Been v. O.K. Industries, Inc.

F I L E D
United States Court of Appeals
Tenth Circuit
PU BL ISH
July 31, 2007
UNITED STATES CO URT O F APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT

CHARLES BEEN, individually and d/b/a
Creekside Farm, Inc.; DO NA LD FRO ST;
ED W IN JOHNSTO N; BO B FIELD S,
individually and dba Okie Blue Sky Farm,
Inc.; GENE BLACKW ELL, Class
Representatives,

Plaintiffs - Appellants,
No. 05-7079
v.

O.K. INDUSTRIES, INC.; O.K. FOODS,
INC.; O.K. FA RM S, INC., all Arkansas
corporations, individually and as
administrators of health and benefit plans;
O.K. BRO ILER FARM S LIM ITED
PA RTNERSH IP, an Arkansas limited
partnership, individually and as
administrator of health and benefit plans;
COLLIER W ENDEROTH, JR.;
RANDA LL GOINS; TOM W EBB,
individually and as trustees of health and
benefit plans; OK INDU STRIES, INC.
EM PLO Y EE B EN EFIT PLA N ; OK
IND USTRIES, INC . EM PLOYEE
FUND ED GROUP HEALTH CARE
PLAN; OK IND USTRIES, INC . AN D ITS
SUBSIDIAR IES EM PLOYEE FUND ED
H EA LTH CA RE PLA N ; O K
IND USTRIES, INC . AN D A FFILIATES
FLEXIBLE BENEFITS/HEALTH CARE
PLA N ; O K IN D U STR IES, IN C. AND
AFFILIATES FLEXIBLE BEN EFITS
PLA N ; R ETIR EM EN T SA V IN GS PLAN
O F O K IN D U STR IES, IN C. A ND
 SU BSID IA RIES; R ETIR EM ENT
SAVINGS PLA N OF OK INDUSTRIES,
INC.; GROUP LONG TERM
DISABILITY PLA N; GRO UP LIFE
H EA LTH IN SU RA N CE PLA N ; GROUP
VOLUNTARY TERM LIFE INSURANCE
PLAN; KEN PRIM M ,

Defendants - A ppellees.

A PPE AL FR OM T HE UNITED STATES DISTRICT COURT
FO R TH E EASTERN DISTRICT O F O K LAH O M A
(D. Ct. No. 02-CV-285-W )

Charles B. Goodwin and Harry A. W oods, Jr. (M ack J. M organ, III, Christopher
B. W oods, and Amanda L. M axfield, with them on the briefs), Crowe & Dunlevy,
P.C., Oklahoma City, Oklahoma, appearing for the A ppellants.

M atthew Horan, Smith, M aurras, Cohen, Redd & Horan, PLC, Fort Smith,
Arkansas (James M . Sturdivan and Ronald N. Ricketts, Gable & Gotw als, P.C.,
Tulsa, Oklahoma, and Don A. Smith, Smith, M aurras, Cohen, Redd & Horan,
PLC, Fort Smith, Arkansas, with him on the briefs), appearing for the A ppellees.

Before TA CH A, Chief Circuit Judge, BR ISC OE, and HA RTZ, Circuit Judges.

TA CH A, Chief Circuit Judge.

This appeal presents a matter of first impression for this Circuit, namely

whether § 202(a) of the Packers and Stockyards Act (“PSA ”), 7 U.S.C. § 181 et

seq., requires a plaintiff to prove that an allegedly “unfair practice” injures or is

likely to injure competition. The District Court held that such proof is required

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and, finding that the Plaintiffs had failed to present any evidence of a competitive

injury, granted summary judgment in favor of the D efendants. The court also

granted the Defendants’ motion for summary judgment on the Plaintiffs’ state law

claim of unconscionability. W e take jurisdiction under 28 U.S.C. § 1291, and for

the reasons that follow, we affirm in part and reverse in part, remanding to the

District Court for further proceedings consistent with this opinion.

I. BACKGROUND

Defendants-Appellants OK Industries, OK Farms, Inc., and OK Foods, Inc.

(collectively “OK”) constitute a vertically integrated poultry producer operating

in Arkansas and Oklahoma. OK is involved in almost every stage of the

production and wholesale of poultry and poultry products: it breeds, hatches,

provides feed for, transports, slaughters, and processes poultry. One aspect of

poultry production OK does not handle is the raising of broiler chickens to

slaughtering age. OK enters into contracts w ith various “growers” who handle

that part of the production process.

The Plaintiffs-A ppellants (“Growers”) are a class of growers operating in

Oklahoma under contract with OK. In addition to alleging that the process by

which OK and its growers enter into contracts is unconscionable under Arkansas

law, the G row ers argue that the terms of the contracts, as w ell as O K’s

performance under the contracts, violate the Packers and Stockyards Act, 7 U.S.C.

§ 181 et seq. Their claims hinge on the following undisputed facts.

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 OK is the largest poultry integrator in O klahoma. W ith limited exceptions,

no other integrators operate in the geographic markets in which OK operates. At

the time of this lawsuit, OK had a waiting list of over 130 persons desiring to

become growers for OK or to expand their existing operations. W hen OK needs

to expand its production, it contacts persons on the waiting list to determine

whether they are still interested, and if so, whether they will be suitable growers.

Prior to entering into a contract with a grower, OK requires the grower to first

obtain financing and build chicken houses to specifications set by OK. In

exchange for a grower’s expenditure of money to build the requisite chicken

houses, OK signs a letter of intent, agreeing to enter into a broiler contract with

the grower upon satisfactory completion of the chicken houses. One chicken

house can cost a grower nearly $160,000, not including the cost of land and

equipment.

All the broiler contracts are materially identical; they are standard contracts

drafted by OK and are not subject to negotiation. Under the standard contract, a

grower agrees to use only chicks, feed, and medicine supplied by OK. OK is not

liable, however, for any loss a grower incurs as a result of OK’s failure to provide

feed and supplies; nor is OK liable for birds condemned due to certain diseases.

The contract also provides that a grow er may not sell its chickens to poultry

integrators other than OK and may not transfer its broiler contract to other

potential growers w ithout OK’s prior approval. Under the terms of the contract,

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OK agrees to provide the grower with only one flock of chicks, which typically

takes a grower seven weeks to raise. 1 Thereafter, OK may provide the grower

with replacement flocks “from time to time.” In addition to deciding when to

deliver replacement flocks, OK determines the breed of chicken, the number of

chicks per flock, and the number of flocks. Furthermore, at the end of each

grow ing cycle, OK may require that a grower update its houses to meet OK’s

most recent specifications before it will place another flock of chicks with the

grower. These required changes result in significant costs to growers.

The contract also details the method OK uses to calculate a grower’s pay.

OK uses a “competitive ranking” system to reward growers who produce chickens

at the least cost to OK. Under OK’s system of payment, OK first calculates the

production cost per pound 2 of each grower’s flock and labels this production cost

the grower’s “flock prime cost.” It then lists the flock prime cost of each grower

in order from lowest to highest. The flock prime cost of the grower that is

numerically in the middle of the list is designated as the “average prime cost.” If

any individual grower’s flock prime cost is less than the average prime cost, then

OK pays that grower a higher rate per pound than those whose flock prime cost is

1
Because of the large capital comm itments needed to become a grower for
OK, growers must typically raise chickens for fifteen to twenty-five years to
recover their initial investment.
2
The production cost per pound takes into account the weight of the
chickens raised by growers, as well as the cost for chicks, medicine, and feed.

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higher than the average prime cost. In other words, a grower’s pay is based on

how grow ers in a group rank against each other, not on the individual grower’s

production.

The Growers in this case filed suit in the United States District Court for

the Eastern District of Oklahoma. They obtained class certification to challenge

the following conduct: (1) OK deducts from the Growers’ pay certain charges for

medicine and supplies; (2) OK sometimes delivers dead chicks to the Growers and

causes the Growers to pay for them because OK counts chicks to be delivered at

the hatchery, rather than at the Growers’ premises; and (3) OK has reduced the

number of birds placed per year with the Growers, causing a substantial decrease

in the Growers’ income. The Growers also challenged OK’s competitive ranking

system, arguing it is unfair and unconscionable because (1) OK uses the median

flock prime cost as the average prime cost, which alters the rankings in a way that

benefits OK to the detriment of the Growers; (2) OK exercises control over

factors affecting the Growers’ performance; and (3) OK calculates the weight of

condemned birds, for which OK will not pay Growers, based on the weight of

healthy birds, even though condemned birds can weigh up to 50% less than

healthy birds. The Growers alleged that OK’s conduct constitutes a breach of

contract and violates § 202(a) of the PSA, 7 U.S.C. § 192(a). They also alleged

that the broiler contract is unconscionable and therefore unenforceable under state

law .

