© 2015 The Texas Lawbook.
By Mark Curriden
(April 22) – A federal judge in East Texas Friday threw out a decade-long series of litigation brought by hundreds of chicken farmers seeking a combined $500 million against Pilgrim’s Pride Corp. for allegedly manipulating poultry prices with the intent of shutting down some of the chicken growers and unfair trade practices.
U.S. Magistrate Judge Roy Payne ruled Friday that Pilgrim’s Pride did not violate the federal Packers and Stockyards Act of 1921, which was signed into law by President Warren Harding and regulates interstate commerce by those involved in livestock, dairy products, poultry products and eggs.
More than 500 chicken growers in Arkansas, Louisiana and Texas sued the poultry business, claiming that Pilgrim’s Pride required them to spend tens-of-millions of dollars to upgrade their facilities, only to close those processing operations a short time later in order to reduce chicken supplies and increase prices.
Each of the chicken farmers, including about 60 in Nacogdoches, Texas, sought $1 million in damages.
Judge Payne, however, ruled that there was no evidence that Pilgrim’s Pride encouraged the chicken farmers “to make these investments intending to cause the plaintiffs’ losses.
“It was only when Pilgrim’s ran into financial difficulties, whether caused by extrinsic market forces (such as the increased cost of chicken feed or the decreased demand brought on by the recession) or by bad investments and imprudent acquisitions, that Pilgrim’s decided to try to improve its bottom line by closing some of its processing facilities,” Judge Payne wrote in dismissing the lawsuits.
Pilgrim’s Pride had two goals, according to the judge: “reducing operating costs and raising the price of chicken by reducing the supply of processed chicken.”
In a seven-page decision, Judge Payne stated that “nothing in the evidence meets the high standard of ‘egregious actions involving elements of fraud, misrepresentation, deception, or other unethical conduct’ “ that required him to conclude that Pilgrim’s Pride violated state deceptive trade practices laws.
“This litigation against Pilgrim’s has been going on for more than nine years and it is nice for our client to have some closure,” says Clayton Bailey, a partner at Dallas-based Bailey Brauer, which represents the poultry giant.
Pilgrim’s Pride was founded in 1946 in Pittsburg, Texas. The company filed for bankruptcy in 2009 when it realized that it was overextended in the commodity chicken market.
Pilgrim’s Pride, which employs 35,000 people and boasts $9 billion in revenues, is now a subsidiary of Brazilian food giant JBS.
Lawyers for the chicken farmers did not reply to requests for comments.
In addition to Bailey, Pilgrim’s legal team also included Dallas lawyers David Parham of Akerman LLP, Jennifer Ainsworth of The Wilson Law Firm and former Baker & McKenzie lawyer Jennifer McCollum. Michael Pollard and William Roppolo of Baker & McKenzie’s Chicago and Miami offices were also involved. McCollum is now the vice president and deputy general counsel of ACE Cash Express in Irving.
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