The Fifth U.S. Circuit Court of Appeals has ruled in favor of Pilgrim’s Pride in a suit challenging the company’s producer payments under the federal Packers and Stockyards Act.
In the case of Wheeler vs. Pilgrim’s Pride, the court ruled that the plaintiffs failed to show that the payment system they are challenging has, or is likely to have, an anticompetitive effect.
“The purpose of the Packers and Stockyards Act of 1921 is to protect competition and, therefore, only those practices that will likely affect competition adversely violate the Act,” Judge Thomas M. Reavley wrote for a 9-7 majority of the court.
A group of poultry farmers who raise chickens for Pilgrim’s Pride brought the suit. Under their contract, which applies to most Pilgrim’s Pride farmers, they receive chicks, feed and supplies and return grown chickens to the company for processing. Pilgrim’s Pride determines their compensation by ranking their performance against other growers for the company.
Lonnie “Bo” Pilgrim, founder and chairman of the company, has a different contract that allows him to purchase chicks, feed and supplies from Pilgrim’s Pride and sell mature chickens to the company at market price or 102% of his costs, whichever is less. The plaintiffs said they wanted to enter into a similar contract, but Pilgrim’s Pride declined.
The ruling reverses a July decision by a three-judge panel of the circuit court, which voted 2-1 in favor of the plaintiffs. “The ruling restores the customary interpretation of the law as upheld by other circuit courts around the country,” said George Watts, president of the National Chicken Council, which represents integrated chicken producer-processors.
