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Prominent meat processing corporations, namely Hormel (NYSE:HRL), National Beef and Smithfield, find themselves in a tight spot as a federal judge in Colorado permits a class action to proceed.
The lawsuit alleges that these companies colluded to depress workers' remuneration.
In a detailed decision spanning 44 pages, Chief U.S. District Judge Philip Brimmer opined that the workers from the red meat processing plants presented sufficient preliminary evidence supporting their claims of wage manipulation, reported Reuters.
Despite the arguments put forth by beef and pork processing companies that the workers failed to provide direct or circumstantial proof of such an allegation, the judge's analysis found otherwise.
He highlighted evidence suggesting these meat businesses shared projected compensation data, not merely present-day salaries.
Furthermore, Brimmer dismissed the firm's argument that the complaint was presented beyond the prescribed four-year period for antitrust claims under U.S. law.
Other defendants in the case, including JBS SA (OTC: JBSAY), Cargill, and Tyson Foods (NYSE: TSN), collectively approached Brimmer with a plea to discard the allegations.
Speaking from the plaintiffs' corner, the legal representatives - arguing on behalf of what they believe is a class comprising "hundreds of thousands" of red meat industry workers from 2014 onwards - asserted that the companies orchestrated this scheme through "information exchanges" concerning wages.
This claim is backed by worker compensation assessments, electronic communications, and testimonies from both existing and ex-employees.
Interestingly, few defendants have opted for settlements.
Notably, Perdue Farms confirmed a payout of $1.25 million in agreement with the plaintiffs, while Seaboard Foods committed to a $10 million settlement, also pledging cooperation.
Price Action: HRL shares traded higher by 0.79% at $38.33 premarket on the last check Friday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
