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Allen v. Dairy Farmers of America, Inc.

United States District Court, D. Vermont

February 8, 2016

ALICE H. ALLEN, LAURANCE E. ALLEN, d/b/a Al-lens Farm, GARRET SITTS, RALPH SITTS, JONATHAN HAAR, CLAUDIA HAAR, RICHARD SWANTAK, PETER SOUTHWAY, MARILYN SOUTHWAY, REYNARD HUNT, ROBERT FULPER, STEPHEN H. TAYLOR, and DARREL J. AUBERTINE, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
DAIRY FARMERS OF AMERICA, INC. and DAIRY MARKETING SERVICES, LLC, Defendants.

ORDER GRANTING DAIRY FARMER SUBCLASSES' MOTION FOR PRELIMINARY APPROVAL OF DECEMBER 2015 SETTLEMENT WITH DEFENDANTS DAIRY FARMERS OF AMERICA, INC. AND DAIRY MARKETING SERVICES, LLC (Doc. 712)

CHRISTINA REISS, CHIEF JUDGE UNITED STATES DISTRICT COURT

Pending before the court is Dairy Farmer Subclasses' Motion for Preliminary Approval of December 2015 Settlement with Defendants Dairy Farmers of America, Inc. ("DFA") and Dairy Marketing Services, LLC ("DMS") (Doc. 712). The December 2015 Settlement Agreement (the "2015 Settlement Agreement"), if approved, will resolve litigation that has been pending for over six years.

This class action arises out of Plaintiffs' allegations that Defendants DFA and DMS engaged in a wide-ranging conspiracy to control the supply of raw Grade A milk in Order 1, which had the effect of suppressing certain premiums paid to dairy farmers for their milk.[1] The court has certified a class consisting of all dairy farmers, whether individuals, entities, or members of cooperatives, who produced and pooled raw Grade A milk in Order 1 during any time from January 1, 2002 to the present. This class is comprised of two certified Subclasses.[2] After an adjudication of Defendants' motion for summary judgment, which the court granted in part and denied in part, the parties reached a settlement agreement on July 1, 2014 (the "2014 Settlement"). On March 31, 2015, the court denied final approval of the 2014 Settlement. The parties subsequently continued negotiations, which have resulted in the 2015 Settlement Agreement now before the court.

In determining whether to grant preliminary approval, the court starts with the proposition that "there is an overriding public interest in settling and quieting litigation, and this is particularly true in class actions." In re Prudential Sec. Inc. Ltd. P'ships Litig., 163 F.R.D. 200, 209 (S.D.N.Y. 1995). Preliminary approval is the first step in a multi-step process during which the 2015 Settlement Agreement will be scrutinized by both the court and class members. See Fed. R. Civ. P. 23(e). "Preliminary approval of a class action settlement, in contrast to final approval, 'is at most a determination that there is what might be termed 'probable cause' to submit the proposal to class, members and hold a full-scale hearing as to its fairness.'" Menkes v. Stolt-Nielsen S.A., 270 F.R.D. 80, 101 (D. Conn. 2010) (quoting In re Traffic Exec. Ass 'n-E. R.R.s, 627 F.2d 631, 634 (2d Cir. 1980)). After granting preliminary approval, the court may still reject a settlement in the event it determines that the settlement is not "fair, reasonable, and adequate." Fed.R.Civ.P. 23(e)(2).

For purposes of preliminary approval, the court finds that the 2015 Settlement Agreement was reached as a result of non-collusive, arms-length negotiations that involved experienced attorneys and thirteen Subclass Representatives, all of whom are familiar with the facts and legal theories at issue in this complex litigation. See, e.g., Davis v. Cent. Vt. Pub. Serv. Corp., 2012 WL 1202135, at *3 (D. Vt. Apr. 10, 2012) ("Preliminary approval is appropriate where it is the result of serious, informed, and non-collusive negotiations, where there are no grounds to doubt its fairness and no other obvious deficiencies[]... and where the settlement appears to fall within the range of possible approval.") (internal quotation marks omitted).

The 2015 Settlement Agreement proposes injunctive relief that is more extensive than the injunctive relief proposed in the parties' 2014 Settlement. Among other things, the 2015 Settlement Agreement provides for:

• the establishment of a Farmer Ombudsperson position within DFA and DMS for five years;
• the establishment of an Advisory Council position within DFA and DMS for four years;
• certain safeguards for milk testing and adulterated milk testing for five years;
• limits on DFA's and DMS's ability to acquire a controlling interest in DairyOne, a milk testing company, for ten years;
• restrictions on the entry and renewal of full-supply agreements;
• the ability for cooperatives to terminate their relationship with DFA or DMS during the next four years;
• limits on DFA's and DMS's ability to terminate Subclass members' milk contracts;
• the prohibition of DFA and DMS from entering into any agreement that restricts the solicitation of raw Grade A milk from farmers;
• the ability of Subclass Counsel to seek, without opposition, the unsealing and release of previously confidential documents that were submitted to the court during this case;
• certain required financial and management disclosures by DFA and DMS;
• notice and procedure requirements if DFA decides to vote its members as a block;
• a milk check review by DFA's Northeast Area Council;
• the maintenance of DFA's and DMS's ongoing antitrust compliance programs;
• protections against retaliation and discrimination for ...

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