BY KEN LITTLE
Settlement funds from the Southeast Milk class action lawsuit involving thousands of dairy farmers from Tennessee and surrounding states could reach qualified recipients by Christmas.
U.S. District Judge J. Ronnie Greer issued an order Wednesday authorizing claims administrator Rust Consulting to distribute Dairy Farmers of America (DFA) settlement funds to farmer-plaintiff class members.
Greer said in the order that the net settlement amount for initial distribution is $85.6 million. The settlement totals $140 million.
The net settlement amount is the total amount of settlement funds plus interest, minus attorney's fees and expenses previously approved by Greer, incentive payments previously awarded to class representatives, payment for Rust Consulting's services, and a $250,000 temporary reserve fund held by Rust Consulting to cover potential claims-processing errors.
PROCESS TO BEGIN
Charlene Young, senior project administrator for Rust Consulting, who is overseeing the distribution process, said last month she was awaiting Greer's order to begin cutting checks.
"As soon as we have the order signed, I can immediately sign the checks and get them out," Young said. "I think it's all going to go very quickly, definitely by the end of the year if the judge signs it."
Greer's order clears the way for Rust Consulting "to begin actually cutting and mailing the checks to class members," Julia G. Walker of Newport-based AgriVoice Enterprises said in an email to farmers.
She has been a close observer of the complex civil case in which it was alleged that DFA and other defendants violated federal antitrust laws, resulting in lower amounts paid for raw milk to dairy farmers through price-fixing and suppression of prices.
The May 17 approval of the settlement by Greer concluded "the last major portion in the historic Southeast Milk Litigation," Walker said.
Rust Consulting was assigned as claims administrator by Greer after the settlement was reached.
"With the Christmas holiday season, there's about a 50-50 chance checks could be received by the end of the year," Walker said.
Greer approved the disbursement of the DFA settlement funds following a Nov. 26 motion by dairy-farmer plaintiffs requesting an order approving distribution of the funds.
"With that order, checks can now be distributed to 6,086 members," Walker said.
The average settlement amount for each dairy farmer is $14,072, Walker said.
Payments are prorated depending on pounds produced. Class-eligible dairy farmers with larger herds "will receive significantly more than the average," Walker said.
DFA and related co-defendants National Dairy Holdings (NDH), Dairy Marketing Services, Mid-Am Capital and former DFA Chief Executive Officer Gary Hanman entered into the $140 million agreement in January 2013, on the eve of trial.
The agreement was filed with the court on Jan. 21.
LAST TO SETTLE
DFA and other remaining entities were the last remaining defendants to settle in the case, which was filed in July 2007.
DFA is a national dairy marketing cooperative owned by nearly 15,000 members in 48 states.
Other defendants in the case included Dean Foods, a Texas-based food and beverage company specializing in dairy products. Dean Foods, the Southern Marketing Agency and James Baird finalized settlement agreements in February 2012.
In all the settlements, "none of the defendants admitted guilt to the allegations of antitrust and price-fixing for the purpose of depressing prices paid to dairy farmers in Federal Milk Marketing Orders 5 and 7...," Walker said.
Orders 5 and 7 are, respectively, the Appalachian and Southeast orders.
The DFA gross settlement totaled $140 million, equal to the Dean Settlement monetary amount.
But the Dean Foods Settlement funds will be distributed in annual payments through fall of 2016, while DFA elected to borrow funds and make a one-time payment to settle the lawsuit, Walker said.
DFA placed the $140 million in an escrow account in February 2013, she said.
"There is a good possibility, but not a guarantee, that class members will receive these checks before the end of the year," Walker said.