Morris et al v. Tyson Chicken Inc et al
Filing
267
OPINION AND ORDER: For the reasons explained in the accompanying opinion, the Court denies Tyson's motion to reconsider or certify for interlocutory appeal the partial denial of Tyson's motion to exclude (DN 253 ) and the partial denial of Tyson's motion for summary judgment (DN 252 ). cc: Counsel (JM)
Case 4:15-cv-00077-BJB-HBB Document 267 Filed 01/06/22 Page 1 of 8 PageID #: 9031
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
OWENSBORO DIVISION
Charles Morris, et al.
Plaintiffs
v.
No. 4:15-cv-77-BJB
Tyson Chicken, Inc., et al.
Defendants
* * * * *
MEMORANDUM OPINION & ORDER
Several farmers who raise chickens for Tyson’s poultry plant in Robards,
Kentucky sued for breach of contract and violations of the Packers and Stockyards
Act. Tyson moved for summary judgment (DN 210) and to exclude the Plaintiffs’
economics expert, Dr. Stiegert (DN 175). Judge McKinley granted summary
judgment on most of the contract claims. But he largely declined to exclude Dr.
Stiegert’s opinion testimony and relied on it to hold that genuine issues of material
fact remained for the statutory claims. MSJ Order (DN 246), Daubert Order (DN
247).
Tyson moved to reconsider the denials or certify the issues for interlocutory
appeal. DNs 252, 253. The case was then reassigned, DN 254, requiring a new judge
to assess whether the previous judge, who had presided over this case for several
years, had clearly erred. Revisiting prior rulings or pausing a case for an early
appeal, however, demands a strong showing of error and efficiency. At this stage, the
Court cannot say that Judge McKinley clearly erred in any of his rulings, or that the
immediate intervention of the Court of Appeals would meaningfully speed this
litigation. So the Court denies both motions.
ANALYSIS
District courts have inherent authority, codified in Rule 54(b), to “reconsider,
rescind, or modify an interlocutory order for cause seen by it to be sufficient.”
Leelaneu Wine Cellars, Ltd. v. Black & Red, Inc., 118 F. App’x 942, 946 (6th Cir. 2004);
Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 F. App’x 949, 959 (6th Cir.
2004). That said, courts typically view motions for reconsideration with some
skepticism, asking whether they identify “(1) an intervening change of controlling
law; (2) new evidence available; or (3) a need to correct a clear error or prevent
manifest injustice.” Louisville/Jefferson Cty. Metro Gov’t v. Hotels.com, L.P., 590
F.3d 381, 389 (6th Cir. 2009) (quoting Rodriguez, 89 F. App’x at 959); Vaughn v.
Hawkins, 2018 WL 2210873, at *3 (W.D. Ky. May 14, 2018) (applying this standard).
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Similarly, certifying an interlocutory appeal generally requires an “exceptional
and extraordinary” showing. In re Big Rivers Elec. Corp., 266 B.R. 100, 104 (W.D.
Ky. 2000); Kraus v. Bd. of County Rd. Comm’rs for Kent County, 364 F.2d 919, 922
(6th Cir. 1966). Courts ask whether “[1] the order involves a controlling question of
law to which there is [2] substantial ground for difference of opinion and ... [3] an
immediate appeal may materially advance the termination of the litigation.” In re
Trump, 874 F.3d 948, 951 (6th Cir. 2017) (quoting 28 U.S.C. § 1292(b)).
In this case the only plausible grounds for reconsideration is “a need to correct
a clear error.” Hotels.com, L.P., 590 F.3d at 389. The request for an interlocutory
appeal faces a similarly high hurdle: substantial grounds for disagreement with the
prior ruling. In re Trump, 874 F.3d at 951; In re Miedzianowski, 735 F.3d 383, 384
(6th Cir. 2013) (substantial grounds generally rest on a split among courts or a lack
of precedent). Either showing would be difficult here because both orders turn in
large part on Judge McKinley’s discretionary rulings on evidentiary questions under
Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993), which affords trial
judges “considerable leeway,” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152
(1999). Motions to exclude are rarely appropriate for interlocutory appeal.
