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Stephen L. Lafrance Holding Inc., et al v. National Milk Producers Federation

July 31, 2012

STEPHEN L. LAFRANCE HOLDING INC., ET AL.,
v.
NATIONAL MILK PRODUCERS FEDERATION, ET AL.



The opinion of the court was delivered by: McLaughlin, J.

MEMORANDUM

This case is a putative class action of direct purchasers of milk products in which the plaintiffs claim that they purchased those products at supracompetitive prices. The plaintiffs allege that the defendants,*fn1 which are trade associations and dairy cooperatives, engaged in a "herd retirement" scheme designed to reduce the supply of raw farm milk and increase its market price. The defendants have moved to transfer this action to the United States District Court for the Northern District of California, asserting that the case should be consolidated with three cases pending there that involve substantially similar allegations. The Court will grant the defendants' motion.

I. Facts and Procedural Background*fn2

The plaintiffs are Stephen L. LaFrance Holding Inc., a holding company that owns retail drug stores, and its wholly owned subsidiary, Stephen L. LaFrance Pharmacy, Inc., which purchases and sells fluid milk and other fresh dairy products. Their corporate offices are located in Pine Bluff, Arkansas. They filed this action on behalf of themselves and a class of others similarly situated. Am. Compl. ¶¶ 23-24, 113.

The plaintiffs allege that from 2003 to 2010, the defendants, through an unincorporated association called Cooperatives Working Together ("CWT"), induced dairy farmers to prematurely remove dairy cows from production in exchange for cash payments funded by dues the cooperatives paid to CWT. The "purpose and effect" of the herd retirement program was to "artificially inflate the price paid by direct purchasers of fluid milk products and other fresh dairy products . . . ." Am. Compl. ¶¶ 1, 3-5. They bring a claim under Section 1 of the Sherman Act, 15 U.S.C. § 1.

At the time the complaint in this action was filed, three other cases were pending against the same defendants in the Northern District of California (the "California Actions").*fn3

Those cases are indirect purchaser class actions; the plaintiffs in those cases are individual consumers and non-profit corporate purchasers of milk. The plaintiffs in the California Actions allege that the defendants inflated the price of raw farm milk through coordinated herd retirements, resulting in increased prices of "milk and other fresh milk products" at the consumer level. They bring claims for unjust enrichment and under a variety of state antitrust and unfair competition laws. First Am. Class Action Compl. at ¶¶ 9-10, 34-37, 120-48, Edwards v. Nat'l Milk Producers Fed'n, No. 11-4766 (N.D. Cal. Oct. 28, 2011).

The California Actions were consolidated before Judge White in the Northern District of California for all purposes by stipulation of the parties and approval by that court. Stipulation and Order to Consolidate Cases and Combine Briefs and Aggregate Page Limitations, Edwards v. Nat'l Milk Producers Fed'n, No. 11-4766 (N.D. Cal. Dec. 19, 2011).

The plaintiffs in this action moved the Judicial Panel on Multidistrict Litigation ("JPML") to consolidate the case with the California Actions, asserting that all four cases "arise out of the same conduct and make similar claims." Pls.' Mot. for Transfer & Coordination of Related Actions to the E.D. Pa. Pursuant to 28 U.S.C. § 1407 ¶ 1, MDL No. 2340 (Jan. 10, 2012). The defendants responded by supporting centralization of the actions but requested that it be done in the Northern District of California. The JPML denied the motion, asserting that given the limited number of actions, creating a MDL was not necessary. Order Denying Transfer, In re Fresh Dairy Prods. Antitrust Litig., MDL No. 2340 (J.P.M.L. Apr. 17, 2012).

The defendants moved to dismiss the claims against them in the California Actions, asserting, among other things, that the Capper-Volstead Act, 7 U.S.C. § 292, renders their conduct immune from antitrust liability. A hearing was scheduled on that motion for July 27, 2012. Judge White vacated the hearing and granted the plaintiffs leave to amend in the California Actions based on their assertion that they could present additional allegations of predatory conduct. Order Regarding Amended Complaint, Edwards v. Nat'l Milk Producers Fed'n, No. 11-4766 (N.D. Cal. July 19, 2012).

On June 18, 2012, the defendants also moved to dismiss the complaint in this action, largely based on the same arguments presented to Judge White in the California Actions. The Court denied that motion as moot when the plaintiffs filed their amended complaint. Order of July 17, 2012 (ECF No. 68).

II. Analysis

The defendants move under Section 1404(a) to transfer the action from this Court to the United States District Court for the Northern District of California, asserting that it is a more convenient forum. The factors relevant to 1404(a) transfer counsel in favor of transferring the action to that court.

Under 28 U.S.C. § 1404(a), "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented."*fn4 The Court is to consider the factors enumerated in the statute as well as several additional ...


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