Red Meat Producers Conspired to Keep Wages Low at Processing Plants, Class Action Alleges [UPDATE]

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Eleven of the country’s largest meat processors and several of their subsidiaries have conspired to fix and depress the wages paid to employees at red meat processing plants nationwide, a proposed class action alleges. 

The 133-page antitrust complaint out of Colorado alleges the cadre of defendants, who across roughly 140 processing plants in the United States produce roughly 80 percent of the red meat sold to consumers nationwide, have since at least January 2014 “implemented, monitored, and enforced” the alleged wage-suppression conspiracy through, among other “overt acts,” secret compensation surveys, secret annual meetings, direct communications among executives, the exchange of compensation data, and illegal no-poach agreements. 

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Ultimately, the companies engaged in the alleged conspiracy to cut labor costs, which account for a substantial share of the processors’ total operating costs, the suit states. 

According to the case, the agreement among the defendants—JBS USA Food Company, Cargill, Cargill Meat Solutions, Hormel Foods, American Foods Group, Triumph Foods, Seaboard Foods, National Beef Packaging, Iowa Premium, Smithfield Foods, Smithfield Packaged Meats, Agri Beef, Washington Beef, Perdue Farms, and consulting firms Agri Stats and WMS & Company—to fix and depress compensation paid to red meat processing employees has “unreasonably restrained trade” in violation of the federal Sherman Antitrust Act. 

In order to artificially fix and depress wages for affected employees, including those tasked with slaughtering and aging, cutting and processing, repairing machines and supervising processing lines, the defendants, for one, collectively “designed, implemented, and concealed” a compensation survey across dozens of positions in their plants, the suit claims. From 2014 to 2019, the case says, a “secret group” of executives designed a detailed “red meat industry compensation survey” for the processor defendants to complete each year, purportedly to provide useful, specific information on employee compensation. 

The lawsuit alleges the survey allowed the processor defendants to compare the hourly wages, annual salaries and benefits paid across dozens of employment categories. In order to confer “a veneer of legality” to their “illicit information exchange,” the processor defendants hired WMS & Company, a compensation-consulting firm, to administer the survey, the suit states. 

According to the filing, WMS & Company President Jonathan Meng warned the processor defendants that they were improperly exchanging future compensation data in violation of federal law, but the companies allegedly “paid his warnings no heed for years.” 

In addition, executives for the processor defendants, including human resources and compensation directors, attended annual in-person meetings, the purpose of which was to depress and fix wages, salaries and benefits, the suit claims. At the beginning of these meetings, Meng “customarily” gave a presentation summarizing the results of the red meat industry compensation survey, after which the processor defendants “sometimes excused him from the room so that they could have complete privacy while they held multiple, hours-long ‘roundtable’ discussions,” the case alleges. 

According to the complaint, the processor defendants had “improper conspiratorial communications” at the alleged compensation meetings, as well as at “private dinners” in the evenings before the meetings were to take place. Importantly, the processor defendants were not allowed to participate remotely in the meetings, the suit states. 

“During these discussions, the Defendant Processors’ executives extensively discussed the survey results and, upon information and belief, reached agreements about optimal and future compensation rates and practices,” the filing charges, claiming Meng at one point confirmed that a consultant was needed in the room so that the executives could “appear to comply” with antitrust laws. However, Meng, at the companies’ request, was “conspicuously absent during key roundtable discussions” at some of the meetings at issue, the lawsuit adds. 

Further, the processor defendants’ senior executives “extensively discussed, compared, and in turn further suppressed” worker compensation through email and phone conversations, the lawsuit continues. 

Further still, each processor subscribed to and partnered with defendant Agri Stats to exchange and receive, via “monthly confidential reports,” effective wage rates for various employment categories, the suit claims. This data was then used to implement and monitor the alleged conspiracy, and to ensure and confirm that none of the defendants deviated from the plan, the filing says. 

Lastly, the processor defendants entered into illegal “no poach” agreements with each other, by which they each agreed not to recruit one another’s employees, the case alleges. 

The lawsuit aims to cover all individuals who were employed by the processor defendants, their subsidiaries and/or related entities at their beef- or pork-processing plants in the United States at any time from January 1, 2014 to the present. 

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