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An interesting potential class action was recently filed in U.S. district court in South Carolina involving a broiler grower and Amick Farms. In this class action suit, the grower argues that they and other similarly situated growers for Amick Farms are Amick employees and not independent contractors, as their contracts state. This action is currently in the early stages and will be worth watching for those in the industry going forward. It is important to note that, however, as of right now, the action only involves Amick Farms and no other integrated poultry operations. The action in question is Diaz v. Amick Farms, LLC, No. 5:22-CV-01246.
What Is a Class Action Lawsuit?
Many of us have received that random check in the mail for a small amount as our payout on a class action lawsuit. But many people may not understand what a class action lawsuit is. Class action lawsuits allow the judicial system to manage lawsuits that potentially could be unmanageable. Cases would become unmanageable if each potential class member were to bring a lawsuit. In class actions, the class members must share common questions of law or fact, with proposed claims or defenses being typical for each class member. At the same time, class actions require that the size of the potential class makes it impractical for all the members to join in and that the class representatives can adequately protect the interests of the entire class.
That definition can be confusing, but let's look at a few recent examples that many in agriculture might be familiar with: the recent Syngenta corn seed settlement or the settlement reached with Bayer over the off-target dicamba applications. For a grower who experienced loss in either of those cases, there were other growers also experiencing the same loss with very similar fact patterns. By consolidating all these cases with similar fact patterns, losses, and other commonalities, we can reduce the burden on the court system and allow cases to proceed more quickly.
Diazes and the Diaz Family Farms, LLC, operating a broiler farm in South Carolina, are bringing claims against Amick Farms, LLC, an integrated poultry company that contracts with growers to raise broilers. Amick Farms processes these birds and markets the final products.
Diaz Farms was one of these contractors, an independent contractor to Amick Farms as standard in the industry. An independent contractor is a self-employed person or entity with the right to control or direct the result of work, what will not be done, and how work will be done. For example, if you pay a mechanic to fix your vehicle, the mechanic would be an independent contractor since the mechanic has control over the vehicle, how the work will be done, and what will not be done. Independent contractors are responsible for paying their social security taxes and Medicare taxes.
Claims Being Pursued
Diaz Family Farms' claims are centered on arguments that broiler growers for Amick Farms are not independent contractors but employees, that Amick Farms controls every aspect of raising the broilers, and that the growers are employees of the company. As employees, Diaz Family Farms argues that the company has not been paying the federal minimum wage ($7.25/hour) for growers' work.
Diaz also argues that Amick has violated South Carolina state law requiring employers to notify employees in writing when hired of regular hours agreed to, wages agreed to, the time and place of work, and any deductions from wages. The claims are that Amick often requires growers to make costly improvements to their poultry houses, or the grower might lose their contract. The Diazes argue that these expensive improvements and the tournament system pay system violate South Carolina state law.
At the same time, the Diazes claim that other employees of Amick Farms are offered benefits including health insurance, life insurance, disability insurance, and 401(k) plans. A federal law, Employee Retirement Income Security Act (ERISA), sets minimum standards for employers' voluntary retirement and health plans. The Diazes argue they were eligible for these benefits as employees, and Amick failed to extend these benefits to them.
Finally, the Diazes include in their suit state law claims of violating South Carolina’s Unfair Trade Practices Act (UTPA), breach of the grower contract by a fraudulent act, and breach of the contract by violating the implied covenant of good faith and fair dealing. Violating the UTPA is the only claim brought just on behalf of the Diazes and not the entire class. This claim is based on Amick using contractual language leading the Diazes to believe they were independent contractors when their experience with Amick meant they are employees. Based on their arguments, the other two claims are also based on Amick using the contractual language to lead the plaintiffs to believe they are independent contractors when they are employees.
Amick Farms has yet to answer this complaint. Since the suit is currently only in the pleading stages, we will have to wait and see whether the case will be certified as a class action lawsuit and how much further it may proceed through the court system.