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Chicken Price-Fixing Case to Include Bid-Rig Claims, Eventually

Sept. 23, 2020, 4:21 PM

The sprawling price-fixing case against Tyson Foods Inc., Pilgrim’s Pride Corp., and other top chicken processors—which has centered for years on flock culling practices and an industry index—will now include “bid rigging” allegations by restaurants like Boston Market, a federal judge in Chicago ruled.

But litigation of those new claims will have to wait while other parts of the long-running lawsuit move forward in the U.S. District Court for the Northern District of Illinois, Judge Thomas M. Durkin said, suggesting the suit was “already on borrowed time.”

“In litigation as in life, timing is everything,” Durkin wrote. “The proper administration of the case cannot wait for the new claim to catch up to the claims that have already been litigated for four years.”

The multidistrict suit accuses the 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.

In addition to the civil case, which includes a consolidated class action and individual claims by large retailers that opted out, the industry is facing a parallel Justice Department investigation that led in June to the arrests of its first four targets, including the CEO of Pilgrim’s Pride.

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

The new bid rigging claims emerged from the DOJ probe in June, about a week after the initial arrests in that case.

They first appeared in complaints filed by the companies that operate the Boston Market, Johnny Rockets, Friendly’s, and Smokey Bones restaurant chains. Subway’s purchasing arm subsequently amended its existing suit to add similar allegations.

Durkin agreed Tuesday to consolidate those claims with the multidistrict case. He also ordered retailers that want to add bid rigging allegations to put them in a single complaint, and gave the class action plaintiffs permission to amend their suits as well.

But although all three types of claims are “closely related,” they involve “concededly different means,” which means “evidence of bid rigging is not necessary” to prove the other allegations, the judge found.

He stayed the bid rigging claims until the rest of the case is over, noting that it already involves more than 250 attorneys, nearly 4,000 docket entries, and proposed classes covering “every purchaser of chicken meat in the United States.”

“This should not be a war of attrition,” he wrote. “If the claims in this case are not bifurcated it could be a decade before a judgment of any kind is reached. That is unacceptable. True progress towards an end must be made.”

The amended complaints are due Oct. 23.

The case is In re Broiler Chicken Antitrust Litig., N.D. Ill., No. 16-cv-8637, 9/22/20.

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; Patrick L. Gregory at pgregory@bloomberglaw.com

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