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DFA to pay $50m to settle Northeast US milk price lawsuit

By Mark Astley+

16-Jul-2014
Last updated on 16-Jul-2014 at 15:35 GMT

DFA to pay $50m to settle Northeast US milk price lawsuit

Dairy Farmers of America (DFA) and its marketing arm Dairy Marketing Services (DMS) have agreed to pay a total of US$50m (€37m) to settle a class action lawsuit that alleged a conspiracy to drive down raw milk prices in the Northeast United States.

The lawsuit, filed at the US District Court for the District of Vermont in 2009, charged DFA, DMS and Dean Foods with working together to monopolize the market for raw milk in the Northeast and forcing dairy farmers in the region to join DFA or DMS in order to survive.

In a document filed with the District Court on July 1 2014, DFA and DMS said that "after five years of vigorously-contested litigation and hard-fought, arm's length negotiations" they had reached a settlement with the plaintiffs worth US$50m.

Alongside the cash compensation, which if approved by the presiding Judge will be payable in two installments of US$25m (€18.5m), DFA and DMS proposed a series of "meaningful non-monetary benefits."

"Admitted no wrongdoing"

Despite coming to a settlement, neither DFA or DMS are required to admit any wrongdoing.

“After aggressively defending ourselves in a class action lawsuit filed in 2009 on behalf of dairy farmers in the Northeast region, Dairy Farmers of America (DFA) has agreed to a settlement in the case," said Monica Massey, senior vice president of corporate affairs, DFA, in a statement.

"While we believe the allegations against us were without merit and the activities of DFA, Dairy Marketing Services (DMS) and other affiliated milk marketing cooperatives in the Northeast benefitted cooperative members and independent producers alike, the cost to continue to defend ourselves has become too great. Under terms of the settlement, DFA has admitted no wrongdoing.”

“With settlement reached, we look forward to moving beyond this matter.”

DairyReporter.com approached lead attorney for the dairy farmers, Benjamin Brown, partner, Cohen Milstein, for comment but no reply was forthcoming prior to publication.

"Unlawful" agreements

Filed in October 2009, the lawsuit charged DFA and its co-defendant Dean Foods with monopolizing different levels of fluid milk distribution in the Northeast United States.

DFA was accused of "tying up access to milk bottling plants" in the Northeast "through unlawful exclusive supply agreements." As a result, independent farmers in the region were forced to join DFA or market their raw milk through DMS, the lawsuit alleged.

This enabled DFA to reduce the raw milk prices paid to farmers, which increased profits for Dean Foods and HP Hood, who between them processed around 90% of bottled milk in the area at the time.

Dean Foods and HP Hood were also named in the lawsuit - the latter for aiding DFA and Dean Foods' monopolization of the market.

DFA's co-defendant Dean Foods agreed to pay a settlement, to be divided between around 10,000 Northeast dairy farmers, of US$30m (€22.2m) in 2011.

Like DFA, Dean Foods was not required to admit any wrongdoing under the terms of its settlement.

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