Just months since he ruled third-party lawsuit investor Burford Capital can seize control of food supplier Sysco's lawsuits against poultry producers over chicken prices, a Chicago federal judge has rejected Burford's attempt to stop meat producer Pilgrim's Pride from settling Sysco's lawsuits against Pilgrim's in Chicago federal court and elsewhere over the prices of chicken, pork and beef.
On June 14, U.S. District Judge Thomas M. Durkin granted Pilgrim's Pride's motion to enforce its settlement agreement with Sysco, even though the settlement agreement was never actually signed by Sysco and Judge Durkin had earlier transferred control over Sysco's lawsuits over chicken prices - seemingly including its lawsuit against Pilgrim's Pride - over to a company controlled by Burford.
In the new ruling, Durkin said he believed it was enough that Pilgrim's Pride could produce a chain of emails showing that the two sides had agreed to a settlement in 2022 to end Sysco's lawsuits against Pilgrim's Pride, which were pending in federal courts in Chicago and Minneapolis and accused the company of allegedly conspiring with their competitors to artificially fix the prices of chicken, pork and beef.
U.S. District Judge Thomas M. Durkin
| Law.depaul.edu
"The 'heart' of the agreement was to dismiss the claims in exchange for a total amount of money allocated across the three cases," Durkin wrote. "The email communications and draft written agreements demonstrate that the parties reached such an agreement."
The ruling represents a potentially significant win for Pilgrim's Pride in its fight to draw the lawsuits against them to a close.
Since 2016, Pilgrim's Pride, along with poultry producers, have been pecked by a wave of collective antitrust lawsuits, all centered on accusations that the producers conspired to suppress the supply of chicken and artificially drive up prices.
In the ensuing years, Pilgrim's and other meat producers have also been hit by similar antitrust actions over the prices of pork and beef.
The federal courts consolidated the chicken price lawsuits in Chicago federal court, under Judge Durkin. The beef and pork actions were consolidated in federal court in Minnesota.
Sysco Corp. was among the litany of food buyers, distributors and sellers who lodged lawsuits seeking a share of whatever the meat producers may ultimately pay out.
In 2022, however, those claims by Sysco received significant attention, as in a rare moment of transparency, Sysco and Burford tangled in federal court over an otherwise secret financing arrangement that undergirded Sysco's lawsuits.
In that court fight, Sysco accused Burford of improperly using $140 million in lawsuit loans to improperly interfere with Sysco's attempts to settle its lawsuits and exit the litigation.
According to public reports, Burford annually invests billions of dollars into lawsuits targeting American companies.
According to court documents, Burford was unhappy with the deals Sysco had negotiated, apparently believing it should receive far more on its investment than what Sysco was willing to accept. Burford, through three subsidiaries, instead demanded Sysco continue suing until it could extract a bigger settlement or judgment at trial.
The court fight between Sysco and Burford ended in a settlement, under which Sysco agreed to sign over its legal claims to a Burford subsidiary company, Carina Ventures.
This spring, Pilgrim's Pride, along with a number of other meat producers, failed in a bid to torpedo that settlement. Pilgrim's and its fellow meat producers had argued Burford should not be permitted to take control of the lawsuits, because the company was only a lender with no motive or skin in the game other than a desire to maximize its return on investment.
Durkin, however, rejected that try to undo Burford's control, saying he did not believe there was "anything improper or unusual" about the arrangement, and everyone involved must learn to accept that third-party litigation investing is "a fact of modern litigation."
Meanwhile, in Minneapolis, a federal magistrate judge rejected Burford's try to claim control of Sysco's litigation, saying to allow Burford to interfere would bog down the courts by allowing Burford and other third-party lawsuit investors to block any settlements they believe don't generate enough profit for them, even if it may be in the best interests of all others.
Following the deal between Sysco and Burford in the chicken price fixing lawsuits, Pilgrim's Pride asked the judge to declare an end to all of Sysco's legal actions against them, regardless of the new arrangement. According to court documents, around the time that Sysco and Burford took their legal beef public, Pilgrim's and Sysco appeared to reach a deal to end their court fights in both Chicago and Minneapolis courts.
The terms of that deal were not disclosed in Durkin's recent ruling.
However, the settlement was never signed by Sysco executives.
Nonetheless, Pilgrim's petitioned Durkin to enforce the deal, citing the email chain between attorneys for Pilgrim's and Sysco.
Burford - through its Carina subsidiary - objected to Pilgrim's attempt to enforce the apparent deal, noting it was never signed and they had control of the litigation. They further asserted Pilgrim's Pride had waited too long to seek enforcement of the settlement, and that Durkin cannot approve the settlement, because it involved the cases pending in Minneapolis, as well.
Durkin, however, said he believed the settlement outlined in the emails was sufficient, and it should bind Burford, through Carina.
He further rejected Burford's claims Pilgrim's had waited too long, saying the blame for any delay actually falls on Burford for interfering in the first place.
"... The initial delay was not caused by Pilgrim’s, but by Burford’s attempt to enjoin the settlement. It was only with the settlement of the dispute between Sysco and Burford, followed by the assignment of Sysco’s claims to Carina, that it became clear that Carina would not honor Sysco’s settlement agreement with Pilgrim’s," Durkin wrote. "Pilgrim’s filed this motion three months after Sysco and Carina filed their joint motion to substitute Carina for Sysco as the party in interest in this case. That is not an unreasonable delay by Pilgrim’s."
And the judge said the settlement can apply to the lawsuits pending in Minnesota, too, noting that Burford's logic would effectively prevent any "global settlement" of litigation pending in different jurisdictions.
"It cannot be that there is no court with jurisdiction to enforce the global settlement," Durkin wrote. "As this Court has found, the parties reached an agreement.
"There must be some court that has the jurisdiction to enforce it. And because none of the possibilities avoid some 'treading on' what Carina’s considers to be another court’s jurisdiction, this Court enforcing the agreement is no worse or better - jurisdictionally speaking - than any of the other possibilities.
"... This Court exercising jurisdiction to enforce settlement of actions pending in Minnesota will not interfere with the Minnesota proceedings between Pilgrim’s and Carina/Sysco - it will end them," Durkin said.
Pilgrim's Pride has been represented by attorneys Michael D. Bonanno, William A. Burck and Kathleen A. Lanigan, of the firm of Quinn Emanuel Urquhart & Sullivan, of Washington, D.C., Atlanta and Chicago.
Burford has been represented in Chicago federal court in the chicken price litigation by attorneys Scott Gant, of the Washington, D.C., office of Boies Schiller Flexner, and Colleen Harrison, from the firm’s New York office.