Processed Egg Products Antitrust Litigation

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE: PROCESSED EGG PRODUCTS ANTITRUST LITIGATION

______MDL No. 2002 THIS DOCUMENT APPLIES TO: 08-MD-02002

ALL ACTIONS

DEFENDANTS’ STATEMENT OF LAW SUBMITTED PURSUANT TO CASE MANAGEMENT ORDER NO. 19

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TABLE OF CONTENTS

Table of Authorities ...... xi I. Introduction ...... 1 II. Federal Agricultural Cooperative Immunity Defenses ...... 4 A. Overview ...... 4 1. Section 6 of The Clayton Act of 1914 ...... 5 2. The Capper-Volstead Act of 1922 ...... 7 3. The Cooperative Marketing Act of 1926 ...... 9 B. Capper-Volstead Decisions of the United States Supreme Court, U.S. Court of Appeals for the Third Circuit, and Third Circuit District Courts ...... 10 C. Structural Requirements for Capper-Volstead Immunity ...... 13 1. The Definition of Producers Was Intended To Be Broad ...... 14 2. Pure Processors Are the Only Group Congress Meant To Exclude ...... 15 3. “Large” or “Corporate” Entities Are Not Ineligible for Membership ...... 16 4. Engaging in Contract Farming Does Not Render a Producer Ineligible for Cooperative Membership ...... 17 5. Vertically Integrated Entities Are Not Excluded ...... 18 a. Case Law ...... 18 b. Legislative History ...... 21 c. Dicta and Advisory Opinion Regarding Producer Status ...... 24 6. Who Is a Producer in the Egg Industry? ...... 26 7. Relationships With Other Entities and Non-Members Covered by the Act ...... 26 a. Cooperatives and Non-Member Producers ...... 26 b. Relationships With Other Cooperatives ...... 27 c. Use of Agents ...... 28 D. What Does the Immunity Cover? Protected Conduct Under the Act ...... 30 1. Collectively Processing, Preparing for Market, Handling, and Marketing ...... 30

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2. Acting Like a Single Corporation ...... 31 3. Pricing ...... 31 a. Joint Bargaining and Price Negotiation ...... 31 b. Agreements on Price ...... 32 c. Information Exchange ...... 33 4. Supply Management and Control ...... 34 a. Case Law ...... 34 b. Legislative History ...... 40 c. Policy Considerations ...... 42 5. Joint Response to Consumer Demand ...... 44 E. Prohibited Conduct ...... 45 F. The Defendants’ Good-Faith Belief That They Were Acting in Compliance With Capper-Volstead Bars Imposition of Liability And Acts as a Defense To Plaintiffs’ Complaint ...... 47 1. Producers Who Agreed To Undertake Protected Conduct With the Good Faith Belief They Were Only Agreeing With Other Producers Cannot Be Found Liable for a Section One Violation...... 47 2. Farmers Should Not Lose the Immunity Due to Technical Mistakes or Inadvertently Listing the Wrong Entity as a Member ...... 48 a. Decisions Regarding Technical Mistake or Inadvertence ...... 48 b. Application of Law Regarding Technical Mistake or Inadvertence ...... 50 3. Defendants Also Have a Good-Faith Affirmative Defense To Liability ...... 50 a. Circuit Court Precedent ...... 50 b. The Defendants’ Good Faith Affirmative Defense ...... 51 4. Alternatively, Defendants Have a Good-Faith Damages Defense ...... 53 a. Third Circuit Precedent ...... 53 b. The Defendants’ Good Faith Damages Defense ...... 54 III. State Law Agricultural Cooperative Immunity Defenses ...... 56 A. Arizona ...... 57 1. Arizona Capper-Volstead Equivalents ...... 57

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2. Statutory Prerequisites ...... 57 3. Applicability of Arizona’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 57 B. California ...... 58 1. California Capper-Volstead Equivalents ...... 58 2. Statutory Prerequisites ...... 59 3. Applicability of California’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 60 C. District of Columbia ...... 61 1. District of Columbia Capper-Volstead Equivalents ...... 61 2. Statutory Prerequisites ...... 61 3. Applicability of the District of Columbia’s Agricultural Cooperative Immunities to Non-Antitrust Claims ...... 61 D. Florida ...... 62 1. Florida Capper-Volstead Equivalents ...... 62 a. Agricultural Cooperative Marketing Associations and Nonprofit Cooperative Associations ...... 62 b. Availability of Federal Immunities ...... 63 2. Statutory Prerequisites ...... 64 3. Applicability of Florida’s Agricultural Cooperative Immunities to Non-Antirust Claims...... 64 E. Iowa...... 65 1. Iowa Capper-Volstead Equivalents ...... 65 2. Statutory Prerequisites ...... 66 3. Applicability of Iowa’s Agricultural Cooperative Immunities to Non-Antitrust Claims ...... 67 F. Kansas ...... 67 1. Kansas Capper-Volstead Equivalents ...... 67 2. Statutory Prerequisites ...... 68 3. Applicability of Kansas’ Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 68 G. Massachusetts ...... 69 1. Massachusetts Capper-Volstead Equivalents ...... 69 2. Applicability of Massachusetts’ Agricultural Cooperative Immunities to Non-Antitrust Claims ...... 69

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H. Michigan ...... 70 1. Michigan Capper-Volstead Equivalents ...... 70 2. Statutory Prerequisites ...... 70 3. Applicability of Michigan’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 71 I. Minnesota ...... 71 1. Minnesota Capper-Volstead Equivalents ...... 71 2. Statutory Prerequisites ...... 72 3. Applicability of Minnesota’s Agricultural Cooperative Immunities to Non-Antitrust Claims ...... 73 J. Mississippi ...... 74 1. Mississippi Capper-Volstead Equivalents ...... 74 2. Statutory Prerequisites ...... 75 3. Applicability of Mississippi’s Agricultural Cooperative Immunities to Non-Antitrust Claims ...... 76 K. Nebraska ...... 76 1. Nebraska Capper-Volstead Equivalents ...... 76 2. Statutory Prerequisites ...... 77 3. Applicability of Nebraska’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 77 L. Nevada ...... 78 1. Nevada Capper-Volstead Equivalents ...... 78 2. Statutory Prerequisites ...... 78 3. Applicability of Nevada’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 78 M. New Mexico ...... 79 1. New Mexico Capper-Volstead Equivalents ...... 79 a. The New Mexico Antitrust Act Exempts Agricultural Organizations From Liability Under Antitrust Laws ...... 79 b. The New Mexico Cooperative Marketing Association Act Exempts Registered Agricultural Cooperatives from Liability Under Antitrust Laws ...... 80 2. Statutory Prerequisites ...... 81 3. Applicability of New Mexico’s Agricultural Cooperative Immunities to Non-Antitrust Claims ...... 81 iv

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N. New York ...... 82 1. New York Capper-Volstead Equivalents ...... 82 2. Statutory Prerequisites ...... 83 3. Applicability of New York’s Agricultural Cooperative Immunities to Non-Antitrust Claims ...... 85 O. North Carolina ...... 86 1. North Carolina Capper-Volstead Equivalents ...... 86 2. Statutory Prerequisites ...... 86 3. Applicability of North Carolina’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 86 P. North Dakota ...... 87 1. North Dakota Capper-Volstead Equivalents ...... 87 a. Statutory Exemption for Agricultural Organizations ...... 87 b. Statutory Exemption for Cooperative Associations ...... 88 2. Statutory Prerequisites ...... 89 3. Applicability of North Dakota’s Agricultural Cooperative Immunities to Non-Antitrust Claims ...... 89 Q. South Dakota ...... 89 1. South Dakota Capper-Volstead Equivalents ...... 89 2. Statutory Prerequisites ...... 90 3. Applicability of South Dakota’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 90 R. Tennessee ...... 91 1. Tennessee Capper-Volstead Equivalents ...... 91 2. Statutory Prerequisites ...... 91 3. Applicability of Tennessee’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 92 S. Utah ...... 93 1. Utah Capper-Volstead Equivalents ...... 93 a. The Utah Antitrust Act Exempts Agricultural Organizations From Liability Under Antitrust Laws ...... 93 b. The Utah Uniform Agricultural Cooperative Association Act Exempts Organized Agricultural Cooperatives From Liability Under Antitrust Laws ...... 94 2. Statutory Prerequisites ...... 95

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3. Applicability of Utah’s Agricultural Cooperative Immunities to Non-Antitrust Claims ...... 95 T. Vermont ...... 96 1. Vermont Capper-Volstead Equivalents ...... 96 2. Statutory Prerequisites ...... 96 3. Applicability of Vermont’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 97 U. West Virginia ...... 97 1. West Virginia Capper-Volstead Equivalents ...... 97 2. Statutory Prerequisites ...... 99 3. Applicability of West Virginia’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 99 V. Wisconsin ...... 100 1. Wisconsin Capper-Volstead Equivalents ...... 100 2. Statutory Prerequisites ...... 101 3. Applicability of Wisconsin’s Agricultural Cooperative Immunity to Non-Antitrust Claims ...... 102 IV. Federal Standard Setting Law ...... 104 A. Introduction To Federal Standard-Setting Law ...... 104 B. Assessment Of Standard Setting As A Restraint Of Trade Or Procompetitive Conduct Under Federal Law...... 106 1. The UEP Certified Program Is Not Subject to Per Se Analysis...... 106 2. Product Standards Like the UEP Certified Program Are Routinely Upheld as Pro-competitive ...... 109 a. Courts Typically Subject Challenged Standards to the Rule of Reason ...... 109 b. Quality Standards, Such as the UEP Certified Program, Are Regularly Upheld By Courts ...... 114 C. Conclusion ...... 115 V. State Standard Setting and Antitrust Analysis ...... 117 A. Arizona ...... 117 1. State Antitrust Statute ...... 117 2. Relationship to Federal Statute ...... 118 3. State Law on Standard Setting ...... 119

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B. California ...... 119 1. State Antitrust Statute ...... 119 2. Relationship to Federal Law ...... 120 3. State law on Standard Setting ...... 120 C. District of Columbia ...... 121 1. State Antitrust Statute ...... 121 2. Relationship to Federal Statute ...... 121 3. State Standard Setting Law ...... 122 D. Florida ...... 122 1. State Antitrust Statute ...... 122 2. Relationship to Federal Statute ...... 124 3. State Standard Setting Law ...... 124 E. Iowa...... 124 1. State Antitrust Statute ...... 124 2. Relationship to Federal Statute ...... 125 3. State Standard Setting Law ...... 126 F. Kansas ...... 126 1. State Antitrust Statute ...... 126 2. Relationship to Federal Statute ...... 127 3. State Standard Setting Law ...... 127 G. Massachusetts ...... 127 1. State Antitrust Statute ...... 127 2. Relationship to Federal Statute ...... 128 3. State Standard Setting Law ...... 128 H. Michigan ...... 128 1. State Antitrust Statute ...... 128 2. Relationship to Federal Statute ...... 128 3. State Standard Setting Law ...... 129 I. Minnesota ...... 129 1. State Antitrust Law ...... 129 2. Relationship to Federal Statute ...... 130 3. State Standard Setting Law ...... 130 J. Mississippi ...... 130 vii

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1. State Antitrust Statute ...... 130 2. Relationship to Federal Statute ...... 133 3. State Standard Setting Law ...... 134 K. Nebraska ...... 134 1. State Antitrust Statute ...... 134 2. Relationship to Federal Statute ...... 134 3. State Standard Setting Law ...... 135 L. Nevada ...... 135 1. State Antitrust Statute ...... 135 2. Relationship to Federal Statute ...... 135 3. State Standard Setting Law ...... 136 M. New Mexico ...... 136 1. State Antitrust Statute ...... 136 2. Relationship to Federal Law ...... 137 3. State Standard Setting Law ...... 138 N. New York ...... 138 1. State Antitrust Statute ...... 138 2. Relationship to Federal Statute ...... 140 3. State Standard Setting Law ...... 140 O. North Carolina ...... 140 1. State Antitrust Statute ...... 140 2. Relationship to Federal Antitrust Statute ...... 141 3. State Standard Setting Law ...... 142 P. North Dakota ...... 142 1. State Antitrust Statute ...... 142 2. Relationship to Federal Statute ...... 143 3. State Standard Setting law ...... 143 Q. South Dakota ...... 143 1. State Antitrust Statute ...... 143 2. Relationship to Federal Statute ...... 144 3. State Standard Setting Law ...... 145 R. Tennessee ...... 145 1. State Antitrust Statute ...... 145 viii

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2. Relationship to Federal Statute ...... 146 3. State Standard Setting Law ...... 146 S. Utah ...... 146 1. State Antitrust Statute ...... 146 2. Relationship to Federal Statute ...... 147 3. State Standard Setting Law ...... 147 T. Vermont ...... 147 1. State Antitrust Statute ...... 147 2. Relationship to Federal Statute ...... 148 3. State standard setting law ...... 149 U. West Virginia ...... 149 1. State Antitrust Statute ...... 149 2. Relationship to Federal Statute ...... 149 3. State Standard Setting Law ...... 150 V. Wisconsin ...... 150 1. State Antitrust Statute ...... 150 2. Relationship to Federal Statute ...... 151 3. State Standard Setting Law ...... 151 VI. State Unjust Enrichment and Consumer Protection Claims ...... 152 A. State Unjust Enrichment Claims ...... 152 1. Arizona ...... 152 2. California ...... 153 3. District of Columbia ...... 154 4. Florida ...... 155 5. Iowa...... 157 6. Kansas ...... 157 7. Massachusetts ...... 158 8. Michigan ...... 159 9. Minnesota ...... 159 10. Mississippi ...... 161 11. Nebraska ...... 162 12. Nevada ...... 163 13. New Mexico ...... 163 ix

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14. New York ...... 164 15. North Carolina ...... 164 16. North Dakota ...... 165 17. South Dakota ...... 165 18. Tennessee ...... 167 19. Utah ...... 167 20. Vermont ...... 168 21. West Virginia ...... 169 22. Wisconsin ...... 170 B. State Consumer Protection Claims ...... 172 1. Arizona ...... 172 2. California ...... 172 3. District of Columbia ...... 173 4. Florida ...... 174 5. Iowa...... 176 6. Kansas ...... 176 7. Massachusetts ...... 177 8. Michigan ...... 177 9. Minnesota ...... 178 10. Mississippi ...... 178 11. Nebraska ...... 178 12. Nevada ...... 178 13. New Mexico ...... 178 14. New York ...... 180 15. North Carolina ...... 180 16. North Dakota ...... 182 17. South Dakota ...... 182 18. Tennessee ...... 182 19. Utah ...... 182 20. Vermont ...... 182 21. West Virginia ...... 183 22. Wisconsin ...... 183

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TABLE OF AUTHORITIES

CASES

1704 21st Avenue, Ltd. v. City of Gulfport, 988 So. 2d 412 (Miss. Ct. App. 2008) ...... 161 A.G. Edwards & Sons, Inc. v. Northwest Realty Co., 340 N.W.2d 187 (S.D. 1983) ...... 166 Abbott Labs. v. Norse Chem. Corp., 33 Wis. 2d 445 147 N.W.2d 529 (1967) ...... 103 Agritronics Corp. v. Nat’l Dairy Herd Ass’n,, 914 F. Supp. 814 (N.D.N.Y. 1996) ...... 27, 40 Alexander v. Nat’l Farmers Org., 687 F.2d 1173 (8th Cir. 1982) ...... passim All Am. Sch. Supply Co. v. Slavens, 625 P.2d 324 (Ariz. 1981) ...... 118 Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1988) ...... 112 Am. Council of Certified Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d 606 (6th Cir. 1999) ...... 108 Am. Motor Inns, Inc. v. Holiday Inns, Inc., 521 F.2d 1230 (3d Cir. 1975) ...... 110, 111 Am. Tel. & Tel. Co. v. Delta Commc’n Corp., 408 F. Supp. 1075 (S.D. Miss. 1976) ...... 131 Anderson v. DeLisle, 352 N.W. 2d 794 (Minn. App. 1984) ...... 73 Andrx Pharms., Inc. v. Elan Corp., PLC, 421 F.3d 1227 (11th Cir. 2005) ...... 124, 175 Arena Dev. Grp. v. Naegele Commc’ns, Inc., Civ. No. 06-2806, 2007 WL 2506431 (D. Minn. Aug. 30, 2007) ...... 160 Arjay Inv. Co. v. Kohlmetz, 101 N.W.2d 700 (Wis. 1960) ...... 171 Arthur v. Microsoft Corp., 676 N.W.2d 29 (Neb. 2004) ...... 134, 178 Assam Drug Co. v. Miller Brewing Co., 798 F.2d 311 (8th Cir. 1986) ...... 89, 144 Associated General Contractors v. Carpenters, 459 U.S. 519 (1983) ...... 136

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AT&T Corp. v. JMC Telecom, LLC, 470 F.3d 525 (3d Cir. 2006) ...... 110 Atl. Coast Airlines Holdings, Inc. v. Mesa Air Group, Inc., 295 F.Supp.2d 75 (D.D.C. 2003) ...... 122 Atwater v. McGuire, 642 N.Y.S.2d 363 (N.Y. App. Div. 1996) ...... 84 Auto. Alignment & Body Serv., Inc. v. State Farm Mut. Auto. Ins. Co., No. 99-0152, 2005 WL 4826893 (Miss. Ch. Mar. 22, 2005) ...... 131, 132 Barrows v. Grand Rapids Real Estate Board, 214 N.W. 2d 532 (Mich. Ct. App. 1974) ...... 128, 129 Bartlett v. Mirabal, 999 P.2d 1062 (N.M. 2000) ...... 138 Beacon Homes, Inc. v. Holt, 146 S.E.2d 434 (N.C. 1966) ...... 87 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ...... 108, 137 Bellinder v. Microsoft Corp., No.00-C-0855, 2001 WL 1397995 (Kan. Dist. Ct. Sept. 7, 2001) ...... 126 Bello v. Cablevision Sys. Corp., 185 A.D.2d 262 (N.Y. App. Div. 1992) ...... 138 Bergjans Farm Dairy Co. v. Sanitary Milk Producers, 241 F. Supp. 476 (E.D. Mo. 1965) ...... 47 Bergstrom v. Noah, 974 P.2d 520 (Kan. 1999) ...... 127 Blair v. Checker Cab Co., 558 N.W. 2d 439 (Mich. Ct. App. 1996) ...... 128 Blake v. Abbott Labs., Inc., No. 03A01-9509-cv-00307, 1996 WL 134947 (Tenn. Ct. App. Mar. 27, 1996) ...... 93 Boldt v. State, 305 N.W.2d 133 (Wis. 1981) ...... 170, 171 Booe v. Shadrick, 369 S.E.2d 554 (N.C. 1988) ...... 164 Boulware v. State of Nev., Dep’t of Human Resources, 960 F.2d 793 (9th Cir. 1992) ...... 135 Boyce & Isley, PLLC v. Cooper, 568 S.E.2d 893 (N.C. App. 2002) ...... 181 Brixen & Christopher Architects, P.C. v. State, 29 P.3d 650 (Utah Ct. App. 2001) ...... 146, 147

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Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1 (1979) ...... 107, 111, 119 Broadcom Corp. v. Qualcomm Incorp., 501 F.3d 297 (3d Cir. 2007) ...... 112 Broadhead v. Terpening, 611 So. 2d 949 (Miss. 1992) ...... 161 Broadway Foreclosure Invs., LLC v. Tarlesson, 109 Cal. Rptr. 3d 319 (Cal. Ct. App. 2010) ...... 154 Brooks v. Valley National Bank, 548 P.2d 1166 (Ariz. 1976) ...... 153 Brown v. Staple Cotton Co-op. Ass’n, 96 So. 849 (Miss. 1923) ...... 132 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) ...... 133 Buckett v. Jante, No. 2009AP2709-FT. 2010 WL 1780363 (Wis. Ct. App. May 5, 2010) ...... 171 Bunker’s Glass Co. v. Pilkington PLC, 47 P.3d 1119 (Ariz. Ct. App. 2002) ...... 118 Bunker’s Glass Co. v. Pilkington, PLC, 75 P.3d 99 (Ariz. 2003) ...... 118 Buss v. Rosenow, No. 96-1145-FT, 1996 WL 635789 (Wis. Ct. App. Nov. 5 1996) ...... 171 Byre v. Chamberlain, 362 N.W.2d 69 (S.D. 1985) ...... 90, 144 Cal. Dental Ass’n v. FTC, 224 F.3d 942 (9th Cir. 2000) ...... 114 Cal. Dental Ass’n v. FTC, 526 U.S. 756 (1999) ...... 107, 111 California v. Infineon Techs. AG, 531 F. Supp. 2d 1124 (N.D. Cal. 2007) ...... 131 Cameron v. New Hanover Mem’l Hosp., Inc., 293 S.E.2d 901 (N.C. Ct. App. 1982) ...... 140, 141, 181 Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc., 996 F.2d 537 (2d Cir. 1993) ...... 139 Cargill v. Gilmore, No. 920485G, 1993 WL 818899 (Mass. Super. Ct. Aug. 18, 1993) ...... 159 Carlson & Erickson Builders, Inc. v. Lampert Yards, Inc., 529 N.W.2d 905 (Wis. 1995) ...... 150

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Case-Swayne Co. v. Sunkist Growers, Inc., 355 F. Supp. 408 (C.D. Cal. 1971) ...... 19, 20 Case-Swayne Co., Inc. v. Sunkist Growers, Inc., 389 U.S. 384 (1967) ...... passim Casper v. SMG, 389 F. Supp. 2d 618 (D.N.J. 2005) ...... 54 Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 973 P.2d 527 (Cal. 1999) ...... 60, 173 Center v. Mad River Corp., 561 A.2d 90 (Vt. 1989) ...... 97, 168 Chavez v. Whirlpool Corp., 113 Cal. Rptr. 175 (Cal. Ct. App. 2001) ...... 60, 173 Ciardi v. Hoffman-La Roche, Ltd., 762 N.E.2d 303 (Mass. 2002) ...... 128, 177 City of Goodlettsville v. Priceline.com, Inc., 605 F. Supp. 2d 982 (M.D. Tenn. 2009) ...... 167 City of St. Petersburg v. Dayco Prods., Inc., No. 06-20953, 2008 WL 5428172 (S.D. Fla. Dec. 30, 2008) ...... 156 Clamp-All Corp. v. Cast Iron Soil Pipe Inst., 851 F.2d 478 (1st Cir. 1988) ...... 113 Clayworth v. Pfizer, Inc., 233 P.3d 1066 (Cal. 2010) ...... 120 Clough v. Adventist Health Sys., Inc., 780 P.2d 627 (1989) ...... 136 Cmty. Guard. Bank v. Hamlin, 898 P.2d 1005 (Ariz. App. 1995) ...... 58, 153 Cochran v. Veneman, 359 F.3d 263 (3d Cir. 2004), vacated on other grounds, Johanns v. Cochran, 554 U.S. 1058 (2005) ...... 13 Coffee Pot Plaza P’ship v. Arrow Air Conditioning and Refrigeration, Inc., 412 So. 2d 883 (Fla. Dist. Ct. App. 1982) ...... 156 Collins v. eMachines, Inc., 134 Cal. Rptr. 3d 588 (Cal. App. 3d Dist. 2011) ...... 154 Combs v. Associated Elec. Coop., Inc., 752 F. Supp. 1131 (D.D.C. 1990) ...... 54 Comes v. Microsoft Corp., 646 N.W.2d 440 (Iowa 2002) ...... 125 Commercial Trust & Sav. Bank v. Christensen, 535 N.W.2d 853 (S.D. 1995) ...... 90

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Conley Publ’g Grp., Ltd. v. J. Commc’ns, Inc., 665 N.W.2d 879 (Wis. 2003 ...... 151 Consol. Express, Inc. v. New York Shipping Ass’n, Inc. 602 F.2d 494 (3d Cir. 1979) ...... 2, 53, 54, 55 Consol. Metal Prods., Inc. v. Am. Petroleum Inst., 846 F.2d 284 (5th Cir. 1988) ...... 108, 112, 114, 115 Cont’l Airlines v. United Airlines, 277 F.3d 499 (4th Cir. 2002) ...... 111 Continental Cas. Co. v. Wisconsin Patients Comp. Fund, 473 N.W.2d 584 (Wis. Ct. App. 1991) ...... 170 Cooper v. Gen. Motors Corp., 702 So. 2d 428 (Miss. 1997) ...... 76 Copper Valley Coal Co. v. United Mine Workers of Am., 753 F. Supp. 580 (W.D. Pa. 1990) ...... 54 Copperweld v. Independence Tube, 467 U.S. 752 (1984) ...... 50 Craftsmen Limousine, Inc. v. Ford Motor Co., 363 F.3d 761 (8th Cir. 2004) ...... 113 Crosby v. Mills, 413 F.2d 1273 (10th Cir. 1969) ...... 171 Crossland Inv. Co. v. Rhodes, 274 F. Supp. 2d 1302 (N.D. Fla. 2003) ...... 156 D.R. Ward Constr. Co. v. Rohm & Haas Co., 470 F. Supp. 2d 485 (E.D. Pa. 2006) ...... 148, 183 Davidson v. Rogers, 431 So. 2d 483 (Miss. 1983) ...... 161 Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148 (5th Cir. 1992) ...... 131 DJ Painting, Inc. v. Baraw Enters., Inc., 776 A.2d 413 (Vt. 2001) ...... 169 DM Research, Inc. v. Coll. of Am. Pathologists, 170 F.3d 53 (1st Cir. 1999) ...... 114 Eichorn v. AT&T Corp., 248 F.3d 131 (3d Cir. 2001) ...... 107, 109 Elkins v. Microsoft Corp., 817 A.2d 9 (Vt. 2002) ...... 148, 182, 183 Ellis v. Anderson Tully Co., 727 So. 2d 716 (Miss. 1998) ...... 161

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Escarraman v. Northwoods at Coulwood Homeowners Ass’n, No. COA11-1386, 2012 WL 2551928 (N.C. App. 2012) ...... 165 Especiales Al Comercio Exterior v. Johnson Controls, Inc., No. 08-CV-117, 2011 WL 1304922 (E.D. Wis. Apr. 1, 2011) ...... 171 Evans Prods. Co. v. Jorgensen, 421 P.2d 978 (Or. 1966) ...... 170 Ewald Bros., Inc. v. Mid-Am Dairymen, Inc., 877 F.2d 1384, 1390-92 (8th Cir. 1989) ...... 2, 34 Execu-Tech Bus. Sys., Inc. v. Appleton Papers Inc., 743 So. 2d 19 (Fla. Dist. Ct. App. 1999) ...... 123, 175, 176 Fail-Safe, LLC v. A.O. Smith Corp., 674 F.3d 889 (7th Cir. 2012) ...... 102 Fairdale Farms v. Yankee Milk, 635 F.2d 1037 (2d Cir. 1980) ...... passim Fairdale Farms, Inc. v. Yankee Milk, Inc. , 1980-1 Trade Cases (CCH) ¶ 63,029 (D. Vt. 1979) ...... 33 Feather v. United Mine Workers of Am., 711 F.2d 530 (3d Cir. 1983) ...... 2, 54 Fed. Land Bank of Omaha v. Tiffany, 529 N.W.2d 294 (Iowa 1995) ...... 66 Fed. Trade Comm’n & U.S. Dep’t of Justice, Antitrust Guidelines for Collaborations Among Competitors §3.36(b). (2000) ...... 111 First National Bank v. Ramier, 311 N.W. 2d 502 (Minn. 1981) ...... 73 Fla. Power Corp. v. City of Winter Park, 887 So. 2d 1237 (Fla. 2004) ...... 155 Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc., 131 Cal. Rptr. 3d 519 (Cal. Ct. App. 2011) ...... 59 Franklin Cnty Sheriff’s Office v. St. Albans City Police Dep’t, No. 11-266, 2012 Vt. LEXIS 61 (Vt. Aug. 3, 2012) ...... 149 Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d 512 (Tenn. 2005) ...... 92, 145, 167 Frost v. Corp. Comm’n of Okla., 278 U.S. 515 (1929) ...... 27 FTC v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411 (1990) ...... 43 Futurevision Cable Sys. of Wiggins, Inc. v. Multivision Cable TV Corp.¸ 789 F. Supp. 760 (S.D. Miss. 1992) ...... 133

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Galante v. Oz, Inc., 379 N.W.2d 723 (Minn. Ct. App. 1986) ...... 160 Ghory v. Al-Lahham, 257 Cal. Rptr. 924 (Cal. Ct. App. 1989) ...... 60, 154 Golab & Sons v. Schaake Packing Co., 609 P.2d 444 (Wash. 1980) ...... 18 Golden Bridge Tech., Inc. v. Motorola, Inc., 547 F.3d 266 (5th Cir. 2008) ...... 108 Goldfarb v. Va. State Bar, 421 U.S. 773 (1975) ...... 115 Gorbey v. Am. Journal of Obstetrics & Gynecology, No. 11-11259-NMG, 2012 WL 948466 (D. Mass. Mar. 16, 2012) ...... 177 Greater Rockford Energy & Tech. Corp. v. Shell Oil Co., 998 F.2d 391 (7th Cir. 1993) ...... 115 Guidance Endodontics, LLC v. Dentsply Int’l, Inc., 728 F. Supp. 2d 1170 (D.N.M. 2010) ...... 179 Guldberg v. Greenfield, 146 N.W.2d 298 (Iowa 1966) ...... 157 GVF Cannery, Inc. v. Cal. Tomato Growers Ass’n, 511 F. Supp. 711 (N.D. Cal. 1981) ...... 7, 28, 40 Hakki v. Zima Co., No. 03-9183, 2006 WL 852126 (D.C. Super. Mar. 28, 2006) ...... 155 Hardy Bros. Body Shop, Inc. v. State Farm Mut. Auto. Ins. Co., 848 F. Supp. 1276 (S.D. Miss. 1994) ...... 132, 133 Haz-Mat Response v. Certified Waste Serv., 910 P.2d 839 (Kan. 1996) ...... 158 Head v. Platte County, Mo., 749 P.2d 6, 8 (Kan. 1988) ...... 127 Heath Consultants v. Precision Instruments, 527 N.W.2d 596 (Neb. 1995) ...... 134, 178

Heimann v. Kinder-Morgan CO2 Co., 144 P.3d 111 (N.M. Ct. App. 2006) ...... 163 Hershenow v. Enterprise Rent-A-Car Co. of Boston, Inc., 840 N.E.2d 526 (Mass. 2006) ...... 177 Hill v. Stowers, 680 S.E.2d 66 (W. Va. 2009) ...... 169 Himes v. Brown & Co. Secs. Corp., 518 So. 2d 937 (Fla. Dist. Ct. App. 1987) ...... 123, 175, 176

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Hinds County v. Wachovia Bank N.A., 620 F. Supp. 2d 499 (S.D.N.Y. 2009) ...... 108 Hofeldt v. Mehling, 658 N.W.2d 783 (S.D. 2003) ...... 165, 166 Holly Sugar v. Goshen Cnty. Coop. Beet Growers Ass’n., 725 F.2d 564 (10th Cir. 1984) ...... 2, 31, 32, 34 Holman v. CPT Corp., 457 N.W.2d 740 (Minn. Ct. App. 1990) ...... 73 Hood ex rel. State v. BASF Corp., No. 56863, 2006 WL 308378 (Miss. Ch. Jan. 17, 2006) ...... 131 Hosp. Bldg. Co. v. Trustees of the Rex Hosp., 691 F.2d 678 (4th Cir. 1982) ...... 51, 53 Hospira Inc. v. AlphaGary Corp., 671 S.E.2d 7 (N.C. App. 2009) ...... 181 Hough Transit, Ltd. v. Nat’l Farmers Org., 472 N.W.2d 358 (Minn. Ct. App. 1991) ...... 130 Hudson Bay Co. Fur Sales Inc. v. Am. Legend Coop., 651 F. Supp. 819 (D.N.J. 1986) ...... 13 Humphrey v. Rd. Constructors, Inc., 474 N.W.2d 224 (Minn. Ct. App. 1991) ...... 130 Hyde v. Abbott Laboratories, Inc., 473 S.E.2d 680 (N.C. Ct. App. 1996) ...... 141 Iconco v. Jensen Const. Co., 622 F.2d 1291 (8th Cir. 1980) ...... 67, 157 Ihebereme v. Capital One, N.A., 730 F. Supp. 2d 40 (D.D.C. 2010) ...... 174 Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) ...... 118, 126, 133 In re Asbestos Sch. Litig., 46 F.3d 1284 (3d Cir. 1994) ...... 48 In re Estate of Stratman, 1 N.W.2d 636 (Iowa 1942) ...... 67 In re Fla. Microsoft Antitrust Litig., No. 99-27340, 2002 WL 31423620 (Fla. Cir. Ct. Aug. 26, 2002) ...... 123, 124, 176 In re Flash Memory Antitrust Litig., 643 F. Supp. 2d 1133 (N.D. Cal. 2009) ...... 136 In re Fresh & Process Potatoes Antitrust Litig., 834 F. Supp. 2d 1141 (D. Idaho 2011) ...... passim

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In re Ins. Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir. 2012) ...... 107, 108, 110 In re Lower Lake Erie Iron Ore Antitrust Litig., 759 F.Supp. 219 (E.D. Pa. 1991) ...... 2, 51, 52 In re Microsoft Corp. Antitrust Litig., No. MDL 1332, 2003 WL 22070561 (D. Md. Aug. 22, 2003) ...... 131 In re Mushroom Direct Purchaser Antitrust Litigation, 655 F.3d 158 (3d Cir. 2011) ...... 12, 13, 49, 50 In re Potash Antitrust Litig., 667 F. Supp. 2d 907 (N.D. Ill. 2009) ...... 133 In re South Dakota Microsoft Antitrust Litig., 657 N.W.2d 668 (S.D. 2003) ...... 144 In re Static Random Access Memory (SRAM) Antitrust Litig., 580 F. Supp. 2d 896 (N.D. Cal. 2008) ...... 144 In re TFT-LCD (Flat Panel) Antitrust Litig., 599 F. Supp. 2d 1179 (N.D. Cal. 2009) ...... 131 In the matter of Washington Crab Ass’n et al., 66 F.T.C. 45, 1964 WL 73029 (1964) ...... 35, 37, 38 Investors Corp. v. Bayer AG, No. 1011-04, 2005 Vt. Super. LEXIS 92 (Vt. Sup. Ct. June 1, 2005) ...... 169 Jackson v. ASA Holdings, LLC, 751 F. Supp. 2d 91 (D.D.C. 2010) ...... 174 Jacob v. Nodak Mut. Ins. Co., 693 N.W.2d 604 (N.D. 2005) ...... 88, 143 James L. Miniter Ins. Agency, Inc. v. Ohio Indemnity Co., 112 F.3d 1240 (1st Cir. 1997) ...... 69 Jefferson Standard Life Ins. Co v. Guilford Cnty., 34 S.E.2d 430 (N.C. 1945) ...... 165 Jeffs v. Stubbs, 970 P.2d 1234 (Utah 1998) ...... 168 Johnson v. Phoenix Mut. Ins. Co., 266 S.E.2d 610 (N.C. 1980) ...... 141 Johnston v. Palmer, 963 So. 2d 586 (Miss. Ct. App. 2007) ...... 161 Jones Cooling & Heating, Inc. v. Booth, 394 S.E.2d 292 (N.C. App. 1990) ...... 165 Jung v. Ass’n of Am. Med. Colls., 300 F. Supp. 2d 119 (D.D.C. 2004) ...... 108

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Kaiser v. Cyr, No. 247-11-06, 2008 Vt. Super. LEXIS 76 (Vt. Sup. Ct. Dec. 29, 2008) ...... 169 Kanne v. Visa U.S.A., Inc., 723 N.W. 2d 293 (Neb. 2006) ...... 162, 163 Kessel v. Monongalia Cnty. Gen. Hosp. Co., 648 S.E.2d 366 (W. Va. 2007) ...... 149 Kinnett Dairies, Inc. v. Dairymen, Inc., 512 F. Supp. 608 (M.D. Ga. 1981) ...... 29, 34 Knuth v. Erie-Crawford Dairy Cooperative Ass’n, 395 F.2d 420 (3d Cir. 1968) ...... 12 Koehler v. Cnty. Of Grand Forks, 658 N.W.2d 741 (N.D. 2003) ...... 143 Lambo v. Kathleen D’Acquisto Irrevocable Trust, No. 2006AP912, 2007 WL 2712146 (Wis. Ct. App. Sept. 19, 2007) ...... 171 Lass v. Eliassen, 270 P. 745 (Cal. Ct. App. 1928) ...... 154 Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) ...... 107, 126 Liza Danielle, Inc. v. Jamko, Inc., 408 So. 2d 735 (Fla. Dist. Ct. App. 1982) ...... 156 Loiselle v. Cosas Management Group, LLC, 228 P.3d 943 (Ariz. App. 2010) ...... 153 Lorix v. Crompton Corp., 736 N.W.2d 619 (Minn. 2007) ...... 72, 130 Lum v. Bank of Am.¸ 361 F.3d 217 (3d Cir. 2004) ...... 108 Mack v. Bristol-Myers Squibb Co., 673 So. 2d 100 (Fla. Dist. Ct. App. 1996) ...... 122, 123, 174, 175 Mack v. Mack, 613 N.W.2d 64 (S.D. 2000) ...... 165, 166 Madison Cablevision, Inc. v. Morganton, 386 S.E.2d 200 (N.C. 1989) ...... 141, 181 Main St. Publishers, Inc. v. Landmark Commc’ns Inc., 701 F. Supp. 1289 (N.D. Miss. 1988) ...... 134 Major Mat Co. v. Monsanto Co., 969 F.2d 579 (7th Cir. 1992) ...... 102 Mandarin Trading Ltd. v. Wildenstein, 944 N.E.2d 1104 (N.Y. 2011) ...... 85, 164

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Maple Flooring Mfrs. Ass’n v. U.S., 268 U.S. 563 (1925) ...... 111 Marco Island Cable, Inc. v. Comcast Cablevision of South, Inc., No. 2:04-CV-26-FTM-29DNF, 2006 WL 1814333 (M.D. Fla. July 3, 2006) ...... 122, 124, 175 Margrove Inc. v. Upstate Milk Coop., 357 N.Y.S.2d 392 (Sup. Ct. 1974) ...... 83, 140 Marshall v. Miller, 276 S.E.2d 397 (N.C. 1981) ...... 181 Maryland & Virginia Milk Producers Association, 167 F. Supp. 45 (D.D.C. 1958) ...... 17 Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47 (1st Cir. 2009) ...... 158 Mathews v. Lancaster Gen. Hosp., 87 F.3d 624 (3rd Cir. 1996) ...... 149 Matsushita v. Zenith Ratio Corp., 475 U.S. 574 (1986) ...... 130 Matter of Cent. Cal. Lettuce Producers Coop., 90 F.T.C. 18, 1977 WL 188550 (July 25, 1977) ...... 36 Mayer v. Angus, 83 So. 3d 444 (Miss. Ct. App. 2012) ...... 161 Mazanderan v. Indep. Taxi Owners’ Ass’n, Inc., 700 F. Supp. 588 (D.D.C. 1988) ...... 121 McGinty v. Acuity Specialty Prods. Group, Inc., No. CIV. A. 3:07CV715, 2009 WL 161827 (S.D. Miss. Jan. 22, 2009) ...... 161 McGrath v. Braney, No. WOCV201001603, 2011 WL 4424068 (Mass. Super. Ct. July 12, 2011) ...... 69 MCI Commc’ns Corp. v. AT & T, 708 F.2d 1081 (7th Cir. 1983) ...... 51, 53 Md. & Va. Milk Producers Ass’n v. United States, 362 U.S. 458 (1960) ...... passim Medison Am., Inc. v. Preferred Med. Sys., 548 F. Supp. 2d 585 (W.D. Tenn. 2007) ...... 145 Midland Glass Co. v. Aluma Spec, Inc., No. A06-765, 2007 WL 1248031 (Minn. Ct. App. May 1, 2007) ...... 130 Minn. Twins P’ship v. State, 592 N.W.2d 847 (Minn. 1999) ...... 72 Minot v. Gen. Drivers & Helpers Union No. 74, 142 N.W.2d 612 (N.D. 1966) ...... 88, 143

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Mohammed v. Union Carbide Corp., 606 F. Supp. 252 (E.D. Mich. 1985) ...... 128 Mon-Ray, Inc. v. Granite Re, Inc., 677 N.W.2d 434 (Minn. Ct. App. 2004) ...... 159 Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984) ...... 108 Moore v. Boating Indus. Ass’ns, 819 F.2d 693 (7th Cir. 1987) ...... 114 Mothershed v. Justices of Supreme Court, 410 F.3d 602 (9th Cir. 2005) ...... 88, 143 N. Cal. Supermarkets, Inc. v. Cent. Cal. Lettuce Producers Co-op., 413 F. Supp. 984 (N.D. Cal. 1976) ...... passim N. Tex. Producers Ass’n v. Metzger Dairies, 348 F.2d 189 (5th Cir. 1965) ...... 46 N. Valley Commc’ns, LLC v. Qwest Commc’ns Corp., 659 F. Supp. 2d 1062 (D.S.D. 2009) ...... 90 N.C. Farm Bureau Mut. Ins. Co. v. Cully’s Motorcross Park, 725 S.E.2d 638 (N.C. App. 2012) ...... 181 N.C. Steel, Inc. v. Nat’l Council on Comp. Ins., 472 S.E.2d 578 (N.C. Ct. App. 1996) ...... 141 N.N.V. v. Am. Ass’n of Blood Banks, 75 Cal. App. 4th 1358 (Cal. Ct. App. 1999) ...... 120, 121 NAACP v. Claiborne Hardware Co., 393 So. 2d 1290 (Miss. 1980) ...... 133 NAACP v. Claiborne Hardware Co., 458 U.S. 886 (1982) ...... 48 Nat. Ass’n of Review Appraisers & Mortgage Underwriters, Inc. v. The Appraisal Found., 64 F.3d 1130 (8th Cir. 1995) ...... 114 Nat’l Broiler Marketing Ass’n v. United States, 436 U.S. 816 (1978) ...... passim Nat’l Soc’y of Prof’l Eng’rs v. U.S., 435 U.S. 679 (1978) ...... 107 NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85 (1984) ...... 106, 113 Nev. Indus. Dev. v. Benedetti, 103 Nev. 360 (1987) ...... 163 New World Commc’ns, Inc. v. Thompsen, 878 A.2d 1218 (D.C. 2005) ...... 62, 154

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Newsday, Inc. v. The Fantastic Mind, Inc., 655 N.Y.S.2d 583 (N.Y. App. Div. 1997) ...... 139 Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284 (1985) ...... 107 Oce Printing Sys. USA, Inc. v. Mailers Data Servs., Inc., 760 So. 2d 1037 (Fla. Dist. Ct. App. 2000) ...... 122 Olstad v. Microsoft, 700 N.W.2d 139 (Wis. 2005) ...... 150 Omnibank of Mantee v. United S. Bank, 607 So. 2d 76 (Miss. 1992) ...... 76 Ontiveros Insulation Co. v. Sanchez, 3 P.3d 695 (N.M. Ct. App. 2000) ...... 82, 163, 164 Osbourne v. Capital City Mortgage Corp., 727 A.2d 322 (D.C. 1999) ...... 174 Otto Milk Co. v. United Dairy Farmers Cooperative Ass’n, 388 F.2d 789 (3d Cir. 1967) ...... 11, 12, 46 Owens Corning v. R.J. Reynolds Tobacco Co., 868 So. 2d 331 (Miss. 2004) ...... 133, 161, 162 Palmer v. Ill. Farmers Ins. Co., 666 F.3d 1081 (8th Cir. 2012) ...... 74 Parrish v. NFL Players Ass’n, 534 F. Supp. 2d 1081 (N.D. Cal. 2007) ...... 120 Pasco Indus., Inc. v. Talco Recycling, Inc., 985 P.2d 535 (Ariz. Ct. App. 1998) ...... 118 Peerless Packing Co. v. Malone & Hyde, Inc., 376 S.E.2d 161 (W. Va. 1988) ...... 170 Peoples Nat’l Bank of Commerce v. First Union Nat’l Bank of Fla., 667 So. 2d 876 (Fla. Dist. Ct. App. 1996) ...... 156 Peterson v. Cellco P’ship, 80 Cal. Rptr. 3d 316 (Cal. Ct. App. 2008) ...... 60, 153, 154 Podolsky v. First Healthcare Corp., 58 Cal. Rptr. 2d 89 (Cal. Ct. App. 1996) ...... 172 Policemen’s Annuity & Benefit Fund of the City of Milwaukee v. City of Milwaukee, 630 N.W.2d 236 (Wis. Ct. App. 2001) ...... 170, 171 Portales Nat’l Bank v. Ribble, 75 P.3d 838 (N.M. Ct. App. 2003) ...... 179, 180 Poultry Producers of Southern Cal., Inc. v. Barlow, 208 P. 93 (Cal. 1922) ...... 59

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Powell v. Campbell, 912 So. 2d 978 (Miss. 2005) ...... 161 Prestressed Concrete, Inc. v. Bladholm Bros. Culvert Co., 498 N.W.2d 274 (Minn. Ct. App. 1993) ...... 129 Princeton Ins. Agency, Inc. v. Erie Ins. Co., 690 S.E.2d 587 (W. Va. 2009) ...... 149, 150 Privette v. Univ. of N.C., 385 S.E.2d 185 (N.C. Ct. App. 1989) ...... 141 Prohias v. AstraZenica Pharmaceuticals, 958 So. 2d 1054 (Fla. Dist. Ct. App. 2007) ...... 65 Prudential Ins. Co. of Am. v. Couch, 376 S.E.2d 104 (W. Va. 1988) ...... 169 Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 614 F.3d 57 (3d Cir. 2010) ...... 115 Raven Indus., Inc. v. Topcon Positioning Sys., 2009 U.S. Dist. LEXIS 85727 (D.S.D. Sept. 18, 2009)...... 166 Rawlings v. Rawlings, 240 P.3d 754 (Utah 2010) ...... 168 Realmark Devs., Inc. v. Ranson, 542 S.E.2d 880 (W. Va. 2000) ...... 100 Realmark Devs., Inc. v. Ranson, 588 S.E.2d 150 (W. Va. 2003) ...... 169 Rev O, Inc. v. Woo, 725 S.E.2d 45 (N.C. App. 2012) ...... 165 Reynolds v. Cal. Dental Serv., 246 Cal. Rptr. 331 (Cal. Ct. App. 1988) ...... 59, 119, 120 Ridley v. Jim Walter Corp., 158 S.E.2d 869 (N.C. 1968) ...... 87 Ringier Am., Inc. v. Land O’Lakes, Inc., 106 F.3d 825 (8th Cir. 1997) ...... 160 RLH Indus., Inc. v. SBC Commc’ns, Inc., 35 Cal. Rptr. 469 (Cal. Ct. App. 2005) ...... 60, 173 Roberson v. Medtronic, Inc., 494 F. Supp. 2d 864 (W.D. Tenn. 2007) ...... 146 Rollins, Inc. v. Butland, 951 So. 2d 860 (Fla. Dist. Ct. App. 2006) ...... 122, 124, 174, 176 Romero v. Philip Morris, Inc., 242 P.3d 280 (N.M. 2010) ...... 137, 138

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Ron Medlin Constr. v. Harris, 704 S.E.2d 486 (N.C. 2010) ...... 165 Rose v. Vulcan Materials Co., 194 S.E.2d 521 (N.C. 1973) ...... 141 Santagate v. Tower, 833 N.E.2d 171 (Mass. App. Ct. 2005) ...... 69 Savage v. Walker, 969 A.2d 121 (Vt. 2009) ...... 97, 168 Schaaf v. Residential Funding Corp., 517 F.3d 544 (8th Cir. 2008) ...... 160 Schauer v. Morse Operations, Inc., 5 So. 3d 2 (Fla. Dist. Ct. App. 2009) ...... 176 Schwittay v. Sheboygan Falls Mut. Ins. Co., 630 N.W.2d 772 (Wis. Ct. App. 2001) ...... 171 ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544 N.W.2d 302 (Minn. 1996) ...... 73, 159 Slaby v. Fairbridge, 3 F. Supp. 2d 22 (D.D.C. 1998) ...... 174 Smith Mach. Co. v. Hesston Corp., 878 F.2d 1290 (10th Cir. 1989) ...... 80 Southard v. Visa USA, Inc., 734 N.W.2d 192 (Iowa 2007) ...... 125, 157 Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137 (Minn. Ct. App. 1992) ...... 160 Sperry v. Crompton Corp., 863 N.E.2d 1012 (N.Y. 2007) ...... 164 Sports & Travel Mktg. v. Chicago Cutlery Co., 811 F. Supp. 1372 (D. Minn. 1993) ...... 130 Staebler-Kempf Oil Co. v. Mac’s Auto Mart, Inc., 45 N.W. 2d 316 (Mich. Sup. Ct. 1951) ...... 128 Standard Oil Co. of Ky. v. State ex rel. Attorney Gen., 65 So. 468 (Miss. 1914) ...... 131 Stapel v. Stapel, No. 2009AP1195, 2010 WL 2757237 (Wis. Ct. App. July 14, 2010) ...... 171 State ex rel. Cooper v. McClure, No. 03 CVS 5617, 2007 NCBC LEXIS 24 (N.C. Sup. Ct. July 19, 2007) ...... 141 State ex rel. Douglas v. Associated Grocers, 332 N.W.2d 690 (Neb. 1983) ...... 134, 178

