Perdue Farms allegedly had plenty of opportunities to take part in a conspiracy to limit the supply of chicken to drive up the price of chicken, but there is insufficient proof that it ever did, a judge ruled.
In a recent decision in the U.S. District Court for the Northern District of Illinois, Judge Thomas M. Durkin cleared Perdue Farms, as well as five other poultry producers of those allegations brought against them in a series of class-action lawsuits.
Communication with Tyson and Sanderson
Plaintiffs alleged that in 2008 former Tyson Foods executive Don Tyson sent a letter to then-Sanderson Farms CEO Joe Sanderson and Perdue Farms Chairman Jim Perdue and in that letter, Tyson allegedly invited the two to “join together.” A meeting between the three was held, the court document stated, however, Durkin ruled that there was never any proof that Perdue ever agreed to be part of a conspiracy.
“This letter is strong evidence against Tyson because it is direct evidence of Tyson’s intent. But there is no evidence in the record that Perdue accepted the invitation to act jointly,” Durkin wrote.
Durkin also stated that the aforementioned meeting, and other “many regular meetings and communications executives of the defendants producers had with each other,” merely provided an opportunity to conspire.
“There must be some evidence that each defendant in question took some action from which agreement to restrict supply can be inferred,” Durkin wrote. “Mere opportunities to communicate … are insufficient to infer the act of entering an agreement.”
Fishing trip
The court document also revealed that a Perdue executive went on a fishing trip with other defendant producer executives, and that Perdue employee allegedly returned with information about competitors’ production goals, supply cuts and target bird weights.
Durkin declared that there is no evidence that Perdue Farms asked for that information or gave any information to its competitors, and therefore, there is no proof that it ever was part of any collusion.
Perdue and Tip Top Poultry
Plaintiffs pointed out that Jim Perdue was a member of the Tip Top Poultry advisory board, and in that capacity, he received email communications from the staff in 2011 concerning increased breeder hen slaughter.
However, Durkin ruled there was no evidence that Perdue directly acted on that information.
Communications with Fieldale
Officials with Perdue Farms and Fieldale Farms allegedly communicated in 2012 about the potential effect of supply cuts.
According to Durkin, the words contained in that communication showed that both companies were aware that the industry was cutting production, but, “Neither Perdue nor Fieldale communicate their own production plans in this email. They do not discuss the specific production plans of any other defendants. They simply make observations about the state of the market. Considering the limited substance of the email, too many inferences are required to find that Perdue agreed with other defendants to restrict supply based on this email.”
Other allegations
Plaintiffs also brought attention to the fact that Perdue Farms allegedly responded to communication from Agri Stats, in which Perdue asked Agri Stats to “pass the word you need to create demand before you supply the product.”
It was also pointed out that Perdue employees were encouraged to listen to a Tyson Foods quarterly earnings call to learn about “production cuts and increases and major news topics.”
Durkin determined that neither instance showed an intent to join a conspiracy.
Durkin also cleared Foster Farms, Fieldale Farms, Claxton Poultry, Case Farms and Wayne Farms of allegations of collusion, as well as Agri Stats, which provides benchmarking reports for companies within the poultry industry.
