Dairy Farmers of America released the following statement this morning:
"Dairy Farmers of America (DFA) has reached a settlement agreement in a portion of the class action lawsuit regarding DFA’s trading activity on the Chicago Mercantile Exchange (CME) in 2004.
"Under the terms of the settlement with the class of direct purchasers of dairy products, filed this week, DFA makes no admission of wrongdoing and will pay $46 million to the plaintiff class.
"Our farmer leadership and management team have worked diligently to put certain old issues behind us and resolve pending litigation. Recently we were able to settle a class action lawsuit in the Southeast United States. Resolution of both of these lawsuits allows us 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 and pay them a competitive price for that milk. Member milk checks and the member equity program will not be impacted."
As part of the settlement, DFA has also agreed to implement and continue oversight, training and education compliance program regarding CME activities. And it has agreed to not participate in Class III milk futures contracts or cheese spot call contracts with the intent to manipulate markets.
The co-op settled its lawsuit with the Commodity Futures Trading Commission in 2008 over these same issues.
The financial settlements from this latest class action suit have already been included in DFA financial statements, in which it reported a total of $216 million in legal settlement costs in 2012. The larger chunk of that was to settle a class action lawsuit with dairy producers in the Southeast last fall.
DFA was able to make the settlement payments out of cash reserves. Nevertheless, the co-op’s 2012 net income of $83.2 million becomes a reported $132.8 million net loss.
Dairy Farmers of America, Inc. is a national dairy marketing cooperative that serves and is owned by more than 13,000 members on more than 8,000 farms in 48 states. For more information, visit www.dfamilk.com.