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Southeast settlement: Checks are (almost) in the mail

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Final stages of legal action in the “Southeast Milk” lawsuit may mean eligible producers could receive settlement checks by the end of the year, according to Julia Walker, AgriVoice Enterprises, who has been following the lawsuit since July 2007.

Plaintiff attorneys Baker-Hostetler and Brewer & Terry filed a long-anticipated document, Nov. 26, in the Greeneville Division, Eastern District of Tennessee, in the Sixth United States District Court. The document carries a long title: "Dairy Farmer Plaintiffs' Motion for an Order Approving and Authorizing the Distribution of Funds fro the Settlement with Dairy Farmers of America, Inc., Dairy Marketing Services, LLC, Mid-Am Capital, LLC, National Dairy Holdings, LP, and Gary Hanman, and Application for Additional Payment for Claims Administrator Services and Expenses." 

The 403-page document notes a net settlement fund (after court-approved, standard expenses) of about $85.64 million, which will be distributed on a “pro rata” basis to 6,086 eligible claimants. There were 7,764 claim forms submitted. Of those, 1,678 claims were denied, determined to ineligible for a number of reasons. 

Before the checks can be cut and mailed, Judge Ronnie Greer must review and officially approve the motion.  It is unknown how long this action will take to complete. However, given the timing of previous settlement payments, there is a good possibility – but no guarantee – that these monies will be received by eligible dairy producers before the end of this year, Walker said.

This DFA payment is one of six under the terms of all settlements in this historic lawsuit, and has taken nearly 10 months to complete. Last January, the day before the trial was begin, a $158.6 million settlement agreement was reached between attorneys representing dairy farmer plaintiffs and remaining defendants in the suit – Dairy Farmers of America, Inc. (DFA); Dairy Marketing Services LLC; Mid-Am Capital, LLC, DFA’s finance subsidiary; National Dairy Holdings, LP, which DFA sold to Grupo LaLa in 2009; and Gary Hanman, the former DFA CEO. 

The U.S. District Court for the Eastern District of Tennessee originally approved the proposal on Jan. 22, 2013. According to that agreement, DFA will pay $140 million in a one-time cash settlement. An additional $9.3 million/year for two years will be placed in a fund to guarantee stronger Class I (fluid milk) utilization in Appalachian (#5) and Southeast (#7) federal orders. 

DFA admitted no wrongdoing in agreeing to the settlement. Hanman’s liability was released under the settlement.

The original DFA agreement came two weeks after a plan to distribute another $145 million in settlement funds from Dean Foods and Southeast Marketing Agency was approved by the court. Total payments from that portion of the settlement were estimated to average $13,000 per claimant when payments are completed, following a 5-year, tiered payment plan. Total payments will range from less than $200 to more than $20,000 per farm, depending on qualified milk marketings.

Two of Dean Foods’ payments have already occurred. Three additional payments will occur in 2014, 2015 and 2016. Southern Marketing Agency’s $5 million payment was included with the first Dean Foods settlement payment.

The Dean, DFA and SMA agreements bring the total settlement to more than $300 million. 

The “DFA & Related Entities” settlement payment process proved to be challenging, according to Walker, due to the “excruciating details of pounds of class-eligible milk that had to be determined, balanced against herd and milk production expansions and previously reported pounds, and determination of class-eligible applicants.”

Additional information can be found at http://www.southeastdairyclass.com/   

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