The future of the cattle industry is tied up in court right now. Decisions that will shape tomorrow’s cattle industry are either waiting on appeal or on a slow judge. Here is a sampler of pending important judicial decisions that will affect your future.
Sometimes it seems like even when we win we lose.
Ranchers were handed perhaps their largest victory in recent history when an Alabama jury reached a guilty verdict against Tyson/IBP in February after a month-long trial. The $1.28 billion jury verdict in the Pickett vs. Tyson trial was the second largest jury award in the country this year! More importantly, the jury found that Tyson had broken the law in using captive supplies to depress the price of cash cattle.
On April 23, Federal District Court Judge Lyle Strom overruled that jury verdict and said there was not sufficient evidence to prove Tyson’s actions manipulated the cattle market. Which leads one to ask the obvious question: If a judge can so easily throw out a jury verdict why bother with a jury trial in the first place?
In hindsight, clearly there were signs this might happen. Even before the trial began in earnest Judge Strom said he would NOT approve a jury award for all sellers in the cash cattle market. Observers at the trial say that during the trial almost daily Strom would threaten to throw the case out. He also dropped a real bombshell when he gave final jury instructions that almost begged them to find Tyson innocent.
Tyson’s lawyers argued, and Strom evidently agreed, that Tyson had to have the ability to make sweetheart deals and acquire captive cattle “to be able to compete effectively with Excel, Swift and other packers.” In other words, Tyson needed to break the law to compete with competitors who were also breaking the law.
Some people suggest we should go easy on Strom because two other cases almost identical to Pickett will be held in his court, including one involving ConAgra. But even if a jury finds ConAgra guilty won’t Strom overturn that verdict, too, because ConAgra needs to be able to compete with Tyson, who is also breaking the law?
The big packers must have been dancing in Amarillo streets after the ruling but please keep in mind what the Judge’s decision DID NOT dispute. He did not deny that Tyson manipulated the market causing $1.28 billion damage to cash sellers. He did not dispute that Tyson captively bought low-quality cattle and priced their purchased cattle off the lower quality ones. Basically, even though the president of Tyson Fresh Meats admitted there were enough cash cattle in the market for Tyson to supply their plants, Judge Strom felt that without captive supplies Tyson could not compete.
David Domina, the attorney representing the 30,000 cattlemen plaintiffs, said that Strom´s ruling will be appealed and will be reviewed by the U.S. Court of Appeals for the 11th Circuit in Atlanta. Domina said the plaintiffs remain confident that they will prevail. But it could take another two years for the appeal process and in the meantime the packers have been given court approval to continue picking our pockets.
Getting Their Day In Court
Now that a jury has concluded that cattlemen who sell cattle to the Big Three in sweetheart deals are responsible for depressing cattle prices, perhaps current captive contract cattlemen ought to pay attention to activities in an Arkansas Court.
In August 2002 Tyson shut down its swine contract growing operations in Arkansas and Oklahoma. The contract growers put out of business then sued Tyson claiming the firm led them to invest heavily in their farms and then cut them off without warning. Tyson wanted to deal with the former contract growers in arbitration but the pork producers wanted their day in court.
A judge gave it to them but Tyson appealed all the way to the state Supreme Court. The contract pork producers won a 4-3 decision in the Arkansas Supreme Court ruling that their cases must be tried in a court of law. In the meantime all the delays and legal bills have left many of the contract growers destitute. So you ranchers and feeders out there who are part of the Big Three’s captive supply be warned: You may want to have a lawyer standing by on retainer and save all those “premiums” because you might need the money!
In yet another court case, Cargill agreed to settle a price-fixing suit for $24 million. Although the largest private U.S. company, major cattle feeder and owner of Excel said it had done nothing wrong, the firm agreed to settle a class-action suit that accused the company of conspiring with two other firms to fix prices of a common food sweetener. “We agreed to settle only after assessing the costs of further litigation,” Cargill said in a statement. “We did not engage in any illegal activity.”
Full Court Press
How many times does something have to be declared illegal before it is stopped? The $255 million mandatory dairy checkoff was the latest in a long line to be declared unconstitutional by a U.S. Circuit Court of Appeals after a Pennsylvania dairy family filed a lawsuit. The decision on the dairy checkoff follows last year’s federal court rulings that similar beef and pork checkoff programs are also unconstitutional.
Ann Veneman, the USDA Ag Secretary who took it upon herself to throw out a vote to do away with the pork checkoff (probably illegally), announced to a giddy NCBA convention that the Bush administration would petition the U.S. Supreme Court to overturn lower court checkoff rulings. In the meantime, the courts allowed the checkoff programs to continue pending further appeals, thus allowing the NCBA and NPPC to stockpile more checkoff funds to hold them over until they and the USDA can find another way to unconstitutionally take more money from producers. This they will probably try to do with a government mandated animal identification program.
Meanwhile, oral hearings were heard in the Charter checkoff case on March 31 in Seattle. There a three-judge panel of the U.S. 9th Circuit Court of Appeals listened to USDA and NCBA lawyers argue that the checkoff is “government speech” and thus exempt from First Amendment. USDA and NCBA attorneys argued that the checkoff is really a government-run program funded by a “targeted tax on beef.” They maintained that government officials are the ones who are calling all the shots and that members of the Cattlemen’s Beef Board “exercise no independent judgment” and can be fired if USDA so desires.
