Time to pay up

By JOHN MUGGERIDGE

As the last flakes of soybean meal slide out of the dumpster into the hog barn of Middlesex county hog farmer Rein Minnema, the bill for the 37-tonne load is already rolling off the fax machine back at the farmhouse. Minnema chuckles at his supplier's impeccable timing, and the irony of it all. The bill, from Archer Daniels Midland (ADM), amounts to $8,745.77, a fraction of the $35-million bill he has sent their way.

Fears of corporate concentration simmer beneath the surface in Ontario farm country; but it took this steely-eyed hog farmer to call the $20-billion agri-giant ADM based in Decatur, Illinois, and three other companies, onto the carpet to compensate him and fellow Ontario producers for price fixing of lysine, a hog feed ingredient, back in the early 1990s.

In February, Minnema, a 600-sow commercial producer and breeder from Appin, southwest of London, and Barrie law firm Oatley, Purser launched a $35-million class action lawsuit on behalf of Ontario pork producers against lysine suppliers ADM, Anjinomoto Company, Heartland Lysine and Sewon America. The statement of claim says that between 1992 and 1995, the price of lysine, an amino acid pig feed ingredient, was "fixed, maintained or stabilized at artificially high and non-competitive levels," rising from 60 cents US per pound to US$1.20.

Why launch a one-man crusade against the likes of ADM, a multinational company that bills itself as "supermarket to the world?" Minnema says he has been increasingly concerned about the power wielded by large agri-suppliers. "I felt something had to be done, and that's why I took the initiative," he says. "These guys just got caught....[They] fixed it 100 per cent. Lots of them do it with 10 per cent, 20 per cent. Look at our input cost."

Despite playing David to ADM's Goliath, Minnema couldn't wish for the price fixing evidence against ADM and the other conspirators to be blacker or whiter. The only real remaining question is how much they owe him and other Ontario producers. All four companies have pled guilty to fixing lysine prices and ADM has paid fines of $140 million in the U.S. and $16 million in Canada. The other partners in crime paid $3.6 million in fines. The companies have already paid some $200 million in U.S. civil suits to the feed industry, but U.S. producers have yet to see a penny. Three top ADM executives were sentenced in February.

"Why should I?" replies the feisty 54-year-old farmer and father of five when asked whether he shares some of his fellow farmers' reluctance to take on a major Ontario supplier. "It's there," he says, waving at a Macleans magazine article on the kitchen table that chronicles miles of taped evidence incriminating ADM, including the following exchange recorded by FBI informant Mark Whiteacre at a downtown Vancouver hotel in June, 1993:

"Please fix the price in Canada at three-point-ten."

"OK. I will change that price to three-ten."

Still to be settled in the price fixing scam, however, are the civil suits. While there have been U.S. settlements, Minnema represents the first civil action in Canada, where ADM operates a joint venture with United Grain Growers in Western Canada. Ontario operations include a soybean crushing plant at Windsor, a flour mill at Port Colborne, a vitamin premix plant at Woodstock, wheat milling and processing plants at Georgetown, Strathroy and Midland, and a string of elevators across the province.

Despite a misconception on the concessions that Minnema must have deep pockets to afford lawyers, he insists he's not after personal gain in taking the legal action. Under class action rules (see How a class action works) the plaintiff pays no legal fees, and covers his own mileage, telephone and time.

"I have pockets with deep holes," says Minnema, who has already appeared in Macleans magazine, the Toronto Star, and on CBC national radio and television news. "When it comes to a settlement in our favour, I do not pocket the money myself." He will, however, have "a big say" in where any money is directed.

Tougher to put a price tag on is the personal toll to this dogged producer and his family, who emigrated from Holland in 1978. Minnema admits this isn't the first time he's taken legal action against a supplier. A previous case involving a building supplier took nine years. It ended satisfactorily for Minnema, but not without questions from his children, asked at school why their father was in court.

Before the Minnema case goes to trial, actual damages caused to producers by the price fixing must be tabulated, a complex task because lysine is among up to 50 feed ingredients used in feed premix several steps up the supply chain from producers. It was used in different formulas by some producers, both in young pigs' diet and as a replacement for soybean meal in finishing pigs. If a settlement were paid out to individual producers, they would have to be located.