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State ex rel. Educ. Assessments Sys., Inc. v. Coop. Educ. Servs. of N.M., Inc., 848 P.2d 1123 (N.M. Ct. App. 1993) ...... 136 State ex rel. Spitzer v. Daicel Chem. Indus., Ltd., 840 N.Y.S.2d 8 (N.Y. App. Div. 2007) ...... 164 State ex rel. Taggart v. Holcomb, 116 P. 251 (Kan. 1911) ...... 127 State ex. rel. Palmer v. Unisys Corp., 637 N.W.2d 142 (Iowa 2001) ...... 67, 157 State v. Ariz. Pension Planning, 739 P.2d 1373 (Ariz. 1987) ...... 153 State v. Heritage Realty, 407 A.2d 509 (Vt. 1979) ...... 148 State v. Ray Bell Oil Co., 683 P.2d 50 (N.M. Ct. App. 1983) ...... 136 State v. Second Judicial Dist. Court in & for Washoe County, 241 P. 317 (Nev. 1925) ...... 163 State v. Shadbolt, 590 N.W.2d 231 (S.D. 1999) ...... 90 State v. Trevino, 807 N.W.2d 211 (N.D. 2011) ...... 87, 143 Suburban Motors of Grafton, Inc. v. Forester, 396 N.W.2d 351 (Wis. Ct. App. 1986) ...... 171 Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., 370 U.S. 19 (1962) ...... 11, 16, 28, 31 Sweeney v. DeLuca, No. 042338, 2006 WL 936688 (Mass. Super. Ct. Mar. 16, 2006) ...... 158 T.B. Allen & Assocs. v. Euro-Pro Operating LLC, Civ. No. 11-3479, 2012 WL 2508021 (D. Minn. June 28, 2012) ...... 160 Taylor v. United Mgmt., Inc., 51 F. Supp. 2d 1212 (D.N.M. 1999) ...... 180 Tenn. ex rel. Att’y Gen. v. Burley, 2 Tenn. App. 674 (Tenn. Ct. App. 1926) ...... 91 Tesmer v. Dowd, No. 88-0781, 1989 WL 65273 (Wis. Ct. App. Apr. 5, 1989) ...... 171 Three Phoenix Co. v. Pace Indus., Inc., 659 P.2d 1258 (Ariz. 1983) ...... 117 Toledo Mack Sales & Serv., Inc. v. Mack Trucks, Inc., 386 F. App’x 214 (3d Cir. 2010) ...... 47

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Topaz Mut. Co. v. Marsh, 108 Nev. 845 (1992) ...... 163 Topaz Mut. Co. v. Marsh, 839 P.2d 606, 613 (Nev. 1992) ...... 79 Treasure Valley Potato Bargaining Ass’n v. Ore-Ida Foods, Inc., 497 F.2d 203 (9th Cir. 1974) ...... passim Truong v. Allstate Ins. Co., 227 P.3d 73 (N.M. 2010) ...... 179 Tudor Dev. Grp., Inc. v. U.S. Fidelity & Guar. Co., 968 F.2d 357 (3d Cir. 1992) ...... 156 U.S. Fid. & Guar. Co. v. U.S. Sports Specialty Ass’n, 270 P.3d 464 (Utah 2012) ...... 96, 168 U.S. Fire Ins. Co. v. Minn. State Zoological Bd., 307 N.W.2d 490 (Minn. 1981) ...... 160 U.S. v. Arnold, Schwinn & Co., 388 U.S. 365 (1967) ...... 106 U.S. v. Dairymen, Inc., 660 F.2d 192 (6th Cir. 1981) ...... 2, 32 Union Nat’l Life Ins. Co. v. Crosby, 870 So.2d 1175 (Miss. 2004) ...... 162 Uniroyal, Inc. v. Hoff & Thames, Inc., 511 F. Supp. 1060 (S.D. Miss. 1981) ...... 133 United Dairymen of Arizona v. Schugg, 128 P.3d 756 (Ariz. Ct. App. 2006) ...... 32, 153 United States v. Borden Co., 308 U.S. 188 (1939) ...... 11 United States v. Brown Univ., 5 F.3d 658 (3d Cir. 1993) ...... 110, 113 United States v. Dairy Farmers of Am., Civ. A. 00-1663, 2000 WL 33200552, 2001-1 Trade Cases (CCH) (E.D. Pa. Nov. 3, 2000) ...... 13 United States v. Dairymen, 1978-1 Trade Cases (CCH) (W.D. Ky. 1978) ...... 31, 46 United States v. Hinote, 823 F. Supp. 1350 (S.D. Miss. 1993) ...... 20, 21 United States v. King, 229 F. 275 (D. Mass. 1915) ...... 46 United States v. King, 250 F. 908 (D. Mass. 1916) ...... 46

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United States v. Md. Coop. Milk Producers, Inc., 145 F. Supp. 151 (D.D.C. 1956) ...... 29 United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940) ...... 148 USX Corp. v. Adriatic Ins. Co., 99 F. Supp. 2d 593 (W.D. Pa. 2000) ...... 2, 51 Vereen v. Clayborne, 623 A.2d 1190 (D.C. 1993) ...... 155 Vermont Mobile Home Owners’ Ass’n., Inc. v. LaPierre, 94 F. Supp. 2d 519 (Vt. 2000) ...... 148 Vincent v. Ameriquest Mortgage Co., 381 B.R. 564 (Bankr. D. Mass. 2008) ...... 159 Vital Learning Corp. v. Talent Plus, Nos. A-10-1018, A-10-1019, 2012 WL 223910 (Neb. Ct. App. Jan. 24, 2012) ...... 162 Wagley v. Colonial Baking Co., 208 Miss. 815 (Miss. 1950) ...... 132 Walker v. Fleetwood Homes of N.C., Inc., 653 S.E.2d 393 (N.C. 2007) ...... 141 Walker v. U–Haul Co. of Miss., 734 F.2d 1068 (5th Cir. 1984) ...... 131, 133 Wang Elec., Inc. v. Smoke Tree Resort, LLC, No. 1 CA-CV 11-0387, 2012 Ariz. App. LEXIS 120 (Ariz. App. July 31, 2012) ...... 153 Watkins v. Omni Life Science, Inc., No. 09-10857, 2010 WL 809820 (D. Mass. Mar. 9, 2010) ...... 158 Watts v. Watts, 405 N.W.2d 303 (Wis. 1987) ...... 170 Webster v. Royal Caribbean Cruises, Ltd., 124 F. Supp. 2d 1317 (S.D. Fla. 2000) ...... 156 Wedgewood Inv. Corp. v. Int’l Harvester Co., 613 P.2d 620 (Ariz. Ct. App. 1979) ...... 118 Whitehaven Cmty. Baptist Church v. Holloway, 973 S.W.2d 592 (Tenn. 1998) ...... 93 Williams v. Purdue Pharma Co., 297 F. Supp. 2d 171 (D.D.C. 2003) ...... 174 Willis v. Rehab Solutions, PLLC, 82 So.3d 583 (Miss. 2012) ...... 161 Wittenberg v. First Indep. Mortg. Co., 2011 WL 1357483 (N.D. W. Va. Apr. 11, 2011) ...... 100

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Wrede v. Exch. Bank of Gibbon, 531 N.W.2d 523 (Neb. 1995) ...... 77, 78 Wright v. Honeywell Int’l, Inc., 989 A.2d 539 (Vt. 2009) ...... 147, 148, 182 X.L.O. Concrete Corp. v. Rivergate Corp., 634 N.E.2d 158 (N.Y. 1994) ...... 140 Yocherer v. Farmers Ins. Exch., 643 N.W.2d 457 (Wis. 2002) ...... 172 Zinter v. Univ. of Minn., 799 N.W.2d 243, 247 (Minn. Ct. App. 2011) ...... 159 STATUTES

12 U.S.C. §§ 1141-1141j (2006) ...... 4, 8, 10 15 U.S.C. § 17 ...... passim 15 U.S.C. § 521 (2006) ...... 4, 20, 35 15 U.S.C., §1 ...... passim 7 U.S.C. § 2301 (2006) ...... 5, 8 7 U.S.C. § 455 (2006) ...... 1, 4, 5, 9 7 U.S.C. § 601-624 (2006) ...... 4 7 U.S.C. §§ 291-92 ...... passim 9 V.S.A. § 2453(a) ...... 182 Ariz. Rev. Stat. §§ 44-1401 to -146 (2012) ...... 117, 118 Ariz. Rev. Stat. Ann. § 10-2001...... 57 Ariz. Rev. Stat. Ann. § 10-2004...... 57 Ariz. Rev. Stat. Ann. § 10-2006...... 57 Ariz. Rev. Stat. Ann. § 10-2014...... 57 Ariz. Rev. Stat. Ann. § 10-2019...... 57 Ariz. Rev. Stat. Ann. § 10-2020...... 57 Ariz. Rev. Stat. Ann. § 10-2022...... 57 Cal. Bus. & Prof. Code § 17200 et seq...... 60, 154 Cal. Bus. & Prof. Code §§ 16700-70 (2012) ...... 119, 172 Cal. Bus. & Prof. Code §16720 et seq ...... 59, 60 Cal. Food & Agric. Code § 54231 ...... 18 Cal. Food and Agric. Code § 54001 et seq...... 58, 59, 60 D.C. Code § 28-3901 et seq...... 61, 62, 173, 174

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D.C. Code § 28-4504 ...... 61 D.C. Code § 28-4518 ...... 61 D.C. Code §§ 28-4501 to -4518 (2012) ...... 121, 122 Fla. Stat. § 501.212 ...... 63, 64 Fla. Stat. § 542.20 ...... 63 Fla. Stat. § 542.32 ...... 124 Fla. Stat. §§ 618.01-.28 ...... 62, 63, 64 Fla. Stat. §§ 619.01-.09 ...... 62, 63, 64 Iowa Code § 553.2 ...... 66, 125 Iowa Code § 553.6 ...... 65, 66 Iowa Code §§ 553.1-.19 ...... 124, 125 Kan. Stat. Ann. §§ 17-1601 to -1643 (2012) ...... 67, 68 Kan. Stat. Ann. §§ 50-101 to -162 ...... 126, 127 Mass. Gen. Laws ch. 93, § 7 ...... 69 Mass. Gen. Laws ch. 93A §§ 1-11 ...... 127, 128, 177 Mass. Gen. Laws. ch. 93A, §§ 2, 11 ...... 69 Mich. Comp. Laws §§ 445.771-.788 ...... 128, 129 Mich. Comp. Laws Ann. § 290.701, et. seq...... 70 Minn. Stat. § 308A.032 ...... 72 Minn. Stat. § 308A.131 ...... 72 Minn. Stat. § 308A.205 ...... 71, 72 Minn. Stat. § 325D.55 ...... 71, 72 Minn. Stat. §§ 325D.49 - .66 ...... 129 Miss. Code § 75-21-5 ...... 74 Miss. Code § 79-17-1 et seq...... 74, 75 Miss. Code § 79-19-1 et seq...... 75, 76 Miss. Code § 79-4-15 ...... 75 Miss. Code Ann. § 75-21-1 ...... 130, 131 Miss. Code Ann. § 75-21-9 ...... 133 N.C. Gen. Stat. §§ 75-1 to -42 ...... 140, 141, 180 N.C.G.S. § 54-129, et seq...... 86 N.D. Cent. Code § 10-15-52 ...... 89 N.D. Cent. Code § 10-15-59 ...... 88 xxx

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N.D. Cent. Code § 51-08.1 ...... 142 N.D. Cent. Code, § 10-15-51 ...... 89 N.D. Cent. Code, § 51-08.1-04 ...... 87 N.M. Stat. § 57-1-1 ...... 136, 137, 138 N.M. Stat. § 57-1-15 ...... 79, 137, 138 N.M. Stat. § 57-12-1 ...... 81 N.M. Stat. § 57-12-2 ...... 82, 179, 180 N.M. Stat. § 57-12-3 ...... 179 N.M. Stat. § 57-1-3(A) ...... 136 N.M. Stat. § 57-1-4 ...... 79, 80, 81 N.M. Stat. § 76-12-1 to -23 ...... 80, 81 N.M. Stat. § 76-12-11 ...... 18 N.Y. Coop. Corp. Law § 11 ...... 83, 84 N.Y. Coop. Corp. Law § 110 ...... 83, 84 N.Y. Coop. Corp. Law § 111 ...... 83, 84, 85 N.Y. Coop. Corp. Law § 112 ...... 85 N.Y. Coop. Corp. Law § 13 ...... 84 N.Y. Coop. Corp. Law § 15 ...... 83 N.Y. Coop. Corp. Law § 3 ...... 85 N.Y. Coop. Corp. Law § 4 ...... 84 N.Y. Coop. Corp. Law § 76 ...... 84 N.Y. Gen. Bus. Law § 340 ...... 82 N.Y. Gen. Bus. Law § 340 et. seq...... 138, 139, 140 Neb. Rev. Stat. § 59-1601 to -1622 ...... 134, 178 Neb. Rev. Stat. § 59-1618 ...... 76, 77 Neb. Rev. Stat. § 59-829 ...... 134, 178 Nev. Rev. Stat. §§ 598A.010 - .280 ...... 135 Nev. Rev. Stat. 598A.010 et seq...... 78 Nev. Rev. Stat. 598A.040 ...... 78 S.D. Codified Laws § 37-1-22 ...... 89, 90 S.D. Codified Laws § 37-1-3.4 ...... 89 S.D. Codified Laws §§ 37-1-3.1 to -33 (2012) ...... 143, 144 Tenn. Code Ann. § 43-16-101, et seq...... 91, 92 xxxi

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Tenn. Code Ann. § 43-38-101, et seq...... 91 Tenn. Code Ann. § 47-25-101 to -112 ...... 145, 146 Utah Code § 3-1-1 to -46 ...... 94, 95 Utah Code § 3-1-10(2)(a)...... 18 Utah Code §§ 76-10-911 to -926 ...... 93 Utah Code Ann. §§ 76-10-911 to -926 ...... 146, 147 Vt. Stat. Ann. tit. 11 ...... 96, 97 Vt. Stat. Ann. tit. 9, §§ 2451-2480r ...... 147, 148 W. Va. Code § 19-4-1 et seq...... 98, 99 W. Va. Code §§ 47-18-1 to -23 ...... 149 Wis. Stat. § 133.01 - .18...... 150 Wis. Stat. § 133.07(1) ...... 100, 101, 103 Wis. Stat. § 185 ...... 100, 101, 102 Wis. Stat. § 193 ...... 101 OTHER AUTHORITIES

59 Cong. Rec. 7851 ...... 7 59 Cong. Rec. 7851 (1920) ...... 71 59 Cong. Rec. 7852 (1920) ...... 22 59 Cong. Rec. 8034 (1920) ...... 4 60 Cong. Rec. 2225 (1922) ...... 41 60 Cong. Rec. 2453 (1922) ...... 26 60 Cong. Rec. 312 (1920) ...... 42 61 Cong. Rec. 1033 (1921) ...... 41 61 Cong. Rec. 1043 (1921) ...... 42 62 Cong. Rec. 2163 (1922) ...... 22 62 Cong. Rec. 2052 (1922) ...... 15 62 Cong. Rec. 2057 (1922) ...... 41 62 Cong. Rec. 2058 (1922) ...... 8, 37 62 Cong. Rec. 2059 (1922) ...... 37, 40 62 Cong. Rec. 2121 (1922) ...... 22 62 Cong. Rec. 2156 (1922) ...... 24 62 Cong. Rec. 2163 (1922) ...... 22

xxxii

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62 Cong. Rec. 2262 (1922) ...... 41 78 Cong. Rec. 9175 (1934) ...... 38 ABA Section of Antitrust Law, Handbook on the Antitrust Aspects of Standard Setting (2011) ...... 111 Christine A. Varney, The Capper-Volstead Act, Agricultural Cooperatives, and Antitrust Immunity, The Antitrust Source, Dec. 2010 ...... 36 Donald A. Frederick, Managing Cooperative Antitrust Risk, USDA Cooperative Information Report (38) (May 1989) ...... 39 Donald A. Frederick, The Antitrust Status of Farmer Cooperatives: The Story of the Capper-Volstead Act, USDA Cooperative Information Report (59) (Sept. 2002) ...... 39, 40 Donald A. Frederick, What it means to “market” milk, Legal Corner, USDA Rural Cooperatives (March/April 2006) ...... 39 Federal Trade Commission, Central California Lettuce Producers Cooperative, No. 8970 (March 13, 1975) ...... 33 H. Rep. 24, 67th Cong., 1st Sess...... 8 Kenneth O’Rourke & Andrew Frackman, The Capper-Volstead Act Exemption and Supply Restraints in Agricultural Antitrust Actions, Vol. 19, No. 2, Competition, The J. of the Antitrust and Unfair Competition Law Section of the State Bar of Cal. (2010) ...... 43 Letter from Keith Collins, Chief Economist, USDA, to Deborah A. Garza, Antitrust Modernization Commission (July 15, 2005) ...... 42 Michael P. Waxman, Wisconsin Antitrust Law: Outsourcing the Legal Standard, 94 Marq. L. Rev. 1173 (2011) ...... 151 Minnesota Antitrust Law of 1971: Interpretation and Analysis, 63 Minn. L. Rev. 907 (1979) ...... 71 Model Jury Instructions in Civil Antitrust Cases, ABA Section of Antitrust Law (2005) ...... 48 N.D. State Bd. of Higher Educ. v. NCAA, No. 18-06-C-01333 ...... 88 Phillip E. Areeda & H. Hovenkamp, Antitrust Law (3d ed. 2007) ...... 43, 111, 112, 113 Restatement (First) of Restitution § 107(1) ...... 156, 158 Supervalu, Inc., Corporate Social Responsibility Report 2012 ...... 44 U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition 33 (2007) ...... 112 Webster’s Third New International Dictionary (Unabridged) (Merriam-Webster 1981) ...... 27

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TAB I

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I. Introduction

Plaintiffs in these consolidated actions contend that two organizations, United Egg

Producers (“UEP”) and United States Egg Marketers (“USEM”), and the defendant companies

are liable for per se violations of Section 1 of the Sherman Act, 15 U.S.C. §1, as a result of a conspiracy to increase the price of eggs by suppressing their supply. Plaintiffs challenge basically two categories of conduct: (a) defendants’ alleged agreements to decrease the supply

of eggs by implementing flock reductions, early molt and disposal plans, and exports; and (b) the

adoption and operation of a program certifying compliance with the UEP animal welfare

guidelines (the “Certified Program”) and certain defendants’ election to comply with the

Certified Program. As discussed below, defendants have many defenses to plaintiffs’ claims.

The challenged conduct is exempt from antitrust scrutiny under three federal agricultural

cooperative immunities, Section 6 of the Clayton Act of 1914, 15 U.S.C. § 17; the Capper-

Volstead Act of 1922, 7 U.S.C. §§ 291-92; and the Cooperative Marketing Act of 1926, 7 U.S.C.

§ 455. As the evidence will show, UEP was formed in 1968 and now has approximately 170

members. During the time period at issue, it provided a wide variety of services to its members.

It, for example, disseminated food safety information; lobbied before various governmental

authorities; provided information to assist with compliance with environmental standards; and

based in part on publicly available information from the USDA and other sources, compiled,

analyzed, and distributed information on egg prices, supply, and costs. During the time period at

issue, USEM made export sales during periods in which its members believed an opportunity to

sell to purchasers outside the United States was attractive.

As explained fully in Section II below, under Section 6 of the Clayton Act and the

Capper-Volstead Act, UEP, USEM, and their members are entitled to join together and make

decisions concerning production and sale of their products as if they were a single corporation.

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See Md. & Va. Milk Producers Ass’n v. United States, 362 U.S. 458, 466 (1960).1 Courts have repeatedly held that agricultural cooperatives that meet the structural requirements set forth under the Capper-Volstead Act are authorized to fix the prices at which their products will be sold and to agree upon the amounts they will produce. See, e.g., Fairdale Farms v. Yankee Milk,

635 F.2d 1037, 1040 (2d Cir. 1980), cert. denied, 454 U.S. 818 (1981) (internal citations omitted); Ewald Bros., Inc. v. Mid-Am Dairymen, Inc., 877 F.2d 1384 (8th Cir. 1989); Holly

Sugar v. Goshen Cnty. Coop. Beet Growers Ass’n., 725 F.2d 564, 566, 569 (10th Cir. 1984); U.S. v. Dairymen, Inc., 660 F.2d 192, 194 (6th Cir. 1981).2 Furthermore, the defendants’ good-faith

belief that their conduct was exempt from the antitrust laws, and constituted exactly the type of

cooperative effort to manage supply that the United States Department of Agriculture has

repeatedly encouraged, precludes a finding of liability and precludes the imposition of damages.

See In re Lower Lake Erie Iron Ore Antitrust Litig., 759 F. Supp. 219, 225 (E.D. Pa. 1991)

(Fullam, J.) aff’d in part and rev’d in part as to other issues, 998 F.2d 1144 (3d Cir. 1993);

Consol. Express, Inc. v. New York Shipping Ass’n, Inc. 602 F.2d 494 (3d Cir. 1979); vacated on

other grounds, 448 U.S. 902 (1980); Feather v. United Mine Workers of Am., 711 F.2d 530 (3d

Cir. 1983); USX Corp. v. Adriatic Ins. Co., 99 F. Supp. 2d 593 (W.D. Pa. 2000).

Moreover, apart from the agricultural antitrust immunity statutes, the UEP Certified

Program is standard-setting conduct of the sort that is not per se unlawful and is regularly upheld

by courts as pro-competitive. Participation in the Certified Program is voluntary, consumers still

1 State agricultural immunities similarly bar the Indirect Purchaser Plaintiffs’ (the “IPPs”) attempts to challenge defendants’ conduct under various state laws. We address those state law immunities in Section III below. 2 Only one court has, in advisory guidance, opined that some forms of joint supply control are not permissible under Capper-Volstead. See In re Fresh & Process Potatoes Antitrust Litig., 834 F. Supp. 2d 1141 (D. Idaho 2011). There, the court suggested that post-production supply control agreements should be permissible while pre-production should not. As we explain in Section II(D)(4), there is no statutory language, case law, legislative history, or common sense to support creation of such a novel and artificial distinction.

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have many non-Certified options to consider when purchasing eggs, and the Program’s animal welfare guidelines are based on recommendations from a distinguished expert panel of scientists and are pro-competitive responses to the demands of many sophisticated customers. For example, some of the Direct Action Plaintiffs participated in the development of the Certified

Program guidelines, applauded their adoption, demanded expedited implementation of the guidelines, and continue to insist on purchasing only eggs produced in compliance with the

Certified Program. Defendants set forth the law applicable to standard-setting of the type exemplified in the Certified Program in Section IV below.3

3 State law addressing standard-setting activity is addressed in Section V below.

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TAB II

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II. Federal Agricultural Cooperative Immunity Defenses

A. Overview

There are several federal statutes that combine to provide antitrust immunity to

agricultural cooperatives and their members. These laws reflect Congress’ intent to empower

farmers to work collectively as unified entities because of the recognition that they are subject to the vagaries of weather, disease, infestation, and the perennial problem of overproduction—all of which cause farmers to face uncertainty in their advance planning regarding production and the amounts of inputs to purchase, and their ultimate sale price. Compounding these problems is the bargaining power of large corporate entities in the highly concentrated food processing market, which possess the power to dictate the prices at which farmers sell their products and to wield the threat of spoilage that farmers face for their perishable products if they attempt to hold out in

negotiations against buyers.4 For many if not most farmers, going it alone is not a viable option.

Congress therefore enacted a series of federal statutes providing antitrust immunity to

agricultural cooperatives, their members, and their agents, such as common marketing agents.

The seminal laws are: Section 6 of the Clayton Act, the Capper-Volstead Act, and the

Cooperative Marketing Act.5

The factors that led to the enactment of these agricultural antitrust immunities still apply today, and with equal if not greater force. Increasing consolidation in the processing, wholesale, and retail levels of the food industry continues unabated and has been well documented by the

4 See, e.g., 59 Cong. Rec. 8034 (1920) (statement of Rep. Alben Barkley (D-KY)). 5 See also Fishermen’s Collective Marketing Act of 1934, 15 U.S.C. § 521 (2006) (providing a matching immunity to fisherman and aquatic producers as provided by the Capper-Volstead Act to terra firma producers); the Agricultural Marketing Act of 1929, 12 U.S.C. §§ 1141-1141j (2006) (adding various provisions intended to encourage cooperative marketing of agricultural commodities); the Agricultural Adjustment Act of 1933, 7 U.S.C. § 601-624 (2006) (authorizing Secretary of Agriculture “to enter into marketing agreements with processors, producers, associations of producers, and others engaged in the handling of any agricultural commodity” and providing that “[t]he making of any such agreement shall not be held to be in violation of any of the antitrust laws of the United States, and any such agreement shall be deemed to be lawful”).

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USDA.6 Congress emphasized in a Congressional finding that “[t]he efficient production and

marketing of agricultural products by farmers and ranchers is of vital concern to their welfare and to the general economy of the Nation. . . . [T]he marketing and bargaining position of individual farmers will be adversely affected unless they are free to join together voluntarily in

cooperative organizations as authorized by law. Interference with this right is contrary to the

public interest . . .” Agricultural Fair Practices Act of 1967, 7 U.S.C. § 2301 (2006). The

statutory agricultural immunities are needed in the modern era, and Congress has continued to

support its original intent in enacting them.

This section first will introduce the Clayton Act, the Capper-Volstead Act, and the

Cooperative Marketing Act. It will focus specifically on the case law applying these statutes,

primarily the Capper-Volstead Act, beginning with a review of the relevant Supreme Court and

Third Circuit cases, and then turn to broader authorities governing the structural requirements of

these laws, their permitted and prohibited conduct, and defenses to claims of non-conformity

with their requirements.

1. Section 6 of The Clayton Act of 1914

Congress enacted Section 6 of the Clayton Act in 1914 as its first legislative act to

provide agricultural cooperatives and their members with an important immunity from the

antitrust laws.7 It states:

6 John R. Dunn et al., Agricultural Cooperatives in the 21st Century, USDA Rural Business-Cooperative Service, Cooperative Information Report 60, at 4 (Nov. 2002) (“Consolidation of firms at the processing, wholesale, and retail levels of the U.S. food marketing system continues unabated. Market influence and bargaining strength of even the largest cooperatives are limited as a consequence.”) ; available at http://www.rurdev.usda.gov/RBS/pub/cir-60.pdf (Last accessed Oct. 1, 2012); see also, e.g., J. Michael Harris et al., The U.S. Food Marketing System 2002, USDA Agricultural Economic Report No. 811 at 2, 6, 15, 17-19, 26-28, 32- 33 (updated Aug. 1, 2002), available at http://www.ers.usda.gov/publications/aer811/aer811.pdf (Last accessed Oct. 1, 2012). 7 Nat’l Broiler Mktg. Ass’n v. United States, 436 U.S. 816, 824 (1978); Md. & Va. Milk Producers Ass’n v. United States, 362 U.S. 458, 466 (1960).

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… Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.8

Section 6 of the Clayton Act provides the following immunity from prosecution under the antitrust laws: The existence of non-stock, non-profit agricultural organizations created for the

purpose of mutual help is not per se illegal, and, further, their members should not face antitrust

scrutiny “for combining to carry out the legitimate objects of the organization.” N. Cal.

Supermarkets, Inc. v. Cent. Cal. Lettuce Producers Co-op., 413 F. Supp. 984, 988 (N.D. Cal.

1976), aff’d based on reasoning of opinion below, 580 F.2d 369 (9th Cir. 1978), cert. denied,

439 U.S. 1090 (1979). Moreover, “[t]he structural requirements for Section 6 exemptions are not

stringent: An agricultural organization without capital stock, instituted for mutual self-help and

not conducted for profit, qualifies for the exemption.” Id. “Section 6 and Capper-Volstead,

although overlapping, are separate and independent sources of protection.” Id. at 991, 992 n.7.

The Act continues in force today and applies to the activities of non-stock and non-profit

cooperatives. E.g., id. at 994 (“… Central’s activities are protected from antitrust attack by both

Capper-Volstead and Section 6, since it is doing no more than carrying out the legitimate objects

of an agricultural organization.”). We note that UEP and USEM are non-stock and non-profit

cooperatives and thus entitled to the protection of Section 6 of the Clayton Act.

Section 6 of the Clayton Act did not, however, provide sufficient scope for different

forms of corporate organization for cooperatives. In particular, it did not permit farmers to form

8 Clayton Act § 6, 15 U.S.C. § 17 (2006).

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cooperatives with capital stock.9 Therefore, Congress enacted the Capper-Volstead Act in 1922.

The Capper-Volstead Act expanded upon Section 6 of the Clayton Act and provided additional

clarity about the types of activities in which cooperatives can legally engage.10

2. The Capper-Volstead Act of 1922

The Capper-Volstead Act of 1922, 7 U.S.C. §§ 291-92 (2006)(“the Act”), extends broad protection for agricultural producers to engage in cooperative production and marketing efforts.

See GVF Cannery, Inc. v. Cal. Tomato Growers Ass’n, 511 F. Supp. 711, 713 (N.D. Cal. 1981)

(“The courts have broadly interpreted this statute to afford farmers’ associations significant exemptions from the antitrust laws.”) (collecting cases). The Act provides a broad immunity from the antitrust laws and forms the basis for thousands of agricultural cooperatives currently in operation in the United States. Specifically, it provides that:

Persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut or fruit growers may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing in interstate and foreign commerce, such products of persons so engaged. Such associations may have marketing agencies in common; and such associations and their members may make the necessary contracts and agreements to effect such purposes: Provided, however, That such associations are operated for the mutual benefit of the members thereof, as such producers, and conform to one or both of the following requirements: First. That no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein, or, Second. That the association does not pay dividends on stock or membership capital in excess of 8 per centum per annum. And in any case to the following:

9 15 U.S.C. § 17. 10 See 59 Cong. Rec. 7851 (“[T]he provision in the Clayton Antitrust Act . . . has raised the question as to whether or not associations of farmers engaged in collectively marketing their products are illegal under the Federal antitrust laws. The object of [this] bill is to make it clear that persons engaging in the production of agricultural products may form corporations or associations, either with or without capital stock, and may engage in collectively marketing their products.”)

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Third. That the association shall not deal in the products of nonmembers to an amount greater in value than such as are handled by it for members.

7 U.S.C. § 291.

The Capper-Volstead and the Clayton Act’s antitrust exemption, as reinforced by related

legislation, grants cooperatives, whose member/owners are farmers, the same basic

organizational protection accorded to corporations. 7 U.S.C. §§ 291-92; 15 U.S.C. § 17. By

doing so, farmers were granted the same protection and advantage of the corporate umbrella as

was the case with corporations and their stockholders. The legislation and its legislative history

make it clear that, under the cooperative structure, farmers could not be challenged as conspirators under the antitrust laws, similar to the protection granted to a single “ordinary business corporation[].” H. Rep. 24, 67th Cong., 1st Sess. at 2; 62 Cong. Rec. 2058-59 (1922).

As emphasized by the Supreme Court:

This [the cooperative antitrust exemption] indicates a purpose to make it possible for farmer-producers to organize together, set association policy, fix prices at which their cooperative will sell their produce, and otherwise carry on like a business corporation without thereby violating the antitrust laws.

Md. & Va. Milk Producers Ass’n., 362 U.S. at 466-67.

This cooperative exemption is part of the broad public policy, reflected in a series of

Congressional enactments, designed to protect and assist farmers in dealing with the vagaries of

agricultural production, particularly the perennial challenges of overproduction, and the need to

confront the bargaining power of large buyers in highly concentrated markets. See, e.g.,

Cooperative Marketing Act of 1926, 7 U.S.C. § 455 (2006); the Agricultural Marketing Act of

1929, 12 U.S.C. § 1141(a), the Agricultural Fair Practices Act of 1967, 7 U.S.C. § 2301-06

(2006); Nat’l Broiler Marketing Ass’n v. United States, 436 U.S. 816, 824-27 (1978). This

statutory framework makes clear that “. . . agricultural cooperatives were a ‘favorite child of

Congressional policy.’” Fairdale Farms, 635 F.2d at 1043.

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3. The Cooperative Marketing Act of 1926

In 1926, Congress passed the Cooperative Marketing Act (“CMA”), which provides a

further antitrust immunity to agricultural cooperatives and their members. Section 5 of the CMA

states:

Persons engaged, as original producers of agricultural products, such as farmers, planters, ranchmen, dairymen, nut or fruit growers, acting together in associations, corporate or otherwise, in collectively processing, preparing for market, handling, and marketing in interstate and/or foreign commerce such products of persons so engaged, may acquire, exchange, interpret, and disseminate past, present, and prospective crop, market, statistical, economic, and other similar information by direct exchange between such persons, and/or such associations or federations thereof, and/or by and through a common agent created or selected by them.

7 U.S.C. § 455.

The CMA clarified that producers are permitted to exchange information with one another and that cooperatives and their members are allowed to work with third party agents in so doing. The CMA expressly applies to a broad range of data-gathering and data-exchange conduct. It also expressly states that this information exchange is permitted “by direct exchange

between such persons, and/or such associations or federations thereof, and/or by and through a

common agent created or selected by them.” 7 U.S.C. § 455. This Act emphasized that an

important aspect of cooperative marketing was the generation and dissemination of cost and

price, and supply and demand information to aid cooperatives and their members in combating

the problem of overproduction. Treasure Valley Potato Bargaining Ass’n v. Ore-Ida Foods,

Inc., 497 F.2d 203, 214-15 (9th Cir. 1974), cert. denied, 419 U.S. 999 (1974).

Congress has encouraged and authorized cooperatives and their members, without the fear of any antitrust legal challenge, to exchange price, statistical information concerning future production and crop prospects, and supply and demand data in order to deal with the perennial agricultural problem of overproduction. 67 Cong. Rec. 2775 (1926) (“This legislation will give

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to the . . . members of the various organizations the right to gather such information and to disseminate it among organizations and among themselves without being liable criminally for such acts. It will, in my opinion, tend to do away with the great problem that has confronted us and now confronts us, namely, the problem of overproduction”).

The language of the 1926 Act is not by its terms limited to associations or cooperatives

that structurally meet the requirements of the Capper-Volstead Act. 7 U.S.C. § 291. Indeed, the

language indicated that farmers can act in common without the umbrella of such organizations to

gather and share important supply/demand information.

The Agricultural Marketing Act of 1929 (codified as part of the Farm Credit Act of 1933,

12 U.S.C. § 1141 (2006)), also reinforced the need to allow farmers and their cooperatives to

manage and control supply to avoid overproduction and surpluses:

. . . by aiding in preventing and controlling surpluses in any agricultural commodity, through orderly production and distribution . . . and prevent such surpluses from causing undue and exclusive fluctuations in prices for the commodity.

12 U.S.C. § 1141(a).

These statutes evince a compelling public policy intended to grant farmers protection against antitrust challenges, so that they can deal collectively with each other with the problems of overproduction and power buyers.

B. Capper-Volstead Decisions of the United States Supreme Court, U.S. Court of Appeals for the Third Circuit, and Third Circuit District Courts

The U.S. Supreme Court has directly addressed the Capper-Volstead Act on several occasions11:

11 In accordance with Case Management Order 19 and for the sake of completeness, we include in this section II(B) a comprehensive listing of the U.S. Supreme Court and U.S. Court of Appeals for the Third Circuit cases addressing the Capper-Volstead Act, even though many of these cases do not address issues in dispute in the case at bar. To (continued) 10

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(1) United States v. Borden Co., 308 U.S. 188 (1939) (holding that Capper-Volstead immunity did not extend to cover a widespread conspiracy among cooperative members and non-protected entities including distributors, labor officials, municipal officials, and others to control the price for not only the cooperative’s products but for all fluid milk in the Chicago area);

(2) Md. & Va. Milk Producers Ass’n v. United States, 362 U.S. 458 (1960) (holding that Capper-Volstead immunity did not extend to cover a cooperative interfering with shipments of nonmembers’ milk, boycotting a store to compel its owner to purchase milk from the defendant cooperative, compelling a dairy to buy its milk by using the dairy’s indebtedness to the cooperative as leverage, and taking other similar actions to prevent competing non-member producers and cooperatives from selling milk to any dealers, because these activities, among others the cooperative took, were “far outside the legitimate objects of a cooperative”);

(3) Sunkist Growers, Inc. v. Winckler & Smith Citrus Products Co., 370 U.S. 19 (1962) (holding that, under Section 6 of the Clayton Act and the Capper-Volstead Act, three cooperatives that worked together—even though they were separate entities—could not be considered independent parties capable of conspiring in violation of the Sherman Act, because “[t]o hold otherwise would be to impose grave legal consequences upon organizational distinctions that are of de minimis meaning and effect”);

(4) Case-Swayne Co., Inc. v. Sunkist Growers, Inc., 389 U.S. 384 (1967) (holding that packing houses not involved in any growing activity could not be members of a Capper- Volstead cooperative even if the cooperative was run such that the benefits of collective marketing inured to the growers, because “only actual producers of agricultural products” are covered by the Act; noting, but not challenging, the membership of many vertically integrated entities); and

(5) National Broiler Marketing Ass’n v. United States, 436 U.S. 816 (1978) (holding that for a cooperative to enjoy Capper-Volstead immunity, all its members must be qualified “producers” and that entities that “enter the production line only at its later processing stages” are not producers and may not be members of cooperatives; noting but not challenging, the membership of many vertically integrated entities).

The U.S. Court of Appeals for the Third Circuit has also addressed the Capper-Volstead

Act in several decisions. In Otto Milk Co. v. United Dairy Farmers Cooperative Ass’n, 388 F.2d

789 (3d Cir. 1967), United Dairy Farmers Cooperative conducted a secondary boycott of Otto

(continued)

the extent these authorities are relevant to the present litigation, they are discussed in more detail in the sections that follow.

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Milk, a raw milk purchaser that bought from competing producers rather than from the cooperative’s members. Members of the cooperative picketed Otto’s customers (retailers), pressuring them to stop buying from Otto Milk. 388 F.2d at 790-97. The cooperative also conspired with a non-Capper-Volstead-protected entity in doing so. Id. at 796-97. The Third

Circuit affirmed the district court’s holding that the boycott violated Sections 1 and 2 of the

Sherman Act and its grant of a permanent injunction against continuing the boycott. Id. at 799.

In so doing, the Third Circuit rejected the defendant’s Capper-Volstead defense—though without a great deal of discussion or analysis—in part because the cooperative, while undisputedly a properly formed Capper-Volstead cooperative, had conspired with a non-Capper-Volstead protected entity in committing its secondary boycott. See id. at 796-97.

In Knuth v. Erie-Crawford Dairy Cooperative Ass’n, 395 F.2d 420 (3d Cir. 1968), the defendant cooperative sold milk on behalf of its members (Pennsylvania milk producers) and also sold milk produced by non-Pennsylvania producers. A member of the cooperative sued the cooperative and several processors alleging various conspiracies to fix the price of milk and to avoid the Pennsylvania minimum price as well as a refusal to deal directly with the producers or buy milk from any sources not approved by the cooperative. 395 F.2d at 422-25. The court touched upon the Capper-Volstead Act only to “take occasion to note that Section 1 of the

Capper-Volstead Act does not authorize combinations or conspiracies between cooperatives and

[non-exempt entities]” and that “a cooperative may even be liable under the Sherman Act without proof of involvement of non-cooperatives if the activity under attack is predatory.” Id. at 423.

In In re Mushroom Direct Purchaser Antitrust Litigation, 655 F.3d 158 (3d Cir. 2011), the Third Circuit held that “a prejudgment order denying an agricultural cooperative the

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protections of the Capper-Volstead Act” was not immediately appealable under the collateral order doctrine. Id. at 161.12 The court held that it lacked jurisdiction over an interlocutory appeal from denial of the Capper-Volstead defense because the Act provides immunity from liability but not from civil suit.13 Id. at 167. Although it did not reach the merits of the Capper-

Volstead defense, the court called the issue of “whether the inadvertent inclusion of an ineligible member strips an agricultural cooperative of Capper-Volstead protection” “both serious and unsettled.” Id. at 164 n.4.

C. Structural Requirements for Capper-Volstead Immunity

Important structural factors relate to who qualify as farmers and what entities qualify as cooperatives. To benefit from the Capper-Volstead Act‘s protections, an agricultural cooperative must satisfy four structural and technical requirements: (a) all members of the cooperative must be “[p]ersons engaged in the production of agricultural products” or cooperatives composed of such producers (often referred to as “producers” or “farmers”); (b) the cooperative must operate for the mutual benefit of its members; (c) the cooperative must either operate on a one-member, one-vote basis or not issue dividends in excess of eight percent per year; and (d) the cooperative

12 There are other decisions within the Third Circuit dealing with or touching upon the Capper-Volstead Act, but none of them decided issues related to the Act’s applicability. See Cochran v. Veneman, 359 F.3d 263, 273 (3d Cir. 2004) (a First Amendment case, which mentioned in passing that “the Capper-Volstead Act . . . permits producers of agricultural products—including milk, mushrooms and others—to enter into manufacturing and marketing cooperatives without fear of violating antitrust laws.”), vacated on other grounds, Johanns v. Cochran, 554 U.S. 1058 (2005); Hudson Bay Co. Fur Sales Inc. v. Am. Legend Coop., 651 F. Supp. 819 (D.N.J. 1986) (holding that a marketing cooperative and its wholly owned subsidiary were a single entity for purposes of analyzing whether a conspiracy exists in violation of Section 1 of the Sherman Act, but expressly declining to reach the merits of the Capper-Volstead immunity defense because it found no antitrust violation); United States v. Dairy Farmers of Am., Civ. A. 00-1663, 2000 WL 33200552, 2001-1 Trade Cases (CCH) ¶ 73,136 (E.D. Pa. Nov. 3, 2000) (approving settlement between the Department of Justice and Dairy Farmers of America (DFA) concerning DFA’s purchase of a non-cooperative, SODIAAL). While the court made no decisions regarding the applicability or scope of the Capper-Volstead Act, the terms of the merger approval were premised on the Justice Department’s recognition that, due to the Capper-Volstead Act, “explicit collusion” between two Capper-Volstead cooperatives “would be legal and could not be challenged under the antitrust laws.” Competitive Impact Statement, at II(B)(3), 2001-1 Trade Cases ¶ 73,136, at 89,453. 13 In so holding, the court drew a distinction between civil suits (in which cooperatives have immunity only from liability, not from suit) and government prosecution (from which cooperatives are entirely immune). Id. at 167.

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must conduct more than half of its business, by value of agricultural product handled, with the

products of its members (the “50% rule”). 7 U.S.C. § 291. The requirement that all members be

“[p]ersons engaged in the production of agricultural products” is the most often litigated and has

been raised by Plaintiffs here.

1. The Definition of Producers Was Intended To Be Broad

The Capper-Volstead Act’s reference to “[p]ersons engaged in the production of

agricultural products,” was meant to be broad. The words “farmers, planters, ranchmen,

dairymen, nut or fruit growers” were not intended to be limiting words, but rather “descriptive of

the general subject.” Case-Swayne, 389 U.S. at 392 (quoting Sen. Cummins in the legislative history of the Act). Even though some drafters thought that “‘farmers’ would have covered them all,” “out of precaution, the descriptive words [farmers, planters, ranchmen, dairymen, nut or fruit growers] were added” to ensure that “[t]he bill covers farmers, people who produce farm products out of all kinds.” Id. (quoting Sen. Kellogg in the legislative history of the Act). This was done for the purpose of specifying that the Act covers a very broad range of all possible producers of all kinds of agricultural products.

In addition, courts and state statutes have made clear that a producer need not live on the land to qualify as a member of a Capper-Volstead cooperative. A producer can be the owner of farm land or a tenant farmer. Also, a producer can be a corporation, a partnership, or other corporate entity. Each of these forms is employed throughout U.S. agriculture and qualifies for membership in a Capper-Volstead cooperative. See infra Section II(C)(4); see also N. Cal.

Supermarkets, 413 F. Supp. at 992.

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2. Pure Processors Are the Only Group Congress Meant To Exclude

Congress intended to exclude only pure processors from the Capper-Volstead Act’s

protections, not farmers who also engage in some processing.14 Examining the legislative

history of the Act, the Supreme Court has stated that “clearly, Congress did not intend to extend

the benefits of the Act to processors and packers, to whom the farmers sold their goods, even

when the relationship was such that the processor and packer bore a part of the risk.” Nat’l

Broiler, 436 U.S. at 826-27. As such, the Court held that entities that “enter the production line

only at its later processing stages” are not producers within the meaning of the Capper-Volstead

Act. Nat’l Broiler, 436 U.S. at 822; see also Case-Swayne, 389 U.S. at 394-96.

The National Broiler Court made this determination by laying out the steps of raising

broiler chickens (chickens sold for meat) and analyzing the steps in that process in which the

various cooperative members participated. See 436 U.S. at 820-22. Specifically, the Court

identified the steps in the “production” of broiler chickens15 and then examined the production steps in which members of the cooperative, NBMA, engaged. It concluded that any member that

“owns neither a breeder flock nor a hatchery, and that maintains no grow-out facility at which the flocks to which it holds title are raised” was not a “producer” within the meaning of the

Capper-Volstead Act. Id. at 827. “The economic role of such a member in the production of broiler chickens is indistinguishable from that of the processor that enters into a preplanting

14 See 62 Cong. Rec. 2052 (1922) (Senator Cummins: “. . . Take the flouring mills of Minneapolis. They are engaged, in a broad sense, in the production of an agricultural product. The packers are engaged, in a broad sense, in the production of an agricultural product. The Senator does not intend by this bill to confer upon them the privileges which the bill grants, I assume?” Senator Kellogg: “Certainly not . . . .”). 15 The Court identified those steps as: “[1] the placement, raising, and breeding of breeder flocks to produce eggs to be hatched as broiler chicks; [2] the hatching of the eggs and placement of those chicks; [3] the production of feed for the chicks; [4] the raising of the broiler chicks for a period, not to exceed, apparently, 10 weeks; [5] the catching, cooping, and hauling of the ‘grown-out’ broiler chickens to processing facilities; and [6] the operation of facilities to process and prepare the broilers for market.” Nat’l Broiler, 436 U.S. at 820-22.

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contract with its supplier, or from that of a packer that assists its supplier in the financing of his

crops. Their participation involves only the kind of investment that Congress clearly did not

intend to protect.” Id. at 827-28. Thus, these entities were pure processors and were not entitled

to the protections of the Act. The Supreme Court’s decision in National Broiler does not

undermine the Sunkist and Case-Swayne decisions, which made clear that a producer who also processes is qualified to be a member of a cooperative.

3. “Large” or “Corporate” Entities Are Not Ineligible for Membership

The Capper-Volstead Act’s legislative history and court decisions applying the Act show that a bona fide producer does not become ineligible simply because it is large or “corporate.”

Large, corporate-type cooperatives existed at the time the Act was passed, and the drafters of the

Act were well aware that the Act would apply to these cooperatives. E.g., Sunkist, 370 U.S. at

28-29 (“[T]he legislative history of the Act reveals several references to the Sunkist

organization—then called the California Fruit Growers Exchange and numbering 11,000

members—including a suggestion by Senator Capper that this was the type of cooperative that

would find ‘definite legalization’ under the legislation. . . . [T]hese references . . . indicate that a

cooperative of such size and general activities was contemplated by the Act.”).

There also are no restrictions on the size of the growers that can be members of a

cooperative seeking the protection of the Act. See N. Cal. Supermarkets, 413 F. Supp. at 993

n.11 (holding that—contrary to the initial decision by a Federal Trade Commission

administrative law judge—“neither Section 6 nor Capper-Volstead contain restrictions on the

size of growers who are exempted under the Acts.”).

Likewise, “corporate” producers are not excluded. E.g., Case-Swayne, 389 U.S. at 386-

87 (noting, without taking issue with, the fact that in Sunkist, “[a] few of the local associations –

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no more than 5% by number and volume of fruit – are corporate growers whose total volume is sufficient to justify installation of their own packing house facilities”) (emphasis added).

The district court in Maryland & Virginia Milk Producers Association similarly rejected the government’s argument “that the words ‘dairymen’ and farmers’ should be restricted to natural persons who personally work on dairy farms and who derive the major portion of their income from the farms” as having “no basis.” 167 F. Supp. 45, 49 (D.D.C. 1958) aff’d in part and rev’d in part on other grounds, 362 U.S. 458 (1960). Rather, the court concluded:

The owner or operator of a dairy is a dairyman, whether he personally works on his dairy or has the work done by employees. So, too, the owner of a farm may be regarded as a farmer even though he devotes the major portion of his activities to other pursuits. When congress desired to put a more circumscribed definition on the term ‘farmer’ it did so expressly . . . . [I]t is immaterial whether every member of the association personally works on his farm or whether every member of the association is a natural person or a corporation.

Id. (emphasis added).

4. Engaging in Contract Farming Does Not Render a Producer Ineligible for Cooperative Membership

The fact that the owner of a farm or dairy is no less a farmer or dairymen if he “has the work done by employees” is no less true when the owner has work done by individuals engaged as independent contractors rather than as employees. See id. In turn, outsourcing one’s work to

“contract farmers” does not deprive a producer of its producer status under the Capper-Volstead

Act. See id.; Nat’l Broiler, 436 U.S. at 821-22 (noting that, among the members of the cooperative that it held were properly producers within the meaning of the Act, “[a]ll contract with independent growers for the raising or grow-out of at least part, and usually a substantial part, of their flocks,” and “[g]enerally, [but not in all instances] the member retains title to the birds while they are in the care of the independent grower”). Likewise, the individuals who are contracted to farm, raise, or husband hens even though they do not strictly have legal title to the animals, are also “farmers.” See, e.g., Golab & Sons v. Schaake Packing Co., 609 P.2d 444, 447

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(Wash. 1980) (holding that cattle feeders—including those whose “operation consisted solely of

feeding cattle owned by others,” were farmers within meaning of state equivalent to Capper-

Volstead Act).

