Northeast Dairy Farmer Settlement with DFA/DMS

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A Court authorized this Notice because you have a right to know about a proposed settlement of this class action lawsuit and about all of your rights and options before the Court decides whether to approve the settlement.  This Notice explains the lawsuit, the settlement, your legal rights, what benefits are available, who may be eligible for those benefits, and how to get them.

Judge Christina Reiss, of the United States District Court for the District of Vermont, is currently overseeing this case. The case is known as Allen v. Dairy Farmers of America, Inc., No. 5:09-CV-230. The people who sued are called the Plaintiffs and the people and companies they sued are called the Defendants (see Question 3.

A new settlement between the Plaintiffs and Defendants DFA and DMS has been reached since you received notice of a previous settlement in December 2014. The new settlement includes changes that are described in more detail in questions 12 and 14.

This settlement is separate from a prior settlement with Dean Foods Company. Even if you previously participated in the settlement with Dean Foods, you have separate legal rights and options in this settlement with DFA and DMS.

The Notice summarizes the new settlement. The complete Settlement Agreement is available at
www.NortheastDairyClass.com.

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You previously received a notice informing you that this lawsuit has been “certified” as a Class Action.  This means that the Court has found that the lawsuit meets the requirements for class actions and may proceed accordingly.  The Court has certified two “subclasses”.  If you are included in a Subclass, you have decisions to make now about whether to participate in this settlement.  The Notice explains these decisions.

In a class action, one or more people, called class representative, sue on behalf of people who have similar claims.  All these people are a class or class members, except for those who exclude themselves from the class.

In this case, the representative dairy farmers for the DFA/DMS subclass are Jonathan Haar, Claudia Haar, Richard Swantak, Peter Southway, Marion Southway, Robert Fulper and Reynard Hunt.  The representative dairy farmers for the non-DFA/DMS subclass are Alice H. Allen, Laurence E. Allen, Garrett Sitts, Ralph Sitts, Stephen Taylor and Darrel Aubertine.

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This litigation is proceeding against two remaining Defendants, Dairy Farmers of America, Inc. (“DFA”) and Dairy Marketing Services, LLC (“DMS”).  They are involved in the marketing, sale, purchase, and processing of Grade A milk produced by dairy farmers in the Northeast.

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The lawsuit claims that Defendants and other co-conspirators (including previous Defendant Dean Foods) unlawfully conspired to monopolize and to eliminate competition for the marketing, sale, and purchase of raw Grade A milk in the Northeast and thereby suppressed prices lower than they would have been in a competitive market.  This lawsuit seeks to stop Defendants from engaging in the alleged unlawful conduct, to prohibit practices found to be unlawful, and to recover damages for the illegally suppressed prices for raw Grade A milk.  

The Defendants deny that they did anything wrong or that they acted in a manner that harmed dairy farmers.  There has not yet been a determination as to whether Plaintiffs’ Claims are correct or Defendants have done anything wrong.

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The Court has not decided in favor of Plaintiffs or DFA and DMS. The Plaintiffs think they would win against DFA and DMS at a trial. DFA and DMS thinks the Plaintiffs would not win. But there will be no trial against DFA and DMS. Instead, Plaintiffs and DFA and DMS agreed to a settlement. That way, they avoid the cost of a trial and appeals, and Class Members will get the benefits of this Settlement soon. 

The Court previously appointed Counsel to represent each Subclass in this case. Based on an extensive investigation of the facts and the law relevant to the lawsuit, Counsel thinks the Settlement is best for all Class Members. Six of the Nine Subclass Representatives support the settlement.  Three of the Nine Subclass Representatives oppose the Settlement.  The Subclass Representatives – as well as any other members of the Subclasses – will have an opportunity to explain why they support or oppose the Settlement at the Fairness Hearing, see questions 30-32.

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To take effect, class action settlements must be approved by the Court. The Court did not approve the 2014 settlement with DFA and DMS. A copy of the Court’s Opinion and Order denying approval of that settlement is available at the settlement website.

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If you are a member of either of the two Subclasses certified by the Court – and have not excluded yourself – then you are a part of the Settlement. The Court has certified two groups or Subclasses: 

DFA/DMS Member Subclass 

•  All dairy farmers (individuals or entities) who produced and pooled raw Grade A milk in Order 1 during any time from January 1, 2002 to the present, who are members of DFA or otherwise sell milk through DMS.

