throbber
Case 9:21-cv-80424-XXXX Document 1 Entered on FLSD Docket 02/26/2021 Page 1 of 81
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF FLORIDA
`
`Case No.: 9:21-cv-80424
`
`CHENEY BROTHERS, INC.,
`
`Plaintiff,
`
`v.
`
`AGRI STATS, INC., CLEMENS FOOD
`GROUP, LLC, THE CLEMENS FAMILY
`CORPORATION, HORMEL FOODS
`CORPORATION, HORMEL FOODS, LLC,
`JBS USA FOOD COMPANY, SEABOARD
`FOODS LLC, SMITHFIELD FOODS, INC.,
`TRIUMPH FOODS, LLC, TYSON FOODS,
`INC., TYSON PREPARED FOODS, INC., AND
`TYSON FRESH MEATS, INC.,
`
`Defendants.
`
`COMPLAINT AND DEMAND FOR JURY TRIAL
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`

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`Case 9:21-cv-80424-XXXX Document 1 Entered on FLSD Docket 02/26/2021 Page 2 of 81
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`(cid:55)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)
`
`I.
`
`II.
`
`III.
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`NATURE OF ACTION ...............................................................................................1
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`JURISDICTION AND VENUE ..................................................................................4
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`PARTIES ....................................................................................................................5
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`A. Plaintiff ...........................................................................................................................5
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`B. Defendants ......................................................................................................................5
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`(i)
`
`(ii)
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`Agri Stats .................................................................................................................5
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`Clemens ...................................................................................................................5
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`(iii) Hormel .....................................................................................................................6
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`(iv)
`
`(v)
`
`(vi)
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`JBS ..........................................................................................................................6
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`Seaboard ..................................................................................................................7
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`Smithfield ................................................................................................................7
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`(vii) Triumph ...................................................................................................................7
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`(viii) Tyson .......................................................................................................................7
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`IV.
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`FACTUAL ALLEGATIONS ......................................................................................8
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`A. Agri Stats’ central role in collusion in the Broiler industry. ..............................................8
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`B. Agri Stats markets its collusive scheme to Defendants. .................................................. 10
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`C. Agri Stats provided the Other Defendants the unique ability to monitor pricing and
`production and discipline co-conspirators that did not comply with the anticompetitive
`agreement. ............................................................................................................................. 13
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`D. Defendants controlled the supply and production of pork in the United States, which
`allowed the scheme to succeed. ............................................................................................. 21
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`E. The level of concentration in the pork industry was optimal for Defendants’ collusive
`scheme. ................................................................................................................................. 25
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`F. The inelastic demand for, and homogeneity of, pork products facilitated collusion. ....... 31
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`G. Defendants took advantage of numerous opportunities to collude. ................................. 32
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`H. Defendants implemented capacity and supply restraints during the Relevant Period....... 40
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`I. Abnormal pricing during the Relevant Period demonstrates the success of the collusive
`scheme. ................................................................................................................................. 60
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`J. Overcharges due to the cartel were reflected in higher pork prices than what they would
`have been absent the conspiratorial activity. .......................................................................... 65
`
`K. Plaintiff’s Claims are Timely ......................................................................................... 69
`
`V.
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`ANTITRUST IMPACT ............................................................................................. 74
`
`(cid:76)
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`

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`Case 9:21-cv-80424-XXXX Document 1 Entered on FLSD Docket 02/26/2021 Page 3 of 81
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`VI.
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`COUNT I: VIOLATION OF SECTION 1 OF THE SHERMAN ACT ..................... 75
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`VII.
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`REQUEST FOR RELIEF .......................................................................................... 77
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`VIII.
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`JURY TRIAL DEMANDED ..................................................................................... 78
`
`(cid:76)(cid:76)
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`

