Protective Order Issued In Food Lion-DFA Antitrust Suit

On Monday, the Middle District of North Carolina, the court overseeing the antitrust case filed by Food Lion, LLC and Maryland and Virginia Milk Producers Cooperative Association against Dairy Farmers of America (DFA), issued two orders that set the stage for discovery to proceed. The protective order and the Federal Rule of Civil Procedure 502(d) order come approximately five weeks after the court denied the defendant’s motion to dismiss.

The plaintiffs’ May complaint accused the DFA of violating provisions of both the Sherman Act and the Clayton Act by acquiring three milk-processing facilities from the now bankrupt Dean Foods, described in the complaint as “the nation’s largest (former) processor of raw milk.” The allegations concern DFA and Dean’s “illicit agreement,” that allowed “DFA to secure full-supply rights for its higher-priced raw milk to the newly merged Dean processing plants through a twenty-year exclusive-dealing arrangement, in exchange for an agreement not to compete with Dean at the processing level.”

Last year, when Dean announced it was filing for Chapter 11 bankruptcy, it closed on a deal to sell its remaining assets to DFA, allegedly transforming DFA “overnight into both the largest milk producer and the largest milk processor in the United States.” For the defendant’s supposed transgressions, the plaintiffs seek an injunction “requiring DFA to divest at least one of the Carolina facilities to an independent purchaser.”

On July 24, Judge Catherine C. Eagles denied the defendant’s motion to dismiss the complaint for lack of subject-matter jurisdiction and for failure to state a claim in a two-page opinion. The court held that, “(t)he complaint plausibly alleges facts giving rise to subject matter jurisdiction and to plausible claims for relief, and the issues raised by the defendant are more suited for evaluation on a better developed factual record.”

In the protective order issued this week, the court set forth protocol to “prevent the inappropriate dissemination of documents and information produced in the course of discovery.” The parties are required to sign the order with the understanding that any breach of the order “may be punished pursuant to the contempt powers of the Court and could result in an action against the undersigned for any damages caused by any such breach.”

The Rule 502(d) order that the parties stipulated to, lays out precautions and procedures governing the handling and use of confidential information. It also sets forth sealing procedures for evidence produced during discovery and used at trial.

The DFA is represented by Womble Bond Dickinson, Baker and Miller, and Latham & Watkins. MDVA is represented by Troutman Sanders LLP. Food Lion is represented by Hunton Andrews Kurth.