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DENVER (CN) — A federal judge approved a $41.5 million class action settlement on Tuesday between Pilgrim’s Pride and shareholders financially harmed by the chicken company’s price-fixing scheme from the mid-2000s.
“The immediate value for the class outweighs continued litigation,” said Senior U.S. District Judge R. Brooke Jackson. “The high response from the class and lack of objections point to that.”
On behalf of the class, attorney Kim Miller said 28,140 members filed claims adding up to $188 million. They will receive a pro-rated portion of the agreed settlement depending on each person’s claim, with a $40,000 award for lead plaintiff George Fuller. No one appeared in court to oppose the settlement.
The facts driving the case date back to 2008, when chicken producer Pilgrim’s Pride aligned the prices of its broiler chickens with competitors Tyson and Sanderson Farms. The SEC and shareholders alike claimed the scheme to be anticompetitive as the three companies sold about half the chickens consumed in the United States at the time.
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.
Along with the company, Hogan named former CEO William Lovette and chief financial officer Fabio Sandri as defendants. Sandri remains with Pilgrim’s Pride, but Lovette moved to the Virginia-based spice company C.F. Sauer in 2023.
Despite short-term gains, investors said they were ultimately harmed when the scheme came to public light. Since first Hogan sued and Fuller took over as lead plaintiff, Pilgrim’s Pride and executives faced criminal charges. Pilgrim’s Pride 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, which Chief U.S. District Judge Philip Brimmer dismissed that same year. Federal prosecutors tried to charge Lovette with unlawful restraint of interstate trade and commerce in 2020, but he was acquitted by a jury in 2022.
Senior U.S. District Judge R. Brooke Jackson, a Barack Obama appointee, initially dismissed the Hogan case without prejudice in March 2018. However, the 10th Circuit revived the case in July 2023 on a procedural issue.
In court Tuesday, Jackson reflected on the appellate ruling. “I learned a little something about statutes of repose, and you either dismiss the case or you don’t. You don’t give leave to amend.”
A little more than a year later, in December 2024, the parties informed the court they had reached a $41.5 million settlement with the help of a mediator, retired U.S. District Judge Layn Phillips, who had been appointed by Ronald Reagan in 1987.
“I actually sort of enjoyed the case to be honest with you,” Jackson said from the bench. “We don’t get these large complex civil cases as often as I’d like, or large complex white-collar crimes, and the chicken industry treated us to both. I was happy to get my piece.”
When Miller requested $13.8 million in attorneys’ fees, Jackson recalled being paid $25 an hour as an attorney when he started practicing, a rate he said “ripped off” clients at the time.
“Your honor, we earned every penny,” Miller said, characterizing the case as a complex “turducken, a securities case with antitrust litigation wrapped up inside.”
Miller practices with Kahn Swick & Foti in New York.
Ultimately finding the requested attorneys fees “fair, reasonable and adequate,” Jackson concluded, “we’ll send you on your way to a nice champagne dinner somewhere.”
Attorney Milana Bretgoltz, of Weil’s Securities Litigation in New York, represented Pilgrim’s Pride in court, calling the concluding settlement “a hard-fought, arm’s-length negotiation with a mediator after nine years of litigation.”
The hearing was held in a sleek 1960s wood-paneled courtroom on the second floor of the Byron Rogers Federal Building in downtown Denver.
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