DFA

Michigan Spartan LLC: Major ‘Processing Campus’ to be built in Michigan

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A News Digest about Michigan’s $510 Million Processing Complex: DFA, Glanbia, Select Milk, and Proliant are Partners

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On Thursday, August 9, 2018, Michigan announced a monumental project which will fill part of the void in worldwide dairy processing capacity.
Michigan Spartan LLC is the business entity developing a ‘world class dairy processing facility’  expected to process over 8 million pounds of milk a day when fully operating, said to be by September of 2020.  American Cheese is projected to be a primary product, with whey permeates, a by-product of cheese production used for food and feed applications, also a product offering.
The new facility is a partnership between Dairy Farmers of America (DFA),  Glanbia, Select Milk Producers, and Proliant Dairy Ingredients.  The venture is said to be similar to Southwest Cheese, a previously existing partnership of DFA, Glanbia, and Select Milk.
Michigan Milk Producers will also be a milk source for the facility.
The evolution of the project included a number of local and regional economic development and government agencies, with the Michigan Economic Development Corporation’s Michigan Strategic Fund board an integral player.  The Michigan Department of Agriculture was also involved.
The sheer magnitude of all the agencies and efforts involved in this monumental project offers many lessons to others considering dairy development efforts in any location.
The project is multi-national in scope, and involves worldwide dairy industry heavyweights.   Dairy Farmers of America is North America’s 2nd largest cooperative and 8th largest dairy company.  Select Milk Producers is North America’s 8th largest dairy cooperative according to Progressive Dairy, (6th largest on USDA’s Top 100 Ag Co-ops – last available, 2016 numbers) and 14th largest co-op on that composite  ranking.  Glanbia Nutritionals is North America’s 22nd largest dairy company, and a subsidiary of Glanbia PLC, based in Kilkenny Ireland. Proliant is based in Ankeny, Iowa.

Following is a digest compiled from media reports of today’s (August 9, 2018) from Michigan and other areas:

From the Detroit News:  “We really try to grow the value of the agriculture industry so that most of the commodities stay here in the state, have them processed here, keep the farmers here,” is a statement from  MEDC CEO Jeff Mason. The project is slated to receive $26.5 Million in Tax Abatements over 15 years. 

From the Lansing State Journal (makes one marvel at the effort put into project):  the project involved a number of state and local government agencies, included tax concessions on several levels, with these project parameters:
  • 146 acres in the site
  • Will process about 8 Million pounds of milk a day (mostly American style)
  • Will produce about 300 million pounds of cheese per year
  • Will operate  24/7, 365 days per year
  • Notes similarities to Southwest Cheese in New Mexico [another Glanbia / DFA / Select Milk joint venture]
  • Will use by-products from each layer of processing (whey from cheesemaking, then permeate from whey concentrated for dairy solids)
  • 259 jobs at the cheese plant
  • 38 jobs at the adjacent whey permeate plant

From Crain’s Detroit Business;  a business publication in the area:

  • Another $40 Million in Tax Incentives likely to come in the future may drive total investment from $510 to $550 Million
  • The project is part of Michigan’s Agriculture Processing Renaissance Zone initative, a program which assisted with another $58 million dairy processing facility (Foremost Cooperative) and a soybean processing facility earlier this year
  • “Adding this capacity to our ecosystem . . . is really going to bring stability to the market” – Peter Anastor, Division Director, Michigan Department of Agriculture

From The Charlotte Observer (an AP story)

  • Glanbia will oversee commercial, tecnical, and business operations
  • The project considered other sites in other locations

 

A worldwide milkshed suffering from a lack of modernized processing capacity should benefit from this project.

Note: Additional links and updates may be added in the future to this blog post.

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Southeast Milk Litigation: All Payments to be Finalized in Fall of 2016

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Sun Photo by Phil GentryFederal Court House

Sun Photo by Phil Gentry Federal Court House

(Greeneville, TN)  All payments to class members in the Southeast Milk Litigation (SEML) will be final this fall with the completion of up to two additional payments from different settlements in the historic Class Action.

One of those payments will complete the cycle of payments in the Dean Foods portion of the Settlement. Individual recipients should expect to receive an amount similar to the previous Dean payments.

“Almost unbelievably, there are some uncashed checks from previous payments which need to be cleared before those payments can be finalized,” says John Harrison, Class Representative for the plaintiffs.

“Those uncashed checks must be accounted for or reconciled before final payments can be made, since everything must zero out before final closure of the Settlement accounts.”

Letters, some containing reissued checks, have been sent to the owners-of-record of those uncashed checks, with a reminder that those checks must be deposited within 30 days  of check issue (approximately, by the third week of August).

