A federal district court recently ruled that claims of “good faith reliance on counsel” were not sufficient to maintain a Capper-Volstead affirmative defense to the antitrust laws – a result that may soon collide with rulings by other courts considering the same issue.

Several years ago, a Pennsylvania mushroom cooperative, its members, and various other entities, were sued for allegedly violating Sherman Act § 1 by launching a “supply control” campaign that used member funds to acquire and then dismantle other mushroom operations in order to maintain artificially high mushroom prices. See In re Mushroom Direct Purchaser Antitrust Litigation, MDL 0620 (E.D. Pa.).

In response to the suit, mushroom cooperative defendants claimed Capper-Volstead exemption based, among other reasons, on their good faith reliance on counsel’s advice that the cooperative was organized and operating in a manner compatible with the Capper-Volstead Act. The Act provides certain agricultural cooperatives with a limited exemption from the Sherman Act. The trend, reviewed here, is for courts to treat the Capper-Volstead exemption as an affirmative defense – meaning the party asserting the defense must prove that they are eligible for Capper-Volstead’s protection. The defense of “good faith reliance on counsel” can shield defendants from liability to the extent they were acting willfully and in good faith reliance on advice of counsel. See Rhone-Poulenc Rorer Inc. v. Home Indem. Co., 32 F. 3d 851 (3d Cir. 1994).

The Mushroom court rejected the mushroom cooperative defendants’ claims as “problematic.” The court explained: “The affirmative defense of good faith reliance on counsel is generally warranted only where the offense alleged involves willful and unlawful specific intent,” but because “proof of specific intent is not required” for § 1 claims, the “advice of counsel would not be a proper defense.” As a result, the mushroom cooperative defendants could not establish or maintain the Capper-Volstead affirmative defense based on a good faith reliance on counsel’s advice that the cooperative was compliant with the Act.

Other courts considering the same issue appear headed toward a different result. Cooperative defendants have asserted similar “good faith reliance on counsel’s advice” defenses in In re Fresh and Process Potatoes Antitrust Litigation, MDL No. 2186 (D. Idaho) and In re Processed Egg Products Antitrust Litigation, MDL No. 2002 (E.D. Pa.). In both cases, the courts have allowed discovery regarding the defenses, and even granted motions compelling the production of the cooperatives’ attorney-client communications related to the defenses. See Fresh and Process Potatoes, MDL No. 2186, Dkt. 625 (April 14, 2014); Processed Egg, MDL No. 2002, Dkt. 1052 (Sept. 12, 2014). While the courts have not definitively ruled whether cooperative defendants can rely on advice of counsel for maintaining Capper-Volstead protection, the fact that the courts have made other rulings that presume the relevance of the defense suggests that the courts ultimately will determine that cooperative defendants can rely on the advice of counsel in this context.

However the Mushroom, Fresh and Process Potatoes, and Processed Egg courts end up ruling, their decisions could apply to many other industries. A number of statutes like Capper-Volstead offer protection from antitrust claims so long as their requirements are satisfied, such as Packers and Stockyards Act (livestock), McCarran-Ferguson Act (insurance), Sports Broadcasting Act (television and mergers), and Shipping Act of 1984 (ocean carriers). Whether counsel’s advice becomes more or less relevant to determining eligibility for antitrust protections could impact antitrust litigation far beyond agriculture.