Maryland District Court Refuses To Send Poultry Workers’ Claims To Chopping Block In Wage Fixing Class Action
On March 10, 2021, Judge Stephanie Gallagher of the United States District Court for the District of Maryland denied defendants’ motions to dismiss antitrust claims brought by a putative class of poultry workers asserting that poultry processing companies unlawfully exchanged compensation data and conspired to fix and depress employee wages. Jien v. Perdue Farms, Inc., No. 1:19-CV-2521-SAG (D. Md. March 10, 2021).
Plaintiffs brought an action on behalf of a putative nationwide class of former and current employees working for poultry processors. Defendants are fourteen competitor poultry producers that allegedly participated in several secret meetings where they shared compensation information and agreed to fix employee wages, in addition to two data consulting companies that allegedly assisted these poultry companies in sharing sensitive wage data and monitoring adherence to agreed-upon compensation levels.
Defendants filed four motions to dismiss plaintiffs’ Second Amended Complaint (“SAC”). Their first motion sought to narrow the scope of the suit by arguing that named plaintiffs lack standing to bring claims on behalf of certain categories of putative class members. The remaining three motions were filed by individual poultry processor defendants Jennie-O Turkey Store Inc., Mountaire Farms Inc., and Sanderson Farms Inc. (the “Individual Defendants”), each arguing that the SAC failed to state a claim as to their participation in the alleged conspiracy.
The Court began its analysis by addressing defendants’ motion arguing that named plaintiffs, who are exclusively hourly workers in chicken processing plants, did not have standing to bring class claims on behalf of salaried and turkey processing employees. Judge Gallagher noted split decisions on whether named plaintiffs who demonstrated individual standing also have standing to “pursue relief for injuries suffered by proposed class members that may differ from [their] own,” and whether that analysis should more appropriately occur at the class certification stage, when assessing commonality, typicality, and predominance requirements. Citing the Supreme Court’s decision in Gratz v. Bollinger, Judge Gallagher held that named plaintiffs had standing because the interests of the hourly chicken employees are not “significantly different” than those of the salaried and hourly turkey employees. Judge Gallagher explained that she had “already determined that plaintiffs have sufficiently pled the existence of a singular poultry labor market, irrespective of whether the workers are salaried or hourly, or work with chicken or turkey,” that was allegedly “impacted by the same exact anticompetitive conduct.” Therefore, named plaintiffs had sufficient personal stake in other class members’ claims, even where the class members were “from slightly different backgrounds.”
Determining that plaintiffs cured “group pleading” defects in their earlier allegations by amending claims to specifically identify the Individual Defendant entities that engaged in conspiratorial conduct, the Court proceeded to address the Individual Defendants’ challenges to the sufficiency of plaintiffs’ antitrust claims.
As to plaintiffs’ per se wage fixing claims, Individual Defendants argued that the SAC did not sufficiently tie them to the alleged conspiracy, such as by not identifying which particular off-the-books compensation meetings they attended or specifically alleging that they participated in wage fixing while attending those meetings. The Court disagreed, finding that plaintiffs’ allegations that Individual Defendants attended some of those meetings were sufficient, particularly because the Court had already found that another poultry producer’s executive statement established the plausibility of a wage-fixing conspiracy arising from these meetings.
Next, the Court turned to Individual Defendants’ challenges to plaintiffs’ rule of reason claims. Individual Defendants argued that these claims should be dismissed because they failed to sufficiently allege that Individual Defendants participated in an agreement to exchange wage information, or that the plausible effect of this agreement and defendants’ use of the information was to unreasonably restrain trade. Rejecting these assertions, Judge Gallagher found that plaintiffs successfully pled participation in the information exchange by alleging that Individual Defendants participated in secret meetings where extensive poultry processing wage data was exchanged. The Court also found that plaintiffs sufficiently pled anticompetitive effects by alleging that defendants used data consultants to monitor competitors’ compliance with the wage-fixing scheme and exchanged sensitive present and future compensation data with competitors. Accordingly, plaintiffs’ allegations regarding each Individual Defendant’s anticompetitive conduct were sufficient to state a rule of reason claim.
Finally, the Court addressed arguments from Jennie-O to limit the scope of the claims against it. Jennie-O argued that it should not be held liable for co-defendants’ pre-2015 conduct because there were no allegations that Jennie-O attended compensation meetings before 2015. Judge Gallagher disagreed, citing extensive Fourth Circuit precedent for the proposition that defendants are jointly and severally liable for co-conspirators’ conduct, regardless of their knowledge of co-conspirators’ actions or whether those actions occurred before defendants joined the conspiracy. Jennie-O also contended that its liability should be limited to conduct occurring within the four-year limitations period. The Court rejected this argument as well, finding that plaintiffs could seek recovery for harms incurred beyond that period due to allegations that Jennie-O fraudulently concealed its participation in the alleged secret meetings.
Concluding that plaintiffs met the pleading requirements at the motion-to-dismiss stage, Judge Gallagher denied all four motions to dismiss.