A large class of feeder cattle ranchers filed a lawsuit against the “Big 4” meatpacking defendants (Tyson, JBS, Cargill, and National Beef) for their unlawful conspiracy to lower the prices paid for cattle. The misconduct violates section 1 of the Sherman Act and numerous State Consumer Protection laws, including the Kansas Restraint of Trade Act.
Feeder cattle include all steers and heifers before they have been placed in a feedlot to be fattened for slaughter, including those in the cow/calf, backgrounder, and stocker categories, weighing below 900 pounds (at their heaviest). The feeder cattle ranchers’ livelihoods depend on getting competitive prices for their calves and cows. According to the allegations in the lawsuit, they indirectly sold their cows and calves to at least one of the defendants in a manipulated market created by the Big 4, stemming from their collusive conduct. Due to the anticompetitive actions of the defendants, the plaintiffs suffered significant losses.
Here at Paul LLP Trial Attorneys, we are actively involved in prosecuting claims for our clients who were injured by the unfair and anticompetitive business practices of the defendants. Call (816) 984-8100 to learn whether we can help you, too.
Claims Made Against the Defendants in the Lawsuit
Six separate class actions have been filed against the “Big 4” meatpackers on behalf of the “cattle” and “beef” side of the market. Those claims were consolidated before one judge in the District of Minnesota in what is called multidistrict litigation (“MDL”), In re Cattle Litigation. On both sides of the market, there lies a direct and indirect seller and purchaser class of plaintiffs. Additionally, there are classes involving the Cattle Index Market, as the Big 4 defendants (and 10 other Jane Doe Defendants) are also alleged to have fixed the trading market through futures, options, and forward contracts.
All actions filed against the defendant meatpackers allege that they conspired together in order to increase their “meat margin” by limiting the number of U.S. cattle they purchased, and then slaughtering less fed cattle by not operating at capacity and shutting other plants down entirely. The meatpackers’ actions allegedly caused cattle prices to drop significantly during the class period, forcing farmers to sell their cattle at the first bid price they received. By enforcing a queuing convention, the meatpackers forced ranchers into selling their cattle at significantly lower prices. Instead of having the power to negotiate a higher price, they could not sell their highly perishable cattle at the end of the required timeframe and had to accept the first bid a meatpacker offered.
Additionally, on the “beef” side, the meatpackers were allegedly selling boxed beef at higher prices to purchasers, because they were producing less prepared beef by slaughtering less cattle. In doing so, the beef plaintiffs claim the defendants were able to raise their meat margin and reap record-high profits.
We currently represent a proposed class of indirect sellers, which includes all feeder cattle ranchers. Our class alleges the Big 4 meatpackers are engaging in a continuing agreement, understanding, and conspiracy to unlawfully and unreasonably restrain the trade by allocating the market for and depressing, fixing, or suppressing the price of feeder cattle (indirectly) by fixing the prices of fed cattle. In doing so, the plaintiff class alleges the meatpackers committed a per se violation of the Sherman Act of Antitrust law. This is a federal law that prohibits uncompetitive conduct and works to ensure a free market.
We also claim the defendants violated multiple parts of the Packers and Stockyards Act by engaging in this course of business to implement and reach a combination, arrangement, conspiracy, or agreement to allocate the market for and depress, stabilize, fix, or suppress fed cattle prices with the purpose or effect of reducing or suppressing competition among those purchasing feeder cattle.
If not for the Big 4 meatpacker’s actions, the plaintiffs claim they would have obtained higher prices for their feeder cattle because they would have been sold in a competitive and correctly functioning market.
The Feeder Cattle Market and Defendants’ Impact
The beef production process starts with a farmer or rancher maintaining a permanent herd of mature cattle to produce calves. The herd produces one cattle crop annually, with calves typically being born in the spring. These calves are raised, either on the farm where they were born or on another farm, until they become mature enough to be sold to a feedlot where they will be fattened to a desired weight before being sold for slaughter. All farmers who raise cattle that are eventually sold to a feedlot for slaughter make up the feeder cattle market.
Farmers who operate feeder cattle operations have an important role in getting cattle prepared before they are sold to a feedlot to be fattened and then purchased by meatpackers for slaughter. Feeder cattle operations are the crucial first step in the entire cattle and beef supply chain, responsible for maintaining a steady supply of quality cattle, year-over-year. Ranchers generally sell their feeder cattle at auction or through supply agreements depending on specific type of feeder cattle operation (e.g., backgrounding, stocking, or cow-calf). Feeder cattle could be sold at any point after they reach about 600 pounds, and before they hit approximately 900 pounds.
Since 2015, plaintiffs allege the Big 4 meatpackers have been conspiring to increase their “meat margin”: the difference between cost of buying cattle ready for slaughter and the sale price of processed beef. Specifically, plaintiffs allege that meatpackers have been agreeing amongst themselves to limit the amount of cattle bought from U.S. farmers and limit their slaughter volume. This conduct results in a greater supply of cattle and an artificially lower price for farmers, while also limiting the supply of beef creating an artificially higher price for consumers.
The Big 4’s conduct allegedly caused a price collapse in the cattle market, significantly impacting feeder cattle ranchers and their operations. This price collapse caused financial injuries to feeder cattle plaintiffs’ properties and businesses. Among the injuries were deprivation of the benefit of open and free competition and receiving non-competitive and artificial prices for their cow/calves.
At large, the plaintiffs claim that defendants’ conduct deprived them of fair price competition at the top of the supply chain (themselves), and overcharged consumers at the bottom (the beef purchaser classes).
Get the Legal Help and Support You Need
At Paul LLP Trial Attorneys, we advocate for our clients and fight for their futures. We’re not afraid to go up against large companies and hold them liable for their actions. You can depend on us to use our experience, skills, and knowledge to prepare an effective strategy to try to reach a favorable outcome.
If you were the victim of unfair or illegal business practices, call Paul LLP Trial Attorneys at (816) 984-8100 for your free consultation to learn about your legal options.