To Honor A Jury Verdict In Their Favor

Cattlemen Want Courts To Honor A Jury Verdict In Their Favor
Nebraska News –
By GEORGE LAUBY / North Platte Bulletin
December 22, 2004
The validity of a jury verdict is at stake in an agricultural anti-trust case brought by cattle sellers against the world’s largest cattle buyer.A jury previously issued a verdict for the cattlemen, but the trial judge disagreed with the panel and substituted his view for that of the jury. The current appeal followed.
In part, the cattle sellers argued that the trial judge acted improperly. They cited the  Seventh Amendment to the U.S. Constitution:

“In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.”

After eight years, the debate between Alabama cattleman Lee Pickett and others against Tyson Fresh Meats moved to the 11th Circuit Court of Appeals. A panel of three judges recently heard oral arguments in Montgomery, Alabama.

The court is one step short of the U.S. Supreme Court.

Two of the cattlemen challenging Tyson are from Nebraska — Chris Abbott and Bob Rothwell of Hyannis. At issue is the way Tyson buys cattle – namely the legality of private, unwritten agreements with some cattle sellers.
Under questioning from the three-judge panel, Tyson attorney Carter Phillips admitted Tyson uses unwritten marketing agreements to buy large amounts of cattle.

Tyson is using more unwritten agreements all the time, Phillips said.

Judges sharply questioned attorneys from both sides for an hour and a half. Among other issues, they pressed cattlemen’s attorney Joe Whatley about how to accurately identify the cattle sellers that had allegedly been harmed.
Whatley said even if the injured class could not be definitively identified, cattlemen would be entitled to “injunctive relief” – a court order requiring Tyson to buy cattle with a cash-based bid.

Whatley argued that a jury verdict is protected by the 7th amendment of the U.S. Constitution and urged the judges to uphold it.

The Pickett case began eight years ago, pressed by cattlemen who allege unwritten marketing agreements allow Tyson to bid less for cash cattle, driving down the overall price.

The cattlemen say when Tyson buys cattle under unwritten arrangements, the company knows well in advance about how many cattle will arrive at the packinghouse. Therefore, the company bids less aggressively for the rest of the cattle they need.

The cattlemen want a virtual 100-percent return to the bidding system, so there is meaningful “price discovery.”
Non-negotiated sales are an unfair practice that manipulates the market; It violates the Packers and Stockyards Act, the cattlemen say.

After a month-long jury trial early in 2004, a 12-person jury agreed with cattlemen.

However, two months later the judge in the case overturned the verdict.

The judge said it is too difficult to find the cash sellers who were specifically harmed, and that Tyson had a legitimate business motive for offering the private deals – to keep up with its competition from other cattle buying companies.
The cattlemen appealed again and the case continued. Both sides filed briefs in the appeals court during the summer.
The court is expected to rule within six months. Regardless of the outcome, an appeal is expected.

The judges fired questions at attorneys Whatley and Phillips during the hearing earlier this month, asking:
— If there was proof the cash price went down because of the secret agreements.
— If the cattle sellers who were harmed could be put into an identifiable class.
— If the jury’s estimate of damages ($1.28 billion) was accurate.
— If Tyson Fresh Meats had a legitimate business reason for making the deals.

“Did you prove that the overall price of fed cattle was lower than it would have been without these agreements?” Judge Edward Carnes asked Whatley.

“By definition, we did,” Whatley said, referring to a cause and effect relationship. Lower overall prices are a logical result of secret arrangements with a few cattle sellers, especially if they buy in large quantity, he said.

Judge Richard Mills suggested the jury’s award could have been determined by “a roll of the dice.”

In defense of the estimate, Whatley said Auburn economist Robert Taylor testified at the trail that the damages could have been about $2.1 billion over eight years, but the jury had authority to set that amount higher or lower.
The jury’s estimate of damages equals about one out of every 20 cattle that Tyson (then IBP) bought during that time, according to an analysis by a national think-tank, the Organization for Competitive Markets.

Going on the offensive, Whatley said the jury’s findings are protected under the U.S. Constitution.

“The question is — is it proper to set the jury’s verdict aside?” he said. “That is what you have to decide. The question is not what you would have decided.”

The 1921 Packers and Stockyards Act prohibits “any unfair practice” in livestock buying, and any act that has “the effect of manipulating or controlling prices.”

Tyson attorney Carter Phillips, on the other hand, maintained cattle producers ask for the unwritten marketing arrangements, and Tyson must grant them to keep a reliable supply of cattle coming to the packinghouse.
But Judge Carnes questioned Phillips’ argument. He asked if there are fewer cattle in the nation than the capacity to slaughter them. Phillip said yes.

So, all cattle must go to the packinghouse eventually, regardless of how they are bought, Carnes noted.
Whatley said if the secret agreements are illegal for one meatpacker, they are illegal for all of them, especially on a large scale. Lawsuits are underway against the two other largest meatpackers for using the same practice, he said.
Phillips, however, said cattle feeders are free to choose how to sell their cattle. Some feeders like the security of secret marketing agreements, with the terms agreed orally and nothing written down. Those agreements are more efficient because Tyson agrees to receive the cattle from a seller and the seller agrees to send them. The price is set later.
Phillips said the use of secret agreements allows “ultimate freedom” to do business.

Judge Emmett Cox said cash prices might not be used at all by 2008 or 2012 if the trend continues. He compared cattle marketing agreements to hog buying contracts.

What base price will be used if the cash market disappears, Cox asked?

“I suspect it would come down to whatever the packer wants to pay,” Whatley said.

Under questioning, Phillips attacked Taylor’s estimate of damages and said his testimony should not have been allowed. He said the district court judge seemed reluctant to allow Taylor to testify.

Phillips suggested cattlemen, if they feel victimized, should appeal to the Secretary of the U.S. Department of Agriculture, the cabinet officer that oversees enforcement of the Packers and Stockyards Act. Or, cattlemen should ask Congress to update the act.

But Whatley stressed that jury verdicts are protected under the 7th amendment. He asked the court to reinstate the verdict.

Another goal in the case, Whatley told the court, is to put the cattle market back on a cash bid basis so it will “work the way it is intended to work” and provide an open market that is accessible to all cattle producers.

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