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`Case 9:21-cv-80424-XXXX Document 1 Entered on FLSD Docket 02/26/2021 Page 4 of 81
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`
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`Plaintiff Cheney Brothers, Inc. brings this action against the Defendants identified below,
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`for their illegal conspiracy, which increased the prices of pork sold in the United States beginning
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`at least as early as 2009 and continuing through the present. Plaintiff brings this action for treble
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`damages and injunctive relief under Section 1 of the Sherman Act.
`
`I.
`
`NATURE OF ACTION
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`1.
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`Defendants—other than Agri Stats—are the leading suppliers of pork in an industry
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`providing annual gross income of more than $20 billion. The United States pork industry is highly
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`concentrated, with a small number of large companies controlling supply. Together with their
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`co-conspirators, Defendants collectively control approximately 80% of the wholesale pork market.
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`2.
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`Defendant Agri Stats, Inc. (“Agri Stats”) is a specialized information-sharing
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`service that, among other things, obtains data from participating industry producers and develops
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`comprehensive reports based on that data. Agri Stats provides its reports and findings to the
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`participating industry producers.
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`3.
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`Defendants Clemens Food Group, LLC, The Clemens Family Corporation
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`(“Clemens”); Hormel Foods Corporation and Hormel Foods, LLC (“Hormel”); JBS USA Food
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`Company (“JBS”); Seaboard Foods LLC (“Seaboard”); Smithfield Foods, Inc. (“Smithfield”);
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`Triumph Foods, LLC (“Triumph”); and Tyson Foods, Inc., Tyson Prepared Foods, Inc., and Tyson
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`Fresh Meats, Inc. (“Tyson”) (collectively referred to at times as “pork integrator Defendants”) and
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`Agri Stats entered into a conspiracy from at least 2009 through the present (the “Relevant Period”)
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`to fix, raise, maintain, and stabilize the price of pork.1 Defendants implemented their conspiracy
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`by, among other things, coordinating with each other to restrict output and limit production, with
`
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`1 For purposes of this complaint, “pork” includes meat from hogs or domestic swine, fresh or
`frozen, smoked ham, sausage, and bacon.
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`
`
`
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`1
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`

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`
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`the intended purpose and expected result of increasing and stabilizing pork prices in the United
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`States. In furtherance of the conspiracy, Defendants exchanged detailed, competitively sensitive,
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`and closely guarded non-public information about prices, capacity, sales volume, and demand
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`through their co-conspirator, Defendant Agri Stats.
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`4.
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`Beginning at least as early as 2009 through present, Agri Stats began providing
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`highly sensitive benchmarking reports to Defendants. Benchmarking allows competitors to
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`compare their profits or performance against that of other companies. However, Agri Stats reports
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`are unlike those of other lawful industry reports. Agri Stats gathers detailed financial and
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`production data from each of the Defendants, standardizes this information, and produces
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`customized reports and graphs for the co-conspirators. The type of information available in these
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`reports is not the type of information that competitors would provide to one another in a normal,
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`competitive market.
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`5.
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`Agri Stats collected the pork integrator Defendants’ competitively sensitive supply
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`and pricing data and intentionally shared that information through the detailed reports it provided
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`them. On a weekly and monthly basis, Agri Stats provides Defendants with current and forward-
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`looking sensitive information (such as profits, costs, prices, and slaughter information), and
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`regularly provides the keys to deciphering which data belongs to which producer. The effect of
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`this information exchange allowed Defendants to coordinate their anticompetitive conduct,
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`monitor each other’s production, and thereby control pork supply and price in furtherance of their
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`anticompetitive scheme.
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`6.
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`The data exchanged through Agri Stats is a classic enforcement and implementation
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`mechanism of a price-fixing scheme. First, the data is current and forward-looking, which courts
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`2
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`

