Attorneys for a class of dairy farmers are seeking final court approval of a $158.6 million settlement, with about a third of the amount going to themselves.
In court papers filed on Wednesday in a case over control of the milk market in the American Southeast, the attorneys for the class tried to deflect concerns raised about the $52.8 million in fees they are seeking as part of the class action settlement reached in January.
Since the settlement, two class members wrote letters to the court in Greeneville, Tenn., asking for a reduction in the attorneys' fees, which will come out of the settlement. One of the class members called the fees "obscenely excessive."
Lawyers at Baker & Hostetler, which served as lead counsel for the class, countered that the letters offered no legal basis for a reduction in the fees. They also noted that their side had invested $53 million in attorney time plus $8 million in out-of-pocket expenses, "with no guaranty of any recovery much less a return."
Defendants in the underlying settlement included the Dairy Farmers of America and former CEO Gary Hanman, National Dairy Holdings LP, Dairy Marketing Services LLC and Mid-Am Capital LLC.
The lawsuit alleged that the defendants conspired to control the milk market in 14 states in the Southeast by excluding competition from independent milk farmers and cooperatives.
In January, Dairy Farmers of America agreed to a settlement for $140 million, with an additional $18.6 milllon to be put into a fund over the next two years to guarantee a stronger Class I utilization rate in federal orders 5 and 7. That adds up to the $158.6 million reported here. Read more.
Thousands of dairy farmers in southeastern and mid-Atlantic states are eligible for the payouts.
The plaintiffs had previously obtained $145 million in settlements from milk bottler Dean Foods Co, the Southern Marketing Agency and one of its managers.
The total amount obtained from all of the defendants, $303.6 million, represents the largest antitrust settlement in the Eastern District of Tennessee, according to lawyers for the plaintiffs.
U.S. District Judge Ronnie Greer has set an April 3 fairness hearing to consider whether to approve the latest settlement and fees sought by class counsel.
Even if the court approves the fees, there is some uncertainty about where those fees will end up. That is because when the case started more than six years ago, Robert Abrams of Baker & Hostetler, the lead attorney for the plaintiffs, was a partner at Howrey, the defunct law firm that filed for bankruptcy in 2011.
The Howrey trustee, Allan Diamond of Diamond McCarthy, who is seeking to recover assets for the estate, has indicated in court papers that he considers fees recovered by Abrams in the dairy litigation as significant assets belonging to the estate.
Diamond did not return a call seeking comment.
Abrams declined to comment.