In re Broiler Chicken Antitrust Litigation

Case Background

Plaintiffs filed a class action antitrust litigation claiming that the Defendants, who controlled between 92% and 97% of the market during the class period, coordinated their actions to manipulate supply and pricing. Plaintiffs contended that Defendants shared competitive information, restricted production, and engaged in other collusive practices to drive up prices, resulting in significant financial harm to purchasers. The litigation led to numerous settlements, class certifications, and court rulings, including a jury verdict in favor of Sanderson Farms and summary judgment in favor of several other Defendants.

The lawsuit involved multiple groups of Plaintiffs, including direct-purchaser plaintiffs (DPPs), indirect-purchaser plaintiffs (IPPs), end-user consumer plaintiffs (EUCPs), and direct-action plaintiffs (DAPs). The lawsuit was filed in the United States District Court for the Northern District of Illinois. Judge Thomas M. Durkin presided over this lawsuit

Cause

Starting in January 2008, the Defendants and their co-conspirators fixed, raised, and stabilized Broiler prices. They coordinated production levels and restricted supply to increase prices in the U.S. They exchanged sensitive, nonpublic information about prices, capacity, sales, and demand through third-party Agri Stats. The Plaintiffs argue that the Defendants hid their actions to avoid detection.

Until November 2016, the Plaintiffs did not know the Defendants manipulated the Georgia Dock, a key Broiler price index. Broilers make up about 98% of U.S. chicken meat. A few major suppliers, including the Defendants, control roughly 90% of the wholesale market. Historically, the Broiler industry had boom and bust cycles, but Defendants’ actions kept prices high, even when input costs fell.

In 2007, Pilgrim’s and Tyson tried to reduce production, but their efforts failed as others increased output. By January 2008, they realized they needed to cooperate to reduce supply and raise prices. Other producers followed, cutting production significantly.

The Defendants took extreme measures, such as destroying Broiler breeder hens. This limited their ability to increase production for over 18 months. These actions led to a nearly 50% increase in Broiler prices, even with falling input costs. By 2010, some Defendants increased production, but by 2011-2012, they again coordinated cuts, further limiting supply.

Even as input costs dropped from 2014 to 2016, Broiler prices stayed inflated due to the Defendants’ collusion and manipulation of price indices. As a result, the Plaintiffs and others paid higher prices than in a competitive market, suffering harm from the Defendants’ actions.

Damages

The Plaintiffs filed a class action on behalf of all affected parties to recover actual and compensatory damages, as well as double and treble damages where allowed, pre- and post-judgment interest, costs, and attorneys’ fees. They claimed these damages were due to the Defendants’ actions in limiting the supply of Broilers and raising their prices. The Plaintiffs sought damages exceeding $5,000,000.

This case was brought under Section 16 of the Clayton Act (15 U.S.C. §26) to seek an injunction against the Defendants for violating Section 1 of the Sherman Act (15 U.S.C. §1). The court had jurisdiction under 28 U.S.C. §§1331, 1337, and Sections 4 and 16 of the Clayton Act (15 U.S.C. §§15(a) and 26).

In addition, the Plaintiffs raised claims for both actual and exemplary damages, along with injunctive relief, under state antitrust, unfair competition, and consumer protection laws. They aimed to obtain restitution, recover damages, and seek further relief for the violations of those state laws. The Plaintiffs and affected parties also requested attorneys’ fees, costs, and other expenses under both federal and state laws.

Key Arguments and Proceedings

Legal Representation for Plaintiffs

  • Plaintiff(s): Sargent’s Restaurant and Lounge | Fargo Stopping Center, LLC | Wildwood Tavern LLC | Bodega Brew Pub, Inc. | Sullott Corporation | Chicken Joe’s, LLC | Eat This, Inc. | Alpine Special Treatment Center, Inc. | Tennis Bums, LLC dba Alabama Joe’s | Alabama Joe’s 2, Inc. dba Alabama Joe’s | Tani Sushi Bistro, LLC | France 44 Foods, Inc. | Alliance Healthcare System, Inc. | Little Figs, Inc. dba Figaretti’s Restaurant | Da Big Blue Enterprises Corp. dba Blue Tropix Bar & Grill & Da Big Kahuna Waikiki | Floersch IGA, Inc. dba Ray’s Apple Market | Avanti’s of Phoenix, Inc. | Midtown Bar and Grill LLC | Mookie’s Southern Cuisine LLC | Eowyn, LLC dba Cabana | Peppers Grill & Bar, Inc. | Daliano’s, Inc. dba Daliono’s | Sumner Country Restaurant & Creamery LLC dba Kelley’s Row Restaurant & Pub | Bashara & Company, LC dba J. Morgan’s Steakhouse | Tic-Tac-O | Brix Tavern, LLC | Pancho’s Taqueria, Inc. dba Pancho’s Taqueria | Legacy 5, LLC dba Mr. Jim’s Pizza | Roost Fried Chicken LLC | Oregano Italian, LLC dba Oregano Italian Kitchen | Bordenaro’s Pizza, Inc. dba Bordenaro’s Pizza | Telavi Hospitality, Inc. dba Levante’s | FB Mall, LLC dba Fat Belly’s
    • Counsel for Plaintiff(s): Clifford H. Pearson | Daniel L. Warshaw | Bobby Pouya | Michael H. Pearson | W. Joseph Bruckner | Brian D. Clark | Simeon A. Morbey | Arielle S. Wagner | Stephen M. Owen | Kyle Pozan | Bruce L. Simon | Jill M. Manning | Steve A. Hart | Brian Eldridge

