With potentially hundreds of millions of dollars at stake, a federal judge has certified several classes of plaintiffs pursuing class action lawsuits as part of sprawling antitrust allegations of price fixing in the poultry industry.
U.S. District Judge Thomas Durkin issued an opinion May 27 granting certification to three groups of chicken buyers: direct purchasers, such as supermarkets; restaurants and other commercial and institutional buyers he labeled as "indirect purchasers;" and consumers, or end users.
Since 2016, chicken producers have defended themselves against numerous antitrust lawsuits all centered on similar claims. The lawsuits accuse producers of taking actions in prior years to boost profits by sharing internal data from a publication called Agri Stats, and suppressing supply in order to elevate prices, even as the price of raising birds, such as feed costs, dropped. The U.S. Department of Justice has initiated its own proceedings in the matter and certain producers have reach settlements in private litigation exceeding $180 million.
U.S. District Judge Thomas M. Durkin
Durkin said members of the direct purchaser class identified thousands of potential members, while the indirect “class includes nearly every entity in the United States that serves chicken to individuals, whether for profit or otherwise, including restaurants, deli counters, schools, hospitals, airlines, casinos, etc.” The end user class is open to any American who buys chicken.
After rejecting concerns about class representatives, Durkin explained the proposed classes met typicality requirements because although there are varying degrees of market share and buying power, the allegations concern a commodity and intentional supply restrictions.
“Bargaining power may affect the prices ultimately paid by a particular plaintiff,” Durkin wrote. “But all participants in a commodity market exercise their bargaining power — regardless of strength — in the context of the market price, which is viewed by the industry as an objective reflection of value.”
Durkin further explained the plaintiff groups adequately alleged evidence of their theory the producers conspired to suppress prices, specifically citing production data and noting the generally unchanged quality of chickens, “combined with a consistent demand, make it difficult for an individual producer to reduce supply unilaterally.” He further said that whether such evidence can stave off summary judgment or prove liability in a trial isn’t relevant, only that it established the expediency of class action versus “thousands of identical trials.”
The producers based their opposition to certification by arguing the alleged causes and legal injury to plaintiffs are not common among all members. The plaintiffs introduced expert witnesses to bolster those claims and identify class periods, while the producers challenged the reliability of those experts’ opinions. Durkin rejected those concerns and said each class has an expert with their own independent methodology to produce sufficient evidence that production decreases ran counter to other market indicators.
Durkin also rejected the producers’ attempt to question claims of inflated prices, insisting different producers selling different cuts in different formats to different buyers undercuts the class allegations.
“It is impossible to produce wing meat without also producing breast meat, and vice versa,” Durkin wrote, adding any supply reduction “will necessarily decrease the supply of all the products derived from” the producers’ birds.
Resolving further disagreement between experts from both sides concerning the potential reason for price changes is more suitable for summary judgment or trial, Durkin said. He also rejected the producers’ arguments that plaintiffs didn’t propose a suitable method for calculating damages. The judge explained he has already approved apportionment of class settlements from certain producers — Fieldale, George’s, Mar-Jac, Pilgrim’s Pride and Tyson — with an approach “that should also be effective at apportioning any damages awarded by a verdict.”
Durkin also rejected the producers concerns about variations in state laws governing the indirect and end user classes, saying they didn’t identify what different might be relevant. He also said the producers failed to prove ascertaining membership in the end user class would be impractical.
The producer defendants include:
Perdue Farms, represented by Venable LLP, of Washington, D.C., and Falkenberg Ives LLP, of Chicago;
Mountaire Farms, represented by John Treece, of Chicago, and Rose Law Firm, of Little Rock, Ark.;
Foster Farms, represented by Mayer Brown LLP, of Washington, D.C.;
Koch Foods, represented by Novack and Macey, LLP, of Chicago;
House of Raeford, represented by Vedder Price, of Chicago, and Jordan Price Wall Gary Jones & Carlton, of Raleigh, North Carolina;
Wayne Farms, represented by Proskauer Rose LLP, of Washington, D.C.;
Sanderson Farms, represented by Kirkland & Ellis, of Chicago;
Claxton Poultry Farms, represented by Vaughan & Murphy, of Atlanta, and Winston & Strawn LLP, of Chicago;
O.K. Foods, represented by Kutak Rock LLP, of Chicago;
Simmons Foods, represented by Lynn Murray, of Chicago, Laurie Novion, of Kansas City, and Coner & Winters, of Fayetteville, Ark.;
Case Foods, represented by Joseph D. Crney & Associates, of Westlake, Ohio, Miller Shakman Levine & Feldman LLP, of Chicago, and D. Klar Law, of Bel Air, Calif.;
Agri Stats, represented by Hogan Lovells US LLP, of Washington, D.C., and Miller, Canfield, Paddock and Stone, of Chicago; and
Harrison Poultry, represented by Evershields Sutherland LLP, of Atlanta, and SmithAmundsen LLC, of Chicago.
The direct purchaser plaintiffs are represented by attorneys W. Joseph Bruckner, Brian D. Clark, Simeon A. Morbey and Kyle Pozan, of Lockridge Grindal Nauen, of Minneapolis; Clifford H. Pearson, Daniel L. Warshaw, Thomas J. Nolan, Bobby Pouya, Michael H. Pearson and Bruce L. Simon, of Pearson Simon & Warshaw, of San Francisco and Sherman Oaks, California; and Steven A. Hart and Brian Eldridge, of Hart McLaughlin & Eldridge, of Chicago;
The indirect purchasers are represented by attorneys Daniel E. Gustafson, Daniel C. Hedlund, Michelle J. Looby, Joshua R. Rissman and Brittany N. Resch, of the firm of Gustafson Gluek, of Minneapolis; Adam Zapala, Tamarah Prevost and James G. Dallal, of Cotchett Pitre & McCarthy, of Burlingame, California; and Kenneth A. Wexler, Kara A. Elgersma and Melinda J. Morales, of Wexler Boley & Elgersma, of Chicago.
Representing the consumer end user plaintiffs are attorneys Shana E. Scarlett, Steve W. Berman, Breanna Van Engelen and Rio R. Pierce, with the firms of Hagens Berman Sobol Shapiro, of Berkeley, California; and Brent W. Johnson, Benjamin D. Brown, Daniel H. Silverman and Alison Deich, of Cohen Milstein Sellers & Toll, of Washington, D.C.