Rembrandt Soc. Media, LP v. Facebook, Inc., 561 F. App’x 909, 911 (Fed. Cir. 2014)
(denying interlocutory appeal of Daubert ruling even though the district court
certified and the parties requested it). And the Sixth Circuit has observed that an
“allegation of abuse of discretion on an evidentiary ruling does not create a legal issue
under § 1292(b).” In re City of Memphis, 293 F.3d 345, 351 (6th Cir. 2002). Even
assuming the legal rulings at issue in the MSJ Order were to raise substantial
grounds for disagreement, moreover, their interlocutory examination by the Court of
Appeals would need to speed the termination of this long-running litigation—another
high bar for Tyson. See id. (evidentiary rulings rarely materially advance the case).
A. Challenges to Dr. Stiegert’s opinions
Tyson contends that Judge McKinley clearly erred when he declined to exclude
several opinions Dr. Stiegert disclosed in his report: (1) Tyson’s Robards complex was
a “monopsony” (the only buyer in a relevant market), (2) damages could be calculated
by comparing a hypothetical but-for world, (3) Tyson would have fewer “days-out” in
a competitive market, (4) Tyson would pay growers a percentage of its gross margins,
and (5) Tyson would weigh condemned birds differently. Motion to Reconsider (DN
253) at 1–2.1 For all of these opinions, Judge McKinley acknowledged Tyson’s various
concerns but held that they went to the weight of the evidence, not its admissibility,
and could be appropriately addressed on cross-examination rather than through
Tyson styled its motion in response to the summary-judgment order as a motion to
certify the decision for interlocutory appeal or, in the alternative, to reconsider the decision.
DN 252. Its motion in response to the Daubert Order is styled as a motion to reconsider or,
in the alternative, to certify for interlocutory appeal. DN 253. For ease of reference, this
Order refers to the former as the Motion to Certify and the latter as the Motion to Reconsider.
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exclusion. DN 247 at 5–13. Given the discretion inherent in each decision under
Daubert, the Court cannot say that Judge McKinley clearly erred. United States v.
Reynolds, 626 F. App’x 610, 614 (6th Cir. 2015); Kumho Tire, 526 U.S. at 141.
1. Competition. Tyson argues that Stiegert incorrectly concluded that the
Robards facility was a monopsony, given that its competitor Perdue operates a facility
33 miles away in Livermore. Stiegert Report (DN 180) ¶ 73. The motion to reconsider
(at 11–18) contends Stiegert’s opinion impermissibly relied on Plaintiffs’ depositions,
cherry-picked a low number of “switches” by plaintiff-farmers (as opposed to all
chicken farmers) between the two facilities, and ignored contrary evidence. But
Judge McKinley’s order identified several pieces of evidence Stiegert relied on to
reach his conclusion, including a low level of switching overall between facilities and
long “days out” (the time between new chicks). Daubert Order at 5–6. Indeed,
Stiegert’s report explains that most of the switches in question involved farmers
coming to Tyson, and that returning to Perdue may be impractical: Perdue is not
contracting with new farmers, limits the number of chickens it will take, and (like
Tyson) requires huge investments in coops that farmers must build to its own
specifications. Stiegert Report ¶¶ 73–85. And Perdue is moving toward free-range,
organic, and other types of chickens that are different enough to make switching even
harder. Id. ¶ 75; see also In re Processed Egg Prods. Antitrust Litig., 312 F.R.D. 124,
153 (E.D. Pa. 2015) (“Free-range and cage-free eggs, for example, could require more
capital per egg to produce”).
Moreover, the evidence of switching and long “days out” were not the only ways
in which Stiegert said Tyson exercised monopsony power to the detriment of farmers.
