MilkIn 2001, the two biggest sources of the milk that you buy at Stop-n-Shop, Whole Foods, Von's, and the like agree to merge.

A sluggish Antitrust Division of the U.S. Department of Justice okays the deal but tacks on a proviso that the dairy dukes — Dean Foods and Suiza — must divest a few of the plants that process the raw milk.

The milk mavens do spin off the plants. Yet they agree to pay the buyer, Dairy Farmers of America, millions and millions of dollars to do a poor job of running the plants and selling the milk. The payola takes the form of contracts giving DFA the right to sell tons of its raw milk to the new combo.

Do you see a per se violation of the Sherman Act?

The Sixth Circuit didn't. It held that the pact between Dean/Suiza and DFA had too much of a "vertical" aspect to fit within one of the per se realms — price-fixing, allocating customers or areas, limiting output. Food Lion, LLC v. Dean Foods Co., No. 12-5457 (6th Cir. Jan. 3, 2014). 

The ruling means that the plaintiffs, Food Lion and Fidel Breto, will have to proceed under the "rule of reason", which (unlike the per se rule) demands proof that the restraint of trade restrained trade to an "unreasonable" extent. But that represents something of a win. The district court had thrown the case out on summary judgment.

Blawgletter agrees with the Sixth Circuit that the district court erred in granting summary judgment against the plaintiffs. The trial court shouldn't have ignored expert evidence that tended to show that the agreement not to compete pushed milk prices up within a discrete area, as the panel rightly ruled. But we disagree that the plaintiffs in the case don't have a proper per se case. We don't see how the fact that the payola went to DFA instead of straight to the DFA affiliate that carried out the agreement not to compete matters.

Nor did the court help clarify a legal area that many, including lots of lawyers, find daunting if not impenetrable. For example:

  • The panel wrote that "[t]he district court's decision to use the rule of reason is a question of law" but didn't explain how a "decision" could constitute a "question". The decision answers a question of law. The question of law consists in the legal rule that informs the decision. The decision and question aren't the same thing.
  • The court said that the per se rule counts as a "less common method" for judging the lawfulness of restraints on trade and "should be [applied] reluctantly and infrequently". Yet the rule applies 100 percent of the time to price-fixing, for instance, and other kinds of patent efforts to conspire against the common good. In what way is it "less common"?
  • The opinion observed that "[v]ertical restraints . . . have more redeeming qualities" than horizontal ones but doesn't say why a supplier's forcing a buyer to, for example, charge higher prices has any "redeeming qualities". Vertical restraints may be more likely to have redeeming qualities than horizontal ones, but they don't always.
  • The panel relied on the Antitrust Division's and Federal Trade Commission's Horizontal Merger Guidelines from 1997 rather than the current ones from 2010. The newer Guidelines downplay the use of the "hypothetical monopolist" and other mechanical tests for judging the likely effects of a merger. The shift matters – and in fact appears to have prompted a less sluggish Antitrust Division to sue Dean Foods in 2009. (The AD and Dean Foods settled that case in 2011.)
  • The court opined that "Plaintiffs should not be able to change their characterization of the conspiracy midstream in order to gain a more favorable outcome" as if courts shouldn't permit a party to adjust its allegations in light of the evidence it discovers and in response to the rulings of the courts. Why not end the case at the pleadings stage if that's the test, eh?
  • The panel sought support for its per se v. rule-of-reason ruling by saying that, "especially at the summary judgment stage, this is not a 'clear cut' case of an obviously anticompetitive restraint", suggesting that the summary judgment rule imposes a standard higher than the test for upholding a jury verdict. If anything, a court must resolve doubts at the summary judgment phase of case in favor of the non-moving party — not against it.
  • The opinion took the fact that the Antitrust Division did not block the deal as proof that it "sanctioned the agreement at issue here, which presumably would not have occurred if the agreement was a per se unreasonable restraint on trade." The AD did no such thing. It's decision not to sue in no way "sanctioned" the deal. And even the low-key Antitrust Division of that era felt enough worry to try to prevent post-merger abuse of market power.

We don't mean to make light of the difficulties of judging antitrust cases. It isn't at all easy. But we do feel strongly that it's really important to get the details right. And, in this case, the panel didn't do that.

Email this postShare this post on LinkedIn
Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

A versatile trial lawyer, Barnett knows how to handle a case all the way from strategic pre-suit planning to affirmance on appeal. He’s tried cases to verdict and then briefed and argued them when they went before appellate courts, including the Second, Third, Fifth, and Tenth Circuits, the Supreme Court of Louisiana, and (in the case of Comcast Corp. v. Behrend) the Supreme Court of the United States.

Barnett is a sought-after public speaker, often serving on panels and talking about topics like the trials of antitrust class actions and techniques for streamlining complex litigation. He also comments on trends in commercial litigation and the implications of major rulings for outlets such as NPR, Reuters, Law360, Corporate Counsel, and The Dallas Morning News. He’s even appeared in a Frontline program about underfunding of state pensions, authored chapters on “Fee Arrangements” and “Techniques for Expediting and Streamlining Litigation” (the latter with Steve Susman) in the ABA’s definitive treatise on Business and Commercial Litigation in Federal Courts, 5th, and commented on How Antitrust Enforcers Might Think Like Plaintiffs’ Lawyers.

Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

A client in a $100 million oil and gas case, which Barnett’s team won at trial and held on appeal, said Barnett and his team “presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom.” David McCombs at Haynes and Boone said Barnett “has a natural presence that goes over well with juries and judges.”

Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.