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 OK moved for judgment on the pleadings, arguing, inter alia, that proof of

an injury to competition is a required element of a claim brought under § 202(a)

of the PSA . The district court judge denied OK’s motion, holding that § 202(a)

does not require proof of an injury to competition. Approximately eighteen

months later, in a motion for summary judgment before a different district court

judge, OK re-raised the issue. The Growers argued that the doctrine of the law of

the case bound the District Court to its prior ruling and that § 202(a) did not

require proof of an injury to competition. In the alternative, they argued that they

had presented sufficient evidence of an injury to competition to withstand

summary judgment. The court disagreed with all three arguments. After

concluding that the law of the case did not bind the court to the prior ruling, the

District Court held that § 202(a) requires proof that a practice injures or is likely

to injure competition and that the Growers had failed to establish a genuine issue

of material fact concerning competitive injury. Consequently, the court entered

summary judgment in favor of OK on the G row ers’ PSA claim. The G row ers

then moved to reopen discovery for the purpose of determining whether OK’s

conduct injured or was likely to injure competition. The District Court denied the

motion.

Subsequently, in response to a motion filed by the Growers for an

interlocutory appeal, the District Court supplemented its summary judgment

ruling disposing of the PSA claim. It held that, even if § 202(a) does not require

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a competitive injury, whether particular conduct is “unfair” within the meaning of

§ 202(a) is a question of law, and OK’s conduct in this case was not “unfair” as a

matter of law.

In yet another order, the District Court entered summary judgment in favor

of OK on the Growers’ unconscionability claim. W ith respect to the broiler

contracts governed by Oklahoma law , 3 the court concluded that Oklahoma would

not recognize an affirmative claim for damages based on unconscionability. W ith

respect to the broiler contracts governed by Arkansas law, the court concluded

that, although Arkansas recognizes an affirmative cause of action for

unconscionability, the Arkansas courts have not specifically addressed an

affirmative claim for damages, and in any event, these contracts were not

unconscionable under A rkansas law.

Following these rulings, the parties settled the pending class claims for

breach of contract. The Growers now appeal the District Court’s rulings on their

PSA and unconscionability claims.

II. D ISC USSIO N

A. The Packers and Stockyards Act § 202(a)

1. Law of the Case

3
Beginning in 1997, OK’s broiler contracts included a choice-of-law
provision designating the law of Arkansas as the governing law. The District
Court therefore applied Arkansas law to those contracts and Oklahoma law to the
contracts pre-dating 1997.

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 The Growers first contend that the District Court’s initial ruling that

§ 202(a) does not require proof of an injury to competition represents the law of

the case, which should not be disturbed except in very narrow circumstances not

present here. W e disagree. Generally, the “law of the case” doctrine dictates that

prior judicial decisions on rules of law govern the same issues in subsequent

phases of the same case. See Homans v. City of Albuquerque, 366 F.3d 900, 904

(10th Cir. 2004). W e have acknowledged, however, that “the rule is a flexible

one that allows courts to depart from erroneous prior rulings, as the underlying

policy of the rule is one of efficiency, not restraint of judicial power.” Prairie

Band Potawatomi Nation v. Wagnon, 476 F.3d 818, 823 (10th Cir. 2007) (internal

citation omitted). That is, the doctrine is merely a “presumption, one whose

strength varies with the circumstances.” Avitia v. M etro. Club of Chicago, Inc.,

49 F.3d 1219, 1227 (7th Cir. 1995); see also Homans, 366 F.3d at 904 (“[T]he

doctrine is discretionary rather than mandatory.”). If the original ruling was

issued by a higher court, a district court should depart from the ruling only in

exceptionally narrow circumstances. See McIlravy v. Kerr-M cGee Coal Corp.,

204 F.3d 1031, 1035 (10th Cir. 2000). 4 On the other hand, district courts

4
This Court had recognized three “exceptionally narrow” grounds
supporting a district court’s departure from an appellate court’s earlier ruling:
“(1) when the evidence in a subsequent trial is substantially different; (2) when
controlling authority has subsequently made a contrary decision of the law
applicable to such issues; or (3) when the decision was clearly erroneous and
would work a manifest injustice.” M cIlravy, 204 F.3d at 1035 (quotation
(continued...)

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generally remain free to reconsider their earlier interlocutory orders. Harlow v.

Children’s Hosp., 432 F.3d 50, 55 (1st Cir. 2005); see also United States v. Smith,

389 F.3d 944, 949 (9th Cir. 2004) (explaining that a district court may review its

prior rulings so long as it retains jurisdiction over the case).

Finding no Supreme Court or Tenth Circuit authority interpreting § 202(a)

to require proof of a competitive injury, the first district court judge denied O K’s

motion for judgment on the pleadings. In reviewing OK’s motion for summary

judgment eighteen months later, however, the second judge found persuasive

authority from other circuits holding that such proof is required. In light of these

circumstances and the interlocutory nature of the initial ruling, the D istrict Court

did not abuse its discretion in reconsidering the prior ruling. See Harlow, 432

F.3d at 55–56 (reviewing a district court’s reconsideration of a prior interlocutory

order for abuse of discretion).

2. Interpretation of “Unfair Practices” under § 202(a)

Section 202 of the PSA makes it unlawful for a “live poultry dealer” 5 to

(a) Engage in or use any unfair, unjustly discriminatory, or deceptive
practice or device; or

4
(...continued)
omitted).
5
It is undisputed that OK is a “live poultry dealer,” defined as “any person
engaged in the business of obtaining live poultry by purchase or under a poultry
growing arrangement for the purpose of either slaughtering it or selling it for
slaughter by another.” 7 U.S.C. § 182(10).

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 (b) M ake or give any undue or unreasonable preference or advantage
to any particular person or locality in any respect whatsoever, or
subject any particular person or locality to any undue or
unreasonable prejudice or disadvantage in any respect whatsoever; or

(c) Sell or otherwise transfer to or for any other packer, swine
contractor, or any live poultry dealer, or buy or otherwise receive
from or for any other packer, swine contractor, or any live poultry
dealer, any article for the purpose or with the effect of apportioning
the supply between any such persons, if such apportionment has the
tendency or effect of restraining comm erce or of creating a
monopoly; or

(d) Sell or otherwise transfer to or for any other person, or buy or
otherwise receive from or for any other person, any article for the
purpose or with the effect of manipulating or controlling prices, or of
creating a monopoly in the acquisition of, buying, selling, or dealing
in, any article, or of restraining comm erce; or

(e) Engage in any course of business or do any act for the purpose or
with the effect of manipulating or controlling prices, or of creating a
monopoly in the acquisition of, buying, selling, or dealing in, any
article, or of restraining commerce; or

(f) Conspire, combine, agree, or arrange with any other person (1) to
apportion territory for carrying on business, or (2) to apportion
purchases or sales of any article, or (3) to manipulate or control
prices; or

(g) Conspire, combine, agree, or arrange with any other person to do,
or aid or abet the doing of, any act made unlawful by subdivisions
(a), (b), (c), (d), or (e) of this section.

7 U.S.C. § 192.

At issue in this case is only what constitutes an “unfair” practice within the

meaning of § 202(a). The District Court held that an “unfair” practice is one that

“injures or is likely to injure competition.” The Growers contend that this

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interpretation of the statute is belied by the United States Department of

Agriculture’s (“USD A”) interpretation, as well as the statute’s plain language and

purpose.

W e first address the Grow ers’ suggestion that we must defer to the U SDA’s

reasonable interpretation of the statute because the agency is authorized to make

rules and regulations necessary to carry out the PSA. See Chevron U.S.A., Inc. v.

Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984) (holding that when

Congress has implicitly delegated legislative authority to an agency, “a court may

not substitute its own construction of a statutory provision for a reasonable

interpretation made by the administrator of an agency”). To that end, the

Growers claim that the USDA “has consistently taken the position that in order to

prove that any practice is ‘unfair’ under [§] 202(a) . . . of the Act, it is not

necessary to prove predatory intent, competitive injury, or likelihood of injury;

and that it is the Department’s duty to stop unlawful practices in their incipiency

prior to actual injury.” In re Ozark County Cattle Co., Inc., 49 Agric. Dec. 336,

365 (1990), 1990 W L 320312. They also note that the USD A filed an amicus

brief before the Eleventh Circuit in London v. Fieldale Farms Corp., 410 F.3d

1295 (11th Cir. 2005), cert. denied, 126 S.Ct. 752 (2005), stating that the

Secretary of A griculture’s position is that the PSA prohibits all unfair practices,

regardless of whether a practice causes a competitive injury.

Although we generally defer to an agency’s interpretation of an ambiguous

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statute that it implements, “[d]ifferent types of agency pronouncements are

entitled to different degrees of deference.” Newton v. FAA, 457 F.3d 1133, 1136

(10th Cir. 2006). As the Supreme Court has explained:

[A]dministrative implementation of a particular statutory provision
qualifies for Chevron deference when it appears that Congress delegated
authority to the agency generally to make rules carrying the force of law,
and that the agency interpretation claiming deference was promulgated in
the exercise of that authority. Delegation of such authority may be shown
in a variety of ways, as by an agency’s power to engage in adjudication or
notice-and-comment rulemaking, or by some other indication of a
comparable congressional intent.

