Judge Rejects Dairy Settlement
Montpelier — A judge has rejected a proposed settlement between Northeastern U.S. farmers and the Dairy Farmers of America over an alleged effort to drive down prices paid to farmers.
U.S. District Court Judge Christina Reiss opposed the $50 million settlement after objections by some farmers who said the payments would be insufficient and the settlement would not address the alleged wrongdoing. They also said some farmers’ lawyers would be the primary beneficiaries of the proposed settlement if legal fees and costs were approved.
Reiss said, however, that the court couldn’t find the monetary relief of $50 million was “on its face” inadequate or unreasonable.
The March 31 ruling came in a 2009 class-action lawsuit that accused the cooperative, its marketing arm Dairy Marketing Services and Dallas-based Dean Foods with trying to monopolize the market for raw milk in the Northeast.
The lawsuit claimed the cooperative created an agreement with Dean Foods to source all of its milk from the cooperative’s farms.
The settlement would have provided about $4,000 to each of the more than 7,000 dairy farmers.
Officials with the Dairy Farmers of America said Thursday they were disappointed with the judge’s decision and would determine their next step in going forward in the case. Dean Foods agreed to a separate $30 million settlement in 2011.
Benjamin Brown, a Washington-based lawyer and class counsel, also expressed disappointment with the ruling.
“We believe the settlement was in the best interest of the class,” he said. “We believe that the monetary relief was meaningful and that farmers could really use these checks.”
But some farmers testified and sent in letters to the court saying they objected to the proposed settlement, which they said amounted to about 16 cents per 100 pounds of milk.
“This insignificant amount falls way short of the actual alleged damages caused by (the defendants’) anticompetitive behavior,” said a letter signed by 16 farmers from Pennsylvania that was filed in U.S. District Court in Vermont on Monday.
The letter said that more important than the dollar amount is the accountability for the behavior alleged in the lawsuit, which the farmers say will only occur if the case goes to trial.
“As dairy farmers, we need to have confidence that our farmer-owned cooperatives truly act in our best interests. The information that would come out in a trial, or be buried in a settlement, is vital to this confidence,” the letter said.
Some farmers last month requested new lawyers to take the case forward.