Thus, in contract farming arrangements, both the producer who engages the contract

farmer and the contract farmer himself are “[p]ersons engaged in the production of agricultural

products” and eligible to be members of Capper-Volstead cooperatives. See, e.g., Cal. Food &

Agric. Code § 54231 (permissible association members include ”such persons as are engaged in the production of any product which is to be handled by or through the association, or that use or employ any service or facility offered by the association on, or in connection with, land which is

used for the production of any product, including the lessees and tenants of land which is used

for the production of such product and any lessors and landlords that receive as rent all or part of

the crop which is raised on the leased premises”); N.M. Stat. § 76-12-11 (permissible association members include “persons engaged in the production of agricultural products to be handled by or through the association, including the lessees and tenants of land used for the production of such products and any lessors and landlords who receive as rent all or part of the crop raised on the leased premises”); Utah Code § 3-1-10(2)(a) (permissible association members include: “(i) current producers of agricultural products; (ii) tenants and landlords receiving a share of the crop; and (iii) cooperative associations of those producers”).

5. Vertically Integrated Entities Are Not Excluded

a. Case Law

Likewise, a bona fide producer does not become ineligible for membership in a Capper-

Volstead cooperative simply because, in addition to engaging in production of agricultural products, it also engages in some further processing activity. That is, a legitimate producer does not lose its producer status simply because it is vertically integrated. The National Broiler and

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Case-Swayne decisions made clear that pure processors or pure distributors may not be members

of cooperatives. Case-Swayne, 389 U.S. at 393-96; Nat’l Broiler, 436 U.S. at 822, 826-28. But

just as important as their holdings regarding the entities that were not producers is their treatment

of the members that are entitled to the Act’s protections. The National Broiler Court noted that

all the entities it found to be farmers within the meaning of the Act were vertically integrated16

and that all contracted with independent growers to outsource at least part of the growing of their birds.17 It also noted that the industry had changed over time and “become highly efficient and departmentalized in recent years.” Id. at 821. Importantly, these facts did not lead the Court to conclude that vertically integrated members were not farmers within the meaning of the Act. To the contrary, while all members were vertically integrated, only certain members (those that entered the production line only at its later processing stages) were found to be non-farmers.

Similarly, in Case-Swayne, the presence of non-farmer middlemen as members was sufficient to eliminate the protection of the Capper-Volstead Act, but it was only the presence of packers who were not also growers—and not the presence of growers who performed additional processing functions—that destroyed the immunity. 389 U.S. at 386, 393, 395-97.

On remand in Case-Swayne, the district court ruled expressly that after Sunkist reorganized its membership to exclude pure processors and to include only growers or integrated grower-processors, the Capper-Volstead Act protection applied. Case-Swayne Co. v. Sunkist

Growers, Inc., 355 F. Supp. 408, 414-15 (C.D. Cal. 1971). Under the Sunkist reorganization in

16 Id. at 821 (“All the members of NBMA are ‘integrated,’ that is, they are involved in more than one of these stages of production. Many, if not all, directly or indirectly own and operate a processing plant where the broilers are slaughtered and dressed for market.”). 17 Id. (“All contract with independent growers for the raising or grow-out of at least part, and usually a substantial part, of their flocks.”). While the Court noted that “[g]enerally, the member retains title to the birds while they are in the care of the independent grower,” it did not by any means make such ownership a requirement for the members to retain “producer” status. See id. at 822.

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Case-Swayne, as approved by the court, Sunkist continued to include individual growers who

employed their own individual packing facilities along with grower who used facilities owned by

the cooperative. Id. at 413.

Thus, the only entities involved in bringing agricultural products to market that courts

have ever determined were not “producers” were either pure processors or—as in one unique

case discussed below—non-bona fide producers; that is, entities whose involvement in the

earliest stages of production was determined to be merely a sham.

That case is a district court decision from the Southern District of Mississippi, United

States v. Hinote, 823 F. Supp. 1350 (S.D. Miss. 1993), which turned on a unique set of facts. In

Hinote, the two largest food processing companies agreed with the processing facility of a bona

fide cooperative (Delta Pride) to fix the price for processed catfish and limit the amount paid to

catfish farmers. When the United States indicted the president of the bona fide cooperative,

Samuel Hinote, on charges of criminal price-fixing, he turned to the Capper-Volstead Act and the Fishermen’s Collective Marketing Act in his motion to dismiss the indictment. Id. at 1351-

52. Never prior to that time had he or the processors claimed any common cooperative status or immunity. In a post-hoc litigation strategy, he argued that he and the alleged co-conspirators were also engaged in catfish farming and were therefore eligible for immunity under the two acts. Id. The court saw this subterfuge for what it was. It recognized that two of the co- conspirators were subsidiaries of large food conglomerates that had integrated upstream into de minimis catfish farming activities (rather than downstream from farming into processing) and that the alleged conspiracy involved “selling the finished catfish products” rather than the activity of the processors “as farmers.” Id. at 1358-59. It further noted that the alleged co- conspirators had not actually formed a cooperative and—putting the defense claims into stark

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relief—the court recognized a separate “true” cooperative of catfish farmers, which the defendant’s alleged co-conspirators had not joined, as the actual cooperative representing catfish farmers. Id. at 1354 n.8, 1359. In fact, the court noted that if that cooperative—through which farmers built their own processing facility to process and sell their catfish—had been the only entity involved, its activities would be protected by the Capper-Volstead Act immunity. Id. at

1354 n.8. In doing so, the Hinote court confirmed that vertically integrated growers can indeed form a Capper-Volstead compliant cooperative.

Thus, the fact that the alleged co-conspirators at issue “purchased a substantial amount of catfish for processing from independent farmers who sold on the open market” was not the only reason the Hinote court rejected the Capper-Volstead defense. See id. at 1358. Far more important was the court’s concerns that the claim of Capper-Volstead immunity was a sham and that allowing the alleged conspirators to “exempt themselves from the antitrust laws by the simple expedient of purchasing and/or leasing some interests in a farming operation, no matter how de minimis the interest.” Id. at 1359.

The unique facts of that case prove why it is a rare exception to the bright-line rule that a person engaged in the production of agricultural products is entitled to the protection of the

Capper-Volstead Act so long as it does not “enter the production line only at its later processing stages.” See Nat’l Broiler, 436 U.S. at 822. That exception is: a sham in which the alleged conspirators truly represent the interests of processors rather than producers.

b. Legislative History

The basic purpose of the Capper-Volstead Act was to offset the power of large middlemen-purchasers of agricultural products, and one goal by which the Act’s drafters sought to do so was to encourage farmers to integrate forward into processing and the distribution chain of their products. By encouraging farmers to handle, process, and distribute their products, they 21

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could offset the buying clout of the large processor-middlemen. The purpose of the legislation was to bring the growers of farm products as close to the consumer as possible through vertical

integration by the growers or their cooperatives. 59 Cong. Rec. 7852 (1920). The legislation

was specifically designed to allow and encourage farmers to go beyond their individual efforts of handling and marketing and to permit them to get together collectively to pool their resources to process and convert their agricultural products into finished consumer products. 62 Cong. Rec.

2163 (1922).

This vertical integration was intended to be accomplished either by individual members or through the collective efforts of members of the cooperative. 62 Cong. Rec. 2121, 2163

(1922).

That is just exactly what we want to do by this. We want to allow a lot of farmers, instead of bringing their milk into a cheese factory run by private capital, selling their milk to the corporation which runs that cheese factory, to be permitted to associate themselves together—which of course, would eliminate competition between themselves—build their own cheese factory, bring their milk to that cheese factory, sell the cheese, and divide the profits. That is what this bill is for.

62 Cong. Rec. 2163 (1922).

The Act’s sponsors expressly contemplated that even producers that engaged in a great deal of processing activity (even if they engaged in more processing than production) could join

Capper-Volstead cooperatives:

Senator Pomerene: Assuming that one of the great millers of Minnesota had a farm, and that one of the great packers of Chicago had a ranch, what is there under this bill to prevent those two men and half a dozen other farmers of very modest means organizing together, and in that way fixing exorbitant prices for meat or flour? Senator Walsh: … [Such entities] might join with other farmers, and under this bill they would be entitled not only to handle the products of their own farms but to engage in the handling of the products of others; but the Senator will notice that their power to deal is restricted by a further amendment proposed by the committee, to the effect that they shall not deal in the products of nonmembers to an amount greater than the amount which they contribute from their own farms.

62 Cong. Rec. 2121 (1922).

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This discussion makes clear that integrated entities, even those large enough and engaged

in enough processing to be given the sobriquet “great,” are entitled to the Act’s protection, so

long as they also engage in bona fide production activities such as ranching or farming.18 What

Senator Walsh explained was that the 50% rule—which requires that the cooperative, as a whole,

“shall not deal in the products of nonmembers to an amount greater in value than such as are

handled by it for members”—was the mechanism by which the Act avoided allowing processing

interests to overtake producer interests in cooperatives. To the extent a concern exists that

cooperatives might represent the interests of processors over producers or that their members

might engage in “too much” processing, it is the cooperative-wide 50% rule—and no other

test—that controls. And by the clear text of the Act, the 50% Rule applies only cooperative-

wide, and there is no requirement that each individual member produce at least 50% of the

product that it markets. In other words, there is no “mini-50% Rule.” And the discussion above

makes clear that Congress intended exactly this result.

Indeed, Senator Walsh later reiterated this intention. Referring back to Senator

Pomerene’s question whether the Act would “permit Mr. Swift or Mr. Armour, or Mr. Wilson [a

reference to the three large meat packing companies of the day], each of whom, I undertake to

say, own a farm and raises hogs, . . . to organize under this proposed act and deal in the products

of their own farms, and also to buy extensively from other producers,” Senator Walsh responded

that yes, even these large, powerful packers could take advantage of the Act so long as they truly

18 The Department of Justice has also endorsed the membership of vertically integrated producers as members of cooperatives. See DOJ Business Review Letter 88-3 from Charles F. Rule, Assistant Attorney General, to Neil Norquest (Mar. 17, 1988) (stating that vertically integrated entities engaged in processing products they did not themselves grow are permitted to be members of Capper-Volstead cooperatives and permitting immunity for a cooperative in which “[s]ome members also will maintain facilities for handling, packing and storing the products, and these members may assist other members in the handling and marketing of their products”).

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did engage in farming, and so long as their cooperatives satisfied the cooperative-wide 50%

Rule:

I think that that [Mr. Swift, Mr. Armour, or Mr. Wilson’s membership in a cooperative] could be accomplished under the House bill. Recognizing that there is an evil there, and that the act might easily be abused, the Senate bill provides that such organizations can not deal in products other than those produced by their members to an amount greater than the amount of the products which they get from their members. So that if the three gentlemen to whom I refer should organize an association under this proposed law, they could throw the product of their own farms into the association and could put just so much more into the business, but no more.

62 Cong. Rec. 2156, 2157 (1922).

Senator Walsh noted that the proposed legislation “would not permit a combination of independent non-producer organizations, i.e., manufacturing establishments. . .,” but also explained that integrated farmer/packagers/processors would be protected and that farmers taking advantage of the Act may vertically integrate and participate in processing and distribution activities:

. . . The Senator from Washington will observe that under the provisions of both bills the organization authorized must be an organization of the producers themselves of the product of the farm. They may engage in marketing that product or they may engage in processing it for the purpose of putting it upon the market, but the proposed legislation would exclude a combination of producers of condensed milk who do not themselves produce it. There is a further provision in both bills to the effect that the organization may deal not only in the products of their members but also in that product by whomsoever it may be produced.

62 Cong. Rec. 2156, 2157 (1922) (emphasis added).

c. Dicta and Advisory Opinion Regarding Producer Status

Justice Brennan wrote a concurring opinion in National Broiler, which was not joined by any other member of the Court. That opinion offered advisory guidance that—while often cited by plaintiffs and others—does not reflect the decisions that courts have actually made regarding

Capper-Volstead Act eligibility. Justice Brennan advised that: “in my view, the nature of the association’s activities, the degree of integration of its members, and the functions historically

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performed by farmers in the industry are relevant considerations in deciding whether an association is exempt.” Nat’l Broiler, 436 U.S. at 836 (Brennan, J., concurring). Although dicta and therefore not controlling, Justice Brennan’s view is not inconsistent with the point noted earlier: producers are eligible for membership except when an entity’s membership would be a sham for a processor.

More recently, in In re Fresh and Process Potatoes Antitrust Litigation, 834 F. Supp. 2d

1141 (D. Idaho 2011), Judge Winmill of the District of Idaho likewise offered advisory guidance about this question. In that case, Judge Winmill denied a motion to dismiss based on defendants’

Capper-Volstead arguments because he concluded that questions of fact related to that defense remained unresolved. Thus, he did not decide Capper-Volstead eligibility of the integrated entities at issue. But he noted in dicta he was disinclined to adopt either of two “bright line” rules: First, he rejected a “bright line rule . . . to the effect that a farming operation is an eligible participant under Capper-Volstead, even if it is a fully integrated operation which extends from spring planting to the grocery store warehouse.” Id. at 1153-54. Second, he was “disinclined to adopt a bright line rule that any degree of vertical integration disqualifies a farming operation from participating in a Capper-Volstead eligible association.” Id. at 1154. Rather, Judge

Winmill concluded, “a factually-intense inquiry is necessary—one which focuses on the economics and history of potato marketing, the actual functions of the associations, and the degree of integration of the participants.” Id. at 1154. Because discovery had not yet occurred, though, the court could not engage in this “factually-intense inquiry.” See id. As such, Judge

Winmill’s discussion was not part of his holding.

Neither the advisory guidance in Justice Brennan’s concurring opinion nor the dicta in

Judge Winmill’s recent district court decision should persuade courts to abandon the holdings of

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the cases that have actually applied producer status analysis to real world facts. The holdings of

those cases form a clear, bright-line rule grounded in the legislative history and purposes of the

Act: If a “[p]erson engaged in the production of agricultural products” does not enter the

production process “only at its later processing stages,” then, so long as its involvement in the

production of agricultural products is not a sham, it is eligible to be a member of a Capper-

Volstead cooperative.

6. Who Is a Producer in the Egg Industry?

The question of who is a producer in the egg industry requires a determination whether—

in light of the economic realities of the egg production industry—the defendant member of UEP

and USEM enter the egg production process “only at its later processing stages.” Nat’l Broiler,

436 U.S. at 822. So long as the members are engaged in farming, they are bona fide producers

and are eligible to join a Capper-Volstead cooperative. This is true regardless of the amount of

processing or post-production activities they engage in.

7. Relationships With Other Entities and Non-Members Covered by the Act

Courts have made clear over the years that several structural arrangements that cooperatives employ do not run afoul of the structural requirements for Capper-Volstead immunity.

a. Cooperatives and Non-Member Producers

The Capper-Volstead Act clearly provides that an association cannot deal in the products of non-members “to an amount greater in value than such as are handled by it for members.”

7 U.S.C. § 291. Representative Volstead specifically indicated, however, that cooperatives could deal in the product of non-members, as long as they followed this limitation. 60 Cong. Rec.

2453 (1922). Thus, with that limitation, cooperatives are specifically permitted under the

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exemption to deal in the products of non-members. The term “deal” has the same broad meaning

as does marketing or market. “Deal” is synonymous with allot, apportion, distribute or share

among persons or members of a group. Webster’s Third New International Dictionary

(Unabridged) at 581 (Merriam-Webster 1981). Thus, the language of the statute and its legislative history included the authority of cooperatives to deal with non-member producers. In a somewhat unrelated case, Justice Brandeis in dissent, noted:

Experience has demonstrated also that doing business for nonmembers is usually deemed essential to the success of a cooperative. More than five-sixths of all the farmers’ cooperative associations in the United States do business for nonmembers. In 1925, 86.3 percent of the reporting organizations did so.

Frost v. Corp. Comm’n of Okla., 278 U.S. 515, 545 (1929).

There are no reported decisions that preclude application of the cooperative exemption when a cooperative deals with non-member producers. Cooperatives thus may market, sell, or otherwise deal in the products of non-members, which cooperatives often do in order to “fill out the line”—that is, obtain enough product from non-members to meet its commitments to purchasers or other plans. Doing so is permissible not only under any clear reading of the 50%

Rule but also because the Act permits cooperatives and their members “make the necessary contracts and agreements to effect [their] purposes.” 7 U.S.C. § 291.

b. Relationships With Other Cooperatives

A properly formed Capper-Volstead cooperative may include as members not only

“[p]ersons engaged in the production of agricultural products” but also may include

“cooperatives composed of such producers.” Agritronics Corp. v. Nat’l Dairy Herd Ass’n,, 914

F. Supp. 814, 823 (N.D.N.Y. 1996). Likewise, multiple cooperatives involved in the same industry may work with each other, share information, and engage in joint marketing and pricing even if they do not formally join together in an umbrella cooperative. This was the holding of

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Treasure Valley Potato, in which two cooperatives were alleged to have conspired with one

another with regard to their contracts with buyers. 497 F.2d at 205. The court concluded that “If

Section 1 of the Capper-Volstead Act . . . permits a common marketing agency, separate from

the cooperatives themselves, it would follow that without such a separate agency, the

associations may act together in marketing and make the necessary contracts to accomplish their

legitimate purpose. If an act of the agent is lawful, the same act performed by the principal is also lawful.” Id. at 214; see also GVF. Cannery, Inc., 511 F. Supp. at 714 (“[T]hat which agricultural producers may combine to accomplish within a single association, they may lawfully combine to achieve by way of multiple organizations.”).

Similarly, producers that could have legitimately formed a cooperative—or a producer and a cooperative that it could have legitimately joined—may also work together, share information, and engage in joint marketing and pricing even if they do not formally join together in a cooperative. See Sunkist, 370 U.S. at 28-29 (“There can be no doubt that under [Section 6 of

the Clayton Act and the Capper-Volstead Act] the 12,000 California-Arizona citrus growers ultimately involved could join together into one organization for the collective processing and marketing of their fruit and fruit products . . . . [W]e feel that the 12,000 growers here involved

are in practical effect and in the contemplation of the statutes one ‘organization’ or ‘association’

even though they have formally organized themselves into three separate legal entities. To hold

otherwise would be to impose grave legal consequences upon organizational distinctions that are

of de minimis meaning and effect to these growers who have banded together for processing and

marketing purposes within the purview of the Clayton and Capper-Volstead Acts.”).

c. Use of Agents

A Capper-Volstead cooperative may contract with, or engage as agents, non-producers

that will provide services to the cooperative, such as packing, shipping, sales, or other services. 28

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The language of the Act expressly allows the use of agents: “Such associations may have

marketing agencies in common; and such associations and their members may make the necessary contracts and agreements to effect such purposes.” 7 U.S.C. § 291. Cooperatives and their members engage agents in several contexts, and in none of these contexts must the agents themselves be “producers” of agricultural products, because the agents are not themselves members of the cooperatives.

First, producers acting through cooperatives frequently employ common marketing agents to efficiently market their products. These marketing agents in common “may perform the same function on behalf of their members as the members can perform on behalf of their farmer members . . . .” Kinnett Dairies, Inc. v. Dairymen, Inc., 512 F. Supp. 608, 632 (M.D. Ga.

1981), aff’d, 715 F.2d 520 (11th Cir. 1983). Multiple cooperatives representing growers in the

same industry may also use the same marketing agent and take advantage of the same prices.

United States v. Md. Coop. Milk Producers, Inc., 145 F. Supp. 151, 154 (D.D.C. 1956) (“[T]he

Act permits agricultural cooperatives to have marketing agencies in common. Obviously, it must

have been contemplated that a common marketing agency would fix the same prices for the

products of all its principals and would not discriminate among them. Consequently, it must have been foreseen that this provision would, in some cases, lead to the fixing of prices of agricultural commodities.”).

Second, while members of cooperatives must be true producers, a producer member may send an agent (i.e., someone that sells or otherwise markets the producer’s products) to communicate on its behalf (and act in the producer’s interest) at cooperative meetings.

Third, officers, directors, and employees of UEP and USEM need not themselves be farmers. They are not themselves members of the cooperatives, so the requirements for

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membership do not apply to them. Moreover, cooperatives are allowed to engage agents

(including employees) and make contracts as needed to effectuate their purposes.

D. What Does the Immunity Cover? Protected Conduct Under the Act

As an initial matter, courts have made clear that the Capper-Volstead Act covers an ambit of activities, and a cooperative need not engage in the entire ambit of immunized activity in order to receive the Act’s protection. Far from it, courts have held that a Capper-Volstead cooperative may exist to perform only one of the many activities it is permitted to perform.

“[E]ven if [the cooperative] engaged in no other collective marketing activities, mere price- fixing is clearly within the ambit of the statutory protection. It would be ironic and anomalous to expose producers, who meet in a cooperative to set prices, to antitrust liability, knowing full well that if the same producers engage in even more anticompetitive practices, such as collective marketing or bargaining, they would clearly be entitled to an exemption.” N. Cal Supermarkets,

413 F. Supp. at 992.

Cooperatives that meet the structural requirements above (and their members) are entitled to immunity from the antitrust laws. This immunity is broad and covers at least the following activities:

1. Collectively Processing, Preparing for Market, Handling, and Marketing

The Act expressly permits members of Capper-Volstead cooperatives to “collectively process[], prepar[e] for market, handl[e], and market[]” the products of cooperative members. 7

U.S.C. § 291. This language grants a broad immunity: “[T]he term marketing is far broader than the word sell” and includes “buying, selling, storing, transporting, standardizing, financing, risk bearing, and supplying market information” for purposes of interpreting the breadth of Capper-

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Volstead immunity. Treasure Valley Potato, 497 F.2d at 215. Permissible joint marketing

includes joint branding and product promotion.

2. Acting Like a Single Corporation

Farmers can join together and make decisions concerning production and sale of their

products as if they were a single corporation or enterprise. See Md. & Va. Milk Producers Ass’n,

362 U.S. at 466 (“[T]he general philosophy of both [§ 6 of the Clayton Act and the Capper-

Volstead Act] was simply that individual farmers should be given, through agricultural

cooperatives acting as entities, the same unified competitive advantage – and responsibility –

available to businessmen acting through corporations as entities. . . . This indicates a purpose to

make it possible for farmer-producers to organize together, to set association policy, fix prices at which their cooperative will sell their produce, and otherwise carry on like a business

corporation without violating the antitrust laws.”) (emphasis added); see also N. Cal.

Supermarkets, 413 F. Supp. at 993-94.

3. Pricing

a. Joint Bargaining and Price Negotiation

Cooperatives may engage in group negotiation on price and other terms of sale, whether

or not the cooperatives take title to or process member product. Treasure Valley Potato, 497

F.2d at 215; United States v. Dairymen, 1978-1 Trade Cases (CCH) ¶ 62,053 (W.D. Ky. 1978);

Sunkist Growers, 370 U.S. at 27-29 (joint marketing and processing by multiple cooperatives);

N. Cal. Supermarkets, 413 F. Supp. at 986-87 (cooperative operated as forum, with members

then selling as individuals at prices agreed to through the cooperative).

A cooperative that negotiates or sells jointly on behalf of its members may enforce

marketing agreements with members that prevent them from independently negotiating contract

sales with buyers. Holly Sugar Corp., 725 F.2d at 566-69. It may also use as a negotiation tactic

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the refusal to sell any product at all. Id. They may agree to withhold product from the market

(and enforce such agreements). Alexander v. Nat’l Farmers Org., 687 F.2d 1173 (8th Cir. 1982),

cert. denied, 461 U.S. 937 (1983) (holding that it is lawful for cooperative members to agree to withhold milk from the market, and encourage other dairy farmers to join the coop and withhold their milk from the market, in order to achieve more favorable contract terms); United Dairymen of Arizona v. Schugg, 128 P.3d 756 (Ariz. Ct. App. 2006).

b. Agreements on Price

Farmers in cooperatives may fix prices at which agricultural products will be sold. See e.g., Dairymen, Inc., 660 F.2d at 194 (holding that the Capper-Volstead Act “permits an agricultural association to be formed solely to fix the price at which its members products are sold”). Indeed, courts have held that a cooperative that does nothing more than jointly set the prices for its members’ products is lawful under the U.S. antitrust laws. N. Cal. Supermarkets,

413 F. Supp. at 992. The cooperative in Northern California Supermarkets also facilitated members’ exchange of information on crop conditions and problems with buyers and sponsored some advertising of lettuce generally. But the district judge expressly held that “even if Central engaged in no other collective marketing activities, mere price-fixing is clearly within the ambit of the statutory protection.” Id. at 922.

As noted above, the court there also made clear that members of cooperatives can simply agree on price levels and then sell their products at those prices individually, even if they do not engage in joint bargaining with buyers: “It would be ironic and anomalous to expose producers, who meet in a cooperative to set prices, to antitrust liability, knowing full well that if the same producers engage in even more anticompetitive practices, such as collective marketing or bargaining, they would clearly be entitled to an exemption.” Id. In so holding, the Northern

California Supermarkets court rejected the initial conclusion of an FTC administrative law judge 32

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that “to be exempt, a cooperative must acquire and bargain to sell the entire production of its

members, or at least bargain for the members in the open market.” Id. at 993 n.11 (citing Federal

Trade Commission, Central California Lettuce Producers Cooperative, no. 8970 (March 13,

1975)). Such a conclusion was based on the administrative law judge having read Treasure

Valley too “narrowly,” according to the district court. The Ninth Circuit Court of Appeals affirmed the district court decision in a one-paragraph per curiam opinion “for the reasons stated by the trial judge.” N. Cal. Supermarkets, Inc., 580 F.2d 369 (9th Cir. 1978).

This holding was echoed in Fairdale Farms, Inc. v. Yankee Milk, Inc. the next year: “It would be strange indeed if participation in this portion of the marketing process [price-fixing], standing alone, would subject a cooperative to antitrust liability, when the exercise of the full range of activities covered by Capper-Volstead would not.” 635 F.2d at 1040. This decision affirmed the district court holding that “section 1 of the Capper-Volstead Act exempts from the constraints of section 1 of the Sherman Act a qualified agricultural organization that does nothing but fix prices.” Fairdale Farms, Inc. v. Yankee Milk, Inc., 1980-1 Trade Cases (CCH) ¶

63,029, at 77,112 (D. Vt. 1979).

c. Information Exchange

Members of a cooperative—or even two separate cooperatives—may jointly market their products by simply exchanging information about the progress of their negotiations with buyers, and in this way coordinate their bargaining, even if they do not actually sell or even bargain jointly. See Treasure Valley Potato, 497 F.2d at 215-16. There, two cooperatives each engaged in bargaining on behalf of their members in preseason contracts with two purchasers. Id. at 215.

The cooperatives “tacitly attempted to secure similar contracts,” and “the two associations, their officers, directors and bargaining committees met frequently, exchanged information on the progress of each other’s negotiations and coordinated their bargaining efforts.” Id. at 215 n.9. 33

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The court held that this information exchange constituted “marketing” and was protected joint activity under the Capper-Volstead Act and Section 6 of the Clayton Act. Id. at 213, 215-16.

4. Supply Management and Control

a. Case Law

Farmers in cooperatives may jointly manage supply and engage in advance planning to decide how much to produce. Numerous court decisions, from multiple federal circuit courts going back decades, have held that the Capper-Volstead Act immunizes many types of supply control measures. E.g., Ewald Bros., 877 F.2d 1384 (rejecting challenge to cooperatives forming standby pools to provide members with milk supply to meet demand during seasonal low periods and entering option agreements to purchase milk from members and non-members, even though these option agreements had the effect of reducing the supply of milk in the event the cooperatives did not exercise the options); Holly Sugar Corp., 725 F.2d 564 (holding that cooperatives can engage in pre-season price setting and supply management programs for members’ production, just like any corporation can; holding specifically that marketing agreements between cooperative and members that prevented the members from putting their crops on the market without going through the cooperative—even when the cooperative had failed to reach an agreement with the buyer—are enforceable); Kinnett Dairies, Inc., 512 F.

Supp. 608, aff’d, 715 F.2d 520 (holding that cooperatives may manage supply of their members’ products in the market by, for example, allocating certain territories or customers for the sale of certain members’ products); Alexander, 687 F.2d at 1187-88 (holding that NFO’s sponsorship of a two-week action to withhold milk from the market in order to obtain more favorable contract terms for the cooperative and its members was “within the scope of the Capper-Volstead exemption”).

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Additionally, in In the matter of Washington Crab Ass’n et al., 66 F.T.C. 45, 1964 WL

73029 (1964), the Federal Trade Commission held that the decision of a fishermen’s cooperative

to “s[i]t on the beach” and refuse to fish while holding out for higher prices from buyers was

lawful under the Fishermen’s Collective Marketing Act (“FCMA”), 15 U.S.C. § 521, which provides the same immunity as the Capper-Volstead Act. See 66 F.T.C. 45, 1974 WL 73029 at

*10, 30. In reaching this conclusion, the Commission expressly relied on the analogous provisions of the Capper-Volstead Act:

To be sure, this is a “limitation on production” and, except for the exemption afforded to these respondents by the Fisherman’s Collective Marketing Act, . . . would be a per se violation of the Sherman Act and the Federal Trade Commission Act. But the Supreme Court has held, . . . that “the general philosophy of [Capper-Volstead] was simply that individual farmers should be given, through agricultural cooperatives acting as entities, the same unified competitive advantage—and responsibility—available to businessmen acting through corporations as entities.” . . . There is no obligation on the single corporation to produce at capacity; it may produce in any volume that it likes, and allocate production among its several “divisions” in such proportions as it sees fit. . . . We see nothing unlawful in their limiting production by agreement among themselves.

Id. at *59 (bracketed material in original; bolded emphasis added). The Federal Trade

Commission’s interpretation of both the FCMA and the Capper-Volstead Act to allow this type of supply control is further support for Capper-Volstead immunity covering cooperative supply control efforts.

Dicta in one 2011 district court decision, however, attempted to distinguish all this prior case law by suggesting that there is a material difference between pre-production and post- production supply control. See Potatoes, 834 F. Supp. 2d at 1155-57. The district court posited a novel distinction: it suggested that while post-production supply control measures (that is, joint decisions to destroy product or withhold it from the market and let it go to waste) are covered by the immunity, pre-production supply control measures (that is, joint decisions about how much to plant in the first place) are forbidden. Id.

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In doing so, the opinion in Potatoes expressed only very preliminary observations. It

purported to rely on the comprehensive analysis anticipated by the recent article of the Assistant

Attorney General in charge of the U.S. Department of Justice’s Antitrust Division. But in fact it

disregarded the key conclusions of that article related to supply management. A 2010 article by

Christine Varney, the then-Assistant Attorney General in charge of the Antitrust Division, is

important because it summarized the historical position of the various interested agencies and:

(1) recognized that whether supply management is exempt conduct under the Capper-Volstead

Act is a legal issue; (2) took no position other than to summarize the pros and cons as to whether

the Capper-Volstead exemption covers supply management; (3) did not adopt or endorse the

dated, negative view toward supply management of prior Antitrust Division representatives;

(4) specifically acknowledged a central point — that the Capper-Volstead exemption is

predicated on the principle that cooperatives are authorized to function like any corporate entity

in assuring the efficient marketing of their members’ production; and (5) looked to the courts in

pending cases, for guidance and resolution of the legal issue of supply management. Indeed,

Assistant Attorney General Varney emphasized that the supply management issue “provides an

intellectual challenge to lawyers and judges, but, much more importantly, it has great practical

consequences for farmers and the agricultural community as a whole.”19 Even so, the Potatoes

judge disregarded Assistant Attorney General Varney’s statement of position and relied instead

on a position that the DOJ took in 1977. See Potatoes, 834 F. Supp. 2d at 1172 n.9.

Judge Winmill in the Potatoes case also relied on dicta appearing in a Federal Trade

Commission (“FTC”) decision —Matter of Cent. Cal. Lettuce Producers Coop., 90 F.T.C. 18,

1977 WL 188550 *15, n.20 (July 25, 1977). Potatoes, 834 F. Supp. at 1156-57. As an aside,

19 See Christine A. Varney, The Capper-Volstead Act, Agricultural Cooperatives, and Antitrust Immunity, The Antitrust Source, Dec. 2010.

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the FTC noted in a footnote that Congress did not intend to allow farmers to limit their

production based on the corporate model for cooperatives. First, the FTC’s view in that respect is at odds with the Supreme Court’s decision in Maryland & Virginia Milk Producers, 362 U.S.

at 466, which specifically noted that the purpose of the exemption was to permit farmers to

organize and operate “like a business corporation” without thereby violating the antitrust laws.

Second, the FTC misunderstood the context of an observation by Senator Capper that farmers

cannot achieve monopolies because of the perennial problem of overproduction. 62 Cong. Rec.

2059 (1922). Read in context with Senator Capper’s overall statement and stated purpose, it is

manifest that the legislation was designed to permit cooperatives and their members to manage

production and to plan ahead in anticipation of projected demand in order to operate efficiently.

62 Cong. Rec. 2058-2059 (1922); Fairdale Farms, 635 F.2d at 1043. Senator Capper’s

observation was a recognition of how difficult it was for farmers to deal with the problem of

overproduction. Third, the FTC’s decision had, in the interim, effectively been overruled by the

Ninth Circuit, at both the district and appellate level. See N. Cal. Supermarkets, 413 F. Supp.

984, aff’d based on reasoning of opinion below, 580 F.2d 369.

Finally, the court in the Potatoes case also based its conclusion about pre-production as

opposed to post-production supply management on its reading of the language of the Capper-

Volstead Act, reasoning that “[t]he key phrase of the Act, ‘processing, preparing for market,

handling, and marketing,’ applies to acts done to an agricultural product after it has been planted

and harvested. Thus, under the plain language of the statute, coordinating and reducing acreage

for planting is not allowed.” Id. at 1154-55. The court distinguished the directly analogous

holding in Washington Crab because the FCMA contains the words “catching, collecting, or

cultivating aquatic products, or as planters of aquatic products . . .” whereas the Capper-Volstead

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Act does not contain words such as “plant[ing] and harvest[ing]. See id. at 1155 (citing 15

U.S.C. § 521).

But this reading ignores case law, legislative history, and logical considerations. First, it

ignores that the Washington Crab decision was expressly dependent on the Commission reading

the FCMA and the Capper-Volstead Act as providing coterminous immunities. See 66 F.T.C.

45, 1964 WL 73029, at *59. Similarly, decisions involving the Capper-Volstead Act have

approved cooperative actions taken prior to planting as protected within the Capper-Volstead

immunity. See Treasure Valley Potato, 497 F.2d at 215 (upholding cooperatives’ entering into

pre-season contracts between their members and potato processors as encompassed within

“marketing” without in any way limiting legitimate marketing activities to post-harvest

production).

Second, Judge Winmill’s reading of the Act also ignores the legislative history of the

FCMA, which made clear that the immunity it provided represented “no change” from the

immunity provided in the Capper-Volstead Act: “[T]his bill provides for the same relief for the fishermen that has already been given to the farmers. There is no change in the law except it is made applicable to fishermen.” 78 Cong. Rec. 9175 (1934) (statement of Rep. Bland in support of the bill). The additional use of words such as “catching and producing” in the FCMA merely

describes what fishermen do when fishing or harvesting fish whereas farmers, in the words of the

Capper-Volstead Act, are “Persons engaged in the production of agricultural products” and prepare “processing, preparing for market, handling and marketing” agricultural products, 7

U.S.C. § 291.

Third, Judge Winmill’s reliance on earlier USDA references failed to take into account the development of case precedent and the broad public policy encouraging farmers to deal with

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the recurring problem of overproduction. See id. at 1155-56 & n. 9. The USDA’s current

position, as stated by Donald A. Frederick, the Program Leader for Law, Policy and Governance

at USDA, unequivocally supports the right of farmers and cooperatives to manage or limit the

supply of their production. Donald A. Frederick, The Antitrust Status of Farmer Cooperatives:

The Story of the Capper-Volstead Act, USDA Cooperative Information Report (59) (Sept. 2002)

at 289-9220:

It is uncontested...that a value-added cooperative can, just like its non-cooperative competitors, limit the amount of product it offers for sale. These precedents suggest that members of a cooperative may voluntarily agree among themselves to limit their production as well.

Id. at 291. Mr. Frederick has reinforced this position based on the legal precedent that supports the right of cooperatives to manage the production of its members. Donald A. Frederick, What it means to “market” milk, Legal Corner, USDA Rural Cooperatives (March/April 2006) at 1521.

Thus, the current position of USDA representatives, based on case and related authority, unequivocally supports the right of cooperatives to engage in supply management programs. In a previous report, Donald A. Frederick, Managing Cooperative Antitrust Risk, USDA

Cooperative Information Report (38) (May 1989) at 23-2422, noted that there might be some risk

for a cooperative to act as a vehicle for its members to agree to limit the quantity of a commodity

they would produce. Mr. Frederick also pointed out in that same article that a limited body of

case law supported the proposition that producers may use their cooperative to agree among themselves to manage or limit their production. Id. at 23. Despite this earlier more conservative observation about risk, Mr. Frederick’s opinion solidified into confirming the well-defined

20 Available at http://www.rurdev.usda.gov/rbs/pub/cir59.pdf (Last accessed Oct. 2, 2012). 21 Available at http://www.rurdev.usda.gov/rbs/pub/mar06/mar06.pdf (Last accessed Oct. 2, 2012). 22 Available at http://www.rurdev.usda.gov/rbs/pub/cir38/cir38.pdf (Last accessed Oct. 2, 2012).

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legality of producer agreements to reduce production through their cooperative. Donald A.

Frederick, The Antitrust Status of Farmer Cooperatives: The Story of the Capper-Volstead Act,

USDA Cooperative Information Report (59) (September 2002) at 289-29223.

Moreover, it has been articulated time and again that the exemption is to be construed

broadly. In GVF Cannery, Inc., 511 F. Supp. at 713, the court noted that: “The courts have

broadly interpreted this statute to afford farmers associations significant exemption from the

antitrust laws.” Id. In Agritronics Corp, 914 F. Supp. at 824-825, the court refused to give a

“hyper-technical reading” of the Act and provided an expansive definition of “marketing,” to

include a broad range of functions such as supplying market information or just fixing prices.

This is the interpretation provided by the Ninth Circuit in Treasure Valley Potato, 497 F.2d at

215-216 and Northern Cal. Supermarkets, 413 F. Supp. at 991, aff’d, 580 F.2d 369. There is

compelling congressional articulation of public policy, reflected in the overall farm legislation

enacted by Congress, which supports a broad and liberal application of the exemption. Fairdale

Farms, 635 F.2d at 1042-44.

In any event, to suggest that farmers or their cooperatives cannot pre-plan their

production contradicts one of the essential purposes of the exemption — promotion of efficiency.

As Senator Capper noted the legislation was designed to provide “greater efficiency all along the

line” to “cut costs of production and risk” and “stabilize the market, preventing waste.” 62

Cong. Rec. 2059-60 (1922).

b. Legislative History

The legislative history of the Act also supports the view of established case law over the

novel distinction suggested by the District of Idaho in dicta. First, the language of the Act itself

23 Available at http://www.rurdev.usda.gov/rbs/pub/cir59.pdf (Last accessed Oct. 2, 2012).

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suggests no Congressional intent to distinguish between joint action to manage supply and joint

action to manage price. See 7 U.S.C. § 291. Indeed, price-fixing is undisputedly permitted by

cooperative members even though the word “price” does not appear in Section 1 of the Act. See

id.; see also supra Section II(D)(3).

To the contrary, the Capper-Volstead Act’s drafters expressly contemplated the Act

allowing farmers to “reduce the production” in response to declines in demand just as individual

corporations can “reduce the production[,] . . . cut down their forces, and run their factories upon what is called 25 or 30 percent capacity, and merely feed out to the market what it will consume at their prices.” 62 Cong. Rec. 2262 (1922) (statement of Senator Hitchcock). The Act’s sponsors both expressed that the purpose of the bill was to allow cooperatives to collectively act, and react to market conditions, just like a single corporation can: Senator Capper stated “The

bill is designed to give the farmer the same right to bargain collectively that is already enjoyed

by corporations.” 62 Cong. Rec. 2057 (1922). And Senator Volstead stated that “The object of

this bill is to modify the laws under which business organizations are now formed, so that

farmers may take advantage of the form of organization that is used by business concerns.” 61

Cong. Rec. 1033 (1921).

The drafters also contemplated that under the Act cooperatives would be able to,

“through cooperation, have some control and agreement as to production and as to prices.” 60

Cong. Rec. 2225 (1922) (statement of Senator Lenroot) (emphasis added). Senator Lenroot

likewise stated, in support of the bill, that “we are justified in enacting this legislation which will

enable the farmers of this country to put themselves somewhat nearer an equality of bargaining

power and control of output in production that all other industries have today.” 60 Cong. Rec.

2225 (1922) (statement of Senator Lenroot) (emphasis added). In support of an earlier version of

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the Capper-Volstead Act, Senator King stated that farmers “shall not only be permitted to

combine for the purpose of marketing their products, but for the purpose of holding them for an

indefinite period in order to secure higher prices….” 60 Cong. Rec. 312 (1920) (statement of

Senator King) (emphasis added). Representative Hershey likewise stated that the ability to form

cooperatives would enable farmers “to act together for their mutual interests in the planting,

care, and marketing of agricultural products. 61 Cong. Rec. 1043 (1921) (emphasis added).

Likewise, the legislative history of other agricultural statutes evinces Congress’ intent

that it is the agricultural policy of the United States to assist farmers with addressing the

perennial problem of overproduction in order to promote a steady, stable food supply.

c. Policy Considerations

Policy considerations also counsel against upsetting established case law holding that the

Capper-Volstead Act allows cooperatives to manage their supply jointly as an integral part of

their cooperative marketing efforts. First, the need for advance planning in farming is even more

salient than it is in other industries because farmers must make production decisions before

actual demand for the product is known. See Letter from Keith Collins, Chief Economist,

USDA, to Deborah A. Garza, Antitrust Modernization Commission, at 2-3 (July 15, 2005). 24

Once production decisions are made, they cannot be easily or quickly changed, and capital investments cannot be easily transferred to alternative production choices. Id. Many farmers negotiate purchases of inputs collectively through cooperatives and thus need to engage in advance planning on production levels. Id. And farmers have few opportunities to delay selling if they produce too much because of the perishable nature of most agricultural products. Id.

24 Available at http://govinfo.library.unt.edu/amc/public_studies_fr28902/immunities_exemptions_pdf/050715_Collins_USDA.pdf (Last accessed Oct. 1, 2012).

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Second, basic economics counsels against excluding supply control from Capper-

Volstead immunity. Fundamental antitrust legal and economic principles equate price-fixing and direct agreements between competitors to reduce output as basically the same anticompetitive conduct. Price-fixing and supply control are two sides of the same coin, and without the ability

to control supply, farmers’ (undisputed) right to control price would itself be eviscerated.

Kenneth O’Rourke & Andrew Frackman, The Capper-Volstead Act Exemption and Supply

Restraints in Agricultural Antitrust Actions, Vol. 19, No. 2, Competition, The J. of the Antitrust

and Unfair Competition Law Section of the State Bar of Cal. (2010) at 69, 83.); Phillip E. Areeda

& H. Hovenkamp, Antitrust Law (3d ed. 2007) at 377, ¶ 395a (hereinafter “Areeda”). In FTC v.

Superior Court Trial Lawyers Ass’n, 493 U.S. 411, 423 (1990), the Supreme Court noted that supply or output restriction was in essence price-fixing because agreeing to reduce output operates to increase prices.

Third, the novel interpretation of the Capper-Volstead Act proposed by Judge Winmill creates an artificial distinction between pre-production and post-production supply control that would allow cooperatives to throw away their products or let them go to waste in order to control supply and price, but would not allow them to engage in more orderly joint planning to achieve the same purposes more efficiently. That interpretation of the Act would only encourage waste.

It also lacks any support in case law or legislative history. The Capper-Volstead Act has to be interpreted in a practical way. Many cooperatives in the United States today rely on the immunity provided by the Act in their advance planning and supply management efforts.

Reinterpreting the immunity to exclude supply control, or to exclude “pre-production” supply control, would pull the rug out from under these cooperatives and disrupt a significant portion of the U.S. farming economy.

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5. Joint Response to Consumer Demand

As discussed elsewhere (see Sections IV and V, infra) separate and apart from any immunity, antitrust law looks favorably on standard setting and other procompetitive joint responses to consumer demands for products that have been produced in particular ways such as organic products, fair-trade coffee, “green” products (those produced in an environmentally sound manner), dolphin-safe tuna, Kosher and Halal meats, and products produced according to animal welfare standards. Although Capper-Volstead immunity is not required for these activities, the joint marketing, branding, and bargaining permitted by the Act provides an additional and separate protection.

There is a market for each of these products, and they typically demand a premium over otherwise identical products that were produced in more conventional ways. Branding the products is key to capturing this premium. Cooperatives can engage in joint branding of these value-added products, and in monitoring and enforcing these “premium” production methods in order to manage and protect the brand.

Producing these products also imposes additional costs on producers. Members of a cooperative are entitled to jointly discuss and negotiate their responses to these demands.

Indeed, it is well established that a cooperative may act as a corporation does, see Md. & Va.

Milk Producers, 362 U.S. at 466, and corporations are indisputably permitted to respond to similar consumer demands. And in fact corporations—including some of the plaintiffs in this case—do just that. See, e.g., Supervalu, Inc., Corporate Social Responsibility Report 2012, at 4,

(detailing Supervalu, Inc.’s commitment to “sourcing more carton eggs from ‘cage-free’ chicken operations during the past year,” as “[c]age-free eggs have grown in importance to many customers in recent years . . . .,” its “Living Green” private label paper products line that targets

“eco-conscious customers,” its commitment to locally harvested produce because “[c]onsumer 44

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interest in locally grown produce continues to increase each year,” among other socially

desirable value-added traits that SuperValu, Inc. markets) (emphasis added);25 Publix, Inc.,

Sustainability Report 2011, at 19-20 (noting that “[c]ustomers around the country are asking

for more natural and organic products, and Publix customers are no exception” and that

“[s]ales of natural and organic products increased in 2011, which tells us our customers want

more” and describing Publix’s response to these demands, namely, its “GreenWise Market

stores,” “GreenWise organic strawberry jam and Concord grape jelly,” and partnership with “a

new organic egg supplier located closer to our Atlanta division”).26

If the members accept these demands, they also are entitled to jointly negotiate prices related to their implementation and discuss other economic aspects of these consumer demands.

This is permitted as part of cooperatives’ immunity for joint bargaining and pricing activity. Just

as with any price negotiation, members may jointly decide, as a negotiation tactic, to refuse to

provide these products under certain conditions or at certain prices.

To know that producing a product demanded by a customer with additional attributes

entails higher costs, and to seek to either avoid those costs or to receive higher prices to

compensate for them, is basic business conduct and part of the lawful negotiating process that is

protected by the Capper-Volstead Act.

E. Prohibited Conduct

Courts have held that certain activities are not included within the immunity: Even

entities protected by Capper-Volstead immunity may not conspire with those outside the Act’s

25 Available at http://www.supervalu.com/sv- webapp/downloads/SUPERVALU_Corporate_Social_Responsibility_2012.pdf. (Last accessed Oct. 2, 2012). 26 Available at http://sustainability.publix.com/get_into_a_green_routine/get_into_a_green_routine.php? (Last accessed Oct. 2, 2012)

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protections, such as pure processors or ineligible members, to monopolize or restrain trade,27 nor may they engage in predatory or monopolistic practices outside the legitimate purposes of a cooperative.

Many of the cases concerning predatory or monopolistic practices have involved cooperatives or their members engaging in several of the following activities—they are often not close cases. First, predatory or monopolistic practices include attempting to force non-members to join a cooperative or to abide by the cooperative’s rules. Fairdale Farms, 635 F.2d at 1044;

Alexander, 687 F.2d at 1182. Second., they also include punishing non-members of one’s cooperative or excluding non-members from the relevant market. Md. & Va. Milk Producers

Ass’n, 362 U.S. at 468.

Another prohibited predatory or monopolistic practice is engaging in secondary boycotts.

A cooperative may not pressure unaffiliated sellers to not do business with buyers who are unwilling to do business with the cooperative. Secondary boycotts also include picketing, interfering with deliveries, or otherwise harassing retailers (or any other customer of the cooperative’s customer) in order to pressure those retailers to exert pressure on their suppliers— the cooperative’s customers—to take certain actions. This was the type of secondary boycott involved in Otto Milk Co., 388 F.2d 789, discussed in more detail supra Section II(B); see also

N. Tex. Producers Ass’n v. Metzger Dairies, 348 F.2d 189, 195-96 (5th Cir. 1965), cert. denied,

382 U.S. 977 (1966); United States v. King, 229 F. 275 (D. Mass. 1915); United States v. King,

250 F. 908 (D. Mass. 1916); Dairymen, 1978-1 Trade Cases (CCH) ¶ 62,053. Finally,

27 See United States v. Nat’l Broiler Mktg. Ass’n, 436 U.S. 816 (1978); Case–Swayne Co. v. Sunkist Growers, Inc., 389 U.S. 384 (1967) (15% of members of local Sunkist associations were packing houses, rather than producers, which entered into contracts with producers to handle each grower’s fruit at cost plus a fixed surcharge); United States v. Borden Co., 308 U.S. 188 (1939); Bergjans Farm Dairy Co. v. Sanitary Milk Producers, 241 F. Supp. 476, 482 (E.D. Mo. 1965), aff’d, 368 F.2d 679 (8th Cir. 1966).

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cooperatives similarly have no immunity for manipulating market prices in an attempt to drive competitors out of the cooperative. Bergjans Farm Dairy Co. v. Sanitary Milk Producers, 241 F.

