Companies Seek Wage-Fixing Case Exit

LINCOLN, Neb. (DTN) -- Half of the remaining food companies fighting a wage-fixing lawsuit asked a federal judge earlier this month to dismiss their cases, according to motions filed in court.

In November 2022, a group of employees filed a class-action lawsuit in the U.S. District Court for the District of Colorado. That lawsuit alleges a group of food companies conspired to keep wages low, damaging the employees' future earnings potential.

Last month JBS USA Food Company and Tyson Foods reached a combined $127.3 million settlement with a group of current and former employees.

Motions to dismiss were filed in the federal court by nine of the remaining 18 companies that have not settled in the lawsuit.

That includes Agri Beef Co., Washington Beef LLC, Quality Pork Processors Inc., Rochelle Foods LLC., Indiana Packers Corporation, Greater Omaha Packing Co. Inc., Smithfield Foods Inc., Smithfield Packaged Meats Corp. and Nebraska Beef Ltd.

Companies not yet filing dismissal motions include Cargill Inc., Cargill Meat Solutions Corp., Hormel Foods Corp., American Foods Group LLC, National Beef Packing Company, Iowa Premium LLC, Agri Stats Inc., Webber, Meng, Sahl and Company Inc. and WMS and Company Inc.

The nine companies filing motions generally argue they were not part of the wage-fixing conspiracy alleged by the employees just because they provided information to industry wage indexes alleged to have been used to fix wages.

In its motion to dismiss, Nebraska Beef said it was not a party to the lawsuit when it was initially filed and "should not be a defendant in this case" going forward.

"Plaintiffs generally alleged in conclusory fashion that Nebraska Beef, Ltd., directly exchanged current and future wage information with competing beef processors through the beef industry wage index conducted by Tyson at least in 2000, 2004, 2006-09, 2011-15 and 2019 and established compensation schedules for and directed payments to class members at artificially depressed and fixed rates," Nebraska Beef said in its motion.

The company argues the plaintiffs made no "specific factual allegations" against Nebraska Beef as to the "who, what, when, where and how" the company reportedly "reached an agreement to fix compensation."

In its motion to dismiss, Greater Omaha Packing Co. Inc. said the plaintiffs didn't provide direct evidence the company joined the alleged conspiracy.

"It is therefore conspicuously implausible that Greater Omaha reached the requisite agreement to join a sweeping, quarter-century-long conspiracy to exchange comprehensive, granular data on employee compensation -- including 'wages, salaries and benefits' -- yet participated only in the BIWI (beef industry wage index), which solely offered base wage data for two narrow classes of plant workers, during just 11 of the 24 years the conspiracy was alleged to have occurred," the company argued in its motion.

In August 2023, the plaintiffs announced a $10 million settlement with Seaboard Foods and an agreement with Triumph Foods to cooperate in the ongoing case against the other companies. In addition, the plaintiffs agreed to a $1.3 million settlement with Perdue Farms Inc.

According to the settlement announced in federal court last month, Tyson agreed to pay $72.3 million and JBS $55 million -- bringing the total to about $138.5 million.

The original lawsuit alleged that since at least 2014 the companies "conspired and combined to fix and depress" compensation to employees at about 140 red meat processing plants across the country, in violation of the Sherman Antitrust Act. The companies named in the lawsuit produce about 80% of all red meat sold to U.S. consumers.

The lawsuit said senior executives at the companies established and approved hourly wage rates, annual salaries and employment benefits.

The complaint said the companies conducted "secret" compensation surveys and held "secret" annual meetings that included executives from the companies named in the lawsuit.

"The purpose, intent and outcome of these annual red meat industry compensation meetings was to depress and fix the wages, salaries and benefits of class members at artificially depressed levels," the complaint alleged.

In addition, the lawsuit said the companies were in direct communication with senior executives who "extensively discussed, compared, and in turn, further suppressed compensation through email and phone communications."

The complaint said the companies entered into no-poach agreements, preventing the companies from recruiting the other companies' employees.

"The intended and actual effect of defendants' conspiracy to fix compensation has been to reduce and suppress the wages, salaries and benefits paid to class members since January 2014 to levels materially lower than they would have been in a competitive market," the employees said in the lawsuit.

Read more on DTN:

"Tyson, JBS Settle on Wage-Fixing Case," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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