DFA Reaches Settlement in Southeast Lawsuit

January 22, 2013

Today, Dairy Farmers of America’s Board of Directors and management announced the Cooperative has reached a settlement agreement in the class action lawsuit against DFA in the southeastern United States. Trial for the suit was scheduled to begin this month.

DFA makes no admission of wrongdoing in this settlement. Under the terms of the settlement, filed yesterday with the U.S. District Court for the Eastern District of Tennessee, DFA will pay $140 million to the plaintiff class. An additional, refundable $9.3 million per year for two years will be placed in a fund to incentivize stronger Class I utilization rates in Federal Orders 5 and 7.

Also included in the agreement are remedial elements regarding reporting, accounting and communication of certain business information and functions. Many of these components are consistent with new policies and procedures DFA management voluntarily developed and implemented previously to emphasize a culture of openness and transparency within the Cooperative.

“Our Board and management team have worked diligently to put certain old issues behind us,” said Rick Smith, president and chief executive officer. “This outcome positions DFA to fulfill a commitment to our members to resolve pending litigation, to remove a source of distraction for our leadership and to avoid additional legal fees.”

The payment of the settlement will not affect the Cooperative’s day-to-day operations or its ability to market members’ milk or pay them a competitive price for that milk. Member milk checks and the member equity program will not be impacted.

“The Cooperative remains healthy and poised for a bright future,” Smith said. “We continue to develop new member programs and invest in plants and new products. We also continue to seek out new opportunities and innovative ways to increase value to our dairy farmer owners.”