Allen v. Dairy Farmers of Am., Inc., Case No. 5:09-cv-230
| Decision Date | 31 March 2015 |
| Docket Number | Case No. 5:09-cv-230 |
| Court | U.S. District Court — District of Vermont |
| Parties | ALICE H. ALLEN, LAURANCE E. ALLEN, d/b/a Al-lens Farm, GARRET SITTS, RALPH SITTS, JONATHAN HAAR, CLAUDIA HAAR, and RICHARD SWANTAK, on behalf of themselves and all others similarly situated, Plaintiffs, v. DAIRY FARMERS OF AMERICA, INC., and DAIRY MARKETING SERVICES, LLC, Defendants. |
(Doc. 625)
Pending before the court is a motion for final approval of a proposed settlement between the DFA/DMS and non-DFA/DMS subclasses (collectively, the "Dairy Farmers Subclasses") and Defendants Dairy Farmers of America, Inc. ("DFA") and Dairy Marketing Services, LLC ("DMS") (the "Proposed Settlement"). (Doc. 625.)
The Proposed Settlement requires Defendants to make a payment of $50 million dollars to class members in two installments, authorizes certain injunctive relief, provides for incentive payments to Subclass Representatives, and seeks a proposed attorney's fees award of approximately $16.6 million, plus expenses, which Defendants have agreed not to oppose.
Based on the number of claims that may be filed, the average payment per class member dairy farm is estimated to be approximately $4,000. In exchange, class members must enter into a release (the "Proposed Release"), releasing, among other things, any claims they have in this action, any claims which may have been brought in this action,and any claims which in certain respects are related to this action against Defendants and other entities with whom Defendants have or had a relationship.
Defendant DFA is a dairy cooperative that produces, processes, and distributes raw Grade A milk. Defendant DMS is a milk marketing agency which was formed in 1999 by DFA and Dairylea Cooperative, Inc. ("Dairylea") and is currently owned by DFA, Dairylea, and St. Albans Cooperative Creamery, Inc. Plaintiffs are dairy farmers who produced and sold raw Grade A milk in Federal Milk Market Order 1 ("Order 1") during the time period between January 1, 2002 to the present.
This class action arises out of Plaintiffs' allegations that Defendants and their alleged co-conspirators engaged in a wide-ranging conspiracy at the processor and cooperative levels to control the supply of raw Grade A milk in Order 1, which had the effect of suppressing certain premiums paid to dairy farmers for their milk. In their Revised Consolidated Amended Class Action Complaint (the "Amended Complaint"), (Doc. 117), Plaintiffs allege that Defendants engaged and are presently engaging in five violations of the Sherman Act, 15 U.S.C. §§ 1-2: (1) conspiracy to monopolize/monopsonize in violation of § 2 of the Sherman Act; (2) attempt to monopolize/monopsonize in violation of § 2 of the Sherman Act; (3) unlawful monopoly/monopsony in violation of § 2 of the Sherman Act; (4) price fixing in violation of § 1 of the Sherman Act; and (5) conspiracy to restrain trade in violation of § 1 of the Sherman Act. The court granted summary judgment in Defendants' favor on Plaintiffs' price fixing claim.
In late 2010, Plaintiffs and former Defendant Dean Foods Company ("Dean") reached a settlement agreement (the "Dean Settlement") that required Dean to make a one-time payment of $30 million. Plaintiffs agreed to release and discharge Dean from certain claims and potential claims. After granting preliminary approval of the Dean Settlement and holding a fairness hearing regarding final approval on July 18, 2011, the court granted final approval of the Dean Settlement and awarded attorney's fees of $4.5million and costs and expenses of $1.5 million to Plaintiffs' counsel. (Doc. 341 at 14, 19.)1
On February 1, 2011, Plaintiffs filed a motion to certify the class and appoint class counsel and class representatives, (Doc. 206), which the court denied without prejudice. (Doc. 361.) Following a subsequent request for certification of two subclasses, (Doc. 388), this court granted on November 19, 2012, Plaintiffs' renewed motion for class certification and certified the following two subclasses:
1. All dairy farmers, whether individuals or entities, who produced and pooled raw Grade A milk in Order 1 during any time from January 1, 2002 to the present, who are members of DFA or otherwise sell milk through DMS ("DFA/DMS subclass"); and
2. All dairy farmers, whether individuals or entities, who produced and pooled raw Grade A milk in Order 1 during any time from January 1, 2002 to the present, who are not members of DFA and do not otherwise sell milk through DMS ("non-DFA/DMS subclass").
