CHICAGO (CN) — A federal judge in Texas has sent a sprawling antitrust case against turkey processors to Chicago, where a similar consolidated action is pending.
The case was first filed this past July in Houston. In it, the plaintiffs say the largest turkey meat distributors whom collectively control 70% of the U.S. wholesale turkey market, including Butterball, Tyson and Hormel Foods, conspired together and with consulting firm Agri Stats to artificially inflate the domestic price of turkey products from 2008 to 2016, if not longer.
U.S. District Judge George Hanks Jr. of the Southern District of Texas ordered the case moved to Chicago this past week at the defendant turkey companies' request, finding the case's allegations overlap significantly with a large consolidated antitrust suit that is currently pending in the Northern District of Illinois. That suit, of which the earliest action was filed in 2019, cites 2010 to 2017 as the conspiracy period.
The Barack Obama appointee stated in his Friday ruling that "by all indications, the core issues in the two cases are the same, and much of the proof adduced in the two cases would likely be identical."
Both the consolidated Illinois litigation — composed of two class actions and three direct actions — and the Texas suit now in Illinois, were brought by businesses who claim they were systematically overcharged for turkey products. Plaintiffs in the consolidated Illinois case include grocery chains such as Winn-Dixie, catering firms like Sandee's and food service wholesalers like Maplevale Farms. The main plaintiff in the Texas case is Carina Ventures, an entity created by the multibillion-dollar Chicago-based finance firm Burford Capital.
These plaintiffs claim the turkey processors, using private market reports and other data generated by Agri Stats and its subsidiary Express Markets, conspired to throttle national turkey production, even as the price of turkey products rose throughout the late 2000s and early 2010s. They accomplished this, all the plaintiffs say, by cutting back on turkey slaughters and continually raising turkey product prices based on competitive data they shared with each other via Agri Stats' reports. None of the Agri Stats data was made publicly available, Carina notes in the Texas case.
"Agri Stats prepared monthly reports for defendants regarding their sales of turkey that identified, on a specific product-by product level, the prices and returns each defendant was obtaining on its sales of turkey," Carina claims in its suit. "These sales reports allowed the defendants to easily identify opportunities to raise prices that were lower than their competitors’ prices."
According to the U.S. Department of Agriculture, the average price per pound of turkey hens hovered between 55 cents and 85 cents from 2000 to 2008, only rising slightly above 85 cents briefly from late 2007 to early 2008. But starting in 2009 those prices began to increase sharply, peaking in 2016 at over $1.15 per pound. Prices began to drop again in late 2016, which the Illinois plaintiffs say corresponds to a yet another massive, consolidated antitrust case they filed against broiler chicken producers in Illinois that year.
The broiler chicken case, which makes similar claims as both turkey cases, remains pending.
Attorneys for Carina Ventures did not respond to requests for comment on their case moving to Chicago. But Justin Wade Bernick of the D.C. law firm Hogan Lovells, one of the attorneys representing Agri Stats, said it was a matter of "efficiency" for the defendants in both cases to have the suits collated in Chicago.
"Our position is that all these cases should be centralized," Bernick said, also adding that "We think all these matters should be in front of the same judge, if possible."
At the moment they are not. The case from Texas is currently assigned to U.S District Judge Franklin Valderrama, a Donald Trump appointee, while the consolidated Illinois case is assigned to George W. Bush appointee U.S. District Judge Virginia Kendall. The broiler chicken litigation, in which Agri Stats is also a defendant, is currently assigned to U.S. District Judge Thomas Durkin, a Barack Obama appointee.
This jurisdictional complexity now facing Agri Stats and its co-defendants is mirrored by underlying court battles between the plaintiffs, particularly Carina Ventures in the Texas case.
Carina is a stand-in for the Texas-based Sysco Corporation, another multibillion-dollar business involved with food distribution and wholesale. Carina acquired numerous assets, including the claims against the defendants in the Texas suit, from Sysco this past June. The acquisition followed a complex web of internecine litigation and arbitration between Sysco, Burford and its subsidiaries over control of the suit and any potential returns a settlement or successful jury trial might generate.
According to a separate filing from New York state court this past March, Burford subsidiaries invested $140 million "in Sysco in exchange for a portion of the proceeds of Sysco’s antitrust claims against major U.S. chicken, beef, pork, and turkey suppliers."
Whether Carina or Burford will ever see those returns from Sysco is still an open question. The plaintiffs in both cases seek injunctions against the turkey processors barring anticompetitive practices, as well as damages for the years the plaintiffs say they overpaid for turkey products. In both cases, the plaintiffs have demanded a jury trial.
News of the Texas case coming to Chicago comes less than 30 days after a federal jury in Chicago settled another agricultural antitrust suit; in that case the jurors found the nation's largest egg producers guilty of conspiring to price-fix eggs in the U.S. for years, and ordered the producers to pay Kraft, Kellogg, Nestle and General Mills a collective $17.7 million in damages.
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