IN THE UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
`
`
`Food Lion, LLC, and Maryland and Virginia
`Milk Producers Cooperative Association, Inc.,
`
`
`Plaintiffs,
`
`v.
`
`Dairy Farmers of America, Inc.,
`
`
`Defendant.
`
`
`
`
`
`
`
`
`
`Case No. 1:20-cv-00442
`
`
`DEFENDANT DAIRY FARMERS OF AMERICA, INC.’S MOTION TO DISMISS
`FOR LACK OF SUBJECT-MATTER JURISDICTION AND FAILURE TO
`STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
`
`
`
`Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), Defendant
`
`Dairy Farmers of America, Inc. (“DFA”), by and through its undersigned counsel, hereby
`
`move to dismiss Plaintiffs’ Complaint (ECF No. 1) for lack of subject matter jurisdiction
`
`and for failure to state a claim upon which relief can be granted. Plaintiffs have attempted
`
`to state claims under Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 2 of the
`
`Sherman Act, 15 U.S.C. § 2, but have alleged only highly speculative future injury that is
`
`insufficient to confer standing under Article III of the U.S. Constitution. Plaintiffs’
`
`speculative injuries also show that Plaintiffs have not alleged injury of the type the antitrust
`
`laws were intended to prevent. Further, Plaintiffs have pleaded an implausibly narrow
`
`relevant geographic market that cannot support their antitrust claims.
`
`Plaintiffs’ claims are also foreclosed by the Failing Company Doctrine, a complete
`
`defense to a Section 7 case. For that doctrine to apply, a defendant must show that the
`
`Case 1:20-cv-00442-CCE-JLW Document 30 Filed 06/16/20 Page 1 of 5
`
`
`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
`
`
`
`Food Lion, LLC, and Maryland and Virginia
`Milk Producers Cooperative Association, Inc.,
`
`
`Plaintiffs,
`
`v.
`
`Dairy Farmers of America, Inc.,
`
`
`Defendant.
`
`
`
`
`
`
`
`
`
`Case No. 1:20-cv-00442
`
`
`DEFENDANT DAIRY FARMERS OF AMERICA, INC.’S MOTION TO DISMISS
`FOR LACK OF SUBJECT-MATTER JURISDICTION AND FAILURE TO
`STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
`
`
`
`Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), Defendant
`
`Dairy Farmers of America, Inc. (“DFA”), by and through its undersigned counsel, hereby
`
`move to dismiss Plaintiffs’ Complaint (ECF No. 1) for lack of subject matter jurisdiction
`
`and for failure to state a claim upon which relief can be granted. Plaintiffs have attempted
`
`to state claims under Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 2 of the
`
`Sherman Act, 15 U.S.C. § 2, but have alleged only highly speculative future injury that is
`
`insufficient to confer standing under Article III of the U.S. Constitution. Plaintiffs’
`
`speculative injuries also show that Plaintiffs have not alleged injury of the type the antitrust
`
`laws were intended to prevent. Further, Plaintiffs have pleaded an implausibly narrow
`
`relevant geographic market that cannot support their antitrust claims.
`
`Plaintiffs’ claims are also foreclosed by the Failing Company Doctrine, a complete
`
`defense to a Section 7 case. For that doctrine to apply, a defendant must show that the
`
`Case 1:20-cv-00442-CCE-JLW Document 30 Filed 06/16/20 Page 1 of 5
`
`
`
`acquired corporation faced the grave probability of a business failure and that it conducted
`
`a good faith effort to seek offers from other potential purchasers. In this case, those
`
`elements are established by the factual findings of the United States Bankruptcy Court for
`
`the Southern District of Texas, which conducted the bankruptcy proceeding that resulted
`
`in DFA’s bid for and acquisition of the dairy plants at issue in this case. See In re: Southern
`
`Foods Group, LLC, Case No. 19-36313-H2-11 (Bankr. S.D. Tex.) (the “Dean Bankruptcy
`
`Case”).
`
`DFA submits the following exhibits in support of its Motion:
`
`1.
`
`Attached as Exhibit A is the Declaration of Anthony Magro in Support of
`
`Debtor’s Reply in Support of Motion to Approve Sales of Debtor’s Assets and Related
`
`Relief, which is publicly filed as ECF No. 1514-1 in the Dean Bankruptcy Case.1
`
`2.
`
`Attached as Exhibit B are excerpts from the transcript of the March 12, 2020
`
`Motion Hearing in the Dean Bankruptcy Case, which is publicly filed as ECF No. 1145 in
`
`the Dean Bankruptcy Case.
`
`3.
`
`Attached as Exhibit C is an excerpt from the Reply in Support of Emergency
`
`Motion of Food Lion LLC and Maryland and Virginia Milk Producers Cooperative
`
`Association, Inc. for Relief from the Automatic Stay to Allow Commencement of Antitrust
`
`Action, which is publicly filed as ECF No. 1816 in the Dean Bankruptcy Case.
