. 

It stated that Monument staff circulated the email. 

“Their conduct is unethical and should be fully investigated,” it stated. 

Sallet wrote that Lamb testified that he received assistance from staff, and didn’t identify any other firm or Dwyer as persons who assisted him in any way. 

He wrote that it wasn’t the first time an issue arose in the case. He wrote that plaintiffs withdrew their first economist, Ronald Knutson, after he lied about the extent of help he received. 

Sallet requested a discovery order so the producers could investigate the claims. 

He requested a status conference to address the progress of discovery in light of upcoming pretrial deadlines.   

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