Dairy farmers are finally receiving payments stemming from a 9-year-old lawsuit involving milk marketing practices in the Northeast U.S.
The class action lawsuit (Allen v. Dairy Farmers of America Inc., No. 5:09-CV-230) was initially filed in 2009. Dairy farmer plaintiffs in the lawsuit alleged Deans Foods, dairy cooperative Dairy Farmers of America (DFA) and its marketing arm, Dairy Marketing Services (DMS), were involved in anti-competitive milk marketing conduct within Federal Milk Marketing Order (FMMO) 1.
Dean Foods agreed to a separate $30 million settlement in 2011, and DFA/DMS reached a $50 million settlement agreement in late 2014. However, Judge Christina Reiss, of the U.S. District Court for the District of Vermont, rejected the DFA/DMS settlement after a majority of dairy farmers testifying at a “fairness hearing” expressed opposition. A final $50 million agreement, with few changes from the original, was approved in June of 2016.
After deducting legal fees and other expenses, estimated at $16.6 million at the time of the settlement, the remaining portion was placed in a fund for distribution to dairy farmers. Settlement fund administrator Rust Consulting mailed claim forms to dairy farmers in FMMO 1.
Individual shares of the lawsuit settlement were dependent on the amount of raw Grade A milk produced in and pooled on FMMO Order 1 from Jan. 1, 2002, to Dec. 31, 2014. It was estimated the average payment per farmer would be about $4,000 if an estimated 8,000 dairy farmers filed claims.
According to Rust Consulting, 8,571 dairy farmers filed claims to receive a portion of the payment. Even though the claim forms were simplified to enable farmers to complete them without legal assistance, in some cases, claims were filed by third-party filers (TPF) on behalf of individual farmers.
A court document indicates filing by some TPFs, generally law and consulting firms providing services related to class action lawsuits, resulted in some filing duplication. Additionally, the document said some TPFs charged individual farmers a portion of the claim to complete the filing process, in some cases, up to 33 percent of their individual payment. The percentages requested by some of the TPFs were in excess of the percentages the court had originally awarded attorneys representing the farmers in the lawsuit.
Settlement payments were held up while the court ruled on whether the checks should be sent to individual farmers or the TPFs who submitted claims. A decision by Judge Reiss on May 25, 2018, finally cleared the way for settlement fund distribution. Judge Reiss ordered all settlement checks be sent directly to individual dairy farmers, notwithstanding the existence of any contracts with TPFs.
The order left it up to dairy farmers to determine if they had any obligation to pay TPFs a portion of the settlement checks. An order authorizing payment distribution was issued on Aug. 14, and farmers started receiving checks during the last week of August.
Separate case continues
The settlement payment distribution closes one chapter in the lawsuit but doesn’t end the story.
About 115 dairy farmers would not accept the settlement and opted out of the original class action lawsuit. Known as the Farmers United, they have filed a separate legal challenge, also in the U.S. District Court for the District of Vermont (Sitts v. Dairy Farmers of America Inc., Case No. 2:16-cv-287).
That case is currently in the discovery process, a period when legal facts related to the case are collected and prepared for trial. At the conclusion of the discovery process, parties involved may file a motion for a summary judgment based on the facts presented. The deadline for that filing is set for Dec. 15.
The court can either accept that motion, or deny it and send the case to a formal trial. If the case proceeds, a trial is likely to begin in early January 2019. 
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Dave Natzke
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- Progressive Dairyman
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