Allen v. Dairy Farmers of America, Inc. et al.,
D.VT No. 5:09-cv-00230-cr

Publicly Available Documents

In Allen v. Dairy Farmers of America, Plaintiffs allege a conspiracy among Defendants Dean Foods Company, Dairy Farmers of America, Dairy Marketing Services, and others to monopolize and monopsonize[FN1] the market for raw Grade A milk in Federal Milk Market Order 1, which covers much of the Northeast United States, including all of Vermont. The result of this conspiracy, as alleged, was to depress the prices that dairy farmers were paid for raw Grade A milk. Plaintiffs seek to represent a class of dairy farmers who both produced (i.e., are physically located in) and pooled raw Grade A milk in Federal Milk Market Order 1.

Proposed Settlement

On December 13, 2010, Plaintiffs in the litigation Allen v. Dairy Farmers of America, Inc. et al., D.VT No. 5:09-cv-00230-cr, filed a Motion for Preliminary Approval of a settlement with Dean Foods Company. The settlement is only with Dean Foods. The litigation will continue against the other two defendants, Dairy Farmers of America and Dairy Marketing Services.

The key provisions in the Proposed Settlement regarding relief are as follows:

Monetary Damages (para 9.1):

Within fifteen calendar days after the entry of the Preliminary Approval Order, the Settling Defendant will deposit a sum of thirty million United States dollars ($30,000,000) into an escrow account (the "Settlement Fund"), held and administered by Eagle Bancorp, Inc. Eagle Bancorp shall serve as the escrow agent (unless the parties agree upon another escrow agent). The escrow account shall be established and administered in accordance with paragraph 10.1 hereto.

Injunctive Relief (para 9.2):

Not later than six months following the Effective Date, Settling Defendant will offer to purchase, at a price that, in Settling Defendant's sole discretion, reflects a competitive market price, from marketers other than Dairy Farmers of America ("DFA") or Dairy Marketing Services ("DMS"), raw grade A milk that meets or exceeds Settling Defendant's quality specifications, including producer's certification that milk is rBST-free, in an aggregate quantity of at least 10% and up to 20% of Settling Defendant's monthly raw grade A milk purchases for its plants in Order 1, such quantity not to exceed 60,000,000 pounds (600,000 cwt) per month, for delivery at Settling Defendant's processing plants in East Greenbush, NY; Franklin, MA; and West Lynn, MA. Settling Defendant shall have independent discretion to continue or discontinue making such offers to purchase at such levels as it determines at the end of 30 months from the first purchase pursuant to this program.

Preliminary Approval Hearing

On April 15, 2011, the Court held a Preliminary Approval Hearing, the purpose of which was to determine whether the settlement was within a range of acceptable settlements, whether the settlement was arrived at appropriately, and whether the proposed notice to the Settlement Class was sufficient, among other issues.

The Vermont Attorney General’s Office has at this time not taken any position with regard to this litigation but will be evaluating what recommendation to make to the Court on the Proposed Settlement.

Many of the documents filed in this litigation have been heavily redacted due to the parties’ confidentiality concerns. However, it is impossible to evaluate the settlement without as full access as possible to the documents that have been filed with the Court. Therefore, the Attorney General’s Office has worked with the parties to make these documents as publicly available as possible. This has resulted in less-redacted versions of the documents being produced. More documents will be posted to this site as they are received by the Attorney General’s Office.

[FN1] A monopolist controls the market for sale of a particular good or service. A monopsonist controls the market for the purchase of a particular good or service – in this case, the purchase of raw Grade A milk.