Supp. 476 (E.D. Mo. 1965), aff’d, 368 F.2d 679 (8th Cir. 1966). The activities that plaintiffs allege in this case, however, are not among the activities that courts have held to be outside the

Capper-Volstead immunity.

F. The Defendants’ Good-Faith Belief That They Were Acting in Compliance With Capper-Volstead Bars Imposition of Liability And Acts as a Defense To Plaintiffs’ Complaint

1. Producers Who Agreed To Undertake Protected Conduct With the Good Faith Belief They Were Only Agreeing With Other Producers Cannot Be Found Liable for a Section One Violation.

Plaintiffs cannot prove that a legally qualified producer who entered into an agreement to conduct activity that is exempt from the federal antitrust laws under Capper-Volstead is liable for a Sherman Act violation simply because one or more of the parties with whom the producer agreed, unbeknownst to the producer, did not meet the legal standards to qualify as a producer.

A producer who held such a good faith belief cannot be said to have knowingly entered an actionable Section 1 conspiracy.

In order to establish the first element of a Section 1 claim, plaintiffs must prove “that the alleged conspiracy of two or more persons existed” and that the defendants “knowingly became members of the conspiracy.” Toledo Mack Sales & Serv., Inc. v. Mack Trucks, Inc., 386 F.

App’x 214, 222 (3d Cir. 2010) (citation omitted). Producers who engaged in protected conduct with the good-faith belief that they were agreeing only with similarly qualified producers cannot be found to have “knowingly” become members of an actionable conspiracy. Plaintiffs must establish that each defendant they seek to hold liable “knowingly” entered into an actionable conspiracy, and in order to do so, plaintiffs must show that each such defendant entered the agreement they contend was illegal “voluntarily and intentionally, and not because of mistake or

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accident or other innocent reason.” Model Jury Instructions in Civil Antitrust Cases, ABA

Section of Antitrust Law (2005) at B-2. A legally qualified producer who enters an agreement to undertake protected conduct solely because it, in good-faith, mistakenly believed it was only agreeing with other legally qualified producers enters into the relevant agreement by “mistake” or as a result of “innocent reasons.” See, e.g., In re Asbestos Sch. Litig., 46 F.3d 1284, 1289-90

(3d Cir. 1994) (“For liability to be imposed by reason of association alone, it is necessary to establish that the group itself possessed unlawful goals and that the individual held a specific intent to further those illegal aims.”) (quoting NAACP v. Claiborne Hardware Co., 458 U.S.

886, 920 (1982) (emphasis in original).

2. Farmers Should Not Lose the Immunity Due to Technical Mistakes or Inadvertently Listing the Wrong Entity as a Member

a. Decisions Regarding Technical Mistake or Inadvertence

In applying the requirement that all members of a cooperative be producers of agricultural products, courts emphasize substance and economic realities over “record-keeping formalities.” In Alexander, the fact that “a small number of non-farmers were nominal members of NFO during certain periods” did not deprive the cooperative of its Capper-Volstead immunity because the “non-farmer issue” arose merely “because of ignorance or sloppiness on the part of

NFO in policing its membership rolls.” 687 F.2d at 1183-86. Noting that “[t]he ‘not even one’ language in National Broiler cannot be divorced from that Court’s emphasis on the economic role of such middlemen . . . to participate in price-fixing,” the Alexander court focused instead on the actual workings of the NFO. Id. at 1186. It concluded that because the non-farmer nominal members did not actually exercise the benefits of membership in the cooperative, and because

“NFO’s bylaws prohibit such persons from asserting any membership interest and there is no contention that any such persons bought or sold milk through NFO,” the administrative mistake

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in including them on the membership rolls did not deprive NFO of its Capper-Volstead status.

Id. at 1186-87.

Judge O’Neill’s 2009 decision in Mushrooms is not to the contrary. 621 F. Supp. 2d 274.

In that case, one farming family organized its business into multiple entities, all which had the same ownership – a situation that is not at all uncommon in agriculture. One of the entities grew mushrooms while another was a packer that did not engage in production, and the family had inadvertently signed up the packing entity as the member of the cooperative. Although the court found against the cooperative on the record before it, it also embraced the need to emphasize substance over formalities. Judge O’Neill did not reject the reasoning in Alexander, but rather distinguished its facts. See Mushrooms 621 F. Supp. 2d at 284-86 & n.11. The decision against the EMMC cooperative was based on the court’s conclusion that the membership of non-farmers was not in fact a “technical, de minimis error” but rather that “the EMMC’s true purpose [was] to benefit distributors rather than growers.” Id. at 284-86. The court went on in a footnote to discuss its conclusion that the cooperative’s methods of collecting dues and its pricing activity seemed to benefit distributors rather than growers and the fact that the EMMC helped unaffiliated “pure growers” to organize another cooperative, “the EMMCGA[,] which was to benefit pure growers”—separate from the EMMC. Id. at 286 & n.11.

The impact of these facts and others on the degree to which non-growers actually participated in the EMMC may be hotly contested in the Mushrooms litigation; however, what is clear is that the Mushrooms court did embrace and apply a substantive analysis; it did not rest on

“mere record-keeping formalities.” On interlocutory appeal, the Third Circuit declined to reach the merits but called the issue of “whether the inadvertent inclusion of an ineligible member strips an agricultural cooperative of Capper-Volstead protection” “both serious and unsettled.”

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b. Application of Law Regarding Technical Mistake or Inadvertence

Evaluating substance rather than formalities requires acknowledging the realities of U.S. agriculture, including the fact that many farmers organize their business into several related but separate entities. Yet, in light of the Alexander and Mushrooms decisions, a bona fide producer in that instance should not lose its immunity under the Capper-Volstead Act simply because of inadvertence or administrative errors in the cooperative’s files as to which of the related entities within an integrated farming operation is listed as the member of the cooperative.

Another economic reality to acknowledge is that many producers choose to be represented in their cooperatives through agents, as permitted by the Capper-Volstead Act and traditional agency law. When a producer’s bona fide agent has – through an administrative error

– been made the titular member of the cooperative, the producer, and all other member of the cooperative, should not lose the protection of the Act as a result.

Additionally, the well-established Copperweld principle—that affiliated entities owned in common are treated as a single economic unit—applies equally to sibling entities as it does to a parent and wholly owned subsidiaries, and it calls for a “functional analysis” of “how the parties

. . . actually operate.” Copperweld v. Independence Tube, 467 U.S. 752 (1984). It should therefore apply to these farmers, who hold their various operations (farming, landowning, processing) in different corporate entities but with unity of ownership.

3. Defendants Also Have a Good-Faith Affirmative Defense To Liability

a. Circuit Court Precedent

The Third Circuit has recognized that a defendant who in good faith believed that its conduct was protected by a bona fide exemption from the antitrust laws can raise its good-faith belief as an affirmative defense to a Section 1 claim-and can submit that defense to the jury. See

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In re Lower Lake Erie, 759 F. Supp. at 225, aff’d in part and rev’d in part, 998 F.2d 1144 (3d

Cir. 1993); USX Corp., 99 F. Supp. 2d at 633.

In In re Lower Lake Erie, the only defendant who went to trial, Bessemer & Lake Erie

Railroad (B & LE) claimed it, in good faith, believed two immunities exempted its actions from

antitrust scrutiny. 759 F. Supp. at 224. Judge Fullam, who presided over the matter in the

district court, “fully explained” the parameters of these immunities during his jury instructions,

at B & LE’s request. Id. at 225. The Third Circuit affirmed, explaining that that the district

court had “instructed the jury concerning B & LE’s good faith and regulatory climate defenses

and informed the jury that if the company’s conduct was consistent with the overall policies of

the ICC, it was not in violation of the antitrust laws” and that “instruction, as a whole” was

proper. In re Lower Lake Erie, 998 F.2d at 1116, 1160-61.

In USX Corp., 99 F. Supp. 2d at 634, the court explained that in In re Lower Lake Erie the Third Circuit “specifically held that the district court’s instructions on the good-faith and regulatory climate defenses were accurate.”

At least two other Circuit Courts have approved similar good-faith defenses in the antitrust context. See MCI Commc’ns Corp. v. AT & T, 708 F.2d 1081, 1138 (7th Cir. 1983);

Hosp. Bldg. Co. v. Trustees of the Rex Hosp., 691 F.2d 678, 685 (4th Cir. 1982).

b. The Defendants’ Good Faith Affirmative Defense

Defendants should similarly be able to raise their good-faith belief that their challenged conduct was exempt from the Sherman Act’s prohibitions under the Capper-Volstead Act as a defense in this action. No meaningful legal distinction exists between the antitrust immunities at issue in In re Lower Lake Erie and those at issue here. Like the immunities at issue in In re

Lower Lake Erie, the Capper-Volstead Act is a bona fide exemption from the proscriptions of the antitrust laws. And both exemptions are limited ones; that is, neither railroads nor agricultural 51

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cooperatives under the Capper-Volstead Act can claim complete immunity from antitrust

liability. In light of the similarities between the antitrust immunities at issue in In re Lower Lake

Erie and the Capper-Volstead Act, the same sort of good-faith belief instructions that the Third

Circuit approved in In re Lower Lake Erie should be provided in this action.

Indeed, the legal grounds for recognizing such a good-faith defense in this case are stronger than they were in In re Lower Lake Erie. There, the Third Circuit had no trouble concluding that B & LE’s anticompetitive conduct fell outside the scope of the exemptions at issue. In contrast, the core of the alleged anticompetitive conduct here—reducing the supply of eggs in order to boost prices—has repeatedly been held to fall squarely within the Capper-

Volstead exemption. See, e.g., Md. & Va. Milk Producers, 362 U.S. at 466 (stating that Capper-

Volstead “make[s] it possible for farmer-producers to organize together, set association policy, fix prices at which their cooperative will sell their produce, and otherwise carry on like a

business corporation without thereby violating the antitrust laws”); Alexander, 687 F.2d at 1182

(stating that Capper-Volstead cooperatives “are exempt from liability for price-fixing and other

joint marketing efforts which seek to achieve the lawful aims of the cooperative movement, i.e.,

collective marketing of farm products so as to improve economic conditions for individual

farmers”); id. at 1188 (analyzing a cooperative’s “sponsorship of a two-week milk withholding

action” that “was part of concerted demands for higher dairy prices,” court held that “this type of

activity, as a general matter, is within the scope of the Capper-Volstead exemption” as long as it

is not aimed at eliminating competition among cooperatives). The current Defendants’ claim to

a good-faith affirmative defense is far more compelling than that of the defendants’ in In re

Lower Lake Erie.

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Moreover, the Fourth and Seventh Circuit rulings in Hospital Building and MCI further

buttress Defendants’ position that they can invoke a good-faith defense to Plaintiffs’ antitrust claims. Hospital Building and MCI involved a good-faith belief in merely implied exemptions recognized only by Circuit Courts. See MCI, 708 F.2d at 1101-05; Hosp. Bldg., 691 F. 2d at

685-86. Capper-Volstead is an express statutory exemption from the antitrust laws. Defendants

are surely entitled to raise their good-faith belief that their challenged actions fell within this

express statutory exemption when such a defense has been found appropriate even with reference

to implied exemptions.

4. Alternatively, Defendants Have a Good-Faith Damages Defense

a. Third Circuit Precedent

The Third Circuit has held that the nonstatutory labor exemption affords immunity from damages sought under Section 4 of the Clayton Act for behavior under a collective bargaining agreement later determined to be illegal, if the defendants “could not reasonably have foreseen” that illegality. Consol. Express, Inc. v. N.Y. Shipping Ass’n, Inc., 602 F.2d 494, 521 (3d Cir.

1979), vacated on other grounds, 448 U.S. 902 (1980) (“Conex”).

In Conex, the defendants argued that their challenged conduct qualified for the nonstatutory labor exemption. The court rejected that argument, holding that the conduct at issue “was not exempt” 602 F.2d at 519. The Third Circuit also held, however, that the nonstatutory labor exemption nonetheless immunized the defendants from liability for damages

(but not injunctive relief) with respect to conduct that the defendants reasonably (but mistakenly) believed to be protected by the exemption. Id. at 521.

With respect to damages claims based on conduct that the conspiring parties reasonably believed to be legal, the court concluded that “there is room for a defense to a § 4 damage claim that would not be available in a § 16 injunctive action or a government injunctive action.” Id.

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Specifically, the court held that once allegedly protected conduct was shown to be illegal under applicable labor law and hence not entitled to the nonstatutory labor immunity, “the defendants may assert, first, that at the time they acted . . . they could not reasonably have foreseen that the subject matter of the agreement being challenged would be held to be unlawful.” Id. The court then remanded for proceedings on that defense.

Other courts have followed Conex. See Feather, 711 F.2d at 542-43 (affirming district court judgment that exemption applied under Conex test); Combs v. Associated Elec. Coop., Inc.,

752 F. Supp. 1131, 1133, 1136, 1141 (D.D.C. 1990) (adopting Conex test and holding exemption applies); Copper Valley Coal Co. v. United Mine Workers of Am., 753 F. Supp. 580, 582-83

(W.D. Pa. 1990) (adopting Conex test and holding illegality was not foreseeable); see Casper v.

SMG, 389 F. Supp. 2d 618, 620-21 n.6 (D.N.J. 2005) (refusing to allow expert testimony on first prong of Conex test, whether defendants “could not reasonably have foreseen that the subject matter of the agreement being challenged would be held to be unlawful”).

b. The Defendants’ Good Faith Damages Defense

In light of the reasoning of Conex and its progeny, Defendants can argue that just as a

“reasonable belief” test for damages immunity under the nonstatutory labor exemption properly balances the need to further collective bargaining encouraged by labor law against the need to deter anticompetitive behavior, a “good faith” or “reasonable belief” test for Capper-Volstead immunity from damages liability properly balances the need to further farming cooperatives encouraged by federal law against the need to deter anticompetitive behavior, while still preserving the availability of injunctive relief to prevent future violations. Imposing antitrust treble damage liability on farmers who could not “reasonably have foreseen” that their activities would not qualify for Capper-Volstead immunity would harm the national interest in farming cooperatives and the policies advanced by the Capper-Volstead Act and Section 6 of the Clayton 54

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Act without meaningfully advancing the purposes of antitrust law because, as the Third Circuit explained, “a damage remedy is effective as a deterrent only when its application to an agreement can be foreseen by the parties at the time they are engaged in [the conduct at issue].”

Conex, 602 F.2d at 520.

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TAB III

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III. State Law Agricultural Cooperative Immunity Defenses

In addition to the Capper-Volstead immunity discussed above, Defendants may also be entitled to state-law immunities against the various claims asserted by the Indirect Purchaser

Plaintiffs (“IPPs”). Each of the twenty-two states at issue in these MDL proceedings has enacted its own agricultural cooperative immunity or immunities, expressly incorporated the Capper-

Volstead Act, or both. This Statement of Law is organized alphabetically by state. For each state, the Statement of Law sets forth the relevant statutory language, identifies any registration or filing requirements, and explains why the statutory exemptions, if applicable, would also bar the IPPs’ non-antitrust claims.

As to unjust enrichment claims in particular, Defendants submit that immunized conduct cannot form the basis for equitable relief. The IPPs assert claims for unjust enrichment under the laws of nineteen states. Each of those states requires a plaintiff alleging unjust enrichment to prove (1) that the defendant received a benefit, and (2) that the defendant’s retention of the

benefit would be “unjust” as that term is construed in that particular state. See infra Section VI.

In the present case, the IPPs allege that Defendants received “illegally inflated prices” for their eggs “[b]y engaging in the unlawful conduct described herein.” E.g., IPP Compl. ¶¶ 380, 382.

But if Defendants’ alleged supply management activity is expressly immunized by state or

federal statute, then it is not “unlawful,” and the resulting egg prices cannot be characterized as

“illegally inflated.” The IPPs would then have no basis for claiming that Defendants’ retention

of the alleged overcharges is “unjust.” Moreover, allowing the IPPs to circumvent statutory

antitrust immunities through common law unjust enrichment claims would defeat the purposes of

the immunities and run counter to each state’s legislatively recognized public policy.

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A. Arizona

1. Arizona Capper-Volstead Equivalents

Arizona law provides the following antitrust exemption for “Cooperative Marketing

Associations”:

An association shall not be deemed to be a combination in restraint of trade, an illegal monopoly or an attempt to lessen competition or fix prices arbitrarily. The marketing contracts or agreements between the association and its members, or any agreements or acts authorized by this article, shall not be considered in restraint of trade.

Ariz. Rev. Stat. Ann. § 10-2022.

2. Statutory Prerequisites

Under the Arizona antitrust statute, an “association” is defined as “a corporation organized under the provisions of this article.” Ariz. Rev. Stat. Ann. § 10-2001(3). Likewise, both “marketing agreements” and “members” are defined in reference to associations duly organized under the statute. Id. § 10-2001(4) (“‘Marketing agreement’ means any agreement entered into between an association organized under this article and its members.”); § 10-2001(5)

(“‘Member’ includes members of associations.”).

The process for organizing under the statute requires that a cooperative (i) file its articles of incorporation in accordance with Arizona’s general corporations law, Ariz. Rev. Stat. Ann.

§ 10-2004; (ii) adopt bylaws within 30 days of incorporating, id. § 10-2006; (iii) elect directors, a president, a secretary, and a treasurer, id. § 10-2012; (iv) conduct meetings at least annually, id.

§ 10-2014; (v) make annual reports, id. § 10-2019; and (vi) pay a nonrefundable license fee both annually and at incorporation, id. § 10-2020.

3. Applicability of Arizona’s Agricultural Cooperative Immunity to Non-Antitrust Claims

Arizona courts would likely hold that the statutory antitrust exemption also bars common law claims for unjust enrichment. A plaintiff cannot recover under a theory of unjust enrichment

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without demonstrating the “absence of justification for enrichment and impoverishment.” Cmty.

Guard. Bank v. Hamlin, 898 P.2d 1005, 1008 (Ariz. App. 1995); see also State v. Ariz. Pension

Planning, 739 P.2d 1373, 1375 (Ariz. 1987) (holding that unjust enrichment will not lie unless

“the ties of natural justice and equity [require] . . . compensation for benefits received”). Here, the IPPs base their claim for unjust enrichment on Defendants’ allegedly “illegal” and

“unlawful” conduct. IPP Compl. ¶¶ 380, 382. These claims must fail if the challenged conduct is expressly declared legal by statute, in which case the IPPs cannot demonstrate the requisite

“absence of justification” for Defendants’ actions.

B. California

1. California Capper-Volstead Equivalents

California Food and Agricultural Code Section 54001 et seq. provides that certain associations formed for the purpose of marketing agricultural products are, by statute, exempt from certain antitrust laws. An association that meets the requisite criteria “is not…(a) A conspiracy, a combination in restraint of trade, or an illegal monopoly [or] (b) An attempt to lessen competition, to fix prices arbitrarily, or to create a combination or pool in violation of any law of this state.” Food & Agric. Code § 54038.28 Moreover, “[t]he marketing contracts and agreements” between an association that meets the requisite criteria and its members “are not illegal, in restraint of trade, or contrary to any statute which is enacted against pooling or combinations.” Id. § 54039.

28 Food & Agric. Code § 54038 provides, in full: Any association which is organized pursuant to this chapter is not any of the following: (a) A conspiracy, a combination in restraint of trade, or an illegal monopoly. (b) An attempt to lessen competition, to fix prices arbitrarily, or to create a combination or pool in violation of any law of this state.

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The California Supreme Court applied the statutory exemption in a 1922 decision upholding the validity of a contract between a cooperative and its stockholders. See Poultry

Producers of Southern Cal., Inc. v. Barlow, 208 P. 93, 94 (Cal. 1922). In Poultry Producers, a stockholder challenged the legality of an agreement requiring each stockholder to sell all of its eggs through the cooperative, claiming the agreement was an unlawful restraint of trade. Id. at

95. Citing the statutory exemption for agricultural associations, the court held that such agreements were “expressly declared not to be within the inhibitory provisions of the Cartwright

Act.” Id. at 96.

Defendants are unaware of any recent case law addressing the application of California’s agricultural association immunity to antitrust claims under the Cartwright Act, Bus. & Prof.

Code §16720 et seq. However, California courts would likely consider analogous federal case law when interpreting the scope and applicability of the state-law immunity. See, e.g., Reynolds v. Cal. Dental Serv., 246 Cal. Rptr. 331, 334 n.2 (Cal. Ct. App. 1988) (“Reliance on federal authority in interpreting the Cartwright Act is accepted since the latter is modeled after the

Sherman Act.”); Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc., 131 Cal.

Rptr. 3d 519, 525 (Cal. Ct. App. 2011) (noting that “federal case law interpreting the Sherman

Act is often a useful aid in interpreting the Cartwright Act”).

2. Statutory Prerequisites

To qualify as a cooperative association under California law, an association must, among other things: (1) be made up of three or more natural persons, a majority of whom are California residents, Food & Agric. Code § 54061; (2) be incorporated under California law, id. § 54082; and (3) have certain provisions in its articles of incorporation and bylaws, see id. §§ 54081,

54111.

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3. Applicability of California’s Agricultural Cooperative Immunity to Non-Antitrust Claims

Research did not reveal any California decisions examining whether Food and

Agricultural Code sections 54038 and 54039 provide a defense to claims under the California

Unfair Competition Law (“UCL”), Bus. & Prof. Code § 17200 et seq., or common law claims for

unjust enrichment. However, under general principles of California law, if conduct is found not

to violate state antitrust laws, that same conduct generally cannot be the basis for a UCL claim.

See Chavez v. Whirlpool Corp., 113 Cal. Rptr. 175, 184 (Cal. Ct. App. 2001) (“[W]e hold that

conduct alleged to be ‘unfair’ because it unreasonably restrains competition and harms

consumers, such as the resale price maintenance agreement alleged here, is not ‘unfair’ if the

conduct is deemed reasonable and condoned under the antitrust laws.”).29

The same analysis applies to the IPPs’ unjust enrichment claim, which is premised on allegations of “unlawful conduct” and “illegally inflated” prices. IPP Compl. ¶¶ 391, 393.

California courts have rejected efforts to avoid statutory bars on liability by recasting statutory violations as unjust enrichment claims. See, e.g., Peterson v. Cellco P’ship, 80 Cal. Rptr. 3d

316, 325 (Cal. Ct. App. 2008) (rejecting unjust enrichment claim where allegations that defendant acted “improperly, unlawfully, and without authority” were based on alleged statutory violation and plaintiffs were not entitled to recover under statute); see also Ghory v. Al-Lahham,

257 Cal. Rptr. 924, 927 (Cal. Ct. App. 1989) (observing that “[p]rinciples of equity cannot be used to avoid a statutory mandate” and rejecting equitable defense of unjust enrichment). Thus,

29 See also Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 973 P.2d 527, 541-42 (Cal. 1999) (“Acts that the Legislature has determined to be lawful may not form the basis for an action under the unfair competition law, but acts may, if otherwise unfair, be challenged under the unfair competition law even if the Legislature failed to proscribe them in some other provision.”); RLH Indus., Inc. v. SBC Commc’ns, Inc., 35 Cal. Rptr. 469, 475 (Cal. Ct. App. 2005) (affirming dismissal of UCL claim where Cartwright Act claim was dismissed and rejecting proposition that defendant’s conduct, which was found not to violate Cartwright Act, “threatens an incipient violation of the Cartwright Act, violates its policy or spirit, or otherwise threatens competition”).

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the IPPs cannot defeat a legislatively granted immunity by seeking recovery for the same conduct under an unjust enrichment theory.

C. District of Columbia

1. District of Columbia Capper-Volstead Equivalents

The District of Columbia Antitrust Act includes an exemption for labor and agricultural organizations with language similar to that found in Clayton Act § 6:

Labor of a human being is not a commodity or an article of commerce. Nothing contained in this chapter shall be construed to forbid the existence and operation of labor, agricultural or horticultural organizations, instituted for the purpose of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade.

D.C. Code § 28-4504(a). The statute also immunizes the activities of a non-profit, trust, or organization established for religious, charitable, literary, or educational purposes and acting consistently with those purposes, id. § 28-4504(b), and provides that “[n]othing contained in this chapter shall be applicable to conduct or activity specifically regulated, permitted, or required by any regulatory body, agency, or commission acting under statutory authority of the District of

Columbia or the United States.” Id. § 28-4518.

2. Statutory Prerequisites

The exemptions noted above do not contain a registration requirement or fee.

3. Applicability of the District of Columbia’s Agricultural Cooperative Immunities to Non-Antitrust Claims

Although District of Columbia courts have not addressed whether the statutory antitrust exemptions operate to bar claims for unjust enrichment or claims under D.C.’s Consumer

Protection Procedures Act, D.C. Code § 28-3901 et seq., those claims necessarily fail if

Defendants’ conduct is protected by a statutory immunity. Both claims are predicated on the

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allegation that Defendants’ conduct constituted “unlawful” or “illegal” restraints on supply. IPP

Compl. ¶¶ 400, 403. If Defendants were operating under a statutory immunity, then nothing

about the alleged impact on price and supply can be characterized as “unlawful” or “illegal,” and

there is nothing “unjust” about Defendants’ retention of alleged overcharges. See New World

Commc’ns, Inc. v. Thompsen, 878 A.2d 1218, 1223 (D.C. 2005) (“Unjust enrichment occurs

when: (1) the plaintiff conferred a benefit on the defendant; (2) the defendant retains the benefit;

and (3) under the circumstances, the defendant’s retention of the benefit is unjust.”).

Furthermore, the express purposes of the Consumer Protection Procedures Act are to “(1)

assure that a just mechanism exists to remedy all improper trade practices and deter the continuing use of such practices; (2) promote, through effective enforcement, fair business practices throughout the community; and (3) educate consumers to demand high standards and seek proper redress of grievances.” D.C. Code § 28-3901(b). To the extent District of Columbia law sanctions and protects conduct by agricultural cooperatives, such conduct is not “improper”

and is not activity from which consumers need protection.

D. Florida

1. Florida Capper-Volstead Equivalents

a. Agricultural Cooperative Marketing Associations and Nonprofit Cooperative Associations

Florida law exempts two types of agricultural cooperatives from antitrust scrutiny:

agricultural cooperative marketing associations, see Fla. Stat. §§ 618.01-.28, and nonprofit

cooperative associations, see id. §§ 619.01-.09. As to marketing associations, Florida law

provides that “marketing contracts and agreements between the association and its members or

any agreements authorized” cannot be “considered illegal as such, or in unlawful restraint of

trade, or part of a conspiracy . . . to accomplish an improper or illegal purpose.” Id. § 618.21.

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Similarly, a nonprofit cooperative association cannot be considered “a combination in restraint of

trade or an illegal monopoly,” nor shall “any agreements authorized [under the statute] be

considered illegal or in restraint of trade.” Id. § 619.02.

Pursuant to section 618, agricultural cooperative marketing associations may “engag[e] in any cooperative activity in connection with the producing, marketing, or selling of agricultural products; or with the growing, harvesting, preserving, drying, processing, canning, packing, grading, storing, warehousing, handling, shipping, or utilizing such products.” Fla. Stat.

§ 618.06. An agricultural cooperative marketing association must operate “for the mutual benefit of its members” and limit returns on capital stock “to an amount not to exceed 8 percent

per annum.” Id. § 618.01(3). Additionally, “the value of business done with nonmembers shall

not exceed the business done with members.” Id.

Pursuant to section 619.01, a nonprofit cooperative association may be formed to “engage

in the production, preserving, drying, packing, canning, bottling, shipping, or marketing of

agricultural products,” as well as all activities “necessarily incidental thereto.” Fla. Stat.

§ 619.01.

b. Availability of Federal Immunities

Florida law also protects agricultural cooperatives from state antitrust and Florida

Deceptive and Unfair Trade Practices Act (FDUTPA) claims if the cooperative’s actions are immune under federal law. See Fla. Stat. § 542.20 (“Any activity or conduct exempt under

Florida statutory or common law or exempt from the provisions of the antitrust laws of the

United States is exempt from the provisions of this chapter.”); id. § 501.212(1) (providing that

FDUTPA does not apply to “[a]n act or practice required or specifically permitted by federal or state law”). Accordingly, if Defendants’ conduct is immune from antitrust scrutiny under the

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federal Capper-Volstead Act, the conduct is likewise exempt from Florida’s antitrust and consumer protection laws.

2. Statutory Prerequisites

Both types of cooperatives immunized under Florida law must file articles of incorporation and otherwise comply with applicable registration requirements. See Fla. Stat.

§§ 618.04, 619.04. While an agricultural cooperative marketing association can be organized with or without capital stock, a nonprofit cooperative association cannot have capital stock. See id. §§ 618.04, 619.04.

Florida law also provides for the registration of foreign agricultural cooperatives, which then may conduct cooperative activities as allowed under their home states’ laws and Florida law. Specifically, “any cooperative association with or without capital stock . . . organized under the laws of another state shall be allowed to carry on any proper activities, operations and functions” in Florida upon the filing of a certified copy of its articles of incorporation with the

Secretary of State and the payment of a filing fee. Fla. Stat. § 618.26. Further, “all contracts which could be made by any” Florida agricultural marketing cooperative association would likewise be “valid and enforceable.” Id.

3. Applicability of Florida’s Agricultural Cooperative Immunities to Non-Antirust Claims

Under Florida law, antitrust exemptions apply with equal force to claims under the

FDUTPA and claims for unjust enrichment. As discussed above, Fla. Stat. § 501.212(1) shields from liability under the FDUTPA any “act or practice required or specifically permitted by federal or state law.” Accordingly, if Defendants establish that the challenged conduct is protected by either a Florida or federal agricultural cooperative immunity, then the IPPs’

FDUTPA claims fail as a matter of law.

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Similarly, in Prohias v. AstraZenica Pharmaceuticals, a Florida appeals court held that because the defendants’ FDA-approved drug labeling was specifically permitted by federal law, the defendants did not receive an “unjust benefit” from purchasers of the drug complaining about allegedly deceptive promotional and advertising activities. 958 So. 2d 1054, 1056 (Fla. Dist. Ct.

App. 2007). The plaintiff’s common law unjust enrichment claims therefore failed as a matter of law. Id. Just as in Prohias, if the challenged conduct here is permitted by either Florida or federal agricultural cooperative statutes, then Defendants could not have been unjustly enriched by their conduct, and the IPPs’ unjust enrichment claim is barred.

E. Iowa

1. Iowa Capper-Volstead Equivalents

Section 553.6 of the Iowa Competition Law exempts the following activities from antitrust scrutiny:

2. The activities of any agricultural or horticultural organization, whether incorporated or unincorporated, or of the individual members of such organizations, if these activities carry out the legitimate objectives of such organizations, to the extent permitted under the laws of either this state or the United States. 3. The activities of persons engaged in the production of agricultural products when these persons act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing the products of these persons, to the extent permitted under the laws of either this state or the United States. These associations may have marketing and purchasing agencies in common and their members may make the necessary contracts and agreements to effect such purposes. However, such associations must be operated for the mutual benefit of the members of these associations acting as producers to qualify under this subsection. 4. The activities or arrangements expressly approved or regulated by any regulatory body or officer acting under authority of this state or of the United States.

Iowa Code § 553.6.

The Iowa law is similar to the Capper-Volstead Act in that it (1) applies to associations with or without capital stock, (2) covers the activities of collectively processing, preparing for

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market, handling, and marketing the products of association members, (3) allows associations to

have marketing agencies in common, (4) allows members to make necessary contracts and

agreements for such purposes, and (5) requires that associations must be operated for the mutual

benefit of their members.

The Iowa statute provides broader protections than the Capper-Volstead Act in two ways.

First, in addition to having marketing agencies in common, associations under the Iowa law may

also have purchasing agencies in common. Second, the Iowa statute does not include the

Capper-Volstead Act’s requirement of one member, one vote, the eight percent dividend ceiling,

or the restriction on dealing with products of non-members.

Although research did not reveal any decisions interpreting the agricultural exemptions

under Iowa’s antitrust statute, it is likely that Iowa courts would interpret the exemptions as

immunizing any conduct that is exempt under the Capper-Volstead Act and related federal

statutes. Sections 553.6(2) and 553.6(3) both provide exemptions “to the extent permitted under the laws of either this state or the United States.” Iowa Code § 553.6(2), (3) (emphasis added).

This language makes clear that the Iowa legislature meant to immunize any conduct that is immune under the Clayton Act or the Capper-Volstead Act.30

2. Statutory Prerequisites

The exemptions noted above do not contain a registration requirement or fee.

30 Moreover, Iowa Code § 553.2 prescribes a “uniform application of the state and federal laws prohibiting restraints of economic activity and monopolistic practices.” Relying on that provision, the Supreme Court of Iowa has interpreted section 553.6(4) – which provides an exemption for “activities or arrangements expressly approved or regulated by any regulatory body or officer acting under authority of this state or of the United States” – as immunizing conduct that is immune under federal law. See Fed. Land Bank of Omaha v. Tiffany, 529 N.W.2d 294, 296-97 (Iowa 1995) (“Because these plaintiffs would be entitled to exemption under the federal antitrust act [for farm credit banks as federal instrumentalities] and because Iowa Code section 553.2 prescribes a “uniform application of the state and federal laws prohibiting restraints of economic activity and monopolistic practices,” we conclude that section 553.6 should be interpreted to provide an exemption . . . .”). Given the close similarities between the Iowa agricultural exemptions and the analogous federal statutes, Iowa courts would reach a similar conclusion with respect to those exemptions.

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3. Applicability of Iowa’s Agricultural Cooperative Immunities to Non- Antitrust Claims

Iowa courts would likely hold that the statutory antitrust exemptions, if applicable, also

bar common law claims for unjust enrichment under Iowa law. The three basic elements for

unjust enrichment are: “(1) the defendant was enriched by the receipt of a benefit; (2) the enrichment was at the expense of the plaintiff; and (3) it is unjust to allow the defendant to retain

the benefit under the circumstances.” State ex. rel. Palmer v. Unisys Corp., 637 N.W.2d 142,

154-55 (Iowa 2001). The Iowa Supreme Court has further recognized that unjust enrichment

claims require a plaintiff to demonstrate that “a defendant has received money which in equity and good conscience belongs to plaintiff.” Iconco v. Jensen Const. Co., 622 F.2d 1291, 1301

(8th Cir. 1980) (quoting In re Estate of Stratman, 1 N.W.2d 636, 642 (Iowa 1942)). Here, the

IPPs’ only basis for claiming that Defendants have received money “which in equity and good

conscience” belongs to the IPPs is the allegation that Defendants’ alleged supply management

activity constituted “illegal conduct.” IPP Compl. ¶ 417. The unjust enrichment claim therefore

fails if the challenged conduct is expressly declared legal by statute.

F. Kansas

1. Kansas Capper-Volstead Equivalents

Kansas’s Cooperative Marketing Act authorizes the creation of agricultural cooperatives

consisting of five or more persons. Kan. Stat. Ann. §§ 17-1601 to -1643 (2012). Agricultural

cooperatives may “be organized to engage in any activity in connection with the marketing or

selling of the agricultural products of the association’s members . . . .” Id. § 17-1604; see id.

§ 1605 (enumerating broad powers of cooperative associations which include, but are not limited

to, processing, packing, storing, handling, shipping, and utilization of agricultural products).

Cooperatives are similarly empowered to market or otherwise deal in the products of non-

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members so long as the non-members’ products are not “an amount greater in value than [the

products that] are handled by the association for members.” Id. Any laws that conflict with the

Kansas Cooperative Marketing Act “shall not be construed as applying to [cooperative

associations].” Id. §17-1626. Additionally, “[n]o association, contract, method or act which

complies with the provisions of [the Cooperative Marketing Act] . . . shall be deemed a

conspiracy or combination in restraint of trade or as creating an illegal monopoly.” Id. § 17-

1634.

2. Statutory Prerequisites

Kansas cooperatives may be organized with or without capital stock. Kan. Stat. Ann.

§ 17-603(a). To organize under Kansas’s Cooperative Marketing Act, an association must prepare and file articles of incorporation that meet the requirements set forth in § 17-1607. In the alternative, if an association is organized under another statute, it may receive the benefits of the

Cooperative Marketing Act by paying a fee and filing a declaration with the Kansas secretary of state. Id. § 17-1603(c); see also id. § 17-1621 (providing for the adoption of the act by existing corporations). Under section 17-1603(c), an association “organized and doing business under

other statutes or which [has] attempted to so organize and do business, shall have the benefit of

all of the provisions of [the Cooperative Marketing Act] . . . on paying the fees provided for in

[the] act, and filing with the secretary of state a written declaration . . . .” Id. § 17-1603(c).

3. Applicability of Kansas’ Agricultural Cooperative Immunity to Non- Antitrust Claims

The IPPs have not pleaded any non-antitrust claims under Kansas law.

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G. Massachusetts

1. Massachusetts Capper-Volstead Equivalents

Massachusetts does not have a Capper-Volstead equivalent. The Massachusetts Antitrust

Act, however, provides that: “No provision of this Act shall apply to (a) Any activities which

are exempt from any of the federal antitrust laws or the Federal Trade Commission Act . . . or (c)

Any activities authorized or approved under federal, state or local law.” Mass. Gen. Laws ch.

93, § 7. The Massachusetts Consumer Protection Act is also construed in harmony with federal

antitrust statutes. See Mass. Gen. Laws. ch. 93A, §§ 2, 11. Accordingly, conduct that is immune

under the Capper-Volstead Act is also immune under Massachusetts law.

2. Applicability of Massachusetts’ Agricultural Cooperative Immunities to Non-Antitrust Claims

While no cases were found discussing an explicit exemption or other special defense for

cooperatives for non-antitrust claims, conduct exempt from liability under the antitrust laws cannot form the basis for a viable unjust enrichment claim. Unjust enrichment is an equitable claim based on the notion that, in a given situation, it would be “contrary to equity and good conscience” for one to retain a benefit at the expense of another. Santagate v. Tower, 833

N.E.2d 171, 176 (Mass. App. Ct. 2005). To succeed on the claim, a plaintiff must show how the

retention of a benefit is unjust, i.e., “how it violates principles of equity and morality.” McGrath

v. Braney, No. WOCV201001603, 2011 WL 4424068, at *4 (Mass. Super. Ct. July 12, 2011)

(quotation omitted). If the underlying conduct alleged is not wrongful it cannot form the basis

for unjust enrichment. See, e.g., id. at *4-5; James L. Miniter Ins. Agency, Inc. v. Ohio Indemnity

Co., 112 F.3d 1240, 1250 n.4 (1st Cir. 1997). Here, if Defendants’ conduct is immunized under

state or federal law, the conduct is not wrongful and cannot give rise to liability for unjust

enrichment.

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H. Michigan

1. Michigan Capper-Volstead Equivalents

In 1972, Michigan adopted the Agricultural Marketing and Bargaining Act (the

“Agricultural Act”). See Mich. Comp. Laws Ann. § 290.701, et. seq. (West). The Agricultural

Act allows producers of agricultural commodities to be represented by associations, creates an

agricultural marketing and bargaining board, provides for the accreditation of associations,

establishes obligations on the part of handlers and associations, provides for arbitration, defines unfair practices, and prescribes penalties. See id. The Agricultural Act also states that “activities of accredited associations and handlers in bargaining with respect to the price and other terms of sale of the agricultural commodities produced by the members of such accredited associations do not violate any antitrust laws of this state.” Id. § 290.726.

2. Statutory Prerequisites

The Agricultural Act requires that accredited associations meet several requirements.

Mich. Comp. Laws Ann. § 290.707 (West). The filing for accreditation must provide or demonstrate: (1) that the association meets the requirements of the Capper-Volstead Act; (2) that the association has bylaws which satisfy the requirements of the Agricultural Act; (3) the association has marketing and bargaining contracts that satisfy the requirements of the

Agricultural Act; and (4) the association has established and authorized a marketing and

bargaining committee to negotiate with handlers for the agricultural commodity. Id.

After an association becomes accredited, it must file an annual report with the Michigan

Department of Agriculture and Rural Development to certify that it continues to meet the

requirements for accreditation. Mich. Comp. Laws Ann. § 290.711 (West).

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3. Applicability of Michigan’s Agricultural Cooperative Immunity to Non-Antitrust Claims

The IPPs have not alleged a non-antitrust claim under Michigan law.

I. Minnesota

1. Minnesota Capper-Volstead Equivalents

Minnesota has two statutory antitrust exemptions applicable to agricultural cooperatives.

The first such exemption, Minn. Stat. § 325D.55, was derived from Clayton Act § 6 and Capper-

Volstead Act § 1. Note, Minnesota Antitrust Law of 1971: Interpretation and Analysis, 63 Minn.

L. Rev. 907, 939 (1979). Section 325D.55, subdivision 1, provides:

Nothing [in the Minnesota Antitrust Law] shall be construed to forbid the existence or operation of labor, electrical, agricultural, or horticultural organizations . . . that are instituted for the purpose of mutual help, and not conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade under [the Minnesota Antitrust Law], when lawfully carrying out the legitimate objects hereof.

Minn. Stat. § 325D.55, subdiv. 1. The primary difference between section 325D.55 and Clayton

Act § 6 is that the Minnesota statute omits the Clayton Act’s requirement of “not having capital stock.” Compare id., with 15 U.S.C. § 17. Thus, section 325D.55 accomplishes one of the

Capper-Volstead Act’s primary goals: extending the agricultural immunity to organizations with capital stock. See 59 Cong. Rec. 7851 (1920) (statement of Rep. Morgan) (“The object of [this bill] is to make it clear that persons engaging in the production of agricultural products may form corporations or associations, either with or without capital stock, and may engage in collectively marketing their products.”).

In addition to the exemption contained in section 325D.55, Minnesota’s cooperative statute provides an antitrust exemption for “agricultural marketing contracts.” See Minn. Stat.

§ 308A.205. Section 308A.205 authorizes Minnesota cooperatives to “make and execute

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marketing contracts, requiring the members or patrons to sell a specified portion of their agricultural products or specified commodities exclusively to or through the cooperative or facilities established by the cooperative.” Id. subdiv. 1. Section 308A.205 further provides that:

A cooperative exercising authority under this section is not a combination in restraint of trade or an illegal monopoly, or an attempt to lessen competition or fix prices arbitrarily. The marketing contracts and agreements under this section are not illegal, or an unlawful restraint of trade, or a part of a conspiracy or combination to accomplish an improper or illegal purpose.

Id. subdiv. 8.

Research did not reveal any Minnesota case law addressing the state’s statutory exemptions, but Minnesota courts would likely follow analogous federal decisions. See Lorix v.

Crompton Corp., 736 N.W.2d 619, 626 (Minn. 2007) (holding that “Minnesota antitrust law is generally interpreted consistently with federal antitrust law” and observing that “desire for harmony between federal and state antitrust law relates more to prohibited conduct than to who can bring a lawsuit”); Minn. Twins P’ship v. State, 592 N.W.2d 847, 856 (Minn. 1999) (holding that “the business of professional baseball,” which is exempt from federal antitrust laws, is also exempt from Minnesota’s antitrust statute).

2. Statutory Prerequisites

Section 325D.55 does not contain a registration requirement or fee. Minnesota’s cooperative statute, however, imposes a number of registration requirements on a business seeking to organize as a cooperative under Minnesota law, see, e.g., § 308A.131 (requiring cooperatives to file articles of incorporation), and requires foreign cooperatives seeking to do business in Minnesota to comply with most of the filing requirements applicable to foreign corporations, see id. § 308A.032, subdiv. 2.

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3. Applicability of Minnesota’s Agricultural Cooperative Immunities to Non-Antitrust Claims

Minnesota courts have not addressed whether the statutory antitrust exemptions operate

to bar unjust enrichment claims based on allegedly anticompetitive conduct. Nevertheless, the

IPPs’ unjust enrichment claim under Minnesota law, which is premised on the same allegations of “unlawful conduct” and “illegally inflated prices” as the antitrust claim, IPP Compl. ¶¶ 444-

45, necessarily fails if Defendants’ conduct is immune from antitrust liability.

To recover under an unjust enrichment theory, a Minnesota plaintiff must demonstrate not only that the defendant received a benefit, but that the defendant’s retention of the benefit would be illegal, unlawful, or immoral. See ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc.,

544 N.W.2d 302, 306 (Minn. 1996) (“[U]njust enrichment claims do not lie simply because one

party benefits from the efforts or obligations of others, but instead it must be shown that a party

was unjustly enriched in the sense that the term ‘unjustly’ could mean illegally or unlawfully”

(quoting First Nat’l Bank v. Ramier, 311 N.W.2d 502 (Minn. 1981)); Holman v. CPT Corp., 457

N.W.2d 740, 745 (Minn. Ct. App. 1990) (holding that unjust enrichment claim may be founded

on failure of consideration, fraud, mistake, or “situations where it would be morally wrong for

one party to enrich [itself] at the expense of another” (quoting Anderson v. DeLisle, 352 N.W.2d

794, 796 (Minn. App. 1984)). In the present case, the IPPs allege that Defendants received

higher prices for their eggs “[b]y engaging in the unlawful conduct described herein.” IPP

Compl. ¶ 444. If Defendants’ conduct is expressly immunized by state or federal statute,

however, then such conduct is not “unlawful,” and the resulting egg prices cannot be

characterized as “illegally inflated.”

Furthermore, Minnesota courts have consistently rejected efforts to avoid statutory

obstacles to recovery – such as the absence of a private right of action – by recasting statutory

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violations as common law claims. See Palmer v. Ill. Farmers Ins. Co., 666 F.3d 1081, 1085-86

(8th Cir. 2012) (discussing cases). Here, the Minnesota legislature has expressly recognized an

immunity for certain conduct. Minnesota courts would respect the legislature’s decision to

immunize that conduct and, accordingly, would reject an unjust enrichment claim based on

conduct that is immune. See id.

J. Mississippi

1. Mississippi Capper-Volstead Equivalents

Mississippi’s antitrust law broadly exempts agricultural associations from antitrust

scrutiny. In particular, the law states:

Nothing contained in [Mississippi’s antitrust statutes] shall be construed to forbid the existence of agricultural, horticultural, poultry, cattle or dairy organizations, instituted for the purpose of cooperation or mutual help, having no capital stock and not conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof, nor be held or construed to be illegal combinations or conspiracies in restraint of trade under the antitrust law.

Miss. Code § 75-21-5.

Similarly, Mississippi’s Agricultural Association Law, Miss. Code § 79-17-1 et seq.,

specifically authorizes producers of agricultural products to create associations to “co-operate in

the productions, processing, packing, distribution, financing and marketing of agricultural

products.” Id. § 79-17-7. The Agricultural Association Law does not contain a stand-alone

antitrust exemption, but it states broadly that:

Any provision of any law which otherwise would be in conflict with this chapter, or with the powers herein conferred, shall not be construed as applying to the associations herein provided for; and all laws heretofore or hereafter enacted in conflict with any of the provisions hereof shall be construed as not applying to associations of this character, if to construe otherwise would tend to limit, restrict, prohibit, or penalize the associations herein authorized to be organized.

Id. § 79-17-25.

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Finally, Mississippi’s Agricultural Co-operative Marketing Association Law, Miss. Code

§ 79-19-1 et seq., authorizes the creation of associations for purposes of “growing, breeding, handling, shipping, or utilization, or moving or marketing of the byproducts thereof of live stock and poultry.” Miss. Code § 79-19-7. It then provides the following antitrust exemption:

No association organized hereunder shall be deemed to be in violation of the antitrust statutes of this state or a combination in restraint of trade or an illegal monopoly, nor in an attempt to lessen competition or fix prices arbitrarily; nor shall the marketing contracts or agreements between the association and its members or any agreements authorized in this chapter be considered illegal or in restraint of trade, or in violation of said anti-trust statutes of said state.

Id. § 79-19-51. The Agricultural Co-operative Marketing Association Law further states that

“[a]ny provisions of law which otherwise would be in conflict with this chapter shall not be construed as applying to the associations herein provided for.” Id. § 79-19-37.

2. Statutory Prerequisites

The Agricultural Co-operative Marketing Association Law protects “[a]ny co-operative marketing association, organized under appropriate laws of any other state for the purposes and with the restrictions and limitations substantially the same as those set forth herein,” granting them the right to “operate and do business in this state with all the rights, powers, and privileges granted to any cooperative marketing association incorporated under this chapter,” as long as the foreign cooperative complies with Mississippi’s laws “regarding the qualification of foreign corporations.” Miss. Code § 79-19-47. A corporation qualifies if it applies with the Secretary of

State and maintains a registered office and agent. Id. §§ 79-4-15.03, -15.07.

The Agricultural Association Law’s purpose is “to promote the general welfare of agriculture” and “to enable producers of agricultural products whether in the State of Mississippi or not to co-operate in the productions, processing, packing, distribution, financing and marketing of agricultural products.” Miss. Code § 79-17-7. An agricultural association under title 17 can be organized with or without capital stock. Id. §§ 79-17-13, -17-23. 75

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3. Applicability of Mississippi’s Agricultural Cooperative Immunities to Non-Antitrust Claims

Mississippi courts would likely conclude that statutory exemptions apply with equal force

to claims for unjust enrichment based on alleged antitrust violations. The Supreme Court of

Mississippi has recognized the general proposition that “a state cannot impose common law

damages on individuals for doing what a federal act or regulation authorized them to do.”

Cooper v. Gen. Motors Corp., 702 So. 2d 428, 434 (Miss. 1997). The Supreme Court of

Mississippi has also held that a claim for unjust enrichment requires a result “objectively seen as

unjust.” Omnibank of Mantee v. United S. Bank, 607 So. 2d 76, 92 (Miss. 1992). To the extent

Defendants’ actions are immunized by Capper-Volstead or Mississippi’s equivalents, the alleged

agreements among producers, and profits resulting from such agreements, would be the result of legislatively sanctioned conduct and could not, by definition, be labeled as “unjust.”

