David Lutz, a citizen of North Carolina, filed a class-action complaint in the Western District of North Carolina on Thursday, alleging that Case Farms, LLC illegally forces its growers into contracts of adhesion. Lutz claimed he was forced by the company into signing contracts without reading them, which controls many aspects of the growers’ farms.
Growers raise chickens for processing companies, like Case Farms, and typically contract with the company that they will feed and raise chickens on their farm until the chickens are ready to be processed. Case Farms, which slaughters and ships millions of pounds of chicken weekly, controls most of the aspects of raising the chickens, which are primarily broilers, bred to produce additional breast meat. They provide the chickens for the growers to raise and require that they are given specific feed and kept in specific conditions based on the contracts.
Lutz started working with Case Farms in 2013 to build chicken houses on his family farm. He alleged that the financial projections he was shown were “widely incorrect.” He signed a second contract in 2016, which he was told was identical to the other, and that he “had to sign it right now,” as it was laid on the hood of his truck, if he wanted to receive more chickens.
“The 2016 Agreement was not ‘identical’ to prior versions,” the complaint stated, “and adds a new ‘arbitration’ provision not present in the 2012 agreement. As addressed below, the 2016 agreement arbitration provision does not clearly and conspicuously identify his right to decline arbitration, nor the costs of arbitration. It has no advance notice of termination, nor right to cure alleged breach. Plaintiff, nor any other Case growers in North Carolina, were not provided with copies of the 2016 agreement at the time they signed them, and indeed not until years later; even now the copies they were provided by Case are missing pages!”
The plaintiff alleged that the contracts should be considered illegal contracts of adhesion. “Under these dictated contracts, the growers bear virtually all the risk. They are responsible for building and maintaining the facilities on their farms in which the broilers are cared for, relying on Case’s false representations regarding its commitment to its growers and their future earnings. They are required by Case to take out massive loans, using documentation prepared by Case for the loan applications,” the complaint stated.
Under the contract, the growers are paid based on competition with other growers in a tournament system where top producing growers are paid a premium, which is offset by the lower pay given to other growers. The plaintiff alleged that the Growers have no way to repay the loans they are required to take out except to “do exactly as Case says, without ever voicing objection, or risk financial ruin and bankruptcy.”
Lutz claimed that changes in feed, mandated by Case Farms, caused a higher mortality rate among his chickens and a loss of income. After he complained to the company about problems regarding Case Farms’ control over his chicken production, which allegedly was worse because of retaliation, the company “falsely and fraudulently cancelled his cont[r]act.”
Lutz, represented by Pope Aylward Sweeney & Stephenson, claims that Case Farms violated the federal Packers and Stockyards Act, the federal Declaratory Judgement Act, and North Carolina General Statutes. He accuses the company of wilful breach of contract, fraud, and negligent misrepresentation. The plaintiff is seeking damages and injunctive relief based on the actions of Case Farms.
