In a significant turn of events, Pilgrim’s Pride, a major player in the U.S. poultry industry, has seen its current CEO Fabio Sandri removed from a lawsuit filed by the company’s shareholders. This development is part of an ongoing legal saga that began in 2016, revolving around allegations of price-fixing in the chicken market.
Unraveling the Feathers of Controversy: Pilgrim’s Pride in the Throes of a Price-Fixing Legal Battle
The backstory of this case dates back to 2008 when Pilgrim’s Pride, along with Tyson and Sanderson Farms, was accused of coordinating broiler chicken prices. This collusion, instead of healthy market competition, led to artificially inflated prices. These three companies are major suppliers, collectively responsible for about half of the chicken consumed in the U.S.
Investor Patrick Hogan initiated a class-action lawsuit against Pilgrim’s Pride in 2016. Hogan accused the company of deceiving investors through public statements that boasted about their competitive prowess and record profits, while in reality, these achievements were allegedly the result of the price-fixing scheme.
The plot thickened when Pilgrim’s Pride faced criminal charges and, in 2021, pleaded guilty to the accusations, resulting in a $107 million fine to the Department of Justice. This guilty plea not only impacted the company’s financial standing but also shook investor confidence.
The legal journey saw its ups and downs, with Senior U.S. District Judge R. Brooke Jackson initially dismissing the case in 2018, only to allow an amended complaint later. The shareholders’ persistence paid off when they managed to keep the lawsuit alive despite Pilgrim’s Pride’s efforts to dismiss it.
The latest decision by Judge Jackson, detailed in a 15-page order, has led to the exclusion of Fabio Sandri, Pilgrim’s Pride’s former CFO and current CEO, from the lawsuit. However, the claims against the company and its former CEO, William Lovette, remain active. Interestingly, Lovette is now at the helm of C.F. Sauer, a Virginia-based spice company.
Although both Lovette and Sandri were not found guilty of criminal charges in July 2022, the legal proceedings highlighted the complexity of the case, including deadlocked juries and mistrials.
This ongoing legal battle not only highlights the intricacies of corporate governance and ethics in the food industry but also underscores the significant impact such practices can have on market prices, investor trust, and corporate reputation. As the case continues to unfold, it remains a pivotal example of the challenges and responsibilities faced by major players in the food industry.