Also implicated are Ontario premix suppliers, most of whom have already received compensation from the U.S. settlements to their U.S. suppliers. One Ontario feed industry spokesman who requests anonymity says it would be difficult to calculate exactly how much lysine individual producers purchased, and to locate lysine users who have since exited the industry.

It's simplistic to say the lysine price doubled during the price fixing, he says: Lysine is used as a substitute for soybean meal in the ration, and is tied to the price of soybeans and corn. The price of lysine today hovers around C$2 per kilo, versus C$4 cited in the class action, but the spokesman says there's no way of knowing whether it's a competitive price.

The best yardstick for producer damages so far comes from Purdue University agricultural economist John Connor, who estimates the price fixing could have represented one per cent of producers' hog sales - the average producer's margin. He estimates that in the U.S., damages reached US$180 million.

In theory, on Minnema's farm, that could represent $1.50 per hog, $3,750 a year at 2,500 pigs a year, and $11,250 over the three-year period. Over the entire Ontario pork industry, one per cent of 1998 producer sales would amount to $5.5 million.

Minnema and Oatley, Purser law clerk Bob Salvador say support from Ontario Pork will help ensure any settlement is distributed equitably. Salvador says that with the companies already having pled guilty criminally, the only remaining issue on the civil side should be the damages: "Did this harm farmers?"

Support from Ontario Pork will help "present a complete plan from start to finish," says Salvador. "There ought to be a mechanism to distribute money at the end of the day....It would be sad to have a pot of money to be distributed without their input."

Minnema says his lawsuit should be a concern to all of agriculture, and is canvassing support from all the farm groups: "It should send a message to the whole agricultural industry," he says.

Ontario Pork, which represents Ontario's 6,700 commercial producers, however, was initially lukewarm to the idea. Its 14-member board voted in November that "we wouldn't get involved," says chairman Will Nap. Since then the board has warmed somewhat to the issue, offering to lend support such as helping to distribute the money and research the case, says Nap, who confesses to being averse to lawsuits, unlike his litigious American counterparts.

The class action against ADM and the other companies was raised at the Ontario Pork annual meeting in March, but Minnema says he got little response, other than support from one director. Minnema says people are "hesitant to come forward and express their feelings."

Nap says the board needs to know more about the issue before deciding on its level of involvement, and had scheduled a late-April meeting with the lead lawyer in the case, Oliver Bremer. The fact that ADM contributes to Ontario swine research ($105,000 over three years to amino acid research) is "not a factor," Nap insists. The board simply wants to determine "how much staff and time to put into it." Distribution of any funds will be closely monitored "with an eagle eye" by the companies involved, he says.

Under one scenario, the money could be put into a lump sum for research, though Nap says his first reaction is "this is individual producers' money."

Minnema ran into no red tape with the Christian Farmers Federation of Ontario. "At our executive meeting it was very quickly 'yes'," reports CFFO president Bob Bedggood. "It's a worthwhile thing [to support]...When a few people control anything, it's a danger."

Neither the Ontario Federation of Agriculture, or the Chicken Farmers of Ontario, also big lysine users, had had direct contact with Minnema.

Former OFA president Gordon Hill, a long-time critic of multinationals, wasn't slow off the mark, however. "I'm just disappointed with the whole farm community that we haven't the guts to give this man some support," says Hill, a Varna pork and poultry producer who has written Minnema a letter of support. "ADM has been caught with its fingers in the cookie jar before and paid its way out. We have conclusive proof of price fixing. It increased our cost of doing business as it did for all pork and chicken producers.

"It's an indication of the power of multinational companies. They strike fear into our hearts because they wield such immense power over such a wide area."

Having already fought a nine-year court battle, Minnema knows he's in for the long haul with the class action. The statement of claim has recently been translated into Japanese. Unless the companies settle out of court, it could take four or five years to get to court, and then there's the possibility of appeal. An ADM spokesperson at company headquarters in Illinois hadn't yet heard of Minnema's action.

Already, there are reports of further price fixing investigations underway in the complex feed additive business, this time in vitamins.

Is Minnema confident of a victory for Ontario pork producers? "The facts are there. It all depends on the judge. But you cannot buy the judge."

