Today, the United States Fifth Circuit Court of Appeals filed an opinion of great importance. It may, at long last, give farmers protetection from Pilgrim’s Pride, Tyson Food, and other meatpackers that dominate the livestock markets. For decades, farmers have been denied this protection under the Packers and Stockyards Act (“PSA”). The opinion in Wheeler v. Pilgrim’s Pride Corp, Case No. 07-40651 (5th Cir.) may change that.
Until today, virtual every court in the United States had refused to enforce the plain langauge of the Packers and Stockyards Act of 1921. The PSA prohibits meat packers, such as Tyson, Cargill, JBS/Swift, Pilgrims, and Smithfield, from engaging in “any unfair, unjustly discriminatory, or deceptive practice or device. . ..” The plain language prohibits “any” such practice. But the Courts decided that when Congress said “any” such activity, it actually meant such activity that “reduced competition” in the market.
For example, a chicken farmer who had been cheated by a packer, would have to prove the entire market was impacted by the fact he was cheated. It was nearly impossible to show a marketwide impact from a single unfair or deceptive practice. Thus, under this interpretation of the PSA, it was almost always legal for meat packers to use unfair and deceptive practices against farmers and ranchers.
In 2005 this interpretation was relied upon by the 11th Circuit Court of Appeals which overturned the $1.3 billion dollar verdict for ranchers in Picket v. Tyson, 420 F.2d 1272 (11th Cir. 2005). The 5th Circuit Court of Appeals rejected the reasoning and held that any unfair or deceptive practice is illegal. In doing so it has created a split between the circuits. When such a split exists, it is up to the United States Supreme Court to resolve the disagreement between the circuits.
When this question reaches the Supreme Court, it will focus attention on the incredible market power of the packers. Literally, a few people in a few companies decide the price of cattle, chickens and pigs in the United States. Due to their market share, these few multinational corporations have control the markets and they use that power to financially squeeze farmers and rural communities.
Those who defend this situation assert that this is simply the work of the market. They leave out the important fact that in this market, using unfair and deceptive trade practices against farmers and ranchers is legal most of the time. The 5th Circuit’s opinion and its reliance on the “plain language” of the Packers and Stockyards Act marks an important step toward a legitimate livestock market in the United States.