Pork Buyers Say 'Essential' Tag Bolsters Their Antitrust Case

By Matthew Perlman
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Law360 (May 12, 2020, 6:28 PM EDT) -- Pork buyers suing Smithfield, Tyson and other major producers over an alleged conspiracy to inflate prices have told a Minnesota federal court that a White House executive order meant to ensure that meatpackers continue operating during the coronavirus pandemic shows the producers can hike prices by reducing output.

Several groups of buyers on Monday filed a joint request for the court to take judicial notice of President Donald Trump's April 28 executive order that designated meatpacking plants as critical infrastructure amid the COVID-19 pandemic.

The request points to language in the order saying that closing meat and poultry processing facilities can severely affect the food supply chain and that the closure of a single plant can disrupt the supply of protein to an entire chain of grocery stores.

"The executive order contains information regarding the dramatic effect even small output reductions can have on supply of pork at the grocery store," the request said. "These statements are consistent with plaintiffs' allegations that by coordinating output and limiting production, defendants were able to manipulate pork prices on a statistically significant scale."

The order designated beef, pork and poultry processing facilities as critical under the Defense Production Act, a move meant to shore up the supply chain after outbreaks of the virus, and pressure from local authorities and unions, caused closures and disruptions at several facilities around the country.

The order tasks the U.S Department of Agriculture with taking "all appropriate action" to ensure meat processors continue operating, while also following recent guidance on worker safety from the Occupational Safety and Health Administration and the Centers for Disease Control and Prevention. It was meant to address concerns about potential liability for packing companies.

The pork buyers said in Monday's request for notice that the processors have contended in trying to get the suit dismissed that small supply cuts can't affect prices and that the executive order lends additional credibility to the buyers' claims.

Shana Scarlett of Hagens Berman Sobol Shapiro LLP, an attorney for end-buyer consumers, told Law360 on Tuesday the order recognizes the impact that closing even a single plant can have, "further supporting plaintiffs' allegations that the defendants colluded on the supply and price of pork."

The proposed class action dates back to June 2018, and accuses producers including Tyson Foods Inc., Smithfield Foods Inc., JBS USA and various affiliates, of manipulating the price of pork by restricting supply starting as early as 2009. The purchasers say that the companies colluded by coordinating public statements and sharing price information.

The suit also names data compiler and Eli Lilly & Co. unit Agri Stats Inc., in addition to the processing giants, as supplying some of the information that fed the alleged conspiracy.

In addition to the consumer class, the litigation also includes allegations from direct purchasers of pork and indirect purchasers that resold pork, such as restaurants, as well as individual retailers.

U.S. District Judge John Tunheim dismissed claims from three groups of buyers in August last year, finding that the industry-wide data they provided wasn't enough to show the processors were acting in concert. But the judge gave them a chance to amend their complaint.

In February the buyers urged the court not to toss their renewed complaint, contending it details the "method, manner, means, and timing of each of the defendant's supply cuts in furtherance of the conspiracy."

An attorney for Smithfield declined to comment Tuesday. Representatives for the other processors and buyers did not respond to requests for comment.

The direct purchasers are represented by Brian D. Clark, W. Joseph Bruckner, Stephanie A. Chen, Simeon A. Morbey and Arielle S. Wagner of Lockridge Grindal Nauen PLLP, and Bruce L. Simon, Bobby Pouya, Clifford H. Pearson, Michael H. Pearson, Melissa S. Weiner and Joseph C. Bourne of Pearson Simon & Warshaw LLP.

The consumer indirect purchasers are represented by Daniel E. Gustafson, Daniel C. Hedlund, Michelle J. Looby and Brittany N. Resch of Gustafson Gluek PLLC, Steve W. Berman, Shana E. Scarlett and Breanna Van Engelen of Hagens Berman Sobol Shapiro LLP, and David Cialkowski of Zimmerman Reed PLLP.

The commercial indirect purchasers are represented by Jonathan W. Cuneo, Joel Davidow, Blaine Finley and Yifei "Evelyn" Li of Cuneo Gilbert & Laduca LLP, and Shawn Raiter of Larson King LLP.

Triumph Foods LLC is represented by Aaron Chapin, Gene Summerlin, Marnie Jensen, Ryann Glenn, Kamron Hasan, Quinn Eaton and Sierra Faler of Husch Blackwell LLP.

JBS USA is represented by Donald G. Heeman, Jessica J. Nelson and Randi J. Winter of Spencer Fane LLP, and Stephen Neuwirth, Michael B. Carlinsky, Sami Rashid, Richard T. Vagas and David B. Adler of Quinn Emanuel Urquhart & Sullivan LLP.

Smithfield is represented by John Cotter and John Kvinge of Larkin Hoffman Daly & Lindgren Ltd., and Richard Parker, Josh Lipton and Brian Robison of Gibson Dunn & Crutcher LLP.

Tyson is represented by Tiffany Rider, Rachel Adcox, Jetta C. Sandin and Lindsey Strang Aberg of Axinn Veltrop & Harkrider LLP, and David P. Graham of Dykema Gossett PLLC.

Hormel Foods Corp. is represented by Richard Duncan, Aaron D. Van Oort, Craig S. Coleman, Emily E. Chow, Isaac B. Hall and Bryan K. Washburn of Faegre Baker Daniels LLP.

Clemens Food Group is represented by Daniel Laytin, Christa Cottrell, Christina Briesacher and Christina Sharkey of Kirkland & Ellis LLP, and Mark L. Johnson and Virginia R. McCalmont of Greene Espel PLLP.

Indiana Packers Corp. is represented by Britt M. Miller, Robert E. Entwisle and William H. Stallings of Mayer Brown LLP.

Seaboard Foods LLC and Seaboard Corp. are represented by William L. Greene, Peter J. Schwingler, Jon M. Woodruff and J. Nicci Warr of Stinson LLP.

Agri Stats Inc. is represented by Peter H. Walsh, William L. Monts III, Justin W. Bernick and Jennifer A. Fleury of Hogan Lovells US LLP.

The case is In re: Pork Antitrust Litigation, case number 0:18-cv-01776, in the U.S. District Court for the District of Minnesota.

--Additional reporting by Bryan Koenig, Daniel Wilson and Vin Gurrieri. Editing by Peter Rozovsky.

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