Lawyers for a class of dairy farmers led by Baker & Hostetler antitrust practice chair Robert Abrams got some very welcome news on Friday–and so did creditors of the defunct law firm Howrey LLP. Almost a year after the lawyers reached a $140 million class settlement with Dean Foods Co. to resolve price-fixing claims on behalf of about 7,500 dairy farmers and cooperatives in the southeast, a federal judge in Tennessee has finally signed off on the deal.
U.S. District Judge J. Ronnie Greer agreed Friday to grant final approval for the Dean settlement, and he also approved a separate $5 million deal with defendants Southern Marketing Agency Inc., a milk marketing cooperative, and SMA general manager James Baird. According to the judge, the agreements provide for about $13,000 for individual class members–or close to a third of what a plaintiffs’ expert pegged as the farmers’ damages in the alleged scheme to depress prices for raw milk. The SMA settlement also includes structural changes to the way milk is marketed the southeast.
“I always thought these were very positive settlements for dairy farmers in the southeast,” Abrams said in an e-mail. “I’m glad they’re going to at least get a some compensation at this point.” He added that “there are still very significant defendants remaining in the case and there is a trial date currently scheduled.”
As lead counsel for the class, Abrams originally reached the settlement with Dean’s lawyers at Dechert in July 2011, just four months after he joined Baker & Hosteler amid Howrey’s collapse. The deal was indefinitely put on hold, however, when Judge Greer agreed with Dean that potential conflicts required him to decertify a subclass of farmers that belonged to a cooperative called the Dairy Farmers of America, which is also a key defendant in the case. Finally, after appointing new counsel for the DFA subclass, Greer recertified the class in February and put the settlement back on track.
As reported by our colleagues at The Am Law Daily last year, the case became a point of contention in failed merger talks between Howrey and Winston & Strawn, which represents SMA. Howrey’s estate and creditors, meanwhile, are likely in line to receive a substantial chunk of the fees that the plaintiffs lawyers take home from the settlement. We left a message with Howrey Chapter 11 trustee Allan Diamond of Diamond McCarthy to ask about the potential impact of the settlement, but we didn’t hear back. Abrams declined to comment on how the deal could affect his former firm’s estate.
According to a motion for attorney fees filed in April, Abrams and the other class lawyers are seeking more than $55 million for their work on the case against Dean and SMA, including $48.3 million in fees and $7.4 million in expenses. Most of that would go to Baker & Hosteter and Howrey: An accounting of the firms’ work on the case shows that Abrams’ current and former firm together spent more than 108,000 hours on the case, resulting in lodestar estimate of $44.6 million in fees. (The filings don’t show the balance of fees between Howrey and Baker, but Abrams was at Howrey during the bulk of the litigation.) Eight other firms, including Cohen, Milstein, Sellers & Toll; Boies, Schiller & Flexner; and Hausfeld LLP, each estimated their fees at around $500,000 or less.
Meanwhile, the plaintiffs are still pressing ahead with claims against alleged co-conspirator Dairy Farmers of America and a group of related defendants. Trial against DFA is set to begin in November. (DFA is represented by Williams & Connolly.) Abrams is also representing northeastern dairy farmers, along with lead counsel from Cohen Milstein, in a parallel antitrust class action pending in U.S. District court in Vermont.
(An earlier version of this story misidentified White & Case as counsel for Dairy Farmers of America. The defendant is represented by Williams & Connolly. We regret the error.)
