Dairy farmers await court decision
ADDISON COUNTY — Addison County dairy farmers may stand to receive some cold, hard cash, pending the U.S. District Court of Vermont’s approval of a settlement agreement submitted in late December.
The Dean Foods Company and representative dairy farmers are waiting for court approval on a $30 million settlement that the two parties signed last month, which would conclude one part of a months-long class-action suit that accused three companies of price-fixing and illegal monopolizing of the Northeast dairy market.
But on Tuesday, Dairy Farmers of America (DFA) and its affiliate, Dairy Marketing Services (DMS), two milk marketing companies that are defendants in the case alongside Dean Foods, filed their opposition to the settlement.
Dean Foods, the largest dairy processing and distribution company in the country, was the first of three defendants to offer an agreement in the class–action suit, while the case continues against DFA and DMS. The two marketing companies in recent years have had a full-supply agreement to Dean Foods.
In the suit, which was initially filed in October of 2009, the dairy farmer plaintiffs alleged that these supply agreements between Dean Foods and DFA led to a lack of competition in the dairy industry, consolidating and closing regional processing plants to strengthen a hold on the Northeast market.
As part of the settlement, the company agreed in the settlement to purchase between 10 and 20 percent of the raw milk that supplies its three Northeast processing facilities from independent suppliers — that is, not through DFA or DMS — at a competitive price for 30 months.
Despite the settlement terms, Dean Foods admitted no wrongdoing in the settlement, stating that it was not liable for any of the claims asserted. But according to the settlement agreement filed with the court, the company “has nevertheless concluded that it will enter into this agreement solely to avoid further expense, inconvenience and burden of protracted litigation.”
Dean Foods spokeswoman Lilliana Esposito said the expansion to outside suppliers reflects a larger trend in the company’s business practices.
“This is really consistent with what we’ve begun to implement already,” said Esposito.
According to the company’s official statement, the Dean Foods last year began taking steps toward purchasing a portion of its raw milk from marketers other than DFA and DMS.
“(This) reflects the evolution of the company’s supply chain infrastructure,” the statement read.
Nonetheless, Benjamin Brown, an attorney representing the dairy farmers from the Washington, D.C., law firm Cohen Milstein, said that the settlement agreement represents a success.
“We’re pleased with the settlement,” Brown said. “We think it represents a step forward for dairy farmers in the Northeast.”
Brown said that if the court decides to preliminarily approve the settlement, dairy farmers within the boundaries of the suit — including all of Vermont — who sell their grade-A milk into a pool will be notified that they are eligible to receive a portion of the payment. The payout will be determined by how many choose to opt in, but the initial terms of the class-action suit covered an estimated 9,000 farmers in 11 states.
Brown said the money would be distributed on a pro-rata basis among those who choose to receive the payment, depending on the size of the dairy farm.
“We anticipate that it will be within the thousands of dollars per farmer,” he said.
And Brown said that although the suit is far from over, a preliminary decision on the settlement may be just a few months away.
“We’re hopeful,” he added.
But DFA and DMS, in their opposition filing, stated that not all Northeast dairy farmers are necessarily in line with the settlement.
The filing claims that dairy farmers in the Northeast are unlikely to see a significant payoff, and that the settlement will disadvantage farmers who sell milk to DFA and DMS, destabilizing the price of raw milk in the Northeast by allowing Dean Foods to purchase milk at a price set by the company.
Reporter Andrea Suozzo is at [email protected]