Charter’s attorney responded, “This Court should be appalled by the depth of the big lie the government is willing to tell in trying to save this program. The notion that they could remove someone from the checkoff board because they didn’t agree with his opinion is a complete fabrication. In fact, the Beef Board describes itself as a business run by a board of directors and accountable to the producers. If what the government is saying now is true, what the Beef Board has been saying to the public and to its members and to Congress since this program was adopted has been the most stunning lie imaginable. If that kind of government speech is protected under the First Amendment, we have lost our way.”
Thank goodness someone is keeping an eye on the sneaks at the USDA. After seeing reports in the Canadian press regarding a policy change by USDA that would allow in more Canadian beef, a R-CALF researcher located a memorandum embedded deep within a USDA web site. That memo, addressed to U.S. beef importers and brokers, allowed them to bring in more Canadian meat, including T-bones and rib roasts, regardless of age at slaughter, providing the meat was processed in USDA certified establishments. The expanded importation was scheduled to become effective on April 19. Please keep in mind, the USDA bureaucrats did not issue a formal news release on the change. In other words, Veneman was trying to covertly sneak more Canadian meat into this country without any of us becoming aware of it.
There’s only one problem with Queen Ann’s actions . . . they were illegal! “The USDA cannot circumvent procedural requirements by issuing this decision without public notice and opportunity for comment, especially when there are such broad public health and economic concerns at stake,” said Bill Bullard, R-CALF’s CEO.
R-CALF committed up to $500,000 to file a lawsuit requesting injunctive relief against the USDA, arguing the agency acted in an “arbitrary and capricious manner” by relaxing safety standards, which are intended to prevent BSE from entering the U.S. In a Billings courtroom R-CALF asked Judge Richard Cebull to put an immediate halt to the importation of Canadian ground beef, bone-in meat, processed products, and other tissues the USDA was trying to bring in through the back door.
Judge Cebull ruled that R-CALF USA was right and was likely to prevail on its claim that USDA’s decision was arbitrary and capricious and there was a significant threat of irreparable injury if a restraining order was not granted. So, the Judge issued one and gave R-CALF a May court date to further substantiate their case.
In the Judge’s 13-page order he agreed with R-CALF that such a mistake on the part of the USDA could be deadly. He said, “USDA’s recent action may result in a fatal, noncurable disease in humans who consume those products. Since there are no requirements that imports of Canadian beef products be labeled to indicate the country of origin once those products cross the border, they become virtually impossible to recover or segregate if additional cases of BSE are discovered in the Canadian herd.”
Wouldn’t country of origin labeling come in handy about now?
Not surprisingly, the NCBA did not agree with the Judge or R-CALF. The NCBA said R-CALF’s action was “frivolous litigation that will harm efforts to build a global market for U.S. beef based on science.” An NCBA spokesman said the NCBA favors free trade and believes Canadian meat is just as safe as American beef, this despite the fact that Canada has now produced two mad cows and the United States none.
Contempt Of Canada
A couple months ago the Canadian Parliament subpoenaed Cargill Foods, Lakeside Packers and XL Foods for financial records. (Lakeside Packers is owned by Tyson Foods and together these three firms process 75 percent of Canada’s beef.) Parliament wanted the information because Canadian packers have been accused of taking much of the $1.6 billion in government assistance that was supposed to go to Canadian cattlemen. Canadian consumers also complained that while the packers have paid significantly less for cattle as a result of mad cow, retail beef prices remain high.
Despite the fact they can be found in contempt of court, the companies did not give Parliament the information they demanded. Although Tyson did NOT have the time to gather the information for Parliament they did find time to issue a profit statement. According to Tyson, profit surged 65 percent and net income rose to $119 million compared with $72 million in the same period a year earlier.
When Ann Veneman spoke to the NCBA convention in February she said the USDA was working diligently to restart beef exports. We have been told that our government is in the business of tearing down barriers and building foreign trade. So why is the USDA stopping an American firm from selling U.S. beef to a willing foreign buyer?
Recently Japan announced that trade talks had broken down because they want any U.S. beef they buy tested for BSE. Creekstone Farms, the firm that took over the ultramodern Future Beef plant, had a good trade with Japan before the mad cow madness and is more than willing to test all the beef they sell. They spent $500,000 gearing up to test their beef and figure they can do it for $15 per head.
There’s only one problem: The USDA rejected Creekstone’s plan to sell cattle to Japan on the basis that its testing plan was “scientifically unsound.” The USDA is echoing the feelings of the American Meat Institute, lobbyists for the large meatpackers, when they say such testing is not warranted and would unnecessarily scare or confuse American consumers. In rejecting Creekstone’s plan, Bill Hawks, a USDA undersecretary said, “There is no scientific justification for 100 percent testing because the disease does not appear in younger animals under the age of 30 months.”
Perhaps the USDA never heard about the 23-month-old mad cow in Japan? And even if it were true that animals under 30 months of age don’t get BSE why did the USDA test 2,051 animals over the past two years that were under 30 months of age?
It is estimated that Creekstone is losing about $40,000 per day because they can’t sell their beef to Japan and the firm had to lay off 50 employees. Creekstone is pursuing a lawsuit against the USDA for restricting its ability to operate and they have hired a Washington, DC law firm. In the meantime, Australia is grabbing market share in Japan that previously belonged to us, and Canada is considering BSE testing beef for export to Japan.
Those are just a few of the important cases at various stages in our courts. Perhaps it is a good time to remind ourselves what a friend of mine from Montana recently reminded me: Our system of justice is slow, doesn’t always work, sometimes punishes the innocent but it is still the best system in the world . . . that money can buy.