DENVER (CN) — A federal judge partially dismissed a shareholder’s suit against Pilgrim’s Pride on Tuesday, removing the company’s current CEO from litigation but advancing claims against the company and its former CEO.
Chicken producer Pilgrim’s Pride aligned the prices of its broiler chickens with competitors Tyson and Sanderson Farms in 2008. The three companies sell about half the chickens consumed in the United States. Rather than competing, however, they conspired to inflate prices together.
Investor Patrick Hogan filed a class action against Pilgrim’s Pride in 2016, accusing the company of lying to investors about the scheme in press releases and solicitations that praised the company’s competitive skills for driving record profits. George Fuller, who purchased 7,500 shares of company stock in 2015, since filed to take over as lead plaintiff.
Despite short-term gains, investors say they were ultimately harmed when the scheme came to public light. Since the shareholders first sued, Pilgrim’s Pride and its executive suite faced criminal charges. The company pleaded guilty in 2021 to fixing prices and rigging bids for broiler chickens, paying out a $107 million fine to the Department of Justice.
A class of workers also sued the company in 2020 over the scandal's effects on pension funds.
Senior U.S. District Judge R. Brooke Jackson, appointed by Barack Obama, initially dismissed the case without prejudice in March 2018. Seeing the case as “premature but not necessarily hopeless,” Jackson then granted the shareholder's motion to submit an amended complaint.
When the shareholders submitted the amended complaint more than a year later, Pilgrim's Pride moved to dismiss. Jackson granted the dismissal, finding a five-year repose had been exhausted, But the shareholders persuaded the 10th Circuit to reverse in July.
"The question is whether plaintiff has now sufficiently pled falsity, scienter, and causation to survive a motion to dismiss,” Jackson wrote in the 15-page Boxing Day order.
After reviewing the second amended complaint filed in 2020, Jackson relieved Fabio Sandri, the company's former chief financial officer and current CEO, while keeping claims against former CEO William Lovette and Pilgrims Pride active. Lovette now runs the Virginia-based spice company C.F. Sauer.
While both Lovette and Sandri were found not of criminal charges guilty in July 2022, Jackson took note the verdicts came after deadlocked juries and mistrials.
The shareholders are represented by Jeremy Lieberman at Pomerantz in New York, who did not immediately respond to an inquiry for comment. Pilgrim's Pride attorney Caitlin McHugh, at the Denver office of Lewis Roca, did not respond to a request for comment before publication.
Follow @bright_lamp
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
Additional Reads
-
-
Forever-chemical butter April 25, 2024