A lawsuit by dairy farmers who contend that a marketing cooperative negligently depressed prices, costing them millions of dollars in lost revenues, is headed back to a California federal court following plaintiffs’ successful appeal of an earlier dismissal.
Berman DeValerio is part of the legal team that convinced the Ninth Circuit U.S. Court of Appeals to reverse the trial court’s dismissal of the claims by a proposed class of dairy farmers harmed by depressed raw milk prices from January 1, 2002 to April 30, 2007.
In the latest development, the Ninth Circuit remanded the case to District Court in January 2013, reaffirming its August 2012 reversal and denying defendants’ petition for rehearing and rehearing en banc. In doing so, the Court finally remanded the case to District Court for further proceedings, which will commence in March.
“We are pleased that the Ninth Circuit agreed with our view of the filed rate doctrine and that our clients will have a chance to proceed on the merits of their claims,” said Chris Heffelfinger, the Berman DeValerio partner responsible for the case.
The case dates to 2009, when dairy farmers in Fresno, California filed a complaint in U.S. District Court for the Eastern District of California. The complaint alleged that DairyAmerica, a marketing cooperative that represents several producers of processed dairy products, such as nonfat powdered milk, had negligently submitted incorrect pricing data for its members’ finished dairy products to the U.S. Department of Agriculture. The USDA then incorporated the incorrect data in the complex formulas used in Federal Milk Marketing Orders (“FMMOs”) to set the minimum prices for the raw milk sold by plaintiffs. As a result of defendants’ negligence, FMMO prices were set lower than they should have been – depriving farmers of millions of dollars in lost revenue.
The lawsuit alleged California state law claims for negligent misrepresentation, negligent interference with prospective economic advantage, unjust enrichment, and violations of the Unfair Competition Law. Defendants moved to dismiss the complaint, arguing that the claims were barred by the filed rate doctrine.
The filed rate doctrine is a legal rule that generally precludes lawsuits brought to challenge rates and prices approved by government regulators. Defendants argued that the USDA, which set and published the final FMMO rates, approved the rates in question – barring plaintiffs’ lawsuit. The District Court agreed and dismissed the complaint. Plaintiffs appealed.
In its August 2012 ruling, the Ninth Circuit considered the origins and purpose of the filed rate doctrine and held that, while applicable in theory, the filed rate doctrine did not bar plaintiffs’ claims. This was so because the USDA itself had acknowledged the FMMO rates in question were incorrect due to DairyAmerica’s misreporting. Moreover, dismissal of the complaint would leave the dairy farmers without a remedy for the harm they had suffered. The purposes of the filed rate doctrine – deference to government agencies, uniformity in pricing, and avoiding disruption of Congressional pricing schemes – would therefore not be undermined by allowing plaintiffs to proceed.
Berman DeValerio is court-appointed liaison counsel in the case and also serves on the court-appointed plaintiffs’ executive committee with Keller Rorhbach LLP. Court-appointed lead counsel is Cohen Milstein Sellers & Toll PLLC.
*In August 2017, our firm name changed to Berman Tabacco. Case references and content published before that date may refer to the firm under our prior name, Berman DeValerio.