Consumer News Release
For immediate release -- Wednesday, February 9, 2000.
Contact Bob Brammer - 515-281-6699
Court Orders "Special Master" in Smithfield/Stoecker Case
Judge Ronald H. Schechtman issued an order Wednesday appointing a "Special Master" as requested by Attorney General Tom Miller to investigate and report to the Court on financial and business transactions among Smithfield Foods Inc., Murphy Family Farms, Stoecker Farms Inc., and Randall Stoecker, in the context of whether the transactions comply with Iowa's Corporate Farming Law.
The Corporate Farming Law (Iowa Code Ch. 9H) prohibits meat processors from owning, operating or controlling feedlots in Iowa where hogs are fed for slaughter.
"We are very pleased with the order to appoint a Special Master," Miller said. "We believe this will give the Court an orderly and efficient way to sort out the issues in this case."
On Feb. 4 Miller alleged that Smithfield, Murphy and Stoecker Farms were engaged in "sham" transactions and that Smithfield remained in control of Iowa feedlots in violation of Iowa law. Miller asked the Court to name a Special Master to investigate the matter and prepare a report to the Court.
Judge Schechtman appointed Eric W. Lam, an attorney with Moyer & Bergman PLC in Cedar Rapids, Iowa, as Special Master of the Court. Schechtman canceled a hearing set for Feb. 10, but he continued in full force a temporary injunction entered January 24 prohibiting Smithfield acquisition of Murphy's pork production assets in Iowa.
Schechtman directed Lam to file a report with the Court "as soon as he determines it is practicable." The Court directed the Special Master to conduct meetings and fact-finding in order "to file a report with this Court detailing the factual circumstances and background and effect of any and all financial and business transactions and arrangements among and between Smithfield Foods Inc., Murphy Farmily Farms, Stoecker Farms Inc., Randall Stoecker, and/or other parties, in the context of whether any and all such transactions are in compliance with or violative of the provisions of Iowa Code Chapter 9H."
The Special Master was given powers to compel production of any witness or documents, administer oaths, regulate proceedings and "do all acts and take all measures appropriate for the efficient performance of the duties of the Special Master."
The Court order Wednesday noted that "the parties expressly consent to subject themselves to the subpoena power of the Court."
In an affidavit filed with the Court Wednesday, Lam indicated he had been a Bankruptcy Trustee and Examiner in other agriculture-related cases. "I am generally familiar with legal issues sounding in fraudulent conveyances as well as matters involving financial arrangements and transactions among corporate entities and various creditors or lenders," Lam stated.
Lam stated that he intends to hold a first meeting on the matter as soon as possible after his appointment.
The Court said it would conduct a hearing later to consider the final report submitted by the Special Master and continuation of the temporary injunction.
Miller filed a lawsuit January 24 to block Smithfield acquisition of Murphy's pork production assets in Iowa, and District Court Judge Ronald Schechtman issued a temporary injunction later that day barring such an acquisition. On January 28, Smithfield, the world's largest hog producer and pork processor, announced that it was acquiring Murphy Farms, the nation's second largest hog production operation. Miller immediately asked Smithfield to provide information about how the acquisition complies with Iowa law and Judge Schechtman's temporary injunction.
On February 4, Miller alleged "that transactions purporting to transfer Murphy's Iowa hog production assets to a third party are a sham designed for the sole purpose of creating an appearance of compliance by Smithfield with Iowa's corporate farming statute." Miller asked the Court to appoint a Special Master to focus on the situation.
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