DES MOINES, Iowa (AP) - A food distribution company has agreed to pay $1.9 million to settle a lawsuit that claims it conspired with others over several years to restrain the bidding process for selling food at hundreds of schools across Iowa.
The recent settlement involves Cedar Falls-based Martin Brothers Distributing Company, which agreed to make the payment but denied it did anything wrong.
The company worked with the Iowa Educators Corporation and the Iowa Association for Educational Purchasing to supply food at many Iowa schools.
Schools across Iowa from Council Bluffs to Dubuque are listed as participants of the food purchasing program that used Martin Brothers. They include both public schools and accredited private schools.
The settlement states it is not an admission of liability or wrongdoing on the companies’ part. The defendants said the food bidding process was fair, and the agreement was reached to avoid litigation costs.
Attorneys for the plaintiffs and many of the defendants did not immediately return telephone messages left Thursday. Stephen Holtman, an attorney for IEC, said he had no comment because the case is still pending.
The lawsuit, filed in district court in 2011 by two Iowa parents, claimed the IEC and IAEP had an arrangement with Martin Brothers that favors them over other firms and nearly monopolizes the market. Martin Brothers has been the prime distributor of food for the schools for years.
The companies caused thousands of families to pay higher prices for food at the schools because there was a lack of market competition, the lawsuit claimed. The suit also said the actions violated the state’s antitrust laws and the common laws of civil conspiracy and unjust enrichment.
In a separate agreement, IEC and IAEP agreed to pay $150,000 through insurance for an escrow fund to cover certain costs. They have also agreed to change the contract bidding process, including making prices publicly available.
Both settlements are contingent on a court’s final approval. An approval hearing is scheduled on Nov. 4.
An eligible individual can file a claim to receive up to $3.50 per student per year, for a maximum of $50 per student. More information is available through a settlement website.
Iowa School Food Settlement: https://www.iowaschoolfoodsettlement.com/
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