Attorney Offers Observations On IBP-Tyson Price-Fix
New cattle group off and running
BY DAVID BOWER
DENVER — "Julia walked into the courtroom in Montgomery with
75 other people," said Dave Domina, an Omaha, Neb., attorney who
represented cattlemen suing the world's largest beef packer in Montgomery,
Ala., last year.
"She was the fifth of those 75 people
to walk into the courtroom. She didn't know it, but that meant there
was a pretty darn good chance statistically that she was going to serve
on the jury."
Julia was 65 years old.
"She looked like she was frail and
in ill health," Domina continued. "She may have weighed a
When the jury panel was asked if any of them had served on a jury before,
Julia raised her hand along with a few others.
"No other prospective juror had
served three times," Domina said. "Only Julia."
Domina said she talked with such an accent and such difficulty of speech
he was tempted at first to think she was illiterate.
"Julia answered a few more questions
and was largely ignored by the process of choosing the jury, and she
survived to sit in the third seat in the front row for the next five
weeks," Domina said.
Domina later learned that Julia was the
research librarian for the University of Alabama's public library system.
Six months before this jury was empanelled,
he said, budgets dictated that position in the library be eliminated.
The final decision came down between Julia and a 32 year-old widow with
three young children. Either Julia or the mother had to go.
Julia resigned her position so the mother of the three children
wouldn't lose her job.
"Nobody knew that when she was sworn
in as a juror in this case," Domina said.
Julia has never been out of the Deep South. She didn't live too far
from Henry Pickett, the plaintiff in the case from Alabama.
At the sixth annual convention of R-CALF,
Domina talked about the case, Pickett v. IBP, its implications, where
it stands and what the future might hold.
The case stems from a lawsuit filed in
1996, alleging that IBP, now Tyson Fresh Foods, violated the Packers
and Stockyards Act of 1921 by using captive supplies, cattle contracted
for slaughter, to manipulate prices. It was made a class action case
in 2000, representing cattlemen who had sold their animals to IBP between
1996 and 2002.
Following six weeks of testimony, arguments
and deliberations, the Alabama jury found for the cattlemen and awarded
them $1.28 billion in damages. The judge in the trial, Senior U.S. District
Judge Lyle Strom, later set aside the jury's verdict. The case is now
before the 11th Circuit Court of Appeals.
The judge concluded that he had to take
the jury verdict away, Domina said, because he believed IBP had proven
that captive supply would given them a constant and reliable source
of cattle, an affirmative defense in an antitrust case.
"I think he genuinely believed that,"
Domina said. "I know this judge. I respect him. I'm not just saying
that because he's from my home state. It is a very rare event when this
happens. There was no doubt during the oral arguments that the three
members of that (appeals court) panel know it's a rare event."
But Domina maintains that the judge viewed
the case under the Sherman Anti-Trust Act, not the Packers and Stockyards
Act, the law under which the cattlemen sued.
"We think we have by far the proper legal argument," Domina
said, "and that therefore the jury verdict has a high probability
of being reinstated."
Domina said that when they went to trial, he knew
they would be trying the case before a jury that was not from cattle
country. Therefore, he said, they had to start the case by teaching
the jury about the cattle business, and they had to teach them in such
a way as to dispel what Domina said are the many falsehoods he felt
the other side would try to use in the case.
"Those falsehoods included the falsehoods
about genetics and about whether the packers’ use of captive supply
encouraged people to improve their genetics," Domina said.
The plaintiffs suing IBP called on Leo McDonnell, not because he is
the president and founder of R-CALF, Domina said, but because he's a
"As the case progressed," Domina
said, "we called on a couple of feeders, big feeders with a lot
at stake, who were willing to testify about what the cash market means
to them and their business."
At the end of the testimony after the
first three witnesses, Domina said Joe Whatley, one of the Alabama lawyers
for the cattlemen, told him that with the testimony of economist Robert
Taylor of Auburn, Whatley thought they'd made a case that they could
submit to the jury and get a verdict that wouldn't be taken away.
Domina said they called witnesses representing
the class in the class action lawsuit and some more feeders from other
parts of the country and their economist, Taylor.
"Bob had been in depositions for four full days with Tyson,"
Domina said. "He had performed hundreds of regression analyses
and had seen more than a million data points from Tyson records."
Each data point represented a sale of cattle.
"He had looked at more than a million
individual transactions," Domina said. "The attack on him
was that he wasn't qualified and hadn't done enough work."
Domina said Taylor had seen more about the packing industry than all
of the economists in the history of the United State Department of Agriculture
had seen because the packers had never disclosed the data to the USDA.
"When we closed with our evidence,"
Domina said, "we wanted to reach Julia and the other 11 jurors
with one single, forceful, simple, but really important impression."
Herman Schumacher from near the border
of North and South Dakota was their last witness. That part of the country,
Domina said, has land with little utility except for grazing cattle.
"He got on the witness stand and
he was only there four or five minutes," Domina said, "but
after I asked him to describe where he was from and describe the appearance
and configuration of the lay of the land in those states, I said, 'What
do you use land like that for?'"
Schumacher leaned forward in the witness
stand, looked at Domina and then looked at the jury and said, "We
live on cattle."
Tyson's lawyer, Domina said, asked Schumacher
if he flew to Montgomery just to say what he said. Schumacher replied,
"Did you have a good flight?" asked the Tyson lawyer.
"Yes," Schumacher replied.
"Hope you have a good flight home,"
the Tyson lawyer said.
Domina said the packer missed the point.
