Animal Law Digest

The U.S. Department of Justice (DOJ) filed a civil complaint and proposed final judgment in the U.S. District Court for the Northern District of Illinois related to contract termination penalties imposed on poultry growers by Koch Foods, Inc. (“Koch”). The complaint alleged that Koch, the fifth largest poultry processor in the U.S., has been violating the Packers and Stockyards Act and the Sherman Act by anticompetitively and unfairly requiring poultry growers to pay a termination penalty if they switch to another chicken processor. In the simultaneously filed proposed final judgment settling the case, Koch agreed to stop imposing the contract termination penalties for seven years. Per the court’s stipulation and order on November 15, 2023, the parties’ proposed final judgment is open to written public comment for 60 days following its publication under the Antitrust Procedures and Penalties Act.

After a six-week trial in the U.S. District Court for the Northern District of Illinois in an antitrust case brought by thousands of chicken buyers, a jury unanimously found that Sanderson Farms did not conspire to raise broiler chicken prices. Plaintiffs had alleged that poultry producers like Sanderson, the third-largest poultry processor in the United States, had engaged in a conspiracy to drive up prices since 2008 by sharing data and limiting supply. Other defendants, including Tyson Foods and Pilgrim’s Pride, have settled the claims, bringing plaintiffs’ total recovery to over $284 million.

Direct purchasers in a consolidated broiler chicken price-fixing case asked the U.S. District Court for the Northern District of Illinois to approve $75 million in settlements they reached with House of Raeford Farms, Inc. and Koch. The latest settlements bring the total to more than $284 million.

The U.S. Department of Justice (DOJ) filed an antitrust lawsuit against Agri Stats, Inc. in the U.S. District Court for the District of Minnesota. In the lawsuit, DOJ alleges that the data and consulting company is engaging in an unlawful anticompetitive scheme “by providing processors with unique insights about their competitors’ production, costs, and pricing—and refusing to sell the same information to processors’ customers, farmers, workers, or consumers.” DOJ further alleges that “Agri Stats enables and encourages processors to use its asymmetrical information exchanges to weaken competition, curb production, and increase prices for purchasers,” ultimately at consumers’ expense and in violation of the Sherman Act. DOJ is seeking declaratory judgment, permanent injunctive relief, and costs.

The U.S. District Court for the District of Colorado has denied a joint motion to dismiss by major meat producers, including JBS USA Food Co., Cargill Inc., and Tyson Foods, Inc., in a putative class action accusing them of illegally conspiring to suppress wages in the meat processing industry. Plaintiff meat plant workers allege that the defendants (other than Agri Stats, Inc.), which collectively produce approximately 80% of all red meat sold in the U.S., “entered into an agreement to fix, depress, maintain, and stabilize the compensation paid to workers, both hourly and salaried, at their red meat processing facilities in violation of the Sherman Act.” Plaintiffs further allege that all defendants “engaged in a continuing agreement to regularly exchange detailed, timely, competitively sensitive, and non-public information about the compensation being paid or to be paid to their employees at red meat processing plants.” In denying the joint motion to dismiss, Chief U.S. District Judge Philip A. Brimmer found the defendants failed to show that plaintiffs had not sufficiently alleged their claims or had “not plausibly allege[d] that fraudulent concealment tolls the statute of limitations for plaintiffs’ claims.”

The U.S. District Court for the District of Minnesota denied a motion to dismiss filed by Hormel Foods Corp., Hormel Foods, LLC, JBS USA Food Co., Tyson Foods, Inc., Tyson Prepared Foods, Inc., Tyson Fresh Meats, Inc., Smithfield Foods, Inc., Seaboard Foods LLC, Triumph Foods, LLC, Clemens Food Group, LLC, The Clemens Family Corp., and Agri Stats, Inc., in a consolidated antitrust action brought by nine plaintiff groups that accuse the defendants of colluding to diminish pork supply and inflate prices. U.S. District Judge John R. Tunheim rejected defendants’ argument that plaintiffs’ claims are barred by the statute of limitations. Judge Tunheim also found that plaintiffs had adequately alleged defendants’ conspiracy to fix prices and plausibly alleged injury from defendants’ violation of the Packers and Stockyards Act.

The U.S. District Court for the Northern District of Illinois held that Kraft Foods Global, Inc., The Kellogg Company, General Mills, Inc., and Nestlé USA, Inc. met their burden of showing, for purposes of admitting statements made by alleged co-conspirators at an upcoming antitrust trial, that it was more likely than not that United Egg Producers, Inc., United States Egg Marketers, Inc., Cal-Maine Foods, Inc., and Rose Acre Farms, Inc., had conspired to inflate egg prices. Plaintiffs allege that egg producers artificially restricted their supply to inflate prices between at least 1999 and 2008. U.S. District Judge Steven Seeger conditionally admitted almost all statements sought in plaintiffs’ proffer.

S. 2818, the “Strengthening Antitrust Enforcement for Meatpacking Act of 2023,” would amend the Packers and Stockyards Act to prohibit certain acquisitions in the meatpacking and poultry industries that would create monopolies. The bill was introduced by Senator Josh Hawley and referred to the Senate Judiciary Committee.

The U.S. Court of Appeals for the Seventh Circuit vacated and remanded a $57.4 million attorney fee award in a $181 million settlement for broiler chicken purchasers in a complex antitrust case. The three-judge panel found that the district court did not properly consider declining fee scale bids made by class counsel in auctions in other cases and attorney fees awarded to class counsel in the Ninth Circuit.

The U.S. District Court for the Eastern District of Washington dismissed an antitrust suit brought by cattle rancher Cody Allen Easterday against a subsidiary of Tyson Foods, Inc. (Tyson) after Easterday was convicted of a “ghost cattle” fraud scheme, sentenced to eleven years in federal prison, and ordered to pay $244 million in restitution for defrauding Tyson and one other company by charging them for costs related to over 265,000 cattle that never existed. In dismissing Easterday’s federal claims, Chief U.S. District Judge Stanley A. Bastian found that Easterday lacked standing to sue for alleged monopsonistic practices because it was Easterday Ranches, not Easterday himself, that entered the contract with the Tyson subsidiary. Easterday is serving his eleven-year sentence at a federal penitentiary in Lompoc, California.