The expert report also asserts that Tyson controls the inputs (chicks, feed, and more),
used a tournament pay system (in which farmers compete with one another) that
reduced farmer compensation, and condemnation practices (deducting pay for
inadequate birds), all of which Stiegert says reflect monopsony power. Stiegert
Report ¶¶ 46–62 (input control); 90–96 (tournament system); 98–99, 102
(condemnation); 105–07 (days out). Some of Tyson’s concerns and counterarguments
are already addressed in Steigert’s supplemental report. He acknowledged that some
farmers switched to Perdue, but contended these instances were infrequent and
increasingly impractical; he also opined that the farmers couldn’t repurpose their
investments in an economical manner if they left the chicken industry. Stiegert
Supplemental Report (DN 180-2) ¶¶ 23–34 (responding to the report of Prof.
Thurman on behalf of Tyson). Judge McKinley’s decision to allow this testimony was
reasonable. Whether a jury accepts it, despite Tyson’s critiques and the opinions of
its own witnesses, is of course a very different question.
2. Damages. Tyson also revives a number of criticisms Judge McKinley
rejected regarding Stiegert’s damages calculations.
First, Stiegert allegedly should have used real-world comparators or a set of
previously accepted methods for determining damages rather than a hypothetical
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“but-for” world in which chicken integrators compete for the services of chicken
farmers. Motion to Strike (DN 175) at 10–12; Motion to Reconsider at 3–11. His
approach of comparing the current (allegedly anticompetitive) state of affairs to a
hypothetical (allegedly competitive) but-for world, however, is a central aspect of
assessing antitrust damages. “Damages calculations in antitrust cases seek to
compare plaintiffs’ actual experience in the real world with what the plaintiffs’
experience would have been, ‘but for’ the antitrust violation.” In re Pool Prod. Distrib.
Mkt. Antitrust Litig., 166 F. Supp. 3d 654, 678 (E.D. La. 2016) (citing ABA Section of
Antitrust Law, Antitrust Law Developments 783 (7th ed. 2012)).
Judge McKinley’s conclusion on this evidentiary question was understandable:
as long as the expert uses a reasonable benchmark for constructing the hypothetical
“but for” world, courts have allowed opinion testimony utilizing this method. See,
e.g., Cason-Merenda v. Detroit Med. Ctr., No. 06-15601, 2013 WL 1721651, at *3 (E.D.
Mich. Apr. 22, 2013) (allowing but-for damages analysis of agency-nurse fees to
estimate increase in wages in hypothetical market with competition). Although realworld comparators may perform better in some circumstances, hypothetical
constructs are permissible. See In re Se. Milk Antitrust Litig., No. 2:08-md-1000, 2010
WL 8228839, at *4–5 (E.D. Tenn. Dec. 8, 2010) (rejecting argument that but-for
method should be disregarded since it relied on hypothetical assumptions rather than
real-world comparators); In re Nw. Airlines Corp. Antitrust Litig., 197 F. Supp. 2d
908, 925–26 (E.D. Mich. 2002) (same). As a result, Judge McKinley declined to “reject
Stiegert’s use of a but-for methodology generally,” but noted he would “examine how
Stiegert applies the principle to each damage calculation,” given that Tyson’s
criticisms largely “go to the weight of Stiegert’s opinions and not their admissibility.”
Daubert Order at 8.2
Second, Tyson complains that Stiegert assumed a base level of days out
without comparing its practices to competitors like Perdue with longer days out.
Motion to Reconsider at 8–10. As Judge McKinley pointed out, however, Stiegert
relied on plaintiffs’ sworn affidavits, which indicate Tyson represented that its days
out would be 10 to 14 days in the summer and 14 to 21 in the winter. Daubert Order
at 13 (citing Stiegert Report ¶ 127). Stiegert’s damages model merely averaged those
ranges for consistency: 12 and 17.5 days. Id. (citing Stiegert Report ¶ 130). He further
Tyson relied heavily on In re Processed Egg Prod. Antitrust Litig., 312 F.R.D. 124, 154–
56 (E.D. Pa. 2015), in which the court excluded parts of Stiegert’s “but for” methodology
offered to prove predominance in support of class certification. DN 175 at 12–13. Tyson
contends that class-cert analysis was similar to the admissibility question raised here. Id.
