‘Southeast Milk’ settlement payment plan approved

A plan to distribute settlement funds in the “Southeast Milk” class action lawsuit has been approved by the U.S. District Court for the Eastern District of Tennessee Greenville Division. U.S. District Judge Ronnie Greer filed the order on Jan. 8, paving the way for nearly 6,200 southeastern U.S. dairy farmers to begin receiving cash settlement payments, according to Julia Walker, AgriVoice Enterprises, who has been following the lawsuit since July 2007.

Separately, the trial involving remaining defendants – Dairy Farmers of America (DFA), Dairy Marketing Services, LLC; Mid-Am Capital, LLC; National Dairy Holdings, LP; and Gary Hanman, the former DFA CEO – was postponed one week. The trial is now set to begin Jan. 22, and expected to last 6-8 weeks, according to Walker. 


Settlement plan

The settlement payment motion was filed by Rust Consulting, class action and claims administrator, on Dec. 21. The motion laid out a five-year plan to distribute $145 million in settlement funds from Dean Foods and Southeast Marketing Agency (SMA) and James Baird, less attorneys’ fees and administrative costs. Legal fees and costs will likely take more than one-third of the total.

About 6,165 claims will be eligible for settlement payments, covering all producers marketing class-eligible milk sold in Federal Orders #5 and #7 beginning in 2001. Settlement funds will be distributed to each class member on a pro rata basis, based on each member’s reported milk production.

Total payments are 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.

Rust Consulting can now begin the process of writing and mailing checks to producers. Given the amount of checks to be written and verified, it could be a month before checks are received in producer mailboxes, Walker said. Recipients are encouraged to check with their accountants to learn of IRS rulings which may affect the actual dollars received, and an individual’s specific tax situation. 

Rust analyzed 7,363 claims, and conducted additional audits of approximately 11% of the claims, comparing the amount of class-eligible milk stated in the forms with actual milk production and sales records or written confirmation of the same provided to farmers by USDA market administrators or their cooperatives.

Rust recommended payments on 281 late, but otherwise eligible claim forms. In addition, Rust identified 1,198 claim forms that were not eligible to participate in the settlements. These claims are ineligible because they were duplicates; claimants were members of the boards of directors of Dairy Farmers of America or SMA; the farms claimed were not located in Federal Orders #5 or #7; or because the claimants failed to respond to multiple requests for information needed to demonstrate the claimants’ eligibility.

The settlement in the lawsuit (Sweetwater Valley Farm, Inc., et al. v. Dean Foods, et al., No. 2:07-CV-208), required Dean to pay $140 million into a settlement fund over approximately four years. Dean made an initial payment of $60 million in February 2012, and will pay $20 million each of the next four years.  SMA/Baird paid $5 million into the fund in August 2012.

The detailed payment steps are explained in a 376-page document found at this link: