Judge Rules Mushroom Co-op Subject to Antitrust Laws in Winn-Dixie Suit

A judge in an Eastern District of Pennsylvania court on Wednesday granted supermarket chain Winn-Dixie’s motion for summary judgment in a six-year mushroom antitrust lawsuit. 

Both plaintiffs Winn-Dixie Stores Inc. and its parent company Bi-Lo Holdings LLC and defendant Eastern Mushroom Marketing Cooperative filed motions for summary judgment with respect to the EMMC’s ability to invoke the protections of the Capper-Volstead Act. Under the Act, agricultural cooperatives are provided with limited exemption from antitrust laws. 

“Given farmers’ ‘particularly harsh economic position,’ Congress enacted the Capper-Volstead Act to enable them ‘to join together in cooperatives’ as a means of ‘bolster[ing] their market strength and to improve their ability to weather adverse economic periods and to deal with processors and distributors,’” court documents state. 

To receive protection under the Capper-Volstead Act, all members of the cooperative must engage in the production of agricultural products as farmers and receive an equal vote, and they may not pay dividends exceeding eight percent each year or deal in products of nonmembers in an amount greater than that handled for members. Cooperatives that meet these requirements are still answerable to antitrust laws.

Judge Berle M. Schiller ruled that EEMC cannot receive protection under the Act because of its problematic relationships with distributors. For instance, EEMC member Bella Mushroom Farms requires its distributor Buona Foods to sell produce to customers at the cooperative’s minimum pricing. While there is overlap in ownership of these two companies, Judge Schiller wrote in his decision that this does not mean the entities are under common ownership or control, and they are therefore capable of conspiring to fix prices. 

Winn-Dixie initially filed the complaint in 2015, alleging that EMMC artificially inflated the price of Agaricus mushrooms through illegal price fixing. Each year, Americans spend more than $800 million on mushrooms, the majority of which are fresh Agaricus mushrooms, a common table variety. At the time of the complaint, EMMC members controlled over 60 percent of all Agaricus mushrooms grown in the United States and approximately 90 percent of all Agaricus mushrooms grown in the eastern United States. 

Plaintiffs are represented by Ahern and Associates PC

Defendants are represented by Stevens & Lee and Taney Legal LLC.