Labor & Employment Law Daily Wrap Up, CLASS ACTIONS—D. Colo.: Nine meat processors settle wage depression class action for approximately $189 million, (Jan 23, 2025)

By Martin A. Steinberg, J.D.

The court had preliminarily approved settlements with four other meat processors in February 2024 for over $12 million.

The federal district court in Denver has preliminarily approved settlement agreements with an additional nine meat processors and has certified the settlement class in a class action filed by meat processing workers alleging that 15 red meat processors conspired to fix and depress the compensation paid to their employees in violation of the Sherman Antitrust Act. The court found that the settlement class met Rule 23(a)’s numerosity, commonality, and typicality requirements and that the class representatives would “fairly and adequately” protect the interests of the class. The court also found that the class representatives would gain resources to litigate remaining claims and that the presumption of fairness was sufficient to preliminarily approve the proposed agreements (Brown v. JBS USA Food Co., No. 1:22-cv-02946-PAB-STV (D. Colo. Jan. 15, 2025)).

Background. Plaintiffs filed an amended complaint on January 12, 2024, alleging that the two named Plaintiffs were employees of Smithfield Farms, Inc., and National Beef Packing Co., respectively. Plaintiffs brought this action individually “and on behalf of a class... consisting of all persons employed by Defendants, their subsidiaries, and related entities at beef- and pork-processing plants in the continental United States from January 1, 2000, to the present day.” The complaint alleged that Defendants, which include fifteen red meat processors and several of their subsidiaries, collectively produce more than 80 percent of the red meat sold to consumers in the U.S. Beginning in January 2000 and continuing to the present, conspired together to fix and depress the compensation paid to employees of Defendant Processors, their subsidiaries, and related entities at red meat processing plants in the continental U.S. in violation of Section 1 of the Sherman Antitrust Act.

On February 27, 2024, the court preliminarily approved four other settlement agreements with Defendants Perdue Farms, Inc., Triumph Foods, LLC, Seaboard Foods, LLC, and Webber, Meng, Sahl and Company, Inc.

Agreements. Plaintiffs’ motions for preliminary approval of the class settlements with the producers seek certification of a class of all persons employed by Defendants, their subsidiaries, and related entities at beef-processing or pork-processing plants in the continental U.S. from January 1, 2000, until February 27, 2024, which is the date the court first approved a settlement in this case. The settlements require settling Defendants to pay into the settlement funds the following amounts:

• JBS to pay $55,000,000;

• Tyson to pay $72,500,000;

• American Foods to pay $4,000,000;

• National Beef to pay $14,200,000;

• Cargill to pay $29,750,000;

• Hormel Foods-QPP to pay $13,500,000.

The settlement agreements also require each Defendant to cooperate with Plaintiffs in various ways, such as by producing compensation data on members of the class, declarations or affidavits on the authenticity of documents, five current employees of National Beef to be deposed, documents referencing Webber, Meng, Sahl and Company, Inc., (WMS), documents related to the Beef Industry Wage Index and the Pork Industry Wage Index, documents sent to or from the American Meat Institute, American Meat Institute Foundation, Joint Labor Management Committee, North American Meat Institute, National Pork Producers Council, National Cattlemen’s Beef Association, the US Meat Export Federation, and the 21st Century Pork Club that reference compensation, contracts and agreements with Agri Stats, Inc., Express Markets, Inc., and labor unions, and documents previously produced to the Department of Justice.

Numerosity. The court found that a joinder of tens of thousands of people would be impracticable and that the numerosity requirement was met. Plaintiffs stated that the proposed settlement classes likely include tens of thousands of persons. Rule 23(a)(1) requires that the class membership be sufficiently large to warrant a class action because the alternative of joinder is impracticable. Some courts have held that numerosity may be presumed after a certain number; however, the Tenth Circuit has never adopted a presumption of numerosity.

Commonality. Plaintiffs relied on the court’s prior determination that the following common questions of fact and law exist in this case: whether Defendants agreed to restrain wages, whether the agreement had an impact on class members, what the relevant market is for Plaintiffs’ claims, and what are the amount of damages. Plaintiffs must have a common question of fact or law that will connect many individual claims to the relief sought by the class. Even a single common question will satisfy commonality. The Tenth Circuit has acknowledged that “price-fixing affects all market participants, creating an inference of class-wide impact even when prices are individually negotiated.” In re Urethane Antitrust Litigation, 768 F.3d 1245, 1254 (10th Cir. 2014).

Typicality. The court found that Plaintiffs brought claims typical of the proposed class. In conspiracy cases, Plaintiffs’ claims are typical of those of the class because the claims depend on proof of the antitrust violation by Defendants, not on Plaintiffs’ individual positions. The interests and claims of the lead plaintiffs and class members need not be identical to satisfy typicality, and provided the claims of the lead plaintiff and class members are based on the same legal or remedial theory, differing fact situations of the class members do not defeat typicality.