United States v. M ead Corp., 533 U.S. 218, 226–27 (2001).

Regulations promulgated by an agency exercising its congressionally

granted rule-making authority are clearly entitled to Chevron deference. Newton,

457 F.3d at 1137. So too is an agency’s adjudication of matters over which it has

the authority to adjudicate, as such decisions carry the force of law. See id.;

Southern Ute Indian Tribe v. Amoco Prod. Co., 119 F.3d 816, 832 (10th Cir.

1997) (recognizing the rule that an agency “may establish binding policy either

through rule-making procedures or through adjudications that create binding

precedents” (quotation omitted)), rev’d on other grounds, Amoco Prod. Co. v.

Southern Ute Indian Tribe, 526 U.S. 865 (1999). Here, however, the Secretary

has not promulgated a regulation applicable to the practices the Growers allege

violate § 202(a), and the USD A has no authority to adjudicate alleged violations

of § 202 by live poultry dealers. See London, 410 F.3d at 1304 (citing

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administrative complaint procedures under 7 U.S.C. § 193(a)); Jackson v. Swift

Eckrich, Inc., 53 F.3d 1452, 1456–57 (8th Cir. 1995) (holding that the only means

of enforcing § 202 against live poultry dealers is to file suit in federal district

court under § 308, 7 U.S.C. § 209(a)). 6 M oreover, we afford the USD A’s position

as stated in its amicus brief before the Eleventh Circuit little to no deference. See

Shikles v. Sprint/United M gmt. Co., 426 F.3d 1304, 1315 (10th Cir. 2005)

(“[A]micus briefs . . . do not reflect the deliberate exercise of interpretive

authority that regulations and guidelines demonstrate.” (quotation omitted)). The

agency’s view s so stated “may be accepted by a court only as they have power to

persuade.” First Am. Kickapoo Operations, L.L.C. v. M ultimedia Games, Inc.,

412 F.3d 1166, 1174 (10th Cir. 2005) (citing Skidmore v. Swift, 323 U.S. 134, 140

(1944)). As we explain below , we are not persuaded by the U SDA’s

interpretation of the statute. 7

6
Under 7 U.S.C. § 209, any person subject to the PSA may be held liable
for damages. Liability may be enforced either by complaint to the Secretary of
Agriculture “as provided in section 210 of this title,” or through proceedings
instituted in federal district court. 7 U.S.C. § 209(b). Under 7 U.S.C. § 210,
however, only stockyard owners, market agencies, and dealers (not including live
poultry dealers) may be found liable in proceedings before the Secretary of
Agriculture. In addition, the Secretary may issue cease and desist orders and
assess civil penalties against packers and swine contractors, but not poultry
dealers, under 7 U.S.C. § 193. In other words, the Secretary has no adjudicative
authority over live poultry dealers. Hence, the only way to enforce § 202 of the
PSA against a live poultry dealer is to file suit in federal district court under 7
U.S.C. § 209.
7
In addition, we emphasize that we are interpreting the meaning of
(continued...)

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 Having concluded that we need not defer to the agency’s interpretation of

the statute, we turn to the District Court’s construction of § 202(a). W e review

issues of statutory construction de novo, “interpret[ing] the words of the statute in

light of the purposes Congress sought to serve.” Wright v. Fed. Bureau of

Prisons, 451 F.3d 1231, 1233–34 (10th Cir. 2006) (quotation omitted). In so

doing, we begin with “the language employed by Congress,” and we “read the

words of the statute in their context and with a view to their place in the overall

statutory scheme.” Id. at 1234 (quotation omitted).

As the Growers note, nothing in the plain language of § 202(a) indicates

that a practice is unfair only if it adversely affects competition or is likely to do

so. But neither does the statute otherwise define an unfair practice. Enacted in

1921, the “primary purpose of [the PSA] is to assure fair competition and fair

trade practices in livestock marketing and in the meatpacking industry” and “to

safeguard farmers . . . against receiving less than the true market value of their

7
(...continued)
unfairness solely in the context of the PSA. Consequently, the Supreme Court’s
decision in FTC v. Sperry and Hutchinson Co., 405 U.S. 233 (1972), which
addresses similar language in § 5 of the Federal Trade Commission Act, 15
U.S.C. § 45(a)(1), does not dictate a particular interpretation in this case. Unlike
the case before us, the question in Sperry and Hutchinson was one of agency
jurisdiction, namely whether § 5 empowered the FTC to define “unfair practices”
to include practices without anticompetitive effects and of a noncompetitive
nature. Id. at 239. Conversely, as we note above, the present case does not
involve the USDA’s interpretive or enforcement authority under the statute.
Instead, we are faced with the task of construing a statute that only the federal
courts may enforce against live poultry dealers.

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livestock.” H.R. Rep. No. 85-1048, at 1 (1957), reprinted in 1958 U.S.C.C.A.N.

5213, 5213. The “chief evil” Congress feared was the monopolistic practices of

the packers, “enabling them unduly and arbitrarily to low er prices to the shipper,

who sells, and unduly and arbitrarily to increase the price to the consumer, who

buys.” Stafford v. Wallace, 258 U.S. 495, 514–15 (1922). Although intended to

be broader than antecedent antitrust legislation, § 202 “nonetheless incorporates

the basic antitrust blueprint of the Sherman A ct and other pre-existing antitrust

legislation.” D e Jong Packing C o. v. USDA, 618 F.2d 1329, 1335 n.7 (9th Cir.

1980).

Against this backdrop, other circuits have concluded that “unfair[ness]”

under § 202(a) requires evidence that the challenged practice will likely lead to a

competitive injury. The issue is most thoroughly treated in Armour & Co. v.

United States, 402 F.2d 712 (7th Cir. 1968). Armour involved a meat packer’s

coupon promotion, which allegedly had the effect of diverting sales from

competitors to the defendant. After recognizing the PSA’s ancestry in antitrust

law, where Congress has expressed a “basic public policy distinguishing between

fair and vigorous competition on the one hand and predatory or controlled

competition on the other,” id. at 717, the court reasoned that the “fact that a given

provision does not expressly specify the degree of injury or the type of intent

required, does not imply that these basic indicators of the line between free

competition and predation are to be ignored,” id. Even though the test of

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unfairness under § 202(a) is “less stringent than under some of the anti-trust

law s,” the court still concluded that the coupon program at issue could not violate

§ 202(a) “absent some predatory intent or some likelihood of competitive injury.”

Armour, 402 F.2d at 717; 8 see also IBP, Inc. v. Glickman, 187 F.3d 974, 977 (8th

Cir. 1999)) (concluding that the challenged conduct did not “potentially suppress

or reduce competition sufficient to be proscribed by the [PSA]”); Parchman v.

U SD A, 852 F.2d 858, 864 (6th Cir. 1988) (“[The PSA ] does not require that the

Secretary prove actual injury before a practice may be found unfair. The

Secretary need only establish the likelihood that an arrangement will result in

competitive injury to establish a violation.” (alterations, internal quotation marks,

and citation omitted)); DeJong, 618 F.2d at 1337 (holding that “unfair practices

under § 202 are not confined to those where competitive injury has already

resulted, but includes those where there is a reasonable likelihood that the

purpose will be achieved and that the result will be an undue restraint of

competition”).

In a more recent case, based on facts similar to those at issue here, the

Eleventh Circuit similarly held that a claim brought under § 202(a) required

some showing of a competitive injury or the likelihood of competitive injury.

8
W e are not concerned here with predatory intent on the part of OK. That
issue was not raised by the parties, and we therefore express no opinion on
whether evidence of predatory intent can make an act “unfair” when there is no
concomitant showing of a likelihood of competitive injury.

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London, 410 F.3d at 1303. Like the case before us, London involved a vertically

integrated poultry company that entered into contracts with growers to raise

broiler chickens. Id. at 1298–99. One grower filed suit against the company,

arguing that the company violated the PSA when it terminated his broiler

contract. Id. at 1299. After a jury returned a verdict in favor of the grower, the

district court set aside the verdict and granted the defendant’s motion for

judgment as a matter of law. Id. at 1300. Relying in part on Armour, the

Eleventh Circuit held that to prevail under § 202(a), a plaintiff must show that the

defendant’s practice “adversely affects competition or is likely to adversely affect

competition.” Id. at 1304. In reaching this decision, the court identified the

policy implications of a contrary holding: “Eliminating the competitive impact

requirement would ignore the long-time antitrust policies which formed the

backbone of the PSA ’s creation. Failure to require a competitive impact showing

would subject dealers to liability under the PSA for simple breach of contract . . .

.” Id.

The Growers argue, however, that because § 202’s other subsections

contain language prohibiting acts that tend to restrain commerce or create

monopolies, see, e.g., 7 U.S.C. § 192(c), (d), (e), the absence of similar language

in § 202(a) conclusively means that proof of a competitive injury is not required.

