Specht v. Cargill, Incorporated

CourtDistrict Court, D. Minnesota
DecidedMay 28, 2024
Docket0:22-cv-02903
StatusUnknown

This text of Specht v. Cargill, Incorporated (Specht v. Cargill, Incorporated) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Specht v. Cargill, Incorporated, (mnd 2024).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA IN RE CATTLE AND BEEF ANTITRUST LITIGATION MDL No. 22-3031 (JRT/JFD)

This Document Relates To: MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS’ MOTION TO THE INDIRECT SELLER ACTION (“Specht DISMISS THE SPECHT AMENDED Case”), Civil No. 22-2903 COMPLAINT

Richard M. Paul, III, PAUL LLP, 601 Walnut Street, Suite 300, Kansas City, MO 64106; Michael Montaño, GUERRA LLP, 875 East Ashby Place, Suite 1200, San Antonio, TX 78212, for Plaintiffs.

Kosta S. Stojilkovic, WILKINSON STEKLOFF LLP, 2001 M Street, Northwest, 10th Floor, Washington, D.C. 20036, for Defendants Cargill, Incorporated and Cargill Meat Solutions Corporation.

Chelsea A. Bollman, JONES DAY, 90 South Seventh Street, Suite 4950, Minneapolis, MN 55402, for Defendant National Beef Packing Company, LLC.

Jon B. Jacobs, PERKINS COIE LLP, 700 13th Street, Northwest, Suite 800, Washington, D.C., 20005, for Defendants Tyson Foods, Inc., and Tyson Fresh Meats, Inc.

Jessica J. Nelson, SPENCER FANE, 100 South Fifth Street, Suite 2500, Minneapolis, MN 55402, for Defendants JBS USA Food Company, JBS Packerland, Inc., Swift Beef Company, and JBS S.A.

The putative Specht Class Members (“Plaintiffs”) filed an Amended Complaint on behalf of producers of feeder cattle who indirectly sell cows and calves to one or more Defendants in this action. Defendants now move to dismiss Plaintiffs’ Amended Complaint.

Because Plaintiffs have not clearly demonstrated that they are producers of feeder cattle as that term is understood by the CME Feeder Cattle Index and beef production industry at large, their new allegations fail to establish causation and a direct injury as would be necessary for antitrust standing. The Court will therefore dismiss Plaintiffs’

Sherman Act, Packers and Stockyards Act, and state antitrust and consumer protection claims for lack of antitrust standing under Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519 (1983). The Court will also

dismiss the remaining state law claims arising under Colorado and Florida laws. BACKGROUND I. FACTS The Plaintiffs’ factual allegations remain largely the same as those outlined in the Court’s prior order. See In re Cattle and Beef Antitrust Litig., No. 22-3031, 2023 WL

5310905, at *1–2 (D. Minn. Aug. 17, 2023). As such, the Court will only summarize and address newly alleged facts relevant to the current motion. Cow-calf operations are the first step in the beef supply market. (Am. Compl. ¶ 62, Oct. 18, 2023, Docket No. 371.)1; see also In re Cattle and Beef Antitrust Litig., 2023 WL

5310905, at *1 (depicting diagram of beef production market). Cow-calf entities retain

1 Unless otherwise noted, all citations are to Case No. 22-3031. cattle for the gestation period and then raise the calves until they are weaned from their mothers. (Am. Compl. ¶¶ 62–63.); In re Cattle and Beef Antitrust Litig., 2023 WL 5310905,

at *1. After the cattle are weaned, they are raised until they are large enough for finishing at the feedlots—generally, when they are between 600 to 800 pounds. (Am. Compl. ¶ 63.) Ranchers can raise the cattle until they are large enough for finishing and sell directly to a feedlot or, if the cattle are too small or light to enter the feedlot, to stockers or

backgrounders, who will raise the cattle until they are large enough for finishing. (Id.); In re Cattle and Beef Antitrust Litig., 2023 WL 5310905, at *1. Feedlots or finishing operations are the final phase of the beef production system, wherein the cattle are fed