Legal Representation for Defendants

  • Defendant(s): House of Raeford Farms Inc. | Koch Foods Inc. | JCG Foods of Alabama LLC | JCG Foods of Georgia LLC | Koch Meat Co. Inc. | Tyson Foods Inc. | Tyson Chicken Inc. | Tyson Breeders Inc. | Tyson Poultry Inc. | Pilgrim’s Pride Corp. | Perdue Farms Inc. | Perdue Foods LLC | Sanderson Farms LLC | Sanderson Farms Foods LLC | Sanderson Farms Production LLC | Sanderson Farms Processing LLC | Wayne Farms LLC | Mountaire Farms Inc. | Mountaire Farms LLC | Mountaire Farms of Delaware Inc. | Peco Foods Inc. | Foster Farms LLC | Foster Poultry Farms LLC | Simmons Foods Inc. | Simmons Prepared Foods Inc. | Fieldale Farms Corp. | George’s Inc. | George’s Farms Inc. | O.K. Foods Inc. | O.K. Farms Inc. | O.K. Industries Inc. | Norman W. Fries Inc. | Claxton Poultry Farms | Harrison Poultry Inc. | Mar-Jac Poultry Inc. | Mar-Jac AL/MS Inc. | Mar-Hac Holdings Inc. | Mar-Jac Poultry AL LLC | Mar-Jac Poultry MS LLC | Mar-Jac Poultry LLC | Agri-Stats Inc. | Amick Farms LLC | Case Foods Inc. | Case Farms Processing Inc. | Case Farms LLC
    • Counsel for Defendant(s): For Koch – Stephen Novack | Stephen J. Siegel | For House of Raeford – Gregory G. Wrobel | Henry W. Jones Jr.

Claims

Plaintiffs alleged that Defendants violated 15 U.S.C. § 1 of the Sherman Act by engaging in a decade-long conspiracy to fix, raise, maintain, and stabilize broiler chicken prices. They claimed that Defendants, who controlled between 92% and 97% of the market during the class period, coordinated their actions to manipulate supply and pricing.

Defense

The Defendants denied allegations and claimed independent decision-making. Some obtained favorable summary judgment rulings or jury verdicts.

Settlement

Early Settlements

The DPPs secured their first settlement with Fieldale for $2.25 million, with cooperation and documents, approved in November 2018. Later, they reached settlements with Amick for $3.95 million, Peco for $4.96 million, and George’s for $4.1 million, all approved in October 2020.

In June 2021, the court approved settlements with Pilgrim’s for $75 million and Tyson for $79.34 million. By December 2021, the EUCPs finalized settlements totaling $181 million with Fieldale, George’s, Mar-Jac, Peco, Pilgrim’s, and Tyson, appointing Hagens Berman Sobol Shapiro LLP and Cohen Milstein Sells & Toll PLLC as co-lead counsel.

By January 2022, the court approved settlements with Mar-Jac for $7.98 million and Harrison Poultry for $3.3 million. In May, Judge Durkin certified class status for the DPPs, IPPs, and EUCPs.

In October 2022, Judge Durkin awarded $57.4 million in attorney fees and $8.75 million in expenses, but class member John Andren appealed. The Seventh Circuit vacated the fee award in August 2023, requiring further review.

Meanwhile, the DPPs secured settlements with Simmons for $8 million, Mountaire for $15.9 million, O.K. Foods for $4.86 million, House of Raeford for $27.5 million, and Koch for $47.5 million, with preliminary approval granted for each.

In June 2023, the court ruled in favor of six Defendants, including Foster and Perdue, while a jury sided with Sanderson Farms in October. By December 2023, the court finalized settlements with Simmons, Mountaire, and O.K. Foods. In March 2024, the DPPs sought approval for settlements with seven more companies, including Agri-Stats and Sanderson.

The DPP class reached a settlement with seven sellers, resolving litigation costs and attorney fees. The Agri-Stats agreement provided class members six months of free price reports.

Subsequent Settlements and Court Rulings

On March 14, 2024, Judge Durkin denied the DPPs’ motion for judgment as a matter of law. The next day, he granted preliminary approval of the settlements. On June 25, 2024, the DPPs filed for final approval of settlements with the seven Defendants. Shortly after, the EUCPs submitted a settlement notice for House of Raeford Farms.

Judge Durkin later reduced the EUCPs’ attorney fees, ruling that 30% of the settlement fund was reasonable. He referenced a fee structure used in a previous antitrust case as a fair benchmark.

On July 9, 2024, the court finalized the settlements with six Defendants, including Foster, Perdue, and Wayne Farms, while setting a hearing for Agri-Stats in October. The DPPs sought final approval for settlements with House of Raeford and Koch the following day. A week later, the EUCPs notified the court of a settlement with O.K. Foods.

On August 14, 2024, Judge Durkin approved the final settlements, awarding $27.5 million from House of Raeford and $47.5 million from Koch. The ruling confirmed that class members who did not opt-out would be bound by the agreement.

Court Documents:

Documents are available for purchase upon request at jurimatic@exlitem.com