Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: $52 settlement in milk price fixing case reached, (Aug 23, 2016)

By Linda O’Brien, J.D., LL.M.

A group of dairy producers have agreed to pay $52 million to settle consumer claims that they conspired to substantially reduce the supply of raw milk in order to eliminate competition and artificially raise prices for raw milk and milk products. The plaintiffs’ motion for preliminary approval of the proposed settlement was held in abeyance by the federal district court in Oakland pending the parties’ submission of a revised Legal Notice of Settlement (Edwards v. National Milk Producers Federation, August 22, 2016, White, J.).

In September 2011, consumers from 15 states and the District of Columbia who indirectly purchased milk and other fresh milk products filed suit against several milk producers for allegedly conspiring to limit the production, and thereby increase the price, of raw milk, in violation of various state antitrust and consumer protection statutes. In September 2014, the court certified the consumer class. After the close of discovery and denial of cross-motions for summary judgment by the court, the parties reached a resolution. Before the court was the plaintiffs’ unopposed motion for preliminary approval of the settlement.

Under the terms of the settlement, the defendants have agreed to pay $52 million, which is approximately 30 percent of the plaintiffs’ total estimated damages.

Approval of settlement agreement. According to the plaintiffs’ motion for preliminary approval, the proposed settlement was reached after extensive negotiations between experienced and informed counsel and, without any obvious deficiencies, readily meets the standards for preliminary approval.

The settlement bears no signs of collusion or conflict and was reached after the plaintiffs had a thorough understanding of the strengths and weaknesses of their case. Additionally, the allocation of the settlement fund among class members was fair and did not provide preferential treatment for segments of the class or class representatives. The amount of compensation was fixed because a detailed accounting of milk and fresh milk purchases over a decade in the context of an estimated 73 million class members would result in an excessive administrative expense. The fixed amounts to be paid to class members will be set after the number submitting claims has been determined.

Certification of settlement class. For purposes of the settlement, the following class was certified: all consumers who, from 2003 to the present, as residents of Arizona, California, District of Columbia, Kansas, Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Hampshire, Oregon, South Dakota, Tennessee, Vermont, West Virginia, and Wisconsin, indirectly purchased milk and/or other fresh milk products for their own use and not for resale.

Notice of settlement. The court found that the terms of the settlement generally fell within the range of possible approval. However, the court raised a question regarding the proposed Legal Notice of Settlement. There was only a brief reference to the attorney fees, costs, and service awards for the named plaintiffs in the Notice informing class members of their right to attend the final approval hearing. The court therefore recommended that the Notice be edited to clarify the specific amounts of requested attorney fees, costs, and service awards. Although the court was inclined to grant the motion for preliminary approval, the plaintiffs’ motion was held in abeyance to allow the parties to submit a satisfactory revised Notice.

A final approval hearing will be held on December 16 to determine the fairness, reasonableness, and adequacy of the proposed settlement, and to consider class counsel’s request for attorney fees of up to one-third of the settlement.

The case is No. 4:11-cv-04766-JSW.

Attorneys: Sara Payne (Gustafson Gluek PLLC) for Matthew Edwards. Chong Seok Park (Steptoe and Johnson LLP) for National Milk Producers Federation. Jesse William Markham (Baker & Miller PLLC) and Carl R. Metz (Williams and Connolly LLP) for Dairy Farmers of America, Inc. Clifford G. Tsan (Bond Schoeneck and King, PLLC) and Jacob P. Alpren (Farmer Brownstein Jaeger LLP) for Dairylea Cooperative Inc.

Companies: National Milk Producers Federation; Dairy Farmers of America, Inc.; Dairylea Cooperative Inc.; Agrimark, Inc.; Land O'Lakes, Inc.

Cases: Antitrust CaliforniaNews