W e disagree. Unlike subsections (c), (d), and (e), which list specific acts that are

unlawful only when they have the tendency or effect of restraining comm erce or

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creating a monopoly, subsection (a) is a general prohibition on “unfair, unjustly

discriminatory, or deceptive practice[s]” and provides no further guidance on

what type of act falls within its parameters. Not to require a showing of

competitive injury or the likelihood thereof would make a federal case out of

every breach of contract. Nothing in the PSA suggests that Congress intended

this result.

The Growers also argue that because other subsections require proof of a

competitive injury, limiting subsection (a) to anticompetitive acts w ould render it

superfluous and would therefore violate one of the “cardinal principle[s] of

statutory construction” to “give effect, if possible, to every clause and word of a

statute.” Williams v. Taylor, 529 U.S. 362, 404 (2000) (quotation omitted). To

the contrary, such an interpretation is far from rendering subsection (a)

superfluous because it serves as a catchall for acts that Congress could not, at the

time of enactment, have foreseen and specified. Cf. Excel Corp. v. USDA, 397

F.3d 1285, 1293 (10th Cir. 2005) (recognizing that new techniques and tools

utilized by covered entities can violate the PSA even if the USD A has not

previously declared them unlaw ful). W hile the other subsections make certain

acts explicitly unlaw ful, Congress acknowledged with subsection (a) that it could

not list the full panoply of unfair, unjustly discriminatory, or deceptive practices

or devices that a covered entity might utilize.

Although we have never expressly held that unfairness under § 202(a)

-19-
requires a likelihood of injury to competition, our circuit precedent is not to the

contrary. In resolving unfairness cases, we have often suggested that a showing

of competitive injury can be determinative. In Capitol Packing Co. v. United

States, 350 F.2d 67 (10th Cir. 1965), for example, we reviewed a decision issued

by the USD A’s Judicial Officer that various practices engaged in by the

defendants violated § 312(a) of the PSA, 7 U.S.C. § 213(a), “w hich makes it

unlaw ful for any market agency to engage in or use any unfair, unjustly

discriminatory, or deceptive practice or device in connection with the marketing

or selling of livestock.” Capitol Packing Co., 350 F.2d at 73 (quotation omitted).

The Judicial Officer found that a practice called “order buying” (i.e., the sale of

livestock before it arrives at the stockyards) violated the PSA because the

livestock had the misleading appearance of being for sale to the highest bidder by

virtue of its presence in the market. Id. at 74. But this Court concluded, as a

matter of law, that “order buying” was not a violation of § 312(a) in part because

the record lacked “evidence . . . tending to show [order buying] lessens

competition.” Id. (emphasis added).

In Excel C orp. v. U SD A, 397 F.3d 1285 (10th Cir. 2005), we reviewed the

USDA’s determination that Excel violated § 202(a) and one of the PSA’s

implementing regulations, 9 C.F.R.§ 201.99(a), by failing to disclose to hog

producers a change in its formula for computing the weight of carcasses.

Although it admitted that it had changed the formula, the meat packer argued that

-20-
it had not violated the act because, inter alia, “practices are not violative w here

they are required by the exigencies of the business.” Excel Corp., 397 F.3d at

1293. W e rejected this claim, stating that “Congress and the USD A are the

arbiters of what practices w ill impede competition.” Id. (emphasis added).

Hence, “the fact that a particular act is ‘required by the exigencies of the

business’ . . . has no impact on whether that act is violative of the [PSA] and the

implementing regulations.” Id. By failing to notify hog producers of the

changed formula, Excel prevented the producers from shopping their hogs to

other packers to determine if they could obtain a better price. In light of these

facts, we upheld the Judicial Officer’s conclusion that Excel’s practice “impeded

competition.” Id. at 1294.

In Hays Livestock Com mission Co. v. M aly Livestock Com mission Co., 498

F.2d 925, 929 (10th Cir. 1974), we reviewed the Secretary of A griculture’s

determination that a dealer’s refusal to honor a draft to pay for livestock was

“unjust and unreasonable” under 7 U.S.C. § 208. In upholding the Secretary’s

decision, we did not discuss what a plaintiff must show to establish that a practice

is unjust or unreasonable, but we did note that “dishonoring of drafts in this

context . . . placed an inordinate burden on the barns, contrary to the purpose of

the Packers and Stockyards Act to secure the free and unburdened flow of

livestock.” Hays Livestock Comm’n, 498 F.2d at 932 (emphasis added) (quotation

omitted). Like our decisions in Capitol Packing Co. and Excel Corp., our opinion

-21-
in Hays Livestock Com mission indicates that an impediment to competition,

though never expressly required, was implicit in our prior decisions.

The Growers note, however, that we have also resolved cases under

§ 202(a) without any mention that the relevant practice injures competition. They

direct our attention to Peterm an v. USDA, 770 F.2d 888 (10th Cir. 1985), in

which we upheld the Secretary’s determination that a meat packer was guilty of

deceptive trade practices, including its “bait and switch” tactic, whereby the

packer would advertise one product and then convince customers seeking the

product to buy a more expensive one instead. Id. at 890. To the extent our

silence on the competitive injury requirement is relevant, this case is

distinguishable because it involved an act alleged to be deceptive, as opposed to

unfair. W e are concerned here only with whether unfairness requires a showing

of a likely injury to competition, not whether deceptive practices require such a

showing. W e therefore join the those circuits requiring a plaintiff who challenges

a practice under § 202(a) to show that the practice injures or is likely to injure

competition.

3. OK’s Alleged Violations of § 202(a)

After determining that § 202(a) requires proof of an injury or likely injury

to competition, the District Court concluded that the Growers had failed to raise a

genuine issue of material fact regarding competitive injury. W e review the

District Court’s grant of summary judgment de novo, Bryant v. Farmers Ins.

-22-
Exch., 432 F.3d 1114, 1124 (10th Cir. 2005), and will affirm its decision only if

the record “show[s] that there is no genuine issue as to any material fact and that

the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P.

56(c). In review ing the record, “w e must view the evidence and draw reasonable

inferences therefrom in the light most favorable to the nonmoving party.” Bryant,

432 F.3d at 1124.

In granting summary judgment in OK’s favor, the District Court held:

To prove monopoly power typically requires the wilful acquisition or
maintenance of such power as distinguished from growth or
development as a consequence of a superior product, business
acumen, or historic accident. M onopoly power includes power to
exclude competition. Plaintiffs have not presented evidence
demonstrating entry barriers or other circumstances which
improperly preclude other integrators from competing in this market
with defendants. The mere fact that the defendants are the sole
integrator does not demonstrate an illegal monopsony. M oreover, the
plaintiffs are not competitors of defendants. Thus, injury to them by
the allegedly “unfair” contract does not demonstrate injury to
competition.

(internal citations omitted). The Growers argue that the District Court erred

because it implied that (1) an injury to competition only arises in the context of

unlawful monopolization; and (2) an injury to competition only arises when a

competitor is injured.

W e agree that the District Court erred in its legal analysis of what

constitutes a competitive injury under § 202(a). As we noted above, Congress

intended the PSA to have a broader scope than the antitrust laws. The antitrust

-23-
requirement that monopoly power be acquired willfully and include the power to

exclude competitors does not apply in the context of the PSA . By holding that

§ 202(a) requires proof that a practice has injured or is likely to injury

competition, we have not required a showing that the defendant engaged in the

unfair practice with the intent to cause the injury or other unlaw ful effect. 9

Instead, the Growers need only prove that specific practices have the effect of

injuring competition or are likely to do so. M oreover, as we explain below, when

analyzing whether a buyer’s “monopsony” power injures competition, as in this

case, the inquiry is somew hat different from the inquiry into w hether a seller’s

monopoly power injures competition.

The record contains evidence that supports the Growers’ contention that

OK is a monopsony in the relevant regional market. A monopsony is “a condition

of the market in which there is but one buyer for a particular commodity.”

Telecor Commc’ns, Inc. v. Sw. Bell Tel. Co., 305 F.3d 1124, 1133 n.4 (10th Cir.

2002) (quotation omitted). Because the poultry market is vertically integrated, if

OK is the only integrator in the area, as the Growers suggest, it may constitute a

monopsony. The District Court’s characterization of this logic as a “non

sequitur” is therefore incorrect. We have previously acknowledged that a

9
Indeed, we have recognized that § 202(a) focuses on conduct and does not
require proof of wrongful intent: “Nothing in the language of [§ 202(a)] . . .
requires a showing of wrongful intent. To the contrary, the focus is solely on the
acts committed or omitted.” Excel Corp., 397 F.3d at 1294.

-24-
monopsony may exist when sellers are unable to find alternative buyers and must

sell to a single purchaser. Id. at 1135–36.

Furthermore, we have acknowledged that, like a monopoly, a monopsony

can threaten competition. Id. at 1135 (“Economists . . . have long recognized that

market inefficiencies created by anticompetitive restraints on input markets can

be as destructive of a free market economy (and therefore ultimately damaging to

consumers) as restraints on output markets.”). According to economists, without

competition from other buyers, a monopsonist will low er prices paid to sellers,

which over time results in higher consumer prices. 10 In other w ords, a poultry

processor with monopsony power can fix and manipulate prices resulting in injury

to both poultry producers (i.e., growers) and end-users (i.e., consumers). W e

explained why depression of prices potentially injures both producers and

consumers in Telecor: “Some producers will either produce less or cease

production altogether, resulting in less-than-optimal output of the product or

service, and over the long run higher consumer prices, reduced product quality, or

substitution of less efficient alternative products.” Id. at 1136.

