US judges split over litigation funder's role in Sysco cases

Burford Capital denied substitution for Sysco in Minnesota
calendar icon 5 June 2024
clock icon 2 minute read

Two federal judges have issued contradictory rulings on whether litigation funding firm Burford Capital can take over as the plaintiff in lawsuits brought by its financing client Sysco, reported Reuters

In the latest order, US District Judge Tunheim in Minnesota on Monday upheld a magistrate’s February decision requiring food distribution giant Sysco to remain the plaintiff in antitrust lawsuits it filed accusing pork and beef suppliers of overcharges.

Tunheim’s order contrasted with a decision by a Chicago federal judge in March that said Burford unit Carina Ventures could be substituted as the plaintiff in another Sysco antitrust lawsuit accusing chicken processors of fixing prices.

The cases have been closely watched by the litigation funding industry, which provides financing to clients in exchange for a part of any settlement or other judgment. Burford had spent $140 million since 2019 supporting Sysco’s antitrust cases, court documents show.

Burford on Monday said it was reviewing the Minnesota decision and did not have further comment. Sysco declined to comment.

The wrangling over substitution surfaced after Sysco wanted to settle some of its claims at amounts Burford considered too low. Burford won an arbitration order barring Sysco from settling its cases.

Burford and Sysco resolved their dispute, and Sysco voluntarily transferred its claims to Burford's newly created unit Carina.

Meat suppliers fought the substitution effort, however, arguing that putting the funding company in charge went against public policy that favored litigants settling cases on their own terms.

In the earlier Chicago ruling, US District Judge Thomas Durkin said it “generally was not his place" to “interfere with sophisticated parties’ business decisions."

Tunheim, however, said in Monday's Minnesota order that granting substitution could harm antitrust cases around the country. "Sysco and Burford’s conduct is precisely the kind of conduct of which courts are wary," the judge wrote.

Sysco's cases in Illinois and Minnesota are in different federal appellate circuits, which could lead to a broader split on the issue if the decisions are appealed.

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