DFA to pay $46 million settlement in antitrust lawsuit
By CAROL RYAN DUMAS
Dairy Farmers of America will pay $46 million to settle a portion of an antitrust lawsuit over its trading activities on the Chicago Mercantile Exchange.
The co-op agreed to the settlement, but without admitting wrongdoing.
The plaintiffs, purchaser of dairy products Indriolo Distributors, Inc., Knutson's, Inc. and Valley Gold, LLC, filed the lawsuit in March 2009 against DFA, DFA subsidiary Keller's Creamery, former executives at the two companies and other unnamed co-conspirators.
The plaintiffs alleged between at least April 1, 2004 and Dec. 31, 2006, the defendants conspired to fix or manipulate the prices of CME Class III milk futures contracts, CME cheese spot call contracts and other contracts, according to court documents.
The plaintiffs also alleged the defendants obtained unjust enrichment and are obligated to make restitution.
The dairy co-op maintains the claims have no merit, but agreed to settle to avoid further expense, inconvenience and burden, distraction and diversion of personnel and resources, and the risk and expense of complex litigation, according to court documents filed in U.S. District Court for the Northern Illinois District.
"The payment of the settlement will not affect the cooperative's day-to-day operations or its ability to market members' milk and pay them a competitive price for that milk," DFA said in a statement released Friday. "Member milk checks and the member equity program will not be impacted."
In December 2008, the U.S. Commodity Futures Trading Commission ordered DFA and the same former executives to pay a civil penalty of $12 million over the same issues.
DFA also recently paid $140 million to settle a class action antitrust lawsuit by dairy farmers in 14 states in the Southeast over milk prices. DFA also agreed to pay an additional, refundable $9.3 million per year for two years to a fund to incentivize stronger Class I utilization rates in Federal Orders 5 and 7. The co-op admitted no wrongdoing in that case, which was settled in January.
DFA is also involved is an antitrust class action lawsuit brought by Northeast dairy farmers against the Dairy Farmers of America in U.S. District Court in Burlington, Vt.
The suit charges DFA and Dean Foods each with monopolizing a level of distribution of fluid milk in the Northeast and forcing dairy farmers to join DFA or its affiliate Dairy Marketing Services to survive.