October 24, 2005
11th Circuit Grants Tyson "Economic" Eminent Domain
By Terry A. and J. Randall Stevenson
On Tuesday, August 16, 2005, the 11th Circuit Appellate Court overruled an Alabama jury and upheld Judge Strom's decision to overturn the jury's finding that Tyson Fresh Meats Foods, the nation's largest beef packer, used illegal practices to manipulate beef markets. In February 2004, the jury found Tyson liable for $1.28 billion in damages for eight years of market manipulation.
The Court did not disagree with the jury that Tyson had used captive supplies to pressure prices downward. Instead, the Court said the plaintiffs in the suit did not prove the complete absence of an economic justification. Essentially, the Court has ruled that the tremendous producer harm inflicted by Tyson should be ignored even if it overwhelmingly exceeds the financial benefits to Tyson. The 11th Circuit says Tyson had a business justification to do so. The Court said," Pickett must establish more than that the use of marketing agreements have decreased the price for cattle. He must establish that their use has adversely affected competition, which requires showing that marketing agreements have no pro-competitive justifications."
The only way the Court could have arrived at this conclusion was to interpret the Packers and Stockyards Act non-literally. The Packers and Stockyards Act says that it is unlawful to engage in any course of business that has the effect of manipulating prices. The 11th Circuit supported Judge Strom's decision to add other requirements to the law, making it necessary for the plaintiffs to prove that Tyson did not have a legitimate economic justification for its practices.
In the recent decision by the Supreme Court in the case of Kelo vs. New London, that Court took a similar approach. The question was the extent of the government's power of eminent domain. In the Fifth Amendment to the Constitution the government is granted the power of eminent domain provided it pays a fair value for the property taken and that the taking is for "public use." The Court took the term "public use" and interpreted it non-literally to mean "public benefit." In doing so the decision turned on the economic justification of the action involved.
The two decisions have two significant things in common. First, they both depend on a non-literal interpretation of the law. The literalness of the law is a constraint on the power of the judiciary and these judges took to themselves power that did not belong to them in both cases.
Second, both decisions rely heavily on the idea of economic justification. For the 11th Circuit the economic benefit was for Tyson. As long as the activity Tyson engaged in was justified by their own reasonable business rationalization, they were off the hook.
In the Kelo decision, the economic benefit was ostensibly to the city of New London. But that benefit accrued to the city only through an increased tax base because of economic benefit to the new owners of the condemned property. The primary beneficiary involved is Pfizer.
By its very nature, measuring the legality of an activity according to its economic justifications gives an advantage to the larger, wealthier entity and takes away the premise that all are to be equal before the law. Like the Kelo decision, the 11th Circuit Court granted an "eminent domain." Tyson was granted the right of "taking" through price manipulation, as long as it could justify it through its own economic benefit. The "public benefit" is supposedly a greater efficiency in our economy. But the real beneficiary is Tyson.
Contact The Stevenson Report by email at [email protected] or view at www.thestevensonreport.com
11th Circuit Grants Tyson "Economic" Eminent Domain
By Terry A. and J. Randall Stevenson
On Tuesday, August 16, 2005, the 11th Circuit Appellate Court overruled an Alabama jury and upheld Judge Strom's decision to overturn the jury's finding that Tyson Fresh Meats Foods, the nation's largest beef packer, used illegal practices to manipulate beef markets. In February 2004, the jury found Tyson liable for $1.28 billion in damages for eight years of market manipulation.
The Court did not disagree with the jury that Tyson had used captive supplies to pressure prices downward. Instead, the Court said the plaintiffs in the suit did not prove the complete absence of an economic justification. Essentially, the Court has ruled that the tremendous producer harm inflicted by Tyson should be ignored even if it overwhelmingly exceeds the financial benefits to Tyson. The 11th Circuit says Tyson had a business justification to do so. The Court said," Pickett must establish more than that the use of marketing agreements have decreased the price for cattle. He must establish that their use has adversely affected competition, which requires showing that marketing agreements have no pro-competitive justifications."
The only way the Court could have arrived at this conclusion was to interpret the Packers and Stockyards Act non-literally. The Packers and Stockyards Act says that it is unlawful to engage in any course of business that has the effect of manipulating prices. The 11th Circuit supported Judge Strom's decision to add other requirements to the law, making it necessary for the plaintiffs to prove that Tyson did not have a legitimate economic justification for its practices.
In the recent decision by the Supreme Court in the case of Kelo vs. New London, that Court took a similar approach. The question was the extent of the government's power of eminent domain. In the Fifth Amendment to the Constitution the government is granted the power of eminent domain provided it pays a fair value for the property taken and that the taking is for "public use." The Court took the term "public use" and interpreted it non-literally to mean "public benefit." In doing so the decision turned on the economic justification of the action involved.
The two decisions have two significant things in common. First, they both depend on a non-literal interpretation of the law. The literalness of the law is a constraint on the power of the judiciary and these judges took to themselves power that did not belong to them in both cases.
Second, both decisions rely heavily on the idea of economic justification. For the 11th Circuit the economic benefit was for Tyson. As long as the activity Tyson engaged in was justified by their own reasonable business rationalization, they were off the hook.
In the Kelo decision, the economic benefit was ostensibly to the city of New London. But that benefit accrued to the city only through an increased tax base because of economic benefit to the new owners of the condemned property. The primary beneficiary involved is Pfizer.
By its very nature, measuring the legality of an activity according to its economic justifications gives an advantage to the larger, wealthier entity and takes away the premise that all are to be equal before the law. Like the Kelo decision, the 11th Circuit Court granted an "eminent domain." Tyson was granted the right of "taking" through price manipulation, as long as it could justify it through its own economic benefit. The "public benefit" is supposedly a greater efficiency in our economy. But the real beneficiary is Tyson.
Contact The Stevenson Report by email at [email protected] or view at www.thestevensonreport.com
