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DairyAmerica settlement agreement appeal dismissed

Progressive Dairy Editor Dave Natzke Published on 06 August 2020

There apparently has been an update in the decade-long saga of the DairyAmerica milk powder lawsuit. Meanwhile, about 26,000 U.S. dairy farmers are waiting for approximately $26 million in settlement agreement payments.

Here’s the short version of what has transpired: In May 2019, the U.S. District Court Eastern District of California approved a $40 million settlement agreement regarding the lawsuit, Carlin, et al. v. DairyAmerica Inc., et al. However, an appeal was filed before payments were distributed, sending the case back to court.

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In June 2020, the U.S. Court of Appeals for the 9th District dismissed the appeal. According to a website dedicated to updates regarding the settlement agreement, the objectors now have until Nov. 9, 2020, to seek the Supreme Court's review of that dismissal.

For those who may have forgotten, the class action lawsuit was filed in 2009. The lawsuit stemmed from the misreporting of nonfat dry milk (NFDM) prices by DairyAmerica to the USDA’s National Ag Statistics Service (NASS) from April 2006 to April 2007. Because the NASS prices were used to establish Federal Milk Marketing Order (FMMO) prices for milk in Class II, Class IV and, in some instances, Class I milk, the reporting of lower NFDM prices directly resulted in lower minimum milk prices paid to dairy farmers.

In June 2007, the USDA concluded the reporting errors reduced dairy farmer income by about $50 million. Plaintiffs in the case calculated the damages at about $83 million. They charged the underreporting of prices was systematic, and further alleged DairyAmerica and its members profited by depressing the price of NFDM. It also alleged that California Dairies Inc. (CDI), as a shareholder in DairyAmerica, was liable for the misreporting.

In the settlement agreement, DairyAmerica and CDI acknowledged the erroneous reporting, but admitted no intentional wrongdoing. The USDA had immunity in the lawsuit.

Of the $40 settlement agreement, the court approved about $14 million for attorneys and the claims administrator.

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For affected dairy producers, the settlement claim period has long passed. While the claims on the remaining funds average about $1,000 per dairy, the actual payment to each individual dairy will be distributed on a pro rata basis. Payments are calculated based on the producers’ Grade A milk marketings that were pooled on FMMOs during the period Jan. 1, 2002, to April 30, 2007, divided by the total FMMO milk volume pooled during the same period.

For additional background, read:

Final settlement agreement approved in DairyAmerica lawsuit.

The long and winding road of the DairyAmerica lawsuit.  end mark

Dave Natzke
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