Why the chicken executive price-fixing case is a priority for prosecutors

The U.S. Justice Department is hopeful that in the criminal case involving poultry executives whom it says conspired to keep prices high, the third time will be the charm.

Jury selection is scheduled to begin today in Colorado as part of a seldom-seen third trial of the executives from Pilgrim’s Pride and Claxton Poultry Farms. The case, which comes out of a 2020 indictment, has gone to trial twice before. Both times, deadlocked juries led to the cases being declared mistrials. After the last trial ended without a verdict in March, the Justice Department immediately said it wanted to try the case again.

The case is is part of a years-long investigation into price-fixing in the poultry sector. The investigation — which was revealed as the Justice Department intervened in a 2016 class action price fixing lawsuit — ended with criminal charges against 14 poultry executives.

Ten of those executives were involved in this trial. But following the second mistrial, the Justice Department dropped charges against five. The department said this move was made to “streamline” the case, court documents state.

Five executives remain and face charges related to what prosecutors say was a conspiracy to drive up prices of broiler chicken products from at least 2012 through early 2019. They include former Pilgrim’s Pride chief executives Jayson Penn and William Lovette and former vice president Roger Austin; and Claxton Poultry Farms President Mikell Fries and Vice President Scott Brady.

The executives engaged in a “conspiracy to suppress and eliminate competition by rigging bids and fixing prices,” the indictment states. 

Following the announcement of the third trial, lawyers for the executives still facing charges called the Justice Department’s decision to move ahead with a third trial unlawful, filing a motion to dismiss the charges.

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Cheung, Lance. (2011). “110303_CNPP_LSC_0206” [photograph]. Retrieved from Flickr.

 

“A third trial compounds this unfairness — the government will have yet another chance to revise and bolster its case. This puts the Defendants in an untenable position and violates fundamental fairness,” the motion said.

Although District Judge Philip Brimmer, who presided over the previous two executive trials, seemed skeptical about prosecutors’ chances of securing convictions in a third trial, he denied all of the executives’ motions for acquittal last week. The stage is set for another trial, and another chance for the Justice Department to flex its strategy of prosecuting executives for corporate misdeeds. From 2015 to the fall of 2020, 717 cases of executive prosecution in the United States had ended with fines and forfeitures, according to the Corporate Prosecution Registry of Duke University Law School and the Legal Data Lab at the University of Virginia’s Law Library.

This strategy has worked previously in the food and beverage space. Jonathan Kanter, head of the U.S. Justice Department’s antitrust division, told Brimmer at an April hearing that prosecutors “still have every bit of confidence that we did when we charged the case that it will result in convictions,” Bloomberg reported.

The accusations of price fixing in the poultry industry stretch much farther than this criminal case. Charges and investigations are underway for many corporate entities in the space. Tyson and Pilgrim’s Pride received protection from criminal prosecution by agreeing to cooperate with the Justice Department, while Koch Foods and Claxton Poultry face charges. Their trial is currently scheduled for April 2023. And civil lawsuits accusing chicken companies of price fixing have been filed by foodservice companies, CPG makers and retailers.

But the issue of potential price fixing — and federal government attention to executives — is not limited to chicken. There are also pending civil lawsuits about accusations of price fixing in the pork and beef sectors. Both of these have recently come under additional scrutiny as prices have increased and a few major players have dominated the markets.

Poultry companies and the Justice Department did not respond to Food Dive’s request to comment on this story.

Why go after executives?

Food company executives have historically found themselves in prosecutors’ crosshairs. In general, the two types of cases most commonly brought before courts involve food safety or price fixing issues.