Cargill Inc. on Wednesday won federal court approval for an agreement to settle for $24 million a class-action lawsuit that accused the largest private U.S. company of conspiring to fix prices of a food sweetener and sought billions of dollars in damages, a lawyer said.
The verbal order was issued by Judge Michael Mihm of the U.S. District Court in Peoria, Illinois.
St. Paul, Minnesota-based Cargill was accused of teaming up with Archer Daniels Midland Co. (ADM.N: Quote, Profile, Research) and A.E. Staley Manufacturing, a unit of British-based Tate & Lyle Plc (TATE.L: Quote, Profile, Research) , to fix the price of high-fructose corn syrup, a substitute for sugar.
The original suit seeking billions of dollars in damages was filed in 1995 by 18 companies that manufacture soft drinks, canned and baked goods and confectionary or dairy products, including Coca-Cola Co. (KO.N: Quote, Profile, Research) and PepsiCo Inc. (PEP.N: Quote, Profile, Research)
Laddie Montague, lawyer for the plaintiffs, said Judge Mihm verbally approved the order on Wednesday after there was no objection to the settlement. Mihm had given preliminary approval in March.
A final written order will follow, Montague added.
He said the final written approval was not issued on Wednesday because the judge wanted some technical amendments to the order. "I will submit the amendments tomorrow," he said, declining to disclose details.
A Cargill spokesman could not immediately be reached for comment, but the company in March denied claims made in the lawsuit and said the settlement amount was roughly what it would have incurred in legal costs to defend itself and a subsidiary in a trial set for Sept. 7 in Illinois.
"We agreed to settle only after assessing the costs of further litigation," Cargill said in a statement. "We did not engage in any illegal activity."
A spokeswoman for ADM declined to comment. Chris Fox, a spokesman for A.E. Staley, said the company intended to contest the lawsuit in court. He declined further comment.
The lead attorney for the plaintiffs previously had said he would seek combined damages of $1.4 billion from the three companies, an amount that could be tripled to $4.2 billion under federal antitrust laws, for an alleged conspiracy that the plaintiffs say began in the late 1980s and ended in the mid-1990s.
Montague, from the Philadelphia-based law firm of Berger and Montague, said his clients would continue to seek $1.4 billion in damages from top U.S. food processing company ADM and corn processor A.E. Staley.
"We will pursue it with vigor," he told Reuters. He also said Cargill had already paid the $24 million settlement.
Another lawyer for the plaintiffs, Michael Freed, had said in March that a mediator is working with ADM, A.E. Staley and the plaintiffs to reach a settlement.
The lawsuit grew out of a federal probe into Decatur, Illinois-based ADM's involvement in a price-fixing scandal. ADM pleaded guilty to tampering with the prices of lysine, a protein used in animal feed, and citric acid in 1996.
Three former ADM executives, Michael Andreas, Terry Wilson and Mark Whitacre, received prison sentences in 1999 as part of the scandal. The U.S. Justice Department investigated but never brought charges against ADM for activities involving high-fructose corn syrup.
A federal judge in Illinois dismissed the 1995 lawsuit in 2001, but a U.S. appeals court based in Chicago reinstated the lawsuit in 2002, clearing the way for the case to go to trial.Reuters/K.T. Arasu