The two largest dairy farm collectives in the southwestern United States have lost their bid to dismiss a proposed class action in New Mexico accusing them of conspiring to fix prices in the region’s multibillion-dollar milk industry.
Dairy farmers in New Mexico, most of Texas and parts of Arizona, Oklahoma and Kansas can move ahead with antitrust claims for now against Dairy Farmers of America and Select Milk, U.S. District Judge Margaret Strickland ruled on Monday
Strickland said the plaintiffs, including farms and individual farmers, plausibly alleged an ongoing conspiracy since 2015 in which Dairy Farmers of America and other defendants unlawfully coordinated price decisions.
The farmers’ 2022 lawsuit said they were artificially underpaid in violation of U.S. antitrust law for the production of raw fluid Grade A milk.
Dairy Farmers of America in a statement said it was “disappointed in the court’s decision and maintain that the baseless, irresponsible and meritless claims in this case warrant dismissal, despite the court’s hesitancy to do so at this time.” The organization said it would “vigorously defend” against the claims.
Attorneys for Select Milk did not immediately respond to a request for comment on Tuesday.
Attorneys for the plaintiffs, including Othart Dairy Farms and Pareo Farm in New Mexico, did not immediately respond to similar requests.
Texas and New Mexico are among the country’s largest milk-producing states. Annual dairy production in the southwestern United States is valued at more than $3.5 billion, according to the lawsuit.
Cooperatives play a central role in the marketing of milk and other dairy products in the United States.
The lawsuit, opens new tab accused the cooperatives of decreasing payments to farmers for raw milk while keeping volume high. The cooperatives could use cheaper raw milk to make more profit on items such as cheese, yogurt and milk powder, the plaintiffs alleged.
The dairy cooperatives in seeking to dismiss the lawsuit said they had no motive to reduce payments to farmer-members who own and govern their organizations.
The defendants also said federal law allows some coordination on collective marketing and processing decisions.
Strickland said U.S. law does not permit collective actions “such as conspiring to depress payments to members.”
Dairy Farmers of America in 2015 agreed to pay $50 million to resolve a class action from farmers in northeastern United States accusing the cooperative of conspiring to suppress milk prices.
The cooperative in 2013 settled a similar case for $140 million involving farmers in the southeastern United States.
The case is Othart Dairy Farms LLC v. Dairy Farmers of America Inc, U.S. District Court for the District of New Mexico, No. 2:22-cv-00251-MIS-DLM.
For plaintiffs: W. Joseph Bruckner and Brian Clark of Lockridge Grindal Nauen; Steve Berman and Shana Scarlett of Hagens Berman Sobol Shapiro; and David Scott and Patrick McGahan of Scott + Scott Attorneys at Law
For Dairy Farmers of America: Alfred Pfeiffer Jr and Sarah Ray of Latham & Watkins; and W. Todd Miller of Baker & Miller
For Select Milk: Tim Hardwicke and Brian Borchard of GoodSmith Gregg & Unruh
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