Actions from Farm Bureau, PA Milk Marketing Board and others result in Defense to ASK / Dean Foods Demands

Two Weeks of Furious Activity Sets Farmers, Haulers on Paths to Resolution with a Team Effort

The Background: During the week of and prior to Wednesday, November 25, former Dean Foods independent producers and milk haulers began to receive “Demand” letters from ASK, LLP, a law firm specializing in recovery of ‘preferential payments.’ In a concise definition, ‘Preferential Payments’ are often made by entities filing bankruptcy in the 90 days prior to the filing, and in bankruptcy law, it is perfectly legal for attempts to be made to recoup those monies for other purposes in bankruptcy proceedings.

NOTE: This blog post is providing information about legal events, but should not be taken as legal advice. The author is not an attorney. Qualified attorneys are cited and referenced.

When producers began receiving these letters, reactions ranged from dismay, agony, and horror, to disbelief, to scoffs such as “that money came to me as a regular payment – I’m not paying it back!,” to “We have a situation, what should we do?” With deadlines of December 19th and December 24th in those letters, the truth, the legalities, and appropriate responses had to be sorted out in a very short time frame, to make sure producers met legal requirements.

Several dairy industry and agriculture advocacy groups have, since late Wednesday, Nov. 27th, and early morning on Friday, November 27th, worked furiously and tirelessly to challenge the ASK letters, and to keep the monies where they rightfully belonged – in the hands of dairy producers and local farm communities. Through email networks, phone calls, messages via email and text, news stories, podcasts, blog posts, letters from dairy organizations, and conference calls, it has been an ‘all hands on deck’ effort to assist producers and milk haulers in a ‘defense’ to those letters. Here is a summary:

Earlier this week: Newsletters from AgriVoice (excerpts)

ACTIONS by organizations regarding ASK Letters (per Dean Estate) to Producers trying to get ‘payback’ monies from farmers, others;  Resolution seems to be approaching

Over the past 10 days, a number of organizations and individuals in key positions in several states have been diligently working on behalf of producers to help determine paths for producers to challenge the ASK letters received Thanksgiving week, in order to resolve the situation with minimal legal costs and headaches to individuals farmers.  American Farm Bureau, and the Pennsylvania Milk Marketing Board, courtesy of Counsel Doug Eberly, have taken these actions:


– American Farm Bureau Challenges ASK with Strongly Worded Letter (For news release & letter, please scroll)

– FORMS YOU CAN USE to reach resolution (LINK):  The Pennsylvania Milk Marketing Board has been in communications with ASK, and working with that firm, has developed  “Resolution Forms” which can be used by all affected farmers and/or haulers to send to ASK in order to avoid any payback:  

  1. SEE LINKAvoidance Claim Settlement Offers from ASK, LLP
  2. PRINT OFF & READ CAREFULLY
  3. Note: The first two pages explain the situation, then there is a form for farmers to fill out, and a page for haulers to use. Be careful to make sure you select the appropriate form!
  4. FOLLOW INSTRUCTIONS
  5. FILL IN with your information
  6. SEND to ASK via an appropriate method to the party named on the forms you receive – get confirmation it has been received and you should be well on the way to resolution
  7. You MUST send these forms in, for documentation purposes.
  8. Don’t forget – please take a moment to send both parties notes or emails of appreciation, and any others who have worked on this – for instance, your state organization and advocacy groups! 
  9. Contacts at Farm Bureau:  Travis Cushman, travisc@fb.org,  Dale Moore, dalem@fb.org,  John Newton, jnewton@fb.org 
  10. At PA Milk Marketing Board: Doug Eberly, deberly@pa.gov.    

Dec. 4, 2020 – News Release posted at American Farm Bureau Federation

The American Farm Bureau Federation is standing-up for hundreds of dairy farmers being targeted by predatory lawyers representing the estate of Dean Foods, which is currently undergoing bankruptcy proceedings. Almost 500 dairy farmers who once sold milk to Dean Foods received letters threatening legal action unless they refund money legitimately earned prior to the bankruptcy filing.

“Shame on these predatory lawyers for bullying dairy farmers at a time when many are struggling to keep their farms running,” said American Farm Bureau Federation President Zippy Duvall. “It’s ludicrous to suggest the meager profits from regularly scheduled and routine milk sales – sales that are heavily watched and regulated by the federal government – were outside the regular course of business. Someone needs to have the farmers’ backs and I’m proud to say AFBF is stepping-in to do just that.”

AFBF sent a letter to the law firm managing the Dean Foods estate calling for an immediate reversal of their “predatory shakedown” and threatening potential legal action if the firm fails to withdraw the letters sent to farmers. In the letter, AFBF General Counsel Ellen Steen says the letters sent to farmers “are deceptive and constitute an abuse of process that attempts to extract funds that the Debtor (Dean Foods) is not entitled to under the threat of a lawsuit. Put plainly, your letters are a predatory shakedown, written in legalese.”

