Smithfield Foods to pay $42M to settle price-fixing lawsuit
Published 4:41 pm Monday, July 11, 2022
Smithfield Foods has agreed to pay $42 million to settle a federal lawsuit that accused the company of colluding with its competitors over the past 13 years to inflate U.S. pork prices.
Eleven restaurateurs and caterers across the United States had filed the 2018 class action in Minnesota — home to the corporate headquarters of Hormel Foods Corp. — alleging in their complaint that Hormel, Smithfield and other meatpackers that “collectively control over 80 percent” of the wholesale pork market “entered into a conspiracy from at least 2009 to the present” by “coordinating their output and limiting production with the intent and expected result of increasing pork prices in the United States.”
According to the complaint, Smithfield, Hormel, JBS USA, Tyson Foods Inc., Seaboard Foods LLC, Clemens Food Group LLC, Triumph Foods LLC and Indiana Packers Corp. allegedly “exchanged detailed, competitively sensitive, and closely guarded non-public information about prices, capacity, sales volume and demand through their co-conspirator Agri Stats.”
Agri Stats, according to the complaint, has provided “benchmarking” reports to the majority of pork processors since 2009 that, unlike other industry reports, include “detailed financial and production data” beyond “the type of information that competitors would provide each other in a normal, competitive market.” The suit contends that as a subscription service, Agri Stats required the participating meatpackers to “pay millions of dollars over the class period — far in excess of any other pricing and production indices.”
U.S. District Court Chief Judge John Tunheim granted preliminary approval of the $42 million settlement on April 19. According to Tunheim’s order, the settlement is not to be “deemed or construed to be an admission or evidence of a violation of any statute, law, rule or regulation or of any liability or wrongdoing by Smithfield.”
The court issued a July 5 press release informing residents of Arkansas, Arizona, Florida, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, West Virginia, Wisconsin and Washington, D.C., of their eligibility to recover money through the settlement if they had indirectly purchased pork from Smithfield, the other named meatpackers, or their respective subsidiaries or affiliates in the United States from Jan. 1, 2009, through April 19, 2022, for their own business use in commercial food preparation. Those included in the class, or who aren’t sure if they’re included, can obtain more information at www.porkcommercialcase.com or by calling toll-free 1-855-867-0738.
Plaintiffs’ attorneys with the Washington, D.C-based firm Cuneo Gilbert & LaDuca LLP were unwilling to speak on the record as to why Virginia restaurants are excluded from eligibility, citing a “non-disparagement” clause in the settlement agreement that limits what both sides can state publicly regarding the case. According to court records, Tunheim dismissed claims in 2020 that Smithfield violated state-level consumer protection laws in North Dakota, New York and Virginia — but allowed other claims in North Dakota and New York to move forward.
The plaintiffs had previously settled with JBS for $12.75 million in 2021. The court will hold a hearing on Oct. 17 at 10 a.m. to consider whether to give Smithfield’s settlement agreement final approval.
Jim Monroe, Smithfield’s vice president of corporate affairs, declined to comment on the lawsuit’s outcome beyond what the court shared in its press release. According to the settlement agreement, Smithfield “believes that it has valid defenses” to the lawsuit’s claims but “has decided to settle these claims to avoid the uncertainty, risk, expense, and distraction of continued litigation.”