Marketing group agrees to pay $50M to settle milk price suit

AP News
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Posted: Aug 06, 2015 3:47 PM

MONTPELIER, Vt. (AP) — A national dairy marketing cooperative has agreed to pay a total of $50 million to thousands of Northeast dairy farmers in an amended settlement of a long-running lawsuit accusing the group of trying to drive down milk prices, but some farmers are still opposed to the deal.

Under the proposal filed Wednesday, Dairy Farmers of America would pay an average of $4,000 to about 9,000 farmers. The settlement must be approved by a judge, who rejected a previous proposed deal in March.

The 2009 class-action lawsuit charged Dairy Farmers of America, its marketing arm, Dairy Marketing Services, and Dallas-based dairy processor Dean Foods with working together to monopolize the market for raw milk in the Northeast.

Dean Foods agreed to a settlement of $30 million in 2011. It covered farmers in Delaware, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia and the District of Columbia.

U.S. District Court Judge Christina Reiss rejected the previous settlement proposal mainly because some farmers opposed it.

They argued that they could be exposed to retaliation by the groups and said the estimated financial compensation of $4,000 per farm was "functionally irrelevant," reflecting the cost of one "tractor tire," the judge wrote in her decision. They also contended the proposal's injunctive relief was insufficient and would allow the defendants to continue practices that led to the lawsuit, Reiss said.

The judge said it appeared that there was strong opposition to the proposed deal on the following grounds: the monetary relief was inadequate if there were no significant changes to how defendants did business; the proposed release was overly broad and, in light of the modest per farm relief, lawyers would be the primary beneficiaries of the proposed settlement if their fees and costs were approved.

The farmers' attorneys requested fees of $16.6 million plus expenses in the first settlement proposal.

After negotiating, the two sides agreed to amend the settlement to address some of those concerns but the settlement amount remained the same.

"We think it's a fair and reasonable settlement and that it's in the best interest of the farms," said Kit Pierson, a Washington-based attorney for the plaintiffs.

But dairy farmer Jonathan Haar, of West Edmeston, New York, who is a class representative, opposes the deal.

"We remain opposed to it. It's fundamentally the same settlement that the judge correctly recognized...that the primary beneficiaries were counsel," he said.

A spokeswoman for DFA said attorneys for both sides agreed to certain amendments to the earlier deal.

"It is believed that these changes will address the concerns and we look forward to a final conclusion of the matter," said Monica Massey of DFA.