Mushroom industry hit with class-action lawsuits
Mushroom industry hit with class-action lawsuits
A year after the U.S. Department of Justice cleared the actions of the Eastern Mushroom Marketing Council in Wayne, PA, the group was hit by a new series of class-action suits.
The suits were filed in mid-February in the U.S. District Court Eastern District, Pennsylvania, according to Jack Crooks, chief executive officer of the council. The suits claim that actions taken by the defendants artificially raised mushroom prices in 2001.
Mr. Crooks, who joined the council staff on June 20, said that the council was first challenged for buying mushroom facilities earlier this decade. The council purchased one facility each in Ohio and California, as well as two in Pennsylvania. These had either been "out of production and for sale for some time or had ceased production just before we purchased them." The facilities were left out of production by the council in an effort to balance supply with demand, Mr. Crooks said.
Lawsuits challenging that move were settled by the U.S. Department of Justice with the entry of a stipulated judgment in 2005. The council's actions were ruled as protected by the Capper-Volstead Act. We were cleared of everything, but there is some language that people who like to file class-action lawsuits picked up on in the Department of Justice settlement language. Thus, he said, four new lawsuits were filed by mushroom buyers between Feb. 10 and Feb. 14.
Mr. Crooks told The Produce News Feb. 22, its very early in the process, but at some point in the future the suits will be consolidated into one class-action suit against the council. All the charges are similar. One copies the other lawsuit, slaps his name on it and, bingo, you have another.
According to a release by the council, The essence of the claim is that the EMMC artificially raised mushroom prices. Believing that the deed restrictions placed on several mushroom farms acquired by the EMMC in 2002-03 might overly restrict the supply of mushrooms at some future date if demand for mushrooms rose significantly, the government sought the removal of these deed restrictions. The EMMC agreed to remove the deed restrictions without admission or finding that this activity violated the federal antitrust laws.
The suits cast a wide net that includes current and past members of the council, as well as mushroom companies that were never members, according to Mr. Crooks.
Mr. Crooks said that mushroom industry prices, compared to inflation, have declined steadily for the last 10 years. The lawsuits come at a very inopportune time.
The councils release stated, The cooperative and its members believe that their conduct was lawful under the Capper-Volstead Act and that there was no relationship between the EMMCs acquisition of these largely defunct mushroom farms and supply/demand conditions in the marketplace or the prices at which mushrooms were sold during this time period. Accordingly, the cooperative and its members will vigorously defend themselves against these lawsuits.
These suits come at a time when costs such as cardboard, plastic packaging and fuel have risen significantly. While this is true for all fruit and vegetable growers, fuel costs are particularly tough on mushroom producers who must air condition their crops in the summer and heat them in the winter.
The suits were filed in mid-February in the U.S. District Court Eastern District, Pennsylvania, according to Jack Crooks, chief executive officer of the council. The suits claim that actions taken by the defendants artificially raised mushroom prices in 2001.
Mr. Crooks, who joined the council staff on June 20, said that the council was first challenged for buying mushroom facilities earlier this decade. The council purchased one facility each in Ohio and California, as well as two in Pennsylvania. These had either been "out of production and for sale for some time or had ceased production just before we purchased them." The facilities were left out of production by the council in an effort to balance supply with demand, Mr. Crooks said.
Lawsuits challenging that move were settled by the U.S. Department of Justice with the entry of a stipulated judgment in 2005. The council's actions were ruled as protected by the Capper-Volstead Act. We were cleared of everything, but there is some language that people who like to file class-action lawsuits picked up on in the Department of Justice settlement language. Thus, he said, four new lawsuits were filed by mushroom buyers between Feb. 10 and Feb. 14.
Mr. Crooks told The Produce News Feb. 22, its very early in the process, but at some point in the future the suits will be consolidated into one class-action suit against the council. All the charges are similar. One copies the other lawsuit, slaps his name on it and, bingo, you have another.
According to a release by the council, The essence of the claim is that the EMMC artificially raised mushroom prices. Believing that the deed restrictions placed on several mushroom farms acquired by the EMMC in 2002-03 might overly restrict the supply of mushrooms at some future date if demand for mushrooms rose significantly, the government sought the removal of these deed restrictions. The EMMC agreed to remove the deed restrictions without admission or finding that this activity violated the federal antitrust laws.
The suits cast a wide net that includes current and past members of the council, as well as mushroom companies that were never members, according to Mr. Crooks.
Mr. Crooks said that mushroom industry prices, compared to inflation, have declined steadily for the last 10 years. The lawsuits come at a very inopportune time.
The councils release stated, The cooperative and its members believe that their conduct was lawful under the Capper-Volstead Act and that there was no relationship between the EMMCs acquisition of these largely defunct mushroom farms and supply/demand conditions in the marketplace or the prices at which mushrooms were sold during this time period. Accordingly, the cooperative and its members will vigorously defend themselves against these lawsuits.
These suits come at a time when costs such as cardboard, plastic packaging and fuel have risen significantly. While this is true for all fruit and vegetable growers, fuel costs are particularly tough on mushroom producers who must air condition their crops in the summer and heat them in the winter.
