Attorneys defend $53 million fee in dairy antitrust settlement

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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.

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TN  |  April, 01, 2013 at 09:23 AM

Yes, the lawers get too much. However,without them there would be no settlement. What is obscene to me is that it took 6 years to figure this out and get through the system, a system that is designed by lawers to benefit lawyers. Where is the article detailing the DFA executives losing there job or going to jail? I hope the DFA membership and board members will respond appropriately. Everyone on the board should be asking why DFA is in existence? What does their mission statement sound like? Who do they actually serve? It is time for DFA to get to the business of serving the American dairy farmer with some purpose and ethics and stop the back room deals that benefit the corporate office.

April, 01, 2013 at 09:53 AM

DFA is an old fashion co-op benefiting dairy farmers marketing their milk.

Batavia, NY  |  April, 01, 2013 at 11:54 AM

Who are the bigger thieves? The lawyers or DFA management? Now that is a good question!

CNY  |  April, 01, 2013 at 01:29 PM

To no name posted, BWAAHAAHAAHAA, that's a good one.

MO  |  April, 01, 2013 at 01:56 PM

Do you ever think about where that money is coming from? In the case of DFA; the board members chose to make decisions with the member’s money and company (it is a coop) that ended up costing the members millions: First, we were paid below market prices for our products. Even if we are reimbursed it will never make up for the time value of that money. Consider for a moment how much money we all had to borrow (and pay interest on) or at best were not able to reduce our debt at as fast of a rate over the years because of this fraud. Second, the reimbursement will be less the attorney’s fees. We can debate all day on if the fees are fair or not but what should be known is who is paying for the fees. It's the members. Not only are we paying the fees from the plaintiffs (our) attorneys but we also get to pay for the defense. Anyone who tells you otherwise is either a fool or a crook. DFA has no money. It is a coop. We the members own DFA. It is our money. So when you hear them say that they will pay it. What they mean is the members will pay it. Every single expense that DFA has is paid for with our money I would like to remind everyone that the board members sole purpose for being is supposed to be to represent us to the best of their ability. But I fail to see how that will ever be possible so long as they are paid on volume and we are paid on margin. It is almost never to a board members advantage to sell at a higher price. Remember DFA takes its marketing fees from us based on volume not margin. They do not take less when margins are tight and more when they are good. The more volume they move the more cash they bring in. The higher the volume the more inflated their salaries become and the more support staff and

MO  |  April, 01, 2013 at 01:58 PM

Continued: the more support staff and expenses they can justify. The best way to sell more of anything is to lower the price. It seems to me from the outcome of this case that our fearless leaders have learned that they indeed have nothing to fear. Tell me again, what exactly the financial cost was to the board members who made these decisions. They didn’t even loose their jobs. The bottom line here is that the DFA board members and our federal government operate on the exact same philosophy: Take all you can and if you get caught taking too much, take more. One final thought here: Elections have now and have always had consequences. To vote for anyone based on what they say is pure foolishness. One should only vote once one is informed through research not rhetoric.

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