Reuters — Dairy Farmers of America Inc. has agreed to pay US$50 million to settle a class-action lawsuit in which farmers in the northeastern U.S. accused the marketing co-operative of conspiring to drive down milk prices.
Settlement papers were filed on Thursday with the federal court in Burlington, Vermont, and require approval by U.S. District Judge Christina Reiss.
The average payout is expected to be about $4,000 depending on the number of valid claims (all figures US$). A total of 7,550 farmers out of 8,859 who were contacted submitted claims as of July 11. One-third of the settlement amount would go toward legal fees, court papers show.
In their lawsuit, which began in October 2009, farmers accused Dairy Farmers of America, its Dairy Marketing Services arm, and dairy processor Dean Foods of conspiring to monopolize the market for raw Grade A milk in 11 U.S. states stretching from New Hampshire to Virginia.
Dean reached a $30 million settlement of its part of the case in 2011.
On March 31, Reiss rejected an earlier version of the $50 million settlement with Dairy Farmers of America.
She said some farmers complained that the accord might expose them to retaliation from the co-operative, and that the $4,000 average payout was too low “as it reflects the cost of one tractor tire.”
In Thursday’s papers, lawyers for the farmers said the revised settlement includes new protections to prevent retaliation and ensure that farmers with valid claims are not shortchanged.
Dairy Farmers of America did not admit wrongdoing in agreeing to settle. The Kansas City-based co-operative did not immediately respond to requests for comment.
In January 2013, Dairy Farmers of America reached a similar $140 million accord involving farmers in the southeastern U.S.
— Jonathan Stempel is a Reuters correspondent covering U.S. regulatory affairs from New York.