CHICAGO– Scott+Scott Attorneys at Law LLP (“Scott+Scott”), a national antitrust and securities litigation firm, along with Cafferty Clobes Meriwether & Sprengel LLP (“Cafferty Clobes”), have filed a class action lawsuit in federal district court in Chicago on behalf of R-CALF USA and four cattle-feeding ranchers from Iowa, Nebraska, Kansas, and Wyoming. The suit alleges the nation’s four largest beef packers violated U.S. antitrust laws, the Packers and Stockyards Act, and the Commodity Exchange Act by unlawfully depressing the prices paid to American ranchers.
The complaint was filed against Tyson Foods, Inc., JBS S.A., Cargill, Inc., and National Beef Packing Company, LLC, and certain of their affiliates (the “Big 4”), who collectively purchase and process over 80% of the U.S.’s fed cattle—that is, cattle raised specifically for beef production—annually. It alleges that from at least January 1, 2015 through the present, the Big 4 packers conspired to depress the price of fed cattle they purchased from American ranchers, thereby inflating their own margins and profits.
The class action lawsuit seeks to recover the losses suffered by two classes believed harmed by the Big 4’s alleged conduct. The first class includes cattle producers who sold fed cattle to any one of the Big 4 from January 2015 to the present. The second class consists of traders who transacted live cattle futures or options contracts on the Chicago Mercantile Exchange (“CME”) from January 2015 to the present. The complaint, which is supported by witness accounts, including a former employee of one of the Big 4, trade records, and economic evidence, alleges that the Big 4 conspired to artificially depress fed cattle prices through various means, including:
- collectively reducing their slaughter volumes and purchases of cattle sold on the cash market in order to create a glut of slaughter-weight fed cattle;
- manipulating the cash cattle trade to reduce price competition amongst themselves, including by enforcing an antiquated queuing convention through threats of boycott and agreeing to conduct substantially all their weekly cash market purchases during a narrow 30-minute window on Fridays;
- transporting cattle over uneconomically long distances, including from Canada and Mexico, in order to depress U.S. fed cattle prices; and
- deliberating closing slaughter plants to ensure the underutilization of available U.S. beef packing capacity.
These alleged practices are estimated to have depressed fed cattle prices by an average of 7.9% since January 2015, causing significant harm to U.S. ranchers.
“R-CALF USA is taking this historic action to fulfill its promise to its members to prevent the Big 4 packers from capturing the U.S. cattle market from independent U.S. cattle producers,” said R-CALF USA CEO Bill Bullard, adding “we have exhausted all other remedies but now, with the expert help of Scott+Scott and Cafferty Clobes, our members’ concerns will be addressed and we hope U.S. cattle ranchers can be compensated for years of significant losses.”
“The impact of the packers’ conduct on American cattle ranchers has been catastrophic,” said David Scott, managing partner, Scott+Scott. “The health and integrity of the American cattle industry is being permanently and irrevocably damaged, independent ranchers are systematically being driven out of business, and consumers are losing the ability to buy high-quality American beef with confidence.”
“The packers’ alleged conduct has had a direct and significant impact on the commodities underlying CME live cattle futures and options contracts,” said Anthony Fata, partner, Cafferty Clobes. “It is imperative for investors to maintain confidence in this vital financial market, relied upon by ranchers, traders and others to manage the risks associated with their businesses.”
About R-CALF USA
R-CALF USA (Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America) is the largest producer-only cattle trade association in the United States. It is a national, nonprofit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. For more information, visit www.r-calfusa.com or call 406.252.2516.
About Scott+Scott Attorneys at Law LLP
Scott+Scott has significant experience in prosecuting major securities, antitrust, arbitration, data privacy, and consumer actions throughout the United States and Europe. The firm represents pension funds, corporations, foundations, businesses, individuals, and other entities worldwide with offices in New York, London, Connecticut, California, and Ohio. For more information, visit www.scott-scott.com or call 800.404.7770
About Cafferty Clobes Meriwether & Sprengel LLP
Cafferty Clobes Meriwether & Sprengel LLP has significant experience representing trading firms, brokers, advisors, investors, businesses and individuals in complex antitrust, commodities, securities, consumer and commercial litigation throughout the country from its offices in Chicago, Pennsylvania and Michigan. For additional information, visit www.caffertyclobes.com or call 312.782.4880.
