Nearly 500 dairy farmers who once sold milk to Dean Foods recently received letters threatening legal action unless they refund money legitimately earned prior to the bankruptcy filing. American Farm Bureau Federation (AFBF) announced Dec. 4 that it is standing up for the dairy farmers being targeted by “predatory lawyers” representing the estate of Dean Foods, which is still 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 AFBF 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 said 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, AFBF explained.
“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 organization said.
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 called 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 if the Dean Foods estate continues to pursue litigation against farmers. “AFBF intends to intervene in any such litigation or to seek relief in the bankruptcy court. AFBF will consider all remedies that it can seek as an advocate of the producers.”
Dairy Farmers of America (DFA), which purchased the majority of Dean Foods’ assets following the company’s bankruptcy, said it had no advance knowledge of the situation and expressed displeasure in the recent turn of events.
“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,” the company said. “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.”
DFA further noted that it 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.”