The court’s reasoning in Processed Egg, however, focused on Stiegert’s failure to account for
several important variables, and didn’t conclude his but-for methodology was per se
inadmissible. Processed Egg, 312 F.R.D. at 153. And the court accepted other but-for
methods dealing with flock size, which (like here) defendants criticized for not using realworld comparators. Id. at 154–57. If anything, therefore, the Processed Egg decision
supports Judge McKinley’s reasonable exercise of his discretion at the Daubert stage.
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relied on company and public data regarding the actual days out. Stiegert Report ¶¶
106, 127–134. Those days out, according to Stiegert, were longer and more erratic
than Tyson had represented. Id. And when the days out increase, the farmers receive
fewer chicks and thus less profits. Id. ¶ 105. So the difference between the
represented and actual days out could be a fair estimate of potential damages from
anti-competitive activities. Tyson may yet identify better evidence that Stiegert and
the plaintiffs could or should have provided, but that does not mean this evidence is
inadmissible or the prior ruling clearly erroneous. See Daubert, 509 U.S. at 596; Ne.
Ohio Coal. for Homeless v. Brunner, 652 F. Supp. 2d 871, 877 (S.D. Ohio 2009)
(declining to find clear error and “re-litigate issues previously considered”).
Third, Tyson complains that Stiegert calculated base-pay damages by
assuming that Tyson should pay farmers more than 30% of its gross margins, “[g]iven
that the growers have been estimated to contribute approximately half of the capital
and vast majority of the labor associated with the production of a whole chicken.”
Daubert Order at 10–11 (quoting Stiegert Report ¶ 122); see Motion to Reconsider at
3–6. Stiegert’s opinion is questionable, and as yet apparently unsupported by
corroborating evidence that this or related industries would, in a competitive
environment, pay suppliers a share of gross margin. See First Stiegert Dep. (DN 2531) at 194:1–196:24 (unable to identify any such industry). Nor does Stiegert explain
why the pay of farmers serving one particular facility should correlate to the gross
margins of Tyson’s entire operations worldwide, in which margins presumably differ
significantly by sector and location. See Stiegert Report at Table 11, n. 157; Elcock v.
Kmart Corp., 233 F.3d 734, 756 (3d Cir. 2000) (excluding economist’s damages model
that made empirical assumptions not based in the record). If this question remains
live as trial approaches, the Court may be willing to reevaluate this proposed
testimony in response to an objection or a motion in limine that provided a fuller
picture of the admissible evidence, the probativity of this specific testimony, its
potential for prejudice, and countervailing expert testimony. See, e.g., United States
v. Semrau, 693 F.3d 510, 523 (6th Cir. 2012) (discussing interaction of FED. R. EVID.
403 and Daubert). On the current record, however, the decision not to exclude the
opinion in full and in advance was not clearly erroneous.
Similarly, Tyson contests the reliability of and real-world support for Stiegert’s
opinion that condemned birds (which reduce a farmer’s compensation) should be
assigned a weight at 50% of the flock’s average. Motion to Reconsider at 6–9. Stiegert
opined that “it is common knowledge that condemned birds weigh approximately fifty
percent of the weight of a healthy bird.” Stiegert Report ¶ 123. Not that common.
But Stiegert didn’t pluck the 50% figure out of thin air; he relied on an old study that
described diseased and condemned birds as weighing 50% of an average bird. Stiegert
Supplemental Report at ¶ 116 (citing Ansong-Danquah J, A Survey of Carcass
Condemnation at a Poultry Abattoir and its Application to Disease Management, 28
CAN. VET. J. 53, 55 (1987), which asserts that “the producer is charged for birds of a
given weight when, in fact, the majority of these birds may be half this weight”).