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`have consistently held has “the greatest potential for generating anti-competitive effects.”2 Second,
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`the information contained in Agri Stats reports is specific to pork producers, including information
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`on profits, prices, costs, and production levels—instead of being aggregated as industry averages,
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`which provides transactional specificity and the easy identification of individual producers. Third,
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`none of the Agri Stats information was publicly available. Agri Stats is a subscription service that
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`required the co-conspirators to pay millions of dollars over the Relevant Period—far in excess of
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`any other pricing and production indices. Agri Stats ensured that its detailed, sensitive business
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`information was available only to the co-conspirators and not to any buyers in the market.
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`Defendants utilized the information exchanged through Agri Stats in furtherance of their
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`conspiracy to fix raise, stabilize, and maintain artificially inflated prices for pork sold in the United
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`States.
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`7.
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`While Defendants went to great lengths to keep the existence of the conspiracy a
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`secret, they admitted in public calls that they had discussed production cuts at least once and
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`publicly signaled to each other that no supply increases would happen. Furthermore, each
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`Defendant engaged in acts in furtherance of the conspiracy by participating in such supply cuts
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`and by limiting increases in supply that would not have otherwise occurred.
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`8.
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`In addition, there are numerous “plus factors” in the pork industry during the
`
`Relevant Period, including, but not limited to, multiple industry characteristics that facilitate
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`collusion, such as vertically integrated operations, high barriers to entry preventing competitors
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`from coming into the market, high pork industry consolidation and concentration, inelastic supply
`
`and demand, and homogeneity of pork products (within each cut type).
`
`
`2 Todd v. Exxon Corp., 275 F.3d 191, 2011 (2d Cir. 2001) (Sotomayor, J.) (quoting United States
`v. Gypsum Co., 438 U.S. 422, 441 n.16 (1978)).
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`
`
`
`3
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`

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`9.
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`Defendants’ restriction of pork supply had the intended purpose and effect of
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`increasing pork prices for Plaintiff. Beginning in or around 2009, the pork integrator Defendants’
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`earnings began to increase, as they took an increasing amount of the profits available in the pork
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`industry. As a result of Defendants’ unlawful conduct, Plaintiff paid artificially inflated prices for
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`pork during the Relevant Period. Such prices exceeded the amount they would have paid if the
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`price for pork had been determined by a competitive market. Thus, Plaintiff was injured by
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`Defendants’ anticompetitive conduct.
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`II.
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`JURISDICTION AND VENUE
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`10.
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`Plaintiff brings this action under Sections 4 and 16 of the Clayton Act, 15 U.S.C.
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`§§ 15 & 26, for injunctive relief and to recover treble damages and the costs of this suit, including
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`reasonable attorneys’ fees, against Defendants for the injuries sustained by Plaintiff by virtue of
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`Defendants’ violations of Section 1 of the Sherman Act, 15 U.S.C. § 1.
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`11.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 & 1337,
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`and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15(a) & 26.
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`12.
`
`Venue is appropriate in this District under Sections 4, 12, and 16 of the Clayton
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`Act, 15 U.S.C. §§ 15, 22 & 26 and 28 U.S.C. § 1391(b), (c) & (d), because one or more Defendants
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`resided or transacted business in this District, is licensed to do business or is doing business in this
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`District, or because a substantial portion of the affected interstate commerce described herein was
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`carried out in this District.
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`13.
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`This Court has personal jurisdiction over each Defendant because, inter alia, each
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`Defendant: (a) transacted business throughout the United States, including in this District;
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`(b) manufactured, sold, shipped, and/or delivered substantial quantities of pork throughout the
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`United States, including this District; (c) had substantial contacts with the United States, including
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`this District; and/or (d) engaged in an antitrust conspiracy that was directed at and had a direct,
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`4
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`

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`foreseeable, and intended effect of causing injury to the business or property of persons residing
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`in, located in, or doing business throughout the United States, including this District.
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`14.
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`The activities of the Defendants and all co-conspirators, as described herein, were
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`within the flow of, were intended to, and did have direct, substantial, and reasonably foreseeable
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`effects on the interstate commerce of the United States.
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`III.
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`PARTIES
`
`A.
`
`15.
`
`Plaintiff
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`Plaintiff Cheney Brothers, Inc. (“Plaintiff”) or (“Cheney”) is a Florida corporation
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`with its principal place of business in Riviera Beach, Florida. Cheney brings this action on its own
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`behalf, and on behalf of its affiliates, including its predecessors and subsidiaries, who purchased
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`pork directly from one or more Defendants during the Relevant Period, and suffered antitrust injury
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`as a result of the violations alleged in this Complaint.
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`B.
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`Defendants
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`(i)
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`Agri Stats
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`16.
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`Agri Stats, Inc. is an Indiana corporation located in Fort Wayne, Indiana and is a
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`subsidiary of Agri Stats Omega Holding Co. Throughout the Relevant Period, Agri Stats acted as
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`a co-conspirator and committed acts in furtherance of the conspiracy by facilitating the exchange
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`of confidential, proprietary, and sensitive data among Defendants and their co-conspirators.
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`(ii)
`
`Clemens
`
`17.
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`Clemens Food Group, LLC is a limited-liability company headquartered in
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`Hatfield, Pennsylvania. During the Relevant Period, Clemens Food Group, LLC and/or its
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`predecessors, wholly owned or controlled subsidiaries, or affiliates sold pork in interstate
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`commerce, directly or through its wholly owned or controlled affiliates, to purchasers in the United
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`States.
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`5
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`

