United Potato Growers of America denounces buyer's lawsuit as 'legal terrorism'

By MATEUSZ PERKOWSKI

Capital Press

A national farmers' cooperative is accused of violating antitrust law by constraining potato production to boost prices for the crop.

Brigiotta's Farmland Produce and Garden Center -- a potato buyer in Jamestown, N.Y. -- has filed a legal complaint alleging that United Potato Growers of America engages in unlawful price-fixing.

Brigiotta's wants the lawsuit to be certified as a class action on behalf of other wholesale potato buyers, and seeks to recover "three times the amount of damages sustained by plaintiff and the class," with the sum to be determined at trial, the complaint said.

"UPGA and its members operate as a price-fixing trade group, not a legitimate cooperative," the complaint alleges.

Under the Capper-Volstead Act, passed by Congress in 1922, farmers' cooperatives are exempt from antitrust laws.

The complaint claims that the exemption was intended to help "small farmers banding together to cut out the corporate middlemen who would otherwise market their potatoes," whereas UPGA is composed of competing farmers who aim to restrict the potato supply.

"These activities fall outside the legitimate objectives of an agricultural marketing co-op," the complaint said.

According to the complaint, many members of UPGA are fully-integrated packers and shippers of potato products, making them ineligible for the antitrust exemption.

The group's activities also aren't covered by Capper-Volstead because UPGA "conspired and colluded" with non-member farmers and third parties to cut acreage and otherwise reduce supplies, the complaint said.

Randon Wilson, an attorney for UPGA, said the complaint is "wrongheaded" in its understanding of the Capper-Volstead Act.

Legal precedents have established that vertically integrated farmer-packers are covered by the law, and that cooperatives don't actually have to physically market crops to qualify for the antitrust exemption, he said.

"Preparing for market also covers growing the right amount," Wilson said.

The allegations of collusion with third parties are also unfounded, he said.

The group's supply management strategy is devised without outside input, Wilson said. Once a course of action is established, however, UPGA is allowed to make that information public, he said.

"They know they can't have any non-member at the table when those decisions are made," said Wilson. "They've used great care in conducting their activities."

Wilson noted that Brigiotta's previously filed a similar antitrust against the United Egg Producers cooperative. The company dropped the complaint in 2009.

These lawsuits aren't actually motivated by high prices for eggs or potatoes -- the company and its lawyers are simply looking for a financial settlement, Wilson said.

"This is legal terrorism," he said.

An attorney representing Brigiotta's did not return calls for comment from Capital Press, and a company representative refused to comment on the case.