BURLINGTON, Vt. (AP) — A federal judge in Vermont is considering moving forward with a partial settlement of an anti-trust lawsuit in which national dairy processor Dean Foods would pay some northeast dairy farmers $30 million.
But U.S. District Court Judge Christina Reiss said Friday she may defer a decision on part of the settlement that would require Dean Foods of Dallas to change its milk-buying practices in the region for 30 months by buying milk from independent farmers, a controversial provision that the plaintiffs say would jump start competition but a national dairy cooperative says would harm some farmers.
"I am likely to sever the settlement," Reiss told lawyers during a hearing on Friday.
Farmers have complained for years that Dean, the cooperative Dairy Farmers of America and its marketing affiliate Dairy Marketing Services have come to dominate the milk-buying market and have held down prices paid to farmers.
By agreeing to the settlement, Dean Foods does not admit any liability and "continues to maintain that it has not broken any laws," Dean Foods' attorney Paul Friedman said Friday.
It settles a class action lawsuit filed in 2009, which means 5,000 to 10,000 farmers could get a share of the settlement.
During the more than two-hour hearing, both sides urged Reiss to approve the deal, which plaintiff lawyer Kit Pierson said was "reached after extraordinarily difficult negotiations with Dean Foods."
But DFA and DMS, which are also named as co-defendants in the class-action lawsuit but are opposed to the settlement, said the provision in which Dean Foods would get 10 to 20 percent of the raw milk it buys for plants in Lynn and Franklin, Mass., and in East Greenbush, N.Y., from sources other than DMS for 30 months takes business away from their farmers and gives it to someone else.
"The only way our members can participate in that offer is by quitting our operation," said Steven Kuney, a Washington-based lawyer for DFA and DMS.
Dairy farmers who have worked hard to come together as cooperatives could be undercut, members say.
"It would only take a small portion of milk that they could buy cheaper," said Ralph McNall, board president of the St. Albans Cooperative Creamery, which is a member coop of DFA, who attended the hearing along with nearly two dozen other farmers.
Dean Foods, which is already experimenting with buying directly from independent farmers in some small areas of the country, said it would honor any supply agreements it has with DFA and DMS, and says the magnitude of the purchases under the provision is too small to affect dairy prices, Friedman said.
While she hasn't decided whether DFA or DMS have a standing to oppose the settlement, Reiss said farmers would have a chance to oppose it at a fairness hearing before she decides whether or not to give it final approval. If she gives the settlement preliminary approval, notices would go out to the farmers represented in the lawsuit in 10 states.
The lawyers were given two weeks to clarify who is represented in the lawsuit.