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Chicken Industry Execs Face DOJ’s Third Trial Over Price-Fixing (Correct)

June 6, 2022, 10:00 AMUpdated: June 6, 2022, 6:12 PM

The Department of Justice is launching its third attempt at convincing a jury that some chicken manufacturing executives violated federal antitrust law by colluding to fix prices.

The trial against current and former executives of Claxton Poultry Farms and Pilgrim’s Pride Corp., which starts Monday in the US District Court for the District of Colorado, underscores the DOJ antitrust regulators’ insistence on seeing their claims through to the end— despite skepticism from industry proponents and even the court’s judge.

But the repeated efforts also line up with the Biden administration’s focus on cracking down on antitrust abuse across industries. Alleged antitrust violations in the poultry and meat industries also have been subject to numerous private lawsuits.

“We still have every bit of confidence that we did when we charged the case that it will result in convictions,” Jonathan Kanter, assistant attorney general of the Department of Justice Antitrust Division, said after the second trial ended with a hung jury.

Juries twice failed, in December and March, to reach verdicts in the antitrust division’s criminal case in the Colorado court against 10 defendant executives for alleged violations of the Sherman Act.

US District Judge Philip A. Brimmer denied the defendants’ motions for acquittal Wednesday, all but ensuring that the third trial will resume.

In this latest attempt, the DOJ will likely simplify the case, as evidenced by its decision to cut the number of defendants to five, according to Lisa Phelan, a partner and co-chair of Morrison & Foerster’s global antitrust practice.

Since the end of the second trial in March, the Justice Department has brought in prosecutors with experience in previous, successful trials, including the Bumble Bee tuna price-fixing case which netted a $25 million fine, said former DOJ antitrust director of criminal litigation Andre Geverola, now an attorney at Arnold & Porter.

The prosecutors will be best served by trying to explain the relationship between allegations and impact, like demonstrating for jurors that the defendants’ conduct may have contributed to consumers paying more for a meal at Wendy’s, Phelan said. “Simplifying down and clearly connecting the dots is the best path to a clear conviction in an antitrust case,” she said.

Third Time

Still, the third trial may not be the charm for the DOJ, attorneys say. It’s a rare move that may have been influenced by the Biden administration’s antitrust focus on protecting consumers, said Phelan, a former DOJ antitrust official.

Conflicting witness statements, fatigue, and a skeptical judge will all complicate the trial, Phelan said.

“When I talk about my DOJ career, I say I prosecuted 300 Sherman Act cases and walked away from a thousand more,” she said.

It also doesn’t appear that witnesses, evidence, precedent, or a law that could change the proceedings have surfaced, said BakerHostetler partner Carl Hittinger, the firm’s antitrust team leader.

At issue is a Justice Department policy that recommends prosecutions only if a case is likely to result in a conviction. Jurors in the previous trials said they weren’t close on convicting any of the defendants, a tally unlikely to shift much in favor of a better result the third time around, Phelan said.

Jurors in the December trial split on every defendant, netting eight votes to convict four of the defendants now remaining on trial, and five votes to convict the other.

The March jury’s votes weren’t disclosed, but one juror said she doubts a third trial would reach a verdict.

Brimmer also called Kanter to the Denver courtroom in April to explain the decision to continue prosecuting.

There are risks in handling witness testimony during a repeated case, Geverola said. Prior testimony is likely to conflict with earlier sworn testimony, as people’s memories change over time, and a thrice-retold story is unlikely to be identical to its previous iterations.

That opens witnesses up to cross-examination that might not have factored into the previous trials and can sow doubt among the jurors, Geverola said.

“Sometimes witnesses are so focused on telling the same story that their testimony becomes wooden and sounds rehearsed,” Geverola said. “Juries don’t like that either, because it sounds unnatural.”

“To make someone go through this three times is not the kind of thing a person should have to endure unless there’s a good reason to do it,” Hittinger said.

The case is USA v. Penn et al, D. Colo., no. 1:20-cr-00152.

(Corrected the list of companies whose executives are on trial in second paragraph.)

To contact the reporter on this story: Dan Papscun in Washington at dpapscun@bloombergindustry.com

To contact the editor responsible for this story: Roger Yu at ryu@bloomberglaw.com, Melissa B. Robinson at mrobinson@bloomberglaw.com