On December 15, 2009, the court reversed its previous decision and a District Court decision on the question. The court held in an en banc hearing that "an anti-competitive effect is necessary for an actionable claim under Packers and Stockyards Act in light of the act's history in Congress and its consistent interpretation by the other circuits."
Michelle Massey puts in quite simply in her article for the Southeast Texas Record online, farmers wishing to bring an action under the Packers and Stockyards act must show the practices put in place by the companies they work for create an adverse effect in competition under the act.
In 2006, plaintiffs Cody Wheeler, Don Davis and Davey Williams filed a case against Pilgrim’s Pride Corp in Texarkana Division of the Eastern District of Texas. The producers alleged that since the founder and chairman of Pilgrim’s Pride does not have to follow the same contract grower system as the rest of Pilgrim’s producers, the chairman “is receiving ‘undue and unreasonable preference or advantage’ in violation of the act.”
Pilgrim’s Pride then responded to the allegation by arguing that the statute “requires plaintiffs show” that actions put in place by the company have adverse effects on competition. The defendants then filed for a motion of summary judgment base on this argument, but the motion was denied by the District court.
The defendants naturally appealed to the Fifth Circuit, but at the time the Fifth Circuit agreed with the ruling of the district court “that the language of the act is ‘plain, clear and unambiguous and that it does not require growers to prove an adverse effect of competition.”’
The Fifth Circuit also wrote that previous circuit court decisions were misguided because those decisions looked beyond the plain text of the legislation. Naturally, Pilgrim’s Pride appealed the ruling arguing the court should more heavily weigh “sister court” rulings which held that the plaintiff must prove an adverse effect on competition to win.
The en banc hearing on the appeal was in September with the decision coming on December 15, 2009.
“The en banc court concluded that "an anti-competitive effect is necessary for an actionable claim under Packers and Stockyards Act in light of the act's history in Congress and its consistent interpretation by the other circuits. . . The judges decided that that the failure to include the likelihood of an anti-competitive effect goes against the meaning of the statute. To support a claim of violation there 'must be proof of injury, or likelihood of injury, to competition,' the ruling states.”
In his dissenting opinion Judge Emilio M. Garza joined with six other circuit judges and wrote it is not necessary to delve into the legislative history as the act's language is clear.” Garza believes the court ruling will create more confusion than clarity for future courts.
To read the Southeast Texas record article click here.
To read a copy of the opinion click here.
Posted: 01/04/10
