AFF Sentinel Vol.5#04

Radicals Class Action Attempt to Pin Rap on Packers & Extract Cash Fails Again

Three men known most for their lawsuits against packers proved once again that while juries in District Courts may be sympathetic soil for their populist attacks on American business, the higher levels of the court system hew closer to statutes and prove rocky ground for rhetoric and unsubstantiated opinion.

Herman Schumacher, Mike Callicrate and Roger Koch had sued Tyson, Cargill, Swift (then ConAgra) and National Beef, alleging that they had violated P&SA laws. During the first six weeks of implementation of Mandatory Price Reporting (MPR) in 2001, USDA had miscalculated and reported incorrect cutout prices for beef. The packers used USDA's cutout values in deciding what prices to offer cattle feeders for fed cattle. The plaintiffs' contention was that the packers "manipulated" prices by using USDA's incorrect values, later discovered to be lower than they should have been, and violated P&S law prohibiting manipulation or control of prices by packers.

The Appellate Court ruled that the statute's use of the words "manipulate" and "control" imply that intent is required to be in violation of the law. They also cited precedents in Appellate and Supreme Court rulings requiring proof of intent. However, the District Court had instructed the jury that packers could be held liable for a P&S violation "even if they acted unintentionally." The Appellate Court held that jury instruction was improper and reversed the District Court's judgment of the case. The Appellate Court further held that because the plaintiffs "produced no evidence that the packers intentionally violated the PSA by manipulating or controlling (or attempting to manipulate or control) cattle prices," the District Court should enter a judgment for the packers and no new trial was required.

The irony here is that individuals like the plaintiffs in this case and more radical organizations pushed very hard for MPR, as did most cattlemen's groups. The difference is that the enhanced information on prices and packer operations has not provided the "evidence" the radicals hoped would prove packers were cheating cattlemen. And when the packer suers thought they saw an opening here to advance their ultimate goals of proving evil packer activity and extracting cash from them, they failed again.

Two of the plaintiffs in this case, Schumacher and Callicrate, have long contended that packer evil-doing was the reason cattle prices were not higher. They and others like them have consistently misunderstood or ignored basic economic principles of supply and demand. They have either refused to look beyond the feeder's loading chute in assessing the myriad factors affecting cattle prices or reasoned in Willie Suttonesque fashion that the nearest deep pockets to their chutes were the packers. Probably both factors motivated them.

But the bottom line is that beef production is a long chain from the bull and cow to the eater's plate. Meat processing is an essential link in that chain, just as raising calves, feeding cattle, aging beef, running a restaurant or retailing beef. All of those links are businesses. All of them are - or should be - constantly assessing and reassessing the consumer's requirements in terms of taste, price, tenderness, portion, color and cut. None of those links should have to constantly be looking over their shoulder to defend themselves against frivolous lawsuits being actually used to advance and fund populist agendas rather than redress real grievances.

The use of the legal system to harass businesses, using the Endangered Species Act, Environmental Protection Act, health regulations, perceived "rights" violations, "discrimination," anti-trust suits and the like are a plague affecting American life. These lawsuits cloak unmentioned agendas favoring increased government control, increased control by a self-appointed elite that feels it knows what's good for us and the dismantling of much of the economic system built over 200 years. Pressing and defending such lawsuits is a waste of national resources.

If the millions of dollars spent by radical cattlemen and their groups was added to that spent by government and corporations to defend themselves and had been spent instead on research improving beef consistency, or e. coli 0157:H7control or educating the public on the myths regarding livestock's "carbon footprint" or nutrition and health fallacies, something would have been accomplished. While these dollars are lost forever -- thanks to the radicals -- and those opportunities delayed, we will have to console ourselves for now that Appellate Courts do exist. But getting there is expensive and time consuming.

Email your comments to the author

{mos_sb_discuss:08}