WASHINGTON, July 9, 2014 – After “almost five years of intensive litigation” and millions of pages of documents, lawyers for Dairy Farmers of America and a group of northeastern U.S. dairy farmers have agreed to settle a class action antitrust suit for $50 million, to be paid by DFA and an affiliate. The proposed settlement rests on approval by U.S. District Judge Christina Reiss in Burlington, Vermont.
If approved, the deal would end a contentious dispute that began Oct. 8, 2009, when attorneys for dairy farmers Alice and Laurence Allen, of Wells River, Vermont, and Ralph and Garret Sitts, of Franklin, New York, claimed that Dean Foods, HP Hood and DFA worked together to suppress prices paid to farmers and deny them access to milk processors (see Agri-Pulse, Oct. 14, 2009, page 5). All the defendants resisted the allegations. The complaint against Hood was dismissed in 2010 and Dean agreed to settle its part of the suit for $30 million the following year.
The settlement payment would be far less than the challengers first sought. They had presented calculations by University of California-Berkeley agricultural economist Gordon C. Rausser that they lost $341 million as a result of DFA’s and Dean’s marketing practices.
“While we believe the allegations against us were without merit and the activities of DFA, Dairy Marketing Service (DMS) and other affiliated milk marketing cooperatives in the Northeast benefited cooperative members and independent producers alike, the cost to continue to defend ourselves has become too great,” Monica Massey, senior vice president for corporate affairs in DFA’s Kansas City office, said in an email to Agri-Pulse. “Under terms of the settlement, DFA has admitted no wrongdoing. This settlement will not affect DFA’s ability to operate, our members equity or the services provided to DFA members or DMS producers.”
DFA and DMS, the marketing arm of DFA and other milk co-ops, agreed to share in payments, to be made in installments of $25 million each this year and next year, and to change business practices in the Northeast. They agree not to enter new full-supply agreements for Grade A milk in the Boston federal milk marketing order and not to restrict solicitation of milk from farmers by other processors during the next 30 months. In addition, any member, affiliate or associate of DFA or DMS in the area may terminate its relationship on 90 days notice without penalty within the same time. Under the proposal, DFA also has to disclose how much it pays its directors.
The number of farmers who will share in the settlement has been disputed, but DFA said at a hearing in 2011 that as many as 13,000 farmers would split the proceeds, less the contingency fee for the farmers’ attorneys, typically a third of the amount. Lawyers for the challengers estimated at the time that the number of farmers would be less than half the DFA figure. The Boston milk market order website shows nearly 6,500 farmers in New England and New York State; the total grows to about 11,900 if Pennsylvania and Maryland are included.
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