In addition, in the vertically integrated poultry market, a processor with a

monopsony need not wait for poultry growers to produce less to increase prices

10
The danger of increased consumer prices is especially acute when the
monopsonist resells in a monopolized market. See P HILLIP E. A REEDA &
H ERBERT H OVENKAMP , 3 A NTITRUST L AW : A N A NALYSIS OF A NTITRUST
P RINCIPLES AND T HEIR A PPLICATION § 720a n.1 (2005).

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on the wholesale market because the processor also controls the growers’ supply.

It may simply deliver fewer chicks to the growers, pay them the same low prices,

and resell at the same or a higher price. W hen this happens, both the growers and

the end-users are adversely affected. That is, by manipulating prices to suppliers,

a monopsonist threatens to injure the end-users. Id. at 1136 (“[M ]onopsonies fall

under antitrust purview because monopsonistic practices w ill eventually adversely

affect consumers.”); id. at 1134 (“Tenth Circuit case law . . . reject[s] the notion

that a m onopsony plaintiff must prove end-user impact.”); see also M andeville

Island Farms v. Am. Crystal Sugar Co., 334 U.S. 219, 235 (1948) (holding that

sugar beet growers had stated a valid monopsony claim under the Sherman Act

even though they did not allege end-user impact). Hence, to establish that the

practices of a monopsonist have injured or are likely to injure competition, a

plaintiff does not have to be a competitor of the buyer or demonstrate that the

buyer has improperly excluded other competitors. Instead, the plaintiff must

show that the monopsonist’s practices have caused or are likely to cause the

anticompetitive effect associated with monopsonies, namely the arbitrary

manipulation of market prices by unilaterally depressing seller prices on the input

market with the effect (or likely effect) of increasing prices on the output market.

As we noted above, shortly after the PSA’s passage, the Supreme Court

identified these very harms as the reason Congress passed the Act: the “‘chief

evil’” Congress sought to prevent was “‘the monopoly of the packers, enabling

-26-
them unduly and arbitrarily to lower prices to the shipper who sells, and unduly

and arbitrarily to increase the price to the consumer who buys.’” M ahon v.

Stowers, 416 U.S. 100, 106 (1974) (quoting Stafford v. Wallace, 258 U.S. 495,

514–15 (1922)); see also Swift & Co. v. United States, 393 F.2d 247, 254 (7th Cir.

1968) (“The lack of competition between buyers, w ith the attendant possible

depression of producers’ prices, was one of the evils at which the Packers and

Stockyards A ct was directed.”); Bruhn’s Freezer Meats of Chicago, Inc. v. USDA,

438 F.2d 1332, 1337 (8th Cir. 1971) (noting one of the purposes of the PSA was

“to assure fair trade practices in the livestock marketing and meat-packing

industry in order to safeguard farmers and ranchers against receiving less than the

true market value of their livestock”). Although Congress did not intend to

“‘upset the traditional principles of freedom of contract,’” see Pickett v. Tyson

Fresh M eats, Inc., 420 F.3d 1272, 1280 (11th Cir. 2005) (quoting Jackson, 53

F.3d at 1458), it did intend to prevent those practices that facilitate the packers’

arbitrary manipulation of prices and complete subversion of normal market

forces.

Although other circuits have noted that supply contracts between producers

and processors of livestock can increase efficiency, they tend to focus on the

benefits to the processor, rather than the market as a whole. See Pickett, 420 F.3d

at 1283 (“[B]eing able to keep its processing plants operating at capacity has

increased [the processor’s] efficiency.”); IBP, Inc., 187 F.3d at 978 (concluding

-27-
that the terms of the contracts allowed the processor “to have a more reliable and

efficient method of obtaining a supply of cattle”). But even if supply contracts

increase a processor’s efficiency, they may threaten the efficiency of the relevant

market when a monopsony is able to manipulate the market by depressing

producers’ prices and increasing resale prices. 11 Hence, to demonstrate that a

monopsonist has engaged in “unfair practices” under § 202(a), a seller must show

that the buyer’s practices threaten to injure competition by arbitrarily decreasing

prices paid to sellers with the likely effect of increasing resale prices.

After reviewing the record in the case before us, we find that a genuine

issue of material fact exists as to whether O K engaged in unfair practices in

violation of § 202(a). In particular, we note that the record contains evidence of

the classic monopsony injury, namely that OK is depressing the prices it pays the

Growers and reselling at inflated prices. If OK does not compete with other

buyers and completely controls the supply to its growers, it may be able to

manipulate prices by controlling supply and demand. The record contains expert

11
Although this case does not involve horizontal price-fixing by a group of
buyers, OK’s alleged practices manipulate the market in a similar fashion:
“[M ]arket manipulation in its various manifestations is implicitly an artificial
stimulus applied to (or at times a brake on) market prices, a force which distorts
those prices, a factor which prevents the determination of those prices by free
competition alone.” United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223
(1940) (explaining price-fixing as a form of market manipulation). Like illegal
price-fixing agreements, a monopsonist’s use of supply contracts to manipulate
the market poses the risk that prices will be determined by artificial, rather than
market, forces.

-28-
testimony identifying specific practices that are likely to injure competition in

this way. For example, when wholesale prices are weak, OK delays delivery of

chicks to growers, thereby decreasing the production of broilers by growers and

causing prices to rise on the wholesale market (which eventually adversely affects

consumers). Growers are also adversely affected because they produce (and

therefore sell) fewer chickens. Furthermore, the record contains evidence that the

Growers are paid the same under OK’s pricing system during periods of reduced

production as they are during periods of average and above average production.

In other words, OK can decide to reduce production (to reap the benefits of higher

prices on the wholesale market), but it does not have to pay its growers the higher

prices that a reduction in supply would demand in a competitive market.

W e are not suggesting that uncompetitive prices alone are unlaw ful. Courts

have routinely noted that, short of predatory pricing, a monopolist’s

uncompetitive prices do not violate antitrust laws. See, e.g., Kartell v. Blue

Shield of M ass., Inc., 749 F.2d 922, 927 (1st Cir. 1984) (“Ordinarily . . . even a

monopolist is free to exploit whatever market power it may possess when that

exploitation takes the form of charging uncompetitive prices.”). 12 But if a

12
In acknowledging that an insurer could use its market power to “keep
prices down,” the court in Kartell noted that the lower prices the insurer paid
doctors for their services did not result in higher consumer prices, 749 F.2d at
930–31, and that both parties “sit on opposite sides of the bargaining table,” id. at
929 (quotation omitted). W e are confronted with a potentially different
arrangement in the case before us. The record contains evidence that OK’s
(continued...)

-29-
monopsonist’s uncompetitive prices are a result not solely of its market power,

but also of practices that result in complete control of the input (supply) market,

the effect of the monopsonist’s practices may be an injury to competition.

M oreover, although PSA claims against processors for practices associated with

supply contracts have not enjoyed much success, these cases are factually

different from the one before us. See Pickett, 420 F.3d 1272; IBP, Inc., 187 F.3d

974. For example, the producers in these cases did not allege the existence of a

monopsony. In addition, the supply contracts guaranteed producers a price tied to

market prices, and overall, the arrangements created incentives and efficiencies

that benefitted consumers. Pickett, 420 F.3d at 1284 (“[I]t was undisputed . . .

that marketing agreements are a more efficient means for both meat packers and

cattle producers to operate in the market.”); IBP, Inc., 187 F.3d at 978 (explaining

that the marketing agreements “essentially ensure[] that the potential for undue or

arbitrary lowering of prices is eliminated”); see also Griffin v. Sm ithfield Foods,

Inc., 183 F. Supp. 2d 824, 827 (E.D. Va. 2002) (granting summary judgment in

favor of a defendant packer because the plaintiff producers had not identified any

specific practices that violated the PSA).

W e therefore conclude that, if the Growers prove that OK engaged in the

12
(...continued)
practices are likely to increase end-user prices. M oreover, the supply contracts
with the Growers give OK complete control over the input market (i.e., the
chickens available to OK for purchase), leaving the growers with little, if any,
ability to bargain.

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arbitrary price manipulation described above with the effect or likely effect of

depressing prices to the growers and reselling at increased prices, they may

establish that OK engaged in unfair practices in violation of § 202(a). W e are by

no means suggesting that vertically integrated markets will always violate the

PSA. Rather, we hold that § 202(a) is violated when a monopsonist engages in

specific practices that result in or are likely to result in the anticompetitive effects

the PSA was designed to prevent. To prove a violation, the Growers may not rely

on the sum total of various practices that individually are not likely to injure

competition, but must instead prove that specific practices have caused or are

likely to cause injury. Capitol Packing Co., 350 F.2d at 76–77 (“[S]pecified

methods of dealing which are not themselves violations of the [PSA] cannot,

when added together, become a violation.”). Because the record contains

evidence that OK may engage in specific practices that are likely to injure

competition, we reverse the District Court’s grant of summary judgment in favor

of OK and remand for further consideration in light of this opinion.

