$52 Million Settlement Brings On Bigger Picture Concerns

NMPF and Related Entities settle CWT Class Action Lawsuit for $52 Million

No Guilt Admitted by Settlement

Name of Case: Edwards et al v. National Milk Producers Federation, et. al

Website containing several very pertinent court documents: www. boughtmilk. com

 (Note:  It is very troublesome to see that this case challenges the previous immunities, abilities, and parameters of the Clayton Act, Capper-Volsted, and the Sherman Act, important to the function of agricultural co-ops.  However, there will be many statements found in court transcripts, depositions, and other events in this suit which may shed light on the reasons for the Settlement.)

 BRIEF SUMMARY:

 The SETTLEMENT, DEFENDANTS, ATTORNEY FEES, and EXPENSES:

  • A Settlement Amount of $52 Million Dollars has been announced, in a 20-page  agreement dated August 11, 2016.
  • $26 Million is to be placed in an Escrow Account 30 days after preliminary approval [by the Court] of the Settlement Agreement.  The balance of $26 Million is to be deposited in same Escrow Account within 90 days after the Preliminary Approval is entered.
  • Documents indicate Settlement accounts will be funded by National Milk Producers, although member Co-ops Dairy Farmers of America (noted as successor to Dairylea by merger), Land O’Lakes, and AgriMark) are named in the court documents.
  • Attorneys Fees & Expenses to be deducted:  It is expected that approximately $17,333.333 million (1/3 of the Settlement Amount, along with a maximum of $2.4 million in expenses, shall be paid to plaintiffs’ counsel.  A maximum of $2 million is allowed for administration expenses.  Therefore, there is a total of $21.7 million to be deducted from the Settlement Amount of $52 Million, leaving approximately $30.3 million for distribution among class members.

Where will the Money to Fund the Settlement Money Come From?

The Settlement Agreement, as noted above, states that NMPF will fund the Settlement Accounts.  A valid question is “How will that $52 Million be replaced in the NMPF accounts?”  It is possible there could be an insurance policy that may cover this.  It is possible that NMPF may ask the defendant member co-ops for money to help fund the costs, but that would be between NMPF and the Boards of Directors of the Defendant Co-ops.  Producers should ask questions in their individual organizations if they are concerned about this matter

It is best to read the entire Settlement Agreement, along with other official court documents, which can provide thorough understanding.

Who are the class members eligible to file for damages?

CONSUMERS are Claimants:  Those consumers eligible for an estimated $30 damages/each are people who live in 15 states scattered over the country, plus the District of Columbia.   The final dollar amount will be determined by number of those who file claims Claims by Jan. 31, 2017.  The ‘Notice of Settlement’,  3 pages long, is the official court document which is the best reference, and is written per standards dictated by Federal Court Rules.  This map, which illustrates the states eligible to receive settlement monies, was downloaded from the boughtmilk.com website, which contains links to several pertinent court documents.

00_nmpf_settlement_states_f

BACKGROUND: 

The Lawsuit was filed in 2014 challenging CWT activity which began in 2003.  The suit was originally filed by several plaintiffs.  At least some or all of the individuals are associated with a group called Compassion over Killing.  Their Mission statement is:  “Working to end animal abuse since 1995, Compassion Over Killing exposes cruelty to farmed animals and promotes vegetarian eating as a way to build a kinder world.”  An article gives their perspective at the time of the filing.

And for those who want to know the many items that have been vetted, reviewed, and discussed in the course of the litigation, go back to the beginning, and read the “Complaint” (legal term), which set in motion the course of action.  This 52-pg. document is written by the plaintiffs, and was filed with the court in December of 2014.

PRINCIPLES and LOCATIONS: 

  •  Plaintiffs law firm, Hagens, Berman, Sobol, Shapiro LLP is based in Seattle, Washington and Berkely, California.
  • The case has been heard in United States District Court, Northern District of California, Oakland Division. The Honorable Jeffrey S. White is the District Judge who has presided over the litigation. As such, he signed off on the Class Certification Order.
  • Court Documents name the defendants who include National Milk Producers Federation and member co-ops DFA, Land O’ Lakes, and AgriMark. Their legal teams are based in several states in the Eastern United States.

Should the Defendants have settled?

 This is a question which only those intimately involved – and who are well versed in both class action law and federal court case law –  are qualified to answer.  There would have been a far greater financial risk had the case gone on to trial, along with significant additional legal expenses. Millions of dollars, and the risks of being liable for even hundreds of millions of dollars, quickly add up in all class action suits.

RECISSION? APPEAL?  Can the Settlement be Invalidated?

In the Settlement Agreement, there are a few clauses which refer to “Recission,” which describe what will happen  if the Settlement Agreement is appealed, or some other events which could void the agreeement.  It is far too early to predict if such actions will take place, but due to the fact they are mentioned in this agreement,  they can always occur.  The lengthy settlement process in the Northeast Milk Litigation is an example of ‘anything can happen’ in a court of law.

 BIG PICTURE QUESTIONS are raised about long-term CO-OP IMMUNITIES:

  • In general, the class action lawsuit challenged CWT as a vehicle for price-fixing and as a violation of antitrust. Due to the stature of all of the parties involved in developing the CWT, along with the fact a decade passed from the time CWT was instituted and before this suit was filed, it is difficult to understand the impact of the allegations in this suit at this time.
  • The CWT was initiated in 2003, and this suit was filed in 2014. The CWT was well publicized, and legal teams would have had significant input into its design. Why was the CWT not challenged legally at its inception?
  • Did those who designed the CWT miss something at the time, or have times changed and events in the decade since diluted the abilities of Capper-Volsted, the Clayton Act, and how they relate to the Sherman Act?

Questions going forward for all Agriculture Co-ops:

  • Will more lawsuits of this nature be initiated by AR groups? How will we in agriculture get prepared for them?
  • What other kinds of challenges will Capper-Volsted, the Clayton Act, and the Sherman Act have to withstand going forward from any other type of consumer group?
  • As will all big picture events occurring in agriculture today, this settlement could have implications far beyond a $52 Million Dollar Settlement. Only time will tell.

UPDATE –

A Bloomberg writer has posted this article on Sept. 8.  In my opinion, radical wording in the headline which is very shortsighted and shows a lack of knowledge and research into the program’s early days.    This is another example of how words can harm a challenged industry of great people mostly trying to maintain their family farms, which are a treasure to them.   We in agriculture have got to figure out why folks think so little of us, and farms that do feed a world are taken so much for granted. .

The Huffington Post has posted this article.

What’s Missing: 2008-2010 Dairy Crisis saw farm prices down the drain, and Fast Food Dollars and Taxes were generated by the hamburger industry

One item left out of the discussion of any ‘big media’ report is that if the program were designed to raise prices, then the years of 2008-2010 saw some of the worst milk prices in history as paid to farmers.  Many farmers were forced to exit the business in those years, and if they didn’t exit, lost many years of equity. However, if any of those numbers were brought up during the course of the suit’s activity, then a thorough study of the transcripts is required.

And then, there’s no doubt that the slaughtered cows, which were slaughtered by elective choice of the owners, many who may have been facing financial walls, went into the fast-food industry as hamburger.  Event the HuffPo article admits that.  However, what is left out is the amount of income this generated for the fast food industry, along with the tax dollars generated.

This story continues to evolve, and many questions remain.

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