Perdue Premium Meat Co. v. Mo. Prime Beef Packers, LLC

• Decision Date: 20 January 2022
• Docket Number: 6:22-CV-03009-MDH
• Parties: PERDUE PREMIUM MEAT COMPANY, INC., D/B/A NIMAN RANCH Plaintiff, v. MISSOURI PRIME BEEF PACKERS, LLC, and NEXTGEN CATTLE COMPANY, LLC, Defendants.
• Court: U.S. District Court — Western District of Missouri

PERDUE PREMIUM MEAT COMPANY, INC., D/B/A NIMAN RANCH Plaintiff,
v.
MISSOURI PRIME BEEF PACKERS, LLC, and NEXTGEN CATTLE COMPANY, LLC, Defendants.

No. 6:22-CV-03009-MDH

United States District Court, W.D. Missouri, Southern Division

January 20, 2022

ORDER

DOUGLAS HARPOOL, UNITED STATES DISTRICT JUDGE.

Before the Court is Plaintiff Perdue Premium Meat Company, Inc., d/b/a Niman Ranch's (“Niman Ranch”) motion for temporary restraining order and preliminary injunction. (Doc. 9). Plaintiff seeks to enjoin Defendants Missouri Prime Beef Packers, LLC (“Missouri Prime”) and NextGen Cattle Company, LLC (“NextGen). On January 19, 2022, the Court held a hearing regarding the pending motion. The matter is ripe for review. For the reasons set forth herein, Plaintiff's Motion is GRANTED.

BACKGROUND

Niman Ranch operates an Angus grass-fed program and is the largest farmer and rancher network in North America to be Certified Humane. All Niman Ranch livestock are raised according to strict protocols. Niman Ranch's grass-fed customer base includes 22 food service distributors across the country and three retail specific distributors who, in turn, distribute to numerous restaurants and retail outlets across the country.

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On February 2, 2021, Niman Ranch executed a contract with Missouri Prime for the processing and fabrication of Niman Ranch's cattle into wholesale cuts and ground beef products (the “Agreement”). (Ex. 1) The Agreement expires on January 31, 2024. Either party may terminate the Agreement early, but the terminating party must provide at least 90 days' written notice to the other. Id. Notice of termination must be “sent by overnight courier service (such as FedEx) or by prepaid registered or certified mail, return receipt requested, addressed to the other party.” Id.

The original document (Doc. 9, Ex. A) requires Missouri Prime to process the number of cattle stated in Appendix A of the document. Appendix A of that document, however, in incomplete and does not contain a number. According to Plaintiff, while the parties intended to sign the Agreement in February 2021, Missouri Prime was not in a position to begin processing cattle at that time. In April, when it appeared that Missouri Prime was prepared to process cattle, Niman Ranch sent Missouri Prime the committed headcounts constituting Appendix A to the Agreement. (Doc. 19, Ex. 1). However, Missouri Prime was still not in a position to begin processing cattle.

In May, Missouri Prime indicated that it was able to begin processing cattle and asked Niman Ranch to revise the committed headcounts schedule for May through September. Niman Ranch revised the schedule per the request. (Doc. 19, Ex. 2). The Agreement was executed in May and forwarded to Missouri Prime with the revised schedule for May through September. After receiving the signed Agreement and Exhibits 1 and 2, Stacy Davies of Missouri Prime countersigned^[1] the Agreement and returned a copy to Niman Ranch.

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Both committed headcounts schedules reflect a minimum of 40 grassfed cattle per week and included Niman Ranch's growth plan for later months in the year (growing from 40 to 80 grassfed cattle per week for certain weeks). At the request of Missouri Prime, the committed headcounts schedule was revised for September through December. (Doc. 19, Ex. 3). Missouri Prime consistently met the headcounts reflected in Exhibits 1-3 and acted in accordance with the entire Agreement at issue until the December 14, 2021 email.