(Doc. 435 at 3-4). The court further granted Plaintiffs' request to appoint counsel for the Dairy Farmers Subclasses (collectively, the "Subclass Counsel"), as well as to name Jonathan and Claudia Haar and Richard Swantak the Subclass Representatives of the DFA/DMS subclass and to name Alice Allen and Laurance Allen and Ralph Sitts and Garret Sitts the Subclass Representatives of the non-DFA/DMS subclass (collectively, the "Subclass Representatives").
As the case approached trial, the court granted in part and denied in part the parties' motions to exclude certain expert opinions, (Docs. 470 & 473), and Defendants' motion for summary judgment. (Doc. 525.) A jury trial was scheduled to take place on July 7, 2014 through August 20, 2014. After Subclass Counsel notified the court that a settlement had been reached, an expedited motion for preliminary approval of the Proposed Settlement was filed on July 1, 2014 by Subclass Counsel. In seekingpreliminary approval, Subclass Counsel advised the court that the Subclass Representatives unanimously opposed the Proposed Settlement. (Doc. 568; Doc. 568-1 at 4.) The court denied the motion for preliminary approval without prejudice, ruling "as a condition precedent to preliminary approval, [that] Subclass Counsel must disclose to the court the grounds for the Class Representatives' opposition to the Proposed Settlement." (Doc. 569 at 9.) Subclass Counsel submitted information to the court regarding why the Subclass Representatives opposed the Proposed Settlement, which included a letter to the court from the Subclass Representatives.
On October 3, 2014, Subclass Counsel filed a renewed motion for preliminary approval of the Proposed Settlement, (Doc. 580), which the court granted in part.2 (Doc. 582.) The court authorized dissemination of notice to the class and ordered that requests to opt back in, claims forms, objections, and/or requests to be heard be filed fourteen days before the Fairness Hearing. A Fairness Hearing was scheduled for January 29, 2015.
Prior to the Fairness Hearing, Subclass Counsel filed a motion for attorney's fees of $16.6 million, reimbursement of expenses of $3,705,645.91, and incentive awards of $20,000 per farm for the Subclass Representatives. (Doc. 588.) Plaintiffs' motion for final approval of the Proposed Settlement, (Doc. 625), is now pending before the court.
On January 29, 2015, the court held a full day Fairness Hearing, which is briefly summarized below.3
The court received five letters in support of the Proposed Settlement, (Docs. 593, 595, 605, 609 & 623), as well as a letter in support from Subclass Representative Alice Allen. (Doc. 592.) Four individuals spoke in favor of the Proposed Settlement at the Fairness Hearing. (Docs. 591, 602, 613 & 615.) Accordingly, a total of ten dairy farmers affirmatively expressed their support for the Proposed Settlement. In general, thesesupporters either spoke in favor of the Proposed Settlement or expressed concerns that this lawsuit has been harmful to the dairy industry; interfered with practices by Defendants that were advantageous to dairy farmers; pitted dairy farmer against dairy farmer; and constituted a waste of resources.
Alice Allen, the only Subclass Representative who supports the Proposed Settlement, stated that she would prefer "a better settlement" but recognized that "there are risks to both sides in going to trial" and "no guarantee[s] that [the class] would prevail at trial." (Doc. 636 at 50, 53.) She further stated: Id. at 51, 53.
The court received twenty-three letters objecting to the Proposed Settlement, (Docs. 589-90, 594, 596-601, 603-04, 606-08, 610, 612, 614, 616, 618, 627-29 & 632), as well as letters from two individuals who also spoke against the Proposed Settlement at the Fairness Hearing. (Docs. 611 & 630.) Subclass Representatives Richard Swantak, Garret Sitts, Ralph Sitts, Jonathan Haar, Claudia Haar, and their son Joshua Haar each provided a written and verbal statement, objecting to the Proposed Settlement. (Docs. 617 & 619-22.) Accordingly, a total of thirty-five dairy farmers representing twenty-eight farms affirmatively objected to the Proposed Settlement.
At the Fairness Hearing, the remaining Subclass Representatives opposed the Proposed Settlement, challenging both its procedural and substantive fairness. The remaining Subclass Representatives stated that they were advised of the Proposed Settlement only after a monetary settlement had been agreed to in principle by Subclass Counsel, which, in turn, impeded their ability to negotiate for the injunctive relief they contend is an essential component of any settlement.4 They further contend that theywere discouraged from conferring with one another regarding the Proposed Settlement5 and that their concerns about it and their desire to proceed to trial were given...
To continue reading
Request your trial