Been v. O.K. Industries, Inc.

398 F. App'x 382
CourtCourt of Appeals for the Tenth Circuit
DecidedOctober 13, 2010
Docket08-7078
StatusUnpublished
Cited by3 cases

This text of 398 F. App'x 382 (Been v. O.K. Industries, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Been v. O.K. Industries, Inc., 398 F. App'x 382 (10th Cir. 2010).

Opinion

ORDER AND JUDGMENT *

MARY BECK BRISCOE, Chief Judge.

Plaintiffs-Appellees (“Growers”) filed this action alleging that Defendants-Appellants O.K. Industries, Inc., O.K. Farms, Inc., O.K. Foods, Inc., and O.K. Broiler Farms Limited Partnership (collectively “OK”) violated § 202(a) of the Packers and Stockyards Act (PSA), 7 U.S.C. § 192(a). After a jury trial, the Growers prevailed on their claim and were awarded $21,141,975, which the district court reduced to $14,511,935. OK appeals, arguing: (1) the Growers failed to prove that OK engaged in an unfair practice “with respect to live poultry” under the PSA; (2) the Growers failed to prove that OK’s allegedly unfair practices injured consumers *385 and that OK had sufficient market power in the output market; (3) there was insufficient evidence to support two of the five possible theories of liability; (4) the district court erroneously admitted expert testimony; and (5) the district court failed to instruct the jury on the statute of limitations. As discussed below, we have jurisdiction pursuant to 28 U.S.C. § 1291, and affirm.

I

OK is a vertically integrated poultry producer operating in Arkansas and Oklahoma, and it is the largest poultry integrator in Oklahoma. OK is involved in almost every stage of the production and wholesale of poultry. However, OK does not handle the raising of broiler chickens to slaughtering age, but instead enters into contracts with various “growers” who raise the chickens.

Under OK’s standard, non-negotiable contracts, these growers agree to use only chicks and supplies provided by OK. The individual growers also agree not to sell their chickens to other poultry integrators. In turn, OK agrees to provide a grower with only one flock of chicks, which typically takes seven weeks to raise. Then, OK may provide the grower with replacement flocks. Additionally, OK requires each grower to obtain financing and build chicken houses to OK’s specifications, which can cost nearly $160,000. OK periodically requires growers to update their chicken houses to meet recent updated specifications.

Plaintiffs-Appellees are a class of growers operating in Oklahoma under contract with OK. They brought this suit alleging, in part, that the terms of OK’s non-negotiable contracts and OK’s performance under those contracts violate the PSA as unfair practices.

OK filed a motion for summary judgment, and the district court ruled that the PSA required proof of injury to competition, and the Growers failed to establish a genuine issue of material fact regarding competitive injury. The district court granted summary judgment for OK on the PSA claims, as well as on state law claims of unconscionability. The Growers appealed the grant of summary judgment.

On appeal, we held that “a plaintiff who challenges a practice under [PSA] § 202(a) [must] show that the practice injures or is likely to injure competition.” Been v. O.K Indus., Inc., 495 F.3d 1217, 1230 (10th Cir.2007). Applying that holding to the evidence presented by the parties on summary judgment, we first concluded that “[t]he record contained] evidence that supported] the Growers’ contention that OK [wa]s a monopsony in the relevant regional market.” Id. at 1231, 1 We in turn held that, “to establish that the practices of a monopsonist have injured or are likely to injure competition, a plaintiff does not have to be a competitor of the buyer or demonstrate that the buyer has improperly excluded other competitors. Instead, the plaintiff must show that the monopsonist’s practices have caused or are likely to cause the anticompetitive effect associated with monopsonies, namely the arbitrary manipulation of market prices by unilaterally depressing seller prices on the input market with the effect (or likely effect) of increasing prices on the output market.” *386 Id. at 1282. We ultimately concluded “that a genuine issue of material fact existed] as to whether OK engaged in unfair practices in violation of § 202(a).” Id. at 1288. “In particular, we note[d] that the record contained] evidence,” most notably “expert testimony,” “of the classic monopsony injury, namely that OK [wa]s depressing the prices it pa[id] the Growers and reselling at inflated prices.” Id. We thus reversed the district court’s grant of summary judgment for OK on the PSA claim but affirmed the grant of summary judgment regarding the unconscionability of the contracts under state law.

The case proceeded to a jury trial, where the Growers alleged five specific unfair practices that purportedly caused competitive injury in violation of the PSA. The Growers offered testimony that: (1) OK exercised extensive control over the Growers in almost every aspect of production and pay; (2) OK increased the number of days between chicken flocks that it placed with the Growers; (3) OK reduced the number of chickens per square foot of housing space, or “bird density,” placed with the Growers; (4) OK exercised control over the specifications for the chicken houses; and (5) OK shared detailed information with other integrators in the form of “Agri Stats,” but did not share this information with the Growers, leading to a severe asymmetry of information.

At trial, the Growers offered the expert testimony of Dr. C. Robert Taylor, a professor of agricultural economics, who concluded that each of the above practices reduced production, depressed Grower pay compared to competitive-market levels, and likely increased output prices. Taylor also testified that OK’s production practices impacted immediate resale and national prices, conclusions he reached after performing four regression analyses.

Taylor further testified regarding his methodology for calculating the Growers’ damages. Taylor calculated the difference between the profits that the Growers actually received and the profits they would have earned in a competitive market, i.e., one free of the alleged violations of the PSA. He concluded that OK underpaid the Growers by up to $14,511,935 as a result of their violations during the class period. OK repeatedly objected to Taylor’s testimony, requesting an opportunity to voir dire the witness. The district court denied each request, stating that OK would have its opportunity on cross-examination. Following cross-examination, there was no request to exclude Taylor’s testimony, in whole or in part.

The jury returned a verdict, finding that OK violated § 202(a) of the PSA, and awarded the Growers $21,141,975. The district court entered judgment reflecting the verdict and damages on March 25, 2008. On April 8, 2008, OK filed motions for judgment as a matter of law and for a new trial. On July 3, 2008, 2008 WL 2704470, the district court denied OK’s motion for judgment as a matter of law, and it denied OK’s motion for a new trial on the condition that the Growers consent to remittitur, reducing the damages to $14,511,935. The district court stated that it would enter an amended judgment upon Grower’s acceptance of the remittitur.

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398 F. App'x 382, Counsel Stack Legal Research, https://law.counselstack.com/opinion/been-v-ok-industries-inc-ca10-2010.