SEML Trial Week; Turning Point – DFA Trial, or Settlement?

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© Julia G. Walker, AgriVoice Enterprises

A Milkshed – in this instance the national Milkshed, and specifically the Southeast Milkshed  –  is affected by legal matters, some of those mammoth Federal Class Actions.

We are now on the cusp of what could be the food industry’s version of a Class Action trial that changes history.

This week, on Wednesday, Jan. 23, 2013, the long-anticipated trial in the Southeast Milk Litigation, is finally set to begin after 18 months of Trial delays.  This is a crucial turning point in this significant Antitrust and Price-Fixing Federal Lawsuit.

The remaining defendants to be publicly tried are related entities of the United States’ largest farmer-owned milk marketing co-op, Dairy Farmers of America, Inc. (DFA).   The subsidiary co-defendants are Dairy Marketing Services, LLC (DMS); Mid-Am Capital, LLC; National Dairy Holdings, LP (NDH); and Gary Hanman, an individual, the former CEO of DFA.

Legal challenges are one of the ‘checks and balances’ instituted by the Constitution to protect citizens.  In this case, the citizens seeking legal interpretation and recovery of alleged financial damages exceeding $419 million of dollars are 6,100 present and former Southeast Dairy Farmers.

The Honorable J. Ronnie Greer has been the presiding judge, and twice he has been upheld at the appellate level when defendants challenged not one, but two, certifications of DFA members as rightful members of the “Class” – present and former dairy farmers who had been ‘harmed’ by the defendants’ activities.

POTENTIAL IMPLICATIONS for DFA DEFENDANTS:

If the jury trial should proceed, and the defendants found guilty at the jury trial, there would be an automatic trebling of the damages to $1.26 Billion dollars for which the Co-op would be liable.

That huge potential liability, and the risk of payment should Defendants indeed be found guilty, will be a key factor in determining if Trial proceeds or if there will be a Settlement offer by the defendants.

Not only is there the $419 Million/$1.26 Billion financial spectre looming for DFA, there are also implications that could possibly affect their Capper-Volsted standing.

The Act itself – 2 pgs.:  http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5066357

A legal perspective by Christine Varney, formerly of the DOJ:

http://www.americanbar.org/content/dam/aba/publishing/antitrust_source/Dec10_Varney12_21.authcheckdam.pdf

Judge Greer is already on record stating in July of 2012:  “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.”  He went on to say that final determination would be made at a jury trial.

DFA defendants’ in this case refers largely to persons in corporate management and decision-making positions, NOT the grass-roots membership of family dairy farmers. In an exchange with the defense attorneys during one hearing, Judge Greer  noted that for a conspiracy to take place, it was not necessary for all parties to know what the others were doing when several ‘conspirators’ (a legal term) were involved in the process.

The outcome (for better or worse) may affect the financial sustainability of family dairy farms which now supply consumers in the Southeast with fresh, locally-produced milk. Exactly how that could occur remains to be seen.  In addition, dairy related jobs and the economies of the southeast agricultural community may be either preserved or depleted.

Since DFA is a national co-op, any financial liability may also affect DFA members nationwide. And again, the nature and depth of such a liability are unknown and only speculation until a resolution is reached.  One DFA producer, who asked not to be identified, wryly said “If I do get a financial settlement, I’m looking at it like this is a way I will get my rightful allocations paid back much quicker than they [DFA] are doing now.”

At this writing, THE Dates are now there on the Court Calendar – two weeks’ worth of Federal Court time in an Antitrust Class Action Trial expected to last a total of 6-8 weeks.

The link, to the Court’s calendar:  http://www.tned.uscourts.gov/calendar.php

And what you’ll find, unless things change quickly, as they can with a legal proceeding at this stage of the game:

The Dates: Jan 23, 24, 25 (Wed, Thurs, Fri of this week) and Jan 29, 30, 31, Feb. 1 (Tues-Fri. of following week).   [Note: only two weeks at a time are typically posted.]

The Court Docket Notation:  “2:08MD1000 (JRG-C)JURY(6-8 WEEKS) – IN RE: SOUTHEASTERN MILK”    The key:

  • JRG – the presiding judge’s initials, The Honorable J. Ronnie Greer.
  • JURY – means this is a jury trial
  • SOUTHEASTERN MILK – the common name assigned by the Court to the Litigation – a series of filings, motions, responses, orders, notices, and other legal documents in relation to this case.

This litigation began in July of 2007 when two separate, but parallel, complaints were filed in the Columbia Division, Middle District of Tennessee.  One complaint was filed by Independent and Independent Co-op members, and one complaint was filed by DFA members.  In early 2008, the case was moved to the Greeneville Division, Eastern District of Tennessee, and the complaints were consolidated, and the roster of class representative plaintiffs consolidated and downsized.

PREDICTION?  TOTALLY INAPPROPRIATE!!!

In the past weeks, with many folks knowing that I’ve been in the courtroom at almost every hearing since Sept. of 2009, I’ve been asked on several occasions by persons from all across the country:  “Will there be a settlement, or not?”

My answer:  It is totally inappropriate and disrespectful to all parties for me to predict either Trial or Settlement, particularly given that 90% of the discovery evidence remains under seal (not available to the public, but available for the Court’s review and evaluation).

Either resolution is up to decisions made by the litigants, the attorneys, and the Court, and must be done evaluating a myriad of court cases of which a typical layperson has no knowledge.   And as with any legal case, the status and schedule can change at the drop of a hat.  Stay tuned for announcements, or reports on daily events in the courtroom.

Only time will tell how innocent, grass-roots farmers, who had no knowledge of, nor any influence on, the actions taken by people they trusted with their financial well-being will be truly affected by the outcome.

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