`
`
`1 This Court may take judicial notice of documents filed in the Dean Bankruptcy
`Case, as well as other matters of public record, and may consider those documents on a
`motion to dismiss. See Massey v. Ojaniit, 759 F.3d 343, 353 (4th Cir. 2014). This Court
`may also consider documents attached to DFA’s motion that are “integral to the complaint
`and authentic.” Philips v. Pitt County Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009).
`
`
`
`2
`
`Case 1:20-cv-00442-CCE-JLW Document 30 Filed 06/16/20 Page 2 of 5
`
`
`
`4.
`
`Attached as Exhibit D is the Dean Bankruptcy Court’s April 5, 2020 Order
`
`(A) Authorizing Sale of Certain of Debtors’ Assets to Dairy Farmers of America, Inc. Free
`
`and Clear of All Claims, Liens, Interests, and Encumbrances, (B) Authorizing the Debtors
`
`to Enter into and Perform their Obligations Under the Asset Purchase Agreement and
`
`Related Documents, and (C) Granting Related Relief, excluding the voluminous attached
`
`Asset Purchase Agreement, which is publicly filed as ECF No. 1572 in the Dean
`
`Bankruptcy Case.
`
`5.
`
`Attached as Exhibit E is an excerpt from the transcript of the April 28, 2020
`
`Telephonic Hearing in the Dean Bankruptcy Case, which is located at ECF No. 1883 in the
`
`Dean Bankruptcy Case and should be publicly available on the docket on July 30, 2020.
`
`6.
`
`Attached as Exhibit F is a May 1, 2020 Press Release issued by the United
`
`States Department of Justice regarding the conclusion of its investigation into DFA’s
`
`acquisition of Dean’s plants out of bankruptcy, which is publicly available at
`
`https://www.justice.gov/opa/pr/justice-department-requires-divestitures-dean-foods-sells-
`
`fluid-milk-processing-plants-dfa (last retrieved June 16, 2020).
`
`7.
`
`Attached as Exhibit G is the Proposed Final Judgment publicly filed by the
`
`U.S. Department of Justice at ECF No. 4-2 in United States of America, et al. v. Dairy
`
`Farmers of America, Inc., et al., Case 1:20-cv-02658 (N.D. Ill.).
`
`8.
`
`Attached as Exhibit H is the Dean Bankruptcy Court’s March 19, 2020
`
`Order (i) Approving Bidding Procedures For Sale of Debtors’ Assets, (ii) Scheduling
`
`Hearing to Approve Sale of Debtors’ Assets, (iii) Approving Form and Manner of Notices
`
`
`
`3
`
`Case 1:20-cv-00442-CCE-JLW Document 30 Filed 06/16/20 Page 3 of 5
`
`
`
`of Sale and Sale Hearing, (iv) Approving Assumption and Assignment Procedures, and (v)
`
`Granting Related Relief, which is publicly filed as ECF No. 1178 in the Dean Bankruptcy
`
`Case.
`
`9.
`
`Attached as Exhibit I is a print-out from the U.S. Department of
`
`Agriculture’s Agricultural Marketing Service website regarding the Federal Milk
`
`Marketing Order system, which
`
`is available at https://www.ams.usda.gov/rules-
`
`regulations/moa/dairy (last retrieved June 16, 2020).
`
`
`
`Date: June 16, 2020
`
`Respectfully submitted,
`
`
`
`
`
`
`
`
`/s/ Brent F. Powell
`
`James P. Cooney III
`N.C. State Bar No. 12140
`Sarah Motley Stone
`N.C. State Bar No. 34117
`WOMBLE BOND DICKINSON (US) LLP
`Charlotte, North Carolina 28202
`Phone: 704-331-4900
`Fax: 704-331-4955
`Jim.Cooney@wbd-us.com
`Sarah.Stone@wbd-us.com
`
`Brent F. Powell
`N.C. State Bar No. 41938
`WOMBLE BOND DICKINSON (US) LLP
`One West Fourth Street
`Winston-Salem, North Carolina 27101
`Phone: 336-721-3600
`Fax: 336-721-3660
`Brent.Powell@wbd-us.com
`
`W. Todd Miller*
`Amber McDonald*
`
`
`
`4
`
`Case 1:20-cv-00442-CCE-JLW Document 30 Filed 06/16/20 Page 4 of 5
`
`
`
`BAKER & MILLER PLLC
`2401 Pennsylvania Avenue N.W.
`Suite 300
`Washington, D.C. 20037
`Phone: 202-663-7820
`Fax: 202-663-7849
`TMiller@bakerandmiller.com
`AMcDonald@bakerandmiller.com
`
`Attorneys for
`Dairy Farmers of America, Inc.
`
`*Special Appearance Forthcoming
`
`5
`
`Case 1:20-cv-00442-CCE-JLW Document 30 Filed 06/16/20 Page 5 of 5
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`
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`
`
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