MARSHALL -- Pilgrim's Pride is facing allegations of violating the Fair Labor Standards Act from 41 East Texas families who are contracted to operate chicken farms for Pilgrim.
The suit claiming unfair and illegal acts was filed on Nov. 29 in the Marshall Division of the Eastern District of Texas.
As the second largest U.S. chicken producer, Pilgrim produces over six billion pounds of chicken meat per year. As an integrator, Pilgrim owns and operates the entire means of producing chicken meat, from breeding and hatcheries, to processing plants and distribution centers.
Plaintiffs believe that Pilgrim's size, wealth and market control have placed it in a position to misuse its economic power.
"Pilgrim has in fact misused that power, by violating its contracts with growers, committing violations of the Packer and Stockyards Act, committing violations of the Fair Labor Standards Act, committing widespread fraud, engaging in preferential treatment for insiders, manipulating its data and chick distribution and converting the assets of its growers," argues the plaintiffs' original complaint.
Plaintiffs state that the ongoing contracts they each entered required them to supply land, buildings, equipment, utilities and labor. In some cases these families took large loans to construct the necessary facilities.
Despite contractual obligations, the plaintiffs contend their relationship with Pilgrim is the employer-employee form. To apply under the Fair Labor Standards Act, plaintiffs are arguing they have been employees rather than independent contractors of Pilgrims as shown through defendants "supervision, management, direction, and control" of activities on the plaintiffs' farms. Demonstrating the employee argument, plaintiffs describe how Pilgrim sent supervisors called "service technicians" to micromanage how the broilers are feed, broiler house temperature and light amount, and other activities regarding the plaintiffs raising of boilers.
Plaintiffs state that if they did not comply, they would be written up and disciplined by the threatening of terminating contracts, actual termination of contracts, provided less healthy or inferior broiler chicks, and verbally insulted or intimidated.
As a contractual grower, the plaintiffs are provided boilers from the company-owned hatcheries and provided company-manufactured feed.
Plaintiffs state that Pilgrim designates the maturity date for each grower and determines the day for its employees to catch and transport the boilers to processing. Because of these regulations, plaintiffs state they have suffered serious economic loss by unfairly receiving inferior chicks, not enough or poor feed quality, and possible delay in Pilgrim's catching the boilers resulting in less quantity due to mature chicken death.
The East Texas families state they are not permitted to make a profit because of a carefully set contractual fee for mature birds.
After deducting labor, utilities, and debt service, plaintiffs are making little or no profit. Further, plaintiffs state Pilgrim is not fairly paying under contract details but requires the plaintiffs to make unnecessary, unproductive and expensive modifications to equipment.
In addition, Pilgrim is accused of showing favoritism with those retrofitted farms by providing superior broiler chicks and a higher Grower Ranking Report that is used to determine payments.
Plaintiffs state Pilgrim increased profits to Pilgrim CEO Bo Pilgrim and other Pilgrim insiders at the determent and loss to the plaintiffs' profits. Specifically, plaintiffs point out that Bo Pilgrim's LTD Farm is given illegal preferential treatment and compensation through a different pay formula.
The families insist they are prevented from switching to Tyson Foods, which hires from the same geographic area of Northeast Texas.
The families reason that Pilgrim and Tyson have created an economic environment that is lacking competition by each company refusing to hire the others former growers despite expertise or farm operations. Court documents define this condition as turning Pilgrim into a monopsonist Ã¯Â¿Â½ "a buyer that can exercise economic market control over sellers."
Other causes of action held against Pilgrim's Pride include Fair Labor Standards Violations as plaintiffs are employees are not independent contractors, fraud, deceptive trade practice violations through deception and preferential treatment, fraudulent non-disclosure and conspiracy by Bo Pilgrim, breach of contract, detrimental reliance and anticipatory breach of contract, conversion and recoupment, and action for accounting to verify propriety and veracity of Pilgrim's representations.
In addition, plaintiffs are seeking declaratory relief regarding contract details such as the payment system and an order prohibiting retaliation, economic punishment, threats, and intimidating tactics against the plaintiffs.
Plaintiffs are requesting a trial by jury and are represented by Marshall attorneys Mike Miller and Lisa Andrews and Dallas attorney Mark Broudeur.
Judge T. John Ward will preside.
Case No.: 2:07cv00522