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Tyson’s motion leans heavily on Judge McKinley’s decision to exclude a related
damages calculation premised on chicken farmers receiving pay for condemned birds
that Tyson could still use to make dog food. Daubert Order at 12. Stiegert, the Court
ruled, did not show that anyone else paid for such meat. Id. Nor, Tyson now
contends, has he shown that any poultry processor pays half for sick birds. Motion to
Reconsider at 8. Judge McKinley’s contrary conclusion, however, is not clearly
erroneous: unlike Stiegert’s dog-food opinion, his half-bird opinion at least rests a
journal article. Whether some other weight (or no weight) for condemned birds is
more appropriate is quite likely a question on which Tyson may offer witnesses and
evidence in rebuttal. But this evidentiary ruling, too, could conceivably be revisited
through a timely objection or motion in limine that explains the potential probativity,
prejudice, and reliability of Stiegert’s view in light of related evidence and testimony.
See, e.g., Semrau, 693 F.3d at 523.
B. Packers and Stockyards Act
Tyson argues that the summary-judgment ruling either lacked precedential
support or legally erred in three ways. But none of the concerns it raises amount to
clear error or otherwise support interlocutory review. Motion to Certify (DN 252) at
1–2.
1. Specific practices likely to injure competition. First, Tyson complains
that Judge McKinley held that the mere status of monopsony meant the Robards
plant was likely to injure competition. This misconstrues the opinion, which did not
rely solely on Tyson’s alleged monopsonist status. Motion to Certify at 5–9. Tyson is
right that every circuit has interpreted the Packers and Stockyards Act, 7 U.S.C. §§
181–229, to require plaintiffs to show that “specific practices” of the defendant “have
the effect of injuring competition or are likely to do so.” Been v. O.K. Indus., Inc., 495
F.3d 1217, 1231 (10th Cir. 2007). See also id. at 1234 (“We are by no means
suggesting that vertically integrated markets will always violate the PSA. Rather,
we hold that § 202(a) is violated when a monopsonist engages in specific practices
that result in or are likely to result in the anticompetitive effects the PSA was
designed to prevent.”); Terry v. Tyson Farms, Inc., 604 F.3d 272, 277, 279 (6th Cir.
2010) (“those practices that will likely affect competition adversely”) (collecting
cases).
Judge McKinley’s order is consistent with this caselaw. It determined that
Stiegert’s opinion provided enough evidence to conclude that Tyson did or was likely
to harm competition based on its alleged monopsonist status and several of its
practices that could lower pay, reduce supply, and affect prices. MSJ Order at 5–7.
The order pointed to proffered expert testimony that Tyson controlled the input for
the farmers, kept pay low through a tournament system, maintained condemnation
and days-out policies that suppressed competition, required heavy up-front
investments to gain leverage over farmers, and more. Id. (citing Stiegert Report ¶¶
18, 62, 91, 96–97, 99, 105, 107, 108); see also Stiegert Report ¶¶ 41–61, 84, 87). This
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is evidence of “specific practices” that a reasonable jury could find “likely” to injure
competition. See id.; Been, 495 F.3d at 1234–35 (considering similar expert testimony
under the Act).
2. Likely adverse competitive impact. Tyson further contends that no
court has ever relied solely on the likelihood of an injury to competition, rather than
an actual injury, to support a PSA violation. Motion to Certify at 9–11. This is
incorrect. Judge McKinley’s order tracked the Sixth Circuit’s phrasing of the harm
requirement in just these terms: The PSA “does not require that the Secretary prove
actual injury before a practice may be found unfair. The Secretary need only
establish the likelihood that an arrangement will result in competitive injury to
establish a violation.” Parchman v. U.S. Dep’t Agric., 852 F.2d 858, 864 (6th Cir.
