DENVER (CN) — The 10th Circuit revived a shareholder’s amended complaint alleging a chicken producer failed to loop investors in on a price-fixing scheme Thursday from a statute of repose-driven dismissal.
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.
Despite short-term gains, investors like Hogan said they were ultimately harmed when the scheme came to public light. Since Hogan 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 Hogan's case without prejudice in March 2018. Seeing the case as “premature but not necessarily hopeless,” Jackson then granted Hogan’s motion to submit an amended complaint.
But Jackson didn’t set an explicit deadline. Hogan’s attorneys read that as a signal to follow the pending investigation by the U.S. Securities and Exchange Commission.
Hogan submitted the amended complaint more than a year later, on June 8, 2020, and Pilgrim's Pride moved to dismiss. The following April, Jackson granted the dismissal, finding Hogan’s five-year repose was exhausted.
Hogan persuaded the 10th Circuit to reverse Thursday.
The 2002 Sarbanes-Oxley Act prevents plaintiffs from suing over securities fraud five years after the alleged violation. While the statute of repose can protect defendants from long-term liability, it doesn’t just throw out ongoing litigation.
“We are aware of no authority suggesting that statutes of repose are intended to protect litigants from evidence uncovered late in the course of litigation,” wrote Circuit Judge Harris Hartz, a George W. Bush appointee, in the 21-page opinion. “In complicated cases, litigation can take a long time and discovery may not be completed within five years of the alleged misconduct, especially if suit is not brought promptly.”
With Ronald Regan-appointed Senior U.S. Circuit Judge David Ebel and Barack Obama-appointed U.S. Circuit Judge Scott Matheson, Hartz analyzed whether Hogan filing the second amended complaint after the dismissal amounted to resuming the game or starting a new one.
The panel found that because Jackson hadn’t issued a final judgment, the game was still on.
"Setting aside a dismissal before final judgment is entered is no more the bringing of a new action than resuming play after a timeout is the start of a new football game,” Hartz wrote.
The 10th Circuit panel did not consider the merits of the complaint but instructed Jackson to pick up where the case left off.
Attorneys for Hogan did not respond to a request for comment before publication. Representatives for Pilgrim’s Pride declined to comment.
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