Dairy Farmers File Class Action against Southwest Dairy Cooperatives Alleging Violations of Sherman Act

On Monday, a group of dairy farmers filed a class action lawsuit in the District of New Mexico against Dairy Farmers of America, Inc. (DFA), Select Milk Producers, Inc. (Select Milk) and Greater Southwest Agency, Inc. (GSA) alleging violations of the Sherman Antitrust Act. 

According to the complaint, the named plaintiffs, 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, marketed their raw Grade A milk through the dairy cooperative defendants.

The complaint also states that DFA is a Kansas not-for-profit organization and Select Milk is a New Mexico not-for-profit marketing cooperative association and both are organized as member-owned, non-profit dairy cooperatives, obligated to operate for the benefit of their  farmer-members. The complaint purports that together DFA and Select Milk control at least 75% of the Southwest dairy market. 

Additionally, the complaint states that defendant GSA is a Texas corporation that was formed by the three dairy cooperatives that supply nearly 100% of all milk marketed in the Southwest through cooperatives, DFA, Select Milk and Lone Star Milk Producers, to market dairy products in the southwest. The complaint also states that GSA shares its mailing address with DFA’s Southwest Area office.

Further, the complaint states that through the dairy cooperative process the dairy farmer members are obligated to deliver all of their milk to the cooperative to market on their behalf and in return the cooperative must process and market the milk to obtain the best price for the product. 

The complaint purports that the vast majority of the milk marketed in the southwest, approximately 85-90%, is marketed through a cooperative. Further, the complaint notes that cooperatives like DFA and Select Milk financially benefit from reducing raw milk prices paid  to farmers while maintaining the supply of as much raw milk volume as possible. 

In fact, the plaintiffs argue that the defendants have conspired in violation of the Sherman Act to depress the price dairy farmers receive in exchange for their raw milk that is delivered to the defendants. Specifically, the plaintiffs allege that DFA and Select Milk conspired and colluded through GSA to fix and depress the prices paid to Southwestern dairy farmers for the raw Grade A milk they produced beginning in at least 2015. 

The plaintiffs argue that as a result of the defendants’ unlawful conduct, the plaintiffs were artificially underpaid for the raw Grade A milk they produced. Accordingly, the plaintiffs brought the present case alleging violations of Section 1 of the Sherman Antitrust Act and seeking class certification, declaratory and injunctive relief, damages, pre- and post-judgment interest, attorney’s fees and costs. The plaintiffs are represented by Peifer, Hanson, Mullins & Baker, P.A., Lockridge Grindal Nauen P.L.L.P. and Hagens Berman Sobol Shapiro LLP.