Dairy Farmers Land $30M From Dean Foods

BURLINGTON, Vt. (CN) - Dean Foods, a giant in the dairy industry, will pay $30 million to settle claims that it reaped hundreds of millions of dollars in profits while driving small farms out of business, according to an agreement approved by a federal judge.

The farmers say that it "is the largest, reported antitrust settlement in the history of the District of Vermont," according to the ruling.

Dairy farmers sued Dean and the Dairy Farmers of America in 2009, claiming they had engaged in anticompetitive conduct to corner the northeast milk market, fix prices and shutter bottling plants.

After Sen. Bernie Sanders, D-Vt., said the conspiracy cost taxpayers nationwide, Congress approved a bill requesting $350 million in aid for dairy farms.

"Pursuant to the settlement, Dean admits no wrongdoing and plaintiffs agree, on behalf of the proposed settlement class, that once the Dean Settlement Agreement becomes final, their claims against Dean will be released," Chief U.S. District Judge Christina Reiss wrote Wednesday.

She said she would grant preliminary approval of the settlement because "Plaintiffs and Dean represent that the Dean Settlement was reached after vigorous, arm's-length negotiations between highly experienced counsel."

After Reiss heard a hearing on the settlement in April, the parties met and modified an earlier settlement they had proposed four months earlier. The new settlement eliminates the injunctive relief that farmers had demanded because Dean plans "to alter its business practices with or without the injunctive relief," according to the 18-page decision.

That provision had "been the sole source of objections to the Dean Settlement," Reiss wrote. Since the change moots this objection, the judge refused to let various farmers intervene in the preliminary approval process.

Reiss also certified the proposed settlement class, noting that the parties had clarified previous ambiguity she had identified.

Excluding Dean officers and directors, the new settlement class will include "all dairy farmers, whether individuals, entities or members of cooperatives, who produced raw Grade A milk in Order 1 and pooled raw Grade A milk in Order 1 during any time from January 1, 2002 to the Notice Date."

Reiss said the parties will also provide additional financial information in their proposed notices to settlement class members.

This will enable "class members to better evaluate their individual recoveries as a result of the Dean Settlement based upon a sliding scale of potential attorney's fees awards," according to the ruling.

Reiss also refused to let farmers and a dairy organization from Maine intervene in the case, this late in the proceedings.

"The court therefore certifies the class for purposes of the Dean Settlement only," Reiss wrote. "Certification of the settlement class will be considered further at the court's fairness hearing."

That hearing is scheduled for July 18.

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