In re Dairy Farmers of America, Inc., 80 F. Supp. 3d 838

Background

Direct Purchaser Plaintiffs settled with Dairy Farmers of America (DFA) for a $46,000,000 cash common fund; Class Counsel sought up to one-third of the fund plus expenses as attorneys’ fees under the settlement agreement.
Schreiber Foods had been added as a defendant after the settlement amount was negotiated; later the court granted Schreiber summary judgment and declared it a class member for settlement distribution.
Class Counsel petitioned for fees and costs; Schreiber objected to the fee petition and also moved for Rule 11 sanctions against Plaintiffs for allegedly unsupported allegations. Schreiber separately filed a bill of costs as the prevailing party.
The court evaluated fee reasonableness under the percentage-of-the-fund approach, considered objections (including Schreiber’s standing), and reviewed Class Counsel’s lodestar cross-check and expenses.
The court denied Rule 11 sanctions (finding Plaintiffs’ allegations had a sufficient pre-filing evidentiary basis and Rule 11’s standards were not met) and allowed Schreiber’s bill of costs.
Final rulings: awarded Class Counsel one-third of the $46M fund ($15,333,333.33) plus $488,491.24 in costs and interest; denied Schreiber’s Rule 11 motion; awarded Schreiber $32,215.23 in taxable costs but stayed enforcement pending appeal.

Issues

Issue	Plaintiff's Argument	Defendant's Argument (Schreiber/DFA)	Held
Reasonableness of attorneys’ fees	One-third of fund (per settlement) is customary and reasonable given complexity, risk, and results	Fees should be reduced, measured by lodestar, and exclude time spent pursuing claims against Schreiber	Court applied percentage-of-the-fund, granted one-third fee; lodestar cross-check not required and Schreiber’s objections insufficient to reduce award
Standing to object to fee petition	Implicitly, class members may object; Plaintiffs argued Schreiber lacked standing while still a defendant	Schreiber asserted it had standing because it would benefit from or be harmed by fee award	Court held Schreiber had standing (was effectively a class member) and its objections were considered but did not change the result
Rule 11 sanctions (timeliness and merit)	Plaintiffs: Schreiber’s motion was untimely and allegations had evidentiary support from CFTC materials and investigation	Schreiber: Plaintiffs’ allegations against Schreiber lacked factual support and warranted sanctions	Motion timely under Rule 11 standards; court denied sanctions — Plaintiffs performed a reasonable pre-filing inquiry and claims were not frivolous
Taxable costs as prevailing party	Plaintiffs contested many transcript-related and incidental costs as non-taxable or excessive	Schreiber sought $32,215.23 (transcripts, service, copying, etc.)	Court allowed Schreiber’s bill of costs in full, finding costs taxable and reasonable; enforcement stayed pending appeal

Key Cases Cited

In re Synthroid Mktg. Litig., 264 F.3d 712 (7th Cir. 2001) (percentage and market-rate factors for common-fund fee awards)
In re Synthroid Marketing Litig., 325 F.3d 974 (7th Cir. 2003) (endorsement of tiered/declining percentage approach in common-fund cases)
In re Cont'l Ill. Sec. Litig., 962 F.2d 566 (7th Cir. 1992) (use of market analogy and declining percentages for large recoveries)
Silverman v. Motorola Solutions, Inc., 739 F.3d 956 (7th Cir. 2014) (appellate review of fee award and deference to district court’s market-rate assessment)
Trans Union Corp. Privacy Litig., 629 F.3d 741 (7th Cir. 2011) (caution about over-reliance on risk to justify exceptionally large fees)
Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (lodestar method: hours reasonably expended times reasonable rate)
Blum v. Stenson, 465 U.S. 886 (U.S. 1984) (recognition of percentage method for common-fund cases)
Matrix IV, Inc. v. Am. Nat'l Bank & Trust Co., 649 F.3d 539 (7th Cir. 2011) (Rule 11 timeliness: 21-day safe-harbor is a floor; sanctions may be filed post-judgment)
Weeks v. Samsung Heavy Indus. Co., Ltd., 126 F.3d 926 (7th Cir. 1997) (strong presumption in favor of awarding taxable costs to prevailing party)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (standing principles relied on in assessing who may object to class settlement matters)