NEWS

Lely settles robotic milk class action suit

Jan Shepel
Correspondent
Plaintiffs ‒ over 400 farmers or farm entities that purchased approximately 1,468 new Lely Astronaut A4 units ‒ allege that the robotic milking units were defectively designed.

A settlement that could total $105 million or higher for farmers who bought certain Lely robotic milking systems has been reached after three years of litigation. The class action suit was brought on behalf of U.S. farmers who bought or leased the Lely Astronaut A4 units, which were sold in the United States from 2011 to 2018.

Plaintiffs ‒ over 400 farmers or farm entities that purchased approximately 1,468 new Lely Astronaut A4 units ‒ allege that the robotic milking units were defectively designed.

Farmers who bought the Lely A4 units in used condition (not new) are not members of the settlement class “and are not entitled to participate in the benefits of the settlement” according to court documents provided to the Wisconsin State Farmer.

The settlement agreement in the case was reached recently between attorneys for the farmers and Lely. The settlement is for an initial amount of $49.75 million and the company said that amount is subject to adjustment based on the options provided to farmers in the settlement agreement.

The total amount of the settlement depends on the participation rate of farmers in an agreed-upon trade-in program from the company’s A4 to its A5 model. The class action lawsuit was filed in February 2020.

“We do not agree with the assertions made against our company in the lawsuit,” Caius Ort, general counsel for Lely said in a press release. “However the legal process is lengthy, expensive and distracting – so we have decided to reach a settlement that is in the best interest of Lely, as well as our employees, our Lely Center network and our customers. This decision allows us to move on and to focus on what we do best, which is to provide a sustainable, profitable and enjoyable future in farming for our valued customers.”

If a settlement had not been reached, the judge had ordered that parties in the case would have had to be ready for a jury trial by August 2023.

The settlement would resolve claims of Lely customers who purchased or leased a new Lely Astronaut A4 between 2011 and 2018. Eligible Lely Astronaut A4 owners will have a choice between a yet-to-be-determined cash payment and four years of extended warranty; or they can exchange their current Lely Astronaut A4 (and with an additional payment) receive a Lely A5 as a replacement, the company’s press release noted.

The Lely Astronaut A5 marks a new milestone in robotic milking.

An agreed-upon third party administrator will handle the claims administration process and information on that will be coming at a later date, Lely said.

“As a company, we are dedicated to serving our customers to the best of our ability. We are committed to fulfill our obligations under the terms of the settlement and will work closely with the independent administrator to ensure our customers are taken care of in a timely manner,” Ort said.

Attorneys who brought the class action case on behalf of the farmers ‒ Stueve Siegel Hanson LLP, Cullenberg & Tensen PLLC and Perrone Law PLLC – explained that the settlement establishes a cash fund of $49.75 million that Lely will put in an escrow account. In addition, there will be an extended warranty program, an additional payment program for farmers who had problems with what is called a “pinch sleeve” and a program that will allow farmers, if they choose, to trade in their Astronaut A4 units for Lely’s A5.

The lawyers said that depending on the participation rates for benefit options chosen by farmers, the total settlement value could be $105 million or higher. The settlement will provide substantial financial relief to a class of about 400 dairy farmers who purchased or leased new A4 robotic milkers, which were sold in the United States from 2011 to 2018.

The terms of the settlement were agreed upon after nearly three years of litigation. If preliminary approval is granted, class members will have the option of choosing between two separate benefits:

  • Receive a share from that cash fund established by Lely, with individual payout amounts varying based on the number of robots purchased, as well as an additional cash payment of $1,000 per A4 Robot under the Pinch Sleeve Payment Program and the choice between a four-year extended warranty from the company or an additional $7,000 in cash per A4 robot; or
  • The option to trade in their A4 robots for Lely’s new Astronaut A5 robotic milking machine for a substantially reduced payment of $40,000.

“The considerable benefits secured through this settlement are tailored to address the central allegations of this litigation and achieve the primary relief sought by dairy farmers,” said co-lead counsel Patrick J. Stueve.

The class-action case – Kruger et. al. v. Lely North America, Inc. – alleged that the A4 robotic milking system did not operate as represented, including claims that it did not offer the lowest cost of ownership, did not achieve the promised milk production and suffered from defects that adversely affected cow health, milk production and quality, the attorney said.

The settlement includes farmers who purchased or leased new A4 units but does not include farmers who purchased used Lely A4 units. Before farmers who leased their A4 units can enter the trade-in program, if that is what they choose, they must gain title to the units.

The settlement program does not include the central unit, add-ons to the robot unit or other versions of the robotic equipment. According to court documents, the settlement agreement is “not an admission of liability by Defendants” and the parties to the case “cannot use the settlement agreement as evidence for any litigation going forward or in the future.”

The settlement agreement shows that Lely will have to put $5 million into an escrow account within 10 business days of the court’s preliminary approval date and then $44,750,000 within 70 days. The cash fund is to be used to pay all administrative costs associated with the settlement agreement and upon the effective date of the settlement agreement, the fund will also be used to pay all approved claims by claimants in the case.

“Our firms are pleased to secure this second nationwide class action settlement related to robotic milking systems,” said co-lead counsel Arend Tensen.

In July 2022, the U.S. District Court for the Western District of Missouri granted final approval of a $55 million settlement brought by the same law firms against DeLaval for its defective VMS Classic.

More litigation against DeLaval related to its VMS V300 is ongoing in the District of Minnesota and concerns DeLaval’s “upgrade” to the VMS Classic, which was released in 2018 and allegedly suffered from many of the same defects as the VMS Classic, according to Tensen.