Iowa Educators Corp.

Hagens Berman represented Iowa families in a class-action lawsuit filed against Iowa Educators Corporation and Martin Brothers Distributing Company Inc. for allegedly restricting competition and artificially inflating prices of food for school lunches.

The lawsuit, filed in the Iowa District Court of Dallas County, charges Iowa Educators Corporation (IEC) and its current and only director, Mr. Daniel Dreyer, of colluding with Martin Brothers in an attempt to illegally profit from thousands of Iowa families with children who have paid for food at Iowa schools. Both defendants are based in Cedar Falls, Iowa.

According to the lawsuit, Mr. Dreyer, who is also a former Martin Brothers manager, awarded Martin Brothers the title of “prime distributor” which gives the distribution company exclusive access to lower prices negotiated between IEC and its food manufacturers. All schools that want to take advantage of these lower food prices must agree to purchase at least 60 percent of their school’s food from the prime distributor - Martin Brothers, the lawsuit states.

In 2000, IEC was created to provide a purchasing program for K-12 schools throughout Iowa. The program would allow member schools to save thousands if not millions of dollars by participating in a volume pricing program for a variety of products including office supplies, school furniture and food resold to consumers.

Typically, multiple distributors can utilize the reduced prices IEC negotiates with its suppliers and then compete for a given school’s business based on a set price for these products.

Before the creation of IEC, Iowa schools and its school districts traditionally used more than one food distributor and as of 1999, no single competitor in Iowa’s school food distribution industry came close to having a dominant market share. There were about 25 distributors serving Iowa school, but 10 years later and after the establishment of IEC’s relationship with Martin Brothers, only three legitimate school food distributors remain.

Martin Brothers was the dominant player distributing food to Iowa schools with annual sales volumes reaching $35 million.

Martin Brothers’ market share has rapidly increased by about 483 percent in the past 10 years, while the marketplace has been flat or declining, the lawsuit shows. Attorneys believe that the company’s success directly came from its agreement with IEC to attempt to monopolize the Iowa school food market.

Families with children who have purchased food from Iowa schools after October 12, 2000 are encouraged to contact our attorneys to discuss their legal options. Hagens Berman sought injunctive relief against IEC and Martin Brothers and recovered damages on behalf of eligible Iowa families.