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You are not part of the Settlement if you excluded yourself from the Class in this litigation.

The following persons and entities are also excluded from the Settlement: the current and former officers and directors of DFA, DMS, Dean Foods, HP Hood LLC, National Dairy Holdings, Farmland Dairies LLC, Kraft, Dairylea Cooperative, Inc., St. Albans Cooperative Creamery, Inc., Agri-Mark, Inc., Land O’Lakes, Inc., and Maryland and Virginia Milk Producers Cooperative Association, Inc  If you sold milk to or were a member of one or more of these entities, you are still eligible to participate in the lawsuit unless you were an officer or director of the entity. If you hold some other position with any of these entities, but are not an officer or director, you are still eligible to participate in this lawsuit.

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If you previously asked to be excluded from a Subclass in response to the Court’s notice of class certification dated November 19, 2012, you may ask to be reinstated as part of a Subclass for purposes of the settlement with the Settling Defendants.  You must deliver an application to Northeast Dairy Farmer Class Reinstatements, c/o Rust Consulting, Inc., PO Box 2958, Faribault, MN 55021-2958, so that it is postmarked no later than April 22, 2016. Your application must be entitled “Opt- In Letter.” It must include your name, address, and telephone number; the name of the case; a clear statement that you are opting back in; and your signature and the date.

If you are reinstated, you may be eligible for a payment from the settlement with Settling Defendants. You must file a claim form as described in Question 16 to receive payment. In evaluating whether to pursue any individual claim, you should consult your own attorney.

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Yes. See Questions 24-26 regarding how to exclude yourself and how exclusion affects your rights.

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If you are still not sure whether you are included in the Settlement Class, you can ask for free help.

For more information, visit www.NortheastDairyClass.com, or call 1-855-460-1533, or write to Northeast Dairy Farmer Settlement, c/o Rust Consulting, Inc., PO Box 2958, Faribault, MN 55021-2958.

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DFA and DMS have agreed to pay $50,000,000 into a Settlement Fund. After deducting attorneys’ fees, plus costs, expenses, and incentive fees for the dairy farmers who brought the lawsuit (see Questions 22 and 23), the net Settlement Fund will be distributed to members of the Subclasses who file valid claims.

In addition to the $50 million Settlement Fund, DFA and DMS have agreed to change their business practices in the following ways:

Farmer Ombudsperson: For the next five years, a Farmer Ombudsperson will be created to advocate for farmers and promote fairness within DFA and DMS.

• The Farmer Ombudsperson will listen to and investigate farmers’ complaints and concerns.
• The Farmer Ombudsperson will mediate disputes between farmers and DFA and DMS.
• The Farmer Ombudsperson will have access to relevant records within DFA and DMS, will meet with a representative from the DFA and DMS management team, and will be allowed to attend and participate in DFA Northeast Area Council Meetings.
• The Farmer Ombudsperson will report on their activities to Subclass Members every six months.
• DFA/DMS is required to pay the Farmer Ombudsperson an hourly fee, not to exceed a pre-determined amount identified in the settlement.

• The Advisory Council Member can request a third-party review of DFA’s and DMS’s financial statements to be paid for by DFA and DMS, and hire experts. He or she shall have access to all DFA Northeast Area Council and DMS books and financial records
• The Advisory Council Member will be a non-voting member of DFA’s Northeast Area Council, and shall be allowed to attend and participate in DFA Northeast Area Council and other key DFA meetings.
• The Advisory Council Member will report on their activities to Subclass Members every six months.
• DFA/DMS is required to pay the Advisory Council Member an hourly fee, not to exceed a pre-determined amount identified in the settlement.