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`18.
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`The Clemens Family Corporation is a Pennsylvania corporation headquartered in
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`Hatfield, Pennsylvania and the parent company of Clemens Food Group, LLC. During the
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`Relevant Period, The Clemens Family Corporation and/or its predecessors, wholly owned or
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`controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or through its wholly
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`owned or controlled affiliates, to purchasers in the United States.
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`(iii) Hormel
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`19.
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`Hormel Foods Corporation is a Delaware corporation headquartered in Austin,
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`Minnesota. During the Relevant Period, Hormel Foods Corporation and/or its predecessors, wholly
`
`owned or controlled subsidiaries, or affiliates, including but not limited to Hormel Foods, LLC,
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`sold pork in interstate commerce, directly or through its wholly owned or controlled affiliates, to
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`purchasers in the United States.
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`20.
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`Hormel Foods, LLC is a Minnesota corporation headquartered in Austin,
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`Minnesota. Hormel Foods, LLC is a wholly owned subsidiary of Defendant Hormel Foods
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`Corporation. During the Relevant Period, Hormel Foods Corporation and/or its predecessors,
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`wholly owned or controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or
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`through its wholly owned or controlled affiliates, to purchasers in the United States.
`
`(iv)
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`JBS
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`21.
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`JBS USA Food Company is one of the world’s largest beef and pork processing
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`companies and a wholly owned subsidiary of JBS USA Food Company Holdings, which holds a
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`78.5% controlling interest in Pilgrim’s Pride Corporation, one of the largest chicken-producing
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`companies in the world. JBS USA Food Company is a Delaware corporation, headquartered in
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`Greeley, Colorado. During the Relevant Period, JBS USA Food Company and/or its predecessors,
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`wholly owned or controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or
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`through its wholly owned or controlled affiliates, to purchasers in the United States.
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`6
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`(v)
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`Seaboard
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`22.
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`Seaboard Foods LLC is a limited-liability company headquartered in Shawnee
`
`Mission, Kansas, and is a wholly owned subsidiary of Seaboard Corporation. During the Relevant
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`Period, Seaboard Foods LLC and/or its predecessors, wholly owned or controlled subsidiaries, or
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`affiliates sold pork in interstate commerce, directly or through its wholly owned or controlled
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`affiliates, to purchasers in the United States.
`
`(vi)
`
`Smithfield
`
`23.
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`Smithfield Foods, Inc. is incorporated in the Commonwealth of Virginia, and an
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`indirect wholly owned subsidiary of WH Group Limited, a Chinese company. Smithfield Foods is
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`headquartered in Smithfield, Virginia. During the Relevant Period, Smithfield Foods, Inc. and/or
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`its predecessors, wholly owned or controlled subsidiaries, or affiliates sold pork in interstate
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`commerce, directly or through its wholly owned or controlled affiliates, to purchasers in the United
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`States.
`
`(vii) Triumph
`
`24.
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`Triumph Foods, LLC is a limited-liability company headquartered in St. Joseph,
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`Missouri. During the Relevant Period, Triumph Foods, LLC and/or its predecessors, wholly owned
`
`or controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or through its
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`wholly owned or controlled affiliates, to purchasers in the United States.
`
`(viii) Tyson
`
`25.
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`Tyson Foods, Inc. is a publicly traded Delaware corporation headquartered in
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`Springdale, Arkansas. During the Relevant Period, Tyson Foods, Inc. and/or its predecessors,
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`wholly owned or controlled subsidiaries, or affiliates sold pork in interstate commerce, directly or
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`through its wholly owned or controlled affiliates, to purchasers in the United States.
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`7
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`

