BY KEN LITTLE
No objections were voiced by dairy farmers Wednesday to the preliminary settlement recently reached in the drawn-out Southeast Milk Antitrust Litigation case in U.S. District Court in Greeneville.
Eight farmers from the Southeast region made statements at the Fairness Hearing in support of the settlement.
U.S. District Court Judge J. Ronnie Greer will issue a written opinion on approval of the multimillion-dollar settlement within the next few months.
The preliminary settlement agreement was announced in late January, just before the start of the milk price-fixing trial in Greeneville.
The lawsuit claims that defendants such as the Dairy Farmers of America (DFA), Inc., violated federal antitrust laws, resulting in lower amounts paid for raw milk to dairy farmers through price-fixing and suppression of prices.
The case has already included the unprecedented $145 million monetary settlement last year between plaintiffs and milk bottler Dean Foods, the Southern Marketing Agency (SMA) and one of its managers.
Under terms of the settlement with DFA, dairy farmers throughout the Southeast and Appalachian regions who made allegations of price-fixing against defendants [such as DFA] will receive a settlement of $140 million to be placed into an escrow account, along with $18.6 million placed in another account to be distributed to plaintiffs in 2014 and 2015 if outlined utilization goals aren't achieved.
In addition to the class settlement, preliminary settlement terms include changes in the market to improve utilization and the transparency of DFA operating practices.
Utilization rates serve as weights for determining the weighted average price, or blend price, received by dairy farmers within a region each month.
There were 7,730 claim forms submitted, nearly 100 percent of the class, according to a statement in court by independent farmer subclass lawyer Robert G. Abrams, of the Washington law firm of Baker & Hostetler.
"There's almost 100 percent participation by the class in this settlement," said Abrams, lead counsel for the plaintiff-farmers.
Class members will receive more than $10,000 each if the settlement gets formal approval from the court, Abrams said.
"This is a fantastic settlement of this case. It benefits the dairy farmers now," he said. "It avoids the risk of litigation."
FARMERS URGE APPROVAL
Farmers from Tennessee, North Carolina, Kentucky and Virginia representing the independent dairy farmer and cooperative farmer subclass, and DFA member dairy farmer subclass, addressed Judge Greer at the hearing.
"I ask you to approve this settlement. It will bring closure to a long and painful period," said Tom Harrison, of Sweetwater Valley Farm, in Loudon County.
Seven years ago, just before the anti-trust lawsuit was filed, "There was not a lot of hope that anything would really change," Harrison said.
By contrast, "Each co-op now has access to market and has access to independent [buyers] if they choose to operate in that fashion," Harrison said.
He said the settlement "gives members the ability to have more control over their organization and have more input into their organization."
Harrison urged dairy farmers to become more informed about the marketing process and work more closely with their cooperatives.
Lee Robey, owner of Robey Farms in Adairville, Ky., operates a 2,000-cow dairy farm.
"We have seen improvements in the market since this litigation began, and especially since the settlement," Robey said. "Prices are better than they would have been without the litigation."
Support for the settlement among the independent dairy farmer class is nearly unanimous, Robey told Greer.
"No one has told me that they are not satisfied with the settlement. They all strongly support the settlement," Robey said.
'FAIR AND REASONABLE'
Donald Payne, owner of Payne Dairy, in Taylorsville, N.C., said that, as he leaned more about the complex legal case, the more he supported it.
"I believe that the cash payments will be a help to all the farmers in the Southeast," he said.
"We just want to make a living. I believe this settlement is fair and reasonable for all parties involved."
Thomas Watson, owner of Dawn Dairy, in Bedford, Va., said dairy farmers trusted milk cooperative management to pay a fair price for their milk.
"Instead, we were lied to, misled and robbed," Watson said. "I believe the settlement to be fair."
The farmers also thanked Greer for his work in the complex case, and the lawyers who represented them.
NO WRITTEN OBJECTIONS
Greer said there were no written objections to the settlement.
"I will get you a written opinion as quickly as I can," he said.
The extended case has been "highly contested," said Greer, who complimented lawyers involved in the litigation for their professionalism.
The one point of contention at the fairness hearing was the fees lawyers representing the independent sub-class will receive for representing the class.
One dairy farmer, Craig Frazier, of Randolph County, N.C., asked Greer to ensure that the fees were not excessive.
Abrams earlier said that Baker & Hostetler has spent $61 million investigating and prosecuting the civil case. The money was spent, he said, "to get justice for the dairy farmers in the Southeast."
The lawyers' fee will be in excess of one-third of the award to the subclass, according to statements in court.
'A BUSINESS DECISION'
Signing off on the settlement as the trial was about to start "was a business decision," DFA Chief Financial Officer Rick Smith said in January.
DFA is a national dairy marketing cooperative owned by nearly 15,000 members in 48 states.
"We make no admission of wrongdoing," Smith said.
"We will pay $140 million to the plaintiff class and an additional $18.6 million over two years to be refundable based on Class I (milk) utilization rates."
Settling defendants in the agreement are DFA; National Dairy Holdings, LP (NDH); Dairy Marketing Services, LLC; Mid-Am Capital LLC, and Gary Hanman, former chief executive officer of DFA.
Hanman was released from all liability in the settlement, Smith said.
The sizable settlement won't have any impact on DFA's day-to-day operations or payments to farmer-members, Smith stated.
Consumers won't be asked to pick up the bill, Smith added.
The payment is broken down in allocations: $70 million from DFA, $50 million from NDH, and $20 million allocated from Mid-Am Capital.
The $140 million settlement, plus the $18.6 million in price increases added to a previous $145 million settlement with milk bottler Dean Foods and the Southern Marketing Agency (SMA), amounts to a significant sum of money.
Pending approval of the DFA settlement, the total amount obtained from all defendants in the case is more than $303 million. Plaintiff lawyers said that would be the biggest antitrust settlement ever reached in the Eastern District of Tennessee.
Both sides faced unknown risks if they proceeded to trial, Abrams said in court Wednesday.
Dean Foods, a large food and beverage company, agreed last year to pay $140 million over four years.
Greer filed an order on Jan. 8 clearing the way for the first payments from the $145 million Dean/SMA settlement funds.
The Dean Foods settlement had some bearing on the decision made by the other defendants to resolve the case, Smith said.
"As a practical matter, the fact that the other defendants settled or had settled played a part [in the decision]," he said.
PLAINTIFFS IN CASE
Plaintiffs named in the lawsuit are Sweetwater Valley Farm, Inc.; Barbara Arwood and Victor Arwood, doing business as VBA Dairy; Jeffrey P. Bender; Randel E. Davis; Farrar & Farrar Dairy Inc.; Fred Jaques; John M. Moore; D.L. Robey Farms; Robert D. Stoots; Virgil C. Willie; Thomas R. Watson; James D. Baisley and Eva C. Baisley, doing business as Baisley Farms; Stephen J. Cornett, Payne Dairy and Jerry L. Holmes, on behalf of themselves and all members of the class.
Class members include nearly all dairy farmers who produced Grade A milk within the Southeast and sold Grade A milk directly or through an agent to the defendants any time from Jan. 1, 2001, to the present.