On December 14, 2021, Matt Badsky, Missouri Prime's Chief Financial Officer, emailed Niman Ranch stating, “[w]e have made the decision to stop tolling for Niman at the plant, effective 1/3/22. We apologize for the news but we have no choice if we want to remain solvent.” (Ex. 1). Missouri Prime did not send any notice via overnight courier or registered or certified mail as described the Agreement. Niman Ranch responded, asking Missouri Prime to honor the terms of the Agreement and provide the requisite 90 days before termination. Missouri Prime refused, stating “[w]e will provide you our defenses, through our counsel, at the appropriate time if you should decide to proceed in an action against the company.” (Ex. 2).

On December 28, 2021, Niman Ranch sent an email to Missouri Prime confirming that Niman Ranch would be sending 40 head of cattle the following week for harvesting and production. (Ex.3). In response, Missouri Prime stated, “[w]e will not be receiving anymore [N]iman cattle until approval through NextGen.” Id. NextGen Cattle Company is not a party to the Agreement. Niman Ranch accommodated Missouri Prime's request not to process cattle from Niman the week of December 27, so long as they processed 80 head on January 3, 2022.

Niman Ranch argues that as a result of the alleged breach, Niman Ranch cattle allocated to Missouri Prime will not be processed into finished meat products unless and until Niman Ranch can reposition another processor. It further argues that, failing 90 days' notice, Niman Ranch will

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be without the time necessary to source, audit, and set-up a replacement processor because many steps in the process, beyond merely finding an acceptable alternative processor, cannot be accelerated because compliance with the USDA labeling approval process and the Certified Humane certification process requires much more time than three weeks. “Without a processor to harvest, cut, trim, and package these cattle, Niman Ranch will be unable provide finished meat products to its customers.” (Doc. 10 at 4).

Niman Ranch states that Missouri Primes' refusal to process Niman Ranch's cattle while Niman Ranch locates a new processor during the 90-day period, will “permanently damage Niman Ranch's hard-won reputation for meeting its customers' needs...Niman Ranch convinced customers to take its new grass-fed beef product to replace those customers' existing grass-fed products, so if Niman cannot deliver its products to these customers, they will replace Niman's products and may do so permanently.” Id. at 5. Furthermore, Niman argues that the delay in processing will harm its ranchers, because Niman will not be able to take its ranchers' cattle, at cost to the rancher. If the cattle remain unprocessed for too long, it cannot be used for grassfed programs and ranchers may switch to grain-fed programs. Accordingly, Niman is at risk of losing some of its suppliers as well as customers.

STANDARD

Courts in the Eighth Circuit consider four factors when deciding whether to grant a preliminary injunction: (1) the movant's probability of success on the merits; (2) the threat of irreparable harm to the movant; (3) the balance of movant's harm and the injury an injunction could inflict on other parties; and (4) the public interest. Heartland Academy Community Church v. Waddle, 335 F.3d 684 (8th Cir. 2003) (citing Dataphase Systems, Inc. v. C L Systems, Inc., 640 F.2d 109 (8th Cir. 1981)); see also Associated Producers Co. v. City of Independence, Mo.,

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648 F.Supp. 1255 (W.D. Mo. 1986). These same factors apply to the determination of whether to grant a temporary restraining order. GP3 II, LLC v. Bank of the West, 467 F.Supp.3d 765, 769 (W.D. Mo. 2020).

DISCUSSION

1. Niman Ranch is likely to succeed on the merits

“Since Dataphase, the Eighth Circuit has generally held that the likelihood of success on the merits is the most significant factor.” Champion Salt, LLC v. arthofer, No. 4:21-cv-00755-JAR, 2021 WL 4059727, at *6 (E.D. Mo. Sept. 7, 2021) (citing Barrett v. Claycomb, 705 F.3d 315, 320 (8th Cir. 2013)). The Eighth Circuit rejects the requirement that a party seeking preliminary relief must prove a greater than fifty percent likelihood that he will prevail on the merits. Dataphase, 640 F.2d at 113. Instead, the question is whether the movant has a “fair chance of prevailing” on its claims. D.M....