ANY QUESTIONS?  Act Immediately!  If anyone believes that they fall into this category of ‘uncashed checks,’ or if anyone believes they are due a payment which they have not received in previous cycles, they are asked to immediately contact the Attorneys-of-Record of each of the Litigation subclasses as follows:

Independent producers, as well as all other producers belonging to co-ops other than DFA, should contact Baker-Hostetler, by phone at 202- 861-1500, or via mail at:

Southeast Milk Litigation

Baker & Hostetler LLP

Attn: Robert Abrams, Greg Commins, or Danyll Foix
1050 Connecticut Ave., NW

Washington, DC 20036

 

DFA producers should contact Brewer & Terry, by phone at 423-587-2730, or via mail at

     Southeast Milk Litigation

Brewer & Terry, P.C   Attn:  Steve Terry or Gary Brewer

1702 W. Andrew Johnson Hwy

Morristown, TN   37816

The Dean Foods Settlement, a total of $140 Million dollars to be paid over five scheduled payments, was final in June of 2012, with four of those payments already paid to class members.   This fall’s payment will be the last.

The second expected payment, much smaller, will reflect the final apportionment of the Dairy Farmers of America and Related Entities Settlement, which received final approval by the Court in May of 2013.  The initial $140 Million Settlement phase was paid out in one lump sum at the end of December, 2013, and was prorated to individual class members according to production in defined time frames. This fall’s payments will distribute any remaining funds.

All activity in this case was conducted following Federal Class Action laws and directives, and all procedures took place accordingly, under the supervision of the Court.  Judge Ronnie Greer presided over the case.

The amounts of the total Settlement in this case, which totaled in excess of $280 million dollars, set a record in the US Federal Court, Tennessee, Eastern District of Tennessee, and is one of the highest ever reached in dairy or food industry history in the United States.  Terms of each of the Settlements state  that none of the defendants admitted guilt.

For court documents and more information on the litigation, please refer to www.southeastdairyclass.com.  In addition, various articles are posted at www.milkshedsblog.com, or please google search “Southeast Milk Litigation.”

Settlement Funds Released; DFA Trial now January 22, 2013

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Southeast Dairy Farmers will finally be shown their money from the Dean Foods /Southern Marketing Agency (SMA) Settlement funds in the Southeast Milk Litigation.

The Honorable J. Ronnie Greer, presiding judge in the Federal Class action suit in which price-fixing was alleged involving Dean Foods, Southern Marketing Agency, and Dairy Farmers of America and related entities, filed an Order on Tuesday, January 8, 2013 clearing the way for the first payments from the $145 Million Dean/SMA settlement funds.

Total payments to Class Members are estimated to average $13,000 per claimant when payments are completed following a 5-year tiered payment plan.  Payments will range from less than $200 to more than $20,000 per farm, depending on qualified milk pounds belonging to each producer; an approximate net of 10-12 cents/eligible cwt.

With this Order, Claims Administrator Rust Consulting can now begin the process of writing and mailing checks to producers.   Given the amount of checks to be written and verified, it could be a month before checks are received in producer mailboxes.

Recipients of the checks are encouraged to check with their accountants to learn of IRS rulings which may affect the actual dollars received, and an individual’s specific tax situation.

Report of Claims Administrator:

Charlene Young, a Senior Project Administrator with Rust Consulting, filed an Affidavit with the Court describing the methodology, statistics, and other transparent processes which verified requests by Class members claiming pounds for purposes of receiving settlement monies.

Her affidavit states:  “The resulting claims rate of 98.8% is outstanding and virtually unprecedented.”

This is how the numbers stack up:

7,452 potential claimants were originally identified

A total of 6,165 claims were deemed finally eligible out of 7,363 claims form received

Three rounds of follow-up letters were sent to claimants requesting additional information

11% of eligible claims were audited (compared to 2-5% audited in typical Class Action suits)

10 claimants/applicants were ineligible because they were board members of DFA or SMA (no specific names stated)

The detailed steps are explained in a 376-page document found at this link:

http://www.southeastdairyclass.com/PDFs/MotionToApproveAndDistributeTheSettlementFunds.pdf

 

Milk & Dollar Numbers:

$140,000,000 – Largest out-of-court settlement ever entered by Dean Foods

72,984,858,627 (Almost 73 Billion!) pounds of milk ‘harmed’ in the Class Period from Jan. 1, 2001 to May 1, 2001

$35,458,613.64 Dollars in Net Settlement for Distribution to farmers after Court Authorized costs, expenses, and attorney fees

10-12 cents/cwt. approximate net claim per pound (allowing for miscellaneous expenses to come 

 

 

History of Settlement Process:

The road to distribute the Dean Foods Settlement Fund has been 18 months long following the first Dean Foods Settlement Announcement in July, 2011. Dean’s Settlement $140 Million offer was quickly followed by a $5 Million Monetary Settlement, coupled with injunctive considerations, from SMA and its CEO, James Baird.

Dean Foods Settlement offer followed a June 2011 ‘in limine’ ruling by Judge Greer in which he ordered that the Dean-Suiza merger agreements would be allowed as evidence during the litigation trial, then scheduled for July 2011. These documents have been mentioned at numerous hearings as a piece of key evidence in this litigation.

Two weeks after the Settlement was announced, Judge Greer decertified DFA members from the Class eligible to receive damages, in response to a motion by DFA’s defense attorneys made in the spring of 2011.  This decertification put the Dean Foods/SMA Settlement (per a Dean/SMA motion) on hold until DFA farmer members, as plaintiffs, received separate counsel by a differing plaintiff attorney team.

