By Sherry Bunting

There is good news for dairy farmers and milk haulers who received the notices of intended litigation and settlement offers from ASK LLP, a Minnesota law firm representing the Dean Foods estate. The Pennsylvania Milk Marketing Board (PMMB), working with the State Attorney General’s office, and the American Farm Bureau, working through internal and external attorneys, are heroes in bringing resolution to this troubling issue reported on extensively here at the AgMoos blog as well as in Farmshine and at the Milksheds Blog. 

BUT… Don’t ignore the letters. Dairy producers and haulers will still need to act on these letters. 

The good news is, they can simply fill out the one page DECLARATION LETTER developed by PMMB’s chief counsel Doug Eberly with help from the state Attorney General’s office and verbally approved by ASK LLP. 

According to Doug Eberly, chief counsel for PMMB, the Declaration Letters were approved by ASK LLP after a conference call last Friday and can be used by affected dairy producers and haulers from ALL STATES — not just Pennsylvania. There are two separate declaration forms – one for producers and one for haulers. 

An explanation of the forms, with instructions can be read and downloaded at: Avoidance Claim Declarations Explanation.pdf (pa.gov) .

A copy of the Producer Declaration Letter appears below, and it can also be downloaded from this direct link: Farmer Declaration Nov 12.pdf (pa.gov) .

A copy of the Hauler Declaration Letter can be downloaded at this direct link: Hauler Declaration November 12.pdf (pa.gov) .

“Please, please, please complete this Declaration Letter because it gets you off the hook, you will complicate matters if you don’t send them back,” said PMMB chairman Rob Barley in a Center for Dairy Excellence industry conference call December 10. “The (Declaration Letter) will release you from this if you fill it out. We know it is an inconvenience, but if you don’t fill out the Declaration (or handle this your own way with your own attorney), you will risk losing that money.”

Barley said it was the hard work of many people to bring this to resolution.

“We emphasize that it is vitally important that farmers and haulers return the completed declarations to ASK LLP as soon as possible,” the PMMB urged in a press statement Wednesday, Dec. 9, two days after releasing the explanation and the forms at its website https://www.mmb.pa.gov/

American Farm Bureau has sent a letter from attorneys to ASK LLP demanding the letters about preference claims be reversed and withdrawn within 10 days. This an important backstop to the PMMB action in order to be sure no farmers or haulers pay money the Dean estate has no right to. Farm Bureau called the move a “predatory shakedown in legalese.”

Attorneys for Farm Bureau have threatened legal action against ASK LLP if the letters are not withdrawn. However, there is no indication that ASK LLP will withdraw the letters, nor that they can withdraw them because of their trustee obligation to the bankruptcy court.

PMMB’s Eberly says he will be glad when every affected farmer has sent in the Declaration and receives absolution back in writing from the Dean estate trustee ASK LLP. 

During a Center for Dairy Excellence call Thursday (Dec. 10) with hundreds of farmers on the line, Eberly and others from the PMMB board and staff gave an update and answered questions.

Here’s what you need to know:

1. Dairy farmers and milk haulers have an air-tight defense.

2. The Declaration Letters developed by PMMB for use in ALL STATES show this defense by filling in the blanks regarding how often your milk was picked up and how long you shipped milk to Dean Foods.

3. The Declaration Letter describes how milk payments are “ordinary course” of business.

4. The PA Milk Marketing Board made the Dean trustee letters a priority for the board and the staff to get taken care of, and they have been working as fast as they can to do so.

5. The letters received by dairy farmers and haulers are ‘avoidance claims.’ These arise when a business files for bankruptcy protection. All payments the business made to creditors – including vendors and suppliers – in the 90 days immediately prior to filing are liable to be recovered in order to be used to pay other creditors.

PMMB chief counsel Doug Eberly stated that the PA State Attorney General’s office has the expertise on bankruptcy law and has been involved in the Dean Foods bankruptcy for 13 months because of the seven Dean Foods milk plants that are regulated by PMMB to receive milk from PA farms. They have explained the situation and they have interceded in a way that will help all affected dairy farms and haulers from ALL STATES.

Eberly explained the theory behind these letters from ASK LLP is that some creditors of Dean Foods could have had bargaining power to get money from Dean pre-bankruptcy that was not available then to other creditors.