© copyright 1999 Agricultural Publishing Company Limited.

First-ever farm class action Imagine going to your mailbox and finding a cheque from a lawyer you've never met, for a successful lawsuit you didn't know you had been part of. It could happen here in Ontario in connection with a class action suit against Archer Daniels Midland (ADM). There is no doubt class action legislation levels the playing field for those with relatively small grievances who want to challenge large corporations. But is it a double-edged sword for farmers? Ontario effectively entered the class action game Jan. 1, 1993, several decades after the United States and more than 15 years after Quebec. British Columbia is the only other Canadian province allowing class action. Little happened in Ontario until February 1996 when Anita Windisman won a settlement against her condominium company on behalf of her 543 neighbours. Windisman claimed her group was being cheated on interest payments. The group collected $2.6 million. It was Ontario's first successful class action suit. Ottawa-based lawyer Donald Good, who restricts his practice to agriculture and environmental law, predicts "both farmers and consumers may make greater use of this law in future." Proponents hailed passage of Ontario's Class Proceedings Act, 1992, and related amendments to the Law Society Act around the same time, as a breakthrough for the downtrodden in society. In fact there have been relatively few class action proceedings in this province and until Minnema v. Archer Daniels Midland Company, apparently none involving farmers. One of Canada's most famous class actions involves a group of Bre-X shareholders who have brought seven actions against 30 defendants. Some plaintiffs have lost a few thousand dollars while others have lost millions. There are at least 18 lawyers working on that case. Experience in the U.S. has shown that in general, the greater the number of parties in the class and the larger the amount sought, the easier it is to attract competent legal counsel, which in turn improves the odds of success. Why would any lawyer gamble on a class action suit? For one thing there are more lawyers per capita than there were a few years ago and work is scarce. More importantly, however, in class actions the dice are loaded. And lawyers can hit the jackpot. A novel provision of the Class Proceedings Act allows them to collect their normal hourly rate, increased by a court-approved multiplier based on the risk involved in the case. The Law Foundation covers their out of pocket expenses if the case is lost. Bob Salvador, a paralegal who has done much of the leg work in Minnema's ADM case, says costs have so far included the regular document filing as well as extras such as Japanese translation and service for Ajinomoto Company Inc., one of the four co-defendants in the case. Still he notes that a recent database search he conducted found only three class action related motions were lost, out of 100, in Ontario. One of those lost involved a woman who complained about mould in her bathroom. Apparently she couldn't find anyone else similarly affected. - Robert Irwin © copyright 1999 Agricultural Publishing Company Limited.

ADM in Ontario - Windsor: Soybean crushing plant - Strathroy, Midland, Georgetown: Wheat milling and processing - Port Colborne: Flour mill - Mississauga, Georgetown: Cocoa plant - Ontario: string of country elevators How a class action works If you are part of a group that has been wronged, you might want to consider a class action lawsuit. In Ontario, it's the only kind of case lawyers can handle on a contingency fee basis, which means they only collect their fees if they win. Therefore, you may be able to get otherwise unaffordable, top drawer legal counsel to represent you without risking a dime. Your group must be identifiable and your claim must raise common, but not necessarily identical, issues. In theory, as few as two people can form the required class and an action begun in Ontario could include residents from outside the province. In Ontario a court could award costs against unsuccessful plaintiffs. There is a special fund to assist unsuccessful litigants. The first step is to find a lawyer who is knowledgeable and willing to gamble. As in a normal civil suit, the lawyer begins by filing a claim against the defendant. If a judge decides your class action can proceed, you become known as the Class Representative. You will likely be the only person in your group who is subjected to examination by your opponent's lawyers, although additional examinations could be ordered. The court issues a certification order and sets out how other members of the class are to be notified. The court also sets a deadline for any class member to opt out of the action. People opt out for a variety of reasons, which could include the possibility of collecting more from a conventional lawsuit, or because of a special relationship with the defendant. Those who opt out won't receive anything from amounts won in the class action. Those who fail to opt out are automatically included in any award but are prevented from suing the defendant for the same cause. - Robert Irwin © copyright 1999 Agricultural Publishing Company Limited.

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