Copyright 2001 The Omaha World-Herald Company  
Omaha World Herald (Nebraska)
December 28, 2001, Friday MIDLANDS EDITION
SECTION: NEWS; Pg. 1a;

LENGTH: 708 words

HEADLINE: Cattle feeders score legal win Producers who allege IBP has too much control over pricing are given class-action status.

BYLINE: By Bill Hord

SOURCE: WORLD-HERALD BUREAU

DATELINE: Lincoln

BODY:
In a 5-year-old lawsuit seeking to change how the livestock industry operates, a federal judge has handed cattlemen a major legal victory over packing giant IBP Inc. by giving the case class-action status.

Senior U.S. District Judge Lyle Strom of Omaha issued the ruling Wednesday in Montgomery, Ala., where 10 cattlemen brought the lawsuit in 1996.

The suit alleges that IBP controls cattle to the point that prices paid to producers in daily cash sales are pushed lower.

The lawsuit addresses one of the more contentious issues in agriculture today - whether forward-contracting and special deals in buying livestock squeeze profits from producers who sell the old-fashioned way, by taking bids from buyers on a weekly, or even daily, basis.

If the case goes to trial, it will be the first with class-action status under the Packers and Stockyards Act, which was adopted in 1921 to ensure fair play in a meatpacking industry that was becoming increasingly concentrated in a few hands.

"This is great," said Bob Rothwell, 45, of Hyannis, Neb., one of the plaintiffs. "This is a big case. If we win, it is really going to change the (economic) scenery."

IBP has argued that fluctuations in cattle prices are due to basic supply and demand, not concentration in the meatpacking industry or the livestock marketing agreements under which it buys many of its cattle.

"While we are disappointed with the latest development in this long-running case, we remain confident our company will ultimately prevail," said Gary Mickelson, an IBP spokesman.

The livestock industry has been watching the case for years as producers and policy-makers have wrestled with antitrust questions in meatpacking. Eighty percent of U.S. beef packing is concentrated in four companies, and IBP is the largest.

"Even the fact that this case has been certified as a class-action lawsuit could add some boost to new legislation for more competition in the livestock industry," said Neil Harl, an Iowa State University agricultural law expert.

Just two weeks ago, the U.S. Senate rejected an amendment to a proposed farm bill that would have limited the ability of packers to contract for cattle in advance of delivery. Similar amendments could be considered again when the farm bill debate resumes in 2002.

Similar amendments could be considered again when the farm bill debate resumes in 2002.

Cattlemen say only about 30 percent of cattle now go to packers through a traditional bidding process, either at auction markets or by direct negotiations. In the lawsuit, they allege that the "captive" supply gives IBP leverage to reduce cash prices.

Rothwell said that bidding often boils down to one "take-it-or-leave-it" price per week. "There needs to be more competitive bidding," he said.

Strom's ruling means that the potential financial payoff - if there is a settlement or a victory at trial - could warrant the expense of going to trial. If plaintiffs win, their lawyers' fees will be set by Judge Strom.

"If an appeal is denied, we expect we will be in trial in Montgomery by fall," said Nora Kane, a lawyer for Domina Law in Omaha, one of five firms representing cattlemen in the case.

IBP was still reviewing the decision to determine whether to appeal, said Gary Mickelson, IBP spokesman. The company won a reversal of an earlier Strom approval of class-action status.

The company won a reversal of an earlier Strom approval of class-action status.

IBP was acquired in late September by Tyson Foods Inc. of Springdale, Ark.

Strom is hearing the case because, as a senior judge, he is free to handle cases across the country.

The new definition of the "class" as approved by Strom has been refined to include only producers who sold cattle exclusively on the "cash" market and to exclude anyone using contracts.

In the process, four of the original 10 plaintiffs have been dropped from the case because they did not meet the new definition. Among those remaining is widely known anti-packer crusader Mike Callicrate of St. Francis, Kan.

"This is the best news for fair markets since the Packers and Stockyards Act was passed in 1921," Callicrate said. "This means we get to put this case before a jury."



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