4. Discovery Ruling

Following the District Court’s adverse ruling on their PSA claim, the

Growers moved the court to reopen discovery for the limited purpose of

discovering information regarding the likelihood of an injury to competition. The

District Court denied the motion. The G rowers argue that, because of the first

judge’s ruling that such proof is not required and because discovery had closed in

-31-
the interim, the District Court erred in refusing to reopen discovery.

W e review a district court’s denial of a motion to reopen discovery for an

abuse of discretion. SIL-FLO , Inc. v. SFHC, Inc., 917 F.2d 1507, 1514 (10th Cir.

1990). “Under this standard, a trial court’s decision will not be disturbed unless

the appellate court has a definite and firm conviction that the lower court made a

clear error of judgment or exceeded the bounds of permissible choice in the

circumstances.” Id. (quotation omitted).

W hen OK moved for summary judgment on the Growers’ PSA claim, it

explicitly re-raised the issue in dispute. 13 The Growers therefore had fair warning

that the issue was back on the table for resolution. In fact, they addressed the

argument in their response to O K’s motion. They argued that the law of the case

bound the court to the prior ruling, but that in any event they had presented

sufficient evidence of an injury to competition to withstand summary judgment.

Only when the D istrict Court disagreed with both propositions did the Grow ers

seek to reopen discovery, arguing that they did not have an opportunity to

discover the relevant information.

“[T]he Supreme Court has held that, under Fed. R. Civ. P. 56(f), ‘sum mary

13
At this juncture, we would like to note that both parties flouted their duty
under this Circuit’s rules to include in the record the relevant motion for sum mary
judgment, supporting brief, and response. See 10th Cir. R. 10.3(D)(2). Though
w e are not required to do so, w e have obtained copies of the documents. But w e
advise that in the future the parties diligently adhere to the rules of the Circuit if
they wish to avoid unwittingly waiving arguments.

-32-
judgment [should] be refused where the nonmoving party has not had the

opportunity to discover information that is essential to his opposition.’” Dreiling

v. Peugeot M otors of Am., Inc., 850 F.2d 1373, 1376 (10th Cir. 1988) (alteration

in original) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n.5

(1986)). Rule 56(f)’s protection is not absolute, however, as its protection “arises

only if the nonmoving party files an affidavit explaining why he or she cannot

present facts to oppose the motion.” Id. To benefit from the rule, a party “at a

minimum must ask the court to refrain from acting on the summary judgment

request until additional discovery can be conducted.” C.B. Trucking, Inc. v.

Waste M gmt., Inc., 137 F.3d 41, 44 (1st Cir. 1998); see also Allen v. Sybase, Inc.,

468 F.3d 642, 662 (10th Cir. 2006) (concluding that a party’s “footnote request in

its [response] brief for additional discovery time does not pass muster under rule

56(f)”). “[A] party ordinarily may not attempt to meet a summary judgment

challenge head-on but fall back on Rule 56(f) if its first effort is unsuccessful.”

C.B. Trucking, Inc., 137 F.3d at 44. The Growers, with full knowledge that the

District Court would be re-evaluating the competitive injury requirement under

§ 202(a), took no steps to request time for additional discovery; nor did they take

steps to fulfill the requirements of Rule 56(f). In such a case, we are not left with

a “definite and firm conviction that the lower court made a clear error of

judgment or exceeded the bounds of permissible choice in the circumstances.”

SIL-FLO , Inc., 917 F.2d at 1514 (10th Cir. 1990). W e note, however, that on

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remand the parties may seek to reopen discovery, and the District Court may, in

its discretion, grant such requests.

B. The Growers’ Unconscionability Claim

The Growers claim that the broiler contract is unconscionable because of

the gross imbalance of obligation borne by growers. For example, they point to

the fact that the contract guarantees only a single flock of chicks although a

grower must raise broilers for at least fifteen years to recoup its investment. They

also note that OK is not obligated to place a minimum number of chicks or flocks

with each grower, and growers are obligated to make improvements to chicken

houses before OK will place additional flocks with them.

W e must first address a threshold choice-of-law question. Beginning in

1997, OK’s broiler contracts included a choice-of-law provision, designating the

law of Arkansas as the governing law. Consequently, in its order granting

summary judgment, the District Court held that Oklahoma law governed the pre-

1997 contracts and Arkansas law governed the contracts entered into thereafter.

To decide the effect of the contractual choice-of-law clause, we look to the

forum state’s choice-of-law rules. See Dang v. UNUM Life Ins. Co. of Am., 175

F.3d 1186, 1190 (10th Cir. 1999) (“A federal court adjudicating state law claims

m ust apply the forum state’s choice of law principles.”). Under Oklahoma law,

“a contract will be governed by the laws of the state where the contract was

entered into unless otherwise agreed and unless contrary to the law or public

-34-
policy of the state where enforcement of the contract is sought.” Williams v.

Shearson Lehman Bros., Inc., 917 P.2d 998, 1002 (O kla. Civ. App. 1995).

Because we conclude that the Growers’ unconscionability claim fails under both

Oklahoma and Arkansas law, we need not decide whether the application of

Arkansas law would be contrary to Oklahoma’s law or public policy. In reaching

this decision, we review the District Court’s interpretation of state law de novo.

Steiner Corp. v. Johnson & H iggins of Cal., 135 F.3d 684, 690 (10th Cir. 1998)

(citing Salve Regina College v. Russell, 499 U.S. 225 (1991)).

As an initial matter, the Oklahoma Supreme Court has never addressed

whether Oklahoma common law would recognize an affirmative cause of action

seeking damages for unconscionability in contract. Nevertheless, Oklahoma’s

unconscionability standard is so onerous that the Growers cannot meet that

standard here. An unconscionable contract is one in which, “at the time of

making of the contract, and in light of the general commercial background and

comm ercial needs of a particular case, clauses are so one-sided as to oppress or

unfairly surprise one of the parties.” Barnes v. Helfenbein, 548 P.2d 1014, 1020

(Okla. 1976). “Unconscionability has generally been recognized to include an

absence of meaningful choice on the part of one of the parties, together with

contractual terms which are unreasonably favorable to the other party.” Id.

W hether the Growers lacked any meaningful choice is determined by “‘all

the circumstances surrounding the transaction.’” Id. at 1020 n.12 (quoting

-35-
Williams v. Walker-Thom as Furniture Co., 350 F.2d 445, 449–50 (D.C. Cir.

1965)). Relevant factors include whether the aggrieved party had a reasonable

opportunity to understand the terms of the contract and whether the important

terms were hidden “in a maze of fine print” or were “minimized by deceptive

sales practices.” Id. (quotation omitted). Generally, “one who signs an

agreement without full know ledge of its terms might be held to assume the risk

that he has entered a one-sided bargain.” Id. (quotation omitted). On the other

hand, if there is a gross inequality of bargaining power and the aggrieved party

signs a “commercially unreasonable contract with little or no knowledge of its

terms, it is hardly likely that his consent, or even an objective manifestation of his

consent, was ever given to all the terms.” Id. (quotation omitted).

Similar principles apply in A rkansas. In assessing whether a contract or a

particular provision is unconscionable, the court must “review the totality of the

circumstances surrounding the negotiation and execution of the contract,” taking

into consideration “whether there is a gross inequality of bargaining power

between the parties and whether the aggrieved party was made aware of and

comprehended the provision in question.” Jordan, 207 S.W .3d at 535.

Importantly, however, “it is [generally] not the province of the courts to

scrutinize all contracts with a paternalistic attitude and summarily conclude that

they are partially or totally unenforceable merely because an aggrieved party

believes that the contract has subsequently proved to be unfair or less beneficial

-36-
than anticipated.” Assoc. Press v. S. Ark. Radio Co., 809 S.W .2d 695, 697 (Ark.

Ct. App. 1991) (quotation and alteration omitted). Indeed, in Arkansas, “parties

are free to make contracts based on whatever terms and conditions they agree

upon, provided it is not illegal or tainted with some infirmity such as fraud,

overreaching, or the like.” Hancock v. Tri-State Ins. Co., 858 S.W .2d 152, 154

(Ark. Ct. App. 1993) (en banc).

None of these circumstances are present here. Although the D istrict Court

recognized the potential for some inequality of bargaining power, it was not a

“gross inequality of bargaining power.” The court noted that the availability of

the broiler contracts is well-know n in the region and has produced a waiting list

of people w ho wish to become growers under the contract— a contract which is

available for review prior to engaging in the capital investment needed to become

a grower.

