Antitrust Law Daily Class settlement approved in peanut price fixing conspiracy action
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Tuesday, April 6, 2021

Class settlement approved in peanut price fixing conspiracy action

By Steven D. Cole, J.D.

The class action brought by peanut farmers against peanut processors, who were accused of facilitating a price fixing conspiracy that depressed the price of Runner peanuts, has resulted in a settlement which received final court approval.

A federal district court in Norfolk, Virginia granted final approval of a settlement in a class action involving an alleged peanut price fixing conspiracy. Representatives for the class of aggrieved peanut farmers reached an agreement with two of the three defendants in a multi-million dollar settlement. This is expected to result in financial recovery to peanut farmers across the southern and southeastern regions of the country who sold peanuts at a reduced price due to the defendants’ price fixing scheme. The court applied the Rule 23(e)(2) factors and concluded that the settlement adequately considered and protected the rights of the class members (D&M Farms v. Birdsong Corp., April 5, 2021, Jackson, J.).

Procedural history. The farmers initiated this action in 2019, claiming that the processors to whom they sold their peanuts—Birdsong Corp. ("Birdsong"), Golden Peanut Co., LLC ("Golden Peanut"), and Olam Peanut Shelling Co., Inc. ("Olam")—used their 80-90 percent market share in the peanut shelling industry to facilitate a price fixing conspiracy that depressed the price of Runner peanuts. In May 2020, the court denied the defendants’ motion to dismiss, finding that the complaining farmers adequately alleged a price fixing conspiracy and fraudulent concealment. In December 2020, the court certified the class as "[a]ll persons or entities in the United States who sold raw, harvested runner peanuts to any of the Defendants, their subsidiaries or joint-ventures, from January 1, 2014 through December 31, 2019." Prior to certification, representatives for the class agreed to settlements with Birdsong and Olam, which the court approved on December 23, 2020. Notice of settlement was then distributed to 9,369 prospective class members beginning in January 2021. The court held a fairness hearing in March 2021, during which the parties reported no objections to the settlement from any prospective class members. On April 5, 2021, the court granted the farmers’ motion for final approval of the settlement entered into with Birdsong and Olam.

Rule 23(e)(2) factors. First, the court found that the class representatives and counsel adequately represented the class, noting that the class representatives were themselves peanut farmers who sold raw, harvested Runner peanuts to the defendants and that the class counsel, in the court’s view, had adequately and capably adjudicated the claim. Second, the proposal was negotiated at arm’s length, according to the court. The parties were at all times represented by counsel and had nearly completed discovery at the time of settlement negotiations. Third, the court was persuaded that the settlement provided adequate relief to the class members, taking into account the factors listed in subsection (e)(2)(C) of Rule 23. The parties agreed to a total settlement fund of $57,750,000, from which payments would be allocated among approved claimants according to the amount of their recognized sales of Runner peanuts to the defendants during the class period, after payment of attorneys’ fees, costs and expenses, and service awards for class representatives. Fourth, according to the court, this proposed pro-rata distribution of awards was fair and equitable as to ensure that class members would not be over- or under-compensated for any alleged harm.

Counsel for the farmers stated that they intend to file a motion seeking attorneys’ fees and service awards after the claim against Golden Peanut has been resolved. The court noted that should it grant a service award to the class representatives, the reward will be fair and reasonable, in accordance with the requirements of Rule 23(e)(2).

This case is No. 2:19-cv-00463-RAJ-LRL.

Attorneys: Kevin Jermone Funk(Durrette Arkema Gerson & Gill PC) and Simeon Andrew Morbey (Lockridge Grindal Nauen PLLP) for D&M Farms and Rocky Creek Peanut Farms, LLC. Patrick Hugh O'Donnell (Kaufman & Canoles PC) for Birdsong Corp. and Golden Peanut Company, LLC. Ashley Marie Bauer (Latham & Watkins LLP) for Olam Peanut Shelling Company, Inc. f/k/a McClesky Mills, Inc.

Companies: D&M Farms; Rocky Creek Peanut Farms, LLC; Birdsong Corp.; Golden Peanut Company, LLC; Olam Peanut Shelling Company, Inc. f/k/a McClesky Mills, Inc.

MainStory: TopStory Antitrust GCNNews VirginiaNews

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