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Allen v. Dairy Farmers of America, Inc.

United States District Court, D. Vermont

July 9, 2014

ALICE H. ALLEN, LAURANCE E. ALLEN, d/b/a Al-lens Farm, GARRET SITTS, RALPH SITTS, JONATHAN I IAAR, CLAUDIA HAAR, and RICHARD SWANTAK, on behalf of themselves and all others similarly situated, Plaintiffs,


CHRISTINA REISS, Chief District Judge.

This matter came before the court on the expedited motion of the DFA/DMS and non-DFA/DMS subclasses (collectively, the "Dairy Farmer Subclasses") for preliminary approval of a proposed settlement between the Dairy Farmers Subclasses and Defendants Dairy Farmers of America, Inc. ("DFA") and Dairy Marketing Services, LLC ("DMS") (the "Proposed Settlement") (Doc. 568). The Dairy Farmer Subclasses, through their attorneys ("Subclass Counsel"), ask that in conjunction with preliminary approval, the court approve their proposed notices to class members and set this matter for a hearing to determine whether the Proposed Settlement is "fair, reasonable, and adequate" as required by Fed.R.Civ.P. 23(e) (the "Fairness Hearing").

I. Basic Terms of the Proposed Settlement.

The Proposed Settlement was reached on the eve of trial and contemplates settlement payments totaling $50 million, payable in two installments of $25 million each, the first in 2014 and the second prior to April 15, 2015. In addition, the Proposed Settlement requires DFA and DMS to implement certain changes to how they do business in the Northeast, including altering certain activities that the Dairy Farmers Subclasses challenged in this action. In exchange, class members will provide DFA and DMS a release.

Dairy Farmers Subclass Counsel seeks an attorney's fee award of $16.66 million or one third of the Settlement Fund, plus the payment of reasonable costs and expenses incurred in connection with this case. No estimate of these costs and expenses has been provided although these amounts should be calculable.

The Class Representatives for the DFA/DMS subclass are Jonathan Haar, Claudia Haar, and Richard Swantak. The Class Representatives for the non-DFA/DMS subclass are Alice H. Allen, Laurence E. Allen, Garrett Sitts, and Ralph Sitts. Subclass Counsel will request an incentive fee in the amount of $20, 000 for each of the Class Representatives' farms. The Class Representatives for the Dairy Farmer Subclasses oppose the Proposed Settlement and will seek to voice their opposition at a Fairness Hearing. No reason for their opposition has been provided.

A. The Draft Notices to Class Members.

When presented with a proposed settlement of a class action lawsuit, a "court must direct notice in a reasonable manner to all class members who would be bound by the proposal." Fed.R.Civ.P. 23(e)(2). The notice to class members regarding a proposed settlement must therefore be "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). The notice "must express no opinion on the merits of the settlement, " Handschu v. Special Servs. Div., 787 F.2d 828, 833 (2d Cir. 1986), and "need not include the entire text of the proposed settlement but may describe it in general terms." Id. "Subject to these requirements... the district court has virtually complete discretion as to the manner of giving notice to class members." Id.

Subclass Counsel has submitted a draft "Notice of Proposed Settlement" (the "draft Notice") and a "Summary Notice of Proposed Settlement" (the "draft Summary Notice"). The draft Notice describes the purposes of the notice as follows: "A Court authorized this Notice because you have a right to know about a proposed settlement of this class action lawsuit and about all of your rights and options before the Court decides whether to approve the settlement." (Doc. 568-3 at 4.) Although the draft Notices generally provide adequate notice of the Proposed Settlement, in certain respects, they describe Dairy Farmers Subclass members' rights and the effect of approval of the Proposed Settlement in an incomplete or inaccurate manner or in a manner that may be potentially confusing or misleading.

For example, although the amount each class member will receive from the Proposed Settlement has not and cannot be calculated with certainty, the draft Notices propose that class members be advised as follows:

How much money can I get from the Settlement?

The amount of money you may receive cannot be calculated at this time. Your share will depend on the amount of raw Grade A milk you produced in and pooled on Order 1 from January 1, 2002 to [Date] as well as the number of valid claims that are received and the attorneys' fees, incentive fees for the Subclass Representatives, costs, and expenses approved by the Court.
We don't know how many people will file claims. However, if 8, 000 dairy farmers file a valid claim, the average payment per farmer is estimated to be $4, 000. Your payment could be more or less than $4, 000 depending on the amount of raw Grade A milk you produced and pooled on Order 1.

(Doc. 568-3 at 7.) It is not clear what date will be inserted as the end date for the share calculation. This date may affect a class member's position with regard to the Proposed Settlement. Moreover, as the draft Notice requires all claims be received "no less than fourteen (14) days prior to the Fairness Hearing" (Doc. 568-1 at 6), a class member would be required to submit a claim or waive the right to do so even if he or she opposes the Proposed Settlement. The draft ...

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