Farmers support $50M antiturst settlement
BURLINGTON — More than 30 farmers were in federal court this past Friday to express their views on a proposed $50 million settlement between farmers and Dairy Farmers of America (DFA) and its affiliate Dairy Marketing Services (DMS).
Several Vermont farmers spoke at a hearing to determine the fairness of the proposed settlement. Last year, U.S. District Judge Christina Reiss rejected a proposed settlement after hearing from farmers, sending the two sides back to the drawing board. Farmers in the Northeast filed the class action suit seven years ago.
Friday’s hearing encompassed a repetitive four hours, with the final tally of speakers 30 to four in favor of the settlement.
Alice Allen, the foremost named plaintiff in the case, told Judge Reiss, “There comes a time when constant criticism and argument is not good. I think this is a new beginning. We’ve engaged farmers. They’re involved, and that’s going to be the only way to survive in the future. This settlement will keep (DFA)’s feet to the fire.”
The anti-trust case began in 2009. The plaintiffs alleged that DFA, a non-profit cooperative, aimed to create a monopoly on Grade A milk in the Northeast, becoming the sole buyer of that milk through DFA’s marketing arm, the for-profit Dairy Marketing Services, or DMS.
The lawsuit alleged DFA conspired with Dean Foods to create a closed market in which in order to sell to bottling companies, such as Dean, farmers would have to go through DFA and DMS. The suit alleges DFA used single supplier agreements to close non-DFA members off from markets, unless they either joined DFA or agreed to market their milk through DMS.
Under the settlement, DFA would be barred from entering into such agreements for 30 months.
Dean Foods, the largest bottler of milk in the country, owns Garelick Farms, Borden and numerous other regional labels; it was also named in the suit. The company settled for $30 million in 2011.
Judge Reiss rejected an earlier version of DFA’s settlement, after an overwhelming majority of farmers spoke in opposition to the settlement — the opposite of what happened on Friday.
The current settlement is designed to increase transparency and the cooperative’s accountability to members — for example, it forces DFA to disclose financial results from its joint ventures and processing operations at its annual meeting, to disclose all transactions of more than $120,000 annually and to disclose the names of boards and committee members and the per diem payments they receive for sitting on the boards.
The settlement also creates two positions to advocate for farmers, while also seeking to limit DFA’s control over milk testing by establishing protocols for independent testing when problems are found, and creating an appeals process for farmers.
Sound good? Some farmers present at Friday’s hearing said yes.
“This settlement provides the structure to protect this trust” between farmers and their cooperative, said Patrick Howrigan of Sheldon. “I’m confident that when our (cooperative) directors put their boots on in the morning, they feel the same concerns we do.”
Green Mountain Dairy’s Bill Rowell, also of Sheldon, said new provisions in the settlement “create clarity, provide mediation and increases transparency for all involved, not only DFA.”
“No doubt the industry will take time to recover from all this negative press,” Rowell said. “I ask you to end it today, so we can get started.”
Bakersfield’s Clement Gervais warned that if the case went to trial, the additional attorney fees — which thus far total about $16 million — would be “hurting all farmers” named in the suit — about 8,900.
Robert G. Abrams, the plaintiffs’ lead attorney, said this settlement was superior to that in a similar case against DFA in the Southeast.
“I’m going to stand here and say everyone now believes this is an excellent settlement agreement,” Abrams said.
Steven R. Kuney, an attorney representing DFA and DMS, said, “I have to express my surprise — at this point in my career, nothing should be able to surprise me. The settlement process is usually a tug of war, but in this case, it actually became an opportunity to do something positive, an unusual chance to do something better in a settlement case.”
Not everyone was happy. New York farmer Jonathan Haar said the settlement was not a “first step. It’s a settlement. It closes the door. You have in front of you today the classic dairy problem. You have bankers, lawyers and politicians telling you what dairy farmers need.”
Haar accused DFA inspectors of “federal extortion,” to the obvious confusion, amusement and even frustration of the many farmers in attendance.
Judge Reiss said she would issue her ruling within 60 days.
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