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`26.
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`Tyson Prepared Foods, Inc. is a Delaware corporation headquartered in Springdale,
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`Arkansas and is a wholly owned subsidiary of Tyson Foods, Inc. During the Relevant Period,
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`Tyson Prepared Foods, Inc. sold pork in interstate commerce, directly or through its wholly owned
`
`or controlled affiliates, to purchasers in the United States.
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`27.
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`Tyson Fresh Meats, Inc. is a Delaware corporation headquartered in Springdale,
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`Arkansas and is a wholly owned subsidiary of Tyson Foods, Inc. During the Relevant Period,
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`Tyson Fresh Meats, Inc. sold pork in interstate commerce, directly or through its wholly owned or
`
`controlled affiliates, to purchasers in the United States.
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`IV.
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`FACTUAL ALLEGATIONS
`
`28.
`
`Starting in at least 2009 and continuing to the present, Defendants conspired to fix,
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`raise, maintain and stabilize pork prices. To effectuate and enforce their agreement, the pork
`
`integrator Defendants relied on a specialized industry data sharing service known as Agri Stats,
`
`which served a critical role in Defendants’ price-fixing scheme. Through Agri Stats, Defendants
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`shared and monitored critical and sensitive business information regarding each other’s production
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`metrics.
`
`A.
`
`29.
`
`Agri Stats’ central role in collusion in the Broiler industry.
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`Agri Stats has played a central role in collusion in other industries, including the
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`Broiler chicken (“Broiler”) industry. As alleged in several Complaints in In re Broiler Chicken
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`Antitrust Litigation, No. 16-cv-08637 (N.D. Ill.), the defendants in that action used Agri Stats to
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`facilitate their conspiracy to restrain production and inflate prices of Broilers.
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`30.
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`Specifically, Agri Stats collected and disseminated to the defendants disaggregated
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`financial information (such as monthly operating profit, sales and cost per live pound), production
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`volumes, capacity, slaughter information, inventory levels, and sales data by finished product form
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`and type, amongst other competitively sensitive business information. Agri Stats also provided
`
`
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`8
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`detailed price reports to the Broiler industry through its subsidiary, Express Markets, Inc. (“EMI”).
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`Agri Stats reports contained line-by-line entries for plants, lines, and yields of various Broiler
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`facilities. Agri Stats relied upon (and the co-conspirators agreed to) a detailed audit process to
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`verify the accuracy of data from each Broiler producer’s facilities, sometimes directly contacting
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`co-conspirators to verify the data. Agri Stats collected data from the Broiler producers weekly and
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`provided its reports to Broiler producers weekly and monthly.
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`31.
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`The detail of these reports ensured that the Broiler producers could quickly decode
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`the information of their purported competitors. The Broiler complaints allege it was common
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`knowledge among Broiler producers that the detail of the Agri Stats reports allowed any
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`reasonably informed producer to discern the identity of the competitors’ individual Broiler
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`complexes and facilities. The Broiler reports, in parts, contained so few producers participating
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`that the identities were obvious to the other producers. Other reports contained such detailed data
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`that it could be matched with Broiler producers. Agri Stats purposefully circulated this information
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`to top executives to facilitate their agreement on supply constraints and price.
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`32.
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`In Broilers, plaintiffs also alleged that Agri Stats – known to its co-conspirators to
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`be a willing and informed conduit for illicit information exchanges – used public and semi-public
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`forums to convey messages to industry participants that furthered the purposes of the conspiracy
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`by reassuring conspirators that production cuts would continue, and by inducing them to continue
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`to act in concert to ensure they did. Agri Stats’ own statements in the Broiler industry facilitated
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`implementation of the agreement to restrict supply.
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`33.
`
`At the same time, Broiler producers relied on the purportedly “anonymous” nature
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`of the reports to hide their conspiracy from the public. For example, plaintiffs in the Broiler
