October 22, 2018

Vermont dairy farmers receive long-awaited chunk of $50 million settlement

Milking time at Island Acres Farm in South Hero. File photo by Josh Larkin/VTDigger

By Elizabeth Gribkoff

For VT Digger

Vermont dairy farmers received their cut of a $50 million payout earlier this summer as the outcome of a class-action lawsuit initially filed almost a decade ago.

Under a settlement agreement between dairy farmers and Dairy Foods of America and Dairy Marketing Services, claims agent Rust Consulting Inc. sent out checks to farmers on Aug. 27. Rust Consulting did not return multiple requests for more information about payout, but up to 9,000 farmers received $4,000 each.

The settlement checks “came at a wonderful time, because the prices (for milk) stink, so to get anything that would help with this fall’s property taxes or harvesting costs is helpful,” said Jenny Nelson, co-owner of Home Acres Farm, a former agricultural policy adviser for Sen. Bernie Sanders and, as a result of the settlement, an ombudsperson for DFA members.

Dairy farmers from Maryland to Maine who sold Grade A milk from 2002-2014 were eligible to receive payment under the settlement, according to the claims form. Each farmer’s payout was based on their production volume during that time period, said Nelson.

The class-action case, filed in 2009 with U.S. District Court in Vermont, alleged that Dairy Farmers of America conspired to create a monopoly over Grade A milk production in the Northeast. Closely related for-profit entity Dairy Marketing Services sought to become the sole buyer of the milk to drive down prices, alleged the plaintiffs.

DFA and DMS first agreed in 2014 to settle the lawsuit by paying $50 million and making changes to their business practices. A small group of plaintiffs sought to fire their attorneys, claiming that their lawyers colluded with the defendants to reach a settlement that does not do enough to address DFA’s substantial power in the milk market.

U.S. District Judge Christina Reiss approved the final settlement in June 2016. The original complaint included Dean Foods as a defendant, but plaintiffs reached a separate $30 million settlement with Dean in 2011.

Alice Allen, co-owner of Allen Farms and one of the original plaintiffs, said she has been active in milk price discussions for decades, recalling a meeting on the “current dairy dilemma” in 1983 — the same topic as a recent dairy summit in Albany, New York. When Allen was tapped to serve as the lead plaintiff for the class action lawsuit, she agreed.

“The fact that our own government doesn’t enforce antitrust laws that are on the books makes it even more difficult for dairy farmers,” said Allen.

“The bottom line was that when prices were low, you made more milk, and when prices were high, you made more milk,” she added. “And that’s to our detriment.”

DFA Senior Vice President Monica Massey said after the initial settlement agreement was reached in 2014, the cooperative and its marketing arm agreed to settle due to escalating legal costs and not as an admission of wrongdoing.

“When DFA and DMS agreed to settle with the class plaintiffs in June 2016, we did not expect it would take until 2018 for the legal process to conclude before farmers would receive payments from the settlement fund,” said a DFA spokesperson in a recent statement. “We are pleased this matter is resolved and settlement payments are finally being distributed to dairy farmers in the Northeast.”

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