http://setexasrecord.com/news/213840-appeals-court-breaks-from-precedent-on-stockyards-act--ruling-in-pilgrims-pride-case
Appeals court breaks from precedent on Stockyards Act ruling in Pilgrim's Pride case
7/23/2008 12:00 PM
By Michelle Massey, Texarkana Bureau
TEXARKANA -- A group of chicken farmers claim Pilgrim's Pride founder Bo Pilgrim is being unfairly compensated for the chicks he raises for the company, and an appeals court made a bold decision that could make it easier for the farmers to argue their case.
Contrary to other circuit court decisions, the U.S. Fifth Circuit Court of Appeals found that the Packers and Stockyards Act does not require parties to show an adverse effect on competition.
The opinion affirms a district court's denial of a motion for summary judgment by Pilgrim's Pride Corp. The poultry company argued that under the act, plaintiffs have the burden of showing that the defendant's actions affected competition.
To handle the questions of law surrounding the act, the issue was severed into a new litigation by plaintiffs Cody Wheeler, Don Davis, and Davey Williams against Pilgrim's Pride Corporation on Jan. 4, 2006, in the Texarkana Division of the Eastern District of Texas.
The case involves poultry farmers who are contracted to raise chickens for Pilgrim's Pride. The company provides growers with the chicks, feed and supplies. The growers care for the chicks until they mature and are turned back over to Pilgrim's Pride.
The corporation compensates the chicken farmers using a "tournament system," in which growers are ranked against one another and then compensated based on quality, survival rate and amount of supplies used.
However, at least one grower operates under a different system.
Pilgrim's Pride's founder and chairman Bo Pilgrim purchases chicks, feed and supplies that he chooses from the company instead of allowing the company to assign the chicks and supplies to him.
As compensation, Pilgrim's Pride pays him the lesser of a weekly quoted market price or 102 percent of his costs.
The other farmers argue that Bo Pilgrim's payment system allows him to earn more than the "tournament system" and that Pilgrim's Pride refuses to offer the alternative payment system to them.
The growers sued Pilgrim's under the Packers and Stockyards Act, alleging that by refusing the payment option, the insider, Bo Pilgrim, is receiving "undue and unreasonable preference or advantage" in violation of the act.
Previous courts have repeatedly held that to prevail in a lawsuit under the act, the plaintiff had to prove that there had been a negative impact on fair competition.
But this time, the Fifth Circuit Court of Appeals wrote that the language of the act is "plain, clear, and unambiguous, and that it does not require the growers to prove an adverse effect on competition."
Further, the court acknowledged that the decision conflicts with "nearly every decision of our sister circuits on this issue."
The Fifth Circuit believes that the previous decisions went beyond the "clear and unambiguous text" by delving into the act's legislative history.
Pilgrim's Pride argued that the appeals court should follow the "great weight of authority" provided by the previous decisions of sister circuit courts which put the burden of proof on the plaintiff.
Pilgrim's Pride denies that the variances in pay systems negatively affect competition.
The case will continue with a pretrial conference date April 6, 2009.
U.S. District Judge David Folsom is presiding over the litigation.
Case No: 5:2006cv00004
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COMMENTS ON THIS ARTICLE
Reply PSA
The only reinterpretation of the Packers and Stockyards Act came when the 11th circuit ruled in the London case that the plaintiffs (farmers) had to prove that the actions prohibited in Section 202 also had an adverse impact on competition. The same court then ruled in favor of Tyson, as a matter of law (based on their own interpretation of the Packers and Stockyards Act in London, which was a new interpretation) in the Pickett case in which a jury awarded cattlemen who had been cheated in a market manipulation game run by the packers, in order to protect Tyson from a 1.48 billion dollar judgment by the jury.
The plaintiffs did not even have a chance at proving the anticompetitive affects because the trial was already over. Thus, based on a new interpretation of the law in which the judges had to change the wording in the law separating the clauses with "and" instead of the "or"s in the law, protected market manipulation and damage to suppliers of the packers. Tyson argued (in private mostly) that they should not have to be held accountable for the damages because they did not profit off of the market manipulation in the cattle business. While this was slightly true, the rest of the story was that the supply of cattle was reduced by the market manipulation and in subsequent cycles, the price of beef rose due to the lower supplies. In addition, Tyson raked in millions, if not more, in the increase in the price of their main product, chicken. The price of chicken went from a wholesale of around 52 cents a lb to over 90 cents a lb. Due to the industry structure (contracts), Tyson pocketed this money--it did not go to their poultry suppliers (farmers).
Arlen Specter and Bill Clinton helped orchestrate this gift from farmers to packers and had the courts help them do it.
These actions have started a wave of disasters for the farmers who supply the packers their product and windfall contributions to the policy makers who have been willing to sell out the protections of the law for campaign contributions.
We need to see the "reinterpretation" not from the 5th circuit, but from the 11th circuit who reinterpreted the law changing the "or"s into "and"s. If we have judges who can not read the law as plainly as Section 202 of the Packers and Stockyards Act is written, then we need to question the quality of ALL of the judges who have so ruled. It is not a question of "reinterpretation" but one of competence or corruption in our judicial system. It is too bad the media has not been able to put the pieces of the puzzle together. Is it too much for us to ask the media to read and understand the words "or" vs. the reinserted words of "and" in their place before writing an article?
Perhaps a little reading of "The Robber Barons" by Joseph Mathew Jsepheson (1934) might put the merits of the case in a historical perspective. We might then find who did the real "reinterpretation". Follow the money and you will know why. Even the Robber Barons of the day tried to use the theory that the anti trust and other regulatory laws (the Interstate Commerce Act) were reinterpreted to put down labor unrest in the courts. It didn't pass muster under the courts then but our courts have don't seem to like the historical context if it doesn't protect the rich who are breaking the law today--- especially if they are paying off politicians who might give them a raise or promotion.
The ironic thing is that breaking these laws only concentrates the industry more. The industry is more concentrated now than any time. You can't argue with the facts.
Tom