BY KEN LITTLE
The Southeast Milk Antitrust Litigation trial is now scheduled to begin on Nov. 6.
The civil trial had been scheduled to start Tuesday in U.S. District Court in Greeneville.
Its outcome can potentially have an impact on the way milk and dairy products are sold in Tennessee and throughout the Southeast, legal observers said.
The lawsuit was filed in July 2007 against Dallas-based Dean Foods and Dairy Farmers of America (DFA), the largest dairy cooperative in the country; and others.
The complex litigation has already included an unprecedented $145 million monetary settlement between plaintiffs and Dean Foods, the Southern Marketing Agency (SMA) and defendant James Baird.
Dean Foods, a large food and beverage company, agreed to pay $140 million over four years.
Presiding District Judge J. Ronnie Greer issued an order Monday granting final approval to the a settlement agreement.
Dean Foods is the parent company of prominent Southeast consumer brands such as Mayfield, Purity, Barber's, Louis Trauth Dairy, Pet, Dean, Shenandoah's Pride, and Broughton.
The settlement may provide an individual farmer with an "average of $13,000" according to the court-monitored website http://www.southeastdairyclass.com, based on 7,000 claimants.
The civil lawsuit asks for damages for what plaintiffs claim are illegally suppressed prices for raw Grade A milk.
Plaintiffs also ask for changes they maintain are necessary to restore dairy farmer options and a competitive market.
Plaintiffs in the class action lawsuit include about 7,500 current and former dairy farmers.
Defendants include milk processors, milk marketers such as dairy cooperatives, and individuals who worked for one of the defendant processors or marketers.
DFA was one of the processor-defendants. The other is National Dairy Holdings, established in 2001 by DFA and three other individual defendants to acquire dairy processing plants.
Defendant milk marketers named in the 2007 lawsuit include DFA, SMA and Dairy Marketing Services (DMS), a milk marketing agent partially owned by DFA.
Other defendants include Gary Hanman, former president and chief operating officer of DFA, the Kroger Co., Prairie Farms Dairy, and eight individuals "who engaged in business dealings with the defendants," court documents state.
Baird is one of the eight individuals named in the 2007 lawsuit.
Raw milk is a perishable product that must be shipped to its destination to be processed shortly after being produced.
The price for raw milk produced by dairy farmers is regulated, in part, by minimum prices set by the federal government that processors must pay for milk.
"Dairy farmers or cooperatives, however, can negotiate prices above the minimum price. The amount by which the prices paid by processors exceed the minimum is sometimes referred to as the 'over-order premium,'" court documents state.
The amount that dairy farmers actually receive from milk is called the "mailbox price," which, after deductions for costs such as hauling, can include "some portion of the over-order premiums paid by processors," court documents state.
The plaintiffs claim that defendants violated sections of the Sherman Antitrust Act, which prohibits conspiracies to unreasonably restrain trade, and monopolies.
Plaintiffs allege that defendants violated the law "by unlawfully conspiring to eliminate competition for the marketing, sale and purchase of raw milk within the Southeast," and "conspiring to fix and suppress prices paid to Southeast dairy farmers," the lawsuit states.
Plaintiffs claim that defendants and others associated with them control about 90 percent of all milk marketed in the Southeast.
LOWER PRICES ALLEGED
The result was "Southeast farmers receiving prices for their milk that are lower than they would have been in a competitive market," the lawsuit states.
Defendants "deny they conspired to reduce the prices dairy farmers received for their milk," court documents state.
Defendants maintain that dairy farmers in areas of the Southeast covered in the lawsuit "are among the highest paid in the nation."
In a pretrial order issued in June, Greer said that the plaintiffs "must prove their case through either direct or circumstantial evidence."
The defense claims that plaintiffs apparently have neither type of documentation proving that defendants conspired to reduce the price paid to dairy farmers.
"Plaintiffs have not shown that there was any suppression in the prices paid by processors for raw milk," the pretrial order states.
"The evidence shows that the prices paid by dairy processors for raw milk have in fact increased during the time period at issue."
TRIAL DATE CONTINUED
Greer recently granted a motion to continue the trial date until November.
The estimated length of the trial is six to seven weeks, the judge wrote in the pretrial order.
Other defendants include Dairy Marketing Services, National Dairy Holdings and Mid-Am Capital, a company which is owned by DFA.
Other plaintiffs include Food Lion, LLC; and Fidel Brito, doing business as Family Foods, on behalf of the "class" group of dairy farmers who may be entitled to relief through monetary settlement or a positive jury verdict for the plaintiffs.
Greer was acting on an "expedited motion to continue the trial for 90 days or, in the alternative, to stay the trial date"; the motion was filed by DFA. The judge first orally denied the motion on June 14 after arguments before the court.
Greer "reconsidered" in light of the argument of the parties and the court's review of the petition for permission to appeal the Court's June 1 order, filed with the Sixth Circuit on June 12.
Based on the court's review of the DFA petition, "It appears to the court that defendants have misinterpreted or misapprehended the court's holding, likely because the court did not, in its haste to enter a position prior to the (planned July 10) trial date, clearly explain the basis for its decision," Greer wrote in his order granting the continuance.
Before the Nov. 6 trial, Greer will file an amended order "which will more clearly set forth the reason for its June 1 decision," he wrote.