Tyson, Pilgrim’s $155 Million Chicken Cartel Deal Gets Early OK

The chicken wholesalers leading a proposed price-fixing class action over an alleged industrywide scheme won preliminary approval from a federal judge in Chicago for a $155 million settlement with Tyson Foods Inc. and JBS SA subsidiary Pilgrim’s Pride Corp.

Judge Thomas M. Durkin gave his tentative blessing to the deal, which calls for payments of $75 million by Pilgrim’s and $80 million by Tyson. His ruling Tuesday came the same day Pilgrim’s separately became the first chicken processor to plead guilty to price fixing, accepting a $108 million criminal fine.

If ultimately approved, the civil settlement will resolve antitrust allegations on behalf of “direct purchasers,” but not parallel retailer and consumer claims consolidated with them in the U.S. District Court for the Northern District of Illinois.

Tyson said last month it will pay $221.5 million to escape the entire case, a day after groups of “indirect commercial and institutional indirect purchasers” and “end-user consumer plaintiffs” notified Durkin of agreements in principle.

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.

The beef industry, meanwhile, is contending with two separate federal investigations into its prices.

Tyson is represented by Axinn, Veltrop & Harkrider LLP and Lipe Lyons Murphy Nahrstadt & Pontikis Ltd. Pilgrim’s is represented by Weil Gotshal & Manges LLP and Eimer Stahl LLP.

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.

The consumers are represented by Hagens Berman Sobol Shapiro LLP and Cohen Milstein Sellers & Toll PLLC. 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, 2/23/21.