Cargill Inc., the largest private U.S. company, said on Thursday it agreed to settle for $24 million a class-action lawsuit that sought billions of dollars in damages and accused the company of conspiring with two other firms to fix prices of a common food sweetener.
The plaintiffs' attorney said U.S. District Court Judge Michael Mihm on Thursday indicated preliminary approval of the Cargill settlement.
Michael Freed, of Chicago-based Much Shelist Freed Denenberg Ament & Rubenstein P.C., also said the judge appointed a mediator to work out a deal between the plaintiffs and the other co-defendants, Archer Daniels Midland Co (ADM.N: Quote, Profile, Research) and A.E. Staley Manufacturing Co., a unit of Britain-based Tate & Lyle Plc (TATE.L: Quote, Profile, Research) .
The original suit was filed in 1995 by 18 companies that manufacture soft drinks, canned and baked goods and confectionary or dairy products. Plaintiffs involved in the suit, accusing the three firms of fixing prices of high fructose corn sugar, a substitute for sugar, include Coca-Cola Co. (KO.N: Quote, Profile, Research) and PepsiCo Inc. (PEP.N: Quote, Profile, Research) .
Freed said Mihm has scheduled a final hearing on the Cargill settlement on May 19.
ADM declined to comment, while A.E. Staley spokesman Chris Fox said the company will face the plaintiffs in court.
"We obviously continue to deny any allegation of wrong-doing and are contesting the case," Fox said.
Cargill still denies claims made in the lawsuit and said the settlement amount was roughly what the company 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."
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 mid-1995.
Freed declined to give the reasons behind the settlement with Cargill, but said the plaintiffs would continue to seek the $1.4 billion in damages from ADM and A.E. Staley.
The lawsuit grew out of a federal investigation into Decatur, Illinois-based ADM's involvement in a price-fixing scandal. ADM pleaded guilty to fixing 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 high fructose corn syrup.
Last year, ADM Chairman and Chief Executive Officer G. Allen Andreas said the company believes the court will find no evidence that ADM conspired to fix prices of high fructose corn syrup.
His remarks came after the U.S. Supreme Court let stand an appellate court ruling that ADM can be sued for fixing prices of 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.
ADM, Cargill and A.E. Staley all filed separate appeals. They argued the appeals court was wrong in allowing the case to go forward based on "conjectural" evidence.Reuters/K.T. Arasu