1988). And many other courts have long formulated (and applied) the statutory
standard for finding an antitrust violation in this manner. See, e.g., Been, 495 F.3d
at 1231 (“effect of injuring competition or are likely to do so”); Terry, 604 F.3d at 277
(“those practices that will likely affect competition adversely”); De Jong Packing Co.
v. U.S. Dep't of Agric., 618 F.2d 1329, 1337 (9th Cir. 1980); IBP, Inc. v. Glickman, 187
F.3d 974, 977 (8th Cir. 1999); Armour & Co. v. United States, 402 F.2d 712, 722 (7th
Cir. 1968); Breaking Free, LLC v. JCG Foods of Ala., LLC, No. 4:18-cv-1659, 2019 WL
1513978, at *5 (N.D. Ala. Apr. 8, 2019) (“[T]enuous” allegations “that Defendants’
acts are likely to harm competition” are sufficient). Tyson’s argument that the legal
standard applied on summary judgment lacked support in precedent identifies no
clear error.
3. Competition among farmers and “integrators” like Tyson and
Perdue. Finally, Tyson argues that only an adverse effect on other integrators—not
farmers—can support a violation. Motion to Certify at 11–12. The briefs identify no
general principle of antitrust law suggesting that an injury or anti-competitive effect
is relevant here only if it concerns direct competition. And even so, this particular
competition law is written broadly to protect farmers, not just the packers and
stockyards whose business practices it regulates. As the Supreme Court held back in
1922, the “chief evil” addressed by the PSA was the monopolistic practices of the
packers, “enabling them unduly and arbitrarily to lower prices to the shipper, who
sells, and unduly and arbitrarily to increase the price to the consumer, who buys.”
Stafford v. Wallace, 258 U.S. 495, 514–15 (1922). The Act also “safeguard[s] farmers
and ranchers against receiving less than the true market value of their livestock.”
Bruhn’s Freezer Meats of Chicago, Inc. v. U.S. Dep’t Agric., 438 F.2d 1332, 1337 (8th
Cir. 1971); see also Swift & Co. v. United States, 393 F.2d 247, 254 (7th Cir.1968).
In Been v. O.K. Industries, on which Tyson places great weight, the Tenth
Circuit held that a poultry integrator was a monopsony that could harm the chicken
farmers it purchased from. 495 F.3d at 1231–33. The evidence included expert
testimony that the integrator controlled the inputs for the farmers, could decrease
their pay and supply, and wielded market power over consumer prices. Id. at 1234.
So the Tenth Circuit affirmed the denial of summary judgment because “the record
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contains evidence of the classic monopsony injury, namely that [the integrator] is
depressing the prices it pays the Growers and reselling at inflated prices.” Id. at 1233
(emphasis added). The potential injuries, evidence, and concerns regarding the
farmers and consumers at issue in Been appear practically identical to those raised
in this case.3 Judge McKinley did not clearly err or implicate any substantial ground
for disagreement in focusing on the harm to the farmers.
ORDER
The Court denies Tyson’s motion to reconsider or certify for interlocutory
appeal the partial denial of Tyson’s motion to exclude (DN 253) and the partial denial
of Tyson’s motion for summary judgment (DN 252).
January 6, 2022
Tyson relies on In re Pilgrim’s Pride Corp., 728 F.3d 457, 462 (5th Cir. 2013), for the
idea that only harms to direct competitors count for competition. But that decision rested on
a factual determination that the producer attempted to raise consumer prices because it had
overextended and lowered prices too much, not to accomplish any anti-competitive gain
relative to other producers. Id. The court’s ruling did not turn on who suffered the injury.
In fact, Pilgrim relied on the PSA’s object “to secure the flow of livestock from the farms and
ranges to the slaughtering center and into meat products unburdened by collusion that
unduly lowered the prices to the shipper and unduly increased the price to the consumer.”
Id. at 460 (quoting Wheeler v. Pilgrim’s Pride Corp., 591 F.3d 355, 357 (5th Cir. 2009)) (en
banc). Tyson cannot rely on this precedent to narrow the conception of relevant competition.
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