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Cooperative Regions of Organic Producer Pools v. Dairy

United States District Court, D. Oregon, Medford Division

February 23, 2015

COOPERATIVE REGIONS OF ORGANIC PRODUCER POOLS, a Wisconsin Cooperative, Plaintiff,
v.
NOBLE DAIRY, an Oregon business entity of unknown form; JERRY NOBLE, individually, as trustee for the Jerry Noble Trust, and doing business as Noble Dairy; SANDRA NOBLE, individually, as trustee for the Jerry Noble Trust, and doing business as Noble Dairy; ORGANIC WEST MILK, INC., a California Corporation; GAGE STUEVE; LEONARD C. VANDENBURG; DOES 1-50, inclusive, Defendants.

ORDER

OWEN M. PANNER, District Judge.

This matter comes before the Court on Plaintiff Cooperative Regions of Organic Producer Pools' Motion for a Preliminary Injunction (#6). Plaintiff seeks to continue the temporary injunction already in place requiring Defendants Jerry Noble, Sandra Noble, and Noble Dairy (collectively "the Noble Dairy Defendants") to deliver all of their organic milk products to Plaintiff and forbidding them from selling organic milk products to any other parties. Plaintiff's motion is GRANTED.

Background

Plaintiff in this action is a large agricultural cooperative based in Wisconsin. As a cooperative, Plaintiff assembles, packs, processes, and sells the produce of its member farms. A large part of Plaintiff's operations involve the marketing and distribution of organic milk from its member farms.

The demand for organic milk has increased substantially in recent years, but the process of turning an existing dairy farm into an organic dairy farm is both expensive and time-consuming. As a consequence, the supply of organic milk is limited relative to the, growing demand.

The Noble Dairy Defendants own and operate a large organic dairy farm in Josephine County, Oregon. On July 22, 2014, the Noble Dairy Defendants signed a Letter of Intent indicating their interest in becoming one of Plaintiff's member farms, On August 14, 2014, the Noble Dairy Defendants signed a Dairy Member Agreement ("Member Agreement") with Plaintiff.

Under the terms of the Member Agreement, the Noble Dairy Defendants "agree[d] to be bound by both the Cooperative bylaws and this agreement." The Noble Dairy Defendants "pledge[d] all organic dairy production" to Plaintiff and appointed Plaintiff "as its exclusive agent in the marketing of organic milk/dairy products." In return, Plaintiff pledged to pay the Noble Dairy Defendants "for their certified organic milk according to the rates and programs established by the Dairy Executive Committee and the Board of Directors for the Member's region."

The Member Agreement was to be "in effect continuously from date hereof, " subject to termination by either party at any time by giving 180 days notice in writing. The Noble Dairy Defendants were to begin providing organic milk to Plaintiff on February 1, 2015.

In early January 2015, the Noble Dairy Defendants began to negotiate with Defendant Organic West Milk, Inc. ("Organic West"), a California corporation that competes directly with Plaintiff in the organic milk market. On January 12, 2015, the Noble Dairy Defendants entered into a contract with Organic West promising to provide all of Noble Dairy Defendants' organic milk to Organic West. Under the terms of the January 12 contract, the Noble Dairy Defendants were to begin supplying organic milk to Organic West on February 1, 2015.

On January 22, 2015, the Noble Dairy Defendants notified Plaintiff by letter that they were terminating the Member Agreement effective immediately. The letter indicated that the Noble Dairy Defendants were unaware that the Member Agreement was not a letter of intent.

On January 30, 2015, Plaintiff sent a cease-and-desist letter to Organic West, informing it of Plaintiff's Member Agreement with the Noble Dairy Defendants and demanding that Organic West refrain from purchasing organic milk from the Noble Dairy Defendants. Plaintiff also sent the Noble Dairy Defendants a formal letter on January 30, 2015, stating its position that the August 14 Member Agreement was binding and that the Noble Dairy Defendants could not withdraw from the cooperative without 180 days notice, Plaintiff indicated that it intended to send a truck to pick up the first shipment of organic milk from Noble Dairy on February 1, 2015.

On February 1, 2015, Plaintiff sent a milk truck to the Noble Dairy Defendants. Plaintiff's milk truck was turned away and the Noble Dairy Defendants delivered their organic milk to Organic West. On February 2, 2015, Plaintiff filed this action (#1). On February 4, 2015, Plaintiff filed an Ex Parte Motion for Temporary Restraining Order and Order to Show Cause re Preliminary Injunction (#6). On February 5, 2015, I granted a Temporary Restraining Order requiring the Noble Dairy Defendants to deliver their entire organic milk production to Plaintiff pursuant to the Member Agreement.

Legal Standard

The Ninth Circuit has laid out the factors used to determine whether a preliminary injunction should be granted:

The factors we traditionally consider in determining whether to grant a preliminary injunction in this, circuit are (1) the likelihood of plaintiff's success on the merits; (2) the possibility of plaintiff's suffering irreparable injury if relief is not granted; (3) the extent to which the balance of hardships favors the respective parties; and (4) in certain cases whether the public interest will be advanced by the provision of preliminary relief. Dollar Rent A Car of Wash., Inc. v. Travelers Indemnity Co., 774 F.2d 1371, 1374 (9th Cir. 1985). To obtain a preliminary injunction, the moving party must show either (1) a combination of probable success on the merits and the possibility of irreparable injury or (2) that serious questions are raised and the balance of hardships tips in its favor. Benda v. Grand Lodge of Int'l Ass'n of Machinists & Aerospace Workers, 584 F.2d 308, 314-315 (9th Cir. 1978) cert dismissed, 441 U.S. 937, 99 S.Ct. 2065, 20 L.Ed.2d 667 (1979). ...

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