Supreme Court Upholds Decision Requiring Anticompetitive Effect Under Packers Act

The U.S. Supreme Court on Jan. 24 declined to review a Sixth Circuit ruling that a claim of unfair discriminatory practices or undue preference asserted under the Packers and Stockyards Act requires a showing that the challenged practice has an adverse effect on competition.

The U.S. Supreme Court on Jan. 24 declined to review a Sixth Circuit ruling that a claim of unfair discriminatory practices or undue preference asserted under the Packers and Stockyards Act requires a showing that the challenged practice has an adverse effect on competition.

The justices did not comment in turning away former poultry farmer Alton Terry, who said Tyson Foods cut him off from producing for the company because he helped organize area farmers and complained about the company's practices. Lower courts had previously dismissed the lawsuit. Terry, essentially argued that he lost his contract to raise chickens on his 12-acre farm, because he complained too much.

In its earlier ruling the Sixth Circuit examined the sections of the PSA which make it unlawful for any meat packer or live poultry dealer to "[e]ngage in or use any unfair, unjustly discriminatory, or deceptive practice or device," or to make or give any "undue or unreasonable preference" to any person or locality in any respect.

To assert a PSA claim, the Sixth Circuit held, a plaintiff must show that a challenged practice has an adverse effect on competition. Since the plaintiff failed to make such allegations, he cannot pursue his PSA claim, which was properly dismissed by the district court, the Sixth Circuit court ruled.

The Sixth Circuit concluded that the plaintiff had alleged that Tyson's acts harmed him as an individual farmer, but that he had made no allegation regarding the effect of the processor's actions on poultry pricing or on overall competition in the poultry industry. The court of appeals noted that, in reaching this conclusion, it joins seven other circuits in finding that an anticompetitive effect is necessary for an actionable claim under the PSA .

The issue of competition in the livestock sector is one that is high on the agenda for the Obama administration and many in Congress. As a consequence, it is likely that one or more members of Congress will introduce legislation that would make it easier for producers such as Alton Terry to successfully sue processors and packers. 

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