Summary of a Recent
Judicial Development in
Antitrust

"Filed Rate Doctrine" Does Not Bar
Antitrust Lawsuit

Ross H. Pifer
National AgLaw Center Graduate Assistant

Summary of Decision

In Ice Cream Liquidation, Inc., v. Land O'Lakes, Inc., 253 F.Supp.2d 262 (D.Conn. 2003), the United States District Court for the District of Connecticut ruled that the "filed rate doctrine" did not apply where an ice cream manufacturer alleged that dairy cooperatives and other dairy producers and processors had engaged in price-fixing to inflate the wholesale prices of dairy products in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

Background

Plaintiff Ice Cream Liquidation, Inc. was "a manufacturer of ice cream, which purchased milk and ice cream from defendants." Id. at 267. The defendants were several companies, including two cooperatives composed of dairy farmers, that produced and marketed dairy products throughout the United States. See id. at 267-68. Collectively, the defendants produced "approximately 35% of all milk produced in the contiguous United States." Id. at 268.

The minimum price for raw milk as established by USDA as well as wholesale prices of milk, butter, and cream are determined by formulae that considers the market price of butter as traded on the Chicago Mercantile Exchange (CME). See id. at 266. The plaintiff alleged that the defendants were able to successfully inflate the market price of butter on the CME due to the limited trading of butter on the CME and the large market share collectively possessed by the defendants. See id. The plaintiff filed suit, claiming that it "was required to pay prices for milk, cream, and butter substantially above the competitive level" as a result of the defendants' anticompetitive behavior. Id. at 270. The defendants filed a motion "to dismiss plaintiff's complaint pursuant to Rule 12(b)(6), Fed.R.Civ.P." Id. at 266.

Arguments

The defendants contended that the plaintiff's claims were barred by the "filed rate doctrine" because the plaintiff was challenging the minimum price rates for raw milk as established by USDA. See id. at 275. The plaintiff argued that it was not challenging the establishment of the minimum price, but rather it was challenging the defendants' "later conduct in manipulating the components of the formula." Id. The plaintiff further argued that USDA merely established a minimum price level, and the competitive market was to set prices above this minimum level. Id.

Analysis and Holding

The court explained that "[u]nder the 'filed rate doctrine', the filing of rates with any appropriate regulatory body generally prevents the assertion of antitrust liability arising from the charging of the filed rate." Id. at 274. In this case, however, the court found that the plaintiff was not challenging the minimum milk prices established by USDA, but rather was "challenging defendants' inflated wholesale milk prices in excess of the minimum milk prices." Id. at 276. Because the wholesale prices for dairy products charged by the defendants were not established by USDA, the court held that the "filed rate doctrine" did not apply. See id.

The case was decided on March 23, 2003; this summary was posted Jan. 13, 2005.