to harvest weight. (Am. Compl. ¶ 64.) Once cattle reach between 950 and 1,500 pounds, they become fed cattle. (Id.) The finishing process generally takes less than 6 months. (Id.) Fed cattle are sold and slaughtered at packing plants operated by packers like Defendants. (Id. ¶ 66.) The entire cattle production cycle from birth to slaughter is

typically 15 to 24 months. (Id. ¶ 68.) In their Amended Complaint, Plaintiffs relabel themselves as producers of feeder cattle who indirectly sell cattle to one or more Defendants in this case. (Id. ¶ 2.) Feeder cattle are ultimately sold as “fat” or “fed” cattle. (Id. ¶ 7.) Plaintiffs define feeder cattle

as “calves, steers, or heifers raised by cow-calf-entities, ranchers, or backgrounders in the United States, which feedlots use to produce fed cattle.” (Id. ¶ 1 n.1.) This expansion of Plaintiffs from cow-calf ranchers to producers of feeder cattle in effect expands to include all indirect sellers, including cow-calf-entities, ranchers, and backgrounders. (Compare No. 22-2903, Class Action Compl. 4 1, Oct. 31, 2022, Docket No. 1, with Am. Compl. 4] 2.) Plaintiffs reassert the same price-fixing conspiracy by Defendants as in their original complaint. See In re Cattle and Beef Antitrust Litig., 2023 WL 5310905, at *2. They assert that Defendants conspired to suppress the price of fed cattle, and that their coordinated conduct caused a collapse in fed cattle prices in 2015, which in turn caused the prices of feeder cattle to collapse. (Am. Compl. 141 1, 4.) Plaintiffs newly allege that Defendants’ prices for fed cattle have a direct impact on the prices that they receive for feeder cattle. (/d. 7 3.) In support, they provide the following chart comparing the CME Feeder Cattle Index to fed cattle prices. (/d. 4 3, Fig. 1.)

Weekly CME Feeder Cattle Index and Deferred Live Cattle Contract (Adapted from CME) 4-year averages: deferred live cattle = $114, CME feeder cattle index = $144 170 183 155 150 13 513 & 125 120 ie 103 100 38 se re A A x A 2 2 2 “—=CME Feeder Cattle Index Deferred Live Cattle

-4-

As the chart illustrates, Plaintiffs claim there was a correlation between fed cattle prices and feeder cattle prices between 2016 and 2020 that demonstrates the causal

relationship between those prices. (Id. ¶ 3.) Plaintiffs bring two putative classes for each claim type: a nationwide class and an upstream nationwide class. (See id. ¶ 316.) The putative nationwide classes include Plaintiffs who sold cattle to natural persons or entities who in turn sold to Defendants, so

are two links removed from Defendants’ conduct. (Id.) The putative upstream nationwide classes include Plaintiffs who sold cattle to intermediaries who in turn sold to another intermediary or a member of the nationwide classes, so are multiple links

removed from Defendants’ conduct. (Id.) II. PROCEDURAL HISTORY As with the factual history, the Court does not find it necessary to repeat the entire procedural history of this case, so it will only summarize the relevant history here. See In

re Cattle and Beef Antitrust Litig., 2023 WL 5310905, at *2–3. The Court granted Defendants’ motion to dismiss Plaintiffs’ original complaint without prejudice after finding that Plaintiffs failed to establish antitrust standing. Id. at *12. Plaintiffs filed the Amended Complaint with leave of the Court. (See generally Am. Compl.) Named Plaintiffs

James Specht, Jerry Kelsey, Richard Settlemyer, and David Hyatt own and operate farms or ranches that raise and sell cattle at auctions, barn sales, or, for Mr. Hyatt, sometimes directly to a feedlot. (Am. Compl. ¶¶ 24–27.) Plaintiffs re-allege nationwide claims based on market allocation and price-fixing in violation of the Sherman Act (Count I) and the Packers and Stockyards Act (Count II). (Id. ¶¶ 319–33.) They also re-allege state law claims based on violations of antitrust laws (Count III) and consumer protection laws

(Count IV). (Id. ¶¶ 334–40.) Defendants moved to dismiss Plaintiffs’ Amended Complaint. (Joint Mot. Dismiss, Nov. 21, 2023, Docket No. 453.) DISCUSSION I. STANDARD OF REVIEW

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