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December 5, 2019

National Milk Producers Federation Agrees to Settle CWT Suit for $220 Million

 |  By: Jim Dickrell

The National Milk Producers Federation (NMPF) announced Wednesday it has settled a class-action lawsuit brought by larger retailers and companies who purchased cheese and butter from members who participated in the Cooperative Working Together program for a whopping $220 million.

In 2016, NMPF settled a class-action lawsuit brought on behalf of consumers for $52 million.  

The suits were bought following CWT’s Herd Retirement Program, which was an industry-financed herd buyout program that operated between 2003 and 2010. Plaintiffs in both suits alleged the program unfairly raised dairy product prices, costing consumers and food retailers millions of dollars.

This week’s $220 million settlement releases NMPF from all further claims by the plaintiffs. NMPF settled the case because it was at risk of even greater damages had the case gone to trial. “Based on antitrust rules that mandate a tripling of any damages, [the $220 million] is less than 6 percent of the damages sought by plaintiffs,” NMPF says in its release announcing the settlement.

“The settlement amount will be paid through existing CWT mechanisms, ensuring no disruption to other business operations,” the release further states.

“There is no way to sugarcoat a settlement of this size, especially given that the Herd Retirement Program was a well-publicized effort to serve dairy farmers in difficult times and was praised by two Secretaries of Agriculture as well as leading members of Congress,” says Jim Mulhern, NMPF president and CEO.

“Given the potential damages and the uncertainties surrounding any jury trial, resolving this case eliminates the possibility of a truly crippling outcome,” he says. “Lifting this cloud will aid us in work advancing the well-being of U.S. dairy producers, which includes the current robust CWT export assistance program.”

That’s not to say the settlement hasn’t already had an impact. A source within NMPF says the organization was anticipating some kind of settlement would eventually have to be made. The original suit was filed in 2013, and NMPF has been building its CWT reserves over the past several years. It will also have to use some CWT future funds as the terms of the settlement are worked out.

But CWT officials anticipate they will be able to continue to operate CWT export assistance at much the same level as they have in the recent past. Through October, the CWT program has supported export sales of cheese, butter, whole milk powder and other dairy products that equate to nearly 900 million pounds of milk equivalent. In 2018, CWT export-supported sales topped 1 billion pounds of milk equivalent.

About 30 dairy cooperatives and as well as individual farmers participate in CWT. The assessment is 4₵/cwt.

NMPF still faces a CWT case in Florida brought by Winn-Dixie Stores, Inc. But that case is much smaller in scope than the two previous cases.