Moreover, the broad protection of section 79-19-51, which provides that “any agreement

authorized” by the Agricultural Co-operative Marketing Association Law cannot “be considered

illegal,” creates a statutory obstacle to any unjust enrichment claim challenging legitimate

cooperative conduct.

K. Nebraska

1. Nebraska Capper-Volstead Equivalents

Nebraska’s Consumer Protection Act contains an agricultural cooperative exemption that

is nearly identical to the Capper-Volstead Act. Nebraska Revised Statutes section 59-1618

provides:

Persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, nut growers, or fruit growers may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling, and marketing such products in intrastate commerce. Such associations may have marketing agencies in common, and the associations and their members may make the necessary contracts and agreements to effect such purposes. The associations shall be

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operated for the mutual benefit of the members thereof, as such producers, and conform to one or both of the following requirements: (1) That no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein; or (2) That the association does not pay dividends on stock or membership capital in excess of eight percent per annum. Such association shall not deal in the products of nonmembers to an amount greater in value than such as are handled by it for members.

Neb. Rev. Stat. § 59-1618. The only material difference between section 59-1618 and the

Capper-Volstead Act is that the Nebraska statute applies to agricultural products in “intrastate commerce,” whereas the federal immunity applies to agricultural products in “interstate and foreign commerce.” Compare id., with 7 U.S.C. § 291.

2. Statutory Prerequisites

The Nebraska agricultural cooperative exemption does not contain a registration requirement or fee.

3. Applicability of Nebraska’s Agricultural Cooperative Immunity to Non-Antitrust Claims

Although research did not reveal any Nebraska case law directly on point, the state’s agricultural exemption likely provides a defense to the IPPs’ unjust enrichment claim. This result follows from the common-sense proposition that where conduct is not seen as wrongful under state antitrust law, claims premised upon the illegality of that conduct must also be dismissed. For example, in Wrede v. Exch. Bank of Gibbon, 531 N.W.2d 523, 530 (Neb. 1995), the court concluded that the conduct at issue did not violate the state’s Consumer Protection Act.

The court then held that a separate claim in assumpsit – a claim which “lies whenever one has received money which in equity and good conscience one should pay to another” – should therefore also be dismissed. Id. This was because the assumpsit claim could not stand without an underlying “specific legal principle or situation which equity has established or recognized to

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bring a case within the scope of assumpsit for money had and received.” Id. In other words,

“one who is free from fault cannot be held to be unjustly enriched merely because one has

chosen to exercise a legal or contract right.” Id. (emphasis added). The Wrede case suggests that dismissal of the Consumer Protection Act claim would also require dismissal of plaintiffs’ state law unjust enrichment claim, as the unjust enrichment claim depends on the notion that defendants acted in violation of state antitrust law.

L. Nevada

1. Nevada Capper-Volstead Equivalents

Nevada Revised Statute 598A.040 provides that the state’s Unfair Trade Practices Act,

Nev. Rev. Stat. 598A.010 et seq., “do[es] not apply” to:

1. Any labor, agricultural or horticultural organizations organized for the purpose of self-help and not for profit to itself nor to individual members thereof, while lawfully carrying out its legitimate objects…[or] 3. Conduct which is expressly authorized, regulated or approved by: (a) A statute of this State or of the United States; (b) An ordinance of any city or county of this State, except for ordinances relating to video service providers; or (c) An administrative agency of this State or of the United States or of a city or county of this State, having jurisdiction of the subject matter.

Research revealed no Nevada cases applying Nevada Revised Statute 598A.040.

However, under Nevada law the provision “shall be construed in harmony with prevailing

judicial interpretations of the federal antitrust statutes.” Nev. Rev. Stat. 598A.050.

2. Statutory Prerequisites

Nevada Revised Statute 598A.040 contains no registration requirement or fee.

3. Applicability of Nevada’s Agricultural Cooperative Immunity to Non- Antitrust Claims

Research did not reveal any Nevada decision addressing whether Nevada Revised Statute

598A.040 also bars common law claims for unjust enrichment. Nevertheless, if Defendants’

conduct is expressly immunized by state or federal statute, then the IPPs’ unjust enrichment

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claim under Nevada law necessarily fails. “Unjust enrichment is the unjust retention of a benefit

to the loss of another, or the retention of money or property of another against the fundamental

principles of justice or equity and good conscience.” Topaz Mut. Co. v. Marsh, 839 P.2d 606,

613 (Nev. 1992). Here, the IPPs’ unjust enrichment claim is premised entirely on the allegation

that Defendants received “illegally inflated prices” for eggs. IPP. Compl. ¶¶ 466-67. If the

conduct that caused the alleged price inflation was protected by a statutory immunity, there is

nothing “illegal” about the price inflation and nothing “unjust” about Defendants’ retention of the alleged overcharge.

M. New Mexico

1. New Mexico Capper-Volstead Equivalents

a. The New Mexico Antitrust Act Exempts Agricultural Organizations From Liability Under Antitrust Laws

The New Mexico Antitrust Act exempts agricultural organizations and their members from liability under antitrust laws. Section 57-1-4 states:

No law against monopolies or combinations in restraint of trade shall be held or construed to forbid the existence and operation of . . . agricultural . . . organizations instituted for purposes of mutual help and not having capital stock or conducted for profit to the organization or to forbid or restrain individual members of such organizations from lawfully carrying out the objects thereof; nor shall such organizations or the members thereof be held or construed to be illegal combinations or conspiracies in restraint of trade under any law against monopolies or combinations in restraint of trade. . . .

N.M. Stat. § 57-1-4. The statute parrots Section 6 of the Clayton Act. Thus, in light of the fact that the New Mexico Antitrust Act is to be construed in a manner consistent with federal law,

New Mexico courts would likely follow analogous federal case law when interpreting the exemption in Section 57-1-4. See N.M. Stat. § 57-1-15 (stating that courts should interpret New

Mexico Antitrust Act “in harmony with judicial interpretations of the federal antitrust laws”); see

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also Smith Mach. Co. v. Hesston Corp., 878 F.2d 1290, 1292-93 (10th Cir. 1989) (holding that

New Mexico antitrust statute must be construed in harmony with federal antitrust laws).

The New Mexico Antitrust Act also provides that:

Nothing in this section shall be held or construed to justify any restraint of trade or restriction of competition except such as is incident to the protection and promotion of the interests of the members of such organizations, in view of their situation and circumstances, but such organizations and their objects and the effectuation thereof shall prima facie be presumed to be in reasonable restraint of trade or restriction of competition.

N.M. Stat. § 57-1-4. This provision indicates that claims against “agricultural organizations” are to be evaluated under the rule of reason.

b. The New Mexico Cooperative Marketing Association Act Exempts Registered Agricultural Cooperatives from Liability Under Antitrust Laws

The New Mexico Cooperative Marketing Association Act (NMCMA), N.M. Stat. § 76-

12-1 to -23, authorizes the organization of associations to “engage in any activity in connection

with the marketing or selling of agricultural products,” processing such products, or

manufacturing or selling the byproducts of such products, among other specified activities. N.M.

Stat. § 76-12-5. The NMCMA exempts associations organized under it from liability under

antitrust laws. Section 76-12-18 provides:

Any association organized hereunder and complying with the terms hereof shall be deemed not to be a conspiracy nor a combination in restraint of trade nor an illegal monopoly; nor an attempt to lessen competition or to fix prices arbitrarily or to create a combination or pool in violation of any law of this state; and the contracts and agreements between the association and its members and any agreements authorized in this act shall be considered not to be illegal nor in restraint of trade nor a part of conspiracy or combination to accomplish an improper or illegal purpose nor contrary to the provisions of any statute enacted against pooling or combinations.

N.M. Stat. § 76-12-18(A). Furthermore, “[a]n association organized hereunder may acquire, exchange, interpret and disseminate to its members . . . past, present and prospective, crop, market, statistical, economic and other similar information either directly or through an agent

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created or selected by it or by other associations acting in conjunction with it.” Id. § 76-12-

18(B).31

2. Statutory Prerequisites

Section 57-1-4 of the New Mexico Antitrust Act does not contain a registration requirement or fee. The NMCMA applies, by its terms, to “association[s] organized hereunder.”

§ 76-12-18. The term “association” is defined to mean:

[A]ny corporation organized under this act or any similar corporation organized under any general or special act of this or any other state as a cooperative association, for the mutual benefit of its members, as agricultural producers, in which the return on the stock or membership capital is limited to an amount not to exceed eight per centum (8%) per annum, and which during any fiscal year does not deal with nonmembers’ products to an amount greater in value than members’ products.

N.M. Stat. § 76-12-3(C) (emphasis added).32 “[F]oreign associations admitted to do business in

[New Mexico]” are required to pay $25 annually to the state and to obtain an annual license to authorize the transaction of business in the state. N.M. Stat. § 76-12-20.

3. Applicability of New Mexico’s Agricultural Cooperative Immunities to Non-Antitrust Claims

Although New Mexico courts have not yet addressed whether the statutory exemptions operate to bar the non-antitrust claims alleged by the IPPs under New Mexico law – namely, a claim for unjust enrichment and a claim based on an alleged violation of Section 57-12-1 of the

New Mexico Unfair Practices Act (“NMUPA”) – the exemptions should have this effect given that the IPPs’ non-antitrust claims are based on allegedly anticompetitive conduct.

31 The Act also provides that “[a]n association organized hereunder may advise its members in respect to the adjustment of their current and prospective production of agricultural commodities.” N.M. Stat. § 76-12-18(C). 32 The statute requires members of associations organized thereunder to be “persons engaged in the production of agricultural products to be handled by or through the association, including the lessees and tenants of land used for the production of such products and any lessors and landlords who receive as rent all or part of the crop raised on the leased premises.” N.M. Stat. § 76-12-11.

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The IPPs’ unjust enrichment claim under New Mexico law is premised on the same

allegations of “unlawful conduct” and “illegally inflated prices” as their antitrust claim. IPP

Compl. ¶¶ 478-80. If Defendants’ conduct is immune from antitrust liability, it cannot be unjust for Defendants to have retained the benefit they received from the sales of eggs. See Ontiveros

Insulation Co. v. Sanchez, 3 P.3d 695, 698 (N.M. Ct. App. 2000) (holding that unjust enrichment

requires plaintiff to prove (1) defendants knowingly received a benefit at plaintiffs’ expense (2)

in a manner such that allowing defendants to retain the benefit would be unjust).

Similarly, the IPPs’ claim under the NMUPA rests entirely on the allegation that

Defendants fixed prices and manipulated the supply of eggs. IPP Compl. ¶¶ 472-77. If

Defendants’ conduct underlying these allegations is immune from antitrust liability, Defendants

could not have taken advantage of IPPs’ “lack of knowledge, skill, ability, experience or

capacity” to a “grossly unfair degree,” nor was there a “gross disparity” between the value of

eggs sold and the purchase price. See N.M. Stat. § 57-12-2(E)(1)-(2) (defining “unconscionable

trade practice” under NMUPA).

N. New York

1. New York Capper-Volstead Equivalents

New York’s Donnelly Act has substantially similar language to the Capper-Volstead Act

and exempts agricultural cooperatives from its antitrust provisions: “The provisions of this

article shall not apply to cooperative associations, corporate or otherwise, of farmers, gardeners,

or dairymen, including live stock farmers and fruit growers, nor to contracts, agreements or

arrangements made by such associations . . . .” N.Y. Gen. Bus. Law § 340(3). Furthermore, the

law states that “nothing . . . shall be deemed to prohibit or restrict the right of workingmen to

combine in unions, organizations and associations, not organized for the purpose of profit.” Id. §

340(4).

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Another New York statute, the Agricultural Cooperative Corporations Law, mirrors the

remaining language of Capper-Volstead. However, the New York statute is more specific,

stating not only that “farmers may act together in manufacturing, processing, preparing for

market, handling and/or marketing their farm products,” but also that farmers may “act together

in purchasing, testing, grading, processing, distributing and/or furnishing farm supplies and/or

farm business services through cooperatives operated for the mutual benefit of the members

thereof as producers and purchasers.” N.Y. Coop. Corp. Law § 110.

The New York version also permits cooperatives to pay dividends in excess of 12% per

year and includes additional limitations in regards to dealing in agricultural waste products. See

N.Y. Coop. Corp. Law § 111. Finally, New York law permits cooperative corporations of

producers organized under the laws of other states to be eligible for membership in agricultural

marketing or purchasing corporations in New York. Id.

New York case law applying these provisions is limited. One court has found the scope

of the exemption from the state’s antitrust laws to be quite broad, holding that “a co-operative

association of dairymen may not be prosecuted nor liable for damages under the Donnelly Act.”

Margrove Inc. v. Upstate Milk Coop., 357 N.Y.S.2d 392, 394 (Sup. Ct. 1974), aff’d sub nom.

Margrove Inc. v. Wegman’s Food Mkts., Inc., 373 N.Y.S.2d 1014 (N.Y. App. Div. 1975).

2. Statutory Prerequisites

To qualify as an agricultural cooperative under New York state law, an organization must satisfy (1) all statutory prerequisites for becoming a cooperative corporation, generally, and (2) all statutory conditions for qualifying as an agricultural cooperative, specifically.

To form a cooperative corporation, New York law requires that five or more persons file with the secretary of state a certificate of incorporation stating the purpose of the cooperative corporation. N.Y. Coop. Corp. Law §§ 11, 15. A cooperative’s purpose is limited to “assisting 83

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its members . . . by performing services connected with the purchase, financing, production,

manufacture, warehousing, cultivating, harvesting, preservation, drying, processing, cleansing,

canning, blending, packing, grading, storing, handling, utilization, shipping, marketing,

merchandising, selling, financing or otherwise disposing of the agricultural and food products of

its members or of any by-products thereof.” Id. § 13. Additionally, the certificate of

incorporation must state, inter alia, that at least one member is a resident of the state of New

York and that, of the persons named as directors, at least one is a citizen of the United States and

a resident of the state of New York. Id. § 11(9).

New York cooperative corporations law also recognizes cooperative corporations that are

properly formed under the laws of other states. N.Y. Coop. Corp. Law § 76; see also § 4 (stating

that laws of cooperative corporations apply to every corporation formed under laws other than

the statutes of New York to the extent provided in section 76). Foreign cooperatives may do business in New York upon compliance with “all the applicable provisions of this chapter and of

the laws applicable to foreign corporations desiring to do business in [New York].” Id. § 76.

In addition to the general requirements above, New York law sets forth certain requirements for the creation of agricultural cooperative corporations. N.Y. Coop. Corp. Law

§ 110 et seq. The statute defines an agricultural cooperative as either a stock or nonstock cooperative in which (1) no member is allowed more than one vote; (2) the cooperative does not pay dividends in excess of 12% per year; and (3) the cooperative does not deal in farm products, farm supplies, and farm business services with or for non-members in an amount greater in value than the total amount of such business transacted by it with or for members. See id. § 111(a); see also Atwater v. McGuire, 642 N.Y.S.2d 363, 365 (N.Y. App. Div. 1996) (“[T]he question of

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whether a cooperative is an agricultural cooperative corporation is resolved solely by reference

to the statutory definition contained in the Cooperative Corporations Law.”).

The New York statute further requires that “[o]nly persons engaged in the production of

agricultural products, or cooperative corporations of such producers organized under the laws of

this or any other state, shall be eligible for membership in any agricultural marketing or

purchasing corporation formed or operated under the provisions of this article.” N.Y. Coop.

Corp. Law § 111. Agricultural products include dairy and poultry and all by-products thereof.

See id. § 3(a), § 111(b). Finally, the cooperative agricultural corporation must consist of five or

more producers of agricultural products. Id. § 112.

3. Applicability of New York’s Agricultural Cooperative Immunities to Non-Antitrust Claims

It does not appear that courts have addressed whether the Donnelly Act or the cooperative

statute operate to bar unjust enrichment claims based on allegedly anticompetitive conduct.

However, if Defendants’ conduct is expressly immunized by state or federal statute, then such

conduct is not “unlawful” and the IPPs have no basis for claiming that Defendants’ retention of

the alleged overcharges is “against equity and good conscience.” See Mandarin Trading Ltd. v.

Wildenstein, 944 N.E.2d 1104, 1110 (N.Y. 2011) (“The essential inquiry in any action for unjust

enrichment . . . is whether it is against equity and good conscience to permit the defendant to

retain what is sought to be recovered.” (quotation omitted, alteration in original)). Accordingly,

New York’s statutory immunities apply with equal force to the IPPs’ claim for unjust enrichment under New York law.

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O. North Carolina

1. North Carolina Capper-Volstead Equivalents

North Carolina General Statute section 54-129, et seq., permits the formation of agricultural cooperatives for the “orderly producing and marketing of agricultural products through cooperation,” N.C.G.S. § 54-129, and provides the following antitrust immunity:

No association organized hereunder shall be deemed to be a combination in restraint of trade or an illegal monopoly; or an attempt to lessen competition or fix prices arbitrarily, nor shall the marketing contracts or agreements between the association and its members, or any agreements authorized in this Subchapter be considered illegal or in restraint of trade.

Id. § 54-141.

2. Statutory Prerequisites

Under the North Carolina statute, an “association” may include foreign corporations that have not been organized under the statute, so long as the corporation (i) “is organized under any general or special act of another state or the District of Columbia as a cooperative association for the mutual benefit of its members and other patrons,” and (ii) “confines its operations in this

State to the purposes specified in . . . this Subchapter for corporations organized hereunder.”

N.C.G.S. § 54-130(2). The following purposes are proper under the statute:

An association may be organized to engage in any activity in connection with the producing, marketing or selling of the agricultural products of its members and other farmers, or with the harvesting, preserving, drying, processing, canning packing, storing, handling, shipping, or utilization thereof, of the manufacturing or marketing of the by-products thereof; or in connection with the manufacturing, selling, or supplying to its members of machinery, equipment, or supplies; or in the financing of the above-enumerated activities; or in any one or more of the activities specified herein.

Id. § 54-132.

3. Applicability of North Carolina’s Agricultural Cooperative Immunity to Non-Antitrust Claims

North Carolina courts would likely hold that the statutory antitrust exemption bars common law claims for unjust enrichment. Under North Carolina law, a plaintiff cannot succeed

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on a claim for unjust enrichment without demonstrating that “equity and good conscience”

require the defendant to pay restitution. Ridley v. Jim Walter Corp., 158 S.E.2d 869, 872 (N.C.

1968); see also Beacon Homes, Inc. v. Holt, 146 S.E.2d 434, 439 (N.C. 1966) (holding that “the gist of [an unjust enrichment] action is, that the defendant, upon the circumstances of the case, is obliged by the test of natural justice and equity to refund the money”). Here, the IPPs base their claim for unjust enrichment on Defendants’ allegedly “illegal” and “unlawful” conduct. IPP

Compl. ¶¶ 497, 499. Consequently, the IPPs’ unjust enrichment claim fails if the challenged conduct is expressly declared legal by statute, because neither “good conscience” nor “natural

justice” demand the return of any sum received by Defendants through actions permitted by law.

Moreover, allowing the IPPs to circumvent the clearly stated intent of the antitrust immunity by

masking an antitrust claim as an unjust enrichment claim in equity would contradict the

immunity provided in the statute and the underlying public policy.

P. North Dakota

1. North Dakota Capper-Volstead Equivalents

a. Statutory Exemption for Agricultural Organizations

Like Section 6 of the Clayton Act, the North Dakota Uniform State Antitrust Act

provides: “Nothing in this chapter forbids the existence and operation of any labor, agricultural,

or horticultural organization instituted for the purpose of mutual help, while lawfully carrying

out its legitimate objects.” N.D. Cent. Code, § 51-08.1-04.

While no case law exists interpreting this provision, North Dakota courts would likely do

so in accordance with analogous federal decisions. See State v. Trevino, 807 N.W.2d 211, 214

(N.D. 2011) (“When [a North Dakota] rule is derived from a federal rule, we may look to the

federal courts’ interpretation or construction of identical or similar language as persuasive

authority for interpreting our rule.”); Jacob v. Nodak Mut. Ins. Co., 693 N.W.2d 604, 609 (N.D.

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2005) (“When considering claims under the North Dakota Human Rights Act, we may look to federal interpretations of corresponding federal statutes for guidance.”); Minot v. Gen. Drivers &

Helpers Union No. 74, 142 N.W.2d 612, 615-16 (N.D. 1966) (noting that when a North Dakota act is almost identical to a federal act, “an interpretation of the federal act becomes very important to us”). Indeed, in a state court filing seeking an injunction against the NCAA, the

State of North Dakota itself noted that “[p]rovisions of North Dakota antitrust law derive from the Uniform State Antitrust Act which is generally ‘interpreted in conformity with the federal

[antitrust laws].’” N.D. State Bd. of Higher Educ. v. NCAA, No. 18-06-C-01333, available at http://www.ag.nd.gov/NCAA/Memorandum-Prelim-injunction-state-crt.pdf at 67 (last visited

Sept. 27, 2012) (quoting Mothershed v. Justices of Supreme Court, 410 F.3d 602, 609 (9th Cir.

2005)).

b. Statutory Exemption for Cooperative Associations

North Dakota law provides cooperatives generally33 with express exemption from antitrust liability, but imposes a registration requirement on out-of-state cooperatives.

Specifically, North Dakota law provides that:

[N]o association organized under this chapter [related to cooperative organizations] shall be deemed to be a combination in restraint of trade or an illegal monopoly, or an attempt to lessen competition or fix prices arbitrarily. The marketing contracts or agreements between any such association and its members, or any agreements authorized in this chapter, shall not be considered illegal nor in restraint of trade.

N.D. Cent. Code § 10-15-59.

33 The statute provides that “[c]ooperatives may be organized under this chapter for any lawful purpose except banking and insurance, but subject to statutes relating to the organization or operation of specified kinds of corporations or associations.” N.D. Cent. Code § 10-15-02.

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2. Statutory Prerequisites

The North Dakota antitrust statute does not contain a registration requirement or fee. To enjoy the immunity under the cooperative statute, an out-of-state cooperative must obtain a certificate to transact business in North Dakota by making an application to the Secretary of

State. N.D. Cent. Code, § 10-15-51. “Upon issuance of the secretary of state’s certificate of authority, a foreign cooperative is entitled to all rights, exemptions, and privileges of a cooperative organized for the same purposes under the laws of this state.” N.D. Cent. Code §

10-15-52.

3. Applicability of North Dakota’s Agricultural Cooperative Immunities to Non-Antitrust Claims

The IPPs have not asserted any non-antitrust claims under North Dakota law.

Q. South Dakota

1. South Dakota Capper-Volstead Equivalents

The South Dakota antitrust statute contains an immunity that is substantially similar to

Section 6 of the Clayton Act: “Nothing in this chapter shall be construed to forbid the existence and operation of any labor, agricultural, or horticultural organization instituted for the purpose of mutual help, while lawfully carrying out its legitimate objects.” S.D. Codified Laws § 37-1-3.4.

Research revealed no case law interpreting this provision, but it is likely that a South Dakota court would look to analogous federal decisions for guidance. See id. § 37-1-22 (stating that in construing state’s antitrust laws, “the courts may use as a guide interpretations given by the federal or state courts to comparable antitrust statutes.”); Assam Drug Co. v. Miller Brewing Co.,

798 F.2d 311, 313 (8th Cir. 1986) (“The South Dakota statutory language governing restraint of trade is similar to section one of the Sherman Act, and the South Dakota legislature has indicated that federal court interpretations of the federal antitrust laws may be used as a guide in

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interpreting the state law.”); Byre v. Chamberlain, 362 N.W.2d 69, 74 (S.D. 1985) (holding that

“because of the similarity of language between the federal and state antitrust statutes and because

of the legislative suggestion for interpretation found in S.D. Codified Laws § 37-1-22, great

weight should be given to the federal cases interpreting the federal statute”).34

2. Statutory Prerequisites

The South Dakota antitrust statute does not contain a registration requirement or fee.

3. Applicability of South Dakota’s Agricultural Cooperative Immunity to Non-Antitrust Claims

The South Dakota agricultural exemption does not address non-antitrust claims.

Nevertheless, conduct that is immune under the antitrust statute cannot give rise to liability under

a common law unjust enrichment theory. In South Dakota, a claim for unjust enrichment is

premised on “illegal or inequitable behavior” by the defendant. N. Valley Commc’ns, LLC v.

Qwest Commc’ns Corp., 659 F. Supp. 2d 1062, 1071 (D.S.D. 2009) (citing Commercial Trust &

Sav. Bank v. Christensen, 535 N.W.2d 853, 858 (S.D. 1995)). Accordingly, to the extent

Defendants acted lawfully under the statutory immunity, they cannot be liable under a common-

law theory for unjust enrichment. See State v. Shadbolt, 590 N.W.2d 231, 233 (S.D. 1999) (“As

a general precept, common law is in force, except where it conflicts with the will of the

sovereign power as expressed through the constitution, statutory enactments, and ordinances.”).

34 In Byre, the South Dakota Supreme Court held that because federal courts had interpreted the Sherman Act to include what has become known as a state action antitrust exemption, South Dakota’s own antitrust law, which it noted was “taken directly from the Sherman Act,” should be viewed as providing a similar immunity. Byre, 362 N.W.2d at 73-74. .

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R. Tennessee

1. Tennessee Capper-Volstead Equivalents

In 1923, Tennessee passed a Capper-Volstead equivalent known as the “Cooperative

Marketing Law.” See Tenn. Code Ann. § 43-16-101, et seq. The Act provides:

No association organized under this chapter and complying with the terms of this chapter shall be deemed to be a conspiracy or a combination in restraint of trade or an illegal monopoly, or an attempt to lessen competition or to fix prices arbitrarily; nor shall the marketing contracts and agreements between the association and its members or any agreements authorized in this chapter be considered illegal as such or in unlawful restraint of trade or as part of a conspiracy or combination to accomplish an improper or illegal purpose.

Tenn. Code Ann. § 43-16-143; see also Tenn. ex rel. Att’y Gen. v. Burley, 2 Tenn. App. 674

(Tenn. Ct. App. 1926) (holding that Cooperative Marketing Law legalized certain practices by

cooperative so long as cooperative does not exceed or abuse powers granted).

The Cooperative Marketing Law’s purpose is to “promote, foster, and encourage the

intelligent and orderly marketing of agricultural products” as well as to eliminate speculation and

waste, make the distribution of agricultural products between producer and consumer more

direct, stabilize marketing, and provide for the organization and incorporation of cooperative

marketing associations. Tenn. Code Ann. § 43-16-102. A properly organized cooperative can engage in any activities in connection with the marketing, selling, or handling of its members’

products, among other things. Tenn. Code Ann. § 43-16-105.35

2. Statutory Prerequisites

The Cooperative Marketing Law provides that “[e]leven [] or more persons, a majority of

whom are residents of [Tennessee], engaged in the production of agricultural products, may form

35 Tennessee also enacted the “Processing Cooperative Law” in 2004. See Tenn. Code Ann. § 43-38-101, et seq. The law provides detailed regulations concerning the organization and carrying on of an agricultural cooperative. One section sets forth the powers of a cooperative, which include that one “[m]ay perform every act and thing necessary or proper to the conduct of the cooperative’s business or the accomplishment of the purposes of the cooperative.” Id. § 43-38-113.

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a nonprofit, cooperative association, with or without capital stock.” Tenn. Code Ann. § 43-16-

104. A foreign cooperative can avail itself of the benefits of the statute and carry on activities in

Tennessee upon compliance with the general regulations applicable to foreign corporations and payment of taxes that foreign corporations pay. Tenn. Code Ann. § 43-16-142. Therefore, like foreign corporations, cooperatives organized under the laws of a different state are required to apply for a certificate of authority to transact business in the state. Tenn. Code Ann. § 48-25-

101. To obtain a certificate, the organization must apply to the Tennessee Secretary of State, setting forth basic information such as the name of the cooperative, the name of the state under whose law it is registered, period of duration, and addresses of principal office and those of its directors and officers. See Tenn. Code Ann. § 48-25-103. It must also provide a Certificate of

Existence or Certificate of Good Standing from the state of incorporation. See Application for

Certificate of Authority Form, available at http://www.tn.gov/sos/forms/ss-4432.pdf (last visited

Sept. 27, 2012).

3. Applicability of Tennessee’s Agricultural Cooperative Immunity to Non-Antitrust Claims

Tennessee courts have not addressed whether the immunity provided by the Cooperative

Marketing Law extends to claims for unjust enrichment. Because the IPPs’ antitrust and unjust enrichment claims are based on the same conduct, however, the unjust enrichment claim necessarily fails if Defendants’ conduct is protected by the statutory immunity.

The most significant requirement of an unjust enrichment claim is that the alleged benefit received must be “unjust.” Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d 512, 525

(Tenn. 2005). The IPPs bring their unjust enrichment claim on the theory that Defendants’ conduct was “illegal.” IPP Compl. ¶ 515. Thus, if the alleged conduct is not “illegal” because it is permitted and encouraged by the Cooperative Marketing Act, there is no basis to find that it is

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unjust, and the IPPs’ unjust enrichment claim fails as a matter of law. See, e.g., Whitehaven

Cmty. Baptist Church v. Holloway, 973 S.W.2d 592, 597 (Tenn. 1998) (affirming dismissal of unjust enrichment claim where retention of benefit was not unjust).

Moreover, Tennessee courts have rejected attempts to bring secondary claims to avoid the requirements or limitations of their primary claims. See Blake v. Abbott Labs., Inc., No.

03A01-9509-cv-00307, 1996 WL 134947, at *7 (Tenn. Ct. App. Mar. 27, 1996) (“It is a well- settled principle of law that one cannot do indirectly what cannot be done directly.”). If

Defendants’ conduct is immunized under the antitrust laws, that immunization precludes a finding that the conduct was anticompetitive or unjust under other claims, including unjust enrichment.

S. Utah

1. Utah Capper-Volstead Equivalents

a. The Utah Antitrust Act Exempts Agricultural Organizations From Liability Under Antitrust Laws

The Utah Antitrust Act, Utah Code §§ 76-10-911 to -926, exempts agricultural organizations and their members from liability under antitrust laws. Section 76-10-915(2)(b) of the Act provides:

Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purpose of mutual help and not having capital stock or conducted for profit, or to forbid or restrain individual members of these organizations from lawfully carrying out their legitimate objects; nor may these organizations or membership in them be held to be illegal combinations or conspiracies in restraint of trade under the antitrust laws.

Utah Code § 76-10-915(2)(b). This statute closely resembles Section 6 of the Clayton Act. 15

U.S.C. § 17. Because the Utah Antitrust Act is to be construed in a manner consistent with federal law, Utah courts would likely follow analogous federal case law when interpreting the exemption in section 76-10-915(2)(b). See Utah Code § 76-10-926 (“The Legislature intends

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that the courts, in construing this act, will be guided by interpretations given by the federal courts

to comparable federal antitrust statutes and by other state courts to comparable state antitrust

statutes.”).

b. The Utah Uniform Agricultural Cooperative Association Act Exempts Organized Agricultural Cooperatives From Liability Under Antitrust Laws

The Utah Uniform Agricultural Association Cooperative Act (UUAACA), Utah Code

§ 3-1-1 to -46, authorizes the organization of associations “for the purpose of engaging in any

cooperative activity for producers36 of agricultural products in connection with (a) producing,

assembling, marketing, buying or selling agricultural products, or harvesting, preserving, drying,

processing, manufacturing” such products, among other activities. Utah Code § 3-1-4.

The UUAACA exempts associations that comply with its terms from liability under antitrust laws:

No association complying with the terms hereof shall be deemed to be a conspiracy, or a combination in restraint of trade, or an illegal monopoly; or be deemed to have been formed for the purpose of lessening competition or fixing prices arbitrarily, nor shall the contracts between the association and its members, or any agreement authorized in this act, be construed as an unlawful restraint of trade, or as part of a conspiracy or combination to accomplish an improper or illegal purpose or act.

Utah Code § 3-1-19(1). The statute also permits associations to “acquire, exchange, interpret and disseminate to its members, to other cooperative associations, and otherwise, past, present, and prospective crop, market, statistical, economic, and other similar information relating to the

36 “Producer” is defined as “a person who produces agricultural products, or an association of such persons.” Utah Code § 3-1-2(9). Relatedly, an association may only have the following as members: “(i) current producers of agricultural products; (ii) tenants and landlords receiving a share of the crop; and (iii) cooperative associations of those producers.” Id. § 3-1-10(2)(a).

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business of the association, either directly or through an agent created or selected by it or by

other associations acting in conjunction with it.” Id. § 3-1-19(2).37

2. Statutory Prerequisites

The Utah antitrust statute does not contain a registration requirement or fee, but the

UUAACA requires both. The UUAACA defines the term “association” to include a foreign association or corporation if:

authorized to do business in this state, organized under any general or special act as a cooperative association for the mutual benefit of its members, as agricultural producers, and which confines its operation to purposes authorized by this act and restricts the return on the stock or membership capital and the amount of its business with nonmembers to the limits placed thereon by this act for associations organized hereunder.

Id. § 3-1-2(3). Foreign corporations that comply with section 3-1-2(3) “may be authorized to do business in this state under the provisions of this act by complying with the laws relating to foreign corporations doing business in the state,” including paying the same fees as Utah associations. Id. § 3-1-24.38 Once a foreign association complies with these criteria, “it shall

have all the rights and privileges of like domestic associations.” Id.

3. Applicability of Utah’s Agricultural Cooperative Immunities to Non- Antitrust Claims

Although Utah courts have not yet addressed whether the statutory exemptions operate to bar the IPPs’ claim for unjust enrichment under Utah law, the exemptions should have this effect given that the IPPs’ unjust enrichment claim is based on the same allegations of “unlawful conduct” and “illegally inflated prices” as their antitrust claim. IPP Compl. ¶¶ 522-24. If

Defendants’ conduct is immune from antitrust liability, it cannot be unjust for Defendants to

37 The Act further provides that “[a]n association may advise its members in respect to the adjustment of their current and prospective production of agricultural commodities” and “selling prices.” Utah Code § 3-1-19(3). 38 Foreign associations must also file an annual report in accordance with Section 16-6a-1607, and must have a registered office and agent. Id. §§ 3-1-25, 3-1-44.

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have retained the benefits they received from the sale of eggs. See U.S. Fid. & Guar. Co. v. U.S.

Sports Specialty Ass’n, 270 P.3d 464, 468 (Utah 2012) (holding that plaintiff must prove three elements to claim unjust enrichment under Utah law: (1) the defendant received a benefit from the plaintiff; (2) the defendant knew of the benefit; and (3) the defendant accepted or retained the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without payment of its value).

T. Vermont

1. Vermont Capper-Volstead Equivalents

Vermont law permits the formation of agricultural associations, see Vt. Stat. Ann. tit. 11,

§§ 981, 991, and provides the following antitrust immunity:

An association organized under this subchapter and complying with the terms hereof shall not be deemed to be a conspiracy or a combination in restraint of trade or an illegal monopoly or an attempt to lessen competition, or to fix prices arbitrarily. The marketing contracts and agreements between the association and its members and any agreements authorized in this subchapter shall not be deemed illegal as such or in unlawful restraint of trade or as a part of a conspiracy or combination to accomplish an improper or illegal purpose.

Id. § 1030.

2. Statutory Prerequisites

The process for organizing under the Vermont statute requires that a cooperative (i) file a certified copy of its articles of incorporation with the secretaries of state and agriculture, Vt. Stat.

Ann. tit. 11, § 995; (ii) pay the certificate filing fee, id. § 997; (iii) adopt bylaws within 30 days of its organization, id. § 1000; (iv) have at least one annual meeting, id. § 1002; (v) have a board of at least five directors, id. § 1006; (vi) elect a president, vice-president, secretary, and treasurer, id. § 1013; and (vii) issue an annual report, id. § 1026.

The statute provides that “[a] corporation or association organized under generally similar laws of another state shall be allowed to carry on any proper activities, operations and

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functions in this state upon compliance with the general regulations applicable to foreign corporations desiring to do business in this state.” Vt. Stat. Ann. tit. 11, § 1027. Foreign corporations wishing to do business in Vermont must obtain a certificate of authority from the secretary of state, id. § 15.01(a), and continuously maintain a registered office and a registered agent in the state, id. § 15.07.

3. Applicability of Vermont’s Agricultural Cooperative Immunity to Non-Antitrust Claims

Vermont courts would likely hold that the statutory antitrust exemption bars common law claims for unjust enrichment. Under Vermont law, a plaintiff alleging unjust enrichment must demonstrate “that it would be inequitable for defendant not to compensate plaintiff.” Center v.

Mad River Corp., 561 A.2d 90, 93 (Vt. 1989). Thus, recovery may only be had where “it is against equity and good conscience to allow defendant to retain what is sought to be recovered.”

Savage v. Walker, 969 A.2d 121, 124 (Vt. 2009) (holding that this analysis “involves a realistic determination based on a broad view of the human setting involved, rather than a limited inquiry confined to an isolated transaction”). Here, the IPPs base their claim for unjust enrichment on

Defendants’ allegedly “illegal” and “unlawful” conduct. IPP Compl. ¶¶ 530, 532.

Consequently, the unjust enrichment claim fails if the challenged conduct is expressly declared legal by statute, as the IPPs cannot demonstrate that it would be “inequitable” or against “good conscience” to deny their claims.

U. West Virginia

1. West Virginia Capper-Volstead Equivalents

West Virginia’s cooperative associations statute authorizes the creation of agricultural cooperatives with the following powers:

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(a) To engage in any activity in connection with the marketing, selling, preserving, harvesting, drying, processing, manufacturing, canning, packing, grading, storing, handling or utilization of any agricultural products produced or delivered to it by its members or purchased or received by consignment from other persons, or the manufacturing or marketing of the by-products thereof; or any activity in connection with the purchase, hiring, or use by its members of supplies, machinery, or equipment; or in securing and disseminating market information; or in the financing, directly, through agricultural credit associations, and/or otherwise, any such activities; or in any one or more of the activities specified in this section: Provided, however, That all transactions with nonmembers shall be on terms fixed by the association, and such nonmembers shall not otherwise participate in any benefits derived from such transactions; * * * (c) To act as the agent or representative of any member or members in any of the above-mentioned activities; (d) To purchase or otherwise acquire, and to hold, own, and exercise all rights of ownership in, and to sell, transfer or pledge, or guarantee the payment of dividends or interest on, or the retirement or redemption of, shares of the capital stock or bonds of any corporation or association engaged in any related activity or in the warehousing or handling or marketing of any of the products handled by the association; * * * (h) To do each and every thing necessary, suitable or proper for the accomplishment of any one of the purposes or the attainment of any one or more of the subjects herein enumerated, or conducive to or expedient for the interest or benefit of the association; and to contract accordingly; and, in addition, to exercise and possess all powers, rights and privileges necessary or incidental to the purposes for which the association is organized or to the activities in which it is engaged, and any other rights, powers, and privileges granted by the laws of this State to ordinary corporations, except such as are inconsistent with the purposes of this article; and to do any such thing anywhere. . . .

W. Va. Code § 19-4-4.

The statute also provides an antitrust exemption for agricultural cooperatives: No association organized under this article and complying with the terms thereof shall be deemed to be a conspiracy or a combination in restraint of trade or an illegal monopoly or an attempt to lessen competition or to fix prices arbitrarily; nor shall the marketing contract and agreements between the association and its members or any agreements authorized in this article be considered illegal as such or in unlawful restraint of trade or as part of a conspiracy or combination to accomplish an improper or illegal purpose.

W. Va. Code § 19-4-28.

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The primary differences between the West Virginia statute and the Capper-Volstead Act

are: (1) the state provision has no express requirement that the cooperative “operate for the

mutual benefit of its members”; (2) the state provision does not have a “50% rule” limiting a

cooperative’s dealings in products of non-members; and (3) the state provision contains a one-

member, one-vote requirement, but does not contain the Capper-Volstead’s alternative

requirement of an 8% dividend ceiling. The state statute also permits broader membership than

the Capper-Volstead Act, allowing associations between “persons engaged in the production or

cooperative marketing of the agricultural products to be handled by or through the association,

and any lessor or landlord who receives as rent all or any part of the crop raised on the leased

premises.” W. Va. Code § 19-4-5 (emphasis added).

2. Statutory Prerequisites

Under West Virginia’s cooperative statute, a cooperative association must file articles of

incorporation and, within thirty days thereafter, adopt a code of bylaws. W. Va. Code §§ 19-4-6,

19-4-8. In addition to other statutory obligations set forth in section 19-4-1 et seq., the cooperative must prepare an annual report on forms to be provided by “the dean of the college of agriculture at Morgantown.” Id. § 19-4-19. The protections of the statute apply with equal force to foreign cooperatives “organized under generally similar laws of another state . . . upon compliance with the general regulations applicable to foreign corporations desiring to do business in [West Virginia].” Id. § 19-4-24.

3. Applicability of West Virginia’s Agricultural Cooperative Immunity to Non-Antitrust Claims

Although research did not reveal any West Virginia case law directly on point, principles of unjust enrichment would bar recovery if Defendants’ alleged conduct is immunized by statute.

In West Virginia, a claim for unjust enrichment requires a plaintiff to demonstrate that “‘it would

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be inequitable and unconscionable to permit the part receiving [benefits] to avoid payment therefor . . . .’” Wittenberg v. First Indep. Mortg. Co., 2011 WL 1357483, at *15 (N.D. W. Va.

Apr. 11, 2011) (emphasis and alterations in original) (quoting Realmark Devs., Inc. v. Ranson,

542 S.E.2d 880, 884-85 (W. Va. 2000)). If the activity underlying the unjust enrichment claim is immunized under West Virginia law, Defendants’ retention of the allegedly higher egg prices would be neither “inequitable” nor “unconscionable,” and the IPPs’ unjust enrichment claim would fail.

V. Wisconsin

1. Wisconsin Capper-Volstead Equivalents

Wisconsin’s antitrust statute exempts agricultural cooperatives from state antitrust laws as long as they operate “for the purpose of mutual help.” Wisconsin Statutes section

133.07(1) provides:

This chapter shall not prohibit the existence and operation of labor, agricultural or horticultural organizations, instituted for the purpose of mutual help, and not having capital stock or conducted for profit, or organizations permitted under ch. 185 or 193; shall not forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; and such organizations, or the members thereof, shall not be held or construed to be illegal combinations or conspiracies in restraint of trade, under this chapter. The labor of a human being is not a commodity or article of commerce.

Wis. Stat. § 133.07(1). Like its federal analogue, section 133.07(1) exempts agricultural organizations from certain antitrust requirements so long as they operate for the mutual benefit of their members. While the statute does not explicitly state that it applies to both capital and non- capital cooperatives, it does so implicitly by referencing organizations permitted under Chapter

185.39 That chapter, known as the Wisconsin Cooperative Association Act, id. § 185.97, deals

39 Chapter 185 deals with unincorporated cooperative associations.

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with the formation and management of cooperatives. Under that chapter, a cooperative may be organized with or without capital stock. Id. § 185.21(1).

2. Statutory Prerequisites

There are three ways an organization can qualify as a cooperative under section 133.07(1) in order to enjoy the benefits of Wisconsin’s antitrust exemption. First, organizations can be incorporated as a cooperative under the Wisconsin Cooperative Associations Act, Wis. Stat. §

185. This includes submitting articles of incorporation, id. § 185.05, and paying filing fees, id. §

185.83.

Second, organizations can remain unincorporated but operate as unincorporated cooperative associations under Chapter 193. That chapter requires organizations to submit articles of incorporation, Wis. Stat. § 193.215, establish and maintain a registered office in the state of Wisconsin, id. § 193.115(1)(a), and pay certain fees, id. § 193.111(1).

Third, organizations can be incorporated in any other state as a cooperative association.

Wisconsin Statutes section 185.81 provides:

A foreign cooperative is entitled to all rights, exemptions and privileges of a cooperative organized under this chapter, if it is authorized to do business in this state under ch. 180. Such foreign cooperative may qualify under ch. 180 whether or not formed for profit and whether or not formed with stock. Any such foreign cooperative claiming to be subject to s. 71.26 (1)(a) or 71.45 (1)(a) may be required to furnish the department of revenue with such facts as said department shall deem necessary to establish the foreign cooperative’s rights thereunder.40

Wis. Stat. § 185.81. A foreign cooperative is defined as follows:

. . . an association incorporated under a cooperative law of another state which has members residing within this state and which is operating on the following cooperative basis: (a) Either no member of the foreign cooperative who is an individual is allowed more than one vote because of the amount of stock or membership capital the

40 Chapter 180 governs general business corporations. Sections 71.26(1)(a) and 71.45(1)(a) both discuss requirements for claiming tax exemptions.

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member owns therein, or the foreign cooperative does not pay dividends on stock or membership capital in excess of 8% per year; and (b) The foreign cooperative shall not deal in the products of or for nonmembers to an amount greater in value than such as are handled by it for members; and (c) The foreign cooperative distributes its proceeds according to either s. 185.45 or the law of the state of the foreign cooperative’s incorporation.

Id. § 185.01(4).

3. Applicability of Wisconsin’s Agricultural Cooperative Immunity to Non-Antitrust Claims

Wisconsin courts have not addressed whether section 133.07 operates to bar unjust enrichment claims based on allegedly anticompetitive conduct. Nevertheless, the IPPs’ unjust enrichment claim, which is premised on the same allegations as the antitrust claim, should fail if

Defendants’ conduct is immune from antitrust liability.

To recover under an unjust enrichment theory, a Wisconsin plaintiff must demonstrate not only that the defendant received a benefit, but that the defendant’s retention of the benefit would be inequitable or wrongful. See Fail-Safe, LLC v. A.O. Smith Corp., 674 F.3d 889, 895

(7th Cir. 2012) (interpreting Wisconsin law) (“Far from creating a new wrongfulness requirement, the district court correctly noted that inequitable retention must come from an

independent violation of FS’s rights under some ‘body of law.’” (citation omitted)); Major Mat

Co. v. Monsanto Co., 969 F.2d 579, 585 (7th Cir. 1992) (“In Wisconsin, unjust enrichment

further ‘requires a wrongful taking or appropriation of others’ property to one’s own use.’”

(citation omitted)). If Defendants’ conduct is expressly immunized by state or federal statute,

however, then such conduct is not “wrongful,” and the resulting egg prices cannot be

characterized as “illegally inflated.” IPP Compl. ¶ 545. The IPPs would then have no basis for

claiming that Defendants’ retention of the alleged overcharges is “unjust” as that term has been

construed in Wisconsin.

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Furthermore, Wisconsin courts reject efforts to avoid obstacles to recovery – such as the

limits of trade secret law – by recasting statutory violations as unjust enrichment claims. See

Abbott Labs. v. Norse Chem. Corp., 33 Wis. 2d 445, 468, 147 N.W.2d 529, 541 (1967) (“Unjust

enrichment, however, requires a wrongful taking or appropriation of others’ property to one’s own use. In view of the fact that no trade secrets were appropriated by the defendants, there was no unjust enrichment and plaintiff is not entitled to restitution.”). In section 133.07, the

Wisconsin legislature expressly recognized an immunity for those acting as a cooperative.

Wisconsin courts would respect the legislature’s decision to immunize that conduct and, accordingly, would reject an unjust enrichment claim based on the same immune conduct.

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TAB IV

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IV. Federal Standard Setting Law

A. Introduction To Federal Standard-Setting Law

In 2002, United Egg Producers (“UEP”), an agricultural cooperative,41 published a

voluntary set of animal welfare guidelines, which eventually became known as the UEP Certified

Program. UEP began considering animal welfare guidelines for U.S. egg-laying hens in

response to pressure from large retail and restaurant buyers and their trade associations, including retailer plaintiffs and the trade association for many of the plaintiffs in these consolidated cases. UEP’s animal welfare guidelines followed the imposition of far more costly animal welfare regulations by the European Union, which the U.S. industry hoped to avoid.

UEP based the Certified Program on recommendations from a panel of independent scientific experts and designed the program to improve the welfare of egg-laying hens and to meet growing consumer demand for agricultural products and production methods that promote animal welfare.

The UEP Certified Program is a quality standard that establishes a uniform level of treatment for egg-laying hens desired by purchasers of eggs and egg products. “UEP Certified” is not unlike other food product quality designations, such as “kosher,” “dolphin-safe,” or

“organic.” The Program certifies that each participating producer has implemented guidelines addressing legitimate animal welfare issues, such as cage density, beak trimming, back-filling, ammonia levels in a barn, and feeding schedules. While the certification is available to all producers—UEP members and non-members alike—that comply with the guidelines, its use is limited to producers that utilize the animal welfare guidelines in all production facilities. This rule ensures the guidelines’ integrity, for example, by preventing “comingling” of Certified and

41 Standard-setting is a separate issue to be considered by the Court in evaluating plaintiffs’ claims and is not at all dependent on UEP’s status as a Capper-Volstead cooperative.

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non-Certified eggs, through inadvertence or otherwise, and ensuring that buyers that demand

eggs produced in accordance with the guidelines really get them. The UEP Certified label on a

carton of eggs thus tells the consumer that the eggs were produced in accordance with science- based animal welfare guidelines. Armed with this information, the consumer is free to decide whether to buy eggs with that label or some other option. Nothing in the UEP guidelines limits or restricts the consumer’s right to choose. Nor do the guidelines compel adoption by all UEP members or prohibit the creation of alternative animal welfare standards.