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`complaints allege that Sanderson Farms CEO Joe Sanderson claimed, “[w]e use Agri Stats, which
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`9
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`Case 9:21-cv-80424-XXXX Document 1 Entered on FLSD Docket 02/26/2021 Page 13 of 81
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`some of you are probably familiar with. Agri Stats is a benchmarking service that we submit data
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`to. Almost everyone in our industry does as well. And we get the data back. It’s anonymous – the
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`data is anonymous, so we don’t know whose numbers the numbers belong to, but we can see
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`performance indicators all over the industry.”
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`34.
`
`In denying Defendants’ motions to dismiss in In re Broiler Chicken Antitrust
`
`Litigation, the district court noted that, given the nature of the Agri Stats reports, the co-
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`conspirators were sharing future anticipated production information with each other, which raised
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`significant antitrust concerns.3
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`B.
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`35.
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`Agri Stats markets its collusive scheme to Defendants.
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`Beginning in at least 2008, Agri Stats began to propose a series of benchmarks to
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`Defendants similar to the benchmarks used to restrain competition in the Broiler industry.
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`Benchmarking is the act of comparing practices, methods or performance against those of other
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`companies.4 Benchmarking of the type undertaken by Agri Stats and its co-conspirators reduces
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`strategic uncertainty in the market and changes the incentives for competitors to compete, thereby
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`enabling companies to coordinate their market strategies and otherwise restrict competition. This
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`is especially true where benchmarking involves the exchange of commercially sensitive and
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`typically proprietary information among competitors.
`
`36.
`
`In 2008, Greg Bilbrey of Agri Stats wrote in the Advances in Pork Production
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`Journal, benchmarking in the swine industry “could range from simple production comparisons to
`
`
`3 In re Broiler Chicken Antitrust Litig., 290 F. Supp. 3d 772, 784 (N.D. Ill. 2017).
`4 Antitrust Issues Related to Benchmarking and Other Information Exchanges, Federal Trade
`Commission (May 3, 2011), available at https://www.ftc.gov/public-statements/2011/05/antitrust-
`issues-related-benchmarking-and-other-information-exchanges.
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`10
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`Case 9:21-cv-80424-XXXX Document 1 Entered on FLSD Docket 02/26/2021 Page 14 of 81
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`elaborate and sophisticated total production and financial comparisons. Each and every
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`commercial swine operation is encouraged to participate in some benchmarking effort.”5
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`37.
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`Agri Stats emphasized to pork producers that the goal of the agreement to share
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`information was profitability, not production, and invited them again to participate in the
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`benchmarking: “We must remember that the ultimate goal is increasing profitability—not always
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`increasing the level of production.” Finally, Agri Stats told the industry that “[e]ach swine
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`production company should be participating in some type of benchmarking. To gain maximum
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`benefit, production, cost and financial performance should all be part of the benchmarking
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`program.”6
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`38.
`
`In April 2009, Agri Stats again invited pork producers to design and operate their
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`own benchmarking efforts. Thus, Greg Bilbrey of Agri Stats wrote: “Though all producers may
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`not be part of or fit into an Agri Stats type benchmarking program, all producers could participate
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`in benchmarking in some way. Commercial benchmarking opportunities are available. Producer
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`groups could design and operate their own benchmarking effort.”7 Defendants accepted this
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`offer and, beginning no later than 2009, created the detailed benchmarking scheme based upon
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`and found in the Agri Stats reports. Their agreement was to use the exchanged benchmarking
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`information to coordinate supply and stabilize, as well as increase, prices of pork sold in the United
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`States; provide and receive information from Agri Stats; and use this detailed sensitive information
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`to monitor each other’s production and pricing. The agreement was successful, as pork prices rose
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`significantly after the agreement was reached.
`
`
`5 Greg Bilbrey, Benchmarking and Cost—Production Relationships, 19 Advances in Pork
`Production Journal 43 (2008) (emphasis added).
`6 Id. at 41–46 (emphasis added).
`7 Greg Bilbrey, Benchmarking and Tools to Maximize Profit, London Swine Conference—Tools
`of the Trade (Apr. 1–2, 2009) (emphasis added).
`
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`
`11
`
`

