The National Milk Producers Federation (NMPF) 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 (CWT) 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.

In First Impressions Salon Inc. vs. National Milk Producers Federation et al., which is pending in the U.S. District Court for the Southern District of Illinois, the plaintiffs (generally larger retailers and companies that directly purchased butter and cheese from CWT member cooperatives) 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% of the damages sought by plaintiffs. The settlement amount will be paid through existing CWT mechanisms to ensure 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 of 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 chief executive officer 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 Herd Retirement Program operated under CWT that offered dairy farmers financial incentives to market their milking herds for beef. The program operated between 2003 to 2010 and was openly lauded by agriculture secretaries and chairmen of congressional agriculture committees from both parties at the time as an important, appropriate way to help struggling dairy farmers.

NMPF said its 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% of American-type cheese exports, 44% of butter exports and 39% of whole milk powder shipments, helping U.S. dairy producers expand trade relationships in an extremely challenging world trade environment.