SE Milk Litigation Trial scheduled in 4 weeks; $1.2 Billion at Stake

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4 weeks from today, one of the most significant legal actions involving agricultural co-ops in the United States is scheduled to go to trial on January 15th, 2013 in Federal Court in Greeneville, Tennessee.

At stake?  Potentially, $1.2 Billion in damages, payable to certified Class Members (current and past dairy farmers) producing and marketing milk in the Southeast United States, within the geographic bounds of Federal Milk Marketing Order 5 (Appalachian) and Federal Order 7 (Southeast), covering most of the Southeast United States, with the exception of Florida.

Dairy Farmers of America (DFA) and several related entities are the remaining defendants in this extensive litigation. They are accused of price-fixing and antitrust activity, which thus far, has been deemed by the Court to have indeed harmed their own members as well as independent dairy farmers, living in the Southeast United States, specifically in Federal Milk Marketing Orders 5 (Appalachian area) and 7 (Southeast area).   [An FMMO is a defined geographic area, structured to aid in the marketing of fresh, fluid milk.]

Attorneys for the DFA defendants have consistently maintained their co-op’s innocence, yet the Class has been certified not once, but twice, in the past two years. The defense attorney team is led by Steven Kuney, of Williams & Connolloy, LLC, based in Washington, D.C.

Both times the Class Certification withstood petitions to appeal the Court’s ruling, in effect upholding the judge’s work and assessment based on facts presented in the courtroom. Along with courtroom work, there is a significant portion of the evidence that remains under seal, but which has been subject to the Court’s review.

Should trial begin, the presiding Judge, the Honorable J. Ronnie Greer, has maintained he will open all of these records, thus making available all of this information which has been kept not only from the public, but supposedly from review by the great majority of DFA’s grass-roots owner/members.

In addition to the twice-certified class, Judge Greer stated the following in a July 2012 Memorandum Opinion which reinforced his June, 2012 Recertification Order: “The plaintiffs have offered convincing proof sufficient to meet their burden under Rule 23 that DFA and the DFA related defendants have engaged in illegal conduct in violation of the Sherman Act and that the members of the DFA subclass have, across the board, suffered common injury as a result of the DFA defendants conduct.“

Ultimate assessment of the dollar amount of damages will be up to a jury; plaintiff’s experts have calculated that amount in excess of $400 million. If defendants are found guilty should a trial go forward, amount of damages is automatically trebled according to Federal Court Rules, making the defendants subject to a $1.2 Billion dollar payout. (Amounts found in court documents.)

Known as the Southeast Milk Litigation, the federal class action lawsuit began in July of 2007 when two groups of Southeast dairy farmers (plaintiffs) filed suit in Columbia, TN, alleging price-fixing and antitrust activity against some of the dairy industry’s biggest players.

Defendants Dean Foods settled in the winter of 2012 for $140 million (admitting no guilt), and Southern Marketing Agency (SMA) and James Baird settled for $5 million and injunctive relief in the marketplace. The $60 Million initial payment on this settlement is awaiting disbursement from an escrow account.

Class members have been through an arduous and lengthy claims and audit process since May, not surprising since ‘average’ payment is expected to average $13,000 per claimant. However, that sum will vary widely due to herd size and milk production during the allowed class period, which began January 1, 2001. Payments will begin when the Claims Adminisrator files, and the Court approves, a Claims Process and Methods report.

Since that time, over 5 Million pages of paperwork have been filed with the Federal Court in Greeneville, TN. Dairy Farmers of America, the largest dairy cooperative in the United States, and its related entities Dairy Marketing Services, LLC (DMS), National Dairy Holdings, LP (NDH), Mid-Am Capital, LLC (Mid-Am), and Gary Hanman, an individual who is the former CEO of DFA.

Legal events are a significant, though not often discussed, segment of your worldwide milkshed. Over the next weeks, Milksheds will be reviewing some of the events that have occurred in this litigation, as well as relating some of the courtroom discussions. This should provide a quick review for consumers and farmers alike.

For additional information, please visit www.southeastdairyclass.com.  Click on the court documents, which are only a portion of the 2000 that have been filed to date. The numbers and dollars are mind-boggling, and are involved in the sustainability of fresh milk being produced on local Southeast Dairy Farms

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