Despite its voluntary nature, obvious responsiveness to consumer demand, and benefits to product quality, plaintiffs purport to attack the UEP Certified Program as a per se unlawful mechanism for reducing the supply of eggs. Plaintiffs allege that UEP and its members agreed to

“adopt cage space allowance guidelines, which limited the number of hens per cage, in order to provide a long term and stable reduction in the number of chicks hatched for laying farms.” See e.g., Direct Purchaser Plaintiffs’ Second Consolidated Amended Class Action Complaint (“DPP

Compl.”) at ¶¶ 14, 417. All parties agree that these cage space allowance guidelines are part of the UEP Certified Program, and plaintiffs readily admit that UEP described its purpose in launching the program as creating animal-welfare production standards. Id. ¶ 206. Nonetheless, plaintiffs contend that UEP’s member-producers drafted the guidelines “[a]s part of [an] agreement to supracompetitively inflate the price of eggs. . . with animal husbandry as a pretext, but with the knowledge and understanding that the guidelines would be used by the co- conspirators to substantially reduce egg production . . . .” Id. ¶ 518(c).42

42 Plaintiffs challenge not just the cage space allocations but also several additional aspects of the animal-welfare standards as illicit “output restrictions.” DPP Compl. at ¶ 518(c). These include limiting the program’s certification to producers that comply with the animal welfare guidelines in all production facilities and the facilities of their affiliates, i.e., the 100% rule, referenced above. See e.g., id. ¶ 221. The rule not only prevents comingling but also ensures that Certified producers treat all of their hens humanely and protects the program’s reputation from animal (continued) 105

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Notwithstanding plaintiffs’ attempt to characterize the Certified Program as a mechanism

for reducing supply, plaintiffs cannot attack the Program itself as per se illegal. Because the

Certified Program neither limits the number of eggs a member can produce nor fixes the price of

those eggs, it does not contain the type of naked restraint subject to per se treatment.

Additionally, the UEP Certified Program is the type of quality standard that courts routinely

analyze and uphold under the rule of reason. Courts across the nation have recognized that

private efforts to set quality standards—especially those grounded on the input of independent

experts—are an essential part of a competitive marketplace. In light of these benefits alone,

modern courts simply do not treat standard-setting conduct as a per se violation of Section 1.

Moreover, as numerous courts have acknowledged, the antitrust laws should not be used to

second-guess the technical correctness of plausible quality standards, such as the UEP Certified

Program, that do not compel or coerce market participants into producing or purchasing only the

standardized product.

B. Assessment Of Standard Setting As A Restraint Of Trade Or Procompetitive Conduct Under Federal Law.

1. The UEP Certified Program Is Not Subject to Per Se Analysis

The Supreme Court has interpreted Section 1 to prohibit only unreasonable restraints—

that is, only those agreements that unreasonably restrict competition. U.S. v. Arnold, Schwinn &

Co., 388 U.S. 365, 375 (1967); NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 104

(1984) (“[T]he essential inquiry [is] . . . whether or not the challenged restraint enhances

(continued)

rights activists’ attempts to discredit it by using undercover video cameras to film conditions at non-certified facilities of a Certified member. Plaintiffs also contest the UEP decision to certify only producers that do not engage in “back-filling” (id. ¶ 306), that is, the practice of replacing prematurely deceased hens with new hens not raised with the existing groups and sometimes outside their age cohort entirely. The evidence will show that the UEP relied on the advice of independent scientific experts regarding the inimical effects of backfilling on hen welfare.

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competition.”). In deciding whether an alleged restraint unreasonably harms competition, courts generally apply one of two tests – the per se rule or the rule of reason.

The per se rule provides, in essence, a short-cut to liability. It declares a business practice unlawful without any consideration of the defendants’ market power, the justifications for the practice, or its actual competitive effects, because such a practice is manifestly and unquestionably anticompetitive in virtually all circumstances. Leegin Creative Leather Prods.,

Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007) (“To justify a per se prohibition a restraint must have manifestly anticompetitive effects and lack . . . any redeeming virtue.”). Because of its harsh consequences, modern courts invoke the per se rule only where the alleged violation is a naked restraint on price or output, a group boycott, or a tying arrangement. See Nw. Wholesale

Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 289 (1985); Eichorn v. AT&T

Corp., 248 F.3d 131, 143 (3d Cir. 2001) (“The per se illegality rule applies only in those cases where the business practice in question is one, which on its face, has no purpose except stifling of competition.”) (quotations and citations omitted). Even restraints that may appear anticompetitive do not garner per se treatment where their economic impact is not “immediately obvious.” See Nat’l Soc’y of Prof’l Eng’rs v. U.S., 435 U.S. 679, 692 (1978); Broadcast Music,

Inc. v. CBS, Inc., 441 U.S. 1, 18-20 (1979) (rejecting per se analysis for blanket license at a fixed price, observing that even some horizontal arrangements that fix prices can promote competition).43

43 Courts on occasion have applied a “quick look” analysis, or “an abbreviated form of the rule of reason,” for cases in which “[p]er se condemnation is inappropriate, but at the same time, the ‘inherently suspect’ nature of the restraint obviates the sort of ‘elaborate industry analysis’ required by the traditional rule-of-reason standard.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 317 (3d Cir. 2012); see Cal. Dental Ass’n v. FTC, 526 U.S. 756, 778, 780 (1999) (noting that standards for Section 1 liability exist on a sliding scale, but quick-look analysis was inappropriate where “the plausibility of competing claims about the effects” of the challenged conduct “rules out [an] indulgently abbreviated review”).

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In the present case, Plaintiffs cannot seriously allege that the UEP Certified Program guidelines themselves contain or constitute a naked restrain on supply.44 The Program’s guidelines themselves contain no such restriction, nor do Plaintiffs actually point to one. The

UEP Certified Program includes guidelines on how much space each hen should have in a cage, but the Program does not restrict or reduce the number of hens, barns, or cages a Certified producer may have and does not restrict or reduce the number of eggs a Certified producer may produce.45 Importantly, a UEP Certified producer is and always has been free to own as many birds, cages, and barns as it determines is in its individual economic self-interest, and a Certified producer is free to add new hens, cages, and barns to maintain or increase its overall flock size as it provides each hen more space. In fact, many Certified producers did add new hens, cages, and barns even as they implemented the Certified Program. In addition, Plaintiffs do not plead, nor

44 The plaintiffs’ burden to prove a predicate “agreement” within the meaning of Section 1 is not satisfied by merely pointing to a producer’s adoption of the Certified Program. If that were the case, every instance of standard setting could qualify as an unlawful agreement in restraint of trade. Courts have consistently rejected the notion that a standard-setting organization is a “walking conspiracy.” Consol. Metal Prods., Inc. v. Am. Petroleum Inst., 846 F.2d 284, 293-94 (5th Cir. 1988); see also Golden Bridge Tech., Inc. v. Motorola, Inc., 547 F.3d 266, 271-73 (5th Cir. 2008) (similar); Am. Council of Certified Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d 606, 621 (6th Cir. 1999) (similar). Rather, the plaintiffs instead must offer evidence tending to exclude the possibility that producers acted independently in deciding to join the Certified Program. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554 (2007) (“[P]roof of a § 1 conspiracy must include evidence tending to exclude the possibility of independent action.”); see generally Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984) (defining concerted action as a “conscious commitment to a common scheme designed to achieve an unlawful objective”). And that evidence must implicate each producer that allegedly participated in the conspiracy. See Jung v. Ass’n of Am. Med. Colls., 300 F. Supp. 2d 119, 161 (D.D.C. 2004) (explaining plaintiff has “the burden of adequately alleging that a conspiracy to restrain trade existed in the first instance and that each defendant knowingly joined or agreed to participate in the conspiracy”); Hinds County v. Wachovia Bank N.A., 620 F. Supp. 2d 499, 513 (S.D.N.Y. 2009) (“To state a claim against each Defendant, Named Plaintiffs must make allegations that plausibly suggest that each Defendant participated in the alleged conspiracy.”) (quotation and citation omitted). A plaintiff lacking direct evidence of concerted action must show not only parallel conduct, but also “plus factors”—that is, “circumstances under which . . . the inference of rational independent choice [is] less attractive than that of concerted action.” Lum v. Bank of Am.¸ 361 F.3d 217, 230 (3d Cir. 2004), abrogated on other grounds by Twombly, 550 U.S. 544 (2007); see also In re Ins. Brokerage Litig.,, 618 F.3d at 315 (reciting burden to offer direct evidence of concerted action or plus factors suggesting “more than conscious interdependence”). 45 In addition, no guideline requires Certified producers to reduce chick hatch. Rather, the “chick hatch schedule” described in plaintiffs’ complaint, see, e.g., DPP Compl. ¶¶ 14, 464, refers to the way in which producers phased in the guidelines, which was by ensuring that chicks hatched after certain dates were afforded progressively more cage space, ultimately reaching the minimum cage space per hen on all flocks. This phase-in schedule was accelerated at the request of retailers and their trade groups, many of which are plaintiffs in this action.

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do the guidelines require, that all egg producers become UEP Certified, that all egg producers sell only UEP Certified eggs, or that buyers purchase only UEP Certified eggs. Indeed, consumers have many choices when purchasing eggs, including organic, cage-free, free-range, and non-Certified eggs produced in conventional cages, sometimes under competing animal welfare programs. Because the Certified Program’s guidelines do not restrain flock size, output or supply, the UEP Certified Program cannot be evaluated under the per se rule. Broadcast

Music, 441 U.S. at 19-20 (absent such a naked restraint, there is no basis to conclude that the alleged practice “appears to be one that would always or almost always tend to restrict competition and decrease output”).

Implicitly acknowledging that the guidelines themselves do not restrict supply, Plaintiffs contend that the Defendants separately agreed, outside the guidelines, not to add new cages, hens, or barns as the guidelines were phased-in. DPP Compl. ¶ 208 (defendants “agreed not to add capacity or make up for the lost hens that would result through reduced cage densities in order to restrict output”). The evidence will show that such a side agreement did not exist and that Certified producers phased-in the guidelines gradually to avoid disruption in domestic egg supply.

2. Product Standards Like the UEP Certified Program Are Routinely Upheld as Pro-competitive

a. Courts Typically Subject Challenged Standards to the Rule of Reason

As the Third Circuit has acknowledged, “claims not within established categories of antitrust liability are more appropriately analyzed under the rule of reason where courts can balance the effect of the alleged anti-competitive activity against its competitive purposes within the relevant product and geographic markets.” Eichorn, 248 F.3d at 143. In contrast to the per se rule, the court in a rule of reason case does not conclusively presume competitive harm;

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instead, the fact-finder thoroughly analyzes competition in the market, prices, supply, demand,

elasticity of supply and demand, substitution among competing products, and the overall

competitive effects of a supposed restraint on competition. AT&T Corp. v. JMC Telecom, LLC,

470 F.3d 525, 531 n.7 (3d Cir. 2006) (“When conducting a rule of reason inquiry, the factfinder

weighs all of the circumstances of a case in deciding whether a restrictive practice should be

prohibited as imposing an unreasonable restraint on competition.”); accord State Oil Co. v.

Khan, 522 U.S. 3, 10 (1997) (similar).

Under a rule of reason analysis, the ultimate question is whether the challenged conduct

has an anticompetitive effect and, if so, “whether the anticompetitive effects of the practice are

justified by any countervailing pro-competitive benefits.” In re Ins. Brokerage Antitrust Litig,

618 F.3d at 316. That inquiry is a three-step process. At the outset, “[t]he plaintiff bears an

initial burden . . . of showing that the alleged combination or agreement produced adverse, anti-

competitive effects within the relevant product and geographic markets.” United States v. Brown

Univ., 5 F.3d 658, 668 (3d Cir. 1993). “If a plaintiff meets his initial burden of adducing

adequate evidence of market power or actual anti-competitive effects, the burden shifts to the

defendant to show that the challenged conduct promotes a sufficiently pro-competitive

objective.” Id. at 669. “To rebut, the plaintiff must demonstrate that the restraint is not reasonably necessary to achieve the stated objective.”46 Id.

46 See Brown Univ., 5 F.3d at 679 (“To determine if a restraint is reasonably necessary, courts must examine first whether the restraint furthers the legitimate objectives, and then whether comparable benefits could be achieved through a substantially less restrictive alternative. Once a defendant demonstrates that its conduct promotes a legitimate goal, the plaintiff, in order to prevail, bears the burden of proving that there exists a viable less restrictive alternative.”) (citations omitted). Notably, this prong does not require a defendant to implement what others may consider to be the “least restrictive alternative.” See Am. Motor Inns, Inc. v. Holiday Inns, Inc., 521 F.2d 1230, 1248-49 (3d Cir. 1975) (“In a rule of reason case, the test is not whether the defendant deployed the least restrictive alternative. Rather the issue is whether the restriction actually implemented is fairly necessary in the circumstances of the particular case or whether the restriction exceed(s) the outer limits of restraint reasonably necessary to protect the defendant.”) (quotations omitted); Fed. Trade Comm’n & U.S. Dep’t of Justice, Antitrust Guidelines for (continued) 110

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As the Supreme Court directed in a recent Section 1 case, a rule of reason balancing is the proper analytical framework where the pro-competitive effects could plausibly negate or even outweigh anticompetitive ones. Cal. Dental, 526 U.S. at 774; see also id. at 778 (“The plausibility of competing claims about the effects of [the challenged conduct] rules out [an] indulgently abbreviated review . . . .”); see also Cont’l Airlines v. United Airlines, 277 F.3d 499,

510-11 (4th Cir. 2002) (rejecting district court’s use of quick-look analysis based on the improper assumption that improved safety, experience, and timeliness were not plausible procompetitive benefits); accord Broadcast Music, 441 U.S. at 20 (refusing to apply per se analysis to a blanket license that amounted to a horizontal agreement to fix prices where the license could provide procompetitive benefits).

Consistent with this paradigm, the myriad procompetitive benefits associated with the introduction of a quality standard, such as the Certified Program, typically results in a court subjecting challenged standards to rule of reason—not per se—scrutiny. See ABA Section of

Antitrust Law, Handbook on the Antitrust Aspects of Standard Setting 35 (2011) (“[S]trict per se analysis is now infrequently applied in the standard-setting context, and the trend has been toward evaluating standard setting under the rule of reason.”). As far back as 1925, the Supreme

Court described standardization as “admittedly beneficial to the industry and to consumers.”

Maple Flooring Mfrs. Ass’n v. U.S., 268 U.S. 563, 566 (1925); see also Areeda at 434, ¶ 2230b

(continued)

Collaborations Among Competitors §3.36(b). (2000) (“[T]he Agencies consider only alternatives that are practical in the business situation faced by the participants; the Agencies do not search for a theoretically less restrictive alternative that is not realistic given business realities.”). Moreover, the defendants’ subjective motivations should have little (if any) relevance to the ultimate issue—whether the challenged conduct has produced actual anticompetitive effects. See Am. Motor Inns., 521 F.2d at 1248 (holding that “[i]f the restraint on competition caused by the [contested agreement] is otherwise reasonable, [the defendant’s] purpose in adopting [it] does not by itself render the clause a violation of the Sherman Act”); Areeda at 420 ¶ 1506 (“To focus on an unreasonable intent that is inferred from undesirable conduct is simply to add an unnecessary step to the analysis of conduct.”).

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(“Standard setting helps ensure that customers can compare prices rather than debate whether one product is slightly better than another; or that a common attribution, such as ‘Grade A,’

means the same thing for one manufacturer’s version of a product as it does for another’s[.]”).

As the Supreme Court later explained in Allied Tube & Conduit Corp. v. Indian Head, Inc., 486

U.S. 492 (1988), “it is [the] potential for procompetitive benefits that has led most lower courts

to apply rule-of-reason analysis to product standard-setting by private associations.” Id. at 501;

see also Broadcom Corp. v. Qualcomm Incorp., 501 F.3d 297, 307-08, 314 (3d Cir. 2007)

(discussing procompetitive benefit of standard setting in technology markets, even where the

“standard, by definition, eliminates alternative technologies”).47

Other courts have adopted and expounded upon Allied Tube’s reasoning. For example, in

Consolidated Metal Products, the Fifth Circuit rejected per se treatment and upheld a product

quality standard under the rule of reason, despite the exclusion of the plaintiff’s product from the

standard, reasoning, in part, that “[p]roduct information is crucial to a competitive market . . .

This information saves buyers the trouble of investigating products themselves and the risk of

trying untested products.” 846 F.2d at 296; see also Areeda at 434, ¶ 2230b (quality standards

“help ensure that customers can compare prices rather than debate whether one product is

slightly better than another” and can “reduce[] a manufacturer’s costly obligation to meet

47 The two principal types of standards are (1) performance standards, such as quality standards like the Certified Program, that set minimum requirements for all compliant products and (2) interoperability standards, which guarantee the products made by different vendors can work together (i.e., interoperate). U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition 33 (2007). While both types of standards provide procompetitive benefits, each presents unique antitrust questions. In Broadcom, the Third Circuit addressed “patent hold-up,” a situation typically seen in interoperability standards. 501 F.3d at 310. Patent-hold up can occur when a patent holder misleads a standard- setting organization into incorporating its patented technology into a standard. Id. at 310-14. After the standard is implemented across an entire industry—in Broadcom, wireless telecommunication devices—market participants are “locked in,” thereby granting the patent holder market power “to extract supracompetitive royalties” from any person using the standard. Id. at 310. The factual differences—in terms of both the challenged conduct and type of standard at issue—make Broadcom inapposite here.

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different and sometimes inconsistent standards in different locations”). The First Circuit

likewise upheld a quality standard for couplings under the rule of reason, noting that specifying

what counts as an approved product “provides a relatively cheap and effective way for a

manufacturer or a buyer to determine whether a particular coupling” performs to the level set by

the standard. Clamp-All Corp. v. Cast Iron Soil Pipe Inst., 851 F.2d 478, 487 (1st Cir. 1988); see

also Craftsmen Limousine, Inc. v. Ford Motor Co., 363 F.3d 761 (8th Cir. 2004) (rejecting per se analysis, based on plausible procompetitive effects of product safety standards that exceeded federal requirements). As a general matter of economics, quality improvements like the

Certified Program that enhance “the public’s desire for [a] product or service” benefit competition. See, e.g., Brown Univ., 5 F.3d at 674 (citing NCAA, 468 U.S. at 114-15); Deutscher

Tennis Bund v. ATP Tour, Inc., 610 F.3d 820, 833 (3d Cir. 2010) (same). As Professors Areeda

and Hovenkamp note, even “quality-improving agreements” that result in higher prices can be

pro-competitive due to increased quality and related efficiencies. Areeda at 228-29, ¶ 1901d

(noting that “quality-improving agreements” also have the benefit of lower transaction costs for

consumers inasmuch as a standard “makes customer purchasing much easier by eliminating their

need to make inquiry into each manufacturer’s grading scheme”). And the Certified Program

was an attempt to avoid a patchwork of conflicting and inconsistent standards that were being

floated by certain buyers and that egg producers thought might be proposed by state legislatures,

all of which would have imposed massive additional costs on producers and consumers.

Simply put, because the UEP Certified Program is the type of product quality standard that contains actual—let alone plausible—procompetitive benefits, it cannot be evaluated under the per se framework, and a producer’s participation cannot, by itself, give rise to antitrust liability.

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b. Quality Standards, Such as the UEP Certified Program, Are Regularly Upheld By Courts

As a general principle of antitrust law, because of the pro-competitive benefits associated

with product quality standards, courts are loath to second-guess private standards or substitute their judgment for that of private parties. DM Research, Inc. v. Coll. of Am. Pathologists, 170

F.3d 53, 57 (1st Cir. 1999). In DM Research, the First Circuit noted that quality standards and

certification programs are both “useful” and “commonplace” and that “[m]erely to say that the

standards are disputable or have some market effects has not generally been enough to condemn

them as ‘unreasonable’ under the Sherman Act.” Id. As the Fifth Circuit likewise noted:

[F]ederal courts [should not] become boards of automatic review for trade association standards committees, product testing services, and countless other business transactions. Not only would this tax the abilities of the federal courts, but fear of treble damages and judicial second-guessing would discourage the establishment of useful industry standards. Under such a regime, the antitrust laws would stifle, not protect, the competitive market.

Consol. Metal Prods., Inc., 846 F.2d at 297 (emphasis added); see also Cal. Dental Ass’n v.

FTC, 224 F.3d 942 (9th Cir. 2000) (upholding, on remand from the Supreme Court, professional

association’s advertising quality-control standard under the rule of reason); Moore v. Boating

Indus. Ass’ns, 819 F.2d 693 (7th Cir. 1987) (finding that the refusal of a manufacturer’s

association to certify boat trailers using plaintiff’s lamps—based on independent test report—did

not violate federal antitrust laws, even if associations acted unreasonably or arbitrarily); Nat.

Ass’n of Review Appraisers & Mortgage Underwriters, Inc. v. The Appraisal Found., 64 F.3d

1130 (8th Cir. 1995) (after determining per se treatment inapplicable, upholding quality-control

standard for real estate appraisers under the rule of reason).

Moreover, quality standards that do not compel market participants to buy only the

standardized product have been held lawful because consumers remain free to purchase a non-

standardized alternative. See Consol. Metal Prods., Inc., 846 F.2d at 293 (noting that where, as

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here, the quality standard does not “coerce users to buy” only the standardized product, no cognizable anticompetitive market effect could be established); Greater Rockford Energy &

Tech. Corp. v. Shell Oil Co., 998 F.2d 391, 397 (7th Cir. 1993) (no actual anticompetitive effects where market included standardized and non-standardized products). As applied here, the

Certified Program cannot have restrained competition in the overall market for eggs because it was one among many options in the market. Producers were free to remain non-Certified or even develop their own animal welfare guidelines, as one defendant in this MDL proceeding did.

Moreover, retailers and consumers could purchase a number of alternative products such as non-

Certified eggs, so-called “specialty eggs,” or even eggs produced pursuant to different animal welfare guidelines. See Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 614 F.3d 57, 81 (3d

Cir. 2010) (no Section 1 violation where certification competed for customers that could easily switch to an alternative certification); Consol. Metal Prods., Inc., 846 F.2d at 296 (quality standard poses little antitrust risk where the ultimate determination of its usefulness remains in the hands of consumers).48

C. Conclusion

The UEP Certified Program does not impose a restraint on producer flock size. It does not dictate how many birds, cages, or barns a producer may own. In addition, there is no requirement that any producer become UEP Certified or that customers or consumers buy UEP

Certified eggs. As such, no basis exists to apply the per se rule to the UEP Certified Program.

48 In narrow circumstances, courts have condemned under the per se rule standards that the defendants claimed were quality-based but that contained a naked restraint on competition and/or were compulsory for the entire market. For example, in Goldfarb v. Va. State Bar, the Supreme Court held a bar association’s ethical rule imposing a minimum legal fee schedule as per se illegal price-fixing. 421 U.S. 773, 782 (1975); see also Nat’l Soc’y of Prof’l Eng’rs, 435 U.S. at 682-83 (holding professional ethical rules barring competitive bidding unlawful as price-fixing). And in National Macaroni Manufacturers Association v. F.T.C., the court condemned a quality standard in which competitors collectively agreed to fix demand for a product input to reduce the input’s price—in essence, a buyer cartel—which resulted in the production of a lower quality product. 345 F.2d 421 (7th Cir. 1965).

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Moreover, the well-recognized pro-competitive benefits of quality standards ensure that only a

rule of reason analysis could determine the overall competitive effects of the Certified Program.

The evidence will show that the UEP Certified Program is unquestionably pro-competitive

because it provides retailers and consumers with information they demanded—and continue to

demand—about the conditions under which their eggs were produced. The evidence also will show that in drafting the guidelines, UEP adopted recommendations from a scientific advisory

committee of animal husbandry experts and incorporated input from producers, consumers,

retailers, and the organizations that represent them. The end result is a UEP Certified seal that

increases competition by assuring retailers and consumers that if they choose to purchase UEP

Certified eggs, they are indeed getting eggs that were farmed in accordance with science-based

animal welfare standards.

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TAB V

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V. State Standard Setting and Antitrust Analysis

The following summarizes state antitrust statutes, their relationship to the federal antitrust

statute, and state law (if any) on standard setting in the context of antitrust claims brought by

indirect purchaser plaintiffs. Unlike the Sherman Act, the state statutes discussed below permit

indirect purchaser claims. Nonetheless, twenty-one of the twenty-two states listed below

generally direct, through statute or case law, courts to look to federal antitrust law to interpret the

state antitrust statute.49 Consequently, the highest court in each of these states would likely

follow the federal approach to standard setting, as outlined in Section IV above.

A. Arizona

1. State Antitrust Statute

Arizona IPPs allege violations of the Arizona Uniform State Antitrust Act, Ariz. Rev.

Stat. §§ 44-1401 to -146 (2012). (Indirect Purchaser Plaintiffs’ Third Amended Consolidated

Class Action Complaint, “IPP Compl.” ¶¶ 375-79.) Arizona’s antitrust act provides that “[a]

contract, combination or conspiracy between two or more persons in restraint of, or to

monopolize, trade or commerce, any part of which is within this state, is unlawful.” Ariz. Rev.

Stat. § 44-1402. Following federal law, Arizona differentiates between agreements that are per

se unlawful—such as price-fixing—and ancillary restraints that are subject to the rule of reason.

See Three Phoenix Co. v. Pace Indus., Inc., 659 P.2d 1258, 1260 (Ariz. 1983) (considering state

and federal antitrust claims); Dattilo v. Tucson Gen. Hosp., 533 P.2d 700, 703 (Ariz. App. 1975)

49 Even in Vermont, the only exception, no published case interprets the state antitrust statute inconsistently with federal antitrust law outside the context of indirect purchaser standing. Further, courts have looked to federal antitrust law to interpret the state antitrust statute, Thus while no Vermont case or statutory law applies Vermont’s antitrust statute to standard setting activity, the logical, persuasive and compelling legal theories behind federal standard setting law suggest that Vermont would follow suit.

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(“The rule of reason established in respect to the Sherman Antitrust Act applies in the

construction of state antitrust laws.”).

The Arizona Antitrust Act permits actions by indirect purchasers. Bunker’s Glass Co. v.

Pilkington, PLC, 75 P.3d 99, 101-03 (Ariz. 2003) (holding that indirect purchasers have standing to assert causes of action under the Arizona Antitrust Act).

2. Relationship to Federal Statute

The statute declares that “[i]t is the intent of the legislature that in construing this article, the courts may use as a guide interpretations given by the federal courts to comparable federal antitrust statutes.” Id. § 44-1412; see also Wedgewood Inv. Corp. v. Int’l Harvester Co., 613

P.2d 620, 623 (Ariz. Ct. App. 1979) (noting that “[t]he Arizona legislature clearly intended to

strive for uniformity between federal and state antitrust laws”). Consequently, Arizona courts

will typically follow federal law in antitrust matters. See, e.g., Bunker’s Glass Co. v. Pilkington

PLC, 47 P.3d 1119, 1126 (Ariz. Ct. App. 2002); All Am. Sch. Supply Co. v. Slavens, 625 P.2d

324, 325 (Ariz. 1981) (interpretation of federal antitrust statutes persuasive in interpreting A.R.S.

§ 44-1402); Pasco Indus., Inc. v. Talco Recycling, Inc., 985 P.2d 535, 542 (Ariz. Ct. App. 1998)

(analyzing requirements necessary to prove violation of A.R.S. § 44-1403 under federal case law

interpreting section 2 of Sherman Act); Wedgewood, 613 P.2d at 623. Nonetheless, the Arizona

Supreme Court has made clear that federal law is simply a “guide” and not an imperative in

interpreting Arizona’s antitrust statute. See Bunker’s Glass Co. v. Pilkington PLC, 75 P.3d 99,

103 (Ariz. 2003). Because § 44-1412 uses the word “may,” the statute is “permissive rather than

mandatory.” Id. at 102. Accordingly, Arizona courts will not “rigidly follow federal precedent

on every issue of antitrust law regardless of whether differing concerns and interests exist in the

state and federal systems.” Id. (refusing to adopt the Supreme Court’s holding in Illinois Brick

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3. State Law on Standard Setting

Arizona courts have not addressed standard setting arguments under Arizona antitrust

law.

B. California

1. State Antitrust Statute

The California IPPs allege a violation of the Cartwright Act—California’s antitrust

statute, Cal. Bus. & Prof. Code §§ 16700-70 (2012). (IPP Compl. ¶¶ 383-86.) The Cartwright

Act provides that any “trust” that is not specifically allowed by statute is “unlawful, against

public policy, and void,” and it defines “trust” to include any “combination of capital, skill or

acts by two or more persons” that is formed to, among other things, “limit or reduce the

production, or increase the price of merchandise, produce or any commodity” or “create or carry

out restrictions in trade or commerce.” Cal. Bus. & Prof. Code §§ 16720(a)-(b). As with federal

law, California law treats some restraints of trade as per se unlawful, while others are analyzed

under the rule of reason. See Reynolds v. Cal. Dental Serv., 246 Cal. Rptr. 331, 334 (Cal. Ct.

App. 1988). In deciding on the proper standard, California courts inquire into whether the

practice facially appears to be one that would always or almost always tend to restrict

competition and decrease output, and in what portion of the market, or instead one designed to

increase economic efficiency and render markets more, rather than less, competitive. Id. at 334-

335 (citing Broadcast Music, 441 U.S. at 19-20).

The Cartwright Act permits actions by indirect purchasers. Cal. Bus. & Prof. Code §

16750(a) (providing that a private Cartwright Act action “may be brought by any person who is injured in his or her business or property by reason of anything forbidden or declared unlawful by this chapter, regardless of whether such injured person dealt directly or indirectly with the

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defendant.”); Clayworth v. Pfizer, Inc., 233 P.3d 1066, 1082 (Cal. 2010) (discussing history and

intent behind Section 16750(a)).

2. Relationship to Federal Law

California courts recognize that federal cases interpreting the Sherman Act apply to analyses of the Cartwright Act. See Reynolds, 246 Cal. Rptr. at 334 n.9 (“Reliance on federal authority in interpreting the Cartwright Act is accepted since the latter is modeled after the

Sherman Act.”); see also Parrish v. NFL Players Ass’n, 534 F. Supp. 2d 1081, 1092 (N.D. Cal.

2007) (“Because [exclusive deals] can have economic benefits, they are judged by the rule of reason under both the Sherman Act and the Cartwright Act.”).

3. State law on Standard Setting

No California cases examine standard setting in the context of antitrust claims. In N.N.V. v. Am. Ass’n of Blood Banks, 75 Cal. App. 4th 1358 (Cal. Ct. App. 1999), however, the court held that a private standard setting body, the American Association of Blood Banks (AABB), owed no duty of care to a patient infected with AIDS by blood screened under AABB standards.

In affirming summary judgment for AABB, the court noted:

[T]he public benefits from having private medical and scientific societies coordinating research, debating the merits of various scientific and medical information and technologies, and making recommendations to its members and the community at large. Leaving these matters solely in the hands of governmental agencies, which is a possible result of imposing liability here, would not further the public’s interests nor guarantee the safety of the nation’s blood supply. It would limit the debate and would deprive medical practitioners, scientists and governmental agencies of a valuable resource.

Id. at 1386-87. Quoting from an amicus brief, the court also observed:

A standard setting body, such as the AABB, provides an arena in which researchers can and do come together to focus on the state of scientific knowledge. The standard setting process thus imposes a certain discipline and coordination to what would otherwise be independent research going on in many places at the same time. Without this arena or this discipline, there are only scholarly articles going back and forth in various journals that are then individually analyzed and responded to months later by other researchers. At best, without an active standard setting process, there may be only an annual meeting

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or isolated conference involving separate organizations often consisting of only one discipline where ideas will be exchanged and challenged.

Id.

C. District of Columbia

1. State Antitrust Statute

District of Columbia IPPs allege violations of the District of Columbia Antitrust Act,

D.C. Code §§ 28-4501 to -4518 (2012). (IPP Compl. ¶¶ 394-97). The D.C. Antitrust Act declares the following: “Every contract, combination in the form of a trust or otherwise, or conspiracy in restraint of trade or commerce all or any part of which is within the District of

Columbia is declared to be illegal.” D.C. Code § 28-4502.

The Act provides for private civil actions:

Any person who is injured in that person’s business or property by reason of anything forbidden by this chapter may bring a civil action for damages, for appropriate injunctive or other equitable relief, or for both. In such an action, in addition to any appropriate injunctive or equitable relief, the court shall award as monetary relief: (1) threefold the total damage sustained by such person; and (2) as determined by the court, the costs of suit including reasonable attorney’s fees.

Id. § 28-4508(a). And indirect purchaser suits are permitted: “[a]ny indirect purchaser in the chain of manufacture, production, or distribution of goods or services, upon proof of payment of all or any part of any overcharge for such goods or services, shall be deemed to be injured within the meaning of this chapter.” Id. § 28-4509(a).

2. Relationship to Federal Statute

The D.C. Antitrust Act is generally construed in accordance with Sections 1 and 2 of the

Sherman Act. Mazanderan v. Indep. Taxi Owners’ Ass’n, Inc., 700 F. Supp. 588, 591 n.9

(D.D.C. 1988) (“Analysis of plaintiff’s state antitrust claim necessarily follows that of the federal claim….”); Atl. Coast Airlines Holdings, Inc. v. Mesa Air Group, Inc., 295 F.Supp.2d 75, 89 n.7

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(D.D.C. 2003) (“Whenever the Court refers to § 1 of the Sherman Act in its Analysis, it also

refers to the claims brought under the parallel provision of the D.C. Code, § 28-4502.”).

3. State Standard Setting Law

Neither the D.C. Superior Court nor the D. C. Court of Appeals has decided any case

involving standard setting in the antitrust context.

D. Florida

1. State Antitrust Statute

Florida IPPs allege a violation of the Florida Deceptive and Unfair Trade Practices Act

(“FDUTPA”), Fla. Stat. §§ 501.201-.213 (2012). (IPP Compl. ¶¶ 406-09). A consumer claim

for damages under FDUTPA has three elements: (1) a deceptive or unfair practice, (2) causation,

and (3) actual damages. Rollins, Inc. v. Butland, 951 So. 2d 860, 869 (Fla. Dist. Ct. App. 2006).

Florida courts have allowed indirect purchasers to bring claims under FDUTPA. See, e.g., Mack v. Bristol-Myers Squibb Co., 673 So. 2d 100, 104-06 (Fla. Dist. Ct. App. 1996). Only in-state consumers can pursue a valid claim under FDUTPA. Oce Printing Sys. USA, Inc. v. Mailers

Data Servs., Inc., 760 So. 2d 1037, 1042 (Fla. Dist. Ct. App. 2000).

With respect to the first element, Florida courts have determined that the phrase “unfair practices” encompasses antitrust violations. See Mack, 673 So. 2d at 104 (holding that an allegation of an antitrust conspiracy was sufficient to state a claim as an unfair trade practice, in part, because the “it is well established that collusive price-fixing constitutes a violation of section 5(a)(1) of the Federal Trade Commission Act”). If the challenged conduct does not constitute an antitrust violation and no other basis exists to consider the conduct an unfair or deceptive trade practice, then a FDUTPA claim must be dismissed. See Marco Island Cable,

Inc. v. Comcast Cablevision of South, Inc., No. 2:04-CV-26-FTM-29DNF, 2006 WL 1814333, at

*8 (M.D. Fla. July 3, 2006) (granting partial summary judgment on a FDUTPA claim where

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challenged exclusive dealing was not anticompetitive and “there is no basis to find the

exclusivity contracts to be an unfair or deceptive trade practice”).

With respect to causation, FDUTPA generally requires the plaintiff to establish that the

challenged conduct proximately caused it harm. Himes v. Brown & Co. Secs. Corp., 518 So. 2d

937, 938 (Fla. Dist. Ct. App. 1987) (plaintiff must suffer actual damages “proximately caused” by the challenged conduct). Where a FDUTPA indirect purchaser plaintiff asserts that the

defendants charged “supra-competitive, artificially inflated prices,” IPP Compl. ¶ 409, to

establish the causal chain, the supposedly illegal overcharge must be passed on to the end user

level through the chain of distribution. See Mack, 673 So. 2d at 106 (indirect purchasers can

“recover overcharges passed on to them” by upstream purchasers); Execu-Tech Bus. Sys., Inc. v.

Appleton Papers Inc., 743 So. 2d 19, 21 (Fla. Dist. Ct. App. 1999) (affirming denial of class

certification in indirect purchaser FDUTPA class action based on lack of common proof “that a

manufacturer-level price increase was passed through the distribution chain to impact each and

every consumer”). Specifically, to satisfy the pass-on requirement, the IPPs must show both that

the “[defendants] charged supra-competitive prices for the products at issue, resulting in

overcharges to the entities purchasing those products directly from [the defendants]” and “that at least some portion of these overcharges were passed on to the indirect purchaser end users.” In

re Fla. Microsoft Antitrust Litig., No. 99-27340, 2002 WL 31423620, at *7 (Fla. Cir. Ct. Aug.

26, 2002); accord Execu-Tech, 743 So. 2d at 21-22.

FDUTPA plaintiffs seeking monetary damages are entitled to recover only actual

damages. See Himes, 518 So. 2d at 938. The standard for determining actual damages under

FDUTPA is “well-defined in the case law” as the “difference in the market value of the product

or service in the condition in which it was delivered and its market value in the condition in

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which it should have been delivered.” Rollins, 951 So. 2d at 869. As applied to the IPPs’

FDUTPA claims, actual damages would be the amount of the illegal overcharge, if any, passed on to the IPPs from direct purchasers of eggs from the defendants. This analysis would take into

account pricing at all levels in the chain of distribution to determine what, if any, allegedly

illegal overcharge was borne by other purchasers. See In re Fla. Microsoft Antitrust Litig., 2002

WL 31423620, at *10 (“Plaintiffs will have to establish the extent that overcharges to

Microsoft’s direct customers were passed onto the indirect purchaser end user.”).

2. Relationship to Federal Statute

Under Florida law, both Sherman Act and Florida antitrust case law govern whether an

antitrust violation occurred. See Marco Island Cable, Inc., 2006 WL 1814333, at *6 (citing

Andrx Pharms., Inc. v. Elan Corp., PLC, 421 F.3d 1227, 1233 n.5 (11th Cir. 2005)) (“[B]oth

Florida and federal antitrust law are analyzed under the same rules and case law.”). Florida law

provides that “due consideration and great weight be given to the interpretations of the federal

courts relating to comparable federal antitrust statutes.” Fla. Stat. § 542.32 (emphasis added).

See Andrx, 421 F.3d at 1233 n.5 (stating that “the Florida antitrust statutes . . . closely track the

language of the Sherman Act and are analyzed under the same rules and case law”).

3. State Standard Setting Law

No Florida state or federal court has analyzed the propriety of standard setting conduct

under Florida’s antitrust laws.

E. Iowa

1. State Antitrust Statute

Iowa IPPs allege a violation of Iowa Competition Law, Iowa Code §§ 553.1-.19 (2012).

(IPP Compl. ¶¶ 413-16). The Iowa Competition Law prohibits restraints of trade as follows: “[a]

contract, combination, or conspiracy between two or more persons shall not restrain or

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monopolize trade or commerce in a relevant market.” Iowa Code § 553.4. The relevant market is defined as “the geographical area of actual or potential competition in a line of commerce, all or any part of which is within this state.” Iowa Code § 553.3(6).

The Iowa Competition Law does not explicitly permit indirect purchaser suits. In deciding whether Iowa law followed federal case law in prohibiting indirect purchaser suits, however, the Iowa Supreme Court held “the Iowa Competition Law is not controlled by federal law and indirect purchasers may maintain an antitrust action in state court.” Comes v. Microsoft

Corp., 646 N.W.2d 440, 441 (Iowa 2002).

2. Relationship to Federal Statute

The Iowa Competition Law provides that it:

shall be construed to complement and be harmonized with the applied laws of the United States which have the same or similar purpose as this chapter. This construction shall not be made in such a way as to constitute a delegation of state authority to the federal government, but shall be made to achieve uniform application of the state and federal laws prohibiting restraints of economic activity and monopolistic practices.

Iowa Code § 553.2.

As stated by the Iowa Supreme Court, such harmonization is not unlimited:

We do not find Iowa Code section 553.2 requires Iowa courts to interpret the Iowa Competition Law the same way federal courts have interpreted federal law. In fact, the harmonization statute specifically states the provision "shall not be made in such a way as to constitute a delegation of state authority to the federal government." This is not an issue of federal preemption of state law.

Comes, 646 N.W.2d at 446 (holding that indirect purchaser suits are permitted under Iowa law even though disallowed under federal law). This decision appears to present a conflict with the plain language of Iowa Code section 553.2, but Comes was discussed extensively by the Iowa

Supreme Court in Southard v. Visa USA, Inc., 734 N.W.2d 192, 195-97 (Iowa 2007) and remains good law.

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3. State Standard Setting Law

Iowa state courts have not decided any case analyzing standard setting in the antitrust or other contexts.

F. Kansas

1. State Antitrust Statute

Kansas IPPs allege a violation of the Kansas Restraint of Trade Act (“KRTA”), Kan.

Stat. Ann. §§ 50-101 to -162 (2012). (IPP Compl. ¶¶ 420-26.) The KRTA contains an Illinois

Brick repealer statute and, as such, authorizes indirect purchaser suits. Kan. Stat. Ann. § 50-

161(b). To recover under the KRTA, the IPPs must prove that the alleged illegal overcharge was actually “passed on by intermediate purchasers to plaintiffs.” Bellinder v. Microsoft Corp.,

No.00-C-0855, 2001 WL 1397995, at *1 (Kan. Dist. Ct. Sept. 7, 2001).

In O’Brien v. Leegin Creative Leather Products, the Kansas Supreme Court recently clarified the elements of the two liability provisions of the KRTA, namely sections 50-101 and

50-112. 277 P.3d 1062 (Kan. 2012). The court generally adopted a literalist approach to the statutory language. For section 50-101, a challenged “trust” need only literally fall within the orbit of one of the enumerated theories of unlawful conduct. Id. at 1075 (to establish a trust, “a plaintiff need not show a relationship rising to the level of an agreement”). For section 50-112, proof of “mere arrangements between persons” is similarly sufficient. Id. at 1075. The collaborative conduct likely does not need to have actually caused anticompetitive effects under either provision. Id. at 1075 (suggesting that for section 50-101 a plaintiff need merely establish that the defendants intended to cause harm); see also id. (stating that for section 50-112 “a plaintiff does not have to show that the arrangement actually succeeds in increasing prices”).

Nevertheless, “a plaintiff must show that the plaintiff was injured or damaged by the defendant’s forbidden behavior.” Id. at 1076.

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The KRTA does impose territorial restrictions. In Associated Wholesale Grocers v.

United Egg Producers, the action remanded by this court, the presiding Kansas judge acknowledged during a hearing that the KRTA applies only to “the purchase, sale or manufacture of any goods, wares, merchandise or other commodities” in Kansas where the case involves an alleged out-of-state conspiracy. See Kan. Stat. Ann. § 50-117; see also id. § 50-112;

Head v. Platte County, Mo., 749 P.2d 6, 8 (Kan. 1988) (“A state is sovereign only within its own boundaries and its laws have no extraterritorial force.”) (quoting State ex rel. Taggart v.

Holcomb, 116 P. 251, 252 (Kan. 1911). Certain defendants in the Kansas action, who are also defendants in this MDL proceeding, have filed individual motions for summary judgment on the grounds that they did not “purchase, [sell], or manufacture” the relevant products within the state of Kansas. Kan. Stat. Ann. § 50-117. This motion is currently pending before the Kansas court.

2. Relationship to Federal Statute

The Kansas Supreme Court has noted that while federal Sherman Act case law “may be persuasive authority for any state court interpreting its antitrust laws, such authority is not binding upon any court in Kansas interpreting Kansas antitrust laws.” Bergstrom v. Noah, 974

P.2d 520, 530 (Kan. 1999).

3. State Standard Setting Law

There is no Kansas state law analyzing standard setting in the antitrust context.

G. Massachusetts

1. State Antitrust Statute

Massachusetts IPPs allege a violation of the Massachusetts Consumer Protection Act

(“MCPA”), Mass. Gen. Laws ch. 93A §§ 1-11 (2012). (IPP Compl. ¶¶ 427-30). The Act forbids

“[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Mass. Gen. Laws ch. 93A § 2.

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Indirect purchasers have been held to have standing to sue under the MCPA. Ciardi v.

Hoffman-La Roche, Ltd., 762 N.E.2d 303 (Mass. 2002).

2. Relationship to Federal Statute

The Act is construed in harmony with federal antitrust statutes. See Mass. Gen. Laws. ch.

93A §§ 2(c), 11; see also id. at ch. 93, § 1.

3. State Standard Setting Law

No cases address standard setting in the context of a violation of the MCPA.

H. Michigan

1. State Antitrust Statute

Michigan IPPs allege a violation of the Michigan Antitrust Reform Act (“MARA”),

Mich. Comp. Laws §§ 445.771 - .788 (2012). (IPP Compl. ¶¶ 434-39). MARA, in pertinent part, prohibits “[a] contract, combination, or conspiracy between 2 or more persons in restraint of, or to monopolize, trade or commerce in a relevant market . . . .” Mich. Comp. Laws § 445.772.

Michigan law follows federal law in distinguishing per se violations and the rule of reason. See id. § 445.784(2). Under the rule of reason, only combinations and contracts that unreasonably restrain trade are subject to liability under the antitrust laws. Staebler-Kempf Oil Co. v. Mac’s

Auto Mart, Inc., 45 N.W. 2d 316, 318 (Mich. Sup. Ct. 1951).

2. Relationship to Federal Statute

Because MARA is modeled after the Sherman Act, Michigan courts often turn to interpretations of the Sherman Act by the federal courts. Barrows v. Grand Rapids Real Estate

Board, 214 N.W. 2d 532, 536 (Mich. Ct. App. 1974). See e.g., Mohammed v. Union Carbide

Corp., 606 F. Supp. 252, 257 (E.D. Mich. 1985) (relying on federal interpretation of the Sherman

Act in deciding issues related to MARA); Blair v. Checker Cab Co., 558 N.W. 2d 439, 442

(Mich. Ct. App. 1996) (same). Michigan courts have turned to federal interpretations of the

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Sherman Act because “it is in the Federal law where we find most discussion relative to the restraint of trade provisions.” Barrows, 214 N.W. 2d at 536. Furthermore, MARA states that

“courts shall give due deference to interpretations given by the federal courts to comparable antitrust statutes . . . .” Mich. Comp. Laws § 455.784.

3. State Standard Setting Law

Michigan courts have not addressed standard setting arguments in antitrust cases.

I. Minnesota

1. State Antitrust Law

Minnesota IPPs allege that defendants “formed contracts, combinations or conspiracies in restraint of trade or commerce” in violation of the Minnesota Antitrust Law, Minn. Stat.

§§ 325D.49 - .66 (2012). (IPP Compl. ¶ 440-43.) Minnesota’s antitrust statute provides that “[a] contract, combination, or conspiracy between two or more persons in unreasonable restraint of trade or commerce is unlawful.” Minn. Stat. § 325D.51. The phrase “contract, combination, or conspiracy” is defined to mean “any agreement, arrangement, collusion, or understanding.” Id.

§ 325D.50, subd. 4. To the extent the IPPs purport to assert a claim for conspiracy to monopolize (see IPP Compl. ¶ 443), such a claim would fall under Minnesota’s analogue to

Sherman Act § 1, Minn. Stat. § 325D.51, rather than Minnesota’s analogue to Sherman Act § 2.

Prestressed Concrete, Inc. v. Bladholm Bros. Culvert Co., 498 N.W.2d 274, 276-77 (Minn. Ct.

App. 1993).

Minnesota’s antitrust statute provides protection against duplicative damages awards: “In any subsequent action arising from the same conduct, the court may take any steps necessary to avoid duplicative recovery against a defendant.” Minn. Stat. § 325D.57.

Like federal antitrust law, Minnesota law differentiates between actions that are per se unlawful and those subject to review under the rule of reason. See Humphrey v. Rd.

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Constructors, Inc., 474 N.W.2d 224, 225 & n.1 (Minn. Ct. App. 1991) (citing federal authority

for proposition that certain restraints of trade are reviewed under rule of reason).

2. Relationship to Federal Statute

As a general matter, Minnesota courts will construe the Minnesota Antitrust Law

consistently with federal interpretations of the Sherman Act. See Lorix, 736 N.W.2d at 626 (“As

the purposes of Minnesota and federal antitrust law are the same, it is sensible to interpret them

consistently.”). See e.g,. Humphrey, 474 N.W.2d at 225 & n.1 (citing federal authority for

proposition that certain restraints of trade are reviewed under rule of reason); Hough Transit, Ltd.

v. Nat’l Farmers Org., 472 N.W.2d 358, 360 (Minn. Ct. App. 1991) (holding that section

325D.51 “codifies the ‘rule of reason’ used to evaluate the legality of trade restraints under federal law”). Thus, for example, the federal Matsushita summary judgment standard applies to

conspiracy claims under Minnesota’s antitrust statute. See Sports & Travel Mktg. v. Chicago

Cutlery Co., 811 F. Supp. 1372, 1384 (D. Minn. 1993) (relying on Matsushita v. Zenith Ratio

Corp., 475 U.S. 574 (1986) in holding that proof of conspiracy under Minnesota Antitrust Law must include evidence that tends to exclude possibility of unilateral action); accord Midland

Glass Co. v. Aluma Spec, Inc., No. A06-765, 2007 WL 1248031, at *2 (Minn. Ct. App. May 1,

2007) (same).

3. State Standard Setting Law

Minnesota courts have not addressed the propriety of standard setting conduct under the

Minnesota Antitrust Law.

