Opinion
CASE NO. 3:18-CV-100 (CDL)
09-21-2020
David P. ECHOLS et al., Plaintiffs, v. PILGRIM'S PRIDE CORPORATION, Defendant.
ORDER
CLAY D. LAND, U.S. DISTRICT COURT JUDGE
Defendant is a national chicken processing company that contracted with Plaintiffs to raise chickens in the Athens, Georgia area for its Athens processing complex. In early 2017, Defendant notified Plaintiffs that it required them to upgrade their chicken housing to meet Defendant's customers’ demand for antibiotic-free chicken. Plaintiffs did not upgrade their housing, the parties’ contractual relationships ended, and Plaintiffs brought this action, alleging a variety of claims under state and federal law. Plaintiffs now move for partial summary judgment on their wrongful termination claims. For the following reasons, that motion (ECF No. 83) is denied.
Plaintiffs also filed a motion to strike Defendant's response because Defendant asked the Court to grant it summary judgment on the wrongful termination claims. The Court does not grant summary judgment for Defendant in today's order, and that motion to strike (ECF No. 93) is thus moot.
SUMMARY JUDGMENT STANDARD
Summary judgment may be granted only "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In determining whether a genuine dispute of material fact exists to defeat a motion for summary judgment, the evidence is viewed in the light most favorable to the party opposing summary judgment, drawing all justifiable inferences in the opposing party's favor. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material if it is relevant or necessary to the outcome of the suit. Id. at 248, 106 S.Ct. 2505. A factual dispute is genuine if the evidence would allow a reasonable jury to return a verdict for the nonmoving party. Id.
FACTUAL BACKGROUND
Viewed in the light most favorable to Defendant, the record reveals the following facts. Defendant operates two hatcheries, a feed mill, and a chicken processing plant near Athens, Georgia. Defendant contracts with growers, like Plaintiffs, to grow-out chicks that it provides to growers until the appropriate age for processing. Specifically, Defendant provides growers with chicks, the growers house and care for the chicks (which are called "broilers"), and then the growers return the broilers to Defendant for processing. The contracts between Defendant and growers are called Broiler Production Agreements ("BPAs"). Defendant's Athens complex required different types of housing from growers-Class AA, Improved, or Conventional housing.
Plaintiffs are David Echols, Stanley Dove, Alex Mathews, Trinity Farm, and BMW Farms. All five growers had BPAs with Defendant, and Defendant initially required them to provide either Improved or Class AA housing for its broilers. But, in February 2017, Defendant sent a letter to Plaintiffs informing them that, to meet its customers’ increasing demand for antibiotic-free poultry, Defendant would be "transitioning to NAE (No Antibiotic Ever) poultry production which will require a more stable and controlled house environment than has been required in the past." Letter from A. Hall & J. Aaron to Independent Grower (Feb. 14, 2017), ECF No. 49-2 at 2.
The letter continued, "[f]or the above reasons, conventional/unimproved, improved and Class AA houses in the Athens, GA Complex must be phased out and will have to be upgraded and/or replaced with new housing." Id. "The upgraded housing will need to meet the Class AAA housing specifications currently in place in the Athens Complex. Your service tech can provide you with the requirements for the Class AAA housing." Id. The letter noted that if the growers wanted "a sample copy of the Class AAA housing contract to review," they could contact Defendant. Id.
The letter then instructed Plaintiffs to notify Defendant by June 30, 2017 whether they would be upgrading to Class AAA and that if they did not respond, Defendant would assume that they did not intend to upgrade or build new Class AAA housing. Id. It stated that Defendant "will also provide you with 90-days notice of termination in accordance with your current Broiler Production Agreement." Id. The letter included a form that the growers could use to respond regarding their decision to upgrade and informed Plaintiffs that Defendant was "targeting December 31, 2017 as the date [Defendant would begin] no longer placing birds in conventional/unimproved, improved, and Class AA housing." Id.
In September 2017, Defendant sent notices of termination to Echols, Dove, and Trinity Farm. Letter to D. Echols from A. Hall & J. Aaron (Sept. 4, 2017), ECF No. 49-5 (hereinafter "Echols Termination Notice"); Letter to S. Dove from A. Hall & J. Aaron (Sept. 4, 2017), ECF No. 49-7; Letter to J. Dove from A. Hall & J. Aaron (Sept. 4, 2017), ECF No. 83-12. Each notice was essentially identical; they referenced the February 2017 letter and indicated that each grower had either notified Defendant of a decision not to upgrade or had not responded by the June 2017 deadline. Defendant explained that "this letter is to formally notify you that [Defendant] is terminating the above-referenced Agreement due to new housing specifications being implemented in the Athens Complex to meet the requirements for NAE production." Echols Termination Notice. The notice also said that Defendant would be providing its final few broiler flocks to the growers, but if they did not want to receive those flocks, they should notify their service technicians immediately. Id. In response to the termination notice, Echols texted a service technician, Sean Holland, telling him not to provide Echols with any more broilers. Text Message from D. Echols to S. Holland (Sept. 26, 2017), ECF No. 83-20. In October 2017, Dove texted Holland the same message. Text Message from S. Dove to S. Holland (Oct. 19, 2017), ECF No. 83-21. Mathews did not return the form by the deadline and, in July 2017, notified Defendant by telephone to not bring him any more broilers. Mathews Dep. 25:16-26:20, 171:19-172:15, 181:16-19, ECF No. 83-22. A representative of BMW Farms texted a service technician, Steven Caudell, in December 2017 that BMW was finished growing broilers. Text Message from M. White to Steven Caudell (Dec. 5, 2017), ECF No. 53-22 at 20.
