Ag groups backing dairy farmers amid Dean Foods lawsuit
By Kacie Hulshof, Staff Writer Published: December 07, 2020
Image from Dean Foods
Nearly 500 dairy farmers who once sold milk to Dean Foods have received a letter threatening legal action unless they refund money legitimately earned prior to Dean Foods filing for bankruptcy. Although Dean Foods has transitioned most of its operations to Dairy Farmers of America, the letter appears to indicate that there are still efforts to get money back from diary farmers (DFA says it has no connection to the Dean Foods Estate, which is behind the lawsuit).
The legal action has spread quickly over social media in recent days, with channels such as SeeJessFarm on Intstagram being among the first dairy producers to call out Dean Foods and ask for the public's help to spread awareness. Jess said she received a seven page legal document essentially telling her that she was being sued and that the farm had to pay Dean Foods $50,000 (or take the settlement and pay $45,000 in one month).
A post shared by Jess is awesome. (@seejessfarm)
"As you can imagine this morning as I am reading this, tears instantly come to eyes. Because first of all — how the hell are we going to pay this? Second of all, I am confused and lost and angry," Jess said on an Instagram live.
Right away, the Pennsylvania Milk Marketing Board and Pennsylvania Attorney General told farmers not to pay Dean Foods the money — they planned on finding a solution on the farmers behalf.
AFBF legally rebuffs Dean Foods
The American Farm Bureau Federation is standing-up for hundreds of dairy farmers being targeted by predatory lawyers representing the estate of Dean Foods, which is currently undergoing bankruptcy proceedings.
"Shame on these predatory lawyers for bullying dairy farmers at a time when many are struggling to keep their farms running," said American Farm Bureau Federation President Zippy Duvall. "It's ludicrous to suggest the meager profits from regularly scheduled and routine milk sales — sales that are heavily watched and regulated by the federal government — were outside the regular course of business. Someone needs to have the farmers' backs and I'm proud to say AFBF is stepping-in to do just that."
AFBF sent a letter to the law firm managing the Dean Foods estate calling for an immediate reversal of their "predatory shakedown" and threatening potential legal action if the firm fails to withdraw the letters sent to farmers. In the letter, AFBF General Counsel Ellen Steen says the letters sent to farmers "are deceptive and constitute an abuse of process that attempts to extract funds that the Debtor (Dean Foods) is not entitled to under the threat of a lawsuit. Put plainly, your letters are a predatory shakedown, written in legalese."
Many recipients of the Debtor letters are independent farmers already struggling through difficult economic times made worse by the COVID-19 pandemic. The letters put producers in an impossible position — either pay the amounts demanded or incur the cost of legal counsel to defend against the Debtor's allegations.
The AFBF letter outlines the legal legitimacy of the payments made to dairy farmers and admonishes the lawyers representing Dean Foods for knowingly taking advantage of farmers, saying, "Sending the Letters under these circumstances is not only deceptive, but outrageous because they threaten legal action when in fact the Producers have no legal exposure for the reasons set forth herein."
AFBF further calls upon those lawyers to retract their demands by notifying each farmer by separate letter within 10 business days; returning any funds already received; and by ceasing any litigation against farmers who did business with the company. The AFBF letter clearly states a willingness to step-in in the event that the Dean Foods estate pursues litigation against farmers,
Dairy Farmers of America's stance
In a statement, Dairy Farmers of America said, "While we had no advance knowledge and would not have contemplated such a disappointing action, we are aware that the Dean Foods Estate is threatening legal actions against certain milk suppliers unless they agree to repay a portion of the payments received in the ordinary course of business and on regular payment dates prior to the Dean Foods bankruptcy filing.
"We find it extremely disappointing that hardworking dairy farm families are now put in the position of having to incur costs, either in paying the amounts demanded, or obtaining legal counsel to defend themselves against these farfetched claims.
"While there is no legal basis to stop the Dean Foods Estate from pursuing such frivolous claims, it's egregious to attempt this claw back of funds from the very dairy farmer families that supplied milk in good faith and trust.
"We have no connection to the Dean Foods Estate and are disheartened by its actions. DFA did not receive preference action letters. As part of the Asset Purchase Agreement between DFA and Dean Foods, which includes a broad release of claims against each other, Dean Foods released DFA from these types of claims."