`FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
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`Food Lion, LLC, and Maryland and Virginia
`Milk Producers Cooperative Association, Inc.,
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`Plaintiffs,
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`v.
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`Dairy Farmers of America, Inc.,
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`Defendant.
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`Case No. 1:20-cv-00442
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`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
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`
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`Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), Defendant
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`Dairy Farmers of America, Inc. (“DFA”), by and through its undersigned counsel, hereby
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`move to dismiss Plaintiffs’ Complaint (ECF No. 1) for lack of subject matter jurisdiction
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`and for failure to state a claim upon which relief can be granted. Plaintiffs have attempted
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`to state claims under Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 2 of the
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`Sherman Act, 15 U.S.C. § 2, but have alleged only highly speculative future injury that is
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`insufficient to confer standing under Article III of the U.S. Constitution. Plaintiffs’
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`speculative injuries also show that Plaintiffs have not alleged injury of the type the antitrust
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`laws were intended to prevent. Further, Plaintiffs have pleaded an implausibly narrow
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`relevant geographic market that cannot support their antitrust claims.
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`Plaintiffs’ claims are also foreclosed by the Failing Company Doctrine, a complete
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`defense to a Section 7 case. For that doctrine to apply, a defendant must show that the
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`Case 1:20-cv-00442-CCE-JLW Document 30 Filed 06/16/20 Page 1 of 5
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`acquired corporation faced the grave probability of a business failure and that it conducted
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`a good faith effort to seek offers from other potential purchasers. In this case, those
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`elements are established by the factual findings of the United States Bankruptcy Court for
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`the Southern District of Texas, which conducted the bankruptcy proceeding that resulted
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`in DFA’s bid for and acquisition of the dairy plants at issue in this case. See In re: Southern
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`Foods Group, LLC, Case No. 19-36313-H2-11 (Bankr. S.D. Tex.) (the “Dean Bankruptcy
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`Case”).
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`DFA submits the following exhibits in support of its Motion:
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`1.
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`Attached as Exhibit A is the Declaration of Anthony Magro in Support of
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`Debtor’s Reply in Support of Motion to Approve Sales of Debtor’s Assets and Related
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`Relief, which is publicly filed as ECF No. 1514-1 in the Dean Bankruptcy Case.1
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`2.
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`Attached as Exhibit B are excerpts from the transcript of the March 12, 2020
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`Motion Hearing in the Dean Bankruptcy Case, which is publicly filed as ECF No. 1145 in
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`the Dean Bankruptcy Case.
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`3.
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`Attached as Exhibit C is an excerpt from the Reply in Support of Emergency
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`Motion of Food Lion LLC and Maryland and Virginia Milk Producers Cooperative
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`Association, Inc. for Relief from the Automatic Stay to Allow Commencement of Antitrust
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`Action, which is publicly filed as ECF No. 1816 in the Dean Bankruptcy Case.
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`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).
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`2
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`Case 1:20-cv-00442-CCE-JLW Document 30 Filed 06/16/20 Page 2 of 5
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`4.
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`Attached as Exhibit D is the Dean Bankruptcy Court’s April 5, 2020 Order
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`(A) Authorizing Sale of Certain of Debtors’ Assets to Dairy Farmers of America, Inc. Free
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`and Clear of All Claims, Liens, Interests, and Encumbrances, (B) Authorizing the Debtors
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`to Enter into and Perform their Obligations Under the Asset Purchase Agreement and
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`Related Documents, and (C) Granting Related Relief, excluding the voluminous attached
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`Asset Purchase Agreement, which is publicly filed as ECF No. 1572 in the Dean
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`Bankruptcy Case.
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`5.
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`Attached as Exhibit E is an excerpt from the transcript of the April 28, 2020
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`Telephonic Hearing in the Dean Bankruptcy Case, which is located at ECF No. 1883 in the
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`Dean Bankruptcy Case and should be publicly available on the docket on July 30, 2020.
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`6.
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`Attached as Exhibit F is a May 1, 2020 Press Release issued by the United
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`States Department of Justice regarding the conclusion of its investigation into DFA’s
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`acquisition of Dean’s plants out of bankruptcy, which is publicly available at
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`https://www.justice.gov/opa/pr/justice-department-requires-divestitures-dean-foods-sells-
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`fluid-milk-processing-plants-dfa (last retrieved June 16, 2020).
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`7.
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`Attached as Exhibit G is the Proposed Final Judgment publicly filed by the
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`U.S. Department of Justice at ECF No. 4-2 in United States of America, et al. v. Dairy
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`Farmers of America, Inc., et al., Case 1:20-cv-02658 (N.D. Ill.).
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`8.
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`Attached as Exhibit H is the Dean Bankruptcy Court’s March 19, 2020
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`Order (i) Approving Bidding Procedures For Sale of Debtors’ Assets, (ii) Scheduling
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`Hearing to Approve Sale of Debtors’ Assets, (iii) Approving Form and Manner of Notices
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`3
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`of Sale and Sale Hearing, (iv) Approving Assumption and Assignment Procedures, and (v)
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`Granting Related Relief, which is publicly filed as ECF No. 1178 in the Dean Bankruptcy
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`Case.
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`9.
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`Attached as Exhibit I is a print-out from the U.S. Department of
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`Agriculture’s Agricultural Marketing Service website regarding the Federal Milk
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`Marketing Order system, which
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`is available at https://www.ams.usda.gov/rules-
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`regulations/moa/dairy (last retrieved June 16, 2020).
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`
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`Date: June 16, 2020
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`Respectfully submitted,
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`
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`
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`/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*
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`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.
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`*Special Appearance Forthcoming
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