The Declaration Letters producer can send in show that the payments they (and haulers) received were NOT preferential but represented “ordinary course of business.”

“Farmers kept shipping milk in good faith and kept getting paid for the milk in order for Dean to stay in business,” said Eberly.

“If you are a producer or hauler, you received payments in ordinary course of business with Dean. They picked up your milk every day or every other day or you shipped it to them every day or every other day and they paid you twice a month as the Federal and State Milk Marketing Orders specify,” Eberly explained. “We wrote this in the declaration that you can fill out, sign and send back to ASK LLP – without all of the other things the letter you got was asking for.”

BOTTOM LINE, said Eberly: “ASK needs some kind of documentation from you because they have an obligation to the bankruptcy court to show — pursuant to the bankruptcy code – the things they are charged with doing have been done.”

Sending the Declaration Letter back to ASK LLP shows the unsecured creditor committee that as a farmer or hauler, “you have demonstrated to the trustee that you were paid in the ordinary course of business and do not owe this money back, because you weren’t paid in any preferential way when you got paid.”

PMMB chairman Barley, thanked Eberly for the work he has done. “He took the lead on this and reached out to whoever he needed to and brought this to a quick resolution,” said Barley, noting that the PMMB worked with the state Attorney General’s office, the Secretary of Agriculture, Center for Dairy Excellence, American Farm Bureau and organizations and individuals from other states.

“ASK LLP has taken a lot of heat on this and they want to get this behind them because farm groups came together to back the farmers (and haulers),” said Barley. “We’ve worked with anyone who is able to help as we reached out to other states and they reached out to us and this helps them as well. We are unique to have PMMB in Pennsylvania, and this is a time it has shown brightly to have this in Pennsylvania.”

Eberly noted that the insurance bond held by Dean in the state of Pennsylvania is gone. It has already been exercised during the bankruptcy to pay producers, so it would not have been available to help farmers in this situation.

Eberly’s phone rings a lot these days, but he is diligent to get back to everyone. His phone number is on the explanation page with the Declaration Letters and he freely gives it out.

“You can call me at 717.836.3115. I am getting a lot of phone calls but I will get  back to you as soon as I can,” he said.

BELOW ARE SPECIFIC QUESTIONS AND ANSWERS handled on the group call Dec. 10. (Recording is also available here)

Q. If I filed a critical vendor contract with the bankruptcy court to be paid during the bankruptcy, is that enough to prove I did not get preferential payments before the bankruptcy?

A. No. Eberly stated he is not giving legal advice; however, the critical vendor agreements signed by dairy producers and haulers were standard forms that had ways to modify them so they don’t address the points ASK is asking for. The declaration forms PMMB has gotten approved for farmers and haulers are specific to the way milk plants do business with farmers and haulers.

“If you are a dairy producer, the way you prove you did not get preferential payments is you either send all the records that ASK LLP has asked you for, OR you send in the declaration letter we put together to take care of it, and this declaration form is the most efficient way to do that,” said Eberly.

Q.   Do the Declaration Letters PMMB provided need to be submitted by an attorney or how does a dairy producer or hauler submit them?

A.  The bottom line is that the PMMB with the help of the Attorney General’s office worked with ASK LLP to set up these Declaration Letters in a way that a dairy producer or hauler could simply fill it out and send it back by email, fax or postal mail – ON THEIR OWN.

Eberly explained that while a person or corporation can’t really represent itself in bankruptcy court, only through an attorney, these Declaration letters are NOT going to the bankruptcy court (on their own). They are going to the law firm (ASK LLP) that is trustee for the Dean estate and will be part of what ASK shows as fulfilling their obligation with the court on seeking preferential payments.

As for who signs the Declaration Letter? Anyone with authority to sign something on behalf of their farm or hauling business – whether as a single family sole proprietor, multi owner LLC or incorporated business – can sign the Declaration Letter.

“It never hurts to have a lawyer to check with to make sure what you are doing is the right thing to do,” said Eberly. But in general, he said, if three members of an LLC sign other documents, then they would sign this. If one person for an incorporated farm signs other types of documents on behalf of the farm, they would sign this. If a farm received separate letters for separate farm locations, return a Declaration Letter in response to each letter received from ASK LLP.

