East Texas poultry growers sue Pilgrim's

By LYNN MONTGOMERY | East Texas Edition

July 11, 2002 -- A federal class action lawsuit filed July 1 against Pilgrim's Pride alleges the No. 2 poultry company has engaged in conduct that is "manipulative, coercive, fraudulent, overreaching, deceptive and unfair."

Don Davis, Davey Williams and Cody Wheeler, three East Texas contract chicken growers, brought the suit against Pilgrim's on behalf of thousands of Pilgrim's Pride farmers nationwide.

The lawsuit was filed in federal court in Texarkana.

"This is a class action complaint" and if the three representatives (Davis, Williams, and Wheeler) meet the requirements during a court hearing, then the suit will represent thousands of growers," according to Nicholas Patton, a lawyer with Patton & Tidwell, Texarkana, who is handling the case for the plaintiffs.

Williams and Wheeler are current contract growers for Pilgrim's, whereas Davis is a past grower.

"The suit is without merit," said Cliff Butler, Pilgrim's Pride vice chairman, on July 5.

"We have a waiting list of people who want to become growers for Pilgrims," Butler added. "Obviously, we treat them pretty well, or we wouldn't have this list."

Surveys, according to Butler, done by Purdue University show over 75 percent of growers are satisfied.

But the three East Texas growers believe Pilgrim's is in violation of the Packers and Stockyards Act.

"We (company's operation procedures) are inspected and pass with flying colors," Butler said in regards to the Packers and Stockyards Act.

According to the lawsuit, growers and Pilgrim's entered into a poultry growing arrangement for grow-out of live poultry. Pilgrim's represented to the growers that Pilgrim's considered the growers to be partners.

Pilgrim's operates as a vertically integrated company, which means it controls the production, processing and distribution of the chickens. Pilgrim's owns and operates the hatcheries, feed mills, processing plants and distribution centers. Pilgrim's also owns and supplies the contract growers the birds, feed and medicine to the growers. The growers provide the land, buildings, equipment, utilities and labor in growing the birds, according to the lawsuit.

The growers have invested 50 percent of the capital costs, but have no influence upon the terms of the arrangement or the grow-out of the birds, continued the lawsuit's complaints.

"They control it all," stated Kelly Tidwell, attorney for the growers. "Right down to how they (the growers) are paid."

The growers say Pilgrim's discriminates between growers who have tunnel ventilation (cool cell) and those who have conventional ventilation. Williams and Wheeler have conventional ventilation.

Pilgrim's states that they offer incentives for growers who make the changes suggested, such as converting to cool cell houses.

"We offer a financial incentive for growers who convert to cool cell," Butler said.

If the growers convert, Pilgrim's pays them a half-of-a-cent more per pound for broilers, according to Butler.

According to Wheeler, "Converting a conventional house to tunnel would cost in excess of $30,000 per house, and even with the increase in pay, it is not economically feasible to make the conversion."

Converting to cool cell, according to Butler, would increase density (which means more chickens can be put into a house), chickens grow-out quicker, therefore a grower increases profit.

The growers, who compete for a predetermined amount of money and are paid based on a ranking system, state that there are too many variables that determine the pay to the growers. In addition, Pilgrim's controls these variables.

The lawsuit could affect between 3,000 and 4,000 growers. One, of which, is Butler.

"I have been a contract grower for 16 years and it has been an excellent investment for me and my family," Butler said.

Wheeler and Williams have also asked for a preliminary injunction against Pilgrim's from altering the status quo of their current and ongoing business relationship.

Pilgrim's Pride has 30 days in which to respond to the lawsuit.