In a landmark class-action lawsuit charging unfair pricing practices by Iowa Beef Packers, a Montgomery, Ala., jury has ruled in favor of seven independent cattle producers -- including Colorado Springs businessman Mike Callicrate, owner of Ranch Foods Direct.
The seven plaintiffs represent a class of cattle feeders and producers whose numbers could be as many as 30,000. The jury's decision, handed down on Tuesday, recommends that Iowa beef packers -- now owned by Tyson Foods, Inc. -- pay up to $1.3 billion in lost revenues incurred by those cattle producers between February 1994 and October 2002. Overseeing the case is U.S. District Judge Lyle Strom.
At issue are marketing agreements that essentially allow companies like Tyson/IBP, one of the nation's "big four" meatpackers, to stockpile cattle and create a captive supply -- pushing down demand and the price of cattle from independent ranches and feedlots.
Callicrate, who owns a feedlot in St. Francis, Kan., contends that such practices bully and cheat those who raise and feed cattle, is noncompetitive, and violates the Packers and Stockyards Act of 1921 -- federal legislation that at the time was designed to break up a meatpacking monopoly where five companies controlled about two-thirds of the market.
Today, four meatpackers control an estimated 80 percent of the U.S. market, with the top three companies controlling 75 percent.
Attorney David Domina, who represented Callicrate and the other plaintiffs, said the jury's decision represents a victory for independent cattle producers.
"I am really encouraged that this means independent cattle people will get their market back and will be able to stay in business," said Domina, speaking from a cell phone on Tuesday as he drove across Mississippi en route to his home in Tulsa, Okla.
Now up to the judge
Both Domina and Callicrate emphasize that although the cash settlement is significant, more important is the possibility of an injunction that could significantly alter -- or even end -- the practice of captive supply.
"We sued for both damages and an injunction," explained Domina. "Now that the jury phase is over, it's up to the judge to weigh the liability that has been established and to hear a completely new kind of evidence. He knows how the market manipulation works; he has to decide how to stop it.
"I think Judge Strom will make a very significant change in how cattle are bought and sold."
But Washington, D.C., attorney Tom Green, defending Tyson in the case, said he believes an injunction will never be issued and downplayed the significance of the jury's verdict.
Green represented Tyson in a 1994 independent counsel inquiry ordered by then Attorney General Janet Reno to investigate Secretary of Agriculture Mike Espy and the possibility of gratuities and favors between the USDA and Tyson. More recently, he defended Tyson in an illegal worker smuggling case.
He contends that Judge Strom will not uphold the jury's award, although it is rare for a judge to ignore a jury's verdict.
"The number they came back with is meaningless," said Green. "This case now goes back to the judge on renewed motions urging the judge to consider whether or not he will accept the verdict from the jury.
"If he lets the verdict stand, we go to appeal."
Minding the government's business
Green argues that change in business practices by Tyson and other big meatpackers needs to be "promulgated by the government or elected representatives," not the courts.
"State legislatures, the USDA, they've all looked at [this issue] and have not implemented any change."
That's precisely the point, says Callicrate, and it's the the reason he, Domina and the other plaintiffs have spent the last six years working to bring the issue before a jury and a judge.
"The U.S. Department of Agriculture is run by the packers they're supposed to regulate," said Callicrate. "They've run roughshod over cattle producers in their own market.
"We've now shown the USDA what has to be done."
-- Kathryn Eastburn
For more on Mike Callicrate and the lawsuit, see "This Cattleman's Got a Beef," www.csindy.com/csindy/2003-11-20/cover.html.