"The court finds that plaintiffs failed to present evidence at trial to sustain their burden with respect to both liability and damages," Strom wrote. The Organization for Competitive Markets said in a release today that the ruling will be appealed to the 11th Circuit Court of Appeals.
The case went to jury Feb. 10 in Montgomery, AL. The jury returned a week later finding that the plaintiffs "had established by a preponderance of evidence" that: there is a nationwide market for fed cattle; that IBP's use of captive supply had an anti-competitive effect on the cash market for fed cattle; that IBP lacked a legitimate business reason or competitive justification for using captive supply; that IBP's use of captive supply proximately caused the cash market price to be lower than it otherwise would have been; and that IBP's use of captive supply injured each and every member of the plaintiffs' class. The jury also found that IBP's use of captive supply damaged the calf market price of fed cattle sold to IBP during the class period by $1,281,690,000.
Tyson countered by filing a motion for judgment of law claiming there was no "legally sufficient evidentiary basis for a reasonable jury" to have found in the affirmative on any of the five points, or that there were damages sustained from the alleged violations of the Packers and Stockyards Act (PSA).
In his ruling, Strom pointed out that such "captive supply" marketing arrangements were a practice initiated by producers in the early 1980s, and that the producer had no obligation to deliver the cattle to the packer until such cattle were designated by the producer for delivery.
He also said the captive supply transactions permitted IBP "to achieve a reliable and consistent supply of fed cattle, allowing it to operate its plants in an efficient manner." He said a packer doesn't violate PSA when its conduct is undertaken "in order to have a more reliable and efficient method of obtaining a supply of cattle."
Strom said IBP also produced evidence at trial that justified its acquiring of cattle through captive supply transactions because it needed to do so to "meet the competition." Strom said the plaintiffs didn't offer any evidence at trial suggesting that IBP would be able to compete if its competition were allowed to continue to use captive supply but IBP was forced to discontinue use of such procurement practices.
"The use of marketing agreements, joint ventures and forward contracts is not, per se, violative of the PSA," Strom wrote. "Generally, such conduct only amounts to a violation of the Act if it constitutes an 'unfair practice', involves price manipulation or violates some other specific provision of the Act. There is no evidence that defendant's competitors' use of these supply arrangements violated the Act, nor is there any evidence that the use of such arrangements is per se illegal."