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Second potato supply lawsuit moved to Idaho

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Capital Press

A grocery supplier's federal lawsuit filed in Kansas alleging United Potato Growers of America and some cooperative members artificially inflated prices through cartel-like efforts to limit supply has been moved to Idaho and combined with another similar class-action lawsuit.

Wyandotte County, Kan.,-based Associated Wholesale Grocers Inc., which supplies more than 2,000 grocery stores, filed its suit on April 17. Allegations in the complaint were similar to the class-action case filed in Pocatello, Idaho, federal court by the Jamestown, N.Y., wholesale potato buyer Brigotta's Farmland Produce and Garden Center.

The combined case is scheduled for a telephonic status conference with attorneys at the end of this month.

"There's no need for a judge in Kansas to get deep into the potato discovery. There's a judge in Idaho who's already on top of that," said Peter Carstensen, a University of Wisconsin law professor and antitrust expert.

Carstensen said combining the cases doesn't preclude Associated Wholesale Grocers from testing a Kansas state law that could significantly increase damages. The grocery supplier has alleged the defendants violated the Kansas Restraint of Trade Act, opening the door to indirect purchases made with the alleged conspirators through an intermediary, which aren't eligible under federal law.

The state law also awards full repayment of commodities sold under an illegal price, rather than actual damages under federal law. The plaintiffs have asked the federal court to assume jurisdiction over the alleged state law violation because the case involves residents in several states and more than $75,000 in alleged actual damages.

Carstensen believes the Kansas money-back provision will make it more difficult for defendants to prove that alleged damages vary too widely to establish a uniform class. Though the provision hasn't been well tested, he believes it provides a bargaining tool.

"It makes it easier for a court to say, 'Even if I'm not sure whether you're able to establish class-wide damages, since you're entitled to a refund we're going to go forward with the trial on the merits,'" Carstensen said.

Plaintiffs claim UPGA, formed in 2005, helped triple prices by 2011, fining growers for over-planting. The defendants believe the federal Capper-Volstead Act, which grants associations of agricultural producers certain exemptions from antitrust laws, protects their strategy. In the Brigotta's case, Chief U.S. District Judge B. Lynn Winmill has already ruled "acreage reductions, production restrictions and collusive crop planning are not activities protected by the Capper-Volstead Act."

Carstensen predicts the defendants will eventually settle.

"If they can't convince the judge to expand his interpretation of Capper-Volstead or find that the class is not sufficiently uniform, then I think they're going to wind up with a fairly substantial payday for the plaintiffs," Carstensen said.

He said the potato case and pending cases involving dairy, mushrooms and eggs involve similar "efforts to restrict production as opposed to an agreement about how to price what is being produced. It looks to me as though this set of cases is going to wind up in a pretty clear interpretation of Capper-Volstead that will say, 'No, you cannot excuse restricting production by doing it through a cooperative.'"

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