The Growers argue that the inequality of bargaining power should not be

determined by reference to the availability of contracts and the fact that many

people want to become a grow er for OK. Rather, they suggest that the court

consider whether they lacked any meaningful choice as to the terms of the

contract and whether they had an alternative source for obtaining the desired

service or product. Although Arkansas case law does suggest that these are

relevant considerations, see Nat’l Union Fire Ins. Co. of Pittsburgh v.

Guardtronic, Inc., 64 S.W .3d 779, 783–84 (Ark. Ct. App. 2002), the G row ers are

-37-
incorrect in dismissing the fact that they initiated the contracting process with O K

(i.e., OK did not solicit their business) as irrelevant to the analysis.

In Jordan, the plaintiff was a landscaper who rented large equipment from

the defendant. 207 S.W .3d at 528. The rental agreement contained a boilerplate

provision excusing the defendant from liability for the consequences of its own

negligence in connection with the rental of the equipment. Id. at 531–32. After

the plaintiff was injured by the equipment, he sued, arguing that the exculpatory

clause was unconscionable and therefore unenforceable. The Arkansas Supreme

Court disagreed. The court found no evidence of a “gross inequality of

bargaining power” when the plaintiff “sought out the services” of the defendant

and “paid for the rental equipment after being shown how to operate it.” Id. at

536; see also Barnes, 548 P.2d at 1021 (applying Oklahoma law, court held that

defendant did not behave unconscionably when the plaintiff’s representative

sought out the defendant to enter into a contract).

Furthermore, the Growers do not suggest that they are unsophisticated

parties unable to evaluate the risks of the contract prior to entering into it. And

they do not suggest that they failed to read and understand the terms of the

contract prior to entering into it or even prior to building the chicken houses.

Also worthy of note is that some of the named plaintiffs have been operating

under this allegedly “unconscionable” contract for nearly twenty years.

Generally, “[t]he fairness or unfairness, folly or wisdom, or inequality of

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contracts are questions exclusively within the rights of the parties to adjust at the

time the contract is made.” Id. W e therefore affirm the District Court’s grant of

summary judgment in favor of OK on the Growers’ unconscionability claim.

III. C ON CLU SIO N

Section 202(a) of the Packers and Stockyards Act requires a plaintiff who

claims that a defendant’s conduct was “unfair” to show that such conduct results

in or is likely to result in an injury to competition. Because the record contains

evidence that raises a genuine issue of material fact concerning the G rowers’

§ 202(a) claim, we REVERSE the D istrict Court’s order granting OK summary

judgment on this claim and REM AND for further proceedings consistent with this

opinion. The Growers have, however, failed to show that the contracts at issue

are unconscionable under state law. Accordingly, we AFFIRM the decision of the

District Court granting summary judgment in O K’s favor on the G rowers’

unconscionability claim. In addition, we AFFIRM the District Court’s denial of

the Growers’ motion to reopen discovery, but do so without prejudice to

subsequent requests to reopen discovery on remand. W e also deny the G rowers’

motion to file a second supplemental appendix because the document they seek to

add was not part of the record before the District Court.

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05-7079, Been v. O.K. Industries, Inc.

HA RTZ, Circuit Judge, concurring/dissenting

I join Chief Judge Tacha’s thorough and scholarly opinion for the panel

except for Part II.A.2, entitled “Interpretation of ‘Unfair Practices’ under

§ 202(a)” and Part II.A.3, entitled, “OK’s Alleged Violations of § 202(a).” I

arrive at almost the same destination regarding statutory interpretation, but

through a rather different route. In my view a practice may be “unfair” under

§ 202(a) of the Packers and Stockyards Act (PSA ) even though it causes no

competitive injury. In interpreting that provision we owe respect to the

longstanding view of the U nited States D epartment of Agriculture (USDA),

although I would reach the same interpretation even without reference to that

view. On the other hand, the majority opinion’s conception of com petitive injury,

which I do not share, appears to be broad enough that many, perhaps all, of the

practices that could properly be labeled unfair would satisfy its competitive-

injury requirement. Finally, I would affirm the district court’s decision that the

Growers failed to provide evidence showing that the practices challenged on

appeal were unfair.

I. D EFE RE NC E T O THE USDA

The deference issue in this case is a very interesting one. The majority

opinion appears to acknowledge that we would need to grant Chevron deference

to the U SD A ’s interpretation of PSA § 202(a), 7 U.S.C. § 192(a), if the USDA
had “authority to adjudicate alleged violations of § 202 by live poultry dealers.”

Op. at 13. See Chevron USA, Inc. v. Natural Res. Def. Council, Inc., 467 U.S.

837 (1984) (court should defer in certain circumstances to agency’s reasonable

interpretation of ambiguous statutory language). Certainly such deference would

appear to be required by the Supreme Court’s gloss on Chevron in United States

v. M ead Corp., 533 U.S. 218, 226–27 (2001):

[A]dministrative implementation of a particular statutory provision
qualifies for Chevron deference when it appears that Congress
delegated authority to the agency generally to make rules carrying
the force of law, and that the agency interpretation claiming
deference was promulgated in the exercise of that authority.
Delegation of such authority may be shown in a variety of ways, as
by an agency’s power to engage in adjudication or notice-and-
comment rulemaking, or by some other indication of a comparable
congressional intent.

As the majority opinion correctly notes, the USD A does not have

adjudicatory authority over § 202(a) violations by live-poultry dealers. The

USDA does, however, have authority to adjudicate § 202(a) violations by packers.

See 7 U.S.C. § 193. M ost of the judicial decisions cited by the majority opinion

involved packers, see, e.g., Armour & Co. v. United States, 402 F.2d 712 (7th Cir.

1968); IBP, Inc. v. Glickman, 187 F.3d 974, 977 (8th Cir. 1999), so we have the

peculiar situation of not granting Chevron deference to the USD A in this case but

relying on cases in which Chevron deference would have been proper.

I confess to having no idea how the Supreme Court would resolve this

conundrum. Perhaps it would avoid the issue as I do, by agreeing with the

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USD A’s interpretation. But at the least I would think that we owe respect to the

experience and expertise of the USDA regarding the PSA. See Skidmore v. Swift

& Co., 323 U.S. 134, 139–40 (1944). In that regard it is worth noting that 26

years ago a treatise could report that the USDA “has consistently taken the

position that in order to prove that a practice violates the broad prohibitions in

§§ 202(a) and (b) . . . of the [PSA], it is not necessary to prove predatory intent,

competitive injury, or likelihood of injury.” 1 John H. Davidson et al.,

Agricultural Law § 3.47, at 244 (1981). Such a longstanding view of an agency is

entitled to more respect than an ad hoc litigating position. Cf. INS v. Cardoza-

Fonseca, 480 U.S. 421, 446 n.30 (1987) (“An agency interpretation of a relevant

provision which conflicts w ith the agency’s earlier interpretation is entitled to

considerably less deference than a consistently held agency view.” (internal

quotation marks omitted)).

In any event, even if the USDA had never addressed the matter, I w ould

interpret the term unfair practices as not requiring competitive injury. I am

persuaded by the Supreme Court’s interpretation of the term unfair practices in

the Federal Trade Commission Act (FTCA), the relationship between the PSA and

that A ct, and an early Supreme Court decision explaining the purpose of the PSA .

In Federal Trade Commission v. Sperry & Hutchinson Co., 405 U.S. 233

(1972), the Supreme Court construed § 5(a)(6) of the FTCA, 15 U.S.C. § 45(a)(6),

which stated in pertinent part:

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 The Commission is empowered and directed to prevent persons,
partnerships, or corporations . . . from using unfair methods of
competition in commerce and unfair or deceptive acts or practices in
commerce.

(amended and now recodified as 15 U.S.C. § 45(a)(2)). The Federal Trade

Commission (FTC) had held that Sperry & Hutchinson (S& H) had violated the

FTCA by attempting “to suppress the operation of trading stamp exchanges and

other ‘free and open’ redemption of stamps.” Sperry & Hutchinson, 405 U.S. at

234. S& H challenged the resulting cease-and-desist order, and the Fifth Circuit

agreed, holding that the FTC could halt only conduct that “violated either the

letter or the spirit of the antitrust laws.” Id. at 235. Before the Supreme Court

the FTC did not dispute that S& H’s conduct violated neither the letter nor spirit

of the antitrust laws; rather, it contended that its authority was not limited to such

conduct. Id. at 239. The Court held that the FTCA “empower[s] the [FTC] to

proscribe practices as unfair or deceptive in their effect upon consumers

regardless of their nature or quality as competitive practices or their effect on

competition.” Id.

