Assignee Take Care – Burford Capital’s Gets a Workout

For years, district courts of the Midwest have played host to the protein antitrust litigation – a web of multiple MDLs concerning even more webs of conspiracy between and among commercial producers of broiler chickens, turkey, beef and pork products.  Federal antitrust claims asserted by plaintiffs from all levels of the distribution chain describe sundry schemes of price fixing, bid rigging and other forms market manipulation.   The litigation has since grown with civil charges filed by the Justice Department, and contentious criminal cases and meat producers and their executives.

Enter litigation financier Burford Capital, a firm “listed on the New York Stock Exchange (NYSE) and the London Stock Exchange (LSE) with a $7.2 billion portfolio.”  Seeing an opportunity to add protein to its portfolio, Burford acquired assignments of claims from a pair of direct purchasers starting in 2019, as the cases were well underway.  These included claims from the defunct Maines Paper & Food Services, a poultry processor in the process of bankruptcy liquidation, and the very going concern of Sysco Corp, the “the world’s largest food-away-from-home distributor”.

But the cases forced Burford to do some exercise, as well.  Sysco and Burford soon traded lawsuits regarding the authority to enforce settlements negotiated by the food giant.  A Minnesota magistrate in Pork recognized the assignability of Sysco’s federal antitrust claims, but denied substitution of Sysco for a Burford subsidiary, citing concerns of disrupting late-stage litigation proceedings.

Meanwhile, another Burford subsidiary was welcomed into Broiler Chicken, despite producer defendants’ cries of champerty, an “ancient” contract defense intended to discourage vexatious litigation by uninterested parties.  While not recognized by federal law, champerty remains on the books in over a dozen States, including Delaware and Illinois, which laws defendants argued voided Burford’s assignments.    However, the Broiler Chicken court found the medieval-era idea of champerty at odds with modern purpose of encouraging private enforcement of the antitrust laws and the assignability of such claims.

But the even older legal maxim caveat emptor applies to purchasers of antitrust claims, too.  In June 2024, defendant meat manufacturer Pilgrims’ Pride successfully enforced a global settlement it had reached with Sysco in 2022 (but had not reduced to writing), when Sysco and Burford were still disputing whether the assignments granted Burford veto power over such agreements.  The Broiler Chicken court gave no weight to this intra-plaintiff dispute, and applied familiar common-law principles of contract law to find a meeting of the minds on all material terms of an agreement that settled Sysco’s claims, and extinguished Burford’s interest.

Now, defendant manufacturer Tyson is looking to build on Pilgrim’s win with a counterclaim against Burford. Tyson asserts that the litigation funding firm tortiously interfered with a potential settlement with Sysco, before it had legally acquired any right to Sysco’s claims.  That counterclaim is now the subject of a motion to dismiss being briefed in Broiler Chicken now.

Burford’s antitrust investments have likely borne far higher costs that the litigation funder hoped.  And while the protein litigation is unusual for its sheer size and scope, Burford’s experience carries lessons for any prospective antitrust assignee. First, craft an assignment that is clear and easy to apply, particularly when assigning current claims already subject to litigation.  Vague assignments of such claims may open an assignee to defenses of claim splitting, and (as in Burford’s case) conflict between assignee and assignor over management of ongoing litigation.  Second, craft an assignment governed by the law of a state that does not open an assignee to esoteric defense such as champerty.  While such State law will not trump the transfer of federal rights an assignee (as in Burford’s case) can avoid costly litigation of that point.   Better yet, choose federal common law, which has never prohibited champerty.  This option has the virtue of aligning with the source of law (federal) of the claim for relief being assigned, which will repel an attack under Restatement (Second) of Conflicts § 187.  Finally, with a well-drafted assignment in hand, the assignee must diligently assert those rights (as Burford has learned), lest they be extinguished by settlements releasing the same claims already purchased.