A federal judge in Chicago has refused to let turkey producers escape a class action lawsuit accusing them of violating federal antitrust laws by conspiring to fix prices for their birds.
U.S. District Judge Virginia Kendall issued an opinion Nov. 21 denying a motion to dismiss consolidated lawsuits representing complaints from supermarket chain Winn-Dixie, as well as one group of other so-called direct purchasers and another of "indirect purchasers." The litigation is similar to recently settled claims against chicken producers, where plaintiffs were largely divided into consumers and other end users in one group and another of direct purchasers, which included wholesalers, supermarkets and other retailers.
According to Kendall, the allegations say defendant producers — Butterball, Cargill, Cooper Farms, Farbest Foods, Foster Farms, Hormel, Jennie-O, House of Raeford Farms, Prestage Farms, Perdue and Tyson Foods — had an agreement from “2010 to 2017 to exchange competitively sensitive information and to fix prices by restraining the supply of turkey products.” The complaints also name as co-conspirators Dakota Provisions, Kraft, Michigan Turkey Producers, Norbest and West Liberty Foods.
Tyson settled with the direct and indirect purchaser plaintiffs in February for $4.6 million, but joined in the motion to dismiss in order to end its entanglement with Winn-Dixie.
Kendall said she had earlier dismissed without prejudice allegations of a per se price fixing deal, but allowed a claim of unlawful information exchange to continue. More than a year later, the plaintiffs filed amended complaints, which the producers allowed provided they could still challenge the sufficiency of the new allegations.
Like the chicken lawsuits, the turkey complaints center around claims producers boosted profits by sharing internal data from a publication called Agri Stats, suppressing supply in order to elevate prices, even as the price of feeding and raising the birds dropped. The plaintiffs also say “the National Turkey Federation provided a forum for coordination” and offered allegations of abnormal pricing demonstrating how the conduct affected pricing.
“Plaintiffs’ amended complaint includes new allegations relating specifically to the per se claim,” Kendall wrote, “including that defendants engaged in parallel conduct, including supply cuts between 2008-2009 and 2012-2013, directly encouraged each other to cut production in 2009, engaged in private communications about production cuts and pricing, actively used Agri Stats reports to monitor production levels and used participation in trade associations to exchange current and forecasted production information.”
Kendall declined to grant dismissal on grounds Winn-Dixie missed by a month the deadline to join opposition to the dismissal effort, then rejected the defendants’ argument the allegations against them are too reliant on circumstantial evidence to survive. She said the plaintiffs “outlined allegations of activity within at least one of the two-year periods where each defendant reduced supply” and, although details involving Prestage and Raeford were lacking compared to the other producers, the larger context of the pleadings was sufficient.
By alleging parallel conduct among turkey producers, along with four specific additional factors to bolster claims of a conspiracy, the consolidated complaints effectively support the claims of exchanging competitive information through Agri Stats and other trade organizations to which they all belonged as a means of inflating prices.
“While defendants present alternative explanations for the plus factors outlined, plaintiffs are only required to allege plausibility at this point in the proceedings,” Kendall wrote. “When the allegations are considered as a whole, Plaintiffs’ claims give rise to an inference of a price-fixing conspiracy sufficient to state a claim and survive the motion to dismiss.”
Winn-Dixie is represented by attorney Patrick J. Ahern, of Ahern and Associates, of Chicago.
Other direct purchaser plaintiffs are represented in the action by attorneys Shana E. Scarlett and Steve Berman, of Hagens Berman Sobol Shapiro, of Chicago and Berkeley, California.
Indirect commercial and institutional purchaser plaintiffs are represented by attorneys W. Joseph Bruckner and Simeon A. Morbey, of Lockridge Grindal Nauen, of Minneapolis; Blaine Finley and Jonathan W. Cuneo, of Cuneo Gilbert & LaDuca, of Washinton, D.C.; Robert A. Clifford and Shannon M. McNulty, of the Clifford Law Offices, of Chicago; and Don Barrett, of Barrett Law Group, of Lexington, Mississippi, and others with those firms.
Turkey producer and Agri Stats defendants are represented by attorneys James D. Baldridge, of Venable LLP, of Washington, D.C.; William H. Stallings and Britt M. Miller, of Mayer Brown, of Washington, D.C. and Chicago; Kirstin B. Ives, of Falkenberg Ives, of Chicago; Jennifer A.L. Battle, of Carpenter Lipps & Leland, of Columbus, Ohio; Daniel D. Birk, of Eimer Stahl, of Chicago; Jordan M. Tank, of Lipe Lyons Murphy Nahrstadt & Pontikis, of Chicago; Tiffany Rider Rohrbaugh, of Axinn Veltrop & Harkrider, of Washington, D.C.; Marc E. Rosenthal, of Proskauer Rose, of Chicago; Sybil Dunlop, of Greene Espel, of Minneapolis; Michael K. Sciaccotta, of Dentons US LLP, of Chicago; Colby A. Kingsbury, of Faegre Drinker Biddle & Reath, of Chicago; Gregory G. Wrobel, of Vedder Price, of Chicago; Jacob D. Koering, of Miller Canfield Paddock & Stone, of Chicago; and William S. Cherry III, of Manning Fulton & Skinner, of Raleigh, North Carolina; and other attorneys with those firms and others.