Southwest Dairy Farmer Antitrust Litigation
Background
Dairy cooperatives like DFA and Select play a vital role in the Southwest dairy industry, as the overwhelming majority of dairy farmers are members of, and market their milk through, these cooperatives. The cooperatives then market the milk to be processed and bottled for fluid or other uses, such as in cheese, yogurt, ice cream, and milk powder.
Beginning in at least January 2015, the prices that Southwestern dairy farmers received for the raw Grade A milk they produced have been remarkably low, often below the farmers’ costs to produce the milk. The lawsuit alleges that DFA and Select began coordinating after the rates paid to Southwestern dairy farmers reached high prices in 2014. Among other things the farmers allege, beginning in at least January 2015, DFA and Select Milk shared pricing information and coordinated pricing and price-related decisions to drive down the price paid to Southwestern farmers for the milk they produced. These defendants capitalized on perceived oversupply, foreign milk production, and decreased fluid milk consumption to offer artificially low prices to Southwestern dairy farmers. The lawsuit alleges that DFA and Select pay their farmers nearly identical rates for the milk they produce each month, and otherwise limit the negotiating power and pricing options for dairy farmers.
The lawsuit alleges that the effect of DFA and Select’s conspiracy “has been devastating to many dairy farmers,” which “has led numerous farmers to borrow from generations of equity built up in their land, relying on that equity to pay themselves and keep their farms in operation. Many Southwestern dairy farmers have been forced to declare bankruptcy and/or completely closed their operations.”
The lawsuit alleges that the dairy industry is particularly susceptible to antitrust conspiracies due to high consolidation within the industry, incredibly complicated price formulas, and a lack of price transparency. As the dominant players, holding the overwhelming majority of market share for Southwest milk production, DFA and Select dictate the prices offered to Southwestern dairy farmers.
On March 11, 2024, the U.S. District Court for the District of New Mexico denied the Defendants’ motion to dismiss in its entirety. The Honorable Margaret I. Strickland found that Plaintiffs “plausibly allege[] a continuing conspiracy to violate the antitrust laws,” “sufficiently plead each part of their horizontal price-fixing claim,” and “plausibly allege parallel conduct alongside other factors that when taken together ‘tend to exclude the possibility of independent action.’” In summary, the Court ruled that Plaintiffs plausibly alleged that “(1) Defendants participated in concerted actions that (2) resulted in depressed prices sufficient to state a claim under Section 1 of the Sherman Act.”
The lawsuit was filed in the United States District Court for the District of New Mexico on April 4, 2022, and is captioned Othart Dairy Farms, LLC, Pareo Farm, Inc., Pareo Farm II, Inc., Desertland Dairy, LLC, Del Oro Dairy, LLC, Bright Star Dairy, LLC, and Sunset Dairy, LLC, individually and on behalf of all others similarly situated, v. Dairy Farmers of America, Inc., Select Milk Producers, Inc., and Greater Southwest Agency, 22-cv-00251-MIS-DLM.
Are you a Southwestern dairy farmer?
If you are or were a dairy farmer located in New Mexico, Texas, southwestern Kansas, eastern Arizona, or the Oklahoma panhandle since 2015, please contact us.
CONTACT
If you would like to discuss your legal options, please contact Brian Clark or Steve Teti at bdclark@locklaw.com, sjteti@locklaw.com or at 612-339-6900.
ARTICLES & DOCUMENTS
Dairy Farms 22-cv-00251 Order Denying Motion to Dismiss
2022-04-04 [1] Othart Dairy Farms, LLC et al v. Dairy Farmers Of America, Inc. et al Complaint
Top U.S. Dairy Co-Op Hit With Antitrust Lawsuit Over Farmer Pay
Dairy Farmers File Class Action against Southwest Dairy Cooperatives Alleging Violations of Sherman Act
Dairy producers file class action complaint in Southwest
New Mexico dairy farmers allege price fixing in antitrust suit against cooperatives
Dairy collectives must face farmers’ milk price-fixing lawsuit, US judge rules