Dairy Foods
Legal matters

Dairy Farmers of America settle with producers in Southeast Milk Antitrust suit

DFA and other parties have reached a settlement agreement totaling $158,600,000.

January 23, 2013

Editor's note: Below are separate press releases from the dairy cooperative Dairy Farmers of America and the law firm of BakerHostetler regarding a class action lawsuit


DFA reaches settlement in southeast lawsuit

KANSAS CITY, Mo. (January 22, 2013) – Today, Dairy Farmers of America’s Board of Directors and management announced the Cooperative has reached a settlement agreement in the class action lawsuit against DFA in the southeastern United States. Trial for the suit was scheduled to begin this month.

DFA makes no admission of wrongdoing in this settlement. Under the terms of the settlement, filed yesterday with the U.S. District Court for the Eastern District of Tennessee, DFA will pay $140 million to the plaintiff class. An additional, refundable $9.3 million per year for two years will be placed in a fund to incentivize stronger Class I utilization rates in Federal Orders 5 and 7.

Also included in the agreement are remedial elements regarding reporting, accounting and communication of certain business information and functions. Many of these components are consistent with new policies and procedures DFA management voluntarily developed and implemented previously to emphasize a culture of openness and transparency within the Cooperative.

“Our Board and management team have worked diligently to put certain old issues behind us,” said Rick Smith, president and chief executive officer. “This outcome positions DFA to fulfill a commitment to our members to resolve pending litigation, to remove a source of distraction for our leadership and to avoid additional legal fees.”

The payment of the settlement will not affect the Cooperative’s day-to-day operations or its ability to market members’ milk or pay them a competitive price for that milk. Member milk checks and the member equity program will not be impacted.

“The Cooperative remains healthy and poised for a bright future,” Smith said. “We continue to develop new member programs and invest in plants and new products. We also continue to seek out new opportunities and innovative ways to increase value to our dairy farmer owners.”

Dairy Farmers of America (DFA) is a national dairy marketing cooperative that serves and is owned by nearly 15,000 members on nearly 9,000 farms in 48 states. DFA also is one of the country’s most diversified manufacturers of dairy products, food components and ingredients, and is a leader in formulating and packaging shelf-stable dairy products. For more information, call 1-888-DFA-MILK (332-6455) or visit www.dfamilk.com.


Southeastern Milk Antitrust Litigation concludes with $158,600,000 settlement with Dairy Farmers of America and related entities

CLEVELAND – January 22, 2013 – BakerHostetler is proud to announce the third and final settlement agreement with the remaining defendants in the Southeast Milk Antitrust Litigation (MDL 1899—E.D. Tenn.). Dairy Farmers of America (DFA) and the remaining defendants/co-conspirators in the lawsuit that claims violation of federal antitrust laws have reached a settlement agreement with the certified class of Southeastern dairy farmers across 14 states totaling $158,600,000.

“The Southeast milk market has been reformed to the benefit of dairy farmers,” said Robert G. Abrams of BakerHostetler, lead attorney for the plaintiffs. “The monetary recovery itself is very substantial and the resulting conduct changes will significantly and positively impact competition in the southeast dairy industry.”
The settlement was reached in advance of the January 22, 2013 trial date and brings the total award for the certified class to more than $300 million. Previous settlements were reached in July 2011 with defendants Dean Foods for $140 million as well as Southern Marketing Agency and James Baird for $5 million plus changes in milk marketing conduct.

In addition to the monetary award, DFA agreed to change its business conduct in the Southeast, including taking steps to increase raw milk prices; removing cancellation penalties on certain full-supply agreements with bottling plants and not entering into new full supply agreements during the Settlement’s term; modifying membership agreements to improve farmer ability to change cooperatives; enhancing price-related information on milk checks; boosting transparency through auditing and disclosure commitments; and facilitating delegate votes on additional meaningful changes to conduct.

“We have always believed strongly in the southeast farmers’ case—a belief that has now been vindicated by three excellent settlements,” said Abrams.
The BakerHostetler team working on behalf of the certified class of Southeastern dairy farmers was led by Robert G. Abrams and includes Robert Brookhiser Jr., Gregory Commins, Joanne Lichtman, Terry Sullivan, William DeVinney, Dan Foix, Carey Busen, Bridget Merritt, and Nicole Skolout.