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Judge Hears From Farmers in Suit Against Pilgrim's

posted on June 24, 2011


FORT WORTH, Texas (AP) -- A federal judge heard more testimony Friday from farmers who allege poultry giant Pilgrim's Pride closed plants and ran them out of business to manipulate commodity chicken prices, which they say violated a Depression-era law designed to limit big meat companies' power over farmers and ranchers.

"We want Pilgrim's Pride to pay these growers what they've lost, the business value, and the mental anguish that they've suffered," Bob Depper, one of the attorneys representing the 275 farmers in Texas, Arkansas and Louisiana, told The Associated Press. He said a monetary amount had not been determined.

The trial that started Thursday in Marshall, about 175 miles east of Fort Worth, could last weeks or months, Depper said. It is being tried before a judge and not a jury, he said.

Pilgrim's Pride does not comment on pending litigation, company spokesman Gary Rhodes told the AP in an email.

When it closed some plants, cut thousands of jobs and shed production after filing for Chapter 11 bankruptcy protection in late 2008, the company cited cost-saving measures. Pilgrim's Pride emerged from bankruptcy a year later as it sold a majority stake to Brazilian beef giant JBS. Last year the company's headquarters moved from Pittsburg in East Texas to Greeley, Colo.

Because Pilgrim's Pride filed in the U.S. Bankruptcy Court in the Northern District of Texas in Fort Worth, groups of farmers initially filed civil suits there - as did the city of Clinton, Ark.

The northern Arkansas city filed a $28.5 million suit in 2009, alleging price manipulation and fraud, after Pilgrim's Pride shut down its plant there. Clinton, Ark., which was hit by a 2008 tornado that destroyed a boat-making plant that employed 45, said the poultry processor was essentially turning it into a ghost town.

But a federal bankruptcy judge in Fort Worth dismissed the city's suit and didn't allow more time to file an amended complaint. Earlier this year the 5th U.S. Circuit Court of Appeals upheld those rulings. That city's suit is listed as terminated, according to court records.

The city of Clinton, Ark., is not a plaintiff with the farmers in the civil suit currently being tried in East Texas, Depper said.

The suit now in federal court in East Texas alleges that Pilgrim's Pride in 2008 started a plan to boost commodity chicken prices by cutting its weekly production by 5 percent after it closed two plants initially and also terminated contracts with farmers near its other facilities. The growers were devastated financially because no other chicken companies were in the various cities, making the farmers dependent on Pilgrim's Pride, the suit said.

The company's actions came on the heels of its 2007 hostile takeover of Gold Kist when it acquired $1.3 billion in additional debt, according to the suit.

The suit also claims that the company gave preferential treatment to farms owned by employees, managers and officers - including Lonnie "Bo" Pilgrim, Pilgrim's Pride then-chairman and controlling shareholder.

Depper said manipulating prices violates the Packers and Stockyards Act of 1921, where lawmakers recently have argued over reforms that would better protect farmers and ranchers, such as making it easier for them to sue companies on antitrust grounds. The U.S. Department of Agriculture does not need congressional approval for any new rules, which have drawn opposition from big meat companies.

Many believe that to win a lawsuit filed under the law now, farmers or ranchers have to prove a company's actions harmed competition in the entire industry. But Depper said the antitrust component is not specific in the act, and judges have ruled differently depending on the case.

 


Tags: agriculture business chickens commodity prices courts farmers judges meat news poultry