Top U.S. chicken processors face lawsuit over farmer pay

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By Tom Polansek | CHICAGO

CHICAGO A group of U.S. chicken farmers sued the
country’s biggest poultry processors, including Tyson Foods Inc
, for allegedly conspiring to depress their pay, the
latest accusation of improper collusion in the sector.

Tyson, Pilgrim’s Pride Co, Sanderson Farms Inc and other companies illegally agreed to share detailed
data on grower pay with one another to keep compensation below
competitive levels, according to the civil lawsuit filed last
Friday in a federal court in Oklahoma.

Sanderson Farms said in a regulatory filing on Thursday that
the company plans to fight the lawsuit.

Tyson, the largest U.S. chicken company, called the
allegations “false claims.”

“We want our contract farmers to succeed and don’t consult
competitors about how our farmers are paid,” Tyson spokesman
Gary Mickelson said.

Perdue Farms declined to comment while representatives of
the other companies that were sued – Pilgrim’s Pride and Koch
Foods – could not immediately be reached for comment after
normal business hours.

The companies, which the lawsuit refers to as a “cartel,”
frequently shared data on pay with each other to keep
compensation lower than it would have been in a competitive
market, according to the lawsuit. That allowed the companies to
keep more profits, the complaint said.

The companies also agreed not to compete for the services of
farmers working for each in order to insulate themselves “from
normal competitive pressures that could potentially erode the
effects of their information sharing agreement,” according to
the lawsuit.

The farmers want to be paid monetary damages.

Overall, about 25,000 U.S. farmers have production contracts
with chicken processors, according to the National Chicken
Council, a trade group. They produce meat to feed consumers who
spend about $90 billion annually on chicken.

Tyson said its average contract farmer has been raising
chickens for the company for 15 years. Compensation “is set out
clearly in contracts the farmers voluntarily enter into,”
according to the company.

The lawsuit comes after the U.S. Department of Agriculture
in December proposed rules it said would make it easier for
chicken producers to sue processors if they believed they were
being mistreated.

The Trump administration has since frozen the rule, as
officials review regulations proposed toward the end of former
President Obama’s last term in office.

A lawsuit last year alleged that Tyson had colluded with
other companies in the broiler chicken business to reduce
production since 2008. Tyson disputed the allegations at the
time.

The case over pay is Haff Poultry Inc et al v Tyson Foods
Inc et al, U.S. District Court, Eastern District of Oklahoma,
No. 17-CV-00033. (Additional reporting by Karl Plume in Chicago)



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