The prior history of the Court’s interpretations of § 5(a)(6) and Sperry &

Hutchinson’s comments on that history have, as we shall see, particular

implications for interpreting the PSA . The original version of the FTCA, enacted

in 1914, did not include the language empow ering the FTC to prevent “unfair or

deceptive acts or practices in commerce”; the Act provided power only to prevent

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“unfair methods of competition in commerce.” Federal Trade Commission Act,

Pub. L. No. 63-203, § 5, 38 Stat. 717, 719 (1914) (emphasis added). In 1920 (the

year before enactment of the PSA ) the Supreme Court, over the dissent of Justice

Brandeis, one of the FTCA’s drafters, adopted a limiting interpretation of “unfair

methods of competition,” restricting the covered practices to those “heretofore

regarded as opposed to good morals because characterized by deception, bad

faith, fraud or oppression, or as against public policy because of their dangerous

tendency unduly to hinder competition or create monopoly.” FTC v. Grata, 253

U.S. 421, 427 (1920); see Sperry & Hutchinson, 405 U.S. at 241. Later, in

Federal Trade Commission v. Raladam Co., 283 U.S. 643, 649 (1931), the C ourt

made clear that an unfair method must be unfair to competitors. It said:

[T]he word ‘competition’ imports the existence of present or
potential competitors, and the unfair methods must be such as
injuriously affect or tend thus to affect the business of these
competitors— that is to say, the trader whose methods are assailed as
unfair must have present or potential rivals in trade w hose business
will be, or is likely to be, lessened or otherwise injured.

Three years later, however, the Supreme Court changed course in Federal

Trade Commission v. R.F. Keppel & Bro., Inc., 291 U.S. 304 (1934). As

explained in Sperry & Hutchinson, 405 U.S. at 242–43, the Court in Keppel

upheld an FTC cease-and-desist order against a candy marketing scheme on the

ground that it “contravened public policy insofar as it tem pted children to gamble

and compelled those who would successfully compete with Keppel to abandon

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their scruples by similarly tempting children.” The marketing scheme “was

‘unfair,’ though any competitor could maintain his position simply by adopting

the challenged practice.” Id. at 243. Sperry & Hutchinson concluded its

summary of Keppel as follows: “Thenceforth, unfair competitive practices were

not limited to those likely to have anticompetitive consequences after the manner

of the antitrust law; nor were unfair practices in commerce confined to purely

competitive behavior.” Id. at 244. The Court then noted that the Keppel

decision’s “perspective” of the FTCA “was legislatively confirmed” in 1938 when

Congress amended the Act by adding the phrase “unfair or deceptive acts or

practices” to the original ban on “unfair methods of competition.” Id. at 244

(internal quotation marks omitted). The Court thought that the language unfair or

deceptive acts or practices clearly did not require anticompetitive conduct. See

id.

To return to the PSA, the original 1921 language of § 202(a) made it

unlawful to “Engage in or use any unfair, unjustly discriminatory, or deceptive

practice or device in commerce.” Pub. L. No. 67-51, § 202, 42 Stat. 161. The

language “unfair . . . practice . . . in commerce” is the very language construed by

Sperry & Hutchinson as not requiring an “effect on competition.” 405 U.S. at

239. M oreover, the language is part of the same language in the 1938

amendments to the FTCA that Sperry & Hutchinson described as “confirm[ing]”

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the Keppel view that unfair practices under the FTCA were not “confined to

purely competitive behavior.” Id. at 244.

Particularly notew orthy is that the language of PSA § 202(a) more clearly

omits a competitive-effect requirement than does the FTCA language construed in

Keppel. Section 202(a) does not include the phrase “restraining comm erce” that

appears in other subsections of § 202. See § 202(c) (“if such apportionment has

the tendency or effect of restraining comm erce”); § 202(d) (transferring or

reviewing an article “for the purpose or with the effect of . . . restraining

comm erce”); § 202(e) (doing “any act for the purpose or with the effect of

. . . restraining commerce”). And perhaps more striking, § 202(a) does not use

the FTCA’s language “unfair methods of competition” construed in Keppel.

Perhaps this failure to adopt the language of the FTCA, enacted seven years

earlier, was to avoid the narrow construction of the FTCA by the Supreme Court

in Grata, decided shortly before enactment of the PSA.

Comparison of the PSA to the FTCA is sensible because the PSA is an

offspring of the FTCA. In 1917 President W ilson ordered an FTC investigation

of the food industry. See Davidson et al., supra, § 3.02, at 187. The FTC’s report

condemned the practices of the meat-packing industry. See id. The five largest

packers entered into a consent decree under the Sherman Act in 1920, but the

PSA was enacted in 1921, presumably because the antitrust laws and the FTCA

were deemed inadequate to the task of dealing with the problem. See id. at

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187–88. In that light it would be somewhat surprising if “unfair practices” under

the PSA had a narrower meaning than “unfair methods of competition” in the

FTC A.

Supporting this view is the discussion of the recently enacted PSA in

Stafford v. Wallace, 258 U.S. 495 (1922), which upheld the PSA’s

constitutionality. Some courts have relied on the Supreme Court’s statement in

that opinion that “[t]he chief evil feared is the monopoly of the packers.” Id. at

514. But the purpose of the PSA was not just to end the packers’ monopoly. The

1920 consent decree should have accomplished that task. The PSA ’s purpose was

to end the sort of practices engaged in by the monopoly, practices that could

certainly be characterized as unfair but could not easily be characterized as

restricting competition. This point is made clear by quoting at length from Chief

Justice Taft’s opinion for the Court:

The object to be secured by the act is the free and unburdened
flow of live stock from the ranges and farms of the W est and the
Southwest through the great stockyards and slaughtering centers on
the borders of that region, and thence in the form of meat products to
the consuming cities of the country in the M iddle W est and East, or,
still, as live stock, to the feeding places and fattening farms in the
M iddle W est or East for further preparation for the market.

The chief evil feared is the monopoly of the packers, enabling
them unduly and arbitrarily to lower prices to the shipper who sells,
and unduly and arbitrarily to increase the price to the consumer, who
buys. Congress thought that the power to maintain this monopoly
was aided by control of the stockyards. Another evil which it sought
to provide against by the act, was exorbitant charges, duplication of
commissions, deceptive practices in respect of prices, in the passage

-8-
 of the live stock through the stockyards, all made possible by
collusion between the stockyards management and the commission
men, on the one hand, and the packers and dealers on the other.
Expenses incurred in the passage through the stockyards necessarily
reduce the price received by the shipper, and increase the price to be
paid by the consumer. If they be exorbitant or unreasonable, they are
an undue burden on the commerce which the stockyards are intended
to facilitate. Any unjust or deceptive practice or combination that
unduly and directly enhances them is an unjust obstruction to that
commerce. The shipper, whose live stock are being cared for and
sold in the stockyards market is ordinarily not present at the sale, but
is far away in the W est. He is wholly dependent on the commission
men. The packers and their agents and the dealers who are the
buyers, are at the elbow of the commission men, and their relations
are constant and close. The control that the packers have had in the
stockyards by reason of ownership and constant use, the relation of
landlord and tenant between the stockyards owner, on the one hand,
and the commission men and the dealers on the other, the power of
assignment of pens and other facilities by that owner to commission
men and dealers, all create a situation full of opportunity and
temptation to the prejudice of the absent shipper and owner in the
neglect of the live stock, in the mala fides of the sale, in the
exorbitant prices obtained, in the unreasonableness of the charges for
services rendered.

The scope of the PSA is further reflected in the accompanying House Report,

which states:

A careful study of the bill, will, I am sure, convince one that it, and
existing law s, give the Secretary of Agriculture complete
inquisitorial, visitorial, supervisory, and regulatory power over the
packers, stockyards and all activities connected therewith; that it is a
most comprehensive measure and extends farther than any previous
law in the regulation of private business, in time of peace, except
possibly the interstate commerce act.

H.R. Rep. No. 67-77, at 2 (1924).

-9-
 It appears to me that the condemned practices described by Chief Justice

Taft are of the same ilk as those that the majority opinion holds are covered by

the PSA. W here I differ from the majority opinion in this regard is that I would

not describe the injuries caused by those practices as competitive injuries. The

majority opinion does not explain how the alleged practices hurt OK’s

competitors or even how they injure competition among the Growers. The

alleged injuries may be caused by the existence of a monopoly. But it is unclear

to me how the practices (such as unilaterally decreasing production by delivering

fewer chicks to grow ers) reduce competition among either grow ers or dealers. If

competitive injury were required by § 202(a), I would agree with the district court

that the Growers had not presented sufficient evidence of such injury.

Turning to the specific allegations of this case, I depart from the majority

opinion in that I would affirm the decision below because the Growers have not

presented sufficient evidence to support their claims that the practices at issue on

appeal are unfair. M y reasons are essentially the same as the majority opinion’s

reasons for rejecting the Growers’ unconscionability claims. The Growers are not

existing producers who sought a market for their product and were confronted

with OK’s take-it-or-leave-it contracts. Rather, they entered into their businesses

only after approaching OK and seeking approval to become its suppliers. The

terms of the contract were known. The Growers made an informed decision to

enter the industry. To the extent that the Growers claim that the contract

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misrepresents O K’s actual practice, those are deceptive-practice claims; and it is

my understanding that such claims are not before us. Perhaps OK’s exercise of

its authority under the contract to reduce the number of birds placed with the

Growers could be an unfair practice if it were the result of an effort by OK to

drive up prices for its products. But the Growers’ briefs on appeal do not allege

that any reduction in placement has occurred.

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