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Tyson Has $99 Million Deal With Consumers in Chicken Cartel Case

March 2, 2021, 5:14 PM

The consumers leading a proposed chicken price-fixing class action over an alleged industrywide scheme revealed a $99 million settlement with Tyson Foods Inc., part of a larger $104 million “icebreaker” deal they disclosed in a Chicago federal court.

The agreement, which includes a cooperation pledge, is the first between the consumer plaintiffs and the poultry processors they targeted in the U.S. District Court for the Northern District of Illinois, where the consolidated case also includes antitrust claims on behalf of retailers and wholesalers.

The deal comes six days after Judge Thomas M. Durkin granted preliminary approval to a $155 million settlement with wholesalers that calls for payments of $80 million by Tyson and $75 million by JBS SA subsidiary Pilgrim’s Pride Corp., which accepted a $108 million criminal fine the same day.

The consumer settlement also indicates that Tyson’s forthcoming deal with the retailer plaintiffs—disclosed so far only as an agreement in principle—is likely worth about $42.5 million, given that the company has said it will pay $221.5 million to escape the entire case.

The lawsuit accuses the top U.S. chicken processors of inflating prices through long-term supply reductions, achieved by culling flocks of “breeder” hens, and through an index run by Eli Lilly & Co. subsidiary Agri Stats Inc. The dispute recently added bid rigging claims by restaurant chains including Boston Market, Johnny Rockets, and Subway.

The poultry processors have also faced antitrust claims over alleged schemes to fix the wages of their mostly immigrant workforce and drive down compensation for the permanently indebted “modern-day sharecroppers” who raise chickens for them.

The cases are part of a wave of price-fixing suits involving livestock and protein, including pork, beef, turkey, tuna, salmon, and eggs. Tuna and chicken executives—among them the former CEO of Pilgrim’s—are also facing actual or potential prison time.

In addition to the $99 million from Tyson, the $104 million consumer settlement also requires payments of $1.7 million by Fieldale Farms Corp., $1.9 million by Peco Foods Inc., and $1.9 million by George’s Inc.

The settlement was revealed in a court filing Monday.

Tyson is represented by Axinn, Veltrop & Harkrider LLP and Lipe Lyons Murphy Nahrstadt & Pontikis Ltd.

Fieldale is represented by Alston & Bird LLP, Baron Harris Healy, and Smith, Gilliam, Williams & Miles PA. Peco is represented by Skadden, Arps, Slate, Meagher & Flom LLP. George’s is represented by Stinson LLP, Sugar Felsenthal Grais & Helsinger LLP, and the Law Group of Northwest Arkansas LLP.

The consumers are represented by Hagens Berman Sobol Shapiro LLP and Cohen Milstein Sellers & Toll PLLC.

Lockridge Grindal Nauen PLLP and Pearson Simon & Warshaw LLP are interim co-lead counsel for the wholesalers, with Hart McLaughlin & Eldridge LLC as liaison counsel. Gustafson Gluek PLLC, Gotchett and Pitre & McCarthy LLP are interim co-lead counsel for the retailers, while Wexler Wallace LLP is liaison counsel.

The case is In re Broiler Chicken Antitrust Litig., N.D. Ill., No. 16-cv-8637, motion for preliminary settlement approval filed 3/1/21.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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