Cotton farmers in Dunklin County, Mo., recently received news that their class action lawsuit against the USDA had been settled for $2.25 million.

The settlement, approved by Judge Lewis Blanton of the United States District Court for the Eastern District of Missouri, means a legal and administrative saga that began in 1998 has wound to a close. Settlement funds were distributed the second week in April.

Plaintiffs alleged that they and other farmers in Dunklin County received substantially less in loan deficiency payments than they were entitled to receive because they were instructed by Farm Services Administration officials to sign the wrong form. The action asserted 12 counts for relief, including constitutional violations and challenges to the validity of USDA regulations and policies denying equitable relief contrary to statutory authority.

“This had to do with beneficial interest in cotton,” says attorney Gretchen Garrison of Stinson Morrison Hecker LLP. “Producers are supposed to apply for loan deficiency payments while they still have beneficial interest in a cotton crop. ‘Beneficial interest’ has its own set of criteria, but the form the class members signed locked in loan deficiency payment rates at the time of ginning.”

Garrison says that would be appropriate only for people who lose beneficial interest at that time. For others — like those who sell their cotton and lose title after ginning — there's another form that allows you to “float” until ginning is completed and the cotton is sold. Nothing is locked in until the point of sale.

“Well, in this particular year, from the date of ginning to the date of sale, the loan deficiency payment rate rose. Because these farmers were told — and did — sign a particular Farm Services Administration form, they weren't allowed the higher loan deficiency payment rate,” says Garrison.

Who was ultimately at fault?

“I wouldn't use the word ‘fault’ when describing the Farm Services Administration office's advice,” says Garrison. “They just made a mistake. The loan deficiency payments hadn't been available for a while and people weren't familiar with the procedures.”

In relevant statutes, there is a procedure for requesting relief and appealing if relief is denied. Every producer who signed the wrong forms requested relief and was denied.

“Everyone was told in their notices of denial that the finding was not open to appeal. Some of the producers went ahead and tried anyway. Some producers in Dunklin County actually took their appeals all the way through the National Appeals Division. They won at the hearing level but when they went to the director, their requests were denied.”

Garrison, working with lead attorney Don Downing, was successful in opposing the government's attempts to close discovery.

“We submitted lots of document requests, interrogatories and depositions, and the government opposed all of that. That isn't an uncommon thing. The court denied their attempts to foreclose and said we could proceed. It was at that time that we entered into discussions for settlement.”

How many farmers will get checks?

“I don't remember the number exactly. There were well over 500 farm numbers, though.”

Downing, in a press release, says the $2.25 million settlement represents approximately 75 percent of the maximum theoretical damages.

“Many farmers received more than 75 percent of their actual losses,” Downing is quoted as saying. “The adequacy of the settlement from the farmers' perspective is reflected by the fact that not a single farmer in the county objected to or opted out of the settlement…. The case presented complex issues of administrative law and review of agency actions. We believe that ultimately, justice prevailed in a manner intended by Congress when it created a statutory exception to the general rule against estopping the government as to farmers who rely in good faith on what they are told by agency representatives.”

dbennett@primediabusiness.com