Many recipients of the Debtor letters are independent farmers already struggling through difficult economic times made worse by the COVID-19 pandemic. The letters put producers in an impossible position—either pay the amounts demanded or incur the cost of legal counsel to defend against the Debtor’s allegations.

The AFBF letter outlines the legal legitimacy of the payments made to dairy farmers and admonishes the lawyers representing Dean Foods for knowingly taking advantage of farmers, saying, “Sending the Letters under these circumstances is not only deceptive, but outrageous because they threaten legal action when in fact the Producers have no legal exposure for the reasons set forth herein.”AFBF further calls upon those lawyers to retract their demands by notifying each farmer by separate letter within 10 business days; returning any funds already received; and by ceasing any litigation against farmers who did business with the company. The AFBF letter clearly states a willingness to step-in in the event that the Dean Foods estate pursues litigation against farmers.

-American Farm Bureau Federation

READ THE LETTER ITSELF – HIGHLY RECOMMENDED READING!

News Release, December 9th from PA Milk Marketing Board

PMMB QUICK ACTION LEADS TO RESOLUTION OF PAYMENT DEMANDS

The Pennsylvania Milk Marketing Board, working with the Pennsylvania Attorney General’s office and ASK LLP, has developed declarations to respond to avoidance claim settlement offers received by Pennsylvania dairy farmers and milk haulers.  The declarations, available on the Board’s website at https://www.mmb.pa.gov/Consumer/Pages/default.aspx, are a simple and standardized way for farmers and haulers to demonstrate that they received payments from Dean Foods in the ordinary course of their business with Dean.  

Dairy farmers and milk haulers should read the explanation on the Board’s website and return the appropriate declaration to ASK.  We emphasize that it is vitally important that farmers and haulers return the completed declarations to ASK as soon as possible.

In a bankruptcy, payments made by the debtor during the 90 days prior to the bankruptcy filing may be avoided and recovered under some circumstances.  In the continuing aftermath of last year’s Dean Foods bankruptcy, dairy farmers and milk haulers received avoidance claim settlement offers from ASK LLP seeking to recover a portion of the payments they received during that 90-day period.  However, if dairy farmers and milk haulers demonstrate that payments were received in the ordinary course of their business with Dean, those payments may not be recovered, and those farmers and haulers do not have to return those payments.

Because milk marketing is highly regulated, the Board believes that the settlement offers’ request for records spanning May 2018 through November 2019 is not necessary to demonstrate that dairy farmers and milk haulers received payments in the ordinary course of their business with Dean.  ASK agreed to accept declarations in lieu of the records.  After receiving and reviewing a declaration, ASK will seek authority from its client to close the file and then inform the farmer or hauler.

Board Secretary Carol Hardbarger stated that the cooperation received from not only the Attorney General’s office, but other organizations such as the Center for Dairy Excellence and the PA Farm Bureau, enabled the quick resolution of this issue.  Board Chairman Robert Barley and Member Jim Van Blarcom echoed that sentiment.

The information provided is not legal advice and is not a substitute for obtaining legal advice from a licensed attorney.

_______ ADDITIONAL REFERENCES and RESOURCES ___________

11 Dec. 2020, am: Recap & Summary, including FAQs from a PMMB Conference Call on Dec. 10th: ” Milk producers, haulers, MUST respond to ‘Dean’ letters; PMMB Declaration Letters can be used by those affected in ALL states,” written and posted by Sherry Bunting, AgMoos

10 Dec 2020: “Preferential Transfers/Payments: A Conversation with Michael Fielding” – a podcast from Paul Goehringer, University of Maryland, where the entire concept is explained in ‘layman’s terms’ by an attorney

7 Dec 2020:   An Additional Article: ‘Declarations’ Pave Way for Resolution to Dean Settlement Offer Claims,”    by Dave Natzke, for Progressive Dairyman


9 Dec 2020:  Ready for a chuckle? – A humorous description of the situation: “Old Ebenezer Would Have Been Proud of Dean Foods,” by our own Ryan Bright, of Philadelphia, posted at Growing America.
_______________________

A TEAM EFFORT – All will continue to work until resolution: There are many government officials, organizations and individuals both nationally, and in several states, who continue to work on this issue.  Much of this work is being done behind the scenes, and there may be a few days when we don’t hear or know anything while people do the work that matters, using their resources, according to their professional processes. 

In the meantime, make sure you fill out and submit your paperwork to ASK, and take care of what you can do as a farmer or hauler.   All involved are aware of the pending deadlines which were noted in the packets which producers received;  those deadlines vary from December 19th through December 24th. These packets also contain different names of whom to respond – make sure your ‘defense response and declaration’ is directed to the correct party. 

ANY UPDATES WILL BE POSTED AS AVAILABLE.

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