"We hoped the jury hadn't,"
One of the important things in the case,
Domina said, was that they were able to make public testimony by some
of the officers and directors of the nation's largest slaughterhouse.
One of those directors was a former undersecretary of agriculture. She
gave a deposition that Domina videotaped in Sioux City, Iowa.
"When I got home that evening,”
Domina said, “I said to my wife, ‘If I ever get a chance
to play the deposition that was given today by a director of IBP, the
cattlemen will win their case.’"
In the courtroom, Domina played the videotape
and watched the look on the jurors' faces.
"I watched every single, solitary juror's face turn from dumbfounded
to expression-filled to mirthful," Domina said. "I watched
the United States district judge, who was trying to keep a close rein
on his face, bite his hand so he would not laugh as we listened to a
director of IBP — not once, not twice, but three times —
testify under oath that the company's annual revenues were nine million
When Domina asked her if she was sure
it million and not billion, she said it was million.
"That was one of her better answers,"
Domina said the IBP lawyers called captive suppliers to the
"They affirmed the description of the market that our witnesses
had given," Domina said. "They described the advantages of
captive supply and said they had the right to contract, and therefore
we should lose."
IBP proved captive supply can assure
a steady and continuous stream of cattle to the packing plant.
"We, of course, conceded that,"
Bruce Bass, the IBP vice president in
charge of procuring cattle, testified that captive supply assured a
steady stream of cattle to the plant, and that's why the company uses
Domina said Bass admitted that the packer
would have to pay more if they bought the cattle on the cash market.
Bass, Domina said, admitted to setting the price for IBP's cattle bids
each day, and that the bid depended upon the inventory at the plants.
That inventory includes the cattle under contract. The more cattle under
contact, the lower the price.
"He shrugged his shoulders,"
Domina said, "and said, 'Of course.'"
With that, Domina contended, the vice
president for cattle procurement for the largest beef packer in the
United States admitted a violation of the Packers and Stockyards Act.
Domina said that at the end of the trial,
the judge announced he would instruct the jury according to guidelines
under the Sherman Anti-Trust Act, not the Packers and Stockyards Act.
"The difference is that the burden
of proof under the Sherman Anti-Trust Act is significantly higher,"
Domina said. "The reason it is significantly higher is because
if you bring a Sherman case, you're entitled to triple damages and you're
entitled to recover attorney fees."
There's no provision for that under the
Packers and Stockyards Act.
Domina said that by then he thought the judge had become frightened
of the lawsuit.
During a battle over a motion earlier in the case, Domina said, the
judge commented that he didn’t know how he would ever impose an
injunction on IBP.
"In this candid and intelligent
and thoughtful exchange, the judge — who should get credit for
it, not be condemned — made it very clear that he was threatened
by the responsibility that he suddenly realized he had," Domina
The Omaha attorney said since 1921 there
have been 15 presidents of the United States and there have been 24,
soon to be 25, attorneys general.
"None of them," Domina insisted,
"have enforced the Packers and Stockyards Act in an effective way,
and certainly not since Franklin Roosevelt's first term in the early
Despite the stiffer requirements, Julia and the 11 other jurors returned
a verdict for the cattlemen and awarded them $1.28 billion.
But the judge, viewing the case through
the lens of the Sherman Anti-Trust Act, where any economic justification
for IBP's actions justifies the action, a few weeks later set aside
the jury verdict.
"Our contention is that we didn't
try a Sherman Anti-Trust case," Domina said. "If we had, the
verdict would have been $3.8 billion, not $1.3. We would have had an
attorney's fee award."
Domina said profit doesn't justify a monopoly.
"It never has," Domina said. "It never will.
If it does, then the anti-trust law has been repealed by judges."
The case has been appealed to a three-judge
panel in the 11th Circuit Court of Appeals.
One of those judges is an expert in anti-trust
"In one published opinion by this
judge," Domina said, "he starts his opinion by saying, 'The
anti-trust laws of the United States are the Magna Carta of our economic
freedom. They are as important to our economic liberty as the Bill of
Rights is to our personal liberty.'
“We think we'll get a fair shake
from him and the other two judges."
Domina said he thinks the cattlemen have a good chance on appeal.
"We may have to retry the damages aspect of the case," he
conceded, "but we expect that there will be injunctive relief."
If the appellate judges find for the
cattlemen, there will be another trial for injunctive relief, that is,
an order by the judge changing the way packers buy cattle.
The appeals court could send the case
back down and order that the damages aspect of the trial that was held
in Montgomery last year be retried.
Retrying the case wouldn't be all that disappointing, Domina
"We probably have the potential to get a larger verdict,"
he opined. "We'd like to keep the one we have, but if we have to
retry it, then so be it."
Domina said he expects to hear from the
appeals court sometime before June, but there is no timetable for the
judges to issue a ruling.
If the court finds for IBP, Domina said
the cattlemen can ask the entire 11th Circuit, 11 judges, to hear the
case. That is not likely, he said, but it could happen.
In the end the case probably will be appealed to the U.S. Supreme Court.
"If we win in the 11th Circuit, Tyson can go through the same steps,"
The Supreme Court does not have to hear the case. They can let the appellate
court ruling stand.
"A lot of people think that this
particular anti-trust case will wind up on the Supreme Court's docket,"
Domina said. "We'll see."
After the judge in Alabama read out the
verdict, Domina ran into Julia and two other women from the jury at
the foot of the stairs in the Montgomery federal courthouse.
"Julia leaned forward and grabbed
my hand and said, 'I was prepared to stay here in this building until
Christmas if I had to to get this verdict for your people.'"
Julia, Domina said, has become one of the most important people
in the history of the cattle business.