Block on Trump's Asylum Ban Upheld by Supreme Court
Dean Foods and Suiza were the two largest bottlers and processors of milk in the United States. In 2001, they merged, with the approval of the Department of Justice.
The DOJ, however, required certain concessions to be made. The new Dean Foods would have to divest a handful of plants to the Dairy Farmers of America (a cooperative) and the two entities would have to agree to supply contracts that allowed DFA to supply Dean with milk for some of its plants.
The divested plants, as well as five others, were combined into a new competing company, National Dairy Holdings, which was owned by two former Suiza executives, a former business partner of DFA's chief executive officer, and DFA itself, which owned 50 percent of the company and had veto rights.
Got all that? Sounds pretty incestuous, right? Milk resellers, including the appellants Food Lion and Fidel Breto, alleged that NDH is intentionally failing in order to strengthen Dean's position in the marketplace, so that NDH's half-owner DFA can supply milk to all of Dean's plants.
If true, it's pretty clever, and sounds like a Sherman Antitrust Act violation.
The district court granted summary judgment in favor of Dean Foods and the other defendants on all counts, after excluding expert testimony, across two summary judgment opinions.
The plaintiffs appealed the grant of summary judgment on the first count, the allegation that the defendants engaged in a conspiracy not to compete, in violation of 15 U.S.C. § 1. The district court granted summary judgment on that count because the plaintiffs failed to establish that the restraint on trade was unreasonable (largely because of the excluded expert testimony) and because they failed to establish the requisite element of injury.
Sixth Circuit Reverses
Interestingly enough, the existence of the conspiracy itself is not contested here. The district court found sufficient evidence of the alleged restraining conspiracy, but the remaining question was whether that restraint was unreasonable. A restraint is either per se unreasonable (inherently anticompetitive deals, such as horizontal price fixing) or unreasonable because it violates the "Rule of Reason."
The Rule of Reason is a painfully muddled, complex, burden-shifting test, where the plaintiff has to make a prima facie showing of:
If the showing is made, the burden shifts to the defendant to show that the restraint has "'procompetitive effects' that are sufficient to 'justify the otherwise anticompetitive injuries'."
The Sixth Circuit applied the Rule of Reason, but held that the plaintiffs did not need to meet a heightened burden of showing geographic or product market evidence due to a "quick look" rule that has recently become en vogue in courts. "Quick look" cases are somewhat-obviously anticompetitive, fall somewhere between per se and "Rule of Reason" cases, and do not require a showing of the third element of the plaintiff's prima facie burden.
"Accordingly, when construing the facts and record evidence in Plaintiffs' favor, the alleged unlawful conduct has obviously adverse, anticompetitive effects; and for purposes of summary judgment, the district court should have at least considered the fact that a more detailed market analysis may not have been required under these circumstances," the court noted, before shifting the burden to Dean Foods. "Even though Dean Foods' alleged conduct is not illegal per se, the evidence in the record and the allegations in Plaintiffs' complaint are sufficient to shift the burden to Dean Foods to present some procompetitive benefits of the alleged conduct."
Though the panel opinion does express some skepticism of the underlying case, noting that the DOJ approved the initial deal, the case was remanded for consideration of the "quick look" version of the Rule of Reason.