Tag Archives: Southeast Milk Litigation

SE Milk Litigation: Court Approves Settlement Funds to be Paid to Farmers

12 Dec

Image(Greeneville, TN)  A simple 4-page Court Order, a culmination point for one of the most complex farm and food class action litigations in United States history, will return $85 Million dollars to Southeast dairy farm communities in the coming weeks.

 

In an Order entered on December 11, 2013, US District Judge J. Ronnie Greer approved the disbursement of the DFA Settlement Funds in the Southeast Milk Litigation, following a Motion filed by Plaintiff’s Attorneys for the Dairy Farmer Class on November 26, 2013.   The litigation is based in US District Court, Greeneville Division, Eastern District of Tennessee, in the Sixth Federal Circuit.

 

With that Order, checks can now be cut and distributed to 6,086 class members who will receive an average of $14,072.31 each.  However, if farmers elected to use third-party representation, those farmers will receive anywhere from 15% to 30% less, depending on the percentage of fees charged by the third-party filer they elected to use.   

 

Dairy Farmers of America, Inc., (DFA) and related entities National Dairy Holdings, LP (NDH), Dairy Marketing Services, LLC (DMS), Mid-Am Capital, LLC, and Gary Hanman entered into a Settlement Agreement in the class action lawsuit on January 17, 2013, and which was filed with the Court on January 21, 2013.   

 

They were the last remaining defendants to settle in the complex litigation, originally filed in July of 2007, a tenure of six and one-half years. Other defendants Dean Foods, Southern Marketing Agency (SMA), and James Baird finalized their settlement agreements in February of 2012, with final approval by the Court in June of 2012.  In the language of all settlements, none of the defendants admitted guilt to the allegations of antitrust and price-fixing for the purpose of depressing prices paid to dairy farmers in Federal Milk Marketing Orders 5 and 7, respectively the Appalachian and Southeast orders.

 

The settlement agreement for each defendant varies in the terms of the total monetary payments, the terms, timing, and length of the payout schedules, and the conduct changes in the marketplace which will take place over several years.  The court retains enforcement and jurisdiction of the Settlement agreements until the last activities per the agreements are expected to occur by the year 2016.

 

The current DFA Gross Settlement Fund totaled $140 Million Dollars, equal to the Dean Settlement Amount.  However, the Dean Food Settlement Funds will be distributed over annual payments until the fall of 2016, while DFA elected to borrow funds and make a one-time payment to settle the lawsuit.  Honoring the Settlement Agreement, DFA placed the $140 Million in an escrow account in February, 2013.  Any interest accrued by the escrow fund is accounted for in the distribution.

 

In keeping with the normal standards of Federal Class Action lawsuits of this nature, attorneys’ fees and expenses (thirty-three and one-third percent contingency), claims administrator expenses, certain miscellaneous expenses, and payments to named plaintiffs were deducted from the gross settlement fund to result in the net settlement fund of $85,644,095.34.

 

In accordance with Class Action procedure, a Fairness Hearing for the Plaintiffs/Farmer Class to make comments was held on April 3, 2013, with Final Approval of the DFA Settlement entered on the Court’s file on May 17, 2013.  The Order of Approval had to survive an appeals time frame, and the Claims Administrator had to satisfy the Court’s requirements for meticulous audit and accounting procedures  before the funds could be paid to class members.

 

Through the spring, summer, and fall, Claims Administrator Rust Consulting received claims forms, and conducted audits of the claims submitted.

 

There is a good possibility, but not a guarantee, that Class members will receive these checks before the end of the year.    With the first Dean Foods/SMA Settlement payment issued in January, the  Order for Disbursement was filed on January 8, and many farmers received checks beginning two weeks later, on January 22.  With the second Dean payment, there was a month before checks were received following the Order.

 

In a separate portion of the DFA & Related Settlement Agreements, there were approximately 50 documents, a portion of the many confidential documents under seal during the course of the litigation, which the defendants agreed to finally open to the public.  Many dairy industry stakeholders across the country have felt the information contained in those documents was as important as the monetary settlements.  Those documents have yet to be opened, and it is unknown when they will be.

 

Too, there were terms in the Settlement Agreement concerning the public announcement of salaries of key DFA management and compensation for board members to be announced.  Those announcements depended on actions of the applicable councils and committees within the DFA membership itself hinging on annual meeting dates.   It is anticipated those actions should be resolved during the winter and spring of 2014.

 

Appropriate court documents and additional information should be appearing on the Litigation website,

www.southeastdairyclass.com, in the coming days.

SE Milk Litigation – Payment Schedule Updates

21 Aug

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I, along with many other producer organizations, have been receiving questions regarding “When will the DFA Settlement Monies be received by farmers?” The answer: NOT anytime soon, and NOT until the proper reviews have been completed by first, the official Claims Administrator, Rust Consulting, followed by reviews and approvals of their work and official report by THE COURT!

As of Monday, August 19, an additional round of audit letters were received by several class members/producers in several states from Rust Consulting, the Claims Administrator. These letters were checking pounds claims discrepancies reported by Class members ranging from only a view pounds to several hundred thousand pounds. One producer reported that a phone call to Rust is all it took to correct the requested information.

However, that letter does state a response deadline (to Rust Consulting) of September 16 for verifying or correcting the information. Provided there is not another round of audit letters, and observing the January 2013 Dean Settlement payment process as an example, it is predicted that it will be late October AT THE EARLIEST before DFA Settlement Checks can be expected. Any delays will delay checks even further.

