May 5, 2011

US Supreme Court renounces O.K. Industries' Appeal

After the rejection of an appeal by the US Supreme Court earlier this week, a US$14.5 million judgment will stand against the Arkansas poultry producer, O.K. Industries, which is maligned of using its near-monopoly market position to coerce Oklahoma growers into lopsided contracts.

About 300 poultry growers in southeastern Oklahoma filed a class action in 2002 against O.K. Industries, which hires growers to raise broiler chickens.

The growers said O.K. abused its position as the area's largest poultry producer to drive prices down for raising chickens.

To become one of O.K.'s growers, the plaintiffs had to build US$160,000 chicken houses, agree to use only chicks, feed and medicine supplied by O.K., and absorb the costs of diseased birds or inadequate supplies. In exchange, they got one flock of chicks, with replacements promised from time to time.

The growers accused O.K. of deducting costs for medicine and supplies from their pay, delivering dead chicks that they had to pay for, reducing their incomes by giving them fewer birds each year, and paying them according to an unconscionable competitive ranking system.

In July 2007, the 10th Circuit ruled that the growers could proceed with their claim that O.K.'s actions injured competition. A federal jury in 2008 awarded the growers US$21.1 million, which a federal judge then reduced to US$14.5 million. The 10th Circuit in Denver upheld the award in October 2010.

The Supreme Court did not comment on its decision to reject the company's petition for review.