Dairy Settlement Appealed, Delaying Payment To Farmers

Jul 5, 2016

Northeast dairy farmers anticipating a payout from a settlement with a national dairy marketing cooperative may have to wait a year before seeing any checks. 

In June, a federal judge in Vermont approved a $50 million settlement to be paid by the coop Dairy Farmers of America to about 8,860 farms to settle a lawsuit.  The suit claimed DFA conspired to monopolize the marketing and sale of Grade A milk in the Northeast, which resulted in lower prices to the farmers.  

But one group of plaintiffs in the class action lawsuit appealed the settlement to the Second Circuit Court of Appeals.

Attorney Dan Smith is one of the plaintiffs’ lawyers, but is not representing those appealing the settlement.  He explains that any party to a lawsuit has the right to appeal, and one couple chose that option.  “The court approved the settlement and at that point the parties have agreed to settle as approved by the court, but as with any settlement if one of the parties wants to appeal they can still do that. So the Haar’s decided to do that and that's where we are now.  And our role at this point is to defend the settlement. So DFA for their part as the defendants will defend the settlement since they agreed to it, and we as the attorneys on behalf of the named representatives who approved the settlement will be defending the settlement as well. Our role will be to respond to the objections that the Haar’s present to the Second Circuit.”

Farmers would receive an average $4,000 payment under the approved settlement. The appeal leaves them, according to Smith, in a holding pattern.  “The first part is to identify the people in the class who are entitled to the money. So just under 9,000 farms were so identified and got notices and then they had a certain amount of time to return those notices and say ‘Yes I would like to get payment or no I would like to opt out of this and maintain my right to sue DFA if I wish independently of this whole process.’  So that whole notice process is done so that the settlement fund is ready to be dispersed. But in the middle of that is the additional offer to name representatives if they wish to appeal they can do that and suspend the payment of the money until the appeal is processed.”

Vermont Farm Bureau immediate past president Clark Hinsdale is a member of Dairy Farmers of America.  He notes that dairy farmers are paying as well as receiving the money through the settlement, as they sued their own coop. He says it would be nice if things could be agreed upon and the money distributed.  “We are probably right now at the dip in the dairy cycle. Dairy prices seem to go in three to five year cycles. And in 2016 virtually everybody is losing money again. So a dip in prices would be a good time to get the money and it would be nice just to get that over with and move on.  I don't know that it's enough money to make a difference between whether a farmer continues or not.”

While the distribution of settlement funds is on hold during the appeal, non-monetary provisions will be implemented.  Hinsdale thinks many of those issues have been addressed.  “The goal is to have complete transparency with the record so that members and the public can understand the operation of the co-op and the pricing of the milk. I personally believe that the organization has corrected most of its bad behaviors anyway.  I believe that from being at meetings and that they also admit that under prior management and prior boards there were some issues. They’re referred to as legacy issues. Issues that the current crop of people inherited. But obviously the issue of transparency and being able to have independent folks have access to the records is kind of an oversight situation. We will find out how much difference it makes.”

Civil appeals in the Second Circuit on average take about a year.