Settlement Proposed in Tobacco Farmers' Suit

Source from:  By Steve Hartsoe The Associated Press RALEIGH, N.C. 09/26/2005

Tobacco growers would share at least $50 million held by a tobacco cooperative formed to run the discontinued tobacco price support system for decades under a proposed settlement to a lawsuit announced Friday. The lawsuit filed in Wake County Superior Court by tobacco farmers sought class-action status on behalf of all current and former members of the Raleigh-based Flue-Cured Tobacco Cooperative Stabilization Corp. since it was created in 1946. The cooperative bought tobacco from growers of flue-cured tobacco in Virginia, North Carolina, South Carolina, Georgia and Florida who could not sell their crop to major cigarette-makers or leaf dealers. It is trying to reinvent itself as a leaf-dealer, marketer and cigarette maker. The plaintiff farmers said that with the end of the federal price-support system, the cooperative wasn't needed and had become a self-perpetuating bureaucracy. They also sought payment of dividends to members from more than $240 million in stockholder equity the cooperative accumulated over the years. Plaintiffs sought either a distribution of the cooperative's assets or its dissolution. The proposed settlement would create a fund of at least $50 million and allow the cooperative to continue, among other elements, according to a prepared statement. The fund would come from selling tobacco ceded to the cooperative by the U.S. Agriculture Department when the federal price support program ended last year. "I just can't say what the maximum will be," said Arnold Hamm, general manager of the cooperative. The proposed settlement requires approval from plaintiffs and a judge. Attorneys for the farmers said they faced a difficult battle in court. "The settlement will distribute money to farmers that is not necessarily for stabilization's ongoing efforts, and will provide protection and certainty for members in the event the coop is dissolved in the future," attorney William Robert Cherry Jr. said in a statement. If the court grants preliminary approval of the deal, a final hearing would be scheduled about 60 days later. During that 60 days, plaintiffs can opt out of the settlement or object to it. Enditem