Brewer and Terry, of Morristown, TN, were approved by the Court to serve the function of reviewing all work done by the Baker-Hostetler original attorney team (formerly of the Howrey Law firm) on behalf of DFA members.  The appointment of Brewer and Terry ‘cured’ the intraclass conflict which resulted in the decertification, and the Settlement was reinstated on February 14, 2012.

This Settlement, with the entire Class of Dairy Producers in Federal Milk Market Order 5 (Appalachian) and Federal Milk Market Order 7 (Southeast) intact, then entered a claims process in the spring of 2012.  It took 11 months to reach a conclusion to this phase of the marathon litigation, now 5 ½ years in duration since originally filed in July, 2007.

DFA Trial now set for January 22, 2013

In a related matter, the long-anticipated trial against Dairy Farmers of America (DFA) and related co-defendants Dairy Marketing Services, LLC (DMS); Mid-Am Capital, LLC; National Dairy Holdings, LP (NDH); and Gary Hanman, the former CEO of DFA has been postponed once again, this time only one week.

Trial is now set to begin January 22, 2013, and expected to last 6-8 weeks.

DFA is the nation’s largest dairy co-op, with over $9.87 billion in revenue and $2.1 Billion in Assets, according to USDA figures.

Important factors are at play:  $419 million is the assessed harm due to alleged activities of the DFA-related entities; an automatic trebling of that amount to $1.2 Billion occurs if a jury reaches a positive verdict for plaintiffs.

The Court’s made a statement in July 2012, found in a Supplemental 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.”

Judge Greer has stated repeatedly that all of the 90% of information remaining under seal will be opened once trial ensues. It will be interesting to watch activity unfold in the coming weeks in this historic litigation.

The Court has encouraged Mediation and Settlement throughout the litigation.  Final outcome, via either jury trial verdict or settlement, depends on application of Federal Law, the Court, and decisions of attorneys, plaintiffs and defendants.

For more information and litigation updates:

www.southeastdairyclass.com

www.milkshedsblog.com

DFA Denied Appeal – $419 Million at Stake in January Trial

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DFA Denied Appeal on Recertification of Class in SE Milk Class Action Litigation

Farmers seek $419 Million in Damages at January trial

(Greeneville, TN) Dairy Farmers of America, Inc. (DFA) has been denied their Petition to Appeal the Recertification of the Class in the SouthEast Milk Litigation.

With that action, the Sixth Circuit Court of Appeals has upheld, for the second time, the work of District Judge Ronnie Greer in the Class Action litigation alleging that Antitrust and Price-Fixing activity was conducted by the nation’s second-largest milk co-op. The Order was entered September 14, 2012.

The Sixth Circuit Order states: “The district court’s orders certifying, decertifying, and recertifying the DFA subclass reflect that it closely examined the evidentiary record and conducted a ‘rigorous analysis’ of this record before finding that recertification was appropriate.”

Following the Appellate Order, Judge Greer followed with a District Court Order stating: “Now that the Sixth Circuit Court of Appeals has denied the defendants’ application for an interlocutory appeal, there is no impediment to this case proceeding to trial on January 15, 2013, as scheduled.

“It is hereby ORDERED that the parties proceed back to mediation within the next 45 days and that a report on the results of the mediation be filed ten (10) days thereafter.”

DFA, the nation’s 3rd largest agricultural co-op and 2nd ranking milk marketing co-op is accompanied at the defense table by related entities Dairy Marketing Services, LLC (DMS), Mid-Am Capital, LLC; National Dairy Holdings, LP (NDH); and Gary Hanman, the former CEO of DFA.

In 2012, DFA had over $9.87 billion in revenue and $2.1 Billion in Assets, according to USDA figures.

In layman’s terms, rank-and-file DFA members will be eligible to share in any monetary or injunctive relief gained from either settlement or a positive jury verdict, provided no additional evidence is presented which would again decertify the class during trial.

The amount at stake? Quoting a June 12, 2012 Defendant’s motion, “Plaintiffs [farmers] seek damages of approximately $419 million before trebling . . . If the Plaintiffs are successful at trial, that number automatically would be trebled to approximately $1.26 billion.” [Trebling is mandated per standard Federal Court rules.]

This complex litigation has already resulted in a $145 Million settlement from Dean Foods and Southern Marketing Agency (SMA). Those funds await distribution pending final audits and verification of milk pounds claims during the Class period which have been submitted by class members. It is expected distribution may occur before the end of the year.

The $140 Million Settlement from Dean Foods is believed to be the largest legal settlement ever entered into by the global dairy processing giant.

Injunctive relief, in the form of a change in marketplace structure, was also a portion of the SMA settlement. Per terms of those agreements, applications are now being taken for a new manager of SMA, a marketing agency-in-common.

Many official documents, including class notices in the litigation, can be found at http://www.southeastdairyclass.com, a court-monitored website.

DFA Subclass Litigation – Trial now Nov.

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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.