Dairy Farmers Of America Settles Southeast Antitrust Lawsuit
1/23/2013 9:37:18 AM
An agreement by Dairy Farmers of America (DFA) and related companies looks to end six years of litigation related to price-fixing allegations in the southeastern U.S.
"We make no admission of wrongdoing. It was a business decision (among other things, to avoid going to trial). We will pay $140 million to the plaintiff class," DFA President and Chief Executive Officer Rick Smith told the news media on Tuesday.
The $140 million will be broken out as follows:
* DFA, the nation's largest dairy cooperative, will pay $70 million
* DFA's finance subsidiary, Mid-Am Capital LLC, will pay $20 million
* National Dairy Holdings LP, which DFA sold to a Mexican dairy processor in 2009, will pay $50 million.
Thousands of dairy farmers are eligilble for the payouts.
Recipients include those farmers who sold milk to one or more of the defendants in the lawsuit and produce milk in federal orders 5 and 7, which cover all or parts of Missouri, Arkansas, Louisiana, Mississippi, Alabama, Tennessee, Kentucky, Georgia, Florida, South Carolina, North Carolina, Indiana and Virginia and West Virginia.
An additional $18.6 million will be put in a fund over the next two years to guarantee a stronger Class I utilization rate in federal orders 5 and 7.
The payment of money will not affect DFA's day-to-day operations or its ability to market members' milk, Smith said. "The cooperative remains healthy and we look forward to getting this behind us."
"We have the cash on hand" to send to a fund established on behalf of the plaintiffs, Smith said.
With the money already in hand, DFA will not ask members directly for contributions, nor will member milk checks be affected.
Smith said many of the actions alleged in the lawsuit occurred 10 to 15 years ago and no longer reflect the way things are handled by the co-op or current market conditions.
The lawsuit, brought in 2007, claimed that DFA and Dean Foods conspired to fix raw milk prices in the Southeast by closing a number of bottling plants. Trial for the suit was scheduled to begin this month.
In 2011, Dean Foods reached a separate settlement for $145 million. According to this report from Feedstuffs.com, Dean Foods will begin making payments to approximately 6,000 farmers, and payments will range from $200 to $20,000 per farmer, or an average of $13,000 per claimant, to be distributed over a five-year period.
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