Dairy farmers in the Northeast may receive payments of around $4,000 as part of a proposed settlement in a 2009 class action lawsuit alleging misconduct by Dairy Farmers of America (DFA) and Dean Foods.

The lawsuit claimed that Dean Foods cooperated with the DFA and its marketing arm, Dairy Marketing Services (DMS), to decrease the price of milk paid to farmers and to make DFA the sole source of milk for Dean Foods. DFA, DMS and Dean Foods deny any wrongdoing, and the validity of the lawsuit’s claims has not been determined.

“The activities of DFA, DMS and other affiliated milk marketing cooperatives in the Northeast improved pay prices and stabilized milk marketing for cooperative members and independent producers alike," wrote DFA Northeast Area Chief Operating Officer Brad Keating in a January 2011 statement. (PDF, 30 KB)

The proposed settlement affects all farmers who produced Grade A milk in Federal Milk Marketing Order 1 since 2002, including farmers in Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Virginia, according to an Associated Press report. Farmers who wish to be included in the settlement must file a claim before May 30, 2015.

Farmers who do not file a claim will not receive any portion of the settlement. Farmers who previously opted out of the settlement may opt back in until May 30.

Under the terms of the proposed settlement, DFA and DMS will not enter into any new full-supply milk contracts in the Northeast region during the term of the settlement, though they may renew existing contracts.

If the judge approves the settlement, DFA and DMS will pay $50 million into a settlement fund, which will be divided among farmers who have entered claims. Payments to individual farmers are dependent upon the amount of raw Grade A milk produced and pooled by the farmers, according to the settlement website.

DFA and DMS have already paid the first $25 million of the settlement into an escrow account, according to the motion for final approval of the settlement. (PDF 3.8 MB) The money is being held pending the judge's approval of the settlement.

Dean Foods settled with the plaintiffs separately in 2011 for $30 million.

DFA previously settled a similar lawsuit with farmers in 14 Southeastern states in 2013 for $158.6 million. In the same case, Dean Foods settled for $140 million and James Baird settled for $5 million.

The full settlement terms and instructions for filing a claim on the settlement may be found on the settlement website, which is supervised by the court. PD

—Summarized by Progressive Dairyman staff from cited sources