If anyone tells a producer to ‘expect payments anytime soon,” ask where they are getting their information. Unless that source can provide documents from the Court’s record, they are citing no official source. Speculation and ‘country-store discussions’ are not proper in this process!

The COURT is supervising this process, under the guidance of long-established Federal Court Rules. Documents filed on the Court’s record are the only source of accurate information, and are made public when there is official action. Here is the general sequence of events which will occur before checks can finally be issued:

1. The first step has been taken with the filing of a Motion requesting Payment #2 in the Dean Foods Settlement.
2. Requests were made in that document to alter some of the pounds claimed in the Dean Settlement, which in turn may affect the final allocation of pounds to an individual claimant in the DFA Settlement.
3. Those requests must be reviewed and approved by the Court before proceeding to the next step – the filing of a Motion requesting the Disbursement of the DFA Settlement Monies. Rust Consulting must complete their work before that Motion is filed.
4. Since the DFA Settlement will involve some substantial payments, and will be dispensed at one time, every care must be taken to make sure the pounds, and resulting monies, are allocated as fairly as possible and to the Court’s satisfaction before the Judge will approve issuing checks to producers.

To clear up a couple of other ongoing questions:
1.) The settlement checks will not be coming directly from DFA (Dairy Farmers of America. In accordance with Court procedure, DFA placed $140 Million in an escrow account earlier this year. The interest accrued by that fund becomes part of the Settlement fund. The eventual checks will come from Rust Consulting, Claims Administrator.

2.) There is no word yet on when the sealed documents, which DFA agreed to open to the public per terms of the Settlement Agreement, will be available for public review.

Please, Please, be patient. Most events in this case are not our area of expertise, are defined by Rules of Federal Court and process, and are dependent upon work performed by others, and are quite frankly, out of our control. News of important events concerning payments will be distributed as quickly as it becomes available. This is a complex legal event, and while the finish line is hopefully in sight, it is still a legal event, and the final outcome can be determined by a variety of factors.

(Note: photo at top is Greeneville, TN Federal Courthouse, the site of the hearings in the Southeast Milk Litigation, now in its sixth year.)

DFA Subclass Litigation – Trial now Nov.

21 Jun

ImageDairy Farmers and Class Members living in Federal Orders 5 & 7 have begun receiving Class Notices and Opt-Out Notices in regards to the DFA Recertification Subclass in the historic Class Action Southeast Milk Litigation.

In layman’s terms, DFA rank-and-file members in Federal Orders 5 & 7 are now eligible to receive damages – should any come via settlement, injunctive relief, or award by a jury - from their own co-op. These Class members will also have to meet certain standards specfied by the Court in a Class definition.

This is in accordance with the Court’s ruling on June 1st, 2012 following a series of motions and responses by attorneys for dairy farmer plaintiffs and defendant attorneys for DFA corporate businesses – Dairy Farmers of America, Inc.;  Mid-Am Capital, LLC;  Dairy Marketing Services, LLC;  National Dairy Holdings, LP; and an individual, Gary Hanman, former CEO of DFA.  This series of litigation activity was completed with a Hearing for Oral Arguments for Recertification on April 17th, followed by entry of the Judge’s ruling six weeks later.

Complete information, in a question and answer format, can be found by clicking this link: http://www.southeastdairyclass.com/PDFs/NotificationofCertificationofDFASubclass.pdf

The Court’s reason for the recertification can be summed up in one sentence found in the Order: “Plaintiffs have offered substantial proof that the alleged conspiracy has injured all members of the independent farmer subclass and the DFA farmer subclass.”

The Opt-Out option should be taken only if a Class Member/Claimant does not wish to receive any future settlement monies, or monies awarded at trial should a jury find actions of the DFA-related businesses did indeed harm the Southeast dairy community, and to what degree (signaled by the amount of dollar rewards).

Needless to say, DFA filed a petition to appeal that ruling with the Sixth Circuit.  Due to that action, the trial scheduled for July 10th has been continued to November 6th (Election Day).  Should the appeals court deny the petition, the Class stands and trial proceeds with the entire class intact.  Litigation  will proceed with Independent Farmers as plaintiffs irregardless of the decision of the Appeals court concerning DFA members.

More information about the entire Class Action is publicly available at the official Class Website, www.southeastdairyclass.com.

This DFA recertification segment of the litigation follows a previous $145 Million Settlement by defendants Dean Foods, Southern Marketing Agency, and James Baird.  The settlement also included some forms of injunctive relief. This Settlement received Final Approval from the Court on Friday, June 15th.

Audits of claims forms are being conducted now by Rust Consulting.  Those claims forms were submitted during March and April to Rust. It will likely be later this fall before payments to farmers begin.

Legal events, although generally considered unpleasant or controversial, are a part of the Worldwide Milkshed. Sometimes they are the only course of action left for a farmer to get answers about events and companies whose ultimate responsibility should be to ‘protect the farmer’s income.’  With the farmer’s income protected, a consumer will have more peace-of-mind about domestic food security, because farmland will have more certainty about financial sustainability.

Lawsuits or judgments can serve to change the course of the way milk is priced to the farmer, or hold accountable businesses and individuals in their practices that ultimately affect the sustainability of the farmer – the person where a Milkshed begins.

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