Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Hormel, Seaboard Foods pork price fixing case settled, (Dec 20, 2024)

By Christopher M. Longo, J.D.

The Commercial and Institutional Indirect Purchaser Plaintiff Class settled with Hormel and Seaboard for $2,429,000 and $4,960,000, respectively.

The federal district court in Minneapolis, Minesota has granted final approval to settlements with Hormel Foods Corporation and Hormel Foods, LLC (Hormel) and Seaboard Foods, LLC (Seaboard) by the Commercial and Institutional Indirect Purchaser Class (CIIP) of plaintiffs in the Pork Antitrust Litigation, alleging a price fixing conspiracy on the part of various large pork producers. The court held that the settlements were “fair and reasonable,” were attained “following extensive discovery and litigation,” resulted from “vigorous arm’s-length negotiations,” and were “undertaken in good faith.” The court also found that the settlements met Rule 23’s prerequisites for a class action (In Re Pork Antitrust Litigation, No. 0:18-cv-01776-JRT-JFD (D. Minn. Dec. 18, 2024)).

Background. Beginning in 2018, various individual and class antitrust actions were filed in various courts against major American pork producers. The plaintiffs, three classes of pork purchasers—direct purchaser plaintiffs, consumer indirect purchaser plaintiffs, and commercial and institutional indirect purchaser plaintiffs—alleged that the nation’s leading pork producers conspired to limit the supply of pork in order to fix prices. The defendants included Agri Stats, Inc.; Clemens Food Group, LLC, and The Clemens Family Corporation; Hormel Foods Corporation and Hormel Foods, LLC; Indiana Packers Corporation and Mitsubishi Corporation (Americas); JBS USA Food Company and JBS USA Food Company Holdings; Seaboard Foods LLC and Seaboard Corporation; Smithfield Foods, Inc.; Triumph Foods, LLC; and Tyson Foods, Inc., Tyson Fresh Meats, Inc., and Tyson Prepared Foods, Inc. The complaint alleged that the market concentration, barriers to entry, and unique aspects of the pork market put the pork industry in an ideal position for collusion and that the producers were motivated to collude because pork prices were flat (holding at about $1.40 per pound) between 2000 and 2009.

The plaintiffs alleged that the pork producers aimed public statements at each other emphasizing the need to cut production (which also served to signal their continued adherence to the conspiracy) and that they exchanged non-public information about prices, demand, capacity, and sales volume through co-conspirator Agri-Stats, Inc. Agri-Stats is a financial benchmarking company that collects proprietary business data from the pork producers and issues monthly (non-public) reports comparing the producers to one another.

These actions were referred for multidistrict litigation in the District of Minnesota, where they were formally consolidated in November 2021. In March 2023, the court certified the Plaintiff damage classes as (1) direct purchasers (DP); (2) commercial and institutional indirect purchasers (CIIP); and (3) consumer indirect purchasers (CIP). Also certified was an injunctive relief class of the CIIP. Preliminary approval of the settlement between the commercial and institutional indirect purchaser plaintiffs and Hormel was granted on May 6, 2024. Preliminary approval of the settlement between the commercial and institutional indirect purchaser plaintiffs and Seaboard was granted on July 25, 2024. The commercial and institutional indirect purchaser plaintiffs subsequently moved for final approval of the settlements with Hormel and Seaboard.

Final approval of settlements. The court reviewed the settlements with Hormel and Seaboard, finding them “fair and reasonable” and “a fair compromise of the [CIIPs’] claims.” Additionally, the court found that the settlement agreements were “attained following extensive discovery and litigation,” and “resulted from vigorous arm’s-length negotiations, which were undertaken in good faith by counsel with significant experience litigating antitrust class actions.” The court noted that all settlement class members are “members of the nationwide Injunctive Class,” and that only settlement class members in “Repealer Jurisdictions” are “eligible to potentially recover money from the settlement funds available in the Damages Class.” The court also found that the settlements met Rule 23’s prerequisites for a class action.

Under the orders and judgments granting final approval of the settlements, Seaboard’s $4,960,000 held in an escrow account, plus accrued interest, was approved as a qualified settlement fund, as was Hormel’s $2,429,000, plus accrued interest. All claims against Hormel and Seaboard were dismissed with prejudice, and both were released from all past, present, and future claims arising out of the released claims defined in the settlement agreement. No members of the settlement classes “objected to or excluded themselves from the [s]ettlement.”

The Case is No. 0:18-cv-01776-JRT-JFD.

Judge: Tunheim, J.

Attorneys: Bobby Pouya (Pearson Warshaw, LLP) for Direct Purchaser. Arielle Wagner (Lockridge Grindal Nauen PLLP) for Interim Co-Lead Class Counsel for Direct Purchaser. Breanna Van Engelen (Hagens Berman Sobol Shapiro LLP) for Co-Lead Counsel. Christopher A. Smith (Husch Blackwell LLP) for Agri Stats, Inc. Amarto Bhattacharyya (Kirkland & Ellis LLP) for Clemens Food Group, LLC.

Companies: Agri Stats, Inc.; Clemens Food Group, LLC

Cases: Antitrust MinnesotaNews