Judge rejects cooperative settlement with Northeast dairy farmers; says payments inadequate

A judge has rejected a proposed settlement between cooperative Dairy Farmers of America and Northeast dairy farmers over an alleged effort to drive down prices paid to farmers.

U.S. District Court Judge Christina Reiss says the payments to farmers from the $50 million proposal are inadequate if there are no significant changes to how the cooperative does business. She also says the farmers' lawyers would be the primary beneficiaries of the proposed settlement if their fees are approved.

The 2009 class-action lawsuit charged the cooperative, its marketing arm and Dallas-based Dean Foods with working together to monopolize the market for raw milk in the Northeast.

The settlement would have provided about $4,000 to more than 7,000 dairy farmers. Dean Foods agreed to a separate $30 million settlement in 2011.