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Separate lawsuit sought in Northeast antitrust case

Progressive Dairyman Editor Dave Natzke Published on 28 April 2016

Northeast dairy farmers opposing a proposed settlement agreement in a seven-year-old antitrust lawsuit have “opted out” of that agreement and are pursuing their own legal action.

The group of more than 125 dairy farmers retained legal representation for a separate lawsuit against Dairy Farmers of America (DFA) and its marketing arm, Dairy Marketing Services (DMS), according to Mike Eby, a Pennsylvania dairy farmer.

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The original class-action lawsuit (Allen v. Dairy Farmers of America, Inc., No. 5:09-CV-230) was filed in 2009. It alleged Dean Foods, DFA and DMS were involved in anti-competitive milk marketing conduct within Federal Milk Marketing Order (FMMO) 1.

Dean Foods agreed to a $30 million settlement in 2011, which was approved.

DFA reached a $50 million settlement agreement in late 2014. However, in April 2015, Judge Christina Reiss of the U.S. District Court for the District of Vermont rejected that agreement after a majority of dairy farmers testifying at a “fairness hearing” expressed opposition.

Without admitting wrongdoing, DFA and DMS negotiated a revised $50 million settlement agreement with plaintiff attorneys and court-appointed farmer representatives early this year. The agreement is preliminary until approved by the court.

Read: Northeast antitrust lawsuit settlement agreement revised

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Judge Reiss set an April 29 deadline to accept comments on the latest agreement and will hold a fairness hearing on May 13. If approved, individual farmer shares depend on the amount of raw Grade A milk produced in and pooled on FMMO Order 1 from Jan. 1, 2002 to Dec. 31, 2014. It is estimated the average payment per farmer would be about $4,000, if 8,000 dairy farmers filed claims.

Farmers who opt out of the settlement sacrificed their share of the payment if it is approved, but retain any legal claims to pursue further litigation.

According to Eby, both the agreement’s financial payment and requirements steering DFA and DMS marketing practices are inadequate. Instead of being bound to the terms of the settlement in the event it is approved, the farmers opted out by a April 22 deadline and will now pursue a separate lawsuit.

“Not only are we seeking greater compensation, but we feel this option gives us the best hope DFA and DMS will be forced to answer to the antitrust allegations in the case and not simply buy their way out,” Eby said. “We hope Judge Reiss will deny the current proposed settlement and proceed to trial, but we are unwilling to stake the future viability of our farms on the hope that the current settlement will not be approved.”

Eby is chairman of the National Dairy Producers Organization (NDPO). He emphasized NDPO has not endorsed the separate lawsuit, but the organization’s official position is to work in opposition of the current settlement agreement. A recent NDPO newsletter said the group will charter a bus to help members attend the May 13 fairness hearing in Burlington, Vermont.

Eby said farmers already joining the effort have dairy herds ranging in size from 30 to 2,000 cows. He invited other Northeast dairy farmers who officially opted out of the settlement agreement by April 22 to join their legal action with a goal of proceeding to a jury trial. The group is represented by Boston trial attorneys Nystrom, Beckman and Paris LLP.

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The pending agreement and upcoming fairness hearing have generated campaigns on both sides, urging fellow dairy farmers to either accept or reject the settlement.

In a letter to Progressive Dairyman, Vermont dairy farmer Alice Allen, one of the original plaintiffs, urged acceptance.

Read: Northeast antitrust lawsuit plaintiff urges settlement, by Alice H. Allen

In another letter to Progressive Dairyman, Jacob Ricker, a NDPO member, expressed opposition. 

Read: Letter: Northeast antitrust lawsuit settlement agreement falls short

New Jersey dairy farmers Peter and Marilyn Southway of Springhouse Dairy in Fredon, N.J., also urged approval. The Southways, independent dairy producers marketing milk through DMS, were among court-appointed farmer representatives tasked with negotiating a new settlement. They also asked farmers in support of the settlement agreement to attend the fairness hearing.  PD

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