Following a meticulous claims process 11 months in duration, resulting from a Class Action litigation alleging price-fixing among the nation's largest dairy co-op and the nation's largest dairy processor (with a supporting cast), dairy farmers in FMMO's 5 & 7 (the Southeast United States) will be receiving the first of five payments of settlement monies.
The Dean Foods $140 Million Settlement is the largest ever offered by the dairy processing giant. Southern Marketing Agency, a marketing-agency-in-common, added a $5 million to the monetary portion for a total of $145 million. SMA also agreed to injunctive changes.
Judge Ronnie Greer approved disbursement of the funds to farmers with an Order entered Tuesday, January 8, 2013.
News release with details of the settlements appears below:
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:
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/estimated 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 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:
Defendants 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 is scheduled to begin January 22, 2013.
For more information, documents can be accessed at http://www.southeastdairyclass.com ; updates will be posted at http://www.milkshedsblog.com/, or feel free to call Julie Walker at 423-341-1745.