Judge throws out Pickett verdict
Publication Date: 04/24/04
LINCOLN — A federal judge Friday overturned a $1.28 billion jury verdict in the Pickett vs. Tyson Fresh Meat case that found the company manipulated cattle prices, said Steve Cady, executive director of the Organization for Competitive Markets.
Cady said Judge Lyle E. Strom overturned the verdict based on technicalities and not the finding that captive supplies harm prices.
David A Domina, an Omaha attorney representing the 30,000 cattlemen plaintiffs, said Friday that Strom’s ruling will be appealed.
Domina said Strom found that the plaintiffs’ proof of damages was not sufficient and the cattlemen did not disprove all Tyson’s claimed justifications for use of captive supplies or long-term contracts to acquire cattle for slaughter. He said cattlemen claim those contracts are used to manipulate market prices.
He said appeal papers will be filed immediately. The case will be reviewed by the U.S. Court of Appeals for the 11th Circuit in Atlanta.
“We are deeply disappointed with the court’s ruling today, and will immediately ask the court of appeals to review the matter,” Domina said.
He said the plaintiffs remain confident that they will prevail in the end.
“People in the industry know what has happened to our cattlemen, and why,” Domina said. “The jury could see it, and we are optimistic the appellate court will, too.”
The case went to trial on Jan. 12 and the jury reached its verdict in favor of the plaintiffs on Feb. 17 after a four-week trial. Nebraska cattle producers, Chris Abbott of Gordon and Bob Rothwell of Hyannis, were two of the original six plaintiffs in the case, which was filed in 1996.
Last month, the federal judge presiding over the Alabama-based class-action lawsuit against Tyson denied the plaintiffs’ motion to enter a $1.2 billion judgment against the company.
Cady said Strom on Friday left intact the finding that captive supplies harmed all cash sellers of fed cattle to Tyson in the amount of nearly $1.3 billion. The court also left intact the finding by the jury that the market for fed cattle is national.
But Cady said the court found that there were legitimate business reasons for captive supply, including that Tyson was guaranteed a consistent, reliable supply of cattle and that Tyson needed captive supplies to meet the competition where other packers engaged in the practice.
Tyson Fresh Meats is a subsidiary of Tyson Foods Inc., an Arkansas-based company that is the world’s largest processor and marketer of chicken and red meat products. The company operates a number of beef processing plants in Nebraska, including Dakota City and Lexington.
In responding to Friday’s announcement, Tyson Chairman, John Tyson, said the decision was a victory for both the company and cattlemen across the country.
“It protects the freedom of producers to market cattle the way they want, and it affirms our strongly held belief that our livestock practices are proper,” Tyson said.
Fred Stokes, OCM president, said the ruling on technicalities does an “extreme disservice to going forward with more open and competitive markets in the cattle industry that is unencumbered by abuses in market power.”
He said the court did not dispute the fact that the practice harms cattle producers.
“It also did not dispute the fact that cattle quality was lower with captive supply cattle and higher with spot market cattle,” Stokes said. “We think that the jury verdict is entitled to far more respect by the judiciary.”
The court’s finding on legitimate business expectations turned on a dispute of law, Stokes said. He said the plaintiffs argued that where the harm of captive supply outweighs any claimed benefits, the court should find the practice unlawful.
Also, the court accepted the defendant’s argument that even if the harm was severe, if there is any benefit at all, the law was not broken.
“It is not logical that where, for example, there is $100 of harm by Tyson, proof of a $1 benefit makes the net of $99 harm to producers go away,” he said. “Tyson was not able to quantify any benefit received by captive supply in dollar terms. They merely made assertions. Further, it is outlandish that Tyson should be allowed to use strategic price manipulation strategies just because other dominant packers are doing it.”
Stokes said the court additionally held that there was no proof that persons who sold cattle in 1999 and 2000 were harmed.
“We are unsure how the court could find no proof of harm in 1999 and 2000 where captive supplies were going up rapidly when the court accepted that captive supplies lowered prices in all other portions of the eight-year class period,” he said. “It just does not make any sense and does a disservice to cattle producers wanting a fair price.”
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