Pork Processors Want Court to Inspect Sysco-Burford Funding Deal

Major pork processors want a judge to look into litigation funder Burford Capital Ltd.'s deal with Sysco Corp. to back price-fixing lawsuits against the companies.

Sysco’s arrangement with Burford “raises serious case-management concerns,” JBS USA and Smithfield Foods told the federal judge in Minnesota assigned to the multidistrict litigation. The companies, along with others facing antitrust claims, urged Judge John R. Tunheim to “address” those issues by seeking more information about the terms of the deal.

Burford, which gave Sysco $140 million to pursue antitrust claims against pork and poultry producers, is locked in a public dispute with the company. Sysco recently sued the litigation funder, alleging that Burford blocked settlements in at least two cases and has prevented the company from hiring new lawyers.

Burford earlier this month obtained a New York arbitration award stopping Sysco from finalizing settlements in the price-fixing lawsuits, which the funder says are “too low.” Sysco previously agreed to give Burford veto authority over the settlement talks—power that Burford says it normally doesn’t have—after Sysco violated the funding deal by assigning some of its legal claims against the processors to customers.

JBS and Smithfiled told the Minnesota federal court that they’re concerned Burford could take complete control of the litigation by declaring a “remedy event.”

“The idea that a litigation funder—not a party to any case in this MDL—claims that it has such power over the course of a party’s litigation raises serious questions,” the companies said.

A Burford representative denied that the funder has taken control of the litigation.

“The fact that in any standard contract a party’s egregious and flagrant breaches could at some point rise to the level of triggering a remedy event does not in any way mean that Burford is controlling Sysco’s litigation decisions, and any contrary suggestion is simply a rhetorical effort to tarnish the entirely legitimate practice of providing corporate finance to companies involved in litigation,” said David Helfenbein, the Burford spokesman.

Burford in a recent court filing accused Sysco of “blatant forum shopping” by filing its lawsuit against the funder in Illinois instead of New York, where the arbitration tribunal is located.

Burford included redacted correspondence between the funder and Sysco about the funder’s effort to retain new counsel. Sysco parted ways with Scott Gant of Boies Schiller, who it says was swayed by Burford to advise against the settlements.

Sysco said that Burford did not respond to its proposed fee arrangement for new counsel, but the exhibits show that Burford responded three days later approving the fee arrangement with the caveat that Sysco would pay the difference if new counsel was more expensive.

A representative for Sysco confirmed that the company is still seeking counsel.

The case is In re Pork Antitrust Litig., D. Minn., No. 18-cv-1776, 3/24/23.