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.