57 N.Y.2d 707 (1982)
The Donnelly Act’s exemption for dairymen’s cooperatives extends to contracts, agreements, or arrangements made by such associations, shielding them from antitrust scrutiny under the Act even when those arrangements involve non-cooperative entities.
Summary
The State of New York brought an antitrust action against dairy cooperatives and other corporations, alleging a violation of the Donnelly Act. The State claimed the defendants conspired to restrain competition in raw milk purchasing. The New York Court of Appeals affirmed the dismissal of the complaint, holding that the Donnelly Act exempts the activities of dairymen’s cooperatives, including their agreements with other entities, from antitrust regulation. The court found the statutory language broad and unambiguous, indicating legislative intent to regulate dairy cooperatives under the Agriculture and Markets Law instead of the Donnelly Act.
Facts
Northeast Dairy Cooperative Federation, Inc. (NEDCO) acquired a milk plant from Dellwood Foods, Inc. Dellwood ceased purchasing raw milk directly from farmers. NEDCO assured Dellwood’s former suppliers they could sell to NEDCO if they became members. Membership required an initial fee and deductions from milk payments. The State alleged the defendants conspired to allocate Dellwood’s farmers to NEDCO, refusing to buy from them otherwise, violating the Donnelly Act. The state further alleged that the fees charged by NEDCO were excessive.
Procedural History
The defendants moved to dismiss the complaint for failure to state a claim, arguing the Donnelly Act’s exemption for dairy cooperatives applied. Special Term granted the motion to dismiss. The Appellate Division affirmed the dismissal. The New York Court of Appeals granted leave to appeal and affirmed the Appellate Division’s order.
Issue(s)
Whether the Donnelly Act’s exemption for dairymen’s cooperatives applies to agreements among milk purchasers, including non-cooperative entities, regarding the purchase and distribution of milk.
Holding
Yes, because the language of the statutory exemption is broad and unambiguous, encompassing the acts of a dairymen’s cooperative and its contracts, agreements, or arrangements with others. This clear legislative declaration cannot be ignored, and the legislative history confirms the intent to regulate dairymen’s cooperatives under the Farms and Markets Law (now the Agriculture and Markets Law) rather than the Donnelly Act.
Court’s Reasoning
The Court relied on the plain language of subdivision 3 of section 340 of the General Business Law (the Donnelly Act), which states the Act does not apply to cooperative associations of dairymen or their contracts/agreements. The court emphasized that the language was “broad and unambiguous”. The legislative history supported a broad reading, indicating a legislative desire to regulate dairy cooperatives under the Agriculture and Markets Law, which provides a comprehensive regulatory scheme. “Such a legislative declaration, clear on its face, cannot be ignored.” The Agriculture and Markets Law grants the Commissioner of Agriculture and Markets broad supervisory and rule-making powers, including licensing milk dealers, auditing their books, and even fixing milk prices. The Court distinguished the Donnelly Act from Agriculture and Markets Law § 258-c(f), which contains a more limited exemption, applying only to collective sales and marketing activities. The court acknowledged a potential for misuse of the exemption, suggesting that courts could address situations where non-cooperatives exploit the exemption through unrelated trade restraint conspiracies, but found that no such situation was alleged in the present case. The court implied that such an abuse would be evaluated on a case-by-case basis. The court referenced Margrove, Inc. v Upstate Milk Coop., noting its well-reasoned opinion which discusses the legislative history of the Donnelly Act.