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Judge Affirms Poultry Worker Wage-Fixing Claims But Demands More Details for Largest Offenders

A class-action lawsuit accusing major poultry processors of working together to hold down plant workers’ wages will move into the next stage of litigation after a court ruling [[link removed]] last Wednesday. However, some of the largest corporate players, including Tyson Foods, Pilgrim’s Pride, and Perdue, could be off the hook unless workers fine-tune their case by mid-October.

U.S. District Judge Stephanie Gallagher ruled that workers and their lawyers presented plausible evidence of a wage-fixing conspiracy and accordingly denied poultry processors’ motion to dismiss the case. At the same time, the judge threw out all but three poultry corporations from the case, ruling that the suit targeted subsidiaries of poultry conglomerates without specifying how each entity participated in the conspiracy. Lawyers representing the workers have 30 days to revise their suit.

The class-action suit, filed last August on behalf of three former workers, accuses 14 poultry processors and their subsidiaries of participating in a massive conspiracy to “reduce labor costs and maximize profits” by agreeing to hold down wages across the industry and to avoid competing for workers. Together, these businesses control approximately 80% of poultry processing in the U.S.

This scheme allegedly harmed some of America’s most vulnerable and low-paid workers. Today, the average poultry plant worker makes less than $23,000 [[link removed]] a year and more than half are immigrants [[link removed]]. According to the suit, poultry processors purposefully recruit workers who cannot easily secure jobs outside the industry, including immigrants, migrant workers, refugees, asylum seekers, and prison laborers.

Drawing on interviews with former employees, the case alleges that since at least 2009 poultry executives held secret “off the books” meetings at industry conferences to share information about hourly plant workers’ wages and benefits. In 2018, one Tyson employee said that these meetings “were so inappropriate and improper that the company would no longer attend them,” according to the suit [[link removed]].

Participants allegedly upheld their agreement to fix workers’ wages and benefits with the help of data consulting service, Agri Stats, which collected and shared anonymized monthly wage and salary data from more than 95% of U.S. poultry producers. The case claims this anonymized data were so specific that participants could easily match information to individual plants and corporations in order to identify potential deviants from the conspiracy.

Poultry plant managers also allegedly coordinated on the local level. One former human resources manager admitted they shared information about current hourly wages and future wage increases with local competing plant managers. “We would collaborate,” the manager said in the complaint [[link removed]].

In her ruling [[link removed]] last Wednesday, Judge Gallagher found that these quotes from former employees along with other facts “support a plausible per se wage fixing conspiracy claim” for some of the accused corporations. This ruling allows the case to move forward into the “discovery” phase, in which workers’ attorneys can request extensive documents from poultry corporations to further make their case.

However, the judge did not think there was enough information to keep most of the accused poultry processors in the case without additional details. Specifically, she said the suit “lumped the various subsidiaries of the defendant processors together, without alleging any facts specific to each entity or each corporate family.”

For example, the suit accuses ten different Tyson subsidiaries of conspiring to fix wages, but it does not explain exactly how each one of these businesses participated. Instead, it says “decisions on poultry processing compensation [were] made in a systematic and centralized fashion at each [poultry] processor’s corporate headquarters.” The judge ruled that this is not a sufficient explanation of how parent companies and their subsidiaries make wage decisions.

As a result, the judge threw out all parent companies and their subsidiaries from the case, including major corporations such as Tyson Foods, Perdue, Cargill, Pilgrim’s Pride, Mountaire Farms, and Sanderson Farms. Only three individually named poultry processors currently face charges: Fieldale, Butterball, and Peco Foods. Additionally, two data-consulting corporations, Agri Stats and Webber, Meng, Sahl and Company, remain in the case.

Plaintiffs have 30 days to amend their case. If they can illustrate how poultry conglomerates enforced the conspiracy across their various subsidiaries, these corporations could again become targets.

In addition to this wage-fixing suit, poultry processors are embroiled in several other antitrust cases including a federal investigation [[link removed]]. These suits argue poultry and other meat processors conspired to hold down prices paid to farmers and increase prices charged to consumers and other buyers. Agri Stats’ data-sharing plays a central role in several [[link removed]] of [[link removed]] these cases as well.

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What We're Reading

An analysis by the Food & Environment Reporting Network found that 40% of meatpacking plants that received waivers to run faster processing lines have had COVID-19 outbreaks, compared to just 14% of plants nationwide. ( FERN’s Ag Insider [[link removed]]) A federal judge recently overturned a rule that helped fast-food corporations avoid liability for labor violations. ( The Counter [[link removed]])Senators Cory Booker and Elizabeth Warren criticized the Occupational Safety and Health Administration for failing to protect meatpacking workers from COVID-19 and issuing feeble fines to meatpackers responsible for massive outbreaks. ( Bloomberg [[link removed]])

About the Open Markets Institute

The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.

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Written by Claire Kelloway

Edited by Phil Longman, Katherine Dill, and Matthew Buck

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