J. Mississippi

1. State Antitrust Statute

Mississippi IPPs allege that defendants unreasonably restrained trade in violation of the

Mississippi Antitrust Act (“MAA”). Miss. Code Ann. § 75-21-1. (IPP Compl. ¶¶ 447–50.) The

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elements for proving a violation of the MAA are not explicitly listed in any statute or the case law, but several federal cases conclude that the elements are the same as those required for proving a violation of the Sherman Act in the Fifth Circuit. See, e.g., Walker v. U–Haul Co. of

Miss., 734 F.2d 1068, 1070 n.5 (5th Cir. 1984) (treating “the state and federal antitrust claims as analytically identical”).

“Mississippi’s antitrust laws prohibit understandings or agreements to ‘restrain trade,’

‘increase . . . the price of a commodity,’ or ‘hinder competition in the production, importation . . . or sale or purchase of a commodity.’” In re TFT-LCD (Flat Panel) Antitrust Litig., 599 F. Supp.

2d 1179, 1188 (N.D. Cal. 2009) (quoting Miss. Code. Ann. § 75-21-1). In addition, a

Mississippi antitrust claim requires some “activity or conduct occurring in intrastate commerce or trade.” California v. Infineon Techs. AG, 531 F. Supp. 2d 1124, 1158 (N.D. Cal. 2007).50

No state court case in Mississippi has clearly set out the elements of an antitrust claim under the MAA.51 But to demonstrate an “unlawful restraint of trade to the detriment of the public welfare,” Mississippi courts have acknowledged that plaintiffs must show the complained of act “was in some way hostile to the public welfare.” Auto. Alignment & Body Serv., Inc. v.

State Farm Mut. Auto. Ins. Co., No. 99-0152, 2005 WL 4826893 (Miss. Ch. Mar. 22, 2005). “A

50This requirement is not present in the statute, but instead arose as a result of a 1914 Mississippi Supreme Court decision, Standard Oil Co. of Ky. v. State ex rel. Attorney Gen., 65 So. 468 (Miss. 1914), overruled in part by Mladinich v. Kohn, 164 So. 2d 785 (Miss. 1964). In that decision, the court was relying on the now outdated “dual sovereignty” theory, and stated that a monopoly would be punishable under Mississippi law only if it was “accomplished in part at least by transactions which are also wholly intrastate.” Id. at 471; see also Infineon Techs. AG, 531 F. Supp. 2d at 1158 (analyzing whether Standard Oil was still good law and determining that Mississippi law required only that “some activity or conduct occurring in intrastate commerce or trade”). More modern cases have clarified that if a product’s “final destination” is in Mississippi, a claim can be stated under the MAA. Hood ex rel. State v. BASF Corp., No. 56863, 2006 WL 308378, at *5 (Miss. Ch. Jan. 17, 2006)); but see In re Microsoft Corp. Antitrust Litig., No. MDL 1332, 2003 WL 22070561, at *2 (D. Md. Aug. 22, 2003). 51 Certain Mississippi federal courts have identified the elements of antitrust conspiracy claims. “The prerequisites for a violation of § 1 of the Sherman Antitrust Act are twofold. First, there must be a conspiracy, i.e., an agreement between at least two parties. Second, the conspiracy must unreasonably restrain trade.” Am. Tel. & Tel. Co. v. Delta Commc’n Corp., 408 F. Supp. 1075, 1088 (S.D. Miss. 1976); see also Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148, 1158 (5th Cir. 1992).

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‘rule of reason’ is applied in construing the statutory prohibition and requires that there be an unreasonable or undue restraint of trade.” Id.; see also Brown v. Staple Cotton Co-op. Ass’n, 96

So. 849, 855 (Miss. 1923) (“It will be seen that this court in construing our statute prohibiting monopolies has applied the rule of reason, as has the Supreme Court of the United States in construing the federal statute . . .”). Hardy Bros. Body Shop, Inc. v. State Farm Mut. Auto. Ins.

Co., 848 F. Supp. 1276, 1290-91 (S.D. Miss. 1994) (interpreting public welfare requirement akin to rule of reason requirement); but see Wagley v. Colonial Baking Co., 208 Miss. 815, 846-49

(Miss. 1950) (holding that acts listed in the former antitrust statute were declared to be inimical to the public welfare by the legislature and that it is “not left to the courts to say”).

Of clear relevance to our case, the Mississippi Supreme Court has specifically held that the actions of an agricultural cooperative to maintain a profitable price year round were not a restraint of trade under Mississippi’s law. Brown, 96 So. at 854. In particular, it reasoned that the state’s agricultural cooperative laws were “persuasive on the courts as to what was inimical to the public welfare at that time.” Id. at 856. And it applied a rule of reason analysis not only because that was the proper rule under Mississippi law, but also because “the courts of other states in passing on co-operative marketing contracts” had as well. Id. at 855. It noted that the co-operative at issue sought to establish “a steady market and a reasonable price . . . [to allow for] a continuous market for the producer the year round,” and that, “[i]t would be hard to conceive of how a steady market and a reasonable and profitable price for cotton to the producers would be inimical to the public welfare in this state.” Id. at 856.

Mississippi has also required plaintiffs to meet additional hurdles to establish a state antitrust claim. In particular, an antitrust plaintiff must “plead and prove that it suffered not just financial injury but ‘antitrust injury’ – injury inflicted by the anti-competitive effects of the

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violation alleged.” Owens Corning v. R.J. Reynolds Tobacco Co., 868 So. 2d 331, 344 (Miss.

2004) (emphasis in original). The court went on to adopt federal law in defining antitrust injury:

“‘Antitrust injury’ is ‘injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.” Id. (quoting Brunswick Corp. v. Pueblo

Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977); see also In re Potash Antitrust Litig., 667 F. Supp.

2d 907, 945 (N.D. Ill. 2009), rev’d on other grounds by Minn-Chem, Inc. v. Agrium Inc., 657

F.3d 650 (7th Cir. 2011) (“Such an express application of federal standards provides this Court with sufficient reason to believe Mississippi has adopted the antitrust injury requirement as articulated in Brunswick and its progeny.”). Mississippi has enacted an Illinois Brick repealer statute; as such, indirect purchasers are entitled to bring a claim under its antitrust laws. Miss.

Code Ann. § 75-21-9.

2. Relationship to Federal Statute

In general, Mississippi has followed federal law in the application of its state antitrust law. See NAACP v. Claiborne Hardware Co., 393 So. 2d 1290, 1301 (Miss. 1980), rev’d, 458

U.S. 886 (1982) (describing Mississippi statute as “patterned” after the Sherman Act and following federal case law interpretation of same); Hardy Bros., 848 F. Supp. at 1290-91

(finding that “where a court finds no federal antitrust violations, allegations of state law antitrust violations may be dismissed as well.”); Futurevision Cable Sys. of Wiggins, Inc. v. Multivision

Cable TV Corp.¸ 789 F. Supp. 760, 780 (S.D. Miss. 1992), aff’d, 986 F.2d 1418 (5th Cir. 1993)

(same). See also Walker v. U-Haul, 734 F.2d at 1070 n.5 (treating Mississippi and federal antitrust claims as “analytically identical”); Uniroyal, Inc. v. Hoff & Thames, Inc., 511 F. Supp.

1060, 1067 (S.D. Miss. 1981) (granting summary judgment on state antitrust claim when federal claim failed absent “some relevant holding that Mississippi law condemns activity which is not violative of the federal antitrust laws”). Cf. Main St. Publishers, Inc. v. Landmark Commc’ns 133

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Inc., 701 F. Supp. 1289, 1291 (N.D. Miss. 1988) (“[T]he Mississippi statutes only prohibit

specific forms of unfair competition enumerated in the act. Other forms of competition not

specifically proscribed in Mississippi’s antitrust statutes are subject to the federal antitrust

statutes.”).

3. State Standard Setting Law

No Mississippi state or federal court has analyzed the propriety of standard setting

conduct under Mississippi’s antitrust laws.

K. Nebraska

1. State Antitrust Statute

Nebraska IPPs allege that defendants violated Nebraska’s Consumer Protection Act, Neb.

Rev. Stat. § 59-1601 to -1622 (2012). (IPP Compl. ¶¶ 454-57). The Act provides that “[a]ny

contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or

commerce shall be unlawful.” Neb. Rev. Stat. § 59-1603.

2. Relationship to Federal Statute

The Act is “the state version of the Sherman Antitrust Act,” State ex rel. Douglas v.

Associated Grocers, 332 N.W.2d 690, 693 (Neb. 1983), and is construed in the same way that

federal courts construe the Sherman Act. See Neb. Rev. Stat. § 59-829 (“When . . . any provision of Chapter 59 is the same as or similar to the language of a federal antitrust law, the courts of this state in construing [such provisions] shall follow the construction given to the federal law by the federal courts.”); see also Heath Consultants v. Precision Instruments, 527

N.W.2d 596, 606-07 (Neb. 1995) (relying on federal and Supreme Court precedent to analyze state antitrust claims). It does, however, allow claims by indirect purchasers. Arthur v.

Microsoft Corp., 676 N.W.2d 29, 35 (Neb. 2004) (allowing a cause of action for indirect

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purchasers under Nebraska antitrust law based on distinctions between the federal and Nebraska statutes).

3. State Standard Setting Law

Nebraska cases do not address standard setting in the context of antitrust law.

L. Nevada

1. State Antitrust Statute

Nevada IPPs rest their Nevada state law claims on Nevada’s Unfair Trade Practices Act,

Nev. Rev. Stat. §§ 598A.010 - .280 (2012) (IPP Compl. ¶¶ 461-64), which prohibits, in relevant part:

(a) Price-fixing, which consists of raising, depressing, fixing, pegging or stabilizing the price of any commodity or service . . . . (b) Division of markets, consisting of agreements between competitors to divide territories and to refrain from soliciting or selling in certain areas. (c) Allocation of customers, consisting of agreements not to sell to specified customers of a competitor. (d) Tying arrangements, consisting of contracts in which the seller or lessor conditions the sale or lease of commodities or services on the purchase or leasing of another commodity or service. . . .

Id. § 598A.060(1). The statute provides for private civil relief, providing (in relevant part) that:

Any person injured or damaged directly or indirectly in his or her business or property by reason of a violation of the provisions of this chapter may institute a civil action and shall recover treble damages, together with reasonable attorney fees and costs.

Id. § 598A.210.

2. Relationship to Federal Statute

The entirety of the Unfair Trade Practices statute is meant to track judicial interpretation of the federal antitrust statutes. “The provisions of this chapter shall be construed in harmony with prevailing judicial interpretations of the federal antitrust statutes.” Nev. Rev. Stat. §

598A.050; see also Boulware v. State of Nev., Dep’t of Human Resources, 960 F.2d 793, 800-01

(9th Cir. 1992) (relying on § 598A.050 to affirm the district court’s finding in accordance with

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federal case law that plaintiff’s Nevada “state unfair trade practices claim is barred by Noerr–

Pennington immunity” where plaintiff doctor sued defendant hospital regarding regulation of

MRI units). Cf. In re Flash Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1152-53 (N.D. Cal.

2009) (“This Court, however, is reticent to adopt an across-the-board rule that a state’s

harmonization provision, whether created by statute or common law, is an appropriate means of predicting how a state’s highest court would rule regarding the applicability of [Associated

General Contractors v. Carpenters, 459 U.S. 519 (1983)] to state law antitrust claims.”).

3. State Standard Setting Law

No Nevada cases examine standard setting in the context of antitrust claims.

M. New Mexico

1. State Antitrust Statute

New Mexico IPPs allege that defendants have engaged in a contract, combination, or conspiracy in violation of Section 57-1-1 of New Mexico’s Antitrust Act (the “NMAA”), which provides that “[e]very contract, agreement, combination or conspiracy in restraint of trade or commerce, any part of which trade or commerce is within this state, is unlawful.” N.M. Stat.

§ 57-1-1; see also IPP Compl. ¶¶ 468-71. The New Mexico Court of Appeals has held that a plaintiff suing under Section 57-1-1 must prove “‘a conspiracy or combination among two or more persons and an unreasonable restraint of trade due to this combination or conspiracy.’”

State ex rel. Educ. Assessments Sys., Inc. v. Coop. Educ. Servs. of N.M., Inc., 848 P.2d 1123,

1129 (N.M. Ct. App. 1993) (quoting Clough v. Adventist Health Sys., Inc., 780 P.2d 627, 630

(1989)). Price-fixing is a per se restraint of trade under New Mexico law. See State v. Ray Bell

Oil Co., 683 P.2d 50, 52 (N.M. Ct. App. 1983).

Indirect purchasers may pursue damages under the express terms of the NMAA. N.M.

Stat. § 57-1-3(A) (“All contracts and agreements in violation of [the NMAA] shall be void, and

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any person threatened with injury or injured in his business or property, directly or indirectly, by

a violation [of the NMAA] may bring an action ….”).

2. Relationship to Federal Law

The language used in Section 57-1-1 parallels that used in Section 1 of the Sherman Act.

See 15 U.S.C. § 1 (“Every contract, combination in the form of trust or otherwise, or conspiracy,

in restraint of trade or commerce among the several States, or with foreign nations, is declared to

be illegal.”). Further, Section 57-1-15 of the NMAA requires courts to construe Section 57-1-1 and other portions of the NMAA in harmony with federal antitrust law with the goal of achieving uniform application of the respective antitrust laws. See N.M. Stat. Ann. § 57-1-15 (“Unless otherwise provided in the Antitrust Act, the Antitrust Act shall be construed in harmony with judicial interpretations of the federal antitrust laws. This construction shall be made to achieve uniform application of the state and federal laws prohibiting restraints of trade and monopolistic practices.”). New Mexico courts strictly interpret Section 57-1-15’s requirement to harmonize state and federal antitrust law. In Romero v. Philip Morris, Inc., 242 P.3d 280 (N.M. 2010), the

New Mexico Supreme Court reversed the state Court of Appeals because the Court of Appeals

failed to apply the lessons from the U.S. Supreme Court’s decision in Twombly, 550 U.S. 544

when evaluating parallel business behavior by competitors. Romero, 242 P.3d at 290-91 (“In

rejecting the plus factor approach used by the federal courts and holding that parallel conduct can

be enough to prove a conspiracy, the Court of Appeals fails to construe the New Mexico

Antitrust Act in harmony with judicial interpretations of federal antitrust law required by Section

57-1-15.” Id. at 292 (citing Twombly, 550 U.S. at 554).

The only difference between a Section 57-1-1 claim and a Section 1 claim is the

geographical scope of the alleged conspiracy’s effects: a plaintiff suing under Section 57-1-1

would have to prove an effect on trade or commerce occurring within New Mexico, as opposed 137

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to the Sherman Act’s requirement of proving an effect on interstate commerce. Compare N.M.

Stat. § 57-1-1 with 15 U.S.C. § 1.

Also notable is that although New Mexico courts must harmonize state and federal antitrust law under Section 57-1-15, they cannot follow the more liberal federal standard for granting summary judgment. The New Mexico Supreme Court emphasized this in Romero: “We

continue to refuse to loosen the reins of summary judgment, as doing so would turn what is a

summary proceeding into a full-blown paper trial on the merits. We do not wish to grant trial

courts greater authority to grant summary judgment than has been traditionally available in New

Mexico.” Romero, 242 P.3d at 288 (quoting Bartlett v. Mirabal, 999 P.2d 1062 (N.M. 2000)).

3. State Standard Setting Law

No cases decided under New Mexico law have considered standard setting in the context of antitrust claims.

N. New York

1. State Antitrust Statute

New York IPPs allege that defendants “agreed to, and did in fact, act in restraint of trade or commerce by unfairly and deceptively fixing, raising, stabilizing, and maintaining prices of,

allocating markets for, and restraining and manipulating the supply of eggs at supra-competitive levels” in violation of General Business Law § 340 et. seq. IPP Compl. ¶¶ 481-85.

General Business Law § 340 et. seq., or the Donnelly Act, is New York’s antitrust law. It states that “. . . every contract, agreement, arrangement or combination” restricting competition or the free exercise of trade, business or commerce in the state is illegal and void as against public policy. The Donnelly Act requires a conspiracy or relationship between two or more entities acting in concert to unreasonably restrain trade or competition. Bello v. Cablevision Sys.

Corp., 185 A.D.2d 262, 264 (N.Y. App. Div. 1992), appeal denied, 80 N.Y.2d 781 (1992). To

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establish a claim under the Donnelly Act, plaintiff must “(1) identify the relevant product

market; (2) describe the nature and effects of the purported conspiracy; (3) allege how the

economic impact of that conspiracy is to restrain trade in the market in question; and (4) show a

conspiracy or reciprocal relationship between two or more entities.” Newsday, Inc. v. The

Fantastic Mind, Inc., 655 N.Y.S.2d 583, 585 (N.Y. App. Div. 1997).

To recover under the Donnelly Act, plaintiff bears the initial burden of showing under a

“rule of reason” analysis that the challenged action has had an actual adverse effect on

competition as a whole in the relevant market; to prove it has been harmed as an individual

competitor will not suffice. Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc.,

996 F.2d 537, 542 (2d Cir. 1993).

The Donnelly Act expressly permits indirect purchaser actions. General Business Law §

340(6) states, “In any action pursuant to this section, the fact that the state, or any political

subdivision or public authority of the state, or any person who has sustained damages by reason

of violation of this section has not dealt directly with the defendant shall not bar or otherwise

limit recovery.” However, the provision also instructs courts to “take all steps necessary to avoid

duplicate liability” where claims are asserted against a defendant by both direct and indirect

purchasers. The Act provides, “a defendant shall be entitled to prove as a partial or complete

defense to a claim for damages that the illegal overcharge has been passed on to others who are

themselves entitled to recover so as to avoid duplication of recovery of damages.” Id.

While the Donnelly Act does not specify in detail what it requires regarding intrastate conduct or harm, its language seems to imply there is such a requirement. In § 340(1), the Act states that “the conduct of any business, trade or commerce or in the furnishing of any service in

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this state” that establishes or maintains a monopoly or restrains competition is against public policy, illegal and void (emphasis added).

2. Relationship to Federal Statute

The Court of Appeals of New York has held that the Donnelly Act should generally be construed in light of federal precedent and given a different interpretation only where state policy, differences in the statutory language, or the legislative history justify such a result.

X.L.O. Concrete Corp. v. Rivergate Corp., 634 N.E.2d 158, 161 (N.Y. 1994); but c.f. Margrove,

357 N.Y.S.2d at 397 (finding Donnelly Act exemptions to be broader and noting differences between the state and federal language).

3. State Standard Setting Law

No cases decided under New York law have considered standard setting in the context of antitrust claims.

O. North Carolina

1. State Antitrust Statute

North Carolina IPPs allege violations of the North Carolina Monopolies, Trusts and

Consumer Protection Act, N.C. Gen. Stat. §§ 75-1 to -42 (2012). (IPP Compl. ¶¶ 489-92). The

Act states that “[e]very contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce in the State of North Carolina is hereby declared to be illegal.”

N.C. Gen. Stat. § 75-1; see also Cameron v. New Hanover Mem’l Hosp., Inc., 293 S.E.2d 901,

918 (N.C. Ct. App. 1982). Any such conspiracy “which violates the principles of the common law” is also considered a violation of the Act. N.C. Gen. Stat. § 75-2. Thus, “North Carolina’s substantive law of civil conspiracy . . . applies in the context of G.S. 75-1.” Cameron, 293

S.E.2d at 918.

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Civil conspiracy, as applied to § 75-1, consists of four elements: “(1) an agreement

between two or more individuals; (2) to do an unlawful act or to do a lawful act in an unlawful

way; (3) which agreement results in injury to the plaintiff inflicted by one or more of the

conspirators; and (4) pursuant to a common scheme.” State ex rel. Cooper v. McClure, No. 03

CVS 5617, 2007 NCBC LEXIS 24, at *16 (N.C. Sup. Ct. July 19, 2007) (quoting Privette v.

Univ. of N.C., 385 S.E.2d 185, 193 (N.C. Ct. App. 1989)). “The plain language of G.S. 75-1 requires that some concerted action in restraint of trade must be proven; unilateral action cannot violate the statute.” Cameron, 293 S.E.2d at 918.

Indirect purchasers have standing to assert causes of action under the North Carolina antitrust laws. Hyde v. Abbott Laboratories, Inc., 473 S.E.2d 680, 688 (N.C. Ct. App. 1996).

See also Walker v. Fleetwood Homes of N.C., Inc., 653 S.E.2d 393, 397 (N.C. 2007) (noting that

“we agree with the analysis conducted by the Court of Appeals majority [in Abbott Laboratories] and its interpretation of ‘any person’” as including indirect purchasers).

2. Relationship to Federal Antitrust Statute

“[C]hapter 75 is based on the Sherman Act.” Madison Cablevision, Inc. v. Morganton,

386 S.E.2d 200, 213 (N.C. 1989). Accordingly, “the body of law applying the Sherman Act, although not binding upon this Court in applying G.S. 75-1, is nonetheless instructive in determining the full reach of that statute.” Rose v. Vulcan Materials Co., 194 S.E.2d 521, 530

(N.C. 1973). Thus, North Carolina courts will look to federal law in interpreting the state antitrust law. See, e.g., Johnson v. Phoenix Mut. Ins. Co., 266 S.E.2d 610, 620 (N.C. 1980), overruled on other grounds by Myers & Chapman, Inc. v. Thomas G. Evans, Inc., 374 S.E.2d

385 (N.C. 1988); Rose, 194 S.E.2d at 530; N.C. Steel, Inc. v. Nat’l Council on Comp. Ins., 472

S.E.2d 578, 582-83 (N.C. Ct. App. 1996), rev’d in part, 496 S.E.2d 369 (N.C. 1998); Cooper,

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2007 NCBC LEXIS 24, at *17 (noting that the Sherman Act and 75-1 have similar language making conspiracies illegal).

3. State Standard Setting Law

North Carolina courts have not addressed standard setting arguments under North

Carolina antitrust law.

P. North Dakota

1. State Antitrust Statute

North Dakota IPPs allege a violation of the state’s antitrust law, which states in relevant

part that “[a] contract, combination, or conspiracy between two or more persons in restraint of, or

to monopolize, trade or commerce in a relevant market is unlawful.” N.D. Cent. Code § 51-08.1-

02. (IPP Compl. ¶¶ 500-03). North Dakota specifically allows for suits by indirect purchasers.

See N.D. Cent. Code § 51-08.1-08(3) (“In any action for damages under this section, the fact that

the state, political subdivision, public agency, or person threatened with injury or injured in its

business or property by any violation of the provisions of this chapter has not dealt directly with

the defendant does not bar recovery.”).

By its terms, North Dakota’s antitrust statute allows for a defendant to mount a “partial or

complete defense” based on showing that a plaintiff “who paid any overcharge or received any

underpayment passed on all or any part of the overcharge or underpayment to another purchaser

or seller in that action.” Id. § 51-08.1-08(4).

The statute does not mandate that the antitrust conspiracy itself have any nexus to North

Dakota; it requires only that the affected relevant market include some portion of the state. See

id. § 51-08.1-01 to -02. The statute also contains no language limiting its application to only

those transactions which took place in intrastate commerce, suggesting that a plaintiff can

recover for interstate transactions.

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2. Relationship to Federal Statute

As North Dakota’s antitrust statute closely tracks the federal statute, it is likely that North

Dakota courts would give deference to the law developed by federal courts. See e.g. State v.

Trevino, 807 N.W.2d 211, 214 (N.D. 2011) (“When [a North Dakota] rule is derived from a

federal rule, we may look to the federal courts’ interpretation or construction of identical or

similar language as persuasive authority for interpreting our rule.”); Jacob v. Nodak, 693 N.W.2d at 609 (“When considering claims under the North Dakota Human Rights Act, we may look to federal interpretations of corresponding federal statutes for guidance.”) (quoting Koehler v. Cnty.

Of Grand Forks, 658 N.W.2d 741 (N.D. 2003); Minot, 142 N.W.2d at 615-616 (noting that when a North Dakota act is almost identical to a federal act, “an interpretation of the federal act becomes very important to us”). Indeed, in a state court filing seeking an injunction against the

NCAA, the State of North Dakota itself noted that “[p]rovisions of North Dakota antitrust law derive from the Uniform State Antitrust Act which is generally ‘interpreted in conformity with the federal [antitrust laws].’” State v. NCAA, No. 36-09-C-419, Pl.’s Mem. in Supp. of Mot. for

Prelim. Inj. 67 (N.D. Dist. Ct. Oct. 2006), available at http://www.ag.nd.gov/NCAA/Memorandum-Prelim-injunction-state-crt.pdf (quoting

Mothershed, 410 F.3d at 609).

3. State Standard Setting law

There is no case law addressing the role of standard setting in the context of state law antitrust claims.

Q. South Dakota

1. State Antitrust Statute

South Dakota IPPs allege that defendants violated South Dakota’s antitrust statute, S.D.

Codified Laws §§ 37-1-3.1 to -33 (2012) (IPP Compl. ¶¶ 504-07), which states that: “[a]

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contract, combination, or conspiracy between two or more persons in restraint of trade or commerce any part of which is within this state is unlawful.” Id. § 37-1-3.1. Although South

Dakota permits indirect purchasers to bring suit, see id. § 37-1-33; In re South Dakota Microsoft

Antitrust Litig., 657 N.W.2d 668, 671 (S.D. 2003), the statute provides that “[i]n any subsequent action arising from the same conduct, the court may take any steps necessary to avoid duplicative recovery against a defendant.” (quoting S.D. Codified Laws § 37-1-33.)

The statute does not require that the antitrust conspiracy itself take place with South

Dakota, nor does it limit recovery to intrastate commerce. See id. § 37-1-3.1 (providing right of action against antitrust conspiracies affecting commerce “any part of which is within this state”);

In re Static Random Access Memory (SRAM) Antitrust Litig., 580 F. Supp. 2d 896, 906-07 (N.D.

Cal. 2008) (rejecting defendants’ argument that the South Dakota antitrust statute applies only to activities that “affect trade or commerce wholly within the state” and interpreting § 37-1-3.1 to require that “part of the affected trade or commerce take place within South Dakota.”)

2. Relationship to Federal Statute

A South Dakota court would likely rely on the law developed by federal courts. See S.D.

Codified Laws § 37-1-22 (stating that, in construing the state’s antitrust laws, “the courts may use as a guide interpretations given by the federal or state courts to comparable antitrust statutes”); Assam Drug Co., 798 F.2d at 313 (“The South Dakota statutory language governing restraint of trade is similar to section one of the Sherman Act, and the South Dakota legislature has indicated that federal court interpretations of the federal antitrust laws may be used as a guide in interpreting the state law.”); Byre, 362 N.W.2d at 74 (holding that “because of the similarity of language between the federal and state antitrust statutes and because of the legislative suggestion for interpretation found in SDCL 37-1-22, great weight should be given to the federal cases interpreting the federal statute”). 144

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3. State Standard Setting Law

No case law addresses standard setting in the context of antitrust claims under state law.

R. Tennessee

1. State Antitrust Statute

Tennessee IPPs allege a violation of the Tennessee Trade Practices Act (“TTPA”), Tenn.

Code Ann. § 47-25-101 to -112. (IPP Compl. ¶¶ 511-14). The TTPA provides:

All arrangements, contracts, agreements, trusts, or combinations between persons or corporations made with a view to lessen, or which tend to lessen, full and free competition in the importation or sale of articles imported into this state, or in the manufacture or sale of articles of domestic growth or of domestic raw material, and all arrangements, contracts, agreements, trusts, or combinations between persons or corporations designed, or which tend, to advance, reduce, or control the price or the cost to the producer or the consumer of any such product or article, are declared to be against public policy, unlawful, and void.

Tenn. Code. Ann. § 47-25-101. Tennessee courts have held that indirect purchasers have standing to sue under the TTPA. See, e.g., Freeman, 172 S.W.3d at 517.

The TTPA applies only to conduct that substantially affects Tennessee trade or commerce. Id. at 523. In Freeman, the court rejected a TTPA claim for lack of substantial effects where there was nothing more than allegations that the defendant took orders and sold products to customers in Tennessee and there was no indication that the products purchased by the plaintiff were sold by the defendant. Id. at 524. Moreover, the plaintiff in Freeman failed to establish how Tennessee commerce was substantially affected despite allegations that the alleged conduct resulted in higher prices to the plaintiff. Id. See also Medison Am., Inc. v. Preferred

Med. Sys., 548 F. Supp. 2d 567, 585 (W.D. Tenn. 2007) (“Bare allegations that prices were raised as a result of conduct is insufficient to establish that Tennessee commerce was substantially affected.”).

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2. Relationship to Federal Statute

Though the TTPA does not explicitly contain a harmonization clause that requires it to be

construed in accordance with federal antitrust statutes, the language of the Act closely tracks that

of Section 1 of the Sherman Act. Compare Tenn. Code. Ann. § 47-25-101, with 15 U.S.C. § 1.

The Act is generally construed in accordance with federal antitrust statutes. See, e.g., Roberson v. Medtronic, Inc., 494 F. Supp. 2d 864, 870 (W.D. Tenn. 2007) (analyzing TTPA and Sherman

Antitrust Act claims under same principles).

3. State Standard Setting Law

No cases were found addressing standard setting in the context of an alleged violation of the TTPA.

S. Utah

1. State Antitrust Statute

Utah IPPs allege that the defendants violated Section 914 of the Utah Antitrust Act

(“UAA”), Utah Code Ann. §§ 76-10-911 to -926 (2012), which provides that:

(1) Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce is declared to be illegal. (2) It shall be unlawful for any person to monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize, any part of trade or commerce.

Id. § 76-10-914; see also IPP Compl. ¶¶ 518-21.

Price-fixing is a per se antitrust violation under Utah civil law. Brixen & Christopher

Architects, P.C. v. State, 29 P.3d 650, 662 (Utah Ct. App. 2001).

Indirect purchasers can pursue injunctive relief and damages under the UAA, but have been able to do so only since May 1, 2006. Utah Code § 76-10-919(1)(a). Plaintiffs are required to alert the Attorney General whenever a claim is filed under the UAA that involves plaintiffs

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from Utah. Id. § 76-10-919(9). The court needs to approve all fees and arrangements, including contingency fee agreements. Id. § 76-10-919(11).

2. Relationship to Federal Statute

Utah law requires courts to interpret section 76-10-914, which mirrors the Sherman Act, and other portions of the UAA in accordance with comparable federal antitrust precedent. See

Utah Code Ann. § 76-10-926 (“The legislature intends that the courts, in construing this act, will be guided by interpretations given by the federal courts to comparable federal antitrust statutes and by other state courts to comparable state antitrust statutes.”); see also Brixen & Christopher

Architects, 29 P.3d at 661 (“Although no Utah case has evaluated the elements of a civil antitrust violation under the Utah Antitrust Act, we look to ‘interpretations given by the federal courts to comparable federal antitrust statutes and by other state courts to comparable state antitrust statutes.’”) (quoting Utah Code Ann. § 76-10-926).

3. State Standard Setting Law

Utah courts have not considered standard setting in the context of state law antitrust claims.

T. Vermont

1. State Antitrust Statute

Vermont IPPs allege violations of the Vermont Consumer Fraud Act (“CFA”), Vt. Stat.

Ann. tit. 9, §§ 2451-2480r. (IPP Compl. ¶¶ 525-29.) The CFA provides that “[u]nfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful.” Vt. Stat. Ann. tit. 9, § 2453(a). “[A] plaintiff presenting an antitrust claim must prove (1) a violation of the antitrust laws (in this case, the CFA), (2) an injury or impact suffered as a result of that violation, and (3) an estimated measure of damages.” Wright v.

Honeywell Int’l, Inc., 989 A.2d 539, 546 (Vt. 2009). Under Vermont law, “[a]n agreement

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among competitors to fix prices is unlawful per se.” State v. Heritage Realty, 407 A.2d 509, 511

(Vt. 1979) (quoting United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218 (1940)).

Vermont courts have not considered whether to apply the rule of reason.

The Vermont Supreme Court has held that a class of indirect purchasers could bring private antitrust cases under the CFA. See Wright, 989 A.2d at 543 (citing Elkins v. Microsoft

Corp., 817 A.2d 9, 20 (Vt. 2002)).

2. Relationship to Federal Statute

The Vermont Supreme Court has held that federal authority interpreting the Clayton and

Sherman Acts is inapplicable in interpreting the VCFA. See Elkins, 817 A.2d at 16. While the

VCFA does include a “harmony” clause, it is specifically limited to interpretation of the Federal

Trade Commission Act:

It is the intent of the legislature that in construing subsection (a) of this section, the courts of this state will be guided by the construction of similar terms contained in Section 5(a)(1) of the Federal Trade Commission Act as from time to time amended by the Federal Trade Commission and the courts of the United States.

Vt. Stat. Ann. tit. 9, § 2453(b). The Elkins court expressly rejected the argument that this provision encompassed federal court decisions interpreting all federal antitrust statutes, including the Clayton and Sherman Acts. 817 A.2d at 16; see also D.R. Ward Constr. Co. v. Rohm & Haas

Co., 470 F. Supp. 2d 485, 501 (E.D. Pa. 2006) (“[T]he harmonization clause in the VCFA does not require consistency between construction of the VCFA and construction of the Clayton Act and Sherman Act.”) (citing Elkins, 817 A.2d at 17). Nonetheless, excepting their accommodation of indirect purchaser actions, Vermont cases have not interpreted the VCFA contrary to federal antitrust law. See, e.g., Vermont Mobile Home Owners’ Ass’n., Inc. v.

LaPierre, 94 F. Supp. 2d 519, 523 (Vt. 2000) (analyzing jointly claims that defendants’ conduct violated both the Sherman Act and the VCFA because “the former provid[es] the same

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protections as the latter” and applying federal law to both); Franklin Cnty Sheriff’s Office v. St.

Albans City Police Dep’t, No. 11-266, 2012 Vt. LEXIS 61, at *15-16 (Vt. Aug. 3, 2012) (citing federal antitrust law in interpreting reach of VCFA).

3. State standard setting law

Vermont courts have not addressed standard setting arguments under Vermont antitrust law.

U. West Virginia

1. State Antitrust Statute

West Virginia IPPs allege that defendants violated the West Virginia Antitrust Act, W.

Va. Code §§ 47-18-1 to -23 (2012). (IPP Compl. ¶¶ 533-36). Looking to federal law, the West

Virginia Supreme Court held that:

[t]o establish a restraint of trade in violation of section 1 of the Sherman Act, a plaintiff must prove: “(1) concerted action by the defendants; (2) that produced anticompetitive effects within the relevant product and geographic markets; (3) that the concerted actions were illegal; and (4) that it was injured as a proximate result of the concerted action.”

Princeton Ins. Agency, Inc. v. Erie Ins. Co., 690 S.E.2d 587, 592-93 (W. Va. 2009) (quoting

Mathews v. Lancaster Gen. Hosp., 87 F.3d 624, 639 (3rd Cir. 1996)).

2. Relationship to Federal Statute

This Act is similar to section 1 of the Sherman Act. “The primary distinction … is that the West Virginia statute applies to contracts and conspiracies in restraint of trade ‘in this State’ while the federal statute is applicable to contracts and conspiracies ‘in restraint of trade or commerce among the several States, or with foreign nations.”‘ Kessel v. Monongalia Cnty. Gen.

Hosp. Co., 648 S.E.2d 366, 375 (W. Va. 2007) (quoting 15 U.S.C. §1 (2004)). Based on section

47-18-16 of the Code of West Virginia, federal decisional law should be followed where the state

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antitrust provisions track the Sherman Act’s provisions. See, e.g., Princeton Ins. Agency, Inc.,

690 S.E.2d at 592-93 (looking to federal law to define elements of unlawful restraint of trade).

3. State Standard Setting Law

No cases address standard setting in the context of state antitrust law.

V. Wisconsin

1. State Antitrust Statute

Wisconsin IPPs allege that defendants violated Wisconsin’s Trusts and Monopolies Act.

Wis. Stat. § 133.01 - .18 (2012). (IPP Compl. ¶¶ 540-43). Section 133.03 of the Act prohibits

restraint of trade and monopolization. Wis. Stat. § 133.03. Cases decided under this section

apply the rule of reason unless a per se offense is at issue. See 7 Julian O. von Kalinowski et al.,

Antitrust Laws and Trade Regulation § 149.02, at 149-4 to -6 (2012) (citations omitted). Finally,

the state antitrust laws apply not only to intrastate activity but to interstate activity as well.

Olstad v. Microsoft, 700 N.W.2d 139 (Wis. 2005).

Wisconsin courts are to interpret state antitrust laws in the most liberal manner to achieve

the greatest amount of competition. See Carlson & Erickson Builders, Inc. v. Lampert Yards,

Inc., 529 N.W.2d 905, 907–12 (Wis. 1995), overruled on other grounds by Olstad v. Microsoft,

700 N.W.2d 139 (Wis. 2005).

Von Kalinowski describes Wisconsin law on restraints of trade as follows:

When a restraint of trade is judged under the rule of reason, the court may consider any factor relevant to that restraint, including its purpose, the power of those engaged in the restraint and its effects. The restraint is unreasonable if it has a significant harmful effect on marketplace competition. Relevant geographic and product markets must be determined in order to assess the reasonableness of the restraint. Horizontal price-fixing, bid rigging and market or customer allocations have been recognized as categories of per se offenses under Wisconsin antitrust law. An elaborate inquiry in to the precise harm caused by per se unlawful activities or into the business justifications for their use is not required.

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Kalinowski, Antitrust Laws and Trade Regulation § 149.02, at 149-5 (citations omitted).

2. Relationship to Federal Statute

The Supreme Court of Wisconsin requires that state court interpretations of its antitrust

law, modeled on the Sherman Act, follow federal antitrust jurisprudence. See Conley Publ’g

Grp., Ltd. v. J. Commc’ns, Inc., 665 N.W.2d 879, 885–86 (Wis. 2003), overruled on other

grounds by Olstad v. Microsoft Corp., 700 N.W.2d 139 (Wis. 2005); see generally Michael P.

Waxman, Wisconsin Antitrust Law: Outsourcing the Legal Standard, 94 Marq. L. Rev. 1173

(2011).

3. State Standard Setting Law

No Wisconsin court has addressed standard setting in the context of state law antitrust violations.

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TAB VI

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VI. State Unjust Enrichment and Consumer Protection Claims

The linchpin of the Indirect Purchasers Plaintiffs’ Third Amended Complaint (“IPP

Compl.”) is the alleged agreement to manage supply to raise prices in violation of the Sherman

Act and comparable state laws. Without that core, there is no basis for recovery by the IPPs.

The federal and state statutory cooperative exemptions and the reasonableness of the animal

welfare guidelines, which preclude recovery under both federal and state antitrust law, cannot be

circumvented or otherwise vitiated by state claims of unjust enrichment or consumer protection.

Defendants submit this state law summary in an effort to facilitate the Court’s

consideration of the IPPs’ unjust enrichment and consumer protection claims. By providing this

summary, the Defendants do not agree that these claims provide any basis for recovery to the

IPPs in view of the relevant cooperative exemptions and the reasonableness of the animal

welfare guidelines. Those defenses, as well as others discussed in part below, are justifications

for, or defenses to, the alleged conduct that forms the basis of the IPPs’ claims.

A. State Unjust Enrichment Claims

The IPPs allege common law unjust enrichment claims under the laws of various states.52

The following summarizes the elements of proof required as well as the applicable defenses under the pertinent state laws.

1. Arizona

The Arizona IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 380-82. Under

Arizona law, a claim for unjust enrichment requires proof of the following elements: “(i) an enrichment; (ii) an impoverishment; (iii) a connection between enrichment and impoverishment;

(iv) absence of justification for the enrichment and the impoverishment; and (v) absence of a

52 In a telephone conference on the afternoon of October 3, 2012, counsel for Indirect Purchaser Plaintiffs confirmed that they will not be pursuing unjust enrichment claims under North Dakota, Utah, or New York law.

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remedy provided by law.” Cmty. Guard. Bank, 898 P.2d at 1008. Unjust enrichment “provides for the flexible, equitable remedy of restitution whenever the court finds that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to make compensation for benefits received.” State v. Ariz. Pension Planning, 739 P.2d 1373, 1375

(Ariz. 1987) (internal quotation omitted).

Because a plaintiff must “show the absence of any remedy at law,” Loiselle v. Cosas

Management Group, LLC, 228 P.3d 943, 947 (Ariz. App. 2010), unjust enrichment will not apply when the relationship between the parties is governed by contract. Brooks v. Valley

National Bank, 548 P.2d 1166, 1171 (Ariz. 1976) (stating that the existence of a contract specifically governing rights and obligations of each party precludes recovery for unjust enrichment); see also United Dairymen of Ariz. v. Schugg, 128 P.3d at 766 (“The parties’ rights are subject to the terms of the Agreement and we find that the doctrine of unjust enrichment has no applicability in this instance.”). In contrast, “[t]he remedy is . . . available when equity demands compensation for benefits received, even though the party has committed no tort and is not contractually obligated to the other.” Wang Elec., Inc. v. Smoke Tree Resort, LLC, No. 1

CA-CV 11-0387, 2012 Ariz. App. LEXIS 120, at *8 (Ariz. App. July 31, 2012) (internal quotation omitted).

2. California

The California IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 391-93. The elements of an unjust enrichment claim under California law are the receipt of a benefit and the unjust retention of the benefit at the expense of another. Peterson v. Cellco P’ship, 80 Cal. Rptr. at 323.

The theory of unjust enrichment applies to prevent one party from obtaining a windfall at the expense of another in circumstances where its application involves no violation or frustration 153

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of law or opposition to public policy, either directly or indirectly. Broadway Foreclosure Invs.,

LLC v. Tarlesson, 109 Cal. Rptr. 3d 319, 323 (Cal. Ct. App. 2010). As such, unjust enrichment

is not available if it would conflict with a statutory mandate or public policy embodied in such a

mandate. See id. (rejecting argument that the equitable doctrine of unjust enrichment could be

used to bar defendant judgment debtor from a statutory exemption); Ghory, 257 Cal. Rptr. at 927

(finding that statutory provision barred equitable defense of unjust enrichment; “Principles of

equity cannot be used to avoid a statutory mandate.”); Lass v. Eliassen, 270 P. 745, 747 (Cal. Ct.

App. 1928) (“Rules of equity cannot be intruded in matters that are plain and fully covered by positive statute…. Here defendant performed every authorized act required by him. Having done so, plaintiff has no cause of action against him….”) (citations omitted); Peterson, 80 Cal.

Rptr. 3d at 324 (rejecting plaintiffs’ attempt to pursue an “unjust enrichment” claim that is premised on statutory violations that plaintiffs would have no standing to bring).

Unjust enrichment is also barred where the plaintiff has an adequate legal remedy, including where the plaintiff has sufficiently pled a claim for violation of California’s Unfair

Competition Law, Cal. Bus. & Prof. Code Section 17200 et seq. See Collins v. eMachines, Inc.,

134 Cal. Rptr. 3d 588, 597 (Cal. App. 3d Dist. 2011) (where plaintiffs had viable statutory and common law fraud claims, “we conclude the complaint does not state a claim for restitution based on unjust enrichment”).

3. District of Columbia

The D.C. IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 403-405. “Unjust enrichment occurs when: (1) the plaintiff conferred a benefit on the defendant; (2) the defendant retains the benefit; and (3) under the circumstances, the defendant’s retention of the benefit is unjust.” New World Commc’ns, 878 A.2d at 1223.

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“For [the plaintiff] to recover on a quasi-contractual claim, he must show that [the defendant] was unjustly enriched at his expense and that the circumstances were such that in good conscience [the defendant] should make restitution.” Vereen v. Clayborne, 623 A.2d 1190,

1194 (D.C. 1993). Thus, the requirement of an “unjust” benefit, also stated as an equitable appeal to good conscience, serves as a limit to potential claims for unjust enrichment.

D.C. case law applying the elements of unjust enrichment to indirect purchaser claims is sparse. In one unpublished case, the D.C. Superior Court evaluated whether plaintiffs’ unjust enrichment claim against manufacturers and importers of alcoholic beverages could survive a motion to dismiss for failure to state a claim. Hakki v. Zima Co., No. 03-9183, 2006 WL

852126, at *3 (D.C. Super. Mar. 28, 2006). The claims were brought on behalf of (1) parents whose family resources were used by underage children to purchase defendants’ alcoholic beverages, and (2) parents of underage children who may be induced to purchase alcohol because of defendants’ advertising methods. The court dismissed the case because “the complaint does not allege that any Defendant has been unjustly enriched at Plaintiff’s expense or that he or any child of his is the source of even one dime of Defendants’ allegedly ill-gotten gains.” Id. at *3 (original emphasis).

4. Florida

The Florida IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 410-12. Under

Florida law, the elements of an unjust enrichment claim are the following: (1) a benefit conferred upon a defendant by the plaintiff, (2) the defendant’s appreciation of the benefit, and (3) the defendant’s acceptance and retention of the benefit, (4) under circumstances that make it inequitable for him to retain it without paying the value thereof. Fla. Power Corp. v. City of

Winter Park, 887 So. 2d 1237, 1242 (Fla. 2004). Florida courts have further clarified that the benefit must, to some extent, flow directly to the defendant from the plaintiff. See City of St. 155

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Petersburg v. Dayco Prods., Inc., No. 06-20953, 2008 WL 5428172, at *8 (S.D. Fla. Dec. 30,

2008) (summary judgment on unjust enrichment claim appropriate where plaintiff had indirectly purchased parts from a distributor and had not directly dealt with the defendants); Peoples Nat’l

Bank of Commerce v. First Union Nat’l Bank of Fla., 667 So. 2d 876, 878 (Fla. Dist. Ct. App.

1996) (dismissing unjust enrichment claim where plaintiff “could not and did not allege that it had directly conferred a benefit on the defendants”); Coffee Pot Plaza P’ship v. Arrow Air

Conditioning and Refrigeration, Inc., 412 So. 2d 883, 884 (Fla. Dist. Ct. App. 1982)

(recognizing that “some benefit must flow to the party sought to be charged”). Under Florida law, plaintiffs cannot, as the IPPs purport to do here, recover damages based on unjust enrichment when they have received the benefit of the bargain for which they contracted. In other words, a claim for unjust enrichment does not exist where “the payment that has been made is the payment to which the parties agreed.” Crossland Inv. Co. v. Rhodes, 274 F. Supp. 2d

1302, 1315 (N.D. Fla. 2003) (citing Restatement (First) of Restitution § 107(1)) (rejecting

Florida unjust enrichment claim).

Moreover, “the theory of unjust enrichment is equitable in nature and is, therefore, not available when there is an adequate legal remedy.” Webster v. Royal Caribbean Cruises, Ltd.,

124 F. Supp. 2d 1317, 1326 (S.D. Fla. 2000) (citation omitted); Liza Danielle, Inc. v. Jamko,

Inc., 408 So. 2d 735, 738 (Fla. Dist. Ct. App. 1982) (“Lack of an adequate remedy at law is a prerequisite for equitable relief . . . .”). As the Third Circuit explained, when determining whether a remedy is “adequate,” courts determine the “availability” of a remedy and not the

“likelihood of success.” Tudor Dev. Grp., Inc. v. U.S. Fidelity & Guar. Co., 968 F.2d 357, 369

(3d Cir. 1992); see also Liza Danielle, 408 So. 2d at 738 (“[T]o preclude pursuit of equitable

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remedies an available legal remedy must be plain, certain, prompt, speedy, sufficient, complete,

practical, and efficient in attaining the ends of justice.”).

5. Iowa

The Iowa IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 417-19. Under

Iowa law, the three basic elements for recovery based on unjust enrichment are: “(1) defendant

was enriched by the receipt of a benefit; (2) the enrichment was at the expense of the plaintiff;

and (3) it is unjust to allow the defendant to retain the benefit under the circumstances.” State ex. rel. Palmer v. Unisys Corp., 637 N.W.2d 142, 154-55 (Iowa 2001).

The Iowa Supreme Court has interpreted unjust enrichment as a broad principle with few limitations. Id. at 155. Under Iowa law, the principle has not been limited to require the benefits to be conferred directly to the plaintiff; benefits can be direct or indirect.53 Unisys Corp., 637

N.W.2d at 155. (citing Iconco v. Jensen, 622 F.2d at 1301-02 (“plaintiff not required to show he

directly conferred benefit on defendant under Iowa law”)). In Unisys Corp., the Iowa Supreme

Court stated that “the critical inquiry is that the benefit received be at the expense of the

plaintiff.” 637 N.W.2d at 155 (citing Guldberg v. Greenfield, 146 N.W.2d 298, 301 (Iowa

1966)).

6. Kansas

Under Kansas law, “[t]he basic elements of a claim based on a theory of unjust

enrichment are threefold: (1) a benefit conferred upon the defendant by the plaintiff; (2) an

appreciation or knowledge of the benefit by the defendant; and (3) the acceptance or retention by

53 A standing inquiry provides one limitation to unjust enrichment claims. In Southard v. Visa USA Inc., the Iowa Supreme Court upheld the district court’s dismissal of plaintiffs’ unjust enrichment claim, holding that where the indirect purchaser plaintiffs’ antitrust claims were too remote because the plaintiffs could not trace an injury to the defendants’ anticompetitive conduct, their unjust enrichment claims also suffered from the same remoteness of injury problem. 734 N.W.2d at 199 (“Plaintiffs overlook that this common-law theory is subject to the common-law rule that bars recovery for remote injuries.”).

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the defendant of the benefit under such circumstances as to make it inequitable for the defendant

to retain it without payment of its value.” Haz-Mat Response v. Certified Waste Serv., 910 P.2d

839, 847 (Kan. 1996) (citation omitted). While a direct relationship between the plaintiff and the

defendant is not required, in the absence of privity or some direct relationship, “there must exist

some special circumstances” that would justify requiring payment from the defendant. Id. The

Kansas Supreme Court has said that such a special situation would occur when the “benefits

[were] rendered under such circumstances” that would “reasonably notify [the party sought to be charged] that the one performing such services expected to be compensated.” Id. Implicit in this discussion is the principle that a plaintiff cannot state a claim for unjust enrichment when it has received the benefit of the bargain for which it contracted. See Restatement (First) of Restitution

§ 107(1) (articulating this bedrock principle of common law unjust enrichment).