`

`Case 9:21-cv-80424-XXXX Document 1 Entered on FLSD Docket 02/26/2021 Page 15 of 81
`
`
`
`39.
`
`Each pork integrator Defendant identified specific executives that were responsible
`
`for transmitting data to and from Agri Stats relating to pork pricing, supply, slaughter, inventory,
`
`export, or production levels.
`
` Clemens: Joshua Rennels (Treasurer, Clemens Food Group)
`
` Hormel: Paul Bogle (Director, Cost Accounting)
`
` JBS: Garry Albright (Head of Business Analysis), Kevin Arnold (Head of Finance),
`Jamie Fosbery (Analyst), Raven Goodlow (Business Analyst), Robbie Kearns
`(Business Analyst), Lisa Peters (Business Analyst), Eli Zoske (Cost Accountant)
`
` Seaboard: Damon Ginther (Senior Director of Business Data & Analytics), Mel
`Davis (Vice President of Hog Procurement and Bio-Energy, Tom Dye (Operations
`Controller)
`
` Smithfield: Aimee Ward (Director, Hog Finance), Kent Hilbrands (Sr. Director,
`Operations Finance), Elizabeth Barger (Data Analyst)
`
` Triumph: Matt England (Chief Integrated Business Strategy Officer), Ken Grannas
`(Director Inventory/Reporting), Tom French (Director, Margin Management), Joe
`Diebold (Chief Financial Officer), Dan Marlow (Corporate Controller)
`
` Tyson: Deb McConnell (Division Controller)
`
`40.
`
`The volume of U.S. commerce in the pork industry is enormous. Total pork sales
`
`in the United States for a portion of the Relevant Period were:
`
`2016 - $18.9 billion
`2015 - $21.0 billion
`2014 - $26.4 billion
`2013 - $23.4 billion
`
`41.
`
`Each pork integrator Defendant’s annual sales of pork products is also very large.
`
`For example, in 2016, Smithfield reported $3.7 billion of fresh pork sales and an additional $5
`
`billion in packaged pork product sales. That same year, Tyson reported $4.9 billion in pork sales.
`
`With such sizeable revenues, the ability to stabilize or increase the margin, even in small amounts,
`
`has a significant impact on profits.
`
`
`
`
`12
`
`

`

`Case 9:21-cv-80424-XXXX Document 1 Entered on FLSD Docket 02/26/2021 Page 16 of 81
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`
`
`C.
`
`Agri Stats provided the Other Defendants the unique ability to monitor
`pricing and production and discipline co-conspirators that did not comply
`with the anticompetitive agreement.
`
`42.
`
`Agri Stats provided pork integrator Defendants with an unparalleled ability to share
`
`critical, proprietary, and commercially sensitive information concerning key business metrics,
`
`such as production levels and short and long-term production capacity. Agri Stats was central and
`
`critical to the formation, operation, and continuing stability of the Defendants’ anticompetitive
`
`scheme. To effectuate their agreement, Defendants had to ensure that each member was following
`
`through with the agreement by limiting its production and stabilizing prices. Agri Stats served that
`
`function.
`
`43.
`
`Each member of the conspiracy, including Defendants Clemens, Hormel, JBS,
`
`Seaboard, Smithfield, Triumph, and Tyson was an Agri Stats subscriber and reported its
`
`information to Agri Stats. Agri Stats’ parent company, Eli Lilly, stated that “over 90% of the
`
`poultry and pig market” uses Agri Stats in the United States.8
`
`44.
`
`Agri Stats collects commercially sensitive financial and production data
`
`electronically each month from each Defendant. Internal auditors convert the data, prepare it for
`
`comparison, and perform the monthly audits. Each company’s financial data is reconciled to its
`
`general ledger to help ensure actual costs are reported. Raw data is used in Agri Stats’ standardized
`
`calculations, so all company numbers are calculated and reported the same way.9
`
`45.
`
`Unlike traditional “benchmark” services which rely upon unaudited and aggregated
`
`publicly available data, Agri Stats obtains audited data directly from the participating producers.
`
`
`8 Transcript, Eli Lilly and Co. at Morgan Stanley Global Healthcare Conference (Sept. 13, 2016)
`(emphasis added).
`9 Greg Bilbrey, Implementing Simple and Useful Production Benchmarking, London Swine
`Conference—A Time for Change (Mar. 28–29, 2012).
`
`
`
`
`13
`
`

`

`Case 9:21-cv-80424-XXXX Document 1 Entered on FLSD Docket 02/26/2021 Page 17 of 81
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`
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`46.
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`The pork integrator Defendants received monthly detailed reports and graphs that
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`allow them to compare their performance and costs to other participants, the average of all
`
`companies, the top 25%, and the top five companies. Current month, previous quarter, and
`
`previous twelve-month periods are reported.

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