Alleges "Sham" Transactions in
Iowa's Corporate Farming Law prohibits meat processors from owning, operating or controlling feedlots in Iowa where hogs are fed for slaughter.
Miller filed a lawsuit January 24 to block Smithfield acquisition of Murphy's pork production assets in Iowa, and District Court Judge Ronald Schechtman issued a temporary injunction later that day barring such an acquisition. On January 28, Smithfield, the world's largest hog producer and pork processor, announced that it was acquiring Murphy Farms, the nation's second largest hog production operation. Miller immediately asked Smithfield to provide information about how the acquisition complies with Iowa law and Judge Schechtman's temporary injunction.
"Today we are alleging that transactions purporting to transfer Murphy's Iowa hog production assets to a third party are a sham designed for the sole purpose of creating an appearance of compliance by Smithfield with Iowa's corporate farming statute," Miller said.
"We allege that Smithfield still maintains control of Iowa feedlots, and that's a violation," he said.
The Attorney General's amended petition, filed Friday morning in Humboldt County District Court in Dakota City, Iowa, again lists Smithfield Foods as a defendant, and it adds Stoecker Farms Inc. as a defendant. The petition lists several transactions involving Stoecker Farms, Murphy, and Smithfield:
The transfers are
"accomplished for the sole purpose of permitting Smithfield, a processor
prohibited by Iowa Code Chapter 9H from owning, operating or controlling
a feedlot in Iowa in which hogs are fed for slaughter, to in fact control
Miller asked the Court to appoint a "Special Master" at Smithfield's expense with powers to investigate "the many transactions involved, perform an accounting, and file a comprehensive report of his findings with the Court for purposes of implementing an appropriate final decision." The petition asked the Court to name Eric W. Lam as Special Master.The Attorney General asked the Court then to require Stoecker Farms to "disgorge all its holdings" and "prohibit Smithfield Foods Inc. from directly or indirectly participating in any manner with the operation or control of Iowa feedlots."
The lawsuit filed by the Attorney General on January 24 argued that if Smithfield acquired Murphy Farms assets in Iowa Smithfield would retain essential control of pork production at about 300 sites in Iowa where Iowa producers have swine production contracts with Murphy Farms. The contracts specify that Murphy had authority over most important management decisions, from ownership, source and marketing of the hogs, to the hogs' sex, feed ration, medication, and transportation.
Judge Schechtman already had set a hearing February 10 on Miller's request for a preliminary injunction while the matter is considered by the Court. That hearing remains scheduled.