7. Massachusetts

The Massachusetts IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 431-33.

Massachusetts recognizes a cause of action for unjust enrichment, but courts have held it is appropriate only where plaintiffs have no other adequate remedy at law. Sweeney v. DeLuca,

No. 042338, 2006 WL 936688 (Mass. Super. Ct. Mar. 16, 2006). The elements of unjust enrichment are: (1) a benefit conferred upon the defendant by the plaintiff; (2) appreciation or knowledge by the defendant of the benefit; and (3) acceptance or retention of the benefit by the defendant under the circumstances would be inequitable. Mass. Eye & Ear Infirmary v. QLT

Phototherapeutics, Inc., 552 F.3d 47, 57 (1st Cir. 2009); Sweeney, 2006 WL 936688 at *8.

Courts have dismissed unjust enrichment claims where statutory remedies also exist. See, e.g., Watkins v. Omni Life Science, Inc., No. 09-10857, 2010 WL 809820 (D. Mass. Mar. 9,

2010) (dismissing unjust enrichment claim because adequate remedy at law existed, though plaintiffs’ statutory consumer protection claim and other claims were also dismissed); Vincent v. 158

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Ameriquest Mortgage Co., 381 B.R. 564 (Bankr. D. Mass. 2008) (finding that plaintiff had stated a claim under Mass. G.L. 93A for unfair or deceptive acts which, if proved, would govern the calculation of damages, thereby precluding an unjust enrichment claim); Cargill v. Gilmore,

No. 920485G, 1993 WL 818899 (Mass. Super. Ct. Aug. 18, 1993) (granting summary judgment

on unjust enrichment claim because adequate remedy was provided by Massachusetts statute).

8. Michigan

The Michigan IPPs do not allege any common law unjust enrichment claims.

9. Minnesota

The Minnesota IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 444-46.

These common-law unjust enrichment claims are based on the same conduct underlying the

antitrust claim. See IPP Compl. ¶ 444 (alleging that Defendants received higher prices for their eggs “[b]y engaging in the unlawful conduct described herein”). Under Minnesota law, a claim for unjust enrichment has three elements: “(1) a benefit be conferred by the plaintiff on the defendant; (2) the defendant accept the benefit; (3) the defendant retain the benefit although retaining it without payment is inequitable.” Zinter v. Univ. of Minn., 799 N.W.2d 243, 247

(Minn. Ct. App. 2011). “Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others, but instead it must be shown that a party was unjustly enriched in the sense that the term ‘unjustly’ could mean illegally or unlawfully.” ServiceMaster of St. Cloud v. GAB Bus. Servs., Inc., 544 N.W.2d at 306 (quotation omitted). An unjust enrichment claim “may be founded on failure of consideration, fraud, or mistake, or situations where it would be morally wrong for one party to enrich himself at the expense of another.”

Mon-Ray, Inc. v. Granite Re, Inc., 677 N.W.2d 434, 440 (Minn. Ct. App. 2004) (quotation omitted). Moreover, “t[o] determine that unjust enrichment rather than simply a bad bargain exists, there need[s] to be circumstances showing a benefit was conferred unknowingly or

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unwillingly.” Galante v. Oz, Inc., 379 N.W.2d 723, 726 (Minn. Ct. App. 1986); accord T.B.

Allen & Assocs. v. Euro-Pro Operating LLC, Civ. No. 11-3479, 2012 WL 2508021, at *3 (D.

Minn. June 28, 2012) (applying Minnesota law).

Unjust enrichment claims are equitable in nature and thus cannot lie “when there is an adequate remedy at law” or when “statutory standards for recovery are set by the legislature.”

Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137, 140 (Minn. Ct. App. 1992).

Because the Minnesota Antitrust Law provides the IPPs with an adequate legal remedy and establishes statutory standards for recovery, the IPPs cannot invoke principles of unjust enrichment to recover based solely on allegations of price-fixing. See, e.g., Arena Dev. Grp. v.

Naegele Commc’ns, Inc., Civ. No. 06-2806, 2007 WL 2506431, at *11 (D. Minn. Aug. 30, 2007)

(dismissing unjust enrichment claim where plaintiff sought damages for same conduct under fraudulent transfer statute).

Unjust enrichment claims also cannot lie where the rights and obligations of the parties are governed by a valid contract. U.S. Fire Ins. Co. v. Minn. State Zoological Bd., 307 N.W.2d

490, 497 (Minn. 1981). Thus, courts applying Minnesota law have held that unjust enrichment cannot be invoked to recover payments made under a contract. See, e.g., Schaaf v. Residential

Funding Corp., 517 F.3d 544, 554 (8th Cir. 2008) (affirming dismissal of unjust enrichment claim where defendant had contractual right to payment). As the United States Court of Appeals for the Eighth Circuit has observed, “Minnesota courts do not apply unjust enrichment to protect a party from the consequences of its bad bargain, even when a third party has received some benefit from the aggrieved party’s performance.” Ringier Am., Inc. v. Land O’Lakes, Inc., 106

F.3d 825, 829 (8th Cir. 1997).

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10. Mississippi

The Mississippi IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 451-53. A

Mississippi unjust enrichment action is based on a promise, which is implied in law, that one will pay a person what he is entitled to receive according to “equity and good conscience.” 1704 21st

Avenue, Ltd. v. City of Gulfport, 988 So. 2d 412, 416 (Miss. Ct. App. 2008). In order to establish a claim of unjust enrichment, the claimant must show that: (1) there is no legal contract; and (2) the person sought to be charged is in possession of money or property which in good conscience and justice he should not retain but should deliver to another. Mayer v. Angus, 83 So. 3d 444,

451 (Miss. Ct. App. 2012); Ellis v. Anderson Tully Co., 727 So. 2d 716, 719 (Miss. 1998);

McGinty v. Acuity Specialty Prods. Group, Inc., No. CIV. A. 3:07CV715, 2009 WL 161827, at

*5 (S.D. Miss. Jan. 22, 2009) (citing Owens Corning, 868 So. 2d at 342). See also Powell v.

Campbell, 912 So. 2d 978, 982 (Miss. 2005); Johnston v. Palmer, 963 So. 2d 586 (Miss. Ct.

App. 2007).

“[U]njust enrichment applies when one party has mistakenly paid another party.” Willis

v. Rehab Solutions, PLLC, 82 So.3d 583, 588 (Miss. 2012) (reversing jury verdict awarding unjust enrichment damages to employee when relationship was governed by employment contract). Plaintiffs cannot, as the IPPs do here, recover damages based on unjust enrichment when they have received the contracted-for benefit of the bargain, and in Mississippi, that

benefit, in the absence of other proof, is “the contract price.” Davidson v. Rogers, 431 So. 2d

483, 485 (Miss. 1983). Further, “[w]here a complete and adequate remedy exists at law for a

plaintiff’s [unjust enrichment] claim, the chancery courts should not intervene to award equitable

relief.” Broadhead v. Terpening, 611 So. 2d 949, 954 (Miss. 1992). As the IPPs are pursuing a claim for the same harm under the antitrust laws, they should not be entitled to such equitable relief. 161

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The second (and determinative) element of an unjust enrichment claim in Mississippi is

governed by principles of equity. See, e.g., Union Nat’l Life Ins. Co. v. Crosby, 870 So.2d 1175,

1180 (Miss. 2004). Accordingly, “[t]he requirements of proof of unjust enrichment are neither

technical nor complicated and, plaintiff can state a claim against defendants on the basis that defendants were unjustly enriched because they received profits which they should not have been

permitted to receive.” Owens Corning, 868 So. 2d at 342 (quotations omitted). To recover

damages, plaintiffs must prove both that defendants were unjustly enriched and that plaintiffs are rightfully entitled to the amount claimed. Id.

11. Nebraska

The Nebraska IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 458-60.

Nebraska courts recognize a cause of action for unjust enrichment. The Nebraska Supreme

Court, in Kanne v. Visa U.S.A., Inc., stated that a plaintiff seeking to “recover on such a claim

[for unjust enrichment] … must show that (1) the defendant received money, (2) the defendant retained possession of the money, and (3) the defendant in justice and fairness ought to pay the money to the plaintiff.” 723 N.W. 2d 293, 302 (Neb. 2006); see also Vital Learning Corp. v.

Talent Plus, Nos. A-10-1018, A-10-1019, 2012 WL 223910, at *12 (Neb. Ct. App. Jan. 24,

2012); Clif-Tex Land & Livestock, Inc. v. First Dakota Nat’l Bank, N.A., No. A-07-1351, 2008

WL 2930203, at *4 (Neb. Ct. App. July 29, 2008). In Kanne, the Nebraska Supreme Court found that appellants failed to state a claim where “they do not and cannot allege that

[defendants] unjustly obtained or retained any money.” Id. Specifically, the plaintiffs’ unjust enrichment claim was based on an argument that defendants had been enriched by violating state antitrust and consumer protection laws, and the court held that, because it had already concluded that plaintiffs did not state a claim for violation of those laws, their unjust enrichment claim must also fail. Id. at 302-03. The court also rejected the claim because plaintiffs could not show that 162

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defendants actually retained any money, as a merchant class had already sued to recover extra

fees and had settled the claims for over $3 billion. See id. at 303.

12. Nevada

The Nevada IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 465-67. Under

Nevada law, unjust enrichment is “the unjust retention of a benefit to the loss of another, or the

retention of money or property of another against the fundamental principles of justice or equity

and good conscience,” with the “essential elements” being (1) a benefit conferred on the

defendant by the plaintiff, (2) appreciation by the defendant of such benefit, and (3) acceptance and retention by the defendant of such benefit. Topaz Mut. Co. v. Marsh, 108 Nev. 845, 856

(1992) (citing Nev. Indus. Dev. v. Benedetti, 103 Nev. 360, 363 n.2 (1987)).

Nevada recognizes the general rule that equitable remedies are not available where the

plaintiff has an adequate remedy at law. See State v. Second Judicial Dist. Court in & for

Washoe County, 241 P. 317, 322 (Nev. 1925).

13. New Mexico

The New Mexico IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 478-80.

IPPs must prove two elements to make out an unjust enrichment claim under New Mexico law:

(1) the defendants have knowingly received a benefit at IPPs’ expense; (2) in a manner such that

allowing the defendants to retain the benefit would be unjust. Ontiveros, 3 P.3d at 698; see also

Heimann v. Kinder-Morgan CO2 Co., 144 P.3d 111, 118 (N.M. Ct. App. 2006).

New Mexico courts have emphasized that a plaintiff cannot recover for unjust enrichment

when a breach of contract claim is available. “The theory has evolved largely to provide relief

where, in the absence of privity, a party cannot claim relief in contract and instead must seek

refuge in equity.” Ontiveros, 3 P.3d at 698-99. Ontiveros involved an unjust enrichment claim

brought by a subcontractor against two homeowners. The general contractor involved in the

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home construction project went bankrupt, and the subcontractor sued the homeowners trying to

recover amounts it was owed for labor and materials. The court held that the homeowners were

unjustly enriched, with their homes having appreciated by $40,000 while they had paid barely

half the original contract price for the work. Id. at 700.

14. New York

The New York IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 486-88. In

New York, to prevail on a claim for unjust enrichment, a party must show that (1) the other party

was enriched, (2) at that party’s expense, and (3) that it is against equity and good conscience to

permit the other party to retain what is sought to be recovered. Mandarin Trading, 944 N.E.2d at

1110 (internal citations omitted). Courts in New York have denied unjust enrichment claims

where the connection between plaintiffs and defendants is attenuated. See State ex rel. Spitzer v.

Daicel Chem. Indus., Ltd., 840 N.Y.S.2d 8 (N.Y. App. Div. 2007) (holding consumers were too

attenuated from food additive manufacturers for state to bring unjust enrichment claim on

consumers’ behalf against manufacturers arising out of alleged illegal conspiracy to fix and

inflate the price of chemical substances); Sperry v. Crompton Corp., 863 N.E.2d 1012, 1018

(N.Y. 2007) (finding connection between the purchaser of tires and the producers of chemicals

used in the rubber-making process too attenuated to support a claim for unjust enrichment).

15. North Carolina

The North Carolina IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 497-99.

Under North Carolina law, a claim for unjust enrichment requires proof of the following

elements: (i) the plaintiff conferred a benefit on another party; (ii) the other party consciously accepted the benefit; and (iii) the benefit was not conferred gratuitously or by an interference in the affairs of the other party. Booe v. Shadrick, 369 S.E.2d 554, 555 (N.C. 1988). The claim

“operates as an equitable remedy based upon a quasi contract or a contract implied in law which

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provides a measure of recovery for the reasonable value of services rendered in order to prevent unjust enrichment.” Escarraman v. Northwoods at Coulwood Homeowners Ass’n, No. COA11-

1386, 2012 WL 2551928, at *3 (N.C. App. 2012 (quoting Ron Medlin Constr. v. Harris, 704

S.E.2d 486, 488 (N.C. 2010)).

A claim for unjust enrichment will be barred where the suit arises from a contract between the parties: “A claim [for unjust enrichment] is . . . described as a claim in quasi contract or a contract implied in law. . . . If there is a contract between the parties[,] the contract governs the claim and the law will not imply a contract.” Rev O, Inc. v. Woo, 725 S.E.2d 45, 49

(N.C. App. 2012); see also Ron Medlin, 704 S.E.2d at 488 (holding that quantum meruit is “not an appropriate remedy when there is an actual agreement between the parties” “because an express contract precludes an implied contract with reference to the same matter”).

Unjust enrichment is unavailable where the plaintiff has an adequate legal remedy, as

“[e]quity will not lend its aid in any case when the party seeking it has a full and complete remedy at law.” Jones Cooling & Heating, Inc. v. Booth, 394 S.E.2d 292, 294 (N.C. App. 1990)

(quoting Jefferson Standard Life Ins. Co v. Guilford Cnty., 34 S.E.2d 430, 434 (N.C. 1945)).

16. North Dakota

The North Dakota IPPs do not allege any common law unjust enrichment claims.

17. South Dakota

The South Dakota IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 508-10.

Unjust enrichment “occurs when one confers a benefit upon another who accepts or acquiesces in that benefit, making it inequitable to retain that benefit without paying.” Mack v. Mack, 613

N.W.2d 64, 69 (S.D. 2000) (quotation omitted); accord Hofeldt v. Mehling, 658 N.W.2d 783,

788 (S.D. 2003). In order to establish unjust enrichment under South Dakota law, “three elements must be proven: (1) a benefit was received; (2) the recipient was cognizant of that

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benefit; and (3) the retention of the benefit without reimbursement would unjustly enrich the

recipient.” Mack v. Mack, 613 N.W.2d at 69. “On the third element, proof of unfairness in

retaining the benefit without payment, the relevant inquiry is whether the circumstances are such

that equitably the beneficiary should restore to the benefactor the benefit or its value.” Hofeldt,

658 N.W.2d at 788.

“When unjust enrichment is found, the law implies a contract, which requires the

defendant to compensate the plaintiff for the value of the benefit conferred.” Mack v. Mack, 613

N.W.2d at 69. While the enrichment at issue must be unjust, South Dakota law does not require a showing of fault in a claim for unjust enrichment. See A.G. Edwards & Sons, Inc. v. Northwest

Realty Co., 340 N.W.2d 187, 189 (S.D. 1983) (“Enrichment can be unjust if it is a result of money paid by mistake.”).

A federal court in South Dakota has found “that standing to bring a claim for unjust enrichment is limited to the party who has conferred the benefit that is the basis for the claim.”

Raven Indus., Inc. v. Topcon Positioning Sys., 2009 U.S. Dist. LEXIS 85727, at *11 (D.S.D.

Sept. 18, 2009). In Raven, the court considered whether a plaintiff who had entered into an asset purchase agreement could sue for unjust enrichment against other companies that had entered into a later asset purchase agreement with the same seller for the same technologies purchased by the plaintiff. The court found that the plaintiff could not substantiate its claim for unjust

enrichment because “Plaintiff in this case is not the party that conferred the benefit upon either

Defendant.” Id.54

54 This Court, however, has previously found that South Dakota law did not require Plaintiffs to allege that they directly conferred a benefit on Defendants. See Mar. 20, 2012 Op. (Dkt. No. 631) at 107-08.

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18. Tennessee

The Tennessee IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 515-17. The

elements of the claim are: “(1) a benefit conferred upon the defendant by the plaintiff; (2)

appreciation by the defendant of such benefit; and (3) acceptance of such benefit under such

circumstances that it would be inequitable for him to retain the benefit without payment of the value thereof.” Freeman Indus., 172 S.W.3d at 525 (internal citation and quotation marks omitted). A benefit is “any form of advantage that has a measurable value.” City of

Goodlettsville v. Priceline.com, Inc., 605 F. Supp. 2d 982, 998 (M.D. Tenn. 2009).

Plaintiffs alleging unjust enrichment are also required to show that they have exhausted

all remedies available against the person with whom the plaintiff was in privity of contract. Id.

In Freeman, the defendants argued that plaintiffs, indirect purchasers of food products containing

sorbates, failed to exhaust their remedies by not seeking to recover damages from the

supermarkets from which they purchased the products. 172 S.W.3d at 525-26. Plaintiffs’

counsel responded with an affidavit stating that he was unaware of any viable claims against the

supermarkets. The court interpreted this as an argument that bringing claims against the

supermarkets would have been futile. The court agreed that a plaintiff is excused from the

exhaustion requirement against the party with whom the plaintiff is in privity if pursuit of the

claim would be futile. Id. at 526. However, asserting futility requires more than bare allegations

and must instead be supported with sufficient facts. Id.

19. Utah

The Utah IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 522-24. Plaintiffs

must prove three elements in an unjust enrichment claim under Utah law: (1) defendants received

a benefit from IPPs; (2) defendants knew of the benefit; and (3) defendants accepted or retained

the benefit under such circumstances as to make it inequitable for them to retain the benefit

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without payment of its value. U.S. Fid. & Guar. Co., 270 P.3d at 468. A plaintiff can bring an unjust enrichment claim only when it cannot recover through a contract remedy. Id. at 468-69.

As one example, the Utah Supreme Court in 2010 considered an unjust enrichment claim brought in connection with a dispute over a family farm. Rawlings v. Rawlings, 240 P.3d 754

(Utah 2010). After their father deeded the farm to his brother, a group of siblings contributed financially to the property, believing their brother was holding the farm as a family trust. The brother, however, later asserted that he had individual title to the farm. Id. at 756-58. The court affirmed the district court’s imposition of a constructive trust after finding the brother was unjustly enriched by his siblings’ contributions over the years. Id. at 768. The court noted the importance of unjust enrichment as an equitable tool: “‘[U]njust enrichment law developed to remedy injustice when other areas of the law could not,’ and therefore ‘must remain a flexible and workable doctrine.’” Id. at 763 (quoting Jeffs v. Stubbs, 970 P.2d 1234 (Utah 1998)). The court held that the brother represented to his siblings that the farm was being used to support their mother, and his siblings made contributions relying on his representations. Id. at 767-69.

20. Vermont

The Vermont IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 530-32.

Under Vermont law, a claim for unjust enrichment requires the following elements: “(1) a benefit was conferred on defendant; (2) defendant accepted the benefit; and (3) defendant retained the benefit under such circumstances that it would be inequitable for defendant not to compensate plaintiff for its value.” Center, 561 A.2d at 93. “In evaluating unjust-enrichment claims, courts consider whether, in light of the totality of circumstances, it is against equity and good conscience to allow defendant to retain what is sought to be recovered. This involves a realistic determination based on a broad view of the human setting involved, rather than a limited inquiry confined to an isolated transaction.” Savage v. Walker, 969 A.2d at 124. 168

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“Unjust enrichment is a remedy available where there is no enforceable agreement between the parties, and the cause of action is one of implied or quasi-contract.” Kaiser v. Cyr,

No. 247-11-06, 2008 Vt. Super. LEXIS 76, at *13 (Vt. Sup. Ct. Dec. 29, 2008) (citing DJ

Painting, Inc. v. Baraw Enters., Inc., 776 A.2d 413 (Vt. 2001)).

At least one Superior Court has held that a plaintiff may bring claims for both antitrust violations and unjust enrichment that arise from the same course of conduct. See Investors Corp. v. Bayer AG, No. 1011-04, 2005 Vt. Super. LEXIS 92, at *12 (Vt. Sup. Ct. June 1, 2005)

(“[B]ecause of the alleged antitrust and consumer fraud violations, it would be inequitable for the defendants to retain these benefits. [Plaintiff] has therefore stated a valid unjust enrichment claim.”).

21. West Virginia

The West Virginia IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 537-39.

The Supreme Court of Appeals of West Virginia has recognized a cause of action for unjust enrichment. See e.g., Realmark Devs., Inc. v. Ranson, 588 S.E.2d 150, 151-52 (W. Va. 2003). It defined unjust enrichment claims as occurring when “benefits have been received and retained under such circumstance that it would be inequitable and unconscionable to permit the party receiving them to avoid payment therefor.” Id. at 153.

There is no basis for an unjust enrichment claim when the plaintiff “was not the payor of the salary and benefits that [the defendant] received.” Hill v. Stowers, 680 S.E.2d 66, 75 (W. Va.

2009).55

55 See also Hill, 680 S.E.2d at 75 (noting also that “‘[i]t is generally recognized in the law of restitution that if one party pays money to another party (the payee) because of a mistake of fact that a contract or other obligation required such payment, the party making the payment is entitled to repayment of the money from the payee’”) (quoting Prudential Ins. Co. of Am. v. Couch, 376 S.E.2d 104 (W. Va. 1988)).

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Moreover, the Supreme Court of Appeals of West Virginia rejected an unjust enrichment claim where recognizing that claim would have defeated “interests created in compliance with

UCC procedure.” Peerless Packing Co. v. Malone & Hyde, Inc., 376 S.E.2d 161, 164 (W. Va.

1988) (quoting with approval Evans Prods. Co. v. Jorgensen, 421 P.2d 978 (Or. 1966)). Even though recognizing that the result “may appear harsh” in that case, the Supreme Court of

Appeals of West Virginia agreed with the logic of the Oregon Supreme Court that to allow the unjust enrichment claim to proceed and to defeat interests created in compliance with UCC procedure would “‘substantially impair[]’” “‘the purpose and effectiveness of the UCC.’” Id.

(quoting Evans, 421 P.2d 978).

22. Wisconsin

The Wisconsin IPPs’ unjust enrichment claims are located at IPP Compl. ¶¶ 544-46. “In

Wisconsin, an action for unjust enrichment, or quasi contract, is based upon proof of three elements: (1) a benefit conferred on the defendant by the plaintiff, (2) appreciation or knowledge by the defendant of the benefit, and (3) acceptance or retention of the benefit by the defendant under circumstances making it inequitable for the defendant to retain the benefit.” Watts v.

Watts, 405 N.W.2d 303, 313 (Wis. 1987). Where the parties have entered into a contract, the doctrine of unjust enrichment does not apply. Continental Cas. Co. v. Wisconsin Patients Comp.

Fund, 473 N.W.2d 584, 587 (Wis. Ct. App. 1991). For this reason, unjust enrichment claims are characterized as quasi-contractual. Boldt v. State, 305 N.W.2d 133, 141 (Wis. 1981).

Plaintiffs may also plead unjust enrichment when they bring an equitable claim requesting the court to impose a constructive trust. See, e.g., Policemen’s Annuity & Benefit

Fund of the City of Milwaukee v. City of Milwaukee, 630 N.W.2d 236 (Wis. Ct. App. 2001)

(imposing a constructive trust on funds that a city failed to make into an “in lieu” pension fund per a collective bargaining agreement). Constructive trusts are imposed by a court of equity to 170

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prevent unjust enrichment that arises when one party receives a benefit the retention of which would be unjust as against the other party. Id. at 242. Examples of when injustice can arise include breach of a collective bargaining agreement, id., and a breach of a fiduciary relationship,

Suburban Motors of Grafton, Inc. v. Forester, 396 N.W.2d 351, 352–53 (Wis. Ct. App. 1986)

(acknowledging that a fiduciary who fails to exercise a corporate opportunity can result in unjust enrichment, the remedy for which is the imposition of a constructive trust on the benefit wrongly obtained by the fiduciary).

Unjust enrichment claims are “actions on the theory of quasi contracts which are legal actions ruled by equitable principles.” Arjay Inv. Co. v. Kohlmetz, 101 N.W.2d 700, 702 (Wis.

1960) (holding that plaintiff was entitled to receive $3,000 per quasi contract that existed between himself and the defendant). This dual nature of an unjust enrichment claim has produced inconsistent holdings about whether such a claim is governed by a statute of limitations or the doctrine of laches.56 Several cases explicitly note the lack of clarity. Watts v. Watts, 448

N.W.2d at 298 (Wis. Ct. App. 1989); Buss v. Rosenow, No. 96-1145-FT, 1996 WL 635789 at *3

(Wis. Ct. App. Nov. 5 1996) (noting that “[c]ourts have applied both a doctrine of laches, as well

56 Some courts apply the doctrine of laches to unjust enrichment claims. Buckett v. Jante, No. 2009AP2709-FT. 2010 WL 1780363, at *3 (Wis. Ct. App. May 5, 2010) (“The timeliness of an unjust enrichment claim is governed by laches.”) (unpublished decision); Lambo v. Kathleen D’Acquisto Irrevocable Trust, No. 2006AP912, 2007 WL 2712146, at *8 (Wis. Ct. App. Sept. 19, 2007) (“Although the timeliness of the commencement of an action at law is governed by statutes of limitation, in the absence of a controlling statute, the timeliness of an unjust enrichment claim is governed by laches.”) (unpublished opinion); Schwittay v. Sheboygan Falls Mut. Ins. Co., 630 N.W.2d 772, 775 (Wis. Ct. App. 2001) (quoting Crosby v. Mills, 413 F.2d 1273, 1276 (10th Cir. 1969)). See Suburban Motors of Grafton, Inc., v. Forester, 396 N.W.2d 351, 352–53 (Wis. Ct. App. 1986). Other courts apply the statute of limitations for breaches of contract to unjust enrichment claims. Servicios Especiales Al Comercio Exterior v. Johnson Controls, Inc., No. 08-CV-117, 2011 WL 1304922, at *2 (E.D. Wis. Apr. 1, 2011) (citing Boldt v. State, 305 N.W.2d 133, 141 (Wis. 1981)); Stapel v. Stapel, No. 2009AP1195, 2010 WL 2757237, at *6 (Wis. Ct. App. July 14, 2010) (“Recovery based on unjust enrichment is sometimes referred to as a quasi-contract. As a claim based on quasi-contract, a claim for unjust enrichment is subject to the six-year statute of limitations.”) (unpublished opinion); Tesmer v. Dowd, No. 88-0781, 1989 WL 65273, at *1 (Wis. Ct. App. Apr. 5, 1989) (“Recovery upon unjust enrichment is referred to as ‘quasi-contract’ or contract ‘implied in law.’ As a claim based on quasi-contract, the statute of limitations applies.”) (unpublished opinion) (internal citation omitted); Boldt v. State, 305 N.W.2d 133, 141 (Wis. 1981) (“As a claim based on quasi-contract, Boldt’s lawsuit was subject to the six-year statute of limitations” of a breach of contract.).

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as a statute of limitations, to the same [unjust enrichment] claim,” but failing to resolve the

discrepancy) (unpublished opinion).

The doctrine of laches is an affirmative defense to an unjust enrichment claim asserted by

the defendant. The doctrine of laches will apply – that is, the claim will be barred – only if the

plaintiff unreasonably delays in bringing the claim, has knowledge of the events resulting in the

cause of action and acquiesced in those events, and there is prejudice to the party asserting the defense. Yocherer v. Farmers Ins. Exch., 643 N.W.2d 457, 465 (Wis. 2002). The party asserting the defense bears the burden of showing that it should apply. Id.

B. State Consumer Protection Claims

The IPPs allege violations of the consumer protection laws of various states, as follows.

1. Arizona

The Arizona IPPs do not allege any consumer protection claims.

2. California

The California IPPs allege a violation of California’s Unfair Competition Law, Cal. Bus.

& Prof. Code §§ 17200 et seq. (2012). (IPP Compl. ¶¶ 387-90.) Calif. Bus. & Prof. Code

§§ 17200 et seq. can be considered a consumer protection statute, as alleged by the IPPs.

California’s Unfair Competition Law prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code §

17200. “[V]irtually any state, federal or local law can serve as the predicate for an action under” the UCL, and the UCL’s “independent ‘unfairness’ prong” prohibits any practice that “offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” Podolsky v. First Healthcare Corp., 58 Cal. Rptr. 2d

89, 98 (Cal. Ct. App. 1996).

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Under California law, if conduct is found not to violate state antitrust laws, that same conduct generally cannot be the basis for a UCL claim. See Chavez v. Whirlpool Corp., 113 Cal.

Rptr. 175, 184 (Cal. Ct. App. 2001) (“[W]e hold that conduct alleged to be ‘unfair’ because it unreasonably restrains competition and harms consumers, such as the resale price maintenance agreement alleged here, is not ‘unfair’ if the conduct is deemed reasonable and condoned under the antitrust laws.”); RLH Indus., Inc. v. SBC Commc’ns, Inc., 35 Cal. Rptr. 469, 475 (Cal. Ct.

App. 2005) (affirming dismissal of UCL claim where Cartwright Act claim was dismissed and rejecting proposition that defendant’s conduct, which was found not to violate Cartwright Act,

“threatens an incipient violation of the Cartwright Act, violates its policy or spirit, or otherwise threatens competition”); see also Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 973

P.2d 527, 541-42 (Cal. 1999) (“Acts that the Legislature has determined to be lawful may not form the basis for an action under the unfair competition law, but acts may, if otherwise unfair, be challenged under the unfair competition law even if the Legislature failed to proscribe them in some other provision.”).

3. District of Columbia

The D.C. IPPs allege a violation of the D.C. Consumer Protection Procedures Act

(“DCCPPA”), D.C. Code §§ 28-3901, et seq. (2012). (IPP Compl. ¶¶ 398-402.) The DCCPPA includes a laundry list of approximately 35 unlawful trade practices, many of which are particularized to certain industries or professions (such as repair or sales personnel). D.C. Code

§ 28-3904.

The statute provides for a broad application of its protections: “[t]his chapter shall be construed and applied liberally to promote its purpose.” D.C. Code § 28-3901(c). It lists three such purposes: to “(1) assure that a just mechanism exists to remedy all improper trade practices and deter the continuing use of such practices; (2) promote, through effective enforcement, fair 173

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business practices throughout the community; and (3) educate consumers to demand high

standards and seek proper redress of grievances.” D.C. Code § 28-3901(b). D.C. courts have

stated that the DCCPPA’s “extensive enforcement mechanisms apply not only to the unlawful

trade practices proscribed by § 28-3904, but to all other statutory and common law prohibitions.”

Osbourne v. Capital City Mortgage Corp., 727 A.2d 322, 326 (D.C. 1999).

However, “a plaintiff must establish that she has suffered damage as a result of the unlawful trade practice.” Jackson v. ASA Holdings, LLC, 751 F. Supp. 2d 91, 99 (D.D.C. 2010)

(citing Williams v. Purdue Pharma Co., 297 F. Supp. 2d 171, 178 (D.D.C. 2003)). Also, “the

DCCPPA regulates transactions between a consumer and a merchant.” Ihebereme v. Capital

One, N.A., 730 F. Supp. 2d 40, 51 (D.D.C. 2010) (citing D.C. Code § 28-3904). Therefore, the

term “consumer” has been interpreted to exclude corporations, businesses, and certain self-

employed persons acting in a professional capacity from relief under the DCCPPA. See, e.g.

Slaby v. Fairbridge, 3 F. Supp. 2d 22, 27-28 (D.D.C. 1998) (excluding claim by self-employed scientist and author).

4. Florida

Florida’s IPPs allege a consumer protection claim under the Florida Deceptive and Unfair

Trade Practices Act (“FDUTPA”), Fla. Stat. §§ 501.201 - .213 (2012). (IPP Compl. ¶¶ 406-09).

A consumer claim for damages under the FDUTPA has three elements: (1) a deceptive or unfair practice, (2) causation, and (3) actual damages. Rollins, Inc. v. Butland, 951 So. 2d 860, 869

(Fla. Dist. Ct. App. 2006).

With respect to the first element, Florida courts have determined that the phrase “unfair practices” encompasses antitrust violations. See Mack v. Bristol-Myers Squibb Co., 673 So. 2d

100, 104 (Fla. Dist. Ct. App. 1996) (holding that an allegation of an antitrust conspiracy was sufficient to state a claim as an unfair trade practice, in part, because “it is well established that 174

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collusive price-fixing constitutes a violation of section 5(a)(1) of the Federal Trade Commission

Act”). Under Florida law, both the Sherman Act and Florida antitrust case law govern whether

an antitrust violation occurred. See Marco Island Cable, Inc. v. Comcast Cablevision of South,

Inc., No. 2:04-CV-26, 2006 WL 1814333, at *6 (M.D. Fla. July 3, 2006) (citing Andrx Pharm.,

Inc. v. Elan Corp., PLC, 421 F.3d 1227, 1223 n.5 (11th Cir. 2005) (“[B]oth Florida and federal

antitrust law are analyzed under the same rules and case law.”). If the challenged conduct does

not constitute an antitrust violation and no other basis exists to consider the conduct an unfair or

deceptive trade practice, then a FDUTPA claim must be dismissed. See id. at *8 (granting partial

summary judgment on a FDUTPA claim where challenged exclusive dealing was not

anticompetitive and “there is no basis to find the exclusivity contracts to be an unfair or

deceptive trade practice”).

With respect to causation, the FDUTPA generally requires the plaintiff to establish that

the challenged conduct proximately caused it harm. Himes v. Brown & Co. Secs. Corp., 518 So.

2d 937, 938 (Fla. Dist. Ct. App. 1987) (plaintiff must suffer actual damages “proximately caused” by the challenged conduct). Where a FDUTPA indirect purchaser plaintiff asserts that the defendants charged “supra-competitive, artificially inflated prices,” IPP Compl. ¶ 409, to establish the causal chain, the supposedly illegal overcharge must be passed-on to the end user level through the chain of distribution. See Mack, 673 So. 2d at 106 (indirect purchasers can

“recover overcharges passed on to them” by upstream purchasers); Execu-Tech Bus. Sys., Inc. v.

Appleton Papers Inc., 743 So. 2d 19, 21 (Fla. Dist. Ct. App. 1999) (affirming denial of class certification in indirect purchaser FDUTPA class action based on lack of common proof “that a manufacturer-level price increase was passed through the distribution chain to impact each and every consumer”). Specifically, to satisfy the pass-on requirement, the IPPs must show both that

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the “[defendants] charged supra-competitive prices for the products at issue, resulting in

re Fla. Microsoft Antitrust Litig., No. 99-27340, 2002 WL 31423620, at *7 (Fla. Cir. Ct. Aug.

26, 2002); accord Execu-Tech, 743 So. 2d at 21-22.

FDUTPA plaintiffs seeking monetary damages are entitled to recover only actual

damages. See Himes, 518 So. 2d at 938. Consequential damages are not recoverable. Schauer

v. Morse Operations, Inc., 5 So. 3d 2, 7 (Fla. Dist. Ct. App. 2009). The standard for determining

actual damages under the FDUTPA is “well-defined in the case law” as the “difference in the

market value of the product or service in the condition in which it was delivered and its market

value in the condition in which it should have been delivered.” Rollins, 951 So. 2d at 869. As

applied to the IPPs’ FDUTPA claims, actual damages would be the amount of the illegal

overcharge, if any, passed-on to the IPPs from direct purchasers of eggs from the defendants.

This analysis would take into account pricing at all levels in the chain of distribution to

determine what, if any, allegedly illegal overcharge was borne by other purchasers. See In re Fla.

Microsoft Antitrust Litig., No. 99-27340, 2002 WL 31423620, at *10 (“Plaintiffs will have to establish the extent that overcharges to Microsoft’s direct customers were passed onto the indirect purchaser end user.”).

5. Iowa

The Iowa IPPs do not allege any consumer protection claims.

6. Kansas

The Kansas IPPs do not allege any consumer protection claims.

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7. Massachusetts

Massachusetts IPPs allege a violation of the Massachusetts Consumer Protection Act

(“MCPA”), Mass. Gen. Laws ch. 93A §§ 1-11 (2012). (IPP Compl. ¶¶ 427-30). The MCPA

forbids “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct

of any trade or commerce.” Mass. Gen. Laws ch. 93A § 2. A claim under the MCPA requires

that a plaintiff show (1) a deceptive act or practice by the defendant; (2) an injury to the plaintiff;

and (3) a causal connection between the defendant’s deceptive act or practice and the plaintiff’s

injury. Gorbey v. Am. Journal of Obstetrics & Gynecology, No. 11-11259-NMG, 2012 WL

948466, at *3 (D. Mass. Mar. 16, 2012). Indirect purchasers have been held to have standing to

sue under the MCPA. Ciardi v. Hoffman-La Roche, Ltd., 762 N.E.2d 303 (Mass. 2002).

To succeed on a claim under the MCPA, plaintiffs must prove they were “injured” within

the meaning of the statute. This requires a causal connection between the alleged wrongdoing

and the consumer’s loss. Hershenow v. Enterprise Rent-A-Car Co. of Boston, Inc., 840 N.E.2d

526, 532 (Mass. 2006). In Hershenow, the plaintiffs alleged injury based on the defendant’s collision damage waiver contract provision, which was contrary to state law. They argued that because there was a per se violation of Chapter 93A section 2, they were entitled to recover damages, even absent actual injury. The court held that, even if there were a per se unfair or deceptive practice, the plaintiffs still needed to prove injury to sustain their claim. Id. at 533.

The contract was found not to interfere with or deter the exercise of plaintiffs’ legal rights, and no injury was found. The court affirmed summary judgment for the defendants. Id. at 535 (“A consumer is not . . . entitled to redress under G.L. c. 93A where no loss has occurred.”).

8. Michigan

The Michigan IPPs do not allege any consumer protection claims.

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9. Minnesota

The Minnesota IPPs do not allege any consumer protection claims.

10. Mississippi

The Mississippi IPPs do not allege any consumer protection claims.

11. Nebraska

Nebraska IPPs allege that defendants violated Nebraska’s Consumer Protection Act, Neb.

Rev. Stat. § 59-1601 to 1622 (2012). (IPP Compl. ¶¶ 454-57.) The Act provides that “[a]ny

contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or

commerce shall be unlawful.” Neb. Rev. Stat. § 59-1603. The Act is “the state version of the

Sherman Antitrust Act,” State ex rel. Douglas v. Associated Grocers, 332 N.W.2d 690, 693

(Neb. 1983), and is construed in the same way that federal courts construe the Sherman Act.57

However, as some sections of the Nebraska Consumer Protection Act, “have no counterpart in federal law,” and specifically provide a cause of action to indirect purchasers, the Nebraska act

does, unlike the federal Sherman Act, allow claims by indirect purchasers. Arthur v. Microsoft

Corp., 676 N.W.2d 29, 34-35 (Neb. 2004) (allowing a cause of action for indirect purchasers

under Nebraska antitrust law based on distinctions between the federal and Nebraska statutes).

12. Nevada

The Nevada IPPs do not allege any consumer protection claims.

13. New Mexico

The New Mexico IPPs allege that defendants engaged in “unconscionable trade

practices” in violation of Section 57-12-1 et seq. of New Mexico’s Unfair Practices Act

57 Neb. Rev. Stat. § 59-829 (“When … any provision of Chapter 59 is the same as or similar to the language of a federal antitrust law, the courts of this state in construing such sections or chapter shall follow the construction given to the federal law by the federal courts.”); see also Heath Consultants, Inc. v. Precision Instruments, Inc., 527 N.W.2d 596, 600-05 (Neb. 1995) (relying on federal and Supreme Court precedent to analyze state antitrust claims).

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(“UPA”). (IPP Compl. ¶¶ 472-77.) This statute declares that “[u]nfair or deceptive trade practices and unconscionable trade practices in the conduct of any trade or commerce are unlawful.” N.M. Stat. § 57-12-3.58 To make out an “unconscionable trade practices” claim

under the UPA, IPPs must prove that defendants sold goods in a such a way that (1) defendants took advantage of a person’s “lack of knowledge, ability, experience or capacity” to a “grossly unfair degree,” or (2) there was a “gross disparity” between the good’s value and purchase price.

See N.M. Stat. § 57-12-2(E)(1)-(2) (emphasis added). Courts interpret the UPA liberally to accomplish its purposes and intent because it is considered “remedial legislation.” Truong v.

Allstate Ins. Co., 227 P.3d 73, 81 (N.M. 2010).

Few cases address what constitutes an “unconscionable trade practice” under the UPA.

In Portales Nat’l Bank v. Ribble, 75 P.3d 838 (N.M. Ct. App. 2003), an elderly couple brought a claim under the UPA against a bank after the bank foreclosed on their ranch. Id. at 839-40. The

Ribbles contended that the bank took advantage of them by charging excessive overdraft fees,

misrepresenting an advance note secured by a mortgage on their ranch, hindering their attempts

to obtain other financing, and ultimately foreclosing on the ranch. Id. at 842-43. The New

Mexico Court of Appeals held that the trial court should have considered the entire course of conduct over a five-year period between the bank president and the elderly couple in deciding

whether the bank engaged in unconscionable trade practices. Id. at 841. The trial court had

58 The UPA and cases construing it distinguish between “unconscionable trade practices” and “unfair or deceptive trade practices.” See N.M. Stat. § 57-12-2(D)-(E); see Guidance Endodontics, LLC v. Dentsply Int’l, Inc., 728 F. Supp. 2d 1170, 1186 (D.N.M. 2010). In their complaint, IPPs only allege that defendants engaged in “unconscionable trade practices.” See Compl. ¶¶ 473-77. The IPPs are not alleging that defendants engaged in “unfair or deceptive trade practices,” and none of the alleged conduct even possibly fits within the statutory definition of unfair or deceptive trade practices. See N.M. Stat. § 57-12-2(D) (“[A]n act specifically declared unlawful pursuant to the Unfair Practices Act, a false or misleading oral or written statement, visual description or other representation of any kind knowingly made in connection with the sale, lease, rental or loan of goods or services or in the extension of credit or in the collection of debts by a person in the regular course of the person’s trade or commerce, that may, tends to or does deceive or mislead any person.”). The UPA then goes on to list eighteen more specific examples of misleading or deceptive conduct. See id.

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taken a narrower view of what constituted unconscionable trade practices, considering only the

bank’s failure to close the Ribbles’ account and “persistent charging” of overdraft fees. Id. The

Court of Appeals declared: “Though the individual acts may be legal, it is reasonable to infer that the Bank took advantage of the Ribbles to a ‘grossly unfair degree,’ because of (1) the Ribbles’ advancing age, (2) their clear inability to handle their accounts, and (3) their long-term dealings with the bank that could have justified their belief that the bank had sufficient collateral in their property that it should have honored their checks.” Id. at 843.

At least in Ribble, the Court of Appeals held that an “unconscionable trade practices” claim should be broadly construed to take into account a multi-year course of conduct, rather than just the potentially false and misleading statements related to the advance note on the ranch.

Id. “We again interpret the Ribbles’ argument to mean that the pattern of conduct by the Bank, starting in 1994 and continuing through the foreclosure action, when considered in the aggregate, constitutes unconscionable trade practices as defined by Section 57-12-2(E).” Id. Cf. Taylor v.

United Mgmt., Inc., 51 F. Supp. 2d 1212, 1217 (D.N.M. 1999) (rejecting claim alleging

“unconscionable trade practices” based on an allegation that a car dealership bought plaintiff’s car for $4,000 and sold it for $4,600; $600 profit is not a “gross disparity” under N.M. Stat. § 57-

12-2(E)).

14. New York

The New York IPPs do not allege any consumer protection claims.

15. North Carolina

North Carolina IPPs allege violations of the North Carolina Monopolies, Trusts and

Consumer Protection Act, N.C. Gen. Stat. §§ 75-1 to -42 (2012). (IPP Compl. ¶¶ 493-96.) N.C.

Gen. Stat. § 75-1.1 provides that “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful.” The

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elements of a claim under § 75.1-1 are “(1) an unfair or deceptive act or practice, (2) in or

affecting commerce, which (3) proximately caused actual injury to the claimant. . . . To recover,

a plaintiff must have suffered actual injury as a proximate result of the deceptive statement or

misrepresentation.” Boyce & Isley, PLLC v. Cooper, 568 S.E.2d 893, 901-902 (N.C. App.

2002).

“Where an unfair or deceptive practice claim is based upon an alleged misrepresentation by the defendant, the plaintiff must show ‘actual reliance’ on the alleged misrepresentation in

order to establish that the alleged misrepresentation ‘proximately caused’ the injury of which

plaintiff complains.” Hospira Inc. v. AlphaGary Corp., 671 S.E.2d 7, 12 (N.C. App. 2009).

Thus, a plaintiff must offer evidence demonstrating that the representations made by the

defendant “had the capacity to deceive [plaintiff]” and that the plaintiff “actually relied on

them.” Id.

Section 75-1.1 was copied from the Federal Trade Commission Act. DKH Corp. v.

Rankin-Patterson Oil Co., 506 S.E.2d 256, 258 (N.C. App. 1998). Thus, North Carolina courts

look to federal antitrust law in applying § 75-1.1. See Madison Cablevision, Inc. v. City of

Morganton, 386 S.E.2d 200, 213 (N.C. 1989); Marshall v. Miller, 276 S.E.2d 397, 399 (N.C.

1981) (“[F]ederal decisions interpreting the FTC Act may be used as guidance in determining the

scope and meaning of G.S. 75-1.1.”); N.C. Farm Bureau Mut. Ins. Co. v. Cully’s Motorcross

Park, 725 S.E.2d 638, 650 (N.C. App. 2012) (looking to federal law in applying § 75-1.1 claim

because “Chapter 75 of the North Carolina General Statutes was modeled after . . . federal

antitrust law, and . . . federal decisions may provide guidance in determining the scope and

meaning of chapter 75”); Cameron v. New Hanover Mem. Hosp., Inc., 293 S.E.2d 901, 919 (N.C.

App. 1982) (“Since the language of G.S. 75-1.1(a) is strikingly similar to that of a section of the

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Federal Trade Commission Act, 15 U.S.C.A. § 45(a)(1), our courts have held that federal

decisions construing that Act are instructive upon the meaning of G.S. 75-1.1.”)

16. North Dakota

The North Dakota IPPs do not allege any consumer protection claims.

17. South Dakota

The South Dakota IPPs do not allege any consumer protection claims.

18. Tennessee

The Tennessee IPPs do not allege any consumer protection claims.

19. Utah

The Utah IPPs do not allege any consumer protection claims.

20. Vermont

Vermont’s IPPs allege violations of the Vermont Consumer Fraud Act (“VCFA”), Vt.

Stat. Ann. tit. 9, §§ 2451-2480r (2012). (IPP Compl. ¶¶ 525-29.) The VCFA provides that

“[u]nfair methods of competition in commerce, and unfair or deceptive acts or practices in

commerce, are hereby declared unlawful.” 9 V.S.A. § 2453(a). “[A] plaintiff presenting an

antitrust claim must prove (1) a violation of the antitrust laws (in this case, the CFA), (2) an

injury or impact suffered as a result of that violation, and (3) an estimated measure of damages.”

Wright v. Honeywell Int’l, Inc., 989 A.2d 539, ¶ 17 (Vt. 2009).

The Vermont Supreme Court has held that federal authority interpreting the Clayton and

Sherman Acts is inapplicable in interpreting the VCFA. See Elkins v. Microsoft Corp., 817 A.2d

9, 16-17 (Vt. 2002). While the VCFA does include a “harmony” clause, it is specifically limited

to interpretation of the Federal Trade Commission Act:

It is the intent of the legislature that in construing subsection (a) of this section, the courts of this state will be guided by the construction of similar terms contained in section 5(a)(1) of the Federal Trade Commission Act as from time to

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time amended by the Federal Trade Commission and the courts of the United States.

9 V.S.A. § 2453(b). The Elkins court expressly rejected the argument that this provision encompassed federal court decisions interpreting all federal antitrust statutes, including the

Clayton and Sherman Acts. 817 A.2d at 16-17. See also D.R. Ward Constr. Co. v. Rohm &

Haas Co., 470 F. Supp. 2d 485, 501 (E.D. Pa. 2006) (“[T]he harmonization clause in the VCFA does not require consistency between construction of the VCFA and construction of the Clayton

Act and Sherman Act.”) (citing Elkins, 817 A.2d at 17).

21. West Virginia

The West Virginia IPPs do not allege any consumer protection claims.

22. Wisconsin

The Wisconsin IPPs do not allege any consumer protection claims.

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CERTIFICATE OF SERVICE

I, Whitney Redding, hereby certify that on October 5, 2012, the foregoing

Defendants’ Statement of Law Submitted Pursuant to Case Management Order No. 19 was filed using the CM/ECF system, and (1) the filing is available for viewing and downloading via the

CM/ECF system and (2) the CM/ECF system will send notification of such filing to all attorneys of record who have registered for CM/ECF updates. On this date, the aforementioned document was also served by e-mail on all attorneys listed on the Panel Attorney Service List.

/s/ Whitney Redding___ Whitney Redding PEPPER HAMILTON LLP 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103 (215) 981-4121 [email protected]