FEDERAL JURY AWARDS $1.28 BILLION TO CATTLEMEN IN PRICE FIXING CASE
A jury awarded $1.28 billion Tuesday to a group of cattlemen who claim Tyson Fresh Meats Inc. used contracts with a select group of producers to create a captive supply of cattle, allowing them to manipulate the nation's cattle market.
The jury deliberated four days before reaching its verdict. The federal court trial began over a month ago in Montgomery.
"This is definitely a landmark court decision that will affect the entire beef industry," said Alabama Farmers Federation Beef Director Perry Mobley. "How much it will affect it is yet to be seen. Much of that will be determined when the judge makes his final ruling -- including who makes up the class of plaintiffs."
The class-action lawsuit, which originally was filed in Montgomery in July 1996 by 10 cattle producers in seven states, alleges IBP Inc., violated the Packers and Stockyards Act of 1921. The plaintiffs have charged that IBP, which merged with Tyson Foods in 2001, paid higher prices to producers who entered into exclusive agreements with the company and conspired to fix prices paid on the open market.
"The verdict 'really means that independent cattle business has an opportunity to survive, that consolidation will not continue in the feeding sector, and won't be forced by the packers,'" cattlemen's attorney David Domina told the Associated Press.
Tyson officials say they will appeal the verdict.
The plaintiffs claim as many as 30,000 cattlemen who sold cattle to IBP or Tyson Fresh Meats Inc. from February 1994 to October 2002 could qualify for damages under the class-action suit.
Although many of the class members are Midwestern cattlemen, the suit was filed in Montgomery because the lead plaintiff is Henry Lee "Leroy" Pickett of Bullock County.
Several legal issues remain to be decided, most notably the amount of money per animal that cattlemen can claim and whether the judge will enter an order prohibiting certain uses of contracts.
An order that could be issued by the judge could restrict contracts and will determine whether Tuesday's verdict affects the poultry or pork industries, both of which rely heavily on such contracts.
"While contract marketing can be very beneficial to producers with higher quality cattle who market through alliances, it can be detrimental to the industry when extremely large cattle feeding operations enter into agreements with packers that keep hundreds of thousands of head of cattle off the market," Mobley said. "Such a move would give the competitive edge to the packers."