• For the next ten years, DFA and DMS will not acquire a controlling interest in the milk testing company its farmers use, DairyOne, nor will DFA members hold a majority of seats on its board.
• For the next five years, any farmer in Order 1 whose milk is tested by DairyOne and who disputes the accuracy of the test result may require a split sample procedure three times a year at no cost to the farmer and in which the dairy farmer observes the collection and sealing of a sample to be tested at two independent, certified labs selected by the farmer in addition to DairyOne. If the split sample fails to confirm the original test result within a reasonable level of error, the appropriate adjustments to the farmer’s milk check will be made and information regarding the labs’ differing results submitted to the Market Administrator.
• Additional farmer concerns regarding milk testing accuracy may be raised with the Farmer Ombudsperson who shall attempt to mediate any disputes.
• DFA/DMS shall provide the Farmer Ombudsperson with an annual report identifying any discrepancies found between milk test results at DairyOne and those from other certified laboratories.

• For the next five years, any farmer in Order 1 whose milk is found to be adulterated by a processing plant, DFA/DMS will notify the affected farmer within 3 hours of receiving the result. DFA/DMS will request that the processing plant keep any remaining milk samples and, at the farmer’s request, have the remaining samples tested at an independent laboratory.
• If an independent laboratory confirms the processing plant’s testing results, then the farmer will be responsible for covering the costs of the adulterated milk. If the independent laboratory cannot confirm the processing plant’s testing results, then the farmer will not be required to cover the costs of the adulterated milk.
• Farmers may bring any concerns related to adulterated milk to the Farmer Ombudsperson who shall attempt to mediate any dispute.

• DFA and DMS will not enter into any new full-supply agreements for the sale of raw Grade A milk in Order 1 for four years after final approval of the settlement, except in limited circumstances and that certain existing agreements may be renewed.
• Any new supply agreements of any type, or the renewal of existing full supply or other agreements, shall be presented,
• reviewed, and approved by the DFA and/or DMS Board of Directors prior to entering or renewing the agreements.
• Upon written request by any of their respective farmers in Order 1, DFA and DMS agree to disclose to that member a summary of the terms of any DFA or DMS agreement for the supply or sale of raw Grade A milk to customers in Order 1, to the extent the contracts so permit.

• If DFA/DMS decide not to renew a Subclass Member’s milk marketing arrangement due to lack of demand for milk, DFA/DMS will provide the Subclass Member 30 days’ advanced notice, and, at the terminated Subclass member’s request, continue to market their milk for a period of six months.
• If DFA/DMS terminates a Subclass member’s marketing arrangement for cause, DFA/DMS will provide at least 30 days’ advanced written notice of the decision along with a reasonable opportunity to cure the reason for termination.  The terminated Subclass member may dispute the reason for termination. If the Subclass member disputes the basis for termination, the Northeast Area Counsel or DMS Board of Directors will review the decision and, at the farmer’s discretion, the Farmer Ombudsperson may be asked to mediate the dispute.

• DFA will prepare financial reports in accordance with generally accepted accounting principles and DFA will be audited by a nationally-recognized accounting firm.
• DFA senior management and Audit Committee members will affirmatively represent they are responsible for the preparation, integrity, and accuracy of DFA’s annual financial report.
• DFA will post on its member-only website an annual disclosure of all material related-party transactions, specifically broken out and identified by transaction.
• At its annual meeting, DFA will disclose to its delegates all material related-party transactions as well as DFA’s financial results from its participation in joint ventures and off-balance sheet transactions, specifically broken out and identified by transaction.
• DFA will disclose the identity of the members of its board of directors and its committees and their generally applicable per diem payment rate compensation.
• DFA senior executive management and board members will execute annual conflict of interest certifications, which will be subject to review by DFA’s Audit Committee and a report by the Committee at DFA’s annual meeting.

• (1) members’ milk checks in order to determine whether changes in the milk checks are warranted to improve their clarity or transparency; and
• (2) the election procedure by which Area Council members and delegates are chosen, including specifically whether the membership should be able to cast ballots by mail.
• Changes recommended by the NEAC will be implemented.

Answer:

The amount of money you may receive cannot be calculated at this time. Your share will depend on the amount of raw Grade A milk you produced in and pooled on Order 1 from January 1, 2002 to December 31, 2014 as well as the number of valid claims that are received and the attorneys’ fees, incentive fees for the Subclass Representatives, costs, and expenses approved by the Court. 

We don’t know how many people will file claims. However, if 8,000 dairy farmers file a valid claim, the average payment per farmer is estimated to be $4,000. Your payment could be more or less than $4,000 depending on the amount of raw Grade A milk you produced and pooled on Order 1.

