Posted: Thursday, January 27, 2011 10:00 AM
Lawyer: New GIPSA rule could lead to further litigation
By MATEUSZ PERKOWSKI
The U.S. Supreme Court will not review an appeals court ruling that effectively hinders livestock and poultry producers from suing meat packers.
Even so, the legal controversy over the rights of farmers and ranchers under the Packers and Stockyards Act will likely resurface if the USDA decides to implement new restrictions on packers, a lawyer said.
It's currently very difficult for farmers and ranchers to sue a company for violating the statute, which prohibits packers from engaging in any "unfair, unjustly discriminatory or deceptive practice."
Several federal courts of appeal have held that farmers and ranchers can't sue a packer unless they can show that such unfair practices were used to suppress competition in the livestock or poultry industries.
Most recently, the 6th U.S. Circuit Court of Appeals reiterated this interpretation of the Packers and Stockyards Act during litigation between chicken farmer Alton Terry and the Tyson meat packing company.
Terry claimed that Tyson retaliated against him for trying to organize and educate other chicken farmers. According to Terry's lawsuit, the packer refused to allow him to view the weighing of his chickens.
When Terry complained to the USDA, Tyson canceled a shipment of chicks to his farm and later discontinued its contract with the farmer, the lawsuit alleged.
A federal judge's decision to dismiss Terry's complaint was upheld last year by the 6th Circuit, which ruled that the Packers and Stockyards Act was an antitrust statute.
To sue under that law, a grower must show "proof of injury to competition," the opinion said.
Terry appealed that decision to the Supreme Court, arguing that this interpretation of the statute "is a complete frustration of Congress's efforts to protect farmers and ranchers."
Tyson responded that the issue isn't appropriate for review by the nation's highest court because there's no disagreement between federal appeals courts.
Every federal appellate court that encountered the issue has construed the Packers and Stockyards Act as an antitrust statute, the company said in a court submission.
Although the Supreme Court has declined to review the case, that's not an indication of its stance on the Packers and Stockyards Act, said Peter Carstensen, a law professor at the University of Wisconsin and an attorney for Terry.
"The Supreme Court exists not to correct errors but to resolve major issues," he said. "It's not a statement in any way about the merits."
The USDA has proposed a rule for its Grain Inspection, Packers and Stockyard Administration, or GIPSA, that would interpret the statute broadly and prohibit certain activities regardless of their competitive effect.
If those regulations are enacted, they're likely to come up against a legal challenge, said Carstensen. "You name a meat packer, and they'll be in there suing."
A conflict between the USDA's interpretation of the statute and the precedent set by appellate courts would be more likely to attract the Supreme Court review, he said.