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Processed Egg Products Antitrust Litigation

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Processed Egg Products Antitrust Litigation Case 2:08-md-02002-GP Document 748 Filed 10/05/12 Page 1 of 224 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 Case 2:08-md-02002-GP Document 748 Filed 10/05/12 Page 2 of 224 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 Case 2:08-md-02002-GP Document 748 Filed 10/05/12 Page 3 of 224 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 ii Case 2:08-md-02002-GP Document 748 Filed 10/05/12 Page 4 of 224 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 ....................................................................................................
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