Four former Madison County poultry producers, who sued Pilgrim’s Pride claiming they were wrongfully forced out of business, are seeking testimony from a Pilgrim’s Pride executive, but must wait as criminal charges against the company’s two former chief executive officers play out in court.
David P. Echols, Stanley L. Dove, along with James and Teresa Dove of Trinity Farm of Madison County are suing Pilgrim’s Pride Corporation in the United States District Court for the Middle District of Georgia Athens Division.
The ongoing suit, filed in July 2018, alleges that Pilgrim’s Pride initiated a plan in 2017 “to force out a number of older and smaller family farmers who grew chickens for Pilgrims’ Athens facility.”
But the civil suit from Madison County farmers is far from the only legal entanglement for the big-time poultry company.
Chick-fil-A recently sued more than a dozen poultry producers, including Pilgrim’s Pride, accusing the companies of violating antitrust law by colluding to artificially inflate prices after the chain announced in 2014 that it planned to serve antibiotic-free broiler chicken within the next five years.
Pilgrim's Pride announced in October that it would pay more than $110 million to settle chicken price-fixing charges in a plea agreement with the US Department of Justice's Antitrust Division. Two former Pilgrim’s Pride CEOs — Jayson Penn and Bill Lovette — face federal charges related to the scheme.
Meanwhile, Madison County producers allege in their suit that Pilgrim’s Pride breached their contract to them by using Chick-fil-A’s no-antibiotic policy as a guise for requiring small farmers to commit to expensive upgrades they couldn’t make.
“Pilgrim’s made these demands for the purpose of pushing the growers out of the chicken business,” wrote attorney Joel McKie in the plaintiff’s complaint.
Pilgrim’s Pride countered that the plaintiffs made a business decision not to upgrade and that Pilgrim’s Pride could not be held liable for that decision.
“Plaintiffs’ own expert, Dr. John McKissick, shows plaintiffs would have profited if only they had upgraded their poultry houses to AAA specifications and continued growing chickens in accordance with the option Pilgrim’s gave them,” wrote Pilgrim’s Pride attorney Clayton E. Bailey. “And because plaintiffs would have profited from complying with Pilgrim’s upgrade demand, they cannot prove they were injured by the demand. Instead, to the extent plaintiffs were injured, that injury was caused by their own respective decisions not to upgrade their poultry houses and/or to inform Pilgrim’s they no longer wanted to continue growing poultry.”
Recent filings in the case show that the plaintiffs seek to tie their situation to the bigger price-fixing situation. Did the company need to cut farmers and production in order to maintain artificially high prices? The plaintiffs seek to shed light on that with testimony from Pilgrim’s Justin Gay, who, in an August deposition, repeatedly invoked the Fifth Amendment, which allows an individual to refuse to answer official questions where the answer might incriminate him or her in future criminal proceedings.
“Gay holds unique, relevant information that plaintiffs cannot obtain elsewhere,” wrote McKie in court filings. “Gay was Pilgrim’s primary Chick-fil-A contact. And he attended multiple high-level meetings with Chick-fil-A during which Pilgrim’s and Chick-fil-A discussed, among other things, Pilgrim’s conversion to NAE (antibiotic free) production and NAE chicken pricing.”
The attorney said Pilgrim’s plea agreement with the Department of Justice is an admission of a price-fixing scheme.
“PPC (Pilgrim’s Pride) appears prepared to admit to a price-fixing scheme with at least one customer as part of plea agreement,” wrote McKie. “Second, as to pricing, an inference can be drawn from Justin Gay’s invocation of the Fifth Amendment.”
But the Department of Justice recently took the unusual step of blocking Gay's testimony while the criminal proceedings are ongoing, a request granted by the court.
The Department of Justice filing states that: “The government’s grand-jury investigation into the broilers chicken industry has produced charges against 10 individuals for their roles in a conspiracy to fix prices.”
Four of the 10 charged are former employees of Pilgrim’s Pride.
“The government intervened in this action order to protect its interest in a criminal investigation from undue interference by discovery in this action,” wrote Paul Torzilli, trial attorney for the DOJ Antitrust Division. “…The deposition should be stayed until it would no longer interfere with the government’s criminal matter.”
McKie wrote that a judge and jury should draw “adverse inferences” from Gay repeatedly invoking the Fifth Amendment in his August deposition.
“The facts of this case and the Penn prosecution are so ‘intertwined’ that the Court may rest assured that Gay’s invocations are legitimate and that the information sought is pertinent to this case,” wrote McKie.
The court has yet to rule on the “adverse inferences” matter. And the case continues.