Poultry companies seek to dismiss antitrust lawsuit

by Erica Shaffer
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KANSAS CITY, Mo. – At least 14 poultry companies named in an antitrust lawsuit filed by Maplevale Farms recently filed a flurry of motions to dismiss the lawsuit. Maplevale Farms, a food distributor, filed the lawsuit which alleges the companies named in the complaint conspired as early as January 2008 to “fix, raise, maintain, and stabilize” prices for broiler chickens.

The motions included various arguments aimed at supporting the defendants’ assertions that Maplevale Farms failed to prove the companies actually entered into a conspiracy.

For example, Koch Foods Inc., which has headquarters in Park Ridge, Illinois, argued in a separate memorandum in support of its motion to dismiss that Maplevale couldn’t prove that Koch entered into a conspiracy. In fact, the company argued, Koch actually increased production during the period the defendants allege the conspiracy occurred, due to the acquisition of Cagle’s Inc. and a processing plant formerly owned by Tyson Foods. Koch said the acquisitions more than doubled Koch’s market share and boosted its production capacity.

“Given that during the relevant time Koch increased its production capacity twice — and more than doubled its market share — Plaintiffs’ conclusion that Koch colluded with the other Defendants to decrease the Broiler supply is implausible and cannot be accepted as true,” Koch said in court documents.

Sanderson Farms Inc. of Laurel, Mississippi, also argued that the company expanded its market share by opening new production facilities, including three during the alleged conspiracy. “In short, Plaintiffs admit Sanderson Farms “zigged” at the same time they say all Defendants “zagged,” the company said in court documents. “That does not a conspiracy make. Sanderson Farms’ aggressive investment in additional capacity and growth during the class period cannot be reconciled with participation in a supply-reduction conspiracy. Accordingly, Plaintiffs’ conspiracy claim against Sanderson Farms is inconsistent with their own allegations and, as a matter of law, should be dismissed.”

Livingston, California-based Foster Farms Inc. said in its motion that the company’s “everyday” decision not to increase poultry production did not support allegations that the company participated in a conspiracy.

In court documents, Foster Farms argued: “The complaints describe the agreement as one in which the defendants ‘made substantial cuts to their own production’ by ‘destroying Broiler breeder hens, destroying eggs, relying upon one another’s production . . ., and exporting excess Broiler breeder flocks...’”

“Foster Farms, however, is not alleged to have done any of those things,” the company said. “Instead, the only thing it is said to have done in support of the conspiracy is maintain its production at then-current levels. This sort of everyday inaction is fundamentally different in character from the affirmative steps to reduce production alleged to be at the heart of the conspiracy.”

George’s Inc. of Springdale, Arkansas said “No one associated with George’s is alleged to have made any statements regarding production cuts, or to have engaged in any conduct that plausibly could be construed as a ‘signal’ of a commitment to limit supply. Further, the Complaints are devoid of allegations regarding any production decisions by George’s, much less any decisions supposedly ‘coordinated’ with other producers.”

Gainesville, Georgia-based Fieldale Farms Corp. argued that antibiotic-free chicken was not part of the conspiracy alleged in the lawsuit, while Wayne Farms argued, in part, that participation in industry associations and groups is not conspiratorial conduct.

The case is Maplevale Farms Inc. v. Koch Foods Inc. et al, case number 1:16-cv-08637, in the U.S. District Court for the Northern District of Illinois.

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