Q.  Do the documents on the PMMB website at www.mmb.pa.gov only apply to Pennsylvania, or can other farms from other states send them in?

A. PMMB chairman Barley said “It is very important that everyone know about these forms because farmers and haulers from other states can use them. We want to get this information out to every farmer or hauler who received a notice from Dean through ASK LLP so they can use this form. We have shared the forms with other state organizations and with Farm Bureau.”

Eberly earlier stated in an email to Farmshine that ASK LLP will accept these Declaration Letters from producers and haulers in ALL STATES, even though PA Milk Marketing Board is the entity to have constructed them, working with the Attorney General’s office and ASK LLP.

“We did not make these forms PA-specific,” said Eberly, noting that he has talked to the Kentucky Dairy Development Council, the Vermont Attorney General’s office, the Michigan Department of Agriculture, and AgriVoice on behalf of several entities in Tennessee. He said that private individuals have called and are sending the Declaration Letters around and that Farm Bureau is contacting people as well.

Q.  In talking with ASK LLP, is there a way to get a list of all the producers and haulers who got Avoidance Claims letters from ASK so they can be directly contacted and informed to use the Declaration Letters?

A.  Carol Hardbarger, PMMB executive secretary, said that their office has a spreadsheet of producers who shipped milk to the former Dean Foods that represented 125 to 150 names. She said nationwide the number could be 1000, but that they don’t have such a list. She said it is possible that some producers and haulers many have already paid the settlement offer in the letters from ASK LLP.

“We can send information out to individuals on the list we have for Pennsylvania, but we don’t have names from other states,” she said.

PA Representative Frank Ryan (a former CPA who specialized in bankruptcy, now a state lawmaker) noted that a list of all creditors, and those the trustee is asking for money back would be at the Dept. of Justice website. He said a state Attorney General’s office would be able to access that list to determine who needs to be notified in their state.

Meanwhile, many efforts are being made to get the word out through farm media and word of mouth.

Rep. Ryan stated that while he is not an attorney, he did specialize in bankruptcy as a CPA before being voted into the PA state legislature. “These types of ‘demand letters’ are common in bankruptcies,” said Ryan. “They are trying to determine a ‘preference period’. I can’t imagine that any dairy producer got any preference payment or was treated better than someone else (ahead of the bankruptcy).”

Ryan explains: “Say I am owed money by Dean for services (as a CPA) on a 90-day invoice. And say you as a farmer did a contemporaneous exchange of something of value (milk) for payment and you are paid every 14 days. You get preference over me. That’s ordinary business. But, if Dean paid me as a CPA instead of you for that contemporaneous exchange of milk for payment, then the trustee would come back to me for payment.”

He gave this example to further show that it is hard to imagine a case where a dairy producer, or milk hauler, would be liable for paying back this money because they continued to ship milk and be paid.

“In all likelihood, a farmer or hauler should not have to pay any money back. The Declaration Letters are intended to help those producers demonstrate that they do not have to pay that money back,” he said.

Now, if someone went ahead and paid the settlement offer, Ryan said it may be difficult to get that money back. But he said using the Declaration Letter and hiring an attorney to get it back might be successful.

Q. Who, specifically should the Declaration Letters be sent to?

A. At the top of every demand letter sent by ASK LLP is the name, phone number and email address for the paralegal to which your file number has been assigned. That is who you email your signed Declaration Letter to. If using postal mail, get proof such as delilvery confirmation or certify the letter. There is also a fax number on your packet. That number is 651.406.9676. Be sure if faxing to put the name of the paralegal assigned to your file on cover sheet with your Declaration Letter when faxing. Your Declaration Letter has a spot to fill in your File Number so they can handle your case quickly.

Eberly explained that the letters from ASK LLP to producers and haulers “have a paralegal assigned to your file. That is the name and email address to send to, and it will be different for different farmers.”

Eberly notes that some farmers who don’t have email can fax the Declaration letter back. The ASK LLP fax number is on the letterhead. It is 651.406.9676. Be sure to put the fax to the attention of the paralegal that has been assigned to your particular file, says Eberly.

“On your letter from ASK, it will say ‘this matter is assigned to’ and then a name of a person and their phone number and email. This is the person you want to get your Declaration Letter to,” said Eberly. “Get it to the person you are assigned to so that you hear back faster. Until you hear back from them, you will still be wondering about this, and we want to get you to not wondering as quick as we can.”

