Court costs add salt to wound
June 25, 2009
OMAHA (DTN) – Herman Schumacher was out doing some work in the field near his home outside Herreid, SD June 11 when he received a phone call from a U.S. marshal. He needed to go home right away so he could sign court documents. When he got there, “No Trespassing” and “Warning” signs were hung on his front door.
“I guess I was completely blindsided,” he said. “I half-laughed it off until they required a sign on my door.”
Schumacher and two other plaintiffs sued the major meatpackers in 2006 because they thought the packers manipulated a USDA error in order to pay producers less for their cattle. They won the jury trial, but like other cases involving the Packers and Stockyards Act, it was overturned in appellate court.
A founding member of the ranchers’ group R-CALF, Schumacher now owes $15,881.38 to cover court costs for Tyson Fresh Meats Inc. A court lien has been placed against Schumacher’s home until he pays. R-CALF now plans to put a spotlight on the salt that has been poured on Schumacher’s wound after being forced to pay court costs on a case he and others won at trial.
“I’ve worked too hard on the issues for too long not to do it,” Schumacher said about the news conference held at his home Friday. “I think it’s a huge wrong. The sign on my door is a sign on the door of every independent cattle producer in the country.”
Tyson spokesperson Gary Mickelson said the 8th Circuit Appeals Court ruled Tyson was entitled to reimbursement for part of its court costs. It was due six months ago. Mickelson said Tyson reminded Schumacher’s attorney of the bill in January and had to go through additional legal processes in an effort to collect.
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Schumacher owns and operates a livestock sale barn and a feed lot in South Dakota. He said he understands what competition is supposed to be, but the cattleman thinks there is little competition right now in the finished cattle industry.
The Packers and Stockyards Act was passed in 1921 to keep packers from building monopolies and manipulating prices. USDA’s Grain Inspection, Packers and Stockyards Administration has been criticized by cattle producers and members of Congress in the past for not appearing to enforce the act. Schumacher said GIPSA has let small cattle producers down by failing to act on their behalf.
In 2006, he brought a class action lawsuit against major meat packers with Michael Callicrate of Kansas and Roger Koch of Nebraska as co-plaintiffs. As plaintiffs, they represented all of the small producers who lost profits due to the USDA’s errors in calculating the price of boxed beef for six weeks in the spring of 2001.
The lawsuit argued that Swift Beef Co., Tyson Fresh Meats Inc., Cargill Meat Solutions Corp. and the National Beef Packing Company took advantage of the USDA price-reporting error and lowered the prices they paid the ranchers for their cattle. They claimed cattle producers lost millions of dollars.
In the case, Schumacher had to prove the defendants “engaged in any course of business or do any act for the purpose or with the effect of manipulating or controlling prices paid to class members.” The judge’s instructions to the jury also said the “plaintiffs need not prove that defendants acted intentionally or with the intent to violate” the law.
A jury unanimously found the packers guilty and awarded the plaintiffs $9.25 million.
The packers appealed on the ground that the jury was given improper instructions. The appellate court agreed. The court’s opinion focused on the meaning of the words “manipulating” and “controlling.” Since the PSA doesn’t define the words and Congress hasn’t set a legal standard, the court picked up the closest dictionary.
The three-judge panel decided the law’s use of the words – manipulation and control – implies intent. Upon review of the case, the court then determined that Schumacher, Callicrate and Koch couldn’t prove the packers intentionally manipulated the price. They reversed the case.
“The plaintiffs tried to blame the packers for an unintentional market reporting mistake made by the USDA,” Mickelson said. “Our company did nothing wrong, and the federal court system ultimately agreed.”
Schumacher keeps thinking about the sign on his door and what it means for small producers.
“We feel we’re being treated unfairly,” he said on behalf of small producers. “We win a jury trial, and it’s overturned in the appellate court. Who’s going to be left to say enough is enough? I didn’t just represent myself. It’s very disheartening.”
He spent Tuesday shuttling between lawyers and bankers, trying to figure out when he must pay the $15,881.38 and to whom. So far, he’s the only plaintiff that’s had to pay court fees, although an R-CALF press release said it expects Cargill and Swift to pursue similar action against Callicrate and Koch.
Mickelson said Schumacher was chosen to foot the bill because he lives within the jurisdiction of the court that ordered the payment.