CHICAGO — A federal judge won’t let Winn-Dixie continue its antitrust lawsuit against Fieldale Farms, a chicken supplier that previously settled to end its involvement in a larger action concerning the price of broiler hens.
Bi-Lo Holdings LLC, which operates grocery chain Winn-Dixie Stores Inc., filed a federal lawsuit in January 2018 in Chicago, alleging 15 primary defendants and numerous affiliated producers and related businesses “conspired and combined to fix, raise, maintain and stabilize the price of” broiler chickens - the kind of poultry that accounts for roughly 98% of all chicken meat sold in the U.S.
Winn-Dixie's allegations reflect earlier complaints brought by a host of other supermarkets and other plaintiffs against most of the same defendants, which collectively control about 90% of the market. The allegations suggest price fixing started in 2007 when Arkansas-based Tyson Foods and Colorado-based Pilgrim’s Pride tried to cut production levels to drive up prices. In 2008, according to several allegations, defendants destroyed breeder hens, reducing the egg supply, then “made a second wave of coordinated production cuts in 2011 and 2012.” They also allegedly exported excess breeder flocks to Mexico. As a result, wholesale prices jumped 50% after 2008, while production costs — primarily corn and soybeans — fell between 20 and 23%.
In an opinion filed Dec. 9, Judge Thomas Durkin said, when the case began, he appointed interim counsel for three possible plaintiff classes of chicken buyers: direct purchasers, such as retail supermarkets; indirect buyers; and end-user consumers. Fieldale settled with the direct purchaser class, and although Durkin approved that settlement, Winn-Dixie then filed an amended complaint against Fieldale.
According to Durkin, the issue is one of timeliness. Winn-Dixie sent a letter to the administrator asking to be excluded from the settlement class, but it was postmarked Oct. 16, 2018, a day after the deadline. Although the administrator sent an Oct. 25 email stating Winn-Dixie’s request was “received and processed,” Durkin said, that notice also indicated the request was incomplete, and so final determination of the opt-out request would go to the judge.
“There can be no question that Winn-Dixie was aware that the administrator’s role was to make recommendations to the Court, and that an order of the Court would be necessary to permit Winn-Dixie to opt out of the settlement,” Durkin wrote. “To the extent the administrator’s October 25 email made any findings regarding the validity of Winn-Dixie’s opt out request (which it did not), it was unreasonable for Winn-Dixie to rely on the administrator’s preliminary conclusions when it knew that further process before the Court was necessary.”
Durkin said the administrator filed a rejection of the opt-out request on Oct. 29, 2018, and again on Nov. 15, 2018, and he approved the settlement Nov. 16, writing “Winn-Dixie’s decision to ignore these filings was unreasonable and undertaken at its own peril.” He further said Winn-Dixie could only succeed in its attempt to continue its legal action by alleging Fieldale committed a misrepresentation.
“Winn-Dixie cannot seriously argue” it opted out by the deadline, Durkin wrote, meaning it would have to convince the court it was eligible for an “excusable neglect” exception. Although it narrowly missed the deadline, Durkin said, Winn-Dixie still waited 6 months after the final settlement approval order to express a desire to continue as an individual plaintiff, and has yet to identify a reason for the delay.
Durkin also rejected Winn-Dixie’s arguments that its breach of contract and related claims didn’t align with its price fixing allegations. Since those claims are within the scope of the settlement, he said, they must be dismissed.
Winn-Dixie has been represented in the action by attorneys with the Chicago firm of Ahern & Associates.
Fieldale is represented by attorneys with the firms of Alston & Bird LLP, of Atlanta, and Smith, Gilliam, Williams & Miles P.A., of Gainseville, Ga., and attorney Baron Jarris Healey, of Chicago.