Dean Foods to pay $140 million to settle dairy farmers' lawsuit

CHICAGO — Southeastern dairy farmers in a class-action lawsuit have reached a $140 million settlement with one of their adversaries: Dean Foods Co.

The case was filed four years ago on behalf of 7,200 farmers, accusing Dean, the nation's largest milk processor, and Dairy Farmers of America, the nation's largest dairy cooperative, and other entities, including one in Kentucky, of unfair competition.

Under the settlement, the Dallas-based dairy processor will pay $140 million into a fund that will be distributed to dairy farmers who are part of the class action. Dean will make an initial payment of $60 million when the settlement receives preliminary court approval in the U.S. District Court for the Eastern District of Tennessee, with $20 million payments in each of the following four years.

"This is a very positive and successful resolution," the lead attorney for the plaintiffs, Robert G. Abrams of Baker Hostetler, said in a statement. "We feel the settlement amount of $140 million speaks to Dean's past activities in the Southeast and the impact those activities had on the dairy farmers."

The case will continue for the remaining defendants: Dairy Farmers of America of Kansas City, Mo.; Southern Marketing Agency of Louisville; Dairy Marketing Services of East Syracuse, N.Y.; National Dairy Holdings of Dallas; and two individuals.

"Still at issue are charges that the remaining defendants conspired with each other and Dean Foods to stop competing for the purchase of raw Grade A milk from farmers and that, as a result, farmers were paid less for their milk," Abrams said in the statement.

He said Dean also was taking steps to restore fair competition.

"We continue to be confident that we have operated lawfully and fairly at all times in the Southeast," Dean chief executive Gregg Engles said in a statement. "We believe this settlement is in the best interest of our shareholders, employees, customers and consumers. Settling this case allows us to focus on the business challenges that we face and to continue to take costs out of our operations while avoiding the expense, uncertainty and distraction of a protracted litigation and the likelihood of a lengthy appeals process."