Fort Smith-based O.K. Industries Inc. must pay a $14.51 million judgment to Oklahoma poultry farmers after the U.S. Supreme Court declined Monday to hear the company’s appeal of a class-action lawsuit.
The court made no comment in refusing to hear the case and, as a result, upholding the decision for the 10th Circuit Court of Appeals that upheld a 2008 jury verdict in the suit.
O.K. Foods Inc. is the poultry processing subsidiary of O.K. Industries.
O.K. Industries’ attorney, Don Smith of Smith, Cohen & Horan PLC of Fort Smith,said Tuesday that the courts’ refusal to consider the appeal was disappointing.
Oklahoma City attorney Charles B. Goodwin of Crowe & Dunlevy PLC, which represented the farmers, said in an e-mailed statement that he was very pleased that the jury verdict had been upheld.
Goodwin said in the release that the next step in the case would be for the trial court to consider the method of allocating the money to the various class members and the percentage of the judgment to be awarded as attorneys’ fees.
The original suit, filed in 2002 by Oklahoma poultry farmers who contracted with the company to supply chickens, claimed the contracts were anti-competitive and violated the Packers and Stockyards Act.
The farmers argued that O.K. Industries used its economic power as the only area poultry buyer to manipulate a lower price for chickens raised under the contracts.
O.K. Industries had argued that the farmers failed to prove the company engaged in unfair practices, that its actions injured consumers or that it had sufficient power to manipulate the market.
O.K. Foods produced 2 percent of the United States’ supply of chicken at the time of the trial, according to Watt Poultry USA, an industry publication.
A federal jury in the Eastern District of Oklahoma court in Muskogee found in favor of the farmers and awarded them $21.1 million, an amount the judge lowered to $14.51 million. The farmers contended during the trial that they could have earned an additional $12.39million to $14.51 million under fairer contracts.
The award was unanimously upheld in October 2010 by a three-judge panel of the 10th Circuit Court of Appeals in Denver.
In December 2009, the Grain Inspection, Packers and Stockyards Administration outlined proposed changes to the way vertically integrated poultry processors do business with the farmers who raise the birds.
Touted by Secretary of Agriculture Tom Vilsack as a move to increase the fairness and equity between farmers and processing companies, the changes outlined the rights farmers have to discuss contracts with advisors, get contracts in writing, be notified of reasons for performance improvement requirements, and get cancellation notification in writing with 90 days’ warning.
Business, Pages 25 on 05/04/2011