DISCUSSION
Plaintiffs make two arguments in favor of summary judgment on their wrongful termination claims. The Court discusses each argument in turn.
I. Exhibit A to the BPAs
Plaintiffs first argue that paragraphs 8 and 9 of Exhibit A to the BPAs limited Defendant's discretion to require housing upgrades. The Court has previously rejected this same argument, finding it unpersuasive. See Order on Mot. to Compel 2-6 (May 28, 2020), ECF No. 88. As explained in that previous order, the BPA paragraph titled "Basic Housing" states that "[t]he Independent Grower shall provide and maintain proper housing ... in accordance with the Company's specification and applicable regulations." Pilgrim's Pride Corporation Broiler Production Agreement with David Echols, ¶ H(1), ECF No. 49-4 at 3 (hereinafter "Echols BPA"). Paragraphs 8 and 9 to Exhibit A to the BPAs did not limit Defendant's discretion to require housing upgrades. Plaintiffs have not pointed to any evidence establishing as a matter of law that Defendant breached the BPAs by requiring Plaintiffs to upgrade their housing to Class AAA. Plaintiffs are not entitled to summary judgment on this ground.
II. Notice of Breach and Right to Cure
Plaintiffs also argue that Defendant breached the BPAs when it failed to give them notice that Plaintiffs had breached the BPAs by failing to upgrade their housing or notice of their right to cure this breach. According to Plaintiffs, they were legally entitled to this notice pursuant to 9 C.F.R. § 201.217, which provides that "[t]he Secretary may consider various criteria when determining whether a ... live poultry dealer has provided a poultry grower ... a reasonable period of time to remedy a breach of contract that could lead to contract termination." 9 C.F.R. § 201.217. The regulation lists possible criteria to consider, including "[w]hether the ... live poultry dealer provided written notice of the breach of contract to the poultry grower ... upon initial discovery of that breach of contract if the ... live poultry dealer intends to take an adverse action, including termination of a contract, against the poultry grower ... based on that breach of contract by the poultry grower." Id.
The BPAs did not require Defendant to provide written notice informing Plaintiffs of their breach and right to cure. Regarding termination, the applicable BPA provision states "[e]xcept for cause or economic necessity, [Defendant] will not terminate this Agreement and its Exhibits without first requiring [Plaintiffs] to follow the ‘Cost Improvement Program’ as described in Exhibit B." Echols BPA ¶ E. It continues that Defendant "will also provide at least ninety (90) days written notice to [Plaintiffs] prior to the termination of this Agreement." Id. "Any such written notice shall be given from [Defendant] to [Plaintiffs] stating reason(s) for termination, when the termination is effective, and appeal rights, if any, that [Plaintiffs] may have with [Defendant]." Id. Plaintiffs contend that § 201.217, which they argue required written notice of breach and their right to cure, was incorporated into the BPAs. Even if this regulation was incorporated into the BPAs, however, it does not require written notice of breach or written notice of a right to cure. In permissive language, the regulation authorizes the Secretary of Agriculture to "consider" various criteria when determining whether a poultry dealer has given a grower reasonable time to remedy a breach of contract. It does not establish as a matter of law that growers, like Plaintiffs, shall be entitled to written notice of their breach of contract or written notice of their right to cure. Additionally, to the extent that § 201.217 gives growers the right to a reasonable amount of time to cure a breach of contract and to the extent that Plaintiffs argue that Defendant denied them that right, the Court finds that, construing the evidence in Defendant's favor, a genuine factual dispute exists on this issue. For these reasons, summary judgment on this ground is also denied.
Plaintiffs do not appear to argue that they were unaware of Defendant's housing upgrade requirements, that Defendant failed to give them enough time to upgrade, or that they were unaware of the consequences of failing to upgrade. They only argue that Defendant should have given them written notice of their respective breaches and their rights to cure those breaches before terminating the BPAs.
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CONCLUSION
For the foregoing reasons, Plaintiffs’ motion for partial summary judgment (ECF No. 83) is denied and their motion to strike (ECF No. 93) is terminated as moot.
IT IS SO ORDERED, this 21st day of September, 2020.