Tyson Foods, the world’s largest meat processor, persuaded a federal judge to deny $1.28 billion in damages a jury awarded to more than 35,000 cattle ranchers after finding they were victims of price manipulation.
U.S. District Judge Lyle Strom, who presided at last month’s trial in Montgomery, Ala., yesterday rejected the jurors’ award, saying the amount was “overstated” because it reflected potential damages for all ranchers who sold cattle between 1994 and 2002, not just ranchers in the suit.
The verdict was the second-largest in the U.S. this year. The judge didn’t say what damages Tyson should pay and hasn’t decided whether to throw out findings that Tyson drove down cattle prices by using contracts with select producers to control supply.
“It’s certainly nice news, it shows a little bit of sanity,” said Gregg Tenser, who holds 600,000 Tyson shares at NWQ Investment Management in Los Angeles.
The suit was filed in 1996 against IBP, which Tyson bought in 2001 for $2.8 billion. The company controlled about one-third of the cattle that went to slaughter, the cattlemen claimed.
When cattle prices were high, Tyson would slaughter its own, and when prices were low, it would buy from ranchers, the suit said.
Joe Whatley, a Birmingham, Ala.-based attorney for the ranchers, didn’t return a phone message.
Strom said before the trial that he wouldn’t approve a jury award that reflected potential damages to all sellers in the cash market for cattle.
The ranchers’ suit was the first class action by cattlemen under the Packers and Stockyards Act of 1921, a trade-protection law passed during President Harding’s administration, their lawyer said.
In the Northwest, Tyson plants in Pasco and Boise, Idaho, handle 70 percent of all the cattle killed and processed in Washington, Idaho, Montana and Oregon.