Carlin v. DairyAmerica, Inc.

The USDA possesses sufficient regulatory authority over "agency-set minimum prices for raw milk" to make applicable the filed rate doctrine. The USDA’s expression of disapproval of prices set, while not necessarily an explicit rejection, may preclude application of the doctrine.

Gerald Carlin, a dairy farmer, and other national dairy farmers brought a class action suit against DairyAmerica, Inc. (“DairyAmerica”) and California Dairies, Inc., alleging “negligent misrepresentation and negligent interference with prospective economic advantage,” violation of California Business Practices, and unjust enrichment, all under California common law. Carlin’s complaint was based on “erroneous reports” published by DairyAmerica, which “pushed minimum prices paid to milk producers noticeably lower than they would have been otherwise…to the detriment of plaintiff dairy farmers.” The district court dismissed the complaint pursuant to the filed rate doctrine. On appeal, the Ninth Circuit considered two issues: (1) whether the filed rate doctrine is applicable in a class action lawsuit arising from “misreporting price data to the United States Department of Agriculture, where the data in turn were used to set a minimum price structure for raw milk sales” and (2) if applicable, did the district court err in dismissing Carlin’s complaint. First, the Ninth Circuit found that the filed rate doctrine did apply as the “USDA did possess the authority and did exercise it to address problems as to the agency-set minimum prices for raw milk;” thus, providing “enough regulation to justify federal preemption.” However, the Ninth Circuit determined that the USDA’s actions, in “recognizing that earlier filed rates were incorrect at the time they were filed,” “constituted sufficient rejection” of the prior minimum prices “such that the filed rate doctrine is not a bar.” The district court was correct in finding that the filed rate doctrine applied, but erred in determining that it applied to Carlin’s state-law claims. REVERSED and REMANDED.