Burford Capital (BURF.L) has asked a judge to reverse a decision that blocked the litigation funding firm from taking over as the plaintiff in lawsuits brought by its financing client Sysco (SYY.N).
Burford subsidiary Carina Ventures on Friday asked a Minnesota federal judge to overturn a Feb. 9 order requiring food distribution giant Sysco to remain the plaintiff in antitrust lawsuits it filed accusing meat suppliers of overcharges.
Sysco in a filing also challenged the order, calling it “legally flawed.”
The filings set up what is expected to be a novel and closely watched dispute over how and when third-party litigation funders, which back clients' cases in exchange for a cut of an eventual settlement or judgment, can steer litigation.
The case has drawn attention from critics of litigation funding like the U.S. Chamber of Commerce that say it encourages meritless lawsuits and drives up costs. Defenders of the practice say it can level the playing field for plaintiffs.
Burford and Sysco declined to comment.
Sysco last year assigned its claims in some antitrust cases to Carina in a settlement with Burford. The settlement resolved Burford's claims that Sysco was preparing to settle antitrust cases for amounts that were too low, in violation of the companies' litigation financing arrangement.
Burford had loaned $140 million to Sysco since 2019 in exchange for proceeds in the litigation, court papers show.
U.S. Magistrate John Docherty this month refused Sysco’s request to allow Burford's Carina to replace Sysco as the plaintiff.
Docherty questioned Burford's motives and authority to steer the food distributor's cases.
Burford’s Friday filing said Docherty got it wrong, and it wants a U.S. district judge to take up the dispute.
“There is no sound policy reason to require Carina to control the prosecution of its claims from the sidelines, rather than litigating them directly in its own name,” Burford said.
Sysco said Docherty’s order left the Houston-based company “in the undesired and impracticable position of having to continue to litigate claims that it no longer owns or has any economic stake in.”
The meat processor defendants in the case had urged the court to reject Sysco’s move to substitute Burford as the plaintiff. They said such a move could "meaningfully frustrate any future attempts for settlement discussions."
Burford and Sysco said any prior settlement plans were irrelevant to the dispute over who should serve as the plaintiff.
The cases are In re: Pork Industry Litigation, U.S. District Court for the District of Minnesota, No. 0:18-cv-01776, and In re: Cattle and Beef Antitrust Litigation, same court, No. 0:22-md-03031.
For Sysco: Christopher Wilson of Baker Botts
For Carina: Derek Ho of Kellogg, Hansen, Todd, Figel & Frederick; Scott Gant of Boies Schiller Flexner; and Christopher Seeger of Seeger Weiss
Read more:
Litigation funder Burford loses bid to take over Sysco antitrust cases
Sysco's plan to cede antitrust claims to Burford entity draws opposition
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