EAST ST. LOUIS – Milk producers and dairy cooperatives facing a class action trial have moved to call it off, claiming some class members made money off others.
They alleged a conflict of interest on Aug. 2, in a motion to decertify two classes that Chief U.S. District Judge Nancy Rosenstengel certified in 2017.
One class bought cheese and the other bought butter.
Producers and cooperatives filed the motion under seal, but plaintiff counsel Charles Barrett of Tennessee hit the main points in response on Aug. 16.
“The prices at which any class member may have sold its cheese or butter is completely irrelevant,” Barrett wrote.
“The class representatives and the class members were injured when they purchased cheese and butter from defendants at inflated prices…That is the end of the story.”
He defended a report from economic expert Russell Lamb, finding defendants reduced the milk supply by almost 9 billion pounds from 2008 to 2013.
Motions to exclude the report and to allow discovery on an allegation of ghost writing remain pending.
Rosenstengel has set trial to start Oct. 1 and run through Oct. 11.
First Impressions Salon, a Vermont business, filed the suit in 2013.
The salon alleges that the National Milk Producers Association led a conspiracy to raise prices through a herd retirement program, which offered incentives for farmers to convert dairy cattle to beef.
The salon alleges that the conspiracy included three cooperatives, Land O’ Lakes, Agri-Mark, and Dairy Farmers of America.
It also alleges that the conspiracy included Cooperatives Working Together, a group of 33 cooperatives.
Economist Lamb submitted a report on damages this May.
Land O’ Lakes filed a motion to exclude it on May 31, under seal.
On July 23, defendants received an anonymous letter stating that economist Mark Dwyer wrote the report.
Producers association counsel Jonathan Sallet of Washington moved for discovery on July 24, arguing that ghost writing would violate a protective order.
Barrett denied any breach of confidentiality on July 31, writing that Dwyer and Lamb executed a contract with a confidentiality clause.
He wrote that Dwyer worked 62.6 hours and contributed material that appeared in 24 of 205 paragraphs.
On Aug. 5, Sallet wrote that there was truth to the letter.
He wrote that Dwyer’s contract addressed confidential information of Lamb’s firm, not confidential information in litigation.
Defendants had moved three days earlier to decertify the classes, under seal.
Barrett’s response provided glimpses of the motion, along with his rebuttals.
He wrote that as defendants described the conflict of interest in the classes, some who were overcharged might have benefited by selling at inflated prices.
“What defendants seem to be suggesting is that the court create new law involving the netting of a class member’s gains from unrelated third party transactions against losses incurred when it directly purchased products at prices inflated by defendants’ anticompetitive conduct,” Barrett wrote.
“According to defendants, any net gainers are not injured and have a conflict with those who were. This is not the law.”
Barrett wrote that determination of whether a class member experienced a net benefit is inapplicable and irrelevant.
He wrote that defendants asserted that some of the products they sold came from third parties, so the court couldn’t ascertain which class members were injured.
He also wrote that class members, direct purchasers of cheese and butter from defendants, have been ascertained from defendants’ own records.
“Where defendants sourced some of the cheese or butter they sold, or the ingredients from which they made their products, is irrelevant,” he wrote.
Barrett wrote that defendants also contend that they did not always make their own cheese and butter, but sometimes purchased it.
According to Barrett, the law and common sense foreclosed the argument.
He wrote that he was compelled to respond to defendants on the Lamb report, in which the economist estimated that for every ten cows slaughtered in connection with the program, 4.9 were killed solely because of the program. His model predicted that dairy cow levels returned to normal four or five years after the program ended.
He wrote that Lamb then computed how much milk was eliminated from production due to cows removed solely by the program.
“The net results of his dairy cow regression were that the herd retirement program removed 249,239 cows and 8.763 billion pounds of raw milk from the U.S. market,” Barrett wrote.
He wrote that Lamb then determined how much lower prices would have been had that amount not been removed, and Lamb’s model demonstrated a 4.7 percent cheese and a 5.5 percent butter overcharge.