Adequacy of representation. The court found that Plaintiffs and their counsel fairly and adequately protected the interests of the class. Rule 23(a)(4) requires that the class representatives “fairly and adequately protect the interests of the class.” To be an adequate class representative, the representative must be part of the class, possess the same interests, and suffer the same injury as the class members. Plaintiffs’ interests are aligned with those of the proposed settlement class because they seek relief for injuries arising out of the same conspiracy and because they were subject to the same harm, anti-competitive wages. Further, there is nothing in the record to show any conflict of interest between Representative Plaintiffs or counsel and the rest of the class; any class members who disagree will be able to challenge this issue at the fairness hearing if they believe otherwise.

Regarding the second adequacy factor, the proposed class counsel Cohen Milstein Sellers & Toll, PLLC; Hagens Berman Sobol Shapiro LLP; and Handley Farah & Anderson PLLC have been interim co-lead counsel for almost two years. The court noted that there are no questions regarding the proposed class counsel's competency or ability to prosecute this action. To the extent that any such questions do arise, they will be considered at the fairness hearing.

Rule 23(b)(3). Parallel with Rule 23(a)(2)’s commonality element, Rule 23(b)(3)’s predominance requirement imposes an obligation upon district courts to ensure that issues common to the class predominate over those affecting only individual class members. The court agreed with Plaintiffs that common questions predominate over the other issues. Proof of a conspiracy between Defendants is a question that goes to the alleged antitrust violation common to the entire class. Evidence of market wages and any depression across the wages of defendants’ employees is a common question regarding the alleged injury. Although the damages may vary for individuals in the class, the question of what competitive market wages should have been will be common to the class and is enough at this stage to show a common question on the measure of damages.

Further, the court found that a class action settlement is a superior method for resolving this dispute fairly and effectively. The settlement avoids duplicative litigation, saving both class members and defendants significant time and legal costs to adjudicate common legal and factual issues. Additionally, no evidence of analogous antitrust claims filed by potential class members exists. Thus, given that the class members’ claims arise from the same series of events, the court concluded that conducting the class action settlement would achieve economies of time, effort, and expense and promote uniformity of decision to similarly situated persons.

Rule 23(e). Rule 23(e) provides that a proposed settlement may only be approved after a “finding that it is fair, reasonable, and adequate.” To determine whether a proposed settlement is fair, reasonable, and adequate, courts consider the following factors: (1) whether the proposed settlement was fairly and honestly negotiated; (2) whether serious questions of law and fact exist, placing the ultimate outcome of the litigation in doubt; (3) whether the value of an immediate recovery outweighs the mere possibility of future relief after protracted and expensive litigation; and (4) the judgment of the parties that the settlement is fair and reasonable.

First, the court found that the negotiations were conducted fairly and honestly. Second, the serious questions weighed in favor of the proposed settlement agreements because the parties seriously disagreed about whether Defendants illegally conspired to depress workers' compensation for defendant meat processors. Third, given the prospect of shortening what could be prolonged litigation and providing at least partial guaranteed relief, immediate recovery outweighs the possibility of future relief. Regarding the fourth factor, Plaintiffs’ counsel has extensive experience in antitrust litigation and stated that the settlement agreements are fair and reasonable.

Notice of settlement. Plaintiffs must file their proposed notice to the court by February 14, 2025, and require Defendants to file any objections to the proposed notice by February 28, 2025. Because the settlements obtained by Plaintiffs to date exceed two hundred million dollars, and these settlements represent nearly three-quarters of all class members, the court concluded that deferred notice is no longer appropriate.

Class counsel. The court found that interim lead counsel have sufficient experience in class actions, and their knowledge of the applicable law, as exhibited in the case up to this point, weighs in favor of their appointment. Therefore, Cohen Milstein Sellers & Toll PLLC, Hagens Berman Sobol Shapiro LLP, and Handley Farah & Anderson PLLC were appointed as co-lead settlement class counsel.

Further orders. The court further denied as moot any pending motions to dismiss and stayed the cases against the settling Defendants except as noted by the court.

The Case is No. 1:22-cv-02946-PAB-STV.

Judge: Brimmer, P.

Attorneys: Abby R. Wolf (Hagens Berman Sobol Shapiro) for Ron Brown. Christian T. Becker (Kasowitz Benson Torres) for JBS USA Food Co. Abigail W, Williams (Simpson Thacher & Bartlett) for Tyson Foods, Inc. David Leonard Hashmall (Felhaber Larson Fenlon & Vogt) for American Foods Group, LLC.

Companies: JBS USA Food Co.; Tyson Foods, Inc.; American Foods Group, LLC

Cases: ClassActions TortClaims WageHour RemediesDamages ColoradoNews