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Cooperatives Working Together Settlement Lifts Legal Cloud

December 4, 2019

ARLINGTON, VA. – The National Milk Producers Federation today announced it has reached a settlement agreement to end a class-action lawsuit concerning a herd retirement program that ended in 2010 and was administered through NMPF’s Cooperatives Working Together initiative. The settlement will safeguard ongoing efforts to aid U.S. dairy producers, lift a years-long legal cloud and allow NMPF member cooperatives and the current CWT program to move forward with greater legal and fiscal certainty.

The plaintiffs (generally larger retailers and companies who directly purchased butter and cheese from CWT member cooperatives) in First Impressions Salon, Inc. v. National Milk Producers Federation et al, (pending in the U.S. District Court for the Southern District of Illinois), and defendant NMPF have agreed to a settlement of $220 million in exchange for a release from all claims. Based on antitrust rules that mandate a tripling of any damages, that amount is less than 6 percent of the damages sought by plaintiffs. The settlement amount will be paid through existing CWT mechanisms, ensuring no disruption to other business operations.

Neither NMPF nor any of its member cooperatives admit any wrongdoing as a result of this settlement. NMPF is the sole defendant to be a party to the settlement, but the settlement extinguishes claims against all the defendants.

“There is no way to sugarcoat a settlement of this size, especially given that the Herd Retirement Program was a well-publicized effort designed to serve dairy producers in difficult times and was praised by two Secretaries of Agriculture as well as leading members of Congress,” said Jim Mulhern, president and CEO of NMPF, the nation’s largest organization representing dairy farmers. “Given the potential damages and the uncertainties surrounding any jury trial, resolving this case eliminates the possibility of a truly crippling outcome. Lifting this cloud will aid us in our work advancing the well-being of U.S. dairy producers, which includes the current robust CWT export assistance program.”

The plaintiffs’ litigation sought damages relating to the so-called Herd Retirement Program operated under Cooperatives Working Together. The program offered dairy farmers financial incentives to market their milking herds for beef. It operated between 2003 to 2010 and was openly lauded by USDA secretaries and congressional agriculture committee chairmen from both parties at the time as an important, appropriate way to help struggling dairy farmers.

NMPF’s decision to enter into this settlement recognized the uncertainties inherent in any jury trial, the very large damages sought by the plaintiffs and the fact that the successful Export Assistance Program is entirely unaffected by the settlement.  In 2018, CWT assistance aided 57 percent of American-type cheese exports, 44 percent of butter exports, and 39 percent of whole-milk powder shipments, helping U.S. dairy producers expand trade relationships in an extremely challenging world trade environment.