Three dozen of the nation's biggest poultry producers have offered to pay more than $20 million - in cash and chickens - to settle antitrust lawsuits charging they conspired to raise the price of poultry.
The proposed settlements have been filed in recent weeks in federal court in Atlanta but the court has yet to accept the offers.
The payments would end without public trial class actin lawsuits accusing producers of half the nation's chickens of fixing the prices of broilers, fryers and chicken parts.
All the major defendant in the case have settled out of court except for two gian Eastern Shore poultry producers - Perdue, Inc., and Perdue Farms of Salisbury, and Kane-Miller of Terrytown, N.Y., which controls Bayshore Foods and Bayshore Farms of Easton. With the other cases settled in Atlanta, the plaintiffs sued Perdue and Kane Miller in federal court in Baltimore last week.
The class action suits were filed by supermarkets, chicken wholesalers, restaurants, hotels and 19 states after the Justice Department in 1973 accused the National Broiler Marketing Association, a trade group, of price-fixing.
The states that joined in the class acton law suits are: Alabama, Colorado, Connecticut, Florida, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, Missouri, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island and Virginia.
The federal case has been delayed by legal appeals now before the U.S. Supreme Court, in which the chicken producers claim that as farmers they are exempt from antitrust laws.
While the government's case has been focusing on the legal issues, attorneys for the chicken buyers have quietly negotiated a series fo settle ments.
None of the poultry producers which have offered to settle the lawsuits has admitted any antitrust law violation or price fixing. The private settlements do not affect the government case, Justice Department lawyers said yesterday.
The proposed settlements began with an offer of $450,000 from the Pillsbury Company and Cargill Inc. and climaxed in July with a $7.5 million settlement involving 15 chicken raisers.
The out-of-court negotiations have ended claims against all but a handful of the chicken raisers. One, Ralston-Purina, Inc. of St. Louis apparently is still negotiating with the plaintiff's attorneys who are headed by Washington antitrust specialists David L. Shapiro and Joel Kleinman.
Because the cases are class actions, filed on behalf of all wholesale buyers of chickens, the settlements will have to be approved by the court.
Utilizing a technique that price fixing lawyers say is unusual, but not unique, many of the settlements provide for payments both in cash and in poultry products. The plaintiffs are to get a check for part of the settlement; plus a chit that can be redeemed in chickens from the suppliers.
Consumers will not share directly in the settlements, but some of the supermarkets reportedly intend to pass part of their take on to shoppers.
The settlement agreements provide that after attorney fees, 50 per cent of th proceeds would go to supermarkets, 25 percent to chicken wholesalers, 9.7 percent to state and local governments - which purchased chicken for schools and institutions - and the remainder to fast food outlets, restaurants and hotels.
The Justice Department case and the class action lawsuits accuse the chicken producers of what one lawyer described as "a classic price-fixing scheme" to limit the supply and boost the price of young chickens.
In 1971, the year the conspiracy allegedly started, members of the National Broiler Marketing Association sold $600 million worth of chickens or roughly half the total sales in the United States.
The class action lawsuits charge the growers worked through their Jackson. Miss-based association to:
"Exchange information about past, present and future prices for broilers, establish and disseminate a minimum price for broilers, sell broilers at or above that minimum price, withhold broiler or parts from the market in order to increase their price, exchange information about past, present and future production of broilers, establish and disseminare broiler production guidelines, reduce the number of brothers available for marketing in accordance with such guidelines and sell surplus broilers to customers in foreign custom countries."
The Justice Department's case has put those charges aside temporarily to answer a critical legal issue - the poultrymen's contention that they are exempt from antitrust laws.
As a government lawyer explained it:
"Farmers acting together can do certain things that if done by others would be violations of the antitrust laws." The exemption was written into the laws to protect farmer cooperatives. The Justice Department case or the class actions.
The U.S. District Court in Atlanta, upheld the poultrymen's contention that they were exempt from the law, but was overruled by the Fifth Current Court.
The poultrymen have asked the U.S. Supreme Court for a writ of [WORDS ILLEGIBLE] to review the case, but the court has yet to act.
The Circuit Court ruling against the poultrymen apparently provided the initial impetus to settle the class action claims.
Among the settlements offered in Atlanta so far: ConAgra Inc., $1,850,000: Holly Farms, $3,350,000: Heublein. Inc., $2,350,000: Allied Mills $250,000: Wilson and Company, $2,000,000: Central Soya, $2,250,000 and a group of six companies - Tyson Foods, Valmac Industries, Inc., Pir Rite-Care Corp. Hudson Foods Inc. and Peterson Farms - $3,398,000.
The largest offer, $7.5 million came from 15 companies, B & P Poultry Co., Cagles Inc., Claxton Poultry Co, Dent Poultry, DeWitt Farms Corp Fieldale Corp., Gold Kist Inc., Mar-Jac Poultry, Marshall Durbin Farms, MFC Services, OK Processors, Pilgrim Industries, Poultry Products, and Purnell's Pride, Inc.