A federal judge threw out a jury’s $1.28 billion verdict against the nation’s largest beef packer, Tyson Fresh Meats Inc., ruling Friday that it did not illegally manipulate cattle prices.
U.S. Senior District Judge Lyle Strom said the cattlemen who sued the beef division of Tyson Foods failed to produce evidence at trial to support the verdict “with respect to both liability and damages.”
“This decision is a victory for U.S. cattle producers and our company,” said John Tyson, chairman and CEO of Tyson Foods. “It protects the freedom of producers to market cattle the way they want, and it affirms our strongly held belief that our livestock buying practices are proper.”
An attorney for cattlemen said the judge’s ruling would be appealed to the 11th U.S. Circuit Court of Appeals.
“The battle goes on,” said attorney David Domina of Omaha, Neb.
On Feb. 17, a federal court jury found Tyson Fresh Meats used its contracts with select cattle producers to create a captive supply of cattle that it used as leverage to drive down the price of cattle on the open, or cash, market. The jury found Tyson’s actions depressed the cash market by $1.28 billion between February 1994 and October 2002.
The jury recommended awarding $1.28 billion to the entire class of producers. The size of the damages for each producer was to be determined later, depending on the size of the class, but the judge’s ruling Friday said there was insufficient evidence to support the damages.
On March 23, Strom said he wouldn’t approve a lump sum verdict of $1.28 billion, and he went even further with Friday’s ruling.
“Defendant’s use of captive supply arrangements is supported by legitimate business justification of competing in the industry,” the judge wrote.
Six cattlemen sued Tyson Fresh Meats, known then as IBP Inc., in 1996 claiming the company’s use of these contracts, or marketing agreements, violated the federal Packers and Stockyards Act.
The suit was granted class-action status, with the six plaintiffs claiming to represent as many as 30,000 ranchers who sold cattle to Tyson on the cash market during the time at issue.
In asking Strom to throw out the verdict, Tyson argued that the jury didn’t follow the law closely enough.
Strom said that trial testimony showed the use of a captive supply helps Tyson “ensure a reliable and consistent supply of fed cattle” and that a packer “does not violate the Packers and Stockyard Act when its conduct is undertaken ’in order to have a more reliable and efficient method of obtaining a supply of cattle.”’