by Paul Devinsky, Cynthia Chen and Lincoln Mayer
The Supreme Court in Bowman v. Monsanto Co. ruled unanimously that a farmer’s replanting of harvested seeds constituted making new infringing articles. While the case is important for agricultural industries, the Supreme Court cautioned that its decision is limited to the facts of the Bowman case and is not a pronouncement regarding all self-replicating products.
To read the full article, click here.
by Gregory E. Heltzer and Nicole Castle
On December 2, 2011, a federal judge overseeing multidistrict litigation involving an alleged potato price-fixing conspiracy denied a motion to dismiss the antitrust conspiracy claims despite the potato grower cooperatives asserting that the concerted action was permissible under the Capper-Volstead Act. In Re: Fresh and Process Potatoes Antitrust Litigation, No. 10-2186 (D. Idaho).
In particular, the plaintiffs alleged that defendants increased the price of potatoes through reduction of potato planting acreages and by paying farmers to destroy existing stocks. Not only did the court deny the motion to dismiss on several grounds, but took the “extraordinary step” of providing an “advisory opinion” regarding an area of law with scant precedent. The court was willing to offer its opinion at this stage because there were no disputed facts on this legal issue, the parties had fully briefed and argued the matter, and in the court’s view providing this holding at this juncture was consistent with the “command of Rule 1” of the Federal Rules of Civil Procedure – the opinion would help secure the just, speedy and inexpensive determination of the proceeding.
The court’s “advisory opinion” held that pre-production agricultural output limitations among growers are not defensible agreements under the Capper-Volstead Act. The court explained that the plain language of the Capper-Volstead Act protects concerted action after production, that is, growers can collectively process, prepare for market, handle and market its products. According to the court, coordinating and reducing acreage for planting are not defensible because these actions come before production.
The court later opined that the distinction between pre-production output limitation agreements and post-production marketing decisions to withhold product from markets comports with underlying antitrust theory because if prices rise, “farmers will produce more and consumers will not be overcharged.” The court explained that this is a “safety-valve against private abuse that ameliorates the adverse consumer impact of the Capper-Volstead exemption” and that this safeguard is not in play if cooperatives can enforce pre-production limitations.
This decision offers new law and should lead cooperatives to revisit any production curtailment agreements and consider whether any such programs comport with this court’s interpretation of the Capper Volstead Act.
by Lincoln Mayer and Gregory E. Heltzer
On August 23, the Third Circuit denied interlocutory review of an order from the Eastern District of Pennsylvania, which held that defendant mushroom growers were "not a proper agricultural cooperative under the Capper-Volstead Act because one of its members was not technically a grower of agricultural produce." In re: Mushroom Direct Purchaser Antitrust Litigation, Nos. 09-2257, 09-2258, slip op. at 13 (3d Cir. Aug. 23, 2011).
The Third Circuit agreed with the growers that "whether the arguably inadvertent inclusion of an ineligible member strips an agricultural cooperative of Capper-Volstead protection, is both serious and unsettled." Id. at 16 n.4. However, the court considered and rejected the growers’ argument that Capper-Volstead provides not merely a defense to liability, but immunity from suit: "Neither the language of the Capper-Volstead Act nor Supreme Court cases interpreting it indicate that the Act entitles an agricultural cooperative to avoid entirely the burden of litigation. Because the Act does not provide an immunity from suit, a district court order denying a defendant its protections is not effectively unreviewable after final judgment . . . ." Id. at 24; see id. at 18-24.
While the holding that the Capper-Volstead Act does not confer immunity from suit is unsurprising, multiple courts have accepted that de minimis accidental inclusion of non-growers in a cooperative does not defeat Capper-Volstead protection. This decision, however, heightens the antitrust risk associated with such a scenario, and reinforces the importance for Capper-Volstead cooperatives of vigilantly policing their membership roles. Even just one ineligible member risks exposing the cooperative to unwanted and potentially protracted litigation.
Earlier this week, The Tribune (Greely, Colorado) published the article below discussing proposed changes to livestock marketing rules. The article discusses the pros and cons of the Grain Inspection, Packers and Stockyards Administration proposed rule – commonly referred to as the GIPSA rule.
"New rules were mandated by the 2008 Farm Bill, which required the U.S. Department of Agriculture to conduct rulemaking that ‘improves fairness in the marketing of livestock and poultry.’"
The rule aims to promote fairness and transparency, and would make it easier for a plaintiff to bring a case under the Packers & Stockyards Act by no longer requiring that the plaintiff first show harm to competition in a complaint alleging certain unfair trade practices. However, critics say that the changes will promote unnecessary litigation and would result in anywhere from 22,800 to 104,000 jobs lost.
Comments on the new rule were due November 22, 2010 and are currently being reviewed. However, on January 21, 2011, the USDA published one change to their regulations requiring testing of scales twice per year, at defined 6 month intervals.
More information on GIPSA and the 2008 Farm Bill can be found here: https://www.gipsa.usda.gov/GIPSA/webapp?area=home&subject=landing&topic=landing
Proposed changes in livestock marketing rules prompt fears, confusion
Link to article: https://www.greeleytribune.com/article/20110123/NEWS/701229893/1002&parentprofile=1
by Greg E. Heltzer, Carrie G. Amezcua and Jennifer L. Westbrook
The DOJ and USDA just completed a series of five workshops on competition in the agriculture industry. The two agencies have a renewed their focus on competition in this industry and have promised more activity in this area. The highlights from each of the workshops is described below.
An overview of all five workshops:
Issues of Concern to Farmers, March 12, 2010, Iowa
Poultry Industry, May 21, 2010, Alabama
Dairy Industry, June 25, 2010, Wisconsin
Livestock Industry, August 27, 2010, Colorado
Margins, December 8, 2010, Washington, D.C.
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