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In exchange for the Settlement Benefits explained above, you and other members of the Subclasses give up the right to continue this lawsuit against DFA or DMS. 

You also give up the right to sue DFA and DMS, as well as their members and partners and certain related entities, for legal claims that are related to the facts or circumstances of this case including any lawsuit against DFA, DMS, or their related entities regarding the sale, marketing, or purchase, of raw Grade A Milk produced in and pooled on Federal Milk Marketing Order 1. 

Giving up the right to sue DFA, DMS, their members and partners and certain related entities is called a “Release of Claims.” The “Release of Claims” is described more fully in the Settlement Agreement. The Settlement Agreement is available at www.NortheastDairyClass.com. 

You should carefully review a full copy of the Release of Claims to make sure you understand what you are giving up. As stated above, the Release extends beyond DFA and DMS to certain related entities and extends beyond the legal claims in this lawsuit. You may seek legal advice if you have any questions regarding the Release of Claims.

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If you already submitted a claim last year in connection with the previous DFA/DMS settlement, and wish to receive payment from this settlement, you do not need to submit a new claim.

If you did not submit a claim in the previous DFA/DMS settlement, and wish to ask for a payment now,
complete and submit a Claim Form. A Claim Form was enclosed with the Notice. Claim Forms are also available at www.NortheastDairyClass.com or by calling 1-855-460-1533. Please read the instructions carefully, fill out the Claim Form and provide the required information. Your handler or cooperative will likely be able to provide information on the total number of pounds of raw Grade A milk that your farm produced and pooled in Order from January 1, 2002 until December 31, 2014.

You must mail the Claim Form postmarked no later than April 29, 2016, to:

Northeast Dairy Farmer Settlement with DFA/DMS
c/o Rust Consulting, Inc.
PO Box 2958 
Faribault, MN 55021-2958

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Yes. You have the right to oppose the Settlement or any part of the Settlement even if you submit a claim. To learn more about your right to object to the Settlement, see questions 28 and 29.

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No. If you exclude yourself (or opt out) from the Subclasses you cannot submit a claim and receive payment as part of this settlement.

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Yes. The Court has appointed the following firms as counsel for the Subclasses:

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Subclass Counsel will ask the Court for attorneys’ fees of $16.66 million or one-third the Settlement Fund plus the payment of costs and expenses incurred in connection with the case. Subclass Counsel’s applications for attorneys’ fees, costs, and expenses will be filed with the Court by March 24, 2016, and posted on the settlement website.

The Court may award less than these amounts. Payments approved by the Court will be made from the Settlement Fund.

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Incentive fees provide money to the dairy farmers who brought this suit and have served as Subclass Representatives. These fees (sometimes referred to as plaintiff incentive awards) provide payments to the Subclass Representatives for their work in representing the interests of the Subclasses throughout the course of this litigation.

The representatives for the DFA/DMS subclass are Jonathan and Claudia Haar, Richard Swantak, Peter and Marion Southway, Robert Fulper, and Reynard Hunt.  The representative dairy farmers for the non-DFA/DMS subclass are Alice and Laurence Allen, Garrett and Ralph Sitts, Stephen Taylor, and Darrel Aubertine.

Subclass counsel will request incentive fees of $20,000 to each of the Subclass Representatives’ farms. Applications for incentive payments will be filed along with Subclass Counsel’s application for fees and expenses by March 24, 2016, and posted on the settlement website.
The Court may award less than these amounts. Payments approved by the Court will be made from the Settlement Fund.

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No. Unless you exclude yourself, you give up the right to sue DFA or DMS for all of the claims that this proposed settlement.

Proposed settlement resolves and others that could have been asserted based on the conduct in the Complaint in this case. You must exclude yourself from the Subclass to start your own lawsuit, continue with a lawsuit, or be part of any other lawsuit against DFA or DMS relating to the “Released Claims” described in Section 1.16 of the Settlement Agreement.

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If you are a Subclass Member, you can send a letter to the Court expressing your support of the settlement. Your letter must also include the following:

• The title “Letter of Support,”
• Your name, address, and telephone number,
• The name of the case (Allen v. Dairy Farmers of America, Inc., No. 5:09-CV-230-CR),
• The specific reasons you support to the settlement, and
• Your signature and the date.

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