Fonterra settles 2016 Australian clawback class action

Farmers have expressed relief after Fonterra settled a class action case over the 2016 clawback.

Farmers have expressed relief after Fonterra settled a class action for $25 million over its 2016 decision to clawback milk payments.

Financial compensation for dairy farmers who supplied Fonterra in May and June 2016 was sought by legal firm Adley Burstyner over Fonterra’s retrospective pricing move, known as a farmgate price “clawback”.

The case was filed in Victoria’s Supreme Court in June 2020 and the four-week trial was scheduled to start on November 15, until last week’s move.

Adley Burstyner alleged the clawback decision was “misleading, deceptive and unconscionable conduct”, which caused suppliers financial and mental distress.

Lead lawyer David Burstyner said he received a number of grateful email and text messages following the Friday confirmation.

“They’re getting a nice bit of news before Christmas and, with court approval targeted for (early) next year, a nice payout in 2023,” he said.

“It was an intense court process to get here. Fonterra fought hard and we fought hard for farmers.”

Mr Burstyner said his legal team - which numbered around 30 staff at one point - looked at 55,000 documents ahead of scheduled trial.

“(We were) prepared many detailed witness and expert statements, were fired up for a trial in a few weeks, and thought our case had some really good points,” he said.

“But anything can happen at trial, and then there can be appeals, so this settlement avoids all that delay and risk.

“As with all class actions, the court will now check that this outcome is fair and reasonable -including all legal and financing costs - and then the definitive outcome gives farmers certainty, money, satisfaction that their concerns have been vindicated and closure on a period that was very distressing for many.”

Mr Burstyner paid tribute to farmers as well as support from the financier LLS.

“(LLS were) fabulous in providing a warchest of millions to meet fire with fire, and we congratulate the plaintiffs from Strathmerton who put in a superhuman effort, and thank the other farmers who assisted,” he said.

Fonterra Australia managing director Rene Dedoncker said the settlement was in the best interests of the industry.

“We have settled the class action, without any admission of liability,” he said.

“We believe it is in the best interests of farmers, the dairy industry and our business so we can all move forward.”

Mr Dedoncker said the processor had worked to rebuild its relationship with the wider dairy industry since the 2016 clawback.

“Over the last six years we have invested a significant amount of time and effort to overhaul our relationship with farmers to rebuild trust and strengthen the dairy industry,” he said.

“We are proud of the good relationships we have today with our farmers and the wider industry and are committed to investing in the future of Australian dairy for years to come.”

Management confirmed the settlement sum of $25 million, inclusive of interest and all costs, had already been provided for in the prior year’s financial statements and will not have a material impact on Fonterra Co-operative Group Limited’s financial position.