Insurance Company Appeals Judgment for Perdue Farms Finding it Must Cover Antitrust Harms

After Perdue Farms Inc. was granted summary judgment by the District of Maryland in a lawsuit where it claimed its insurance company, National Union Fire Insurance Co. of Pittsburgh PA, should pay for costs incurred due to antitrust allegations against the chicken company, the insurance company appealed the decision to the Fourth Circuit. 

The insurance company filed the notice of appeal last week, and the case was docketed in the Fourth Circuit on Thursday. The appeal specifically relates to a March 8 Amended Order of Judgment of the February 8 Memorandum Opinion. In the amended filing, Judge Stephanie A. Gallagher ordered that the actions of growers and purchasers “do not arise out of Related Wrongful Act(s),” as defined in the insurance agreement, and should fall within the coverage of the 2017 insurance policy agreed to by the parties. 

According to the argument in the initial court opinion, the insurance policy was first obtained by Perdue from National Union in 2016 and in 2017 a subsequent insurance policy contained the similar terms related to antitrust law claims, including a sublimit of $15,000,000. In 2017, growers who raise chickens for Perdue to process and sell filed antitrust allegations against Perdue in the Eastern District of Oklahoma alleging that the company conspired with other chicken companies and was not offering competitive pay. 

Despite the company’s insurance policy, when Perdue reported claims related to the lawsuits, National Union denied coverage and claimed that coverage did not apply, as the claims were not covered in the “related wrongful act(s)” clause in the 2017 policy, and were allegedly limited to the 2016 policy. The court, however, agreed with Perdue ruling that the claims should be covered. 

Perdue is one of many producers of broiler chickens involved in a broader antitrust-activity legal matter in the Northern District of Illinois in which restaurants, distributors, consumers, and others have alleged that the defendants artificially raised the price of chicken. Some other large chicken companies and Agri Stats Inc., defendants in the consolidated broiler chicken antitrust lawsuit, were also intervenors in the District of Maryland lawsuit. 

The plaintiffs, Perdue Farms Incorporated and Perdue Foods LLC, are represented by Venable. The defendant is represented by DLA Piper. A Fourth Circuit briefing order said that the opening brief will be due on May 18, 2021.