The Minnesota District Court granted an order on Tuesday to dismiss a cattle antitrust lawsuit against meat packing companies, including JBS USA Food Company Holdings, Cargill Inc., National Beef Packing Company, and Tyson Foods Inc. Judge John R. Tunheim, however, did give the plaintiffs permission to amend their complaint. The lawsuit was a consolidation of other putative class actions filed by organizations and individuals who sold cattle to the defendants.
The order granting the defendant’s motion to dismiss said that the motion was granted because the plaintiffs “have not pleaded their direct evidence with sufficient detail and because they have not pleaded parallel conduct sufficient to support an inference of a price-fixing conspiracy.” The court said it agrees with the defendant’s arguments that the information given by the plaintiffs was insufficient, because the witnesses were “insufficiently identified,” but their claims were not “sufficiently detailed” enough to stand on their own.
The defendants reportedly said that the four defendants typically purchase 83 percent of cattle bred for meat in the United States. The alleged antitrust activity began from “at least January 1, 2015” and is continuing. The defendants were accused of conspiring to fix and lower the price of “fed cattle.”
The document explained that before 2005 the defendant’s cattle purchasers were at feedlots or auctions and the purchasers paid a set price each day which matched the supply and demand, but between 2005 and 2015 purchasing changed. In 2015, over 60 percent of purchases were made using “formula contracts” where the cows would be supplied to a packer for a contract price set by a formula when they reached the appropriate weight for slaughtering. The formula considers average cash-sale prices from the time of delivery, which are set by the United States Department of Agriculture (USDA). The order said, “even though actual cash sales make up less than a quarter of Defendants fed-cattle purchases, the average cash-sale price affects approximately 85 percent of those purchases.”
The order said three of the defendants reduced annual volume in 2015, Cargill reportedly remained flat but at low levels. The plaintiffs also accused the companies of importing cattle when the price fell low and not expanding their operations.
The plaintiffs have until 90 days from the order to amend their complaint, despite an argument from the defendants that the plaintiffs were already aware of the “specificity the Court would require for pleading a Sherman Act claim” when the second amended complaint was filed.