Mushroom Growers Denied Capper-Volstead Antitrust Immunity

On October 14, 2014, the Eastern District of Pennsylvania denied a motion for reconsideration brought by members and affiliates of the former Eastern Mushroom Marketing Cooperative (EMMC). In re Mushroom Direct Purchaser Antitrust Litig., No. 06-0620 (E.D. Pa. Oct. 14, 2014). In 2009, the court denied defendants' motion for partial summary judgment, which argued that defendants were immune from antitrust liability as members of an agricultural cooperative under the Capper-Volstead Act, 7 U.S.C. § 291. The court gave two reasons for denying the motion: (1) the EMMC allegedly conspired with entities that were not engaged in agricultural production and (2) non-grower M. Cutone's membership in the cooperative destroyed Capper-Volstead immunity. Defendants moved for reconsideration in light of intervening authority from the Supreme Court in American Needle Inc. v. Nat'l Football League, 560 U.S. 783 (2010), and the Third Circuit in Deutscher Tennis Bund v. APT Tour, Inc., 610 F.3d 820 (3d Cir. 2010).

Defendants argued that, under American Needle, an unlawful conspiracy could not exist between an EMMC grower member and its affiliated distributor. The court analyzed American Needle and emphasized that "substance, not form, should determine whether a[n] . . . entity is capable of conspiring under § 1 [of the Sherman Act]." Mushroom, No. 06-0620 at 6 (quoting American Needle, 560 U.S. at 195). The court held that its prior conclusion that member Kaolin/South Mill and its distribution centers were not a single entity was undisturbed by American Needle. That the entities were "separate decision makers pursuing separate economic interests" was strongly evidenced, in the court's eyes, by litigation that had occurred between the entities. Mushroom, No. 06-0620 at 9.

Defendants also argued that...