On February 27, 2023, Judge Philip A. Brimmer for the United States District Court of Colorado granted preliminary approval of a $11.25 million settlement with Seaboard Foods and Perdue Foods, and stayed proceedings against Webber Meng Sahl and Co. Inc., the data consulting firm implicated in this wage suppression antitrust class action for allegedly helping eleven of the country’s largest beef and pork producers exchange compensation data. Earlier in February, JBS USA filed a notice of settlement with the court, although the value of the settlement has yet to be determined. Litigation against other defendants continues.
Plaintiffs, hourly and salaried beef and pork processing workers, who slaughter, age and help prepare the meat for retail distribution, allege that since 2014 JBS USA Food, Tyson Foods, Cargill, Hormell Foods, American Foods, Perdue Farms, Smithfield Foods, and National Beef Packing, and their subsidiaries conspired to fix and depress their compensation. They also claim that two consulting companies, Agri Stats, Inc. and Webber, Meng, Sahl and Company, Inc. d/b/a WMS & Company, Inc. helped the defendants exchange competitively sensitive compensation data.
On January 9, 2023, the Court appointed Cohen Milstein Interim Co-Lead Counsel.
Defendants own and operate approximately 140 red meat processing plants in the continental United States. Collectively they produce approximately 80 percent of the red meat sold to consumers in the United States.
Plaintiffs allege that since at least 2014, Defendants conspired to fix and depress the compensation paid to employees at red meat processing plants in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The purpose of this conspiracy was to increase their profits by reducing labor costs, which comprise a substantial share of each Defendant Processor’s total operating costs.
Specifically, Plaintiffs allege that Defendants implemented, monitored, and enforced their conspiracy to fix and depress compensation paid to Class Members through a series of overt acts, including:
- Secret Compensation Surveys. Defendants collectively designed, implemented, and concealed a compensation survey, called the “Red Meat Industry Compensation Survey.” This survey which was distributed from 2014 – 2019, featured current and future compensation information across dozens of positions across red meat processing plants. Defendants also hired WMS, a compensation-consulting firm, to administer the annual Red Meat Industry Compensation Survey to confer a veneer of legality on Defendants’ illicit information exchange.
- Secret Meetings: Defendants sent their executives, including vice presidents of human resources and directors of compensation, to annual in-person meetings, called the “Red Meat Industry Compensation Meetings.” 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. Defendants also had improper conspiratorial communications before, after and at the Red Meat Industry Compensation Meetings. The agendas for the Red Meat Industry Compensation Meetings, which were circulated by email to each participant beforehand, indicate that Defendant Processors’ executives spent hours collectively discussing their detailed compensation data in the “survey results.”
- Direct Communications among Executives. Defendant senior executives extensively discussed, compared, and in turn further suppressed compensation through email and phone communications. Those conspiratorial communications included both group emails to senior executives for purposes of aligning Defendant Processors’ compensation practices and bilateral communications meant to adopt time-sensitive plans for future compensation.
- Monthly Exchange of Compensation Data through Agri Stats. Defendants Hormel Foods Corporation, JBS, Seaboard Foods LLC, Smithfield Foods, Inc., Triumph Foods, LLC, and Tyson Foods, Inc. (the Pork Processor Defendants) exchanged detailed, current, and non-public compensation information through Agri Stats. Each Pork Processor Defendant subscribed to and partnered with Agri Stats to exchange and receive, via monthly confidential reports, effective wage rates for various categories of pork-processing workers employed by each Pork Processor Defendant. The Pork Processor Defendants also used the data obtained from Agri Stats to implement and monitor the conspiracy to suppress compensation and to ensure and confirm that no pork-processing conspirator deviated from the conspiracy.
- No Poach Agreements. Defendant Processors also entered into illegal “no poach” agreements with each other to refrain from recruiting one another’s employees.
This alleged conspiracy by Defendants to fix and depress compensation paid to employees of red meat processing plants has unreasonably restrained trade in violation of the Sherman Act, 15 U.S.C. § 1. Plaintiffs, on their own behalf and on behalf of the Class, bring this antitrust action to enjoin Defendants from continuing their unlawful agreement and to recover damages for the class.