Antitrust Law Daily Wrap Up, ANTITRUST—D. Ver.: Attorneys awarded $7M in fees from settlement between dairy farmers, marketers, (Jun 16, 2016)

By Jody Coultas, J.D.

Lead counsel for dairy farmers that filed price fixing and conspiracy claims against Dairy Farmers of America, Inc. (DFA), Dairy Marketing Services, LLC (DMS), Dean Foods Company ("Dean Foods") were awarded $7 million in attorney fees, as part of a settlement by the federal district court in Burlington, Vermont. The court also awarded subclass representatives incentive payments (Allen v. Dairy Farmers of America, Inc., June 14, 2016, Reiss, C.).

Consumers alleged that DFA, DMS, Dean Foods, and others conspired to control the supply of raw Grade A milk, which had the effect of suppressing certain premiums paid to dairy farmers for their milk.

The court approved a settlement requiring Dean Foods to make a one-time payment of $30 million, with 20% going to attorney fees and costs. Class representatives were denied any incentive payments.

On November 19, 2012, the court certified a class of all dairy farmers who produced and pooled raw Grade A milk (the "Dairy Farmers Class"). This class is comprised of two Subclasses. Due to a dispute between opposing subclass representatives and Lead Counsel arose, the court granted the appointment of Intervenor Counsel. The farmers negotiated a settlement with DFA and DMS that was overwhelmingly supported by the Dairy Farmers Class and approved by the court. The Dairy Farmer Subclass moved for attorney fees, costs, and incentive awards for subclass representatives in connection with the DFA/DMS 2015 Settlement.

An attorneys' fees award comprising 14% of the December 2015 Settlement ($7 million), without accrued interest, was reasonable, according to the court. Lead Counsel sought attorney fees in the amount of $16,666,666, or 33.3% of the monetary recovery under the settlement. Intervenor Counsel proposed an award of $11.5 million, which reflects 23% of the monetary recovery. A reasonable fee is based on: (1) the time and labor expended by counsel; (2) the magnitude and complexities of the litigation; (3) the risk of the litigation; ( 4) the quality of representation; (5) the requested fee in relation to the settlement; and (6) public policy considerations. Counsels’ lodestar did not provide a reliable cross check for a reasonable attorney fees award, but did provide factual support for the claim that they expended substantial time and effort on this case. Awarding a 14% fee in lieu of the one-third fee requested by Lead Counsel will result in a more meaningful recovery per farm.

The court denied Intervenor Counsel's motion for a portion of the attorney fees award without prejudice. Intervenor Counsel requested $500,000 of the attorney fees award as compensation for "the value they have provided in resolving the prior procedural infirmity of the case and their leadership in providing the material enhancement ofthe proposed settlement's substantive relief." A total distribution plan was necessary before the court could determine whether the request was reasonable. If Plaintiffs' counsel are unable to resolve the issue, they may raise the issue before the court.

An award of costs was granted by the court. Lead Counsel also sought reimbursement of their expenses. Reasonable expenses incidental and necessary to the representation are recoverable. Although substantial, the costs outlined by Counsel were incidental and necessary to providing adequate representation and not artificially inflated or otherwise in bad faith.

Lead Counsel sought incentive payments of $20,000 to each farm that has been a Subclass Representative since the class was certified, and $10,000 to each farm that has been added as a Subclass Representative during the past year. Incentive awards compensate class representatives for work done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize their willingness to act as a private attorney general. The four farms initially appointed as Subclass Representatives maintained significant involvement in this case for approximately six years without any guarantee that their efforts would result in a successful outcome. An award of $20,000 each was proper. The recently added Subclass Representatives invested less time and bore less risk, and deserved $15,000 each.

The case is No. 5:09-cv-230.

Attorneys: Andrew D. Manitsky (Lynn, Lynn, Blackman & Manitsky, PC) for Alice H. Allen. Amber L. McDonald (Baker & Miller PLLC) and Carl R. Metz (Williams & Connolly LLP) for Dairy Farmers of America, Inc. and Dairy Marketing Services, LLC.

Companies: Dairy Farmers of America, Inc.; Dairy Marketing Services, LLC

Cases: Antitrust VermontNews