UPDATE
On December 2, 2020, the Court granted plaintiffs’ motion for class certification, ruling that plaintiffs have met all the requirements necessary to pursue their case against the defendant peanut shellers as a class action. The Court focused much of its ruling on the expert analysis submitted by plaintiffs, finding that the analysis contains plausible evidence in support of plaintiffs’ alleged conspiracy. Plaintiffs are now seeking approval from the Court for their plan to provide notice to all potential members of the class certified by the Court. Plaintiffs continue to vigorously prosecute their case and prepare for trial against the remaining, non-settling defendant Golden Peanut.
On September 5th, 2019, the antitrust team at Lockridge Grindal Nauen filed an antitrust lawsuit on behalf of peanut farmers against the two largest peanut shellers in the country, Golden Peanut and Birdsong. The complaint alleges that Birdsong and Golden Peanut coordinated with one another in violation of antitrust laws to underpay farmers for runner peanuts, the primary type of commercial peanut raised. As a result, peanut farmers have suffered from years of low payments for their crops.
In October and November 2020, the antitrust team at Lockridge Grindal Nauen announced that two defendants in this action, Birdsong and Olam, have agreed to settle plaintiffs’ claims against them for a total of $57.75 million. Birdsong agreed to settle for $50 million and Olam agreed to settle for $7.75 million. Plaintiffs have moved the court for preliminary approval of the settlements. Plaintiffs’ claims against the remaining defendant, Golden Peanut, are scheduled to go to trial on January 19, 2021, in federal district court in Norfolk, VA.
The antitrust team at Lockridge Grindal Nauen commenced this antitrust lawsuit in September 2019 on behalf of peanut farmers against the largest peanut shellers in the country, Golden Peanut Company and Birdsong Corporation. Plaintiffs later named a third peanut sheller, Olam Peanut Shelling Company, as a defendant. Our clients allege that instead of competing, Birdsong, Golden Peanut, and Olam coordinated with one another in violation of antitrust laws to underpay farmers for runner peanuts, the primary type of commercial peanut raised. As a result, peanut farmers have suffered from years of low payments for their crops.
Background
Peanut shelling companies play a crucial role in the peanut production process, as the overwhelming majority of peanuts are sold to shelling plants after harvest to be processed and packaged for food companies or other manufacturers.
Since January 2014, the prices farmers received from shellers for runner peanuts have remained remarkably low and stagnant, despite significant market changes and supply disruptions. The lawsuit alleges Birdsong and Golden Peanut began coordinating after the peanut industry experienced drastic weather-related price changes in 2011-2013 that made it difficult for those shellers to manage risk and plan for production. Among other things, beginning in at least 2014, Birdsong and Golden Peanut over-reported peanut and runner inventory numbers to the USDA to create a false impression of an oversupplied market. The defendants capitalized on the perceived oversupply to offer artificially low runner prices to farmers. The defendants also under-reported peanut and runner prices to the USDA to further suppress prices and keep them low and less volatile. Birdsong and Golden Peanut offer nearly identical shelling contracts to farmers, often within the same day of one another, to limit the negotiating power and pricing options for farmers.
The peanut shelling industry is particularly susceptible to antitrust conspiracies due to high consolidation within the industry and a lack of pricing transparency. Unlike other agricultural commodities, there is no futures market for peanuts. Instead, peanut prices are set through private contracting between shellers and farmers. As the dominant players holding 80-90% of the industry’s market share, Birdsong and Golden Peanut dictate the prices offered to peanut farmers.
On May 13, 2020, Judge Raymond A. Jackson denied defendants’ motions to dismiss class plaintiffs’ complaint, and held that class plaintiffs sufficiently alleged that the defendant peanut shelters colluded to suppress the prices they paid peanut farmers. On May 27, 2020, class plaintiffs amended their complaint to add Olam Peanut Shelling Company, Inc.
On September 4, 2020, plaintiffs filed a motion to certify the proposed class of peanut farmers who sold runner peanuts to the three defendant peanut shellers, Golden Peanut, Birdsong, and Olam, from at least January 1, 2014 through December 31, 2019. The motion remains pending.
On October 23, 2020, plaintiffs entered into a class action settlement agreement with Olam for $7.75 million in cash. On November 2, 2020, plaintiffs entered into a class action agreement with Birdsong for $50 million in cash. Plaintiffs filed motions for preliminary approval of both settlements, which are pending in court.
Trial for the remaining defendant, Golden Peanut, is currently set to begin January 19, 2021.
Are you a peanut farmer?
If you are a peanut farmer who sold peanuts to Golden Peanut or Birdsong since 2014, please contact us.
CONTACT
If you would like to discuss your legal options, please contact Joe Bruckner or Brian Clark at wjbruckner@locklaw.com, bdclark@locklaw.com, or at 612-339-6900.
ARTICLES & DOCUMENTS
1/15/2021
Op-ed piece on the peanut sheller monopoly.
12/14/2020
Media coverage of the case.
12-02-2020
Amended Class Cert Order
11-02-2020
Class Action Settlement Agreement Between Plaintiffs and Defendant Birdsong
11-02-2020
Motion for Preliminary Approval of Settlement with Defendant Birdsong
10-23-2020
Class Action Settlement Agreement Between Plaintiffs and Defendant Olam
10-23-2020
Motion for Preliminary Approval of Settlement with Defendant Olam
05-27-2020
Second Amended Complaint
05-14-2020
Order Denying Defendants’ Motions to Dismiss
09-05-2019
Peanut Farmer Antitrust Complaint
09-05-2019
Media Coverage of Case
09-05-2019
Media Coverage of Case