Q. Do I need to send anything with the Declaration?

A. Eberly said it is their understanding that the Declaration Letter, itself, is sufficient.

Q. Should the dairy producer retype the Declaration to reflect their operation or just fill in the blank? For example, should we retype to change “I” to “We”

A. According to Eberly, there is no need to retype. In fact, don’t retype. Just cross out “I” and write above it “We”. He said “do it with a pen.”

Q. What do I do if I sold milk to Dean for 30 years through a cooperative and 7 years as an independent? Which number do I put down for the number of years?

A. Eberly said in a case like that, just put what is recent. If you shipped milk for the past 7 years as an independent producer and the letter is addressed to you, enter 7 years on that line. “Seven years is good enough. As a dairy farmer, you are not in the position to bargain for special treatment (prior to bankruptcy) so what you are showing in this Declaration is that your treatment in those 90 days before Dean filed bankruptcy was no different than your treatment by Dean at any other time in the course of your relationship with Dean Foods.”

Q. What happens if we simply do not respond to the letter we received from ASK LLP? Is it possible the entire claim will be dropped on its own?

A. Everyone on the call from Eberly to Barley to Ryan stated that ignoring the letter is unwise and risky. “I would caution you about not answering the letter,” said Rep. Ryan. “Absent the response with this Declaration Letter, it will be in the hands of the court. If you ignore it, and they determine you owe the money, you will get an immediate judgement against you and they (bankruptcy court) have incredibly powerful ways to get those funds, so I caution you not to ignore the letter.”

With these Declaration Letters developed by PMMB and approved by ASK LLP, there’s no reason to ignore this. Dairy producers and haulers have an efficient way to take a big step to put this behind them.

Q. Does the American Farm Bureau have standing to bring legal action if Dean does not meet their demand to retract these claims?

A. No one on the call wanted to really address that, except to say that in Pennsylvania, even with the state Attorney General’s office being involved in navigating this issue, a state AG can only take a case and pursue it under certain circumstances.

Instead of waiting for some sort of court action when bankruptcy courts have so many powers we don’t understand, the easiest thing to do to put this behind us is fill out the Declaration Letter and be done with it. Obviously, if producers and haulers do this, and end up still having a problem, that meets a higher threshold for others to get involved in representing farmers at a higher level.

“If you fill out the Declaration Letter and send it back in, that will provide your defense and you should not need further action,“ said Barley.

Q. What is the deadline to submit the Declaration Letter?

A. Best answer is: Submit it by the date on your letter from ASK LLP. Some packets say December 19, others December 24. Whatever your date is, submit your Declaration by that date.

That said, Eberly noted that for those wanting their attorney to look at it, they do have a little flexibility on that date because the trustee (ASK LLP) will not begin filing these claims with the bankruptcy court until January, and those they believe to be farmers will not be in the first group they file.

You see, this is why Declaration Letters are needed and must be sent back quickly. ASK LLP as trustee will file with the court any entity that was paid in that 90 days for the bankruptcy court to take action against. Your Declaration Letter protects you and it protects the Dean estate trustee by showing that they contacted you about the money you were paid and you exercised your defense in this efficient manner.

“You are not being asked to compile all the records that were in that letter from ASK, you just have to download this form, fill it out and sign it and email or fax it back and be done with it,” said Eberly.

Q. Do I need to submit a declaration letter if I provided a paralegal with their requested information already?

A. “I would call the paralegal and ask if they had a chance to look at it and make a determination, and I would also submit the Declaration Letter just to be on the safe side,” said Eberly.

Q. What should lenders and others do who received assignments from milk checks direct from Dean Foods if they received these letters?

A. Since everyone is operating under the belief that producers and haulers won’t owe money back, then their assignees should not owe money back because the assign would not have been paid except for the farmer getting paid.

Eberly noted that lenders have access to legal people and accountants to answer questions for them. But if you are a producer who has money paid directly to someone out of your milk check, contact them to see if they got a letter and tell them what you are doing. Contact the paralegal listed on your letter and let them know that your assignee got a letter too and piggyback your Declaration Letter to cover them by having that conversation.